What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-15 compared with 2024-11-13 · 351 added, 462 removed, 528 unchanged (61% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets:

1 unchanged sentence

Short-term investments

OMIDRIA contract royalty asset, current

OMIDRIA contract royalty asset

Prepaid expense and other assets

4 unchanged sentences

Restricted investments

Liabilities and shareholders’ equity (deficit)

Liabilities and shareholders’ deficit

Current liabilities:

1 unchanged sentence

Accrued expenses

OMIDRIA royalty obligation, current

Lease liabilities, current

Total current liabilities

OMIDRIA royalty obligation

Convertible senior notes, net

Long-term debt, net

Lease liabilities

Total current liabilities

OMIDRIA royalty obligation, non-current

Convertible senior notes, non-current, net

Long-term debt, net

Lease liabilities, non-current

1 unchanged sentence

Commitments and contingencies (Note 10)

Shareholders’ equity (deficit):

Shareholders’ deficit:

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

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

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

57,949,760 and 61,128,597 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively.

none issued and outstanding at March 31, 2025 and December 31, 2024.

Common stock, par value $ 0.01 per share, 150,000,000 shares authorized at March 31, 2025 and December 31, 2024;

58,063,901 and 58,044,465 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively.

Additional paid-in capital

1 unchanged sentence

Total shareholders’ deficit

Total liabilities and shareholders’ equity (deficit)

Total liabilities and shareholders’ deficit

See accompanying Notes to Condensed Consolidated Financial Statements

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Costs and expenses:

13 unchanged sentences

OMEROS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY (DEFICIT)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ DEFICIT

(In thousands, except share data)

1 unchanged sentence

Issuance of common stock upon exercise of stock options

Repurchases of common stock

Stock-based compensation expense

Balance at March 31, 2025

Issuance of common stock upon exercise of stock options

Stock-based compensation expense

Balance at June 30, 2024

Issuance of common stock upon exercise of stock options

Stock-based compensation expense

Balance at September 30, 2024

Balance at January 1, 2024

Stock-based compensation expense

Balance at March 31, 2023

Issuance of common stock upon exercise of stock options

Stock-based compensation expense

Balance at June 30, 2023

Issuance of common stock upon exercise of stock options

Repurchases of common stock

Stock-based compensation expense

Balance at September 30, 2023

Balance at March 31, 2024

See accompanying Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities:

1 unchanged sentence

Stock-based compensation expense

Amortization of discount and issuance costs on convertible notes

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

Depreciation and amortization

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

Non-cash interest earned on OMIDRIA contract royalty asset

Amortization of discount and issuance costs on convertible notes

Non-cash interest remeasurement on the OMIDRIA royalty obligation

Non-cash interest on OMIDRIA contract royalty asset

Remeasurement of OMIDRIA contract royalty asset

1 unchanged sentence

government treasury bills, net

Non-cash interest on royalty obligation

Changes in operating assets and liabilities:

2 unchanged sentences

Accounts payable and accrued expense

Net cash provided by (used in) operating activities

Net cash used in operating activities

Investing activities:

4 unchanged sentences

Financing activities:

Proceeds from sale of future royalties

Proceeds upon exercise of stock options

Cash paid to repurchase 2026 convertible senior notes

Proceeds from sale of future royalties

Principal payments on OMIDRIA royalty obligation

Payments on finance lease obligations

Repurchases of common stock

Principal payments on finance lease obligations

Net cash provided by (used in) financing activities

4 unchanged sentences

Cash paid for interest

Cash paid (received) for income taxes, net

Equipment acquired under finance lease

See accompanying Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

Note 1 — Organization and Basis of Presentation

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

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:

5 unchanged sentences

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 late 2021, FDA issued a complete response letter (“CRL”) with respect to the BLA in which the agency indicated that additional information would be needed to support regulatory approval.

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 our completed pivotal trial previously submitted to FDA an analysis plan to assess survival data from our completed clinical trial, existing data from a historical control population available from an external source, and data from the narsoplimab expanded access program.

As a part of our most recent meeting with FDA, in September 2024, we received minor feedback on our proposed statistical analysis plan for the primary endpoint – patient survival in our pivotal narsoplimab trial compared to that in an external registry of TA-TMA patients – which was a limited request to include certain additional sensitivity analyses.

Additional sensitivity analyses were quickly incorporated into the plan and sent back to FDA.

FDA’s reply is expected in November 2024.

We have no other information requests pending and are not aware of any other impediment to resubmitting our narsoplimab BLA.

After receiving FDA’s response and, assuming general alignment on the revised plan, we intend to proceed with conducting the primary and secondary efficacy analyses.

If the results support resubmission, then we intend to finalize and resubmit our BLA as soon as possible.

We are currently unable to provide a specific estimate of when or if we will resubmit the BLA or, subsequently, FDA’s timing for a decision regarding approval.

Even if the results of the efficacy analysis are favorable and FDA accepts our resubmitted BLA for review, as with any BLA or new drug application, there can be no guarantee that FDA will approve narsoplimab for TA-TMA.

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 to 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 the BLA seeking regulatory approval for narsoplimab in TA-TMA.

The resubmission was accepted for review by FDA as a class 2 resubmission and, pursuant to the Prescription Drug User Fee Act (“PDUFA”), has been assigned a target action date for the FDA decision of September 25, 2025.

As with any BLA or new drug application, there can be no guarantee 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.

2 unchanged sentences

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 activator of the alternative pathway of complement.

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

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

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

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

Several indications for potential Phase 2 clinical development of OMS1029 have been evaluated/selected and may be pursued pending the availability and allocation of capital.

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 also have a small, ongoing Phase 2 study evaluating zaltenibart in complement 3 glomerulopathy (“C3G”), a rare and debilitating renal disease driven by complement dysregulation.

We began initiating clinical trial sites in our Phase 3 program for zaltenibart in PNH during the first quarter of 2025;

however, based on considerations of capital availability and the anticipated ramp up in spending on those trials, we have determined temporarily to pause our Phase 3 clinical development program for zaltenibart in this indication in order to prioritize the use of our available capital to other programs.

We are working with our vendors and investigators to ensure that these studies can be restarted with as little disruption to the timeline as possible after securing capital and allocating it to the program.

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

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

NIDA awarded the grant to us for a total of $ 6.69 million over three years, of which we have claimed and received $ 1.0 million of funding to date and recognized $ 0.8 million into Other Income in our condensed consolidated statement of operations and comprehensive loss.

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 $ 1.3 million of funding to date.

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 is intended to provide the toxicology data necessary to support the human study of OMS527 in CUD.

The toxicology study is underway and is expected to be completed later this year.

Assuming that the results support further development, we expect enrollment in the study evaluating OMS527 in adult patients with CUD to begin in 2025, also fully funded by NIDA.

The preclinical studies have been completed successfully and provide 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 subjects with CUD to begin in 2025, also fully funded by NIDA with data anticipated to be available late this year or early 2026.

We also have various programs in preclinical research and development.

1 unchanged sentence

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

(“Rayner”) for the sale of our commercial product OMIDRIA and certain related assets including inventory and prepaid expenses.

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

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

2 unchanged sentences

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

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

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

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.

To date, international royalties have not been significant.

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

1 unchanged sentence

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

The Credit Agreement provides for a senior secured term loan facility of up to $ 92.1 million, consisting of an initial term loan of $ 67.1 million (the “Initial Term Loan”) and a $ 25.0 million delayed draw term loan (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 on June 3, 2024, we used the Initial Term Loan along with $ 21.2 million of cash on hand, to repurchase from the Lenders $ 118.1 million aggregate principal 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 outstanding debt.

