Q1 2023 OmniAb Inc Earnings Call
Good morning, and welcome to the Inc. First quarter financial results and business update conference call.
At this time all participants.
Anymore.
Following the presentation, we will conduct a question and answer session.
As a reminder, this conference is being recorded.
I would now like to turn the call over to Stephane.
Chief Financial Officer.
Please go ahead.
Thank you operator, and good morning, everyone.
Thank you all for joining our first quarter 2023 financial results conference call. There are slides to accompany today's remarks and they are available in the investors section of our website at <unk> dot.
Before we begin I would like to remind listeners that comments made during this call will include forward looking statements within the meaning of federal Securities laws.
These forward looking statements involve risks and uncertainties that could cause actual results to be materially different from any anticipated results.
We're 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 this live broadcast today.
Date May 11 2023.
As required by law on the App takes 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 for 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 the prepared remarks, we'll open the call to questions with that let me turn the call over to Matt.
Thanks, Curt good morning, everyone and thanks for joining our first quarter of 2023 financial results Conference call.
On the App has been an independent publicly traded company for just about six months now so I'd like to start off this morning by taking a quick moment to welcome our new investors and new analysts who are joining today and to just briefly describe a bit of what we do.
This model is focused on licensing our proprietary discovery platform to enable our partners to rapidly discover innovative therapeutics.
We generate revenue from upfront payments for access to our technology stack from collaboration or service revenue when a partner asks us to do work for and with them.
From milestone payments related to advancement of clinical phases regulatory or commercial achievement and from royalties on net sales of our partners products.
We believe <unk> has the most diverse host systems for fully human advice specific antibody discovery with the industry's only four species platform.
Our technology stack is driven at its core by the biological intelligence of our engineered transgenic animals paired with our high throughput screening technologies to enable the discovery of high quality fully human antibody therapeutic candidates for a wide range of diseases.
Robust base of experience coupled with our close collaborations with partners gives us critical insight into the industry and creates a positive feedback loop to advance and expand our proprietary platform.
We strive to keep our technology offerings at the forefront of our industry and in a few slides I will discuss our branded omni deep offering which leverages in silicon capabilities, such as structural modeling artificial intelligence and machine learning across our technology platforms in order to further enable our partners work Amit.
Amit EBIT the first of our technology launches this year as we also plan to launch our novel heavy chain only chicken in the fourth quarter.
Leveraging our highly scalable business model the number of programs underway by partners continues to grow.
And that provide significant validation of the value our technology brings to our partners and we continue to drive business development efforts to attract additional partners as we participate in this large and growing market, which is projected to reach about $279 billion in 2025.
With our current resources and our dedicated staff of over 100 employees.
Proven technology platform. We believe we are positioned for growth to address major unmet medical need for novel Therapeutics.
We continue to expand partner relationships, which totaled 70 partners at the end of the first quarter with the addition of a new license with the Scripps Research Institute related to assets now being developed by cessation therapeutics.
Subsequent to quarter end, we also filed a new platform license agreement with Neurocrine Biosciences.
Our partners represent a wide range of pharma companies and we continue to attract high quality partners that are seeking our discovery platform and our team's scientific collaboration services.
Approximately 20% of our partners are among the world's top 20 pharmaceutical companies as measured by global revenue.
I'll also highlight here that this industry is constantly expanding and consolidating with new companies being formed and companies being acquired and that dynamic will sometimes impact the number of partners that we report that's expected to be the case with <unk> and Pfizer given their previously announced and planned consolidation.
I note here too that our agreements are generally all structured so that the economics to omni app are tied and maintained to the program even in instances, where there are changes in ownership.
As I mentioned, our portfolio continues to grow and reached over 300 programs with.
With 27 programs in the clinic, we're approved for commercialization at the end of Q1 during the quarter. We added a net of 10 new programs to our portfolio.
The Pie chart on this slide breaks out our 301 programs by stage of development.
The discovery phase is large and growing with a base totaling 260 programs. In addition to 14 programs in the preclinical stage and the COO.
