FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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) Washington 91-1663741 (State o ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 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) Washington 91-1663741 (State ...

Omeros Corporation (NASDAQ:OMER) Q4 2022 Earnings Conference Call March 13, 2023 4:30 PM ET Company Participants Jennifer Williams - Investor Relations Dr. Greg Demopulos - Chairman and CEO Mike Jacobsen - Chief Accounting Officer Cathy Melfi - Chief Regulatory Officer Steve Whitaker - Chief Clinical Officer Nadia Dac - Vice President and CCO Conference Call Participants Colin Bristow - UBS Steve Brozak - WBB Securities Mary Kate - Bank of America Brandon Folkes - Cantor Serge Belanger - Needham & Company O ...

Financial Position - As of December 31, 2022, the company had cash, cash equivalents, and short-term investments totaling $194.9 million, a decrease from $100.8 million in cash and cash equivalents in 2021[354] - Total assets increased to $590.97 million in 2022 from $419.27 million in 2021, primarily driven by an increase in receivables and short-term investments[364] - Total current liabilities increased to $136.38 million in 2022 from $51.79 million in 2021, primarily due to the current portion of unsecured convertible senior notes[364] - The company’s total shareholders' equity rose to $85.68 million in 2022 from $23.78 million in 2021, indicating improved financial stability[364] - As of December 31, 2022, the company reported cash, cash equivalents, and short-term investments totaling $194.9 million, with outstanding accounts receivable of $213.2 million[380] - Total receivables, net increased to $213,221,000 in 2022 from $38,155,000 in 2021, primarily due to a $200,000,000 OMIDRIA milestone receivable[420] Income and Loss - The company reported a net loss from continuing operations of $182.03 million for the year ended December 31, 2022, compared to a loss of $191.55 million in 2021[367] - The company recorded a net income of $47.42 million in 2022, compared to a net income of $194.24 million in 2021, largely due to the impact of discontinued operations[367] - The net income for the year ended December 31, 2022, was $47.4 million, which included a milestone payment of $200.0 million received in February 2023[380] - The company incurred a net loss of $138.1 million in 2020, followed by a net income of $194.2 million in 2021, and a net income of $47.4 million in 2022[372] - Net income from discontinued operations for the year ended December 31, 2022, was $229.4 million, which included $200 million in milestone income and $18.6 million in interest on the OMIDRIA contract royalty asset[416] Expenses - Research and development expenses decreased to $112.72 million in 2022 from $118.78 million in 2021, reflecting a focus on cost management[367] - Interest expense increased to $22.70 million in 2022 from $19.67 million in 2021, reflecting higher debt levels[367] - Stock-based compensation expense for 2022 was $14.1 million, compared to $17.6 million in 2021 and $14.9 million in 2020[372] - Advertising costs for the year ended December 31, 2022, were $3.2 million, with $2 million related to discontinued operations of OMIDRIA[406] - Total accrued expenses decreased to $30,551,000 in 2022 from $33,134,000 in 2021[427] Debt and Liabilities - The principal balance of $95.0 million on the 2023 convertible senior notes is due in November 2023[381] - The principal amount of unsecured convertible senior notes outstanding as of December 31, 2022, was $320,030,000, unchanged from 2021[429] - The fair value of outstanding unsecured convertible senior notes was $92,031,000 for the 2023 Notes and $118,141,000 for the 2026 Notes as of December 31, 2022[429] - The company has operating leases with an initial term through November 2027, with total lease liabilities of $26.7 million as of December 31, 2022[454] - The company has commitments totaling $24.2 million in termination fees if contracts are canceled within specific time frames[458] Royalty and Milestone Payments - The OMIDRIA contract royalty asset was valued at $123.43 million as of December 31, 2022, down from $140.25 million in 2021[364] - The royalty rate on U.S. net sales of OMIDRIA was reduced from 50% to 30% following the $200 million milestone payment event in December 2022[387] - The OMIDRIA royalty obligation was recorded at $125 million, with an effective interest rate of 9.4% amortized over the term of the arrangement[389] - The company expects the U.S. base royalty rate to be reduced to 10% upon certain events, including when OMIDRIA is no longer eligible for separate payment[413] - The total future minimum principal payments under the 2023 and 2026 Notes amount to $320.0 million, with $95.0 million due in 2023 and $225.0 million in 2026[448] Tax and Valuation - As of December 31, 2022, the company had federal net operating loss carryforwards of approximately $361.0 million[475] - The company established a 100% valuation allowance for all periods due to uncertainty in generating sufficient taxable income to realize deferred tax assets[477] - The effective tax rate for 2022 and 2021 was (0.0)%[477] - The change in valuation allowance was 28.3% in 2022 and 26.9% in 2021[477] Other Financial Information - The company has a sales agreement to sell shares of common stock up to an aggregate amount of $150.0 million through an "at the market" equity offering facility[382] - The company operates in one segment and uses cash flow as the primary measure to manage its business[383] - The company recognized a $13.4 million loss on early extinguishment of debt related to the repurchase of the 2023 Notes[432] - Total net lease cost for the year ended December 31, 2022, was $8,574,000, a decrease of 17.4% from $10,390,000 in 2021[455] - Cash payments for operating leases in 2022 were $7,072,000, down from $7,483,000 in 2021, reflecting a reduction of 5.5%[455]

