Omeros(OMER) - 2024 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (Unaudited) This section presents Omeros Corporation's unaudited condensed consolidated financial statements, offering a detailed financial overview Condensed Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2024 | December 31, 2023 | | :------------------------------------ | :------------ | :------------------ | | Total assets | $356,314 | $378,269 | | Cash and cash equivalents | $2,120 | $7,105 | | Short-term investments | $156,792 | $164,743 | | Total current assets | $202,930 | $217,898 | | Convertible senior notes, net | $96,888 | $213,155 | | Long-term debt, net | $94,506 | — | | OMIDRIA royalty obligation, non-current | $212,323 | $116,550 | | Total shareholders' deficit | $(124,598) | $(24,983) | - Total assets decreased by $21.955 million from December 31, 2023, to June 30, 2024, primarily driven by reductions in cash, cash equivalents, and short-term investments[9] - Shareholders' deficit significantly increased from $(24,983) thousand at December 31, 2023, to $(124,598) thousand at June 30, 2024, reflecting increased net losses and debt restructuring[9] Condensed Consolidated Statements of Operations and Comprehensive Loss This section details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $45,349 | $29,639 | $72,119 | $54,249 | | Selling, general and administrative | $13,808 | $11,260 | $26,072 | $22,363 | | Total costs and expenses | $59,157 | $40,899 | $98,191 | $76,612 | | Net loss from continuing operations | $(65,125) | $(44,294) | $(108,975) | $(83,977) | | Net income from discontinued operations | $9,084 | $7,000 | $15,750 | $12,982 | | Net loss | $(56,041) | $(37,294) | $(93,225) | $(70,995) | | Basic and diluted net loss per share | $(0.97) | $(0.59) | $(1.60) | $(1.13) | - Net loss from continuing operations increased significantly for both the three-month and six-month periods ended June 30, 2024, compared to the prior year, primarily due to higher R&D and SG&A expenses[12] - Research and development expenses increased by $15.71 million (53.0%) for the three months ended June 30, 2024, and by $17.87 million (32.9%) for the six months ended June 30, 2024, year-over-year[12] Condensed Consolidated Statements of Stockholders' Equity (Deficit) This section outlines changes in the company's equity or deficit due to operations, stock transactions, and other comprehensive income/loss Changes in Stockholders' Equity (Deficit) (in thousands) | Metric | January 1, 2024 | June 30, 2024 | | :------------------------------------ | :-------------- | :------------ | | Common Stock Amount | $611 | $579 | | Additional Paid-In Capital | $727,936 | $721,578 | | Accumulated Deficit | $(753,530) | $(846,755) | | Total Shareholders' Deficit | $(24,983) | $(124,598) | - The accumulated deficit increased by $93.225 million from January 1, 2024, to June 30, 2024, primarily due to the net loss incurred during the period[15] - Common stock repurchases reduced common stock amount by $32 thousand and additional paid-in capital by $11,819 thousand during the first quarter of 2024[15] Condensed Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $(87,765) | $142,198 | | Net cash provided by (used in) investing activities | $11,225 | $(145,956) | | Net cash provided by (used in) financing activities | $71,555 | $(648) | | Net increase in cash and cash equivalents | $(4,985) | $(4,406) | | Cash and cash equivalents at end of period | $2,120 | $6,603 | - Operating activities shifted from providing $142.2 million in cash in H1 2023 to using $87.8 million in H1 2024, primarily due to the absence of the $200 million milestone payment received in the prior year[17] - Financing activities provided $71.6 million in H1 2024, largely driven by $115.5 million from the sale of future OMIDRIA royalties, partially offset by debt repurchases and payments[17] Notes to Condensed Consolidated Financial Statements This section provides additional information and explanations for the figures presented in the financial statements Note 1—Organization and Basis of Presentation This note describes the company's business, key clinical programs, and significant financial transactions impacting its structure - Omeros Corporation is a clinical-stage biopharmaceutical company focused on small-molecule and protein therapeutics for immunologic disorders, cancers, and addictive/compulsive disorders[18] - Key clinical-stage programs include narsoplimab (TA-TMA, COVID-19), OMS1029 (long-acting MASP-2), zaltenibart (PNH, C3G), and OMS527 (PDE7 inhibitor for cocaine use disorder)[19][20][22][23] - The company sold OMIDRIA in December 2021, classifying its activities as discontinued operations, and further monetized OMIDRIA royalties with DRI Healthcare Acquisition LP in September 2022 and February 2024, receiving an additional $115.5 million and eliminating annual caps on U.S. royalty payments until December 31, 2031[24][25] - In June 2024, Omeros entered a Credit Agreement for a senior secured