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spk01: quarter and full year 2023 financial results and business update conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to Kurt Gustafson, OmniApp Incorporated Chief Financial Officer. You may begin. Thank you.
spk05: Thank you, Operator, and good afternoon to everyone. As he said, this is Kurt Gustafson, And I want to thank you all for joining our fourth quarter and full year 2023 financial results conference call. There are slides to accompany today's prepared remarks, and they're 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 20, 2024. 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 Foer, OmniApp's 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'll open the call to questions. With that, let me turn the call over to Matt.
spk02: Thanks, Kurt, and good afternoon, everyone, and thanks for joining our fourth quarter and full year 2023 conference call. As we kick off the call today, I'd like to mention that our clear mission here at OmniAb is to enable the rapid development of innovative therapeutics by pushing the frontiers of drug discovery technologies. We do this within a pure play licensing business that is partnering focused and that's designed to be efficient, scalable, highly leverageable, and that we believe is now poised for growth to meet what we see as an enduring and global need in the pharmaceutical industry. Our technology offering addresses the most critical challenges of antibody-based drug discovery. We have a highly differentiated suite of technologies that are proven and increasingly leverageable. Better industry success rates and other factors are driving an acceleration of antibody-based investment by the pharmaceutical industry, and we think we're well-positioned to meet increased demand for cutting-edge antibody-focused discovery technologies. OmniApp grew significantly in 2023, making substantial progress across key elements of our business. This included expansion of our partnership base and our pipeline of partner programs, advancements of key late-stage programs by some of our partners, and global expansion of our business development team. We now have BD team members in the U.S. and in Asia, based out of Singapore, and in Europe. We're focused on and dedicated to continued innovation and executed extremely well on that in 2023 with two successful new technology launches, including OmniDeep, which is our suite of in silico AI and machine learning technologies and capabilities that are woven throughout our technology stack and that marry extremely well with the biological intelligence of our transgenic animals. In November, we launched OmniDAB, which is our latest example of a novel transgenic animal, and I'll talk more about that shortly. We had an impressive list of achievements in our first full year as an independent public company, but our focus remains on pushing the boundaries of technologies to continue to meet the needs of our partners now and in the future. We have an increasingly efficient internal technology innovation engine that helps frame how we believe we'll create long-term value for all of our stakeholders. And building on this momentum from 2023, we're looking forward to continued growth in the year ahead. Here now on slide number five, you can see some of our business metrics. And these graphs in many ways speak for themselves and I think clearly show that 2023 was another year of substantial growth and progress in our business. Despite sector-related and macro headwinds last year, our key performance indicators continued to perform extremely well. Our active partners grew to 77 from 69 a year ago, representing a 12% increase. Our active partner programs also grew by 12%, with an increase to 325 from 291. And lastly, our active clinical and approved programs increased by 23% as we had 32 at the end of 2023 compared with 26 at the end of 2022. I want to stress that all of these numbers here are net of attrition. And I note that attrition is obviously natural and it's expected in pharmaceutical discovery and development. I'll now talk about our partnership base in a little more detail here on slide number six. 2023 was highly productive in new partner additions as our number of active partners continued to grow net of attrition. We saw multiple factors driving this expansion, including platform visibility and clinical and commercial validation of our technologies and expanded business development and marketing presence that's backed by our cutting-edge science and our new technology launches. As we continue to focus on licensing to align our interest with our partners, we're attracting and bringing in a diverse set of partners to bolster the next wave of discovery and preclinical candidates advancing to the clinic. Moving now to slide number seven, here we're providing a further breakdown of our new platform licensing deals from last year. We signed 10 new licenses in 2023. And today we're disclosing new platform deals with Enable Life Sciences, as well as one with a startup company that were both signed in the fourth quarter, along with a previously disclosed Big Pharma partnership that was also executed in Q4. And as I said, we signed 10 new deals in the full year of 2023. As you see here on the chart, two were with well-established global Big Pharma players, as well as deals with new biotech partners and academic partners. We added four new deals with startup partners, and I want to highlight that 40% of our deals were done with startup companies despite the significant drop in funding for smaller or new biotech companies in 2023. We see this diversity of new partners as a strength in our business. Maintaining our business track record of execution, we've also seen nice growth and advancement of active programs, and I'm now on slide number eight. As mentioned, we started 2023 with 291 active programs and grew to 325 active programs net of attrition. You can see the growth reflected on the left-hand side in the