What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-31 compared with 2024-04-01 · 331 added, 419 removed, 522 unchanged (59% of the section changed)

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors Omeros Corporation

To the Shareholders and the Board of Directors of Omeros Corporation

Opinion on the Financial Statements

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generally accepted accounting principles.

The Company's Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has stated that substantial doubt exists about the Company’s ability to continue as a going concern.

Management's evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of an expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.

OMIDRIA Contract Royalty Asset

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To measure that contract royalty asset, the Company used the expected value approach, which is the discounted sum of the probability-weighted royalty payments using a range of potential outcomes, to the extent that it is probable that a significant reversal in the amount of cumulative income recognized will not occur.

Auditing management’s forecasts is complex and requires judgment due to the level of estimation uncertainty and the sensitivity of the asset’s value to changes in assumptions.

Auditing management’s forecasts of expected royalty payments is complex and requires judgment due to the level of estimation uncertainty and the sensitivity of the asset’s value to changes in forecast assumptions.

In particular, the value of the OMIDRIA contract royalty asset is sensitive to changes in significant assumptions such as forecasted royalties due from Rayner Surgical, Inc.

in various scenarios and the probability-weighting of those scenarios, which are affected by expectations about future market and regulatory conditions.

in various scenarios, and the probability weighting of those scenarios, which are affected by expectations of future market and regulatory conditions.

How We Addressed

the Matter in Our

To test the measurement of the OMIDRIA contract royalty asset, we performed audit procedures that included, among others, evaluating (1) the estimated future royalties in various scenarios, and (2) management’s relative weighting of those scenarios.

We compared estimated future royalties to the Company’s historical revenues and royalty rates in the asset purchase agreement.

We evaluated the appropriateness and likelihood of occurrence of the various scenarios included in management’s calculation, given the Company’s experience and industry trends, and verified the clerical accuracy of the calculation.

To evaluate the appropriateness and likelihood of occurrence of the estimated future royalties in various scenarios and probability weighting included in management’s calculation, we considered historical results of the Company’s business and third-party data.

We verified the clerical accuracy of the contract royalty asset calculation and agreed it to royalty rates in the asset purchase agreement.

We also evaluated the Company’s disclosures in the consolidated financial statements related to these matters.

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Seattle, Washington

April 1, 2024

March 31, 2025

OMEROS CORPORATION

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Cash and cash equivalents

$ 7,105 $ 11,009

Short-term investments

164,743 183,909

OMIDRIA contract royalty asset, short-term

29,373 28,797

8,096 213,221

OMIDRIA contract royalty asset

Prepaid expense and other assets

Total current assets

217,898 443,236

OMIDRIA contract royalty asset

138,736 123,425

OMIDRIA contract royalty asset, non-current

Right of use assets

18,631 21,762

Property and equipment, net

Restricted investments

$ 378,269 $ 590,969

Liabilities and shareholders’ equity (deficit)

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Accounts payable

$ 7,712 $ 5,989

Accrued expenses

31,868 30,551

Current portion of convertible senior notes, net

Current portion of OMIDRIA royalty obligation

Current portion of lease liabilities

OMIDRIA royalty obligation

Lease liabilities

Total current liabilities

53,316 136,383

OMIDRIA royalty obligation, non-current

Convertible senior notes, net

213,155 220,906

OMIDRIA royalty obligation

116,550 125,126

Term debt, non-current

Lease liabilities, non-current

18,143 22,426

Other accrued liabilities - noncurrent

Other accrued liabilities, non-current

Commitments and contingencies (Note 10)

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Additional paid-in capital

727,936 720,773

Accumulated deficit

( 753,530 ) ( 635,717 )

Total shareholders’ equity (deficit)

( 24,983 ) 85,684

Total liabilities and shareholders’ equity (deficit)

$ 378,269 $ 590,969

See accompanying Notes to Consolidated Financial Statements

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Research and development

$ 114,870 $ 112,721 $ 118,775

Selling, general and administrative

49,660 50,668 54,842

Total costs and expenses

164,530 163,389 173,617

Loss from operations

( 164,530 ) ( 163,389 ) ( 173,617 )

Interest expense

( 30,844 ) ( 22,702 ) ( 19,669 )

Interest and other income

16,342 4,062 1,740

Gain on early extinguishment of convertible senior notes

Net loss from continuing operations

( 174,920 ) ( 182,029 ) ( 191,546 )

Net income from discontinued operations, net of tax

57,107 229,446 385,781

Net income (loss)

$ ( 117,813 ) $ 47,417 $ 194,235

Basic and diluted net income (loss) per share:

Net loss from continuing operations

$ ( 2.79 ) $ ( 2.90 ) $ ( 3.07 )

Net income from discontinued operations

0.91 3.66 6.19

Net income (loss)

$ ( 1.88 ) $ 0.76 $ 3.12

Weighted-average shares used to compute basic and diluted net income (loss) per share

62,739,227 62,737,091 62,344,100

See accompanying Notes to Consolidated Financial Statements

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Balance at December 31, 2021

61,671,231 $ 616 $ 751,304 $ ( 872,672 ) $ ( 120,752 )

Issuance of common stock upon exercise of stock options

945,924 10 8,372 — 8,382

Issuance of common stock upon grant of restricted stock awards

11,700 — 91 — 91

At the market offering fees

— — ( 241 ) — ( 241 )

Issuance of common stock upon vesting of restricted stock units

Stock-based compensation

— — 17,539 — 17,539

Cumulative effect of adopting ASU 2020-06

— — ( 70,777 ) ( 4,697 ) ( 75,474 )

— — — 194,235 194,235

Balance at December 31, 2022

62,628,855 626 706,288 ( 683,134 ) 23,780

Issuance of common stock upon exercise of stock options

101,160 1 414 — 415

Issuance of common stock upon vesting of restricted stock units

98,750 1 ( 1 ) — —

Repurchases of common stock

Stock-based compensation

— — 14,072 — 14,072

— — — 47,417 47,417

Balance at December 31, 2023

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

Issuance of common stock upon exercise of stock options

36,726 — 150 — 150

Issuance of common stock upon vesting of restricted stock units

67,250 1 ( 1 ) — —

Repurchases of common stock

( 1,804,144 ) ( 18 ) ( 4,636 ) — ( 4,654 )

Stock-based compensation

— — 11,650 — 11,650

— — — (117,813 ) ( 117,813 )

Balance at December 31, 2024

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

See accompanying Notes to Consolidated Financial Statements

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Net income (loss)

$ ( 117,813 ) $ 47,417 $ 194,235

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Stock-based compensation expense

11,650 14,072 17,630

Non-cash interest expense on convertible senior notes

1,853 1,830 1,696

Depreciation and amortization

920 952 1,386

Amortization of discount and issuance costs on convertible notes

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

Non-cash interest on OMIDRIA contract royalty asset

Remeasurement on OMIDRIA contract royalty asset

( 41,167 ) ( 14,457 ) —

Interest on OMIDRIA contract royalty asset

(15,315 ) ( 18,634 ) —

Non-cash interest remeasurement on the OMIDRIA royalty obligation

Accretion on U.S.

government treasury bills, net

( 8,714 ) — —

Gain on early extinguishment of convertible senior notes

( 4,112 ) — —

Gain on sale of OMIDRIA, gross

— — ( 310,563 )

Non-cash interest expense on future royalty obligation

Changes in operating assets and liabilities:

205,125 ( 175,066 ) ( 34,314 )

OMIDRIA contract royalty asset

40,595 65,439 —

Accounts payable and accrued expense

4,682 ( 10,665 ) 14,640

Prepaid expenses and other

( 2,978 ) 934 5,568

Accounts payable and accrued expense

Net cash provided by (used in) operating activities

74,726 ( 86,483 ) ( 109,722 )

