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Item 8. Financial Statements and Supplementary Data

2023-03-30 compared with 2022-03-28 · 963 added, 416 removed, 37 unchanged (97% of the section changed)

Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Balance Sheet as of December 31, 2021

Statement of Operations for the period from February 5, 2021 (inception) Through December 31, 2021

Statement of Changes in Shareholders' Deficit for the period from February 5, 2021 (inception) Through December 31, 2021

Statement of Cash Flows for the period from February 5, 2021 (inception) Through December 31, 2021

Notes to Financial Statements

Consolidated and Combined Balance Sheets

Consolidated and Combined Statements of Operations and Comprehensive Loss

Consolidated and Combined Statements of Stockholders’ Equity

Consolidated and Combined Statements of Cash Flows

Notes to Consolidated and Combined Financial Statements

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

Avista Public Acquisition Corp.

To the Stockholders and the Board of Directors of OmniAb, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheet of Avista Public Acquisition Corp.

II (the “Company”) as of December 31, 2021, the related statements of operations, changes in shareholders’ deficit and cash flows for the period from February 5, 2021 (inception) through December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the period from February 5, 2021 (inception) through December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 1 to the financial statements, the Company’s business plan is dependent on the completion of a business combination and the Company’s cash and working capital as of December 31, 2021 are not sufficient to complete its planned activities for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements.

These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We have audited the accompanying consolidated and combined balance sheets of OmniAb, Inc.

(the Company) as of December 31, 2022 and 2021, the related consolidated and combined statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated and combined financial statements”).

In our opinion, the consolidated and combined financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Marcum LLP

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2021.

San Diego, California

March 30, 2023

AVISTA PUBLIC ACQUISITION CORP.

BALANCE SHEET

DECEMBER 31, 2021

CONSOLIDATED AND COMBINED BALANCE SHEETS

(in thousands, except share and per share data)

Current assets:

Prepaid expenses

Cash and cash equivalents $ 33,390 $ —

Short-term investments 54,875 —

Accounts receivable, net 30,290 21,136

Prepaid expenses and other current assets 6,395 1,406

Total current assets 124,950 22,542

Cash held in trust account

LIABILITIES AND SHAREHOLDERS' DEFICIT

Intangible assets, net 167,242 176,321

Goodwill 83,979 83,979

Property and equipment, net 19,979 6,795

Operating lease right-of-use assets 21,483 13,332

Other long-term assets 3,579 1,496

Total assets $ 421,212 $ 304,465

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable $ 2,971 $ 2,924

Accrued expenses

Accrued offering costs

Due to related party

Accrued expenses and other current liabilities 5,557 3,747

Income tax payable 3,485 —

Current contingent liabilities 4,022 2,538

Current deferred revenue 8,207 10,790

Current operating lease liabilities 1,780 578

Total current liabilities 26,022 20,577

Deferred underwriting fee payable

Long-term contingent liabilities 4,089 4,826

Deferred income taxes, net 21,341 21,962

Long-term operating lease liabilities 24,016 13,272

Long-term deferred revenue 4,325 9,226

Other long-term liabilities 46 295

Total liabilities 79,839 70,158

Commitments (see Note 6)

Class A ordinary shares, $ 0.0001 par value, subject to possible redemption;

23,000,000 shares at redemption value

Shareholders' Deficit

Preference shares, $ 0.0001 par value;

5,000,000 shares authorized;

none issued and outstanding

Class A ordinary shares, $ 0.0001 par value;

Stockholders’ equity:

Preferred stock, $ 0.0001 par value;

100,000,000 shares authorized;

no shares issued and outstanding (excluding 23,000,000 shares subject to possible redemption)

Class B ordinary shares, $ 0.0001 par value;

no shares issued and outstanding at December 31, 2022;

no shares authorized, issued and outstanding at December 31, 2021

Common stock, $ 0.0001 par value;

1,000,000,000 shares authorized;

5,750,000 shares issued and outstanding

115,218,229 shares issued and outstanding at December 31, 2022;

no shares authorized, issued and outstanding at December 31, 2021

Additional paid-in capital 330,100 —

Accumulated deficit

( 7,554,273 )

Total Shareholders' Deficit

( 7,553,698 )

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT

The accompanying notes are an integral part of these financial statements.

AVISTA PUBLIC ACQUISITION CORP.

STATEMENT OF OPERATIONS

FOR THE PERIOD FROM FEBRUARY 5, 2021 (INCEPTION) THROUGH DECEMBER 31, 2021

Formation and operating costs

Basic and diluted weighted average shares outstanding , Class A ordinary shares

Basic and diluted net loss per share, Class A ordinary shares

Basic and diluted weighted average shares outstanding , Class B ordinary shares

Basic and diluted net loss per share, Class B ordinary shares

The accompanying notes are an integral part of these financial statements.

AVISTA PUBLIC ACQUISITION CORP.

STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT

FOR THE PERIOD FROM FEBRUARY 5, 2021 (INCEPTION) THROUGH DECEMBER 31, 2021

Class A Ordinary Shares

Class B Ordinary Shares

Shareholders’

Balance at February 5, 2021 (inception)

Issuance of Class B ordinary shares to Sponsor

Proceeds from Initial Public Offering Costs allocated to Public Warrants (net of offering costs)

Proceeds from sale of Private Placement Warrants to the Sponsor (net of offering costs)

Re-measurement of Class A ordinary shares to redemption value

( 21,555,404 )

( 7,037,831 )

( 28,593,235 )

Accumulated other comprehensive income 9 —

Retained earnings 11,252 —

Parent company net investment — 234,307

Total stockholders’ equity 341,373 234,307

Total liabilities and stockholders’ equity $ 421,212 $ 304,465

See accompanying notes to these consolidated and combined financial statements.

CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share data)

License and milestone revenue $ 38,926 $ 14,664

Service revenue 18,784 20,084

Royalty revenue 1,367 —

Total revenues 59,077 34,748

Operating costs and expenses:

Research and development 48,364 39,232

General and administrative 24,903 16,947

Amortization of intangibles 13,050 12,968

Other operating (income) expense, net ( 592 ) 1,210

Total operating expenses 85,725 70,357

Loss from operations ( 26,648 ) ( 35,609 )

Other income (expense):

Interest income 587 —

Interest expense — ( 7 )

Other income, net — 1,266

Total other income, net 587 1,259

Loss before income tax ( 26,061 ) ( 34,350 )

Income tax benefit 3,727 7,308

Net loss $ ( 22,334 ) $ ( 27,042 )

Net loss per share, basic and diluted $ ( 0.26 ) $ ( 0.33 )

Weighted-average shares outstanding, basic and diluted 85,318 82,612

Net loss $ ( 22,334 ) $ ( 27,042 )

Unrealized net gain on available-for-sale securities 9 —

Comprehensive loss $ ( 22,325 ) $ ( 27,042 )

See accompanying notes to these consolidated and combined financial statements.

CONSOLIDATED AND COMBINED STATEMENT OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

Common Stock Additional

comprehensive

income (loss)

Parent company net investment Total

stockholders’

Shares Amount

Balance at January 1, 2021 — $ — $ — $ — $ — $ 235,537 $ 235,537

Net loss — — — — — ( 27,042 ) ( 27,042 )

Parent allocation of shared-based compensation — — — — — 15,065 15,065

Net transfers from parent company — — — — — 10,747 10,747

Balance at December 31, 2021 — $ — $ — $ — $ — $ 234,307 $ 234,307

( 7,554,273 )

( 7,553,698 )

The accompanying notes are an integral part of these financial statements.

AVISTA PUBLIC ACQUISITION CORP.

STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM FEBRUARY 5, 2021 (INCEPTION) THROUGH DECEMBER 31, 2021

Cash Flows from Operating Activities:

Changes in operating assets and liabilities:

Prepaid expenses

Accounts payable

Due to related party

Accrued expenses

Parent allocation of shared-based compensation — — — — — 14,444 14,444

Net transfers from parent company — — — — — 15,047 15,047

Consummation of Separation transaction 97,611,032 10 230,202 — — ( 230,212 ) —

Issuance of common stock upon Business Combination, net of transaction costs 17,209,070 2 95,767 — — — 95,769

Issuance of common stock under employee stock compensation plans, net of tax 398,127 — 253 — — — 253

Share-based compensation — — 3,878 — — — 3,878

Unrealized net gain on available-for-sale securities — — — 9 — — 9

Net income (loss) — — — — 11,252 ( 33,586 ) ( 22,334 )

Balance at December 31, 2022 115,218,229 $ 12 $ 330,100 $ 9 $ 11,252 $ — $ 341,373

See accompanying notes to these consolidated and combined financial statements.

CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended December 31,

Operating activities

Net loss $ ( 22,334 ) $ ( 27,042 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization 18,249 16,252

Share-based compensation 18,322 15,065

Deferred income taxes, net ( 6,419 ) ( 7,325 )

Short-term investments gain — ( 1,265 )

Change in estimated fair value of contingent liabilities ( 592 ) 1,210

Other operating activities 20 64

Changes in operating assets and liabilities, net

Accounts receivable, net ( 12,737 ) 6,019

Prepaid expenses and other current assets ( 4,714 ) ( 632 )

Other long-term assets ( 788 ) 1,454

Accounts payable, accrued expenses, and other current liabilities 15,068 1,513

Operating lease liabilities 1,810 ( 3,255 )

Deferred revenue ( 9,489 ) ( 6,717 )

Other long-term liabilities 17 ( 1,013 )

Net cash used in operating activities ( 3,587 ) ( 5,672 )

( 1,136,926 )

Cash Flows from Investing Activities:

Investment of cash into Trust Account

( 235,750,000 )

Investing activities

Purchases of property and equipment ( 17,168 ) ( 4,070 )

Purchases of short-term investments ( 54,775 ) —

Proceeds from sale of short-term investments 70 1,265

Payments to CVR holders ( 1,440 ) ( 720 )

Other investing activities — ( 500 )

Net cash used in investing activities ( 73,313 ) ( 4,025 )

( 235,750,000 )

Cash Flows from Financing Activities:

Proceeds from issuance of Class B ordinary shares to Sponsor

Proceeds from initial public offering, net of underwriter's discount paid

Proceeds from sale of Private Placement Warrants

Proceeds from Sponsor note

Repayment of Sponsor note

Payment of offering costs

Financing activities

Proceeds from consummation of separation transaction 1,842 —

Proceeds from issuance of common stock in Business Combination 96,242 —

Proceeds from issuance of common stock from stock plans, net 435 —

Payments to CVR holders ( 2,025 ) ( 1,050 )

Net transfer from parent 14,245 10,747

Net cash provided by financing activities 110,739 9,697

Net change in cash

Cash - beginning of period

Cash - end of period

Non-cash investing and financing activities

Re-measurement of Class A ordinary shares to redemption value

Offering costs included in accrued offering costs

Deferred underwriting fee payable

The accompanying notes are an integral part of these financial statements.

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS AND LIQUIDITY

Avista Public Acquisition Corp.

II (the “Company”) is a blank check company incorporated in the Cayman Islands on February 5, 2021.

The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”).

The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination.

The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

As of December 31, 2021, the Company had not commenced any operations.

All activity for the period from February 5, 2021 (inception) through December 31, 2021 relates to the Company’s formation and the initial public offering (“Initial Public Offering”), which is described below.

The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest.

The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.

The Company has selected December 31 as its fiscal year end.

The registration statement for the Company’s Initial Public Offering was declared effective on August 9, 2021.

On August 12, 2021, the Company consummated the Initial Public Offering of 23,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units sold, the “Public Shares”), including 3,000,000 Units that were issued pursuant to the underwriter’s exercise of its over-allotment option in full, at $ 10.00 per Unit, generating gross proceeds of $ 230,000,000 (see Note 3).

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 8,233,333 warrants (the “Private Placement Warrants”), including 900,000 Private Placement Warrants that were issued pursuant to the underwriter’s exercise of its over-allotment option in full, at a price of $ 1.50 per Private Placement Warrant in a private placement to Avista Acquisition LP II (the “Sponsor”), generating gross proceeds of $ 12,350,000 (see Note 4).

Transaction costs amounted to $ 13,662,256 consisting of $ 4,600,000 of underwriting fees, $ 8,050,000 of deferred underwriting fees, and $ 1,012,256 of other offering costs.

In addition, as of December 31, 2021, cash of $ 189,971 is held outside of the Trust Account (as defined below) and is available for the payment of accrued offering costs and for working capital purposes.

Upon closing of the Initial Public Offering and the sale of the Private Placement Warrants, a total of $ 235,750,000 ($ 10.25 per Public Share) was placed in a trust account (the “Trust Account”) and will be invested only in U.S.

government treasury obligations with maturities of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S.

government treasury obligations, until the earlier of:

(i) the consummation of the initial Business Combination within 18 months from the closing of the Initial Public Offering, (ii) the redemption of the Company’s Public Shares if the Company has not consummated an Business Combination within 18 months from the closing of the Company’s Initial Public Offering, subject to applicable law, and (iii) the redemption of the Company’s Public Shares properly submitted in connection with a shareholder vote to approve an amendment to the Amended and Restated Memorandum and Articles of Association (A) that would modify the substance or timing of the obligation to provide holders of the Class A ordinary shares the right to have their shares redeemed in connection with the initial Business Combination or to redeem 100 % of the Company’s Public Shares if the Company does not complete the initial Business Combination within 18 months from the closing the Company’s Initial Public Offering or (B) with respect to any other provision relating to the rights of holders of the Class A ordinary shares.

The Company will provide its holders of the outstanding Public Shares (the “public shareholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer.

The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion.

The public shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account ($ 10.25 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).

There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.

The Public Shares subject to redemption was recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) .

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $ 5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks shareholder approval, a majority of the shares voted are voted in favor of the Business Combination.

If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association (the “Amended and Restated Memorandum and Articles of Association”), conduct the redemptions pursuant to the tender offer rules of the U.S.

Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination.

If, however, shareholder approval of the transaction is required by law, or the Company decides to obtain shareholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules.

If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination.

Additionally, each public shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction or don’t vote at all.

Notwithstanding the above, if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15 % or more of the Public Shares, without the prior consent of the Company.

The Sponsor has agreed to waive (i) redemption rights with respect to its Founder Shares and Public Shares held by it in connection with the completion of a Business Combination, (ii) redemption rights with respect to any Founder Shares and Public Shares held by it in connection with a shareholder vote to amend the Amended and Restated Memorandum and Articles of Association to modify the substance or timing of the Company’s obligation to allow redemption in connection with an initial Business Combination or to redeem 100 % of its Public Shares if the Company does not complete an initial Business Combination within 18 months from the closing of the Initial Public Offering or with respect to any other material provision relating to shareholders’ rights or pre-initial Business Combination activity and (iii) rights to liquidating distributions from the Trust Account with respect to any Founder Shares held if the Company fails to complete an initial Business Combination within 18 months from the closing of the Initial Public Offering.