bar chart. The pie chart on the right breaks down our 325 active programs by stage of development. By the end of 2023, our growing discovery phase consisted of 278 programs and 15 programs that were in the preclinical stage. And importantly, we define preclinical stage programs as ones that are confirmed to be in pre-IND or IND-enabling studies. During 2023, we had six programs move from preclinical to Phase I clinical trials. So at the end of the year, we had 25 programs in Phase I trials And I note also that one program moved from phase three to its first international registration filing. With these leading positive metrics, it's also good to see that we have kept and are building momentum for the growth in active clinical programs that are shown here on slide number nine. We started off 2023 indicating that we expected three to five new clinical starts by our partners and we ended the year with six new clinical starts. To mention a few just briefly, CGEN announced initiation of a first-in-human Phase I clinical trial of its bispecific SGN-BB228, which is targeting anti-CD228 and 401BB in advanced melanoma and other solid tumors. This program is now in Pfizer's pipeline following the closure of their acquisition of CGEN and going forward will be referenced by its Pfizer project number. Immunovant initiated a Phase I clinical trial of its next-generation anti-FCRN IMVT-1402 in autoimmune diseases, and Cessation began a Phase I study of CSX1004, which is a monoclonal antibody derived from Omnirat designed specifically to prevent fentanyl overdose. During the fourth quarter, BioCity Biopharma announced the first patient was dosed with its first-in-class CDH3-targeting antibody drug conjugate, BC3195, in a Phase I trial in China. A number of our other partners also reported progress on other clinical and commercial stage assets in Q4, and some of those were summarized in our press release that was issued after the market closed today. Based on our dialogue with partners, we see potential for approximately four to six new entries into clinical development for novel OmniAb-derived antibodies in 2024. As I mentioned, we're committed to continued innovation around our platform. And because of the nature of our relationships, we have a great vantage point, not only on where the industry is right now, but where the industry is headed. And that informs the technologies that we develop and deploy. Last year, we launched OmniDeep and OmniDab, and both of those are called out here on slide 10 in the two green boxes on the lower left. I'd like to highlight the OmniDab technology that was launched in Q4, as it's quickly becoming yet another key differentiating technology here at Omnia. A foundation of our business is our novel transgenic animals. We believe novel antibodies that are generated in vivo are superior to ones from other sources because they're naturally optimized through an iterative process that preferentially selects for antibodies with excellent specificity and developability profiles. The ability of the immune system of our engineered transgenic animals to create optimized antibodies for human therapeutics is what we call biological intelligence. And we believe this approach increases efficiency and probability of success for our partners and positions our business extremely well. So Omnidab is our latest example of this. And as described here on slide 11, it's the first and only transgenic chicken producing single-domain antibodies, which is a novel class of antibody found naturally in camelids that's being increasingly exploited for a variety of therapeutic applications. Omnidab is a novel in vivo platform based on a human VH scaffold that affinity matures in a chicken host to provide a functionally diverse immune repertoire of antibodies unavailable from mammalian systems. In a simple sense, single domain antibodies provide modular building blocks and can be assembled into various formats to fit the biology of a desired application. And you can also see on this slide some of the things we hear from our partners about the technology as multiple partners are using it now in active programs. We expect many more will initiate programs with Omnidab this year and next. This is partly because of the unique physical properties of single domain antibodies that are summarized here on slide number 12. It can be expressed independently as a unit, and their compact format opens up new and important opportunities from a scientific and medical perspective. Single-domain antibodies can be leveraged for important applications. They can open up alternate routes of administration that we show here on slide 13. They can lead to increased penetration and tunable clearance, and also to new opportunities and new markets for us in imaging, in diagnostics, in theranostics, and in radiotherapy. And they also have broad therapeutic applications in bi and multispecifics and CAR-T therapy, as well as pursuing therapeutics for CNS and neurodegenerative diseases, which are obviously areas of significant interest for our partners. Now, as we look at the current year here on slide 14, in addition to expecting four to six new clinical programs, we expect we'll see late-stage advancement for a number of key programs at GENMAB, at Immunovant, and others. We also expect that our progress on some of our higher value ion channel programs with global big pharma partners will become more visible to investors and to the research world generally. And we're excited about that. We now have a fully staffed business development team and a more efficient innovation and support engine that we plan to leverage for deal expansion globally. And we'll continue to focus on innovation and expansion of our technology platform and the introduction of new technology, new workflows, and new partner experience enhancements that we'll talk about at scientific and technical conferences through the year. And with that, I will turn the call back over to Kurt to run through the financials. Kurt?
