What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-03-04 compared with 2025-03-18 · 73 added, 67 removed, 172 unchanged (45% of the section changed)

9 unchanged sentences

We provide our partners both integrated end-to-end capabilities and highly customizable offerings, which address critical industry challenges and provide optimized discovery solutions.

As of December 31, 2024, we had 91 active partners with 363 active programs using the OmniAb technology platform, including 28 OmniAb-derived antibodies in clinical development by our partners, one under regulatory review, and three approved products developed and commercialized by our partners.

As of December 31, 2025, we had 107 active partners with 407 active programs using the OmniAb technology platform, including 27 OmniAb-derived antibodies in clinical development by our partners, two under regulatory review, and three approved products developed and commercialized by our partners.

Our proprietary technologies are joined with and leverage a suite of in silico , artificial intelligence and machine learning tools for therapeutic discovery and optimization that are woven throughout our various technologies and capabilities.

Additionally, an established core competency focused on ion channels and transporters further differentiates OmniAb’s technology and creates opportunities in many important and emerging target classes.

OmniAb technologies are designed to be leveraged for the discovery of a variety of next-generation antibody-based therapeutic modalities, including bi- and multi-specific biologics, antibody-drug conjugates, CAR-T therapies, targeted radiotherapeutics, and many others.

The OmniAb suite of technologies spans from Biological Intelligence-powered repertoire generation to cutting-edge antibody discovery and optimization offering an increasingly efficient and customizable end-to-end solution for the growing discovery needs of the global pharmaceutical industry.

We partner with pharmaceutical and biotechnology companies and leading academic institutions that vary in size, clinical stage, geography and therapeutic focus.

We partner with pharmaceutical and biotechnology companies and leading academic institutions that vary in size, geography and therapeutic focus.

Our partners gain access to wide repertoires of antibodies and state-of-the-art screening technologies designed to enable efficient discovery of next-generation novel therapeutics and deliver high-quality therapeutic antibody candidates for a wide range of diseases.

18 unchanged sentences

We believe the long-term value of our business will be driven by royalties given that such payments are based on global sales of potential future partner programs, which generally provide for larger and recurring payments as compared to technology access, research and milestone payments.

We believe our revenue will be materially driven by milestones in the shorter term, and by royalties in the longer term, from our partnered programs.

We believe our revenue will be materially driven by milestones and services in the shorter term, and by royalties in the longer term, from our partnered programs.

However, there is significant uncertainty in timing and likelihood of reaching marketing authorization in drug discovery and development, and we cannot be certain when, if at all, royalty payments will be a material portion of our revenue.

12 unchanged sentences

_____________

(1) Two of the five clinical program terminations regressed to discovery or preclinical phases and remained active programs as of December 31, 2024.

(1) Two of the four clinical program terminations regressed to discovery or preclinical phases and remained active programs as of December 31, 2025.

Active partners represents the number of partners that have rights to an active program or have executed a license agreement in advance of initiating an active program.

20 unchanged sentences

Service revenue 7,263 11,949 (4,686) (39) %

xPloration revenue

754 — 754 100 %

Royalty revenue 878 576 302 52 %

1 unchanged sentence

• License and milestone revenue fluctuates depending on the timing of new license agreements with partners and partners’ achievement of milestones.

Because of these factors and the sporadic nature of development milestones, license and milestone revenue could fluctuate significantly from period to period.

License and milestone revenue decreased primarily due to the recognition in the prior year period of a $10.0 million milestone related to the first commercial sale of TECVAYLI ® (teclistamab) in the European Union and $2.5 million of milestones related to the start of pivotal studies in two additional indications for batoclimab.

This decrease was partially offset by the recognition in the current year period of a $2.0 million IND acceptance milestone, a $2.0 million phase 3 milestone, and a $1.5 million phase 1 milestone.

• Royalty revenue decreased primarily due to lower net sales from partners’ product sales.

Operating Expenses

Because of these factors, license and milestone revenue could fluctuate significantly from period to period.

License and milestone revenue decreased primarily due to a $1.6 million decline in milestone revenue and a $2.5 million decline in license revenue.

• Service revenue decreased primarily as a result of the completion or discontinuation of certain small molecule ion channel programs.

• In May 2025, we launched the xPloration Partner Access Program, under which our partners can purchase xPloration instruments.

xPloration revenue increased as a result of the launch and the related sale of an instrument and consumables.

• Royalty revenue increased primarily due to higher net sales from partners’ product sales in China.