term loan facility of up to $92.1 million, using an initial $67.1 million loan and $21.2 million cash to repurchase $118.1 million of 2026 convertible senior notes, reducing outstanding debt by $51.0 million[26][27] - As of June 30, 2024, the company had $158.9 million in cash, cash equivalents, and short-term investments, with $87.8 million cash used in operations for the six months ended June 30, 2024. A covenant in the Credit Agreement requires maintaining at least $25.0 million in unrestricted cash[29][31] Note 2—Significant Accounting Policies This note details the accounting principles and methods used in preparing the financial statements - The company operates in one business segment focused on biopharmaceutical research and development[34] - OMIDRIA asset sale is classified as a discontinued operation, with future royalties treated as variable consideration and the contract royalty asset re-measured quarterly[36][37][38] - The repurchase of 2026 Notes was accounted for as a troubled debt restructuring, with the $29.8 million difference between principal and repurchase price recorded as a premium to long-term debt, amortized as a reduction of debt and interest expense[42] - Stock-based compensation expense is recognized based on estimated fair values using the Black-Scholes model, and common stock repurchases are retired under Washington State law, with the program terminated due to Credit Agreement prohibitions[44][45] Note 3—Net Loss Per Share This note explains the calculation of basic and diluted net loss per share, including potentially dilutive securities Potentially Dilutive Securities Excluded from Net Loss Per Share | Security | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :--------------------------------------------------- | :------------------------------- | :----------------------------- | | 2026 Notes convertible to common stock | 9,714,522 | 10,696,990 | | Outstanding options to purchase common stock | 84,864 | 90,635 | | Total potentially dilutive shares excluded | 9,799,386 | 10,787,625 | - The 2026 Notes repurchase on June 3, 2024, reduced any potential dilutive effect related to those notes[47] Note 4—Investments and Fair-Value Measurements This note provides details on the company's investment portfolio and how fair values are determined Investment Summary (in thousands) | Investment Type | June 30, 2024 (Estimated Fair Value) | December 31, 2023 (Estimated Fair Value) | | :---------------------------------------------------- | :----------------------------------- | :----------------------------------- | | U.S. government securities (short-term) | $91,036 | $102,119 | | Money-market funds (short-term) | $65,751 | $62,643 | | Certificate of deposit (non-current restricted) | $1,054 | $1,054 | | Total investments | $157,841 | $165,816 | - Interest and other income decreased by $1.3 million for the three months and $1.8 million for the six months ended June 30, 2024, compared to 2023, primarily due to a lower average cash and investment balance[48] - Fair value measurements are categorized into Level 1 (quoted prices in active markets) and Level 2 (observable inputs other than quoted prices), with no Level 3 assets or liabilities reported in this section[50][51] Note 5—Certain Balance Sheet Accounts This note offers additional information on specific balance sheet items, including contract royalty assets and accrued expenses OMIDRIA Contract Royalty Asset (in thousands) | Asset Type | June 30, 2024 | December 31, 2023 | | :------------------------------------ | :------------ | :------------------ | | Short-term contract royalty asset | $29,665 | $29,373 | | Long-term contract royalty asset | $133,428 | $138,736 | | Total OMIDRIA contract royalty asset | $163,093 | $168,109 | Accrued Expenses (in thousands) | Expense Type | June 30, 2024 | December 31, 2023 | | :------------------------------------ | :------------ | :------------------ | | Clinical trials | $8,091 | $10,168 | | Contract research and development | $7,104 | $6,223 | | Employee compensation | $5,556 | $7,380 | | Total accrued expenses | $27,966 | $31,868 | - Total OMIDRIA contract royalty asset decreased from $168.1 million at December 31, 2023, to $163.1 million at June 30, 2024[53] - Accrued expenses decreased by $3.9 million from December 31, 2023, to June 30, 2024, primarily due to reductions in clinical trials and employee compensation accruals[57] Note 6—Debt This note details the company's debt instruments, including new term loans, convertible notes, and related transactions - On June 3, 2024, Omeros entered into a Credit Agreement for a senior secured term loan facility of up to $92.1 million, consisting of an Initial Term Loan of $67.1 million and a $25.0 million Delayed Draw Term Loan contingent on FDA approval of narsoplimab in TA-TMA[58] - The Initial Term Loan, along with $21.2 million cash, was used to repurchase $118.1 million aggregate principal of 2026 Notes, resulting in a $51.0 million reduction in outstanding