What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-15 · 347 added, 217 removed, 570 unchanged (50% of the section changed)

5 unchanged sentences

Cash and cash equivalents

$ 1,831 $ 7,105

Short-term investments

228,503 164,743

OMIDRIA contract royalty asset, short-term

29,519 29,373

OMIDRIA contract royalty asset, current

Prepaid expense and other assets

Total current assets

280,958 217,898

OMIDRIA contract royalty asset

135,909 138,736

OMIDRIA contract royalty asset, non-current

Right of use assets

17,767 18,631

Property and equipment, net

Restricted investments

$ 437,492 $ 378,269

Liabilities and shareholders’ equity (deficit)

1 unchanged sentence

Accounts payable

$ 6,182 $ 7,712

Accrued expenses

28,402 31,868

Current portion of OMIDRIA royalty obligation

Current portion of lease liabilities

OMIDRIA royalty obligation, current

Lease liabilities, current

Total current liabilities

59,056 53,316

Convertible senior notes, net

213,463 213,155

Long-term debt, net

OMIDRIA royalty obligation, non-current

217,459 116,550

Lease liabilities, non-current

16,754 18,143

Other accrued liabilities, non-current

2 unchanged sentences

Preferred stock, par value $ 0.01 per share, 20,000,000 shares authorized;

none issued and outstanding at March 31, 2024 and December 31, 2023.

Common stock, par value $ 0.01 per share, 150,000,000 shares authorized at March 31, 2024 and December 31, 2023;

57,942,695 and 61,128,597 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively.

none issued and outstanding at June 30, 2024 and December 31, 2023.

Common stock, par value $ 0.01 per share, 150,000,000 shares authorized at June 30, 2024 and December 31, 2023;

57,944,159 and 61,128,597 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively.

Additional paid-in capital

718,807 727,936

Accumulated deficit

( 790,714 ) ( 753,530 )

Total shareholders’ deficit

( 71,328 ) ( 24,983 )

Total liabilities and shareholders’ equity (deficit)

$ 437,492 $ 378,269

See accompanying Notes to Condensed Consolidated Financial Statements

3 unchanged sentences

Three Months Ended

Six Months Ended

Costs and expenses:

16 unchanged sentences

Balance at January 1, 2024

61,128,597 $ 611 $ 727,936 $ ( 753,530 ) $ ( 24,983 )

Issuance of common stock upon exercise of stock options

9,339 — 32 — 32

Repurchases of common stock

( 3,195,241 ) ( 32 ) ( 11,819 ) — ( 11,851 )

Stock-based compensation expense

— — 2,658 — 2,658

— — — (37,184 ) ( 37,184 )

Balance at March 31, 2024

57,942,695 $ 579 $ 718,807 $ ( 790,714 ) $ ( 71,328 )

Issuance of common stock upon exercise of stock options

Stock-based compensation expense

Balance at June 30, 2024

Balance at January 1, 2023

62,828,765 $ 628 $ 720,773 $ ( 635,717 ) $ 85,684

Stock-based compensation expense

— — 2,953 — 2,953

— — — ( 33,701 ) ( 33,701 )

Balance at March 31, 2023

62,828,765 $ 628 $ 723,726 $ ( 669,418 ) $ 54,936

Issuance of common stock upon exercise of stock options

Stock-based compensation expense

Balance at June 30, 2023

See accompanying Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities:

1 unchanged sentence

Stock-based compensation expense

Non-cash interest on convertible notes and royalty obligations

Non-cash interest earned on royalty obligation

Amortization of discount and issuance costs on convertible notes

Depreciation and amortization

Amortization of non-cash interest and issuance costs on long-term debt

Non-cash interest earned on OMIDRIA contract royalty asset

Remeasurement on OMIDRIA contract royalty asset

Remeasurement of OMIDRIA contract royalty asset

Accretion on U.S.

6 unchanged sentences

Investing activities:

Purchases of investments and other

Purchases of investments

Proceeds from the sale and maturities of investments

Purchases of property and equipment

Net cash used in investing activities

Net cash provided by (used in) investing activities

Financing activities:

Proceeds from sale of future royalties

Repurchases on common stock

Proceeds upon exercise of stock options

Cash paid to repurchase 2026 convertible senior notes

Repurchases of common stock

Principal payments on OMIDRIA royalty obligation

Principal payments on finance lease obligations

Proceeds upon exercise of stock options

Net cash provided by (used in) financing activities

Net decrease in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

2 unchanged sentences

Cash paid for interest

Cash paid (received) for income taxes, net

Equipment acquired under finance lease

See accompanying Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

Note 1 — Organization and Basis of Presentation

Omeros Corporation (“Omeros,” the “Company” or “we”) is a clinical-stage biopharmaceutical company committed to discovering, developing and commercializing small-molecule and protein therapeutics for large-market as well as orphan indications targeting immunologic disorders including complement-mediated diseases, cancers, and addictive and compulsive disorders.

Our clinical-stage development programs include:

1 unchanged sentence

OMS1029, our long-acting antibody targeting MASP-2;

OMS906, our antibody targeting mannan-binding lectin-associated serine protease- 3 (“MASP- 3” ), the key activator of the alternative pathway of complement;

zaltenibart, also known as OMS906, our antibody targeting mannan-binding lectin-associated serine protease-3 (“MASP-3”), the key activator of the alternative pathway of complement;

and OMS527, our phosphodiesterase 7 (“PDE7”) inhibitor program.

6 unchanged sentences

As a result, we are currently unable to estimate when we will submit the BLA or, subsequently, FDA’s timing for a decision regarding approval.

There can be no guarantee that FDA's specific recommendations for resubmission will be acceptable to Omeros in terms of the time and/or expenditure required or that any resubmission of the BLA will result in approval of narsoplimab for TA-TMA.

There can be no guarantee that FDA's specific recommendations for resubmission will be acceptable to us in terms of the time and/or expenditure required or that any resubmission of the BLA will result in approval of narsoplimab for TA-TMA.

Our lectin pathway program also includes OMS1029, our long-acting antibody targeting MASP-2.

This next-generation MASP- 2 inhibitor is intended to be complementary to narsoplimab, enabling us to pursue chronic indications in which dosing convenience would be of significant benefit to patients.

A Phase 1 single-ascending dose clinical trial of OMS1029 was successfully completed in early 2023 and a multiple-ascending dose Phase 1 clinical trial is expected to conclude in mid- 2024.

We have completed Phase 1 clinical trials evaluating both single-ascending and multiple ascending doses of OMS1029.

Results of these studies support once-quarterly dosing administered either intravenously or subcutaneously.

OMS1029 has been well tolerated to date with no safety concerns identified.

We are evaluating several potential indications for Phase 2 clinical development of OMS1029.

Our pipeline of clinical-stage complement-targeted therapeutic candidates also includes OMS906, a proprietary, patented monoclonal antibody targeting MASP- 3, the key activator of the alternative pathway of complement.

We have three ongoing Phase 2 clinical trials evaluating OMS906 for the treatment of paroxysmal nocturnal hemoglobinuria (“PNH”).

The first is in PNH patients who have not previously been treated with a complement inhibitor, and the second is in PNH patients who have had an unsatisfactory response to ravulizumab.

The third Phase 2 clinical trial is an open-label extension study to assess the long-term efficacy and safety of OMS906 in patients who have completed either of the other two PNH Phase 2 clinical trials.

We also have an ongoing Phase 2 clinical program evaluating OMS906 for the treatment of C3G, a rare and debilitating renal disease driven by complement dysregulation.

Our pipeline of clinical-stage complement-targeted therapeutic candidates also includes zaltenibart (also known as OMS906), a proprietary, patented monoclonal antibody targeting MASP-3, the key activator of the alternative pathway of complement.

We have three ongoing Phase 2 clinical trials evaluating zaltenibart for the treatment of paroxysmal nocturnal hemoglobinuria (“PNH”).

The first is in PNH patients who have not previously been treated with a complement inhibitor, and the second is in PNH patients who have had an unsatisfactory response to the C5 inhibitor ravulizumab.

The third Phase 2 clinical trial is an open-label extension study to assess the long-term efficacy and safety of zaltenibart in patients who have completed either of the other two PNH Phase 2 clinical trials.

We also have an ongoing Phase 2 clinical program evaluating zaltenibart for the treatment of C3G, a rare and debilitating renal disease driven by complement dysregulation.

Our phosphodiesterase 7 (“PDE7”) inhibitor program, which we refer to as OMS527, comprises multiple PDE7 inhibitor compounds and is based on our discoveries of previously unknown links between PDE7 and any addiction or compulsive disorder, and between PDE7 and any movement disorders.

In April 2023, we were awarded a grant from the National Institute on Drug Abuse (“NIDA”), part of the National Institutes of Health, to develop, at NIDA’s request, our lead orally administered PDE7 inhibitor compound, for which we have successfully completed a Phase 1 study, for the treatment of cocaine use disorder (“CUD”).

NIDA awarded the grant to Omeros for a total of $ 6.69 million over three years, of which we have claimed and received $ 0.7 million of funding to date and recognized $ 0.2 million into Other Income in our condensed consolidated statement of operations and comprehensive loss.

NIDA awarded the grant to us for a total of $ 6.69 million over three years, of which we have claimed and received $ 0.9 million of funding to date and recognized $ 0.6 million into Other Income in our condensed consolidated statement of operations and comprehensive loss.

The grant is intended to support preclinical cocaine interaction/toxicology studies to assess safety of the therapeutic candidate in the presence of concomitant cocaine administration, as well as an in-patient, placebo-controlled clinical study evaluating the safety and effectiveness of OMS527 in adults with CUD who receive concurrent intravenous cocaine.

6 unchanged sentences

As a result of the divestiture, the results of OMIDRIA activities are classified as discontinued operations in our condensed consolidated statements of operations and comprehensive loss and excluded from continuing operations for all periods presented (See “Note 7 — Discontinued Operations – Sale of OMIDRIA”).

