AI Integration And Global Biologics Demand Will Reshape Antibody Discovery

Key Takeaways

• OmniAb's expanding partner ecosystem and technology platform are set to drive accelerating milestone conversions, greater margin expansion, and multi-revenue growth well above consensus expectations.
  
• Integration of AI and diversification across therapeutic areas position OmniAb for sustained pipeline growth, higher recurring revenue, and faster profitability due to operational streamlining.
  
• Slower regulatory approvals, industry shifts toward alternative therapies, and increased reliance on external partners threaten OmniAb's competitive edge, market size, and earnings stability.

Catalysts

A biotechnology company, licenses discovery research technology to pharmaceutical and biotech companies, and academic institutions to enable the discovery of therapeutics in the United States, Europe, Japan, China, and Canada.

• While analyst consensus highlights double-digit partner and program growth as positive, they may be underestimating the flywheel effect of OmniAb's rapidly expanding 100-partner ecosystem, which could accelerate milestone conversions and lead to exponential growth in high-royalty, late-stage assets-materially boosting long-term revenue and earnings versus current expectations.
  
• Analyst consensus views new technology launches as incremental, but the immediate commercial traction of xPloration-with strong initial sales, recurring consumable and software revenues, and non-partner inbound demand-signals that platform innovation could transform OmniAb from a pure play on royalties to a scalable, high-margin, multi-revenue business, driving gross and net margin expansion far above consensus models.
  
• OmniAb's deep integration of AI, lab automation, and big data tools into its proprietary technology stack positions it as a critical enabler of next-generation drug discovery, just as the biotech industry pivots heavily toward AI-driven R&D and efficient antibody discovery, laying a foundation for outsized, long-term revenue growth as demand for these platforms outstrips market projections.
  
• The company's diversified portfolio-spanning oncology, CNS, inflammation, rare diseases, and more-coupled with global expansion into both large pharma and emerging biotechs, offers multi-pronged exposure to surging demand for biologics driven by aging populations and increasing chronic disease rates, which positions OmniAb for persistent pipeline growth and more frequent, durable royalty streams to fuel cash flows.
  
• Aggressive streamlining and operational leverage, evidenced by headcount reduction from 114 to 87 and $7 million in expected annual cash savings, combined with higher average royalty rates and a shift to more capital-efficient, recurring revenue streams, is setting up a powerful margin inflection and faster path to profitability than currently priced into the stock.

OmniAb Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on OmniAb compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming OmniAb's revenue will grow by 58.0% annually over the next 3 years.
• Even the bullish analysts are not forecasting that OmniAb will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate OmniAb's profit margin will increase from -275.8% to the average US Life Sciences industry of 14.2% in 3 years.
• If OmniAb's profit margin were to converge on the industry average, you could expect earnings to reach $12.9 million (and earnings per share of $0.09) by about August 2028, up from $-63.5 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 144.6x on those 2028 earnings, up from -3.8x today. This future PE is greater than the current PE for the US Life Sciences industry at 28.5x.
• Analysts expect the number of shares outstanding to grow by 3.84% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.29%, as per the Simply Wall St company report.

OmniAb Future Earnings Per Share Growth

Risks

• Increasing global regulatory scrutiny and longer drug approval timelines can delay or reduce milestone and royalty payments from partners developing biologics, which may lead to slower or less predictable revenue growth for OmniAb over the long term.
  
• Dependence on external partners for advancement and commercialization of drug candidates exposes OmniAb to significant revenue risk if key partner programs fail in late-stage development, resulting in future milestone and royalty income volatility and potentially diminishing earnings stability.
  
• Rapid advances in AI-driven and computational drug discovery could outpace OmniAb's traditional antibody platform, threatening the company's competitive edge and eroding both market share and future revenue streams if innovation investments fail to keep pace with industry transformation.
  
• Industry consolidation and tightening capital markets may reduce the number of viable biotech partners, forcing OmniAb to compete more aggressively on price and potentially accept lower royalty rates, which could pressure top-line revenue and diminish profitability over time.
  
• Expanding interest in alternative therapeutic modalities such as gene therapies, cell therapies, and small molecules is likely to reduce demand for antibody discovery platforms, potentially constraining the size of OmniAb's addressable market and putting long-term revenue and growth prospects at risk.

Valuation

• The assumed bullish price target for OmniAb is $11.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of OmniAb's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $11.0, and the most bearish reporting a price target of just $3.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $90.8 million, earnings will come to $12.9 million, and it would be trading on a PE ratio of 144.6x, assuming you use a discount rate of 7.3%.
  
• Given the current share price of $1.97, the bullish analyst price target of $11.0 is 82.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.