debt and a $29.8 million premium recorded to long-term debt due to troubled debt restructuring accounting[59][42] Outstanding Debt Amounts (in thousands) | Debt Type | June 30, 2024 | December 31, 2023 | | :------------------------------------ | :------------ | :------------------ | | 2026 Unsecured Convertible Senior Notes, net | $96,888 | $213,155 | | 2024 Secured Term Loan, net | $94,506 | — | | Total Carrying Value of Debt | $191,394 | $213,155 | - The Loans bear interest at an adjusted SOFR (3.0% floor) plus 8.75% per annum, with an option to pay up to 50% interest in kind at a 10.25% PIK margin[60] - The Credit Agreement includes covenants requiring Omeros to maintain at least $25.0 million in unrestricted cash and restricts common stock repurchases[65] Interest Expense Related to 2026 Notes (in thousands) | Metric | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :----------------------------- | | Contractual interest expense | $2,369 | $5,203 | | Amortization of debt issuance costs | $1,487 | $1,795 | | Total interest expense | $3,856 | $6,998 | Note 7—Discontinued Operations - Sale of OMIDRIA This note provides financial information related to the sale of OMIDRIA and its classification as discontinued operations Net Income from Discontinued Operations (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest earned on OMIDRIA contract royalty asset | $4,271 | $3,829 | $8,614 | $7,754 | | Remeasurement adjustments | $4,314 | $3,147 | $6,653 | $4,824 | | Net income from discontinued operations, net of tax | $9,084 | $7,000 | $15,750 | $12,982 | OMIDRIA Contract Royalty Asset Roll Forward (in thousands) | Item | Amount | | :------------------------------------ | :------- | | OMIDRIA contract royalty asset at December 31, 2023 | $168,109 | | Royalties earned | $(20,283) | | Interest earned on OMIDRIA contract royalty asset | $8,614 | | Remeasurement adjustments | $6,653 | | OMIDRIA contract royalty asset at June 30, 2024 | $163,093 | - Net income from discontinued operations increased by $2.084 million (29.8%) for the three months and $2.768 million (21.3%) for the six months ended June 30, 2024, year-over-year[79] - Net cash provided by discontinued operations from operating activities decreased significantly from $217.7 million in H1 2023 to $21.4 million in H1 2024, primarily due to the $200 million milestone payment received in February 2023[81] Note 8—OMIDRIA Royalty Obligation This note describes the company's royalty obligations related to OMIDRIA, including recent monetization transactions - In February 2024, Omeros sold an expanded interest in OMIDRIA royalties to DRI for $115.5 million cash, eliminating annual caps and entitling DRI to all U.S. net sales royalties until December 31, 2031[82] - Omeros retains rights to international OMIDRIA royalties and global royalties after December 31, 2031, and is eligible for two milestone payments of up to $27.5 million each based on U.S. net sales thresholds[83] OMIDRIA Royalty Obligation Roll Forward (in thousands) | Item | Amount | | :------------------------------------ | :------- | | OMIDRIA royalty obligation at December 31, 2023 | $116,550 | | Additional proceeds | $115,525 | | Non-cash interest | $1,806 | | Principal payments | $(10,700) | | OMIDRIA royalty obligation at June 30, 2024 | $223,181 | - The OMIDRIA royalty obligation is valued using the catch-up method, discounted at an implied effective interest rate of 10.27%, with a fair value of approximately $216.9 million as of June 30, 2024[84][85] Future Expected Principal and Interest Payments on OMIDRIA Royalty Obligation (in thousands) | Year | Principal | Interest | Total | | :----------- | :-------- | :------- | :------ | | 2024 | $9,292 | $11,058 | $20,350 | | 2025 | $20,995 | $20,667 | $41,662 | | 2026 | $23,996 | $18,500 | $42,496 | | 2027 | $27,318 | $16,027 | $43,345 | | 2028 | $30,995 | $13,217 | $44,212 | | Thereafter | $119,161 | $18,852 | $138,013 | | Total | $231,757 | $98,321 | $330,078 | Note 9—Leases This note outlines the company's operating and finance lease arrangements and associated costs - Omeros has an operating lease for office and laboratory facilities ending November 2027, with two five-year extension options, and finance leases for equipment expiring through November 2026[86] Net Lease Cost (in thousands) | Metric | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :----------------------------- | | Operating lease cost | $1,606 | $3,211 | | Finance lease cost (Amortization) | $149 | $295 | | Finance lease cost (Interest) | $40 | $97 | | Variable lease cost | $882 | $1,798 | | Sublease income | $(385) | $(774) | | Net lease cost | $2,292 | $4,627 | - Cash payments for operating leases were $3.63 million and for financing leases were $0.361 million for the six months ended June 30, 2024[87] Note 10—Commitments and Contingencies This note discloses the company's various contractual obligations and potential liabilities - As of June 30, 2024, the company has various agreements with