OmniAb, Inc.

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 the live broadcast today, August 8, 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, OmniAB'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 our prepared remarks, we'll open the call to questions. And with that, let me turn the call over to Matt.

Thanks, Kurt. Good afternoon, everyone, and thanks for joining us today on our Q2 conference call. I'll pick up the presentation this afternoon here on slide number four. During the quarter, we continue to grow our business with the addition of new partnerships. Given the velocity of new deals and a growing book of business, this year has the potential to be our best year ever in new partners and licenses. In parallel, our existing partners continue to advance their programs in the clinic, thereby strengthening our pipeline this year and beyond. We're driving growth in the business with strong execution, and we're doing that within an efficient operating structure and a highly scalable business model. We intend to create further visibility for our platform through publications and by advancing our technologies. And our scientists recently published an important peer-reviewed paper in the Journal of Immunology relating to our OmniDab single-domain antibody technology, which we launched last November and is now driving a growing number of new partner programs. And I also note that in the second quarter, we successfully demonstrated the efficient multi-site deployability of a next-generation exploration instrument across our labs. I mentioned the exploration platform here as it has the potential to drive additional efficiencies for our partner programs and to further expand our position as an industry leader in speed, throughput, reliability, and ease of use for antibody discovery screening activities. We remain committed to the continuous improvement of our technology to meet the evolving and broadening needs of our partners and to retain a leading market position. I'm proud of the achievements of our team and feel confident in our ability to execute our strategy in order to maximize value for all of our stakeholders. Now moving to slide number five, I'll start to review some of our business metrics for the quarter. We finished Q2 with 83 active partners. This includes two new platform license agreements that we signed in the quarter. Those are with DanBio and Topaz Therapeutics. Notably, Topaz is a company focused on radio conjugates, and they represent the first of what we expect to be multiple partners focused on this space. I note also that we mentioned in our earnings release that we issued this afternoon that we expanded our existing successful discovery relationship with Hanall Biopharma and also recently completed new deals with 92Bio and the Memorial Sloan Kettering Cancer Center. As I mentioned, given the velocity of new deals and our growing book of business, this year has the potential to be our best year ever in new partner ads. Now on slide number six, you'll see that our partnership base has grown by 30% over the last two years. And these numbers I note are net of attrition. The expansion in our partnership base has been driven primarily by the validation of our platform, and by new technology launches, as well as much more recently by our expanded business development efforts. On the next slide, slide number seven, you can see the distribution of our partners on a geographic basis linked to the partners headquarters location. Although I note that many of our partners development programs are global in scope. Our partners are predominantly based here in the US with roughly equal representation between Europe and Asia. And over the past year, we've expanded our business development presence outside the US, and we expect that'll result in greater diversity within our partnership base. Slide eight shows the number of active programs at quarter end, net of attrition, with a number of active programs increasing to 333. This represents a net add of six programs on a sequential basis from Q1. During Q2, one program transitioned from discovery to the preclinical stage, one move from preclinical to phase one, and a third program advanced from phase one to phase three. Our partners continue to align and reprioritize their therapeutic programs and pipelines in their normal course of business. In our small molecule ion channel programs during Q2, TSK realigned elements of its portfolio and decided to discontinue their work on the small molecule NAV1.1 sodium channel modulator program that was for rare epilepsies. GSK continues to advance a separate preclinical stage program with us for neurological diseases. And subsequent to the close of the second quarter, Roche elected to return its rights to a small molecule program targeting KV7.2 following an additional internal portfolio review there. We continue to work with Roche on two additional small molecule ion channel programs for the potential treatment of CNS disorders. With our business model and our contractual terms in those deals, the KV7.2 and NAV1.1 small molecule programs are assets that we can repartner with others in the CNS space. Now on slide nine, you can hear the growth in our partners' preclinical and later stage programs. which are some of the programs that we think can be important to near-term and mid-term value generation in our pipeline. We've experienced 39% growth in the number of these programs over the last two years and currently have reached a total of 50 programs at these stages. Our pipeline is robust and it's growing, and we look forward to our partners' progress as they advance programs into the later stages of clinical development towards the market. As you can see here now on slide number 10, as of June 30th, we had 32 active clinical programs and approved products. During the quarter, TEVA entered the clinic with TEV56278, which is an omni-chicken-derived PD-1 with IL-2 fusion. Last week, TEVA publicly highlighted ex vivo data for this program on their earnings call. Those data showed encouraging anti-tumor T-cell activity and they stated that they believe the program has potential to open up additional combo therapy approaches. Based on discussions with our partners, and now with one already in the books, we continue to expect a total of four to six entries into clinical development for novel OmniAB-derived antibodies this year. This next slide, slide number 11, shows the wide and growing range of formats that our antibodies can support. And even though this list is quite broad as it currently stands, As we innovate around the platform and grow our partnership base, we continue to see the number of new formats expand, and although this slide is quite technical, it does really provide a nice illustration of the broad nature and the flexibility of our platform. The most recent new format at the clinical stage is the adenokine multispecific with Teva that I just mentioned and that entered the clinic in Q2. It's shown here on the lower part of the center panel. Now, on slide number 12, I'll highlight a few key recent and Q2 partner updates. GENMAB announced initial data from the Phase 2 trial evaluating acosinolamab as monotherapy and in combination with PEMBRO in patients with PD-L1-positive metastatic non-small-cell lung cancer. Data from this ongoing phase two study informs their planned pivotal phase three trial, which is expected to launch before the end of 2024. Seastone recently announced European approval of Sugamelumab in combination with chemo as first-line treatment for metastatic non-small cell lung cancer, which is one of the largest cancer indications and is also among the leading causes of cancer death. Also, Seastone announced that it entered into a strategic commercial collaboration with IWA Pharma, Under the terms of that agreement, Iwafarma has the commercial rights for sucomelamab in Switzerland and 18 Central Eastern European countries. Cessation presented preliminary data from its Phase 1A First-in-Human study of CSX1004, which is an investigational antibody for prophylaxis against fentanyl-related overdose, demonstrating that CSX1004 is safe and well-tolerated under the conditions tested. In addition, and importantly, the exposure data were predictive of efficacy for blocking fentanyl-induced respiratory depression as well. The next step, cessation, is planning a Phase II proof-of-concept study. I mentioned Teva's work earlier, and their clinical start is also highlighted here on this slide. And lastly, TALIC disclosed FDA clearance of its IND application for ALT02. which is a SERP alpha targeting toll-like receptor agonist antibody conjugate in patients with advanced solid tumors. As you can see here on slide number 13, we look forward to numerous catalysts occurring for the balance of the year and in 2025. This is a subset of publicly disclosed events, and it represents a mix of clinical readouts, clinical starts, and regulatory events. and we continue to be excited about the progress that's being reported by our partners. And my last slide here, slide number 14, provides a current snapshot of the total milestone potential for our pipeline and also calls out those 50 preclinical and later stage programs in our pipeline that I highlighted earlier as near-term and mid-term value drivers. As shown here on the right side of this slide, those 50 programs at preclinical stage and later have over 550 million in potential milestones on the app. And overall, our active antibody programs have over 3 billion in potential milestones, and currently the remaining active small molecule ion channel programs with Roche and GSK have approximately 700 million in remaining milestones. And with that, I will turn the call back over to Kurt for a discussion of our second quarter financial results. Kurt?