Many of our partners have 20 programs in phase one two in phase II and two in phase III.
There are three approved drugs utilizing on the <unk> derived antibodies and we're recognizing royalty revenue from commercial sales if there's an barrel of map and <unk> in China, both of which are also being pursued in other markets.
In the first quarter, we had a new program entered the clinic with CJ, who initiated a phase one clinical trial of STM BB <unk>, eight which is a CD to 28 and 41 BB bi specific molecule that's in clinical development for advanced melanoma and other solid tumors.
As I mentioned on our last quarterly call based on discussions with partners, we see potential for three to five new army have derived antibodies to enter the clinic in 2023.
We strive to provide utmost flexibility to meet our partners' evolving scientific needs.
As we believe generating large and diverse repertoire of high quality antibodies increases the likelihood of success in optimizing desired therapeutic characters characteristics.
The science behind the individual programs drives our partners use of our different engineered animals and in many cases, they use more than one source for our program.
Partners currently have antibodies in clinical trials at a rack derived that our mouse derived in our chicken derived and we continue to see the versatility of our platform showing in the number of modalities and formats being employed by our partners, both pre clinically and clinically.
Our partners made a number of public announcements about their clinical and commercial progress during the first quarter and in recent weeks, notably in January we received $35 million in milestone payments from Yadkin related to Tech, Mali, which Curt will discuss.
Regarding other progress, we'll start with battlefield that.
<unk> is in clinical development by handle by Harbor, Biomed and by immune event.
Harbor Biomet announced positive topline results from its phase III clinical trial in China for the treatment of generalized myasthenia gravis.
Handle has announced that they are making progress on plans to initiate a phase III in Japan. Later this year also for the treatment of generalized myasthenia Gravis. In addition, immuno van announced that it expects to report initial results from its phase II clinical trial and graves disease in the second half of this year.
<unk> is also running clinical trials in generalized myasthenia gravis thyroid eye disease.
Chronic inflammatory demyelinating demyelinating polyneuropathy.
And for the next generation anti F. CRM, <unk>, which was discovered using our omni rat technology immune event announced plans to initiate a phase one clinical trial for autoimmune diseases I want to make one clarifying note regarding the economics for both Datacom AD and the <unk> programs, which is that these mall.
It was originally discovered by handle using omni rat and any payments that we receive will come from handle through defined sharing economics that are built into our agreement with them.
As I mentioned <unk> recently initiated a phase one clinical trial of <unk> to $2 eight <unk> to 28% and four one BB bi specific molecule and advanced melanoma and other solid tumors.
And a comment also Huron ask ill note that based on the titles and presentations that have been disclosed we expect a number of our partners will present, new clinical data for omni abderite programs at the <unk> annual meeting that is taking place coming up here in June .
Yes.
As mentioned in our press release. This morning, we will be launching our omni platform at next week's pegs meeting in Boston.
Our head of systems Engineering, Bob Chen will be presenting case studies highlighting omni deep.
Amit deep is a suite of silicone tools for therapeutic discovery and optimization that had been woven throughout on the apps various technologies and capabilities.
These tools include structural modeling molecular dynamic simulations large proprietary aki species antibody databases, AI and machine and deep learning sequence models and additional features leveraged with a biological intelligence of our engineered animals and our screening technologies such as exploration.
Deep allows for rapid identification of candidates with the right affinity.
Sufficiency and develop ability profile to lead to more effective and efficient drug development.
These proprietary capabilities have been part of our internal research efforts for many years and we've recently expanded them, especially for programs with some of our larger partners.
Our extensive capabilities centered around ion channels and transporters also leverage omni deep, which we view as a differentiated tool for viable target to meet delivery.
We have capabilities that are particularly effective for difficult and high value ion channel targets. These capabilities were originally established and built around small molecule <unk>.
And are now being applied to multiple formats and modalities for our partners.
Not only do we value the relationships, we have with our partners. We also helped to create value.