Costs and Operating Expenses

(Dollars in thousands) 2025 2024 $ Change % Change

Cost of xPloration revenue $ 303 $ — $ 303 100 %

Research and development 47,754 55,110 (7,356) (13) %

1 unchanged sentence

Amortization of intangibles 12,912 17,407 (4,495) (26) %

Other operating expense (income), net (2,365) 191 (2,556) NM (1)

Total operating expenses $ 100,893 $ 103,583 $ (2,690) (3) %

Other operating income, net (2,549) (2,365) (184) 8 %

Total costs and operating expenses

$ 87,635 $ 100,893 $ (13,258) (13) %

(1) P ercentage change is not meaningful.

• Cost of xPloration revenue consists of contract manufacturing costs, material parts costs and associated freight, shipping and handling costs, royalty costs, and other direct costs related to xPloration revenue recognized in the period.

During the year ended December 31, 2025, cost of xPloration revenue increased due to direct costs associated with xPloration revenue recognized during the period.

• Research and development expenses consist of (1) personnel related expenses, including salaries, benefits and share-based compensation, (2) external expenses, including third-party costs for goods and services such as lab supplies and contract research, and (3) facility and other overhead expenses, including depreciation and occupancy costs.

Research and development expenses decreased primarily due to lower personnel costs and external expenses partially offset by higher facility and other overhead expenses.

Research and development expenses decreased primarily due to lower personnel expenses related to lower headcount and lower share-based compensation expense, and lower external expenses associated with ion channel programs and lower contract research costs.

This decrease was partially offset by $3.9 million of impairment charges.

During the year ended December 31, 2025, we determined that certain property and equipment related to small molecule ion channel assets was impaired.

The $3.3 million impairment charge was recorded as a facility and other overhead research and development expense.

Additionally, during the year ended December 31, 2025, an impairment charge of $0.6 million was recorded as an external research and development expense for the impairment of certain prepaid research technology.

For the year ended December 31, 2024, there was no impairment recorded to research and development expenses.

(Dollars in thousands)

8 unchanged sentences

$ 47,754 $ 55,110 $ (7,356) (13) %

• General and administrative expenses decreased primarily due to non-recurring consulting and other outside service expenses incurred in 2023 related to our separation from Ligand to become a standalone public company as well as lower legal and share-based compensation expense.

• Amortization of intangibles increased primarily due to impairments in 2024, including a $1.2 million impairment of certain finite-lived intangible assets related to the legacy acquisition of Ab Initio and a $2.7 million impairment of certain small molecule ion channel intangible assets.

• Other operating income, net increased primarily due to a $2.5 million reduction in contingent liabilities in 2024 attributed to changes in ion channel programs.

• General and administrative expenses decreased primarily due to lower legal fees and share-based compensation expense.

• Amortization of intangibles decreased primarily due to the write-off of the net carrying value of our finite-lived intangible assets related to the acquisition of Ab Initio of $1.2 million and the write-off of the net carrying value of $2.7 million of certain small molecule ion channel intangible assets in the prior year period.

For the year ended December 31, 2025, there was no impairment of intangible assets with finite lives.

• Other operating income, net during the year ended December 31, 2025 includes a gain of $3.0 million from the sale in May 2025 of a small molecule Kv7.2 program to Angelini partially offset by a $0.3 million increase in contingent liabilities expense attributed to changes in certain ion channel programs.

Other operating income, net during the year ended December 31, 2024 primarily consists of a $2.5 million reduction in contingent liabilities attributed to changes in ion channel programs.

Other Income (Expense), net

Other income (expense), net decreased by $2.0 million during the year ended December 31, 2024 compared to December 31, 2023 due to lower interest income related to lower short-term investment balances.

Other income (expense), net during the years ended December 31, 2025 and 2024 primarily related to interest earned on short-term investments.

The decline in interest income during the year ended December 31, 2025 compared to December 31, 2024 was related to lower short-term investment balances as well as declines in interest rates.

This decline was partially offset by $0.7 million of interest earned on a late milestone payment.

Income Tax Benefit

7 unchanged sentences

The tax rate is also affected by discrete items that may occur in any given year, but are not consistent from year to year.

Our effective tax rate for the year ended December 31, 2024 differed from the federal statutory tax rate of 21.0% primarily due to non-deductible share-based compensation expense, an increase to our valuation allowance recorded against deferred tax assets, and repricing of state tax deferred liabilities, net, partially offset by the impact of state taxes and the tax benefit from research and development tax credits.

Our effective tax rate for the year ended December 31, 2023 differed from the federal statutory tax rate of 21.0% primarily due to the tax benefit from research and development credits and the deduction of certain transaction costs, partially offset with non-deductible share-based compensation expense.

Our effective tax rate for the year ended December 31, 2025 differed from the federal statutory tax rate of 21.0% primarily due to an increase to our valuation allowance recorded against deferred tax assets.

