What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-09 compared with 2023-05-09 · 87 added, 73 removed, 128 unchanged (56% of the section changed)

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

The following discussion and analysis 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.

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, 2022, which was filed with the SEC on March 13, 2023 and amended by Amendment No.

1 thereto, which was filed with the SEC on May 1, 2022.

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, 2022, 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 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.

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Clinical development of narsoplimab is currently focused primarily on hematopoietic stem cell transplant-associated thrombotic microangiopathy (“HSCT-TMA”) and immunoglobulin A (“IgA”) nephropathy.

We expect to read out 36-week proteinuria data from our Phase 3 clinical trial evaluating narsoplimab for the treatment of IgA nephropathy, ARTEMIS-IGAN, later this year .

We expect to read out 36-week proteinuria data from our Phase 3 clinical trial evaluating narsoplimab for the treatment of IgA nephropathy, ARTEMIS-IGAN, in the third quarter of this year .

We successfully completed a pivotal clinical trial for narsoplimab in HSCT-TMA and previously submitted to the U.S.

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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 based on both response data and survival data from the completed pivotal trial versus a historical control group, with or without an independent literature analysis.

We have submitted to the review division at FDA a proposed plan to assess already existing clinical trial data and external data on both response rate and survival and are scheduled to meet with the division to confirm the additional information required to be included in the resubmission to support approval of the BLA.

There can be no guarantee that the specific requirements for resubmission, when determined through interaction with the FDA review division, will be satisfactory in terms of the time and/or expenditure required, and there can be no guarantee that any resubmission will result in approval of narsoplimab for HSCT-TMA.

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

In May 2023 we had a Type B meeting at which the Agency reiterated its commitment to work with Omeros toward a resubmission and provided helpful guidance on our proposal to collect and analyze external survival data for inclusion in a resubmitted BLA.

Based on the Agency’s feedback, we expect to submit to FDA early next month a detailed plan of how we intend to analyze those survival data from already-identifed external sources.

This proposal would be submitted as a Type B meeting request, with FDA’s response expected within 60 days.

After receiving FDA’s feedback on our detailed plan, we would access the data, conduct the requisite analyses and, together with additional new supportive data, resubmit the BLA.

Allowing for the full duration of relevant FDA review periods, we currently estimate that an approval decision on the resubmitted BLA could be rendered by FDA in mid-2024.

There can be no guarantee that the specific data and analyses discussed with the FDA review division will be satisfactory, that any new analyses conducted will result in favorable data, or that any resubmission of the BLA will result in approval of narsoplimab for HSCT-TMA.

We are also developing OMS1029, a long-acting, next-generation antibody targeting MASP-2 and the lectin pathway.

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OMS1029 was well tolerated with no safety concerns identified.

Preliminary pharmacokinetic (“PK”) and pharmacodynamic (“PD”) data show dose-proportional exposure and sustained lectin pathway inhibition, consistent with potentially quarterly intravenous or subcutaneous dosing.

We expect to initiate this summer a Phase 1 multiple-ascending-dose study of OMS1029 in healthy subjects.

Preliminary pharmacokinetic (“PK”) and pharmacodynamic (“PD”) data show dose-proportional exposure and sustained lectin pathway inhibition, consistent with

potentially quarterly intravenous or subcutaneous dosing.

Dosing is underway in a Phase 1 multiple-ascending-dose study of OMS1029 in healthy subjects.

A Phase 2 program is expected to begin mid-2024.

Complement Programs:

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

Clinical development of OMS906 is currently focused on rapidly obtaining proof-of-concept data in multiple alternative pathway-related disorders, including complement 3 glomerulopathy

(“C3G”), a rare chronic kidney disease, and paroxysmal nocturnal hemoglobinuria (“PNH”), a rare and life-threatening hemolytic blood disorder.

In April 2023, we announced positive results from a pre-specified interim analysis of our Phase 1b clinical trial of OMS906 in complement-inhibitor-naïve adults with PNH and, in May 2023, we announced updated data from the ongoing trial.

Clinical development of OMS906 is currently focused on rapidly obtaining proof-of-concept data in multiple alternative pathway-related disorders, including complement 3 glomerulopathy (“C3G”), a rare chronic kidney disease, and paroxysmal nocturnal hemoglobinuria (“PNH”), a rare and life-threatening hemolytic blood disorder.