Investing activities:

Purchases of investments

( 1,018,602 ) ( 429,045 ) ( 32,006 )

Proceeds from the sale and maturities of investments

1,046,482 301,594 100,000

Purchases of investments

Purchases of property and equipment

( 426 ) ( 113 ) ( 277 )

Cash proceeds on sale of OMIDRIA

Net cash provided by (used in) investing activities

27,454 ( 127,564 ) 193,710

Financing activities:

Payments on convertible senior notes

( 99,873 ) — —

Repurchases on common stock

( 4,654 ) — —

Proceeds from sale of future royalties

Proceeds upon exercise of stock options

Payment on maturity of 2023 convertible senior notes

Repurchase of 2026 convertible senior notes

Principal payments on OMIDRIA royalty obligation

( 1,152 ) ( 417 ) —

Repurchases of common stock

Payments on finance lease obligations

( 555 ) ( 750 ) ( 1,823 )

Proceeds upon exercise of stock options

150 415 8,383

Proceeds upon entering into OMIDRIA royalty obligation

At the market offering costs

Net cash provided by (used in) financing activities

( 106,084 ) 124,248 6,319

Net increase (decrease) in cash and cash equivalents

( 3,904 ) ( 89,799 ) 90,307

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

11,009 100,808 10,501

Cash and cash equivalents at end of period

$ 7,105 $ 11,009 $ 100,808

Supplemental cash flow information

Cash paid for interest

$ 29,923 $ 19,178 $ 17,876

Equipment acquired under finance lease

$ 952 $ 40 $ 289

Cash paid for income taxes, net

See accompanying Notes to Consolidated Financial Statements

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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.

We marketed our first drug product OMIDRIA® (phenylephrine and ketorolac intraocular solution) 1% / 0.3% for use during cataract surgery or intraocular lens replacement in the United States (the “U.S.”) until we sold OMIDRIA and related business assets on December 23, 2021 ( see “Sale of OMIDRIA Assets” below for additional information).

Our pipeline of clinical-stage development programs includes:

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 diseases, including complement-mediated diseases and cancers related to dysfunction of the immune system, as well as addictive and compulsive disorders.

Our clinical-stage development programs include:

narsoplimab, our antibody targeting mannan-binding lectin-associated serine protease 2 (“MASP-2”), the effector enzyme of the lectin pathway of complement;

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.

Clinical development of narsoplimab is currently focused primarily on hematopoietic stem cell transplant-associated thrombotic microangiopathy (“TA-TMA”).

Our Biologics License Application ("BLA") for narsoplimab in TA-TMA is anticipated to be resubmitted with additional information to support potential approval of narsoplimab in this indication.

In October 2023, we announced the results of a pre-specified interim analysis of our Phase 3 ARTEMIS-IGAN trial evaluating narsoplimab for the treatment of immunoglobulin A ("IgA") nephropathy.

Topline results showed that narsoplimab did not reach statistically significant improvement over placebo on the primary endpoint of reduction in proteinuria.

Based on this result, we have discontinued the ARTEMIS-IGAN clinical trial.

Phase 1 and Phase 2 clinical programs are underway in our other clinical-stage assets.

Sale of OMIDRIA Assets

We successfully completed a pivotal clinical trial for narsoplimab in TA-TMA and previously submitted to FDA a biologics license application (“BLA”) seeking marketing approval for narsoplimab in this indication.

In October 2021, FDA issued a complete response letter (“CRL”) with respect to the original BLA and indicated that additional information would be needed to support regulatory approval.

We appealed FDA’s decision to issue the CRL through a formal dispute resolution process that concluded in late 2022.

Although our appeal was denied, the decision identified potential paths for resubmission of the BLA, including paths based on comparison of survival data from the completed pivotal trial versus a historical control group.

Based on the recommendations included in the appeal decision and on subsequent interactions with FDA’s review division, we developed a statistical analysis plan to assess data from our pivotal clinical trial, existing data from a historical control population available from an external source and data from the narsoplimab expanded access program.

In March 2025, we resubmitted to FDA a BLA seeking regulatory approval for narsoplimab in TA-TMA.

FDA has 30 days to decide whether the application is sufficiently complete to permit a review of the BLA.

Assuming FDA agrees to review the BLA, we expect the resubmission to be classified as Type B, meaning that the target date for FDA action on the BLA under the Prescription Drug User Fee Act (“PDUFA”) is expected to be in September 2025.

As with any BLA or new drug application, there can be no guarantee that, even if FDA agrees to review the BLA, that FDA will complete its review within a given timeframe, or that our BLA will ultimately be approved.

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

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 zaltenibart, a proprietary, patented monoclonal antibody targeting MASP-3, the key and most proximal activator of the alternative pathway of complement.

We have substantially completed two Phase 2 clinical trials evaluating zaltenibart in paroxysmal nocturnal hemoglobinuria (“PNH”) and have an ongoing open label extension study to assess the long-term efficacy and safety of zaltenibart in PNH patients who have completed either of the two Phase 2 clinical trials.

We have initiated our Phase 3 clinical development program for zaltenibart in this indication.

We also have an ongoing program evaluating zaltenibart in 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 the treatment of cocaine use disorder (“CUD”).

NIDA awarded the grant to us for a total of $ 6.24 million over three years, of which we have claimed and received $ 1.1 million of funding to date and recognized $ 1.3 million into Other Income in our consolidated statement of operations and comprehensive income (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.

The preclinical study has been completed successfully and provides the drug-interaction safety data necessary to support the human study of OMS527 in CUD.

We expect enrollment in the study evaluating OMS527 in adult patients with CUD to begin in 2025, also fully funded by NIDA.

We also have various programs in preclinical research and development.

OMIDRIA Sale and Royalty Monetization Transactions

On December 23, 2021, we closed on an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Rayner Surgical Inc.

(“Rayner”) for the sale of our commercial product OMIDRIA.

Rayner paid us $ 126.0 million in cash at closing, and we retained all outstanding accounts receivable, accounts payable and accrued expenses as of the closing date.

Additionally, we are entitled to future royalty payments on net sales of OMIDRIA.

Under the Asset Purchase Agreement, Omeros is entitled to receive a milestone payment of $ 200.0 million (the “Milestone Payment”) 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 (“ASC”) setting.

In December 2022, the Milestone Event occurred and we recorded a $ 200.0 million milestone receivable.

We received the Milestone Payment in February 2023.

As a result of the divestiture, the results of OMIDRIA operations (e.g., revenues and operating costs) have been reclassified to discontinued operations in our consolidated statements of operations and comprehensive income (loss) and excluded from continuing operations for all periods presented (See “Note 7 – Discontinued Operations – Sale of OMIDRIA ” ).

(“Rayner”) for the sale of our commercial product OMIDRIA, which we recorded as an OMIDRIA contract asset on our consolidated balance sheet.

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

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

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

On February 1, 2024, we sold an expanded interest in 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 “Amendment”) eliminates the previously existing annual caps on royalty payments after January 1, 2024, and provides that DRI receives all royalties on U.S.

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

All royalties earned on OMIDRIA sales within the U.S.

through December 31, 2031 are remitted by Rayner to an escrow account established by Omeros, from which payments are made to DRI.

After December 31, 2031, we will retain any U.S.

OMIDRIA royalties.

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

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

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 (collectively “Athyrium”) and funds managed by Highbridge Capital Management (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 (the “Delayed Draw Term Loan”), which may be drawn once in full upon notice delivered on or prior to June 3, 2025, conditioned on receipt of FDA approval of narsoplimab in TA-TMA within 30 days of the notice.

Also, we used the Initial Term Loan along with $ 21.7 million in cash on hand, to repurchase from the Lenders $ 118.1 million aggregate principal amount 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 our outstanding debt.

