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What changed in OmniAb, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of OmniAb, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+430 added−474 removedSource: 10-K (2024-03-25) vs 10-K (2023-03-30)

Top changes in OmniAb, Inc.'s 2023 10-K

430 paragraphs added · 474 removed · 347 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

151 edited+36 added−44 removed42 unchanged
Biggest changeThese patents include: • four U.S. patents directed to rodent germ cells, transgenic rodents, methods of generating transgenic rodents, and antibodies produced from transgenic rodents, and foreign counterparts including in Europe, Japan, China, and Canada, all having an expiration date in 2028 without accounting for potentially available patent term adjustments and extensions or disclaimers; • two U.S. patents directed to our GEM assay, including gel microdrops, their use, and their method of manufacture, and foreign counterparts including in Europe, Japan, and Canada, all having an expiration date in 2029 without accounting for potentially available patent term adjustments and extensions or disclaimers; • seven U.S. patents directed to transgenic animals including chickens, B cells isolated from transgenic chickens, and methods of producing antibodies, all having an expiration date in 2030 without accounting for potentially available patent term adjustments and extensions or disclaimers; • one U.S. patent directed to avian gonocytes and their method of manufacture, each having an expiration date in 2031 without accounting for potentially available patent term adjustments and extensions or disclaimers; • four U.S. patents directed to transgenic chickens and chicken germ cells, and foreign counterparts including in Europe and Canada, all having an expiration date in 2032 without accounting for potentially available patent term adjustments and extensions or disclaimers; • four U.S. patents directed to transgenic chickens, methods of producing antibodies, and isolated antibody-producing cells, all having an expiration date in 2032 without accounting for potentially available patent term adjustments and extensions or disclaimers; • two U.S. patents directed to transgenic rodents, methods of producing antibodies, and chimeric polynucleotides, and foreign counterparts including in Europe, China, and Japan, all having an expiration date in 2033 without accounting for potentially available patent term adjustments and extensions or disclaimers; and • one U.S. patent directed to transgenic chickens and methods of producing antibodies having an expiration date in 2036 without accounting for potentially available patent term adjustments and extensions or disclaimers.
Biggest changeThese patents include: • four U.S. patents directed to rodent germ cells, transgenic rodents, methods of generating transgenic rodents, and antibodies produced from transgenic rodents, and foreign counterparts including in Europe, Japan, China, and Canada, all having an expiration date in 2028 without accounting for potentially available patent term adjustments and extensions or disclaimers; • seven U.S. patents directed to transgenic animals including chickens, B cells isolated from transgenic chickens, and methods of producing antibodies, all having an expiration date in 2030 without accounting for potentially available patent term adjustments and extensions or disclaimers; • one U.S. patent directed to avian gonocytes and their method of manufacture, having an expiration date in 2031 without accounting for potentially available patent term adjustments and extensions or disclaimers; • four U.S. patents directed to transgenic chickens and chicken germ cells, and foreign counterparts including in Europe and Canada, all having an expiration date in 2032 without accounting for potentially available patent term adjustments and extensions or disclaimers; • four U.S. patents directed to transgenic chickens, methods of producing antibodies, including heavy chain antibodies, and isolated antibody-producing cells, all having an expiration date in 2032 without accounting for potentially available patent term adjustments and extensions or disclaimers; • two U.S. patents directed to transgenic rodents, methods of producing antibodies, and chimeric polynucleotides, and foreign counterparts including in Europe, China, and Japan, all having an expiration date in 2033 without accounting for potentially available patent term adjustments and extensions or disclaimers; • one U.S. patent directed to transgenic chickens and methods of producing antibodies having an expiration date in 2036 without accounting for potentially available patent term adjustments and extensions or disclaimers; and • one U.S. patent directed to transgenic chickens, and a counterpart in Japan, both having an expiration date in 2039 without accounting for potentially available patent term adjustment and extensions or disclaimers. 16 We also own 12 pending U.S. patent applications, eight pending European patent applications, seven pending Japanese patent applications, one pending Chinese patent applications, and counterpart patent applications pending in other countries, all relating to our transgenic animals.
Serving a broad partner base has provided us a unique insight into the needs and direction of the industry, and we continue to leverage this insight for our decision-making. In recent years, we have successfully integrated a number of technology acquisitions covering antigen generation, additional animal species, deep screening capabilities, and ion channel expertise.
Serving a broad partner base has provided us unique insight into the needs and direction of the industry, and we continue to leverage this insight for our decision-making. In recent years, we have successfully integrated a number of technology acquisitions covering antigen generation, additional animal species, deep screening capabilities, and ion channel expertise.
For a discussion of the risks we face relating to competition, see “Risk Factors—Risks Related to Our Business—The life sciences and biotech platform technology market is highly competitive, and if we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue, or sustain profitability.” 15 Intellectual Property We believe that patents and other proprietary rights are important to our business.
For a discussion of the risks we face relating to competition, see “Risk Factors—Risks Related to Our Business—The life sciences and biotech platform technology market is highly competitive, and if we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue, or sustain profitability.” Intellectual Property We believe that patents and other proprietary rights are important to our business.
OmniChicken and OmniClic, our bispecific transgenic chicken platform, offer affinity matured antibodies in an evolutionarily distant chicken host environment. As depicted in the figure below, more than 300 million years of evolutionary distance drives divergence between mammalian and avian orthologs, which are genes in different species that evolved from a common ancestral gene by speciation.
OmniChicken and OmniClic, our bispecific transgenic chicken platform, offer naturally affinity-matured antibodies in an evolutionarily distant chicken host environment. As depicted in the figure below, more than 300 million years of evolutionary distance drives divergence between mammalian and avian orthologs, which are genes in different species that evolved from a common ancestral gene by speciation.
Our license agreements are typically terminable by our partners without penalty with specified notice. However, all milestone payments and royalties survive termination and continue with respect to any OmniAb-derived antibodies. The royalty term is typically the longer of 10 years from the first commercial sale or through the last expiration in any jurisdiction of the patents covering such OmniAb-derived antibody.
Our license agreements are typically terminable by our partners without penalty with specified notice. However, all milestone payments and royalties survive termination and continue with respect to any OmniAb-derived antibodies. The royalty term is generally the longer of 10 years from the first commercial sale or through the last expiration in any jurisdiction of the patents covering such OmniAb-derived antibody.
This method has been utilized for over 45 years and results in a loss of over 99% of antibody diversity, drastically reducing the pool of potential therapeutic candidates to choose from. There is a significant and growing disparity between today’s widely used legacy antibody discovery tools and the latest advances in antibody discovery technologies.
This method has been utilized for the last 45 years and results in a loss of over 99% of antibody diversity, drastically reducing the pool of potential therapeutic candidates to choose from. There is a significant and growing disparity between today’s widely used legacy antibody discovery tools and the latest advances in antibody discovery technologies.
In addition, we track our active partnered programs by reviewing our partners’ public announcements and maintaining close communications with our partners to the extent possible. In some instances, a partner may not publicly announce milestones in which case we are generally dependent on our partners to track and disclose milestones at the time of achievement.
In addition, we track our active partnered programs by reviewing our partners’ public announcements and maintaining close communications with our partners to the extent possible. In some instances, a partner may not publicly announce milestones in which case we are generally dependent on our partners to track, report and disclose milestones at the time of achievement.
If we or our partners fail to comply with applicable laws or regulations at any time, we or our partners may become subject to sanctions or other legal consequences, including among other things, delays in 18 developing therapeutics, restrictions on marketing or manufacturing, withdrawal of products, product recalls, or the imposition of civil or criminal penalties.
If we or our partners fail to comply with applicable laws or regulations at any time, we or our partners may become subject to sanctions or other legal consequences, including among other things, delays in developing therapeutics, restrictions on marketing or manufacturing, withdrawal of products, product recalls, or the imposition of civil or criminal penalties.
This evolutionary distance enables generation of a diverse repertoire of antibody panels to highly conserved therapeutic target antigens that are not immunogenic in mammals. OmniChicken features a high level of functional diversity, with sequence diversity focused on the CDR regions, while maintaining conserved, well-validated human framework regions.
This evolutionary distance enables generation of a diverse repertoire of antibody panels to highly conserved therapeutic target antigens that are not immunogenic in mammals. 10 OmniChicken features a high level of functional diversity, with sequence diversity focused on the CDR regions, while maintaining conserved, well-validated human framework regions.
We believe that pairing the power of Biological Intelligence built into our proprietary transgenic animals with our high-throughput screening technologies will continue to enable the discovery of high-quality, fully-human antibody therapeutic candidates for a wide range of indications. 4 • Expand upon our existing partnerships.
We believe that pairing the power of Biological Intelligence built into our proprietary transgenic animals with our high-throughput screening technologies will continue to enable the discovery of high-quality, fully-human antibody therapeutic candidates for a wide range of indications. • Expand upon our existing partnerships.
EvaluatePharma data indicates that monoclonal antibodies have represented the majority of the top 10 bestselling drugs over the last five years. In 2022, approved antibody-based therapeutics accounted for approximately $240.0 billion in sales, according to data published by Clarivate Analytics Cortellis.
EvaluatePharma data indicates that monoclonal antibodies have represented the majority of the top 10 bestselling drugs over the last five years. In 2022, approved antibody-based therapeutics accounted for approximately $240 billion in sales, according to data published by Clarivate Analytics Cortellis.
Ion Channel Differentiated Capabilities Ion channels and transporters are key components in a wide variety of biological processes that involve rapid changes in cells and have broad therapeutic applicability across multiple therapeutic areas including oncology, metabolic disease, pain, neurological diseases, infectious diseases and others.
Ion Channel Capabilities Ion channels and transporters are key components in a wide variety of biological processes that involve rapid changes in cells and have broad therapeutic applicability across multiple therapeutic areas including oncology, metabolic disease, pain, neurological diseases, infectious diseases and others.
FDA approval of a New Drug Application (“NDA”) or Biologics License Application (“BLA”) or supplement, or European Commission or national competent authority of an EU member state granting of a marketing authorization (“MA”) in the EU, is required before any new drug or biologic can be marketed.
FDA approval of a New Drug Application (“NDA”) or Biologics License Application (“BLA”) or supplement, or European Commission or national 18 competent authority of an EU member state granting of a marketing authorization (“MA”) in the EU, is required before any new drug or biologic can be marketed.
Through continual investment and expansion of our capabilities, we believe we have the opportunity to further enable our partners to capture additional value from our technologies. • Further our technological differentiation through intelligent expansion. We employ a methodical and deliberate approach to expanding our technology platform.
Through continual investment and expansion of our capabilities, we believe we have the opportunity to further enable our partners to capture additional value from our technologies. • Further our technological differentiation through intelligent expansion and innovation. We employ a methodical and deliberate approach to expanding our technology platform.
OmniAb’s proprietary Icagen ion channel platform leverages proprietary expertise in the combination of biological assays, medicinal chemistry, and in silico and computational chemistry applications to enable the discovery of ion channel targeting therapeutics.
OmniAb’s proprietary ion channel platform leverages proprietary expertise in the combination of biological assays, medicinal chemistry, and in silico and computational chemistry applications to enable the discovery of ion channel targeting therapeutics.
Secreted antibodies from the B cell diffuse locally in the microenvironment where they can bind to Reporters, which in turn can be detected with a fluorescent probe. Using different types of Reporters in the microenvironment can generate a multi-parameter binding profile of each antibody. Antigen specificity is determined by colocalization of signal with alternative bead and/or cell types.
Secreted antibodies from the B cell diffuse locally in the microenvironment where they can bind to reporters, which in turn can be detected with a fluorescent probe. Using different types of reporters in the microenvironment generates a multi-parameter binding profile of each antibody. Antigen specificity is determined by colocalization of signal with alternative bead and/or cell types.
As of December 31, 2022, there are three OmniFlic-derived antibodies in clinical development by our partners. OmniClic (Bispecific chicken platform) OmniClic was launched in 2019 and is a common light-chain transgenic chicken developed to facilitate the generation of bispecific antibodies. OmniClic was engineered to focus sequence diversity on the CDRs of the VH domain.
As of December 31, 2023, there are three OmniFlic-derived antibodies in clinical development by our partners. OmniClic (Bispecific chicken platform) OmniClic was launched in 2019 and is a common light-chain transgenic chicken developed to facilitate the generation of bispecific antibodies. OmniClic was engineered to focus sequence diversity on the CDRs of the VH domain.
The xPloration screening throughput is designed to enable the discovery of rare cells that would likely be missed with other systems that are only able to evaluate a small sliver of the repertoire. We pair this with next-generation sequencing to further expand the repertoire for potential hit expansion downstream if necessary.
The xPloration screening throughput is designed to enable the discovery of rare cells that would likely be missed with other systems that are only able to evaluate a small portion of a repertoire. We pair this with next-generation sequencing to further expand the repertoire for potential hit expansion downstream if necessary.
Our technology investments are methodical and deliberate, designed to enable our partner-centric business model to leverage the most cutting-edge solutions to solve the biggest challenges in antibody drug discovery. Some partners prefer integrated end-to-end discovery capabilities, while others prefer to use certain of our technologies within their own labs.
Our technology investments are deliberate and designed to enable our partner-centric business model to leverage the most cutting-edge solutions and solve the biggest challenges in antibody drug discovery. Some partners prefer integrated end-to-end discovery capabilities, while others prefer to use some of our technologies within their own labs.
As of December 31, 2022, there is one OmniMouse-derived antibody in clinical development by our partners. OmniChicken OmniChicken was launched in 2016 and is the first successfully engineered bird with an immune system that can efficiently generate human sequence antibody repertoires for the discovery of therapeutic antibodies.
As of December 31, 2023, there is one OmniMouse-derived antibody in clinical development by our partners. OmniChicken OmniChicken was launched in 2016 and is the first successfully engineered bird with an immune system that can efficiently generate human sequence antibody repertoires for the discovery of therapeutic antibodies.
Investors should monitor our Twitter account and our website, in addition to following our press releases, SEC filings, public conference calls and webcasts.
Investors should monitor our X (Twitter) account and our website, in addition to following our press releases, SEC filings, public conference calls and webcasts.
License agreements with academic institutions are typically structured as revenue sharing. We succeed when our partners are successful and our agreements are structured to align economic and scientific interests. Our license agreements typically include annual reporting requirements which provide us updates from our partners on the status of their programs.
