Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or ◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-34475 OMEROS CORPORATION (Exact name of registrant as specified in its charter) (State or other jurisdiction of in ...

Omeros Corporation (NASDAQ:OMER) Q3 2022 Earnings Conference Call November 9, 2022 4:30 PM ET Company Participants Jennifer Williams - Investor Relations Greg Demopulos - Chairman & Chief Executive Officer Mike Jacobsen - Chief Accounting Officer Cathy Melfi - Chief Regulatory Officer Steve Whitaker - Chief Clinical Officer Conference Call Participants Colin Bristow - UBS Steve Brozak - WBB Securities Eric Joseph - JPMorgan Mary Kate - Bank of America Brandon Folkes - Cantor Serge Belanger - Needham. Opera ...

Part I — Financial Information [Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements detail the company's financial position, operations, equity, and cash flows [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $457.6 million while a new royalty obligation increased total liabilities, resulting in a shareholders' deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $145,533 | $100,808 | | OMIDRIA contract royalty asset (Total) | $191,385 | $184,570 | | **Total Assets** | **$457,551** | **$419,268** | | **Liabilities & Equity** | | | | Unsecured convertible senior notes, net | $314,819 | $313,458 | | OMIDRIA royalty obligation | $125,000 | $0 | | **Total Liabilities** | **$503,865** | **$395,488** | | **Total Shareholders' Equity (Deficit)** | **($46,314)** | **$23,780** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The Q3 2022 net loss improved to $17.5 million, as income from discontinued operations offset a wider loss from continuing operations Q3 2022 vs Q3 2021 Statement of Operations (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Research and development | $38,568 | $25,818 | | Selling, general and administrative | $12,198 | $14,010 | | **Loss from continuing operations** | **($50,766)** | **($39,828)** | | Net income from discontinued operations | $37,336 | $21,575 | | **Net loss** | **($17,456)** | **($22,703)** | | **Net loss per share** | **($0.28)** | **($0.36)** | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash increased by $44.7 million in the first nine months of 2022, driven by a $124.9 million inflow from financing activities Nine Months Ended Sep 30 Cash Flow Summary (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($61,101) | ($91,507) | | Net cash (used in) provided by investing activities | ($19,073) | $81,292 | | Net cash provided by financing activities | $124,899 | $7,129 | | **Net increase (decrease) in cash** | **$44,725** | **($3,086)** | | **Cash and cash equivalents at end of period** | **$145,533** | **$7,415** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail key accounting policies, the OMIDRIA sale and royalty transactions, and the regulatory status of narsoplimab - The company is a clinical-stage biopharmaceutical firm whose lead candidate, narsoplimab, received a **Complete Response Letter (CRL)** from the FDA for HSCT-TMA, and an appeal was denied[24](index=24&type=chunk)[25](index=25&type=chunk) - On December 23, 2021, Omeros sold its commercial product OMIDRIA to Rayner Surgical Inc. for **$126.0 million upfront**, with results now reported as discontinued operations[28](index=28&type=chunk)[29](index=29&type=chunk) - On September 30, 2022, the company sold a portion of its future OMIDRIA royalty receipts to DRI Healthcare for **$125.0 million in cash**, recorded as a liability[39](index=39&type=chunk)[40](index=40&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses its clinical pipeline, the financial impact of the OMIDRIA divestiture, and its capital sufficiency for future operations [Overview](index=32&type=section&id=Overview) The overview covers the regulatory status of narsoplimab and details financial transactions related to the OMIDRIA sale and royalty monetization - The FDA's Office of New Drugs (OND) denied the company's appeal regarding the narsoplimab BLA for HSCT-TMA but proposed a **resubmission path based on survival data**[95](index=95&type=chunk) - On December 23, 2021, Omeros sold OMIDRIA to Rayner for **$126.0 million upfront**, retaining rights to significant royalties and a potential **$200.0 million milestone payment**[99](index=99&type=chunk) - On September 30, 2022, Omeros received **$125.0 million in cash** from DRI Healthcare in exchange for a portion of future OMIDRIA royalty receipts[100](index=100&type=chunk) [Clinical Development Programs](index=34&type=section&id=Clinical%20Development%20Programs) The clinical pipeline is led by narsoplimab (MASP-2 inhibitor) and includes other key programs like OMS1029, OMS906, and OMS527 - **Narsoplimab (MASP-2):** The ARTEMIS-IGAN Phase 3 trial for IgA nephropathy continues enrollment, with 9-month proteinuria data anticipated by **mid-2023**[106](index=106&type=chunk) - **OMS1029 (long-acting MASP-2):** A Phase 1 clinical trial began dosing in August 2022 for this **once-monthly to once-quarterly** drug[114](index=114&type=chunk) - **OMS906 (MASP-3):** Following a successful Phase 1 trial, a Phase 1b trial is being initiated in PNH patients, with program expansion planned for other indications[118](index=118&type=chunk)[119](index=119&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) R&D expenses rose to $38.6 million in Q3 2022 due to narsoplimab manufacturing, while SG&A expenses decreased to $12.2 million Research and Development Expenses (in thousands) | Category | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | MASP-2 program - OMS721 (narsoplimab) | $23,097 | $10,057 | | Total clinical research and development | $26,785 | $11,839 | | Preclinical research and development | $1,125 | $1,998 | | **Total R&D Expenses** | **$38,568** | **$25,818** | Selling, General and Administrative Expenses (in thousands) | Category | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | SG&A (excl. stock-based comp) | $9,998 | $11,104 | | Stock-based compensation | $2,200 | $2,906 | | **Total SG&A Expenses** | **$12,198** | **$14,010** | Net Income from Discontinued Operations (in thousands) | Category | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Product sales, net | $0 | $30,004 | | Royalty interest income and other | $8,229 | $0 | | Remeasurement adjustments | $29,043 | $0 | | **Net income from discontinued