What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-09 compared with 2022-08-09 · 146 added, 101 removed, 331 unchanged (43% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets:

6 unchanged sentences

OMIDRIA contract royalty asset

Property and equipment, net

Right of use assets

Property and equipment, net

Restricted investments

5 unchanged sentences

Total current liabilities

Lease liabilities, non-current

Unsecured convertible senior notes, net

OMIDRIA royalty obligation

Lease liabilities, non-current

Other accrued liabilities - noncurrent

2 unchanged sentences

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

none issued and outstanding at June 30, 2022 and December 31, 2021.

Common stock, par value $ 0.01 per share, 150,000,000 shares authorized at June 30, 2022 and December 31, 2021;

62,730,015 and 62,628,855 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively.

none issued and outstanding at September 30, 2022 and December 31, 2021.

Common stock, par value $ 0.01 per share, 150,000,000 shares authorized at September 30, 2022 and December 31, 2021;

62,730,015 and 62,628,855 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively.

Additional paid-in capital

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Costs and expenses:

4 unchanged sentences

Interest expense

Interest and other income

Net loss from continuing operations

17 unchanged sentences

Balance June 30, 2021

Exercise of stock options

Stock-based compensation expense

Balance September 30, 2021

Balance at January 1, 2022

4 unchanged sentences

Balance June 30, 2022

Stock-based compensation expense

Balance September 30, 2022

See accompanying Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities:

5 unchanged sentences

Changes in operating assets and liabilities:

Prepaid expenses and other assets

Prepaid expenses and other

OMIDRIA contract royalty asset

7 unchanged sentences

Financing activities:

Proceeds from OMIDRIA liability for future royalties

Proceeds upon exercise of stock options and warrants

14 unchanged sentences

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

Our drug candidate narsoplimab is the subject of a biologics license application (“BLA”) pending before the U.S.

Our drug candidate narsoplimab, targeting mannan-binding lectin-associated serine protease-2 (“MASP-2”) and the lectin pathway of complement, is the subject of a biologics license application (“BLA”) pending before the U.S.

Food and Drug Administration (“FDA”) for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy (“HSCT-TMA”).

On October 18, 2021, we announced the receipt of a Complete Response Letter (“CRL”) from FDA regarding the BLA.

In the CRL, FDA expressed difficulty in estimating the treatment effect of narsoplimab in HSCT-TMA and asserted that additional information will be needed to support regulatory approval.

In February 2022, we had a Type A post-action meeting with FDA to discuss the CRL.

Although we felt that we adequately addressed all of the issues noted in the CRL, the meeting minutes included a number of the review division’s critiques that we believe had already been addressed and/or were inaccurate.

As a result, in June 2022, we submitted a Formal Dispute Resolution Request.

Formal Dispute Resolution is an official pathway that enables a sponsor to appeal a decision by an FDA review division to a higher authority within FDA, in this case the Office of New Drugs (“OND”).

We continue to believe that our BLA, as submitted, merits approval and that the data meet or exceed the threshold for substantial evidence of effectiveness;

however, there can be no assurances that the Formal Dispute Resolution process will provide a clear path to resubmission of our BLA, that resubmission will result in approval of our BLA, or that any identified path to BLA resubmission will be satisfactory in terms of the information, time and/or expenditure required.

We are currently awaiting a decision from OND on the dispute.

Unless the deciding official asks us for more information or notifies us that more time is needed to complete the review, we expect a decision on the dispute to be rendered in August 2022.

We also have multiple late-stage clinical development programs in our pipeline, which are focused on:

complement-mediated disorders, including immunoglobulin A (“IgA”) nephropathy, atypical hemolytic uremic syndrome (“aHUS”) and COVID-19.

On October 18, 2021, we announced the receipt of a Complete Response Letter (“CRL”) from FDA indicating that the BLA could not be approved as submitted.

In November 2022, we received the decision by FDA’s Office of New Drugs (“OND”) denying our appeal of the CRL.