However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within 18 months from the closing of the Initial Public Offering.

The Company has until 18 months from the closing of the Initial Public Offering to complete a Business Combination (the “Combination Period”).

If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up;

(ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay income taxes, if any (less up to $ 100,000 of interest to pay dissolution expenses) divided by the number of the then-outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any);

and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and board of directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.

The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares.

In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($ 10.00 ).

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company (other than the Company’s independent registered public accounting firm), or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amounts in the Trust Account to below the lesser of (i) $ 10.25 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account if less than $ 10.25 per Public Share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay tax obligations, provided that such liability will not apply to any claims by a third party or prospective target business that executed a waiver of any and all rights to seek access to the Trust Account nor will it apply to any claims under the indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”).

The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

As of December 31, 2021, the Company had $ 189,971 in cash held outside of the Trust Account and a working capital surplus of $ 496,302 .

The Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans.

These conditions raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued.

Moreover, the Company may need to obtain additional financing either to complete a Business Combination or if the Company becomes obligated to redeem a significant number of public shares upon completion of a Business Combination, in which case the Company may issue additional securities or incur debt in connection with such Business Combination.

Of the total proceeds from the Initial Public Offering and sale of the Private Placement Warrants, an amount of approximately $ 2 million was deposited in an operating account for the Company's working capital needs.

The amounts held in the operating account are not expected to provide the Company with sufficient funds to meet its operational and liquidity obligations over the next twelve months.

Going Concern Consideration

As of December 31, 2021, the Company had $ 189,971 in cash held outside of the Trust Account and a working capital surplus of $ 496,302 .

The Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans.

These conditions raise substantial doubt about the Company's ability to continue as a going concern for a period of time within one year after the date that the financial statements are issued.

Management plans to address this uncertainty through the Business Combination as discussed above.

There is no assurance that the Company's plans to consummate the Business Combination will be successful or successful within the Combination Period.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Risks and Uncertainties

Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a prospective partner company, the specific impact is not readily determinable as of the date of these financial statements.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Net increase in cash, cash equivalents, and restricted cash 33,839 —

Cash, cash equivalents and restricted cash at beginning of year — —

Cash, cash equivalents and restricted cash at end of year $ 33,839 $ —

Supplemental cash flow information:

Right-of-use assets obtained in exchange for operating lease obligations $ 10,136 $ 14,515

Deferred revenue recorded in accounts receivable $ 942 $ 11,344

Supplemental non-cash investing and financing activities:

Purchase of fixed assets recorded in accounts payable $ 22 $ 1,231

Intangible additions recorded in contingent liabilities $ 4,804 $ 720

Transaction cost recorded in accounts payable $ 473 $ —

See accompanying notes to these consolidated and combined financial statements.

Notes to Consolidated and Combined Financial Statements

Organization and Basis of Presentation

Description of Business

(“OmniAb” or the “Company”, formerly known as Avista Public Acquisition Corp.

II (“APAC”)) is a biotechnology company with a Biological Intelligence powered multi-species antibody platform for the discovery of mono and bispecific therapeutic human antibodies.

The Company primarily derives revenue from license fees for technology access, milestones from partnered programs and service revenue from research programs.

Separation and Business Combination

On November 1, 2022 (the “Closing Date”), the Company, Ligand Pharmaceuticals Incorporated, a Delaware corporation (“Ligand” or the “Parent”), OmniAb Operations, Inc., a Delaware corporation and wholly-owned subsidiary of Ligand (“Legacy OmniAb”, formerly known as OmniAb, Inc.

and, together with Ligand, collectively, the “Companies”), and Orwell Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of APAC (“Merger Sub”), consummated the transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”), dated as of March 23, 2022.

In connection with, and as contemplated by, the Merger Agreement, on November 1, 2022, in accordance with the terms of the Separation and Distribution Agreement, dated as of March 23, 2022, by and among APAC, Ligand and Legacy OmniAb (the “Separation Agreement”), Ligand transferred the Legacy OmniAb business, including certain related subsidiaries of Ligand, to Legacy OmniAb and made a contribution to the capital of Legacy OmniAb of $ 1.8 million, after deducting certain transaction and other expenses reimbursable by Legacy OmniAb (the “Separation”).

Following the Separation, as contemplated by the Separation Agreement, Ligand distributed on a pro rata basis to its stockholders all of the shares of common stock, par value $ 0.001 per share, of Legacy OmniAb (“Legacy OmniAb Common Stock”) held by Ligand, such that each holder of shares of common stock, par value $ 0.001 per share, of Ligand (“Ligand Common Stock”) was entitled to receive one share of Legacy OmniAb Common Stock for each share of Ligand Common Stock held by such holder as of the record date for the distribution, October 26, 2022 (the “Distribution”).

Following the Separation and Distribution, on November 1, 2022, Merger Sub merged with and into Legacy OmniAb, with Legacy OmniAb surviving as a direct, wholly owned subsidiary of OmniAb (the “Business Combination”).

See Note 4 – Business Combination, for further details.

The Business Combination was accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America (“U.S.

Under this method of accounting, APAC was treated as the acquired company and Legacy OmniAb was treated as the acquirer for financial reporting purposes.

Accordingly, for accounting purposes, the reverse recapitalization was treated as the equivalent of Legacy OmniAb issuing stock for the net assets of APAC, accompanied by a recapitalization.

The consolidated and combined assets, liabilities and results of operations prior to the Business Combination are those of Legacy OmniAb, and the assets, liabilities and results of operations of APAC were consolidated with Legacy OmniAb beginning on the Closing Date.

The net assets of APAC are stated at historical cost, with no goodwill or other intangible assets recorded.

Legacy OmniAb was determined to be the accounting acquirer based on the following predominant factors:

• Legacy OmniAb’s existing stockholders have the greatest voting interest in the Company with approximately 85 % of the voting interest;

• Legacy OmniAb nominated a majority of the initial members of the Company’s board of directors;

• Legacy OmniAb’s senior management is the senior management of the Company;

• Legacy OmniAb is the larger entity based on historical operating activity and has the larger employee base;

• The post-combination company assumed a Legacy OmniAb branded name:

“OmniAb, Inc.”

Basis of Presentation

The accompanying financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

The Company’s accompanying consolidated and combined financial statements have been prepared in accordance with U.S.

Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S.

GAAP as included in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”).

Certain prior period amounts in the consolidated and combined financial statements have been reclassified to conform to the current period presentation.

Periods prior to Separation

The accompanying combined financial statements for periods prior to the Separation have been prepared on a stand-alone basis and are derived from Ligand’s consolidated financial statement accounting records.

The operations comprising Legacy OmniAb were in various legal entities wholly owned by Ligand.

Accordingly, Ligand’s net investment in these operations is shown in lieu of stockholder’s equity in the combined financial statements.

Legacy OmniAb comprised certain stand-alone legal entities for which discrete financial information was available.

As Ligand recorded transactions at the legal entity level, allocation methodologies were applied to certain accounts to allocate amounts to Legacy OmniAb, as discussed further below.

Legacy OmniAb entities were under the common control of Ligand as a result of, among other factors, Ligand’s ownership.

As the entities were under common control, the financial statements report the financial position, results of operations and cash flows of Legacy OmniAb as though the transfer of net assets and equity interests had occurred as of January 2016.

Transactions between Ligand and Legacy OmniAb were accounted through Parent company net investment in Legacy OmniAb.

The total net effect of the settlement of these intercompany transactions is reflected in Legacy OmniAb’s combined balance sheets as Parent company net investment in Legacy OmniAb.

All significant intercompany transactions with Ligand are deemed to have been paid in the period the costs were incurred.

Expenses related to corporate allocations from Ligand to Legacy OmniAb were considered to be effectively settled for cash in the combined financial statements at the time the transaction was recorded.

The combined financial statements include all revenues, expenses, assets and liabilities directly associated with the business activity of Legacy OmniAb as well as an allocation of certain general and administrative expenses related to facilities, functions and services provided by Ligand.

These corporate expenses have been allocated to Legacy OmniAb based on direct usage or benefit, where identifiable, with the remainder allocated based on headcount or a percentage of total operating expenses or other measures that management believes are consistent and reasonable.

See Note 3 – Relationship with Parent and Related Entities.

Ligand maintains various share-based compensation plans at a corporate level.

Legacy OmniAb employees participated in those programs, and a portion of the compensation cost associated with those plans are included in Legacy OmniAb’s combined statements of operations and Parent company net investment.

The amounts presented in the combined financial statements are not necessarily indicative of future awards and may not reflect the results that Legacy OmniAb would have experienced as a stand-alone entity.

See Note 3 – Relationship with Parent and Related Entities for additional discussion.

All of the allocations and estimates in the combined financial statements are based on assumptions that management believes are reasonable.

However, the combined financial statements included herein may not be indicative of the financial position, results of operations and cash flows of Legacy OmniAb in the future or if Legacy OmniAb had been a separate, stand-alone publicly traded entity during the periods presented.

Periods after the Separation

Following the Separation, the Company began accounting for its financial activities as an independent entity.

The Company’s financial statements as of December 31, 2022 and for the period from November 1, 2022 through December 31, 2022 are based on the reported results of OmniAb as a standalone company.

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

All intercompany transactions and accounts within the Company have been eliminated.

Separation-related adjustments

Pursuant to the Separation Agreement, certain accounts receivables, accounts payables, and accrued liabilities included in Legacy OmniAb’s combined balance sheets immediately prior to the Separation were retained by Ligand, and therefore, were adjusted through net parent investment in Legacy OmniAb’s combined financial statements.

In addition, in connection with the Separation, certain equity awards were converted in accordance with the Employee Matters Agreement, as further described in Note 11 – Share-Based Compensation.

As a standalone entity, the Company will file tax returns on its own behalf, and tax balances and the effective income tax rate may differ from the amounts reported in the historical periods.

The difference between the tax attributes the Company historically calculated on a carve-out basis and the actual tax attributes that the Company received as a standalone entity on November 1, 2022 was adjusted through additional paid-in-capital.

As of November 1, 2022 and in connection with the Separation, the Company adjusted its deferred tax balances and computed its related tax provision to reflect operations as a standalone entity.

The following represents the impact of these Separation-related adjustments to the Company’s balance sheet following the Separation on November 1, 2022:

As of Separation-Related As of

(in thousands) October 31, 2022 Adjustments November 1, 2022

Current assets:

Cash and cash equivalents $ 1,842 $ 96,242 $ 98,084

Accounts receivable, net 5,541 ( 5,541 ) —

Prepaid expenses and other current assets 2,220 — 2,220

Total current assets 9,603 90,701 100,304

Deferred income taxes, net 167 ( 167 ) —

Intangible assets, net 166,182 — 166,182

Goodwill 83,979 — 83,979

Property and equipment, net 19,888 19 19,907

Operating lease right-of-use assets 21,290 — 21,290

Other long-term assets 1,448 — 1,448

Total assets $ 302,557 $ 90,553 $ 393,110

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable $ 8,569 $ ( 8,096 ) $ 473

Accrued expenses and other current liabilities 3,381 ( 3,356 ) 25

Current contingent liabilities 1,569 — 1,569

Current deferred revenue 8,582 — 8,582

Current operating lease liabilities 1,611 — 1,611

Total current liabilities 23,712 ( 11,452 ) 12,260

Long-term contingent liabilities 4,175 — 4,175

Deferred income taxes, net 15,136 5,731 20,867

Long-term operating lease liabilities 24,822 — 24,822

Long-term deferred revenue 5,004 — 5,004

Other long-term liabilities 298 ( 298 ) —

Total liabilities 73,147 ( 6,019 ) 67,128

Parent company net investment 229,410 ( 229,410 ) —

Common stock — 12 12

Additional paid-in capital — 325,970 325,970

Total liabilities and stockholders’ equity $ 302,557 $ 90,553 $ 393,110

Liquidity and Capital Resources

Prior to the Separation, Legacy OmniAb was dependent upon Ligand for all of its working capital and financing requirements, as Ligand used a centralized approach to cash management and financing its operations.

There were no cash amounts specifically attributable to Legacy OmniAb for the historical periods presented;

therefore, there was no cash reflected in the combined financial statements.

Accordingly, cash and cash equivalents, debt or related interest expense were not allocated to Legacy OmniAb in the combined financial statements.

Financing transactions related to OmniAb were accounted for as a component of the Parent company net investment in the combined balance sheets and as a financing activity including an interest expense component allocation on the accompanying combined statements of cash flows.

In connection with the Separation, Ligand funded the Company with approximately $ 1.8 million of cash.

Additionally, the Company’s proceeds, net of transactions costs from the Business Combination were $ 95.8 million.

See Note 4 – Business Combination, for further details.

In January 2023, the Company received an aggregate of $ 35.0 million in milestone payments in connection with teclistamab.

For the years ended December 31, 2022 and 2021, the Company’s revenue was $ 59.1 million and $ 34.7 million, respectively.

For the years ended December 31, 2022 and 2021, the Company’s net loss was $ 22.3 million and $ 27.0 million, respectively.

The Company expects to continue to incur losses for the foreseeable future, and anticipates these losses will increase substantially as it invests in research and development activities to improve its technology and platform, market and sell its solutions to existing and new partners, add operational, financial and management information systems and personnel to support its operations and incur additional costs associated with operating as a public company.

The Company’s ability to continue its operations is dependent upon its ability to obtain additional capital in the future and generate cash flows from operations.

The Company believes its existing cash, cash equivalents and marketable securities and the cash it expects to generate from operations, including milestone payments received in January 2023, will provide it the flexibility needed to meet operating, investing, and financing needs and support operations through at least the next 12 months.

The accompanying consolidated and combined financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

OmniAb qualifies as an “emerging growth company” (“EGC”) as defined in Section 2(a) of the Securities Act of 1933, as amended, (“Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”).

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.

The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

OmniAb has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, OmniAb, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of OmniAb’s financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period, difficult because of the potential differences in accounting standards used.

Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S.

GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

Making estimates requires management to exercise significant judgment.

It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.

Accordingly, the actual results could differ from those estimates.

The preparation of these consolidated and combined financial statements in conformity with U.S.

GAAP requires the use of estimates and assumptions that affect the amounts reported in the consolidated and combined financial statements and the accompanying notes.

Actual results may differ from those estimates.

Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents consist of cash and highly liquid investments with original maturities of three months or less when purchased.

As of December 31, 2022, cash and cash equivalents consisted of bank deposits, money market funds as well as U.S.

government agency and corporate debt securities.

The following table provides a reconciliation of the components of cash, cash equivalents and restricted cash reported in the consolidated and combined balance sheets to the total of the amount presented in the consolidated and combined statements of cash flows:

(in thousands) December 31, 2022 December 31, 2021

Cash and cash equivalents $ 33,390 $ —

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.

The Company did not have any cash equivalents as of December 31, 2021.

Class A Ordinary Shares Subject to Possible Redemption

All of the 23,000,000 shares of Class A ordinary shares sold as part of the Units in the Initial Public Offering contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, if there is a shareholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s amended and restated certificate of incorporation.

In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity.

Therefore, all Class A ordinary shares have been classified outside of permanent equity.

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period.

Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid-in capital and accumulated deficit.

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2021, the Class A ordinary shares subject to possible redemption reflected in the balance sheet are reconciled in the following table:

Gross proceeds

Proceeds allocated to Public Warrants

( 9,813,334 )

Issuance costs allocated to Class A ordinary shares

Restricted cash included in other non-current assets 449 —

Total cash, cash equivalents and restricted cash presented in the consolidated and combined statements of cash flows $ 33,839 $ —

The restricted cash relates to the Company’s property leases and is included in “Other long-term assets”.

The restriction will lapse when the related leases expire.

Short-term Investments

Short-term investments primarily consist of commercial paper, corporate debt securities, and government and agency bonds.

The Company classifies short-term investments as “available-for-sale” as the sale of such investments may be required prior to maturity to implement management strategies.

Therefore, the Company has classified all investments with original maturity dates beyond three months as current assets in the accompanying consolidated and combined balance sheets.

Any premium or discount arising at purchase is amortized and/or accreted to interest income as an adjustment to yield using the straight-line method over the life of the instrument.

Investments are reported at their estimated fair value.

Unrealized gains and losses are included in accumulated other comprehensive loss as a component of stockholders’ equity until realized.

Accounts Receivable

The Company’s accounts receivable represents the amounts billed to its partners and that are due unconditionally for services the Company has performed.

The Company establishes an allowance for credit losses to present the net amount of accounts receivable expected to be collected.

The allowance is determined by using the loss-rate method, which requires an estimation of loss rates based upon historical loss experienced and adjusted for factors that are relevant to determining the expected collectability of accounts receivable.

Some of these factors include historical loss experience, delinquency trends, aging behavior of receivables, credit and liquidity quality indicators for industry groups, customer classes or individual customers and the current and expected future economic and market conditions.

Property and Equipment

Property and equipment are stated at cost, subject to review for impairment, and depreciated over the estimated useful lives of the assets using the straight-line method.

Amortization of leasehold improvements is recorded over the shorter of the lease term or estimated useful life of the related asset.

Maintenance and repairs are charged to operations as incurred.

When assets are sold, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operating income or expense.

Asset Estimated Useful Life

Lab and office equipment 4 - 7 years

Computer hardware 3 - 5 years

Leasehold improvements Shorter of the useful life or remaining lease term

Computer software Shorter of 3 years or useful life of asset

The Company first determines whether a set of assets acquired constitutes a business and should be accounted for as a business combination.

If the assets acquired are not a business, the Company accounts for the transaction as an asset acquisition.

Business combinations are accounted for by using the acquisition method of accounting which requires the Company to use significant estimates and assumptions, including fair value estimates, as of the business combination date and to refine those estimates as necessary during the measurement period (defined as the period, not to exceed one year, in which the Company may adjust the provisional amounts recognized).

Under the acquisition method of accounting, the Company recognizes separately from goodwill the identifiable assets acquired, the liabilities assumed, including contingent consideration and all contractual contingencies, generally at the acquisition date fair value.

Contingent purchase consideration to be settled in cash is remeasured to estimated fair value at each reporting period with the change in fair value recorded in the statement of operations.

Costs that the Company incurs to complete the business combination such as investment banking, legal and other professional fees are not considered part of consideration and the Company charges them to general and administrative expense as they are incurred.

The Company measures goodwill as of the acquisition date as the excess of consideration transferred, which is also measured at fair value, over the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed.

Should the initial accounting for a business combination be incomplete by the end of a reporting period that falls within the measurement period, the Company reports provisional amounts in its financial statements.

During the measurement period, the Company adjusts the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date and the Company records those adjustments to its financial statements in the period of change, if any.

Under the acquisition method of accounting for business combinations, if the Company identifies changes to acquired deferred tax asset valuation allowances or liabilities related to uncertain tax positions during the measurement period and they relate to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement period adjustment and the Company records the offset to goodwill.

The Company records all other changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions in current period income tax expense.

Goodwill, Intangible Assets and Other Long-Lived Assets

Goodwill, which has an indefinite useful life, represents the excess of cost over fair value of net assets acquired.

Goodwill is reviewed for impairment at least annually during the fourth quarter, or more frequently if an event occurs indicating the potential for impairment.

During the goodwill impairment review, the Company assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of its reporting unit is less than the carrying amount, including goodwill.

The Company operates in one reporting unit.

The qualitative factors include, but are not limited to, macroeconomic conditions, industry and market considerations, cost factors, the overall financial performance, and events affecting the reporting unit.

If, after assessing the totality of these qualitative factors, the Company determines that it is not more-likely-than-not that the fair value of its reporting unit is less than the carrying amount, then no additional assessment is deemed necessary.

Otherwise, the Company proceeds to perform the quantitative assessment.

The Company will then evaluate goodwill for impairment by comparing the estimated fair value of the reporting unit to its carrying value, including the associated goodwill.

To determine the fair value, the Company generally uses a combination of market approach based on OmniAb and comparable publicly traded companies in similar lines of businesses and the income approach based on estimated discounted future cash flows.

The Company’s cash flow assumptions consider historical and forecasted revenue, operating costs and other relevant factors.

The Company may also elect to bypass the qualitative assessment in a period and elect to proceed to perform the quantitative assessment for the goodwill impairment test.

The Company performed the annual assessment for goodwill impairment during the fourth quarter of 2022 and 2021, noting no impairment indicators under the qualitative assessment.

The Company’s identifiable intangible assets are composed of acquired core technologies, licensed technologies, contractual relationships, customer relationships and trade names.

Identifiable intangible assets with finite lives are generally amortized on a straight-line basis over the assets’ respective estimated useful life.

The Company regularly performs reviews to determine if any event has occurred that may indicate that intangible assets with finite useful lives and other long-lived assets are potentially impaired.

If indicators of impairment exist, an impairment test is performed to assess the recoverability of the affected assets by determining whether the carrying amount of such assets exceeds the undiscounted expected future cash flows.

If the affected assets are not recoverable, the Company estimates the fair value of the assets and records an impairment loss if the carrying value of the assets exceeds the fair value.

Factors that may indicate potential impairment include market conditions, industry and economic trends, changes in regulations, clinical success, historical and forecasted financial results, significant changes in the ability of a particular asset to generate positive cash flows, and the pattern of utilization of a particular asset.

The Company did not identify indicators of impairment for the finite-lived intangibles and other long-lived assets at December 31, 2022 and 2021.

Public, Private Placement, Forward Purchase and Backstop Common Stock Warrants

The Company assumed 7,666,667 warrants originally issued in APAC’s initial public offering (the “Public Warrants”) and 8,233,333 warrants issued in a private placement that closed concurrently with APAC’s initial public offering, (the “Private Placement Warrants”) in the Business Combination.

Additionally, as further discussed in Note 4 – Business Combination, pursuant to the Amended and Restated Forward Purchase Agreement, dated as of March 23, 2022 (the “A&R FPA”), on the Closing Date, the Company issued 1,666,667 warrants in the Forward Purchase (the “Forward Purchase Warrants”) and 1,445,489 warrants in the Redemption Backstop (the “Backstop Warrants”).

The Public, Private Placement, Forward Purchase and Backstop Warrants entitle the holder to purchase one share of common stock at an exercise price of $ 11.50 per share.

The Public Warrants are publicly traded and are exercisable for cash unless certain conditions occur, such as the failure to have an effective registration statement related to the shares issuable upon exercise or redemption by the Company under certain conditions, at which time the warrants may be cashless exercised at the option of the Company.

The Private Placement Warrants have terms and provisions that are identical to the Public Warrants except that the Private Placement Warrants were not transferable, assignable or salable until 30 days after the completion of the Business Combination.

The Private Placement Warrants will be redeemable by the Company in all redemption scenarios and exercisable by the holders on the same basis as the Public Warrants.

The Forward Purchase Warrants and the Backstop Warrants have the same terms as the Private Placement Warrants.

The Company evaluated the Public, Private Placement, Forward Purchase and Backstop Warrants under ASC 815-40, Derivatives and Hedging-Contracts in Entity’s Own Equity (“ASC 815-40”), and concluded they meet the criteria for equity classification as they are considered to be indexed to the Company’s own stock.

Since the Public, Private Placement, Forward Purchase and Backstop Warrants met the criteria for equity classification upon the consummation of the Business Combination, the Company recorded these warrants in additional paid-in capital as part of the Business Combination.

Revenue Recognition

The Company’s revenue is primarily generated from license fees for technology access, development, regulatory and sales based milestone payments, service revenue for performance of research, and royalties on product sales.

The Company applies the following five-step model in accordance with ASC 606, Revenue from Contracts with Customers, in order to determine revenue:

(i) identification of the promised goods or services in the contract;

(ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract;

(iii) measurement of the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations;

and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company’s revenue is typically derived from license agreements with its partners and consists of:

(i) upfront or annual payments for technology access (license revenue) and payments for performance of research services (service revenue);

(ii) downstream payments in the form of preclinical, intellectual property, clinical, regulatory, and commercial milestones (milestone revenue) and (iii) royalties on net sales from partners’ product sales, if any.

License fees are generally recognized at a point in time once the Company grants partners access to intellectual property rights.

The Company generally satisfies its obligation to grant intellectual property rights on the effective date of the contract.

The Company recognizes service revenue for contracted R&D services performed for partners over time.

The Company measures its progress using an input method based on the effort it expends or costs it incurs toward the satisfaction of its performance obligation.

The Company estimates the amount of effort it expends, including the time it will take to complete the activities, or the costs it may incur in a given period, relative to the estimated total effort or costs to satisfy the performance obligation.

This results in a percentage that it multiplies by the transaction price to determine the amount of revenue recognized each period.

This approach requires the Company to make estimates and use judgment.

If estimates or judgments change over the course of the collaboration, they may affect the timing and amount of revenue recognized in current and future periods.

The Company includes contingent milestone based payments in the estimated transaction price when there is a basis to reasonably estimate the amount of the payment and it is probable of being achieved.

These estimates are based on historical experience, anticipated results and its best judgment at the time.

If the contingent milestone based payment is sales-based, we apply the royalty recognition constraint and record revenue when the underlying sale has taken place.

Significant judgments must be made in determining the transaction price for licenses of intellectual property.

Because of the risk that products in development with partners will not reach development based milestones or receive regulatory approval, the Company generally recognizes any contingent payments that would be due to it upon or after achievement of the development milestone or regulatory approval.

Deferred Revenue

Depending on the terms of the arrangement, the Company may also defer a portion of the consideration received if it had to satisfy a future obligation.

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the consolidated and combined balance sheets.

The Company generally receives payment at the point it satisfies its obligation or soon after.

Any fees billed in advance of being earned are recorded as deferred revenue.

During the year ended December 31, 2022, the amount recognized as revenue that was previously deferred at December 31, 2021 was $ 10.5 million.

During the year ended December 31, 2021, the amount recognized as revenue that was previously deferred at December 31, 2020 was $ 7.4 million.

Disaggregation of Revenue

The following table represents disaggregation of revenue by type:

(Dollars in thousands) 2022 2021

Milestone revenue $ 33,871 $ 10,164

Service revenue 18,784 20,084

License fees 5,055 4,500

Royalty revenue 1,367 —

Total revenue $ 59,077 $ 34,748

Research and Development Expenses

Research and development expenses consist of material, equipment, facilities and labor costs of scientific staff who are working pursuant to collaborative agreements and other research and development projects.

Also included in research and development expenses are third-party costs incurred for research programs including in-licensing costs, and costs incurred by other research and development service vendors.

The Company expenses these costs as they are incurred.

When the Company makes payments for research and development services prior to the services being rendered, it records those amounts as prepaid assets on its consolidated and combined balance sheets and it expenses them as the services are provided.

Share-Based Compensation

Prior to the Separation, certain Company employees, directors, managers and advisors participated in share-based compensation plans sponsored by Ligand.

Ligand share-based compensation awards consisted of stock options, restricted stock units (“RSUs”), performance restricted stock units (“PRSUs”) and other cash-based or share-based awards.

As such, prior to the Separation the awards granted to Company employees, directors, managers and advisors are reflected in Parent company net investment within the combined statements of stockholders’ equity at the time they were expensed.

Prior to the Separation, the consolidated and combined statements of operations and comprehensive loss also include an allocation of Ligand’s corporate and shared employee share-based compensation expenses.

The Company recognizes share-based compensation expense based on the estimated fair value on a straight-line basis over the requisite service periods of the awards, taking into consideration forfeitures as they occur.

The fair value of RSUs is determined by the closing market price of the Company’s common stock on the date of grant.

PRSUs generally represent the right to receive a certain number of shares of common stock based on the achievement of the Company’s corporate performance goals and continued employment during the vesting period.

Share-based compensation expense for these PRSUs is measured using the Monte-Carlo valuation model and is not adjusted for the achievement, or lack thereof, of the market conditions.

The Company uses the Black-Scholes-Merton option-pricing model to estimate the fair value of stock purchases under the ESPP and stock options granted.

The model assumptions include expected volatility, term, dividends, and the risk-free interest rate.

The Company measures and recognizes compensation expense for shares to be issued under its employee stock purchase plan based on an estimated grant date fair value recognized on a straight-line basis over the offering period.

The Company provides for income taxes under the asset and liability method prescribed by the ASC Topic 740, Income Taxes (“Topic 740”).

Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates in effect when the differences are expected to reverse.

If necessary, deferred tax assets are reduced by a valuation allowance to reflect the uncertainty associated with their ultimate realization.

The Company accounts for uncertain tax positions recognized in the consolidated and combined financial statements in accordance with the provisions of Topic 740 by prescribing a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

When uncertain tax positions exist, we recognize the tax benefit of tax positions to the extent that the benefit will more likely than not be realized.

The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

The Company evaluates uncertain tax positions on a quarterly basis and adjusts the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions.