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

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

The Credit Agreement provides for a senior secured term loan facility of up to $ 92.1 million, consisting of a term loan of $ 67.1 million (the “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.

Based on the September 2025 target date for FDA action assigned to the narsoplimab BLA, we do not expect to meet the conditions required to utilize the Delayed Draw Term Loan.

Also, we used the Term Loan proceeds along with $ 21.7 million of 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 total debt outstanding.

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

7 unchanged sentences

Liquidity and Capital Resources

As of September 30, 2024, we had cash, cash equivalents and short-term investments of $ 123.2 million.

For the nine months ended September 30, 2024, our cash used in operations was $ 119.8 million.

This includes an $ 18.4 million charge for delivery of narsoplimab drug substance.

In addition, we made a $ 21.2 million payment to repurchase $ 118.1 million of our 2026 Notes.

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

As of March 31, 2025, we had cash, cash equivalents and short-term investments of $ 52.4 million.

For the three months ended March 31, 2025, our cash used in operations was $ 35.8 million and included a net loss for the quarter of $ 33.5 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 September 30, 2024, and an expected repayment of a portion of our outstanding debt on or prior to November 2025, raises substantial doubt about our ability to continue as a going concern.

The recurring losses, in combination with our cash and investment balances as of March 31, 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 condensed 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.

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 of up to $ 150.0 million.

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.

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

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

Should it be necessary or determined to be strategically advantageous, we may also pursue public and private offerings of our equity securities, additional debt transactions/restructuring, 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.

On May 14, 2025, we completed the exchange (the “Convertible Note Exchange”) of $ 70.8 million of our 2026 Notes on a one-for-one basis for newly issued convertible senior notes maturing on June 15, 2029 (the “2029 Notes”).

The Convertible Note Exchange was conducted with a limited number of holders of the 2026 Notes pursuant to exchange agreements dated as of May 12, 2025.

On May 12, 2025, the Company entered into note conversion agreements (each, a “Note Conversion Agreement”) with two affiliated holders of the 2026 Notes to convert $ 10.0 million aggregate principal amount of 2026 Notes into shares of the Company’s common stock (the “Equitization Transaction”).

Under the terms of the Note Conversion Agreements, the holders will convert the equitized principal amount of the 2026 Notes in three equal tranches for a number of shares of common stock to be determined based in part on the closing price of the Company’s common stock on May 9, 2025 and in part based on the 20 -day volume-weighted average price applicable to each tranche conversion date, subject to a floor conversion price.

The Note Conversion Agreements provide that the final settlement will occur no later than September 15, 2025.

The Convertible Note Exchange reduced the aggregate principal balance of our 2026 Notes from $ 97.9 million to $ 27.1 million.

As a result of the reduced principal balance of the 2026 Notes, the Company will no longer be required to make a $ 20.0 million prepayment of the Term Loan outstanding under the Credit Agreement which otherwise would have been required to be paid in November 2025 to avoid accelerated maturity of the entire Term Loan balance (see “Note 6 — Debt”).

Upon completion of the Equitization Transaction, the aggregate principal balance of our 2026 Notes will be further reduced from $ 27.1 million to $ 17.1 million.

No new cash was received as a result of these transactions.

The accompanying condensed consolidated balance sheet as of March 31, 2025 reflects the reclassification from current to non-current on May 14, 2025 of the 2026 Notes that were acquired in the Convertible Note Exchange and that are subject to the Note Conversion Agreement.

To raise capital for our operations, we may also pursue public and private offerings of our equity securities, additional debt transactions or restructuring, 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 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 significantly negative impact on our financial condition.

For purposes of determining available capital resources, 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 November 13, 2025.

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

Subsequent to March 31, 2025, we received $ 3.5 million in net proceeds from sale of our common stock through the ATM facility.

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, any future royalty and/or milestone receipts are excluded.

We have taken steps to manage our operating expenses and reduce our projected cash requirements by delaying clinical trials and reducing selected research and development efforts.

Should it be necessary, we may determine to further reduce or delay these or other aspects of our operations and/or implement other restructuring activities.

The conditions described above, including the need to raise additional capital, 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 condensed 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 the OMIDRIA contract royalty asset valuation, the OMIDRIA royalty obligation valuation, stock-based compensation expense, and accruals for clinical trials and manufacturing of drug product.

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;

2 unchanged sentences

Segment Reporting

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

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 three months ended March 31, 2025, the Company has identified one operating and reportable segment.

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

Discontinued Operations

7 unchanged sentences

The OMIDRIA asset sale to Rayner qualifies as a discontinued operation and has been presented as such for all reporting periods presented.

The Company included information regarding cash flow from discontinued operations (See “Note 7 — Discontinued Operations – Sale of OMIDRIA”).

OMIDRIA Royalties, Milestones and Contract Royalty Assets

8 unchanged sentences

All royalties received from Rayner, other than royalties related to any sales outside the U.S.

and any royalties received after December 31, 2031, U.S.

are passed through directly to DRI and are accounted for as interest expense and a reduction of the OMIDRIA royalty obligation.

and any royalties received after December 31, 2031, are passed through directly to DRI and are accounted for as interest expense and a reduction of the OMIDRIA royalty obligation.

The amount recorded in discontinued operations in future periods will reflect interest earned on the outstanding OMIDRIA contract royalty asset at 11.0 % and any amounts we receive that are different from the expected royalties.

2 unchanged sentences

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, which was recorded as an “OMIDRIA royalty obligation” on our condensed consolidated balance sheet.

On February 1, 2024, we sold to DRI our remaining U.S.

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 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.

1 unchanged sentence

Interest expense is recorded in continuing operations.

To the extent our estimates of future royalties differ materially from previous estimates, we will adjust the carrying amount of the liability 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 a component of net income (loss) from continuing operations and is recorded as a non-cash adjustment to interest expense (see “Note 8 — OMIDRIA Royalty Obligation”).

Repurchase of 2026 Notes

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

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

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

To the extent our estimates of future royalties differ materially from previous estimates, we will adjust the carrying amount of the OMIDRIA royalty obligation to reflect 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.

This is reflected as a remeasurement adjustment recognized as non-cash interest expense, a component of net income (loss) from continuing operations (See “Note 8 — OMIDRIA Royalty Obligation”).

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

8 unchanged sentences

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

Stock-Based Compensation

Stock-based compensation expense is recognized for all share-based payments, including grants of stock option awards 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, risk-free rates, forfeiture rates and expected term.

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

Forfeiture expense is estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates.

Common Stock Repurchases

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

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

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

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

2024 Term Loan and Repurchase of 2026 Notes

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 repurchased by the Company and the $ 88.8 million aggregate repurchase price (consisting of the $ 67.1 million 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 condensed consolidated balance sheet instead of being recognized as a gain on early extinguishment of debt.

We amortize the premium as both a reduction of term debt in the condensed consolidated balance sheet and interest expense in the condensed consolidated statement of operations and comprehensive income (loss) over the duration of the term loan.

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

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.

Financial Instruments and Concentrations of Credit Risk

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

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

At times, our cash and cash equivalents balance held at a financial institution may exceed the federally insured limits.

Cash and cash equivalents, receivables, accounts payable and accrued liabilities, which are recorded at invoiced amount or cost, approximate fair value based on the short-term nature of these financial instruments.

The fair value of short-term investments is based on quoted market prices.

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

At times, our cash and cash equivalents balance held at financial institutions may exceed the federally insured limits.

To limit the credit risk, we invest our excess cash in high-quality securities such as money market mutual funds, certificates of deposit and U.S.

treasury bills.

The Company has not experienced any losses on its deposits of cash and cash equivalents.