Our effective tax rate for the year ended December 31, 2024 differed from the federal statutory tax rate of 21.0% primarily due to non-deductible share-based compensation expense, an increase to our valuation allowance recorded against deferred tax assets, and repricing of state tax deferred liabilities, net, partially offset by the tax benefit from research and development tax credits.

Liquidity and Capital Resources

10 unchanged sentences

• the effect of competing technological and market developments;

• the impact of pandemics or other epidemic diseases on global social, political and economic conditions;

• delays or issues with any of the above, including that the risk of each may be exacerbated by tariffs or trade policies, any future pandemics or epidemic diseases, potential geopolitical instability, war, terrorism, inflation or rising interest rates;

• the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patents and other intellectual property and proprietary rights;

• the costs associated with any technologies that we may in-license or acquire.

On August 26, 2025, we completed a private placement (“August 2025 PIPE”) of 21,254,106 shares of our common stock at a price of $1.40 per share or, with respect to any purchaser that was an officer, director, employee or consultant of the Company, $1.85 per share.

The aggregate gross proceeds from the August 2025 PIPE were approximately $30.0 million, before deducting placement agent fees and offering expenses.

In December 2023, we entered into an Open Market Sale Agreement SM (the “Sales Agreement”), with Jefferies LLC (the “Sales Agent”) under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $100.0 million in an “at the market” (“ATM”) offerings program through the Sales Agent.

1 unchanged sentence

The Sales Agent will receive a commission from us of up to 3.0% of the gross proceeds of any shares of common stock sold under the Sales Agreement.

Sales of our common stock made pursuant to the Sales Agreement are made under our shelf registration statement on Form S‐3 which was filed on December 8, 2023 and declared effective by the SEC on December 18, 2023.

We are not obligated to sell, and the Sales Agent is not obligated to buy or sell, any shares of common stock under the Sales Agreement.

For the year ended December 31, 2024, we sold 2,771,192 shares of our common stock under the ATM program, for net proceeds of $11.4 million, after deducting commissions.

For the year ended December 31, 2025, we sold no shares of common stock under the ATM program.

As of December 31, 2025, $88.3 million remains available under the Sales Agreement for future sales of our common stock.

We anticipate that our principal uses of cash in the future will be primarily to fund our operations, working capital needs, capital expenditures and other general corporate purposes.

3 unchanged sentences

Therefore, any cash proceeds that we may receive in relation to the exercise of such securities will be dependent on the trading price of our common stock.

We anticipate that our principal uses of cash in the future will be primarily to fund our operations, working capital needs, capital expenditures and other general corporate purposes.

Cash Flow Summary

7 unchanged sentences

During the year ended December 31, 2025, cash used in operating activities of $36.5 million primarily reflected our net loss of $64.8 million for the period, adjusted by net non-cash charges of $33.3 million and a net change in operating assets and liabilities of $5.0 million.

The net non-cash charges primarily consisted of share-based compensation expense of $15.8 million and depreciation and amortization expense of $21.8 million, which were partially offset by a gain on sale of an ion channel asset of $3.0 million and a $1.5 million change in deferred income taxes, net.

The net change in operating assets and liabilities was primarily driven by a decrease in deferred revenue of $1.6 million, a decrease in operating lease liabilities of $2.8 million, and an increase in prepaid expenses and other current assets of $1.1 million.

During the year ended December 31, 2024, cash used in operating activities of $39.7 million primarily reflected our net loss of $62.0 million for the period, adjusted by net non-cash charges of $32.5 million and a net change in operating assets and liabilities of $10.2 million.

The net non-cash charges primarily consisted of share-based compensation expense of $21.5 million and depreciation and amortization expense of $23.6 million, which were partially offset by a $9.0 million change in deferred income taxes, net.

The net change in operating assets and liabilities was primarily driven by a decrease in deferred revenue of $6.0 million, a decrease in operating lease liabilities of $2.4 million, and a decrease in accounts payable, accrued expenses, and other liabilities of $2.4 million.

During the year ended December 31, 2023, cash provided by operating activities of $2.3 million primarily reflected our net loss of $50.6 million for the period, adjusted by net non-cash charges of $28.1 million and a net change in operating assets and liabilities of $24.9 million.

The net non-cash charges primarily consisted of share-based compensation expense of $24.8 million and depreciation and amortization expense of $19.5 million, which were partially offset by a $12.5 million change in deferred income taxes, net.

The net change in operating assets and liabilities was primarily driven by a decrease in accounts receivable of $26.9 million and a decrease in deferred revenue of $5.3 million.

