OmniAB (OABI), mcap = $379m, price $3.85 vs $2.90

OABI pitch:
– OmniAb is a recent spinout from $LGND that merged with a SPAC.
– Shares have been driven down by post-spin structural sell-off as large part of $LNGD shareholders could not own $OABI.
– OmniAb earns revenue from access fees, milestone payments, and royalties on its antibody development technologies and patents.
– Both large pharma and smaller startups are clients.

– OmniAb has durable future cash flows from various income streams so not the typical binary biotech bet.
Extremely high takeout value by a strategic acquirer.
 Even bear case assumptions would merit a share price nearly double where it trades today.

OABI valuation:
– Present value of 2022-2040 cash flows is worth $940m or $5.74/share.
– Adding terminal value increases this to $9.29/share.
– OABI shares trade at a FCF yield of 7.8% in 2024 and 10.2% in 2025, whereas peer $ABCL sits at a 5% yield.

Exp. gain: +320% to $9.29/share.

Full write-up (free guest account required):