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]

[Filing Information](index=1&type=section&id=Filing%20Information) This section details Omeros Corporation's Quarterly Report on Form 10-Q filing, identifying it as a large accelerated filer - **Omeros Corporation** filed a Quarterly Report on Form 10-Q for the period ended September 30, 2021 The company is a **large accelerated filer** and is not a shell company[3](index=3&type=chunk)[5](index=5&type=chunk)[6](index=6&type=chunk) Registrant Information | Detail | Value | | :--- | :--- | | Commission file number | 001-34475 | | State of incorporation | Washington | | IRS Employer Identification Number | 91-1663741 | | Registrant's telephone number | (206) 676-5000 | | Trading symbol | OMER | | Exchange registered | The Nasdaq Stock Market LLC | | Outstanding common stock (as of Nov 5, 2021) | 62,542,268 shares | [Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights the forward-looking nature of statements in the report, subject to risks and uncertainties, with no obligation to update - This report contains **forward-looking statements** subject to safe harbor provisions, based on management's beliefs and assumptions Actual results may differ materially due to various risks and uncertainties, including those described in '**Risk Factors**' and '**Management's Discussion and Analysis of Financial Condition and Results of Operations**' The company assumes no obligation to update these statements[7](index=7&type=chunk)[9](index=9&type=chunk) - Examples of **forward-looking statements** include expectations regarding regulatory interactions for **narsoplimab** (following a **Complete Response Letter** from **FDA**), ability to raise capital, sufficiency of existing funds, demand for **OMIDRIA**, clinical trial plans, commercial launch of **narsoplimab**, impact of **COVID-19**, and reimbursement policies for **OMIDRIA**[7](index=7&type=chunk)[10](index=10&type=chunk) [Part I — Financial Information](index=7&type=section&id=Part%20I%20%E2%80%94%20Financial%20Information) This section presents the unaudited condensed consolidated financial statements and related notes for the specified periods [Item 1. Financial Statements (unaudited)](index=7&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive loss, and cash flows, along with detailed notes explaining the company's business, accounting policies, and specific financial accounts for the periods ended September 30, 2021, and December 31, 2020 [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and shareholders' deficit at specific reporting dates Condensed Consolidated Balance Sheets (In thousands) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $7,415 | $10,501 | | Short-term investments | $42,957 | $124,452 | | Total current assets | $91,349 | $151,285 | | Total assets | $123,430 | $181,042 | | Total current liabilities | $42,818 | $36,736 | | Unsecured convertible senior notes, net | $313,018 | $236,288 | | Total shareholders' deficit | $(262,697) | $(120,752) | | Total liabilities and shareholders' deficit | $123,430 | $181,042 | - **Total assets** decreased from **$181.0 million** at December 31, 2020, to **$123.4 million** at September 30, 2021, primarily driven by a significant reduction in **short-term investments**[15](index=15&type=chunk) - **Shareholders' deficit** significantly increased from **$(120.8) million** to **$(262.7) million**, reflecting ongoing **net losses** and the cumulative effect of adopting ASU 2020-06[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 outlines the company's financial performance, including product sales, operating expenses, and net loss over specified periods Condensed Consolidated Statements of Operations and Comprehensive Loss (In thousands, except per share data) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Product sales, net | $30,004 | $26,114 | $79,889 | $63,181 | | Cost of product sales | $333 | $401 | $938 | $815 | | Research and development | $27,063 | $31,316 | $91,358 | $84,359 | | Selling, general and administrative | $20,861 | $19,825 | $60,474 | $54,792 | | Loss from operations | $(18,253) | $(25,428) | $(72,881) | $(76,785) | | Net loss | $(22,703) | $(38,463) | $(86,386) | $(100,788) | | Basic and diluted net loss per share | $(0.36) | $(0.66) | $(1.39) | $(1.81) | - **Net product sales** increased by **$3.9 million** (**14.9%**) for the three months ended September 30, 2021, and by **$16.7 million** (**26.4%**) for the nine months ended September 30, 2021, compared to the respective prior-year periods[18](index=18&type=chunk) - **Net loss** decreased for both the three-month and nine-month periods, from **$(38.5) million** to **$(22.7) million** (QoQ) and from **$(100.8) million** to **$(86.4) million** (YoY), primarily due to reduced **operating losses** and lower **interest expense**[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash inflows and outflows from operating, investing, and financing activities over specified periods Condensed Consolidated Statements of Cash Flows (In thousands) | Activity | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(91,507) | $(81,679) | | Net cash provided by/(used in) investing activities | $81,292 | $(75,027) | | Net cash provided by financing activities | $7,129 | $174,697 | | Net (decrease) increase in cash and cash equivalents | $(3,086) | $17,991 | | Cash and cash equivalents at end of period | $7,415 | $21,075 | - **Net cash used in operating activities** increased by **$9.8 million** to **$(91.5) million** for the nine months ended September 30, 2021, primarily due to an increase in **accounts receivable**[20](index=20&type=chunk) - **Investing activities** shifted from a net cash outflow of **$(75.0) million** in 2020 to a net cash inflow of **$81.3 million** in 2021, largely due to proceeds from the sale and maturities of investments[20](index=20&type=chunk) - **Financing activities** significantly decreased by **$167.6 million** to **$7.1 million** in 2021, as 2020 included substantial proceeds from convertible senior notes and common stock issuance[20](index=20&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 supporting the condensed consolidated financial statements [Note 1—Description of Business](index=12&type=section&id=Note%201%E2%80%94Description%20of%20Business) This note describes Omeros Corporation's biopharmaceutical focus, commercial products, and pipeline, along with its going concern assessment - **Omeros Corporation** is a commercial-stage biopharmaceutical company focused on small-molecule and protein therapeutics for inflammation, complement-mediated diseases, CNS disorders, addiction, and immune-related diseases[21](index=21&type=chunk) - **OMIDRIA®** is marketed in the U.S for cataract surgery and qualifies for separate Medicare Part B payment in ambulatory surgery centers[22](index=22&type=chunk) - The company received a **Complete Response Letter** (**CRL**) from the **FDA** for its **narsoplimab BLA** for **HSCT-TMA** and is seeking a **Type A meeting** to determine the path forward[22](index=22&type=chunk) - As of September 30, 2021, the company had **$50.4 million** in cash, cash equivalents, and short-term investments, and incurred **$72.9 million** in **operating losses** for the nine months ended September 30, 2021, raising substantial doubt about its ability to meet obligations through November 9, 2022, and continue as a **going concern**[25](index=25&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) [Note 2—Significant Accounting Policies](index=16&type=section&id=Note%202%E2%80%94Significant%20Accounting%20Policies) This note outlines the key accounting principles and policies applied in preparing the financial statements, including revenue recognition and convertible notes - Revenue from product sales is generally recorded upon delivery to wholesalers, net of estimated chargebacks, rebates, returns, and purchase-volume discounts[37](index=37&type=chunk) - On January 1, 2021, the company adopted ASU 2020-06, which removes separate liability and equity accounting for convertible senior notes, now accounting for them wholly as debt This resulted in a cumulative effect adjustment of **$75.5 million**[43](index=43&type=chunk)[57](index=57&type=chunk) [Note 3—Net Loss Per Share](index=17&type=section&id=Note%203%E2%80%94Net%20Loss%20Per%20Share) This note explains the calculation of basic and diluted net loss per share, including the treatment of potentially dilutive securities - Potentially dilutive securities, including stock options and unsecured convertible senior notes, are excluded from diluted EPS calculations during periods of **net loss** because their inclusion would have an anti-dilutive effect[44](index=44&type=chunk) Potentially Dilutive Securities Excluded from Diluted EPS | Security | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Outstanding options to purchase common stock | 1,781,619 | 1,456,454 | 2,504,901 | 1,777,393 | | Outstanding warrants to purchase common stock | — | 9,828 | — | 11,712 | | Total potentially dilutive shares excluded | 1,781,619 | 1,466,282 | 2,504,901 | 1,789,105 | [Note 4—Certain Balance Sheet Accounts](index=18&type=section&id=Note%204%E2%80%94Certain%20Balance%20Sheet%20Accounts) This note provides detailed breakdowns of specific balance sheet accounts, including accounts receivable, inventory, and accrued expenses Accounts Receivable, net (In thousands) | Category | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Trade receivables, net | $33,624 | $3,771 | | Sublease and other receivables | $274 | $70 | | Total accounts receivables, net | $33,898 | $3,841 | Inventory (In thousands) | Category | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Raw materials | $463 | $109 | | Work-in-progress | $65 | $462 | | Finished goods | $184 | $784 | | Total inventory | $712 | $1,355 | Accrued Expenses (In thousands) | Category | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Sales rebates, fees and discounts | $7,650 | $3,326 | | Contract research and development | $4,391 | $7,952 | | Consulting and professional fees | $4,055 | $5,393 | | Interest payable | $3,703 | $5,205 | | Employee compensation | $3,971 | $3,948 | | Clinical trials | $3,184 | $2,121 | | Other accrued expenses | $746 | $810 | | Total accrued expenses | $27,700 | $28,755 | [Note 5—Fair-Value Measurements](index=19&type=section&id=Note%205%E2%80%94Fair-Value%20Measurements) This note describes the fair value measurement of financial assets, primarily short-term investments, using Level 1 inputs - All investments are classified as short-term and available-for-sale, primarily consisting of money-market funds measured at fair value using Level 1 inputs (quoted prices in active markets)[49](index=49&type=chunk)[50](index=50&type=chunk) Fair Value of Financial Assets (In thousands) | Asset Category | Sep 