What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-07 · 75 added, 29 removed, 152 unchanged (41% of the section changed)

14 unchanged sentences

Our technology platform creates and screens diverse antibody repertoires and is designed to quickly identify optimal antibodies and other target-binding proteins for our partners’ drug development efforts.

This includes xPloration, our AI-powered, high-throughput single B-cell screening platform.

At the heart of the OmniAb platform is what we call Biological Intelligence™, which powers the immune systems of our proprietary, engineered transgenic animals to create optimized antibody candidates for human therapeutics.

2 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 March 31, 2026, we had 107 active partners with 409 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.

As of June 30, 2026, we had 110 active partners with 425 active programs using the OmniAb technology platform, including 29 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.

36 unchanged sentences

(3) (7) (2) —

March 31, 2026 107 409 32 3

June 30, 2026 110 425 34 3

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.

16 unchanged sentences

Results of Operations

Comparison of the Three Months Ended March 31, 2026 and 2025

Three Months Ended March 31,

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

Three Months Ended June 30,

(Dollars in thousands)

9 unchanged sentences

• Service revenue increased primarily as a result of an increase in ion channel programs.

• xPloration revenue and royalty revenue remained relatively consistent period over period.

• xPloration revenue increased primarily as a result of instrument sales and related consumables.

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

Six Months Ended June 30,

(Dollars in thousands)

2026 2025 Change % Change

License and milestone revenue $ 21,540 $ 3,263 $ 18,277 560 %

Service revenue 4,580 3,839 741 19 %

xPloration revenue 1,215 650 565 87 %

Royalty revenue 507 299 208 70 %

Total revenue $ 27,842 $ 8,051 $ 19,791 246 %

• License and milestone revenue increased primarily due to a $18.3 million increase in milestone revenue.

• Service revenue increased primarily as a result of an increase in ion channel programs.

• xPloration revenue increased primarily as a result of instrument sales and related consumables.

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

Costs and Operating Expenses

Three Months Ended March 31,

Three Months Ended June 30,

(Dollars in thousands)

4 unchanged sentences

Amortization of intangibles 3,053 3,228 (175) (5) %

Other operating income, net (46) (750) 704 (94) %

Other operating expense (income), net 150 (1,922) 2,072 (108) %

Total costs and operating expenses

$ 20,052 $ 20,116 $ (64) — %

• 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.

Cost of xPloration revenue increased as a result of higher instrument and consumables sales compared with the prior year 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 expenses related to lower share-based compensation expense and headcount, and lower external expenses associated with ion channel programs.

Three Months Ended March 31,

Research and development expenses declined primarily due to lower personnel costs, including share-based compensation and

salaries and wages resulting from our 2025 reorganizations, as well as lower facility-related costs following a fixed asset impairment charge recorded in the fourth quarter of 2025.

Three Months Ended June 30,

(Dollars in thousands) 2026 2025 Change % Change

3 unchanged sentences

Total research and development expenses $ 9,586 $ 10,864 $ (1,278) (12)%

• General and administrative expenses declined primarily due to lower personnel expenses related to lower share-based compensation expense and headcount and lower legal fees.

• General and administrative expenses declined primarily due to lower personnel costs, including share-based compensation and salaries and wages resulting from our 2025 reorganizations, and lower other professional fees.

• Other operating expense (income), net during the three months ended June 30, 2026 primarily includes a contingent liability adjustment associated with certain ion channel programs.

Other operating income, net during the three months ended June 30, 2025 includes a gain of $3.0 million from the sale in May 2025 of a small molecule Kv7.2 program to Angelini Pharma S.p.A.

(“Angelini”), partially offset by the contingent liability adjustment associated with that program of $1.0 million.

Six Months Ended June 30,

(Dollars in thousands)

2026 2025 Change % Change

Cost of xPloration revenue $ 625 $ 265 $ 360 136 %

Research and development 19,226 23,466 (4,240) (18) %

General and administrative 13,272 15,599 (2,327) (15) %

Amortization of intangibles 9,081 6,456 2,625 41 %

Other operating expense (income), net 104 (2,672) 2,776 (104) %

Total costs and operating expenses

$ 42,308 $ 43,114 $ (806) (2) %

• Cost of xPloration revenue increased as a result of higher instrument and consumables sales compared with the prior year period.

