Good afternoon, ladies and gentlemen, and welcome to the OmniAb Inc. fourth quarter and full year of 2022 earnings conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. This call is being recorded on Thursday, March 30, 2023. I would now like to turn the conference over to Kurt Gustafson. Please go ahead.
Thank you, operator. Good afternoon. This is Kurt Gustafson, OmniAb's Chief Financial Officer. Thank you all for joining OmniAb's fourth quarter 2022 financial results conference call. I'd like to remind listeners that there are slides to accompany today's remarks. Those slides are available in the investors section of our website at omniab.com. Before we begin, I'd like to remind listeners that comments made during this call will include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from any anticipated results. These forward-looking statements are qualified by the cautionary statements contained in today's press release and our SEC filings. Importantly, this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, today, March 30th, 2023.
Except as required by law, OmniAb undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Joining me on the call today is Matt Foehr, President and CEO. During today's call, Matt and I will provide highlights on the company's operations, partner and technology updates, and our recent financial results. At the conclusion of the prepared remarks, we will open the call to questions. With that, let me turn the call over to Matt. Matt?
Thanks, Kurt. Good afternoon, everyone. Thanks for joining this, our first financial results and business highlights conference call. Since 2016, OmniAb has grown and evolved through multiple strategic acquisitions and organic technology investment initiatives to become a leader in the integrated antibody discovery space. In November of last year, we completed our spin-off from Ligand Pharmaceuticals, resulting in OmniAb becoming an independent publicly traded company. With that transaction closed, I'm confident we're well-positioned with our cur rent corporate structure, our operational focus, and our deep domain expertise to now capitalize on the growth opportunities that are ahead of us. In doing so, make an enduring impact on global human health. That promise of impacting human health energizes our team of just over 100 employees and positions us very well for the future.
OmniAb's highly scalable business model of licensing our discovery platform globally enables our partners to rapidly develop innovative therapeutics. Our partners value that we continue to push the frontiers of enabling technologies. We believe we're the industry's only four-species antibody discovery platform, making OmniAb the most diverse host system for fully human and bispecific antibody discovery. With our proven platform technology, the number of partners with access to OmniAb antibodies has grown significantly to a total of 69 with 291 active programs, now including 3 product approvals. Another point I'd like to make here is that we're participating in a large and growing market.
With global sales of antibody pharmaceutical products projected to reach approximately $279 billion in 2025, up from about $180 billion in recent years. Some of the best-selling drugs today are antibody-based medicines. These are just some of the factors that drive the industry's demand for cutting-edge discovery technology. Our technology platform continues to prove its value to partners. Our teams made great strides in growing our portfolio with the addition of 13 new partnerships in 2022, including an expansion deal with an existing partner. We added more new partners in 2022 than in any other year of the technology's history, which we feel positions the business for future growth. As I mentioned, we have 291 programs currently being developed or commercialized by our partners.
We recognized royalty revenue from initial commercial sales of both zimberelimab and sugemalimab in China. It's also important to note that the numbers in the graphs on these slides are net of attrition. Our platform continues to generate new clinical programs, and we now have rat-derived, mouse-derived, and chicken-derived antibodies that have entered human clinical trials. By year-end, our platform had generated a cumulative total of 28 clinical or approved antibodies, including 3 new programs that entered the clinic during the second half of 2022. Each of these programs has a different modality, which further demonstrates the flexibility of our technology. The 3 new programs include Merck's antibody-drug conjugate, anti-CEACAM5 in advanced solid tumors, Genmab and BioNTech's HexaBody anti-CD27 in malignant solid tumors, and Janssen's trispecific antibody in relapsed or refractory multiple myeloma.
There were 2 programs that came out of clinical development in 2022 as 2 of our partners realigned the therapeutic area focus of their pipelines. That said, the clinical attrition rate of OmniAb antibodies remains very low. There are now more than 140 different clinical trials underway or completed by our partners. More than 27,000 subjects are to be or have been enrolled in clinical trials that are testing OmniAb-derived antibodies. This is a representation of the significant invstments that our partners are making in downstream development of antib odies discovered using our technologies. Based on dialogue with partners, we see potential for approximately 3 to 5 new entries into clinical development for novel OmniAb-derived antibodies in 2023, with programs addressing major unmet medical needs. On slide 7, we break out our 291 programs by stages of development.