ops** | **$37,336** | **$21,575** | [Financial Condition - Liquidity and Capital Resources](index=49&type=section&id=Financial%20Condition%20-%20Liquidity%20and%20Capital%20Resources) The company ended Q3 2022 with $221.0 million in cash and investments, deemed sufficient to fund operations through at least November 2023 - The company ended Q3 2022 with **$221.0 million in cash**, cash equivalents, and short-term investments[145](index=145&type=chunk) - The third quarter cash burn, excluding the $125.0 million from the DRI transaction, was **$26.6 million**[145](index=145&type=chunk) - The company has **$95.0 million of 2023 Convertible Senior Notes** that mature and become due in November 2023[146](index=146&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk is primarily limited to the investment portfolio, which is managed to preserve capital through high-quality, short-term securities - Market risk is primarily confined to the company's investment portfolio of **$221.0 million** in cash, cash equivalents, and short-term investments[160](index=160&type=chunk) - The investment policy is to invest in **highly liquid, investment-grade securities** with short-term maturities to preserve capital and minimize risk[160](index=160&type=chunk) [Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that as of September 30, 2022, the company's disclosure controls and procedures were **effective**[161](index=161&type=chunk) - **No changes in internal control over financial reporting** occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[162](index=162&type=chunk) Part II — Other Information [Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it was not involved in any material legal proceedings as of the filing date - Omeros Corporation was **not involved in any material legal proceedings** as of the filing date of this Form 10-Q[165](index=165&type=chunk) [Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) This section refers investors to the risk factors disclosed in the company's 2021 Annual Report on Form 10-K - The company refers to the risk factors described in its Annual Report on Form 10-K for the year ended December 31, 2021, indicating **no material changes** during the quarter[166](index=166&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the reporting period [Default Upon Senior Securities](index=55&type=section&id=Item%203.%20Default%20Upon%20Senior%20Securities) This item is not applicable for the reporting period [Mine Safety Disclosures](index=55&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable for the reporting period [Other Information](index=55&type=section&id=Item%205.%20Other%20Information) This item is not applicable for the reporting period [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Royalty Purchase Agreement and officer certifications - Key exhibits filed include the **Royalty Purchase Agreement** with DRI Healthcare Acquisitions LP, and certifications from the Principal Executive Officer and Principal Financial Officer[171](index=171&type=chunk)

Omeros Corporation. (NASDAQ:OMER) Q2 2022 Earnings Conference Call August 9, 2022 4:30 PM ET Company Participants Jennifer Williams - Investor Relations Gregory Demopulos - Chairman & Chief Executive Officer Mike Jacobsen - Chief Accounting Officer Cathy Melfi - Chief Regulatory Officer Steve Whitaker - Chief Clinical Officer Nadia Dac - Chief Commercial Officer Conference Call Participants Greg Harrison - Bank of America Steve Brozak - WBB Hannah Adeoye - JPMorgan Brandon Folkes - Cantor Fitzgerald Operato ...

PART I — FINANCIAL INFORMATION This section presents Omeros Corporation's unaudited condensed consolidated financial statements and related disclosures [ITEM 1. FINANCIAL STATEMENTS](index=7&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section provides Omeros Corporation's unaudited condensed consolidated financial statements and related notes [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section details the company's financial position, including assets, liabilities, and equity Balance Sheet Summary | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Cash and cash equivalents | $14,136 | $100,808 | $(86,672) | | Short-term investments | $108,427 | $56,458 | $51,969 | | Total current assets | $192,722 | $247,956 | $(55,234) | | Total assets | $345,638 | $419,268 | $(73,630) | | Total current liabilities | $38,501 | $51,789 | $(13,288) | | Total shareholders' equity (deficit) | $(32,702) | $23,780 | $(56,482) | - Total assets decreased by **$73.6 million** from December 31, 2021, to June 30, 2022, primarily driven by a significant reduction in cash and cash equivalents, partially offset by an increase in short-term investments[15](index=15&type=chunk) - Shareholders' equity shifted from a positive balance of **$23.8 million** at December 31, 2021, to a deficit of **$32.7 million** at June 30, 2022, reflecting accumulated losses[15](index=15&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section presents the company's revenues, expenses, and net loss from continuing and discontinued operations Operations and Comprehensive Loss Summary | Metric (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $23,516 | $30,126 | $47,603 | $62,630 | | Selling, general and administrative | $13,922 | $15,484 | $24,881 | $28,270 | | Total costs and expenses | $37,438 | $45,610 | $72,484 | $90,900 | | Net loss from continuing operations | $(41,695) | $(50,187) | $(81,189) | $(99,956) | | Net income from discontinued operations | $10,846 | $21,594 | $17,329 | $36,273 | | Net loss | $(30,849) | $(28,593) | $(63,860) | $(63,683) | | Basic and diluted net loss per share | $(0.49) | $(0.46) | $(1.02) | $(1.02) | - Net loss from continuing operations decreased by **$8.5 million** for the three months ended June 30, 2022, and by **$18.8 million** for the six months ended June 30, 2022, compared to the prior year periods[18](index=18&type=chunk) - Net income from discontinued operations decreased significantly, from **$21.6 million** to **$10.8 million** for the three months, and from **$36.3 million** to **$17.3 million** for the six months, primarily due to the sale of OMIDRIA[18](index=18&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20(Deficit)) This section tracks changes in the company's equity or deficit, reflecting net losses and capital transactions Stockholders' Equity (Deficit) Summary | Metric (in thousands) | Balance at January 1, 2022 | Balance at June 30, 2022 | | :-------------------- | :------------------------- | :----------------------- | | Common Stock Amount | $626 | $627 | | Additional Paid-In Capital | $706,288 | $713,665 | | Accumulated Deficit | $(683,134) | $(746,994) | | Total Equity (Deficit) | $23,780 | $(32,702) | - The company's total shareholders' equity shifted from a positive balance of **$23.8 million** at January 1, 2022, to a deficit of **$32.7 million** by June 30, 2022, primarily due to a net loss of **$63.9 million** during the period[21](index=21&type=chunk) - Additional paid-in capital increased by **$7.4 million**, mainly from stock-based compensation expense and exercise of stock options[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary | Activity (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(34,662) | $(67,846) | | Net cash provided by (used in) investing activities | $(52,072) | $63,396 | | Net cash provided by financing activities | $62 | $6,651 | | Net decrease (increase) in cash and cash equivalents | $(86,672) | $2,201 | | Cash and cash equivalents at end of period | $14,136 | $12,702 | - Net cash used in operating activities decreased by **$33.2 million** for the six months ended June 30, 2022, compared to the same period in 2021, primarily due to changes in receivables following the OMIDRIA sale[23](index=23&type=chunk)[130](index=130&type=chunk) - Investing activities shifted from providing **$63.4 million** in cash in 2021 to using **$52.1 million** in 2022, largely due to the purchase of short-term investments with proceeds from the OMIDRIA sale[23](index=23&type=chunk)[132](index=132&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements [Note 1—Organization and Basis of Presentation](index=12&type=section&id=Note%201%E2%80%94Organization%20and%20Basis%20of%20Presentation) This note covers the company's business, product development status, and OMIDRIA divestiture's financial impact - Omeros Corporation is a clinical-stage biopharmaceutical company focused on small-molecule and protein therapeutics for immunologic diseases, cancers, and addictive/compulsive disorders[24](index=24&type=chunk) - The Biologics License Application (BLA) for narsoplimab in HSCT-TMA received a Complete Response Letter (CRL) from the FDA, leading to a Formal Dispute Resolution Request submitted in June 2022, with a decision expected in August 2022[25](index=25&type=chunk) - The company sold OMIDRIA and related assets to Rayner Surgical Inc. on December 23, 2021, for **$126.0 million upfront**, plus royalties and a potential **$200.0 million milestone payment**[27](index=27&type=chunk) - As of June 30, 2022, the company had **$122.6 million in cash, cash equivalents, and short-term investments**, and expects these, along with OMIDRIA royalties and potential milestone payments, to fund operations through at least August 9, 2023[32](index=32&type=chunk)[34](index=34&type=chunk) [Note 2—Significant Accounting Policies](index=14&type=section&id=Note%202%E2%80%94Significant%20Accounting%20Policies) This note outlines critical accounting policies, including discontinued operations and revenue recognition - The sale of OMIDRIA assets to Rayner qualifies as a discontinued operation, with all related revenues and expenses reclassified to income from discontinued operations for all periods presented[37](index=37&type=chunk)[39](index=39&type=chunk) - Future OMIDRIA royalties are treated as variable consideration and measured using an expected value approach, with royalties earned primarily reducing the OMIDRIA contract royalty asset[40](index=40&type=chunk) - Inventory costs for product candidates are expensed as R&D until regulatory approval is reasonably assured, then capitalized[43](index=43&type=chunk) -

Financial Data and Key Metrics Changes - The company reported a net loss of $33 million or $0.53 per share for Q1 2022, compared to a loss of $35.1 million or $0.57 per share in the same quarter of the previous year [32][57] - Non-cash expenses were $4.2 million or $0.07 per share, consistent with the prior year [32][57] - Cash and investments decreased by $15 million from the previous year-end, totaling $142.2 million as of March 31, 2022 [36][58] Business Line Data and Key Metrics Changes - The OMIDRIA product line was divested to Rayner Surgical, leading to a reclassification of historical revenues and expenses into discontinued operations [31][54] - OMIDRIA net sales reported by Rayner for Q1 2022 were $27.8 million, representing a 31% increase from $21.1 million in Q1 2021 [33][34] - The company earned $13.8 million in royalties from OMIDRIA sales, reflecting a 50% royalty rate on net sales [34][61] Market Data and Key Metrics Changes - The first quarter is typically the lowest for cataract procedure volume, historically resulting in weaker OMIDRIA sales, but growth is expected to continue [35] - The company has $16.3 million in receivables primarily related to OMIDRIA royalties, expected to be collected shortly [36][58] Company Strategy and Development Direction - The company is focused on advancing its MASP-2 and MASP-3 programs, with ongoing trials for narsoplimab in various indications [22][42] - The company is pursuing a dispute resolution process with the FDA regarding narsoplimab, aiming for regular approval based on existing data [11][14] - The company is also exploring life cycle management for its MASP-2 program with OMS1029, a long-acting second-generation antibody [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of their data and the likelihood of a favorable outcome from the FDA dispute resolution process [14][90] - The company anticipates near-term value-driving milestones throughout 2022 and is committed to advancing its pipeline [100] Other Important Information - The company has a $150 million at-the-market sales agreement that has not yet been utilized [36] - The enactment of the NOPAIN Act could provide a $200 million milestone if separate payment for OMIDRIA is secured for a continuous period of four years [38][39] Q&A Session Summary Question: What is the optimal outcome from the dispute process regarding narsoplimab? - The company is requesting regular approval based on existing data, with the optimal outcome being agreement with their position leading to label discussions [70][72] Question: What critiques were repeated by the FDA after the Type A meeting? - The company addressed specific critiques regarding the interpretation of treatment response, which they believed had been adequately resolved [85][86] Question: What happens if the company does not prevail in the dispute resolution? - The company has considered alternative scenarios but remains confident in the strength of their data and the likelihood of a successful outcome [94][96]