Although our appeal was denied, the decision proposes a path forward for resubmission of the BLA based on survival data from the completed pivotal trial versus a historical control group, with or without an independent literature analysis.

Clinical development of narsoplimab also includes programs focused on complement-mediated disorders, including immunoglobulin A (“IgA”) nephropathy, atypical hemolytic uremic syndrome (“aHUS”) and COVID-19.

Our pipeline of investigational agents also includes:

our long-acting MASP-2 inhibitor OMS1029, which is currently in a Phase 1 clinical trial, and OMS906, our inhibitor of mannan-binding lectin-associated serine protease 3 (“MASP-3”) targeting the alternative pathway of complement, which has completed a Phase 1 clinical trial and is being advanced into clinical programs for paroxysmal nocturnal hemoglobinuria (“PNH”) and complement 3 (“C3”) glomerulopathy.

Basis of Presentation

Our condensed consolidated financial statements include the financial position and results of operations of Omeros and our wholly owned subsidiaries.

All inter-company transactions have been eliminated.

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

generally accepted accounting principles (“GAAP”).

Certain prior year amounts in the condensed consolidated balance sheets, statements of operations, statements of stockholders’ equity (deficit) and statements of cash flows and the notes to the condensed consolidated financial statements have been reclassified in the condensed consolidated financial statements to conform to the current year presentation.

Sale of OMIDRIA Assets

4 unchanged sentences

As a result of the divestiture, the results of OMIDRIA operations (e.g., revenues and operating costs) are included in discontinued operations in our condensed consolidated statements of operations and comprehensive loss for all periods presented (see “Note 3 – Discontinued Operations”).

Basis of Presentation

Our condensed consolidated financial statements include the financial position and results of operations of Omeros and our wholly owned subsidiaries.

All inter-company transactions have been eliminated.

The accompanying condensed

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

generally accepted accounting principles (“GAAP”).

Risks and Uncertainties

As of June 30, 2022, we had cash, cash equivalents and short-term investments of $ 122.6 million and outstanding accounts receivable of $ 14.5 million.

Our loss for the second quarter ended June 30, 2022 was $ 30.9 million and included $ 3.7 million of noncash operating expenses.

Our loss for the six months ended June 30, 2022 was $ 63.9 million and included $ 7.9 million of noncash operating expenses.

We plan to continue to fund our operations for the next twelve months with our existing cash and investments, our current accounts receivable, and OMIDRIA royalties.

There is also the potential for us to receive a $ 200.0 million milestone related to achievement of long-term OMIDRIA separate payment.

If FDA approval is granted for narsoplimab for HSCT-TMA within the next twelve months, we expect that sales of narsoplimab will also provide funds for our operations .

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

As of September 30, 2022, we had cash, cash equivalents and short-term investments of $ 221.0 million and outstanding accounts receivable of $ 13.9 million.

Our loss for the quarter ended September 30, 2022 was $ 17.5 million.

Included in our loss for the quarter was a $ 29.0 million noncash benefit related to the revaluation of our OMIDRIA contract royalty asset, which was partially offset by $ 4.6 million of noncash operating expenses.

Our loss for the nine months ended September 30, 2022 was $ 81.3 million and included $ 30.5 million of noncash benefit related to the revaluation of our OMIDRIA contract royalty asset along with differences between actual and estimated royalties in the third quarter, which was partially offset by $ 12.5 million of noncash operating expenses.

We plan to continue to fund our operations for the next twelve months with our existing cash and investments, our current accounts receivable, and our portion of OMIDRIA royalties.

There is also the potential for us to receive a $ 200.0 million milestone related to achievement of long-term OMIDRIA separate payment if, prior to January 1, 2025, separate payment for OMIDRIA is secured under Medicare Part B for at least four continuous years.

If FDA approval is granted for narsoplimab for HSCT-TMA, we expect that sales of narsoplimab will also provide funds for our operations .

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

Should it be determined to be strategically advantageous, we could pursue debt financings as well as public and private offerings of our equity securities, similar to those we have previously completed, or other strategic transactions, which may include licensing a portion of our existing technology.

