What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-09 · 92 added, 62 removed, 359 unchanged (30% of the section changed)

28 unchanged sentences

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

none issued and outstanding at March 31, 2023 and December 31, 2022.

Common stock, par value $ 0.01 per share, 150,000,000 shares authorized at March 31, 2023 and December 31, 2022;

62,828,765 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively.

none issued and outstanding at June 30, 2023 and December 31, 2022.

Common stock, par value $ 0.01 per share, 150,000,000 shares authorized at June 30, 2023 and December 31, 2022;

62,848,321 and 62,828,765 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively.

Additional paid-in capital

7 unchanged sentences

Three Months Ended

Six Months Ended

Costs and expenses:

6 unchanged sentences

Net loss from continuing operations

Net income from discontinued operations, net of tax

Net income from discontinued operations

Basic and diluted net income (loss) per share:

7 unchanged sentences

Balance at January 1, 2022

Exercise of stock options and warrants

Exercise of stock options

Stock-based compensation expense

Balance at March 31, 2022

Stock-based compensation expense

Balance at June 30, 2022

Balance at January 1, 2023

1 unchanged sentence

Balance at March 31, 2023

Exercise of stock options

Stock-based compensation expense

Balance at June 30, 2023

See accompanying Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities:

16 unchanged sentences

Proceeds from the sale and maturities of investments

Purchases of property and equipment

Net cash used in investing activities

2 unchanged sentences

Principal payments on finance lease obligations

Proceeds upon exercise of stock options and warrants

Proceeds upon exercise of stock options

Net cash provided by (used in) financing activities

4 unchanged sentences

Cash paid for interest

Equipment acquired under finance lease

See accompanying Notes to Condensed Consolidated Financial Statements

3 unchanged sentences

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

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

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 assets on December 23, 2021 (see “Sale of OMIDRIA Assets” below for additional information).

The lead drug candidate in our pipeline of complement-targeted therapeutics is narsoplimab, a proprietary, patented human monoclonal antibody targeting mannan-binding lectin-associated serine protease 2 (“MASP-2”), the key activator of the lectin pathway of complement.

5 unchanged sentences

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

Under the Asset Purchase Agreement with Rayner (“Asset Purchase Agreement”), we were entitled to receive a milestone payment of $ 200.0 million (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 (“ASC”) setting.

Under the Asset Purchase Agreement with Rayner (the “Asset Purchase Agreement”), we were entitled to receive a milestone payment of $ 200.0 million (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 (“ASC”) setting.

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

Upon the achievement of the Milestone Event, our royalties on U.S.

net sales were reduced from 50 % to 30 %, with royalties on any net sales outside the U.S.

remaining unchanged at 15 %.

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

6 unchanged sentences

Liquidity and Capital Resources

As of March 31, 2023, we had cash, cash equivalents and short-term investments of $ 371.4 million and outstanding accounts receivable of $ 10.0 million.

Our loss for the quarter ended March 31, 2023 was $ 33.7 million and our cash provided by operations was $ 174.5 million.

Included in our cash provided by operations was the $ 200.0 million collection of the Milestone Payment.

As of June 30, 2023, we had cash, cash equivalents and short-term investments of $ 341.3 million and outstanding accounts receivable of $ 11.2 million.

Our loss for the quarter ended June 30, 2023 was $ 37.3 million and our cash

provided by operations for the six months ended June 30, 2023 was $ 142.2 million, which included collection of the $ 200.0 million Milestone Payment in the first quarter of 2023.

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

1 unchanged sentence

We plan to continue to fund our operations for at least the next twelve months with our existing cash and investments, royalties from Rayner and our outstanding accounts receivable.

If FDA approval is granted for narsoplimab for treatment of HSCT-TMA within the next twelve months, sales of narsoplimab may 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.

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.

If FDA approves narsoplimab for treatment of any indication within the next twelve months, then sales of narsoplimab may also provide funds for our operations .

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

Should it be determined to be strategically advantageous, we could also 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 technologies.

Use of Estimates

8 unchanged sentences

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

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

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

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

10 unchanged sentences

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 differ 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 original effective interest rate of 9.4 % utilizing the cumulative catch-up method.

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 original effective interest rate of 9.4 % utilizing the cumulative catch-up method.

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

8 unchanged sentences

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

We account for leases with initial terms of 12 months or less as operating expenses on a straight-line basis over the lease term .

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

Stock-Based Compensation

12 unchanged sentences

patent, which we expect to occur no earlier than 2033.

The Milestone Event resulted in recognition of the $ 200.0 million Milestone Payment, which we received in

February 2023.

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, the U.S.

The Milestone Event resulted in recognition of the $ 200.0 million Milestone Payment, which we received in February 2023.

