0001558370-21-002177 | 10-K | XBRL Viewer

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2020	Feb. 25, 2021	Jun. 30, 2020
Document Document and Entity Information [Abstract]
Document Type	10-K
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2020
Entity File Number	001-34475
Entity Registrant Name	OMEROS CORPORATION
Entity Incorporation, State or Country Code	WA
Entity Tax Identification Number	91-1663741
Entity Address, Address Line One	201 Elliott Avenue West
Entity Address, City or Town	Seattle
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98119
City Area Code	206
Local Phone Number	676-5000
Title of 12(b) Security	Common Stock
Trading Symbol	OMER
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Entity Shell Company	false
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	Yes
Entity Common Stock, Shares Outstanding		61,933,806
Current Fiscal Year End Date	--12-31
Entity Public Float			$ 762,308,158
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Entity Central Index Key	0001285819
Amendment Flag	false

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 10,501	$ 3,084
Short-term investments	124,452	57,704
Receivables, net	3,841	35,185
Inventory	1,355	1,147
Prepaid expense and other assets	11,136	6,625
Total current assets	151,285	103,745
Property and equipment, net	2,551	3,829
Right of use assets	25,526	27,082
Restricted investments	1,055	1,154
Advanced payments, non-current	625	1,159
Total assets	181,042	136,969
Current liabilities:
Accounts payable	4,199	5,328
Accrued expenses	28,755	46,627
Current portion of lease liabilities	3,782	3,504
Total current liabilities	36,736	55,459
Lease liabilities, non-current	28,770	32,318
Unsecured convertible senior notes, net	236,288	158,213
Commitments and contingencies (Note 10)
Shareholders' deficit:
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized; none issued and outstanding at December 31, 2020 and December 31, 2019.
Common stock, par value $0.01 per share, 150,000,000 shares authorized at December 31, 2020 and December 31, 2019; 61,671,231 and 54,200,810 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively.	616	542
Additional paid-in capital	751,304	625,048
Accumulated deficit	(872,672)	(734,611)
Total shareholders' deficit	(120,752)	(109,021)
Total liabilities and shareholders' deficit	$ 181,042	$ 136,969

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Revenue:
Product sales, net	$ 73,813	$ 111,805	$ 29,868
Costs and expenses:
Cost of product sales	902	865	512
Research and development	110,817	109,696	89,860
Selling, general and administrative	72,695	64,626	51,718
Total costs and expenses	184,414	175,187	142,090
Loss from operations	(110,601)	(63,382)	(112,222)
Loss on early extinguishment of debt	(13,374)		(12,993)
Interest expense	(26,751)	(22,657)	(16,252)
Other income	654	1,553	1,781
Loss before income tax benefit	(150,072)	(84,486)	(139,686)
Income tax benefit	12,011	0	12,929
Net loss	(138,061)	(84,486)	(126,757)
Comprehensive loss	$ (138,061)	$ (84,486)	$ (126,757)
Basic and diluted net loss per share (USD per share)	$ (2.41)	$ (1.71)	$ (2.61)
Weighted-average shares used to compute basic and diluted net loss per share ( in shares)	57,176,743	49,523,444	48,582,636
Revenue, Product and Service [Extensible List]	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Cost, Product and Service [Extensible List]	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2017	48,211,226
Balance at Dec. 31, 2017	$ 482	$ 520,072	$ (523,368)	$ (2,814)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of stock options	$ 8	6,724		6,732
Issuance of common stock upon exercise of stock options (in shares)	800,458
Issuance of warrants in connection with debt amendment		1,424		1,424
Stock-based compensation expense		11,713		11,713
Equity component of Notes, net of issuance costs		55,655		55,655
Purchases of Capped Calls		(33,180)		(33,180)
Income tax benefit related to issuance of notes		(12,929)		(12,929)
Net loss			(126,757)	(126,757)
Balance (in shares) at Dec. 31, 2018	49,011,684
Balance at Dec. 31, 2018	$ 490	549,479	(650,125)	(100,156)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in direct offering, net of offering costs	$ 44	54,194		54,238
Issuance of common stock in direct offering, net of offering costs (in shares)	4,389,311
Issuance of common stock upon exercise of stock options	$ 8	7,590		7,598
Issuance of common stock upon exercise of stock options (in shares)	799,815
Stock-based compensation expense		13,785		13,785
Net loss			(84,486)	(84,486)
Balance (in shares) at Dec. 31, 2019	54,200,810
Balance at Dec. 31, 2019	$ 542	625,048	(734,611)	(109,021)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in direct offering, net of offering costs	$ 69	93,606		93,675
Issuance of common stock in direct offering, net of offering costs (in shares)	6,900,000
Issuance of common stock upon exercise of stock options	$ 5	5,017		$ 5,022
Issuance of common stock upon exercise of stock options (in shares)	556,421			556,421
Issuance of common stock upon grant of restricted stock awards		155		$ 155
Issuance of common stock upon grant of restricted stock awards (in shares)	14,000
Stock-based compensation expense		14,770		14,770
Equity component of Notes, net of issuance costs		61,628		61,628
Purchases of Capped Calls		(23,223)		(23,223)
Equity component of early extinguishment of 2023 Notes		(22,073)		(22,073)
Termination of the 2023 Capped Call contracts related to debt repurchased		8,387		8,387
Income tax benefit related to issuance of notes		(12,011)		(12,011)
Net loss			(138,061)	(138,061)
Balance (in shares) at Dec. 31, 2020	61,671,231
Balance at Dec. 31, 2020	$ 616	$ 751,304	$ (872,672)	$ (120,752)