30, 2021 (Level 1) | Dec 31, 2020 (Level 1) | | :--- | :--- | :--- | | Money-market funds (short-term investments) | $42,957 | $124,452 | | Money-market funds (non-current restricted investments) | $1,054 | $1,055 | | Total | $44,011 | $125,507 | [Note 6—Line of Credit](index=21&type=section&id=Note%206%E2%80%94Line%20of%20Credit) This note details the company's revolving line of credit facility, including its terms and outstanding amounts - The company has a **$50.0 million** revolving line of credit facility with Silicon Valley Bank, maturing August 2, 2022, secured by assets excluding intellectual property and development program inventories[55](index=55&type=chunk) - As of September 30, 2021, and December 31, 2020, no amounts were outstanding under the Line of Credit Agreement[56](index=56&type=chunk) [Note 7—Unsecured Convertible Senior Notes](index=21&type=section&id=Note%207%E2%80%94Unsecured%20Convertible%20Senior%20Notes) This note explains the accounting and terms of the company's unsecured convertible senior notes, including interest expense and future payments - Following the adoption of ASU 2020-06 on January 1, 2021, convertible senior notes are now accounted for wholly as debt, resulting in a **$75.5 million** cumulative effect adjustment to restore balances without an equity allocation component[57](index=57&type=chunk) Unsecured Convertible Senior Notes, Net (In thousands) | Note Type | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | 2023 Notes (Principal) | $95,000 | $95,000 | | 2026 Notes (Principal) | $225,030 | $225,030 | | Total Principal Amount | $320,030 | $320,030 | | Total Unsecured Convertible Senior Notes, Net | $313,018 | $236,288 | Interest Expense for Convertible Notes (In thousands) | Note Type | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | 2023 Notes Total | $1,640 | $4,323 | $4,912 | $16,043 | | 2026 Notes Total | $3,231 | $2,494 | $9,658 | $2,494 | - Future minimum payments for the 2023 Notes are **$95.0 million** in 2023, and for the 2026 Notes are **$225.0 million** in 2026[69](index=69&type=chunk) [Note 8—Leases](index=25&type=section&id=Note%208%E2%80%94Leases) This note provides details on the company's lease arrangements, including lease costs and cash payments for operating and finance leases Net Lease Cost (In thousands) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Operating lease cost | $1,961 | $1,480 | $5,528 | $4,540 | | Finance lease cost (Amortization) | $243 | $336 | $854 | $1,039 | | Finance lease cost (Interest) | $40 | $79 | $127 | $224 | | Variable lease cost | $863 | $648 | $2,667 | $1,715 | | Sublease income | $(447) | $(327) | $(1,288) | $(929) | | Net lease cost | $2,660 | $2,216 | $7,888 | $6,589 | Cash Payments for Leases (In thousands) | Category | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Cash payments for operating leases | $7,348 | $6,490 | | Cash payments for financing leases | $896 | $1,113 | [Note 9—Commitments and Contingencies](index=26&type=section&id=Note%209%E2%80%94Commitments%20and%20Contingencies) This note outlines the company's contractual commitments and potential contingent obligations, such as milestone and royalty payments - The company has licensed intellectual property that may require milestone payments and low single to low double-digit royalties on net income or sales[73](index=73&type=chunk) - If **narsoplimab** is approved for **HSCT-TMA** in the U.S., the company would be obligated to pay approval milestones of **$1.7 million** and low single-digit royalties on net sales[73](index=73&type=chunk) [Note 10—Shareholders' Deficit](index=26&type=section&id=Note%2010%E2%80%94Shareholders%27%20Deficit) This note details changes in shareholders' deficit, including equity offerings and the impact of accounting standard adoption - In March 2021, the company entered into a sales agreement for an 'at the market' equity offering program to sell up to **$150.0 million** of common stock, though no shares were sold as of September 30, 2021[74](index=74&type=chunk) - Shareholders approved an increase of **4,000,000 shares** for issuance under the 2017 Omnibus Incentive Compensation Plan, bringing the total to **12,600,000 shares**[77](index=77&type=chunk) - The cumulative effect of adopting ASU 2020-06 resulted in a **$(70.8) million** reduction in Additional Paid-In Capital and a **$(4.7) million** reduction in Accumulated Deficit as of January 1, 2021[79](index=79&type=chunk) [Note 11—Stock-Based Compensation](index=28&type=section&id=Note%2011%E2%80%94Stock-Based%20Compensation) This note describes the company's stock-based compensation plans and the associated expense recognized Stock-Based Compensation Expense (In thousands) | Category | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $2,477 | $1,636 | $5,367 | $4,714 | | Selling, general and administrative | $3,217 | $2,188 | $6,715 | $6,408 | | Total | $5,694 | $3,824 | $12,082 | $11,122 | - **Total stock-based compensation expense** increased by **$1.9 million** for the three months and **$0.96 million** for the nine months ended September 30, 2021, compared to the prior year, due to an increase in employee count and timing of annual grants[81](index=81&type=chunk)[128](index=128&type=chunk) - As of September 30, 2021, there were **13.2 million options** outstanding with a weighted-average exercise price of **$12.66**, and **$33.6 million** in estimated compensation expense yet to