Through their feedback on the discovery process in areas that they find of interest to their pipeline expansion plans. We utilize this input to further enhance and innovate our technology platform to maintain what we see as a leading position within the industry.
We have a highly scalable business model and we're poised to facilitate the development of therapeutic candidates into the clinic by our partners as well as to continue to do new deals with structures that create value for all stakeholders.
And also that expand our portfolio with new partners.
And we look forward to keeping you updated as we execute on this strategy.
So with that let me now turn the call back over to Kurt for a discussion of the first quarter financials, Kurt Thanks, Matt.
As a reminder, the financial results reported from the prior year period are prepared on a carve out basis, which were derived from <unk> historical accounting records as if omni App were an independent company. This makes certain comparisons difficult primarily for operating expenses given the differences in the methodologies for reporting.
Let's walk through a few of the highlights for the quarter.
Total revenue for the first quarter of 2023 was $16 9 million compared to $9 6 million in the prior year quarter the.
The revenue increase was primarily due to the recognition of the remaining $10 million milestone payment for the first commercial sale of Tech Valley in the EU.
I mentioned on our last conference call that we received a $35 million payment from Janssen and that $25 million was recognized as revenue in the fourth quarter for first commercial sale in the U S.
He also stated that we would likely recognize the remaining $10 million milestone payment later in the year.
However in April we received information from Johnson that met the criteria for recognizing the EU portion of this milestone revenue in the first quarter.
Like last quarter, our service revenue was down slightly as a result of less work being performed for some of our ion channel partners based on stage and status of these exclusively licensed programs.
Turning to operating expense.
Our R&D expense for the first quarter was $13 8 million as compared to $10 8 million in the prior year quarter.
The increase was primarily due to higher personnel costs and higher costs associated with our new facilities.
G&A expense was $8 2 million compared to $4 1 million in the prior year quarter as we staffed up these functions and incurred other costs associated with being a public company.
The net loss for the first quarter was $6 1 million or <unk> <unk> per share versus a net loss of $6 3 million or <unk> <unk> per share in the prior year period.
One additional comment about shares used for our earnings per share calculation.
The number of shares of $99 2 million for Q1 is based on our basic shares outstanding and should be a good number to be to be using for the EPS calculations going forward.
We ended the first quarter with $113 6 million in cash cash equivalents and short term investments.
The increase in the quarter was primarily driven by the receipt of the $35 million milestone payment for technology.
Other than the associated decrease in accounts receivable for the milestone that I just mentioned.
There were no significant changes to our balance sheet.
The only other change that I'll mention is that we paid approximately $2 million in the first quarter on our CVR obligations, most of which was rate related to various omni tour programs that recently started.
We continue to expect that our cash balance at the end of 2023 will be slightly higher than the balance at the end of 2022 and that this balanced provide sufficient runway to fund our operations for the foreseeable future.
On our fourth quarter earnings call I indicated that our Q4 2022 R&D expense is a good base off of which we would be growing.
Q1, 2023 actual results are in line with that expectation and we continue to expect to see this trend going forward.
On the G&A side of things I previously indicated that our fourth quarter 2020 to G&A expenses.
Included approximately $2 million of one time expenses and indicated that if you pulled out that $2 million.
We expected that our G&A expense would grow slightly off this adjusted Q4 figure.
As you can see our Q1 2023 results are consistent with that guidance and we also expect to see this similar trend going forward.
And with that I'd like to open up the call for questions operator.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session.
Should you have a question please press star one.
If you want to withdraw your question. Please press star two.
Your question is will be built in the orders they are received.
If you are using a speaker phone please lift the handset before pressing entities.
One moment. Please for your first question.
Your first question comes from Robyn <unk> from <unk> Securities. Please go ahead.
Hi, This is Michelle on.
One for Robyn Thanks for taking the question then.
First of all the process. So a question on omni deep.
I mean, we still believe that biologic in WNS is a better place.
Antibody. So I'm just wondering if youre willing to leverage <unk> to kind of create novel antibodies does in clinical is that is that.