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Operating activities:
Net loss	$ (138,061)	$ (84,486)	$ (126,757)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	14,925	13,785	11,713
Non-cash interest expense	11,649	9,232	5,635
Depreciation and amortization	1,616	1,790	962
Loss on early extinguishment of debt	13,374		12,993
Deferred income tax	(12,011)	0	(12,929)
Fair value settlement upon termination of cap call contract	838		354
Changes in operating assets and liabilities:
Receivables	31,344	(12,367)	(5,674)
Inventory	(208)	(1,059)	355
Prepaid expenses and other assets	(3,816)	(251)	(498)
Accounts payable and accrued expenses	(19,736)	13,283	10,109
Net cash used in operating activities	(100,086)	(60,073)	(103,737)
Investing activities:
Purchases of property and equipment	(283)	(334)	(567)
Purchases of investments	(133,194)	(58,217)	(68,782)
Proceeds from the sale and maturities of investments	66,446	55,150	94,500
Net cash (used in) provided by investing activities	(67,031)	(3,401)	25,151
Financing activities:
Proceeds from issuance of convertible senior notes	225,030		210,000
Payments for debt issuance costs	(6,785)		(6,800)
Proceeds from debt borrowings			44,550
Purchases of capped calls related to convertible senior notes	(23,223)		(33,180)
Payments for repurchases of convertible senior notes	(125,638)
Repayment of debt			(132,077)
Payments on debt prepayment and extinguishment			(11,902)
Proceeds from termination of capped call contracts	7,549
Proceeds from issuance of common stock, net	93,675	54,238
Proceeds upon exercise of stock options and warrants	5,022	7,598	6,732
Release in restricted investments	99		4,681
Principal payments on finance lease liabilities	(1,195)	(1,139)	(951)
Net cash provided by financing activities	174,534	60,697	81,053
Net increase (decrease) in cash and cash equivalents	7,417	(2,777)	2,467
Cash and cash equivalents at beginning of period	3,084	5,861	3,394
Cash and cash equivalents at end of period	10,501	3,084	5,861
Supplemental cash flow information
Cash paid for interest	11,603	13,462	8,896
Property acquired under finance lease	$ 216	$ 1,440	2,118
Conversion of accrued interest to debt			3,408
Fair value of warrants issued in connection with debt amendment			$ 1,424

Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Significant Accounting Policies

Significant Accounting Policies

Note 2—Significant Accounting Policies

Cash and Cash Equivalents, Short-Term Investments and Restricted Investments

Cash and cash equivalents include highly liquid investments with a maturity of three months or less on the date of purchase. Short-term investment securities are classified as available-for-sale and are carried at fair value. Unrealized gains and losses, if any, are reported as a separate component of shareholders’ deficit. Amortization, accretion, interest and dividends, realized gains and losses and declines in value judged to be other-than-temporary are included in other income. The cost of securities sold is based on the specific-identification method. Investments in securities with maturities of less than one year, or those for which management intends to use the investments to fund current operations, are included in current assets. We evaluate whether an investment is other-than-temporarily impaired based on the specific facts and circumstances. Factors that are considered in determining whether an other-than-temporary decline in value has occurred include: the market value of the security in relation to its cost basis; the financial condition of the investee; and the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment. Restricted investments held in money-market funds include security deposits held by our landlord.

As of December 31, 2020 and 2019, all investments are classified as short-term and available-for-sale. Investment income, which is included as a component of other income, consists primarily of interest earned.

Inventory

Inventory is stated at the lower of cost or market determined on a specific identification basis in a manner that approximates the first-in, first-out (FIFO) method. Costs include amounts related to third-party manufacturing, transportation and internal labor and overhead. Capitalization of costs as inventory begins when regulatory approval of the product candidate is reasonably assured in the U.S. or the European Union (EU). We expense inventory costs related to product candidates as research and development expenses prior to receiving regulatory approval in the respective territory. Inventory is reduced to net realizable value for excess and obsolete inventories based on forecasted demand.

Receivables, Net

Receivables relate primarily to sales of OMIDRIA to wholesalers and include reductions for estimated chargebacks and product returns that are expected to be settled through reductions in receivables. Remaining receivables consist of amounts from subleases for space in our facilities. Considering the nature and historic collectability of our receivables, we concluded an allowance for doubtful accounts is not necessary as of December 31, 2020 and 2019.

Property and Equipment, Net

Property and equipment are stated at cost, and depreciation is calculated using the straight-line method over the estimated useful life of the assets, which is generally three to 10 years. Equipment acquired through finance leases is recorded as property and equipment and is amortized over the shorter of the useful lives of the related assets or the lease term. Expenditures for repairs and maintenance are expensed as incurred.

Right-of-Use Assets and Related Lease Liabilities

On January 1, 2019, we adopted Accounting Standards Update (ASU) 2016-02, Leases, (Topic 842) using a modified retrospective approach versus recasting the prior periods presented. We elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical assessment of whether (i) contracts contain leases, (ii) lease classifications and (iii) initial direct costs. Upon adoption we recognized right-of-use assets and lease liabilities of $17.7 million and $26.4 million, respectively. The balance of the net right-of-use asset included the reversal of the outstanding balance of deferred rent of $8.7 million.