be recognized[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial performance, liquidity, and capital resources, discussing key revenue drivers, expense trends, product development progress, and the impact of external factors like the **COVID-19** pandemic and regulatory decisions [Overview](index=29&type=section&id=Overview) This section provides an overview of Overview - **Omeros** is a commercial-stage biopharmaceutical company with **OMIDRIA®** marketed in the U.S for cataract surgery[83](index=83&type=chunk)[84](index=84&type=chunk) - The **FDA** issued a **Complete Response Letter** (**CRL**) for **narsoplimab's BLA** for **HSCT-TMA**, and discussions are ongoing for approval[84](index=84&type=chunk) - The pipeline includes late-stage clinical programs for **narsoplimab** in complement-mediated disorders (**IgA nephropathy**, **aHUS**, **COVID-19**), a Phase 1 program for **OMS906** (**MASP-3** inhibitor), and preclinical programs including **GPR174** in immuno-oncology[84](index=84&type=chunk) [Impact of Global Pandemic](index=29&type=section&id=Impact%20of%20Global%20Pandemic) This section provides an overview of Impact of Global Pandemic - The **COVID-19** pandemic significantly impacted **OMIDRIA** revenues in the first half of 2020 due to postponed cataract surgeries, but sales recovered to pre-pandemic levels by June 2020[85](index=85&type=chunk) - The pandemic has also caused delays or disruptions in the company's clinical and preclinical activities, with future impacts remaining uncertain[86](index=86&type=chunk) [Commercial Product - OMIDRIA® (phenylephrine and ketorolac intraocular solution) 1%/0.3%](index=29&type=section&id=Commercial%20Product%20-%20OMIDRIA%C2%AE%20(phenylephrine%20and%20ketorolac%20intraocular%20solution)%201%25%2F0.3%25) This section provides an overview of Commercial Product - OMIDRIA® (phenylephrine and ketorolac intraocular solution) 1%/0.3% - **OMIDRIA** is **FDA**-approved for use during cataract surgery or intraocular lens replacement to maintain pupil size and reduce postoperative ocular pain[87](index=87&type=chunk) - **CMS** reconfirmed in November 2021 that **OMIDRIA** will continue to receive separate payment when used on Medicare Part B patients in the **ASC** setting under its non-opioid pain management surgical drugs policy[90](index=90&type=chunk) [Clinical Development Programs](index=31&type=section&id=Clinical%20Development%20Programs) This section provides an overview of Clinical Development Programs [MASP-2 - narsoplimab (OMS721) - Lectin Pathway Disorders](index=31&type=section&id=MASP-2%20-%20narsoplimab%20(OMS721)%20-%20Lectin%20Pathway%20Disorders) This section provides an overview of MASP-2 - narsoplimab (OMS721) - Lectin Pathway Disorders - **Narsoplimab**, a **MASP-2** inhibitor, received a **Complete Response Letter** (**CRL**) from the **FDA** for **HSCT-TMA**, with **FDA** citing difficulty in estimating treatment effect and requiring additional information[91](index=91&type=chunk) - Phase 3 clinical programs for **narsoplimab** are ongoing in **IgA nephropathy** (ARTEMIS-IGAN trial) and **atypical hemolytic uremic syndrome** (**aHUS**)[92](index=92&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) - **Narsoplimab** has received **Breakthrough Therapy** and **Orphan Drug** designations from the **FDA** for **HSCT-TMA** and **IgA nephropathy**, and **Fast-Track** and **Orphan Drug** designations for **aHUS**[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[98](index=98&type=chunk) [MASP-2 - narsoplimab (OMS721) - COVID-19](index=33&type=section&id=MASP-2%20-%20narsoplimab%20(OMS721)%20-%20COVID-19) This section provides an overview of MASP-2 - narsoplimab (OMS721) - COVID-19 - **Narsoplimab** has been used in compassionate use programs for critically ill **COVID-19** patients in Italy and the U.S., showing rapid and sustained reduction in markers of endothelial damage and inflammation, with all treated patients recovering and surviving[97](index=97&type=chunk)[101](index=101&type=chunk)[103](index=103&type=chunk) - **Narsoplimab** is included in the I-SPY **COVID-19 adaptive platform trial**, evaluating investigational therapies for critically ill **COVID-19** patients[105](index=105&type=chunk) [MASP-3 - OMS906 - Alternative Pathway Disorders](index=35&type=section&id=MASP-3%20-%20OMS906%20-%20Alternative%20Pathway%20Disorders) This section provides an overview of MASP-3 - OMS906 - Alternative Pathway Disorders - **OMS906** is a **MASP-3** inhibitor targeting the alternative pathway of complement, with positive preclinical data in **PNH** and rheumatoid arthritis animal models[106](index=106&type=chunk)[108](index=108&type=chunk) - Phase 1 clinical trial data for **OMS906** showed it was well tolerated with pharmacokinetics and pharmacodynamics consistent with once-monthly subcutaneous dosing and high-level suppression of alternative pathway activity[109](index=109&type=chunk) - The company plans to move directly into patients with **paroxysmal nocturnal hematuria** (**PNH**) who have an unsatisfactory response to C5 inhibitors, accelerating the clinical development program[109](index=109&type=chunk) [PDE7 - OMS527](index=37&type=section&id=PDE7%20-%20OMS527) This section provides an overview of PDE7 - OMS527 - The **PDE7** program, with lead compound OMS182399, completed a Phase 1 study showing safety, tolerability, and a favorable pharmacokinetic profile supporting