License agreements with academic institutions are typically structured with revenue sharing. We succeed when our partners are successful and our agreements are structured to align economic and scientific interests. Our license agreements typically include reporting requirements, which provide us updates from our partners on the status of their programs.
Using technology we own or license from Stanford University, thousands of AI-selected B cells are recovered within minutes using lasers that break the capillary forces and drop the B cell into wells for sequencing. The whole process can screen up to 40 million cells and recover thousands of paired sequences all within a few hours.
Using technology we own or license from Stanford University, thousands of AI-selected B cells are recovered within minutes using lasers that break the capillary forces and drop the B cell into wells for sequencing. The process can screen up to 40 million cells and recover thousands of paired sequences within only a few hours.
OmniChicken antibodies bind to diverse epitopes on human targets with high affinity, and additionally offer excellent developability profiles. As of December 31, 2022, there is one OmniChicken-derived antibody in clinical development by our partners. 11 OmniTaur OmniTaur was launched in 2020 and provides cow-derived ultralong CDR-H3 antibodies with a human framework.
OmniChicken antibodies bind to diverse epitopes on human targets with high affinity, and additionally offer excellent developability profiles. As of December 31, 2023, there is one OmniChicken-derived antibody in clinical development by our partners. OmniTaur OmniTaur was launched in 2020 and provides cow-derived ultralong CDR-H3 antibodies with a human framework.
The quality and breadth of our platform enables our partners to succeed in new campaigns and has also enabled them to pursue programs that would otherwise not be pursued due to technical challenges.
The quality and breadth of our platform enables our partners to succeed in new antibody discovery campaigns and has also enabled them to pursue programs that would otherwise not be pursued due to technical challenges.
These patents and applications are directed to methods of generating combinatorial human antibody libraries, methods of affinity maturation of antibodies, humanized antibodies with ultralong CDRs, and bovinized human antibodies comprising ultralong CDRs. The patents and applications in Taurus’ owned portfolio are expected to expire between 2029 and 2034, without accounting for potentially available patent term adjustments and extensions or disclaimers.
These patents and applications are directed to methods of generating combinatorial human antibody libraries, methods of affinity maturation of antibodies, humanized antibodies with ultralong CDRs, and bovinized human antibodies comprising ultralong CDRs. The patents and applications in our portfolio are expected to expire between 2029 and 2034, without accounting for potentially available patent term adjustments and extensions or disclaimers.
You may obtain copies of these documents by visiting the SEC’s website at www.sec.gov. In addition, we may use Twitter (@OmniAbTech) and our investor relations website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.
You may obtain copies of these documents by visiting the SEC’s website at www.sec.gov. In addition, we may use X, formerly known as Twitter (@OmniAbTech), and our investor relations website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.
These website addresses and the information accessible through our Twitter 20 account are not intended to function as hyperlinks, and the information contained in our website and in the SEC’s website is not intended to be a part of this filing.
These website addresses and the information accessible through our X (Twitter) account are not intended to function as hyperlinks, and the information contained in our website and in the SEC’s website is not intended to be a part of this filing.
OmniRat produces a diverse repertoire of antibodies with human idiotypes and immunological characteristics that are comparable to antibodies from wildtype animals. OmniRat provides cross-reactivity against a mouse, which may streamline preclinical development by obviating the need for surrogate antibodies, and thereby may decrease clinical risks.
OmniRat produces a diverse repertoire of antibodies with human idiotypes and immunological characteristics that are comparable to antibodies from wildtype animals. OmniRat provides cross-reactivity against mouse orthologs of human therapeutic targets, which may streamline preclinical development by obviating the need for surrogate antibodies, and thereby may decrease clinical risks.
Our Strategy Our mission is to enable the rapid development of innovative therapeutics by pushing the frontiers of drug discovery technologies. We intend to achieve this mission by enabling the discovery of high-quality therapeutic candidates and by being the partner of choice for pharmaceutical and biotechnology companies.
Our Strategy Our mission is to enable the rapid development of innovative therapeutics by pushing the frontiers of drug discovery technologies. We pursue this mission by enabling the discovery of high-quality therapeutic candidates and by being the partner of choice for pharmaceutical and biotechnology companies.
Our computational antigen generation technology has been validated in successfully generating, stabilizing, and purifying antigen for these targets and our four-species transgenic animal platform is validated in successfully generating antibodies for poorly immunogenic, high homology, and cryptic targets. In addition to the drug design challenges, it is difficult to develop effective functional assays to test potential therapeutics.
Our computational antigen design technology has been validated in successfully generating, stabilizing, and purifying natively-folded antigen for these targets and our four-species transgenic animal platform is validated in successfully generating antibodies for poorly immunogenic, high homology, and cryptic targets. 14 In addition to the drug design challenges, it is difficult to develop effective functional assays to test potential therapeutics.
According to PharmaIntelligence’s Clinical Development Success Rates and Contributing Factors 2011-2020, which summarizes a study of over 9,000 drugs being developed for the U.S. market, monoclonal antibodies and monoclonal antibody conjugate drugs have had an approximately 12% likelihood of receiving market authorization from the start of Phase 1 clinical trials.
According to BIO’s Clinical Development Success Rates and Contributing Factors 2011-2020, which summarizes a study of over 9,000 drugs being developed for the U.S. market, monoclonal antibodies and monoclonal antibody conjugate drugs have had a 12.1% likelihood of receiving market authorization from the start of Phase 1 clinical trials.
The various OmniAb animal technologies are depicted in the figure below. 7 We believe that natural antibodies are superior to other antibody generation methods due to the immune system’s ability to naturally select quality, and already optimized antibodies through a process that has evolved over 500 million years.
The various OmniAb novel animal-based technologies are depicted in the figure below. 3 We believe that natural antibodies are superior to other antibody generation methods due to the immune system’s ability to naturally select quality, and already-optimized antibodies through a process that has evolved over 500 million years.
Earlier transgenic systems demonstrated proof-of-concept and did deliver therapeutic antibodies, however it became apparent that flaws in transgene design limited the robustness of immune responses from these animals. In addition, other technical issues, legacy agreement structures and industry consolidation presented further obstacles for the access to and use of the early platforms. • Display technology.
Earlier transgenic systems demonstrated proof-of-concept and delivered a few therapeutic antibodies, however it became apparent that flaws in transgene design limited the robustness of immune responses from these animals. In addition, other technical issues, legacy agreement structures and industry consolidation presented further obstacles for the access to and use of the early platforms. • Display technology.
These patents and applications are directed to methods and apparatus. The patents and applications in xCella’s owned portfolio are expected to expire between 2036 and 2040, without accounting for potentially available patent term adjustments and extensions or disclaimers.
These patents and applications are directed to methods and apparatus. The patents and applications in our portfolio are expected to expire between 2036 and 2040, without accounting for potentially available patent term adjustments and extensions or disclaimers.
We have 69 active partners as of December 31, 2022, consisting of pharmaceutical, biotechnology and academic organizations, varying in size, clinical stage, geography and therapeutic focus. We intend to continue to identify and capture new opportunities with existing partners by building upon our trusted relationships.
We have 77 active partners as of December 31, 2023, consisting of pharmaceutical, biotechnology and academic organizations, varying in size, clinical stage, geography and therapeutic focus. We intend to continue to identify and capture new opportunities with existing partners by building upon our trusted relationships.
The OmniRat has been engineered to contain functional recombinant immunoglobulin loci, use genes with similar frequency as humans, and rearrange functional human immunoglobulin genes. The animals are bred on a mixed genetic background to further diversify the antibody repertoire and feature different light chain isotypes which is designed to provide flexibility around partners’ needs and technology.
The OmniRat has been engineered to contain functional recombinant immunoglobulin loci, use the full repertoire of human germline genes with similar frequency as humans, and rearrange functional human immunoglobulin genes. The animals are bred on a mixed genetic background to further diversify the antibody repertoire and feature different light chain isotypes designed to provide flexibility around partners’ needs and technology.
According to the Antibody Society Database of Antibody Regulatory Approvals, as of December 30, 2022, over 90% of all approved antibody drugs had been derived from natural immune systems, which we believe is due to their superior drug-like properties.
According to the Antibody Society Database of Antibody Regulatory Approvals, as of December 30, 2022, over 90% of all approved antibody drugs had been derived from natural immune systems, which we believe is due to their ability to make antibodies with superior drug-like properties.
Our team of world-renowned scientists use a variety of gene editing techniques to alter the genomes of animals to produce antibodies that use human sequences, while retaining the animal’s ability to illicit a strong immune response to antigen. We then set up breeding colonies of our genetically modified animals for use in partners’ discovery efforts.
Our team of world-renowned scientists uses a variety of gene editing techniques to alter the genomes of animals to produce antibodies that use human sequences, while retaining the animal’s ability to produce a strong immune response to a specific target antigen. We then set up multiple breeding colonies of our genetically modified animals for use in partners’ discovery efforts.
Chips are processed through automated imaging, then AI-powered algorithms analyze and identify thousands of B cells that express antibodies with the desired characteristics. Our AI algorithms are empowered by the industry leading LandingLens TM platform developed by Landing AI.
Chips are processed through automated imaging, then AI-powered machine vision algorithms analyze and identify thousands of B cells that express antibodies with the desired characteristics. Our AI algorithms are internally-developed or empowered by the industry leading LandingLens TM platform developed by Landing AI.
In situations where characteristics need to be improved beyond what is available in the repertoire, we can filter sequence variants through a battery of in silico evaluations to remove sequences with liabilities or potential developability problems, and potentially improve potency.
In situations where characteristics need to be improved beyond what is available in the repertoire, we can filter sequence variants through a battery of OmniDeep in silico evaluations to remove sequences with potential liabilities, and potentially improve potency.
We own patents directed to OmniAb animals and related inventions, including 25 issued patents in the United States, six issued patents in Europe, five issued patents in Japan, three issued patents in China, and counterpart patents granted in other countries.
We own patents directed to OmniAb animals and related inventions, including 24 issued patents in the United States, six issued patents in Europe, five issued patents in Japan, five issued patents in China, and counterpart patents granted in other countries.
We believe this suite of technologies provides a differentiated capability for advancing high value ion channel and transporter drug discovery programs regardless of modality including small molecules, mono-, bi-and multi-specific antibodies, and antibody-drug conjugates (ADCs). 14 Investing in Differentiated Technology We built the OmniAb technology platform through acquisition, investment, and innovation. We acquired Open Monoclonal Technology, Inc.
We believe this suite of technologies provides a differentiated capability for advancing high value ion channel and transporter drug discovery programs regardless of modality including small molecules, scaffolded peptides or mini-proteins, mono-, bi-and multi-specific antibodies, and antibody-drug conjugates (ADCs). Investing in Differentiated Technology We built the OmniAb technology platform through acquisition, investment, and innovation. We acquired Open Monoclonal Technology, Inc.
The OmniRat shows high expression, normal human CDR-H3 length distribution, and normal hypermutation and affinity maturation. As of December 31, 2022, there are three approved OmniRat-derived antibodies and 18 additional antibodies in clinical development by our partners.
The OmniRat shows high expression, normal human CDR-H3 length distribution, and normal hypermutation and affinity maturation. As of December 31, 2023, there are three approved OmniRat-derived antibodies and 24 additional antibodies in clinical development by our partners.
Common light chain antibodies allow for combining targeting arms for bispecific and multi-specific antibodies without the complexity of correct heavy and light chain pairing. Using this IgG format, the bispecific function can be introduced while maintaining the natural shape of the antibody.
Common light chain antibodies allow the pairing of targeting arms for bispecific and multi-specific antibodies without the complexity of ensuring correct heavy and light chain pairing. Using this IgG format, the bispecific function can be introduced while maintaining the natural IgG-like format of the antibody.
Our Icagen ion channel platform has issued patents and pending patent applications directed to X-ray fluorescence-based detection of binding events and transport across barriers and related inventions, including 22 issued patents in the United States, four issued patents in Europe, eight issued patents in Japan, and three issued patents in China.
Our ion channel platform has issued patents and pending patent applications directed to X-ray fluorescence-based detection of binding events and transport across barriers and related inventions, including 25 issued patents in the United States, seven issued patents in Europe, eight issued patents in Japan, and three issued patents in China.
Both OmniFlic, our bispecific rat, and OmniClic, our bispecific chicken, express the same light chain which enables the formation of bispecific therapeutics through the combination of antibodies generated from either platform. We believe that the characteristics of our common light chain platforms offer several advantages over current generation bispecific antibody technologies.
Both OmniFlic, our bispecific rat, and OmniClic, our bispecific chicken, express a fixed VK3-15 light chain which enables the formation of bispecific therapeutics through the combination of antibodies generated from either platform. 11 We believe that the characteristics of our common light chain platforms offer several advantages over current generation bispecific antibody technologies.
The xPloration platform is an AI-powered single-cell microcapillary platform that provides multi-dimensional profiling data on tens of millions of cells. Our proprietary technology uses a chip with 1.5 million microscopic capillaries that are loaded with individual secreting B cells.
The xPloration platform is an AI-powered single-cell microcapillary platform that quickly provides multi-dimensional profiling data on tens of millions of cells. This proprietary technology uses a chip with 1.5 million microcapillaries that are loaded with individual secreting B cells.
Our strategy to accomplish this is as follows: • Enable discovery of high-quality antibody candidates through our platform. We have a technologically differentiated platform that provides our partners with end-to-end antibody discovery capabilities, as well as customized solutions for individual steps of the antibody discovery process.
Our strategy to accomplish this includes the following: • Enable discovery of high-quality antibody candidates through our platform. We have a technologically differentiated platform that provides our partners with end-to-end antibody discovery technology or capabilities, as well as customized solutions for individual steps of the antibody discovery process.
An active program is counted once research work has commenced or an antigen is introduced into our animals and includes active clinical programs and approved products. An active partner is one that has an active program or has executed a license agreement in advance of initiating an active program.
An active partner is one that has rights to an active program or has executed a license agreement in advance of initiating an active program. An active program is one in which research work has commenced or an antigen is introduced into our animals and also includes active clinical programs and approved products.
Importantly, our royalty term is linked to the patents that our partners file, which both lengthens and diversifies the royalty streams we receive. Our typical royalty rates for antibody discovery contracts are currently in the low- to mid-single digits, and can vary depending on other economic terms in the agreement.
