OmniAb (OABI) Q4 2025 Earnings Call Transcript

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Date

March 4, 2026, at 4:30 p.m. ET

Call participants

• President and Chief Executive Officer — Matthew W. Foehr
• Chief Financial Officer — Kurt A. Gustafson

Takeaways

• Active partners -- Reached 107 by year-end, reflecting business growth and broadening geographic presence.
• Active programs -- Increased to 407, with 84 new program starts and 44 net additions, while 40 programs were terminated as part of normal attrition.
• Program progression -- Recorded 25 advancement events, including one program reaching registration, and 16 moving from discovery to preclinical development.
• Clinical pipeline -- Totaled 32 active clinical programs and approved products, with over $350 million in remaining contracted milestone payments for these.
• Revenue -- Full-year revenue was $18.7 million in 2025, down from $26.4 million in 2024, primarily due to decreased license and milestone revenue, partially offset by $0.8 million from the Exploration platform launch.
• Operating expense -- Decreased to $87.6 million in 2025 from $100.9 million in 2024, including a Q4 noncash impairment charge of $3.9 million related to small-molecule ion channel assets.
• Net loss -- Reported at $64.8 million, or $0.57 per share, compared with $62.0 million, or $0.61 per share, in 2024; excluding the Q4 impairment, EPS would have been $0.54.
• Cash position -- Ended 2025 with $54 million in cash, cash equivalents, and short-term investments.
• Workforce reduction -- Reduced headcount by 22 employees during 2025 to realize ongoing cost savings.
• 2026 financial guidance -- Revenue expected in the $25 million-$30 million range; operating expense projected at $80 million-$85 million; cash operating expense guided at $50 million-$55 million; year-end cash is anticipated at $30 million-$35 million.
• Contracted economics -- Over 98% of programs carry future contracted economics to the company, with $3 billion in total contracted milestone payments and a portfolio average royalty rate of 3.4%.
• OmniUltra launch -- Introduced the first transgenic chicken platform capable of expressing ultra-long CDRH3s, entering the peptide therapeutics space and launching to positive initial partner engagement.
• Exploration platform -- Launched mid-2025, with two units deployed by year-end and contributions expected from multiple durable revenue streams, including consumables and software subscriptions.
• Clinical milestones -- First OmniDAb-derived program advanced to human clinical trials within two years of technology introduction.
• Notable partner updates -- Key clinical and regulatory events expected in 2026 for Immunovant, Teva, and Merck KGaA partner programs, with Immunovant's "IMVT-1402" and Teva's "TEV-‘408" highlighted for near-term data releases.

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Risks

• CFO Kurt A. Gustafson reported, "Total revenue for 2025 was $8.4 million compared with $10.8 million in the same period in 2024," citing decreased license and milestone revenues as primary drivers.
• Operating expenses included a $3.9 million noncash impairment in Q4 for small-molecule ion channel assets, further affecting profitability.
• Net loss widened to $64.8 million from $62.0 million; CFO Kurt A. Gustafson stated, "Our net loss for the fourth quarter was $14.2 million, or $0.11 per share, compared with a net loss of $13.1 million, or $0.12 per share, in the prior-year period."

Summary

OmniAb (NASDAQ:OABI) reported continued expansion of its partner and program base, with 107 active partners and 407 programs, while advancing 25 programs across development stages. OmniUltra and Exploration were highlighted as new technology launches, with the former aimed at peptide therapeutics and the latter contributing revenue from two deployed systems. Management provided 2026 guidance indicating expected revenue growth to $25 million-$30 million and a reduced cost structure, aligning the company on a path toward cash flow positivity. Notable milestone opportunities in 2026 were cited in partner pipelines, supporting future royalty and milestone revenue streams.

• The partner mix remained stable, with the majority of partner headquarters located in the United States and the remainder in Europe and Asia, according to management.
• During the year, major new license agreements were signed with Dana-Farber Cancer Institute, MabTherix Biosciences, and two major global pharmaceutical firms.
• Clinical advancement included Merck KGaA's decision to move M9140 to Phase III trials and Teva's new funding agreement for TEV-‘408, showing significant clinical development acceleration in the partner pipeline.
• OmniAb expects a shift in revenue mix from milestone-based to more royalty-driven over time, with current contracted milestones providing future revenue visibility.
• Exploration platform interest was particularly strong among top-tier partners due to its high-throughput capabilities, and its contribution to both new and deepened partnerships was noted by management.