On September 30, 2022, we sold to DRI Healthcare Acquisition LP (“DRI”) an interest in a portion of our future OMIDRIA royalty receipts and received $ 125.0 million in cash consideration, which we recorded as an OMIDRIA royalty obligation on our condensed consolidated balance sheet.

On September 30, 2022, we sold an interest in a portion of our future OMIDRIA royalty receipts to DRI Healthcare Acquisition LP (“DRI”) and received $ 125.0 million in cash consideration, which we recorded as an OMIDRIA royalty obligation on our condensed consolidated balance sheet.

Interest expense on the royalty obligation is recorded as a component of continuing operations.

On February 1, 2024, we sold to DRI an expanded interest in our OMIDRIA royalties and received $ 115.5 million in cash consideration, which we recorded as an addition to the OMIDRIA royalty obligation.

The amended and restated royalty purchase agreement with DRI (the “Amendment”) eliminates the previously existing annual caps on royalty payments after January 1, 2024, and provides that DRI now receives all royalties on U.S.

On February 1, 2024, we sold an expanded interest in our OMIDRIA royalties to DRI and received $ 115.5 million in cash consideration, which we recorded as an addition to the OMIDRIA royalty obligation.

The amended and restated royalty purchase agreement with DRI (the “DRI Amendment”) eliminates the previously existing annual caps on royalty payments after January 1, 2024, and provides that DRI now receives all royalties on U.S.

net sales of OMIDRIA payable between January 1, 2024 and December 31, 2031.

We are entitled to retain all royalties on net sales of OMIDRIA outside of the United States.

(See “Note 8 — OMIDRIA Royalty Obligation”).

Omeros is entitled to retain all royalties on net sales of OMIDRIA outside of the United States.

Term Loan and Repurchase of 2026 Notes

On June 3, 2024, we, with certain subsidiaries, as guarantors, entered into a Credit and Guaranty Agreement (the “Credit Agreement”) with funds managed by Athyrium Capital Management LP (collectively, “Athyrium”) and funds managed by Highbridge Capital Management, LLC (collectively, “Highbridge”) as lenders (the “Lenders”).

The Credit Agreement provides for a senior secured term loan facility of up to $ 92.1 million, consisting of an initial term loan of $ 67.1 million (the “Initial Term Loan”) and a $ 25.0 million delayed draw term loan which may be drawn once in full, on or prior to June 3, 2025, conditioned on receipt of FDA approval of narsoplimab in TA-TMA (the “Delayed Draw Term Loan”).

Also on June 3, 2024, we used the Initial Term Loan along with $ 21.2 million of cash on hand, to repurchase from the Lenders $ 118.1 million aggregate principal of our existing 5.25 % convertible senior notes due on February 15, 2026 (the “2026 Notes” and such repurchase, the “2026 Note Repurchase Transaction”), which resulted in a $ 51.0 million reduction in outstanding debt.

In addition, we paid accrued and unpaid interest on the repurchased 2026 Notes through the closing date of the transaction.

As a post-closing adjustment, we accrued $ 0.6 million which was paid in July 2024 in additional consideration to a certain Lender.

(See “Note 6 — Debt” for a description of the Credit Agreement provisions).

Basis of Presentation

1 unchanged sentence

All inter-company transactions have been eliminated.

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S.

The accompanying condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments and non-recurring adjustments, considered necessary for the fair presentation of such information.

Our financial statements have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”).

These financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, from which the December 31, 2023, condensed consolidated balance sheet has been derived.

Liquidity and Capital Resources

As of March 31, 2024 , we had cash, cash equivalents and short-term investments of $ 230.3 million.

During the quarter ended March 31, 2024, our cash used in operations was $ 41.8 million.

As of June 30, 2024, we had cash, cash equivalents and short-term investments of $ 158.9 million.

For the six months ended June 30, 2024, our cash used in operations was $ 87.8 million.

The second quarter of 2024 includes a $ 17.6 million charge for delivery of narsoplimab drug substance.

In addition, we made a $ 21.2 million payment for term loan-related debt repurchase and incurred $ 1.9 million of term loan-related transaction costs.

Pursuant to a covenant in the Credit Agreement entered on June 3, 2024, we must maintain at all times at least $ 25.0 million of unrestricted cash and cash equivalents.

Historically, we have incurred net losses from continuing operations and negative operating cash flows.

We have not yet established an ongoing source of revenue sufficient to cover our operating costs;

therefore, we potentially need to continue to raise additional capital to accomplish our business plan and retire our outstanding convertible senior notes due in February 2026 ( the “2026 Notes”).

We plan to continue to fund our operations for at least the next twelve months with our existing cash and investments.

therefore, we potentially need to continue to raise additional capital to accomplish our business plan.

We have a sales agreement to sell shares of our common stock, from time to time, in an “at the market” equity offering facility through which we may offer and sell shares of our common stock equaling an aggregate amount up to $ 150.0 million.

Should it be determined to be strategically advantageous, we could pursue debt financings as well as public and private offerings of our equity securities, or other strategic transactions, which may include licensing or selling a portion or all of one or more of our existing technologies.

Should it be necessary to manage our operating expenses, we could also reduce our projected cash requirements by delaying clinical trials, reducing selected research and development efforts, or implementing other restructuring activities.

In addition, our Delayed Draw Term Loan of $ 25.0 million may be drawn once in full on or prior to June 3, 2025 at our election, but it is conditioned on the approval by FDA of narsoplimab in TA-TMA.

Proceeds of the Delayed Draw Term Loan may only be used towards any related transaction costs and for commercialization of narsoplimab efforts of TA-TMA.

We may pursue additional debt financings to retire the 2026 Notes that remain outstanding and to fund operations.

Should it be determined to be strategically advantageous, we could pursue public and private offerings of our equity securities, or other strategic transactions, which may include licensing or selling a portion or all of one or more of our existing technologies.

However, pursuing debt financings, certain equity offerings or other strategic transactions may result in mandatory prepayments of the Initial Term Loan to the Credit Agreement.

(See “Note 6 — Debt” for further details).

We expect to continue to fund our operations and service our debt for at least the next twelve months with our existing cash and investments.

We plan to manage our operating expenses and reduce our cash requirements by reducing or delaying selected research and development efforts and by managing operating expenses.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

Significant items subject to such estimates include OMIDRIA contract royalty asset valuation, stock-based compensation expense, and accruals for clinical trials and manufacturing of drug product.

Significant items subject to such estimates include the OMIDRIA contract royalty asset valuation, the OMIDRIA royalty obligation valuation, stock-based compensation expense, and accruals for clinical trials and manufacturing of drug product.

We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances;

1 unchanged sentence

Note 2 — Significant Accounting Policies

Segment Reporting

We operate in one business segment and focus on the research, discovery, development and commercialization of small-molecule and protein therapeutics for large-market as well as orphan indications targeting immunologic disorders including complement-mediated diseases, as well as cancers and addictive and compulsive disorders.

Discontinued Operations

23 unchanged sentences

OMIDRIA royalty receipts through December 31, 2031 for $ 115.5 million in cash, which increased the OMIDRIA royalty obligation by the same amount.

The OMIDRIA royalty obligation is amortized through December 31, 2031 using the implied effective interest rate of 10.3 %.

The OMIDRIA royalty obligation is valued based on our estimates of future OMIDRIA royalties and is amortized through December 31, 2031 using the implied effective interest rate of 10.27 %.

Interest expense is recorded in continuing operations.

1 unchanged sentence

The offset to the adjustment would be recognized as a component of net income (loss) from continuing operations (see “Note 8 — OMIDRIA Royalty Obligation”).

Repurchase of 2026 Notes

We performed an assessment of the Credit Agreement and 2026 Note Repurchase Transaction we entered into on June 3, 2024 and determined that it met the criteria to be accounted for as a troubled debt restructuring.

As a result, the $ 29.8 million difference between the $ 118.1 million aggregate principal amount of the 2026 Notes and the $ 88.3 million aggregate repurchase price (consisting of the $ 67.1 million Initial Term Loan and $ 21.2 million from cash on hand) was recorded as a premium (i.e., an increase) to the long-term debt recorded on the Company’s condensed consolidated balance sheet instead of being recognized as a gain on early extinguishment of debt.

The premium will be amortized as both a reduction of long-term debt in the condensed consolidated balance sheets and interest expense in the condensed consolidated statement of operations and comprehensive loss over the duration of the term loan.

We expense inventory costs related to product candidates as research and development expenses until regulatory approval is reasonably assured in the U.S.

14 unchanged sentences

Common Stock Repurchases

We may repurchase shares of our common stock from time to time under authorization made by our Board of Directors.

Historically, we have repurchased shares of our common stock from time to time under authorization made by our Board of Directors.

Under Washington State law, repurchased shares are retired and not presented as treasury stock on the condensed consolidated financial statements.

The terms of the Credit Agreement prohibit us from repurchasing our common stock, unless expressly agreed to by the Lenders.

Consequently, the Board of Directors terminated the share repurchase program effective upon execution of the Credit Agreement.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their tax basis.

3 unchanged sentences

Financial Instruments and Concentrations of Credit Risk

inancial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and short-term investments.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and short-term investments.

Cash and cash equivalents are deposited in checking and sweep accounts at financial institutions.

7 unchanged sentences

The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash, cash equivalents and investments, and issuers of the investments to the extent recorded on the unaudited condensed consolidated balance sheets.

As of March 31, 2024, the Company has no off-balance sheet concentrations of credit risk.

As of June 30, 2024, the Company has no off-balance sheet concentrations of credit risk.

Note 3 — Net Loss Per Share

1 unchanged sentence

Diluted net income per share (“Diluted EPS”) is computed by dividing net income by the weighted average number of common shares and potentially dilutive common shares outstanding during the period using the treasury stock method.

In periods where we have a net loss from continuing operations but overall net income, we do not compute Diluted EPS.

We do not compute Diluted EPS for periods in which we have overall net income and a net loss from continuing operations.