Any changes to these estimates, based on the actual results obtained and/or a change in assumptions, could affect its income tax provision in future periods.

Interest and penalty charges, if any, related to unrecognized tax benefits would be classified as a provision for income tax in its consolidated and combined statements of operations.

Prior to the Separation, Legacy OmniAb’s income taxes include current and deferred income taxes of Ligand allocated to its combined financial statements in a manner that is systematic, rational and consistent with the asset and liability method prescribed in Topic 740.

Accordingly, the Company’s income tax provision was prepared following the “Separate Return Method.” The Separate Return Method applies Topic 740 to the combined financial statements of the OmniAb members of the consolidated group as if the group member were a separate taxpayer which joined in filing a consolidated federal income tax return and combined state income tax returns separate from Ligand.

In general, the taxable loss of Legacy OmniAb for the tax periods ended October 31, 2022 and 2021 was included in Ligand’s U.S.

consolidated federal and combined state income tax returns, where applicable.

As such, separate income tax returns were not prepared for OmniAb.

Consequently, income taxes currently payable are deemed to have been remitted to Ligand in the period the liability arose and income taxes currently receivable are deemed to have been received from Ligand in the period that a refund could have been recognized by OmniAb had we been a separate taxpayer, if applicable.

For the period from November 1 through December 31, 2022, the Company will file its own consolidated federal income tax return and combined state income tax returns separate from Ligand.

Any income taxes due for the tax year ended December 31, 2022 will be directly payable by the Company.

Income (Loss) Per Share

Basic income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period.

Diluted income (loss) per share is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period.

For periods prior to the Separation, basic and diluted income (loss) per share was calculated based on the 82.6 million shares issued to Ligand shareholders at the Closing Date.

Comprehensive Income (Loss)

Comprehensive income (loss) represents net income (loss) adjusted for the change during the periods presented in unrealized gains and losses on available-for-sale debt securities and reclassification adjustments for realized gains or losses included in net income (loss).

The unrealized gains or losses are reported in the consolidated and combined statements of operations and comprehensive income (loss).

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date.

The Company has evaluated recently issued accounting pronouncements and does not currently believe that any of these pronouncements will have a material impact on its consolidated and combined financial statements and related disclosures.

The Company did not adopt any new accounting standards during the year ended December 31, 2022 which had a material impact on the consolidated and combined financial statements.

Segment Information

Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the Company’s chief operating decision-maker in deciding how to allocate resources and assess performance.

The Company currently operates in one reportable business segment.

Concentrations of Business Risk

Revenue from significant partners, which is defined as 10% or more of total revenue, was as follows:

Year Ended December 31,

Partner A 47 % 24 %

Partner B 15 % 28 %

Partner C 10 % (1)

Partner D (1) 11 %

_____________

Accretion of carrying value to redemption value

Class A ordinary shares subject to possible redemption

Offering Costs associated with the Initial Public Offering

The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A - Expenses of Offering .

Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Initial Public Offering.

Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity.

Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately.

The Company incurred offering costs amounting to $ 13,662,256 as a result of the Initial Public Offering (consisting of $ 4,600,000 of cash underwriting discounts, $ 8,050,000 in deferred underwriting fees and $ 1,012,256 of other offering costs).

As such, the Company recorded $ 13,029,901 of offering costs as a reduction of temporary equity and $ 632,355 of offering costs as a reduction of permanent equity in connection with the issuance of the Units in the Initial Public Offering and the Private Placement Warrants.

The Company accounts for income taxes under ASC 740, Income Taxes (“ASC 740”).

ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards.

ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statements recognition and measurement of a tax position taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.

Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements.

Since the Company was incorporated on February 5, 2021, the evaluation was performed for the 2021 tax year which will be the only period subject to examination.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.

There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2021.

The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

The Company is considered an exempted Cayman Islands Company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States.

Consequently, income taxes are not reflected in the Company’s financial statement.

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

Net Loss Per Ordinary Share

Net loss per ordinary share is computed by dividing net loss by the weighted-average number of ordinary shares outstanding during the period.

The Company has not considered the effect of the warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 15,900,000 shares in the calculation of diluted income per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.

The following table reflects the calculation of basic and diluted net loss per ordinary share (in dollars, except per share amounts):

For the Period from February 5,

2021 (inception) Through

(1) less than 10%

Relationship with Parent and Related Entities

Prior to the Separation, the OmniAb business was managed and operated in the normal course of business consistent with other affiliates of the Parent.

Accordingly, certain shared costs were allocated to the Company and reflected as expenses in the combined financial statements.

Management considered the allocation methodologies used to be reasonable and appropriate reflections of the historical Parent expenses attributable to OmniAb for purposes of the stand-alone financial statements.

However, the expenses reflected in the combined financial statements may not be indicative of the actual expenses that would have been incurred during the periods presented if OmniAb historically operated as a separate, stand-alone entity.

In addition, the expenses reflected in the combined financial statements may not be indicative of related expenses that will be incurred in the future by OmniAb.

General Corporate Overhead

The combined statements of operations include expenses for certain centralized functions (such as information systems, accounting, treasury, audit, purchasing, human resources, legal and facilities), executive compensation and other programs provided and/or administered by Parent that were charged directly to the Company.

A portion of these costs benefited the Company and were allocated using a pro-rata method based on project-related costs or other measures that management believed were consistent and reasonable.

Costs of $ 5.5 million for the ten months ended October 31, 2022, and $ 6.1 million for the year ended December 31, 2021, respectively, have been reflected in the general and administrative expenses in our combined statements of operations for our allocated share of Parent’s corporate overhead.

Cash Management and Financing

The Company participated in Ligand’s centralized cash management and financing programs prior to the Separation.

Disbursements were made through centralized accounts payable systems which were operated by Ligand.

Cash receipts were transferred to centralized accounts, also maintained by Ligand.

As cash was disbursed and received by Ligand, it was accounted for through the Parent company net investment.

All obligations were financed by Ligand and financing decisions were determined by central Ligand treasury operations.

Equity-Based Incentive Plans

Certain of our employees participated in the former Parent’s equity-based incentive plans.

Under the Ligand 2002 Stock Incentive Plan (2002 Plan), employees, directors, managers and advisors were awarded share-based incentive awards in a number of forms, including nonqualified stock options.

Under the 2002 Plan, employees could be awarded share-based incentive awards which included non-statutory stock options or incentive stock options, restricted stock units, performance stock units and other cash-based or share-based awards.

Awards granted to employees under the incentive plans typically vested 1/8 on the six month anniversary of the date of grant, and 1/48 each month thereafter for forty-two months.

The Company measured share-based compensation for all share-based incentive awards at fair value on the grant date.

Share-based compensation expense was generally recognized on a straight-line basis over the requisite service periods of the awards.

Compensation costs associated with the Company’s employees’ participation in the incentive plans were specifically identified for employees who exclusively supported the Company’s operations and were allocated to the Company as part of the cost allocations from the Company’s former Parent.

Total costs charged to the Company related to its employees’ participation in the former Parent’s incentive plans, depending on the nature of the employee’s role in our operations, were $ 14.4 million ($ 8.2 million in research and development expenses and $ 6.2 million in general and administrative expenses), $ 15.1 million ($ 9.0 million in research and development expenses and $ 6.1 million in general and administrative expenses), during the ten months ended October 31, 2022 and year ended December 31, 2021, respectively.

Employee Stock Purchase Plan

The Company’s eligible employees participated in its former Parent’s ESPP.

The ESPP permitted eligible participants to purchase Ligand’s shares at a discount through regular payroll deductions of up to 10 % of their eligible compensation during the offering period.

The ESPP was typically implemented through consecutive six -month offering periods.

The purchase price of the shares was 85 % of the lesser of the fair market value of the closing price per share on the first day of the offering period and the fair market value of the closing price per share on the last day of the offering period.

No participant may purchase more than $ 25,000 worth of common stock per calendar year.

Costs charged to the Company related to the Company’s participation in its former Parent’s ESPP was $ 0.1 million for each of the years ended December 31, 2022 and 2021.

Business Combination

As discussed in Note 1 – Organization and Basis of Presentation, on November 1, 2022, the Company consummated the transactions contemplated by the Merger Agreement.

At the Closing Date, and subject to the terms and conditions of the Merger Agreement, each outstanding share of Legacy OmniAb Common Stock was cancelled in exchange for 4.90007 shares of common stock of OmniAb, par value $ 0.0001 per share (“OmniAb Common Stock”) and 0.75842 shares of OmniAb Common Stock subject to certain price-based earnout triggers (the “Earnout Shares”).

Holders of shares of Legacy OmniAb common stock received an aggregate 82,611,789 shares of the OmniAb Common Stock, excluding Earnout Shares, as consideration in the Business Combination.

In addition, all outstanding Legacy OmniAb equity awards were converted into OmniAb equity awards to purchase, in the case of options, or receive, in the case of restricted stock units and performance-vesting restricted stock units, shares of OmniAb Common Stock, in each case, equal to the number of shares underlying such Legacy OmniAb equity awards multiplied by the Exchange Ratio.

Each holder of an outstanding Legacy OmniAb equity award also received Earnout Shares equal to the number of shares of Legacy OmniAb Common Stock underlying such equity award multiplied by 0.75842 .

Holders of shares of Legacy OmniAb common stock and holders of Legacy OmniAb equity awards received an aggregate 14,999,243 Earnout Shares as consideration in the Business Combination.

50 % of the Earnout Shares will vest on the date on which the volume-weighted average price (“VWAP”) equals or exceeds $ 12.50 on any 20 trading days in any 30 consecutive trading-day period, and all remaining Earnout Shares will vest on the date on which the VWAP equals or exceeds $ 15.00 on any 20 trading days in any 30 consecutive trading-day period, in each case provided such vesting occurs during the five year period following the Closing Date (the “Earnout Period”);

provided, that in the event of a Change of Control (as defined in the Merger Agreement) during the Earnout Period pursuant to which OmniAb or any of its stockholders have the right to receive, directly or indirectly, cash, securities or other property attributing a value of at least $ 12.50 (with respect to 50 % of the Earnout Shares) or $ 15.00 (with respect to all Earnout Shares) per share of OmniAb Common Stock, and such Change of Control has been approved by a majority of the independent directors of the OmniAb Board, then such Earnout Shares shall be deemed to have vested immediately prior to such Change of Control.

The Earnout Shares are accounted for as equity-classified equity instruments and recorded in additional paid-in capital as part of the Business Combination.

Pursuant to the Sponsor Insider Letter Agreement executed concurrently with the Merger Agreement, by and among APAC, Avista Acquisition LP II (the “Sponsor”), Legacy OmniAb and certain insiders of APAC, 1,293,299 shares of OmniAb Common Stock held by the Sponsor became subject to the same price-based vesting conditions as the Earnout Shares (the “Earnout Founder Shares”).

The Earnout Founder Shares are accounted for as equity-classified equity instruments and recorded in additional paid-in capital as part of the Business Combination.

On the Closing Date, the Company completed the issuance and sale of 1,500,000 shares of the Company’s common stock and 1,666,667 Forward Purchase Warrants to the Sponsor for an aggregate purchase price of $ 15.0 million (the “Forward Purchase”), pursuant to the amended and restated forward purchase agreement (the “A&R FPA”).

Additionally, and also pursuant to the A&R FPA, on the Closing Date, the Company completed the sale of 8,672,934 shares of the Company’s common stock and 1,445,489 Backstop Warrants to the Sponsor for a purchase price of $ 10.00 per share and aggregate purchase price of $ 86.7 million in order to backstop shareholder redemptions which would have otherwise resulted in the cash proceeds available to OmniAb following the Business Combination from OmniAb’s trust account to be less than $ 100,000,000 .

Refer to Note 10 – Stockholders' Equity, for additional information on the accounting for the Forward Purchase Warrants and Backstop Warrants.

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S.

Under this method of accounting, APAC was treated as the “acquired” company and OmniAb is treated as the acquirer for financial reporting purposes.

Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of OmniAb issuing stock for the net assets of APAC, accompanied by a recapitalization.

The net assets of APAC are stated at historical cost, with no goodwill or other intangible assets recorded.

Upon the closing of the Business Combination, the Company’s certificate of incorporation was amended and restated to, among other things, increase the total number of authorized shares of all classes of capital stock to 1,100,000,000 shares, $ 0.0001 par value per share, of which, 1,000,000,000 shares are designated as OmniAb Common Stock and 100,000,000 shares are designated as preferred stock.

The following table reconciles the elements of the Business Combination to the consolidated statement of cash flows and the consolidated statement of stockholders’ equity for the year ended December 31, 2022:

in thousands Amount

Cash - A&R FPA - Backstop $ 86,729

Cash - A&R FPA 15,000

Cash - Avista trust and cash, net of redemptions 9,103

Transaction costs paid at closing by Avista ( 9,209 )

Transaction costs paid at closing by OmniAb ( 5,381 )

Cash contributions from the Business Combination, net of transaction costs 96,242

Transaction costs accrued not paid by OmniAb ( 473 )

Net Business Combination and related transactions $ 95,769

The number of shares of common stock issued immediately following the consummation of the Business Combination:

Shares issued pursuant to A&R FPA - Backstop 8,672,934

Avista shares held by the Sponsor 4,456,701

Shares issued pursuant to A&R FPA 1,500,000

Earnout shares issued to founders 1,293,299

Common stock of Avista net of redemptions 1,286,136

Total shares issued in Business Combination, A&R FPA 17,209,070

Shares issued for OmniAb common stock 82,611,789

Earnout shares issued to OmniAb 14,999,243

Total shares of common stock immediately following the Business Combination 114,820,102

Fair Value Measurement

The Company measures its financial assets and liabilities at fair value, which is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company uses the following three-level valuation hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial assets and liabilities:

• Level 1 - Observable inputs such as unadjusted quoted prices in active markets for identical instruments.

• Level 2 - Quoted prices for similar instruments in active markets or inputs that are observable for the asset or liability, either directly or indirectly.

• Level 3 - Significant unobservable inputs based on the Company’s assumptions.

Financial Instruments Measured on a Recurring Basis

The following tables provide a summary of the assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2022 and 2021:

Fair Value Measurements as of

December 31, 2022

Basic and diluted net loss per share:

Basic and diluted weighted average shares outstanding

Basic and diluted net loss per share

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $ 250,000 .

The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

Fair Value of Financial Instruments

The Company applies ASC Topic 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework.

ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date.

The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity.

Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.

The carrying amounts reflected in the balance sheet for cash, deferred offering costs, accrued offering costs, promissory note - related party, and advance from anchor investor approximate fair value due to their short-term nature.

Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges.

Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities.

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

Recent Accounting Standards

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments.

ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity.

The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity.

ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if converted method for all convertible instruments.

ASU 2020-06 is effective for the Company on January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021.

The Company adopted ASU 2020-06 effective January 1, 2021 using the modified retrospective method of transition.

The adoption of ASU 2020-06 did not have a material impact on the financial statements for the period from February 5, 2021 (inception) through December 31, 2021.

Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

INITIAL PUBLIC OFFERING

The registration statement for the Company’s Initial Public Offering was declared effective on August 9, 2021.

On August 12, 2021, the Company completed its Initial Public Offering of 23,000,000 Units, including 3,000,000 Units that were issued pursuant to the underwriter’s exercise of its over-allotment option in full, at $ 10.00 per Unit, generating gross proceeds of $ 230,000,000 .

Each Unit consists of one Class A ordinary share and one-third of one redeemable warrant (“Public Warrant”).

Each Public Warrant entitles the holder to purchase one Class A ordinary share at an exercise price of $ 11.50 per whole share (see Note 7).

PRIVATE PLACEMENT

Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 8,233,333 Private Placement Warrants, including 900,000 Private Placement Warrants that were issued pursuant to the underwriter’s exercise of its over-allotment option in full, at a price of $ 1.50 per Private Placement Warrant ($ 12,350,000 in the aggregate).

Each Private Placement Warrant is exercisable to purchase one Class A ordinary share at a price of $ 11.50 per share.

The proceeds from the Private Placement Warrants were added to the net proceeds from the Initial Public Offering to be held in the Trust Account.

If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.

There will be no redemption rights or liquidating distributions from the Trust Account with respect to the Private Placement Warrants.

RELATED PARTY TRANSACTIONS

Founder Shares

On February 12, 2021, the Sponsor paid an aggregate of $ 25,000 to cover certain expenses on behalf of the Company in exchange for the issuance of 5,750,000 Class B ordinary shares (the “Founder Shares”).

The Founder Shares include an aggregate of up to 750,000 Class B ordinary shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the holders of the Founder Shares will own, on an as-converted basis, 20 % of the Company’s issued and outstanding shares after the Initial Public Offering.

On June 16, 2021, the Company transferred 35,000 Class B ordinary shares each to three members of the Company’s board of directors (or 105,000 Class B ordinary shares in total) at their original cost (see Note 7).

The underwriters exercised their over-allotment option in full on August 12, 2021;

thus, no ordinary shares remain subject to forfeiture (see Note 6).

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

The Sponsor has agreed that, subject to certain limited exceptions, the Founder Shares will not be transferred, assigned, or sold until the earlier of (i) one year after the completion of a Business Combination or (ii) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction after an initial Business Combination that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.

Notwithstanding the foregoing, if (1) the closing price of the Company’s Class A ordinary shares equals or exceeds $ 12.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 - trading day period commencing at least 150 days after an initial Business Combination or (2) if the Company consummates a transaction after an initial Business Combination which results in the Company’s shareholders having the right to exchange their shares for cash, securities or other property, the Founder Shares will be released from the lock-up.

Promissory Note — Related Party

On February 12, 2021, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate of $ 300,000 to cover expenses related to the Initial Public Offering.

The Promissory Note was non-interest bearing and was payable on the earlier of (i) December 31, 2021 or (ii) the consummation of the Initial Public Offering.

The Company's Sponsor paid certain offering costs totaling $ 55,725 , which was included in the outstanding balance of the Promissory Note as of March 22, 2021, and the Company borrowed $ 119,275 on June 23, 2021.

On August 12, 2021, the Company repaid the outstanding balance under the Promissory Note of $ 175,000 .

Administrative Support Agreement

The Company entered into an agreement, commencing on August 9, 2021, to pay an affiliate of the Sponsor a total of $ 10,000 per month for administrative, financial and support services.

Upon the completion of an initial Business Combination, the Company will cease paying these monthly fees.

Under this agreement, $ 46,129 of expenses were incurred during the period from February 5, 2021 (inception) through December 31, 2021.

Due to Related Party

Due to related party consists of advances from the Sponsor to pay for offering costs and formation costs on behalf of the Company and are payable on demand.

Related Party Loans

In order to finance transaction costs in connection with an intended initial Business Combination, the Company’s sponsor or an affiliate of the sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”).

If the Company completes the initial Business Combination, it may repay such loaned amounts out of the proceeds of the trust account released to us.

Otherwise, such loans may be repaid only out of funds held outside the trust account.

In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from the Company’s trust account would be used to repay such loaned amounts.

Up to $ 2,000,000 of such loans may be convertible into warrants of the post-Business Combination entity at a price of $ 1.50 per warrant at the option of the lender.

The warrants would be identical to the Private Placement Warrants.

Except as set forth above, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans.

Prior to the completion of the initial Business Combination, the Company does not expect to seek loans from parties other than the Company’s sponsor, its affiliates or any members of the management team as the Company does not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in the trust account.

As of December 31, 2021, there was no balance outstanding under the Working Capital Loans.

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

Registration and Shareholder Rights Agreement

Pursuant to a registration rights agreement entered into on August 9, 2021, the holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants issued upon conversion of the Working Capital Loans) will have registration and shareholder rights to require the Company to register a sale of any of its securities held by them pursuant to a registration and shareholder rights agreement to be signed prior to or on the effective date of the Initial Public Offering.

The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities.

In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of an initial Business Combination.

The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

The underwriters were paid a cash underwriting discount of $ 0.20 per Unit, or $ 4,600,000 in the aggregate, upon the closing of the Initial Public Offering and exercise of the over-allotment in full on August 12, 2021.

In addition, $ 0.35 per unit, or $ 8,050,000 in the aggregate will be payable to the underwriters for deferred underwriting commissions.

The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

Forward Purchase Agreement

In connection with the consummation of the Initial Public Offering, the Company entered into a forward purchase agreement with the Sponsor, Avista Acquisition LP II, a Cayman Islands exempted limited partnership, which provides for the purchase of an aggregate of 10,000,000 Class A ordinary shares plus an aggregate of 3,333,333 redeemable warrants to purchase Class A ordinary shares at $ 11.50 per share, for an aggregate purchase price of $ 100,000,000 , in the private placement.

The obligations under the forward purchase agreement do not depend on whether any Class A ordinary shares are redeemed by the Company’s public shareholders.

The forward purchase securities will be issued in connection with the closing of the initial Business Combination.

The proceeds from the sale of forward purchase securities will be used as part of the consideration to the sellers in the Company’s initial Business Combination, expenses in connection with the initial Business Combination or for working capital in the post-transaction company.

SHAREHOLDERS’ DEFICIT

Preference shares — The Company is authorized to issue 5,000,000 preference shares with a par value of $ 0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.

As of December 31, 2021, there were no preference shares issued or outstanding .

Class A ordinary shares — The Company is authorized to issue 500,000,000 Class A ordinary shares with a par value of $ 0.0001 per share.

Holders of Class A ordinary shares are entitled to one vote for each share.

At December 31, 2021, there were 23,000,000 Class A ordinary shares issued and outstanding , including 23,000,000 Class A ordinary shares subject to possible redemption.

Class B ordinary shares — The Company is authorized to issue 50,000,000 Class B ordinary shares with a par value of $ 0.0001 per share.

Holders of Class B ordinary shares are entitled to one vote for each share.

As of December 31, 2021, there were 5,750,000 Class B ordinary shares issued and outstanding , and the holders of the Founder Shares own, on an as-converted basis, 20 % of the Company’s issued and outstanding shares.

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

Ordinary shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders.

Except as described below, holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders except as required by law.

Unless specified in the Company’s Amended and Restated Memorandum and Articles of Association, or as required by applicable provisions of the Companies Act or applicable stock exchange rules, the affirmative vote of a majority of the ordinary shares that are voted is required to approve any such matter voted on by the shareholders.

Approval of certain actions will require a special resolution under Cayman Islands law, being the affirmative vote of at least two-thirds of the ordinary shares that are voted, and pursuant to the Amended and Restated Memorandum and Articles of Association;

such actions include amending the Amended and Restated Memorandum and Articles of Association and approving a statutory merger or consolidation with another company.

The Company’s board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being appointed in each year.

There is no cumulative voting with respect to the appointment of directors, with the result that the holders of more than 50 % of the shares voted for the appointment of directors can appoint all of the directors.

The Company’s shareholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor.

Prior to the Company’s initial Business Combination, (i) only holders of the founder shares will have the right to vote on the appointment of directors and (ii) in a vote to continue the Company in a jurisdiction outside the Cayman Islands (which requires the approval of at least two thirds of the votes of all ordinary shares), holders of the Company’s Class B ordinary shares will have ten votes for every Class B ordinary share and holders of the Class A ordinary shares will have one vote for every Class A ordinary share.

These provisions of the Company’s Amended and Restated Memorandum and Articles of Association may only be amended by a special resolution passed by not less than 90% of the ordinary shares who attend and vote at the Company’s general meeting which shall include the affirmative vote of a simple majority of the Class B ordinary shares.

Holders of the public shares will not be entitled to vote on the appointment of directors prior to the initial Business Combination.

In addition, prior to the completion of an initial Business Combination, holders of a majority of the founder shares may remove a member of the board of directors for any reason.

In connection with the initial Business Combination, the Company may enter into a shareholders agreement or other arrangements with the shareholders of the target with respect to voting and other corporate governance matters following completion of the initial Business Combination.

Redeemable Warrants — Each whole warrant entitles the registered holder to purchase one Class A ordinary share at a price of $ 11.50 per share , subject to adjustment as discussed below, at any time commencing 30 days after the completion of the Company’s initial Business Combination, except as discussed in the immediately succeeding paragraph.

Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of Class A ordinary shares.

This means only a whole warrant may be exercised at a given time by a warrant holder.

No fractional warrants will be issued upon separation of the units and only whole warrants will trade.

Accordingly, unless you purchase at least three units, you will not be able to receive or trade a whole warrant.

The warrants will expire five years after the completion of the initial Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A ordinary shares underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company’s satisfying of the obligations described below with respect to registration, or a valid exemption from registration is available.

No warrant will be exercisable and the Company will not be obligated to issue a Class A ordinary share upon exercise of a warrant unless the Class A ordinary share issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.

In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless.

In no event will the Company be required to net cash settle any warrant.

In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the Class A ordinary share underlying such unit.

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of the initial Business Combination, the Company will use commercially reasonable efforts to file with the SEC a registration statement (which may be a post-effective amendment to the registration statement of which the Company’s prospectus is a part or any other applicable registration statement) for the registration, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the warrants, and the Company will use commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of the initial Business Combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed, as specified in the warrant agreement;

provided that if the Company’s Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at it’s option, require holders of warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, will not be required to file or maintain in effect a registration statement, and will use commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent available.

If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption, and the Company will use commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent available.

In such event, each holder would pay the exercise price by surrendering the warrants for that number of Class A ordinary shares equal to the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the warrants, multiplied by the excess of the “fair market value” (defined below) less the exercise price of the warrants by (y) the fair market value.

The “fair market value” as used in this paragraph shall mean the volume weighted average price of the Class A ordinary shares for the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent.

Redemption of warrants

Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants):

(in thousands) Level 1 Level 2 Level 3 Total

Cash equivalents

Money market funds $ 26,056 $ — — $ 26,056

Government and agency securities — 2,987 — 2,987

Corporate debt securities — 1,510 — 1,510

Total cash equivalents $ 26,056 $ 4,497 $ — $ 30,553

Short-term investments

Government and agency securities 29,951 4,838 — 34,789

Corporate debt securities — 1,983 — 1,983

Commercial paper — 17,491 — 17,491

Asset-backed securities — 612 — 612

Total short-term investments $ 29,951 $ 24,924 $ — $ 54,875

Current contingent liabilities $ — $ — $ 4,022 $ 4,022

Long-term contingent liabilities — — 4,089 4,089

Total liabilities $ — $ — $ 8,111 $ 8,111

Fair Value Measurements as of

December 31, 2021

(in thousands) Level 1 Level 2 Level 3 Total

Current contingent liabilities $ — $ — $ 2,538 $ 2,538

Long-term contingent liabilities — — 4,826 4,826

Total liabilities $ — $ — $ 7,364 $ 7,364

The carrying amounts reported in our consolidated and combined balance sheets for accounts receivable, other assets, accounts payable and other accrued expenses approximate fair value due to their relatively short periods to maturity.

Available-for-Sale Securities

The Company obtains the fair value of its Level 2 available-for-sale securities from third-party pricing services.

The pricing services utilize industry standard valuation models whereby all significant inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, or other market-related data, are observable.

The Company validates the prices provided by the third-party pricing services by reviewing their pricing methods and obtaining market values from other pricing sources.

The Company did not adjust or override any fair value measurements provided by these pricing services as of December 31, 2022.

The Company has not transferred any investment securities between classification levels.

Contingent Liabilities

Contingent liabilities are measured at fair valued each reporting period by using a probability weighted income approach.

A reconciliation of the Level 3 financial instruments as of December 31, 2022 and 2021 is as follows:

(in thousands) Crystal (1)

Beginning balance as of January 1, 2021 $ 800 $ — $ — $ 6,404 $ 7,204

Payments to CVR holders — — ( 720 ) ( 1,050 ) ( 1,770 )

Fair value adjustments to contingent liabilities ( 800 ) — 720 2,010 1,930

Balance as of December 31, 2021 — — — 7,364 7,364

Payments to CVR holders — — ( 1,440 ) ( 2,025 ) ( 3,465 )

Fair value adjustments to contingent liabilities — 1,600 3,204 ( 592 ) 4,212

Balance as of December 31, 2022 $ — $ 1,600 $ 1,764 $ 4,747 $ 8,111

_____________

(1) Changes in the fair values of contingent liabilities in connection with the acquisition of Crystal and Icagen are recognized in Other operating (income) expense, net in the consolidated and combined statements of operations and comprehensive loss and in the operating section of the statements of cash flows .

Payments to CVR holders are disclosed in the financing section of the statements of cash flows.

(2) Changes in the fair values of contingent liabilities in connection with the acquisition of Taurus and xCella are recognized in Intangible assets, net in the consolidated and combined balance sheets.

Payments to CVR holders are disclosed in the investing section of the statement of cash flows.

Contingent liabilities are classified as Level 3 liabilities as their valuation requires substantial judgment and estimation of factors that are not currently observable in the market.

These subjective estimates include but are not limited to assumptions involving the achievement probability of certain developmental and commercialization milestones, discount rates, and projected years of payments.