Industry glossary

• CDRH3: The third complementarity-determining region of the antibody heavy chain, critical for antigen binding specificity and diversity.
• Picobody: An exceptionally small antibody fragment leveraging ultra-long CDRH3s, smaller than nanobodies, designed for novel therapeutic applications.
• OmniDAb: OmniAb's single-domain antibody discovery platform for generating humanized antibody fragments with potential for rapid clinical progression.

Full Conference Call Transcript

Matthew W. Foehr: Thanks, Kurt. Good afternoon, everyone, and thanks for joining our call. I will start now on slide number four. Our business built nice momentum in 2025 that we sustained throughout the year, specifically related to broadening both our roster of partners and the number of active programs enabled by our technologies. By year-end, we are happy to report that we had 107 partners who are running 407 active programs. As our partner pipeline advances, certain later-stage programs are now coming into focus with the potential to drive meaningful milestone revenue and create value over time, headed toward the generation of significant future recurring royalty revenue streams.

On the innovation front, we introduced OmniUltra at the Antibody Engineering Conference in San Diego in mid-December. OmniUltra is the industry's first and only transgenic chicken platform to express ultra-long CDRH3s on a human antibody framework. We see OmniUltra as an important new growth driver that can help us gain additional partners, generate new program starts, create incremental near-term revenue opportunities, and extend our reach into peptide-focused discovery applications. Additionally, we are building a strong foundation for our Exploration platform, which brings our high-throughput single B-cell screening capabilities directly into our partners' labs.

We think Exploration is very well positioned for significant growth, with an expanding pipeline of high-quality prospects and increasing engagement as more partners are actively evaluating the platform for use in their labs, and we expect Exploration to be additive to the business and to contribute to our growth. With the growth in our base of partners and our partner program portfolio, it is becoming easier to highlight that our differentiated platforms and business are highly scalable, allowing us to add new programs while maintaining operating efficiency, positioning OmniAb, Inc. on a sustainable path to future growth. As Kurt will describe in his section in a bit, we are on a trajectory to positive cash flow.

Moving to our key business metrics, starting on slide number five. As I mentioned, at year-end, we had 107 active partners, reflecting a continued growth and diversification of our business from that perspective. During Q4, we executed new license agreements with the Dana-Farber Cancer Institute, MabTherix Biosciences, which is a newly formed JV between Avoro Capital Advisors and Viking Global Investors, and with two global big pharma companies. The partner mix across discovery-stage, commercial, and academic partners continues to evolve and has remained relatively constant percentage-wise. A majority of our partners are headquartered in the U.S.; the remainder are primarily in Europe and Asia.

We continue to broaden and diversify our partner base, which I think demonstrates consistent, strong execution by our business development and scientific teams. 2025 was an especially strong year for us in terms of partner additions. I also note that we are proud of the strength of our partners as well, which I think says a lot about the quality of our technologies. Eight of the ten largest pharma companies in the world are active partners of OmniAb, Inc.

Now on to slide number six, you will see our active programs metrics. We exited 2025 with 407 active programs, representing a net increase of 44 programs during the year. We saw 84 program additions in 2025, with a significant share of additions originating from our newer technology offerings. Our number of program additions in 2025 was substantially higher than recent years and more than 20% higher than 2024. Attrition is obviously a natural and expected part of drug discovery and development, and I note that we had 40 program terminations during the year, consistent with the normal ebb and flow we expect as partners adjust portfolios and budgets and adjust technical priorities.

Lastly, and I think it is important to note here, over 98% of our active programs have contracted future economics to OmniAb, Inc. We have over $3 billion in total contracted milestone payments for active antibody programs and an average royalty rate of 3.4% across our portfolio.