spk05: Thanks, Matt. So bear with me one final time as I make the statement about our historical financials. These financial results reported for the periods prior to November 1, 2022, are prepared on a carve-out basis, which were derived from Ligand's historical accounting records as if Omniab were an independent company. This makes certain comparisons difficult, primarily for operating expenses, given the differences in corporate structure and the methodologies for reporting. So, moving to slide 16. This summarizes the financial performance in the fourth quarter of 2023. Total revenue for the fourth quarter was $4.8 million compared to $35.3 million in the prior year quarter. The decrease was primarily due to the recognition of the tech volley milestone of $25 million that was recorded in Q4 2022. Service revenue was lower primarily due to the completion of work on certain ion channel programs, and royalty revenue was about the same as it was last year. Turning to operating expense, our R&D expense for the fourth quarter was $14.8 million compared to $12.9 million in the prior year quarter. The increase was primarily due to higher personnel costs and investments in our new facilities. For G&A, expense was $7.9 million compared to $10.2 million in the prior year quarter. Our G&A expense was down due to the transaction costs associated with the spinoff that were recorded in Q4 of 2022. This was somewhat offset by the higher headcount-related cost as we built up the G&A side of the business over the course of 2023. The net loss for the fourth quarter was $14.1 million, or 14 cents per share, versus a net income of $6.8 million, or 7 cents per share, in the prior year period. One additional thing that I want to point out is regarding our tax rate in the fourth quarter. We recognized a one-time benefit in the fourth quarter of 2022 2023 that was primarily the result of a deduction for transaction-related expenses associated with the spin-out. Absent one-time items, we generally expect our tax rate to be around 20% going forward. Turning to the full-year results on slide 17, for 2023 total revenue was $34.2 million compared to $59.1 million for 2022. Our license and milestone revenue was lower versus the prior year. The primary difference between the two years was the revenue recognition of the Tech Bali milestones. We recorded a $25 million milestone for Tech Bali in 2022 for the commercial launch in the United States versus the $10 million milestone that was recorded in 2023 for the EU launch. Recall, however, that the cash for both milestones was actually received in 2023. Service revenue was down compared to the previous year, primarily due to the completion of work on certain ion channel programs. Operating expense for 2023 was approximately $103.6 million compared to $85.7 million in 2022. We saw an increase in R&D costs associated with higher headcount and the investments in our new facilities in 2023. And for G&A, we saw an increase in costs associated with building out our G&A infrastructure which included both people as well as normal public company costs that were not part of the expense structure for most of 2022. Net loss in 2023 was 50.6 million or 51 cents per share versus a net loss in 2022 of 22.3 million or 26 cents a share. 2023 was a year of establishing our operations as a separate public company and building a base from which we can grow the business. As you can see, looking at the total operating expense line on slide 18, operating expenses leveled out at about $26 million per quarter. But keep in mind that a good portion of our operating expense is non-cash. But we now have the personnel and facilities that we believe will be sufficient to support the growth of the operation well into the future. Importantly, we expect to continue to grow the number of partners and programs, but this growth will require a minimal additional headcount going forward due to the leverage that is built into our business. As a result, we expect operating expense in 2024 to be approximately the same as it was in 2023. This is a differentiating feature of our business given that our workstreams leverage the biological intelligence built into our transgenic animals to discover new molecules. Turning to slide 19 and taking a look at the balance sheet and our cash position, we ended the year with $87 million in cash versus a starting cash balance of $88.3 million. The only other kind of major change on our balance sheet of note was the reduction in accounts receivable that was based on the collection of those tech value milestones. To set the stage for our projected cash position going forward, I think it's important to understand the components of what drove our cash burn in 2023, which is shown here on slide 20. If you look at the hashed black bars, in the chart on the right, you'll see our actual quarterly cash flows for 2023. These show that our net cash used for the full year was $1.3 million. However, this was aided by the receipt of a $35 million payment for the Tech Valley milestones that were received, both of them were received in Q1 of 2023. The blue bars show cash burn excluding this payment, which show that pro forma cash burn averaged about $9 million per quarter for a total of 36.3 million for the year. As we look ahead to 2024, we expect our cash use in 2024 to be relatively