We record operating leases as right-of-use assets and recognize the related lease liabilities equal to the fair value of the lease payments using our incremental borrowing rate when the implicit rate in the lease agreement is not readily available. We recognize variable lease payments, when incurred. Costs associated with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease.

We record finance leases as a component of property and equipment and amortize these assets within operating expenses on a straight-line basis to their residual values over the shorter of the term of the underlying lease or the estimated useful life of the equipment. The interest component of a finance lease is included in interest expense and recognized using the effective interest method over the lease term.

We account for leases with initial terms of 12 months or less as operating expenses on a straight-line basis over the lease term.

Unsecured Convertible Senior Notes

In November 2018, we issued $210.0 million in aggregate principal amount of our 6.25% Convertible Senior Notes (the 2023 Notes) and, in August and September 2020, we issued $225.0 million in aggregate principal amount of our 5.25% Convertible Senior Notes (the 2026 Notes). We used a portion of the proceeds from the 2026 Notes to repurchase $115.0 million principal amount of the 2023 Notes and the related capped call (see “Note 8--Unsecured Convertible Senior Notes”) and used the remainder for general corporate purposes.

The 2023 and 2026 Notes are accounted for in accordance with Accounting Standards Codification (ASC) Subtopic 470-20, Debt with Conversion and Other Options. Pursuant to ASC Subtopic 470-20, we account for convertible debt that may be settled wholly or partially in cash upon conversion as having both a liability component (debt) and an equity component (conversion option). The cash conversion guidance applies as the embedded conversion features meet the requirements for a derivative scope exception for instruments that are both indexed to an entity’s own stock and classified in stockholders’ equity in the balance sheet. Principal cash proceeds from the instrument are allocated first to the liability component based on the fair value of non-convertible debt using the income and market-based approaches to determine an effective interest rate for present valuing the cash proceeds. For the income-based approach, we use a convertible bond pricing model that includes several assumptions such as volatility and a risk-free rate. For the market-based approach, we observe the price of derivative price instruments purchased in conjunction with our convertible senior note issuances or evaluate issuances of convertible debt securities by other companies with similar credit risk ratings at the time of issuance. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the instrument. Issuance costs from the instrument are then allocated to the liability and equity components in the same proportion as the proceeds. The equity component of the cash principal proceeds and the liability component of the issuance costs represent a debt discount, which we amortize as non-cash interest expense over the term of the notes using the effective interest rate method.

Transactions involving contemporaneous exchanges of cash between the same debtor and creditor in connection with the issuance of a new debt obligation and satisfaction of an existing debt obligation by the debtor should be evaluated as a modification or an exchange transaction depending on whether the exchange is determined to have substantially different terms. The 2023 Notes repurchase and issuance of the 2026 Notes were deemed to have substantially different terms due to the significant difference between the value of the conversion option immediately prior to and after the exchange. Therefore, the repurchase of the 2023 Notes was accounted for as a debt extinguishment.

Impairment of Long-Lived Assets

We assess the impairment of long-lived assets, primarily property and equipment, whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of these assets is measured by comparing the carrying value to future undiscounted cash flows that the asset is expected to generate. If the asset is considered to be impaired, the amount of any impairment will be reflected in the results of operations in the period of impairment. We have not recognized any impairment losses for the years ended December 31, 2020, 2019 and 2018.

Revenue Recognition

When we enter into a customer contract, we perform the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation.

Product Sales, Net

We generally record revenue from product sales when the product is delivered to our wholesalers and title for the product is transferred. Product sales are recorded net of wholesaler distribution fees and estimated chargebacks, rebates, returns and purchase-volume discounts. Accruals or allowances are established for these deductions in the same period when revenue is recognized, and actual amounts incurred are offset against the applicable accruals or allowances. We reflect each of these accruals or allowances as either a reduction in the related accounts receivable or as an accrued liability depending on how the amount is expected to be settled.

Chargebacks and Rebates

Provisions for chargebacks are determined utilizing historical and projected payer mix and information regarding sell-through and inventory on-hand received directly from wholesalers. Chargebacks are generally settled within four weeks of recording product sales revenue.

We provide reimbursement support services and financial assistance in the form of a rebate to patients whose commercial insurance is inadequate to cover the full cost of OMIDRIA. We apply an experience ratio based on historical and projected patient claims. This experience ratio is applied to product sales to determine the patient rebate accrual and is being reviewed and updated periodically to reflect actual results.

We provide rebate payments for which ASCs qualify by meeting or exceeding purchase volumes of OMIDRIA under our purchase volume-discount program. We calculate rebate payment amounts due under this program based on actual qualifying purchase volumes and apply a contractual discount rate. For purchases of OMIDRIA not yet reported as sold-through to the ASC by our wholesalers, we apply an experience ratio to product sales to determine the rebate accrual. This experience ratio is being reviewed and updated periodically to reflect actual results.

Distribution Fees and Product Return Allowances

We pay our wholesalers a distribution fee for services that they perform for us based on the wholesaler average cost value of their purchases of OMIDRIA. We record a provision against product sales for these charges at the time of sale to the wholesaler.