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

Basis of Presentation

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All inter-company transactions have been eliminated.

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

The accompanying 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”).

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As of December 31, 2024, we had cash, cash equivalents and short-term investments of $ 90.1 million.

Our cash provided by operations for the year ended December 31, 2023 was $ 74.7 million and included our 2023 net loss for the year of $ 117.8 million and collection of the $ 200.0 million Milestone Payment in the first quarter of 2023.

We extinguished $ 95.0 million outstanding of convertible senior notes at maturity in November 2023.

In February 2024, we received $ 115.5 million upon the sale to DRI Healthcare Acquisition LP ("DRI") of substantially all of our expected remaining U.S.-only Rayner OMIDRIA royalty receipts payable through December 31, 2031 ( see “Note 8 - OMIDRIA Royalty Obligation”).

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 2026.

We plan to continue to fund our operations for at least the next twelve months with our existing cash and investments and the $ 115.5 million we received in February 2024 from DRI.

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, similar to those we have previously completed, or other strategic transactions, which may include licensing a portion of our existing technology.

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.

We operate in one segment.

Management uses cash flow as the primary measure to manage our business and does not segment our business for internal reporting or decision-making.

Our cash used in operations for the year ended December 31, 2024 was $ 148.8 million and included a net loss for the year of $ 156.8 million.

Pursuant to a covenant in the Credit Agreement entered on June 3, 2024, we must maintain $ 25.0 million of unrestricted cash, cash equivalents and short-term investments at all times (see “Note 6 - Debt”).

In recent years, Omeros has incurred net losses from continuing operations and negative cash flows from operations.

The recurring losses, in combination with our cash and investment balances as of December 31, 2024, and an expected repayment of a portion of the borrowings under our secured credit facility on or prior to November 1, 2025, along with the maturity of the 2026 Notes on February 15, 2026, raises substantial doubt about our ability to continue as a going concern.

The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to our ability to continue as a going concern.

As we currently do not have an ongoing source of revenue sufficient to cover our operating costs, we will need 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 upon notice delivered on or prior to June 3, 2025, conditioned on receipt of FDA approval of narsoplimab in TA-TMA within 30 days of the notice;

however, we do not expect that FDA approval of narsoplimab will be obtained within a timeframe that would permit the Delayed Draw Term Loan to be drawn absent an amendment to, or waiver of, this condition.

Proceeds of the Delayed Draw Term Loan, if available, 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 necessary or determined to be strategically advantageous, we also could pursue public and private offerings of our equity securities, additional debt transactions or restructurings, future royalty sales, 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).

If these capital resources, for any reason, are needed but inaccessible, it would have a significant negative impact on our financial condition.

For purposes of determining available capital resources, future royalty and/or milestone receipts are excluded.

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

The conditions described above, when evaluated in accordance with the relevant accounting literature, raise substantial doubt with respect to our ability to meet our obligations through one year from the issuance of the Company's consolidated financial statements.

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 and the OMIDRIA royalty obligation valuation.

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

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Note 2 — Significant Accounting Policies

Segment Reporting

We operate in one business segment focusing on the research, discovery, development and commercialization of small-molecule and protein therapeutics targeting immunologic diseases, including complement-mediated diseases and cancers related to dysfunction of the immune system, as well as addictive and compulsive disorders.

The Company defines its operating segment based on internally reported financial information that is regularly used by the Chief Operating Decision Maker (“CODM”) to analyze performance, make decisions and allocate resources.

The Company's CODM is our Chief Executive Officer.

For the year ended December 31, 2024, the Company has identified one operating and reportable segment.

The CODM reviews net loss and expenses reported on the consolidated statement of operations and comprehensive income (loss).

The measurement of segment assets is reported on the balance sheet as total consolidated assets.

All long-lived assets are held in the U.S.

Our segment net income (loss) aligns with our consolidated statement of operations and comprehensive income (loss).

Discontinued Operations

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The sale of OMIDRIA qualified as an asset sale under GAAP.

To measure the OMIDRIA contract royalty asset, we used the expected value approach which is the sum of the discounted probability-weighted royalty payments, we would receive using a range of potential outcomes, to the extent that it is probable that a significant reversal in the amount of cumulative income recognized will not occur.

As contemplated by the Asset Purchase Agreement, the royalty rate applicable to U.S.

net sales of OMIDRIA was reduced from 50 % to 30 % upon the occurrence, in December 2022, of the event triggering the $ 200.0 million Milestone Payment.

The reduction in our royalty rate to 30 % continues until the expiration or termination of the last issued and unexpired U.S.

To measure the OMIDRIA contract royalty asset, we use the expected value approach which is the sum of the discounted probability-weighted royalty payments we would receive using a range of potential outcomes, to the extent that it is probable that a significant reversal in the amount of cumulative income recognized will not occur.

As contemplated by the Asset Purchase Agreement, in December 2022, we earned a $ 200.0 million milestone payment (the “Milestone Payment”) upon the establishment of separate payment for OMIDRIA for a continuous period of at least four years when furnished in the ambulatory surgery center (“ASC”) setting (the “Milestone Event”).

We received $ 200.0 million in February 2023.

Upon achieving the Milestone Event, the royalty rate applicable to U.S.

net sales of OMIDRIA was reduced from 50 % to 30 %.

The 30 % royalty rate continues until the expiration or termination of the last issued and unexpired U.S.

patent, which we expect to occur no earlier than 2035.

Consequently, we revalued the OMIDRIA contract royalty asset using the 30 % royalty rate on U.S.

Consequently, in December 2022, we revalued the OMIDRIA contract royalty asset using the 30 % royalty rate on U.S.

net sales and adjusted the probability weighted outcomes to reflect the occurrence of the Milestone Event.

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OMIDRIA Royalty Obligation

On September 30, 2022, we sold to DRI an interest in a portion of our future OMIDRIA royalty receipts for a purchase price of $ 125.0 million and recorded as an “OMIDRIA royalty obligation” on our consolidated balance sheet.

The liability is amortized over the term of the arrangement using the implied effective interest rate of 9.4 %.

Interest expense is recorded as a component of continuing operations.

T o the extent our estimates of future royalties are less than previous estimates, we will adjust the carrying amount of the OMIDRIA royalty obligation to the present value of the revised estimated cash flows, discounted at the effective interest rate utilizing the cumulative catch-up method.

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

On September 30, 2022, we sold to DRI a portion of our future OMIDRIA royalty receipts for a purchase price of $ 125.0 million and recorded an OMIDRIA Royalty Obligation for the same amount.

On February 1, 2024, DRI purchased our remaining U.S.

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 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 as a component within continuing operations.

To the extent our estimates of future royalties differ materially from the previous estimates, we will adjust for future OMIDRIA royalties to the present value of the revised estimated cash flows, discounted at the implied effective interest rate of 10.27 % utilizing the cumulative catch-up method.

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

Cash and Cash Equivalents, Short-Term Investments and Restricted Investments

Cash and cash equivalents include highly liquid investments with a maturity of three months or less on the date of purchase which can be easily converted into cash without a significant impact to their value.

Short-term investment securities are classified as held-to-maturity.

Cash and cash equivalents include highly liquid instruments with a maturity of three months or less on the date of purchase which can be easily converted into cash without a significant impact to their value.

Short-term investment securities are classified as held-to-maturity, except for money market funds which are classified as available-for-sale.

Investments classified as available-for-sale are measured at fair value.

Investments classified as held-to-maturity are carried at cost.

Amortization, accretion, interest, and dividends, realized gains and losses and declines in value judged to be other-than-temporary are included in other income.

Amortization, accretion, interest, and dividends, realized gains and losses and declines in value judged to be other-than-temporary are included within other income.