Management believes that the Company is not currently exposed to significant credit risk as the Company’s short-term investments are held in custody at third-party financial institutions.

The Company’s investment policy limits investments to certain types of securities issued by the U.S.

government, its agencies and institutions with investment-grade credit ratings and places restrictions on maturities and concentration by type and issuer.

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

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

Recent Accounting Pronouncements

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 annual 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 ASU 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 annual 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.

In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments , which provides clarification on the accounting treatment of convertible debt settlements that occur under terms differing from those of the original instrument.

The amendments specify that if the settlement is considered an induced conversion, an entity must recognize an inducement expense at the offer acceptance date.

Conversely, if the settlement is treated as a debt extinguishment, an entity must recognize a gain or loss at the extinguishment date.

This ASU is effective for all entities for annual years beginning after December 15, 2025, including interim periods within those years, with early adoption permitted.

The Company is in the process of assessing the potential impact of this ASU on its debt accounting policies.

Note 3 — Net Loss Per Share

Basic net income (loss) per share (“Basic EPS”) is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period.

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

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

Potentially dilutive securities are as follows:

Our potential dilutive securities include common shares related to our stock options 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 because the effect would be anti-dilutive.

Potentially dilutive securities excluded from Diluted EPS are as follows:

Three Months Ended

Nine Months Ended

September 30,

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

2023 Notes convertible to common stock (3)

Outstanding options to purchase common stock

Outstanding restricted stock units (4)

Total potentially dilutive shares excluded from net loss per share

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

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

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

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

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

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 held in our name and are classified as short-term and held-to-maturity on the accompanying condensed consolidated balance sheets.

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

Interest and other income for the three months ended September 30, 2024 and September 30, 2023 consists primarily of interest earned of $ 1.8 million and $ 4.0 million, respectively.

Interest and other income for the nine months ended September 30, 2024 and September 30, 2023 consists primarily of interest earned of $ 7.1 million and $ 11.7 million, respectively.

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

Money market funds are classified as available-for-sale on the accompanying condensed consolidated balance sheets.

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

Interest and other income for the three months ended March 31, 2025 and March 31, 2024 consists primarily of interest earned of $ 0.7 million and $ 2.8 million, respectively.

The following tables summarize our investments:

September 30, 2024

March 31, 2025

Gross Unrealized

3 unchanged sentences

(In thousands)

government securities classified as short-term investments

Money-market funds classified as short-term investments

Total short-term investments

Certificate of deposit classified as non-current restricted investments

6 unchanged sentences

(In thousands)

government securities classified as short-term investments

Money-market funds classified as short-term investments

Total short-term investments

Certificate of deposit classified as non-current restricted investments

7 unchanged sentences

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

September 30, 2024

March 31, 2025

(In thousands)

government securities classified as short-term investments

Money-market funds classified as short-term investments

Total short-term investments

Certificate of deposit classified as non-current restricted investments

2 unchanged sentences

(In thousands)

government securities classified as short-term investments

Money-market funds classified as short-term investments

Total short-term investments

Certificate of deposit classified as non-current restricted investments

Total investments

Cash held in demand deposit accounts of $ 1.5 million and $ 7.1 million is excluded from our fair-value hierarchy disclosure as of September 30, 2024 and December 31, 2023, respectively.

Cash held in demand deposit accounts of $ 4.3 million and $ 3.4 million is excluded from our fair-value hierarchy disclosure as of March 31, 2025 and December 31, 2024, respectively.

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

3 unchanged sentences

The OMIDRIA contract royalty asset consists of the following:

September 30,

(In thousands)

4 unchanged sentences

Receivables consist of the following:

September 30,

(In thousands)

2 unchanged sentences

Total receivables

Other receivables of $ 1.4 million includes $ 1.1 million of royalties paid by Rayner representing escrowed funds in-transit to DRI and received on April 1, 2025.

These funds are also recorded as a current OMIDRIA royalty obligation during the quarter.

Property and Equipment, Net

Property and equipment, net consists of the following:

September 30,

(In thousands)

5 unchanged sentences

Total property and equipment, net

For the three months ended September 30, 2024 and 2023, depreciation and amortization expense was $ 0.2 million for both periods.

For the nine months ended September 30, 2024 and 2023, depreciation and amortization expense was $ 0.6 million and $ 0.7 million, respectively.

For the three months ended March 31, 2025 and 2024, depreciation and amortization expense was $ 0.3 million and $ 0.2 million, respectively.

Accrued Expenses

Accrued expenses consists of the following:

September 30,

Accrued expenses consist of the following:

(In thousands)

Clinical trials

Employee compensation

Clinical trials

Contract research and development

Interest payable

Consulting and professional fees

Interest payable

Other accrued expenses

2 unchanged sentences

2024 Secured Term Loan

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

The Delayed Draw Term Loan may be drawn once in full 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 November 13, 2024, no such additional exchanges have occurred.

On June 3, 2024, we entered into a Credit Agreement with the Lenders, pursuant to which we have a Term Loan of $ 67.1 million.

The Credit Agreement also provides for a Delayed Draw Term Loan of $ 25.0 million conditioned on the receipt of FDA approval of narsoplimab for TA-TMA within 30 days of a draw notice delivered no later than June 3, 2025, but we do not expect to meet this condition based on the September 25, 2025 target date for FDA action on our narsoplimab BLA.

At any time prior to November 1, 2025, 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 Term Loan and the Delayed Draw Term Loan, the “Loans”).

As of May 15, 2025, no such additional exchanges for additional term loans have occurred.

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

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

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

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

In connection with our entry into the Credit Agreement, we used the Term Loan 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 consideration paid at closing 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 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 condensed 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 condensed consolidated balance sheets and interest expense in the condensed consolidated statement of operations and comprehensive loss over the duration of the term loan.

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

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

September 30,

The amount outstanding on the Term Loan is as follows:

(In thousands)

1 unchanged sentence

Unamortized debt premium, net of issuance costs and other

Total long-term debt

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 3.00 % floor, plus 8.75 % per annum, payable quarterly from the closing date.

As of September 30, 2024, the contractual interest rate on the Loans was 13.87 %.

As of March 31, 2025, the contractual interest rate on the Loans was 13.17 %.

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.

1 unchanged sentence

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 1.52 %.

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

Three Months Ended

Nine Months Ended

September 30, 2024

Due to the premium amortization on the Term Loan, interest expense is currently being recognized at an implied effective interest rate of 1.43 %.

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

(In thousands)

Contractual interest expense

Amortization of premium and debt issuance costs

Amortization of debt issuance costs

Total interest expense

1 unchanged sentence

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.

As a result of the Convertible Note Exchange completed on May 14, 2025, the prepayment requirement is no longer applicable because the outstanding principal amount under the 2026 Notes was reduced below $ 38.5 million.

As a result, the accompanying condensed consolidated balance sheet as of March 31, 2025 reflects the entire Term Loan balance of $ 67.1 million as a long-term liability.

(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.

9 unchanged sentences

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

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;

1 unchanged sentence

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 September 30, 2024, the Company was in compliance with the covenants under the Credit Agreement.

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

As of March 31, 2025, the Company was in compliance with the covenants under the Credit Agreement.

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 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 September 30, 2024, the approximate fair value of our Loan obligations was $ 69.5 million.

As of March 31, 2025 and December 31, 2024, the approximate fair value of our Loan obligations was $ 70.2 million and $ 69.5 million, respectively.

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

2026 Unsecured Convertible Senior Notes

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

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

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Contractual interest expense

Amortization of debt issuance costs

2026 Unsecured Convertible Senior Notes

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

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

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

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

Amounts outstanding on our 2026 Notes are as follows:

September 30,

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

On May 14, 2025, we completed the Convertible Note Exchange in which we exchanged $ 70.8 million in aggregate principal of our 2026 Notes for a like principal amount of our 2029 Notes.