Slide seven provides another look at our active programs and shows the strong advancement activity we saw across our partner pipeline throughout 2025. The figure here on this slide encompasses our entire partner program pipeline. As you can see on the left side of this pyramid graphic, during the year we added the 84 new programs I just referenced, demonstrating the continued strength of our technology platforms, and again, this was a very strong year from that perspective and substantially higher than recent years. In terms of active program progression, we had 25 advancement or progression events in 2025. Sixteen programs advanced from discovery into preclinical development, which reflects our partners' progress in the identification of promising therapeutic candidates to take forward towards human trials. We also saw some healthy advancement further in the development process: four programs moved from preclinical into Phase I clinical trials, a couple of programs advanced into each of the clinical phases thereafter, and notably, one program reached the registration stage during 2025. This slide shows each advancement event, and I note that a couple of programs advanced through more than one level or stage during the year. On attrition, which is depicted on the right side of this pyramid graphic, we had the 40 program terminations across various stages and four program regression events during the year. Regression is far less common but does happen from time to time in a portfolio of active programs that has grown to the level that ours has in recent years.

We see the level of attrition shown here as consistent with the normal dynamics of drug development. What is particularly encouraging and exciting are the 25 total program advancement events we saw as programs moved from one development stage to the next. This progression demonstrates that OmniAb, Inc.-enabled therapeutics are continuing to perform well for our partners in development and in the clinic and are moving closer to potential commercialization, which supports our milestone and royalty revenue opportunity over time and increases the value of the individual programs to our stakeholders.

Slide eight shows the growth in the post-discovery-stage programs over recent years. This, again, I think demonstrates the value that our technologies bring to our partners. I note both the overall growth and the progression into the preclinical stage over recent years. Slide nine shows the number of active clinical programs and approved products, which totaled 32 at the end of Q4. These numbers are net of and reflect new clinical entrants as well as attrition and a regression event during the year. The fourth quarter saw a very important milestone with the first OmniDAb-derived program advancing into human clinical testing.

This program entered human clinical trials less than two years from when we introduced the OmniDAb single-domain discovery platform, so having it generate a program that reached the clinic that quickly underscores both the technology's traction with our partners and its potential to drive future value for our stakeholders. We anticipate the potential for multiple new entries into clinical development for novel OmniAb, Inc.-derived programs this year, including additional OmniDAb programs. We look forward to the continued progression of these active clinical programs, which have over $350 million in remaining contracted milestone payments to us.

Turning now to slide 10. Here, we are highlighting and only listing our active clinical and commercial-stage partner pipeline programs that are active and that carry remaining downstream economics to OmniAb, Inc. The placement of each program in this graphic is based on its most advanced stage in any geography or indication. We found this figure can be a helpful visual for investors who follow some of our more visible partner programs.

Turning now to slide 11, I want to highlight a few recent updates for partner programs that are leveraging our technologies. Immunovant continues to make what we see as strong progress and report clinical momentum in the anti-FcRn space across a range of important indications with major unmet medical needs. Their next-generation candidate, IMVT-1402, has a potentially registrational trial in difficult-to-treat rheumatoid arthritis fully enrolled, with top-line data expected in the second half of this year. Top-line data from a proof-of-concept trial in lupus are also expected in the second half of this year.

IMVT-1402 development is progressing across a range of indications, with potentially registrational trials in Graves' disease, myasthenia gravis, CIDP, and Sjögren's disease all remaining on track, and with top-line data for Graves' disease and myasthenia gravis expected in 2027. Immunovant also anticipates sharing top-line data from its two Phase III studies evaluating batoclimab as a potential treatment for active moderate-to-severe thyroid eye disease in the first half of this year. In addition, HanAll reported ongoing preparations for an NDA submission in Japan for batoclimab as a treatment for myasthenia gravis.

Moving across to the center of the slide here, at the time of the J.P. Morgan conference in January, Teva announced a funding agreement with Royalty Pharma of up to $500 million to accelerate the clinical development of their anti-IL-15 antibody TEV-‘408 specifically for vitiligo. Top-line results from the Phase Ib trial in that indication are expected in the first half of this year, and top-line results of a Phase IIa trial evaluating ‘408 for celiac disease are expected in the second half of this year. With recent developments and disclosures, this is an asset and a program that is rightfully gaining more attention.

Lastly, Merck KGaA indicated that based on Phase I data, it plans to advance M9140 directly to Phase III trials in metastatic colorectal cancer. This compound is a novel anti-CEACAM5 antibody-drug conjugate with a topoisomerase I inhibitor payload. It has been disclosed that the Phase III study is anticipated to start in the first half of this year, which represents a pretty significant acceleration of the program's development.