The cost of securities sold is based on the specific-identification method.

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and the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.

Restricted investments held in money-market funds include security deposits held by our landlord.

Restricted investments held in money-market funds include security deposits on our office lease.

Investment income, which is included as a component of other income, consists primarily of interest earned.

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Once approval is reasonably assured, costs, including amounts related to third-party manufacturing, transportation and internal labor and overhead, will be capitalized.

Receivables at December 31, 2023 primarily consist of royalties receivable from Rayner.

Receivables at December 31, 2022 also included the $ 200.0 million Milestone Payment which we received in February 2023.

Receivables primarily consist of royalties receivable from Rayner.

Considering the nature of our receivables, we concluded an allowance for doubtful accounts was not necessary as of December 31, 2024 and 2023, respectively.

Property and Equipment, Net

Property and equipment are stated at cost, and depreciation is calculated using the straight-line method over the estimated useful life of the assets, which is generally three to 10 years.

Equipment acquired through finance leases is recorded as property and equipment and is amortized over the shorter of the useful lives of the related assets or the lease term.

Property and equipment are stated at cost, and depreciation is calculated using the straight-line method over the estimated useful life of the assets, which is generally between three to 10 years.

Expenditures for repairs and maintenance are expensed as incurred.

Convertible Senior Notes

On January 1, 2021, we adopted Accounting Standards Update (“ASU”) 2020 - 06, Debt — Debt with Conversion Options (Subtopic 470.20 and Derivatives and Hedging — Contracts in Entity ’ s Own Equity (Subtopic 815 - 40 ) on a modified retrospective basis.

ASU 2020 - 06 removed the separate liability and equity accounting for our convertible senior notes that was required under previous guidance and allows us to account for our convertible senior notes wholly as debt.

Upon adoption, we removed the equity component allocated to debt issuance costs.

Transactions involving contemporaneous exchanges of cash between the same debtor and creditor in connection with the issuance of a new debt obligation and satisfaction of an existing debt obligation are evaluated as a modification or an extinguishment depending on whether the exchange is determined to have substantially different terms.

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

In December 2023, we repurchased $ 9.1 million par value of our 5.25 % convertible senior notes ( “2026 Notes”) at a discount, realizing a $ 4.1 million non-cash gain on extinguishment.

Right-of-Use Assets and Related Lease Liabilities

We record operating leases as right-of-use assets and recognize the related lease liabilities equal to the fair value of the lease payments using our incremental borrowing rate when the implicit rate in the lease agreement is not readily available.

We recognize variable lease payments when incurred.

Costs associated with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease.

We record finance lease obligations as a component of property and equipment and amortize these assets within operating expenses on a straight-line basis to their residual values over the shorter of the term of the underlying lease or the estimated useful life of the equipment.

The interest component of finance lease obligations is included in interest expense and recognized using the effective interest method over the lease term.

We account for leases with initial terms of 12 months or less as an operating expense.

Impairment of Long-Lived Assets

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We have not recognized any impairment losses for the years ended December 31, 2024, 2023 and 2022.

Revenue Recognition

When we enter into a customer contract, we perform the following five steps:

(i) identify the contract with a customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when (or as) we satisfy a performance obligation.

Prior to the sale of OMIDRIA to Rayner, we recorded product sales as revenue when the product was delivered to our wholesalers and title for the product was transferred.

Product sales were recorded net of wholesaler distribution fees and estimated chargebacks, rebates, returns and purchase-volume discounts.

Payment on Maturity of the 2023 Notes

On November 15, 2023, we extinguished our 6.25 % convertible senior notes (the “2023 Notes”) at par upon maturity.

Repurchase of 2026 Notes

In December 2023, we repurchased $ 9.1 million par value of our 2026 Notes at a discount, realizing a $ 4.1 million non-cash gain on extinguishment.

In June 2024, we performed an assessment of the Credit Agreement which was entered into with Highbridge and Athyrium and determined that it met the criteria to be accounted for as a troubled debt restructuring.

As a result, the $ 29.3 million difference between the $ 118.1 million aggregate principal amount of the 2026 Notes exchanged and the $ 88.8 million aggregate repurchase price (consisting of the $ 67.1 million Initial Term Loan and $ 21.7 million cash on hand) was recorded as a premium (i.e.

an increase) to the term debt recorded on the Company's 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 term debt in the consolidated balance sheet and interest expense in the consolidated statement of operations and comprehensive income (loss) over the duration of the term loan.

Research and Development

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Selling, General and Administrative

Selling, general and administrative expenses are comprised primarily of marketing and selling expenses;

Selling, general and administrative expenses are comprised primarily of marketing expenses;

professional and legal services;

patent costs;

and salaries, benefits, and stock-compensation costs for sales, marketing, and other personnel not directly engaged in research and development.

and salaries, benefits, and stock-compensation costs for marketing and other personnel not directly engaged in research and development.

Additionally, selling, general and administrative expenses include depreciation;

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We had no advertising costs during the years ended December 31, 2024, 2023 and 2022.

For the year ended December 31, 2021, we incurred $ 0.8 million in advertising costs related to our sales of OMIDRIA.

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 bases.

Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which those temporary differences are expected to be recovered or settled.

We recognize the effect of income tax positions only if those positions are more likely than not of being sustained upon an examination.

We recognize the effect of income tax positions only if those positions are more likely than not of being sustained upon an examination by the relevant taxing authority.

A valuation allowance is established when it is more likely than not that the deferred tax assets will not be realized.

Stock-Based Compensation

Stock-based compensation expense is recognized for all share-based payments, including grants of stock option awards and restricted stock units (“RSU”) based on estimated fair values.

The fair value of our stock is calculated using the Black-Scholes option-pricing model, which requires judgmental assumptions around volatility, forfeiture rates, risk-free rate and expected term.

Stock-based compensation expense is recognized for all share-based payments, including grants of stock option awards and restricted stock units based on estimated fair values.

The fair value of our stock is calculated using the Black-Scholes option-pricing model, which requires assumptions around volatility, forfeiture rates, risk-free interest rate and expected term.

Compensation expense is recognized over the requisite service periods, which is generally the vesting period, using the straight-line method.

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Common Stock Repurchases

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

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

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

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

The terms of the Credit Agreement dated June 3, 2024 prohibit us from repurchasing our common stock, unless agreed to by the Lenders.

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

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) is comprised of net income (loss) and certain changes in equity that are excluded from net income (loss).

There was no difference between comprehensive income (loss) and net income (loss) for the years ended December 31, 2023 , 2022 and 2021 .

There were no differences between comprehensive income (loss) and net income (loss) for the years ended December 31, 2024, 2023 and 2022.

Financial Instruments and Concentrations of Credit Risk

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Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board issued ASU 2023 - 09, Income Taxes - Improvements to Income Tax Disclosure (Topic 740 ), to enhance the transparency of income tax disclosures.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosure (Topic 740), to enhance the transparency of income tax disclosures.

ASU 2023-09 provides enhancements to the income tax disclosures related to the rate reconciliation and income taxes paid information.

ASU 2023 - 09 is effective for fiscal years after December 15, 2025 and applied prospectively.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and applied prospectively.

The Company is evaluating the impact of this pronouncement on its consolidated financial statements.

In November 2024, the FASB issued 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expense , requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact on its financial statement disclosures.

Note 3 — Net Income (Loss) Per Share

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Our potentially dilutive securities include common shares related to our stock options, RSUs and convertible senior notes calculated 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.

In periods where we have a net loss from continuing operations but overall net income, we do not compute Diluted EPS because the effect would be antidilutive.