Potentially dilutive securities are as follows:

Three Months Ended

Six Months Ended

2026 Notes convertible to common stock (1)(2)

11,679,459 12,172,008

2023 Notes convertible to common stock (3)

Outstanding options to purchase common stock

97,346 17,454

Outstanding restricted stock units (4)

Total potentially dilutive shares excluded from net loss per share

11,776,805 17,223,451

The 2026 Notes are subject to a capped call arrangements that potentially reduces the dilutive effect as described in “Note 6 — Convertible Senior Notes.” Any potential impact of the capped call arrangements is excluded from this table.

The 2026 Notes are subject to a capped call arrangements that potentially reduces the dilutive effect of conversion as described in “Note 6 — Debt.” Any potential impact of the capped call arrangements is excluded from this table.

On June 3, 2024, we repurchased $ 118.1 million of our 2026 Notes reducing any effect of dilution related to those notes.

For further details refer to “Note 6 — Debt.”

The 2023 Notes (defined below) were fully extinguished upon maturity on November 15, 2023.

3 unchanged sentences

Interest income is included as a component of other income on our condensed consolidated statement of operations and comprehensive loss.

Interest and other income for the three months ended March 31, 2024 and March 31, 2023 consists primarily of interest earned of $ 2.8 million and $ 3.4 million, respectively.

Interest and other income for the three months ended June 30, 2024 and June 30, 2023 consists primarily of interest earned of $ 2.5 million and $ 4.2 million, respectively.

Interest and other income for the six months ended June 30, 2024 and June 30, 2023 consists primarily of interest earned of $ 5.3 million and $ 7.6 million, respectively.

The following tables summarize our investments:

March 31, 2024

June 30, 2024

Gross Unrealized

26 unchanged sentences

Our fair value hierarchy for our financial assets and liabilities are as follows:

March 31, 2024

June 30, 2024

(In thousands)

11 unchanged sentences

Total investments

Cash held in demand deposit accounts of $ 1.8 million and $ 7.1 million is excluded from our fair-value hierarchy disclosure as of March 31, 2024 and December 31, 2023 , respectively.

Cash held in demand deposit accounts of $ 2.1 million and $ 7.1 million is excluded from our fair-value hierarchy disclosure as of June 30, 2024 and December 31, 2023, respectively.

The carrying amounts reported in the accompanying condensed consolidated balance sheets for receivables, accounts payable and accrued liabilities, and other current monetary assets and liabilities approximate fair value.

See “Note 6 — Convertible Senior Notes” and “Note 8 — OMIDRIA Royalty Obligation” for the carrying amount and estimated fair value of our outstanding convertible senior notes and the OMIDRIA royalty obligation.

See “Note 6 — Debt” and “Note 8 — OMIDRIA Royalty Obligation” for the carrying amount and estimated fair value of our outstanding term loan, convertible senior notes and the OMIDRIA royalty obligation.

Note 5 — Certain Balance Sheet Accounts

3 unchanged sentences

Short-term contract royalty asset

$ 29,519 $ 29,373

Long-term contract royalty asset

135,909 138,736

Total OMIDRIA contract royalty asset

$ 165,428 $ 168,109

See “Note 7 — Discontinued Operations – Sale of OMIDRIA” for discussion regarding the estimated fair value of our OMIDRIA contract royalty asset.

Receivables consist of the following:

1 unchanged sentence

OMIDRIA royalty receivables

$ 6,986 $ 6,724

Other receivables

Total receivables

$ 7,642 $ 8,096

See “Note 7 — Discontinued Operations – Sale of OMIDRIA” for discussion regarding the estimated fair value of our OMIDRIA contract royalty asset.

Property and Equipment, Net

2 unchanged sentences

Equipment under finance lease obligations

$ 6,929 $ 6,929

Laboratory equipment

1 unchanged sentence

Office equipment and furniture

12,249 12,191

Less accumulated depreciation and amortization

( 10,445 ) ( 10,241 )

Total property and equipment, net

$ 1,804 $ 1,950

For the three months ended March 31, 2024 and 2023 , depreciation and amortization expense was the same at $ 0.2 million.

For the three months ended June 30, 2024 and 2023, depreciation and amortization expense was $ 0.2 million and $ 0.3 million, respectively.

For the six months ended June 30, 2024 and 2023, depreciation and amortization expense was $ 0.4 million and $ 0.5 million, respectively.

Accrued Expenses

2 unchanged sentences

Clinical trials

$ 9,357 $ 10,168

Employee compensation

Contract research and development

Employee compensation

Consulting and professional fees

2 unchanged sentences

Total accrued expenses

$ 28,402 $ 31,868

Note 6 — Convertible Senior Notes

2023 Convertible Senior Notes

Note 6 — Debt

2024 Secured Term Loan

On June 3, 2024, we entered into a Credit Agreement with the Lenders, which provides for a term loan credit facility of up to $ 92.1 million, in aggregate, consisting of an Initial Term Loan of $ 67.1 million and a Delayed Draw Term Loan of $ 25.0 million.

The Delayed Draw Term Loan may be drawn once in full, on or prior to June 3, 2025, conditioned upon receipt of FDA approval of narsoplimab in TA-TMA.

The Delayed Draw Term Loan would be issued with an original issue discount of 3.0 % and the proceeds may be used only for commercialization of narsoplimab in TA-TMA and transaction costs associated with the Delayed Draw Term Loan.

Until the earlier of November 1, 2025 and the date we elect to utilize the Delayed Draw Term Loan, the Company, at its sole discretion, may exchange up to $ 14.9 million aggregate principal amount of outstanding 2026 Notes for cash and/or additional term loan amounts, with the holders of such notes becoming Lenders under the Credit Agreement (any such additional term loans, together with the Initial Term Loan and the Delayed Draw Term Loan, the “Loans”).

As of August 7, 2024, no such additional exchanges have occurred.

All indebtedness under the Credit Agreement is secured by a first-priority security interest in and lien on substantially all our tangible and intangible property, subject to customary exceptions, and excluding royalty interests in OMIDRIA ® and certain related rights.

In connection with our entry into the Credit Agreement, we used the Initial Term Loan along with $ 21.2 million of cash on hand to repurchase $ 118.1 million aggregate principal amount of the 2026 Notes held by the Lenders.

The total consideration paid at closing of $ 88.3 million represents a purchase price equal to approximately 75 % of the par value of the 2026 Notes retired in the transaction.

The reduction in the aggregate outstanding principal of balance of our 2026 Notes and incurrence of new Initial Term Loan resulted in a $ 51.0 million reduction of our outstanding debt.

The $ 29.8 million difference between the $ 118.1 million aggregate principal amount of the 2026 Notes and the $ 88.3 million aggregate repurchase price was recorded as a premium (i.e., an increase) to the long-term debt on the Company’s condensed consolidated balance sheet instead of being recognized as a gain on early extinguishment of debt.

As a post-closing adjustment, we accrued $0.6 million which was paid in July 2024 in additional cash consideration to a certain Lender.

The amount outstanding on the Initial Term Loan is as follows:

(In thousands)

Principal amount

Unamortized debt premium, net of issuance costs

Total long-term debt

The Loans have a stated maturity date of June 3, 2028 and bear interest at an adjusted secured overnight financing rate (“adjusted SOFR”), subject to a 3.0 % floor, plus 8.75 % per annum, payable quarterly from the closing date.

As of June 30, 2024, the contractual interest rate on the Loans was 14.20 %.

We have the option to pay all of the interest in cash or to pay 50% in cash and pay-in-kind (“PIK”), the remaining interest.

When this provision is elected, interest for the quarter, including both the cash interest and PIK interest, is calculated based on adjusted SOFR plus a 10.25 % PIK margin (instead of the customary 8.75 % margin).

The PIK interest is then added to the outstanding principal balance and interest is computed using the original adjusted SOFR plus 8.75 % margin rate.

Due to the premium amortization on the Initial Term Loan, interest expense is currently being recognized at an implied effective interest rate of 1.61 %.

The following table sets forth interest expense recognized related to the Initial Term Loan:

Three Months Ended

(In thousands)

Contractual interest expense

Amortization of premium and debt issuance costs

Total interest expense

We may elect to prepay the Loans, in whole or in part, in cash, plus an applicable prepayment and/or make-whole premium.

Under certain circumstances, we are required to prepay all or a portion of the outstanding Loans, plus an applicable prepayment and/or make-whole premium, as described below.

(1) If, on November 1, 2025, (i) the aggregate outstanding principal amount of the outstanding 2026 Notes that is not held by the Lenders equals or exceeds $ 38.5 million and (ii) we have not made or delivered notice that we expect to make certain voluntary or mandatory prepayments under the Credit Agreement of at least $ 20.0 million in the aggregate, then we would be required, on or prior to November 15, 2025, to make a $ 20.0 million mandatory prepayment, together with a $ 1.0 million prepayment premium.

(2) Upon the occurrence of a change in control, we must prepay the entire outstanding amount of the Loans, plus the applicable make-whole or prepayment premium.

(3) We must prepay the Loans in an amount equal to:

(i) 25.0% of any milestone payments received from DRI or its affiliates on the basis of net sales of OMIDRIA;

(ii) 60.0% of the net cash proceeds (excluding transaction expenses and certain milestone payments) received by Omeros from the sale or license of our assets (or in the case of an asset sale or license involving narsoplimab that occurs while any Delayed Draw Term Loan is outstanding, an amount equal to 100% of the net cash proceeds from such transaction);

(iii) 100.0% of net cash proceeds of indebtedness incurred by the Company other than as permitted by the Credit Agreement and (iv) 100% of the net cash proceeds of insurance recoveries on loss of property, except to the extent utilized to repair or replace the relevant assets within a specified time.

Voluntary and mandatory prepayments of the Loans are subject to payment of the following premiums:

(i) during the first year of such Loans, a make-whole premium plus 5.0 % of the applicable prepayment amount (unless the prepayment is made in contemplation of a change of control, in which case only the make-whole premium would be payable);

(ii) during the second year, a prepayment premium equal to 5.0 % of the applicable prepayment amount;

and (iii) during the third year, a prepayment premium equal to 3.0 % of the applicable prepayment amount.