The Convertible Note Exchange reduced the principal balance of our 2026 Notes from $ 97.9 million to $ 27.1 million.

In addition, on May 12, 2025, we entered into the Equitization Transaction, which will result in conversion of an additional $ 10.0 million aggregate principal amount of our 2026 Notes into shares of the Company's common stock, to be delivered in three approximately equal tranches on or prior to September 15, 2025.

Amounts outstanding on our 2026 Notes as of March 31, 2025 and December 31, 2024 are as follows:

(In thousands)

Principal amount

Principal amount not subject to the Convertible Note Exchange

Unamortized debt issuance costs

Total 2026 Notes, net, classified as current

Principal amount subject to the Convertible Note Exchange

Unamortized debt issuance costs

Total 2026 Notes, net, classified as noncurrent

Total unsecured convertible senior notes, net

1 unchanged sentence

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 at the end of the reporting period.

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

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

Unamortized debt issuance costs of $ 0.8 million as of September 30, 2024 are amortized to interest expense at an effective interest rate of 5.89 % over the remaining term.

Unamortized debt issuance costs represent an allocation of the $ 0.5 million of debt issuance costs under the original 2026 Notes as of March 31, 2025.

We have amortized interest expense on the 2026 Notes at an effective interest rate of 5.89 %.

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

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Contractual interest expense

1 unchanged sentence

Total interest expense

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

The 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.

5 unchanged sentences

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 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.

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 50 th 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.

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.

5 unchanged sentences

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

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

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

As of March 31, 2025, 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.

1 unchanged sentence

Minimum Commitments

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

As of March 31, 2025, the most probable principal payments on our convertible notes and the Term Loan are as follows and reflects the impact of refinancing our 2026 Notes from short-term to long-term:

(In thousands)

1 unchanged sentence

Total principal payments

Unamortized premiums, discounts and issuance costs and other

Unamortized premiums, discounts, issuance costs and other

Carrying value of debt

1 unchanged sentence

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

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

The milestone payment was received in February 2023.

Net income from discontinued operations is as follows:

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

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

1 unchanged sentence

Remeasurement adjustments

Other income, net

Other loss, net

Net income from discontinued operations, net of tax

4 unchanged sentences

Remeasurement adjustments

OMIDRIA contract royalty asset at September 30, 2024

OMIDRIA contract royalty asset at March 31, 2025

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

Cash flow from discontinued operations is as follows:

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

Net cash provided by discontinued operations from operating activities

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.

Net cash provided by discontinued operations primarily represents royalties received from Rayner.

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

through December 31, 2031 are remitted by Rayner to DRI via an escrow arrangement.

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

1 unchanged sentence

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

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

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

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

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

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

In February 2024, Omeros and DRI expanded their royalty purchase agreement under the Amendment, resulting 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.

4 unchanged sentences

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 following schedule is a roll forward of the OMIDRIA royalty obligation (in thousands):

The changes in the OMIDRIA royalty obligation during the three months ended March 31, 2025 are as follows (in thousands):

Balance at December 31, 2024

Additional proceeds

Non-cash interest

Principal payments

Balance at September 30, 2024

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

The catch-up method requires that we adjust the carrying amount to match the present value of revised estimated cash flows of Rayner’s U.S.

net sales of OMIDRIA.

We discounted the OMIDRIA royalty obligation at an implied effective interest rate of 10.27 %.

Balance at March 31, 2025

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

As of September 30, 2024, the approximate fair value of our obligation was $ 213.4 million .

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

For the three months ended September 30, 2024 and 2023, we incurred interest expense of $ 2.2 million and $ 3.0 million, respectively.

For the nine months ended September 30, 2024 and 2023, we incurred interest expense of $ 13.7 million and $ 8.9 million, respectively.

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

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 measurement date.

As of March 31, 2025 and December 31, 2024, the approximate fair value of our obligation was $ 204.9 million and $ 209.7 million, respectively .

For the three months ended March 31, 2025 and 2024, we incurred interest expense of $ 1.8 million and $ 5.0 million, respectively.

As of March 31, 2025, the expected scheduled principal and interest payments (based on an implied effective interest rate of 10.27 %) are as follows:

(In thousands)

Total scheduled payments

Note 9 — Leases

Note 9 — Lease Liabilities

We have an operating lease for our office and laboratory facilities with an initial term that ends in November 2027 and two options to extend the lease term by an additional five years each.

Restricted investments of $ 1.1 million represent the security deposit on our office and laboratory facilities.

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.

Supplemental lease information is as follows:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

4 unchanged sentences

Net lease cost

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

Nine Months Ended

September 30,

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

Three Months Ended

(In thousands)

4 unchanged sentences

Good and Service Contracts

We have various agreements with third parties that collectively require payment of termination fees totaling $ 5.6 million as of September 30, 2024 if we cancel the work within specific time frames, either prior to commencing or during performance of the contracted services.

We have various agreements with third parties that collectively require payment of termination fees totaling $ 4.4 million as of March 31, 2025 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

1 unchanged sentence

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

For the three and nine months ended September 30, 2024, development milestone expenses were not significant.

In the three and nine months ended September 30, 2023, we paid a third-party licensor $ 5.0 million in connection with achievement of a development milestone in our zaltenibart program.

Note 11 — Shareholders ’ Equity (Deficit)

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

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

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

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

For the three months ended March 31, 2025 and 2024, development milestone expenses were not significant.

Note 11 — Shareholders ’ Deficit

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

Subsequent to March 31, 2025, we sold 0.5 million shares of common stock pursuant to our ATM program, generating net proceeds of $ 3.5 million at an average price per share of $ 6.94 .

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.

From inception through its termination in June 2024, we repurchased and retired 5.0 million shares at an average price of $ 3.30 per share.

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

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

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

Note 12 — Stock-Based Compensation

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Continuing operations

1 unchanged sentence

Selling, general and administrative

Total stock-based compensation in continuing operations

Discontinued operations

Total stock-based compensation

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30, 2024

March 31, 2025

Estimated weighted-average fair value

13 unchanged sentences

Balance at December 31, 2024

Balance at September 30, 2024

Vested and expected to vest at September 30, 2024

Exercisable at September 30, 2024

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

Of the 18.1 million common stock options outstanding as of September 30, 2024, 9.8 million have an exercise price per share above $ 3.97 , which was the closing price of our stock on the Nasdaq exchange on September 30, 2024.

As of September 30, 2024, there were 6.0 million unvested options outstanding that will vest over a weighted-average period of 2.4 years.

Balance at March 31, 2025

Vested and expected to vest at March 31, 2025

Exercisable at March 31, 2025

Of the 16.6 million common stock options outstanding as of March 31, 2025, 8.2 million have an exercise price per share above $ 8.22 , which was the closing price of our stock on the Nasdaq exchange on March 31, 2025.

As of March 31, 2025, there were 4.8 million unvested options outstanding that will vest over a weighted-average period of 2.4 years.

The total estimated compensation expense yet to be recognized on outstanding options is $ 10.4 million.

As of September 30, 2024, the total number of shares of common stock available for grant was 5.9 million.

As of October 29, 2024, the total number of shares of common stock available for grant increased to 7.1 million due to approximately 1.2 million shares of common stock expiring and returning to our stock option plan for reissuance.

As of March 31, 2025, the total number of shares of common stock available for grant was 6.9 million.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10 ‑ Q and with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on April 1, 2024.