In June 2023, results from a pre-specified interim analysis of our ongoing clinical trial of OMS906 in complement-inhibitor-naïve adults with PNH were detailed at the 2023 congress of the European Hematology Association as a “late-breaker” podium presentation.

Statistically significant and clinically meaningful improvements were observed in all measured markers of hemolysis, including hemoglobin and lactate dehydrogenase.

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

Based on pharmacokinetic data from a successful Phase 1 single-ascending-dose study of OMS906 in healthy subjects and the interim data from our Phase 1b clinical trial in treatment-naïve PNH patients, we are planning a dosing frequency of once quarterly, either intravenously or subcutaneously.

We have two additional Phase 1b clinical programs ongoing.

One, evaluating OMS906 in PNH patients who have had an unsatisfactory response to the C5 inhibitor ravulizumab, is enrolling and dosing of OMS906 has inititated.

Based on pharmacokinetic data from a successful Phase 1 single-ascending-dose study of OMS906 in healthy subjects and the interim data from our ongoing clinical trial in treatment-naïve PNH patients, we are planning and expect that we will be able to achieve a dosing frequency of once quarterly, either intravenously or subcutaneously.

We have two additional clinical programs ongoing.

One, evaluating OMS906 in PNH patients who have had an unsatisfactory response to the C5 inhibitor ravulizumab, has enrolled and dosed a substantial number of patients.

The second, also underway, is evaluating OMS906 in patients with C3G.

Each of these trials were initiated under a Phase 1b clinical protocol.

We are currently completing a series of protocol amendments to re-categorize these studies as Phase 2 trials given the positive data obtained to date and to allow for increasing the number of patients to be enrolled.

PDE7 Inhibitor Program

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Pre-clinical Programs

We also have a diverse group of preclinical programs, including GPR174, a novel target in immuno-oncology that modulates a new cancer immunity axis that we discovered.

Inhibitors of GPR174 are part of our proprietary G protein-coupled receptor (“GPCR”) platform through which we control 54 GPCR drug targets and their corresponding compounds.

We also have a diverse group of preclinical programs.

These include our proprietary G protein-coupled receptor (“GPCR”) platform through which we control 54 GPCR drug targets and their corresponding compounds.

We are also developing novel adoptive T cell/CAR-T therapies and novel immunotherapeutics and cancer vaccines as part of our immuno-oncology platform.

We previously developed and commercialized OMIDRIA ® (phenylephrine and ketorolac intraocular solution) 1%/0.3%, which is approved by FDA for use during cataract surgery or intraocular lens (“IOL”) replacement to maintain pupil size by preventing intraoperative miosis (pupil constriction) and to reduce postoperative ocular pain.

pupil size by preventing intraoperative miosis (pupil constriction) and to reduce postoperative ocular pain.

We marketed OMIDRIA in the United States (the “U.S.”) from the time of its commercial launch in 2015 until December 2021.

On December 23, 2021, we sold our commercial product OMIDRIA and certain related assets, including inventory and prepaid expenses to Rayner Surgical Inc.

On December 23, 2021, we sold OMIDRIA and certain related assets, including inventory and prepaid expenses to Rayner Surgical Inc.

Rayner paid us $126.0 million in cash at the 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 (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.

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 established separate payment for OMIDRIA for a continuous period of at least four years when furnished in the ambulatory surgery center (“ASC”) setting.

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

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Interest expense is recorded as a component of continuing operations.

As of March 31, 2023, the maximum future payout that DRI is entitled to receive through the remaining term of the agreement is $183.5 million.

As of June 30, 2023, the maximum future payout that DRI is entitled to receive through the remaining term of the agreement is $180.3 million.

The term of the agreement with DRI runs through December 31, 2030, and our payments to DRI will not total $125.0 million until August 2028 at the earliest.

Financial Summary

Our loss for the quarter ended March 31, 2023 was $33.7 million.

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 available to fund operations and debt service.

We have a $95.0 million principal payment due on our 2023 Notes which we expect

either to pay from our existing funds or to refinance.

Our cash provided by operations for the quarter ended March 31, 2023 was $174.5 million which includes the collection of our $200.0 million Milestone Payment.