Importantly, our royalty term is typically linked to the composition-of-matter patents that our partners file related to the antibody discovered using our technology, which both lengthens and diversifies the royalty streams we receive. Our typical royalty rates for antibody discovery contracts are currently in the low- to mid-single digits, and can vary depending on other economic terms in the agreement.
Active clinical programs represents the number of unique programs for which an IND or equivalent under other regulatory regimes has been filed based on an OmniAb-derived antibody and which are in clinical development. Approved products represents an OmniAb-derived antibody for which our partner has received marketing approval.
Active clinical programs represents the number of unique programs for which an Investigational New Drug Application or equivalent under other regulatory bodies has been filed based on an OmniAb-derived antibody and which are in clinical development. Approved products represents an OmniAb-derived antibody for which our partner has received marketing approval.
These large antibody repertoires can present a challenge in identifying the antibodies with the most optimal candidate drug profiles from millions of possibilities. 8 In addition to the enormous number of different antibodies generated, individual B cells are microscopic, generate only a miniscule amount of antibody protein, and are difficult to grow in culture conditions.
Large antibody repertoires can present a screening challenge in identifying antibodies with the most optimal candidate drug profiles. In addition to the enormous number of different antibodies generated, individual B cells are microscopic, generate only a miniscule amount of antibody protein, and are difficult to grow in laboratory conditions.
The GEM technology incorporates many of the same principles of the xPloration platform by isolating and performing multi-dimensional profiling of single B cells from an immunized animal. Small droplets encapsulate single B cells and reporters that present the target antigen on the surface of a bead or cell.
For certain development programs, we leverage our proprietary GEM technology. The GEM technology incorporates many of the same principles of the xPloration platform by isolating and performing multi-dimensional profiling of single B cells from an immunized animal. Small droplets encapsulate single B cells and reporters that present the target antigen on the surface of a bead or cell.
During this process, B cells are fused with a certain type of cancer cell, which immortalizes the B cells allowing them to be grown into sufficient quantities for the antibodies to be tested in conventional 96-well plates.
During this process, B cells are fused with a certain type of cancer cell, which immortalizes the B cells allowing them to be grown into sufficient quantities for the antibodies to be tested with conventional laboratory equipment (e.g. 96-well plates) or methods.
The patents and patent applications referenced below are in each case, as of March 15, 2023. OmniAb Technology Platform Our OmniAb therapeutic antibody platforms, including OmniRat, OmniMouse and OmniChicken, produce naturally optimized antibodies with human sequences in animals.
The patents and patent applications referenced below are in each case, as of March 1, 2024. Technology Platform Transgenic Animals Our transgenic animal therapeutic antibody platforms, including OmniRat, OmniMouse and OmniChicken, produce naturally optimized antibodies with human sequences in animals.
We structure our license agreements with partners to typically include: (i) upfront or annual payments for technology access and payments for performance of research services; (ii) downstream payments in the form of preclinical, intellectual property, clinical, regulatory, and commercial milestones; and (iii) royalties on net sales of our partners’ products, if any.
Our license agreements with pharmaceutical and biotechnology partners generally include: (i) upfront or, in some instances, annual payments for technology access and payments for performance of research services; (ii) downstream payments in the form of preclinical, intellectual property, clinical, regulatory, and commercial milestones; and (iii) royalties on net sales of our partners’ products, if any.
In the most challenging discovery programs, our team can provide hit expansion through xPloration deep dives and/or NGS data mining to identify variants of confirmed clones with improved affinity, improved manufacturability, or other favorable characteristics, while avoiding the time and technical risk associated with traditional optimization methods.
In the most challenging discovery programs, our team can provide hit expansion using xPloration and/or NGS data mining to empower OmniDeep to identify variants with improved affinity, improved manufacturability, or other favorable characteristics, while avoiding the time and technical risk associated with traditional optimization methods.
This process takes approximately 8 to 12 weeks, and is extremely inefficient, leading to losses of 99.9% of the relevant immune diversity from the beginning of the process. Despite these significant limitations, hybridoma remains a commonly used technology in the industry. We analyze B cells individually using microcapillaries and industry leading throughput with our proprietary xPloration and GEM platforms.
This process takes approximately 8 to 12 weeks, and is extremely inefficient, leading to losses of 99.9% of the relevant immune repertoire diversity from the beginning of the process. Despite these significant limitations, hybridoma remains a commonly used technology in the pharmaceutical industry. In contrast, we analyze B cells individually using our proprietary xPloration® and Gel Encapsulated Microenvironment (“GEM”) platforms.
To generate these antibodies, we conduct parallel immunizations with two antigens and then engineer a bespoke version of the transgenic platform to generate a diverse set of heavy chains and ultimately bispecific therapeutic antibodies.
To generate these antibodies, we conduct parallel immunizations with two antigens and then engineer a bespoke version of the transgenic platform to generate a diverse set of heavy chains and ultimately bispecific therapeutic antibodies. Our bispecific antibodies are IgG antibodies, with a common light chain and different heavy chains.
Our laser-based recovery process retains heavy/light chain pairing of the antibodies, which directly provides potential lead antibody sequences bypassing the need for pairing algorithms that attempt to reconstruct the repertoire. The considerable throughput combined with retaining heavy/light chain antibody pairing can cut weeks or months off traditional discovery workflows. For certain development programs, we leverage our proprietary GEM technology.
Our laser-based recovery process in xPloration retains heavy/light chain pairing of the antibodies, which directly provides potential lead antibody sequences bypassing the need for pairing algorithms that attempt to reconstruct the repertoire. The considerable throughput combined with retaining heavy/light chain antibody pairing can cut weeks or months off traditional discovery workflows for our partners.
This flexibility not only provides value to our partners, but also allows for greater scalability of our business since we do not have to build out capacity for partners that prefer to use some of their own technologies in the process.
This flexibility not only provides value to our partners, but also allows for scalability of our business since we do not have to build out capacity for partners that prefer to incorporate our technologies in their processes.
The breadth and depth of our partner-centric model benefits our investment decision making by providing critical insights into the needs and direction of the industry. According to Vaccines journal, antibodies are among the fastest growing class of drugs and are used across multiple therapeutic areas including oncology, inflammation, and neurodegeneration.
The breadth and depth of our partner-centric model benefits our investment decision-making by providing critical insights into the current and future needs of the pharmaceutical industry. Antibodies are among the fastest growing class of drugs and are used across multiple therapeutic areas including oncology, immunology, and neurodegeneration.
The below graph shows the growth in active partners, active programs and clinical programs and the number of programs that have entered clinical trials. As of December 31, 2022, there were 291 active antibody programs.
Key Business Metrics The below graph shows the growth in active partners, active programs and clinical programs and the number of programs that have entered clinical trials. As of December 31, 2023, there were 325 active antibody programs.
Through Taurus, we also have an exclusive license from The Scripps Research Institute to technology related to ultralong CDR-H3s. This licensed portfolio includes three issued patents in the U.S., one issued patent in Japan, and two issued patents in Australia.
We also have an exclusive license from The Scripps Research Institute to technology related to ultralong CDR-H3s. This licensed portfolio includes three issued patents in the U.S., one issued patent in Europe, and one issued patent in Japan, as well as three pending applications in Japan and one in China.
These factors have led to substantial investment in antibody discovery, which we believe will continue to expand the total addressable market for antibody discovery technologies. 2 Despite industry momentum that has resulted in an overall increase in the number of antibody therapeutic approvals per year, drug discovery and development have become increasingly fragmented, outdated and non-robust.
These factors have led to substantial investment in antibody development, which we believe will continue to expand the total addressable market for leading antibody discovery technologies. While industry momentum has resulted in an overall increase in the number of antibody therapeutic approvals per year, discovery approaches and technology access have become increasingly fragmented and inefficient.
In 2022, 54 antibody therapeutics reached blockbuster status with sales higher than $1.0 billion, up from 49 antibodies in 2021. Furthermore, antibody-based therapeutic sales are expected to grow to approximately $279.0 billion by 2025. Despite advances in other therapeutic modalities, investment in antibodies has accelerated over the past decade, which has translated into clinical productivity and ultimately new drug approvals.
In 2022, 54 antibody therapeutics reached blockbuster status with sales higher than $1 billion, up from 49 antibodies in 2021. Furthermore, according to Clarivate, antibody-based therapeutic sales are expected to surpass $300 billion by 2027. Investment in antibodies has accelerated over the past decade, which has translated into clinical productivity and ultimately new drug approvals.
As such, B cell screening with OmniAb’s platforms enables the discovery of unique antibodies from any host systems. 13 Next generation xPloration (in development) OmniAb scientists and engineers are currently developing a next generation xPloration platform as depicted in the figure below.
As such, B cell screening with OmniAb’s platforms enables the discovery of unique antibodies from any host system. 13 Next generation xPloration OmniAb scientists and engineers recently developed a next generation xPloration instrument as depicted in the figure below.
Functional data combined with the large amounts of data generated from xPloration provide a comprehensive view of the immune response and allow our partners to select antibodies with even the most stringent design criteria. Often the right antibody must be further modified to enhance certain desired characteristics in a process known as antibody optimization.
Functional data combined with the large amounts of data generated from xPloration provide a comprehensive view of the immune response and allow our partners to select antibodies for even the most stringent design criteria. 4 When using other antibody sources, selecting the right antibody often requires significant modification to enhance certain desired characteristics in a process known as antibody optimization.
These licensed patents have an expected expiry date in 2033, without accounting for potentially available patent term adjustments and extensions or disclaimers. Ab Initio In July 2019, we acquired Ab Initio.
These licensed patents and applications have an expected expiry date in 2033 and 2036, without accounting for potentially available patent term adjustments and extensions or disclaimers.
The amount of antibody produced by an individual B cell is too small to be tested directly in conventional 96-well plates. Because of this, scientists have relied on the hybridoma method for antibody discovery for the past 45 years.
The amount of antibody produced by an individual B cell is too small to be tested directly using conventional methods. As a result, scientists have relied on the hybridoma method for antibody discovery for the past 45 years.
The patents and application in the licensed portfolio are expected to expire between 2034 and 2035, without accounting for potentially available patent term adjustments and extensions or disclaimers. 17 We also use trademark rights to protect our brand.
The patents and applications in our ion channel portfolio are expected to expire between 2024 and 2044, without accounting for potentially available patent term adjustments and extensions or disclaimers. Trademarks We also use trademark rights to protect our brand.
According to data from the Antibody Society, the number of antibodies in the clinic has increased at an estimated 11% CAGR from approximately 500 in 2015 to approximately 950 in 2021. The expansion of clinical development has led to an accelerating pace of regulatory approvals as depicted in the figure below. The FDA approved the first therapeutic antibody in 1986.
According to data from the Antibody Society, the number of antibodies in the clinic has increased from 572 in 2018 to 1,212 in 2023, an estimated 20% CAGR. The expansion of clinical development has led to an accelerating pace of regulatory approvals as depicted in the figure below. The FDA approved the first therapeutic antibody in 1986.
There are very few successful examples of large-scale manufacturing for a bispecific antibody, and the “common light chain format” is a technology designed to simplify and improve the efficiency of the production and purification of a whole IgG—type bispecific antibody. Our bispecific antibodies are IgG antibodies, with a common light chain and different heavy chains.
There are very few successful examples of large-scale manufacturing for a bispecific antibody, and the “common light chain format” is a technology designed to simplify and improve the efficiency of the production and purification of a classical asymmetric IgG like bispecific antibody.
We believe this platform has the potential to further expand our position as the industry leader in speed, throughput, reliability, and ease of use.
We believe the xPloration platform has the potential to drive additional efficiencies in our business and further expand our position as the industry leader in speed, throughput, reliability, and ease-of-use for screening activities.
Bispecific antibody platforms We offer the only rat and chicken platform for generation of bispecific antibodies. Although bispecific antibody drugs have been researched for more than 30 years, only a limited number of bispecific antibodies have achieved regulatory approval.
Although bispecific antibody drugs have been researched for more than 30 years, only a limited number of bispecific antibodies have achieved regulatory approval.
Ion channels make particularly challenging drug targets due to (i) difficulty with antigen purification (ii) poor immunogenicity (iii) high homology with rodents used in immunization campaigns and (iv) small binding regions with the majority of protein embedded in cell membranes. Due to these challenges in developing effective therapeutics, patients suffering from ion channel and transporter related diseases are severely underserved.
Ion channels make particularly challenging drug targets due to (i) difficulty with antigen purification (ii) poor immunogenicity (iii) high homology with rodents used in immunization campaigns and (iv) small accessible binding regions with the majority of protein embedded in cell membranes.
As of March 15, 2023, we own a total of 22 registered United States trademarks, eight pending United States trademarks, 131 registered foreign trademarks in various countries including China, the European Union, and Japan, and eight pending foreign trademarks in various countries around the world.
As of March 1, 2024, we own a total of 20 registered United States trademarks, seven pending United States trademarks, 129 registered foreign trademarks in various countries including China, the European Union, and Japan, and six pending foreign trademarks in various countries around the world.
Through xCella, we also have a non-exclusive license from Stanford University to a patent family directed to methods for extracting samples from microcapillary arrays, which includes two issued patents in the U.S., two issued patents in Europe, three issued patents in Japan, two issued patents in China, one pending application the U.S. and one pending application in Europe.
We also have a non-exclusive license from Stanford University to two patent families relating to methods for extracting samples from microcapillary arrays, which together include four issued patents in the U.S., two issued patents in Europe, four issued patents in Japan, two issued patents in China, and pending applications in the U.S. and China.
In the search for new drugs, ion channels are a frequent, but challenging target. We believe our capabilities in the ion channel area can be leveraged for both small molecule and antibody approaches to therapeutic development. We partner with pharmaceutical and biotechnology companies that vary in size, clinical stage, geography and therapeutic focus.
