Good morning and welcome to OmniAb, Inc.'s third quarter 2026 financial results and business update conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would like to now turn the call over to Kurt Gustafson, OmniAb, Inc.'s financial officer. Chief financial officer, you may begin now.

Thank you, operator, and good morning, everyone. This is Kurt Gustafson, OmniAB's chief financial officer, and thank you all for joining our third quarter 2026 financial results conference call. There are slides to accompany today's prepared remarks, and they're available in the investor section of our website at OmniAB.com. Before we begin, I'd like to remind listeners that comments made during this call by OmniAB's management will include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from any of the anticipated results. These forward-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 the live broadcast today, October 30, 2026. Except as required by law, Amechi undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Joining me this morning is Matt Foer, Amechi's president and CEO, and Amechi Nwachuku, our chief operating officer. During today's call, Matt is going to cover some highlights. Amechi will provide an update on our exploration program, and I'll go through our financial results and guidance and then we'll open up the call to questions. And with that, let me turn the call over to Matt.

Thanks, Kurt. Good morning, everyone, and thanks for joining our third quarter call. I'll start now on slide number four, which includes some highlights from the third quarter. Our business here at OmniAb has been designed to benefit from diversified long-term and durable revenue streams. We continued to drive strong performance in the third quarter as our highly differentiated technology platforms are facilitating growth and partnerships and progression of programs. We have been and continue to be very active from a licensing perspective and announced a major new deal in the quarter with Eli Lilly for a novel ion channel program. We were really pleased to enter into this important new relationship with Lilly as they're obviously focused on delivering medicines to address major unmet medical needs and our differentiated expertise and established technologies that specifically relate to ion channels are well positioned to help facilitate that and drive this new discovery program forward. Under the terms of that license deal, we received an upfront payment and are eligible to receive up to $370 million in research, development, and commercial milestone payments, as well as potential tiered royalties on global net sales. In Q3, we saw increased utilization of our differentiated technologies within our growing ecosystem of partners, and we also saw strong traction with our exploration platform and steady progress across programs that our partners are advancing through various stages of development. These teams were front and center at our Investor and Analyst Day that we held earlier this month, and we really appreciate everyone who joined us for that event here in Emeryville and on the video webcast. As highlighted at that event, Exploration, our AI-powered high-throughput single B-cell screening platform, is now available to all potential customers. This creates valuable opportunities for our business and Amechi will speak to exploration in more detail in his section. And we also launched OmniTides, our new peptide discovery offering powered by our OmniUltra transgenic chicken. OmniTides is designed to provide an integrated discovery to synthesis workflow for partners with available peptide manufacturing by qualified CROs to generate naturally optimized peptides for a range of growing therapeutic applications. And finally, our continued strong business performance has resulted in yet another raise to our 2026 revenue and cash outlook. Kurt will speak to our updated guidance in greater detail during his portion of the presentation this morning. Moving now to slide number five. Our novel technologies here at Onyab reinforce our position as a key enabling technology licensing partner and support both existing and new partnerships. Novel technologies and our capabilities, as well as our vantage point in the industry, keep us at the forefront of next generation therapeutics discovery and we think position us to create meaningful value for our stakeholders. Slide five shows our technology platform organized around how we help partners efficiently create, screen, and ultimately deliver novel therapeutics. This quarter, we advanced important elements of the platform, and I mentioned OmniTides, which incorporates in vivo optimization driven by biological intelligence, which is a term we coined several years back. OmniTides leverages biological intelligence early in discovery, and that can support efficient progression to chemical synthesis and ultimately development. Our novel transgenic chicken-based technologies, specifically OmniDAB and OmniUltra, shown on the left here, continue to attract new partners and drive new programs. Our OmniDeep offering, shown across the bottom of this