We allow for the return of product up to 12 months past its expiration date or for product that is damaged. In estimating product returns, we take into consideration our return experience to date, the remaining shelf-life of product we have previously sold, inventory in the wholesale channel and our expectation that product is typically not held by the health care providers based on the frequency of their reorders.

Research and Development

Research and development expenses are comprised primarily of contracted research and manufacturing costs prior to approval; costs for personnel, including salaries, benefits and stock compensation; clinical study costs; contracted research; manufacturing costs prior to approval; consulting services; depreciation; materials and supplies; milestones; an allocation of our occupancy costs; and other expenses incurred to sustain our overall research and development programs. Advance payments for goods or services that will be used or rendered for future research and development activities are deferred and then recognized as an expense as the related goods are delivered or the services are performed, or when the goods or services are no longer expected to be provided. All other research and development costs are expensed as incurred.

Selling, General and Administrative

Selling, general and administrative expenses are comprised primarily of salaries, benefits, and stock-compensation costs for sales, marketing, and other personnel not directly engaged in research and development. Additionally, selling, general and administrative expenses include marketing and selling expenses, professional and legal services; patent costs; depreciation, an allocation of our occupancy costs; and other general corporate expenses. Advertising costs, which we consider to be media and marketing materials, are expensed as incurred and were $5.6 million, $8.0 million and $2.5 million during the years ended December 31, 2020, 2019 and 2018, respectively.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained upon an examination. A valuation allowance is established when it is more likely than not that the deferred tax assets will not be realized.

Stock-Based Compensation

Stock-based compensation expense is recognized for all share-based payments based on estimated fair values. The fair value of our stock options is calculated using the Black-Scholes option-pricing model which requires judgmental assumptions around volatility, forfeiture rates and expected option term. Compensation expense is recognized over the optionees’ requisite service periods, which is generally the vesting period, using the straight-line method. Forfeiture expense is estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss is comprised of net loss and certain changes in equity that are excluded from net loss. There was no difference between comprehensive loss and net loss for the years ended December 31, 2020, 2019 or 2018.

Financial Instruments and Concentrations of Credit Risk

Cash and cash equivalents, receivables, accounts payable and accrued liabilities, which are recorded at invoiced amount or cost, approximate fair value based on the short-term nature of these financial instruments. The fair value of short-term investments is based on quoted market prices. Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments and receivables. Cash and cash equivalents are held by financial institutions and are federally insured up to certain limits. At times, our cash and cash equivalents balance held at a financial institution may exceeds the federally insured limits. To limit the credit risk, we invest our excess cash in high-quality securities such as money market mutual funds, certificates of deposit and commercial paper.

Major Customers

We sell OMIDRIA through a limited number of wholesalers. Each of these wholesalers, together with entities under their common control, accounted for greater than 10% of our total revenues for the years ended December 31, 2020, 2019 and 2018 and greater than 10% of accounts receivable as of December 31, 2020, 2019 and 2018 as noted below.


	2020				2019				2018
	Percentage		Percentage		Percentage		Percentage		Percentage		Percentage
	of Total		of Accounts		of Total		of Accounts		of Total		of Accounts
	Revenue		Receivable		Revenue		Receivable		Revenue		Receivable
Distributor A	25	%	36	%	25	%	23	%	31	%	27	%
Distributor B	26	%	31	%	24	%	19	%	27	%	25	%
Distributor C	32	%	10	%	29	%	33	%	22	%	25	%
Distributor D	17	%	23	%	22	%	25	%	20	%	23	%

Major Suppliers

We use a single contract manufacturer to supply the OMIDRIA drug product and a separate company to package OMIDRIA for commercial sale. We generally use different contract manufacturers to produce drug substance, drug product and to perform final packaging for our drug product candidates.

We endeavor to maintain reasonable levels of drug supply for our commercial and clinical trial use and other manufacturers are available should we need to change suppliers. A change in suppliers, however, could cause a delay in delivery of OMIDRIA or our clinical trial material that would adversely affect our business.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses, (Topic 326) which changes how entities account for credit losses on most financial assets and certain other instruments and expands disclosures. We adopted the standard on January 1, 2020 and the adoption did not have a material impact on our consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software, (Subtopic 350-40) related to the accounting for cloud computing arrangements to follow the internal-use software guidance in determining which development costs to defer and recognize as an asset. We adopted the standard January 1, 2020 on a prospective basis.

In August 2020, the Financial Accounting Standards Board issued ASU 2020-06, Debt—Debt with Conversion Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from U.S. GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt.

Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Among other potential impacts, this change is expected to reduce reported interest expense, increase reported net income, and result in a reclassification of certain conversion feature balance sheet amounts from stockholders’ equity to liabilities as it relates to the Company’s convertible senior notes. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS), which is consistent with the Company’s accounting treatment under the current standard. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020, and can be adopted on either a fully retrospective or modified retrospective basis. The Company is evaluating the impact of this pronouncement on its consolidated financial statements.

In December 2019, the Financial Accounting Standards Board issued ASU 2019-12, Income Taxes (Topic 740), which is intended to simplify various aspects of the income tax accounting guidance, including elimination of the exception to the incremental approach of intra-period tax allocation when there is a loss from continuing operations and income or gain from other items (for example, other comprehensive income). ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is evaluating the impact of this pronouncement on its consolidated financial statements.

