OmniAb, Inc. (OABI) stock intrinsic value fair value estimate & owner earnings analysis

OmniAb licenses antibody-discovery technology - genetically engineered rats, chickens and other animals that produce human antibodies (OmniRat, OmniChicken), plus screening tools such as the xPloration instrument - to about 110 drug developers. It earns upfront license fees, fees for discovery services, milestone payments as partners' drugs progress, and low- to mid-single-digit royalties if a partner's drug is ever sold. As of June 30, 2026 it counted 425 active partner programs, 34 in the clinic or on the market. The market is interested in what that portfolio might become (for example Immunovant's IMVT-1402, Johnson & Johnson's ramantamig and Merck KGaA's precemtabart tocentecan are in late-stage trials), but our valuation only credits what the business has actually produced or has under contract. What it has produced is losses. Measured as cash the owners could take out after paying employees partly in stock, the business lost $26M in 2021, $24M in 2022, $50M in 2023, $55M in 2024 and $51M in 2025 (about -$0.45 per share in 2025). Revenue has swung with milestone timing: $35M, $59M, $34M, $26M and $19M in 2021-2025. Royalties, the part meant to become the long-term payoff, were only $0.9M in 2025 and $0.5M in the first half of 2026, from three approved partner products (including sugemalimab from CStone and zimberelimab from Gloria, sold mainly in China). We treat stock-based pay ($16M in 2025) as a real cost. Amortization of the acquired technology (about $13M a year) is a non-cash charge that we add back, but because that technology wears out we give it no value beyond contracts already signed. 2026 is better. First-half revenue was $27.8M, mostly milestones, and the owner loss narrowed to about $4M for the half. But the company's own outlook implies a weak second half (full-year revenue $32-36M against cash operating costs of $51-55M), and cash plus short-term investments are expected to fall from $52.0M at June 30 to roughly $37-41M by year-end. The company has no borrowings; it does have about $20M of office and lab leases running to the early 2030s. In August 2025 it sold 21.3M new shares in a private placement to fund the losses. How we value it: no case assumes new approvals, bigger royalty streams or growth that the business has not already delivered. The cases differ in revenue level and in how long the company keeps spending before it would have to either raise more money (which hands future value to new investors) or stop and collect on contracts it already holds. We use about 129M shares, excluding 16.3M sponsor earnout shares that only vest if the stock averages $12.50-$15.00 before November 2027. Bear case ($0.00): revenue stays near 2024-2025 levels (~$22M) while costs stay at the 2026 level, so the business loses about $42M a year of owner earnings. Cash lasts about a year; after paying for leases and severance, collecting royalties on today's three products does not cover what was spent. The business is worth less than its $52M of cash by more than the full cash balance; because the company has no debt, shareholders' losses are limited to their stake, so we show zero. Base case ($0.00): revenue runs at the company's typical ~$34M (the 2021-2025 median and the 2026 outlook), and costs stay at the lower 2026 level that recent cost cuts have already produced (research spending fell from $56.5M in 2023 to an annualized ~$38M in early 2026; stock pay from $25M to ~$13M). That still loses about $30M a year. Two more years of spending consumes most of the cash; a run-off of existing contracts (~$1M a year of royalties plus fading milestones) does not make up the gap. Value comes out at about -$0.10 per share before the zero floor. Last fiscal year owner earnings improved about 8% (from -$55M to -$51M); our first-year base assumption (-$30M) is better than that because the lower cost base is already visible in the first-half 2026 results, not because we assume a turnaround - and the case is still below zero. Bull case ($0.42): revenue at the upper end of what the business has already achieved (~$50M a year, as in 2022 and the first half of 2026 annualized), continued cost reduction to ~$49M of cash costs, and approval of Salubris's SAL003, which is already filed in China, lifting royalties to ~$4M a year. The company runs close to cash break-even for three years and then harvests its signed portfolio (royalties plus ~$10M a year of milestones fading over six years) with a lean team. Even here, owner earnings stay slightly negative while it keeps investing in the platform. The shares are worth about $0.00 in the bear and base cases and $0.42 in the bull case. What would make this wrong: the portfolio producing a large royalty earner - a late-stage partner drug reaching the market in a big indication - which would change the picture, but none has yet. Most of the value investors see in OmniAb depends on events that have not happened. The margin-of-safety price of $0.10 applies only if the company shows it can stop consuming cash; a stop-now harvest of the existing contracts is worth about $0.28 per share today, and the margin-of-safety price sits well below that given how small and uncertain the business is. The small year-to-year gaps between our rebuilt cash flow figures and the reported operating cash flow ($0.5-2.1M) could not be fully traced in the filings and do not change the conclusion.