You can see there's a large and growing base in the discovery stage, totaling 251 programs, and now 14 programs in preclinical. In the clinic, our partners have programs totaling 19 in phase 1, 2 in phase 2, and 2 in phase 3. As I mentioned, there are 3 approved products derived from OmniAb technologies. We believe generating large, diverse antibody repertoires of high-quality antibodies increases the likelihood of success in discovering an antibody with optimal therapeutic characteristics. Many of our partners are using a number of our different engineered animals, and in some cases, more than one of our sources for a single program. OmniChicken has been the fastest-growing source species as OmniChicken antibodies bind to diverse epitopes on human targets with high affinity and also offer excellent profiles for development.
OmniFlic and OmniClic are fixed and common light chain engineered rats and chickens designed for efficient discovery of bispecific antibodies, which are of growing interest to the pharmaceutical industry. OmniTaur provides access to antibodies with unique structural characteristics for challenging targets. I note too that OmniRat, which is our largest source category here on this slide, has been available to our partners the longest and was launched first. Our partners tell us they place a high value on our ability to provide flexibility to meet their evolving scientific needs. Our technology stack can be leveraged to develop multiple therapeutic formats and modalities, as shown on slide 9. By generating large and diverse repertoires of high-quality antibodies, we believe the biological intelligence of our technologies increases the probability of success of therapeutic antibody discovery and helps limit attrition of antibody product candidates.
Our partners continue to advance programs through development, some made public announcements about their progress during the fourth quarter and into this year. Notably, we received $35 million in milestone payments from our partner Janssen related to TECVAYLI, which Kurt will talk more about in a moment. Moving to batoclimab, Harbour BioMed recently announced positive top-line results from its phase 3 clinical trial for the treatment of generalized myasthenia gravis. Immunovant announced initiation of a phase 3 trial of batoclimab in thyroid eye disease and a pivotal phase 2B trial in chronic inflammatory demyelinating polyneuropathy. Turning to zimberelimab, Gilead and Arcus Biosciences announced positive results from the fourth interim analysis of the ARC-7 phase 2 clinical trial in patients with first-line metastatic non-small cell lung cancer.
For Sugemalimab, EQRx announced that the UK and European regulatory agencies accepted its marketing authorization applications for first-line treatment of metastatic non-small cell lung cancer. In addition to that, CStone announced other updates in China as well. Our technology stack is driven by the biological intelligence of our engineered transgenic animals paired with our high-throughput screening technologies to enable discovery of high-quality, fully human antibody therapeutic candidates for a wide range of diseases. As I mentioned, we believe we're the industry's only four species in vivo antibody discovery platform, making OmniAb the most diverse host repertoires that are available. Our experience and our collective dialogue with our partners gives us critical insight into the industry, it creates a positive feedback loop to advance and innovate around our proprietary platforms.
We also have a suite of in silico tools for therapeutic discovery and optimization that are woven throughout our various technologies and capabilities. These tools include structural modeling, large multi-species antibody databases, artificial intelligence, and machine learning sequence models, and more. These capabilities enhance our ability for rapid identification of candidates with the right affinity, specificity, and developability profiles, and leads to more effective and efficient drug development by our partners. In addition, we have extensive capabilities centered around ion channels and transporters that were established and built around small molecules and have clear potential in multiple formats and modalities. We think we can create possibilities for completely new paradigms for approaching ion channel and transporter targets. We continue to invest in innovating around our technology while evaluating strategic technology acquisitions and licensing opportunities to further broaden our capabilities.
For example, in February, we entered into a license agreement with mAbsolve for its Fc silencing platform technology. The agreement provides us with exclusive sub-licensable access to the STR technology, which will provide our partners with the ability to efficiently silence effector functions to help discover and develop safe and effective therapeutics. This is the latest example of creative expansion of our platform. We're also excited to roll out new innovations relating to our platform this year, and our launches of new technologies will generally coincide with major antibody engineering and antibody discovery conferences this year. As I mentioned, we believe we're well-positioned for future growth as we leverage our highly scalable business model and support our partners' pipelines as they expand and advance into the clinic. Through our business development efforts, we plan to add more license agreements and more partners to our portfolio.
Further, we remain committed to investing in our proprietary technology platform to enhance our position as a leader in the marketplace and to continue to offer our partners versatility in workflows. As just one example, during the fourth quarter of this year, we plan to launch a heavy chain-only transgenic chicken, which we see as an important new innovation that our partners will want to access. We look forward to keeping you updated on these developments through the year. With that, I will turn the call back over to Kurt for a discussion of the financials. Kurt?
Thanks, Matt. Before I turn to a discussion of our financial results, I'd like to spend a few moments reviewing our business model and how our license agreements are structured with our partners. One of the key points of the structure of our deals is that they are designed to align the economic and scientific interests of both parties. What I mean by this is that deals are structured so that we get paid when our partners have success. We try to keep access to the technology at a relatively low cost to encourage our partners to utilize the technology as much as they want. In terms of deal structure, agreements typically include an upfront payment for access to our full technology stack. There's also a potential for us to earn collaboration or service revenue should a partner ask us to do work for them.