• Research and development expenses declined primarily due to (1) lower personnel costs including reduced severance, salaries, and share-based compensation resulting from our 2025 reorganizations, (2) lower external expenses primarily from certain ion channel programs, and (3) lower facility expenses from reduced depreciation following the Icagen fixed asset impairment in 2025.

Six Months Ended June 30,

(Dollars in thousands) 2026 2025 Change % Change

Personnel related expenses $ 9,579 $ 12,366 $ (2,787) (23)%

External expenses 6,175 6,972 (797) (11)%

Facility and other overhead expenses 3,472 4,128 (656) (16)%

Total research and development expenses $ 19,226 $ 23,466 $ (4,240) (18)%

• General and administrative expenses declined primarily due to lower personnel expenses related to lower share-based compensation, lower salaries and wages from reduced headcount following our 2025 reorganizations, and lower other professional fees.

• Amortization of intangibles increased primarily due to the write-off of the net carrying value of $2.9 million of certain legacy small molecule ion channel intangible assets.

• Other operating income, net decreased primarily due to a lower reduction in contingent liabilities attributed to changes in certain ion channel programs, which was partially offset by an increase in royalty expense.

• Other operating expense (income), net during the six months ended June 30, 2026 primarily includes a contingent liability adjustment associated with certain ion channel programs.

Other operating income, net during the six months ended June 30, 2025 includes a gain of $3.0 million from the sale in May 2025 of a small molecule Kv7.2 program to Angelini and a $0.9 million reduction in contingent liabilities attributed to changes in certain ion channel programs, which were partially offset by the $1.0 million contingent liability adjustment associated with the Angelini program.

Other Income (Expense), net

Other income (expense), net during the three months ended March 31, 2026 and 2025 primarily related to interest earned on short-term investments.

The decline in interest income was related to lower short-term investment balances as well as declines in interest rates.

Income Tax (Expense) Benefit

Three Months Ended March 31,

Other income (expense), net during the three and six months ended June 30, 2026 and 2025 primarily related to interest earned on short-term investments and remained relatively consistent period over period.

Income Tax Benefit (Expense)

Three Months Ended June 30,

(Dollars in thousands)

2 unchanged sentences

$ (6,212) $ (15,756) $ 9,544 (61) %

Income tax (expense) benefit

Income tax benefit (expense) 353 (119) 472 (397) %

Net loss $ (5,859) $ (15,875) $ 10,016 (63) %

Effective tax rate

5.7 % (0.8) %

Six Months Ended June 30,

(Dollars in thousands)

2026 2025 Change % Change

Loss before income taxes

$ (13,477) $ (34,062) $ 20,585 (60) %

Income tax expense (89) (13) (76) 585 %

Net loss $ (13,566) $ (34,075) $ 20,509 (60) %

4 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 each of the three months ended March 31, 2026 and 2025 differed from the federal statutory tax rate of 21.0% primarily due to the valuation allowance established on federal and state attributes and the tax impact of stock award activities that was partially offset with the benefit related to research and development tax credits.

Our effective tax rate for each of the three and six months ended June 30, 2026 and 2025 differed from the federal statutory tax rate of 21.0% primarily due to the valuation allowance established on federal and state attributes, the tax impact of stock award activities, and the benefit related to research and development tax credits.

Liquidity and Capital Resources

As of March 31, 2026, our cash, cash equivalents and short-term investments were $49.1 million.

As of June 30, 2026, our cash, cash equivalents and short-term investments were $52.0 million.

We believe our existing cash, cash equivalents and short-term investments are sufficient to support operations through at least the next 12 months from the date of issuance of these financial statements.

17 unchanged sentences

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.

During the three months endedMarch 31, 2026, we sold no shares of our common stock under the Sales Agreement.

As of March 31, 2026, $88.3 million remains available under the Sales Agreement for future sales of our common stock.

During the six months ended June 30, 2026, we sold no shares of our common stock under the Sales Agreement.

As of June 30, 2026, $88.3 million remains available under the Sales Agreement for future sales of our common stock.