If different assumptions were used for the various inputs to the valuation approaches, the estimated fair value could be materially higher or lower than the fair value determined.

Assets Measured on a Non-Recurring Basis

The Company applies fair value techniques on a non-recurring basis associated with valuing potential impairment losses related to goodwill, finite-lived intangible assets, and long-lived assets.

Short-Term Investments

The Company classified short-term investments as available-for-sale securities, as the sale of such investments may be required prior to maturity to implement management strategies.

The Company did not have short-term investments as of December 31, 2021.

The following table summarizes short-term investments as of December 31, 2022:

As of December 31, 2022

(in thousands) Amortized Cost Gains Losses Estimated

Government and agency securities $ 34,781 $ 15 $ ( 7 ) $ 34,789

Commercial paper 17,491 — — 17,491

Corporate debt securities 1,983 — — 1,983

Asset-backed securities 611 1 — 612

Total investments $ 54,866 $ 16 $ ( 7 ) $ 54,875

The Company has classified all investments with maturity dates beyond three months at the date of purchase as short-term investments in the consolidated and combined balance sheets based upon its ability and intent to use the investments to satisfy the liquidity needs of current operations.

The following table summarizes available-for-sale investments by maturity as of December 31, 2022:

(in thousands) Amortized Cost Estimated Fair Value

Due in one year or less $ 54,866 $ 54,875

Due after one year — —

Total investments $ 54,866 $ 54,875

The following table summarizes the Company’s available-for-sale investments’ gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in a continuous loss position, as of December 31, 2022:

As of December 31, 2022

Less than 12 months More than 12 months Total

(in thousands) Count Fair

Value Unrealized

Losses Count Fair

Value Unrealized

Losses Count Fair

Value Unrealized

Government and agency securities 7 $ 13,667 $ ( 7 ) — $ — $ — 7 $ 13,667 $ ( 7 )

7 $ 13,667 $ ( 7 ) — $ — $ — 7 $ 13,667 $ ( 7 )

The Company had certain available-for-sale debt securities in an unrealized loss position without an allowance for credit losses as of December 31, 2022.

Unrealized losses on these debt securities have not been recognized into income because of (1) the issuers’ high credit quality, (2) management does not intend to sell and it is likely that management will not be required to sell these securities prior to their anticipated recovery and (3) the decline in fair value is largely due to market conditions and/or changes in interest rates.

The issuers continue to make timely interest payments on the securities, and the fair value is expected to recover as the bonds approach maturity.

Balance Sheet Account Details

Property and Equipment, Net

Property and equipment, net, consisted of the following as of December 31, 2022 and 2021:

(in thousands) 2022 2021

Leasehold improvements $ 16,085 $ 1,320

Lab and office equipment 8,126 5,597

Computer equipment and software 641 182

Construction in progress 315 2,988

Property and equipment, at cost 25,167 10,087

Less accumulated depreciation and amortization ( 5,188 ) ( 3,292 )

Total property and equipment, net $ 19,979 $ 6,795

Depreciation expense of $ 3.2 million and $ 2.0 million was recognized during the years ended December 31, 2022 and 2021, respectively, and was included in operating expenses.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following as of December 31, 2022 and 2021:

(in thousands) 2022 2021

Compensation $ 4,101 $ 2,320

Royalties owed to third parties 739 296

Professional service fees 664 67

Acquisitions related liabilities — 1,000

Total accrued expenses and other current liabilities $ 5,557 $ 3,747

Goodwill and Intangible Assets

The following is a summary of goodwill and intangible assets:

(in thousands) 2022 2021

Goodwill $ 83,979 $ 83,979

Definite-lived intangible assets

Complete technology 231,379 227,403

Accumulated amortization ( 71,964 ) ( 60,099 )

Customer relationships 11,100 11,100

Accumulated amortization ( 3,273 ) ( 2,083 )

Intangible assets, net $ 167,242 $ 176,321

Total goodwill and other identifiable intangible assets, net $ 251,221 $ 260,300

There were no changes in the carrying amount of goodwill during the years ended December 31, 2022 and 2021.

Intangible Assets

Amortization of finite-lived intangible assets is computed using the straight-line method over the estimated useful life of the asset of up to 20 years and is reflected within depreciation and amortization expense on the consolidated and combined statements of operations and comprehensive loss.

Amortization expense of $ 13.0 million and $ 13.0 million was recognized for the years ended December 31, 2022 and 2021, respectively.

For each of the years ended December 31, 2022 and 2021, there was no impairment of intangible assets with finite lives.

The remaining weighted-average useful life of definite lived intangible assets is 13.1 years.

At December 31, 2022, future amortization expense on intangible assets is estimated to be as follows:

(in thousands) Years Ending December 31,

2023 $ 13,478

Thereafter 100,292

Commitments and Contingencies

Lease Commitments

The Company’s corporate headquarters and research and development facilities are located in Emeryville, California, where it leases approximately 35,000 square feet of space under leases expiring in 2032.

The Company’s Icagen ion technology business leases approximately 31,000 square feet of research and development space in Durham, North Carolina and Tucson, Arizona, under leases that expire between 2026 and 2029.

The Company’s lease agreements do not contain any material residual value guarantees, material restrictive covenants, or material termination options.

The Company’s operating lease costs are primarily related to facility leases for administration offices and research and development facilities and its finance leases are immaterial.

Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists.

Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease.

These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using the Company’s incremental borrowing rate generally applicable to the location of the lease asset, unless the implicit rate is readily determinable.

Lease assets also include any upfront lease payments made and lease incentives.

Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised.

Leases with an initial term of 12 months or less are not recorded on the consolidated and combined balance sheets, and the expense for these short-term leases and for operating leases is recognized on a straight-line basis over the lease term.

The depreciable life of lease assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

The below table provides supplemental cash flow and other information related to operating leases (in thousands, except for lease term and discount rate):

Year Ended December 31,

Cash paid for amounts included in the measurement of lease liabilities:

$ 2,480 $ 1,071

Right-of-use assets obtained in exchange for lease obligations:

$ 10,136 $ 14,515

Weighted average remaining lease term (in years) 8.6 9.2

Weighted average discount rate 4.3 % 3.9 %

In addition to base rent, certain of the Company’s operating leases require variable payments.

These variable lease costs include amounts relating to common area maintenance and are expensed when the obligation for those payments is incurred and are recognized as operating expenses in the consolidated and combined statements of operations.

The following table summarizes the components of operating lease expense for the years ended December 31, 2022 and 2021:

Year Ended December 31,

(in thousands) 2022

Operating lease cost $ 3,041 $ 1,630

Variable lease cost 1,281 597

Total lease costs $ 4,322 $ 2,227

Future minimum lease commitments are as follows as of December 31, 2022 (in thousands):

Years Ending December 31, Operating Leases

Thereafter 15,018

Total lease payments 33,260

Less tenant improvement allowance ( 1,549 )

Less imputed interest ( 5,915 )

Present value of lease liabilities $ 25,796

Legal Proceedings

From time to time, the Company has been and may be involved in various legal proceedings arising in its ordinary course of business.

In the opinion of management, resolution of any pending claims (either individually or in the aggregate) is not expected to have a material adverse impact on the consolidated and combined financial statements, cash flows or financial position and it is not possible to provide an estimated amount of any such loss.

However, the outcome of disputes is inherently uncertain.

Therefore, although management considers the likelihood of such an outcome to be remote, an unfavorable resolution of one or more matters could materially affect future results of operations or cash flows, or both, in a particular period.

Stockholders' Equity

Authorized and Outstanding Capital Stock

The total number of shares of the Company’s authorized capital stock is 1,100,000,000 .

The total amount of authorized capital stock consists of 1,000,000,000 shares of Common Stock and 100,000,000 shares of preferred stock.

As of December 31, 2022, no shares of preferred stock are issued or outstanding.

Holders of Common Stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders,

including the election of directors, and do not have cumulative voting rights.

Subject to preferences that may be applicable to any then outstanding preferred stock, holders of our Common Stock are entitled to receive ratably those dividends, if any, as may be declared by the Board out of legally available funds.

In the event of our liquidation, dissolution or winding up, the holders of Common Stock will be entitled to share ratably in the assets legally available for distribution to stockholders after the payment of or provision for all of our debts and other liabilities, subject to the prior rights of any preferred stock then outstanding.

Holders of our Common Stock have no preemptive or conversion rights or other subscription rights and there are no redemption or sinking fund provisions applicable to the Common Stock.

All outstanding shares of Common Stock are duly authorized, validly issued, fully paid and nonassessable.

The rights, preferences and privileges of holders of our Common Stock are subject to and may be adversely affected by the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

Preferred stock

Under the terms of our certificate of incorporation, our Board has the authority, without further action by our stockholders, to issue up to 100,000,000 shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the dividend, voting and other rights, preferences and privileges of the shares of each wholly unissued series and any qualifications, limitations or restrictions thereon, and to increase or decrease the number of shares of any such series, but not below the number of shares of such series then outstanding.

Our Board may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our Common Stock.

The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deterring or preventing a change in our control and may adversely affect the market price of the Common Stock and the voting and other rights of the holders of our Common Stock.

We have no current plans to issue any shares of preferred stock.

Earnout Shares

OmniAb Earnout Shares and Sponsor Earnout Shares are issued and outstanding.

Earnout Shares vest based upon the achievement of certain volume-weighted average trading prices (VWAP) for shares of the Company for any 20 trading days over a consecutive 30 trading-day period during the five-year period following the Closing Date, with (i) fifty of such Earnout Shares vesting upon achievement of a VWAP of $ 12.50 per share of New OmniAb common stock or upon the occurrence of a change of control transaction that will result in the holders of New OmniAb common stock receiving a price per share in excess of $ 12.50 , and (ii) the remaining fifty percent of the Earnout Shares vesting upon achievement of a VWAP of $ 15.00 per share of New OmniAb common stock or upon the occurrence of a change of control transaction that will result in the holders of New OmniAb common stock receiving a price per share in excess of $ 15.00 .

The Earnout Shares are not transferable until the vesting condition for the applicable tranche of Earnout Shares has been achieved.

The Earnout Shares will be automatically forfeited for no consideration if an applicable OmniAb Triggering Event or Sponsor Triggering Event has not occurred from the Closing Date to and including the fifth anniversary of the Closing Date.

As part of APAC’s initial public offering, 7,666,667 Public Warrants were sold.

The Public Warrants entitle the holder thereof to purchase one share of common stock at a price of $ 11.50 per share, subject to adjustments.

The Public Warrants are only exercisable for a whole number of shares of common stock.

No fractional shares are to be issued upon exercise of the warrants.

The Public Warrants will expire on November 1, 2027 (which is five years after the completion of the Business Combination), at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

The Public Warrants are listed on the Nasdaq Capital Market under the symbol “OABIW”.

Additionally, once the Public Warrants become exercisable, the Company can redeem the outstanding Public Warrants:

• in whole and not in part;

1 unchanged sentence

• upon not less than 30 days’ prior written notice of redemption to each warrant holder;

● if, and only if, the closing price of the Class A ordinary shares equals or exceeds $ 18.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 - trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders.

The Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating to those Class A ordinary shares is available throughout the 30 -day redemption period.

If and when the warrants become redeemable by the Company, the Company may exercise the Company’s redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

The Company has established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price.

If the foregoing conditions are satisfied and the Company issues a notice of redemption of the warrants, each warrant holder will be entitled to exercise his, her or its warrant prior to the scheduled redemption date.

However, the price of the Class A ordinary shares may fall below the $ 18.00 redemption trigger price (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) as well as the $ 11.50 (for whole shares) warrant exercise price after the redemption notice is issued.

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

No fractional Class A ordinary shares will be issued upon exercise.

If, upon exercise, a holder would be entitled to receive a fractional interest in a share, the Company will round down to the nearest whole number of the number of Class A ordinary shares to be issued to the holder.

If, at the time of redemption, the warrants are exercisable for a security other than the Class A ordinary shares pursuant to the warrant agreement (for instance, if the Company is not the surviving company in the Company’s initial Business Combination), the warrants may be exercised for such security.

At such time as the warrants become exercisable for a security other than the Class A ordinary shares, the Company (or surviving company) will use its commercially reasonable efforts to register under the Securities Act the security issuable upon the exercise of the warrants.

If the number of outstanding Class A ordinary shares is increased by a capitalization or share dividend payable in Class A ordinary shares, or by a sub-division of ordinary shares or other similar event, then, on the effective date of such capitalization or share dividend, sub-division or similar event, the number of Class A ordinary shares issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding ordinary shares.

A rights offering made to all or substantially all holders of ordinary shares entitling holders to purchase Class A ordinary shares at a price less than the “historical fair market value” (as defined below) will be deemed a share dividend of a number of Class A ordinary shares equal to the product of (i) the number of Class A ordinary shares actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A ordinary shares) and (ii) one minus the quotient of (x) the price per Class A ordinary share paid in such rights offering and (y) the historical fair market value.

For these purposes, (i) if the rights offering is for securities convertible into or exercisable for Class A ordinary shares, in determining the price payable for Class A ordinary shares, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) “historical fair market value” means the volume weighted average price of Class A ordinary shares as reported during the 10 trading day period ending on the trading day prior to the first date on which the Class A ordinary shares trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.

In addition, if the Company, at any time while the warrants are outstanding and unexpired, pays a dividend or makes a distribution in cash, securities or other assets to all or substantially all of the holders of the Class A ordinary shares on account of such Class A ordinary shares (or other securities into which the warrants are convertible), other than (a) as described above, (b) any cash dividends or cash distributions which, when combined on a per share basis with all other cash dividends and cash distributions paid on the Class A ordinary shares during the 365-day period ending on the date of declaration of such dividend or distribution does not exceed $ 0.50 (as adjusted to appropriately reflect any other adjustments and excluding cash dividends or cash distributions that resulted in an adjustment to the exercise price or to the number of Class A ordinary shares issuable on exercise of each warrant) but only with respect to the amount of the aggregate cash dividends or cash distributions equal to or less than $ 0.50 per share , (c) to satisfy the redemption rights of the holders of Class A ordinary shares in connection with a proposed initial Business Combination, (d) to satisfy the redemption rights of the holders of Class A ordinary shares in connection with a shareholder vote to amend the Amended and Restated Memorandum and Articles of Association (A) to modify the substance or timing of the Company’s obligation to provide holders of the Class A ordinary shares the right to have their shares redeemed in connection with the initial Business Combination or to redeem 100 % of the public shares if the Company does not complete it’s initial Business Combination within 18 months from the closing of the Initial Public Offering or (B) with respect to any other provision relating to the rights of holders of the Company’s Class A ordinary shares, or (e) in connection with the redemption of the Company’s public shares upon failure to complete the Company’s initial Business Combination, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each Class A ordinary share in respect of such event.