On slide number 12, we show some of the upcoming events that I just mentioned. 2026 is positioned to be a fantastic year for potential value-creating events. This calendar of near-term events is the strongest in recent memory. In addition to the data and regulatory events highlighted here, we also expect new Phase I, Phase II, and Phase III trial initiations this year. We will talk more about this as we go through the year, but early views are that 2027 is also shaping up to be a year that will have important events, including for some of the programs that I mentioned on the prior slide.

Turning to slide 13, I would like to take a moment to highlight our two most recent technology launches, which we believe position us for substantial growth while reflecting our commitment to innovation, which we think differentiates OmniAb, Inc. in the eyes of our partners. OmniUltra is the first and only transgenic chicken producing antibodies with ultra-long CDRH3s, which is a structural feature of antibodies typically found in cows. These ultra-long CDRH3s are designed to reach binding pockets not accessible with other antibodies or modalities, potentially unveiling new therapeutic opportunities. What is particularly exciting about OmniUltra is the potential ability of these ultra-long CDRH3s to create novel picobodies.

At roughly one-third the size of a nanobody, picobodies are the smallest functional antibody fragment and have a range of potential uses, including as building blocks for multispecifics, as binders for CAR-T, and as a radiopharmaceutical therapy as well as in vivo–generated peptides. OmniUltra not only expands our antibody discovery capabilities, but it also creates a meaningful entry point into the peptide therapeutic space. As I think almost everyone knows by now, peptide therapeutics have experienced substantial growth in industry attention and investment, driven in large part by the success of the GLP-1s over the last couple of years.

Moving to the right panel on this slide, last May we launched our Exploration partner access program. Exploration is our proprietary, innovative high-throughput single B-cell screening platform that leverages machine learning and artificial intelligence. The Exploration platform includes a competitively priced instrument and proprietary single-use consumables as well as annual software subscriptions and maintenance contracts. As such, it has the potential for multiple revenue streams. Deployed instruments are performing extremely well for partners, and we are seeing strong continued demand for both on-site and virtual demos. Together, OmniUltra and Exploration represent important new engines that broaden our technology offering, expand our addressable markets, and strengthen our competitive position in the discovery platform space.

I will now turn the call over to Kurt for a discussion of our financial results. Kurt?

Kurt A. Gustafson: Thank you, Matthew. On slide 15, I will start with the review of revenue. Total revenue for 2025 was $8.4 million compared with $10.8 million in the same period in 2024. The decrease was primarily driven by a decline in license revenue, which was partially offset by an increase in milestone revenue. Royalty revenue increased, but this was due to an adjustment in the prior-year period to reconcile royalties to actual product sales, and we also saw a small contribution from Exploration in the fourth quarter.

Slide 16 shows our costs and operating expenses for 2025. As Matthew mentioned, even with our growing program portfolio, we have a scalable platform that has allowed us to be very disciplined with our cost structure. As you can see from the chart, our operating expenses in the fourth quarter decreased to $24.1 million from $26.7 million. Most of this decrease was due to lower personnel costs. We also saw lower outside service costs primarily related to reduced spend for our legacy small-molecule ion channel programs. Q4 2025 also included a noncash impairment charge of $3.9 million primarily related to certain small-molecule ion channel property and equipment. Q4 2024 had a similar-size write-off associated with intangibles.

Turning to slide 17, I will focus on the bottom part of the P&L here and make just a few comments. If you focus on the tax line, as we previously guided for taxes, we record a full valuation allowance against the income tax benefit associated with our net loss, which is why our effective tax rate is close to 0%. Our net loss for the fourth quarter was $14.2 million, or $0.11 per share, compared with a net loss of $13.1 million, or $0.12 per share, in the prior-year period.

On slide 18, for the full year 2025, revenue was $18.7 million versus $26.4 million in 2024. The difference related to both a decline in license revenue and milestone revenue. Service revenue decreased as a result of the completion of certain small-molecule ion channel programs, and these declines were partially offset by approximately $800,000 of Exploration revenue as a result of the launch of our Exploration partner access program.