slide, which is our suite of AI and machine learning tools woven throughout our technology stack also drives significant value. And that's along with the extremely important novel data layers that we have and can generate that can also create substantial business opportunities for us. I'll briefly review now some of our metrics starting with slide number six. At the end of the third quarter, we had 111 active partners, which is a net increase from 110 at the end of the second quarter. New licenses in Q3 included Yamaya, Inc. and Monash University, and that was partially offset by a signal partner attrition event that was triggered by one of our larger partners acquiring one of our smaller ones. We've seen this from time to time and generally see these as positive events for assets that have been discovered with our technologies. We continue to have a nice diversified mix of partners and are proud that now nine of the 10 largest pharmaceutical companies in the world are active partners of OmniAb, which I think demonstrates the quality and the strength of our partner base. Now moving on to slide number seven, you'll see here our active programs metric. We ended the quarter with 433 active programs. That's up from 407 at the end of 2025, reflecting 38 additions and 12 terminations so far this year. And we saw a net increase of eight programs in the third quarter alone. Attrition is obviously a normal part of the business as partners refine their pipelines and their investment and R&D priorities. Importantly, More than 98% of our active programs have contracted Future Economics to OmniAb. And across our portfolio, we have more than $3 billion in total contracted potential milestones with an average royalty rate of approximately 3.4%. On the clinical front, slide number eight here shows our partners' active clinical programs and approved products. At the end of Q3, there were 34 active clinical programs and approved products that leverage our technologies. We've had four new clinical additions so far in 2026, and we continue to anticipate new clinical entrants in the very near term. These active clinical programs carry approximately $340 million in remaining potential milestones to OmniAb. Turning to slide nine, this graphic summarizes the status of our clinical and commercial stage partner pipeline as of September 30th for programs that carry remaining downstream economics to AmeAb. The placement of each program here on this graphic is based on its most advanced status in any geography, market, or indication. The right-hand side of this slide continues to include what some of our partners view as important potential first-in-class or Best in Class Medicines. And I'll review some of those when I cover the next slide. I also note that subsequent to the end of Q3, just last week actually, Bataclumab, which is shown here on slide number nine in the registration column in blue, received approval in China for the treatment of generalized myasthenia gravis in adult patients who are anti-acetylcholine receptor antibody positive. Bataclumab in China represents the fourth drug approved from our platform. So the next time we show this graphic with a full year 2026 status, one of the changes and updates of progression that investors will see is that Bataclumab will slide over to the right into the approved column. Moving now onto slide 10, which calls out a few recent partner program developments. The three programs starting from the left of this slide, IMVT-1402, PEV408, and Precentabart Tocentican all are being described as potential pipeline in a product type assets with either first in class or best in class potential. These are programs that are going after indications with substantial unmet medical needs with partners who are highly committed to rapid advancement. And also highlighted on this slide on the right side, you'll see here the approval update related to Baticlumab in China that I mentioned earlier. So now wrapping up my section on slide 11, we highlight here what we see as OmniAb's pillars of value. Our differentiated discovery technologies, innovative capabilities, and expanding partnerships we think position us to drive durable, long-term value for our stakeholders. We have a growing pipeline and broad partnership base that supports substantial contracted downstream milestones and royalties from a diversified basket of promising potential first in class and best in class programs while providing us unique industry insights that continue to inform our strategic priorities and our areas of focus. In addition, Our expanding suite of innovative discovery technologies, including our chicken-based technologies, drive new partnerships and open additional avenues for licensing value creation both now and in the future. Further, our differentiated exploration platform expands our reach and complements our existing discovery technology offerings while adding durable, meaningful revenue streams to the business. We believe we are now extremely well positioned to deliver for our stakeholders. And with that, I'll turn the call over to Amechi to talk more about exploration. Amechi?