In addition, you should read the section entitled “ Risk Factors ” and the disclaimers regarding forward-looking statements included herein and in our Annual Report on Form 10-K for the year ended December 31, 2024, for a discussion of important factors that could cause our results to differ materially from the results described in or implied by any forward-looking statements contained herein.

Omeros Corporation (“Omeros,” the “Company” or “we”) is a clinical-stage biopharmaceutical company committed to discovering, developing and commercializing first-in-class 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.

We are a clinical-stage biopharmaceutical company committed to discovering, developing and commercializing first-in-class 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.

Complement Inhibitor Programs

6 unchanged sentences

Lectin Pathway / MASP 2

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

MASP-2 is a novel pro-inflammatory protein target that is the effector enzyme of the lectin pathway and is required for the function of this pathway.

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

2 unchanged sentences

The lead product candidate in our pipeline of complement-targeted therapeutics is narsoplimab (OMS721), a proprietary, patented human monoclonal antibody targeting MASP-2, the key activator of the lectin pathway of complement.

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

In late 2021, FDA issued a complete response letter (“CRL”) with respect to the BLA in which the agency 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.

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

Additional sensitivity analyses were quickly incorporated into the plan and sent back to FDA.

FDA’s reply is expected in November 2024.

We have no other information requests pending and are not aware of any other impediment to resubmitting our narsoplimab BLA.

After receiving FDA’s response and, assuming general alignment on the revised plan, we intend to proceed with conducting the primary and secondary efficacy analyses.

If the results support resubmission, then we intend to finalize and resubmit our BLA as soon as possible.

We are currently unable to provide a specific estimate of when or if we will resubmit the BLA or, subsequently, FDA’s timing for a decision regarding approval.

Even if the results of the efficacy analysis are favorable and FDA accepts our resubmitted BLA for review, there can be no guarantee that FDA will approve narsoplimab for TA-TMA.

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

We also continue to explore the mounting evidence that MASP-2 and the lectin pathway are important drivers of post-acute sequelae SARS-CoV-2 (“PASC”), commonly known as long COVID, and have developed an assay platform to identify hyperactivation of the lectin pathway for use in severe acute COVID and PASC as well as in ARDS.

Lectin pathway hyperactivation is correlated with COVID-19-related-ARDS and may be involved in the pathogenesis of PASC and of ARDS, including H1N1- and H5N1-related ARDS.

As such, the assay may be useful to identify patients who are at greatest risk of hospitalization and/or mortality as well as those who are particularly amenable to lectin pathway inhibition therapy for the treatment of one or more of these conditions.

We continue to validate the clinical correlation of lectin pathway hyperactivation with COVID-19, ARDS and PASC and to engage in discussions with potential partners as well as with representatives of the U.S.

government regarding potential opportunities to obtain funding and advance development of our potential diagnostic and/or therapeutic product candidates for COVID-19, PASC or other infectious diseases.

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

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

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

Results of these studies confirmed by pharmacokinetic and pharmacodynamic modeling and dose simulation, support once-quarterly, low-volume dosing, administered either intravenously or subcutaneously.

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

We continue to evaluate several potential indications for which Phase 2 clinical development of OMS1029 could be pursued, depending on resource availability.

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

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

We also preparing a European marketing authorization application (MAA) for narsoplimab in TA-TMA, which is targeted for submission to the European Medicines Agency during the second quarter of 2025.

Development efforts in our narsoplimab program have also been directed to COVID-19, acute respiratory distress syndrome and post-acute sequelae SARS-CoV-2, commonly known as long COVID.

Our pipeline also includes OMS1029, our long-acting antibody targeting MASP-2 which we expect will be well-suited to indications requiring long-term, chronic administration.

In addition, we have a program focused on development of an orally administered small-molecule MASP-2 inhibitor.

In the first quarter of 2025 we determined to pause most development activities in our OMS1029 and MASP-2 small-molecule development programs to preserve available capital for narsoplimab and other prioritized programs.

Alternative Pathway / MASP-3

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

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

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

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

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

Wehave three ongoing clinical trials evaluating zaltenibart for PNH.

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

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

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

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

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

With these data, along with data from our Phase 1 study in healthy subjects evaluating higher dose levels than were used in our first completed Phase 1 study, we have now finalized selection of the zaltenibart dose for Phase 3 development.

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

The last patient visit in our Phase 2 trial evaluating two doses of zaltenibart in PNH patients who have had an unsatisfactory response to the C5 inhibitor ravulizumab occurred in October 2024.

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

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

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

All 13 enrolled patients were included in the interim analysis.

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

Data from the monotherapy portion of the trial show that clinically meaningful improvements in hemoglobin levels and absolute reticulocyte counts were sustained following transition to zaltenibart monotherapy and prevented both intravascular and extravascular hemolysis.

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

Full details from interim analysis in the monotherapy portion of the trial will be presented at the annual meeting of the American Society of Hematology in December 2024.

Our third Phase 2 study is an open-label extension study to assess the long-term efficacy and safety of zaltenibart in patients with PNH.

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

Data from this study are expected to contribute to any future marketing applications for zaltenibart in the treatment of PNH.

As with our Phase 2 program, our Phase 3 development program in PNH is anticipated to include both a “switch-over” study and a study treating patients who are not receiving a complement-inhibitor.

In September and October 2024, we met with FDA and European regulators to discuss further details of our planned Phase 3 program for zaltenibart in PNH.

With both regulatory agencies, we discussed data developed from our clinical and nonclinical programs to date and our Phase 3 development plans for zaltenibart in PNH.

Both regulatory agencies agreed with the design of our proposed studies, as well as our dose-finding strategy, and provided other valuable feedback to inform our development plans.

The Phase 3 protocols are being finalized and we expect to open enrollment in our Phase 3 program evaluating zaltenibart in PNH in early 2025.

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

Notably, the relevance of the alternative pathway to C3G has been clinically validated in two Phase 3 trials with other inhibitors of the alternative pathway that reported positive results in the treatment of C3G.

Sites for the zaltenibart Phase 2 trial in C3G are open to enrollment in multiple countries and dosing in the study is ongoing.

We are targeting to initiate Phase 3 trials for C3G in the first half of 2025.

In October, we announced that zaltenibart received a rare pediatric disease designation from FDA for the treatment of C3G.

Companies awarded a rare pediatric disease designation are eligible to receive a rare pediatric disease priority review voucher from FDA when the designated drug's first approval is for the associated indication in the pediatric population and certain other criteria are met.

Absent expected legislative reauthorization and extension of the priority review voucher program for rare pediatric disease, one of the criteria under current law is that the drug be approved by September 30, 2026.

The holder of a priority review voucher is entitled to obtain a priority review by FDA of either a new drug application or a biologics license application for a different product and/or indication, reducing the review time and accelerating any grant of approval and subsequent market entry by at least four months.

The voucher may be used by the original recipient, or it can be sold for use by another company.

Clinical development of zaltenibart is currently focused on PNH and C3G.

We have substantially completed two Phase 2 clinical trials evaluating zaltenibart 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 also have a small, ongoing Phase 2 study evaluating zaltenibart in C3G.

We began initiating clinical trial sites in our Phase 3 program for zaltenibart in PNH during the first quarter of 2025;

however, based on considerations of capital availability and the anticipated ramp up in spending on those trials, we have determined temporarily to pause our Phase 3 clinical development program for zaltenibart in this indication to prioritize the use of our available capital to other programs.

We are working with our vendors and investigators to ensure that these studies can be restarted after securing capital and allocating it to the program with as little disruption to the timeline as possible.

PDE7 Inhibitor Programs

Our 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, and requested by NIDA to develop our lead orally administered PDE7 inhibitor compound, for which we have successfully completed a Phase 1 study, for the treatment of cocaine use disorder (“CUD”).