On slide 19, we have our operating expense for the full year. Operating expense in 2025 decreased to $87.6 million from $100.9 million last year. R&D expense for the year was $47.8 million, down from $55.1 million in 2024 due to lower personnel costs and stock-based compensation and external expenses. As I mentioned, in Q4 2025 there was also a noncash impairment charge of $3.9 million related to legacy small-molecule ion channel assets. G&A was $29.2 million in 2025 compared with $30.7 million in 2024, primarily due to lower legal fees and stock-based compensation.

Moving to slide 20, which shows our P&L for the full year 2025 versus 2024, I will once again focus on the bottom line here. The net loss was $64.8 million, or $0.57 per share, compared with a net loss of $62.0 million, or $0.61 per share, in 2024. Excluding the noncash impairment charge we took in the fourth quarter, earnings per share in 2025 would have been $0.54.

Slide 21 shows the company's P&L for the year broken out by quarter. As we have mentioned previously, and you can see in this table, our revenue is lumpy, as much of the revenue comes in from the achievement of milestones. One other thing I wanted to point out here is that you will see a general trend of declining R&D and G&A expense, obviously excluding the impairment charge we took in the fourth quarter. In 2025, we implemented workforce reductions of 22 employees, which resulted in savings in 2025 and going forward.

On slide 22, we have the balance sheet as of December 31, 2025, and 2024. We ended the year with $54 million in cash, cash equivalents, and short-term investments. You also see here the normal reductions to goodwill and intangible assets. These intangible assets relate to prior corporate and technology acquisitions, which are amortized over time. Property, plant, and equipment is also lower due to normal depreciation as well as the noncash impairment charge we took in the fourth quarter.

On slide 23, we have our financial guidance for 2026. The revenue guidance is based on information that our partners have disclosed to us as well as information they have disclosed publicly about their programs, and based on this information, we expect revenue in 2026 to be in the range of $25 million to $30 million. We expect operating expense to be in the range of $80 million to $85 million as we continue to realize efficiencies in the business. Cash operating expense is expected to be in the range of $50 million to $55 million. We define cash operating expense as GAAP operating expense less stock-based compensation, depreciation, and the amortization of intangibles.

We expect the combination of these noncash items to be about $30 million in 2026. In addition, the company expects to end the year with a cash balance in the range of $30 million to $35 million. Just as in 2025, the 2026 full-year effective tax rate is expected to be approximately 0% due to the valuation allowance.

Turning to slide 24. In addition to providing 2026 guidance, we wanted to provide some thoughts on our longer-term financial outlook. The financial side of our business model is one that is highly scalable. As we look out into the future, our revenue is expected to transition from more milestone-driven to more royalty-driven. That being said, we have over $3 billion of contracted milestones in our existing antibody programs, and $350 million of that is for programs that are already in the clinic. The average royalty across our antibody portfolio is approximately 3.4%. These types of revenue streams do not have corresponding cost of goods or selling costs.

We have also been realizing efficiencies in our operating costs in recent years. We have a focused business development team dedicated to bringing in new partners, while most of our R&D costs relate to maintaining our animal colonies, with a small amount directed towards new technology development. This creates a highly leverageable business. As you can see from these charts, we have and will continue to control operating costs to capture that leverage that is built into our business model. Our maturing portfolio programs are expected to drive revenue higher. Combined with tight control of our operating expenses, we are driving our cash use lower, and this puts us on a trajectory to being cash flow positive.

We will now open for questions. Operator?

Operator: Ladies and gentlemen, we will now begin the question-and-answer session. You will hear a prompt that your hand has been raised. If you would like to withdraw from the polling process, please press star then the number two. If you are using a speakerphone, please make sure to lift your handset before pressing any keys. Your first question comes from the line of Puneet Souda from Leerink. Please go ahead.

Puneet Souda: Thanks for taking the questions here. First one on the partner programs. Given the sort of the back of the markets fundraising activity that happened in the second half last year and still is ongoing, on the clinical assets, just wondering if you are seeing any effect from that? And how should we think about the new program growth this year despite the strong 2025 that you had? I know it is always hard to outline that, but just wondering how you are thinking about the new programs growth this year and any feedback on the business outlook side?