The Credit Agreement contains certain customary default provisions, representation and warranties and affirmative and negative covenants.

These include a covenant requiring us to maintain at all times unrestricted cash and cash equivalents of at least $ 25.0 million in accounts subject to control agreements and a covenant limiting the use of cash for open market or privately negotiated repurchases of any outstanding 2026 Notes to:

(i) an initial amount not exceeding $ 25.0 million, which may be increased by up to an additional $ 10.0 million subject to the satisfaction of certain conditions;

(ii) an unlimited amount, if the amount of the Loans outstanding at the time of repurchase does not exceed $ 38.5 million;

and (iii) an additional amount not to exceed 50% of the net cash proceeds from an equity offering, provided that the Company offers to prepay an equal amount of the Loans with the net cash proceeds of such offering.

As of June 30, 2024, the Company was in compliance with the covenants under the Credit Agreement.

After review of the customary default provisions, affirmative and negative covenants, and voluntary and mandatory prepayment options, this resulted in a net derivative asset that was not significant as of June 30, 2024.

The fair value of the Loans is classified as a Level 3 liability as its valuation requires substantial judgment and estimation of factors that are not currently observable in the market.

As of June 30, 2024, the approximate fair value of our Loan obligations was $ 68.9 million.

We determined the fair market value by discounting the future cash flows based on adjusted SOFR at each measurement date.

2023 Unsecured Convertible Senior Notes

We extinguished the $ 95.0 million outstanding on our 6.25 % convertible senior notes (the “2023 Notes”) at par upon maturity on November 15, 2023.

For the three months ended March 31, 2023, we recognized interest expense of $ 1.5 million and amortization of debt issuance costs of $ 0.2 million.

2026 Convertible Senior Notes

We have outstanding unsecured convertible senior notes which accrue interest at an annual rate of 5.25 % per annum, payable semi-annually in arrears on February 15 and August 15 of each year (the “2026 Notes”).

The following table set forth interest expense recognized related to the 2023 Notes.

Three Months Ended

Six Months Ended

(In thousands)

Contractual interest expense

Amortization of debt issuance costs

Total interest expense

2026 Unsecured Convertible Senior Notes

We have outstanding unsecured convertible senior notes which accrue interest at an annual rate of 5.25 % per annum, payable semi-annually in arrears on February 15 and August 15 of each year.

The 2026 Notes mature on February 15, 2026, unless earlier purchased, redeemed or converted in accordance with their terms.

On June 3, 2024, we completed the 2026 Note Repurchase Transaction, through which we repurchased $ 118.1 million of principal amount outstanding on our 2026 Notes for total consideration of $ 88.3 million (approximately 75 % of par value) , consisting of the Initial Term Loan of $ 67.1 million and $ 21.2 million of cash on hand.

As discussed above, subsequent to June 30, 2024, we paid an additional $ 0.6 million in cash to certain Lenders as a post-closing adjustment under the 2026 Note Repurchase Transaction.

Amounts outstanding on our 2026 Notes are as follows:

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Principal amount

$ 215,924 $ 215,924

Unamortized debt issuance costs

( 2,461 ) ( 2,769 )

Total unsecured convertible senior notes, net

$ 213,463 $ 213,155

Fair value of outstanding unsecured convertible senior notes (1)

$ 156,545 $ 131,444

The fair value is classified as Level 3 due to the limited trading activity for the unsecured convertible senior notes.

The fair value is classified as Level 3 liability due to the limited trading activity for the unsecured convertible senior notes.

The fair value of the 2026 Notes is determined based on quoted prices in an over-the counter market using the most recent trading information at the end of the reporting period.

The value of the conversion feature of the 2026 Notes is not deemed to be significant as the current market price of our common stock is below the initial conversion price of $ 18.49 per share of common stock.

The unamortized debt issuance costs of $ 2.5 million as of March 31, 2024 will be amortized to interest expense at an effective interest rate of 5.9 % over the remaining term.

Unamortized debt issuance costs of $ 1.0 million as of June 30, 2024 are amortized to interest expense at an effective interest rate of 5.89 % over the remaining term.

The following table sets forth interest expense recognized related to the 2026 Notes:

Three Months Ended

Six Months Ended

(In thousands)

Contractual interest expense

$ 2,834 $ 2,954

Amortization of debt issuance costs

$ 3,142 $ 3,258

The initial conversion rate is 54.0906 shares of our common stock per $ 1,000 of note principal (equivalent to an initial conversion price of approximately $ 18.4875 per share of common stock), which equals approximately 12.2 million shares issuable upon conversion, subject to adjustment in certain circumstances.

Total interest expense

The initial conversion rate is 54.0906 shares of our common stock per $ 1,000 of note principal (equivalent to an initial conversion price of approximately $ 18.4875 per share of common stock), which equaled approximately 12.2 million shares issuable upon conversion, subject to adjustment in certain circumstances.

The 2026 Notes are convertible at the option of the holders on or after November 15, 2025 at any time prior to the close of business on February 12, 2026, the second scheduled trading day immediately before the stated maturity date of February 15, 2026.

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The amount paid for the 2026 Capped Call was recorded as a reduction to additional paid-in capital in the condensed consolidated balance sheet.

As of March 31, 2024, approximately 12.2 million shares remained outstanding under the 2026 Capped Call.

The Company also retains all potential future value of the capped calls associated with the repurchased 2026 Notes.

As of June 30, 2024, approximately 12.2 million shares remained outstanding under the 2026 Capped Call.

Further, we concluded the 2026 Capped Call qualifies for a derivative scope exception for instruments that are both indexed to an entity’s own stock and classified in stockholders’ equity in its balance sheet.

Consequently, the fair value of the 2026 Capped Call of $ 23.2 million is classified as equity, not accounted for as derivatives, and will not be subsequently remeasured.

Minimum Commitments

As of June 30, 2024, the most probable principal payments on our 2026 Notes and Term Loan are as follows.

(In thousands)

2029 and thereafter

Total principal payments

Unamortized premiums, discounts and issuance costs

Carrying value of debt

Note 7 — Discontinued Operations - Sale of OMIDRIA

On December 23, 2021, we sold the rights to OMIDRIA and related assets to Rayner.

In December 2022, we earned a $ 200.0 million milestone upon occurrence of the event specified in the Asset Purchase Agreement with Rayner.

On December 23, 2021, we sold the rights to OMIDRIA and related assets to Rayner, which is reported as discontinued operations in our condensed consolidated statements of operations and comprehensive loss and excluded from continuing operations for all periods presented.

In December 2022, we earned a $ 200.0 million milestone payment upon the occurrence of an event specified in the Asset Purchase Agreement with Rayner.

The milestone payment was received in February 2023.

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Three Months Ended

Six Months Ended

(In thousands)

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Remeasurement adjustments

Other income (loss), net

Other income, net

Net income from discontinued operations, net of tax

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Remeasurement adjustments

OMIDRIA contract royalty asset at March 31, 2024

OMIDRIA contract royalty asset at June 30, 2024

We remeasure the OMIDRIA contract royalty asset on a quarterly basis using the expected value approach, which incorporates actual results and future expectations.

The OMIDRIA contract royalty asset is classified as a Level 3 asset as its valuation requires substantial judgment and estimation of factors that are not currently observable in the market.

Cash flow from discontinued operations is as follows:

Three Months Ended

Six Months Ended

(In thousands)

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DRI was entitled to receive royalties on OMIDRIA net sales between September 1, 2022 and December 31, 2030, subject to annual caps.

In February 2024, Omeros and DRI expanded their royalty purchase agreement under the Amendment, resulting in Omeros receiving an additional $ 115.5 million in cash consideration, which we accounted for as a modification of our existing debt from DRI.

The Amendment eliminated the annual caps on royalty payments and provides that DRI will receive all royalties on U.S.

In February 2024, Omeros and DRI expanded their royalty purchase agreement under the DRI Amendment, resulting in Omeros receiving an additional $ 115.5 million in cash consideration, which we accounted for as a modification of our existing debt from DRI.

The DRI Amendment eliminated the annual caps on royalty payments and provides that DRI will receive all royalties on U.S.

net sales of OMIDRIA payable between January 1, 2024 and December 31, 2031.

Omeros retains the right to receive all royalties payable by Rayner on any net sales of OMIDRIA outside the U.S.

We retain the right to receive all royalties payable by Rayner on any net sales of OMIDRIA outside the U.S.

payable after January 1, 2024, as well as royalties on global net sales of OMIDRIA payable from and after December 31, 2031.

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Principal payments

OMIDRIA royalty obligation at March 31, 2024

OMIDRIA royalty obligation at June 30, 2024

We account for the OMIDRIA royalty obligation under the catch-up method.

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The OMIDRIA royalty obligation is classified as a Level 3 liability as its valuation requires substantial judgment and estimation of factors that are not currently observable in the market.

As of March 31, 2024 , the approximate fair value of our obligation was equal to its carrying value.

For the three months ended March 31, 2024 and 2023, we incurred interest expense of $ 5.0 million and $ 3.0 million, respectively.

As of March 31, 2024 , future expected principal and interest payments are as follows:

As of June 30, 2024, the approximate fair value of our obligation was $ 216.9 million .

We determined the fair market value by discounting the future cash flows based on the initial contractual rate adjusted for any changes in the prime rate through to the measurement date.

For the three months ended June 30, 2024 and 2023, we incurred interest expense of $ 6.4 million and $ 3.0 million, respectively.

For the six months ended June 30, 2024 and 2023, we incurred interest expense of $ 11.5 million and $ 5.9 million, respectively.

As of June 30, 2024, future expected principal and interest payments are as follows:

(In thousands)

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Three Months Ended

Six Months Ended

(In thousands)

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Cash paid for amounts included in the measurement of lease liabilities is as follows:

Three Months Ended

Six Months Ended

(In thousands)

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Good and Service Contracts

We have various agreements with third parties that collectively require payment of termination fees totaling $ 23.3 million as of March 31, 2024 if we cancel the work within specific time frames, either prior to commencing or during performance of the contracted services.