Something like a plan for the future.
Thanks, Sean Yes, good question.
I'll first talk a little bit about the quote branding of omni deep and it's really a nod to.
The term deep and omni deep as really a nod towards deep repertoires right that are that the biological intelligence of our animals produced the deep screening and in terms of our screening capabilities with exploration.
Deep sequencing and ultimately to deep learning as well.
And.
We'd already been leveraging and silica tools and AI in our downstream work, especially on the screening side and then some.
Some of the work around ion channels, and transporters really for some time and I'd be remiss.
Remiss if I didn't note that we have some really fantastic in silica experts on our team who are really impressive and important teammates and have been at for for a long time.
We actually announced the deal a couple of summers ago with landing AI and talked a bit about it then and that work.
Banded considerably over the last 12 or 18 months or so that work was centered around our exploration screening platform.
And kind of as you're generally referencing there are obviously, some public and sporadic examples of.
Concordance have predicted structures with actual crystal structures right. So this is a.
The scientific resource that's available to us and really to everyone else in the drug discovery space, but that.
I will say that area of work really is not perfect. There are many many classes of proteins, where it's not so good at all for a variety of reasons and similarly designing antibodies based on predicted antibody structure from sequence has a lot of very well known limitations.
And Andy uncertainties are really compounded in that quite a bit when using it predicted but not verified antigen structure, which creates almost like a.
House of cards type scenario as Tom has described it when using only silicone where AI only approaches instill wow that sort of approach me bear bits of fruit in specific instances that will lead only to a subset of all solutions and it will never change the fact that and then silicon solution or enhancement.
We will need to be tested for expression in binding in both in vitro and eventually in vivo and we will also need to be evaluated for off target binding to a large number of irrelevant proteins, but.
The point I really want to highlight here is it carefully engineered transgenic animal systems have many of these tests inherently built in as natural checkpoints. So our systems can essentially try and test many different antibody sequence possibilities directed at the actual protein structure rather than just the.
Didn't model in that it can read out antibodies that don't express well or that bind promiscuously and then it can further and refine and edit if you will for high affinity and Thats why.
Long lead up but thats, why we and our partner see so much power.
In pairing our biological intelligence of our highly engineered transgenic animals with the in silicon tools that we brand and call Omni D. So.
Those are the sorts of reasons why we're excited about it and I think our partners are but really it remains our core foundation the biological intelligence, but obviously, we're leaning into the omni deep element as we expand our technology as well.
Great. Thanks, and in terms of the economic sulfur diesel as you do more needs for difficult targets using your new advanced technologies is there variability in terms of economics do you do you negotiate higher economics for these type of deals versus the others.
Which sounds like more simpler targets.
Yes.
In general we've.
Obviously, you got a core commitment as part of our strategy.
<unk> to innovate around the platform to really continue to keep it cutting edge right and that takes a variety of forms that's not only workflow enhancement.
Also continue genetic engineering as I said, we're going to be watching a heavy chain only chicken in the fourth quarter.
And it's really leveraging the positive feedback loop that we have from our partners at really understanding not only where they are today, but where they are headed.
Generally when it comes to deal structures.
I'll, let Kurt comment a little bit on kind of the elements of economics of it.
All of our deals.
But it's really an interchange of kind of the work that we're doing that the technology that partners are leveraging.
And then that you can kind of is reflected in the in the structure of the deal or maybe you want to comment there, yes, I mean for the most part the economics of all of our partnership deals are established and set at the time that we sign those deals. So there are sort of fixed in nature in terms of what milestones and royalties will be that being said to the extent that we are.
Performing additional work we were partners, we would earn additional service revenue for those types of things.
Okay, and just lastly, I mean your yes.
I know you reaffirmed your guidance for a number of new clinical.
Good morning.
We will enter the clinic in this year just wondering I mean, you are seeing a nice going through some trained up on Lake and New project starts every quarter do you have plans doing like for like items.
For a new a new project starts for the year.