We believe our capabilities in the ion channel area can be leveraged for both small molecule and antibody approaches to therapeutic development. Our Partnership Business Model We partner with pharmaceutical and biotechnology companies and leading academic institutions that vary in size, clinical stage, geography and therapeutic focus.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeUnder a registration statement on Form S-1, Registration No. 333- 268613 (the “Resale S-1”), that we filed the with SEC on February 7, 2023, the Selling Securityholders (as defined in the Resale S-1) may sell (a) up to 36,450,645 Total Resale Shares (as defined in the Resale S-1 and which represented approximately 31.6% of our total outstanding Common Stock as of December 31, 2022, assuming no exercise of the Warrants and options, or approximately 28.8% of our outstanding Common Stock if the Warrants were exercised in full), which consist of (i) up to 3,920,440 shares of Common Stock issued in connection with the Business Combination at an equity consideration value of $10.00 per share, including 843,736 shares of Common Stock that may become tradeable upon the achievement of certain stock price-based vesting conditions in accordance with the terms of the Merger Agreement (“Earnout Shares”), (ii) 15,922,934 shares of Common Stock issued to the Sponsor and related parties in private placements, which includes 5,750,000 shares of Founder Shares (as defined in the Resale S-1) issued in connection with APAC’s initial public offering (the “IPO”) at a purchase price of approximately $0.004 per share, including 1,293,299 Sponsor Earnout Shares, and an aggregate of 10,172,934 shares issued in the Redemption Backstop and the Forward Purchase (each as defined in the Resale S-1) at a purchase price of $10.00 per share, (iii) 11,345,489 shares of Common Stock that are issuable upon the exercise of 11,345,489 Private Placement Warrants (as defined in the Resale S-1) at an exercise price of $11.50 per share, which includes 8,233,333 warrants originally issued by APAC in connection with the IPO at a price of $1.50 per Private Placement Warrant and an aggregate of 3,112,156 warrants issued to the Sponsor in the Redemption Backstop and the Forward Purchase, which warrants were issued as part of the overall share purchase price of $10.00 per share in such transactions, (iv) 5,261,782 shares of Common Stock issued or issuable upon the exercise of options to purchase Common Stock at a weighted average exercise price of $10.83 and the vesting of restricted stock units and performance stock units, and (b) up to 11,345,489 of the Private Placement Warrants (which represented approximately 9.0% of our total outstanding Common Stock as of December 31, 2022, assuming the Warrants were exercised in full). 57 Subject to certain exceptions, our Amended and Restated Registration and Stockholder Rights Agreement, dated November 1, 2022, between us, the Sponsor and other parties named therein (the “A&R Registration Rights Agreement”) provides for certain restrictions on transfer with respect to our securities, including Founder Shares, Private Placement Warrants, and securities held by former directors and officers of APAC and certain directors and officers of OmniAb and Ligand.
Biggest changeUnder a registration statement on Form S-1, Registration No. 333-268613, that we filed the with SEC on February 7, 2023, as amended, including as amended by the Post-Effective Amendment No. 3 to Form S-1 on Form S-3 that we filed with the SEC on December 8, 2023 and the SEC declared effective on December 18, 2023 (the “Resale S-3”), the Selling Securityholders (as defined in the Resale S-3) may sell (a) up to 36,450,645 Total Resale Shares (as defined in the Resale S-3 and which represented approximately 31.2% of our total outstanding Common Stock as of December 31, 2023, assuming no exercise of the Warrants and options, or approximately 28.4% of our outstanding Common Stock if the Warrants were exercised in full), which consist of (i) up to 3,920,440 shares of Common Stock issued in connection with the Business Combination at an equity consideration value of $10.00 per share, including 843,736 Earnout Shares (as defined in the Resale S-3), (ii) 15,922,934 shares of Common Stock issued to the Sponsor in private placements, which include 5,750,000 shares of Founder Shares (as defined in the Resale S-3) issued in connection with APAC’s initial public offering (the “IPO”) at a purchase price of approximately $0.004 per share, including 1,293,299 Sponsor Earnout Shares (as defined in the Resale S-3), 57 and an aggregate of 10,172,934 shares issued in the Redemption Backstop and the Forward Purchase (each as defined in the Resale S-3) at a purchase price of $10.00 per share, (iii) 11,345,489 shares of Common Stock that are issuable upon the exercise of 11,345,489 Private Placement Warrants (as defined in the Resale S-3) at an exercise price of $11.50 per share, which include 8,233,333 warrants originally issued by us to the Sponsor in connection with the IPO at a price of $1.50 per Private Placement Warrant, and an aggregate of 3,112,156 warrants issued to the Sponsor in the Redemption Backstop and the Forward Purchase, which warrants were issued as part of the overall share purchase price of $10.00 per share in such transactions, and (iv) 5,115,522 shares of Common Stock issued or issuable upon the exercise of options to purchase Common Stock and the vesting of restricted stock units and performance restricted stock units, and (b) up to 11,345,489 of the Private Placement Warrants (which represented approximately 8.8% of our total outstanding Common Stock as of December 31, 2023, assuming the Warrants were exercised in full).
We face a number of risks relative to protecting this critical information, including loss of access risk, inappropriate use or disclosure, accidental exposure, unauthorized access, inappropriate modification and the risk of our being unable to adequately monitor and audit and modify our controls over our critical information.
We face a number of risks relative to protecting this critical information, including loss of access risk, inappropriate use or disclosure, accidental exposure, unauthorized access, inappropriate modification and the risk of our being unable to adequately monitor, audit, and modify our controls over our critical information.
For example: • others may be able to make products that are similar to any therapeutic candidates generated by our platform that our partners may develop but that are not covered by the claims of the patents that we or our partners have or license or may own or license in the future; 48 • we, or our current or future partners, might not have been the first to make the inventions covered by the issued patents and pending patent applications that we or our partners have or license or may have or license in the future; • we, or our current or future partners, might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned or licensed intellectual property rights; • it is possible that our pending patent applications or those that we may hold in the future will not lead to issued patents; • issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we cannot ensure that any patents issued to us or our licensors will provide a basis for an exclusive market for our commercially viable technology or therapeutic candidates of our partners or will provide us or our partners with any competitive advantages; • we cannot ensure that our commercial activities or partners’ therapeutic candidates will not infringe the patents of others; • we cannot ensure that we will be able to further commercialize our technology on a substantial scale, if approved, before the relevant patents that we hold or license expire; • we cannot ensure that any of our patents, or any of our pending patent applications, if issued, or those of our licensors, will include claims having a scope sufficient to protect our technology; • we may not develop additional proprietary technologies that are patentable; • the patents or intellectual property rights of others may harm our business; and • we may choose not to file a patent application in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.
For example: • others may be able to make products that are similar to any therapeutic candidates generated by our platform that our partners may develop but that are not covered by the claims of the patents that we or our partners have or license or may own or license in the future; • we, or our current or future partners, might not have been the first to make the inventions covered by the issued patents and pending patent applications that we or our partners have or license or may have or license in the future; • we, or our current or future partners, might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned or licensed intellectual property rights; • it is possible that our pending patent applications or those that we may hold in the future will not lead to issued patents; • issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we cannot ensure that any patents issued to us or our licensors will provide a basis for an exclusive market for our commercially viable technology or therapeutic candidates of our partners or will provide us or our partners with any competitive advantages; • we cannot ensure that our commercial activities or partners’ therapeutic candidates will not infringe the patents of others; • we cannot ensure that we will be able to further commercialize our technology on a substantial scale, if approved, before the relevant patents that we hold or license expire; • we cannot ensure that any of our patents, or any of our pending patent applications, if issued, or those of our licensors, will include claims having a scope sufficient to protect our technology; • we may not develop additional proprietary technologies that are patentable; • the patents or intellectual property rights of others may harm our business; and 48 • we may choose not to file a patent application in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.
General Risk Factors Our employees, consultants and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, and insider trading. We are exposed to the risk of fraud or other misconduct by our employees, consultants and commercial partners.
General Risk Factors Our employees, consultants and partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, and insider trading. We are exposed to the risk of fraud or other misconduct by our employees, consultants and commercial partners.
The provisions in our charter documents include the following: • a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our Board; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; 58 • the exclusive right of our Board, unless the Board grants such a right to the holders of any series of preferred stock, to elect a director to fill a vacancy created by the expansion of the Board or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board; • the required approval of at least 66-2/3% of the shares entitled to vote to remove a director for cause, and the prohibition on removal of directors without cause; • the ability of our Board to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our Board to alter our bylaws without obtaining stockholder approval; • the required approval of at least 66-2/3% of the shares entitled to vote to adopt, amend or repeal our bylaws or repeal the provisions of our certificate of incorporation regarding the election and removal of directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • an exclusive forum provision providing that the Court of Chancery of the State of Delaware will be the exclusive forum for certain actions and proceedings; • the requirement that a special meeting of stockholders may be called only by the Board, the chair of the Board, the chief executive officer or the president, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and • advance notice procedures that stockholders must comply with in order to nominate candidates to our Board or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
The provisions in our charter documents include the following: • a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our Board; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our Board, unless the Board grants such a right to the holders of any series of preferred stock, to elect a director to fill a vacancy created by the expansion of the Board or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board; • the required approval of at least 66-2/3% of the shares entitled to vote to remove a director for cause, and the prohibition on removal of directors without cause; • the ability of our Board to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our Board to alter our bylaws without obtaining stockholder approval; • the required approval of at least 66-2/3% of the shares entitled to vote to adopt, amend or repeal our bylaws or repeal the provisions of our certificate of incorporation regarding the election and removal of directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; 58 • an exclusive forum provision providing that the Court of Chancery of the State of Delaware will be the exclusive forum for certain actions and proceedings; • the requirement that a special meeting of stockholders may be called only by the Board, the chair of the Board, the chief executive officer or the president, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and • advance notice procedures that stockholders must comply with in order to nominate candidates to our Board or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
Our facilities and equipment could be harmed or rendered inoperable or inaccessible by natural or man-made disasters or other circumstances beyond our control, including fire, earthquake, power loss, communications failure, war or terrorism, or another catastrophic event, such as a pandemic or similar 34 outbreak or public health crisis, which may render it difficult or impossible for us to support our partners and develop updates, upgrades and other improvements to our platform, advanced automation systems, and advanced application and workflow software for some period of time.
Our facilities and equipment could be harmed or rendered inoperable or inaccessible by natural or man-made disasters or other circumstances beyond our control, including fire, earthquake, power loss, communications failure, war or terrorism, or another catastrophic event, such as a pandemic or similar outbreak or public health crisis, which may render it difficult or impossible for us to support our partners and develop updates, upgrades and other improvements to our platform, advanced automation systems, and advanced application and workflow software for some period of time.
Restrictions under applicable federal, state and foreign healthcare laws and regulations, include the following: • the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal and state healthcare programs such as Medicare and Medicaid.
Restrictions under applicable federal, state and foreign healthcare laws and regulations, include the following: 37 • the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal and state healthcare programs such as Medicare and Medicaid.
This risk extends to the third party vendors and subcontractors we use to manage this sensitive data or otherwise process it on our behalf. 35 Attacks upon information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise.
This risk extends to the third party vendors and subcontractors we use to manage this sensitive data or otherwise process it on our behalf. Attacks upon information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise.
In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future products. 45 We may not be aware of all third party intellectual property rights potentially relating to our platform or technology.
In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future products. We may not be aware of all third party intellectual property rights potentially relating to our platform or technology.
Biopharmaceutical development is inherently uncertain, and it is possible that none of the therapeutic candidates discovered using our platform that are further developed by our partners will become viable commercial products, on a timely basis or at all. We use our platform to offer antibody drug-discovery programs to partners who are engaged in drug discovery and development.
Biopharmaceutical development is inherently uncertain, and it is possible that none of the therapeutic candidates discovered using our platform that are further developed by our partners will become viable commercial products, on a timely basis or at all. We use our platform to offer antibody drug-discovery programs to partners who are engaged in drug research and development.
Our business could be adversely affected if we or our licensors are unable to prosecute, maintain and enforce our licensed and sublicensed intellectual property effectively. 47 Our licensors may have relied on third-party consultants or collaborators or on funds from third parties such that our licensors are not the sole and exclusive owners of the patents and patent applications we in-license.
Our business could be adversely affected if we or our licensors are unable to prosecute, maintain and enforce our licensed and sublicensed intellectual property effectively. Our licensors may have relied on third-party consultants or collaborators or on funds from third parties such that our licensors are not the sole and exclusive owners of the patents and patent applications we in-license.
Additionally, unless publicly disclosed by our partners, we do not have access to information related to our partners’ clinical trial results, including serious adverse events, or ongoing communications with the FDA or other foreign regulatory authorities regarding our partners’ 23 current clinical programs, which limits our visibility into how such programs may be progressing.
Additionally, unless publicly disclosed by our partners, we do not have access to information related to our partners’ clinical trial results, including serious adverse events, or ongoing communications with the FDA or other foreign regulatory authorities regarding our partners’ current clinical programs, which limits our visibility into how such programs may be progressing.
In addition, if COVID-19 or any other epidemic disease infects our genetically modified animals, which form the basis of our platform, or if there is an outbreak among our employees or our subcontractor’s employees who maintain and care for these animals, we and our partners may be unable to produce antibodies for development.
In addition, if COVID-19 or any other pandemic or epidemic disease infects our genetically modified animals, which form the basis of our platform, or if there is an outbreak among our employees or our subcontractor’s employees who maintain and care for these animals, we and our partners may be unable to produce antibodies for development.
We cannot predict the impact of such changes and cannot be certain of our future compliance. We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws and anti-money laundering laws and regulations. We could face criminal liability and other serious consequences for violations, which could harm our business.
We cannot predict the impact of such changes and cannot be certain of our future compliance. 53 We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws and anti-money laundering laws and regulations. We could face criminal liability and other serious consequences for violations, which could harm our business.
Our existing and future partners may have limited bandwidth to initiate new programs, which could limit their adoption or scale of application of our technologies. We engage in conversations with companies regarding potential partnerships on an ongoing basis. These conversations may not result in a commercial agreement.
Our existing and future partners may have limited bandwidth to initiate new programs, which could limit their adoption or scale of application of our technologies. 25 We engage in conversations with companies regarding potential partnerships on an ongoing basis. These conversations may not result in a commercial agreement.
We have elected to use this extended transition period for complying with new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. 60 We are also a smaller reporting company as defined in the Exchange Act.
We have elected to use this extended transition period for complying with new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. We are also a smaller reporting company as defined in the Exchange Act.
If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business. 56 Affiliates of Avista Capital Partners own a significant equity interest in the Company and may take actions that conflict with the interests of our public shareholders.
If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business. Affiliates of Avista Capital Partners own a significant equity interest in the Company and may take actions that conflict with the interests of our public shareholders.
We cannot prevent third parties from also accessing those technologies. In addition, our licenses may place restrictions on our future business opportunities. In addition to the above risks, intellectual property rights that we license in the future may include sublicenses under intellectual property owned by third parties, in some cases through multiple tiers.