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, the U.S.

base royalty rate would be further reduced to 10 %.

The sale of OMIDRIA was recorded as an asset sale.

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.

The sale of OMIDRIA and related assets was recorded as an asset sale.

Additionally, the results of operations related to OMIDRIA are recorded as income from discontinued operations for all periods presented in the condensed consolidated statements of operations and comprehensive loss.

4 unchanged sentences

Remeasurement adjustments

OMIDRIA contract royalty asset at March 31, 2023

OMIDRIA contract royalty asset at June 30, 2023

Net income from discontinued operations is as follows:

Three Months Ended

Six Months Ended

(In thousands)

4 unchanged sentences

Cash flow from discontinued operations is as follows:

Three Months Ended

Six Months Ended

(In thousands)

Net cash provided by discontinued operations from operating activities

Net cash provided by discontinued operations primarily represents royalties earned and the $ 200.0 million Milestone Payment that we received from Rayner in February 2023.

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.

Note 4—Net Loss Per Share

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

Our potentially dilutive securities include potential common shares related to our stock options, 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

2026 Notes convertible to common stock (1)

14 unchanged sentences

OMIDRIA royalty

Employee retention tax credit

Sublease and other

1 unchanged sentence

Total receivables

In March 2023, we received notification of an employee retention tax credit of $ 2.1 million from the Internal Revenue Service due to the Coronavirus Aid, Relief and Economic Security (“CARES”) Act.

We received an amount equal to the tax credit in April 2023.

Property and Equipment, Net

7 unchanged sentences

Total property and equipment, net

For the three months ended March 31, 2023 and 2022, depreciation and amortization expense was $ 0.2 million and $ 0.3 million, respectively.

For the three months ended June 30, 2023 and June 30, 2022, depreciation and amortization expense was $ 0.3 million and $ 0.2 million, respectively.

For the six months ended June 30, 2023 and 2022, depreciation and amortization expense was $ 0.5 million for each period.

Accrued Expenses

3 unchanged sentences

Clinical trials

Income taxes payable

Interest payable

Consulting and professional fees

Contract research and development

Consulting and professional fees

Income taxes payable

Other accrued expenses

2 unchanged sentences

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.

Investment income for the three months ended March 31, 2023 and December 31, 2022 consists of interest earned of $ 3.4 million and $ 2.2 million, respectively, and is included in other income.

Investment income is included as other income.

Investment income for the three months ended June 30, 2023 and June 30, 2022 consists primarily of interest earned of $ 4.2 million and $ 0.2 million, respectively.

Investment income for the six months ended June 30, 2023 and June 30, 2022 consists of interest earned of $ 7.6 million and $ 0.2 million, respectively.

The following tables summarize our investments:

March 31, 2023

June 30, 2023

Amortized Cost

22 unchanged sentences

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

March 31, 2023

June 30, 2023

(In thousands)

9 unchanged sentences

Certificate of deposit classified as non-current restricted investments

Cash held in demand deposit accounts of $ 3.8 million and $ 11.0 million is excluded from our fair-value hierarchy disclosure as of March 31, 2023 and December 31, 2022, respectively.

Cash held in demand deposit accounts of $ 6.6 million and $ 11.0 million is excluded from our fair-value hierarchy disclosure as of June 30, 2023 and December 31, 2022, respectively.

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

2 unchanged sentences

We carry $ 95.0 million in aggregate principal on our 6.25 % Convertible Senior Notes (the “2023 Notes” ) and $ 225.0 million in aggregate principal on our 5.25 % Convertible Senior Notes (the “2026 Notes”) as shown below:

Balance as of March 31, 2023

Balance as of June 30, 2023

(In thousands)

13 unchanged sentences

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

The unamortized debt issuance costs of $ 0.4 million as of March 31, 2023 will be amortized to interest expense at an effective interest rate of 7.0 % over the remaining term.

The unamortized debt issuance costs of $ 0.3 million as of June 30, 2023 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.

2 unchanged sentences

However, should the market price of our common stock exceed the $ 28.84 cap, then the conversion of the 2023 notes could have a dilutive impact or may require a cash expenditure to the extent the market price exceeds the cap price.

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 March 31, 2023, approximately 4.9 million shares remained outstanding on the 2023 Capped Call.

As of June 30, 2023, 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

Six Months Ended

(In thousands)

Contractual interest expense

3 unchanged sentences

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

The unamortized debt issuance costs of $ 3.8 million as of March 31, 2023 will be amortized to interest expense at an effective interest rate of 5.9 % over the remaining term.

The unamortized debt issuance costs of $ 3.5 million as of June 30, 2023 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.

2 unchanged sentences

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.

A s of March 31, 2023, approximately 12.2 million shares remained outstanding on the 2026 Capped Call.