Thank you, Matt, and good morning, everyone. As Matt mentioned, we've expanded commercial access to our exploration platform. This addresses an estimated market opportunity of more than $500 million and potentially creates synergistic opportunities across OmniAb's business lines at a time when the industry is embracing the value of lab automation and big data generation for discovery. Exploration is a novel platform for B-cell screening. The exploration platform drives value for antibody discovery teams with higher throughput, ease of use, robustness, and lower cost compared with current methods. Since the launch, researchers at big pharma companies, global CROs, and specialty biotech companies have used live demonstrations to understand what the exploration instrument can do in their workflows. Their feedback has been consistently positive, and that interest is translating into placements. In fact, in the third quarter, we placed another unit with a top global big pharma. Our growing qualified sales pipeline and our primary market research support our outlook for the exploration business. Turning to the business model on slide 14, exploration is a complete platform with multiple revenue streams. Exploration combines an instrument-led customer relationship with three recurring revenue streams. The instrument is a starting point. Each capital sale establishes a broader and deeper customer relationship and expands the install base that supports future recurring revenue. From there, Proprietary chips and other consumables generate high margin, usage-based revenue with every run. That revenue scales as customers adopt the platform and run more experiments. Software adds another recurring stream. Annual licenses support analysis and data management, create predictable revenue, and can expand value as we add workflows and applications. Service completes the model. installation training at preventive maintenance support instrument uptime, customer retention, and repeat purchases, typically through multi-year contracts tied to the install base. Together, these revenue streams can create a durable and complementary source of growth for OmniAb. Turning to slide 15, you can see that we expect exploration revenue in 2026 to be between $2 and $3 million. and we expect exploration revenue to double in 2027 and to double again in 2028. Over time, we expect recurring revenue from consumable software and service to ramp up and become a long-term growth driver for the exploration business, such that exploration delivers durable revenue streams. With that, I'll turn the call over to Kurt to discuss our financials. Kurt?

Thank you, Amechi. On slide 17, I'll start with revenue. Revenue for the third quarter of 2026 was $4 million, compared with $2.2 million in the prior year period, with the increase driven primarily by service and exploration revenue. Service revenue increased due to work performed on both antibody and ion channel programs. And late last year and earlier this year, we signed new ion channel service agreements that drive some of this increase. One additional note is that we would expect the service revenue from the Lilly collaboration to start contributing in the fourth quarter. On slide 18, revenue for the nine-month period was $31.8 million, compared with $10.3 million for the same period in 2025, with the increase primarily related to milestone revenue. We've seen great advancement of our partner programs this year, and this has varied from quarter to quarter. Last year milestone revenue was heavily weighted toward the back half of the year and this year it's more front end loaded. Turning to slide 19, you'll see our operating expense for the quarter. Total cost and operating expense was $20.4 million in both periods. R&D expense was lower in the current period and was partially offset by a small increase in G&A expense as well as other operating expense. Remember that we include cost of sales in the other expense category, and part of the increase in the other bucket this quarter is a function of the increased cost of sales associated with higher instrument sales. On slide 20, we have our year-to-date operating expense, which totaled $62.7 million compared with $63.5 million in the prior year period. The decrease in both R&D and G&A expense reflects the efficiencies that we found in the business that drove costs lower. These lower operating costs were partially offset by an increase in other expense. Recall that last year we recorded a gain that had the impact of lowering the operating expense in the prior year period. And earlier this year, we took a non-cash write-off in the first quarter. These two line items skew the overall operating expense comparisons which would have shown a much larger decrease had those one-time items not occurred. On slide 21 shows our P&L for the quarter and year to date. I've already walked you through the revenue and operating costs so I'll focus on the bottom line. The net loss for the third quarter was $15.7 million or 12 cents per share compared with the net loss of $16.5 million or 14 cents per share in the year-ago period. Year-to-date, the net loss improved to $29.3 million or $0.23 per share versus a net loss of $50.6 million or $0.46 per share in the prior year period. Slide 22, we have a reconciliation of our GAAP operating expense to our non-GAAP cash costs and operating expense, which removes the major non-cash items of depreciation, share-based compensation, and the amortization of intangibles. We believe this measure is a better indicator of our true operations and the figures here are fairly similar from period to period. Turning to the balance sheet on slide 23, we ended the quarter with cash and investments of $64.2 million. You'll also notice an increase in deferred revenue. This is a result of the upfront payment that we received from the Ion Channel Agreement we struck in the third quarter. Deferred revenue is generally amortized over the research terms of the specific agreements. Our updated 2026 financial guidance is on slide 24. We are increasing our revenue and cash guidance based on higher milestone revenue that we've achieved, while decreasing our operating expense guidance based on lower operating costs. I'll cover the details on the next slide here. So slide 25, you can see our current guidance relative to some of the past figures. We now expect total revenue to be in the range of $35 to $39 million, which is up from $32 to $36 million previously. And we now expect costs and operating expenses to be in the range of $83 to $87 million, which is down $1 million from our previous guidance. Similarly, we're bringing our cash costs and operating expense guidance down by $1 million to a range of $50 to $54 million. Regarding our cash projection, we now expect our year-end cash balance to be in the range of $53 to $57 million. We started the year with $54 million in cash, which means from a net cash flow standpoint, we expect the business to be basically break-even for the year. 2026 has been a strong year for us. We've seen great progression from our partners that has driven milestone revenue higher. The exploration business is off to a good start and we expect to see continued momentum on that front. In addition, we've signed a number of new multi-year ion channel contracts, which has lifted service revenue, and we hope to build on this progress. When you combine these factors with a controlled operating expense base, It sets us up well for the future. And with that, I'd like to open up the call for questions. Operator?