Fair-Value Measurements

12 Months Ended

Dec. 31, 2020

Fair-Value Measurements

Fair-Value Measurements

Note 5—Fair-Value Measurements

As of December 31, 2020 and 2019, all investments were classified as short-term and available-for-sale. Investment income, which was included as a component of other income, consists of interest earned.

On a recurring basis, we measure certain financial assets at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting standard establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required:

Level 1—Observable inputs for identical assets or liabilities, such as quoted prices in active markets;

Level 2—Inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3—Unobservable inputs in which little or no market data exists, therefore they are developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

Our fair-value hierarchy for our financial assets measured at fair value on a recurring basis are as follows:


	December 31, 2020
	Level 1		Level 2		Level 3		Total

	(In thousands)
Assets:
Money-market funds classified as non-current restricted investments	$	1,055	$	—	$	—	$	1,055
Money-market funds classified as short-term investments		124,452		—		—		124,452
Total	$	125,507	$	—	$	—	$	125,507


	December 31, 2019
	Level 1		Level 2		Level 3		Total

	(In thousands)
Assets:
Money-market funds classified as non-current restricted investments	$	1,154	$	—	$	—	$	1,154
Money-market funds classified as short-term investments		57,704		—		—		57,704
Total	$	58,858	$	—	$	—	$	58,858

Cash held in demand deposit accounts of $10.5 million and $3.1 million is excluded from our fair-value hierarchy disclosure as of December 31, 2020 and 2019, respectively. There were no unrealized gains or losses associated with our short-term investments as of December 31, 2020 or 2019. The carrying amounts for receivables, accounts payable and accrued liabilities, and other current monetary assets and liabilities, including lease financing obligations, approximate fair value.

See “Note 8--Unsecured Convertible Senior Notes” for the carrying amount and estimated fair value of our 5.25% Convertible Senior Notes due 2026 and 6.25% Convertible Senior Notes due 2023.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Certain Balance Sheet Accounts

12 Months Ended

Dec. 31, 2020

Certain Balance Sheet Accounts

Certain Balance Sheet Accounts

Note 6—Certain Balance Sheet Accounts

Inventory

Inventory consists of the following:


	December 31,		December 31,
	2020		2019

	(In thousands)
Raw materials	$	109	$	91
Work-in-progress		462		338
Finished goods		784		718
Total inventory	$	1,355	$	1,147

Property and Equipment, Net

Property and equipment, net consists of the following:


	December 31,		December 31,
	2020		2019

	(In thousands)
Finance leases	$	5,690	$	5,474
Laboratory equipment		2,898		2,844
Computer equipment		985		921
Office equipment and furniture		625		625
Total cost		10,198		9,864
Less accumulated depreciation and amortization		(7,647)		(6,035)
Total property and equipment, net	$	2,551	$	3,829

For the years ended December 31, 2020, 2019 and 2018, depreciation and amortization expenses were $1.6 million, $1.8 million and $1.0 million, respectively.

Accrued Expenses

Accrued expenses consist of the following:


	December 31,		December 31,
	2020		2019

	(In thousands)
Contract research and development	$	7,952	$	24,107
Consulting and professional fees		5,393		3,610
Interest payable		5,205		1,640
Employee compensation		3,948		3,546
Sales rebates, fees and discounts		3,326		10,870
Clinical trials		2,121		1,982
Other accrued expenses		810		872
Total accrued expenses	$	28,755	$	46,627

Unsecured Convertible Senior Notes

12 Months Ended

Dec. 31, 2020

Unsecured Convertible Senior Notes

Unsecured Convertible Senior Notes

Note 8—Unsecured Convertible Senior Notes

In November 2018, we issued $210.0 million in aggregate principal amount on our 2023 Notes, and in August and September 2020, we issued an aggregate principal amount of $225.0 million on our 2026 Notes. We used a portion of the proceeds from the 2026 Notes to repurchase $115.0 million principal amount of the 2023 Notes and terminate a corresponding portion of the related capped call.

Unsecured convertible senior notes outstanding at December 31, 2020 and 2019, respectively, are as follows:


	Balance as of December 31, 2020
	2023 Notes		2026 Notes		Total

	(In thousands)
Principal amount	$	95,000	$	225,030	$	320,030
Unamortized discount		(17,101)		(60,544)		(77,645)
Unamortized issuance costs attributable to liability component		(1,481)		(4,616)		(6,097)
Total Convertible Senior Notes, net	$	76,418	$	159,870	$	236,288

Fair value of outstanding Convertible Senior Notes (1)	$	101,769	$	246,779

Amount by which the Convertible Senior Notes if-converted value exceeds their principal amount	$	6,769	$	21,749

Equity component	$	25,854	$	63,544
Issuance costs		(837)		(1,916)
Net carrying amount of equity component (2)	$	25,017	$	61,628


	Balance as of
	December 31, 2019
	2023 Notes
	(In thousands)
Principal amount	$	210,000
Unamortized discount		(47,660)
Unamortized issuance costs attributable to liability component		(4,127)
Total Convertible Senior Notes, net	$	158,213

Fair value of outstanding Convertible Senior Notes (1)	$	208,163

Amount by which the Convertible Senior Notes if-converted value exceeds their principal amount	$	—

Equity component	$	57,152
Issuance costs		(1,851)
Net carrying amount of equity component (2)	$	55,301

(1)	The fair value is classified as Level 3 due to the limited trading activity for the unsecured convertible senior notes.