There are also milestone payments related to the advancements of programs in the clinic and regulatory approval. Lastly, royalties on net sales of our partners' products. We believe the long-term growth in revenue will primarily be driven by royalties. However, I expect that most of the growth in the next few years will be driven by milestone payments. Turning now to our financial results. As a reminder, OmniAb was part of Ligand for the first 10 months of the year, so the financial results prior to November 1st were prepared on a carve-out basis. Starting with revenue, total revenue for the fourth quarter of 2022 was $35.3 million, compared to $15.3 million in the prior year quarter. The revenue increase was primarily due to the recognition of the U.S.-based teclistamab milestone of $25 million in the quarter.
We expect to recognize the remaining $10 million of milestone revenue for the first commercial sale in Europe later in 2023. There are specific accounting criteria for the recognition of this milestone as revenue. As of today, we don't believe these criteria have been met, so it is likely that this $10 million will not be recognized even in the first quarter, but likely later in the year. Our service revenue is down slightly as a result of less work performed for some of our ion channel partners, partly due to the success with some of these programs as they advance into the next stage of development. Operating expenses for the fourth quarter were $26.3 million, compared with $20.4 million in 2021. The increase included expenses necessary to support our standalone structure as an independent public company.
This includes increases in staff costs as we've hired people in various G&A functions, as well as other typical public company costs. I would note that this quarter also included approximately $2 million of expenses that were more one-time in nature. Net income for the quarter was $6.8 million, or $0.07 per diluted share, versus a net loss of $3.1 million, or a loss of $0.04 per share in the year-ago period. For the full year of 2022, total revenue was $59.1 million. The increase in revenue was primarily due to the recognition of additional milestone revenue I just spoke of, as well as royalty revenue from our partners' sales of zimberelimab and sugemalimab. Operating expenses for 2022 were approximately $85.7 million, compared with $70.4 million for 2021.
The increase was driven primarily by the same items that drove the increase in the fourth quarter and mostly relate to the growth in our R&D infrastructure, as well as OmniAb preparing to be a standalone company. Net loss for the full year was $22.3 million, or $0.26 per share, versus a net loss for 2021 of $27 million, or $0.33 per share. I also wanted to make a couple of comments about taxes. A new federal tax law went to effect at the beginning of 2022 that changed the way R&D expenses are deducted. Under the new law, US R&D expenses generally have to be amortized and expensed over a 5-year period.
As a result of this tax law change, combined with the recognition of the teclistamab milestone, we are going to be a cash taxpayer for the fourth quarter stub period, where we were an independent company. We also expect to be a cash taxpayer for the full year of 2023. At the end of the day, this is really just a timing difference for taxes, as we will eventually realize the full benefit of all of our R&D costs. Let me also make a few comments about the share count for EPS. Both our full year and Q4 share count numbers used for EPS represent a blended share count for the period prior to the spin out, which was approximately 82.6 million shares, and the shares outstanding post the spin out, which was approximately 98.9 million.
Going forward, the 98.9 million basic shares outstanding will be the more appropriate base figure to use for EPS calculations. Just as a reminder of various components of our capital structure, in addition to the public float shares, we have approximately 16 million of earn-out shares outstanding, as well as various employee equity awards and warrants. The earn-out shares expire five years after the close of the spin-out transaction, and half vests at a price of $12.50, and the other half vests at a price of $15. The warrants also have a five-year life and a strike price of $11.50. You'll see on the face of our financial statements that we have 115 million shares issued and outstanding. This is the combination of the basic share count as well as the earn-out shares.
We ended the year with $88.3 million in cash equivalents, and short-term investments. Previously disclosed, in January, we received $35 million in milestone payments from Janssen related to the launch of teclistamab. With the addition of these milestone payments, we are in a strong capital position. The business has been running fairly close to breakeven cash flow on an operating basis for the last couple of years. We believe that our current cash balance gives us sufficient runway to fund our operations for the foreseeable future. As for specific guidance, we expect that our cash balance at the end of 2023 will be slightly higher than the balance as of 12/31/2022. I'll close my comments with a discussion of our financial outlook for 2023.
For perspective, I thought it might be helpful by starting to look at our operating expenses over the four quarters of 2022. The fourth quarter was the first quarter that OmniAb started reporting as a standalone public company. As such, the fourth quarter provides the best representative base level of our operating expenses going forward. As Matt mentioned, we will continue to invest in R&D. I would expect our quarterly R&D costs in 2023 to grow off this Q4 2022 base. On the G&A side, remember that the G&A line included close to $2 million of expenses that were non-recurring in nature. If you exclude those one-time expenses, our G&A expense level for the fourth quarter is largely in line with what we are expecting in subsequent quarters throughout 2023, with some nominal growth. One final comment.