Potentially dilutive securities excluded from Diluted EPS are as follows:

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

11,132,366 12,172,008 12,172,008

2023 Notes convertible to common stock (3)

4,318,944 4,941,739 4,941,739

Outstanding options to purchase common stock

38,462 9,488 1,707,371

Outstanding restricted stock units (4)

— 98,750 2,642

Total dilutive shares excluded from net income (loss) per share

15,489,772 17,221,985 18,823,760

( 1 ) The 2023 Notes were, and the 2026 Notes are subject to a capped call arrangement that potentially reduces the dilutive effect as described in “Note 6 - Convertible Senior Notes”.

(1) The 2026 Notes are subject to a capped call arrangement that potentially reduces the dilutive effect as described in “Note 6 - Debt”.

Any potential impact of the capped call arrangement is excluded from this table.

( 2 ) The 2023 Notes were fully extinguished on November 15, 2023.

Note 4 — Fair-Value Measurements

All of our investments are held in our name and are classified as short-term and held-to-maturity.

Interest income from investments for the years ended December 31, 2023 and December 31, 2022 were $ 14.7 million and $ 2.2 million, respectively .

(2) In December 2023 and on June 3, 2024, we repurchased $ 9.1 million and $ 118.1 million of our 2026 Notes, respectively, reducing an effect of dilution related to those notes.

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

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

(4) The outstanding restricted stock units were vested and converted to shares of common stock on December 1, 2023.

Note 4 — Investments and Fair-Value Measurements

All of our investments are short-term and held in our name.

Money market funds are classified as available-for-sale and treasury bills are classified as held-to-maturity on the accompanying consolidated balance sheets.

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

Interest and other income for the years ended December 31, 2024, December 31, 2023 and December 31, 2022 consists primarily of interest earned from investments of $ 8.4 million, $ 14.7 million and $ 2.2 million, respectively.

The following tables summarize our investments:

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(In thousands)

government securities classified as short-term investments

$ 102,100 $ 19 $ 102,119

Money-market funds classified as short-term investments

62,643 — 62,643

Total short-term investments

164,743 19 164,762

Certificate of deposit classified as non-current restricted investments

1,054 — 1,054

Total investments

$ 165,797 $ 19 $ 165,816

December 31, 2023

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government securities classified as short-term investments

$ 99,027 $ 22 $ 99,049

Money-market funds classified as short-term investments

84,882 — 84,882

Total short-term investments

183,909 22 183,931

Certificate of deposit classified as non-current restricted investments

1,054 — 1,054

Total investments

$ 184,963 $ 22 $ 184,985

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

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(In thousands)

government securities classified as short-term investments

$ — $ 102,119 $ — $ 102,119

Money-market funds classified as short-term investments

62,643 — — 62,643

Total short-term investments

62,643 102,119 — 164,762

Money-market funds classified as non-current restricted investments

1,054 — — 1,054

Certificate of deposit classified as non-current restricted investments

Total investments

$ 63,697 $ 102,119 $ — $ 165,816

December 31, 2023

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government treasury bills classified as short-term investments

$ — $ 99,049 $ — $ 99,049

Money-market funds classified as short-term investments

84,882 — — 84,882

Total short-term investments

84,882 99,049 — 183,931

Money-market funds classified as non-current restricted investments

1,054 — — 1,054

Certificate of deposit classified as non-current restricted investments

Total investments

$ 85,936 $ 99,049 $ — $ 184,985

Unrealized gains and losses on our short-term investments were not material for either period presented.

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The carrying amounts for receivables, accounts payable and accrued liabilities, and other current monetary assets and liabilities, including lease financing obligations, 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 2023 Notes, 2026 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, 2026 Notes and the OMIDRIA royalty obligation.

Note 5 — Certain Balance Sheet Accounts

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(In thousands)

OMIDRIA milestone receivable

$ — $ 200,000

OMIDRIA royalty receivables

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Total receivables

$ 8,096 $ 213,221

Property and Equipment, Net

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Equipment under finance leases

$ 6,929 $ 6,204

Laboratory equipment

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Office equipment and furniture

12,191 11,040

Less accumulated depreciation and amortization

( 10,241 ) ( 9,548 )

Total property and equipment, net

$ 1,950 $ 1,492

For the years ended December 31, 2024, 2023 and 2022, depreciation and amortization expenses were $ 1.0 million, $ 0.9 million and $ 1.0 million, respectively.

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(In thousands)

Clinical trials

$ 10,168 $ 5,536

Employee compensation

Clinical trials

Contract research and development

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Total accrued expenses

$ 31,868 $ 30,551

Note 6 — Convertible Senior Notes

On January 1, 2021, we adopted ASU 2020 - 06, Debt — Debt with Conversion Options (Subtopic 470 - 20 ) and Derivatives and Hedging — Contracts in Entity ’ s Own Equity (Subtopic 815 - 40 ) on a modified retrospective basis.

ASU 2020 - 06 removes the separate liability and equity accounting for our convertible senior notes.

Consequently, we now account for our convertible senior notes wholly as debt.

Upon adoption, we removed the equity component allocated to debt issuance costs increasing convertible senior notes and shareholders’ equity by $ 75.5 million.

In December 2023, we repurchased $ 9.1 million par value of our 2026 Notes realizing a non-cash gain on debt extinguishment of $ 4.1 million to our consolidated statement of operations and comprehensive loss in the current year.

On November 15, 2023, we also extinguished at par the $ 95.0 million outstanding principal amount on our 2023 Notes.

Convertible senior notes outstanding at December 31, 2023 and 2022 , respectively, are as follows:

Balance as of December 31, 2023

Note 6 — Debt

Secured Term Debt

On June 3, 2024, we entered into a Credit Agreement, 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 upon notice delivered on or prior to June 3, 2025, conditioned on receipt of FDA approval of narsoplimab in TA-TMA within 30 days of the notice;

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 December 31, 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 of $ 67.1 million along with $ 21.7 million of cash on hand to repurchase $ 118.1 million aggregate principal amount of the 2026 Notes held by the Lenders.

The total aggregate purchase price of $ 88.8 million represented 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 balance of our 2026 Notes and incurrence of a new Initial Term Loan resulted in a $ 51.0 million reduction of our outstanding debt.

The $ 29.3 million difference between the $ 118.1 million aggregate principal amount of the 2026 Notes and the $ 88.8 million aggregate repurchase price was recorded as a premium (i.e., an increase) to the long-term debt on the Company’s consolidated balance sheet instead of being recognized as a gain on early extinguishment of debt.

The premium is being amortized as both a non-cash reduction of long-term debt in the consolidated balance sheets and interest expense in the consolidated statement of operations and comprehensive income (loss) over the duration of the term loan.

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

(In thousands)

Principal amount

$ — $ 215,924 $ 215,924

Unamortized debt issuance costs

— ( 2,769 ) ( 2,769 )

Total convertible senior notes, net

$ — $ 213,155 $ 213,155

Fair value of outstanding convertible senior notes (1)

$ — $ 131,444

Balance as of December 31, 2022

Unamortized debt premium, net of issuance costs and other

Total term debt, net

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 December 31, 2024, the contractual interest rate on the Loans was 13.32 %.

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 1.50 %.

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

Twelve Months Ended

December 31, 2024

(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, representations and warranties and affirmative and negative covenants.

These include a covenant requiring us to maintain at all times unrestricted cash, cash equivalents and short-term investments 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 December 31, 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, we determined that the net derivative asset was not significant as of December 31, 2024.

A default under the Credit Agreement that results in the outstanding debt thereunder being declared due and payable prior to the stated maturity would constitute a cross-default under the indenture governing the 2026 Notes.

In such an event, the principal and all accrued and unpaid interest on the 2026 Notes may be declared immediately due and payable either by the trustee under the indenture, or by the holders of at least 25 % of the aggregate principal amount of the 2026 Notes outstanding.