(2)	Included in the consolidated balance sheet within additional paid-in capital.

2023 Convertible Senior Notes

In November 2018, we issued $210.0 million in aggregate principal amount on our 2023 Notes. The 2023 Notes are unsecured and accrue interest at an annual rate of 6.25% per annum, payable semi-annually in arrears on May 15 and November 15 of each year. The 2023 Notes mature on November 15, 2023 unless earlier purchased, redeemed or converted in accordance with their terms. We received net proceeds of $24.0 million as summarized below:


	(In thousands)
2023 Notes principal amount issued	$	210,000
Repayment of previously outstanding note payable (see "Note 7--Debt")		(146,046)
Purchase of 2023 Capped Call		(33,180)
Issuance costs		(6,800)
Net proceeds available for corporate use	$	23,974

The 2023 Notes are convertible into cash, shares of our common stock or a combination thereof, as we elect at our sole discretion. The initial conversion rate is 52.0183 shares of our common stock per $1,000 of note principal (equivalent to an initial conversion price of approximately $19.22 per share of common stock), subject to adjustment in certain circumstances. To reduce the dilutive impact or potential cash expenditure associated with conversion of the 2023 Notes, we entered into a capped call transaction (the 2023 Capped Call), which essentially covers the number of shares of our common stock underlying the 2023 Notes when our common stock is trading between the initial conversion price of $19.22 per share and $28.84 per share. However, should the market price of our common stock exceed the $28.84 cap, then the conversion of the 2023 Notes would have an additional dilutive impact or may require a cash expenditure to the extent the market price exceeds the cap price.

In August and September 2020, we issued the 2026 Notes and used approximately $125.6 million of the net proceeds to repurchase $115.0 million principal amount of the 2023 Notes (see “2026 Convertible Senior Notes” below). The settlement consideration was allocated between the repurchase of the liability and the equity component with the fair value of the liability component estimated to be $103.6 million based on the expected future cash flows associated with the $115.0 million principal amount discounted at a 9.9% effective interest rate. The remaining $22.0 million was accounted for as a repurchase of the equity component, reducing additional paid-in capital. As of the repurchase date of August 14, 2020, the carrying value of the repurchased 2023 Notes, net of unamortized debt discount and issuance costs, was $90.2 million. The difference between the $103.6 million fair value of the 2023 Notes repurchased and the carrying value of $90.2 million resulted in a $13.4 million loss on early extinguishment of debt. After giving effect to the repurchase, the total principal amount outstanding under the 2023 Notes as of August 14, 2020 was $95.0 million.

In connection with the repurchase of $115.0 million in principal amount of the 2023 Notes, we terminated a proportionate amount of the related 2023 Capped Call for approximately 6.0 million underlying shares. Upon settlement, the Company received $7.5 million in cash and recorded a $0.8 million loss due to the change in fair value of the contract between signing and settlement dates. The proceeds were recorded as cash with a corresponding increase in additional paid-in capital, and the loss was recorded to other expense in the consolidated statements of operations and comprehensive loss. As of December 31, 2020, approximately 4.9 million shares remained outstanding on the 2023 Capped Call.

The following table sets forth total interest expense recognized in connection with the 2023 Notes:


	Year Ended December 31,
	2020		2019		2018

Contractual interest expense	$	10,410	$	13,089	$	1,677
Amortization of debt issuance costs		669		8,496		996
Amortization of debt discount		7,728		736		86
Total	$	18,807	$	22,321	$	2,759

2026 Convertible Senior Notes

In August and September 2020, we issued $225.0 million aggregate principal amount on our 2026 Notes. The issuance of the 2026 Notes and use of proceeds are as follows:


	(In thousands)
2026 Notes principal amount issued	$	225,030
Repurchase of 2023 Notes		(125,638)
Purchase of 2026 Capped Call		(23,223)
Termination of the 2023 Capped Call contracts related to debt repurchased		7,549
Issuance costs		(6,785)
Net proceeds available for corporate use	$	76,933

The 2026 Notes are unsecured and accrue interest at an annual rate of 5.25% per annum, payable semi-annually in arrears on February 15 and August 15 of each year. The 2026 Notes mature on February 15, 2026, unless earlier purchased, redeemed or converted in accordance with their terms.

The initial conversion rate is 54.0906 shares of our common stock per $1,000 of note principal (equivalent to an initial conversion price of approximately $18.4875 per share of common stock), which equals approximately 12.2 million shares issuable upon conversion, subject to adjustment in certain circumstances.

The 2026 Notes are convertible at the option of the holders on or after November 15, 2025 at any time prior to the close of business on February 12, 2026, the second scheduled trading day immediately before the stated maturity date of February 15, 2026. Additionally, holders may convert their 2026 Notes at their option at specified times prior to the maturity date only if:

(1)

during any calendar quarter, beginning after September 30, 2020, that the last reported sale price per share of our common stock exceeds 130% of the conversion price of the 2026 Notes for each of at least 20 trading days in the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2)

during the five consecutive business days immediately after any five-consecutive-trading-day period (such five-consecutive-trading-day period, the “measurement period”) in which the trading price per $1,000 principal amount of 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;

(3)

there is an occurrence of one or more certain corporate events or distributions of our common stock; or

(4)

we call the 2026 Notes for redemption.