third parties requiring payment of termination fees totaling $7.9 million if work is canceled within specific timeframes[88] - Development, collaboration, and licensing agreements may require milestone payments and/or royalties based on achievements or net sales, though development milestone expenses were not significant for the reported periods[88] Note 11—Shareholders' Equity (Deficit) This note details changes in shareholders' equity, including equity offerings and share repurchase programs - Omeros has an 'at the market' equity offering facility to sell up to $150.0 million of common stock, with no shares sold under this program as of June 30, 2024[89] - The Board of Directors terminated the $50.0 million share repurchase program, effective upon execution of the Credit Agreement, after repurchasing 3.2 million shares for $11.9 million in Q1 2024[90] Note 12—Stock-Based Compensation This note provides information on stock-based compensation expenses and stock option activity Total Stock-Based Compensation (in thousands) | Metric | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :----------------------------- | | Research and development | $1,069 | $2,083 | | Selling, general and administrative | $1,699 | $3,343 | | Total stock-based compensation | $2,768 | $5,426 | Stock Option Activity as of June 30, 2024 | Metric | Options Outstanding | Weighted-Average Exercise Price per Share | | :------------------------------------ | :------------------ | :---------------------------------------- | | Balance at December 31, 2023 | 15,255,154 | $9.50 | | Granted | 3,072,900 | $3.10 | | Exercised | (10,803) | $3.32 | | Forfeited | (327,751) | $6.83 | | Balance at June 30, 2024 | 17,989,500 | $8.46 | - Total stock-based compensation in continuing operations for the six months ended June 30, 2024, was $5.426 million, a decrease from $5.807 million in the prior year, primarily due to valuation and timing of employee stock option vesting[93][133] - As of June 30, 2024, there were 18.0 million common stock options outstanding, with 9.8 million having an exercise price above the closing stock price of $4.06 on June 28, 2024[96] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Omeros Corporation's financial condition and results of operations, discussing key business developments, clinical programs, financial performance drivers, liquidity, and capital resources for the periods presented Overview This section provides a high-level introduction to Omeros Corporation's business and strategic focus - Omeros Corporation is a clinical-stage biopharmaceutical company focused on discovering, developing, and commercializing therapeutics for immunologic disorders, cancers, and addictive/compulsive disorders[98] Complement Inhibitor Programs This section details the progress and focus of the company's complement inhibitor drug development programs - Narsoplimab (MASP-2 inhibitor) is primarily focused on hematopoietic stem cell transplant-associated thrombotic microangiopathy (TA-TMA), with ongoing discussions with FDA for BLA resubmission after a Complete Response Letter[101][102] - Evidence suggests narsoplimab may be effective for COVID-19, ARDS, and long COVID, with ongoing validation of lectin pathway hyperactivation correlation and discussions with potential partners for funding[103] - OMS1029, a long-acting MASP-2 inhibitor, completed Phase 1 trials supporting once-quarterly dosing and is being evaluated for Phase 2 development in chronic indications[104] - Zaltenibart (MASP-3 inhibitor) is in multiple Phase 2 clinical trials for paroxysmal nocturnal hemoglobinuria (PNH) and complement 3 glomerulopathy (C3G), with Phase 3 trials for PNH targeted to begin in late 2024 and for C3G in Q1 2025[105][106][107][108][109][111][112] - Interim analysis results for zaltenibart in complement-inhibitor-naïve PNH patients showed statistically significant and clinically meaningful improvements in hemolysis markers, and in ravulizumab-unsatisfactory PNH patients, combination therapy with zaltenibart showed significant improvements in hemoglobin and reticulocyte counts[108][109] PDE7 Inhibitor Programs This section describes the company's development efforts for PDE7 inhibitors targeting addiction and movement disorders - The OMS527 PDE7 inhibitor program is developing compounds for addiction/compulsive disorders and movement disorders, with a lead orally administered compound in preclinical cocaine interaction/toxicology studies for cocaine use disorder (CUD), supported by a $6.69 million NIDA grant[113] Immuno-Oncology Platform This section outlines the company's preclinical immuno-oncology platforms and their therapeutic potential - Omeros has five novel and proprietary immuno-oncology platforms in preclinical development, including adoptive T-cell therapy, CAR-T, signaling-driven immunomodulators, and oncotoxins, showing positive in vitro, ex vivo, and animal study results[114] OMIDRIA Sale and Royalty Monetization Transactions This section summarizes