I'm pleased to announce that we've hired a new head of investor relations. Her name is Neha Singh, and I look forward to introducing her to all of you in the coming weeks. With that, I'd like to open up the call for questions. Operator?
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the 1 on your telephone keypad. You will hear a 3-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press the star followed by the 2. If you're using a speakerphone, please leave the handset before pressing any keys. Your 1st question comes from the line of Robyn Karnauskas from Truist Securities. Please go ahead.
Hi this is Nishant on for Robyn. Congrats on all the progress and, yeah, thank you for taking our questions. Question around royalties. I mean, I know you have signed a lot more deals with new partners, you know, last year, and then now your platform is validated with more than 25 programs in clinic. For programs going forward, do you expect to negotiate higher royalties for any of your programs considering you have a lot of validation for your projects? Second, on pipeline diversity, I see with the programs in clinic, you have a lot more molecules in oncology. Is that a consideration for you going forward to diversify into the disease areas and, you know, sign new partnerships in new disease areas? Thank you.
Maybe I'll take the first part of that, Matt, and you can talk about the second part.
Sure.
With regards to royalties, you know, you're absolutely right to sort of point out that, as the platform has become more validated, we've actually been able to garner sort of better economics on some of the deals. You know, I can't predict what that is going forward, but if I go take a look at historically, and take a look at the average royalty rate for deals signed in sort of each of the last five years, you'll see a slight trend in terms of higher royalty rates through those deals that are signed. I think that's just a function of, as you point out, the validation of the technology has done that. You know, we hope that that continues, but it's difficult to project going forward.
Matt, on the diversity question.
Yeah. Thanks, Nishant, for the question. Yeah. You point out that for the programs that have matriculated into the clinics first, if you look across that, our platform now has generated a total of a cumulative total of 28 clinical programs, so it's highly validated from that perspective. You're correct. The majority of those from a therapy area perspective are in oncology, although there are some in GI disease, in immunology, also some in inflammation. As you look at our pie chart that we have in slide 7 of the deck, the breakdown there.
As you go deeper into the pipeline, especially in preclinical as well as discovery, we're beginning to see the platform used across therapy areas as one might expect. Things like CNS diseases, inflammation, women's health, infectious diseases and other areas. I think over time, we'll see that diversity build up in the clinic as those programs progress and matriculate through development.
Great. Thank you.
Thank you. Your next question comes from the line of Stephen Willey from Stifel. Please go ahead.
Thanks for taking the question. This is Josh on for Steve. I guess I'll start with which of your transgenic animal platforms garnered the most interest, and how do you see the further development and prioritization of these platforms changing in the coming years? I have a few follow-up questions. Thanks.
Great. Thanks, thanks Josh, for the question. Yeah. We included some data this time to break down a little bit the distribution of the source antibody source technology that our partners are leveraging. If you look across our portfolio, a little more than half of the programs that are being actively moved through development by our partners leverage our OmniRat platform. OmniRat was actually the first platform that we launched. It was the first and is a widely used transgenic rat. The mouse space, obviously there are mice out there, but the rat is quite unique and it's been proven over time to produce robust antibody responses for our partners.
There's also a lot of efficiency and flexibility that OmniRat presents for our partners, allowing us to feed flexibly into their work streams. We've actually even set up breeding colonies of OmniRat for some of our partners who are spinning up multiple programs a year. OmniRat obviously is a large source. In terms of the fastest growing in terms of percentage growth, I'd point to OmniChicken. The chicken has advantages largely because of its evolutionary distance. Chickens are evolutionary very distant from humans and mice and rats. That creates a lot of advantages for our partners that they like to leverage.
And we've been able to really increase the number of partners leveraging OmniChicken by about 10x since the time it was acquired and became part of the OmniAb platform technology. Then downstream to that, we also see nice growth in the bispecific space, both with our OmniFlic, which is a transgenic rat with a fixed light chain, and OmniClic, which is a transgenic chicken with a common light chain. If you look across actually our downstream clinical programs that our partners are progressing through the clinic, a large number of those actually are bispecific antibodies, and that's a growing area of interest for partners as well. Beyond that, I'd also point to OmniTaur.
While it's a small % of active programs today, it's an area that is of a lot of interest, a lot of inbound interest as our BD team is talking to new potential partners, given the fact that those Taur-inspired antibody structural features have the potential to open up new approaches to antibody-based therapies that many partners say they've not been able to access before. We're excited about that as well.