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question for optimum sound quality, and if muted locally, please remember to unmute your device. Please stand by now while we compile the Q&A roster. Your first question comes from the line of Punit Sudha with Lyrinc Partners. Your line is open. Please go ahead.

Hi, guys. Thanks for taking the questions here. The first one, I mean, the collaboration revenue was strong in the quarter, and that is before the Lilly revenue. So just how much of that is driven by adoption of OmniUltra and other chicken models, and sort of how should we think about the cadence of deferred revenue recognition?

Yeah, thanks, Puneet. I can just comment generally on the mix, and then Kurt can give any detail I missed. Candidly, it's a mix, right? I mean, we've seen that as we launch new technologies, they attract new partners and programs. For chicken-based programs, the partners obviously have to use us for the work, and both OmniDab and OmniUltra are attracting new partners and driving new service work. We've also, and this goes back a bit, but we had signed some new ion channel deals late last year and earlier this year. So those are contributing to service work as well. And as you noted, the Lilly deal was announced in the quarter. We expect that to start contributing in the fourth quarter, and that will be a multi-year collaboration with Lilly. So hopefully that gives you the color you need.

Got it, super helpful. On exploration, you talked about one more placement there. Could you talk a bit about how the commercial pipeline is shaping up? You've talked about doubling the numbers here. What could drive that potentially even higher? What are some of the drivers that sort of drive it in line? And maybe if you could talk a little bit about the capital side, how you're engaging with the customers, and how should we think about the capital side versus the recurring revenue consumables from exploration?

Thank you for the question. So the starting point for The exploration platform sales is the capital side. And for our customers, we're finding that all of them have different capital budgeting processes. And that's why the pipeline for an instrument sale could be anywhere from 12 to 18 months. And so we develop that relationship early. And then we work with our customers to place an instrument. And that's what gives us the confidence to be able to project the pipeline and say, we believe. that we will double the business next year and the year after. After that, then the recurrent revenue streams kick into place as the customers use the instruments and run different experiments.

I see. Got it. Thanks for that. And then maybe if I could, you know, just ask briefly on the Ptolemaic, you know, how should we think about the royalty contribution there? Should we expect a similar performance versus the other China assets you've seen in the past, or should we expect that to be a bit higher? Thank you.