The fair value of the Loans is classified as a Level 3 liability.

As of December 31, 2024, the approximate fair value of our Loan obligations was $ 69.5 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 2023 Notes at par upon maturity on November 15, 2023.

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

Year Ended December 31,

(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.

In 2024, we repurchased $ 118.1 million of principal amount outstanding on our 2026 Notes for a total aggregate repurchase price of $ 88.8 million (approximately 75 % of par value), using proceeds from the Initial Term Loan of $ 67.1 million and paying $ 21.7 million of cash on hand.

Amounts outstanding on our 2026 Notes are as follows:

(In thousands)

Principal amount

$ 95,000 $ 225,030 $ 320,030

Unamortized debt issuance costs

( 619 ) ( 4,124 ) ( 4,743 )

Total convertible senior notes, net

$ 94,381 $ 220,906 $ 315,287

Fair value of outstanding convertible senior notes (1)

$ 92,031 $ 118,141

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

2023 Convertible Senior Notes

The 2023 Notes accrued interest at an annual rate of 6.25 % per annum.

The 2023 Notes matured on November 15, 2023, and the $ 95.0 million outstanding principal and related accrued interest were paid at that time.

The following table sets forth total interest expense recognized in connection with the 2023 Notes:

(1) The fair value is classified as Level 2 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 available 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 $ 0.7 million as of December 31, 2024 will be 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:

Year Ended December 31,

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Contractual interest expense

$ 5,195 $ 5,938 $ 5,938

Amortization of debt issuance costs

Total interest expense

$ 5,814 $ 6,601 $ 6,556

2026 Convertible Senior Notes

The 2026 Notes are unsecured and 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.

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.

The 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 5.3 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.

Additionally, holders may convert their 2026 Notes at their option at specified times prior to the maturity date only if:

( 1 ) during any calendar quarter, beginning after September 30, 2020, that the last reported sale price per share of our common stock exceeds 130 % of the conversion price of the 2026 Notes for each of at least 20 trading days in the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(1) during any calendar quarter, the last reported sale price per share of our common stock exceeds 130 % of the conversion price of the 2026 Notes for each of at least 20 trading days in the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2) during the five consecutive business days immediately after any five -consecutive-trading-day period (such five -consecutive-trading-day period, the “measurement period”) in which the trading price per $ 1,000 principal amount of 2026 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;

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We will settle any conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, based on the applicable conversion rate(s).

Subject to the satisfaction of certain conditions, we may redeem in whole or in part the 2026 Notes at our option beginning August 15, 2023 through the 50th scheduled trading day immediately before the maturity date at a cash redemption price equal to the principal amount of the 2026 Notes to be redeemed plus any accrued and unpaid interest to, but excluding, the redemption date.

The 2026 Notes are subject to redemption only if certain requirements are satisfied, including that the last reported sale price per share of our common stock exceeds 130 % of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice and (ii) the trading day immediately before the date we send such notice.

In order to reduce the dilutive impact or potential cash expenditure associated with the conversion of the 2026 Notes, we entered into capped call transactions in connection with the issuances of the 2026 Notes (the "2026 Capped Call").

The 2026 Capped Call will cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2026 Notes, the number of shares of common stock underlying the 2026 Notes when our common stock is trading within the range of approximately $ 18.49 and $26.10.

However, should the market price of our common stock exceed the $ 26.10 cap, then the conversion of the 2026 Notes would have an additional dilutive impact or may require a cash expenditure to the extent the market price exceeds the cap price.

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

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.

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.

The unamortized debt issuance costs o f $ 2.8 million as of December 31, 2023 will be amortized to interest expense at an effective interest rate of 5.9 % over the remaining term.

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

Year Ended December 31,

Minimum Commitments

As of December 31, 2024, the most probable principal payments on our 2026 Notes and Term Loan are as follows:

(In thousands)

Contractual interest expense

$ 11,774 $ 11,814 $ 11,814

Amortization of debt issuance costs

1,355 1,167 1,078

Total interest expense

$ 13,129 $ 12,981 $ 12,892

2029 and thereafter

Total principal payments

Unamortized premiums, discounts and issuance costs and other (1)

Carrying value of debt

(1) Under the Term Loan, we expect to pay a $ 1.0 million prepayment penalty in November 2025 which is included in the current portion of term debt in the consolidated balance sheet.

As this is not a principal payment it is included as a component of other costs herein.

Note 7— Discontinued Operations - Sale of OMIDRIA

On December 23, 2021, we closed the sale of OMIDRIA and related assets, which is reported as discontinued operations in our consolidated statements of operations and comprehensive income.

Upon closing, we received an up-front cash payment from Rayner of $ 126.0 million, and we retained the outstanding receivables and liabilities related to OMIDRIA as of the closing date.

The year ended December 31, 2021, included a gain on the sale of OMIDRIA comprised as follows (in thousands):

Cash proceeds

OMIDRIA contract royalty asset

Gain on sale of OMIDRIA, gross

Transaction and closing costs

RSUs granted to transferred employees

Prepaid assets and inventory at cost

Gain on sale of OMIDRIA

In December 2022, the achievement of the Milestone Event triggered a $ 200.0 million Milestone Payment from Rayner which we received in February 2023.

On December 23, 2021, we sold the rights to OMIDRIA and related assets to Rayner, which is reported as discontinued operations in our consolidated statements of operations and comprehensive income (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.

The Milestone Event also resulted in a reduction in the U.S.

royalty rate from 50 % to 30 % on OMIDRIA net sales.

The results of operations for OMIDRIA are recorded as income from discontinued operations for all periods presented in the consolidated statements of operations and comprehensive income (loss).

The results of operations for OMIDRIA are recorded as income from discontinued operations for all periods presented in the consolidated statements of operations and comprehensive income (loss) are as follows:

Year Ended December 31,

(In thousands)

Product sales, net

$ — $ — $ 110,735

Costs and expenses

Gain on sale of OMIDRIA

Milestone income

Interest on OMIDRIA contract royalty asset

15,315 18,634 —

Remeasurement adjustments

41,167 14,457 —

1,087 307 1,035

Milestone income

Income before income tax

57,569 233,398 386,787

Income tax expense (1)

( 462 ) ( 3,952 ) ( 1,006 )

Net income from discontinued operations, net of tax

$ 57,107 $ 229,446 $ 385,781

(1) For further discussion of income tax expense refer to “Note 13 – Income Taxes”.

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Net cash provided by discontinued operations from operating activities

$ 241,317 $ 78,082 $ 55,380

Net cash provided by discontinued operations from investing activities

$ — $ — $ 125,993

Net cash provided by discontinued operations primarily represents royalties received and the $ 200.0 million milestone payment that we collected from Rayner in February 2023.

All royalties earned on OMIDRIA sales within the U.S.

through December 31, 2031 are remitted by Rayner to an escrow account established by Omeros, from which payments are made to DRI.

Note 8— OMIDRIA Royalty Obligation

In September 2022, we sold to DRI an interest in our future OMIDRIA royalty receipts and received $ 125.0 million in cash consideration which was recorded as an OMIDRIA royalty obligation on our consolidated balance sheet.

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

DRI receives their prorated monthly cap amount before we receive any royalty proceeds.

DRI is not entitled to carry-forward nor recoup any shortfall if the royalties paid by Rayner for an annual period are less than the cap amount applicable to each discrete calendar year.

Additionally, DRI has no recourse to or security interest in our assets other than our OMIDRIA royalty receipts.

DRI was entitled to receive royalties on OMIDRIA net sales between September 1, 2022 and December 31, 2030 up to certain annual cap limits.

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

All royalties earned on OMIDRIA sales within the U.S.

through December 31, 2031 are remitted by Rayner to an escrow account established by Omeros, from which payments are made to DRI.