Awesome. I guess that feeds nicely into my second question with regard to how do you typically prioritize partnerships between kind of smaller cap biotech companies to large pharma? Is there kind of a large discrepancy you're seeing? Then are you generally seeing less BD activity from smaller cap companies as a function of kind of macro R&D budget tightening?
Yeah. I'll make a couple of comments, and then Kurt may wanna add in others as well. You know, we're coming off a year last year where we did more new partnerships than we ever have in the history of the technology, right? A large majority of those partnerships are driven by what I'll term inbound interest or scientist migration, scientists who've had positive experiences at one licensed partner and then moved to a new, a new company, and then wanna get access.
We see that as interesting and important because I think it also speaks to the opportunity, which is why we have been and are expanding our business development team really to manage that increase in inbound interest to get access to cutting-edge technologies as the industry has shifted more and more towards antibody-based medicines. We have a number of the partners we've added have been funded biotechs, you know, earlier in their life cycle, but many of them have a lot of really interesting biology. We obviously already have existing partnerships with a number of big pharmas, and they are prolific users of our platform.
At any one time are always in dialogue with many parties, at various stages of development, always negotiating new license deals or negotiating terms. Those include large pharma players as well, who I think understand, especially now post with our new structure, our commitment to continuing innovation, and our commitment to remaining on the cutting edge of antibody discovery. Those are the kinds of things that attract not only biotechs with interesting biology, but the large pharma players as well. Kurt, I don't know if you wanna add anything to that or anything else?
I guess the only thing I would add that, you know, in general, we don't really need to prioritize these things, right? Because that would be maybe what you would have to do if you had a capacity issue. We don't really have a capacity issue.
In many situations is, for example, if we talk about work that's done with the OmniRat, most of those situations our partners we're shipping the rats to them, and they're doing all of the work. You know, that business model is, you know, almost infinitely scalable for us. There's really not a need to kind of prioritize doing one deal over the other. This is about sort of signing up as many people as we can and encouraging them to use the technology as much as we can.
Great. Lastly, just regarding the new J&J tri-specific asset, do you anticipate this to be a royalty-bearing asset or will it have a similar deal structure as seen with teclistamab?
Yeah. The deal with J&J was struck very early after OmniRat was launched and actually it was a deal that was signed by a predecessor company that we acquired, OMT. The way that deal was structured is that upon commercial launch, there's a payment in the U.S. and then a payment in Europe. It's similar to the teclistamab deal, right? That's $35 million in payments for those markets for that asset.
Great. Thank you for taking the question.
Thank you. Your next question comes from the line of Joseph Pantginis from H.C. Wainwright & Co. Please go ahead.
Hey, guys. Good afternoon. Nice to have your first, independent call under your belt here for earnings. The first question I wanna ask is about your underlying BD efforts. Your business model. First, obviously the numbers that you have, numbers of partners and number of programs in development almost act as an inherent marketing tool. I guess, you know, how would you describe your 2023, you know, you know, efforts currently with regard to push and pull, meaning, you know, how much of your current BD is from inbounds versus like the levels of marketing that you had to do?
Yeah. Yeah. Thanks, Joe. Your point about it being an inherent marketing tool is it couldn't be more correct. I think we've benefited historically by partners talking about the success they've had with our platform at podiums at, you know, antibody engineering or protein engineering conferences. That happens consistently, we see it. I can think of an example of Amgen recently highlighting their successful use of OmniFlic at one of the antibody conferences just very recently. That drives a lot of the inbound interest. The majority of the deals we've struck have come from that sort of thing where partners are talking about their success with the platform, and that drives others to understand it.
Also, the level of clinical validation I think is important as well. Now with the number of clinical programs that have been produced by our platform, that creates increased visibility for others who are in the antibody discovery space. One of the things we are focused on and have been more recently is really expanding our business development reach. One, to capitalize on that opportunity, we're actually increasing our attendance at both business development related, licensing related and scientific related conferences this year. We're partnering with some of our partners for joint presentations and publications.
We think all of those things position us to really capitalize on the opportunity that's been built on the innovation and the continued innovation that we're committed to going forward. As I said, at any one time, we're always negotiating new license deals, new partnerships, and we're excited about the way we're positioned now and the way our team's managing it.
That's really helpful, Matt. Thanks for that. I guess the other aspect with regard to your underlying business, you alluded to in your prepared comments, you said OmniChicken, for example, in your prepared comments was the, you know, fastest growing and, you know, new technology, you're constantly working there, and you'll be looking to present at, you know, like antibody engineering conferences. Maybe, you know, without giving away the special sauce right now, but you know, what kind of general tech improvements are you looking at and you'll be able to share with The Street?