And in terms of guidance for the only guidance that we're providing is really just sort of this guidance on the number of clinical starts it and the reason for that is it's sort of a number where we do have some visibility in terms of discussions and insight from partners as it relates to kind of.
Ram starts it's a really difficult thing for us to project.
Given the way partners start new programs, so I would doubt that we would ever provide guidance on that number.
But to the extent, where we do have visibility like like I said on kind of clinical starts that's what we've tried to provide a little bit more guidance here.
Great. Thank you thanks for taking my questions.
Sure.
Thank you.
Next question comes from Steven <unk> from Stifel. Please go ahead.
Yes. Good morning, Thanks for taking the questions maybe just to follow up on.
On the omni deep.
Is that technology that.
Partner with just a broader platform license would have access to or is that technology that a partner who comes to you looking for a full end to end solution wood.
Benefit from given the way that it's kind of woven into the into the tech stack.
Yes. Thanks, Steve This is Matt yes, it really is woven throughout our tech stack right and there are elements of this.
We're now branding as <unk> deep that we've been.
Leveraging for years.
And so it's been.
Part of it we've expanded it over the last 12 to 18 months.
And we are employing these techniques for partners, especially some of our larger partners.
So to.
And to answer your question. It is part of the benefit if you will that partners get when they partner with us they know they're coming to us.
They get cutting edge technology, they get continued innovation.
And a commitment to continued investment around the platform and I think that's what drives our partners use of the platform. That's one of the reasons I think they're excited about the things that we do and why our science team is excited about as well. So hopefully that gives you a little perspective there.
Got it and then you talked about launching the heavy chain chicken.
Species in.
I think the fourth quarter of this year.
I guess, how do you think about what the demand for that will look like right and I guess I asked the question I know that you guys launched on the tour I think back in 2020, and I think kind of per one of the slides you have in the deck I think cheaper.
2% of.
Demand looks to be centered around that technology.
You expect the heavy chain chicken to.
Sure.
To improve upon I guess kind of 2% Amit.
Tor demand metrics.
Yes, Thanks, Steve.
I'll say for Omni tour.
We actually are seeing an increase in starts there and that percentage is going up obviously when you have over 300 programs.
It can be.
The edges, but omni tour is an area of growing an increased interest and we have had new new starts there.
On the heavy chain antibody side, that's an area of growing interest in the industry.
Domain antibodies heavy chain antibodies antibody sika bodies that sort of thing.
So we do see.
Demand there in fact, we do have partners who are already <unk>.
Acquiring and lining up.
For us.
Use and access to the heavy chain chicken when it becomes available in December .
We'll probably talk more about where we see it fitting in to the overall landscape at the time, we launch it but.
Hopefully that gives you a little bit of color.
Okay, and then maybe just.
Lastly, you can kind of speak to.
The average royalty rate.
The royalty bearing assets across the portfolio right now.
Where you think that metric can kind of realistically expand to over the next three to five years and then maybe.
What are the key levers that allow for that expansion to occur. Thanks.
Yes, Steve So I guess the way that I would sort of frame that question is there are two products that are approved right now, we're receiving royalty and that is a flat 3% royalty.
In terms of.
Royalty rate that for the entire.
Your portfolio, we haven't given a specific number but it's generally in the low to mid single digits.
And I would expect based on kind of as we get out into the future that that 3% number would go up based on sort of deals that we signed.
That being said, it's going to be a function of sort of what individual deals are that kind.
Kind of move forward, but in general I would expect that number to.
Operator can we go to the next question.
Your next question comes from Joel Bargains from H C. Wainwright. Please go ahead.
Hey, guys. Good morning, Thanks, So I guess I'm going to approach omni deep from a marketing standpoint, so whether you get inbounds or whether you are out there marketing your overall platform.
How would you say omni deep differentiates from other in silicone approaches.
Yes, yes, thanks, Joe.
Really it starts at our core I'll say, which is our foundation of biological intelligence in the deep repertoires proprietary multi species antibody databases that we possess that had been built up by doing.