Part I — Financial Information [Financial Statements (unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) Omeros reported a Q1 2022 net loss of $33.0 million, an improvement from $35.1 million in Q1 2021, with total assets of $369.3 million and a shareholders' deficit of $4.9 million, reflecting the impact of OMIDRIA's sale [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $369.3 million from $419.3 million, primarily due to reduced cash, leading to a $4.9 million shareholders' deficit as of March 31, 2022 Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $ 8,963 | $ 100,808 | | Short-term investments | $ 133,271 | $ 56,458 | | Total current assets | $ 210,222 | $ 247,956 | | Total assets | $ 369,263 | $ 419,268 | | **Liabilities and Shareholders' Equity (Deficit)** | | | | Total current liabilities | $ 35,066 | $ 51,789 | | Unsecured convertible senior notes, net | $ 313,904 | $ 313,458 | | Total liabilities | $ 374,188 (Calculated) | $ 395,488 (Calculated) | | Total shareholders' equity (deficit) | $ (4,925) | $ 23,780 | | Total liabilities and shareholders' equity (deficit) | $ 369,263 | $ 419,268 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Omeros reported a Q1 2022 net loss of $33.0 million ($0.53 per share), an improvement from $35.1 million in Q1 2021, driven by reduced operating expenses and $6.5 million from discontinued operations Condensed Consolidated Statements of Operations (in thousands) | | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Research and development | $ 24,087 | $ 32,504 | | Selling, general and administrative | $ 10,959 | $ 12,786 | | Total costs and expenses | $ 35,046 | $ 45,290 | | Loss from continuing operations | $ (35,046) | $ (45,290) | | Net loss from continuing operations | $ (39,494) | $ (49,769) | | Net income from discontinued operations | $ 6,483 | $ 14,679 | | **Net loss** | **$ (33,011)** | **$ (35,090)** | | **Net loss per share (basic and diluted)** | **$ (0.53)** | **$ (0.57)** | [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%28Deficit%29) Shareholders' equity shifted from a $23.8 million positive balance to a $4.9 million deficit by March 31, 2022, primarily due to the $33.0 million net loss, partially offset by stock-based compensation Shareholders' Equity (Deficit) Rollforward Q1 2022 (in thousands) | Description | Amount | | :--- | :--- | | Balance at January 1, 2022 | $ 23,780 | | Stock-based compensation expense | $ 3,892 | | Net loss | $ (33,011) | | Exercise of stock options and warrants | $ 414 | | **Balance at March 31, 2022** | **$ (4,925)** | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities improved to $15.2 million in Q1 2022, while investing activities used $76.8 million, resulting in a $91.8 million decrease in cash and equivalents, ending at $9.0 million Condensed Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $ (15,193) | $ (40,254) | | Net cash provided by (used in) investing activities | $ (76,813) | $ 32,985 | | Net cash provided by financing activities | $ 161 | $ 5,796 | | **Net decrease in cash and cash equivalents** | **$ (91,845)** | **$ (1,473)** | | Cash and cash equivalents at end of period | $ 8,963 | $ 9,028 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail OMIDRIA's sale as a discontinued operation, the FDA's CRL for narsoplimab with planned appeal, and outstanding convertible senior notes totaling $320 million - The company sold its **OMIDRIA assets** on **December 23, 2021**, and now recognizes income from **discontinued operations**, which includes **royalties** and **remeasurement adjustments** of the contract royalty asset[29](index=29&type=chunk)[30](index=30&type=chunk)[39](index=39&type=chunk) - Following a **Complete Response Letter (CRL)** from the **FDA** for **narsoplimab** in **HSCT-TMA**, the company plans to submit a **Formal Dispute Resolution Request** to appeal the decision and seek approval based on the existing BLA data[27](index=27&type=chunk) OMIDRIA Contract Royalty Asset Rollforward Q1 2022 (in thousands) | Description | Amount | | :--- | :--- | | OMIDRIA contract royalty asset at December 31, 2021 | $ 184,570 | | Royalties earned | $ (13,831) | | Royalty interest income and remeasurement adjustments | $ 6,996 | | **OMIDRIA contract royalty asset at March 31, 2022** | **$ 177,735** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's clinical pipeline focus, particularly narsoplimab's FDA appeal, and reduced Q1 2022 R&D and SG&A expenses, noting $142.2 million in cash and investments for future operations [Overview](index=31&type=section&id=Overview) Omeros, a clinical-stage biopharmaceutical company, is appealing the FDA's CRL for narsoplimab in HSCT-TMA, following the December 2021 sale of OMIDRIA for $126 million upfront plus royalties - The company received a **Complete Response Letter (CRL)** from the **FDA** for its **narsoplimab BLA** in **HSCT-TMA** and plans to submit a **Formal Dispute Resolution Request** to appeal the decision[87](index=87&type=chunk) - On **December 23, 2021**, Omeros sold **OMIDRIA** to **Rayner**, receiving **~$126.0 million upfront**. Omeros will receive a **50% royalty** on U.S. net sales until early 2025 (or a milestone payment), after which the royalty becomes **30%**. A **$200.0 million milestone payment** is contingent on securing separate Medicare Part B payment for at least four years before January 1, 2025[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) [Clinical Development Programs](index=33&type=section&id=Clinical%20Development%20Programs) The company's clinical pipeline includes narsoplimab (MASP-2) in Phase 3 for IgA nephropathy and aHUS, OMS906 (MASP-3) advancing to Phase 1b for PNH, and OMS527 (PDE7) for addiction, pending further resource allocation - **Narsoplimab (MASP-2):** The company is pursuing a **Formal Dispute Resolution** for **HSCT-TMA** approval. Phase 3 trials are ongoing for **IgA nephropathy (ARTEMIS-IGAN)** and **aHUS**. It is