Yeah. Yeah. Thanks, Joe. As I said, we plan on launching innovations around our technology at major antibody engineering or protein engineering conferences through the year. There are elements that it's a never-ending process in our view, in terms of continuing to innovate around the platform. We have a really unique and I think important seat in the industry with 69 partners, the number of active programs where we really can have that deep collaborative dialogue with partners to understand not only what they need now, but also to predict where they're headed technologically.
When you start hearing the same things out of multiple big pharma players and some smaller biotechs, you really do get a good sense of what innovations will be leverageable broadly across the industry. One example of that that's really in the past was where we were a couple of years ago with launching OmniFlic and OmniClic, right? Really seeing the bispecific field forming years and years ago, and that's one of the reasons why we started engineering a heavy chain only chicken a couple of years ago. That was done in collaboration with one of our big pharma partners. It will become available and we plan to launch it in the fourth quarter of this year.
Heavy chain only antibodies have a lot of interesting and desirable characteristics. We've turned them kind of nanobodies or picobodies in some instances, but they can open up new therapeutic approaches and have other biological benefits that we think will be something that is desired by our partners. That's one that we expect to launch at a major conference in the fourth quarter.
Great. Thanks for the color, guys.
Thanks.
Thanks, Joe.
Thank you. Your next question comes from the line of Steven Mah from Cowen. Please go ahead.
Great. Thanks for the questions. I have a two-part question on your active partners. If I'm doing the math right, it looks like there was 13 new partner adds and 12 rolling off in the quarter. The question is, of these 12 programs that rolled off, were any of these paused, or were they just terminated? Or could they possibly resurface? The second part, could you give us a sense for these 12 partners that rolled off, were they mostly big pharma or large biotechs or small biotechs? Thanks.
Yeah. Thanks, Steve. I'm not, I don't think I'm following your math. The one thing I would point out, we added 12 new partners last year, right? Through the year, right? Then we did an agreement that was an expansion with an existing partner. There might be a mix-up, or maybe we're talking about... You're talking quarter versus annual. We did not have partners rolling off to that degree at all.
Oh, okay. Gotcha.
I. There might be a clarification there or maybe a interchanging of programs or partners or something. I don't know.
Oh, no. Yeah, no, I didn't. No, I didn't do my math right. Yeah, sorry. I was looking. Sorry, this is my first call with you guys. Yeah, it was annual versus a quarterly. Okay. Yeah, gotcha.
Got it. Good.
You know, you know, on the 13 new partner adds on the, You know, could you give us some color, you know, on the partner type? Are they pharma or biotech? You know, you said OmniChicken is growing the fastest. could you give us a sense of what% of these new partners, added, are OmniChicken?
Yeah. I think I can give you a little color there. you know, of the 12 new partners added last year, the majority were biotechs. These are companies with well-funded companies who are bringing a program forward. We have a high standard for what we count as an active partner and an active program. a number of them have some really interesting biology that I think excite our scientists and have impact, potential for impacts on health in interesting ways. That is an area our team is continuing to be excited about. In terms of how many are leveraging our various technologies, it's really a mix, right?
In terms of what attracts partners to our platform, one is the flexibility to use OmniChicken, say, for a program where that is an ideal approach. At the same time, some of those new partners may also be using OmniRat or OmniFlic as well, right? It really is a mix. Partners do value the fact that they get access to multiple technologies when they take a license with us, and that we can really have a deeply scientific dialogue and pair the technologies with their needs, not only from a scientific perspective but also from an operational perspective in terms of what works best for them.
Okay, great. If I can sneak one last one in. This agreement with mAbsolve, could you give us a sense of the deal structure on that? Is it like a joint venture, or is it just a strict licensing fee? Are they eligible to receive any milestones or royalties from you?
Yeah. I'll give you a little more color there. Well, first I'll answer the economic question. There's no downstream economics to mAbsolve, right? It's a license agreement where we're able to exclusively license their STR Fc silencing technology to our partners with antibodies that are generated with the OmniAb platform. Then there's no downstream to mAbsolve. Now stepping back a little bit just to give a little more color on that. Obviously, the Fc-mediated immune effector activities are important, are really an important part of an antibody's natural function. In many therapeutic antibodies, those interactions are not desirable or can lead to adverse effects.
Obviously there are a variety of approaches to eliminate effector function, but they have a lot of limitations. We were impressed with the STR Fc silencing platform that mAbsolve developed. It was recently described in detail in a PLOS ONE paper, but it delivers from what we see as the most truly silent Fc mutations that have been described to date. Therefore it has the potential to improve safety and efficacy for therapeutic antibodies and Fc fusion proteins. Now it's something we can offer to our partners downstream. Hopefully that gives you a little bit more color.