A s of June 30, 2023, approximately 12.2 million shares remained outstanding on the 2026 Capped Call.

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

Three Months Ended

Six Months Ended

(In thousands)

Contractual interest expense

1 unchanged sentence

Future Minimum Principal Payments

Future minimum principal payments for the 2023 Notes and 2026 Notes as of March 31, 2023 are as follows (in thousands):

Future minimum principal payments for the 2023 Notes and 2026 Notes as of June 30, 2023 are as follows (in thousands):

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

5 unchanged sentences

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.

At March 31, 2023, the maximum remaining amount that DRI is entitled to receive through the term of the agreement (December 31, 2030) is $ 183.5 million, which, if fully paid, would be at an implied effective interest rate of 9.4 % over the entire term of the loan.

As of March 31, 2023, the OMIDRIA royalty obligation’s carrying value approximates fair value, which is a Level 3 estimate as its valuation requires substantial judgment and estimation of factors that are not currently observable in the market.

As of March 31, 2023, the obligation’s carrying value approximates fair value.

For the three months ended March 31, 2023, we incurred $ 3.0 million of cash interest expense.

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

At June 30, 2023, the maximum remaining amount that DRI is entitled to receive through the term of the agreement (December 31, 2030) is $ 180.3 million, which, if fully paid, would be at an implied effective interest rate of 9.4 % over the entire payment period.

For the three months and six months ended June 30, 2023, we incurred $ 3.0 million and $ 5.9 million, respectively, of cash interest expense.

We consider our OMIDRIA royalty obligation to be a Level 3 Held-to-Maturity obligation as its valuation relies on factors that are not easily observable in the market.

As of June 30, 2023, the approximate fair value of our obligation is $ 117.1 million.

As of June 30, 2023, the maximum remaining scheduled principal and interest payments (based on an implied effective interest rate of 9.4 %) are as follows:

(In thousands)

8 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

Operating lease cost

4 unchanged sentences

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

Three Months Ended

Six Months Ended

(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 $ 26.1 million as of March 31, 2023 if we cancel the work within specific time frames, either prior to commencing or during performance of the contracted services .

Goods and Services Contracts

We have various agreements with third parties that collectively require payment of termination fees totaling $ 21.2 million as of June 30, 2023 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 on 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 ended March 31, 2023 and March 31, 2022, 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.

Note 11—Shareholders’ Deficit

For the three months and six months ended June 30, 2023 and June 30, 2022, development milestone expenses were insignificant.

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

In July 2023, we achieved a clinical development milestone in our OMS906 program that triggered a $ 5.0 million milestone payment obligation to a third-party licensor, which we expect to pay in the third quarter of 2023.

This amount is excluded from the commitment amount above.

Note 11—Shareholders’ Equity (Deficit)

Common Stock and Warrants

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 March 31, 2023, we have not sold any shares under this program.

As of March 31, 2023, warrants to purchase 200,000 shares of our common stock remained outstanding with an exercise price of $ 23.00 per share.

The warrants expired without being exercised on April 12, 2023.

As of June 30, 2023, we have not sold any shares under this program.

On April 12, 2023, warrants to purchase 200,000 shares of our common stock with an exercise price of $ 23.00 per share expired without being exercised.

We have no other warrants outstanding.

Amendment of 2017 Omnibus Incentive Compensation Plan

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

The total number of shares of common stock available for grant as of June 30, 2023 was 10,175,852 .

Note 12—Stock-Based Compensation

1 unchanged sentence

Stock-based compensation is as follows:

Three Months Ended

Six Months Ended

(In thousands)

8 unchanged sentences

Three Months Ended

March 31, 2023

Six Months Ended

June 30, 2023

Estimated weighted-average fair value

8 unchanged sentences

Balance at December 31, 2022

Balance at March 31, 2023

Vested and expected to vest at March 31, 2023

Exercisable at March 31, 2023

As of March 31, 2023, there were 3.6 million unvested options outstanding that will vest over a weighted-average period of 2.1 years.

Balance at June 30, 2023

Vested and expected to vest at June 30, 2023

Exercisable at June 30, 2023

Of the 13.6 million common stock options outstanding at June 30, 2023, 11.1 million have an exercise price per share above $ 5.44 which was the closing price of our common stock on the NASDAQ exchange on June 30, 2023.

As of June 30, 2023, there were 3.1 million unvested options outstanding that will vest over a weighted-average period of 1.9 years.

The total estimated compensation expense yet to be recognized on outstanding options is $ 14.5 million.

The Company had 92,250 unvested RSUs outstanding as of March 31, 2023 that vest on December 1, 2023.

The Company had 89,750 unvested RSUs outstanding as of June 30, 2023 that vest on December 1, 2023.

The weighted average grant date fair value per share was $ 7.53 .

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