Matthew W. Foehr: Yeah. Yeah. Thanks, Puneet. This is Matt. 2025, we observed really nice momentum in program additions and also a really strong year in terms of partner adds as well. We noticed a shift beginning last year as, you know, as I think the industry started to get some more wind in its sails. We saw partners, both existing and new partners, initiating new programs. Many of those are attracted to us because of our newer technologies, some of the technologies we had launched, that being OmniDAb the year prior, or the prospect of OmniUltra coming, which we launched in mid-December.

We feel like we are very well positioned for this year with coming on the tail end of new technology launches, and are obviously really pleased to see partners actively progressing, looking at accelerating development and that sort of thing. We feel very good about that element as we look forward.

Puneet Souda: Got it. And then on Exploration, nice to see some revenue there. I do not know if you can quantify it, but maybe for the full year I would love to know if you have a number in mind for the full year, what sort of growth you can see on that platform? It is a nice addition of revenue on top of the core animal models and program growth that you are seeing. And then, also wondering if you can provide anything on the pull-through side of Exploration.

Kurt A. Gustafson: Yeah. Puneet, I will give a little color there. Yeah. Obviously, we launched Exploration midyear last year with our partner access program, highlighted it at the PEGS conference and sold an instrument right after that.

Matthew W. Foehr: Obviously, deployed instruments now are performing extremely well for partners. Exploration has the potential to contribute revenue in a variety of ways, not only from instrument sales, but also from the single-use consumables, which are at a very nice high margin, as well as subscriptions and maintenance contracts. The flow of interest is very strong. It is with our highest tier of partners.

These are ones who are obviously doing a lot of discovery work and I think are attracted to Exploration because of its high throughput and its ease of use, the ability to do multiple runs in a day, and the ability to generate huge amounts of data, which I think is very well timed for some of the interests of the industry. We do expect it will be contributing this year. We are excited about that. We have not broken down the various parts of revenue in the guidance, but we do see significant growth for Exploration and contribution this year.

Puneet Souda: Got it. Okay. Alright. Thank you.

Operator: Your next question comes from the line of Michael King from Rodman & Renshaw. Please go ahead.

Michael King: Hey, guys. Thanks for taking the questions. First, nice to see you are capital-light and keeping the expenses under control. But as a valuation metric, it would seem to me to be more important for you to be adding programs and advancing things in the pipeline. I am just wondering how sacrosanct the cash flow neutrality or positivity is relative to additional investments that you might want to make to generate additional partnerships?

Matthew W. Foehr: Yeah. Yeah. Mike, good question. We are obviously building this business to be differentiated from the perspective of technologies that we know the industry needs, but to do that in a really efficient way that benefits our shareholders and our stakeholders. We are in a unique position in the industry with 107 partners. Over 407 programs that partners are progressing through various stages of development gives us a really valuable perspective on the industry. We can see, we understand the targets that are of most interest to the biggest and most valuable pharma companies in the world, and that informs how we invest in our technologies.

It informs the work that we do and how we work with the partners, and I think you are seeing the benefit of that in many of our metrics. For us, to add incremental partnerships, we can do that quite efficiently in the model that we have. We talk a lot about the innovations that we choose to invest in, and we do it really with that knowledge of not only where the industry is right now from the perspective of discovery and innovation, but knowing where it is heading as well.

That is what informed our investments over past years in things like our OmniDAb single-domain technology, and then more recently, with the mid-December launch of OmniUltra, which is—it sounds Buck Rogers–y—but it is a chicken that makes cow-like antibodies with fully human sequences. That was something that was, you know, we knew there would be demand there based on our dialogue with partners. For us, I think we can do that very efficiently. We think that benefits all of our stakeholders, and that is where we are going to continue to focus.

Michael King: Okay. And then just real quick, follow-up. Jumping to share count in the third and fourth quarter, what can we attribute that to?

Kurt A. Gustafson: Yeah. Thanks, Mike. We did raise some capital, and so that raising capital increased the share count during that period of time.

Michael King: Okay. Great. Thank you.

Matthew W. Foehr: Thanks, Mike.

Operator: Your next question is from the line of Matthew Hewitt from Craig-Hallum Capital Group. Please go ahead.

Matthew Hewitt: Good afternoon. Thanks for taking the questions. Maybe to dig in a little bit more on the Exploration opportunity. Sounds like you are seeing strong demand. What was the number of systems placed or deployed exiting this past year? And given the pipeline, where could that go in 2026?