Yeah, thanks, Puneet. Yeah, there's fresh news. Late last week, Harbor Biomed announced they'd received NMPA approval for Bataclumab in China for generalized Myasthenia Gravis for these set of patients that are anti-acetylcholine receptor antibody positive. As part of that, they said they're looking to launch the drug soon. They were clear about preparing for that and probably still too early to know what pricing will be, et cetera, and how that will impact the royalty line. But I would just say stay tuned on that.

Okay. Got it. Super. And congrats on the quarter. Thanks, guys.

Thanks.

Thanks, Vineet.

Your next question comes from the line of Skripa Devarakonda with Truist Securities. Your line is open. Please go ahead.

Hey, guys. Thank you so much for taking my question, and congratulations on the progress of Water. I have a couple of questions, one with the TABA partnership, the TABA 408. Does the positive celiac study change the expected monetization timeline in any way? And what next development decisions could trigger additional milestones? Any color you can provide there because you have both celiac as well as vitiligo development would be helpful. and I have a follow-up.

Yeah, Kripa, thanks for the question. Yeah, we were really pleased to see the data that Teva presented in Celiac, just from my perspective, really an exquisitely designed and so forth. So we're happy to see that. They've been pretty transparent in their presentations publicly on the potential. They're seeing potential peak sales just in the celiac Thank you. Thank you. Additionally, in Vitiligo, Teva has publicly said they see peak sales potential there of approximately a billion dollars. They're moving that forward at speed as well. But then in addition to those two indications, there's also been discussion of potential application of TEV408 in other indications as well, alopecia areata, Acyanophilic esophagitis, and then atopic dermatitis, all of those add substantially to the potential patient population that could be impacted by the drug. So it was great to see those data in Celiac, and we're excited for what's to come with that asset.

Great. Thank you so much. Yeah, that was good data. Congratulations on that. Maybe a question for Kurt. So as you're looking at the next leg of growth, just was wondering how you think about incremental spend that you would need to deliver the next phase of growth. And as exploration scales, do you think the You know, existing base can support the growth that you outlined or should we expect meaningful investment step ups in the next year and two? Thank you.

Yeah, I think I think for, you know, the core antibody business, we've built a team and actually, you know, if you We've been able to find efficiencies within that business. We think this business is right-sized to support the partnerships that we have and that we will sign and the programs that we have and the programs that will grow. We don't see a need to add additional infrastructure for that part of the business. I think with expiration, we're going to continue to watch how that business progresses. and to the extent that there are additional investments that we need to make, we'll allocate those just like we have this year. So this year we did spend some more money on exploration. We found savings in other areas to reallocate those resources. And so we sit down and make judgments on where to deploy resources and deploy dollars where we think we're going to get a nice return. But I guess Big picture, I wouldn't expect to see dramatic increases in our operating expense based on sort of our projection of the operations that we have.

Great. Thank you so much.

Your next question comes from the line of Joe Pantinis with HC Wainwright. Your line is open. Please go ahead.

Good morning. This is Josh on for Joe. Thanks for taking our question. So since you introduced OmniTides at your investor day, so I'm curious how partner interest has been there, and are you seeing that interest specifically concentrated around any particular therapeutic applications?

Yeah, Josh, thanks. Yeah, so just as background, you know, OmniTides is our discovery to synthesis workflow. and we launched that at our investor day weeks back. It's powered by our Omni Ultra transgenic chicken. And the short answer is yes, it absolutely attracts partners. I'll say deep collaborators and others. There's really been, I'll say, a growth, a substantial growth in peptide use. as really driven by the metabolic space. And of course, that's an area where folks are interested. We also see applications outside of metabolic as well in a variety of formats and modalities. So we're quite excited about OmniTides and how it diversifies our partner base, opens up our, I'll say, call file for our business development and licensing team to new players. And we're seeing that in real time. So we're really excited about it. I think it'll diversify not only the partner base, but also the therapeutic areas that are being pursued with our technologies.