Management believes the assets on hand along with expected royalties to be received are adequate to finance our operations at least through August 9, 2023.

Management believes the assets on hand along with our portion of expected OMIDRIA royalties to be received are adequate to finance our operations at least through November 9, 2023.

Accordingly, the accompanying condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

13 unchanged sentences

general corporate overhead is not allocated to discontinued operations.

asset sale to Rayner qualifies as a discontinued operation.

The Company included information regarding cash flows from discontinued operations (see “Note 3 – Discontinued Operations”).

The OMIDRIA assets sold to Rayner qualify as a discontinued operation (see “Note 3 – Discontinued Operations”).

OMIDRIA Royalties and OMIDRIA Contract Royalty Assets

3 unchanged sentences

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

Accordingly, the contract royalty asset excludes the achievement of the $ 200.0 million milestone payment and any foreign royalties to the extent it is probable that a significant reversal in the amount of cumulative income recognized will not occur.

Royalties earned will primarily be recorded as a reduction to the OMIDRIA contract royalty asset.

The amount recorded in discontinued operations will reflect interest earned on the outstanding OMIDRIA contract royalty asset and any amounts received that are different from the expected royalties recorded at closing.

The OMIDRIA contract royalty asset will also be re-measured periodically using the expected value approach based on actual results and future expectations.

Accordingly, the contract royalty asset excludes the achievement of the potential $ 200.0 million milestone payment and any non-U.S.

royalties to the extent it is probable that a significant reversal in the amount of cumulative income recognized will not occur.

Royalties earned are primarily recorded as a reduction to the OMIDRIA contract royalty asset.

The amounts recorded in discontinued operations will reflect interest earned on the outstanding OMIDRIA contract royalty asset and any amounts received that are different from the expected royalties recorded at closing.

The OMIDRIA contract royalty asset is re-measured periodically using the expected value approach based on actual results and future expectations.

Any required adjustment to the OMIDRIA contract royalty asset will be recorded into discontinued operations.

OMIDRIA Royalty Obligation

On September 30, 2022, we sold to DRI Healthcare Acquisitions LP (“DRI”) an interest in a portion of our future OMIDRIA royalty receipts for a purchase price of $ 125.0 million in cash (see “Note 8 – OMIDRIA Royalty Obligation”).

The $ 125.0 million cash consideration obtained is classified as liability and is recorded as an “OMIDRIA royalty obligation” on our condensed consolidated balance sheet.

The liability is being amortized over the term of the arrangement using the implied effective interest rate of 9.4 % and interest expense is recorded as a component of continuing operations.

To the extent our estimates of future royalties are greater or less than 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 original effective interest rate utilizing the cumulative catch-up method.

The offset to the adjustment would be recognized as a component of net income (loss) from continuing operations.

OMIDRIA Revenue Recognition

20 unchanged sentences

Stock-Based Compensation

Stock-based compensation expense is recognized for all share-based payments based on estimated fair values.

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

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

18 unchanged sentences

for a continuous period of at least four years .

During the three and six months ended June 30, 2022, we earned royalties of $ 17.2 million and $ 31.1 million on sales of OMIDRIA which we recorded as a reduction from the OMIDRIA contract royalty asset.

We also recorded $ 17.1 million of income in discontinued operations representing interest income and remeasurement adjustments to the OMIDRIA contract royalty asset.

During the three and nine months ended September 30, 2022, we earned royalties of $ 16.5 million and $ 47.6 million, respectively, on sales of OMIDRIA which we recorded as a reduction from the OMIDRIA contract royalty asset.

During the three and nine months ended September 30, 2022, we also recorded $ 37.3 million and $ 54.7 million, respectively, of

income in discontinued operations representing interest income and remeasurement adjustments to the OMIDRIA contract royalty asset.

