Omeros(OMER) - 2022 Q1 - Quarterly Report

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