We have various agreements with third parties that collectively require payment of termination fees totaling $ 7.9 million as of June 30, 2024 if we cancel the work within specific time frames, either prior to commencing or during performance of the contracted services.

Development Milestones and Product Royalties

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Some of these agreements require milestone payments based on achievements of development, regulatory or sales milestones, and/or low-single to low-double digit royalties on net income or net sales of the relevant product.

For the three months ended March 31, 2024 and 2023, development milestone expenses were not significant.

For the three and six months ended June 30, 2024 and 2023, development milestone expenses were not significant.

Note 11 — Shareholders ’ Equity (Deficit)

At the Market Sales Agreement - We have a sales agreement to sell shares of our common stock having an aggregate offering price of up to $ 150.0 million, from time to time, through an “at the market” equity offering program.

As of March 31, 2024 , we have not sold any shares under this program.

Share Repurchase Program - On November 9, 2023, the Board of Directors approved an indefinite term share repurchase program under which we may repurchase from time to time up to $ 50.0 million of our common stock in the open market or through privately negotiated transactions.

For the three months ended March 31, 2024, we repurchased and retired 3.2 million shares of common stock at an average share price of $ 3.71 for an aggregate repurchase price of $ 11.9 million.

As of June 30, 2024, we have not sold any shares under this program.

Share Repurchase Program - On November 9, 2023, the Board of Directors approved an indefinite term share repurchase program under which we were authorized to repurchase from time to time up to $ 50.0 million of our common stock in the open market or through privately negotiated transactions.

Since inception of the program, we have repurchased and retired 5.0 million shares at an average price of $ 3.30 per share.

During the first quarter of 2024, we repurchased and retired 3.2 million shares of common stock at an average share price of $ 3.71 at an aggregate cost of $ 11.9 million.

We did not repurchase any shares of our common stock in the three months ended June 30, 2024.

The terms of the Credit Agreement prohibit us from repurchasing our common stock unless expressly agreed to by the Lenders.

Consequently, the Board of Directors terminated the share repurchase program effective upon execution of the Credit Agreement.

Note 12 — Stock-Based Compensation

Our stock option plans provide for the grant of incentive and non-qualified stock options, restricted stock awards, restricted stock units, and other stock awards to employees, non-employee directors and consultants.

On April 25, 2024, annual stock option grants of approximately 2.9 million shares of common stock were awarded to eligible participants for the 2023 annual performance period.

The options have an exercise price of $ 3.06 per share and vest monthly on a straight-line basis over four years.

Stock-based compensation is as follows:

Three Months Ended

Six Months Ended

(In thousands)

Continuing operations

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Three Months Ended

March 31, 2024

Six Months Ended

June 30, 2024

Estimated weighted-average fair value

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Balance at December 31, 2023

Balance at March 31, 2024

Vested and expected to vest at March 31, 2024

Exercisable at March 31, 2024

Of the 15.2 million common stock options outstanding as of March 31, 2024 , 12.1 million have an exercise price per share above $ 3.45 , which was the closing price of our stock on the Nasdaq exchange on March 28, 2024.

As of March 31, 2024 , there were 4.2 million unvested options outstanding that will vest over a weighted-average period of 2.0 years.

Balance at June 30, 2024

Vested and expected to vest at June 30, 2024

Exercisable at June 30, 2024

On April 25, 2024, annual stock option grants of approximately 2.9 million shares of common stock were awarded to eligible participants for the 2023 annual performance period.

Of the 18.0 million common stock options outstanding as of June 30, 2024, 9.8 million have an exercise price per share above $ 4.06 , which was the closing price of our stock on the Nasdaq exchange on June 28, 2024.

As of June 30, 2024, there were 6.4 million unvested options outstanding that will vest over a weighted-average period of 2.5 years.

The total estimated compensation expense yet to be recognized on outstanding options is $ 16.3 million.

As of June 30, 2024, the total number of shares of common stock available for grant was 6.1 million.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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classical, lectin, and alternative.

Omeros is focused on development of therapeutics to treat diseases associated with the lectin and/or alternative pathways of complement.

Omeros is developing antibodies as well as small-molecule inhibitors of key enzymes known to be centrally involved in the in activation of the targeted pathway of complement.

We are focused on development of therapeutics to treat diseases associated with the lectin and/or alternative pathways of complement.

We are developing antibodies as well as small-molecule inhibitors of key enzymes known to be centrally involved in the in activation of the targeted pathway of complement.

Lectin Pathway / MASP 2

Mannan-binding lectin-associated serine protease 2 (“MASP-2”) is a novel pro-inflammatory protein target that is the effector enzyme of the lectin pathway and is required for the function of this pathway.

Omeros is developing antibodies and small-molecule inhibitors of MASP-2 as potential therapeutics for diseases in which the lectin pathway has been shown to contribute to significant tissue injury and pathology.

We are developing antibodies and small-molecule inhibitors of MASP-2 as potential therapeutics for diseases in which the lectin pathway has been shown to contribute to significant tissue injury and pathology.

When not treated, these diseases are typically characterized by significant end-organ damage, such as kidney or central nervous system injury.

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Although our appeal was denied, the decision identified potential paths for resubmission of the BLA based on both response data and survival data from the completed pivotal trial versus a historical control group, with or without an independent literature analysis or based on survival data alone.

Consistent with subsequent interactions with FDA’s review division, we submitted to FDA in the fall of 2023 an analysis plan to assess already existing clinical trial data, existing data from a historical control population available from an external source, data from the narsoplimab expanded access program, and data directed to the mechanism of action of narsoplimab.

We are having ongoing discussions with the agency regarding the proposed analysis plan.

Consistent with subsequent interactions with FDA’s review division, we submitted to FDA an analysis plan to assess already existing clinical trial data, existing data from a historical control population available from an external source, data from the narsoplimab expanded access program, and data directed to the mechanism of action of narsoplimab.

We are having ongoing discussions with the agency regarding the proposed analysis plan and FDA's requirements for resubmission of our BLA.

As a result, we are currently unable to estimate when we will submit the BLA or, subsequently, FDA’s timing for a decision regarding approval.

There can be no guarantee that FDA’s specific recommendations for resubmission will be acceptable to Omeros in terms of the time and/or expenditure required or that any resubmission of the BLA will result in approval of narsoplimab for TA-TMA.

There can be no guarantee that FDA’s specific recommendations for resubmission will be acceptable to us in terms of the time and/or expenditure required or that any resubmission of the BLA will result in approval of narsoplimab for TA-TMA.

Additionally, there is strong and increasingly well-established evidence of the central role of the lectin pathway in COVID-19 and acute respiratory distress syndrome (“ARDS”), and we have developed mechanistic, in vivo animal data, and proof-of-concept clinical data indicating that narsoplimab may be an effective therapeutic for COVID-19, ARDS and/or related indications.

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This next-generation MASP-2 inhibitor is intended to be complementary to narsoplimab, enabling us to pursue chronic indications in which dosing convenience would be of significant benefit to patients.

Dosing of all cohorts in a single-ascending dose Phase 1 clinical trial of OMS1029 was successfully completed in early 2023.

Pharmacokinetic (“PK”) and pharmacodynamic (“PD”) data show dose-proportional exposure and sustained lectin pathway inhibition, consistent with dosing of OMS1029 once quarterly, either intravenously or subcutaneously.

Dosing has also been completed in both of two planned cohorts of our ongoing Phase 1 multiple-ascending-dose study of OMS1029 in healthy volunteers and we expect the study to conclude in mid-2024.

We have completed Phase 1 clinical trials evaluating both single-ascending and multiple-ascending doses of OMS1029.

Results of these studies support once-quarterly dosing, administered either intravenously or subcutaneously.

OMS1029 has been well tolerated to date with no safety concerns identified.

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Alternative Pathway / MASP-3

Our pipeline of clinical-stage complement-targeted therapeutic candidates also includes OMS906, a proprietary, patented monoclonal antibody targeting MASP-3, the key activator of the alternative pathway of complement.

Our pipeline of clinical-stage complement-targeted therapeutic candidates also includes OMS906, now known as a “zaltenibart,” a proprietary, patented monoclonal antibody targeting MASP-3, the key activator of the alternative pathway of complement.

We believe OMS906 has the potential to treat a wide range of alternative pathway-related diseases and that its attributes favorably differentiate OMS906 from other marketed and in-development alternative pathway inhibitors.

Clinical development of OMS906 is currently focused on rapidly advancing to Phase 3 clinical trials in multiple alternative pathway-related disorders, including paroxysmal nocturnal hemoglobinuria (“PNH”) and complement 3 glomerulopathy (“C3G”).

We have multiple ongoing Phase 2 clinical trials evaluating OMS906 in these indications.

We have three ongoing Phase 2 clinical trials evaluating OMS906 for PNH.

The United States Adopted Names (“USAN”) Council, in consultation with the World Health Organization’s International Nonproprietary Names (“INN”) Expert Committee, has recently adopted for OMS906 the nonproprietary name “zaltenibart.” The USAN Council, by working closely with the INN Programme of the World Health Organization and various national nomenclature groups, aims for global standardization and unification of drug nomenclature to ensure that drug information is communicated accurately and unambiguously.

Going forward, we will use the name zaltenibart in publications, at conferences and in other forums to refer to our lead MASP-3 antibody.

Clinical development of zaltenibart is currently focused on rapidly advancing to Phase 3 clinical trials in multiple alternative pathway-related disorders, including paroxysmal nocturnal hemoglobinuria (“PNH”) and complement 3 glomerulopathy (“C3G”).

We have multiple ongoing Phase 2 clinical trials evaluating zaltenibart in these indications.

We have one ongoing Phase 1 study in healthy subjects that is evaluating higher doses than were used in the completed Phase 1 study.