Our loss for the three and six months ended June 30, 2023 was $37.3 million and $71.0 million, respectively.

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 available to fund operations and debt service.

In November 2023, we have a $95.0 million principal payment due on our 2023 Notes which we expect either to pay from our existing funds or to refinance.

Our cash provided by operations for the six months ended June 30, 2023 was $142.2 million, which includes the collection of our $200.0 million Milestone Payment.

Results of Operations

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Direct external expenses consist primarily of expenses incurred pursuant to agreements with third-party manufacturing organizations prior to receiving regulatory approval for a drug candidate, contract research organizations (“CROs”), clinical trial sites, collaborators, and licensors and consultants.

Costs are reported in preclinical research and development until the program enters the clinic.

Pre-clinical research and development includes costs prior to beginning Phase 1 studies in human subjects.

Internal, overhead and other expenses primarily consist of costs for personnel, overhead, rent, utilities and depreciation.

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Three Months Ended

Six Months Ended

(In thousands)

Continuing research and development expenses:

Research and development expenses:

Direct external expenses:

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Stock-based compensation expenses

Total continuing research and development expenses

Clinical research and development expenses increased $2.2 million for the three months ended March 31, 2023 compared to the prior year primarily due to bioanalytical laboratory, proof-of-concept and investigational site start-up expenses related to OMS906, and transitioning of OMS1029 from preclinical research and development to clinical research and development upon the initiation of human trials during the third quarter of 2022.

The $1.8 million decrease in our preclinical research and development expenses for the three months ended March 31, 2023 as compared to the same period in 2022 is due primarily to the transitioning of OMS1029 from preclinical research and development to clinical research and development during the third quarter of 2022.

Internal overhead and other expenses increased $0.6 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 due to additional employee-related costs.

Total research and development expenses

Clinical research and development expenses increased $7.4 million and $9.6 million for the three and six months ended June 30, 2023, respectively, as compared to the same periods in the prior year, primarily due to drug manufacturing costs and the initiation of additional OMS906 clinical trials in the third quarter of 2022.

Additionally, during the 2023 periods, we incurred incremental OMS721 clinical trial costs for IgA nephropathy and data analysis from HSCT-TMA.

In the third quarter of 2022, we transitioned OMS1029 from preclinical research and development to clinical research and development upon the initiation of human trials.

Preclinical research and development expenses decreased $1.0 million and $2.8 million for the three and six months ended June 30, 2023, respectively, as compared to the same periods in 2022 due primarily to the transitioning of OMS1029 from preclinical research and development to clinical research and development during the third quarter of 2022.

Internal overhead and other expenses increased $0.6 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 due to additional employee-related costs.

This increase was partially offset by the recognition of an employee retention tax credit from the Internal Revenue Service resulting from the passage and implementation of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act.

The $0.4 million decrease in stock-based compensation for the three months ended March 31, 2023 compared to the same period in the prior year is due to the valuation and timing of the vesting of employee stock options.

We expect overall research and development costs will increase in the second quarter of 2023 compared to the first quarter of 2023 due to the timing of certain clinical and manufacturing activities.

The $0.3 million and $0.7 million decreases in stock-based compensation for the three and six months ended June 30, 2023, respectively, compared to the same periods in the prior year was due to the valuation and timing of the vesting of employee stock options.

We expect overall research and development costs will increase in the third quarter of 2023 compared to the second quarter of 2023 due primarily to a $5.0 million payment owed to a licensor in connection with achievement of a clinical development milestone in our OMS906 program.

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

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Six Months Ended

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Continuing selling, general and administrative expenses:

Selling, general and administrative expenses:

Selling, general and administrative expenses, excluding stock-based compensation expense

Stock-based compensation expense

Total continuing selling, general and administrative expenses

Total selling, general and administrative expenses, excluding stock-based compensation, increased by $0.6 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to additional employee-related costs.

This increase was partially offset by recognition of an employee retention tax credit from the Internal Revenue Service resulting from the passage and implementation of the CARES Act.

The $0.5 million decrease in stock-based compensation for the three months ended March 31, 2023 compared to the same period in the prior year is due to the valuation and timing of the vesting of employee stock options.