Yeah, that's helpful. Thank you. Apologies for the mix-up on the new partners.
No problem at all.
Thanks, Steve.
Thank you once again. Should you have a question, please press star followed by the one. Your next question comes from the line of Puneet Souda from SVB Securities. Please go ahead.
Thanks for taking my questions, Matt Foehr and Kurt Gustafson. First one is on, maybe if I could ask a high-level question, on, you know, obviously the small biotech funding is a major question out there. We are seeing that from the companies that provide tools and capabilities to the small biotech. You know, sort of maybe give us a view of what you're seeing from your perspective. How are you including that in your calculation for the year? If you can, I'm wondering if you can talk about the programs, sort of for the full year. I know you talked about ion channel partners were slightly down, but you also talked about, you know, clinical attrition remains very low, which is a positive in my view.
wanted you to just calibrate us on what's going on among the small biotechs. Is that something you're considering into your calculation for the full year?
Yeah, Puneet, thanks. This is Matt, Kurt will probably have some comments here too. Obviously we're, keep an eye on the space and understand, you know, kind of the global landscape. We are coming off a period where there has been a lot of funding into biotech companies, right? I'm speaking kind of in the past here. That we've found as we talk to our partners, has led to really a focus on investment. I mean, again, coming off a year last year with more new partnerships ever. There really does seem to be a sustained commitment to discovery, right?
I think, on a macro level, discovery is obviously important and from a cost perspective with partners, we haven't seen kind of the effects you're implying, based on our dialogue with partners. You go to the conferences we're at, all they want to talk about is new ways of approaching antibody-based targets, structural elements that we, our scientists may be the only ones who can elucidate or provide access to. There really is a real focus on remaining at the cutting edge of innovation for that discovery phase. Obviously we continue to watch the landscape, et cetera, but, you know, we're coming off a year where we signed up more new partners than we ever have.
That shows a commitment on new partners, to want to access the technology to, in many instances, quickly ramp up projects. Hopefully that gives you a little bit of color. I don't know, Kurt, anything you want to add there?
I mean, I think that's right. I mean, had you told me a year ago that we would sign more deals in 2022 than ever, I might have questioned that just given the sort of the state of funding in the biotech universe. Clearly we're still seeing interest.
That's great. It's encouraging, given the backdrop we're seeing out there. One other question on maybe for Kurt on the cash side and position you have and, you know, when you look at the capabilities that you have currently on the animal platform, diverse platform across the board, that's where the strength is. When you look at the overall technology stack from in terms of screening, identifying the right antibodies down the line, assays and whatnot, given that valuations have sort of come down across the space and some of those technologies and maybe even to the private markets, how do you think about the overall, you know, your technology stack and capabilities and, you know, and investments into that?
You know, should we think about more internal work or organic or should we think about more, you know, some opportunities that you can explore out there to improve that, capabilities?
I think the short answer is both. You know, I don't think we need to go do M&A in terms of really, you know. There's nothing that sort of is missing out of the technology stack. That being said, we have our eyes on certain technologies that we think would be synergistic with the technology stack that we have today, and we're on the lookout for those. Some of that could come through, you know, an acquisition of technology that's external to us today. Some of it will be some internal investment that we're going to make. You know, we've got an internal strategic plan of how we want to build out our technology stack further and, you know, we'll execute that.
I think it'll be a combination of both internal investment as well as, you know, some acquisition of new technology.
Got it. Last one on the OmniChicken platform. You were talking about potential additions to that with cow-inspired ultralong CDRs. Can you just provide an update on that where that stands?
Yeah. Yeah. Thanks, Puneet. Yeah, we didn't cover it in prepared remarks today as I'm, you know, we're highlighting the launch of the heavy chain only chicken that we'll do in Q4. You're right to bring up part of the rationale for the OmniTaur platform and for acquiring the business where that originally resided was that it opens the possibility for us to engineer those unique cow-like properties, those long CDR H3s into a humanized chicken host. And there's a lot of science behind that, and our team is doing great work progressing that, something that we are very excited about, and we feel we're uniquely positioned, perhaps the only people on the planet, that can do that.
That is a program we will be talking more about in the future. It's the kind of innovation that I think attracts partners to us because they realize the impact that that can have, especially in areas like CNS diseases or other infectious diseases or emergency settings or a variety of targets that having that structural characteristic built into a humanized chicken host creates some pretty substantial and meaningful opportunities downstream, especially well-matched with our capabilities around ion channels and transporters as well because ion channels and transporters are targets where that technology could be even more meaningful.