NIDA awarded the grant to us for a total of $6.69 million over three years, of which we have claimed and received $1.0 million of funding to date and recognized $0.8 million into Other Income in our condensed consolidated statement of operations and comprehensive loss.

The preclinical study is intended to provide the toxicology data necessary to support the human study of OMS527 in CUD.

The toxicology study is underway and is expected to be completed by the end of 2024.

Assuming positive results, we expect enrollment in the study evaluating OMS527 in adults patients with CUD to begin in 2025, also fully funded by NIDA.

Oncology Platform

Building on our understanding of immunity, both innate, or complement-mediated, and adaptive, meaning B-cells as well as CD4 and CD8 T-cells, the objective of our oncology program is to move beyond existing targeted biologics, such as antibody-drug conjugates and radioligands, and beyond immuno-therapies, like checkpoint inhibitors and CAR-T.

To achieve this, we are developing a portfolio of signaling-driven immunomodulators, oncotoxins, and an adoptive T-cell technology combined with an immunostimulator that, unlike other cellular therapy approaches requires no cellular engineering, reduces manufacturing costs and timelines, and maintains an enhanced anti-cancer immune response through subsequent repetitive and simple therapeutic administrations.

We believe that the in vitro and in vivo study data generated to date support the potential of our novel therapeutic programs to deliver effective and safe cancer therapies that can overcome the shortcomings of currently marketed therapies by:

● treating both hematological and solid tumors;

● targeting both cell-surface and intracellular cancer antigens;

● increasing levels of CD4 and CD8 cancer antigen-specific effector and memory cells.

Our oncology development program is operating in stealth mode as we continue to confirm our results and to generate new data which we expect will contribute to our intellectual property position.

We expect to share additional details regarding our oncology programs in coming months, after the relevant intellectual property filings have been completed.

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

With NIDA funding, we successfully completed preclinical cocaine interaction/toxicology studies to assess safety of the OMS527 compound when co-administered with cocaine.

Based on the successful outcome of the preclinical studies, we have initiated, and NIDA has confirmed availability of grant funding for, an in-patient, placebo-controlled clinical study evaluating the safety and effectiveness of OMS527 in adults with CUD who receive concurrent intravenous cocaine.

Organizational and regulatory activities necessary to begin the study evaluating OMS527 in adult patients with CUD is in progress with enrollment expected to begin in 2025 and data anticipated to become available late this year or early 2026.

Preclinical Programs - Oncology Platform

We are developing a portfolio of signaling-driven immunomodulators, oncotoxins, and an adoptive T-cell technology combined with an immunostimulator that, unlike other cellular therapy approaches requires no cellular engineering, may reduce manufacturing costs and timelines, and may maintain an enhanced anti-cancer immune response through subsequent repetitive and simple therapeutic administrations.

We continue on a limited basis to progress pre-clinical studies within our novel oncology program, including IND-enabling studies in our program to develop novel, proprietary large molecule therapeutics designed to target and kill only dividing cancer cells.

Acute myeloid leukemia (“AML”) is the lead indication for development in this program, which we refer to as OncotoX-AML.

In preclinical models both in vivo and in vitro , our potential AML therapeutic has consistently demonstrated superior efficacy to current AML standard of care treatments and has been well-tolerated in preliminary, preclinical tolerability studies.

Our OncotoX-AML therapeutic also shows broad potential application across AML regardless of genetic mutation, including TP53, NPM1, KMT2a and FLT3.

In April 2025, we established the Omeros Oncology Clinical Steering Committee to help advance our OncotoX-AML program.

The clinical steering committee is composed of leaders in AML treatment and research at the premier cancer centers across the United States.

These experts in the treatment of AML are expected to help guide clinical development of our potential AML therapeutic.

IND-enabling work is ongoing with an estimated timeline to clinical entry of 18-24 months.

We continue to confirm our results and to generate new data which we expect will contribute to our intellectual property position.

OMIDRIA Sale and Royalty Monetization Transactions

4 unchanged sentences

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

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

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

We received the Milestone Payment together with accrued interest in February 2023.

Under the Asset Purchase Agreement, the occurrence of the Milestone Event triggered a reduction in the U.S.

royalty rate from 50% to 30% on OMIDRIA net sales until the expiration or termination of the last issued and unexpired U.S.

As contemplated by the Asset Purchase Agreement, in December 2022, we achieved a milestone event upon the establishment of separate payment for OMIDRIA for a continuous period of at least four years when furnished in the ambulatory surgery center setting.

The achievement of this milestone event resulted in a reduction of our royalty rate applicable to U.S.

net sales of OMIDRIA 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.

Upon the occurrence of certain events described in the Asset Purchase Agreement, including during any specific period in which OMIDRIA is no longer eligible for certain separate payment (i.e., becomes included in the packaged payment rate for the surgical procedure) under Medicare Part B, the U.S.

Upon the occurrence of certain events described in the Asset Purchase Agreement, including during any specific period in which OMIDRIA is no longer eligible for separate payment (i.e., becomes included in the packaged payment rate for the surgical procedure) under Medicare Part B, or in certain circumstances involving entry of generic competition for OMIDRIA, the U.S.

base royalty rate would be further reduced to 10%.

Pursuant to legislation enacted in late 2022, we expect separate payment for OMIDRIA under Medicare Part B to extend until at least January 1, 2028.

As a result of the OMIDRIA divestiture, the results of OMIDRIA activities are classified as discontinued operations in our condensed consolidated statements of operations and comprehensive loss and excluded from continuing operations for all periods presented (See “Note 7 — Discontinued Operations – Sale of OMIDRIA” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q).

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

As a result of the OMIDRIA divestiture, we recorded an OMIDRIA contract royalty asset on our balance sheet.

The results of OMIDRIA activities are classified as discontinued operations in our condensed consolidated statements of operations and comprehensive income (loss) and excluded from continuing operations for all periods presented.

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

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

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

The liability is being amortized over the term of the arrangement using the implied effective interest rate of 10.27%.

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

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

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

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

On February 1, 2024, we sold an expanded interest in our future 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”) eliminated 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.

DRI is entitled to payment only to the extent of royalty payments that are payable on 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 the OMIDRIA royalties.

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

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

To date, international royalties have not been significant, but are expected to increase in 2025.

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

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

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

net sales of OMIDRIA.

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

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

as well as royalties on global net sales of OMIDRIA payable from and after December 31, 2031, including royalties on U.S.

OMIDRIA net sales.

To date, international royalties have not been significant.

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

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

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

2024 Term Loan and Repurchase of 2026 Notes

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

The Credit Agreement provides for a senior secured term loan facility initially of up to $92.1 million consisting of (i) an initial term loan of $67.1 million (the “Initial Term Loan”), which was fully funded on the Closing Date, and (ii) a $25.0 million delayed draw term loan (the “Delayed Draw Term Loan”), which may be drawn once in full 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.

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

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

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

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

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

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

In July 2024, we paid $0.6 million in post-closing adjustments to certain Lenders.

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

The Credit Agreement provides for a senior secured term loan facility initially of up to $92.1 million consisting of (i) the term loan of $67.1 million (the “Term Loan”), which was fully funded on the Closing Date, and (ii) a $25.0 million delayed draw term loan (the “Delayed Draw Term Loan”), which may be drawn once in full 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.

We do not expect to meet the conditions required to access the Delayed Draw Term Loan based on the September 25, 2025 target date for FDA action assigned to the BLA for narsoplimab.

In 2024, we used the $67.1 million Term Loan, along with $21.7 million of cash on hand to repurchase from the Lenders $118.1 million aggregate principal amount of the Company's existing 5.25% convertible senior notes due on February 15, 2026 (the “2026 Notes”, and such repurchase the “2026 Note Repurchase Transaction”).