We cannot prevent third parties from also accessing those technologies. In addition, our licenses may place restrictions on our future business opportunities. 46 In addition to the above risks, intellectual property rights that we license in the future may include sublicenses under intellectual property owned by third parties, in some cases through multiple tiers.
Second, if our Common Stock is at any time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of Public 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 we so elect, we will not be required to file or maintain in effect a registration statement, and in the event we do not so elect, we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
If our Common Stock is not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act at the time that any warrant is exercised, we may, at our option, require holders of Public 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 we so elect, we will not be required to file or maintain in effect a registration statement, and in the event we do not so elect, we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a therapeutic candidate’s clinical development and may vary among jurisdictions. For instance, the regulatory landscape related to clinical trials in the European Union (the “EU”) recently evolved.
In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a therapeutic candidate’s clinical development and may vary among jurisdictions. 26 For instance, the regulatory landscape related to clinical trials in the European Union (the “EU”) recently evolved.
We are also subject to industry-wide FDA and other regulatory risk. The number of BLAs and NDAs approved by the FDA varies significantly over time and if there were to be an extended reduction in the number of BLAs or NDAs approved by the FDA, the industry would contract and our business would be materially harmed.
We and our partners are also subject to industry-wide FDA and other regulatory risk. The number of BLAs and NDAs approved by the FDA varies significantly over time and if there were to be an extended reduction in the number of BLAs or NDAs approved by the FDA, the industry would contract and our business would be materially harmed.
The sizes of the markets and forecasts of market growth for the demand of our OmniAb technology platform and other of our key performance indicators are based on a number of complex assumptions and estimates, and may be inaccurate. We estimate annual total addressable markets and forecasts of market growth for our platform and technologies and for antibody-based therapeutics generally.
The sizes of the markets and forecasts of market growth for the demand of our OmniAb technology platform and other of our key performance indicators are based on a number of complex assumptions and estimates, and may be inaccurate. 31 We estimate annual total addressable markets and forecasts of market growth for our platform and technologies and for antibody-based therapeutics generally.
Changes in and actual or perceived failures to comply with applicable data privacy, security and protection laws, regulations, standards and contractual obligations may adversely affect our business, operations and financial performance. We and our partners may be subject to federal, state, and foreign laws and regulations that govern data privacy and security.
Changes in and actual or perceived failures to comply with applicable data privacy, security and protection laws, regulations, standards and contractual obligations may adversely affect our business, operations and financial performance. 38 We and our partners may be subject to federal, state, and foreign laws and regulations that govern data privacy and security.
Fluctuations in the availability and price of laboratory materials and equipment could have an adverse effect on our ability to meet our technology development goals with our partners and thus our results from operations as well as future 30 partnership opportunities.
Fluctuations in the availability and price of laboratory materials and equipment could have an adverse effect on our ability to meet our technology development goals with our partners and thus our results from operations as well as future partnership opportunities.
Some of the policies we currently maintain include general liability, property, umbrella and directors’ and officers’ insurance. Any additional insurance coverage we acquire in the future, may not be sufficient to reimburse us for any expenses or losses we may suffer.
Some of the policies we currently maintain include general liability, property, umbrella and directors’ and officers’ insurance. 35 Any additional insurance coverage we acquire in the future, may not be sufficient to reimburse us for any expenses or losses we may suffer.
And, over the long-term, if we are unable to establish name recognition based on our trademarks, then our marketing abilities may be materially and adversely impacted. 50 We may be subject to claims challenging the inventorship of our patents and other intellectual property.
And, over the long-term, if we are unable to establish name recognition based on our trademarks, then our marketing abilities may be materially and adversely impacted. We may be subject to claims challenging the inventorship of our patents and other intellectual property.
Compliance with such regulations may limit our exclusive rights, and limit our ability to contract with non-U.S. manufacturers. Some of our intellectual property rights may have been generated through the use of U.S. government funding and are therefore subject to certain federal regulations.
Compliance with such regulations may limit our exclusive rights, and limit our ability to contract with non-U.S. manufacturers. 52 Some of our intellectual property rights may have been generated through the use of U.S. government funding and are therefore subject to certain federal regulations.
Although we attempt to mitigate these risks through diversification of our investments, the value of our investments may nevertheless decline, and our ability to fund our near-term 39 and long-term working capital needs to support our business and operating plans may be adversely affected.
Although we attempt to mitigate these risks through diversification of our investments, the value of our investments may nevertheless decline, and our ability to fund our near-term and long-term working capital needs to support our business and operating plans may be adversely affected.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. 46 In addition, our rights to certain components of our technology platform, are licensed to us on a non-exclusive basis.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. In addition, our rights to certain components of our technology platform, are licensed to us on a non-exclusive basis.
Any security compromise affecting us, our service providers, strategic partners, other contractors, consultants, or our industry, whether real or perceived, could harm our reputation, erode confidence in the effectiveness of our security measures and lead to regulatory scrutiny.
Any security compromise affecting us, our service providers, partners, other contractors, consultants, or our industry, whether real or perceived, could harm our reputation, erode confidence in the effectiveness of our security measures and lead to regulatory scrutiny.
The Separation and Distribution may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements. The Separation and Distribution are subject to review under various state and federal fraudulent conveyance laws.
The Separation and Distribution may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements. 41 The Separation and Distribution are subject to review under various state and federal fraudulent conveyance laws.
In particular, except in specific circumstances, in the two years following the Distribution, we will be restricted from, among other things, (i) entering into certain transactions pursuant to which all or a portion of shares of our common stock would be acquired, whether by merger, consolidation, certain stock issuances or otherwise, and (ii) ceasing to actively conduct certain of the OmniAb businesses.
In particular, except in specific circumstances, in the two years following the Distribution, we are restricted from, among other things, (i) entering into certain transactions pursuant to which all or a portion of shares of our common stock would be acquired, whether by merger, consolidation, certain stock issuances or otherwise, and (ii) ceasing to actively conduct certain of the OmniAb businesses.
In addition, we could encounter delays in product or service introductions while we attempt to develop alternative products or services to avoid 51 infringing third-party patents or proprietary rights.
In addition, we could encounter delays in product or service introductions while we attempt to develop alternative products or services to avoid infringing third-party patents or proprietary rights.
As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software or claiming noncompliance with open source 52 licensing terms.
As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software or claiming noncompliance with open source licensing terms.
Information technology and telecommunications systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious software, bugs or viruses, human acts and natural disasters. Moreover, despite network security and back-up measures, some of our servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems.
Information technology and telecommunications systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious software, bugs or viruses, human acts and natural disasters. Despite network security and back-up measures, our servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems.
We may not develop additional proprietary platforms, methods and technologies that are patentable. 44 Assuming that other requirements for patentability are met, prior to March 16, 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent.
We may not develop additional proprietary platforms, methods and technologies that are patentable. 43 Assuming that other requirements for patentability are met, prior to March 16, 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent.
We incur significant costs as a result of operating as a standalone public company, and our management is required to devote substantial time to new compliance initiatives. As a standalone public company, we incur significant legal, accounting, insurance and other expenses that we did not incur as a private company.
We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives. 54 As a public company, we incur significant legal, accounting, insurance and other expenses that we did not incur as a private company.
Despite such a decline in the public trading price, some of the Selling Securityholders may still experience a positive rate of return on the securities they purchased due to the differences in the purchase prices described in the Resale S-1.
Despite such a decline in the public trading price, some of the Selling Securityholders may still experience a positive rate of return on the securities they purchased due to the differences in the purchase prices described in the Resale S-3.
Notwithstanding the opinion, the IRS could determine on audit that the Distribution, together with certain related transactions, does not qualify as a reorganization if it determines that any of the facts, assumptions, representations or undertakings on which the opinion is based are not correct or have been violated or that the Distribution, together with certain related transactions, should be taxable for other reasons, including as a result of a significant change in stock or asset ownership of Ligand or OmniAb after the Distribution.
In addition, the opinion is not binding on the IRS or the courts and notwithstanding the opinion, the IRS could determine on audit that the Distribution, together with certain related transactions, does not qualify as a reorganization if it determines that any of the facts, assumptions, representations or undertakings on which the opinion is based are not correct or have been violated or that the Distribution, together with certain related transactions, should be taxable for other reasons, including as a result of a significant change in stock or asset ownership of Ligand or OmniAb after the Distribution.
Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid or the Children’s Health Insurance Program to report to the Department of Health and Human Services information related to certain financial interactions with physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives), and teaching hospitals, as well as the ownership and investment interests of physicians and their immediate family members; • analogous state laws and regulations, such as state anti-kickback and false claims laws that may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; and some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare professionals or marketing expenditures and pricing information; and • EU and other foreign law equivalents of each of the laws, including reporting requirements detailing interactions with and payments to healthcare providers. 37 Ensuring that our business arrangements with third parties comply with applicable healthcare laws and regulations may involve substantial costs.
Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid or the Children’s Health Insurance Program to report to the Department of Health and Human Services information related to certain financial interactions with physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives), and teaching hospitals, as well as the ownership and investment interests of physicians and their immediate family members; • analogous state laws and regulations, such as state anti-kickback and false claims laws that may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; and some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare professionals or marketing expenditures and pricing information; and • EU and other foreign law equivalents of each of the laws, including reporting requirements detailing interactions with and payments to healthcare providers.
Once the Regulation becomes applicable, it will have a phased implementation depending on the concerned products. This Regulation intends to boost cooperation among EU member states in assessing health technologies, including new medicinal products, and providing the basis for cooperation at the EU level for joint clinical assessments in these areas.
Once applicable, it will have a phased implementation depending on the concerned products. This Regulation intends to boost cooperation among EU member states in assessing health technologies, including new medicinal products, and provide the basis for cooperation at the EU level for joint clinical assessments in these areas.
The principal risks and uncertainties affecting our business include, but are not limited to, the following: • We have incurred losses on an as-reported basis for the last three years, and we may not be able to generate sufficient revenue to achieve and maintain profitability. • Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide. • Our commercial success depends on the quality of our antibody discovery platform and technological capabilities and their acceptance by new and existing partners in our market. • Our future success is dependent on the eventual approval and commercialization of products developed by our partners for which we have no control over the clinical development plan, regulatory strategy or commercialization efforts. • If we cannot maintain and expand current partnerships and enter into new partnerships, our future operating results would be adversely affected. • Our partners may not achieve projected discovery and development milestones and other anticipated key events in the expected timelines or at all, which could have an adverse impact on our business and could cause the price of our common stock to decline. • The life sciences and biotech platform technology market is highly competitive, and if we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue, or sustain profitability. • We rely on third parties to host our mouse and rat colonies to supply laboratory equipment and materials. • If we are unable to obtain and maintain sufficient intellectual property protection for our platform and technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technologies or a platform similar or identical to ours, and our ability to successfully sell our platform and services may be impaired. • We rely on in-licenses from third parties.
The principal risks and uncertainties affecting our business include, but are not limited to, the following: • We have incurred losses on an as-reported basis for the last several years, and we may not be able to generate sufficient revenue to achieve and maintain profitability. • Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide. • Our commercial success depends on the quality of our antibody discovery platform and technological capabilities and their acceptance by new and existing partners in our market. • Our future success is dependent on the eventual approval and commercialization of products developed by our partners for which we have no control over the clinical development plan, regulatory strategy or commercialization efforts. • If we cannot maintain and expand current partnerships and enter into new partnerships, our future operating results would be adversely affected. • Our partners may not achieve projected discovery and development milestones and other anticipated key events in the expected timelines or at all, which could have an adverse impact on our business and could cause the price of our common stock to decline. • The life sciences and biotech platform technology market is highly competitive, and if we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue, or sustain profitability. 21 • We rely on third parties to host our mouse and rat colonies and to supply laboratory equipment and materials, and these third parties may not perform satisfactorily which could delay, prevent or impair our partnership programs and research and development efforts. • If we are unable to obtain and maintain sufficient intellectual property protection for our platform and technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technologies or a platform similar or identical to ours, and our ability to successfully sell our platform and services may be impaired. • We rely on in-licenses from third parties.
The Regulation will permit EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the most potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.
It will permit EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the highest potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.
If we fail to comply with applicable laws and regulations we could be subject to penalties or sanctions, including criminal penalties if we knowingly obtain or disclose individually identifiable health information from a covered entity in a manner that is not authorized or permitted by HIPAA or applicable state laws.
If we fail to comply with applicable laws and regulations we could be subject to penalties or sanctions, including criminal penalties if we knowingly obtain or disclose individually identifiable health information from a covered entity in a manner that is not authorized or permitted by such laws.
Under the Tax Matters Agreement that we entered into with Ligand, we will be required to comply with the representations made in the materials submitted to legal counsel in connection with the tax opinion that Ligand received regarding the intended tax treatment of the Distribution and certain related transactions.
Under the Tax Matters Agreement that we entered into with Ligand, we are required to comply with the representations made in the materials submitted to legal counsel in connection with the tax opinion that Ligand received regarding the intended tax treatment of the Distribution and certain related transactions.
Sanctions imposed by the United States and other countries in response to such conflicts, including the one in Ukraine, may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability.
Sanctions imposed by the United States and other countries in response to such conflicts may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability.
The market price of our Common Stock and Warrants may fluctuate significantly due to a number of factors, some of which may be beyond our control, including those factors discussed in this “Risk Factors” section and many others, such as: • actual or anticipated fluctuations in our financial condition and operating results, including fluctuations in its quarterly and annual results; • our inability to establish additional partnerships, the termination of license agreements by our existing partners or announcements by our partners regarding therapeutic candidates generated using our platform; • the introduction of new technologies or enhancements to existing technology by us or others in the industry; • departures of key scientific or management personnel; • announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors; • our failure to meet the estimates and projections of the investment community or that it may otherwise provide to the public; • publication of research reports about us or the industry, or antibody discovery in particular, or positive or negative recommendations or withdrawal of research coverage by securities analysts; • changes in the market valuations of similar companies; • overall performance of the equity markets; • announcements or actions taken by Ligand as our previous principal stockholder; • sales of our Common Stock by us or sales or shorting of our Common Stock by our stockholders in the future; • trading volume of our Common Stock; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • significant lawsuits, including patent or stockholder litigation; • the impact of any natural disasters or public health emergencies, such as the COVID-19 pandemic; • general economic, industry and market conditions other events or factors, many of which are beyond our control; and • changes in accounting standards, policies, guidelines, interpretations or principles.