You pair that with our extreme high-throughput electrophysiology capabilities that were built up over many, many years, we're talking decades, you know, we believe we may have some of the largest capacity in the world, anywhere in the world for screening ion channel and transporters. You pair something like that capability, the engineering in an OmniTaur-like chicken, if you will, to just use general terms, that's something that could have a pretty significant impact to the industry downstream. That's something we expect we'll be talking more about in the future, but is just another example of some of the things we're working on around tech expansion and advancement internally.
Got it. Super. Congrats on the first quarter call and it's a solid one. Thank you.
Thank you.
Thanks, Puneet.
Thank you.
Thank you. Your next question comes from the line of Yuan Zhi. from B. Riley. Please go ahead.
Thank you for taking our questions. I have two of them. Matt, some of your peers are using AI to generate antibodies. Just want to hear when you talk with your potential customers, has this topic been discussed with them? What factors of your platform do you think would convince customers, your platform is the right choice?
Yeah, thanks. Really, so a couple of comments I'll make. Really we at the core of our technology is what we call biological intelligence, right? Based, that is based in a foundation really that antibodies generated in vivo are superior for from other sources, largely because they're naturally optimized through an iterative process that preferentially selects antibodies with excellent specificity and developability profiles, right? That ability of the immune system of our engineered transgenic animals is something we have been uniquely positioned to do, but also has developed over millions and millions of years of evolution, right? Those optimized antibodies and the ability of our animals to do that is what we call biological intelligence. This approach really increases efficiency and probability of success.
It's what drives a lot of partners to us. We believe it also helps limit the attrition of antibody candidates in the clinic. That said, we obviously leverage in silico tools here all the time, right, spread across our three scientific sites here in Emeryville, in Tucson, Arizona, where we have a dedicated in silico team, with a long history of modeling and structural modeling and a whole host of other capabilities, as well as our team in Durham, North Carolina. I think it may be a little underappreciated that here for many years, we've built up a suite of in silico tools for therapeutic antibody discovery and optimization that are really woven through and paired with our technologies.
These two tools are, as I said, structural modeling, but they're paired with large multi-species antibody databases, and that's a really key part. If you've been through as many programs as we have over many years, deep collaborations with partners, and we then use that, and we also leverage AI and machine learning here as well. That is something else that I think our partners value may not be as well known that we do that because to us it's good science. You weave it together, but unless you've got that biological intelligence source that was built over millions of years of evolution, you know, those tools are hindered without that.
we see, we obviously leverage that as well and are proud of the fact that we advance programs for our partners, pairing those internal capabilities, obviously with our novel transgenic animals.
Yeah. Got it. That's very helpful, and thorough review of your platform. Kurt, maybe one for you. Understand the uniqueness of your business. As you know, there are active royalty deals on the market, and can you remind us the discussion you may have had with these royalty players to monetize your future royalty or potential collaborations, or any of your thoughts will be very helpful.
Sure. you know, these folks come and, we have conversations with them, so we're certainly aware that those are options that are out there. I think in terms of where we stand today, though, as I kind of talked about
We're sitting in a strong capital position, right? This business is in some ways a fairly mature business that's fairly close to breakeven cash flow. Given the amount of money that we have on the balance sheet today, we're sort of set. As I look forward into the future, I don't foresee the need to raise additional capital, you know, barring some sort of acquisition that we might do. You know, we talk to those people. We're aware of what's out there, but it's sort of not part of anything that we're contemplating, you know, at this point.
Got it. That's all our questions. Thank you.
Great. Thanks, Yuan.
Thank you, Mr. Ford. There are no further questions at this time. Please proceed.
Great. Thanks. I'd like to thank you all for joining today's call and for your questions and engagement. As I close out the call here, I also wanna take a really quick moment to thank our employees, as completing a split out of from a public company is a substantial project and takes some business stamina, relentless attention to detail and collaborative teamwork to do. To do that all while running and growing the business, supporting our partners, innovating around the technology as well. I wanna thank the employees. I will say that together, we feel great about our positioning and our ability to build value for all stakeholders, which includes, of course, our partners and of course, importantly, you, the investors.
We keep these things top of mind here at OmniAb. Just wanted to close out with that. I'll also mention that we'll be at a couple of investor conferences in the nearer term. We'll be at the H.C. Wainwright BioConnect Investor Conference at the Nasdaq headquarters in New York City on May second. We're also planning on attending the EF Hutton Global Conference on May eleventh, which is also in New York City. We'll look forward to keeping you updated on our progress, and I hope everybody has a great day. Thank you.
Thank you. That does conclude our conference for today. Thank you all for participating. You may now disconnect.