Great. And with exploration, just wondering about the customer mix there. So now that you have broader commercialization, if most of that What's that mix in terms of smaller biotech, large pharma, CROs?

We are seeing interest from all three. So our pipeline and the feedback from the folks who are doing live demonstrations does include feedback from discovery teams, whether they are at large pharma, CROs, small biotech. Obviously, this is a larger capital purchase for customers, and so The ability to pay, let's put it that way, does differ depending on which segment they fall into, but we are seeing interest and we're seeing placements with all three groups.

All right, perfect. Thanks for the color.

Your next question comes from the line of Matt Hewitt with Craig Hallam. Your line is open. Please go ahead.

Good morning and congratulations on the strong quarter. I'm curious if you could kind of give us what the top line, what the milestone contribution would be for the 19 readouts that you expect over the next 15 months. I realize that not all of them are going to progress to the next clinical stage or be commercially approved, but I'm just trying to get a sense for what those milestones or what the total milestones could look like to kind of create a bracket for what, you know, the milestone contribution could be like over the next call it two years.

Yeah, Matt, thanks. And you're referencing, you know, the readouts we highlighted a few weeks back at our analyst event. Yeah, we have an upcoming calendar of, I'll say, primary completion of clinical trials by partners that is, The busiest we've ever seen, which is great as we're looking out over the next 18 months. Those readouts within that pool of programs and partnerships, there's a total, right, those are within that total of the $340 million of potential milestone payments that we can earn from those programs. It's a substantial amount of milestones. Now, every contract is a little bit different in terms of how they're structured and when they pay milestones. But we feel great about that flow of news, that flow of data events. and really the conviction and investment by our partners who are rapidly progressing programs through that were discovered with our technologies. I think it says a lot about the value that our technologies create and I'll say the nature of our partner base and the power of it.

Got it. And then maybe a question for Amechi on exploration. I realize it's still early days. You just placed another system. But given your experience with the first couple that have been out in the field, what are you seeing from a consumable pull through? Is it kind of where you expected it? Is there some things that you can do to help your customers better utilize the equipment? Just any color that you're learning early on in the launch of exploration. Thank you.

Thank you for that question. And it is early days to be able to tell you that it has stabilized. It's too early to say that. I will say that we invest heavily in working with our customers to make sure that they have a great experience and that they're using the instrument in the way that serves them the best. Obviously, the consumables pull-through will vary. It will be different, for example, if it's an academia customer versus if it's a large pharma. The collective picture makes us optimistic and gives us that confidence to be able to say we anticipate that the revenue will double in 2027 and then continue to grow and double again in 2028. Got it.

Thank you.

Your next question comes from the line of Brendan Smith with TD Cohen. Your line is open. Please go ahead.

Great. Thanks for taking the questions, guys. And congrats on the quarter, too. Maybe just one more, actually, on kind of the total revenue mix conversation. There's been a few here so far. But I guess just kind of given the recent clinical progress and kind of upcoming progress on the partners, too, can you give us a sense of what that total revenue mix ultimately looks like over the next couple of years? I know there's a lot of moving parts, even high level. Like if we use slide 17 and 18, for example, as a reference, is it fair to assume that milestones remain the biggest bucket kind of through next year? But I guess at what point does that flip? The majority royalties, can that come in 28, 29? And then should we expect milestones to start tapering on a dollar basis or kind of keep growing in tandem? Just anything kind of high level on the evolution of that mix would be great.