similar to the cash use in 2023 when you exclude the $35 million tech volley milestone payment that we received in 2023. However, unlike 2023, the timing of our cash burn will be more front-end loaded in 2024. Q1 is traditionally our largest burn quarter due to compensation cycle items, and in 2024, we are projecting that milestone payments will be weighted toward the second half of the year based on the latest information we've received from our partners and public statements that they've made. Looking at the following year based on the expected progression of our existing partner pipeline, we expect our cash use in 2025 to be substantially lower than in 2024. We still expect that our cash, our current cash balance and cash from operations should provide sufficient capital to fund the operations for the foreseeable future. The view of our longer term cash is based on a model that forecast cash inflows from each of our existing partner programs utilizing standard industry timelines for clinical development and applying standard industry probabilities of success. For example, we had 25 programs in phase one studies at the end of 2023. Based on standard industry probabilities, we would expect approximately half of those to make it to a phase two study. Using industry average, we calculate the amount of time a program would spend in a phase one study before moving to a phase two study, We then multiply the contracted phase two milestone payment by this probability to come up with our projected milestone payment. Now in reality, we will never get half of a milestone payment. However, given the number of programs that are under development, we believe that this methodology provides a suitable way to forecast future revenue. One additional point is that this cash outlook excludes any sort of strategic technology acquisition. And with that, I will let Matt make a few closing comments before we open up the call to Q&A.
spk02: Thanks again, Kurt. I want to reiterate that in just over a year after completing our spinoff and becoming an independent company, we've made great strides in our business execution. OmniApp is primed for growth, and our business is now highly scalable and highly leverageable given the team we've assembled and the previous investments that we've made into the business. We focus our organizational energy here on our stakeholders, which we see as our team, our partners, and the patients that their programs treat or will treat, the communities where we work, and of course, and importantly, on our investors. And with that, I will now turn the call back over to the operator to open it up for questions. Operator?
spk01: Thank you. Ladies and gentlemen, we will now conduct a question and answer session. If you have a question, please press star followed by the number one on your telephone keypad. You will hear a three-tone prompt acknowledging your request. If you would like to cancel your request, please press star two. Please ensure you lift the handset if you're using a speakerphone before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Puneet Sudha from LeeRank Partners. Your line is now open.
spk08: Hey, guys. Thanks for the questions here. So first one, Matt, if I could ask around, you know, in terms of, you know, overall expectations, you ended up ahead of that. The number of programs were also ahead. So just trying to parse out how much of this is simply a function of biotech fundraising and also M&A that we have seen, you know, in the first three months this year. And how much of this is due to more business development conversations? Could you maybe, you know, parse those out? And maybe you were seeing some effect of that already in 2023. So maybe just talk to us about sort of what you saw at the end of 2023 and what's been the conversation on the business development side in the first quarter here as well.
spk02: Yeah. Yeah, Puneet, thanks for the question. you know, implicit in your question, and as you said, you know, we're coming off a period in 2022 and 2023 when, you know, the biotech funding generally was down substantially, right? Smaller companies especially were having a hard time raising money. Big pharma is well established. We're taking a close look at their pipelines and focusing their energy on certain assets or therapy areas. And really, despite that, in 2022 and 2023, we saw really nice growth net of attrition in active partners as well as active programs. In fact, 2022 and 2023 were some of our highest growth years in terms of number of new licenses. In some ways, it can be hard to parse out the various elements of what's driving that growth, right? We were building our business development team through the year. Last year, we had some nice visibility for the platform really driven by the increased investment in innovation and launching new technologies, as well as nice headlines from partners who were progressing nicely through the clinic. So I think all of those things play a role in the growth that we're seeing. It is clear that the industry as a whole appears to be off to a good start this year, especially when you compare it to 2022 and 2023. And we think that really does position our technology quite well, given the level of validation and visibility and momentum that we're building up. So hopefully that gives you a little more color.