We expect selling, general and administrative expenses in the second quarter of 2023 to be similar to the first quarter of this year.

Total selling, general and administrative expenses

For the three and six months ended June 30, 2023, selling, general and administrative costs, excluding stock-based compensation, decreased by $2.5 million and $2.0 million, respectively, compared to the corresponding prior year periods.

The reductions were due primarily to decreased legal, patent and marketing costs associated with our narsoplimab program for HSCT-TMA.

Employee-related costs were also reduced and we recognized an employee retention tax credit in March 2023 related to the CARES Act.

The $0.1 million and $0.6 million decreases in stock-based compensation for the three and six months ended June 30, 2023 compared to the same periods in the prior year was due to the valuation and timing of the vesting of employee stock options.

We expect selling, general and administrative expenses in the third quarter of 2023 to be similar to those in the second quarter of this year.

Interest Expense

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Six Months Ended

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Interest expense is primarily comprised of interest and amortization of debt discount and issuance costs related to our 2023 Notes and 2026 Notes and interest on our DRI royalty obligation (see “Note 7 - Unsecured Convertible Senior Notes” and “Note 8 – OMIDRIA Royalty Obligation” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q).

The $3.0 million increase in interest expense between the three months ended March 31, 2023 and 2022 is primarily due to interest earned on our OMIDRIA royalty obligation, which we entered into September 2022.

We expect that interest expense for the second quarter of 2023 will be similar to that of the first quarter of this year.

The $3.0 million and $6.0 million increase in interest expenses between the three and six months ended June 30, 2023 and 2022 was primarily due to interest on our OMIDRIA royalty obligation, which we entered into in September 2022.

We expect that interest expense for the third quarter of 2023 will be similar to that of the second quarter of this year.

Interest and Other Income

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Interest and other income

The $3.5 million increase in interest and other income is due to higher average cash and investment balances available to invest and higher market interest rates in the current year quarter.

The receipt of the $200.0 million Milestone Payment in February 2023 increases our average cash balance.

We expect interest and other income for the second quarter will be similar to those of the first quarter of this year.

The $3.9 million and $7.3 million increases in interest and other income for the three and six months ended June 30, 2023 as compared to the same periods in 2022 were due to higher average cash and investment balances available to invest in the current year following the receipt of the $200.0 million Milestone Payment in February 2023 and to higher market interest rates in the current year as compared to the prior year.

We expect interest and other income for the third quarter to be slightly less than the second quarter of this year due to a reduction in our overall cash and investments available to invest.

Discontinued operations and OMIDRIA contract royalty asset

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

The $0.9 million reduction in interest earned is due to the decrease in the balance of the OMIDRIA contract royalty asset.

The $0.9 million decrease in the remeasurement adjustment between the three months ended March 31, 2023 and 2022 reflects the amount of royalties earned in excess of projections for the period and any change in discounted future royalty expectations.

The $0.7 million and $1.6 million reductions in interest earned for the three and six months ended June 30, 2023 as compared to the same periods in 2022 was due to the decrease in the balance of the OMIDRIA contract royalty asset.

The $2.4 million and $2.9 million decreases in the remeasurement adjustment for the three and six months ended June 30, 2023 as compared to the same periods in 2022 reflects the amount of royalties earned in excess of projections for the period and any change in discounted future royalty expectations.

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

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Remeasurement adjustments

OMIDRIA contract royalty asset at March 31, 2023

The occurrence of the Milestone Event in December 2022 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.

patent which we expect to occur no earlier than 2033.

OMIDRIA contract royalty asset at June 30, 2023

The occurrence of the Milestone Event in December 2022 triggered a reduction in the royalty rate applicable to U.S.

net sales of OMIDRIA from 50% to 30%.

The royalty rate on any net sales outside the U.S.

remains unchanged at 15%.

Financial Condition - 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.

We have $95.0 million of 2023 Notes that will mature and become due in November 2023.

Unless the debt is repurchased or converted to equity at or prior to maturity, we plan to fund the repayment of the 2023 Notes through a combination of cash on hand, cash generated from operations, strategic transactions and sales of stock or through issuance of additional debt .