We also have three ongoing Phase 2 clinical trials evaluating zaltenibart for PNH.

The first is in PNH patients who have not previously been treated with a complement inhibitor and the second in PNH patients who have had an unsatisfactory response to ravulizumab, an inhibitor of complement component 5 (“C5”).

Results from a pre-specified interim analysis of our ongoing Phase 2 clinical trial of OMS906 in complement-inhibitor-naïve adults with PNH were featured in a podium presentation at the annual meeting of the American Society of Hematology in December 2023.

The ongoing Phase 1 study has successfully dosed subjects at two different dose levels, and data from this study have provided important pharmacokinetic (“PK”) and pharmacodynamic (“PD”) information for determination of final dosing for our Phase 3 trials.

Results from a pre-specified interim analysis of our ongoing Phase 2 clinical trial of zaltenibart in complement-inhibitor-naïve adults with PNH were featured in a podium presentation at the annual meeting of the American Society of Hematology in December 2023.

The interim analysis results showed statistically significant and clinically meaningful improvements in all measured markers of hemolysis, including hemoglobin and lactate dehydrogenase.

No patients were reported to have had a clinical breakthrough of PNH or a thrombotic event, and none were reported to require a transfusion while receiving OMS906 treatment.

Enrollment is complete and dosing is ongoing in our Phase 2 trial evaluating two doses of OMS906 in PNH patients who have had an unsatisfactory response to the C5 inhibitor ravulizumab.

Utilizing a “switch-over” design, this study enrolls PNH patients receiving ravulizumab, adds OMS906 to provide combination therapy with ravulizumab for 24 weeks, and then, in those patients who demonstrate a hemoglobin response with the combination therapy, switches to OMS906 monotherapy.

Data from a pre-specified interim analysis showed that the addition of OMS906 therapy to ravulizumab treatment resulted in statistically significant and clinical meaningful improvements in both mean hemoglobin levels and absolute reticulocyte counts by week 4 of combination therapy, with a sustained response demonstrated through week 24 (the latest assessment prior to the interim analysis cutoff).

All 13 entrolled patients were included in the interim analysis.

This study was amended to gather additional data to inform the choice of zaltenibart dose for Phase 3 development.

These data have been collected and are being analyzed.

Enrollment is complete and dosing is ongoing in our Phase 2 trial evaluating two doses of zaltenibart in PNH patients who have had an unsatisfactory response to the C5 inhibitor ravulizumab.

Utilizing a “switch-over” design, this study enrolls PNH patients receiving ravulizumab, adds zaltenibart to provide combination therapy with ravulizumab for 24 weeks, and then, in those patients who demonstrate a hemoglobin response with the combination therapy, switches to zaltenibart monotherapy.

In June 2024, efficacy data from a pre-specified interim analysis of the combination therapy portion of the trial were featured in a podium presentation at the annual congress of the European Hematology Association held in Madrid, Spain.

The interim analysis showed that the addition of zaltenibart therapy to ravulizumab treatment resulted in statistically significant and clinical meaningful improvements in both mean hemoglobin levels and absolute reticulocyte counts by week 4 of combination therapy, with a sustained response demonstrated through week 24 (the latest assessment prior to the interim analysis cutoff).

All 13 enrolled patients were included in the interim analysis.

All patients in the high-dose group achieved clinical response, defined as an increase in hemoglobin of at least 2 grams, and six of seven patients in the low-dose group achieved this same clinical response.

No patients in either dose group required transfusions following initiation of OMS906.

As with all other clinical studies with OMS906, the drug was well tolerated without any safety signal of concern.

Full details from the interim analysis will be featured in a podium presentation at EHA 2024, the annual congress of the European Hematology Association, to be held in Madrid, Spain in June.

Interim analysis data from the monotherapy portion of the trial are expected to be available in late 2024.

We have initiated an open-label extension study to assess the long-term efficacy and safety of OMS906 in patients with PNH.

In the extension study, PNH patients who have completed a previous study evaluating OMS906 roll directly into the extension study without a break in OMS906 treatment.

Data from this study will contribute to a planned BLA for OMS906 in the treatment of PNH.

Based on PK data from a successful Phase 1 single-ascending-dose study of OMS906 in healthy subjects and interim data from our ongoing clinical trials in PNH patients, we are exploring two different dosing frequencies - once every eight weeks and once every 12 weeks - for the Phase 3 studies and commercialization, if approved.

In February 2024 we met with FDA to discuss our development program for OMS906 in PNH.

Interim analysis data from the monotherapy portion of the trial showed that clinically meaningful improvements in hemoglobin levels and absolute reticulocyte counts were sustained following transition to zaltenibart monotherapy and prevented both intra-vascular and extra-vascular hemolysis.

As with all other clinical studies with zaltenibart, the drug was well tolerated without any safety signal of concern.

Full details from the interim analysis in the monotherapy portion of the trial are expected to be presented at a relevant scientific congress in late 2024.

We have initiated an open-label extension study to assess the long-term efficacy and safety of zaltenibart in patients with PNH.

In the extension study, PNH patients who have completed a previous study evaluating zaltenibart roll directly into the extension study without a break in zaltenibart treatment.

Data from this study will contribute to a planned BLA for zaltenibart in the treatment of PNH.

Selection of the dose level and frequency for the Phase 3 studies and commercialization, if approved, is being informed by PK data from the two Phase 1 single-ascending-dose studies of zaltenibart in healthy subjects and interim data from our ongoing clinical trials in PNH patients.

In February 2024, we met with FDA to discuss our development program for zaltenibart in PNH.

We presented clinical and nonclinical data and requested input on expectations for Phase 3 studies and BLA submission.

FDA confirmed that the scope of our nonclinical program is sufficient to support Phase 3 clinical studies and provided input on dosing and design of the proposed Phase 3 program to support a BLA in PNH.

We expect to meet again with FDA later this year to discuss further details of the design of our Phase 3 studies.

Phase 3 clinical trials evaluating OMS906 in PNH are targeted to begin in late 2024.

We also have an ongoing Phase 2 clinical program evaluating OMS906 for the treatment of C3G, a rare and debilitating renal disease driven by complement dysregulation.

We expect to meet again with FDA as well as European regulators later this year to discuss further details of our planned Phase 3 studies.

Phase 3 clinical trials evaluating zaltenibart in PNH are targeted to begin in late 2024.

We also have an ongoing Phase 2 clinical program evaluating zaltenibart for the treatment of C3G, a rare and debilitating renal disease driven by complement dysregulation.

Notably, the relevance of the alternative pathway to C3G has been clinically validated in a Phase 3 trial with another inhibitor of the alternative pathway that reported positive results in the treatment of C3G.

Sites are now open in multiple countries and patients are being screened for enrollment.

We are targeting to initiate Phase 3 development for C3G in the first part of 2025, after Phase 2 results are available and discussions occur with regulators.

Sites are now open in multiple countries and enrollment has begun.

We are targeting to initiate Phase 3 development for C3G in the first quarter of 2025.

PDE7 Inhibitor Programs

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In April 2023, we were awarded a grant from the National Institute on Drug Abuse (“NIDA”), part of the National Institutes of Health, and requested by NIDA to develop our lead orally administered PDE7 inhibitor compound, for which we have successfully completed a Phase 1 study, for the treatment of cocaine use disorder (“CUD”).

NIDA awarded the grant to Omeros for a total of $6.69 million over three years, of which we have claimed and received $0.7 million of funding to date and recognized $0.2 million into Other Income in our condensed consolidated statement of operations and comprehensive loss.

NIDA awarded the grant to us for a total of $6.69 million over three years, of which we have claimed and received $0.9 million of funding to date and recognized $0.6 million into Other Income in our condensed consolidated statement of operations and comprehensive loss.

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(“Rayner”) for the sale of OMIDRIA and related business assets.

Under the Asset Purchase Agreement, we were entitled to receive a $200.0 million Milestone Payment within 30 days following an event (the “Milestone Event”) that establishes separate payment for OMIDRIA for a continuous period of at least four years when furnished in the ambulatory surgery center setting.

Under the Asset Purchase Agreement, we were entitled to receive a $200.0 million milestone payment (the “Milestone Payment”) within 30 days following an event (the “Milestone Event”) that establishes separate payment for OMIDRIA for a continuous period of at least four years when furnished in the ambulatory surgery center setting.

The Milestone Event occurred in December 2022 and we recorded a $200.0 milestone receivable.

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Interest expense on the royalty obligation is recorded as a component of continuing operations.

On February 1, 2024, we entered into amended and restated royalty purchase agreement pursuant to which we sold to DRI an expanded interest in our OMIDRIA royalties (the “Amendment”).

On February 1, 2024, we entered into amended and restated royalty purchase agreement pursuant to which we sold to DRI an expanded interest in our OMIDRIA royalties (the “DRI Amendment”).

We received $115.5 million in cash consideration, which we recorded as an addition to the OMIDRIA royalty obligation.

The Amendment eliminated the previously existing annual caps on royalty payments effective beginning in the first quarter of 2024 and entitled DRI to receive all royalties on U.S.

The DRI Amendment eliminated the previously existing annual caps on royalty payments effective beginning in the first quarter of 2024 and entitled DRI to receive all royalties on U.S.

net sales of OMIDRIA payable between January 1, 2024 and December 31, 2031.

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net sales of OMIDRIA on or before December 31, 2031 and DRI has no recourse to our assets other than its interest in the OMIDRIA royalties.

Omeros retains the right to receive all royalties payable by Rayner on any net sales of OMIDRIA outside the U.S.

We retain the right to receive all royalties payable by Rayner on any net sales of OMIDRIA outside the U.S.

payable from and after January 1, 2024, as well as all royalties on global net sales of OMIDRIA payable from and after December 31, 2031.

In addition to the cash consideration received at closing, the Amendment also entitles us to receive two milestone payments of up to $27.5 million each, payable in January 2026 and January 2028, respectively, based on achievement of certain threshholds for U.S.