We may elect, at our sole discretion, to convert the 2026 Notes into cash, shares of our common stock or a combination thereof.

Subject to the satisfaction of certain conditions, we may redeem in whole or in part the 2026 Notes at our option beginning August 15, 2023 through the 50th scheduled trading day immediately before the maturity date at a cash redemption price equal to the principal amount of the 2026 Notes to be redeemed plus any accrued and unpaid interest to, but excluding, the redemption date. The 2026 Notes are subject to redemption only if certain requirements are satisfied, including that the last reported sale price per share of our common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice and (ii) the trading day immediately before the date we send such notice.

In order to reduce the dilutive impact or potential cash expenditure associated with the conversion of the 2026 Notes, we entered into capped call transactions in connection with the issuances of the 2026 Notes (the 2026 Capped Call). The 2026 Capped Call will cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2026 Notes, the number of shares of common stock underlying the 2026 Notes when our common stock is trading within the range of approximately $18.49 and $26.10. However, should the market price of our common stock exceed the $26.10 cap, then the conversion of the 2026 Notes would have an additional dilutive impact or may require a cash expenditure to the extent the market price exceeds the cap price. The 2026 Capped Call will expire on various dates over the 50-trading-day period ranging from December 2, 2025 to February 12, 2026, if not exercised earlier. The 2026 Capped Call is a separate transaction and not part of the terms of the 2026 Notes and was executed separately from the issuance of the 2026 Notes. The amount paid for the 2026 Capped Call was recorded as a reduction to additional paid-in capital in the condensed consolidated balance sheet. As of December 31, 2020, approximately 12.2 million shares remained outstanding under the 2026 Capped Call.

We evaluated the accounting for the issuance of the 2026 Notes and concluded that the embedded conversion features meet the requirements for a derivative scope exception for instruments that are both indexed to an entity’s own stock and classified in stockholders’ equity in its balance sheet, and that the cash conversion guidance applies. Therefore, proceeds of $225.0 million are allocated first to the liability component based on the fair value of non-convertible debt with the residual proceeds allocated to the equity component for the conversion features. The Company allocated $6.8 million in issuance costs associated with the 2026 Notes to the liability and equity component in the same proportion as the $225.0 million in proceeds.

Further, we concluded the 2026 Capped Call qualifies for a derivative scope exception for instruments that are both indexed to an entity’s own stock and classified in stockholders’ equity in its balance sheet. Consequently, the fair value of the 2026 Capped Call of $23.2 million is classified as equity, not accounted for as derivatives, and will not be subsequently remeasured.

In accounting for the issuance of the 2026 Notes, we separated the 2026 Notes into liability and equity components, using an effective interest rate of 12.5% to determine the fair value of the liability component.

The following table sets forth interest expense recognized related to the 2026 Notes:



	Year Ended
	December 31, 2020
	(In thousands)
Contractual interest expense	$	4,397
Amortization of debt issuance costs		230
Amortization of debt discount		3,022
Total	$	7,649

Future minimum payments for the 2023 and 2026 Notes as of December 31, 2020 are as follows:


	(In thousands)
2021	$	—
2022		—
2023		95,000
2024		—
2025		—
2026		225,030
Total future minimum payments under the convertible senior notes	$	320,030

Lease Liabilities

12 Months Ended

Dec. 31, 2020

Lease Liabilities

Lease liabilities

Note 9—Lease Liabilities

We have operating leases related to our office and laboratory space. The initial term of the leases is through November 2027 and we have two options to extend the lease term, each by five years. We have finance leases for certain laboratory and office equipment that have lease terms expiring through December 2024.

Lease-related assets and liabilities recorded on the balance sheet are as follows:


	December 31,
	2020			2019

	(In thousands)
Assets
Operating lease assets	$	25,526		$	27,082
Finance lease assets, net		1,822			2,973
Total lease assets	$	27,348		$	30,055

Liabilities
Current:
Operating leases	$	2,740		$	2,282
Finance leases		1,042			1,222
Non-current:
Operating leases		28,032			30,772
Finance leases		738			1,546
Total lease liabilities	$	32,552		$	35,822

Weighted-average remaining lease term
Operating leases		6.8 years			7.8 years
Finance leases		1.9 years			2.5 years
Weighted-average discount rate
Operating leases		12.85	%		12.85	%
Finance leases		11.85	%		12.17	%

The components of total lease costs are as follows:


	Year Ended December 31,
	2020		2019

	(In thousands)
Lease cost
Operating lease cost	$	6,055	$	4,604
Finance lease cost:
Amortization		1,367		1,340
Interest		295		337
Variable lease cost		2,893		2,320
Sublease income		(1,300)		(913)
Net lease cost	$	9,310	$	7,688

The supplemental cash flow information related to leases during 2020 is as follows:


	Year Ended December 31,
	2020		2019

	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	10,103	$	6,951
Operating cash flows used for finance leases	$	295	$	337
Financing cash flows used for finance leases	$	1,195	$	1,139

The future maturities of our lease liabilities as of December 31, 2020 are as follows:


	Operating		Finance
	Leases		Leases

	(In thousands)
2021	$	6,536	$	1,205
2022		6,678		603
2023		6,823		168
2024		6,972		30
2025		6,998		—
Thereafter		12,593		—
Total undiscounted lease payments		46,600		2,006
Less interest		(15,828)		(226)
Total lease liabilities	$	30,772	$	1,780

As of December 31, 2020, we have committed to additional leased space in the building located at 201 Elliott Avenue West, Seattle, Washington (the “Omeros Building”) that will commence in February 2021. The lease terms are consistent with our existing leases in The Omeros Building, and the monthly lease payments are approximately $0.1 million.