Matthew W. Foehr: Yeah. Yeah. Thanks, Matt. The answer to the first part of the question is two instruments deployed as of the end of 2025. As we look to this year, as I said, we expect growth out of Exploration. We are excited about the flow of interest from our highest tier partners. These are obviously larger capital purchases for many companies, so there can be longer sales cycles, which we fully expected when we launched the technology. They go through budget and capital approvals, etc. The reception is quite positive. It is keeping our team very busy, which is great, and the interest in demos and the performance in those demos has really been fantastic.

Hopefully, that gives you the color you need.

Matthew Hewitt: Yeah. No, that is great. And then you talked about—Kurt, I think you were talking about this a little bit during your prepared remarks—as far as your trajectory towards a cash flow breakeven. Given the pipeline, and, Matt, you spoke to this as well, given the pipeline of opportunities, things progressing through the clinic this year and into next year, when do you think that you could hit breakeven? Is that something that you see potentially exiting 2027? Maybe a little bit longer? Just trying to get a sense for the timeframe as to when you could get to that level. Thanks.

Matthew W. Foehr: Thanks, Matt. Great question. Our future revenue is largely based on clinical and regulatory advancements by our partners for our partner programs. While we are not giving a precise date for when we achieve breakeven, the growing, maturing portfolio of our partner programs gives us confidence that we are on the right path and that our trajectory can take us there. We see it coming, but we cannot give you an exact date right now. We do see it coming.

Matthew Hewitt: Got it. Alright. Thank you.

Operator: Your next question comes from the line of Joseph Pantginis from H.C. Wainwright. Please go ahead.

Joseph Pantginis: So on the flip side for Exploration, obviously, we see the opportunities there. Just curious, how would you describe—It sounded like you placed two machines in 2025—but looking forward, your manufacturing needs and investment on your end and impact on op expenses as the program gets larger.

Matthew W. Foehr: Yeah. Joe, good question. This is an instrument that we use here for our own research, so we have a team of folks that understands the instrument and is using it all of the time, and so there is not a large incremental investment in terms of staff that we need to make to go do this. This is a program that we have made available to our partners. For the most part, instruments would be built to suit, if you will, or built for these folks when they order one, and so there is not even a large sort of investment in inventory to go do that.

We are keeping this really lean right now, as we want to make sure that this is something that is as accretive to the business as we possibly can make it going forward.

Joseph Pantginis: Got it. Thank you.

Operator: Your next question comes from the line of Brendan Smith from TD Cowen. Please go ahead.

Jacqueline Kay Kisa: Hey, this is Jacqueline on for Brendan. Thanks for taking the question. I would like to kick it off with Ultra. How has the initial response from partners been? And have you seen the beginning of that ramp in demand that you called out last quarter?

Matthew W. Foehr: Yes. Jackie, thanks. Ultra launch is going fantastically well. I have been really pleased with the reception. It is still very early days; we just launched it in mid-December. We did a massive amount of validation work around Ultra before we launched it. The presentations that were given at the AET conference in December highlighted a broad array of therapeutic targets that we had assessed at the time of launch. We also had three partner programs already progressing at that time. That number has increased, and we expect it will continue to increase. We are seeing really strong engagement. The technology is performing extremely well, and we feel good about how it will impact the business going forward.

Jacqueline Kay Kisa: That is awesome. Are you seeing any specific traction amongst other modalities that you would call out of interest?

Matthew W. Foehr: Yeah. I think there has been a general trend in the industry—smaller is better—looking for smaller binding units that can be strung together in multispecifics. There has obviously been a big growing opportunity in the radiopharma space; that is something the industry has observed. Then, of course, we have opened up totally new opportunities and a completely new call file in the peptide space. Peptides are an area of growing and increasing interest. There is significant growth in that space and it really opens up our call file to well over 130 companies that are new potential targets for us. For all those reasons, we are excited about it.

Again, early days, but we are building some nice momentum, and we are excited about it.

Jacqueline Kay Kisa: Totally. I am going to be that person. I am going to fit one more question in. For your fiscal year 2026 revenue guide, it is hinting at a return to 2024 levels. Would it be safe to say you are seeing early signs of recovery in the market? What kind of visibility do you have into your partners' spend expectations that could inform that outlook?