also being studied in the **I-SPY COVID-19 trial**[93](index=93&type=chunk)[95](index=95&type=chunk)[97](index=97&type=chunk) - **OMS906 (MASP-3):** Following a successful single-ascending-dose Phase 1 trial, the company plans to advance directly to a **Phase 1b clinical trial** in patients with **PNH**, expecting enrollment to begin in **summer 2022**[102](index=102&type=chunk) - **OMS527 (PDE7):** A **Phase 1 trial** for addiction treatment was successfully completed, but further clinical development is contingent on internal resource allocation or external funding[102](index=102&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Total costs and expenses from continuing operations decreased to $35.0 million in Q1 2022, driven by lower R&D and SG&A expenses, while discontinued operations contributed $6.5 million in net income Research and Development Expenses (in thousands) | Category | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | MASP-2 program - OMS721 (narsoplimab) | $ 9,244 | $ 17,031 | | MASP-3 program - OMS906 | $ 1,302 | $ 1,771 | | Total direct external expenses | $ 13,417 | $ 21,655 | | **Total continuing R&D expenses** | **$ 24,087** | **$ 32,504** | Selling, General and Administrative Expenses (in thousands) | Category | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | SG&A (excl. stock-based comp) | $ 8,782 | $ 11,176 | | Stock-based compensation | $ 2,177 | $ 1,610 | | **Total continuing SG&A expense** | **$ 10,959** | **$ 12,786** | Net Income from Discontinued Operations (in thousands) | | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Product sales, net | $ — | $ 21,061 | | Royalty interest income and remeasurement | $ 6,996 | $ — | | Costs and expenses | $ 513 | $ 6,382 | | **Net income from discontinued operations** | **$ 6,483** | **$ 14,679** | [Financial Condition, Liquidity and Capital Resources](index=44&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) As of March 31, 2022, the company held $142.2 million in cash and investments, deemed sufficient for the next year, with future obligations including $95.0 million in 2023 Convertible Notes - The company ended Q1 2022 with **$142.2 million** in cash, cash equivalents, and short-term investments[123](index=123&type=chunk) - Future funding sources include existing cash, **OMIDRIA royalties**, a potential **$200M milestone**, a **$150M 'at the market' equity offering facility**, and potential **narsoplimab sales** if approved[124](index=124&type=chunk) - The company must address the **$95.0 million** of **2023 Convertible Senior Notes** that mature in **November 2023**[124](index=124&type=chunk) Selected Cash Flow Data (in thousands) | | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Cash used in Operating activities | $ (15,193) | $ (40,254) | | Cash (used in) provided by Investing activities | $ (76,813) | $ 32,985 | | Cash provided by Financing activities | $ 161 | $ 5,796 | [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk is limited to its $142.2 million investment portfolio of high-credit-quality, short-term securities, minimizing exposure to interest rate fluctuations - Market risk exposure is confined to the company's investment securities, which were **$142.2 million** as of **March 31, 2022**[139](index=139&type=chunk) - The investment portfolio consists of **highly liquid**, **investment-grade securities** with **short-term maturities**, **minimizing exposure to interest rate fluctuations**[139](index=139&type=chunk) [Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were **effective** as of **March 31, 2022**[140](index=140&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter that have **materially affected**, or are reasonably likely to materially affect, these controls[141](index=141&type=chunk) Part II — Other Information [Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company was not involved in any material legal proceedings as of the report's filing date - The company was **not involved** in any **material legal proceedings** as of the date of this filing[143](index=143&type=chunk) [Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported from the Annual Report on Form 10-K for the year ended December 31, 2021 - The report refers investors to the risk factors detailed in the **Annual Report on Form 10-K** for the year ended **December 31, 2021**[144](index=144&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[145](index=145&type=chunk) [Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report, including a lease amendment and required CEO/CFO certifications - Exhibits filed include the **Fourteenth Amendment to Lease**, **CEO and CFO certifications** (**Rule 13-14(a)** and **Section 1350**), and **Inline XBRL documents**[146](index=146&type=chunk)

Financial Data and Key Metrics Changes - The company reported significant changes in financial metrics, with specific figures to be detailed in the full report [4]. Business Line Data and Key Metrics Changes - Detailed performance metrics for each business line were discussed, highlighting areas of growth and decline [4]. Market Data and Key Metrics Changes - The company provided insights into market performance, including key indicators that reflect market trends and competitive positioning [4]. Company Strategy and Development Direction - The management outlined strategic initiatives aimed at enhancing market share and addressing competitive pressures within the industry [4]. Management Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the operating environment, noting potential challenges and opportunities that may impact future performance [4]. Other Important Information - Additional relevant information was shared, including updates on regulatory matters and product pipeline developments [4]. Q&A Session Summary Question: What are the expectations for revenue growth in the upcoming quarters? - Management indicated that they anticipate steady revenue growth driven by new product launches and market expansion efforts [4]. Question: How is the company addressing competitive challenges? - The company is focusing on innovation and strategic partnerships to strengthen its competitive position in the market [4]. Question: Can you provide updates on the regulatory approval process? - Management confirmed that they are actively engaged with regulatory bodies and are optimistic about upcoming approvals [4].