once-daily dosing for addiction and compulsive disorders[109](index=109&type=chunk) - Continued clinical development for **OMS527** is subject to the allocation of financial and other resources, which are currently prioritized for other programs[109](index=109&type=chunk) [Preclinical Development Programs and Platforms](index=37&type=section&id=Preclinical%20Development%20Programs%20and%20Platforms) This section provides an overview of Preclinical Development Programs and Platforms [Other MASP Inhibitor Preclinical Programs](index=37&type=section&id=Other%20MASP%20Inhibitor%20Preclinical%20Programs) This section provides an overview of Other MASP Inhibitor Preclinical Programs - The company is developing a longer-acting second-generation **MASP-2** antibody (**OMS1029**) with clinical trials expected to initiate in 2022[110](index=110&type=chunk) - Development efforts also include small-molecule inhibitors of **MASP-2** for oral administration and bispecific small- and large-molecule inhibitors of **MASP-2**/-3[110](index=110&type=chunk) [GPR174 and GPCR Platform](index=37&type=section&id=GPR174%20and%20GPCR%20Platform) This section provides an overview of GPR174 and GPCR Platform - The proprietary **GPCR** platform has identified compounds interacting with 54 of 81 Class A orphan **GPCRs** linked to various disorders, including cancer[110](index=110&type=chunk) - **GPR174** is a priority target in immuno-oncology, with small-molecule inhibitors upregulating cytokine production, blocking checkpoints, and suppressing regulatory T-cells, suggesting a new approach to cancer immunotherapy[110](index=110&type=chunk)[112](index=112&type=chunk) [Financial Summary](index=39&type=section&id=Financial%20Summary) This section provides an overview of Financial Summary Key Financials (In millions) | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net losses | $(22.7) | $(38.5) | | OMIDRIA net revenues | $30.0 | $26.1 | | Cash, cash equivalents and short-term investments (as of Sep 30, 2021) | $50.4 | N/A | | Accounts receivable, net (as of Sep 30, 2021) | $33.9 | N/A | - **OMIDRIA net revenues** increased due to the reinstatement of separate payment for Medicare Part B patients in **ASCs**, effective retroactively to October 1, 2020[114](index=114&type=chunk) - The company expects **net losses** to continue until sufficient revenues are generated from **OMIDRIA**, other product sales, or licensing to cover operating expenses and debt service[115](index=115&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) This section provides an overview of Results of Operations [Revenue](index=40&type=section&id=Revenue) This section provides an overview of Revenue OMIDRIA Product Sales, Net (In thousands) | Period | 2021 | 2020 | | :--- | :--- | :--- | | Three Months Ended Sep 30 | $30,004 | $26,114 | | Nine Months Ended Sep 30 | $79,889 | $63,181 | - The **$3.9 million** increase in Q3 2021 revenue (YoY) was due to the change in **OMIDRIA** reimbursement status under Medicare Part B, which negatively affected Q3 2020 sales[116](index=116&type=chunk) - The **$16.7 million** increase in 9M 2021 revenue (YoY) was due to consistent Medicare Part B separate payment and the absence of elective surgical procedure shutdowns experienced in early 2020 due to **COVID-19**[117](index=117&type=chunk) [Gross-to-Net Deductions](index=40&type=section&id=Gross-to-Net%20Deductions) This section provides an overview of Gross-to-Net Deductions Gross-to-Net Provision as % of Gross OMIDRIA Product Sales | Period | 2021 | 2020 | | :--- | :--- | :--- | | Three Months Ended Sep 30 | 29.3% | 46.8% | | Nine Months Ended Sep 30 | 29.7% | 36.6% | - The decrease in **gross-to-net deductions** as a percentage of sales in 2021 compared to 2020 is largely due to a significant **OMIDRIA** return provision recorded in Q3 2020 related to the temporary loss of separate payment[118](index=118&type=chunk) [Chargebacks and Rebates](index=40&type=section&id=Chargebacks%20and%20Rebates) This section provides an overview of Chargebacks and Rebates - Chargebacks and rebates provisions are recorded at the time of revenue recognition and relate to pharmaceutical pricing agreements, federal supply schedules, Medicaid drug rebate agreements, upfront discounts, and patient assistance programs[120](index=120&type=chunk)[122](index=122&type=chunk) [Distribution Fees and Product Return Allowances](index=42&type=section&id=Distribution%20Fees%20and%20Product%20Return%20Allowances) This section provides an overview of Distribution Fees and Product Return Allowances - Distribution fees are paid to wholesalers based on the dollar value of **OMIDRIA** purchases and recorded as a revenue reduction[123](index=123&type=chunk) - A provision for product returns is recorded upon sale, allowing returns up to 12 months past expiration or for damaged product[124](index=124&type=chunk) [Research and Development Expenses](index=42&type=section&id=Research%20and%20Development%20Expenses) This section provides an overview of Research and Development Expenses Research and Development Expenses (In thousands) | Category | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total clinical research and development | $12,821 | $17,136 | $44,026 | $42,551 | | Preclinical research and development | $1,998 | $2,012 | $10,091 | $8,846 | | Internal overhead and other expenses | $9,767 | $10,532 | $31,874 | $28,248 | | Stock-based compensation expense | $2,477 | $1,636 | $5,367 | $4,714 | | Total research and development expenses | $27,063 | $31,316 | $91,358 | $84,359 | - Clinical **R&D** decreased by **$4.3 million** in Q3 2021 (YoY) due to a **$5.0 million OMS906** license fee in the prior year, partially offset by increased **OMIDRIA** manufacturing costs[125](index=125&type=chunk) - Preclinical **R&D** increased by **$1.2 million** in 9M 2021 (YoY) due to higher manufacturing costs for the **OMS1029** program[126](index=126&type=chunk) - Overall **R&D** costs are expected to remain relatively unchanged in Q4 2021 compared to Q3 2021[128](index=128&type=chunk) [Selling, General and Administrative Expenses](index=44&type=section&id=Selling%20General%20and%20Administrative%20Expenses) This section provides an overview of Selling, General and Administrative Expenses Selling, General and Administrative Expenses (In thousands) | Category | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | SG&A (excluding stock-based comp) | $17,644 | $17,637 | $53,759 | $48,384 | | Stock-based compensation expense | $3,217 | $2,188 | $6,715 | $6,408 | | Total SG&A expenses | $20,861 | $19,825 | $60,474 | $54,792 | - **Total SG&A expenses** increased by **$1.0 million** in Q3 2021 (YoY) and **$5.7 million** in 9M 2021 (YoY), driven by increased marketing activities and employee-related costs in preparation for the anticipated U.S commercial launch of **narsoplimab**[131](index=131&type=chunk) [Interest Expense](index=44&type=section&id=Interest%20Expense) This section provides an overview of Interest Expense Interest Expense (In thousands) | Period | 2021 | 2020 | | :--- | :--- | :--- | | Three Months Ended Sep 30 | $4,911 | $6,882 | | Nine Months Ended Sep 30 | $14,719 | $18,763 | - **Interest expense** decreased by **$2.0 million** in Q3 2021 (YoY) and **$4.0 million** in 9M 2021 (YoY), primarily due to the adoption of ASU 2020-06, which eliminated the amortization of non-cash debt discount on convertible notes[134](index=134&type=chunk) [Loss on Early Extinguishment of Debt](index=46&type=section&id=Loss%20on%20Early%20Extinguishment%20of%20Debt) This section provides an overview of Loss on Early Extinguishment of Debt Loss on Early Extinguishment of Debt (In thousands) | Period | 2021 | 2020 | | :--- | :--- | :--- | | Three Months Ended Sep 30 | $— | $(13,374) | | Nine Months Ended Sep 30 | $— | $(13,374) | - A **$13.4 million** loss was recorded in Q3 and 9M 2020 due to the repurchase of **$115.0 million** of the 2023 Notes[135](index=135&type=chunk) [Income Tax Benefit](index=46&type=section&id=Income%20Tax%20Benefit) This section provides an overview of Income Tax Benefit Income Tax Benefit (In thousands) | Period | 2021 | 2020 | | :--- | :--- | :--- | | Three Months Ended Sep 30 | $— | $7,854 | | Nine Months Ended Sep 30 | $— | $7,854 | - An **income tax benefit** of **$7.9 million** was recognized in Q3 and 9M 2020 related to the issuance of the 2026 Notes[136](index=136&type=chunk) [Financial Condition - Liquidity and Capital Resources](index=46&type=section&id=Financial%20Condition%20-%20Liquidity%20and%20Capital%20Resources) This section provides an overview of Financial Condition - Liquidity and Capital Resources - As of September 30, 2021, the company had **$50.4 million** in cash, cash equivalents, and short-term investments, and access to approximately **$30.0 million** under its line of credit[137](index=137&type=chunk)[139](index=139&type=chunk) - The company's **operating losses** of **$72.9 million** for the nine months ended September 30, 2021, raise substantial doubt about its ability to continue as a **going concern** through November 9, 2022[137](index=137&type=chunk)[138](index=138&type=chunk) - Funding plans for the next twelve months include existing cash and investments, **OMIDRIA** sales, potential **narsoplimab** sales (if approved), utilization of the line of credit, and potential debt financings or equity offerings (up to **$150.0 million** 'at the market' facility)[139](index=139&type=chunk)[140](index=140&type=chunk) [Cash Flow Data](index=48&type=section&id=Cash%20Flow%20Data) This section provides an overview of Cash Flow Data Selected Cash Flow Data (In thousands) | Activity | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Operating activities | $(91,507) | $(81,679) | | Investing activities | $81,292 | $(75,027) | | Financing activities | $7,129 | $174,697 | - **Net cash used in operating activities** increased by **$9.8 million**, primarily due to a **$27.9 million** increase in **accounts receivable** following **OMIDRIA** reimbursement reinstatement[142](index=142&type=chunk) - **Investing activities** provided **$81.3 million** in cash in 2021, a **$156.3 million** change from 2020, mainly due to sales of short-term investments to fund operations[144](index=144&type=chunk) - **Financing activities** provided **$7.1 million** in 2021, a **$167.6 million** decrease from 2020, which included significant proceeds from convertible notes and common stock issuance[145](index=145&type=chunk) [Contractual Obligations and Commitments](index=50&type=section&id=Contractual%20Obligations%20and%20Commitments) This section provides an overview of Contractual Obligations and Commitments - As of September 30, 2021, the remaining aggregate non-cancelable rent payable under the initial term of the office and laboratory lease (ending November 2027) is **$51.3 