In addition to the cash consideration received at closing, the DRI Amendment also entitles us to receive two milestone payments of up to $27.5 million each, payable in January 2026 and January 2028, respectively, based on achievement of certain thresholds for U.S.

net sales of OMIDRIA.

See “Note 8 — OMIDRIA Royalty Obligation” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

2024 Term Loan and Repurchase of 2026 Notes

On June 3, 2024 (the “Closing Date”), we, with certain subsidiaries, as guarantors, entered into a Credit and Guaranty Agreement (the “Credit Agreement”) with certain funds managed by Athyrium Capital Management, LP (collectively, “Athyrium”) and certain funds managed by Highbridge Capital Management, LLC (collectively, “Highbridge”) as lenders (together with additional lenders from time to time, the “Lenders”) and Wilmington Savings Fund Society, FSB, as administrative agent and collateral agent.

The Credit Agreement provides for a senior secured term loan facility initially of up to $92.1 million consisting of (i) an initial term loan of $67.1 million (the “Initial Term Loan”), which was fully funded on the Closing Date, and (ii) a $25.0 million delayed draw term loan (the “Delayed Draw Term Loan”), which may be drawn once in full on or prior to June 3, 2025, provided that the we have received FDA approval of narsoplimab in TA-TMA.

Proceeds of the Delayed Draw Term Loan, if borrowed, must be used to fund the commercialization of narsoplimab and to pay transaction costs associated with the Delayed Draw Term Loan.

The Initial Term Loan has no original issue discount, while the Delayed Draw Term Loan would be issued with an original issue discount of 3.00%.

Neither the Initial Term Loan nor the Delayed Draw Term Loan include any equity consideration for the Lenders (i.e., the transaction is non-dilutive to the Company’s shareholders).

On the Closing Date, we used the $67.1 million Initial Term Loan, along with $21.2 million of cash on hand, subject to certain post-closing adjustments, to repurchase from the Lenders $118.1 million aggregate principal amount of the Company’s existing 5.25% convertible senior notes due on February 15, 2026 (the “2026 Notes,” and such repurchase the “2026 Note Repurchase Transaction” ).

The principal amount retired in the 2026 Note Repurchase Transaction represents a 55% reduction of the outstanding principal balance of the 2026 Notes at a purchase price of approximately 75% of par value.

We paid accrued and unpaid interest on the repurchased 2026 Notes through the Closing Date.

As of June 30, 2024, we accrued $0.6 million in post-closing adjustments to certain Lenders and paid them in July 2024.

We are permitted under the Credit Agreement to repurchase additional outstanding 2026 Notes for cash in open market or privately negotiated transactions, subject to certain limitations described below.

Additionally, until the earlier of November 1, 2025 and the date the we elect to draw under the Delayed Draw Term Loan, we, at our sole discretion, may exchange up to $14.9 million aggregate principal amount of outstanding 2026 Notes for cash and additional term loan amounts, with the holders of such notes becoming Lenders under the Credit Agreement (any such additional term loans, together with the Initial Term Loan and the Delayed Draw Term Loan, the “Loans”).

We also retain all potential future value of the capped call purchased in connection with the issuance of the 2026 Notes covering all shares underlying the original 2026 Notes.

All indebtedness outstanding under the Credit Agreement is guaranteed by certain of our direct and indirect subsidiaries, other than certain foreign subsidiaries that are not material (we and the guarantors, collectively, the “Credit Parties”).

Pursuant to a Pledge and Security Agreement, dated June 3, 2024 (the “Pledge and Security Agreement”), the indebtedness under the Credit Agreement is secured by a first-priority security interest in and lien on substantially all tangible and intangible property of the Credit Parties, subject to customary exceptions, and excluding royalty interests in OMIDRIA ® and certain related rights.

The Credit Agreement contains certain customary default provisions, representations and warranties and affirmative and negative covenants, including a covenant for the Credit Parties to maintain at all times unrestricted cash and cash equivalents of at least $25.0 million in accounts subject to control agreements, and a covenant limiting the use of cash for open market or privately negotiated repurchases of any outstanding 2026 Notes to:

(i) an initial amount not exceeding $25.0 million, which may be increased by up to an additional $10.0 million subject to the satisfaction of certain conditions;

(ii) an unlimited amount, if the amount of Loans outstanding at the time of repurchase does not exceed $38.5 million;

and (iii) an additional amount not to exceed 50% of the net cash proceeds from an equity offering, provided that we offer to prepay an equal amount of Loans with the net cash proceeds of such offering.

The Loans accrue interest at a rate of adjusted term SOFR (with a 3.00% floor) plus 8.75% per annum, payable quarterly.

We may choose to pay up to 50% of any quarterly interest payment in kind by adding the portion of such interest payment to the outstanding principal amount of Loans using a quarterly interest rate of adjusted term SOFR (with a 3.00% floor) plus 10.25% per annum.

A default interest rate of an additional 3.00% per annum would apply on all outstanding obligations after the occurrence and during the continuance of certain specified events of default.

The Credit Agreement with a four-year term has a scheduled maturity date of June 3, 2028 (unless all Loans become due and payable at an earlier date, whether by acceleration or otherwise).

If on November 1, 2025, (i) the aggregate principal amount of the 2026 Notes outstanding that is not held by the Lenders is equal to or greater than $38.5 million and (ii) we have not made nor delivered notice that we expect to make certain voluntary or mandatory prepayments under the Credit Agreement of at least $20.0 million in the aggregate, then we would be required to prepay the Loans in the amount necessary to achieve the $20.0 million prepayment requirement.

All mandatory prepayments are subject to the prepayment premiums as described below.

We may elect to prepay Loans, in whole or in part, in cash, subject to (i) during the first year of such Loans, a make-whole premium plus 5.00% of the aggregate principal amount of Loans subject to prepayment (unless the prepayment is made in contemplation of a change of control, in which case only the make-whole premium would be payable);

(ii) during the second year, a 5.00% prepayment premium;

and (iii) during the third year, a 3.00% prepayment premium.

The Credit Agreement requires mandatory prepayments of Loans in an amount equal to 60% of the net cash proceeds (excluding research and development and certain other milestone payments) received by the Credit Parties from asset sales and licenses, provided that if an asset sale or license involving narsoplimab occurs while any Delayed Draw Term Loans are outstanding, mandatory prepayments must be in an amount equal to 100% of the net cash proceeds from such sale.

Mandatory prepayments are also required:

(i) from insurance recoveries on loss of property that are not otherwise reinvested in other assets of the Credit Parties;

(ii) from indebtedness incurred by any of the Credit Parties other than as permitted by the Credit Agreement;

(iii) in the event of a change of control and (iv) in respect of 25% of the amount of any Milestone Payment received from DRI its affiliates on the basis of net sales of OMIDRIA.

Financial Summary

Our loss for the quarter ended March 31, 2024 was $37.2 million.

As of March 31, 2024, we had cash, cash equivalents and short-term investments of $230.3 million available to fund operations and debt service.

Our cash used in operations for the three months ended March 31, 2024 was $41.8 million.

Our loss for the three and six months ended June 30, 2024 was $56.0 million and $93.2 million, respectively.

As of June 30, 2024, we had cash, cash equivalents and short-term investments of $158.9 million available to fund operations and to service debt.

Results of Operations

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Six Months Ended

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MASP-2 program - OMS721 (narsoplimab)

MASP-3 program - OMS906

MASP-3 program - OMS906 (zaltenibart)

MASP-2 program - OMS1029

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Total research and development expenses

Clinical research and development expenses increased $0.2 million compared to the prior year quarter due primarily to increased OMS906 clinical and manufacturing activities, partially offset by decreased expenditure on narsoplimab due to termination of our IgA nephropathy program following analysis of our Phase 3 clinical trial results.

Preclinical research and development expenses increased $0.7 million for the three months ended March 31, 2024 as compared to the same period in 2023, primarily due to increased discovery work in our cancer program.

Internal overhead and other expenses increased $1.5 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to receipt of an Employee Retention Credit in the prior year that was recorded as an offset to expense.

Stock-based compensation expenses decreased $0.3 million for the three months ended March 31, 2024 as compared to the same period in the prior year, primarily due to the valuation and timing of the vesting of employee stock options.

We expect research and development expenses in the second quarter of 2024 to be higher than those in the first quarter of this year primarily due to increased manufacturing costs associated with narsoplimab.

For the three and six months ended June 30, 2024, clinical research and development expenses increased $14.7 million and $14.9 million, respectively, compared to the prior year periods.

The increases were primarily due to increased narsoplimab drug substance manufacturing and zaltenibart clinical research costs, partially offset by decreased clinical expenditures on narsoplimab due to the termination of our IgA nephropathy program following analysis of our Phase 3 clinical trial results .

Our accounting policy is to expense all manufacturing costs related to drug candidates until regulatory approval is reasonably assured in either the U.S.

or European Union.

For the three and six months ended June 30, 2024, internal overhead and other expenses increased $0.8 million and $2.3 million, respectively, as compared to the same periods in the prior year.

The increases were primarily due to additional employee related costs and receipt of an Employee Retention Credit received in the second quarter of the prior year that was recorded as an offset to expense.

Stock-based compensation expenses decreased $0.3 million for the six months ended June 30, 2024 as compared to the same period in the prior year, primarily due to the valuation and timing of the vesting of employee stock options.

We expect research and development expenses in the third quarter of 2024 to be substantially lower than those in the second quarter of this year primarily due to the manufacturing costs associated with narsoplimab that were expensed in the second quarter.

At this time, we are unable to estimate with certainty the longer-term costs we will incur in the continued development of our drug candidates due to the inherently unpredictable nature of our preclinical and clinical development activities.

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Six Months Ended

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Total selling, general and administrative expenses

For the three months ended March 31, 2024, selling, general and administrative expenses, excluding stock-based compensation expense, increased $1.2 million compared to the prior year quarter.

The increase was primarily due to the receipt of an Employee Retention Credit in the first quarter of 2023 and increased patent and other legal costs in the first quarter of this year.