Whenever the number of Class A ordinary shares purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of Class A ordinary shares purchasable upon the exercise of the warrants immediately prior to such adjustment and (y) the denominator of which will be the number of Class A ordinary shares so purchasable immediately thereafter.

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $ 9.20 per ordinary share (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Company’s sponsor or its affiliates, without taking into account any founder shares held by the sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60 % of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates it’s initial Business Combination (such price, the “Market Value”) is below $ 9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115 % of the higher of the Market Value and the Newly Issued Price, the $ 18.00 per share redemption trigger price described above under “Redemption of warrants” will be adjusted (to the nearest cent) to be equal to 180 % of the higher of the Market Value and the Newly Issued Price.

No fractional warrants will be issued upon separation of the units and only whole warrants will trade.

If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, the Company will, upon exercise, round down to the nearest whole number the number of Class A ordinary shares to be issued to the warrant holder.

The Private Placement Warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in the Company’s Initial Public Offering except that the Private Placement Warrants (including the Class A ordinary shares issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable until 30 days after the completion of the initial Business Combination (except pursuant to limited exceptions to the Company’s officers and directors and other persons or entities affiliated with the initial purchasers of the Private Placement Warrants).

The Private Placement Warrants will be redeemable by the Company in all redemption scenarios and exercisable by the holders on the same basis as the warrants included in the units being sold in the Initial Public Offering.

The Company accounts for the 15,900,000 warrants issued in connection with the Initial Public Offering (including 7,666,667 Public Warrants and 8,233,333 Private Placement Warrants), and will account for the 3,333,333 Forward Purchase Warrants to be issued in connection with the initial Business Combination, in accordance with the guidance contained in ASC 815-40, Derivatives and Hedging .

Such guidance provides that the warrants described above are not precluded from equity classification.

Equity-classified contracts are initially measured at fair value (or allocated value).

Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity.

SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued.

Based upon this review, other than the items disclosed below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

On March 14, 2022, the Company entered into a promissory note pursuant to the Working Capital Loans terms as outlined in Note 5 with the Sponsor (the “Sponsor Working Capital Loan”) to which the Company could borrow up to an aggregate of $ 750,000 .

The Sponsor Working Capital Loan is non-interest bearing and payable upon the earlier of (i) completion of the initial Business Combination or (ii) the date that the winding up of the Company is effective.

The unpaid principal balance on the Sponsor Working Capital Loan may be convertible into warrants at the option of the Sponsor at a price of $ 1.50 per warrant.

The warrants would be identical to the Private Placement Warrants.

On March 15, 2022, the Company drew down $ 500,000 under the Sponsor Working Capital Loan.

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

Proposed Business Combination

On March 23, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Ligand Pharmaceuticals Incorporated, a Delaware corporation (“Ligand”), OmniAb, Inc., a Delaware corporation and wholly-owned subsidiary of Ligand (“OmniAb” and, together with Ligand, collectively, the “Companies”), and Orwell Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), pursuant to which we will combine with OmniAb, Ligand’s antibody discovery business (the “OmniAb Business”), in a Reverse Morris Trust transaction.

Also on March 23, 2022, and in connection with the execution of the Merger Agreement, (a) the Company, Ligand, OmniAb and Merger Sub entered into that certain Employee Matters Agreement (the “Employee Matters Agreement”), (b) OmniAb and our sponsor entered into that certain sponsor insider letter agreement (the “Sponsor Insider Agreement”) with the Company and certain insiders of the Company (the “Insiders”) and (c) we amended and restated that certain forward purchase agreement, dated August 9, 2021, by entering into the amended and restated forward purchase agreement (the “A&R FPA”), by and among the Company, our sponsor and OmniAb.

Immediately prior to the Merger (as defined below) and pursuant to a Separation and Distribution Agreement, dated as of March 23, 2022, among the Company, Ligand and OmniAb (the “Separation Agreement”), Ligand will, among other things and subject to the terms and conditions of the Separation Agreement, transfer the OmniAb Business, including certain related subsidiaries of Ligand, to OmniAb and, in connection therewith, will distribute (the “Distribution”) to Ligand stockholders 100% of the common stock of OmniAb, par value $0.001 (the “OmniAb Common Stock”).

Immediately following the Distribution, in accordance with and subject to the terms and conditions of the Merger Agreement, Merger Sub will merge with and into OmniAb (the “Merger”), with OmniAb continuing as the surviving company in the Merger and as a wholly-owned subsidiary of the Company.

The Merger Agreement, along with the Separation Agreement and the other transaction documents to be entered into in connection therewith, provides for, among other things, the consummation of the following transactions (collectively, the “OmniAb Business Combination”):

(i) we will redomicile by way of continuation from the Cayman Islands to Delaware and domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law and with Section 206 of the Cayman Islands Companies Act (As Revised) at least one business day prior to the closing of the proposed OmniAb Business Combination (the “Domestication”), (ii) Ligand will transfer the OmniAb Business (the “Separation”) to its wholly-owned subsidiary, OmniAb, and contribute $15 million in capital thereto (less certain transaction-related and other expenses), and (iii) following the Separation, Ligand will distribute 100% of the shares of OmniAb Common Stock, to Ligand stockholders by way of the Distribution.

Following the completion of the foregoing transactions and subject to the satisfaction or waiver of certain other conditions set forth in the Merger Agreement, the parties shall consummate the Merger.

The Distribution and Merger are intended to qualify as “tax-free” transactions.

Upon consummation of the proposed OmniAb Business Combination, and after the Domestication, we will have one class of common stock, par value $0.0001 per share (“APAC Common Stock”), which will be listed on Nasdaq under the ticker symbol “OABI”.

Our then-outstanding warrants will be listed on Nasdaq under the ticker symbol “OABIW”.

At the time the proposed OmniAb Business Combination is effected (the “Closing”), each share of OmniAb Common Stock outstanding after the Distribution and immediately prior to the effective time of the Merger will be converted into a number of shares of APAC Common Stock based on an exchange ratio determined by reference to a pre-money equity value for OmniAb of $850 million.

Holders of OmniAb options, restricted stock units and performance stock units (determined after the Distribution and the division of Ligand equity awards into both Ligand equity awards and OmniAb equity awards pursuant to the Employee Matters Agreement) will have their awards rolled over into equity awards of the Company and adjusted pursuant to the exchange ratio.

AVISTA PUBLIC ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

In addition, at the Closing, holders of OmniAb Common Stock and equity awards will also receive earnout consideration in the form of an additional 15 million shares of APAC Common Stock (the “OmniAb Earnout Shares”), with 50% of such earnout shares vesting upon the combined company’s achievement of a post-transaction volume-weighted average price (“VWAP”) of $12.50 per share of APAC Common Stock for any 20 trading days over a consecutive 30 trading-day period, and the remainder vesting upon achievement of a post-transaction VWAP of $15 per share of APAC Common Stock for any 20 trading days over a consecutive 30 trading-day period, in each case provided such vesting occurs during the five-year period following the Closing.

In connection with the proposed OmniAb Business Combination, upon the Domestication (i) all issued and outstanding Class A ordinary shares and Class B ordinary shares will convert automatically, on a one-for-one basis, into shares of APAC Common Stock, (ii) all issued and outstanding warrants will convert automatically into warrants to acquire shares of APAC Common Stock and (iii) all issued and outstanding Units will separate and convert automatically into one share of APAC Common Stock and one-third of one warrant to purchase APAC Common Stock.

The consummation of the proposed OmniAb Business Combination is subject to certain conditions as further described in the Merger Agreement.

• if, and only if, the closing price of the ordinary shares equals or exceeds $ 18.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 -trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders provided there was an effective registration statement covering the shares of common stock issuable upon exercise of the warrants.

If the Company calls the Public Warrants for redemption as previously described, the Company has the option to require all holders that wish to exercise the Public Warrants to do so on a cashless basis.

Simultaneously with APAC’s initial public offering, APAC consummated a private placement of 8,233,333 Private Placement Warrants with APAC’s sponsor.

Each Private Placement Warrant is exercisable for one share of common stock at a price of $ 11.50 per share, subject to adjustment.

The Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants except that the Private Placement Warrants were not transferable, assignable or salable until 30 days after the completion of the Business Combination.

The Private Placement Warrants will be redeemable by the Company in all redemption scenarios and exercisable by the holders on the same basis as the Public Warrants.

Additionally, on the Closing Date, the Company issued 1,666,667 Forward Purchase Warrants and 1,445,489 Backstop Warrants pursuant to the A&R FPA.

The Forward Purchase Warrants and Backstop Warrants have the same terms as the Private Placement Warrants.

The Company concluded the Public, Private Placement, Forward Purchase and Backstop Warrants meet the criteria to be classified as equity.

Upon consummation of the Business Combination, the Public, Private Placement, Forward Purchase and Backstop Warrants were recorded in additional paid-in capital.

Equity Compensation Plans

2022 Incentive Award Plan

The Company’s board and stockholders adopted the 2022 Incentive Award Plan, or the 2022 Plan, which became effective upon the Closing of the Business Combination.

Under the 2022 Plan, the Company may grant cash and equity incentive awards to eligible employees, directors and consultants.

The initial aggregate number of shares of our common stock that was available for issuance under the 2022 Plan was equal to the sum of (i) 16,409,022 shares, and (ii) any shares which, as of the effective date of the 2022 Plan, were subject to awards under the OmniAb Prior Plans which, on or following the effective date of the 2022 Plan, become available for issuance pursuant to the 2022 Plan recycling provisions.

In addition, the number of shares of our common stock available for issuance under the 2022 Plan will be annually increased on January 1 of each calendar year beginning in 2023 and ending in 2032 by an amount equal to the lesser of (i) a number equal to 5 % of the fully-diluted shares on the final day of the immediately preceding calendar year or (ii) such smaller number of shares as is determined by our Board.

The 2022 Plan provides for the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, restricted stock, dividend equivalents, RSUs and other stock or cash based awards.

OmniAb Prior Plans

In connection with the Business Combination, Legacy OmniAb adopted the OmniAb, Inc.

2022 Ligand Service Provider Assumed Award Plan and the OmniAb, Inc.

2022 OmniAb Service Provider Assumed Award Plan, collectively referred to as the OmniAb Prior Plans, which govern the OmniAb Equity Awards issued upon adjustment of outstanding Ligand equity awards in connection with the Distribution.

All awards under the OmniAb Prior Plans that are outstanding as of the closing of the Business Combination will continue to be governed by the terms, conditions and procedures set forth in the OmniAb Prior Plans and any applicable award agreements, as those terms may be equitably adjusted in connection with the Business Combination.

The Company assumed the OmniAb Prior Plans in connection with the closing of the Business Combination, and each of the awards thereunder.

At the time of the Distribution, and after giving effect to the adjustment of the OmniAb Equity Awards to reflect the Business Combination, awards representing the right to receive an aggregate of 5,997,765 and 8,302,710 shares of our common stock were outstanding under the OmniAb, Inc.

2022 Ligand Service Provider Assumed Award Plan and the OmniAb, Inc.

2022 OmniAb Service Provider Assumed Award Plan, respectively.

No future awards will be granted under the OmniAb Prior Plans.

Shares subject to outstanding awards under the OmniAb Prior Plans as of the effective date of the 2022 Plan may, on or following the effective date of the 2022 Plan, become available for issuance pursuant to the 2022 Plan recycling provisions.

Share-Based Compensation

Conversion and Modification of Equity Awards Outstanding at Separation Date

In connection with the Separation on November 1, 2022, under the provisions of the existing plans, the Company adjusted its outstanding equity awards in accordance with the Merger Agreement to preserve the intrinsic value of the awards immediately before and after the Distribution.

Upon the Distribution, employees holding stock options, restricted stock units and performance restricted stock units denominated in pre-Distribution Ligand stock received a number of otherwise-similar awards either in post-Distribution Ligand stock or in a combination of post-Distribution Ligand stock and OmniAb stock based on conversion ratios outlined for each group of employees in the Merger Agreement that the Company entered into in connection with the Distribution.

The equity awards that were granted prior to March 2, 2022 were converted under the shareholder method, wherein employees holding outstanding equity awards received equity awards in both Ligand and OmniAb.

For equity awards granted after March 2, 2022, for Ligand employees, the number of awards that were outstanding at the Separation were proportionately adjusted into post-Distribution Ligand stock to maintain the aggregate intrinsic value of the awards at the date of the Separation;

for OmniAb employees, the number of awards that were outstanding at the Separation were proportionately adjusted into post-Distribution OmniAb stock to maintain the aggregate intrinsic value of the awards at the date of the Separation.

The conversion ratio was determined based on the relative values of Ligand common stock in the “regular way” and “ex-distribution” markets during the five -trading day period prior to the closing of the Business Combination.

These modified awards otherwise retained substantially the same terms and conditions, including term and vesting provisions.

Due to the modification of the equity awards as a result of the Distribution, the Company compared the fair value of the outstanding equity awards immediately before and after the Distribution.

Due to the immaterial amount of incremental expense, the Company did not recognize any incremental fair value as a result of the modification.

The Company will not incur any future compensation cost related to equity awards held by Ligand employees and directors.

The Company will incur future compensation cost related to Ligand equity awards held by OmniAb employees.

The Company recognized share-based compensation expense by function as follows:

Year Ended December 31,

(in thousands) 2022 2021

Research and development expenses $ 10,312 $ 9,016

General and administrative expenses 8,010 6,049

Total share-based compensation expense $ 18,322 $ 15,065

The Company recognized share-based compensation expense by award type as follows:

Year Ended December 31,

(in thousands) 2022 2021

Stock options $ 10,489 $ 9,306

Restricted stock units 5,264 3,823

Performance restricted stock units 2,219 1,852

Employee share purchase plan 350 84

Total share-based compensation expense $ 18,322 $ 15,065

Stock Options

Stock options granted under the 2022 Plan typically vest 1/8 on the 6 -month anniversary of the date of grant, and 1/48 each month thereafter for 42 months.

All option awards generally expire ten years from the date of grant.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options granted.

The model assumptions include expected volatility, term, dividends, and the risk-free interest rate.

• Expected volatility :

Since the Company is a newly public company and does not have a trading history for its common stock, the expected volatility assumption is based on volatilities of a peer group of similar companies whose share prices are publicly available.

The peer group was developed based on companies in the biotechnology industry.

The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.

• Expected term :

The expected term represents the period of time that options are expected to be outstanding.

Because the Company does not have historical exercise behavior, it determines the expected life assumption using the simplified method which is an average of the contractual term of the option and its vesting period.