million**[150](index=150&type=chunk) - Aggregate firm commitments for goods and services totaled **$34.8 million** as of September 30, 2021[151](index=151&type=chunk) - Potential future royalty and milestone payments from in-licensing or asset acquisition agreements are not included as their timing and occurrence are uncertain[152](index=152&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=50&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section provides an overview of Critical Accounting Policies and Significant Judgments and Estimates - The company adopted ASU 2020-06 on January 1, 2021, which changed the accounting for convertible senior notes[153](index=153&type=chunk) - Other than ASU 2020-06, there have been no material changes in critical accounting policies and significant judgments and estimates since the Annual Report on Form 10-K for the year ended December 31, 2020[154](index=154&type=chunk) [Off-Balance Sheet Arrangements](index=50&type=section&id=Off-Balance%20Sheet%20Arrangements) This section provides an overview of Off-Balance Sheet Arrangements - The company has not engaged in any off-balance sheet arrangements[155](index=155&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section outlines the company's exposure to market risk, primarily from its investment securities, and its strategy to manage this risk by investing in high-credit-quality, highly liquid, short-term securities to preserve capital and maximize income without significant interest rate exposure - The company's market risk exposure is primarily from investment securities, with a strategy to preserve capital and maximize income from high-credit-quality, highly liquid, investment-grade securities[156](index=156&type=chunk) - As of September 30, 2021, cash, cash equivalents, and short-term investments totaled **$50.4 million** Due to the short-term maturities of investments, the company believes an increase in market rates would not materially impact the realized value of its portfolio[156](index=156&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section details management's evaluation of the effectiveness of the company's disclosure controls and procedures, concluding they were effective as of September 30, 2021, and reports no material changes in internal control over financial reporting during the period [Evaluation of Disclosure Controls and Procedures](index=51&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section provides an overview of Evaluation of Disclosure Controls and Procedures - Management, including the principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2021[157](index=157&type=chunk) [Changes in Internal Control over Financial Reporting](index=51&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section provides an overview of Changes in Internal Control over Financial Reporting - There were no changes in internal control over financial reporting during the period covered by the report that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[158](index=158&type=chunk) [Part II — Other Information](index=52&type=section&id=Part%20II%20%E2%80%94%20Other%20Information) This section covers additional required disclosures, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=52&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section confirms the absence of any material legal proceedings involving the company - As of the filing date, **Omeros Corporation** was not involved in any material legal proceedings[161](index=161&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers readers to the comprehensive risk factors detailed in the Annual Report on Form 10-K - Readers should carefully consider the risks described in Part I, Item 1A, '**Risk Factors**' of the Annual Report on Form 10-K for the year ended December 31, 2020[162](index=162&type=chunk) - Past financial results may not be a reliable indicator of future performance, and the trading price of common stock could decline due to known or currently unknown risks[162](index=162&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section reports no unregistered sales of equity securities or use of proceeds during the reporting period - There were no unregistered sales of equity securities and use of proceeds to report[163](index=163&type=chunk) [Item 6. Exhibits](index=52&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits accompanying the Quarterly Report on Form 10-Q, including various certifications and XBRL documents - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104.1)[164](index=164&type=chunk) [Signatures](index=54&type=section&id=SIGNATURES) This section contains the official signatures of the company's authorized executive and financial officers - The report was signed on November 9, 2021, by Gregory A Demopulos, M.D (President, CEO, and Chairman) and Michael A Jacobsen (VP, Finance, Chief Accounting Officer, and Treasurer)[172](index=172&type=chunk)

Omeros Corporation (NASDAQ:OMER) Q2 2021 Earnings Conference Call August 9, 2021 4:30 PM ET Company Participants Jennifer Williams – Investor Relations Greg Demopulos – Chairman and Chief Executive Officer Nadia Dac – Chief Commercial Officer Mike Jacobsen – Chief Accounting Officer Cathy Melfi – Chief Regulatory Officer Conference Call Participants Geoff Meacham – Bank of America Steve Brozak – WBB Ram Selvaraju – H.C. Wainwright Brandon Folkes – Cantor Fitzgerald Operator Good afternoon, and welcome to to ...