We expect selling, general and administrative expenses in the second quarter of 2024 to be similar to those in the first quarter of this year.

For the three and six months ended June 30, 2024, selling, general and administrative expenses, excluding stock-based compensation expense, increased $2.5 million and $3.8 million, respectively, as compared to the same periods in the prior year.

The increase was primarily due to legal and financial advisory expenses incurred in the connection with the 2026 Note Repurchase Transaction, receipt of an Employee Retention Credit in the second quarter of 2023 ( that was recorded as an offset to expense) and patent related expenses.

We expect selling, general and administrative expenses in the third quarter of 2024 to be lower compared to those in the second quarter of this year.

Interest Expense

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Interest expense

Interest expense is primarily comprised of interest and amortization of debt discount and issuance costs on our convertible senior notes maturing in February 2026 as well as interest on our DRI royalty obligation (see “Note 6 — Convertible Senior Notes” and “Note 8 — OMIDRIA Royalty Obligation” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q).

Interest expense increased $0.3 million due to charges on the additional principal balance of our DRI royalty obligation, which were partially offset by a reduction in interest expense from our convertible senior notes that were retired at maturity in November 2023.

We expect that interest expense for the second quarter of 2024 will increase from the first quarter due the $115.5 million additional payment that we received from DRI in February 2024.

Interest expense is primarily comprised of interest and amortization of debt discount and issuance costs on our 2026 Notes as well as interest on our DRI royalty obligation (see “Note 6 — Debt ” and “Note 8 — OMIDRIA Royalty Obligation” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q).

Interest expense for the three and six months ended June 30, 2024 increased $1.3 million and $1.6 million, respectively, due to a $115.5 million of borrowing under our royalty obligation with DRI in February 2024.

These increases were partially offset by a reduction in interest expense from the retirement at maturity in November 2023 of our 6.25% convertible senior notes, which had a par value of $95.0 million, and the partial repurchase of our 2026 Notes in December 2023 and in June 2024, which had a collective par value of $127.2 million.

We expect that interest expense for the third quarter of 2024 will decrease from the second quarter due to the net reduction of debt resulting from the 2026 Note Repurchase Transaction.

Interest and Other Income

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Interest and other income

Interest and other income decreased $0.5 million for the three months ended March 31, 2024 as compared to the same period in 2023 due to holding a lower average cash and investment balances than in the prior year.

We expect interest and other income for the second quarter of 2024 to be slightly lower compared to those in the first quarter of this year.

Interest and other income decreased $1.3 million and $1.8 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023 primarily due to holding a lower average cash and investment balance than in the prior year.

We expect interest and other income for the third quarter of 2024 to be lower compared to those in the second quarter of this year due to lower average cash and investment balances.

Discontinued operations and OMIDRIA contract royalty asset

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Remeasurement adjustments

Other income (loss), net

Other income, net

Net income from discontinued operations, net of tax

Interest is earned on the OMIDRIA contract royalty asset at an implied effective interest rate of 11.0%.

The $0.4 million increase in interest earned is due to a higher OMIDRIA contract royalty asset balance during the first quarter of 2024 than in the first quarter of 2023.

The increased balance in the OMIDRIA contract royalty asset resulted from remeasurements made throughout 2023.

The $0.7 million increase in remeasurement adjustment between the three months ended March 31, 2024 and 2023 reflects the amount of royalties earned in excess of projections for the period and any change in discounted royalty expectations.

The $0.4 million and $0.9 million increase in interest earned for the three and six months ended June 30, 2024, respectively, were due to a higher OMIDRIA contract royalty asset balance in 2024 than during the same periods in 2023.

The increased balance in the OMIDRIA contract royalty asset resulted from periodic remeasurements made during 2023.

For the three and six months ended June 30, 2024, remeasurement adjustments increased $1.2 million and $1.8 million, respectively, reflecting the increased interest incurred on the OMIDRIA contract royalty asset as a result of remeasurements made during 2023.

The following schedule presents a roll forward of the OMIDRIA contract royalty asset (in thousands):

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Remeasurement adjustments

OMIDRIA contract royalty asset at March 31, 2024

OMIDRIA contract royalty asset at June 30, 2024

Financial Condition – Liquidity and Capital Resources

As of March 31, 2024, we had cash, cash equivalents and short-term investments of $230.3 million.

Our loss for the quarter ended March 31, 2024 was $37.2 million, and cash used in operations was $41.8 million.

As of June 30, 2024, we had cash, cash equivalents and short-term investments of $158.9 million.

Our loss for the three and six months ended June 30, 2024 was $56.0 million and $93.2 million, respectively.

Cash used in operations for the six months ended June 30, 2024 was $87.8 million.

The second quarter of 2024 includes a $17.6 million charge for delivery of narsoplimab drug substance.

In addition, we made a $21.2 million payment for term loan-related debt repurchase and incurred $1.9 million of term loan-related transaction costs.

Pursuant to a covenant in the Credit Agreement entered on June 3, 2024, we must maintain at all times unrestricted cash and cash equivalents of at least $25.0 million.

Historically, we have incurred net losses from continuing operations and negative operating cash flows.

We have not yet established an ongoing source of revenue sufficient to cover our operating costs;

therefore, we potentially need to continue to raise additional capital to accomplish our business plan and to retire our outstanding convertible senior notes due in February 2026.

We plan to continue to fund our operations for at least the next twelve months with our existing cash and investments.

therefore, we potentially need to continue to raise additional capital to accomplish our business plan.

In addition, our Delayed Draw Term Loan of $25.0 million may be drawn once in full on or prior to June 3, 2025 at our election, but it is conditioned on the approval by FDA of narsoplimab in TA-TMA.

Proceeds of the Delayed Draw Term Loan may only be used toward any related transaction costs and for commercialization efforts of TA-TMA.

We may pursue additional debt financings to retire the 2026 Notes that remain outstanding and to fund operations.

However, pursuing debt financings, certain equity offerings or other strategic transactions may result in mandatory prepayments of the Initial Term Loan to the Credit Agreement.

(See “Note 6 — Debt” for further details).

We expect to continue to fund our operations and service our debt for at least the next twelve months with our existing cash and investments.

We plan to manage our operating expenses and reduce our cash requirements by reducing or delaying selected research and development efforts and by managing operating expenses.

Cash Flow Data

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Operating Activities.

Net cash used in operating activities for the three months ended March 31, 2024 increased by $216.3 million as compared to the same period in 2023 .

The increase was primarily due to a $202.7 million decrease in receivables due to the receipt of the $200.0 million OMIDRIA milestone received in February 2023, a $5.7 million decrease in funds provided by accounts payable and accrued expenses, and a $4.5 million increase in funds used for prepaids and other assets.

Additionally, Omeros incurred a $3.5 million increase in net loss compared to the same period a year ago.

Net cash used in operating activities for the six months ended June 30, 2024 increased by $230.0 million compared to the same period in 2023 .

This change was primarily due to collecting a $200.0 million Milestone Payment from Rayner in the prior year, a $22.2 million increase in net loss, a $9.1 million decrease in accounts payable and accrued expenses, and a $2.9 million decrease in prepaid expenses.

Investing Activities.

Cash flows used in investing activities primarily reflect cash used to purchase short-term investments and proceeds from the sale of short-term investments, thus causing a shift between our cash and cash equivalents and short-term investment balances.

Because we manage our cash usage with respect to our total cash, cash equivalents and short-term investments, we do not consider fluctuations in cash flows from investing activities to be important to the understanding of our liquidity and capital resources.

Net cash used in investing activities during the three months ended March 31, 2024 decreased by $119.4 million as compared to the same period in 2023.

The decrease was primarily due to purchasing investments in the first quarter of 2023 using the $200.0 million receipt of the OMIDRIA milestone while, in the first quarter of 2024, we purchased investments using the $115.5 million we received related to the DRI Amendment.

Cash flows provided by investing activities primarily reflects cash used to purchase short-term investments and proceeds from the sale of those investments.

This frequently causes a shift between our cash, cash equivalents and short-term investment balances.

As we manage our usage with respect to total cash, cash equivalents and short-term investments, we do not consider fluctuations in cash flows from investing activities to be important to the understanding of our liquidity and capital resources.

Net cash provided by investing activities during the six months ended June 30, 2024 increased by $157.2 million as compared to the same period in 2023.

The increase was due to the timing of purchasing investments and of maturities of investments.

Significant initial investment purchases during the periods were the investment of the $200.0 million Milestone Payment we received from Rayner in February 2023 and the $115.5 million we received from DRI related to the sale of future OMIDRIA royalties in February 2024.

Financing Activities.

Net cash provided by financing activities during the three months ended March 31, 2024 increased $98.8 million compared to the same period in 2023.

This was primarily due to the $115.5 million we received from DRI in February 2024 related to the Amendment, partially offset by $11.9 million in expenditures related to repurchasing 3.2 million shares of our common stock.

Net cash provided by financing activities during the six months ended June 30, 2024 increased $72.2 million compared to the same period in 2023.

The increase was primarily due to receiving the $115.5 million related to the sale of future OMIDRIA royalties in February 2024 from DRI offset by $10.7 million of principal payments on the OMIDRIA royalty obligation.

Additionally, we paid $21.2 million to the Lenders in the 2026 Note Repurchase Transaction and repurchased 3.2 million shares of our common stock for $11.9 million.

Contractual Obligations and Commitments

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In addition, we carry various finance lease obligations for laboratory and office equipment.

As of March 31, 2024, the remaining aggregate non-cancelable rent payable under the initial term of the lease, excluding common area maintenance and related operating expenses, is $25.1 million.

Convertible Notes

See “Note 6 — Convertible Senior Notes” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

As of June 30, 2024, the remaining aggregate non-cancelable rent payable under the initial term of the lease, excluding common area maintenance and related operating expenses, is $23.4 million.

Convertible Senior Notes and Long-Term Debt

See “Note 6 — Debt” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

OMIDRIA Royalty Obligation

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What changed 10-Q

Item 1. Financial Statements