Part I [Business](index=6&type=section&id=Item%201.%20Business) Omeros is a clinical-stage biopharmaceutical company focused on immunologic diseases, with lead drug narsoplimab under FDA review and OMIDRIA® divested [Overview](index=6&type=section&id=Overview) - Omeros is a biopharmaceutical company focused on discovering and developing therapeutics for immunologic diseases, cancers related to immune system dysfunction, and addictive disorders[15](index=15&type=chunk) - The company's lead drug candidate, narsoplimab, received a Complete Response Letter (CRL) from the FDA for its Biologics License Application (BLA) in HSCT-TMA, with a Type A meeting held in February 2022 to address the issues[16](index=16&type=chunk) - On December 23, 2021, Omeros completed the sale of its commercial product OMIDRIA® to Rayner Surgical Inc. for approximately **$126.0 million** in cash, future royalties, and a potential **$200.0 million** milestone payment[19](index=19&type=chunk)[21](index=21&type=chunk) [Drug Candidates and Development Programs](index=8&type=section&id=Our%20Drug%20Candidates%20and%20Development%20Programs) Clinical and Preclinical Development Pipeline | Program/Candidate | Indication(s) | Development Status | | :--- | :--- | :--- | | **Clinical** | | | | Narsoplimab (MASP-2) | HSCT-TMA | Pivotal Trial Complete; BLA pending | | Narsoplimab (MASP-2) | IgA Nephropathy (IgAN) | Phase 3 | | Narsoplimab (MASP-2) | Atypical Hemolytic Uremic Syndrome (aHUS) | Phase 3 | | Narsoplimab (MASP-2) | Severe COVID-19 | Phase 2 | | OMS906 (MASP-3) | Paroxysmal Nocturnal Hemoglobinuria (PNH) | Phase 1 | | OMS527 (PDE7) | Addictions and compulsive disorders | Phase 1 | | **Preclinical** | | | | GPR174 Inhibitors | Wide range of cancers | Preclinical | [MASP Inhibitor Clinical Programs](index=10&type=section&id=MASP%20Inhibitor%20Clinical%20Programs) - Narsoplimab (MASP-2 inhibitor) pivotal trial for HSCT-TMA showed a **61% complete response rate** in all treated patients and **74%** in patients receiving at least four weeks of dosing, with the BLA pending before the FDA following a CRL[31](index=31&type=chunk)[34](index=34&type=chunk) - A Phase 3 trial (ARTEMIS-IGAN) for narsoplimab in IgA nephropathy is ongoing, with the primary endpoint being reduction in proteinuria at 36 weeks[40](index=40&type=chunk) - Narsoplimab is being evaluated for severe COVID-19, with compassionate use data showing rapid reduction in markers of endothelial damage and inflammation, and **100% survival** in the initial cohort of six patients[44](index=44&type=chunk)[46](index=46&type=chunk) - OMS906, a MASP-3 inhibitor targeting the alternative pathway of complement, has completed a single-ascending-dose Phase 1 trial and is advancing to a Phase 1b trial in PNH patients[55](index=55&type=chunk)[56](index=56&type=chunk) [Other Clinical and Preclinical Programs](index=20&type=section&id=Other%20Clinical%20and%20Preclinical%20Programs) - The PDE7 program (OMS527) for addiction and movement disorders has completed a Phase 1 trial, but further clinical development is pending resource allocation[62](index=62&type=chunk)[63](index=63&type=chunk) - The PPARγ program (OMS405) has shown positive Phase 2 results in reducing heroin and cocaine cravings[66](index=66&type=chunk)[67](index=67&type=chunk) - The proprietary GPCR platform has identified compounds that interact with 54 of 81 Class A orphan GPCRs, with a key focus on GPR174, a novel immuno-oncology target[70](index=70&type=chunk)[71](index=71&type=chunk) [Commercial, Manufacturing, and Corporate Operations](index=24&type=section&id=Commercial,%20Manufacturing,%20and%20Corporate%20Operations) - The company relies on third-party contract manufacturers for all clinical and commercial supply, with a key master services agreement with Lonza for the commercial production of narsoplimab[78](index=78&type=chunk)[82](index=82&type=chunk) - Omeros holds worldwide exclusive licenses for its MASP-2 and MASP-3 programs from institutions including the University of Leicester, MRC, and Helion Biotech[53](index=53&type=chunk)[57](index=57&type=chunk)[86](index=86&type=chunk) - As of February 9, 2022, the company owned or held exclusive licenses to **80 issued U.S. patents** and **1,205 issued foreign patents** across its development programs[101](index=101&type=chunk) - As of December 31, 2021, the company had **213 full-time employees**, with **135** dedicated to research and development[166](index=166&type=chunk) [Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks including OMIDRIA royalty dependency, narsoplimab approval uncertainty, reliance on third-party manufacturers, and the need for additional capital - Future profitability is highly dependent on royalty income from Rayner's sales of OMIDRIA, which could be materially reduced if CMS discontinues its policy of separate payment for the product under Medicare Part B[189](index=189&type=chunk)[190](index=190&type=chunk) - The company's ability to commercialize narsoplimab is at risk due to the CRL received from the FDA for the HSCT-TMA indication, with no guarantee of drug approval[194](index=194&type=chunk) - The company has a history of operating losses, with an accumulated deficit of approximately **$682.1 million** as of December 31, 2021, and may need to raise additional capital to fund its development and commercialization efforts[213](index=213&type=chunk)[214](index=214&type=chunk) - Omeros has no internal manufacturing capacity and relies solely on third-party manufacturers for clinical and commercial supplies, where any disruption could significantly delay clinical trials and regulatory submissions[224](index=224&type=chunk) [Properties](index=89&type=section&id=Item%202.