OmniAb Lifts 2026 Guidance as Batoclimab Becomes Its Fourth Approved Drug, but xPloration Is Still a $2 Million to $3 Million Business
Third quarter 2026 earnings call, October 30, 2026
OmniAb raised its 2026 revenue outlook to $35 million to $39 million, from $32 million to $36 million, on stronger-than-expected milestone payments. The more important development for the long-term thesis arrived a week before the call: China's NMPA approved batoclimab, partnered through Harbour BioMed, for generalized myasthenia gravis. It is the fourth approved drug discovered with OmniAb technology. Management also said it expects royalties to remain a secondary revenue source for at least two more years, and that the next large royalty driver, Immunovant's IMVT-1402, is unlikely to contribute before late 2028.
Royalty Timing Pushed Out, Milestones Remain the Engine
CFO Kurt Gustafson was direct about the revenue mix. "For the next couple of years, milestones we would expect would still be the biggest contributor to our overall revenue stream," he said. He identified IMVT-1402 as the next product likely to make royalties a larger part of the growth story, and noted that "if I look at the forecasts that are out there for that program, it looks like that might start in late 2028 and then ramps from there." Investors hoping for a royalty-led earnings profile should therefore plan on a longer wait than the pipeline headlines suggest.
Batoclimab does not change that picture quickly. Harbour BioMed said it intends to launch soon, but CEO Matt Foehr declined to speculate on pricing or the size of the royalty stream, saying only "stay tuned." Portfolio-wide royalty economics are modest, with contracted rates averaging about 3.4%, so the value rests on volume from a few successful assets rather than on rate.
The milestone pool is large and near-term. The 34 active clinical programs and approved products carry about $340 million in remaining potential milestones, and management described the upcoming calendar of partner trial completions as "the busiest we've ever seen" over the next 18 months. It did not give a probability-weighted estimate or timing, and said each contract is structured differently. Some contracts pay milestones by indication, geography, or label expansion, while others do not. Management would not comment on specific agreements, which limits how precisely analysts can model the next two years.
Financials: Better Revenue, Tighter Costs, Cash Roughly Flat
Third quarter revenue was $4 million, up from $2.2 million a year earlier, driven by service work on antibody and ion channel programs and by xPloration instrument sales. Nine-month revenue was $31.8 million versus $10.3 million, almost entirely on milestones that were front-loaded this year, whereas 2025 milestones skewed to the second half. Because the timing is lumpy, the quarterly line can mislead in either direction.
The net loss for the quarter narrowed to $15.7 million, or $0.12 per share, from $16.5 million, or $0.14 per share. The year-to-date loss was $29.3 million, or $0.23 per share, versus $50.6 million, or $0.46 per share. Total costs and operating expenses were $20.4 million in both periods. Cost of sales rose with instrument volume, which hit the "other" expense line. One-time items distort the year-over-year comparison: a prior-year gain and a noncash write-off in the first quarter of 2026.
Guidance for costs and operating expenses fell by $1 million to $83 million to $87 million, and cash costs fell by $1 million to $50 million to $54 million. Year-end cash is expected at $53 million to $57 million, against $54 million at the start of the year, which implies a roughly breakeven year. Cash and investments were $64.2 million at quarter-end. The balance is thin for a company funding a new instrument business, though the cash profile has stabilized. Gustafson said the core antibody business is "rightsized" and that he does not expect "dramatic increases" in operating expense, with any xPloration investment funded by reallocating savings elsewhere.
xPloration: Broad Launch, Small Base, Long Sales Cycles
xPloration, the company's AI-powered high-throughput single B-cell screening platform, is now available to all customers after about 18 months in a partner access program. Management sized the addressable market at more than $500 million. Revenue is guided to $2 million to $3 million in 2026, doubling in 2027 and again in 2028. Even if achieved, that implies roughly $8 million to $12 million in 2028, small against the cost base.
The visibility behind that target is limited. Instrument sales cycles run 12 to 18 months because every customer has a different capital budgeting process, and the company placed another unit with a top global pharma in the quarter. Today's revenue is almost entirely instrument sales. COO Amechi Nwachuku described recurring streams from chips and consumables, software licenses, and multi-year service contracts as potential future contributors, with the revenue mix to shift "over time, potentially."
On the key early question for a razor-and-blade model, consumable pull-through, management offered no data. "It is early days to be able to tell you that it has stabilized," Nwachuku said, adding that usage will differ between academic and large pharma customers. The doubling targets rest on pipeline confidence rather than demonstrated recurring revenue.
Lilly Ion Channel Deal and the Chicken Platform
OmniAb signed a new ion channel license with Eli Lilly in the quarter, with an undisclosed upfront payment, up to $370 million in research, development, and commercial milestones, and tiered royalties on global net sales. The upfront boosted deferred revenue, which will be recognized over the research term. Service revenue from the Lilly work should begin contributing in the fourth quarter. Multi-year ion channel service contracts signed late last year and earlier this year are already lifting service revenue, which Gustafson said hit "almost kind of a low point" in 2025.
The company also launched OmniTides, a peptide discovery offering built on its OmniUltra transgenic chicken and paired with synthesis through qualified CROs. Foehr tied demand to growth in peptides in the metabolic space and said it widens the pool of potential partners and therapeutic areas. No revenue or customer numbers were provided, so it is a strategic option rather than a financial contributor for now.
Partner Base and Pipeline Quality
Active partners rose to 111 from 110. New licensees Yemaya and Monash University were partly offset by one attrition event, when a larger partner acquired a smaller one. Nine of the 10 largest pharmaceutical companies are now partners. Active programs rose to 433 from 407 at year-end 2025, reflecting 38 additions and 12 terminations. More than 98% carry contracted economics to OmniAb, and total contracted potential milestones exceed $3 billion. Foehr said that after an acquisition the economics stay tied to the asset and its patents, so the royalty stream survives.
Management pointed to three assets with potential first-in-class or best-in-class profiles: IMVT-1402, Teva's TEV-'408, and Precemtabart tocentecan. On TEV-'408, Teva's positive celiac data prompted Foehr to cite Teva's own peak sales estimates of roughly $1.5 billion to $2 billion in celiac and about $1 billion in vitiligo, with other indications under discussion, including alopecia areata, eosinophilic esophagitis, and atopic dermatitis. These are Teva's figures rather than OmniAb's, and management did not say whether the data change any milestone timing. Four new clinical entrants have been added in 2026, and more are expected soon.
AI Positioning
Asked about autonomous, AI-driven laboratories, management said its OmniDeep tools and the human-relevant data generated by its transgenic animals position it well. Nwachuku said xPloration's speed, ease of use, and throughput make it a fit for AI-enabled workflows. The answers were general and did not describe specific software integrations or product plans.