Additionally, we may receive up to $218.6 million from the exercise of our warrants, assuming the exercise in full of all the warrants for cash, but not from the sale of the shares of our common stock issuable upon such exercise.

4 unchanged sentences

Cash Flow Summary

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2026 2025 Change

4 unchanged sentences

Cash from Operating Activities:

During the three months ended March 31, 2026, cash used in operating activities of $4.9 million primarily reflected our net loss of $7.7 million and changes in our operating assets and liabilities in the amount of $7.7 million, partially offset by net non-cash charges of $10.5 million which primarily included $6.0 million in amortization of intangible assets, $3.3 million in share-based compensation, $0.6 million in depreciation of property and equipment, and $0.6 million in amortization of operating lease right-of-use assets, and a change in our deferred income taxes of $0.4 million.

During the three months ended March 31, 2025, cash used in operating activities of $15.9 million primarily reflected our net loss of $18.2 million, changes in our operating assets and liabilities in the amount of $5.4 million, partially offset by net non-cash charges of $7.7 million.

These non-cash charges primarily included $4.1 million in share-based compensation, $3.2 million in amortization of intangible assets, $1.0 million in depreciation of property and equipment, and $0.5 million in amortization of operating lease right-of-use assets, partially offset by $0.8 million of changes in estimated fair value of contingent liabilities.

During the six months ended June 30, 2026, cash used in operating activities of $2.2 million primarily reflected our net loss of $13.6 million and changes in our operating assets and liabilities in the amount of $6.1 million, partially offset by net non-cash charges of $17.5 million which primarily included $9.1 million in amortization of intangible assets, $6.5 million in share-based compensation, $1.2 million in depreciation of property and equipment, and $1.2 million in amortization of operating lease right-of-use assets.

During the six months ended June 30, 2025, cash used in operating activities of $21.0 million primarily reflected our net loss of $34.1 million, changes in our operating assets and liabilities in the amount of $1.5 million, partially offset by net non-cash charges of $14.6 million which primarily included $8.3 million in share-based compensation, $6.5 million in amortization of intangible assets, a gain on sale of an ion channel assets of $3.0 million, $1.8 million in depreciation of property and equipment, and $1.1 million in amortization of operating lease right-of-use assets.

Cash from Investing Activities:

During the three months ended March 31, 2026 , cash provided by investing activities of $8.4 million primarily consisted of $18.0 million of proceeds from the maturity of short-term investments, partially offset by $9.4 million of cash used to purchase short-term investments.

During the three months ended March 31, 2025 , cash used in investing activities of $0.9 million primarily consisted of $10.3 million of cash used to purchase short-term investments, partially offset by $9.5 million of proceeds from the maturity of short-term investments.

During the six months ended June 30, 2026 , cash provided by investing activities of $0.8 million primarily consisted of $34.1 million of proceeds from the maturity of short-term investments, partially offset by $33.0 million of cash used to purchase short-term investments.

During the six months ended June 30, 2025 , cash provided by investing activities of $11.4 million primarily consisted of $27.3 million of proceeds from the maturity of short-term investments and $3.0 million of proceeds from the sale of an ion channel asset , partially offset by $18.6 million of cash used to purchase short-term investments.

Cash from Financing Activities:

During the three months ended March 31, 2026 and 2025 , cash from financing activities was negligible.

During the six months ended June 30, 2026 and 2025 , cash provided by financing activities was $0.2 million and $0.3 million, which primarily consisted of proceeds from the issuance of common stock from stock plans.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates during the three months ended March 31, 2026, as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2025 Annual Report.

There have been no material changes to our critical accounting policies and estimates during the six months ended June 30, 2026, as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2025 Annual Report.

Recent Accounting Pronouncements

1 unchanged sentence

Quantitative and Qualitative Disclosures about Market Risk

As of March 31, 2026, there were no material changes to our market risks from the discussion provided in Item 7A of our 2025 Annual Report.

As of June 30, 2026, there were no material changes to our market risks from the discussion provided in Item 7A of our 2025 Annual Report.

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-Q

Item 2. Management’s Discussion and Analysis