Omeros(OMER) - 2021 Q3 - Quarterly Report

Filing Information 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][5][6] 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 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][9] - 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][10] Part I — Financial Information This section presents the unaudited condensed consolidated financial statements and related notes for the specified periods Item 1. Financial Statements (unaudited) 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 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] - 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] Condensed Consolidated Statements of Operations and Comprehensive Loss 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] - 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] Condensed Consolidated Statements of Cash Flows 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] - 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] - 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] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1—Description of Business 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] - OMIDRIA® is marketed in the U.S for cataract surgery and qualifies for separate Medicare Part B payment in ambulatory surgery centers[22] - 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] - 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][27][28] Note 2—Significant Accounting Policies 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] - 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][57] Note 3—Net Loss Per Share 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] 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 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 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][50] 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 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] - As of September 30, 2021, and December 31, 2020, no amounts were outstanding under the Line of Credit Agreement[56] Note 7—Unsecured Convertible Senior Notes 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] 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] Note 8—Leases 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 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] - 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] Note 10—Shareholders' Deficit 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] - 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] - 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] Note 11—Stock-Based Compensation 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][128] - 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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][84] - The FDA issued a Complete Response Letter (CRL) for narsoplimab's BLA for HSCT-TMA, and discussions are ongoing for approval[84] - 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] Impact of Global Pandemic 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] - The pandemic has also caused delays or disruptions in the company's clinical and preclinical activities, with future impacts remaining uncertain[86] Commercial Product - OMIDRIA® (phenylephrine and ketorolac intraocular solution) 1%/0.3% 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] - 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] Clinical Development Programs This section provides an overview of Clinical Development Programs MASP-2 - narsoplimab (OMS721) - Lectin Pathway Disorders 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] - Phase 3 clinical programs for narsoplimab are ongoing in IgA nephropathy (ARTEMIS-IGAN trial) and atypical hemolytic uremic syndrome (aHUS)[92][96][97] - 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][93][94][98] MASP-2 - narsoplimab (OMS721) - COVID-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][101][103] - Narsoplimab is included in the I-SPY COVID-19 adaptive platform trial, evaluating investigational therapies for critically ill COVID-19 patients[105] MASP-3 - OMS906 - Alternative Pathway Disorders 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][108] - 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] - 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] PDE7 - OMS527 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] - Continued clinical development for OMS527 is subject to the allocation of financial and other resources, which are currently prioritized for other programs[109] Preclinical Development Programs and Platforms This section provides an overview of Preclinical Development Programs and Platforms Other MASP Inhibitor Preclinical Programs 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] - 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] GPR174 and GPCR Platform 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] - 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][112] Financial Summary 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] - 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] Results of Operations This section provides an overview of Results of Operations 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] - 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] Gross-to-Net Deductions 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] Chargebacks and Rebates 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][122] Distribution Fees and Product Return Allowances 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] - A provision for product returns is recorded upon sale, allowing returns up to 12 months past expiration or for damaged product[124] Research and Development Expenses 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] - Preclinical R&D increased by $1.2 million in 9M 2021 (YoY) due to higher manufacturing costs for the OMS1029 program[126] - Overall R&D costs are expected to remain relatively unchanged in Q4 2021 compared to Q3 2021[128] Selling, General and Administrative Expenses 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] Interest Expense 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] Loss on Early Extinguishment of Debt 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] Income Tax Benefit 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] Financial Condition - Liquidity and Capital Resources 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][139] - 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][138] - 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][140] Cash Flow Data 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] - 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] - 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] Contractual Obligations and Commitments 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] - Aggregate firm commitments for goods and services totaled $34.8 million as of September 30, 2021[151] - Potential future royalty and milestone payments from in-licensing or asset acquisition agreements are not included as their timing and occurrence are uncertain[152] Critical Accounting Policies and Significant Judgments and Estimates 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] - 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] Off-Balance Sheet Arrangements This section provides an overview of Off-Balance Sheet Arrangements - The company has not engaged in any off-balance sheet arrangements[155] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] - 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] Item 4. Controls and Procedures 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 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] Changes in Internal Control over Financial Reporting 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] Part II — Other Information This section covers additional required disclosures, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] - 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 6. Exhibits 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] 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]