spk08: Yeah, that's helpful, Matt. And could you talk a little bit about, in terms of single domain antibodies, you pointed to a couple of areas where they could be potentially applicable. Within the context of your prior you know, product launches, maybe just talk to us, how would you stack this, the level of interest you're getting here and your expectations for sort of the growth in this technology?
spk02: Yeah, yeah, Puneet, thanks. In terms of the amount of interest in Omnidab, I really can't recall another technology that we've added on or launched that that has had more interest on day one. In fact, you know, really the moment that we launched it, we were already, when partners knew it was coming, we were already working on antigen for a number of programs. We now have multiple partners leveraging the technology, some of them with multiple programs. And it really is, I think, a technology launch that was very well-timed. from a number of perspectives. Obviously, these are all discovery stage at this point, but, you know, it was really dialogue we've been having with partners over the last couple of years that informed our conviction around the need for a single domain technology like OmniDab that can leverage the chicken host, especially when it's paired with our screening and other technologies that are woven throughout our stack. So, yeah, we feel really good about the work that's already going on, the dialogue and the deliverables that are already being provided to partners who were, you know, the earliest users that started at the end of last year. And, yeah, we're excited about how it positions the business.
spk11: Got it. Okay. Super helpful. I'll hop back into Q.
spk01: Your next question comes from the line of Joe Pantinis from HC Wainwright. Your line is now open.
spk10: Hey, guys. Good afternoon. Thanks for taking the question. Before my questions, actually, I think it's pretty encouraging at this point, you know, having modeled both ends of the business from the LIGAN days to really hear the efficiencies that you have in place now and that you don't really need to add, you know, employees that much, you know, even as your number of programs grow. So that's very nice to hear. So my first question, I guess first starting high level, so not to sound, well, you're already doing cutting edge technologies with regard to antibody discovery. So you did mention it briefly in your prepared comments, but how have you seen the role of AI impacting your technologies? Because obviously that's not only just the catchphrase of the day, but increasingly important with regard to these technological breakthroughs.
spk02: Yeah, Joe, thanks. This is Matt. And obviously AI, and you've known the business for a while, tracked the business for a while. AI, big data management, deep learning, machine learning, these are all areas that we've been involved in and leaning into for quite a while, really the last few years or more. It comes naturally when you're in the sort of cutting-edge science world that we're in, and it is an area that we've been leaning into much more. Last year, last May, we launched OmniDeep, which is our suite of in silico AI machine learning tools that leverage, you know, large multi-species databases. We launched that in May of last year, but really many of our partners knew we were in this space long in advance of that. And really what OmniDeep is designed to do is leverage deep learning and really provide the best of our in vivo engineering capabilities and our in silico capabilities. So we use high quality input data. We have deep learning models that we've presented on at scientific conferences that leverage variational autoencoders to really extend insights that we already get from our screening hits to infer function on other untested areas. suggesting new hits and then putting those through in silico developability filters. So we really are using AI and leveraging it here and have been for quite a while. It really does offer our partners new, larger-scale discovery workflows with big data, allows us to use optimization tools for existing discovery campaigns. It really provides high-quality training data, if you will, for a lot of those capabilities that we've built up over time. So hopefully that's helpful to you.
spk10: No, it certainly does, Matt. I appreciate that color. And I guess my next question and my last question really applies to both the growth and the number of partners that you've been seeing as well as Attrition rates, so I guess, you know, is there sort of a steady state because you have long term data, you know, not only from the spin out, but even, you know, from the times that ligand and from the initial start of Omni app, you know, any steady state rates that you're sort of seeing with regard to partner growth. Obviously, you know, we have the charts about number of partners growing, but, you know, how that. links to the visibility of your BD discussions about how many are mature and the attrition rates, does that sort of, is it standard over time or do you see a lot of volatility? And of course, I'm using the analogy from back in the day of Captisol where it's really changing from quarter to quarter.