the transactions related to the sale of OMIDRIA and subsequent royalty monetization - Omeros sold OMIDRIA and related assets to Rayner Surgical Inc. in December 2021, receiving a $200.0 million milestone payment in February 2023, and classifying OMIDRIA activities as discontinued operations[117][119] - The U.S. royalty rate on OMIDRIA net sales was reduced from 50% to 30% following the milestone event, expected to last until at least January 1, 2028, due to separate payment under Medicare Part B[118] - In February 2024, Omeros sold an expanded interest in OMIDRIA royalties to DRI for an additional $115.5 million, eliminating annual caps and granting DRI all U.S. royalties until December 31, 2031, while Omeros retains international and post-2031 global royalties[121] 2024 Term Loan and Repurchase of 2026 Notes This section details the company's recent debt financing and the repurchase of convertible senior notes - On June 3, 2024, Omeros secured a senior term loan facility of up to $92.1 million, including an initial $67.1 million loan and a $25.0 million delayed draw term loan contingent on FDA approval of narsoplimab in TA-TMA[122] - The initial term loan and $21.2 million cash were used to repurchase $118.1 million of 2026 convertible senior notes, reducing the outstanding principal balance by 55% at approximately 75% of par value[123] - The loans accrue interest at adjusted term SOFR (3.00% floor) plus 8.75% per annum, with an option for up to 50% PIK interest at a 10.25% margin[127] - The Credit Agreement includes mandatory prepayments under certain conditions, such as asset sales, other indebtedness, change of control, and 25% of OMIDRIA milestone payments from DRI, subject to prepayment premiums[128][129] Financial Summary This section provides a concise overview of the company's key financial performance indicators - Omeros reported a net loss of $56.0 million for the three months and $93.2 million for the six months ended June 30, 2024[130] - As of June 30, 2024, the company had $158.9 million in cash, cash equivalents, and short-term investments[130] Results of Operations This section analyzes the company's financial performance, including revenue, expenses, and net loss Research and Development Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Clinical research and development | $31,374 | $16,673 | $44,438 | $29,501 | | Preclinical research and development | $1,789 | $1,533 | $3,369 | $2,442 | | Internal overhead and other expenses | $11,116 | $10,300 | $22,228 | $19,901 | | Stock-based compensation expenses | $1,069 | $1,133 | $2,083 | $2,405 | | Total research and development expenses | $45,348 | $29,639 | $72,118 | $54,249 | - Clinical R&D expenses increased by $14.7 million (88.2%) for the three months and $14.9 million (50.5%) for the six months ended June 30, 2024, primarily due to increased narsoplimab drug substance manufacturing and zaltenibart clinical research costs[132] Selling, General and Administrative Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | SG&A excluding stock-based comp | $12,109 | $9,580 | $22,729 | $18,961 | | Stock-based compensation expense | $1,699 | $1,680 | $3,343 | $3,402 | | Total selling, general and administrative expenses | $13,808 | $11,260 | $26,072 | $22,363 | - SG&A expenses (excluding stock-based compensation) increased by $2.5 million (26.1%) for the three months and $3.8 million (20.0%) for the six months ended June 30, 2024, due to legal/financial advisory fees for the 2026 Note Repurchase Transaction, and patent-related expenses[136] Interest Expense (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest expense | $9,215 | $7,932 | $17,446 | $15,865 | - Interest expense increased by $1.3 million (16.2%) for the three months and $1.6 million (10.0%) for the six months ended June 30, 2024, primarily due to the $115.5 million borrowing under the DRI royalty obligation in February 2024, partially offset by debt retirements[140] Interest and Other Income (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest and other income | $3,247 | $4,537 | $6,662 | $8,500 | - Interest and other income decreased by $1.3 million (28.4%) for the three months and $1.8 million (21.6%) for the six months ended June 30, 2024, due to a lower average cash and investment balance[140] Financial Condition – Liquidity and Capital Resources This section discusses the company's cash position, funding needs, and strategies for managing liquidity - As of June 30, 2024, Omeros had $158.9 million in cash, cash equivalents, and short-term investments, with $87.8 million cash used in operations for the six months ended June 30, 2024[144] - The company has historically incurred net losses and negative operating cash flows, necessitating additional capital raises through an 'at the market' equity offering facility (up to $150.0 million) and a $25.0 million Delayed Draw Term Loan contingent on FDA approval of narsoplimab in TA-TMA[145] Selected Cash Flow Data (in