Cash from Investing Activities:

During the year ended December 31, 2025, cash provided by investing activities of $6.5 million primarily consisted of $50.8 million of cash from the maturity of short-term investments and $3.0 million of proceeds from the sale of an ion channel asset, partially offset by $46.9 million of cash used to purchase short-term investments.

During the year ended December 31, 2024, cash provided by investing activities of $37.9 million primarily consisted of $78.0 million of cash from the maturity of short-term investments partially offset by $40.3 million of cash used to purchase short-term investments.

During the year ended December 31, 2023, cash used in investing activities of $18.4 million primarily consisted of $112.6 million of cash used to purchase short-term investments and $96.9 million of cash from the maturity of short-term investments.

Cash from Financing Activities:

During the year ended December 31, 2025, cash provided by financing activities was $27.9 million, which primarily consisted of net proceeds from the issuance of our common stock in the August 2025 PIPE.

During the year ended December 31, 2024, cash provided by financing activities was $13.0 million, which primarily consisted of $11.4 million for the issuance of common stock under the ATM facility, net of commissions and $3.3 million of proceeds from the issuance of common stock from stock compensation plans.

During the year ended December 31, 2023, cash used in financing activities was $0.9 million.

Critical Accounting Policies and Estimates

7 unchanged sentences

Revenue Recognition

License revenue is recognized when (or as) control of a performance obligation is transferred to the customer.

When combined performance obligations contain a promised license and related services or other promises, management judgment is required to determine whether revenue is recognized at a point in time or over time.

If a license for technology access is deemed to be the predominant promise in a performance obligation, we first determine the nature of the license, whether functional or symbolic intellectual property, to conclude whether revenue recognition as of a point in time or over time is most appropriate.

The determination of functional or symbolic intellectual property requires an assessment of whether the customer is able to benefit from the license in its current condition, or if the utility of the license is dependent on or influenced by our ongoing activities.

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), (ii) payments for the performance of research services (service revenue), (iii) downstream payments in the form of preclinical, intellectual property, clinical, regulatory, and commercial milestones (milestone revenue) and (iv) royalties on net sales from our partners’ product sales (royalty revenue).

At the inception of each agreement, we determine which promises represent distinct performance obligations, for which management must use significant judgment.

Additionally, at inception and at each reporting date thereafter, we must determine and update, as appropriate, the transaction price, which includes variable consideration such as development and commercial milestones.

We include 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.

3 unchanged sentences

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

We recognize service revenue for contracted R&D services performed for partners over time.

We measure our progress using an input method based on the effort we expend or cost we incur relative to the estimated total effort or costs to satisfy the performance obligation.

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

This approach requires us 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.

We occasionally have sub-license obligations related to arrangements for which we receive license fees, milestones and royalties.

We evaluate the determination of gross as a principal versus net as an agent reporting based on each individual agreement.

Our license agreements typically grant a perpetual license to our technology and are typically terminable by our partners without penalty with specified notice.

License fees are nonrefundable, and termination of a license does not impact previously received and recognized license revenue.

In addition, all milestone payments and royalties survive termination of the license agreement and continue with respect to any OmniAb-derived antibodies discovered under the license agreement and would be recognized when achieved in accordance with our revenue recognition policies regardless of a license termination.

As such, any license agreement termination would not affect our revenue recognition policies.

For arrangements that include sales-based royalties, and under which the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Each quarterly period, sales-based royalties are recorded based on estimated quarterly net sales of the associated collaboration products.

Differences between actual results and estimated amounts are adjusted for in the period in which they become known, which typically follows the quarterly period in which the estimate was made.

To date, actual royalties received have not differed materially from our estimates.

Goodwill — Impairment Assessment

Goodwill is tested annually for impairment in the fourth quarter of our fiscal year, and whenever events or changes in circumstances indicate that it is more likely than not that the fair value is less than the carrying value.

Events that would indicate impairment and trigger an interim impairment test include, but are not limited to, current economic and market conditions, including a decline in market capitalization, a significant adverse change in legal factors, business climate or operational performance of the business.

Goodwill impairment is assessed at the reporting unit level.

During the goodwill impairment review, we assess qualitative factors to determine whether it is more likely than not that the fair values of our reporting units are less than the carrying amounts, including goodwill.

The qualitative factors include, but are not limited to, macroeconomic conditions, industry and market considerations, and our overall financial performance.

If, after assessing the totality of these qualitative factors, we determine that it is not more likely than not that the fair values of our reporting units are less than the carrying amounts, then no additional assessment is deemed necessary.

Otherwise, we compare the estimated fair values of the reporting units with the carrying values, including goodwill.