Sure, I can take that one. And Matt, maybe if you have additional color, you can. So I think you kind of outlined how we see this rolling out, right? So For the next couple of years, milestones we would expect would still be the biggest contributor to our overall revenue stream. The next sort of big product that comes up that I think starts to drive those royalties to be a bigger part of the growth story would be Immune Events 1402. And so if I look at the forecasts that are out there for that program, it looks like that might start in late 2028 and then ramps from there. I will say though that you know in terms of the other lines we did see sort of a almost kind of a low point in service revenue last year and I think you've seen that line item grow and that that I think will contribute to the revenue growth and I also think you know Amechi here has talked about what our specific guidance is with exploration two to three this year and then doubling and then doubling again so I think you're actually going to see contributions from multiple of these revenue lines that will contribute to that overall growth. But I guess the simple answer is for the next couple of years, yes, we would expect that Milestone would be the sort of the biggest contributor to the overall revenue picture.

Yeah, and I'd only add one element to that too, Brendan, which is sort of the value creation with technology licenses. Obviously, we have um technologies that represent a substantial durable competitive advantage um and we can you know we'll continue to do licenses whether it's our standard Tech Licensing, you know, Kurt referenced the service work where we're doing a lot of work for not only on the traditional antibody side, also on the ion channel screening side. We highlighted our entrepreneur enablement licensing as well, which creates other forms of upside. And then of course, asset based deals we've done from time to time. And then in addition to that, we also see opportunities where data layers that we have and can create can create additional opportunities for licensing as well. So I think we've got a lot of opportunities there that we're really excited about.

Got it. It's super helpful, guys. Thanks. Yep. Thank you.

Your next question comes from the line of Mike King from Rodman and Renshaw. Your line is open. Please go ahead.

Hey, good morning, guys. Thanks for taking the question. And let me add my congratulations to the great quarter. And thank you for doing our model for us. It's always appreciated. You know, a lot of questions have been asked and answered about the revenue mix. So I just maybe want to dive in a little more specifically. And when you guys have, you know, a pipeline and a product type of opportunity like TEVA 408, can you help us understand Do each of these types of products have discrete milestones for individual, you know, individual indications? Or is it just a pure royalty play? Or does it just vary upon the type of agreement you sign with them?

Yeah, Mike, thanks for the question. And you're right to kind of highlight pipeline in a product assets as someone who's been a Deep in the pharmaceutical royalty space for the last 15 plus years, one of the real differentiators of a royalty-bearing asset is when it is a pipeline in a product asset, when partners are pursuing multiple indications, going after multiple areas. So obviously we do a lot of licensing with an eye towards creating that substantial value for our shareholders with royalties. So these are all things we think about in terms of milestones around approvals in various geographies, clinical starts. Sometimes we do have in our contracts milestones around multiple indications or multiple markets. are, but there is, I'll say, a variety in our portfolio of partnerships. There's always a negotiation there, but there certainly are assets that we have for where we do get milestones based on different sorts of trial starts or different indications, label expansions, geography expansion, et cetera, but it is It is a mix, and I can't comment on any one specific contract, but we do have those sorts of instances in our portfolio.

OK, so it's steel specific. That helps. Let me just switch to exploration for a minute. We've heard these anecdotes from others that there are these AI-powered laboratories that basically run autonomously. Everything from designing an experiment to ordering reagents to running the experiments to spitting out the data, etc. I just wonder how much AI you intend to build into exploration over time and how you think about customer needs when it comes to integrating with those kind of automated laboratory systems.

Yeah, Mike, I'll make a comment, just a general high-level comment, and then Amechi can comment more specifically about how exploration is leveraged in AI. Just more at a high level, and those that know us well, we are big believers in AI. We see AI as a massive tailwind for the industry and have for many years. Our partners know that about us. We launched our OmniDeep platform many years back. That's our suite of AI tools that are woven throughout our platform. One of the things that AI needs is high-quality data that's relevant to human therapeutics. Our platform generates exactly that. Our business model is naturally AI-friendly, and I think folks know that about us. There's been increased investment around that space, especially in the compute layer. As discovery becomes more iterative, more data intensive, we think that is a great thing for the sorts of technologies that we have developed and are developing. And largely because of the vantage point we have on the industry, we've got a lot of conviction around that, and I think positions us extremely well, not only for our transgenic animals, that can create these massive data layers that are relevant, highly relevant to novel drug discovery, but also for exploration as well. And I'll kind of turn it over to Amechi, let him talk a little bit more about that.