Financial Data and Key Metrics Changes - The company reported a net loss of $17.5 million or $0.28 per share for Q3 2022, an improvement from a loss of $22.7 million or $0.36 per share in Q3 2021 [21] - Non-cash expenses were $4.6 million or $0.07 per share for the current quarter, down from $6.4 million or $0.10 per share in the prior year quarter [22] - Total cash burn for the quarter was $26.6 million, with approximately $5 million attributed to manufacturing costs [22] - As of September 30, 2022, the company had $221 million in cash and investments, including $125 million received from DRI Healthcare Trust [24] Business Line Data and Key Metrics Changes - The company earned $16.5 million in royalties from Rayner's net sales of OMIDRIA, a decrease of approximately $700,000 from Q2 2022 due to timing of wholesaler purchases [23] - Rayner's unit sell-through to ASCs and hospitals increased by 4% over the second quarter [23] - Discontinued operations included $37 million of income, recognizing $8 million of interest earned and $29 million in remeasurement adjustments to the OMIDRIA contract royalty asset [58] Market Data and Key Metrics Changes - The company expects continued growth in OMIDRIA sales for Q4 2022, supported by CMS reaffirming OMIDRIA's qualification for separate payment under the outpatient prospective payment system [33] - The NOPAIN Act, which would provide separate payment for non-opioid pain management drugs like OMIDRIA, is gaining bipartisan support and could trigger a $200 million milestone payment to the company [35] Company Strategy and Development Direction - The company is focusing on the development of narsoplimab for TA-TMA and is working through FDA's recent decision regarding the path forward [8][10] - The company is advancing its OMS1029 and OMS906 programs, with plans for multiple ascending dose studies and initial patient data expected in early 2023 [13][15] - The company aims to leverage its MASP-2 portfolio and is closing in on a lead development candidate for a small molecule MASP-2 inhibitor [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the approval of narsoplimab for TA-TMA, stating that abandoning the path forward is not an option [65] - The company is committed to getting narsoplimab approved as quickly as possible, emphasizing the urgent need for treatment in the market [107] - Management highlighted the importance of strong advocacy within the expert community to support the approval process [85] Other Important Information - The company recorded the $125 million upfront payment from DRI as a liability, consistent with accounting practices for asset sales [31][52] - The structure of the DRI transaction shifts risk from the company to DRI, particularly regarding the ability to generate OMIDRIA royalty streams [28] Q&A Session Summary Question: Is there an outcome where the company would abandon the TA-TMA indication? - Management believes that narsoplimab should be approved and abandoning the path forward is not an option [65] Question: How comfortable is the company with the mechanism of action for COVID? - Management provided detailed insights into the mechanism of action and its relevance to both COVID and TA-TMA, citing published data [79] Question: What is the minimum survival benefit the FDA would want to see for narsoplimab? - Management has not discussed specific thresholds with the FDA but believes the survival benefit observed exceeds literature expectations [91] Question: How close is the company to full enrollment in the IGAN trial? - Enrollment is wrapping up, and the study is powered at 90% to detect differences in proteinuria [92] Question: What options is the company considering regarding the FDA's request for historical control data? - The company is considering a broad range of options, including addressing the historical control request [104]

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)