And then pairing that with with cutting edge technology as I said this is an area that's been woven throughout our tech stack.
In pieces for years, but we.
We leaned into it more over the last 12 months to 18 months really leverage some of the expertise that we've had internally.
That had been built up over time and some of the organizations that were acquired that form the foundation of omni app, but really what differentiates. It is pairing some of these tools and capabilities with our transgenic animal systems and the biological intelligence and capabilities again, the term deep as it or not.
<unk> deep repertoires deep screening capabilities that we have deep sequencing as well as as deep learning elements that we've invested in.
As we launch this next week at pegs as I said, Bob Chen who heads our systems engineering will be presenting at the pegs meeting in Boston also with some case studies.
Around.
Targets were.
This sort of work has really been able to be highlighted things like <unk> 46 in other areas, where I think.
Partners will realize and some partners are already benefiting from these capabilities.
Power that this creates within our business model.
Helpful. Thank you and then I guess two little questions housekeeping and expenses for both of you I guess are there any changes to the terms are everything sort of status quo with the C stone announcement and number two.
With regard to omni deeper for example, any key infrastructure investments that need to come from that at this point.
Yes, I can comment on Keystone, Yes, Joe Youre, referring to see Scott, Steve Stone announced earlier in the week. They regained development commercialization rights to <unk> Mellon that outside of greater China.
And no change at all too.
Two the economics to us.
Obviously assets do change hands from time to time, we've seen that.
At times and there is no change there maybe I'll, let Kirk comment on expenses.
Yes, no no no additional <unk>.
<unk>.
Related to omni deeper or any of these other programs relative to we're still sticking with the guidance that we have so no major change to that.
Fantastic Thanks for the color guys.
Yes, Thanks, Joe.
Thank you.
Your next question comes from Tony <unk>.
<unk> Securities. Please go ahead.
Yes.
Yes, hi, thanks for taking the questions. So first one on.
Maybe a broader one just given what we're hearing in the marketplace and in terms of.
Small biotechs emerging biotechs.
You're funding constraints.
What are you seeing within the business doubled with pipeline, maybe can you give us a high level view there.
And then also within the 200 <unk> discovery programs that you have.
Are you hearing anything in terms of cancellations or.
Potential for that.
Sort of in the next two quarters.
Yeah. Thanks, Thanks, Puneet, So first I'll just comment on your on your last question. All the numbers. We report are net of attrition.
So whenever we report our numbers there net of attrition and of course, you do see attrition.
At any time.
Actual part of the pharmaceutical business of course, but to your question on the on the macro environment. Obviously, we are students of the industry as well and have been for some time and we do have I'll say, a really interesting vantage point on the industry given our 70 different partners over 300 programs.
But in answering your question I think I'll first point historically.
And note that we've been able to grow our number of partners and number of active programs on an annual basis through a variety of macro funding cycles in the industry.
Times, when raising capital for smaller partners was relatively easy or in times like now where it's viewed as more complex.
And I'll speak for our business more specifically I would say that the diversity of our partner base with a mix of global pig farmers with biotechs with startups, who have interesting biology, but that diversity brings a lot of power to the business and I think positions us well to create long term value for our <unk>.
Take holders.
The cycles come and go deeper relationships with partners also informs our innovation that obviously creates what we call the positive feedback loop and really I'll say informs our conviction around continued innovations for our platform.
And also I'll say I'd say this to our team a lot internally as well that when you see cycles in the broader landscape generally.
That these are the times when true innovation and true differentiation, but innovation wins, if you will and partners come to us to help them discover new drugs.
To get scientific solutions, that's why they come to us for that innovation. So.
Could some of the things that <unk> seen in the macro landscape if sustained influence some of our metrics at some point.
Sure I think it would be odd to say that it absolutely could not but that said we.
We do think that our innovation will went out.
And we really like how we're positioned because of that.
Our business development team remains extremely busy.
The vast majority of our deal dialogue and deals have come from inbound interest or scientist migration.