We retain the right to receive all royalties payable by Rayner on any U.S.

net sales of OMIDRIA after December 31, 2031 and all royalties on global net sales of OMIDRIA from and after December 31, 2031.

To date, international royalties have not been significant.

DRI has no recourse to our assets other than in its interest in OMIDRIA royalties.

We are also entitled to receive a milestone payment ranging between $ 10.0 million and $ 27.5 million if U.S.

net sales of OMIDRIA reach applicable thresholds ranging between a total of $ 156.0 million and $ 160.0 million for any period of four consecutive quarters prior to January 1, 2026.

In addition, we are entitled to receive a separate milestone payment ranging between $ 8.0 million and $ 27.5 million if U.S.

net sales of OMIDRIA reach applicable thresholds ranging between a total of $ 181.0 million and $ 185.0 million for any period of four consecutive quarters prior to January 1, 2028.

The changes in the OMIDRIA royalty obligation during the year ended December 31, 2024 are as follows (in thousands):

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Balance at December 31, 2023

Additional proceeds

Principal payments

Non-cash interest

Balance at December 31, 2024

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.

The fair value of the OMIDRIA royalty obligation is determined by calculating the net present value of our estimated future OMIDRIA cash flows using the interest rate at inception of our royalty purchase agreement with DRI, adjusted for the change in the prime rate through the remeasurement date.

As of December 31, 2024, the approximate fair value of our obligation was $ 209.7 million.

For the years ended December 31, 2023 and December 31, 2022, we incurre d interest expense of $ 11.8 million and $ 2.9 million, respectively, on the OMIDRIA royalty obligation.

As of December 31, 2023 , the maximum scheduled principal and interest payments (based on an implied effective interest rate of 9.4 %) are as follows:

For the years ended December 31, 2024, 2023 and 2022, we incurred interest expense of $ 15.0 million, $ 11.8 million and $ 2.9 million, respectively, on the OMIDRIA royalty obligation.

As of December 31, 2024, the expected scheduled principal and interest payments (based on an implied effective interest rate of 10.27 %) are as follows:

(In thousands)

$ 8,576 $ 11,424 $ 20,000

14,641 10,359 25,000

16,081 8,919 25,000

17,664 7,336 25,000

19,402 5,598 25,000

48,762 4,988 53,750

Total scheduled payments

$ 125,126 $ 48,624 $ 173,750

Subsequent Event

In February 2024, Omeros and DRI expanded their royalty purchase agreement, resulting in Omeros receiving $ 115.5 million in cash consideration from DRI upon closing.

The Amended and Restated Royalty Purchase Agreement ("RPA") eliminated the caps on royalty payments effective in the first quarter of 2024 and provides that DRI will now receive all royalties on U.S.

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

DRI is entitled to payment only to the extent of royalty payments that are payable in the respect of U.S.

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

Omeros retains 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 royalties on global net sales of OMIDRIA payable from and after December 31, 2031.

To date, international royalties have not been significant.

We are also entitled to receive a milestone ranging between $ 10.0 million and $ 27.5 million if U.S.

net sales of OMIDRIA reach applicable thresholds ranging between a total of $ 156.0 million and $ 160.0 million for any period of four consecutive quarters prior to January 1, 2026.

In addition, we are entitled to receive a separate milestone ranging between $ 8.0 million and $ 27.5 million if U.S.

net sales of OMIDRIA reach applicable thresholds ranging between a total of $ 181.0 million and $ 185.0 million for any period of four consecutive quarters prior to January 1, 2028.

Note 9 — Lease Liabilities

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The initial term of the leases is through November 2027 and we have two options to extend the lease term, each by five years.

We have finance leases for certain laboratory and office equipment that have lease terms expiring through November 2026.

We have finance leases for certain laboratory and office equipment that have lease terms expiring through October 2029.

Lease-related assets and liabilities recorded on our consolidated balance sheet are as follows:

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Operating lease assets

$ 18,631 $ 21,762

Finance lease assets, net

Total lease assets

$ 19,851 $ 22,707

Operating leases

$ 4,590 $ 3,888

Finance leases

Operating leases

17,424 21,971

Finance leases

Total lease liabilities

$ 23,303 $ 26,736

Weighted-average remaining lease term

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Operating leases

12.81 % 12.81 %

Finance leases

8.57 % 10.44 %

The components of total lease costs are as follows:

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Operating lease cost

$ 6,464 $ 6,152

Finance lease cost:

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Sublease income

( 1,500 ) ( 1,755 )

Net lease cost

$ 8,975 $ 8,574

The supplemental cash flow information related to leases is as follows:

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Cash payments for operating leases

$ 7,144 $ 7,072

Cash payments for financing leases

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(In thousands)

$ 8,528 $ 684 $ 9,212

7,088 517 7,605

6,870 258 7,128

5,950 — 5,950

Total undiscounted lease payments

28,436 1,459 29,895

Less interest

( 6,422 ) ( 170 ) ( 6,592 )

Total lease liabilities

$ 22,014 $ 1,289 $ 23,303

Note 10 — Commitments and Contingencies

We have various agreements with third parties that collectively require payment of termination fees totaling $ 25.8 m illion as of December 31, 2023 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 $ 4.7 million as of December 31, 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 years ended December 31, 2023 , 2022 and 2021 , we paid $ 5.0 million, $ 0.3 million and $ 0.5 million, respectively in development milestones.

For the year ended December 31, 2024, we did not pay any development milestones.

For the years ended December 31, 2023 and 2022, we paid $ 5.0 million and $ 0.3 million, respectively in development milestones.

Note 11 — Shareholders ’ Equity (Deficit)

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Amendment of 2017 Omnibus Incentive Compensation Plan - At our June 23, 2023 annual meeting, our shareholders approved a 5,000,000 share increase in the number of shares of common stock available for grant under the 2017 Omnibus Incentive Compensation Plan, as amended and restated.

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 year ended December 31, 2023, we repurchased and retired 1.8 million shares of common stock at an average share price of $ 2.54 , for an aggregate repurchase price of $ 4.7 million.

Share Repurchase Program - On November 9, 2023, the Board of Directors approved a share repurchase program under which we were permitted to 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 year ended December 31, 2023, we repurchased and retired 1.8 million shares of common stock at an average price of $ 2.54 per share for an aggregate purchase price of $ 4.7 million.

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

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 the Credit Agreement in June 2024.

Note 12 — Stock-Based Compensation

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Research and development

$ 4,754 $ 6,123 $ 6,791

Selling, general and administrative

7,140 8,042 8,154

Total stock-based compensation in continuing operations

11,894 14,165 14,945

Discontinued operations

( 244 ) ( 93 ) 2,685

Total stock-based compensation

$ 11,650 $ 14,072 $ 17,630

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model.

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Estimated weighted-average fair value

$ 2.44 $ 2.94 $ 10.54

Weighted-average assumptions:

Expected volatility

93 % 90 % 81 %

Expected life, in years

Risk-free interest rate

3.97 % 2.83 % 1.06 %

Expected dividend yield

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Options Outstanding

Weighted- Average Exercise Price per Share Remaining Contractual Life (In years)

Weighted- Average Exercise Price per Share

Remaining Contractual Life (In years)

Aggregate Intrinsic Value (In thousands)

Balance at December 31, 2023

13,872,973 $ 11.02

3,153,200 3.01

( 36,726 ) 4.10

( 1,734,293 ) 9.96

Balance at December 31, 2024

15,255,154 $ 9.50 6.2 $ 1,388

Vested and expected to vest at December 31, 2024

14,762,090 $ 9.65 6.0 $ 1,272

Exercisable at December 31, 2024

10,554,140 $ 11.50 4.7 $ 217

Of the 16.7 million common stock options outstanding as of December 31, 2024, 8.2 million have an exercise price above the $ 9.88 closing price of our stock on the Nasdaq exchange on December 31, 2024.