spk02: Yeah, Joe, look, I mean, we always, as you pointed out, we report our numbers net of attrition for active partners, active programs, and active clinical and approved products, largely because we find that gives the best clarity on where the business stands and where it's headed. Attrition, of course, is very natural, very expected in pharmaceutical discovery and development. It can be different. um, stage to stage and, you know, as we're building up our experience with, with programs and our portfolio, you know, there are some interesting insights, but it is, I think, still early in some ways. I mean, one, one I will point out is that, um, while, while time in different phases can vary program to program, um, based on, um, therapy area and the work that's needed based on, you know, a variety of factors, investment profile from the partner, and, you know, how many things are done in parallel versus sequentially and things like that. You can have, you know, at least a difference in phase-to-phase. But I'll point out our preclinical section, which is the orange slice in our pie charts in the slides. We have a very high hurdle for what we put into preclinical. These are programs that are in pre-IND studies. We've actually not had any attrition in preclinical. Now, it can be different timeframe to timeframe in terms of how long something is in preclinical. If it's in a cancer indication, it may move into the clinic more quickly than if it's in a CNS indication or if it's in a metabolic indication or inflammation. We do see variability in time in the various stages, but, you know, differences stage to stage in terms of attrition rates, discovery versus preclinical versus clinical.
spk10: Got it. Very helpful caller. Thank you, Matt.
spk01: Your next question comes from the line of Stephen Wiley from Stiefel. Your line is now open. I'm sorry, your next question comes from the line of Chad Wiatrowski from TD Cowen.
spk06: Hey, guys. How's it going? On the sales rep, what's the size of the sales force, and can you give that geographic mix? I know you mentioned U.S., Singapore, and EU, and do all the sales reps focus on the entire suite of transgenic animals, including the newly launched products?
spk02: Chad, yeah, this is Matt. Thanks for that. Yeah, so we've built our business development team of really experienced folks who have deep scientific foundation as well as business foundation also. So we have a team of BD professionals here in the U.S. We have a West Coast presence and East Coast presence, and then also coverage of the middle of the U.S., Then we've got a BD professional based in the UK that covers Europe. We also have alliance team members that are based in Europe as well who support and are involved with our business development efforts. And then our Asia presence is based in Singapore but covers all of Asia. So that's our makeup of our BD team.
spk06: Got it, thanks. And then on Sugamalimab, like, does the approval in China of the additional indication or a potential U.S. approval give you any type of milestone, or are these legacy-type large upfront milestones largely cycled through the business after these teclistamab ones this year?
spk05: Yeah, so specifically for Sugamalimab, the approval milestones, have sort of been hit already. So really the only thing left on that program is to receive royalties. So, you know, we're generating you know, small but kind of steady royalty revenues from China and that to the extent that the drug was approved in additional territories, you know, we would hope that that would translate into additional sales that would translate into additional royalties for us, but there's sort of no, you know, other one-time payments that would come to us for milestones for that program. That's helpful. Thanks for the questions, guys.
spk06: Sure.
spk01: Your next question comes from the line, Stephen Wiley from Stifel. Your line is now open.
spk00: Yeah, hopefully you guys can hear me now. I apologize for that.
spk01: Yeah, we can hear you, Steve.
spk00: Perfect. So I know of the six programs to enter the clinic this past year, I think five of those were, or five of those included downstream participation on the royalty front, right? I think only the Roche asset was a legacy fully purchased. paid license. I guess of the active programs and various stages of discovery and development now, what proportion of those include downstream participation on the royalty end? Have you kind of worked through a lot of those fully paid licensing transactions?
spk05: Yeah. So, you know, Steve, this is Kurt. I'd take you back to kind of what we talked about on our research and technology day, kind of back in November of last year. So only about just a handful of our programs involved, you know, something where there was a prepaid license or a grandfathered license, if you will, where we don't have economics. So, you know, we said 2% of the entire portfolio. That number still is, you know, I don't think we'll update that number every quarter, but it still holds as of today, you know. The vast majority of our programs have downstream economics. Obviously, every program is different, but there are very few that have this sort of structure that was a prepaid license.