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

1 unchanged sentence

Royalties earned

Royalty interest income and remeasurement adjustments

OMIDRIA contract royalty asset at June 30, 2022

Royalty interest income and other

Remeasurement adjustments

OMIDRIA contract royalty asset at September 30, 2022

Net income from discontinued operations is as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

Product sales, net

Royalty interest income and remeasurement adjustments

Other (income), costs and expenses, net

Royalty interest income and other

Remeasurement adjustments

Other income (expenses), net

Net income from discontinued operations

Cash flow from discontinued operations is as follows:

Six Months Ended June 30,

Nine Months Ended

September 30,

(In thousands)

Total operating cash flows from discontinued operations

Total operating inflows (outflows) from discontinued operations

Note 4—Net Loss Per Share

Our potentially dilutive securities include potential common shares related to our stock options, warrants, restricted stock units (“RSUs”) and unsecured convertible senior notes.

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

Diluted earnings per share (“Diluted EPS”) considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect.

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

2023 Notes convertible to common stock (1)

2 unchanged sentences

Total potentially dilutive shares excluded from net loss per share

(1) The 2023 Notes are subject to a capped call arrangement that potentially reduces the dilutive effect as described in “Note 8 — Unsecured Convertible Senior Notes.” Any potential impact of the capped call arrangement is excluded from this table.

(1) The 2023 Notes (defined below) are subject to a capped call arrangement that potentially reduces the dilutive effect as described in “Note 7 — Unsecured Convertible Senior Notes.” Any potential impact of the capped call arrangement is excluded from this table.

Note 5—Certain Balance Sheet Accounts

OMIDRIA Contract Royalty Asset

OMIDRIA contract royalty asset consists of the following:

The OMIDRIA contract royalty asset consists of the following:

September 30,

(In thousands)

4 unchanged sentences

Receivables, net consists of the following:

September 30,

(In thousands)

6 unchanged sentences

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 June 30, 2022 and 2021, depreciation and amortization expense was $ 0.2 million and $ 0.4 million, respectively.

For the six months ended June 30, 2022 and 2021, depreciation and amortization expense was $ 0.5 million and $ 0.7 million, respectively.

For each of the three months ended September 30, 2022 and September 30, 2021, depreciation and amortization expense was $ 0.3 million.

For the nine months ended September 30, 2022 and September 30, 2021, depreciation and amortization expense was $ 0.8 million and $ 1.1 million, respectively.

Accrued Expenses

Accrued expenses consists of the following:

September 30,

(In thousands)

Employee compensation

Interest payable

Clinical trials

Consulting and professional fees

Interest payable

Employee compensation

Contract research and development

Consulting and professional fees

Sales rebates, fees and discounts

2 unchanged sentences

Note 6—Fair-Value Measurements

As of June 30, 2022, and December 31, 2021, all investments were classified as short-term and available-for-sale on the accompanying condensed consolidated balance sheets.

As of September 30, 2022, and December 31, 2021, all investments were classified as short-term and available-for-sale on the accompanying condensed consolidated balance sheets.

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

7 unchanged sentences

Our fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis are as follows:

June 30, 2022

September 30, 2022

(In thousands)

5 unchanged sentences

Money-market funds classified as non-current restricted investments

Cash held in demand deposit accounts of $ 14.1 million and $ 100.8 million is excluded from our fair-value hierarchy disclosure as of June 30, 2022 and December 31, 2021, respectively.

There were no unrealized gains or losses associated with our investments as of June 30, 2022 or December 31, 2021.

Cash held in demand deposit accounts of $ 145.5 million and $ 100.8 million is excluded from our fair-value hierarchy disclosure as of September 30, 2022 and December 31, 2021, respectively.

There were no unrealized gains or losses associated with our investments as of September 30, 2022 or December 31, 2021.

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

See “Note 7—Unsecured Convertible Senior Notes” for the carrying amount and estimated fair value of our outstanding convertible senior notes.

Note 7—Line of Credit

As of June 30, 2022, we had a Loan and Security Agreement with Silicon Valley Bank (“SVB”) providing for a $ 50.0 million revolving line of credit facility (the “Line of Credit Agreement”).