Thanks, Matt. So I'll provide a brief overview of our financial results for the second quarter, and then we'll take some questions. On slide 16, we have our income statement for the second quarter of 2024 versus the year-ago period. Total revenue for the quarter was $7.6 million compared with $6.9 million in the prior year quarter. This revenue was consistent with our expectations, with the exception of higher service revenue. Matt mentioned the discontinuation of the GSK small molecule ion channel program, and this triggered an acceleration of $1.3 million in service revenue, above and beyond what would have otherwise been recognized in the quarter. GSK had paid for the service fees up front, which were recorded as deferred revenue and were being amortized over the life of the research term. The discontinuation resulted in the acceleration of this amortization, which would have otherwise been recognized mostly over the next two quarters. As I previously stated, we continue to project milestone payments to be weighted towards the second half of the year based on the information and statements made by our partners. In terms of expenses, our R&D expense was relatively unchanged versus the prior year. G&A expense was $8 million versus last year's $8.7 million, with the decrease primarily due to lower share-based compensation expense as well as non-recurring costs in the prior year associated with our ERP system implementation. The amortization of intangibles in the second quarter was higher than our recent trend. The increase was due to a $1.2 million impairment related to assets associated with two legacy unpartnered ab initio programs. In addition, other operating income for the quarter included a $2.6 million reduction in contingent liabilities primarily related to changes in the ion channel programs. We have CVR obligations that expire in 2027 from our acquisition of ICAGEN and we accrue these CVR liabilities based on our projections of achieving various milestones. The recent notifications from GSK and Roche resulted in a decrease in our expected obligations for these CVRs, which was then recorded here in other operating income. Year-to-date, our operating expenses track relatively close to plan. However, we now expect total operating expenses in 2024 to be slightly less than total operating expenses in 2023. Turning to slide 17, here you'll see our balance sheet as of June 30, 2024. We ended the second quarter with $57.2 million in cash. And as we've discussed before, we expect the first half of 24 to have a higher burn relative to the second half of the year, partly due to the milestone revenue being weighted towards the second half of the year, and partly due to the timing of cash payments from certain operating expense items that occurred in the first quarter. Given that we are still tracking close to our original plans, our cash guidance remains unchanged. And with that, I'd like to open the call for questions. Operator?