spk02: Yeah, and I'll just add a little color there too, Steve, that all of the 2%, which as we do new deals, that number is getting lower across the portfolio. Those were deals that we inherited, if you will, not ones we would do today generally.
spk00: understood i i i had forgotten you guys had shared that back in november um and then kurt you're kind of referencing of uh expecting substantially lower cash use in 25 year relative to 24. i think you kind of talked about that maybe a little bit on the milestone front but is there any are there any other drivers there that you guys are thinking about um When you think about that 2025 cash use number, is there some kind of royalty component to that? Is there an ion channel partnership component to that? We'd just be kind of curious as to whether or not that's just all milestone driven.
spk05: Yeah, I think that's the vast majority. I sort of talked about the shape of our revenue. And sort of in the near to medium term, we think that the vast majority of revenue growth is going to come from milestones. as you start looking further out, say, you know, three, four, five years out, I think royalties will start to be a bigger, you know, part of the revenue growth story. But yeah, in terms of the way we're looking at this, and essentially, Steve, we just, we lay out all of the partner programs and we just sort of estimate what the timelines are. And when we get to kind of 2025, there's just a lot more catalysts in terms of, events that we think could potentially happen. We don't know for sure whether they happen, but as I kind of talked about, we take a probabilitized approach when we look at those. But the more events, the more possibilities for additional inflows from milestones. But yeah, I mean, going back to your basic question, there's nothing else out there. This is really, the short term is going to be driven by milestone payments.
spk00: Okay, I appreciate it. And maybe just lastly, Matt, you had made a comment, I think, about there being an opportunity for the Ion Channel and transporter partnerships with Roche and GSK to become more visible to investors, I guess, maybe over the next year or so. Is there anything more that you can just add there with respect to this kind of progress that's being made? Or I guess anything that you can say? I'm sure Roche and GSK are driving the communication part of this, but...
spk02: Yeah, and we've highlighted before that we've got five ion channel programs that are active discovery programs with GSK and Roche. Total milestones for those five programs added up are over a billion dollars. They're generally in the neurodegenerative area. and other areas where ion channels are critical. We do have really a rich heritage there in ion channel discovery and screening. They're all discovery stage, so I want to stress that, but we are excited about the work that's going on and excited about the progress that we expect to make on those programs this year.
spk00: Understood. Thanks for taking the question.
spk01: Your next question comes from the line of Matt Hewitt from Craig Hallam. Your line is now open.
spk09: Hi, guys. This is Jack on for Matt. We just have one question. It seems like there's a noted pickup in activity at the end of fiscal 23. Has that momentum carried through Q1, or how is the quarter looking so far?
spk02: Yeah, Jack, thanks. We'll obviously update on our metrics for Q1 when we report formally, and obviously we get – we obviously interact with partners every day, all the time, and are always working on deals from a business development perspective. But we also get reports from partners at various points during the quarter, often near the end of the quarter. So, we'll report those numbers when we report likely in the May timeframe for Q1.
spk11: Okay, thank you.
spk01: Your next question comes from the line of Robin Karnascus from TruViz. Your line is now open.
spk04: Hi, this is Alex on for Robin. The progress has been really great. We're excited to see. We're wondering now that the pipeline is more mature, there are more molecules in the clinic, various stages, will anything change with how you approach new partnerships and the deals that you're considering with new partners? Let us know if the strategy will change at all now that you're potentially at a different stage than you were before.
spk02: Yeah, Alex, I mean, we are extremely, I'll say, mission-focused, right, on really enabling rapid development of cutting-edge drugs for our partners by being focused on licensing drug discovery technologies. We expect, and that is our plan. We are highly committed to that plan. It's something that I think our partners really value. And we are at a stage now with the growth in the number of partnerships that we've built up that the deep relationships that we have with our partners really inform our conviction and focus around technology investment. So we feel great about our mission, great about the momentum we're building up with partners. And we're going to stick with that strategy. That is the right strategy for this business. We hear it all the time from partners, especially some of our newer partners, and I'll point out new big pharma partners who we added last year who were attracted to our technology because of our clear-minded focus on technology development. and meeting their needs not only now but in the future. And so, yeah, we feel great about the business that we're building and our ability to execute on it.