Kurt A. Gustafson: Yeah. I think most of—A big chunk of our revenue is milestone-based. As we have talked about, on a quarterly basis, the revenue number is lumpy. It actually is for years as well. It is really a function of what clinical or regulatory events are going to be happening, and as we project forward into 2026, based on what partners have said, we project out what those milestones might be. I am not sure it is really whether the industry or the overall market is what is driving that as much as us taking a look at the very specific events that are happening with the programs that we have and the events that are coming up for 2026.

That is really more the driver of it.

Jacqueline Kay Kisa: Great. That is super helpful. Thank you.

Operator: Your next question comes from the line of Kripa Devarakonda from Turris. Please go ahead.

Unknown Analyst: Hi. This is Anna on for Kripa. Thanks so much for taking our question. Congrats on the year. One question on Exploration. Could you qualitatively describe how the interest in Exploration is shaping up in terms of interest from any new partners or the strength of existing partner relationships? Thanks.

Matthew W. Foehr: Yeah. Great question. The answer is both. Of our existing partners, the ones that have been quick engagers in evaluating Exploration with strong interest have been that highest tier of partners. These are the ones that are doing a lot of antibody discovery work, have a thirst for more data, and are attracted to the high throughput and ease of use of the instrument. It is also attracting others as well who are not current partners of our repertoire generation discovery technology. That is one of the things I reference when I generally say I think there are benefits and advantages that Exploration creates for the business.

It is not only deepening those relationships with existing partners and building structures that allow us to create value earlier in a program’s life cycle or the relationship, but also attracting others as well whom we can bring in as a broader partner in the process. I think that is another benefit of Exploration.

Unknown Analyst: Great. Thanks. And on OmniUltra, are there any milestones we should expect from OmniUltra in 2026?

Unknown Analyst: ’26?

Matthew W. Foehr: We expect to continue adding partners and programs with OmniUltra. That is going to be our initial focus as we launch the technology. As those programs go through development and graduate to later stages of development, we expect that will happen in due time, but the initial focus is going to be driving new partnerships and new programs and leveraging the technology in that way.

Unknown Analyst: Great. Thanks so much.

Operator: Your last question comes from the line of Stephen Douglas Willey from Stifel. Please go ahead.

Stephen Douglas Willey: Yeah. Good afternoon. Thanks for taking the question. Just actually had a question about a footnote on slide 24 where I think for programs with tiered royalties you are making some kind of sales assumption and using a blended royalty calculation. Have you said or can you speak to what proportion of the programs that are active have either a tiered or fixed royalty structure?

Kurt A. Gustafson: That is a good question, Steve. I do not think we have given that number out before. It is more than a handful, but I would not say it is a majority.

Matthew W. Foehr: More than a handful that have tiered. The majority of our deals are flat royalties. There are some instances in which they are tiered, but the majority are a straight royalty.

Stephen Douglas Willey: Got it. And then just also curious where you think that average— I guess it is 3.4%—royalty rate could trend to over time and whether you are trying to command a higher royalty rate on some of the newer technology offerings like OmniDAb and OmniUltra.

Matthew W. Foehr: Yeah. I think for discovery technologies, Steve, there is always a dynamic there of how far you can push on royalties. Obviously, the level of innovation allows us to drive better economics more generally, but those economics can be an interplay between upfront payments, service payments, milestones that are paid along the way, and royalties. It really depends, in many instances, on the negotiating dynamic, the points of interest of the partner. I will say that more innovative technologies do drive more value for our shareholders, and that is one of the reasons why we have launched new technologies like OmniUltra and OmniDAb. That gives you a little color on the dynamic.

Stephen Douglas Willey: Understood. Thanks for taking the questions.

Matthew W. Foehr: Thanks, Steve.

Operator: There are no further questions at this time. I would now like to turn the call back to Matthew W. Foehr for closing comments. Sir, please go ahead.

Matthew W. Foehr: Great. Thanks. I would like to thank everyone for joining today's call and for your questions and engagement. We look forward to discussing our first quarter financial results in a few months. In the meantime, we will be participating at the Leerink Global Healthcare Conference next week in Miami, so we hope to see some of you there. We also expect to be on the road likely in the spring with NDRs and the like. Thanks again, and have a great day.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.

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