If the carrying amounts of the reporting units exceed the fair values, we record an impairment loss based on the difference.

If a quantitative assessment is performed, the evaluation includes estimates of cash flow projections and includes assumptions such as revenue growth, terminal values and discount rates.

We also consider our market capitalization as a part of our analysis.

We may elect to bypass the qualitative assessment in a period and proceed to perform the quantitative goodwill impairment test.

Intangible Assets and Other Long-Lived Assets — Impairment Assessments

We regularly perform reviews to determine if an event occurred that may indicate the carrying values of our intangible and other long-lived assets are impaired.

If indicators of impairment exist, we assess the recoverability of the affected long-lived assets by comparing its carrying amounts to its undiscounted cash flows.

If the affected assets are not recoverable, we estimate the fair value of the assets and record an impairment loss if the carrying value exceeds the fair value.

Factors that may indicate potential impairment include a significant decline in our stock price and market capitalization compared to net book value, significant changes in the ability of an asset to generate positive cash flows and the pattern of utilization of a particular asset.

In order to estimate the fair value of identifiable intangible assets and other long-lived assets, we estimate the present value of future cash flows from those assets.

The key assumptions that we use in our discounted cash flow model are the amount and timing of estimated future cash flows to be generated by the asset over an extended period of time and a rate of return that considers the relative risk of achieving the cash flows, the time value of money, and other factors that a willing market participant would consider.

We review intangible assets and other long-lived assets for impairment indicators on a regular basis.

If indicators exist, we assess recoverability by comparing the asset group’s carrying amount to the sum of its estimated undiscounted cash flows.

If the affected asset group is not recoverable, we measure and record an impairment charge for any excess carrying value.

Indicators include significant declines in market capitalization, changes in expected cash flows, or utilization patterns.

Fair value estimates are based on discounted cash flows, requiring assumptions about future cash flows, timing, and discount rates reflecting risk and market participant considerations.

Significant judgment is required to estimate the amount and timing of future cash flows and the relative risk of achieving those cash flows.

Assumptions and estimates about future values and remaining useful lives are complex and often subjective.

They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts.

For example, if our future operating results do not meet current forecasts or if we experience a sustained decline in our market capitalization that is determined to be indicative of a reduction in fair value of our reporting unit, we may be required to record future impairment charges for purchased intangible assets.

Impairment charges could materially decrease our future net income and result in lower asset values on our balance sheet.

Our provision for income taxes, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect our best assessment of estimated current and future taxes to be paid.

Significant judgments and estimates based on interpretations of existing tax laws or regulations in the United States are required in determining our provision for income taxes.

Changes in tax laws, statutory tax rates, and estimates of our future taxable income could impact the deferred tax assets and liabilities provided for in the consolidated financial statements and would require an adjustment to the provision for income taxes.

Deferred tax assets are regularly assessed to determine the likelihood they will be recovered from future taxable income.

A valuation allowance is established when we believe it is more likely than not the future realization of all or some of a deferred tax asset will not be achieved.

In evaluating our ability to recover deferred tax assets within the jurisdiction which they arise, we consider all available positive and negative evidence.

Factors reviewed can include the cumulative pre-tax book income (loss) for the past three years, scheduled reversals of deferred tax liabilities, our history of earnings and reliability of our forecasts, projections of pre-tax book income over the foreseeable future, and the impact of any feasible and prudent tax planning strategies.

We recognize the impact of a tax position in our financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position.

Tax authorities can examine our returns in the jurisdictions in which we do business and we regularly assess the tax risk of our return filing positions.

Due to the complexity of some of the uncertainties, the ultimate resolution may result in payments that are materially different from our current estimate of the tax liability.

These differences, as well as any interest and penalties, will be reflected in the provision for income taxes in the period in which they are determined.

Assumptions regarding future values and useful lives are inherently subjective and influenced by internal forecasts, business strategy and external factors such as industry and economic conditions.

If actual results differ from forecasts or market capitalization declines, additional impairment charges may be required, which could materially impact net income and asset values.

During the fourth quarter of 2025, we elected to bypass the qualitative assessment and proceeded to perform the quantitative assessment.

We performed a recoverability test by comparing the small molecule ion channel asset group’s carrying amount to estimated undiscounted cash flows, which indicated the carrying amount was not recoverable.

As a result, we recorded a $3.3 million impairment charge related to certain ion channel property and equipment, recognized within “Research and development” expenses in the consolidated statements of operations.

Fair value was determined based on estimated liquidation value, considering physical condition, functionality, and market conditions.

Recent Accounting Pronouncements

18 unchanged sentences

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 7. Management’s Discussion and Analysis