• Dividend yield :

The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends and, therefore, used an expected dividend yield of zero.

• Risk-free interest rate :

The risk-free interest rate is based upon U.S.

Treasury securities with remaining terms similar to the expected term of the share-based awards.

Prior to the Separation on November 1, 2022, valuation assumptions were determined by the Company’s former parent, Ligand, using historical and implied volatility of Ligand stock to determine the expected volatility.

The expected term of an award was based on historical forfeiture experience, exercise activity, and on the terms and conditions of the stock awards.

The expected dividend yield was determined to be 0 % given that it had not paid any dividends on common stock in the past except for 2007, during which Ligand declared a cash dividend on its common stock of $ 2.50 per share, and did not expect to pay cash dividends or make any other distributions on common stock in the future.

The risk-free interest rate was based upon U.S.

Treasury securities with remaining terms similar to the expected term of the share-based awards.

Following the Separation on November 1, 2022, the fair value of each option issued to employees was estimated on the grant date using the Black-Scholes option pricing model with the following weighted-average assumptions:

Year Ended December 31,

Risk-free interest rate 3.6 % —

Expected volatility 49.6 % —

Expected term (years) 6.1 0

Dividend yield — % — %

The following table summarizes stock option activity under the Company’s equity award plans:

Shares Weighted-average exercise price per share Weighted-average remaining contractual life (in years) Aggregate intrinsic value (in thousands) (1)

Outstanding at January 1, 2022 —

Converted in distribution (2)

6,952,164 $ 11.76

Granted 5,849,771 $ 3.71

Exercised — $ —

Cancelled/Expired ( 111,147 ) $ 12.66

Outstanding at December 31, 2022

12,690,788 $ 8.04 8.5 $ 246

Exercisable at December 31, 2022

3,148,763 $ 12.21 5.9 $ —

_____________

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the common stock for in the money options at December 31, 2022.

(2) Excludes 5,625,551 of options issued to Ligand employees.

As of December 31, 2022, unrecognized stock-based compensation expense related to OmniAb options was $ 29.3 million, which is expected to be recognized over a remaining weighted-average period of approximately 1.66 years.

As of December 31, 2022, unrecognized stock-based compensation expense related to Ligand options was $ 5.5 million, which is expected to be recognized over a remaining weighted-average period of approximately 1.01 years.

Restricted Stock Units

Restricted stock units (“RSUs”) are awards of nontransferable shares of common stock subject to certain vesting conditions and other restrictions.

RSUs generally vest over three years .

The fair value of restricted stock is determined by the closing market price on the date of grant.

The following table summarizes RSU activity during the year ended December 31, 2022 under the Company’s equity awards plans:

Shares Weighted-Average Grant Date Fair Value

Unvested balance at January 1, 2022 — $ —

Converted in distribution (1)

1,017,696 $ 10.36

Granted — $ —

Vested ( 145,544 ) $ 10.47

Forfeited ( 12,923 ) $ 10.48

Unvested balance at December 31, 2022

859,229 $ 10.31

_____________

(1) Excludes 464,196 unvested RSUs issued and outstanding to Ligand employees as of the Separation on November 1, 2022.

As of December 31, 2022, unrecognized stock-based compensation expense related to OmniAb RSUs was $ 5.8 million, which is expected to be recognized over a remaining weighted-average period of approximately 1.39 years.

The aggregate intrinsic value of OmniAb RSUs vested during the year ended December 31, 2022 was $ 0.5 million.

As of December 31, 2022, unrecognized stock-based compensation expense related to Ligand RSUs was $ 2.6 million, which is expected to be recognized over a remaining weighted-average period of approximately 1.01 years.

Performance Restricted Stock Units

PRSUs are share awards that, upon vesting, will deliver to the holder shares of the Company’s common stock.

PRSUs vest over a continued employment period and are based on the achievement of certain corporate performance or market goals.

The Company’s PRSUs contain a market condition dependent upon the Company’s relative and absolute total stockholder return over a three-year period, with a payout range of — % to 200 % of the target shares granted.

Share-based compensation expense for these PRSUs is measured using the Monte-Carlo valuation model and is not adjusted for the achievement, or lack thereof, of the market conditions.

The following table summarizes the PRSU activity during the year ended December 31, 2022, under the Company’s equity awards plans:

Shares Weighted-Average Grant Date Fair Value

Unvested balance at January 1, 2022 — $ —

Converted in distribution (1)

94,749 $ 16.11

Granted — $ —

Forfeited — $ —

Unvested balance at December 31, 2022

94,749 $ 16.11

_____________

(1) Pursuant to the terms of the awards granted, the actual number of awards earned could range between — % and 200 % of target.

The amount disclosed represents PRSU grants at target payout.

As of December 31, 2022, unrecognized stock-based compensation expense related to OmniAb PRSUs was $ 1.2 million, which is expected to be recognized over a remaining weighted-average period of approximately 2.00 years.

Employee Stock Purchase Plan

Under the Company’s 2022 Employee Stock Purchase Plan (the “ESPP”), eligible employees are entitled to purchase shares of common stock at a discount with accumulated payroll deductions.

The ESPP provides for a series of overlapping 24 -month offering periods comprising four six-month purchase periods.

The initial offering period under the 2022 ESPP is longer than 24 months, commencing November 1, 2022 and ending on November 29, 2024.

The purchase price for shares of common stock purchased under the ESPP is equal to 85 % of the lesser of the fair market value of the Company’s common stock on (i) the first trading day of the applicable offering period or (ii) the last trading day of each six month purchase period in the applicable offering period.

The aggregate number of shares of our common stock that may be issued pursuant to rights granted under the ESPP equals 1,758,109 shares of our common stock.

In addition, on the first day of each calendar year beginning on January 1, 2023 and ending on (and including) January 1, 2032, the number of shares available for issuance under the ESPP will be increased by a number of shares equal to the lesser of (i) 1 % of the fully diluted shares outstanding on the final day of the immediately preceding calendar year, and (ii) such smaller number of shares as determined by our Board.

Following the Separation on November 1, 2022, the fair value of ESPP shares issued to employees was estimated on the grant date using the Black-Scholes option pricing model with the following weighted-average assumptions:

Year Ended December 31,

Risk-free interest rate 4.7 % —

Expected volatility 54.8 % —

Expected term (years) 1.3 0

Dividend yield — % — %

As of December 31, 2022, there was $ 1.6 million of unrecognized compensation expense associated with the ESPP, which is expected to be recognized over an estimated weighted-average period of 1.22 years.

During the year ended December 31, 2022, there were no shares issued pursuant to the ESPP.

The components of the income tax expense (benefit) are as follows:

Year Ended December 31,

(in thousands) 2022 2021

Current expense (benefit):

Federal $ 3,477 $ —

Deferred expense (benefit):

Federal ( 7,063 ) ( 6,756 )

State ( 185 ) ( 569 )

( 7,248 ) ( 7,325 )

Total income tax expense (benefit) $ ( 3,727 ) $ ( 7,308 )

A reconciliation of income tax expense (benefit) to the amount computed by applying the statutory federal income tax rate to the net income (loss) is summarized as follows:

Year Ended December 31,

(in thousands) 2022 2021

Tax at federal statutory rate $ ( 5,473 ) 21.0 % $ ( 7,214 ) 21.0 %

State, net of federal benefit ( 218 ) 0.8 % ( 350 ) 1.0 %

Contingent liabilities — — % ( 168 ) 0.5 %

Share-based compensation 2,371 ( 9.0 ) % 1,143 ( 3.3 ) %

Foreign-derived intangible income ( 55 ) 0.2 % — — %

Research and development credits ( 444 ) 1.7 % ( 1,064 ) 3.1 %

Change in uncertain tax positions 78 ( 0.3 ) % 119 ( 0.3 ) %

State tax rate change ( 570 ) 2.2 % 37 ( 0.1 ) %

Change in valuation allowance 880 ( 3.4 ) % 228 ( 0.7 ) %

Other ( 296 ) 1.1 % ( 39 ) 0.1 %

Total income tax benefit and effective tax rate $ ( 3,727 ) 14.3 % $ ( 7,308 ) 21.3 %

The Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future.

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2022 and 2021 are shown below.

The Company assesses the positive and negative evidence to determine if sufficient future taxable income will be generated to realize the existing deferred tax assets.

The Company’s evaluation of evidence resulted in management concluding that the majority of the Company’s deferred tax assets will be realized.

The Company offsets all deferred tax assets and liabilities by jurisdiction, as well as any related valuation allowance, and presents them on our consolidated balance sheet as a non-current deferred income tax asset or liability (as applicable).

Deferred tax assets (liabilities) are comprised of the following:

(in thousands) 2022 2021

Deferred tax assets:

Net operating loss carryforwards $ 316 $ 6,618

Research credit carryforwards 1,341 2,803

Share-based compensation 3,454 1,703

Deferred revenue 2,090 1,768

Operating lease liabilities 5,650 3,088

Contingent liabilities 745 —

Capitalized research and experimental expenditures 4,992 —

Other 256 1,488

Valuation allowance for deferred tax assets ( 314 ) ( 526 )

Net deferred tax assets $ 18,530 $ 16,942

Deferred tax liabilities:

Identified intangibles $ ( 32,890 ) $ ( 35,114 )

Operating lease assets ( 4,713 ) ( 2,973 )

Fixed assets ( 2,212 ) —

Other ( 56 ) ( 817 )

Net deferred tax liabilities $ ( 39,871 ) $ ( 38,904 )

Deferred income taxes, net $ ( 21,341 ) $ ( 21,962 )

Prior to the Separation on November 1, 2022, OmniAb operated as part of Ligand and not as a stand-alone company.

We determined the OmniAb income tax provision as if Legacy OmniAb had filed consolidated federal income tax returns and combined state income tax returns separate from Ligand since its inception on January 8, 2016 when Ligand acquired Legacy OmniAb (originally known as Open Monoclonal Technology, Inc.

We recorded the deferred tax assets related to net operating loss and research credit carryforwards at December 31, 2022 as a stand-alone company.

We adjusted our deferred tax assets as of November 1, 2022 to reflect the actual tax attributes that the Company received when it left the consolidated group of Ligand.

As of December 31, 2022, our deferred tax assets reflect the tax attributes that are available for us to use going forward.

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 requires taxpayers to capitalize and amortize certain research and experimental expenditures over five years for domestic research and 15 years for foreign research pursuant to Section 174 of the Internal Revenue Code of 1986, as amended.

The Company recorded a net increase of $ 5.0 million to income tax payable and deferred tax assets during 2022 due to the capitalization of research and experimental expenditures under Section 174.

As of December 31, 2022, the Company had federal net operating loss carryforwards set to expire through 2037 of $ 0.4 million, and $ 3.2 million of state net operating loss carryforwards that are set to expire through 2039.

The Company also had $ 0.5 million of federal research and development credit carryforwards, which expire through 2028, and $ 1.4 million of California research and development credit carryforwards that have no expiration date.

Pursuant to Section 382 and 383 of the Internal Revenue Code of 1986, as amended, utilization of the Company’s net operating losses and credits may be subject to annual limitations in the event of any significant future changes in its ownership structure.

These annual limitations may result in the expiration of net operating losses and credits prior to utilization.

The deferred tax assets as of December 31, 2022 are net of any previous limitations due to Section 382 and 383.

The Business Combination on November 1, 2022 did not trigger an ownership change under Section 382.

The Company accounts for income taxes by evaluating a probability threshold that a tax position must meet before a financial statement benefit is recognized.

The minimum threshold is a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position.

The Company’s remaining liabilities for uncertain tax positions are presented net of the deferred tax asset balances on the accompanying consolidated and combined balance sheets.

A reconciliation of the amount of unrecognized tax benefits at December 31, 2022 and 2021 is as follows:

(in thousands) 2022 2021

Balance at beginning of year $ 894 $ 766

Additions based on tax positions related to the current year 41 128

Reductions for tax positions of prior years ( 472 ) —

Balance at end of year $ 463 $ 894

Included in the balance of unrecognized tax benefits at December 31, 2022 is $ 0.4 million of tax benefits that, if recognized would impact the effective rate.

There are no positions for which it is reasonably possible that the uncertain tax benefit will significantly increase or decrease within twelve months.

For the year ended December 31, 2022, the Company recorded reductions in unrecognized tax benefits of $0.4 million related to certain tax attributes utilized by Ligand in the prior years.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

As of December 31, 2022 and December 31, 2021, the Company recognized no interest and penalties.

The Company files income tax returns in the United States and various state jurisdictions with varying statutes of limitations.

The federal statute of limitation remains open for the 2018 tax year to the present.

The state income tax returns generally remain open for the 2017 tax year through the present.

Net operating loss and research credit carryforwards arising prior to these years are also open to examination if and when utilized.

Net Loss Per Share

Income (Loss) Per Share

Basic income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period.

Diluted income (loss) per share is computed based on the sum of the weighted average number of common shares and dilutive common shares outstanding during the period.

As described in Note 2 – Summary of Significant Accounting Policies, earnout shares issued in connection with the Business Combination, as further described in Note 4 – Business Combination, are subject to vesting based on the volume-weighted average trading prices (“VWAP”) of common shares during the earnout period.

The earnout shares are excluded from the calculation of basic and diluted weighted-average number of common shares outstanding until vested.

For periods prior to the Business Combination, basic and diluted loss per share was calculated based on the 82.6 million shares issued to Ligand shareholders at the Closing Date.

As of December 31, 2022, there were 98.9 million shares issued and outstanding, excluding earnout shares.

The following table outlines the basic and diluted net loss per share for the years ended December 31, 2022 and 2021 (in thousands, except per share data):

Year Ended December 31,

Net loss $ ( 22,334 ) $ ( 27,042 )

Weighted-average shares outstanding, basic and diluted 85,318 82,612

Net loss per share, basic and diluted $ ( 0.26 ) $ ( 0.33 )

The following table outlines dilutive common share equivalents outstanding, which are excluded in the above diluted net loss per share calculation, as the effect of their inclusion would be anti-dilutive or the share equivalents were contingently issuable as of each period presented:

Options to purchase common stock issued and outstanding (1)

Earnout shares 16,292,542 —

Avista private placement warrants 8,233,333 —

Avista public warrants 7,666,667 —

Shares expected to be purchased under employee stock purchase plan 1,983,180 —

Forward purchase warrants 1,666,667 —

Backstop warrants 1,445,489 —

Restricted stock units issued and outstanding (1)

Total anti-dilutive shares 56,629,252 —

_____________

(1) Outstanding stock options and restricted stock units include awards outstanding to employees of Ligand.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data