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

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

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

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

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

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

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

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

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

The Credit Agreement contains certain customary default provisions, representations and warranties and affirmative and negative covenants, including a covenant for the Credit Parties to maintain at all times unrestricted cash, 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;

1 unchanged sentence

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

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

The Loans accrue interest at an adjusted term secured overnight financing rate, (“adjusted term SOFR”) (with a 3.00% floor) plus 8.75% per annum, payable quarterly.

As of March 31, 2025, the contractual interest rate on the Term Loan was 13.17%.

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

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

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

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

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

The Credit Agreement has a scheduled maturity date of June 3, 2028.

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

1 unchanged sentence

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

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

Mandatory prepayments are also required:

2 unchanged sentences

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

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

Convertible Note Exchange and Equitization Transaction

In May 2025, we completed the exchange of $70.8 million of our 2026 Notes on a one-for-one basis for newly issued convertible senior notes maturing on June 15, 2029 (the “Convertible Note Exchange”).

In addition, the Company entered into note conversion agreements (each, a “Note Conversion Agreement”) with two affiliated holders of the 2026 Notes to convert $10.0 million aggregate principal amount of 2026 Notes into shares of the Company’s common stock (the “Equitization Transaction”).

Under the terms of the Note Conversion Agreements, the holders will convert the principal amount of the 2026 Notes in three equal tranches for a number of shares of common stock to be determined based in part on the closing price of the Company’s common stock on May 9, 2025 and in part based on the 20-day volume-weighted average price applicable to each tranche conversion date, subject to a floor conversion price.

The Note Conversion Agreements provide that conversion of the entire $10.0 million principal amount of 2026 Notes will be completed no later than September 15, 2025.

The Convertible Note Exchange reduced the aggregate principal balance of our 2026 Notes from $97.9 million to $27.1 million.

Upon completion of the Equitization Transaction, the aggregate principal balance of our 2026 Notes will have been further reduced from $27.1 million to $17.1 million.

As a result of the reduced principal balance of the 2026 Notes, the Company will no longer be required to make a $20.0 million prepayment of the Term Loan outstanding under the Credit Agreement.

The prepayment otherwise would have been required to be paid in November 2025 to avoid accelerated maturity of the entire Term Loan balance.

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

Financial Summary

Our loss for the three and nine months ended September 30, 2024 was $32.2 million and $125.5 million, respectively.

As of September 30, 2024, we had cash, cash equivalents and short-term investments of $123.2 million available to fund operations and to service debt.

As of March 31, 2025, we had cash, cash equivalents and short-term investments of $52.4 million available to fund operations and to service debt.

Our loss for the three months ended March 31, 2025 and 2024 was $33.5 million and $37.2 million, respectively.

For the three months ended March 31, 2025, our cash used in operations was $35.8 million and included a net loss for the year of $33.5 million.

Results of Operations

11 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

2 unchanged sentences

Clinical research and development:

MASP-2 program - OMS721 (narsoplimab)

MASP-3 program - OMS906 (zaltenibart)

MASP-2 program - OMS1029

MASP-2 program - OMS721 (narsoplimab)

MASP-2 program - OMS1029 and other

Total clinical research and development

4 unchanged sentences

Total research and development expenses

For the three months ended September 30, 2024, clinical research and development expenses decreased $8.5 million compared to the prior year quarter primarily due to the wind down of our IgA nephropathy program following analysis of our Phase 3 clinical trial results.

In addition, in the prior year quarter, we paid a third-party licensor $5.0 million in connection with achievement of a development milestone in our zaltenibart program.

For the nine months ended September 30, 2024, clinical research and development expenses increased $6.5 million compared to the same period in the prior year primarily due to increased narsoplimab drug substance manufacturing and zaltenibart clinical research costs, partially offset by decreased costs due to the closeout of our IgA nephropathy program and payment in the prior year to a third-party licensor of the above-mentioned zaltenibart achievement milestone.

Preclinical research and development costs increased $1.5 million for the nine months ended September 30, 2024 primarily due to increased expenses associated with our immune-oncology platforms.

Internal overhead and other expenses increased $2.8 million for the nine months ended September 30, 2024 primarily due to additional employee related costs and having received an Employee Retention Credit in the prior year that was recorded as an offset to expense.

Stock-based compensation expenses decreased $0.2 million and $0.6 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in the prior year, primarily due to the valuation and timing of the vesting of employee stock options.

We expect research and development expenses in the fourth quarter of 2024 to be similar to those in the third quarter of this year.

For the three months ended March 31, 2025, clinical research and development expenses decreased $3.0 million compared to the prior year quarter primarily due to the winding down of our IgA nephropathy program following analysis of our Phase 3 clinical trial results and reduction in spend on our OMS1029 program.

These costs were offset by increased PNH clinical development costs.

We expect research and development expenses, exclusive of any one-time restructuring expenses, in the second quarter of 2025 to be lower than those in the first quarter of this year due to a pause in our two Phase 3 clinical trials for zaltenibart and reductions in development activities across certain other programs.

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

6 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

3 unchanged sentences

Total selling, general and administrative expenses

For the three and nine months ended September 30, 2024, selling, general and administrative expenses, excluding stock-based compensation expense, decreased $4.6 million and $0.9 million, respectively, as compared to the same periods in the prior year.

The decreases were primarily due to a non-recurring employee compensation expense in the prior year period and reduced marketing spend in the current year associated with the closeout of our IGA nephropathy program.

For the nine months ended September 30, 2024, these decreases were partially offset by additional spend on legal patents.

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

We expect selling, general and administrative expenses, exclusive of any one-time restructuring expenses, in the second quarter of 2025 to be comparable to those in the first quarter of this year.

Interest Expense

Interest expense is comprised of contractual cash and accrued interest on our 2026 Notes and Term Loan.

In addition, we record pass through interest on the OMIDRIA royalty obligation, non-cash interest comprised of remeasurement adjustments taken on our OMIDRIA royalty obligation and amortization of debt discount or premiums on our notes and term debt.

Interest expense, net of premiums, discounts, issuance costs and remeasurement adjustments is shown below:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Interest expense

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

Interest expense for the three and nine months ended September 30, 2024 decreased $3.9 million and $2.3 million, respectively, primarily due to retirement at maturity in November 2023 of our 6.25% convertible senior notes, which had a par value of $95.0 million.

For the nine months ended September 30, 2024, interest expense also decreased due to the partial repurchase of our 2026 Notes in December 2023 and June 2024, which had a collective par value of $127.2 million.

The decrease was partially offset by an increase in interest expense related to the OMIDRIA Royalty Obligation with DRI and interest under our Credit Agreement.

We expect that interest expense for the fourth quarter of 2024 will increase from the third quarter due to the higher interest associated with the OMIDRIA Royalty Obligation.

Contractual interest expense

Amortization of debt discount and issuance costs

Interest expense on 2026 Notes

OMIDRIA royalty obligation

Pass through interest remitted to administrative agent

Non-cash remeasurement adjustment

Interest expense on OMIDRIA royalty obligation

2024 Term Loan

Contractual interest expense

Amortization of debt premium and issuance costs

Interest expense on 2024 Term Loan

Finance leases and other

Total interest expense

Contractual interest expense is comprised of cash interest paid during the year and the net change in accrued interest.

Interest on our OMIDRIA royalty obligation is calculated under the effective interest method and represents a portion of the royalties remitted by Rayner to our administrative agent, Wilmington Savings Fund Society, FSB, along with principal.