spk04: Sounds great. And another one, if I could, we're really excited to hear about all the interest in the Omnidab program and the new scaffolding tech that goes into that. What is the feedback from the partnerships on that? any other stones left unturned? What type of tech investors could see in the future? Is there another stage that you're working on or anything that you can allude to about challenges that still need to be addressed?
spk02: Look, it's an area that I get very excited about, as everyone here will tell you. And we've got a pretty exciting investment plan in new technologies that's built into our plan. We're becoming more and more efficient in terms of rolling out new technologies. That's largely because of investments that we've made in facilities and workflows and things over recent years. I'll just say generally I'm excited about our work around the novel scaffolds area, which is that kind of lower left-hand area of our technology continuum. Also, more abilities and work around big data management and things like that that I think will benefit programs and accelerate programs, and also some more scalability initiatives around screening and other things. It gets pretty technical pretty fast, but we'll be talking more about those things at the major antibody discovery conferences through the year. like PEGS and AETC, but we're excited about our internal innovation plan.
spk04: Yeah, well, that sounds great. And, yeah, I think we're all excited about 2024 and beyond. Thanks so much.
spk11: Thank you.
spk01: Your next question comes from the line of Connor McNamara from RBC Capital Markets. Your line is now open.
spk07: Hey, guys. Thanks for taking the questions. Appreciate it. Just for you, I appreciate that color you gave on how you probability adjust the program progression throughout the year. If you just think about 2023 and where you were a year ago, how did this year stack up versus what your model would have said? Did financing have any impact on where you hit versus what you were expecting on the probability for this year?
spk05: You know, when we look at the short term, we tend to sort of, when I talk about the probabilistic approach, that's sort of maybe for future years. For the current year, as we kind of set the guidance, for example, for 2024, We tend to not look at them on a probabilitized basis. We actually sort of decide, you know, based on our conversations with partners, is it in or out? And so it's a little bit different in the short term because we have a little bit more visibility. You know, for example, you know, we'll have a partner that's out there making a public statement saying, We expect to start a phase three study or a phase two study in Q3 of this year. So, I mean, that makes us sort of say, well, we're going to slot that in as, you know, kind of happening. So I think things were largely as expected. There were one or two programs that... you know, partners said we're going to hit in 2023 that got pushed to say, you know, the next quarter or something like that. But for the most part, I think things were kind of on point.
spk07: Okay. Thanks. And then just from a competitive standpoint, if you were to look at, you know, the number of total programs that are either entering the clinic or discovery programs, do you guys have any clarity as to how many of those programs you guys are winning? And has that market share, how has that evolved over the last several years?
spk02: Yeah, Connor, you know, there's not a lot of, I'll say, fulsome data on discovery programs or discovery campaigns out there. The one clear thing is that the green field here in terms of antibody-based discovery, and I say that broadly because there's all kinds of interesting and exciting things that are going on in new modalities that are antibody-based but are, you know, sometimes people refer to them as kind of Frankenstein molecules. We're really excited about that in terms of where our technology sits. But there's not really a lot of good data that you can point to on exact market share around discovery campaigns. I will say the green field here is very large and growing. So I'll balance it with that. And that's largely driven by, you know, a number of factors that are pretty well documented at this point that are attracting more and more sponsors to antibody-based modalities, whether that be the better clinical success rates as compared to small molecules or things like dynamics within the IRA or other things that have driven more investment towards antibodies and But hard to give you an exact market answer there.
spk07: Got it. Thanks for the questions, guys. Really appreciate it.
spk11: Yep. Thanks, Connor.
spk01: There are no further questions at this time. Please continue.
spk02: Great. I want to thank everyone for joining our call today. We look forward to keeping you updated on our progress and speaking with you when we give an update for next quarter. We'll obviously be at various conferences that we'll be attending this spring, so we'll look forward to seeing investors then. In the meantime, we appreciate your interest in Omniab, and thanks again.
spk01: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
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