thousands) | Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Operating activities | $(87,765) | $142,198 | | Investing activities | $11,225 | $(145,956) | | Financing activities | $71,555 | $(648) | - Net cash used in operating activities increased by $230.0 million compared to H1 2023, primarily due to the absence of the $200.0 million milestone payment from Rayner in the prior year[149] - Net cash provided by financing activities increased by $72.2 million, driven by $115.5 million from the sale of future OMIDRIA royalties, partially offset by debt repurchases and payments[151] Contractual Obligations and Commitments This section outlines the company's future payment obligations under various agreements - The company's future minimum contractual obligations and commitments have not materially changed from those reported in the 2023 Annual Report on Form 10-K, except for details provided in specific notes[152] - Remaining aggregate non-cancelable rent payable under the initial term of the office and laboratory lease is $23.4 million as of June 30, 2024[153] Critical Accounting Policies and Significant Judgments and Estimates This section addresses the key accounting policies and estimates that significantly impact the financial statements - 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, 2023[155] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines Omeros Corporation's exposure to market risks, primarily related to investment securities, and the strategies employed to manage these risks, emphasizing capital preservation and minimizing significant risk - The company's primary market risk exposure is to investment securities, with a strategy focused on capital preservation and maximizing income from high-credit-quality, highly liquid, investment-grade securities[156] - As of June 30, 2024, Omeros had $158.9 million in cash, cash equivalents, and short-term investments, and does not believe an increase in market rates would materially negatively impact the realized value of its investment portfolio due to short-term maturities[156] ITEM 4. Controls and Procedures This section details management's evaluation of the effectiveness of Omeros Corporation's disclosure controls and procedures and reports on any changes in internal control over financial reporting - Management concluded that Omeros Corporation's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2024[157] - There were no material changes in internal control over financial reporting during the period covered by the report[158] PART II — OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS This section reports on any material legal proceedings involving Omeros Corporation - As of the filing date, Omeros Corporation was not involved in any material legal proceedings[160] ITEM 1A. RISK FACTORS This section updates and should be read in conjunction with the risk factors described in the Annual Report on Form 10-K, highlighting new or updated risks that could materially affect Omeros Corporation's business, prospects, financial condition, and results of operations - The Credit Agreement places significant restrictions on Omeros' operating and financial flexibility, including limitations on incurring indebtedness, granting liens, disposing of assets, making investments, and repurchasing stock[162][163] - A default under the Credit Agreement could lead to acceleration of repayment obligations and lenders taking control of pledged assets, including intellectual property, potentially forcing the company into bankruptcy or liquidation[163] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section reports on any unregistered sales of equity securities and the use of proceeds, if applicable - This item is not applicable for the reporting period[164] ITEM 3. DEFAULTS UPON SENIOR SECURITIES This section reports on any defaults upon senior securities, if applicable - This item is not applicable for the reporting period[164] ITEM 4. MINE SAFETY DISCLOSURES This section provides disclosures related to mine safety, if applicable - This item is not applicable for the reporting period[164] ITEM 5. OTHER INFORMATION This section provides other information not covered in previous items, including details on 10b5-1 Plans - Two 10b5-1 Plans were adopted in Q2 2024 by a Board member (Thomas J. Cable for up to 27,500 shares) and the CEO (Gregory A. Demopulos for 449,999 shares) for potential exercise of vested stock options and associated sales[165][166] ITEM 6. EXHIBITS This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q - Key exhibits include the Credit and Guaranty Agreement, Pledge and Security Agreement, and certifications of principal executive and financial officers[169] SIGNATURES This section contains the required signatures for the Quarterly Report on Form 10-Q - The report was signed by Gregory A. Demopulos, M.D., President, Chief Executive Officer and Chairman of the Board of Directors, and David J. Borges, Vice President, Finance, Chief Accounting Officer and Treasurer, on August 7, 2024[173]