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 losses for the three and six months ended June 30, 2023 were $37.3 million and $71.0 million, respectively, and our cash provided by operations for the six months ended June 30, 2023 was $142.2 million.

Cash provided by operations includes collection of the $200.0 million Milestone Payment.

We have $95.0 million in outstanding principal of the 2023 Notes that will mature and become due in November 2023.

Unless the debt is repurchased or converted to equity at or prior to maturity, we plan to fund the repayment of the 2023 Notes with our existing funds or proceeds from any refinancing transaction .

From time to time, we may repurchase our outstanding notes in the open market or through privately-negotiated transactions.

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

We have not yet established an ongoing source of revenue sufficient to cover our operating costs and, therefore, we could need to continue to raise additional capital to accomplish our business plan and to retire our outstanding convertible senior notes due in 2026.

We have not yet established an ongoing source of revenue sufficient to cover our operating costs and, therefore, we would need to continue to raise additional capital to accomplish our business plan and retire our outstanding convertible senior notes due in 2026.

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

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

Cash Flow Data

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Operating Activities.

Net cash provided by operating activities for the three months ended March 31, 2023 increased by $189.7 million as compared to the same period in 2022.

The increase was primarily due to a $181.3 million decrease in receivables due to the collection of our $200.0 million Milestone Payment and a $16.4 million change in accounts payables and accrued expenses.

This was offset by $4.6 million decrease in cash received from royalty earnings, a $1.2 million increase in prepaids and $1.5 million of non-cash charges.

Net cash provided by operating activities for the six months ended June 30, 2023 increased by $176.9 million as compared to the same period in 2022.

The increase was primarily due to a $178.4 million decrease in receivables resulting from the collection of our $200.0 million Milestone Payment and an $18.0 million change in accounts payable, accrued expenses and other receivables.

This was offset by a $7.1 million increase in net loss, an $11.1 million decrease in cash received from royalty earnings and $1.2 million of non-cash charges.

Investing Activities.

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

Net cash used in investing activities increased $104.5 million during the three months ended March 31, 2023 as compared to the same period in the prior year due to net purchases of short-term investments upon the receipt of the $200.0 million Milestone Payment.

In the prior year quarter, net purchases of short-term investments included investing the proceeds from the sale of OMIDRIA.

Net cash used in investing activities increased $93.9 million during the six months ended June 30, 2023 as compared to the same period in the prior year due to net purchases of short-term investments following the receipt of the $200.0 million Milestone Payment.

In the corresponding prior year period, net purchases of short-term investments included investing the proceeds from the sale of OMIDRIA.

Financing Activities.

Net cash used in financing activities during the three months ended March 31, 2023 increased $0.5 million compared to the same period in 2022 due to principal payments on our contract royalty obligation, partially offset by decreases in our principal payments on finance lease obligations and by stock option exercises in the prior year period.

Net cash used in financing activities during the six months ended June 30, 2023 increased $0.7 million compared to the same period in 2022 due to principal payments on our contract royalty obligation, partially offset by decreases in our principal payments on finance lease obligations and by stock option exercises.

Contractual Obligations and Commitments

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

As of March 31, 2023, the remaining aggregate non-cancelable rent payable under the initial term of the lease, excluding common area maintenance and related operating expenses, is $32.0 million.

As of June 30, 2023, the remaining aggregate non-cancelable rent payable under the initial term of the lease, excluding common area maintenance and related operating expenses, was $30.3 million.

Convertible Notes

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

Goods and Services

We have certain other non-cancelable obligations under various agreements that relate to goods and services.

As of March 31, 2023, our aggregate firm commitments were $26.1 million.

We may be required, in connection with in-licensing or asset acquisition agreements, to make certain royalty and milestone payments.

We cannot, at this time, determine when or if the related milestones will be achieved or whether the events triggering the commencement of payment obligations will occur.

Therefore, such payments are not included in the amounts described above.

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.

Critical Accounting Policies and Significant Judgments and Estimates

Aside from using the catch-up method to account for our OMIDRIA royalty obligation (see “Note 2 – Significant Accounting Policies – OMIDRIA Royalty Obligation” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q), 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, 2022, which was filed with the SEC on March 13, 2023.

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, 2022, which was filed with the SEC on March 13, 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 2. Management’s Discussion and Analysis