Thank you, Matt. I think you covered it quite well, but to add on to the specifics of exploration, right, because it's rapid, because it's super easy to use and robust, and because it's high throughput, it can potentially fit in so well for AI-enabled discovery workflows. And we absolutely seek to make it available for those folks and to have them leverage these benefits of exploration for them.

Great. Thanks for taking the questions. Thanks, Mike.

Thanks, Mike. Your next question comes from the line of Stephen Willey with Stiefel. Your line is open. Please go ahead.

Hey, good morning. This is Josh. I'm for Steve. Thanks for taking our questions and congrats on the quarter. So in the instances of this active partner being acquired by a larger partner, what happens to that royalty base that was contracted? I assume it just translates one to one, but just looking for any clarity there. And then maybe a quick one for Amechi on exploration, just what kind of Revenue mix you're seeing from consumables and instrument sales and kind of maybe remind us what your biggest near and long-term drivers for the business might be. Thanks.

Yeah, thanks, Josh. So in terms of when smaller partners are acquired by larger partners, which we've seen now a few times in recent years, our licenses are structured so that the economics are linked to the asset itself. So that's what survives. We put a lot of thought into how our licenses are structured. Structured, the royalties are also linked to the patents that the partners file on the molecules that are discovered with our tech. But the simple answer is those economics remain for the asset, even if it's acquired by a larger partner who has an existing license.

And then on the exploration revenue mix question, we're early in the lifecycle of exploration of the platform. And so most of our revenue today is coming from instrument placement, that first revenue stream. And over time, potentially we could see the recurring revenue becoming more important, a bigger contributor as customers use the platform more regularly and as we expand the applications that are available on the platform.

And maybe if I could just squeeze in another quick one. I know it's early, like you said, Have you seen any sort of dynamics been playing out within the exploration platform whereby your like the partner dynamics use this exploration platform downstream and then that sort of consummates a additional partnership down the line for I guess the end product of what the exploration platform provides you?

Yes, so exploration is very synergistic with the rest of our Ameya business. Obviously, we have for the last year and a half roughly been running in the partner access program. So most of our placements have pretty much all of our placements historically have been with partners, and we're now expanding to general availability. And we are finding that feedback loop working really well between the exploration business and the traditional licensing business. It's very interesting. One of the common refrains we hear from Antibody Discovery Teams, when we first placed the instrument, after they've learned the basics, is they come back to us and they say, oh, what more could we be doing with this platform? How about we try this? And that's when we find ourselves engaged in that scientist to scientist collaboration that's quite fulfilling for their teams, our teams, and exciting to be part of.

Awesome. Thanks for taking the question. Congrats on the quarter.

Yep. Thanks. There are no further questions at this time. I will now turn the call back to Matt Foer, OmniAb CEO, for closing remarks.

Thanks. I'd like to thank everyone for joining today's call and for your questions and engagement. I also want to thank our team here at OmniAb for their continued hard work around our innovative platforms and our licensing efforts and their focus on our partners and customers. We're at a really exciting time for the business and for the industry, and we look forward to discussing our fourth quarter and full year 2026 financial results in a few months. In the meantime, we will be at a number of upcoming investor conferences, including the People Healthcare Conference on November 11th, the Truist BioPharma Symposium on November the 12th, and the Craig Hallam Investor Conference on November 17th. All of those are in New York City. And I'll also be at the Jeffries Healthcare Conference in London from November 16th to the 19th. So we look forward to seeing many of you while we are out at those events. And that concludes our call today. Thanks again and have a great morning and a great rest of the day.

This concludes today's call. Thank you for attending. You may now disconnect.