The market price of our Common Stock and Warrants may fluctuate significantly due to a number of factors, some of which may be beyond our control, including those factors discussed in this “Risk Factors” section and many others, such as: • actual or anticipated fluctuations in our financial condition and operating results, including fluctuations in its quarterly and annual results; • our inability to establish additional partnerships, the termination of license agreements by our existing partners or announcements by our partners regarding therapeutic candidates generated using our platform; • the introduction of new technologies or enhancements to existing technology by us or others in the industry; • departures of key scientific or management personnel; • announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors; • our failure to meet the estimates and projections of the investment community or that it may otherwise provide to the public; • publication of research reports about us or the industry, or antibody discovery in particular, or positive or negative recommendations or withdrawal of research coverage by securities analysts; • changes in the market valuations of similar companies; • overall performance of the equity markets; • sales of our Common Stock by us or sales or shorting of our Common Stock by our stockholders in the future; • trading volume of our Common Stock; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • significant lawsuits, including patent or stockholder litigation; • the impact of any natural disasters or public health emergencies; • general economic, industry and market conditions other events or factors, many of which are beyond our control; and • changes in accounting standards, policies, guidelines, interpretations or principles. 56 In addition, the stock markets have experienced extreme price and volume fluctuations that affected and continue to affect the market prices of equity securities of many companies.
Affiliates of Avista Capital Partners own 15,817,934 shares including earnout shares, or 13.7% of our outstanding Common Stock as of December 31, 2022. In addition, affiliates of Avista Capital Partners own Warrants to purchase 11,345,489 shares of our Common Stock at an exercise price of $11.50 per share.
Affiliates of Avista Capital Partners own 15,817,934 shares including earnout shares, or 13.5% of our outstanding Common Stock as of December 31, 2023. In addition, affiliates of Avista Capital Partners own Warrants to purchase 11,345,489 shares of our Common Stock at an exercise price of $11.50 per share.
In addition, if partners choose to announce a collaboration with us, there is no guarantee that we will recognize research discovery fees in that quarter or even the following quarter, as such fees are not payable to us until our partner begins discovery activities.
In addition, if partners choose to announce a collaboration with us, there is no guarantee that we will recognize revenue in that quarter or even the following quarter, as fees are not necessarily payable to us until our partner begins discovery activities.
Third, if we call the Public Warrants for redemption, our management will have the option to require all holders that wish to exercise Warrants to do so on a cashless basis.
In addition, if we call the Public Warrants for redemption, our management will have the option to require all holders that wish to exercise Warrants to do so on a cashless basis.
Further, to the extent the COVID-19 pandemic or any other outbreak of an epidemic disease adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this section.
Further, to the extent any outbreak of an epidemic disease adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this section.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the level of demand for our technology platform and solutions, which may vary significantly; • the timing and cost of, and level of investment in, research, development and commercialization activities relating to our platform and technology and any of our internal development programs, which may change from time to time; • the start and completion of programs in which our platform is utilized; • the timing of and the degree to which our partners successfully develop, secure marketing approvals for and commercialize any therapeutic candidates based on the antibodies discovered using our platform; • the introduction of new technologies, platform features or software, by us or others in our industry; • expenditures that we may incur to acquire, develop or commercialize additional platform technologies; • the degree of competition in our industry and any change in the competitive landscape of our industry, including consolidation among our competitors or future partners; • the level of demand for any products commercialized by our partners, which may vary significantly; • natural disasters, outbreaks of disease or public health crises, such as the COVID-19 pandemic; • the timing and nature of any future acquisitions or strategic partnerships; • future accounting pronouncements or changes in our accounting policies; and • changes in general market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk. 22 The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results and revenues.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: 22 • the level of demand for our technology platform and solutions, which may vary significantly; • the timing and cost of, and level of investment in, research, development and commercialization activities relating to our platform and technology and any of our internal development programs, which may change from time to time; • the start and completion of programs in which our platform is utilized; • the timing of and the degree to which our partners successfully develop, secure marketing approvals for and commercialize any therapeutic candidates based on the antibodies discovered using our platform; • the introduction of new technologies, platform features or software, by us or others in our industry; • expenditures that we may incur to acquire, develop or commercialize additional platform technologies; • the degree of competition in our industry and any change in the competitive landscape of our industry, including consolidation among our competitors or future partners; • the level of demand for any products commercialized by our partners, which may vary significantly; • natural disasters, outbreaks of disease or public health crises; • the timing and nature of any future acquisitions or strategic partnerships; • future accounting pronouncements or changes in our accounting policies; and • changes in general market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk.
The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including the war between Russia and Ukraine, terrorism or other geopolitical events.
The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including the wars between Russia and Ukraine and Israel and Hamas, terrorism or other geopolitical events.
Furthermore, a possible recession, rising inflation, and the ongoing COVID-19 pandemic has and may continue to adversely affect the financial markets in some or all countries worldwide. Each of these events may cause us to record charges to reduce the carrying value of our investment portfolio or sell investments for less than our acquisition cost.
Furthermore, a possible recession and continuing inflation concerns has and may continue to adversely affect the financial markets in some or all countries worldwide. Each of these events may cause us to record charges to reduce the carrying value of our investment portfolio or sell investments for less than our acquisition cost.
The COVID-19 pandemic and mitigation measures have had and may continue to have, and any future epidemic disease outbreak may have, an adverse impact on global economic conditions which could have an adverse effect on our business and financial condition and the trading price of shares of our common stock and could impair our ability to raise capital when needed.
The COVID-19 pandemic and mitigation measures had, and any emergence of variants thereof or future pandemic or epidemic disease outbreaks may have, an adverse impact on global economic conditions which could have an adverse effect on our business and financial condition and the trading price of shares of our common stock and could impair our ability to raise capital when needed.
However, following the expiration of the applicable lock-up period, such equityholders will not be restricted from selling shares of Common Stock held by them, other than by applicable securities laws. As such, sales of a substantial number of shares of Common Stock in the public market could occur at any time.
Such equityholders will not be restricted from selling shares of Common Stock held by them, other than by applicable securities laws. As such, sales of a substantial number of shares of Common Stock in the public market could occur at any time.
The Separation Agreement, among other things, provides for indemnification obligations (for uncapped amounts) designed to make us financially responsible for all liabilities that Ligand may incur or may exist relating to our business activities (as currently and historically conducted), whether incurred prior to or after the Separation. 42 Pursuant to the Separation Agreement and certain other agreements with Ligand, Ligand agreed to indemnify us for certain liabilities.
The Separation Agreement, among other things, provides for indemnification obligations (for uncapped amounts) designed to make us financially responsible for all liabilities that Ligand may incur or may exist relating to our business activities (as currently and historically conducted), whether incurred prior to or after the Separation.
However, the FDA may determine that we are not in compliance with the conditions imposed upon us to avoid the requirement for such approvals or exemptions at present or we may later become subject to such approvals or exemptions.
However, the FDA may determine that we are not in compliance with the conditions imposed upon us to avoid the requirement for such approvals or exemptions at present or we may later be required to obtain such approvals or exemptions.
If any of these facts, assumptions, representations, or undertakings are incorrect or not satisfied, Ligand may not be able to rely on the opinion, and Ligand could be subject to significant U.S. federal income tax liabilities. In addition, the opinion is not binding on the IRS or the courts.
If any of these facts, assumptions, representations, or undertakings are incorrect or not satisfied, Ligand may not be able to rely on the opinion, and Ligand could be subject to significant U.S. federal income tax liabilities.
If the Distribution, together with certain related transactions, fails to qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, or the Merger causes Section 355(e) of the Code to apply to the Distribution, Ligand could incur significant tax liabilities, and OmniAb could be required to indemnify Ligand for taxes that could be material pursuant to indemnification obligations under the Tax Matters Agreement.
Risks Related to the Separation and Distribution and Our Relationship with Ligand If the Distribution, together with certain related transactions, failed to qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, or the Merger or other transactions caused Section 355(e) of the Code to apply to the Distribution, Ligand could incur significant tax liabilities, and OmniAb could be required to indemnify Ligand for taxes that could be material pursuant to indemnification obligations under the Tax Matters Agreement.
A pandemic, including COVID-19 or other public health epidemic, poses the risk that we or our employees, contractors, including our CROs, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time, including due to spread of the disease within these groups or due to shutdowns that may be requested or mandated by governmental authorities.
Future pandemics, including the residual effects of the COVID-19 pandemic, or other public health epidemics pose the risk that we or our employees, contractors, including our CROs, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time, including due to spread of the disease within these groups or due to shutdowns that may be requested or mandated by governmental authorities.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage.
Intellectual property rights do not necessarily address all potential threats to our competitive advantage. The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage.
Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. We may experience security breaches that may remain undetected for an extended period.
Furthermore, because the techniques used to obtain unauthorized access to, infiltrate, or sabotage systems change frequently and often are not recognized until after they occur, we may be unable to anticipate these exploits or implement adequate preventative measures. We may experience security breaches that may remain undetected for an extended period.
It is possible that governmental authorities may conclude that our or our partners’ business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations.
Ensuring that our business arrangements with third parties comply with applicable healthcare laws and regulations may involve substantial costs. It is possible that governmental authorities may conclude that our or our partners’ business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations.
If we lose these rights, our business may be materially and adversely affected, our ability to develop improvements to our technology platform and antibody discovery platform may be negatively and substantially impacted, and if disputes arise, we may be subjected to future litigation, as well as the potential loss of or limitations on our ability to incorporate the technology covered by these license agreements. • Unstable market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk may have serious adverse consequences on our business, financial condition and stock price. • The market price of our Common Stock and Warrants is likely to be highly volatile, and you may lose some or all of your investment. • Sales of a substantial number of our securities in the public market by the Selling Securityholders and/or by our existing securityholders could cause the prices of our Common Stock and Warrants to fall. 21 Risks Related to Our Business We have incurred losses on an as-reported basis for the last three years, and we may not be able to generate sufficient revenue to achieve and maintain profitability.
If we lose these rights, our business may be materially and adversely affected, our ability to develop improvements to our technology platform and antibody discovery platform may be negatively and substantially impacted, and if disputes arise, we may be subjected to future litigation, as well as the potential loss of or limitations on our ability to incorporate the technology covered by these license agreements. • Unstable market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk may have serious adverse consequences on our business, financial condition and stock price. • The market price of our Common Stock and Warrants is likely to be highly volatile, and you may lose some or all of your investment. • Sales of a substantial number of our securities in the public market by the Selling Securityholders and/or by our existing securityholders could cause the prices of our Common Stock and Warrants to fall.
As a result, we may not realize the intended benefits of our partnerships. 25 Neither we nor our partners are permitted to market any therapeutic candidate until we or they receive regulatory approval of a New Drug Application (“NDA”) or Biologics License Application (“BLA”) from the FDA in the United States or until we or they receive regulatory approval from foreign regulatory authorities in other countries.
Neither we nor our partners are permitted to market any therapeutic candidate until we or they receive regulatory approval of a New Drug Application (“NDA”) or Biologics License Application (“BLA”) from the FDA in the United States or until we or they receive regulatory approval from foreign regulatory authorities in other countries.
While the Clinical Trials Directive required a separate clinical trial application (“CTA”) to be submitted in each member state, to both the competent national health authority and an independent ethics committee, the CTR introduces a centralized process and only requires the submission of a single application to all member states concerned.
While the Clinical Trials Directive required a separate clinical trial application (“CTA”) to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials.
While we believe our platform is capable of identifying high quality antibodies, there can be no assurance that our partners will successfully develop, secure marketing approvals for and commercialize any therapeutic candidates based on the antibodies discovered using our platform.
While we believe our platform is capable of identifying high quality antibodies, there can be no assurance that our partners will successfully develop, secure marketing approvals for and commercialize any therapeutic candidates based on the antibodies discovered using our platform. As a result, we may not realize the intended benefits of our partnerships.
The enactment of such laws could have potentially conflicting requirements that would make compliance challenging. In the event that we are subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.
In the event that we are subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.
In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. For example, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, beginning January 1, 2024.
In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. For example, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminated the statutory Medicaid drug rebate cap, beginning January 1, 2024.
As a result, you would receive fewer shares of Common Stock from such exercise than if you were to exercise such Warrants for cash. 61 There is no guarantee that the exercise price of the Public Warrants will ever be less than the trading price of our Common Stock on Nasdaq, and they may expire worthless, and the terms of the Public Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then outstanding Public Warrants approve of such amendment.
There is no guarantee that the exercise price of the Public Warrants will ever be less than the trading price of our Common Stock on Nasdaq, and they may expire worthless, and the terms of the Public Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then outstanding Public Warrants approve of such amendment.
There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology, pharmaceutical and drug discovery industries, including patent infringement lawsuits, declaratory judgment litigation and adversarial proceedings before the USPTO, including interferences, derivation proceedings, ex parte reexaminations, post-grant review and inter partes review, as well as corresponding proceedings in foreign courts and foreign patent offices.
There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology, pharmaceutical and drug discovery industries, including patent infringement lawsuits, declaratory judgment litigation and adversarial proceedings before the USPTO, including interferences, derivation proceedings, ex parte reexaminations, post-grant review and inter partes review, as well as corresponding proceedings in foreign courts and foreign patent offices. 50 We are, and may, in the future, become involved with litigation or actions at the USPTO or foreign patent offices with various third parties.
In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, or prevent future non-compliance with Nasdaq’s listing requirements.
In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, or prevent future non-compliance with Nasdaq’s listing requirements. 55 Our business is subject to risks arising from pandemic and epidemic diseases.
In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could impact our ability to sell our products profitably. 31 In particular, in the United States, in 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (“ACA”), was enacted, which, among other things, subjected biologic products to potential competition by lower-cost biosimilars; addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program; extended the Medicaid rebate obligation to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations; subjected manufacturers to new annual fees and taxes for certain branded prescription drugs; and provided incentives to programs that increase the federal government’s comparative effectiveness research.
In particular, in the United States, in 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (“ACA”), was enacted, which, among other things, subjected biologic products to potential competition by lower-cost biosimilars; addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program; extended the Medicaid rebate obligation to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations; subjected manufacturers to new annual fees and taxes for certain branded prescription drugs; and provided incentives to programs that increase the federal government’s comparative effectiveness research. 32 Since its enactment, there have been numerous judicial, administrative, executive, and legislative challenges to certain aspects of the ACA.