Pass through interest paid to DRI is offset by non-cash remeasurement adjustments taken to properly reflect the OMIDRIA royalty obligation for changes in probable cash flows on our future expected Rayner royalties.

Debt discounts on the 2026 Notes are accretive whereas the unrealized gain on the 2026 Note Repurchase Transaction is treated as a premium on the Term Loan and deducted from contractual interest expense.

For the three months ended March 31, 2025, interest expense decreased $4.6 million compared to the same period in 2024.

This decrease was primarily due to (i) non-cash remeasurement costs of our OMIDRIA royalty obligation to reflect the change in the future expected OMIDRIA cash flows from Rayner and (ii) decreased contractual interest expense on our 2026 Notes due to repurchasing $118.1 million of principal amount outstanding (approximately 75% of par value) in the 2026 Note Repurchase Transaction.

These expenses were offset by an increase in pass through interest remitted to DRI through our administrative agent, resulting from DRI purchasing an expanded interest in all U.S.

OMIDRIA royalties through 2031 for $115.5 million in February 2024, which consequentially increased the OMIDRIA royalty obligation by the same amount in the prior year.

For further information see “Note 6 — Debt” and “Note 8 – OMIDRIA Royalty Obligation” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

We expect that interest expense for the second quarter of 2025 will be higher compared to the first quarter, under the assumption that there is no remeasurement adjustment to the OMIDRIA royalty obligation.

Interest and Other Income

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Interest and other income

Interest and other income decreased $2.1 million and $3.9 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023 primarily due to holding a lower average cash and investment balance than in the prior year.

Included with other income for the current year is our grant from NIDA for which we have recognized $0.8 million in the nine months ended September 30, 2024.

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

Interest and other income decreased $2.4 million for the three months ended March 31, 2025 as compared to the same period in 2024 primarily due to holding a lower average cash and investment balance than in the prior year period.

We expect interest and other income for the second quarter of 2025 to be lower compared to those in the first quarter of this year due to lower average cash and investment balances.

Discontinued operations and the OMIDRIA contract royalty asset

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

1 unchanged sentence

Remeasurement adjustments

Other income, net

Other loss, net

Net income from discontinued operations, net of tax

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

The $0.5 million and $1.3 million increase in interest earned for the three and nine months ended September 30, 2024, respectively, were due to a higher OMIDRIA contract royalty asset balance in 2024 than during the same periods in 2023.

The increased balance in the OMIDRIA contract royalty asset resulted from periodic remeasurements made during 2023 and 2024.

For the three and nine months ended September 30, 2024, remeasurement adjustments decreased $9.4 million and $7.5 million, respectively.

The decreases reflect a reduced rate of increase in the estimated future royalty payments in 2024 than in 2023.

The $2.6 million decrease in net income from discontinued operations is primarily due to lower royalties earned in the first quarter of 2025 compared to the first quarter of 2024, which resulted in a lower remeasurement adjustment.

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

3 unchanged sentences

Remeasurement adjustments

OMIDRIA contract royalty asset at September 30, 2024

OMIDRIA contract royalty asset at March 31, 2025

Financial Condition – Liquidity and Capital Resources

As of September 30, 2024, we had cash, cash equivalents and short-term investments of $123.2 million.

Our loss for the three and nine months ended September 30, 2024 was $32.2 million and $125.5 million, respectively.

Cash used in operations for the nine months ended September 30, 2024 was $119.8 million, which includes an $18.4 million charge for delivery of narsoplimab drug substance and a $21.2 million payment related to our 2026 Note Repurchase Transaction.

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

As of March 31, 2025, we had cash, cash equivalents and short-term investments of $52.4 million.

For the three months ended March 31, 2025, our cash used in operations was $35.8 million and included a net loss for the quarter of $33.5 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.

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 September 30, 2024, and an expected repayment of a portion of our outstanding debt on or prior to November 2025, raise substantial doubt about our ability to continue as a going concern for the twelve-month period ending November 13, 2025.

The recurring losses, in combination with our cash and investment balances as of March 31, 2025, along with the maturity of our remaining 2026 Notes on February 15, 2026, raise substantial doubt about our ability to continue as a going concern through one year from the issuance of the Company's condensed consolidated financial statements.

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.

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 amount up to $150.0 million.

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.

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

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

Should it be necessary or determined to be strategically advantageous, we also could pursue public and private offerings of our equity securities, additional debt transactions/restructuring, 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” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for details).

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

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

To raise capital for our operations, we may 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 Term Loan to the Credit Agreement.

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

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

Subsequent to March 31, 2025, we received $3.5 million in net proceeds from sale of our common stock through the ATM facility.

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, any future royalty and/or milestone receipts are excluded.

We have taken steps to manage our operating expenses and reduce our projected cash requirements by delaying clinical trials and reducing selected research and development efforts.

Should it be necessary, we may determine to further reduce or delay these or other aspects of our operations and/or implement other restructuring activities.

Cash Flow Data

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

5 unchanged sentences

Operating Activities.

Net cash used in operating activities for the nine months ended September 30, 2024 increased by $229.4 million compared to the same period in 2023.

This change was primarily due to collecting a $200.0 million Milestone Payment from Rayner in the prior year, the 2024 net loss increasing by $16.7 million, and accounts payable and accrued expenses decreasing by $15.0 million in the current year.

Net cash used in operating activities for the three months ended March 31, 2025 decreased by $5.9 million compared to the same period in 2024.

This decrease was primarily due to a $4.6 million reduction in prepayments during the quarter as compared to the same period in the prior year.

Investing Activities.

2 unchanged sentences

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

Net cash provided by investing activities during the nine months ended September 30, 2024 increased by $136.1 million as compared to the same period in 2023.

The increase was due to the timing of investment maturities and purchases.

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

Net cash provided by investing activities during the three months ended March 31, 2025 changed by $100.5 million as compared to the same period in 2024 as cash and investments were used to fund operations.

Financing Activities.

Net cash provided by financing activities during the nine months ended September 30, 2024 increased $68.1 million compared to the same period in 2023.

The increase was primarily due to receiving the $115.5 million related to the sale of future OMIDRIA royalties in February 2024 from DRI.

This was offset by $21.2 million we paid in 2024 for the 2026 Note Repurchase Transaction, a $14.3 million increase in 2024 principal payments paid to DRI on the OMIDRIA royalty obligation and $11.9 million paid in 2024 to repurchase 3.2 million shares of our common stock.

Net cash used by financing activities decreased $100.3 million for the three months ended March 31, 2025 as compared to the same period in the prior year.

The decrease was primarily due to prior year activities related to (i) receiving $115.5 million in cash from DRI related to the sale of expanded OMIDRIA royalties in February 2024, (ii) repurchases of $11.9 million in common stock and (iii) payments to DRI of $3.4 million in royalties.

Contractual Obligations and Commitments

1 unchanged sentence

Other than the following, our future minimum contractual obligations and commitments have not changed materially from the amounts previously reported.

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

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

Operating Leases

2 unchanged sentences

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

As of September 30, 2024, the remaining aggregate non-cancelable rent payable under the initial term of the lease, excluding common area maintenance and related operating expenses, is $20.8 million.

As of March 31, 2025, the remaining aggregate non-cancelable rent payable under the initial term of the lease, excluding common area maintenance and related operating expenses, is $18.5 million.

Convertible Senior Notes and Long-Term Debt

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

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

OMIDRIA Royalty Obligation

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

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

Goods and Services Contracts, Development Milestones and Product Royalties

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

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

Critical Accounting Policies and Significant Judgments and Estimates

There have not been any material changes in our critical accounting policies and significant judgments and estimates as disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on April 1, 2024.

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-Q

Item 1. Financial Statements