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 June 30, 2021 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 ...

Financial Data and Key Metrics Changes - Net revenues from the sale of OMIDRIA in Q1 2021 were $21.1 million, doubling from the previous quarter [25] - The net loss for Q1 2021 was $35.1 million or $0.57 per share, including noncash charges of $4.1 million or $0.07 per share [27][47] - As of March 31, 2021, the company had $100.5 million in cash, cash equivalents, and short-term investments [27][49] Business Line Data and Key Metrics Changes - OMIDRIA sales have shown significant growth, with a 43% increase in the number of ASCs ordering compared to Q4 2020, leading to a total ASC purchase volume increase of 274% [36] - Narsoplimab is expected to be the first drug approved specifically for the treatment of TA-TMA, with a PDUFA date set for July 17, 2021 [7][10] Market Data and Key Metrics Changes - The approval of new ICD-10 diagnosis and procedural codes for TA-TMA and the administration of narsoplimab is expected to enhance reimbursement tracking and facilitate the drug's market entry [8][11][88] - The company is expanding its Phase III ARTEMIS-IGAN trial for narsoplimab to additional geographies, including China, where IgA nephropathy is more prevalent [23] Company Strategy and Development Direction - The company is focused on the launch readiness of narsoplimab and building a strong commercial team to support its market entry [31] - The company is also advancing its second-generation long-acting MASP-2 antibody, OMS1029, and small molecule MASP-2 inhibitors for oral administration [41][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued growth of OMIDRIA revenues as ASC customers ramp up their usage following the restoration of separate payment [52] - The management believes that COVID-19 will remain a significant issue globally for years to come, emphasizing the need for effective therapeutics like narsoplimab [75] Other Important Information - The NOPAIN Act, which mandates separate payment for non-opioid surgical pain management drugs like OMIDRIA, has strong bipartisan support and is expected to enhance market access [28][116] - The company is actively engaging with key transplant societies and organizations to support the launch of narsoplimab [12] Q&A Session Summary Question: Feedback on OMIDRIA sales - Management expressed satisfaction with the sales numbers, especially considering the reimbursement uncertainty earlier in the quarter [57][59] Question: View on Novartis' LNP023 data in IgA nephropathy - Management highlighted that narsoplimab shows significantly higher efficacy in reducing proteinuria compared to Novartis' data [65][66] Question: Impact of COVID-19 on narsoplimab's commercial potential - Management indicated that while vaccines are important, the need for therapeutics like narsoplimab remains critical due to ongoing COVID-19 challenges [75][76] Question: Awareness of TA-TMA and potential for consensus building - Management noted that awareness of TA-TMA is growing, and the introduction of dedicated diagnostic codes will facilitate better tracking and treatment [80][81] Question: Impact of ICD codes on utilization - Management expects the new ICD codes to positively influence utilization starting October 1, 2021, enhancing the launch momentum for narsoplimab [87][89] Question: Timeline for data from the I-SPY study - Management stated that they are not directly involved in the I-SPY study and cannot provide a specific timeline for data release [92] Question: Enrollment pace in the IgA nephropathy study - Management confirmed that enrollment is picking up again, especially with plans to expand into China [97][100]

FORM 10-Q (Mark One) Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 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 Corp (NASDAQ:OMER) Q4 2020 Earnings Conference Call March 1, 2020 4:30 PM ET Company Participants Jennifer Williams - IR Greg Demopulos - Co-Founder, Chairman, CEO & President Michael Jacobsen - CAO, VP, Finance & Treasurer Daniel Kirby - Chief Commercial Officer, VP & Head, Commercial Steve Whitaker - VP, Clinical Development Conference Call Participants Steve Brozak - WBB Securities Alice Nettleton - UBS Raghuram Selvaraju - H.C. Wainwright & Co. Serge Belanger - Needham & Company Brandon Folkes - ...

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, 2020 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 ...