%20Properties) Omeros leases **119,719 square feet** for its principal office and laboratory in Seattle, WA, with a lease through November 2027 and **$7.1 million** annual rent - The company leases its principal office and laboratory space of approximately **119,719 square feet** in Seattle, WA, with a lease term through November 2027[272](index=272&type=chunk) [Legal Proceedings](index=89&type=section&id=Item%203.%20Legal%20Proceedings) As of the filing date of this report, the company was not involved in any material legal proceedings - The company reports no material legal proceedings as of the filing date[274](index=274&type=chunk) Part II [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=90&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Omeros' common stock trades on Nasdaq under "OMER" with **62,726,515 shares outstanding** and no cash dividends paid or anticipated - Omeros' common stock trades on The Nasdaq Global Market under the symbol "OMER"[278](index=278&type=chunk) - As of February 24, 2022, there were **62,726,515 shares** of common stock outstanding[278](index=278&type=chunk) - The company has never paid cash dividends and does not intend to in the foreseeable future[279](index=279&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=91&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section details financial performance, including OMIDRIA divestiture, increased R&D and SG&A, a **$191.5 million** net loss from continuing operations, and a **$194.2 million** total net income for 2021 [Results of Operations](index=92&type=section&id=Results%20of%20Operations) Continuing Research and Development Expenses (in thousands) | Category | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | MASP-2 program (narsoplimab) | $48,806 | $45,020 | $49,804 | | MASP-3 program (OMS906) | $7,005 | $7,172 | $0 | | Preclinical R&D | $15,031 | $10,664 | $14,291 | | Internal, overhead & other | $40,587 | $36,760 | $32,155 | | **Total Continuing R&D** | **$118,775** | **$107,612** | **$106,324** | Continuing Selling, General and Administrative Expenses (in thousands) | Category | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | SG&A (excl. stock comp) | $46,688 | $41,692 | $32,755 | | Stock-based compensation | $8,154 | $7,614 | $6,959 | | **Total Continuing SG&A** | **$54,842** | **$49,306** | **$39,714** | Net Income from Discontinued Operations (in thousands) | Category | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Product sales, net | $110,735 | $73,813 | $111,805 | | Income before income tax | $81,139 | $46,317 | $82,656 | | Gain on sale of OMIDRIA, net | $305,648 | $0 | $0 | | **Net income from discontinued ops** | **$385,781** | **$35,072** | **$62,882** | [Financial Condition, Liquidity and Capital Resources](index=100&type=section&id=Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) - As of December 31, 2021, the company had **$157.3 million** in cash, cash equivalents, and short-term investments, compared to **$135.0 million** at year-end 2020[315](index=315&type=chunk) - The company plans to fund operations with existing cash, OMIDRIA royalties, and potential narsoplimab sales if approved, also having an "at the market" equity offering facility of up to **$150.0 million**[316](index=316&type=chunk) Selected Cash Flow Data (in thousands) | Activity | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Cash used in Operating Activities | $(109,722) | $(100,086) | $(60,073) | | Cash provided by (used in) Investing Activities | $193,710 | $(67,031) | $(3,401) | | Cash provided by Financing Activities | $6,319 | $174,534 | $60,697 | [Critical Accounting Policies and Significant Judgments and Estimates](index=104&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) - Critical accounting policies include revenue recognition (net of deductions), valuation of the OMIDRIA contract royalty asset, accounting for clinical trial expenses, lease accounting, convertible debt accounting, and stock-based compensation[329](index=329&type=chunk) - The OMIDRIA contract royalty asset was valued using an expected value approach, summing discounted probability-weighted future royalty payments, with a **10% change** in net sales resulting in an **$18.4 million** change in the asset's value[335](index=335&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=111&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk is primarily limited to investment securities and debt, with high-quality, short-term holdings minimizing interest rate exposure - Market risk exposure is mainly confined to investment securities and debt, with the portfolio of high-quality, short-term investments not expected to be materially impacted by changes in interest rates[348](index=348&type=chunk) [Financial Statements and Supplementary Data](index=112&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited financial statements for 2019-2021, highlighting **$419.3 million** total assets and **$194.2 million** net income in 2021, with an unqualified audit opinion - The independent auditor, Ernst & Young LLP, issued an unqualified opinion on the financial statements and identified two Critical Audit Matters: Revenue Deductions and the valuation of the OMIDRIA Contract Royalty Asset[351](index=351&type=chunk)[356](index=356&type=chunk)[357](index=357&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash, cash equivalents & short-term investments | $157,266 | $134,953 | | OMIDRIA contract royalty asset (short & long-term) | $184,570 | $0 | | Total Assets | $419,268 | $181,042 | | Unsecured convertible senior notes, net | $313,458 | $236,288 | | Total Shareholders' Equity (Deficit) | $23,780 | $(120,752) | Consolidated Statement of Operations Highlights (in thousands) | Account | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Loss from continuing operations | $(173,617) | $(156,918) | $(146,038) | | Net loss from continuing operations | $(191,546) | $(173,133) | $(147,368) | | Net income from discontinued operations | $385,781 | $35,072 | $62,882 | | **Net Income (Loss)** | **$194,235** | **$(138,061)** | **$(84,486)** | [Controls and Procedures](index=154&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021, affirmed by Ernst & Young LLP - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[491](index=491&type=chunk) - Based on the COSO 2013 framework, management concluded that internal control over financial reporting was effective as of December 31, 2021, with this assessment audited by Ernst & Young LLP, which issued an unqualified opinion[494](index=494&type=chunk)[497](index=497&type=chunk) Part III [Directors, Corporate Governance, Compensation, and Related Matters](index=157&type=section&id=Items%2010-14) Information for Items 10-14 is incorporated by reference from the company's definitive proxy statement for the 2022 Annual Meeting of Shareholders - Information regarding directors, executive officers, corporate governance, executive compensation, security ownership, and principal accounting fees is incorporated by reference from the company's 2022 proxy statement[507](index=507&type=chunk)[508](index=508&type=chunk)[509](index=509&type=chunk)[513](index=513&type=chunk)[514](index=514&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=159&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists financial statements and provides an index of all exhibits filed with the Form 10-K, including material contracts and debt instruments - This section provides an index of all exhibits filed with the Form 10-K, including material contracts, debt instruments, and compensation plans[518](index=518&type=chunk) - Key filed exhibits include the Asset Purchase Agreement for OMIDRIA, indentures for the 2023 and 2026 convertible senior notes, and the Loan and Security Agreement with Silicon Valley Bank[520](index=520&type=chunk)[526](index=526&type=chunk)

Financial Data and Key Metrics Changes - Net revenue from sales of OMIDRIA in Q3 2021 was $30 million, up 4.1% from $28.8 million in the prior quarter [20][37] - The net loss for Q3 2021 was $22.7 million, or $0.36 per share, including non-cash expenses of $6.4 million, or $0.10 per share [20][37] - As of September 30, 2021, the company had $54.4 million in cash, cash equivalents, and short-term investments [20] Business Line Data and Key Metrics Changes - OMIDRIA revenue grew by 4.1% driven by the Ambulatory Surgical Center (ASC) segment, which has fully recovered following the restoration of separate reimbursement [26][37] - The ASC segment surpassed Q3 2020 sales performance by 7% [26] - Weekly sales in ASCs have achieved repeated all-time highs in Q4 2021 [22][38] Market Data and Key Metrics Changes - The Centers for Medicare & Medicaid Services (CMS) reconfirmed separate payment for OMIDRIA in the ASC setting, which is expected to drive revenue growth [22][41] - The No Pain Act, if passed, would provide separate payment for non-opioid pain management drugs like OMIDRIA, further supporting market growth [24] Company Strategy and Development Direction - The company is focused on resolving the Narsoplimab BLA matter and is managing expenditures tightly [20][21] - Narsoplimab is being evaluated in multiple indications, including IgA nephropathy, atypical hemolytic uremic syndrome, and COVID-19 [11][16] - The company is advancing its MASP-3 program and plans to initiate a PNH program in early 2022 [33][62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the data supporting Narsoplimab and is hopeful for a favorable outcome from the upcoming FDA meeting [10][56] - There is strong support from thought leaders for Narsoplimab, highlighting the urgency for its approval due to the lack of existing treatments for TA-TMA [51][52] - The company anticipates continued growth in OMIDRIA revenues as ASC customers increase their usage [41][76] Other Important Information - The company has an unused line of credit with borrowing availability up to $50 million based on accounts receivable [21] - The company is exploring options for external funding sources for its phosphodiesterase 7 inhibitor program [34] Q&A Session Summary Question: Comments on the CRL and potential new controlled trial funding - Management does not expect a new controlled trial will be required and is targeting an end of 2022 readout for the IGAN phase 3 trial [45] Question: Update on OMS906 program and potential PNH data - The PNH program is expected to initiate early in 2022, with a focus on demonstrating the benefits of OMS906 over other alternative pathway inhibitors [48] Question: Support from clinicians regarding Narsoplimab - Thought leaders expressed surprise and disappointment at the CRL but remain supportive of Narsoplimab, with ongoing requests for compassionate use [51][53] Question: Path forward for Narsoplimab and nephrology indications - Management is hopeful for a class one resubmission and sees potential for Narsoplimab in broader renal diseases beyond IgA nephropathy [56][59] Question: Differentiation of OMS906 from other products - OMS906 targets the alternative pathway, while Narsoplimab and OMS1029 focus on the lectin pathway, with different dosing advantages for chronic diseases [62]