The total intrinsic value of stock options exercised during the years ended December 31, 2024, 2023 and 2022 was $ 0.5 million, $ 0.1 million and $ 0.2 million, respectively.

At December 31, 2023 , there were 4.7 million unvested stock options outstanding that vest over a weighted-average period of 2.1 years.

The remaining estimated compensation expense to be recognized in connection with these unvested stock options is $ 14.5 million.

RSU activity for all stock plans is as follows:

RSUs Outstanding

Weighted- Average Grant Date Fair Value Per Share

Balance at December 31, 2022

98,750 $ 7.53

Vested and released

( 67,250 ) 7.53

( 31,500 ) 7.53

Balance at December 31, 2023

At December 31, 2024 and December 31, 2023, there were 5.4 million and 4.7 million unvested stock options outstanding, respectively, that vest over a weighted-average period of 2.4 years and 2.1 years, respectively.

The remaining estimated compensation expense to be recognized in connection with these unvested stock options is $ 12.5 million and $ 14.5 million for the years ended December 31, 2024 and December 31, 2023, respectively.

Note 13 — Income Taxes

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Total deferred income tax benefit

Income tax benefit in continuing operations

Income tax expense in continuing operations

Income tax expense as a component of discontinued operations

$ 462 $ 3,952 $ 1,006

For the years ended December 31, 2023, 2022 and 2021, for federal and state income tax purposes, we had net losses from continuing operations and net income from discontinued operations, which resulted in an overall tax loss.

At December 31, 2023, 2022 and 2021, we had federal net operating loss ("NOL") carryforwards of approximately $ 398.6 million, $ 361.4 million and $ 630.6 million, respectively, for all periods.

For the year ended December 31, 2024, for federal and state income tax purposes, we have net income from continuing operations and from discontinued operations.

For the years ended December 31, 2023 and 2022, we had net losses from continuing operations and net income from discontinued operations.

At December 31, 2024, 2023 and 2022, we had federal net operating loss (“NOL”) carryforwards of approximately $ 331.7 million, $ 398.6 million and $ 361.4 million, respectively.

At December 31, 2024, 2023 and 2022, we had state NOL carryforwards of approximately $ 233.2 million, $ 245.8 million and $ 226.3 million, respectively.

In 2023, we had a net loss for federal income tax purposes and in 2022 and 2021, we utilized existing net operating loss carryforwards of $ 268.6 million and $ 245.1 million, respectively to fully offset our federal tax liability for both periods.

We recorded state income tax expense of $0.5 million, $ 4.0 million and $ 1.0 million in discontinued operations in 2023, 2022 and 2021, respectively as we did not have adequate net operating losses and tax credits to fully offset our state tax liability.

Deferred income tax assets and liabilities reflect the tax effect of net operating loss and tax credit carryforwards and the net temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

In 2024 and 2022, we had net income for federal income tax purposes.

Therefore, we utilized existing NOLs of $ 62.5 million and $ 268.6 million, respectively, to fully offset our federal tax liability for both periods.

In 2023, we had a net loss for federal income tax purposes and no federal tax liability.

We recorded state income tax expense of $ 0.3 million, $ 0.5 million and $ 4.0 million in discontinued operations in 2024, 2023 and 2022, respectively, as we did not have adequate NOLs and tax credits to fully offset our state tax liability.

Deferred income tax assets and liabilities reflect the tax effect of NOL and tax credit carryforwards and the net temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of deferred income taxes were as follows:

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Net operating loss carryforwards

$ 95,183 $ 85,887

Research and development tax credits

92,837 78,992

Capitalized research and development

39,318 21,864

OMIDRIA royalty obligation

28,903 28,938

Stock-based compensation

10,132 12,517

Lease liability

Total deferred tax assets

281,741 243,358

Deferred tax liabilities:

OMIDRIA contract royalty asset

( 38,832 ) ( 34,883 )

Right of use assets

( 4,304 ) ( 4,987 )

Property and equipment

( 122 ) ( 288 )

Total deferred tax liabilities

( 43,258 ) ( 40,158 )

Net deferred tax assets before valuation allowance

238,483 203,200

Less valuation allowance

( 238,483 ) ( 203,200 )

Net deferred tax liabilities

As of December 31, 2023 , we had federal net operating loss carryforwards of approximately $ 398.6 million and state net operating loss carryforwards of approximately $ 245.8 million.

Pre- 2018 federal net operating losses of $ 109.8 million expire between 2035 and 2037.

Post- 2018 federal net operating losses of $ 288.8 million do not expire.

As of December 31, 2024, we had federal NOL carryforwards of approximately $ 331.7 million and state NOL carryforwards of approximately $ 233.2 million.

Pre-2018 federal NOLs of $ 45.2 million expire between 2035 and 2037.

Post-2018 federal NOLs of $ 286.5 million do not expire.

Research and development tax credit carryforwards of $ 104.9 million expire between 2025 and 2044.

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federal statutory rate on net loss

( 21.0 )% ( 21.0 )% ( 21.0 )%

State tax, net of federal tax benefit

( 2.1 )% ( 1.7 )% ( 0.6 )%

Change in valuation allowance

27.7 % 28.3 % 26.9 %

( 8.0 )% ( 6.8 )% ( 5.5 )%

Nondeductible items

Stock compensation

1.5 % 1.4 % 0.3 %

1.9 % ( 0.2 )% ( 0.1 )%

Effective tax rate

0.0 % 0.0 % 0.0 %

We file federal and certain state income tax returns, which provides varying statutes of limitations on assessments.

However, because of net operating loss carryforwards, substantially all our tax years remain open to federal and state tax examination.

As of December 31, 2023 and 2022, the total amount of gross unrecognized tax benefits was $ 2.0 million and $ 0.2 million, respectively.

We recognized $ 0.3 million of interest and penalties at December 31, 2023 as an unrecognized tax benefit.

However, because of NOL carryforwards, substantially all our tax years remain open to federal and state tax examination.

As of December 31, 2024, 2023 and 2022, the total amount of gross unrecognized tax benefits was $ 4.5 million, $ 2.0 million and $ 0.2 million, respectively.

Interest and penalties of $ 0.5 million and $ 0.3 million, respectively, were included within our unrecognized tax benefits as of December 31, 2024 and December 31, 2023.

As of December 31, 2024, $ 4.2 million of the total unrecognized tax benefits, if recognized, would have an impact on our effective tax rate.

We estimate that there will be no material changes in this uncertain tax position for the next 12 months.

Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

We estimate that there will be no material changes in uncertain tax positions for the next 12 months.

The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

The following table summarizes the activities related to our gross unrecognized tax benefits (in thousands):

4 unchanged sentences

Balance at December 31, 2023

Increase in balance related to tax positions taken during current year

Decrease in balance as a result of a lapse of the applicable statute of limitations

Balance at December 31, 2024

Note 14 — 401(k) Retirement Plan

Our 401(k) retirement plan provides for an annual company discretionary match on employee contributions.

For the years-ended December 31, 2023, 2022 and 2021, Omeros' 401 (k) match expense was $ 0.6 million, $ 0.6 million and $ 0.8 million, respectively.

We match up to 4.0 % of each participating employee’s eligible earnings, with a maximum company match of $ 4,000 per employee per year.

All employees are eligible to participate.

For all three years ended December 31, 2024, 2023 and 2022, Omeros' 401(k) match expense was $ 0.6 million.

We match up to 4.0 % of each participant's eligible earnings, with a maximum annual company match of $ 4,000 per employee.

All employees are eligible to participate in the 401(k) match.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data