ANAB — H1 2026 (Transition Period) Financial Report Analysis

A royalty company now, and a tax gain makes the profit look far bigger than it is

AnaptysBio is no longer a drug developer. On April 20, 2026 it spun off its clinical-stage biotech business as a separate company, First Tracks Biotherapeutics, and handed it $100 million of cash. What is left is a company with no employees whose value rests almost entirely on royalties from GSK's cancer drug Jemperli (dostarlimab), plus a future 10% royalty on Vanda's Quimilza (imsidolimab) if it is approved. The company also moved its fiscal year-end from December 31 to June 30, so this filing is a "transition" annual report (Form 10-KT) covering only the six months from January 1 to June 30, 2026.

Revenue for the six months rose 6.0% to $53.0 million, driven by a 33.5% rise in Jemperli royalties. Reported net income was $131.0 million ($3.50 per diluted share), against a $78.0 million loss a year earlier. Almost all of that swing is a one-time accounting entry: a $181.5 million tax benefit from releasing a reserve against past tax losses. Before tax, the remaining royalty business lost $5.1 million in the half.

At a glance

• Jemperli royalties: $51.2 million, up 33.5%. This is the part of the business that matters, and it is growing fast because GSK's Jemperli sales grew 34% in the half, to $644 million.
• Pre-tax loss from continuing operations: $5.1 million, versus a $16.7 million profit a year ago. Legal costs from the GSK lawsuit and the separation, plus a 2025 one-off payment from Vanda that did not repeat, explain the difference.
• Cash and investments: $164.1 million, down $47.5 million from December 31. The royalties Anaptys books do not yet arrive as cash: they go to Sagard, a royalty investor that paid Anaptys upfront in 2021 and 2024, until Sagard has collected $600 million.

Results for the six months ended June 30, 2026

All figures are for the six-month transition period, compared with the same six months of 2025. Because the spun-off biotech business is reported as "discontinued operations", the continuing figures below describe only the royalty business.

"n/m" = not meaningful (a swing from loss to profit, or driven by a one-time tax item).

For the second quarter alone (April to June), revenue was $27.5 million, up 23.5% from $22.3 million, and income from continuing operations was $177.3 million, nearly all of it the same tax benefit.

Where the revenue comes from

Total revenue grew only 6% because the 2025 half included $9.7 million recognized when Vanda licensed imsidolimab. Without that, revenue grew by about a third, in line with Jemperli sales. Anaptys earns a tiered royalty on Jemperli: 8% of annual net sales below $1.0 billion, 12% between $1.0 and $1.5 billion, 20% between $1.5 and $2.5 billion, and 25% above $2.5 billion. Because the rate steps up as sales grow, each extra dollar of Jemperli sales is worth more to Anaptys than the last.

What the headline numbers hide

• The profit is a tax entry, not cash. The $181.5 million income tax benefit is, per the filing, "primarily attributable to the release of the valuation allowance on our deferred tax assets." In plain terms: Anaptys had built up past tax losses that it had treated as probably unusable. With the biotech business gone and royalties expected to produce taxable income, it now expects to use them, so it recorded them as an asset ($106.6 million of deferred tax assets now sits on the balance sheet). That lowers future tax bills, but it brought in no cash this half and will not repeat. Strip it out and the continuing business lost $5.1 million before tax.
• None of the royalty revenue is cash yet. The filing states that all royalty revenue recognized in the half "is non-cash revenue pursuant to the Royalty Monetization Agreements." In 2021 and 2024 Anaptys sold its Jemperli royalties to Sagard for $300 million in total. Sagard keeps the royalties (and certain milestones) until it has received $600 million (or $675 million if that takes until after March 31, 2031). As of June 30, Sagard had earned about $300.8 million. The accounting treats the Sagard deal as a loan, which is why there is a $41.2 million "non-cash interest" charge: it is the cost of that loan, paid out of royalties Anaptys never touches. Management expects the remaining ~$299 million to be paid off in the second half of 2027, after which Jemperli royalties flow to Anaptys in cash.
• Cash flow shows the real picture. Operating cash flow from continuing operations was -$1.4 million against $176.4 million of reported continuing income. The business currently lives on its existing $164.1 million of cash and investments, plus interest income ($3.3 million in the half).
• Overhead jumped, but should fall. General and administrative costs rose to $23.4 million from $8.3 million. The filing attributes this to an $8.2 million rise in legal costs (the GSK lawsuit and the separation), $5.9 million more personnel costs and $1.0 million of other costs. Management says it expects these costs to decrease now that the separation is complete. Research spending was negative (-$2.7 million) because closed-out clinical contracts reduced costs booked before the spin-off; that will not recur either.
• One customer, one drug. Jemperli royalties were 96.5% of revenue in the half. Anaptys depends on how well GSK sells a single drug, and it is suing that same partner.
• Buybacks are authorized but unused. A $100 million share repurchase program runs until December 31, 2026; no shares had been bought by June 30. EPS was not helped by buybacks this period; diluted share count actually rose as stock options were exercised (bringing in $25.4 million of cash).

Takeaway: The $3.50 of earnings per share is mostly a one-time tax entry. What actually matters for Anaptys is a cash-light wait: Jemperli royalties grew 33.5% but all go to Sagard until about the second half of 2027, so the next 12 months depend on keeping costs down and on two outside events, the GSK lawsuit ruling and a possible FDA approval of Jemperli in rectal cancer.

What to watch next

• The GSK/Tesaro lawsuit. Anaptys sued in Delaware in November 2025, arguing that Tesaro (a GSK company) breached the license agreement and that GSK interfered with it. Anaptys is asking the court to return Jemperli's rights to it. The court dismissed Tesaro's counterclaim that Anaptys had breached the agreement on April 24, 2026. The trial took place July 14–17, post-trial argument is set for October 20, 2026, and the company expects a judgment in Q4 2026 or Q1 2027. Either outcome could change the company's value a lot. A win could change who controls the drug; a loss would leave the royalty arrangement as it is, after a costly fight.
• Jemperli in rectal cancer. GSK reported positive interim results in July from the AZUR-1 trial in untreated locally advanced dMMR/MSI-H rectal cancer (a genetic subtype of tumor). The FDA's target decision date is February 2027, possibly earlier because of a priority review voucher. A broader label would push sales further into the higher royalty tiers. Anaptys says it expects more than $390 million a year in Jemperli royalties as early as 2029 if Jemperli reaches GSK's peak monotherapy sales target of more than $2.7 billion. That is the company's projection based on GSK's ambition, not a GSK forecast of royalties.
• Quimilza (imsidolimab). The FDA decision for Vanda's drug in generalized pustular psoriasis, a rare skin disease, is due December 12, 2026. Anaptys keeps a 10% royalty on sales; milestone payments went to First Tracks in the separation.
• Our read: Royalties are growing faster than costs are likely to, and G&A should fall once the legal fight ends. But until Sagard is paid off, Anaptys has little cash coming in, so its $164.1 million of cash and investments has to cover public-company and legal costs. Management says that is enough for at least the next twelve months. Watch the first quarterly report on the new fiscal calendar (quarter ending September 30, 2026) for whether G&A falls back and how fast Sagard's balance is shrinking.