As of June 30, 2022, we had no outstanding borrowings under the Line of Credit Agreement.

The Line of Credit Agreement expired on August 2, 2022.

Note 7—Unsecured Convertible Senior Notes

1 unchanged sentence

We used a portion of the proceeds from the 2026 Notes to repurchase $ 115.0 million principal amount of the 2023 Notes and terminate a corresponding portion of the related capped call for the 2023 Notes, as described below.

Unsecured convertible senior notes outstanding at June 30, 2022 and December 31, 2021 are as follows:

Balance as of June 30, 2022

Unsecured convertible senior notes outstanding at September 30, 2022 and December 31, 2021 are as follows:

Balance as of September 30, 2022

(In thousands)

13 unchanged sentences

The 2023 Notes mature on November 15, 2023 unless earlier purchased, redeemed or converted in accordance with their terms.

As of June 30, 2022, the unamortized debt issuance costs of $ 1.0 million will be amortized to interest expense at an effective interest rate of 7.0 % over the remaining term.

The 2023 Notes are convertible into cash, shares of our common stock or a combination thereof, as we elect at our sole discretion.

The initial conversion rate is 52.0183 shares of our common stock per $ 1,000 of note principal (equivalent to an initial conversion price of approximately $ 19.22 per share of common stock), which equals approximately 4.9 million shares of common stock issuable upon conversion, subject to adjustment in certain circumstances.

As of September 30, 2022, the unamortized debt issuance costs of $ 0.8 million will be amortized to interest expense at an effective interest rate of 7.0 % over the remaining term.

Subject to the satisfaction of certain conditions, the 2023 Notes are convertible into cash, shares of our common stock or a combination thereof, as we elect at our sole discretion.

The initial conversion rate is 52.0183 shares of our common stock per $ 1,000 of note principal (equivalent to an initial conversion price of approximately $ 19.22 per share

of common stock), which equals approximately 4.9 million shares of common stock issuable upon conversion, subject to adjustment in certain circumstances.

To reduce the dilutive impact or potential cash expenditure associated with the conversion of the 2023 Notes, we entered into a capped call transaction (the “2023 Capped Call”), which covers the number of shares of our common stock underlying the 2023 Notes when our common stock share price is trading between the initial conversion price of $ 19.22 and $ 28.84 .

In connection with the partial repurchase of the 2023 Notes, we entered into a capped call termination contract to unwind a proportionate amount of the 2023 Capped Call.

As of June 30, 2022, approximately 4.9 million shares remained outstanding on the 2023 Capped Call.

As of September 30, 2022, approximately 4.9 million shares remained outstanding on the 2023 Capped Call.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

5 unchanged sentences

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

As of June 30, 2022, the unamortized debt issuance costs of $ 4.7 million will be amortized to interest expense at an effective interest rate of 5.9 % over the remaining term.

The 2026 Notes are convertible into cash, shares of our common stock or a combination thereof, as we elect at our sole discretion.

As of September 30, 2022, the unamortized debt issuance costs of $ 4.4 million will be amortized to interest expense at an effective interest rate of 5.9 % over the remaining term.

Subject to the satisfaction of certain conditions, the 2026 Notes are convertible into cash, shares of our common stock or a combination thereof, as we elect at our sole discretion.

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

To reduce the dilutive impact or potential cash expenditure associated with the conversion of the 2026 Notes, we entered into capped call transactions (the “2026 Capped Calls”).

The 2026 Capped Calls will cover the number of shares of our common stock underlying the 2026 Notes when our common stock share price is trading between the initial conversion price of $ 18.49 and $ 26.10 .

To reduce the dilutive impact or potential cash expenditure associated with the conversion of the 2026 Notes, we entered into capped call transactions (the “2026 Capped Calls”), which cover the number of shares of our common stock underlying the 2026 Notes when our common stock share price is trading between the initial conversion price of $ 18.49 and $ 26.10 .