<unk> to be true and we are leaning into.
I'll say more conferences, we used to do about a half a dozen or so conferences a year, we're increasing that by about <unk> over the next 12 months. So.
Hopefully a little bit of color there for you.
Yes, no that's great.
On the business model.
The way Youre offering is.
Can you talk to us a little bit on sort of how cost effective it is versus the traditional model where.
<unk>.
The work is being done under one roof and some of your competitors.
Can you talk about what sort of leverage you have if the market was to get tougher.
How can that offering resonate potentially more with your customers. Thank you. Thank you.
Yes, it's a great question, who need because our business is highly scalable in terms of the way we've structured it so.
The deals that we have when partners come to us depending on the type of species, they used and will use <unk> as an example in that case.
In many cases, we do very little work for the partner, we shipped them the rats they have the capabilities to.
Do the inoculations do the screening themselves and we really just kind of get quarterly reports on on the work that they've done so.
In terms of omni rat that business is almost theoretically infinitely scalable without us adding additional costs.
When it comes to omni chicken, we actually have to go do some of that work.
Our cells on the front on the front end because we're the only ones that how is the chickens.
But we sort of pride ourselves in having this flexibility our flexible business model right, where partners can come in and pay us to go do all the work right. So we can do screening and optimization for them and we will earn extra service revenue for that but to the extent that the partner has those capabilities and wants to do that work themselves.
That's fine too and they take over the work and do that so.
Our business model tends to be much more scalable than others. Just in terms of the way that we operate with our partners and the fact that.
In many many cases our partners are doing the majority of the work themselves.
Got it okay, great. Thanks, guys.
Thanks Bonnie.
Alright. Thank you. Your next question comes from Steven Mah from CV. Please go ahead.
Oh, great. Thanks for the questions and congrats on the quarter.
Okay. Thanks.
And maybe just a follow up on <unk> question on.
When youre doing a.
Blake transgenic animal license.
It seems like to me, maybe you can confirm on the scripts licensing.
Deal, that's an omni rat license, where scripts was maintaining the colony and doing the work for themselves is that right.
Yes, without going into deeper specifics around.
We.
One of the things we have started to focus on over the last year or so is is continuing to advance partnerships with leading academic institutions.
And Scripps is an example of that we've got a great network.
Of academics not only through.
Kind of the history that we've built up a genetic engineering first but also through.
Our board and others.
And scripts.
As an example of an organization that has a history of innovation and interesting biology, so they want accessories taken access to.
Yeah.
Our animals.
And then from there.
One of the benefits of these sorts of deals and we have we've done these with other academic institutions as well is that these are ones that also have a history of of licensing and or seeding and spinning out innovative companies and in this instance, with the scripts.
Institute the assets that came out of our technology. There are now in development at cessation therapeutic sensations developing novel immuno biologics to prevent a fentanyl overdose and to treat fentanyl addiction, using really what is a completely new approach is really by some.
Westering Sentinel before it's able to enter the brain.
To offer more durable protection for overdose, so kind of what kind of an interesting new area of science, but this is an instance, where it's a partnership through.
Through a leading academic center, who had some interesting novel biology that now then led to assets being moved forward at a at a company.
Okay. Okay. Yeah, I appreciate the color and if possible can you give us a sense for the economic structures of like a trend.
Transgenic animal licensing deal, where we're aware I mentioned, where they maintain the colony themselves and do the work themselves versus like a full platform deal like the.
The one you signed with Neurocrine in second quarter.
Yeah.
In terms of the way the deals are structured.
The partnership economics or are all built the same right. So we don't to the upfront we don't sort of say hey, if we're going to do a lot of work for you then thats going to come at a higher royalty rate or higher royalty rate.
Ideas that the economics in terms of the upfront and milestone payments and royalties that really established upfront and their independent of whether or not we tend to do or whether we're going to do a lot of work for the partner.
On a program or not because in some cases youll have a partner where.
They might be set up to do do an omni rat program, where they do all of that work themselves.