We have installed, and expect to expand, a number of enterprise software systems that affect a broad range of business processes and functional areas, including for example, systems handling human resources, financial controls and reporting, contract management, regulatory compliance and other infrastructure operations. These implementations were expensive and required a significant effort in terms of both time and effort.
We have installed, and expect to expand, a number of enterprise software systems that affect a broad range of business processes and functional areas, including for example, systems handling human resources, financial controls and reporting, contract management, regulatory compliance and other infrastructure operations.
Although we maintain backup colonies of our animals, disease or death on a broad scale could materially interrupt business operations as animals are a key part of our antibody discovery programs, which could have a material adverse effect on our results of operations and financial condition. 28 Further, genetic engineering and testing of animals has been the subject of controversy and adverse publicity.
Although we maintain backup colonies of our animals, disease or death on a broad scale could materially interrupt business operations as animals are a key part of our antibody discovery programs, which could have a material adverse effect on our results of operations and financial condition.
If we are unable to obtain adequate financing, if we require it, when needed or on terms acceptable to us, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and could have a material adverse effect on our business, financial condition, results of operations and prospects. 24 If we cannot maintain and expand current partnerships and enter into new partnerships, our future operating results would be adversely affected.
If we are unable to obtain adequate financing, if we require it, when needed or on terms acceptable to us, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and could have a material adverse effect on our business, financial condition, results of operations and prospects.
Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license. Intellectual property rights do not necessarily address all potential threats to our competitive advantage.
Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
The extent to which the COVID-19 pandemic impacts our results of operations will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the virus and new variants and the actions to contain its impact.
The extent to which pandemics or epidemics diseases impact our results of operations will depend on future developments that are highly uncertain and cannot be predicted, including information that may emerge concerning new variants of COVID-19.
In addition, even if these therapeutic candidates receive regulatory approval in the United States, our partners may never obtain approval or commercialize such therapeutic candidates outside of the United States, which would limit their full market potential and therefore our ability to realize their potential downstream value.
It is possible that substantially all of these therapeutic candidates will never receive regulatory approval and, even if approved, such therapeutic candidates may never be successfully commercialized. 27 In addition, even if these therapeutic candidates receive regulatory approval in the United States, our partners may never obtain approval or commercialize such therapeutic candidates outside of the United States, which would limit their full market potential and therefore our ability to realize their potential downstream value.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters and research and development facilities are located in Emeryville, California, where we lease approximately 35,000 square feet of space under leases expiring in 2032.
Biggest changeItem 2. Properties Our corporate headquarters and primary research and development facilities are located in Emeryville, California, where we lease approximately 35,000 square feet of space under leases expiring in 2032. We also lease 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.
Removed
Icagen, our ion channel 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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, regardless of outcome, litigation can have an adverse impact on our business because of defense and settlement costs, diversion of management resources and other factors, and there can be no assurances that favorable outcomes will be obtained. Item 4. Mine Safety Disclosures Not applicable. PART II
Biggest changeHowever, regardless of outcome, litigation can have an adverse impact on our business because of defense 63 and settlement costs, diversion of management resources and other factors, and there can be no assurances that favorable outcomes will be obtained. Item 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeUnregistered Sales of Equity Securities Other than as previously disclosed in our Current Reports on Form 8-K or Quarterly Reports on Form 10-Q filed with the SEC, we did not issue any unregistered equity securities during the 12 months ended December 31, 2022. 63 Use of Proceeds On August 12, 2021, APAC consummated its IPO of 23,000,000 units, including 3,000,000 over-allotment units.
Biggest changeUnregistered Sales of Equity Securities Other than as previously disclosed in our Current Reports on Form 8-K or Quarterly Reports on Form 10-Q filed with the SEC, we did not issue any unregistered equity securities during the 12 months ended December 31, 2023. 64 Item 6. [Reserved]
Holders of Record As of close of business on March 15, 2023, there were 925 holders of record of our common stock and three holders of record of our Warrants.
Holders of Record As of close of business on March 1, 2024, there were 1,941 holders of record of our common stock and three holders of record of our Warrants.
Removed
The units sold were sold at an offering price of $10.00 per unit, generating total gross proceeds of $230 million. The securities in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333- 257177). The SEC declared the registration statement effective on August 9, 2021.
Removed
We incurred a total of approximately $13.7 million in costs as a result of the Initial Public Offering (consisting of $4.6 million of cash underwriting discounts, $8.1 million in deferred underwriting fees and $1.0 million of other offering costs).
Removed
As such, the Company recorded approximately $13.0 million of offering costs as a reduction of temporary equity and $0.6 million 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.
Removed
Of the gross proceeds received from the IPO, the full exercise of the over-allotment option and the sale of private placement warrants in connection with the IPO, approximately $235.8 million ($10.25 per Public Share) was placed in a trust account.
Removed
After deducting payments to existing shareholders of $224.0 million in connection with their exercise of redemption rights, the remaining balance immediately prior to the Closing of the Business Combination of approximately $13.3 million remained in the trust account. The remaining amount in the trust account was used to fund the Business Combination and related transaction expenses. 64 Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCash Flow Summary A discussion regarding our cash flow summary for the year ended December 31, 2022 compared to the year ended December 31, 2021 is presented below. in thousands 2022 2021 $ Change % Change Net cash provided by (used in): Operating activities $ (3,587) $ (5,672) $ 2,085 (37) % Investing activities (73,313) (4,025) (69,288) NM (1) Financing activities $ 110,739 $ 9,697 $ 101,042 NM (1) _____________ (1) Percentage change is not meaningful. 69 Cash Used in Operating Activities: During the year ended December 31, 2022, cash used in operating activities of $3.6 million primarily reflected our net loss of $22.3 million for the period, adjusted by net non-cash charges of $29.6 million which primarily included $18.3 million in share-based compensation, and $18.2 million in depreciation and amortization, partially offset by $6.4 million of deferred income taxes, net, as well as changes in our operating assets and liabilities in the amount of $10.8 million.
Biggest changeCash Flow Summary (dollars in thousands) 2023 2022 $ Change Net cash provided by (used in): Operating activities $ 2,347 $ (3,587) $ 5,934 Investing activities (18,376) (73,313) 54,937 Financing activities $ (892) $ 110,739 $ (111,631) Cash Used in Operating Activities: 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.
Cash Used in Investing Activities: During the year ended December 31, 2022, cash used in investing activities of $73.3 million primarily consisted of $54.8 million of cash used to purchase short-term investments and $17.2 million of cash used to purchase property and equipment.
During the year ended December 31, 2022, cash used in investing activities of $73.3 million primarily consisted of $54.8 million of cash used to purchase short-term investments and $17.2 million of cash used to purchase property and equipment.
We believe the allocations have been determined on a reasonable basis; however, the amounts were not necessarily representative of the amounts that would have been reflected in the combined financial statements had Legacy OmniAb been an entity that operated separately from Ligand during the periods presented. Following the Separation, we began accounting for our financial activities as an independent entity.
We believe the allocations have been determined on a reasonable basis; however, the amounts were not necessarily representative of the amounts that would have been reflected in the combined financial statements had Legacy OmniAb been an entity that operated separately from Ligand during the periods presented. 66 Following the Separation, we began accounting for our financial activities as an independent entity.
Our future capital requirements will depend on many factors, including, but not limited to: • our ability to achieve revenue growth; • the costs of expanding our operations, including our business development and marketing efforts; • our rate of progress in selling access to our platform and marketing activities associated therewith; • our rate of progress in, and cost of research and development activities associated with, our platform technologies and our internal developed programs to the extent we pursue any such programs; • the effect of competing technological and market developments; • the impact of the COVID-19 pandemic or other epidemic diseases on global social, political and economic conditions; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company; • the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patents and other intellectual property and proprietary rights; and • the costs associated with any technologies that we may in-license or acquire.
Our future capital requirements will depend on many factors, including, but not limited to: • our ability to achieve revenue growth; • the costs of expanding our operations, including our business development and marketing efforts; • our rate of progress in selling access to our platform and marketing activities associated therewith; • our rate of progress in, and cost of research and development activities associated with, our platform technologies and our internal developed programs to the extent we pursue any such programs; • the effect of competing technological and market developments; • the impact of pandemics or other epidemic diseases on global social, political and economic conditions; • our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company; • the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patents and other intellectual property and proprietary rights; and • the costs associated with any technologies that we may in-license or acquire.
Active programs represents a program for which research work has commenced or where an antigen is introduced into our animals and remains so as long as the program is actively being developed or commercialized. This number includes active clinical programs and approved products separately disclosed above.
Active programs represents a program for which research work has commenced or where an antigen is introduced into our animals and remains so as long as the program is actively being developed or commercialized. This number includes active clinical programs and approved products separately disclosed in the table above.
However, drug discovery and development has significant uncertainty in timing and likelihood of reaching marketing authorization, and we cannot be certain when, if at all, royalty payments will be a material portion of our revenue.
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.
We structure our license agreements with partners to typically include: (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 of our partners’ products, if any.
We structure our license agreements with partners to typically include: (i) upfront or, in some instances, 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 of our partners’ products.
Cash provided by financing activities during the year ended December 31, 2022 and 2021 primarily included cash transferred to us from Ligand based on changes in our cash used for operations.
Cash provided by financing activities during the year ended December 31, 2023 and 2022 primarily included cash transferred to us from Ligand based on changes in our cash used for operations. During the year ended December 31, 2023, cash used in financing activities was $0.9 million.
We believe the long-term value of our business will be driven by partner royalties as such payments are based on global sales of potential future partner antibodies, which generally provide for larger and recurring payments as compared to technology access, research and milestone payments.
Historically, our revenue has been derived from payments for technology access, collaborative research services and milestones. We believe the long-term value of our business will be driven by partner royalties as such payments are based on global sales of potential future partner antibodies, which generally provide for larger and recurring payments as compared to technology access, research and milestone payments.
Our 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 and combined financial statements include the accounts of OmniAb and its wholly owned subsidiaries. All intercompany transactions and accounts within OmniAb have been eliminated.
Our financial statements as of December 31, 2023 and 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 and combined financial statements include the accounts of OmniAb and its wholly owned subsidiaries.
On November 1, 2022, with the closing of the Business Combination, we were capitalized with $95.8 million in net cash. As of December 31, 2022, our cash, cash equivalents and short-term investments were $88.3 million.
In connection with the closing of the Business Combination, we were capitalized with $95.8 million in net cash, and as of December 31, 2022, had cash, cash equivalents short-term investments of $88.3 million. As of December 31, 2023, our cash, cash equivalents and short-term investments were $87.0 million.
Our effective tax rate for the year ended December 31, 2021 differed from the federal statutory tax rate of 21.0% due to share-based compensation expense which is not tax deductible and an increase to our valuation allowance recorded against deferred tax assets, offset by the tax benefit of research and development tax credits. 68 Liquidity and Capital Resources Prior to November 1, 2022, funding from Ligand was our primary source of liquidity.
Our effective tax rate for the year ended December 31, 2022 differed from the federal statutory tax rate of 21.0% primarily due to non-deductible share-based compensation expense and an increase to our valuation allowance recorded against deferred tax assets, partially offset by the tax benefit from research and development tax credits and the impact of changes in our state tax rate. 68 Liquidity and Capital Resources Prior to our spin-off from Ligand, funding from Ligand was our primary source of liquidity.
Key Business Metrics We regularly review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe that the following metrics are important to understanding our current business.
All intercompany transactions and accounts within OmniAb have been eliminated. Key Business Metrics We regularly review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe that the following metrics are important to understanding our current business.
Following the Separation, as contemplated by the Separation Agreement, Ligand distributed on a pro rata basis to its stockholders all of the Legacy OmniAb Common Stock held by Ligand, such that each holder of 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.
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”).
Active clinical programs represents the number of unique programs for which an Investigational New Drug (“IND”) or equivalent under other regulatory regimes has been filed based on an OmniAb-derived antibody and which are in clinical development by our partners and we continue to count programs as active as long as they are actively being developed or commercialized.
Active clinical programs and approved products represents the number of unique programs for which an Investigational New Drug Application or equivalent under other regulatory regimes has been filed based on an OmniAb-derived antibody and which are in clinical development by our partners.
While in 2022 we recognized royalty revenue from our partners’ sales of zimberelimab and sugemalimab in China, 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 in the United States and Europe.
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 in the United States and Europe.
Additionally, unless publicly disclosed by our partners, we do not have access to information related to our partners’ clinical trial results, including serious adverse events, or ongoing communications with regulatory agencies regarding our partners’ current clinical programs, which limits our visibility into how such programs may be progressing. 65 For the years ended December 31, 2022 and 2021, our revenue was $59.1 million and $34.7 million, respectively.
Additionally, unless publicly disclosed by our partners, we do not have access to information related to our partners’ clinical trial results, including serious adverse events, or ongoing communications with regulatory agencies regarding our partners’ current clinical programs, which limits our visibility into how such programs may be progressing.
Closing of the Business Combination and Separation from Ligand On November 1, 2022, in accordance with the terms of 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.
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”).
We partner with numerous pharmaceutical and biotechnology companies, varying in size, clinical stage, geography and therapeutic focus. Our license agreements are negotiated separately for each discovery partner, and as a result, the financial terms and contractual provisions vary from agreement to agreement.
We offer the industry’s only 4-species platform with differentiated technologies and capabilities. 65 We partner with pharmaceutical and biotechnology companies and leading academic institutions that vary in size, clinical stage, geography and therapeutic focus. Our license agreements are negotiated separately for each discovery partner, and as a result, the financial terms and contractual provisions vary from agreement to agreement.
Metric December 31, 2022 December 31, 2021 % Change Active partners 69 57 21% Active programs 291 252 15% Active clinical programs and approved products 26 25 4% Approved products 3 2 50% 66 Active partners represents the number of partners that have an active program or have executed a license agreement in advance of initiating an active program.
Metric December 31, 2023 December 31, 2022 % Change Active partners 77 69 12% Active programs 325 291 12% Active clinical programs and approved products 32 26 23% Approved products 3 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.
Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those set forth under the section entitled “Risk Factors” or in other parts of this Annual Report. Overview Our mission is to enable the rapid development of innovative therapeutics by pushing the frontiers of drug discovery technologies.
Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those set forth under the section entitled “Risk Factors” or in other parts of this Annual Report. Overview OmniAb, Inc. licenses cutting edge discovery research technology to the pharmaceutical and biotech industry to enable the discovery of next generation therapeutics.