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

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

2 unchanged sentences

Amortization of debt issuance costs

Future minimum payments for the 2023 Notes and 2026 Notes as of June 30, 2022 are as follows:

Future Minimum Principal Payments

Future minimum principal payments for the 2023 Notes and 2026 Notes as of September 30, 2022 are as follows:

(In thousands)

Total future minimum principal payments under the 2023 Notes and 2026 Notes

Note 8—OMIDRIA Royalty Obligation

On September 30, 2022, we sold to DRI an interest in our future OMIDRIA royalty receipts and received $ 125.0 million in cash consideration.

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

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

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

Additionally, DRI has no recourse to or security interest in our assets other than our OMIDRIA royalty receipts, and we retain all royalty receipts in excess of the respective cap in any given calendar year.

The maximum payout DRI is entitled to receive is $ 188.4 million which, if fully paid, would be an effective interest rate of 9.4 %.

The annual caps are as follows:

● $ 1.7 million for the remainder of calendar year 2022

● $ 13.0 million for calendar year 2023

● $ 20.0 million for calendar year 2024

● $ 25.0 million for calendar years 2025 through 2028

● $ 26.3 million for calendar year 2029

● $ 27.5 million for calendar year 2030

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, 2022, the carrying value approximates its estimated fair value.

Note 9—Leases

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

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 five years each.

On January 14, 2022, we entered into an agreement with our landlord to early terminate a portion of the rentable square footage of our office and laboratory facilities, which reduced the right of use asset by $ 4.7 million and related liability by $ 5.2 million.

We recorded a non-cash gain of $ 0.5 million to early terminate the lease.

We recorded a non-cash gain of $ 0.5 million upon early termination of this portion of the lease.

In addition, we carry various finance leases for laboratory equipment.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

6 unchanged sentences

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

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

3 unchanged sentences

Note 10—Commitments and Contingencies

We have various agreements with third parties that collectively require payment of termination fees totaling $ 30.5 million as of June 30, 2022 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 $ 20.6 million as of September 30, 2022 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

These licenses may require milestone payments during the clinical development processes or upon approval of commercial sale as well as low single- to low double-digit royalties on the net income or net sales of the product.

For the three months and six months ended June 30, 2022 and June 30, 2021, development milestone expenses were insignificant.

For the three months and nine months ended September 30, 2022 and September 30, 2021, development milestone expenses were insignificant.

Should narsoplimab be approved, we would owe milestone payments to development partners and be obligated to pay low single-digit royalties on net sales of the product.

2 unchanged sentences

On March 1, 2021, we entered into 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 June 30, 2022, we have not sold any shares under this program.

As of September 30, 2022, we have not sold any shares under this program.

In March 2021, a cashless exercise was executed for 43,115 warrants, resulting in the issuance of 24,901 shares of our common stock.

As of June 30, 2022, 200,000 warrants remained outstanding with an exercise price of $ 23.00 per share.

As of September 30, 2022, warrants to purchase 200,000 shares of our common stock remained outstanding with an exercise price of $ 23.00 per share.

The warrants expire on April 12, 2023.

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

8 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2022

Nine Months Ended

September 30, 2022

Estimated weighted-average fair value

8 unchanged sentences

Balance at December 31, 2021

Balance at June 30, 2022

Vested and expected to vest at June 30, 2022

Exercisable at June 30, 2022

As of June 30, 2022, there were 2.5 million unvested options outstanding that will vest over a weighted-average period of 2.2 years.

Balance at September 30, 2022

Vested and expected to vest at September 30, 2022

Exercisable at September 30, 2022

As of September 30, 2022, there were 4.4 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 $ 22.6 million.

The Company has 204,500 shares of unvested RSUs outstanding as of June 30, 2022 that vest 50 % on December 1, 2022 and 50 % on December 1, 2023.

The Company has 200,000 unvested RSUs outstanding as of September 30, 2022 that vest 50 % on December 1, 2022 and 50 % on December 1, 2023.

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