And then the next program they decided to go do is with omni chicken, whereas were maybe doing a big chunk of that work.
The economics in terms of milestones and royalties will be the same although in the case of the chicken program, that's where we would earn additional service revenue as we do work. So the basic structure of the deal is sort of the same for all programs that a partner would go do the difference would be to the extent there.
We're doing additional work is the additional collaboration revenue that we would have.
Okay, that's really helpful color and.
Last one for me on <unk>.
<unk> deep.
Is this something that can be monetized as like a software as a service to others are too.
For example partners that are just doing the transgenic animal license route.
I think the answer to that is is it's elements of it potentially could but but you could say that about a lot of elements of our technology stack right. We've got proprietary.
Pieces of our technology that one could use the portable word around.
From a number of perspectives, but generally that's not been how we do it right and we've we have built up.
Technology offering of a variety of proprietary tools of which this contains a number as well, but our view would be no. This would be for our partners, who signed licenses with us.
And we leveraged yet for them to facilitate.
Facilitate their progress moving forward more more quickly and efficiently.
Okay got it perfect. Thanks for the questions.
Yes, Thanks, Steve.
Thank you.
Ladies and gentlemen, as a reminder show you have a question. Please press star one.
Your next question comes from Matt Hewitt from Craig Hallum Capital Group. Please go ahead.
Good morning, Thank you for taking the questions and I apologize if I ask one that was already.
Past kind of bounce around between calls, but first off thank you for providing the update on the number of active programs. Some nice growth there. Despite some of the questions about funding and whatnot.
Curious what is the number of partners that you currently have.
Is do you have that number at the breakout.
Yes, Matt we're reporting at the end of Q1 70 partners.
Who are leveraging <unk> technologies and assets.
That's great. Thank you and then.
Congratulations on that.
The pending launch of omni deep, but I'm curious given your strong cash balance and the current environment that is putting some pressure on some of the smaller companies.
Would you contemplate or is M&A.
Nothing that you would consider.
To kind of add to your toolset or is your preference to continue to build build those out internally. Thank you.
Yes, Matt Matt Thanks, Ed a.
Great Great question, and obviously, we built.
What became the foundation of omni App through doing.
Six acquisitions in less than six years right.
Technologies that fit very well with one another that are complementary to one another.
The fact that we've kept many of the founders of those companies onboard as key members of our science team and so so M&A really is.
Something that is in our DNA right those six acquisitions.
All of which have have brought us elements of our technology stack that have been.
We're always cautious never to promise deals right.
But we've been quite.
Quite successful I think.
In tacking on technologies and teams.
Out of the private sector right. So these are private companies, who have technologies that are validated or in the early stages of validation.
So like I said, we're always cautious never to promise deals, but I, but I certainly wouldn't rule. It out that that is that is something we do think about and are thinking about and are always assessing that said. We are also excited about our internal investments in technology like omni deep like the heavy chain only chicken that will launch in the Q in Q4.
That investment in our technology is built into our plan right. It's something we'll continue to do and we can keep leveraging.
That positive feedback loop that we have from from deeper relationships with partners that that really inform our conviction around innovation. So.
Long way to say, yes, we certainly.
Are always looking at interesting things to bolt on whether those come out of.
Companies, whether they come out of universities.
Or or other academic areas, where we think we could add on new technologies or capabilities that will drive growth in partnerships and programs. So hopefully that answers your question.
Absolutely great. Thank you very much.
Thank you.
Thank you.
There are no further questions at this time you May proceed.
Great. Thank you operator, I'd like to thank.
Everyone for participating on this morning's call and for your questions and engagement. We look forward to keeping you updated on our progress and speaking with you next quarter I just want to mention also that will be out on the road meeting with investors. In addition to attending the EF Hutton conference today here in New York, We will also be attending.
The B Riley conference in the L. A area the benchmark virtual conference as well as the Craig Hallum Capital Conference, that's coming up in Minneapolis. So thanks, again, all and have a great day.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
Thank you.