Where the date of such application is not known to us, we use the official start date from clinical trial registries for the purpose of calculating this metric. This number includes approved products separately disclosed below.
We continue to count programs as active as long as they are actively being developed, under regulatory review or commercialized. Where the date of such application is not known to us, we use the official start date from clinical trial registries for the purpose of calculating this metric. This number includes approved products separately disclosed in the table above.
Income tax benefit (Dollars in thousands) 2022 2021 $ Change % Change Loss before income tax $ (26,061) $ (34,350) $ 8,289 (24) % Income tax benefit 3,727 7,308 (3,581) (49) % Net loss $ (22,334) $ (27,042) $ 4,708 (17) % Effective Tax Rate 14.3 % 21.3 % Our effective tax rate is affected by recurring items, such as the U.S. federal and state statutory tax rates and the relative amounts of income we earn in those jurisdictions.
Income tax benefit (Dollars in thousands) 2023 2022 $ Change % Change Loss before income tax $ (64,363) $ (26,061) $ (38,302) 147 % Income tax benefit 13,744 3,727 10,017 269 % Net loss $ (50,619) $ (22,334) $ (28,285) 127 % Effective Tax Rate 21.4 % 14.3 % Our effective tax rate is affected by recurring items, such as the U.S. federal and state statutory tax rates and the relative amounts of income we earn in those jurisdictions.
During the year ended December 31, 2021, cash used in investing activities of $4.0 million primarily consisted of $4.1 million of cash used to purchase property and equipment.
Cash Used in Investing Activities: 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.
Our effective tax rate for the year ended December 31, 2022 differed from the federal statutory tax rate of 21.0% due to share-based compensation expense which is not tax deductible and an increase to our valuation allowance recorded against deferred tax assets, partially offset by the tax benefit of research and development tax credits and the impact of changes in our state tax rate.
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, offset with non-deductible share-based compensation expense.
Our partners have access to these antibody candidates that are based on unmatched biological diversity and optimized through integration across a full range of technologies, including antigen design, transgenic animals, deep screening and characterization. We provide our partners both integrated end-to-end capabilities and highly customizable offerings, which address critical industry challenges and provide optimized antibody discovery solutions.
We provide our partners both integrated end-to-end capabilities and highly customizable offerings, which address critical industry challenges and provide optimized antibody discovery solutions.
Interest income of $0.6 million in the year ended December 31, 2022 was due to interest earned on short-term investments. Other income, net of $1.3 million in the year ended December 31, 2021 included a gain from sale of an equity security. Interest expense for the year ended December 31, 2021 was related to certain equipment financing.
Other income (expense) Interest income of $5.1 million and $0.6 million during the years ended December 31, 2023 and December 31, 2022, respectively, was due to interest earned on short-term investments. Prior to the Separation on November 1, 2022, interest income was earned and accounted for by Ligand.
During the year ended December 31, 2021, cash used in operating activities of $5.7 million primarily reflected our net loss of $27.0 million for the period, adjusted by net non-cash charges of $24.0 million which primarily included $15.1 million in share-based compensation, and $16.3 million in depreciation and amortization, partially offset by $7.3 million of deferred income taxes, net, as well as changes in our operating assets and liabilities in the amount of $2.6 million.
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. 69 During the year ended December 31, 2022, cash used in operating activities of $3.6 million primarily reflected our net loss of $22.3 million for the period, adjusted by net non-cash charges of $29.6 million and a net change in operating assets and liabilities of $10.8 million.
We believe that pairing the large and diverse antibody repertoires generated from our proprietary transgenic animals with our cutting-edge and high-throughput validated screening tools will deliver high-quality therapeutic candidates for a wide range of diseases. Our OmniAb technology platform creates and screens diverse antibody repertoires and is designed to quickly identify optimal antibodies for our partners’ drug development efforts.
Our technology platform creates and screens diverse antibody repertoires and is designed to quickly identify optimal antibodies for our partners’ drug development efforts. At the heart of the OmniAb platform is something we call Biological Intelligence TM , which powers the immune systems of our proprietary, engineered transgenic animals to create optimized antibody candidates for human therapeutics.
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We intend to achieve this mission by enabling the discovery of high-quality therapeutic candidates and by being the partner of choice for pharmaceutical and biotechnology companies.
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We believe the OmniAb animals comprise the most diverse host systems available in the industry. Our suite of technologies and methods, including computational antigen design and immunization methods, paired with high-throughput single B cell phenotypic screening and mining of next-generation sequencing datasets with custom algorithms, are used to identify fully human antibodies with exceptional performance and developability characteristics.
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We harness the power of Biological Intelligence, which we built into our proprietary transgenic animals and paired with our high-throughput screening technologies to enable the discovery of high-quality, fully-human antibody therapeutic candidates. We believe these antibodies are high quality because they are naturally optimized in our proprietary host systems for affinity, specificity, developability and functional performance.
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As of December 31, 2023, we had 77 active partners with 325 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 of our partners.
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As of December 31, 2022, we had 69 active partners with 291 active programs using the OmniAb technology, including 23 OmniAb-derived antibodies in clinical development by our partners, and three approved products of our partners: (i) zimberelimab, which was approved in China for the treatment of recurrent or refractory classical Hodgkin’s lymphoma, (ii) sugemalimab, which was approved in China for the first-line treatment of metastatic (stage IV) non-small cell lung cancer in combination with chemotherapy, as well as for patients with unresectable stage III non-small cell lung cancer whose disease has not progressed following concurrent or sequential platinum-based chemoradiotherapy, and (iii) teclistamab, which received accelerated approval in the U.S. for adult patients with relapsed or refractory multiple myeloma who have received at least four prior lines of therapy, including a proteasome inhibitor, an immunomodulatory agent, and an anti-CD38 monoclonal antibody, and conditional marketing authorization in Europe as monotherapy for the treatment of adult patients with relapsed and refractory multiple myeloma.
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Our proprietary transgenic animals, including OmniRat ® , OmniChicken ® and OmniMouse ® have been genetically modified to generate antibodies with human sequences to streamline the development of human therapeutic candidates. OmniFlic ® and OmniClic ® are fixed or common light-chain rats and chickens, respectively, designed to facilitate the discovery of bispecific antibodies.
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For the years ended December 31, 2022 and 2021, our net loss was $22.3 million and $27.0 million, respectively. Historically, our revenue has been derived from payments for technology access, collaborative research services and milestones.
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OmniTaur™ provides cow-inspired antibodies with unique structural characteristics for challenging targets. In May 2023, we announced the launch of OmniDeep™, a suite of in silico, AI and machine learning tools for therapeutic discovery and optimization that are woven throughout our various technologies and capabilities.
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Impact of COVID-19 Pandemic To date, we have not experienced material disruptions in our business operations or financial impacts as a result of the COVID-19 pandemic.
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These tools include structural modeling, molecular dynamics simulations, large multi-species antibody databases, artificial intelligence, machine learning, deep learning models and more. OmniDeep is designed to expedite the identification of candidates with the optimal affinity, specificity and developability profiles required for successful drug development.
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While it is not possible at this time to estimate the impact that COVID-19 or other public health epidemic could have on our business in the future, the continued spread of COVID-19 and variants of the virus, the rate of vaccinations regionally and globally and the measures taken by the government authorities, and any future epidemic disease outbreaks, could: disrupt the supply chain and the manufacture or shipment of products and supplies for use by us in our discovery activities and by our partners for their discovery and development activities; delay, limit or prevent us or our partners’ from continuing research and development activities; impede our negotiations with partners and potential partners; impede testing, monitoring, data collection and analysis and other related activities, by us and our partners; interrupt or delay the operations of the FDA or other regulatory authorities, which may impact review and approval timelines for initiation of clinical trials or marketing; impede the launch or commercialization of any approved products; any of which could delay our partnership programs, increase our operating costs, and have a material adverse effect on our business, financial condition and results of operations.
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In November 2023, we launched Omni dAb TM , an in vivo platform for the discovery of single domain antibodies based upon a human VH scaffold that affinity matures in a chicken host environment to provide a functionally diverse immune repertoire unavailable from mammalian systems.
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In addition, if COVID-19 or any other epidemic disease infects our genetically modified animals, which form the basis of our platform, or if there is an outbreak among our employees or subcontractor’s employees who maintain and care for these animals, we and our partners may be unable to produce antibodies for development.
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Closing of the Business Combination and Separation from Ligand On November 1, 2022 (the “Closing Date”), we, 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.
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Results of Operations A discussion regarding our financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 is presented below.
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Results of Operations A discussion regarding our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 is presented below: Revenue (Dollars in thousands) 2023 2022 $ Change % Change License and milestone revenue $ 20,699 $ 38,926 $ (18,227) (47) % Service revenue 12,180 18,784 (6,604) (35) % Royalty revenue 1,285 1,367 (82) (6) % Total revenue $ 34,164 $ 59,077 $ (24,913) (42) % 67 • License and milestone revenue decreased primarily due to (1) the recognition of a $25.0 million milestone related to the first commercial sale of teclistamab in the U.S. during the year ended December 31, 2022, which was partially offset by the recognition of a $10.0 million milestone related to the first commercial sale of teclistamab in the EU during the year ended December 31, 2023 and (2) decreases in license and milestone revenue from other programs. • Service revenue decreased as a result of the completion of work on certain ion channel programs and adjustments resulting from the extension of one of our ion channel programs with GSK, partially offset by the recognition of a portion of a research progression milestone.
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Revenue (Dollars in thousands) 2022 2021 $ Change % Change Milestone revenue $ 33,871 $ 10,164 $ 23,707 233 % Service revenue 18,784 20,084 (1,300) (6) % License fees 5,055 4,500 555 12 % Royalty revenue 1,367 — 1,367 NM (1) Total revenue $ 59,077 $ 34,748 $ 24,329 70 % _____________ (1) Percentage change is not meaningful.
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Operating Expenses (Dollars in thousands) 2023 2022 $ Change % Change Research and development $ 56,525 $ 48,364 $ 8,161 17 % General and administrative 33,313 24,903 8,410 34 % Amortization of intangibles 13,554 13,050 504 4 % Other operating (income) expense, net 191 (592) 783 NM (1) Total operating expenses $ 103,583 $ 85,725 $ 17,858 21 % _____________ (1) P ercentage change is not meaningful. • Research and development expenses increased primarily due to increased personnel costs and rent expenses for newly leased facilities as we invested in the growth and development of our business. • General and administrative expenses increased primarily due to personnel-related costs and costs associated with our obligations as a new public company. • The change in other operating (income) expense, net was primarily due to changes in the fair value adjustments to contingent earnout liabilities and royalty expense.
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Total revenue increased $24.3 million, or 70%, in the year ended December 31, 2022 as compared to 2021 driven primarily by (1) additional milestone revenue following the first commercial sale of teclistamab in the U.S. during the year ended December 31, 2022 and (2) royalty revenue from our partners’ sales of zimberelimab and sugemalimab. 67 Operating Costs and Expenses (Dollars in thousands) 2022 2021 $ Change % Change Research and development $ 48,364 $ 39,232 $ 9,132 23 % General and administrative 24,903 16,947 7,956 47 % Amortization of intangibles 13,050 12,968 82 1 % Other operating (income) expense, net (592) 1,210 (1,802) (149) % Total operating expenses $ 85,725 $ 70,357 $ 15,368 22 % Our R&D expenses increased $9.1 million, or 23%, in the year ended December 31, 2022 compared with 2021, primarily due to an increase in rent expense for newly leased facilities and increased personnel-related costs driven by our increased investment in the growth and development of the OmniAb business.
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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.
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General and administrative expenses increased $8.0 million, or 47% in the year ended December 31, 2022 compared with 2021, primarily due to increased personnel-related costs and costs associated with our obligations as a public company.
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The net non-cash charges primarily consisted of share-based compensation expense of $18.3 million, and depreciation and amortization expense of $18.2 million, which were partially offset by a $6.4 million change in deferred income taxes, net.
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Other operating income, net, of $0.6 million and other operating expense, net, of $1.2 million in the years ended December 31, 2022 and 2021, respectively, resulted from fair value adjustments to contingent earnout liabilities issued in connection with acquisitions.
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The net change in operating assets and liabilities was primarily driven by an increase in accounts payable and accrued liabilities of $15.1 million offset by an increase in accounts receivable of $12.7 million and a decrease in deferred revenue of $9.5 million.
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Other income (expense) (Dollars in thousands) 2022 2021 $ Change % Change Interest income $ 587 $ — $ 587 NM (1) Interest expense — (7) 7 NM (1) Other income, net — 1,266 (1,266) NM (1) Total other income, net $ 587 $ 1,259 $ (672) (53) % _____________ (1) Percentage change is not meaningful.
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In January 2023, we received an aggregate of $35.0 million in milestone payments in connection with teclistamab; we recognized $25.0 million as revenue in the fourth quarter of 2022 and the remainder is expected to be recognized in 2023 in accordance with the terms of the license agreement.
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During the year ended December 31, 2021, cash provided by financing activities was $9.7 million which primarily consisted of $10.7 million net transfer from Ligand partially offset by $1.1 million of payments to CVR holders.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2022, our cash equivalents and marketable securities of $85.6 million primarily consisted of money market mutual funds, U.S. government and agency securities, commercial paper and corporate bonds.
Biggest changeAs of December 31, 2023, our cash equivalents and marketable securities of $82.9 million primarily consisted of money market mutual funds and U.S. government and agency securities.
Effects of Inflation Inflation generally affects us by increasing our cost of labor and research and development contract costs. We do not believe inflation has had a material effect on our results of operations during the periods presented in OmniAb’s consolidated and combined financial statements included in this Annual Report.
Effects of Inflation Inflation generally affects us by increasing our cost of labor and research and development contract costs. We do not believe inflation has had a material effect on our results of operations during the periods presented in OmniAb’s consolidated and combined financial statements included in this Annual Report. 73
If market interest rates were to increase immediately and uniformly by 100 basis points, or one percentage point, from levels at December 31, 2022, we estimate that the increase would have resulted in a hypothetical decline of $0.3 million in the net fair value of our interest-sensitive securities.
If market interest rates were to increase immediately and uniformly by 100 basis points, or one percentage point, from levels at December 31, 2023, we estimate that the increase would have resulted in a hypothetical decline of $0.4 million in the net fair value of our interest-sensitive securities.

Other OABI 10-K year-over-year comparisons