Stock-Based Compensation

12 Months Ended

Dec. 31, 2020

Stock-Based Compensation.

Stock-Based Compensation

Note 12—Stock-Based Compensation

Our equity plans provide for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance units, performance shares and other stock and cash awards to employees, directors and consultants. Stock options are granted with an exercise price not less than the fair market value of Omeros’ common stock on the date of the grant. Any unexercised options expire 10 years from grant date, and any unvested stock options granted which are subsequently canceled become available for future reissuance.

Vesting schedules for our equity plans generally are as follows:


Grant Type		Vesting Schedule
Employee initial grants		25% at one-year anniversary, 1/48 monthly thereafter
Employee recurring grants		1/48 monthly
Board member initial grants		33+% per year for 3 years
Board member recurring grants		100% after one year
Non-employee consultant grants		1/12 monthly
Non-employee consultant grants		1/48 monthly

In November 2020, restricted stock awards totaling 14,000 shares with a fair value of $11.05 per share were granted to sales employees. The awards vested immediately upon grant.

Stock-based compensation expense is as follows:



	Year Ended December 31,
	2020		2019		2018

	(In thousands)
Research and development	$	6,331	$	6,095	$	4,961
Selling, general and administrative		8,594		7,690		6,752
Total	$	14,925	$	13,785	$	11,713

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following assumptions were applied to stock option grants during the periods ended:


	Year Ended December 31,
	2020			2019			2018
Estimated weighted-average fair value	$	8.19		$	9.93		$	10.32
Weighted-average assumptions:
Expected volatility		77	%		80	%		78	%
Expected life, in years		6.0			6.0			6.0
Risk-free interest rate		1.06	%		2.41	%		2.68	%
Expected dividend yield		—	%		—	%		—	%

Expected volatility is based on the historical volatility of our stock price weighted by grant issuances over the reporting period. We use the simplified method to calculate expected life used in the valuation of our stock options. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Forfeiture expense is estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates.

Stock option activity for all stock plans is as follows:


		Weighted-
		Average			Aggregate
		Exercise		Remaining	Intrinsic
	Options	Price per		Contractual Life	Value
	Outstanding	Share		(In years)	(In thousands)
Balance at December 31, 2019	11,207,931	$	11.72
Granted	2,237,535		12.29
Exercised	(556,421)		9.03
Canceled	(950,517)		12.14
Balance at December 31, 2020	11,938,528	$	11.92	5.8	$	32,384
Vested and expected to vest at December 31, 2020	11,584,202	$	11.88	5.8	$	31,880
Exercisable at December 31, 2020	8,805,571	$	11.48	4.9	$	27,844

The total intrinsic value of options exercised during the years ended December 31, 2020, 2019 and 2018 was $5.6 million, $5.4 million and $11.4 million, respectively.

At December 31, 2020, there were 3.1 million unvested options outstanding that vest over a weighted-average period of 2.5 years. The remaining estimated compensation expense to be recognized in connection with these unvested options is $23.2 million.

Income Taxes

12 Months Ended

Dec. 31, 2020

Income Taxes

Income Taxes

Note 13—Income Taxes

The components of income tax benefit are as follows:


	December 31,
	2020		2019		2018

	(In thousands)
Current income tax benefit:
Federal	$	—	$	—	$	—
State		—		—		—
Total current income tax benefit		—		—		—
Deferred income tax benefit:
Federal		10,149		—		11,261
State		1,862		—		1,668
Total deferred income tax benefit		12,011		—		12,929
Income tax benefit	$	12,011	$	—	$	12,929

We have a history of losses and therefore have historically not made a provision for income taxes. However, in 2020 and 2018 we recorded an income tax benefit of $12.0 million and $12.9 million related to the issuance of our 2026 and 2023 Notes, respectively. In accordance with intra-period tax allocation rules, the deferred tax liability related to the equity component of convertible debt is a source of income that can be used to recognize the tax benefit of the current year loss through continuing operations. Deferred income taxes reflect the tax effect of net operating loss and tax credit carryforwards and the net temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of deferred income taxes are as follows:


	December 31,
	2020		2019

	(In thousands)
Deferred tax assets:
Net operating loss carryforwards	$	149,993	$	126,794
Research and development tax credits		56,103		40,654
Stock-based compensation		10,586		9,959
Lease liability		8,646		7,908
Disallowed interest expense		11,859		8,122
Other		7,411		6,433
Total deferred tax assets		244,598		199,870
Deferred tax liabilities:
Property and equipment		(113)		—
Equity component of Convertible Notes		(18,302)		(11,082)
Right of use assets		(6,197)		(6,480)
Total deferred tax liabilities		(24,612)		(17,562)
Net deferred tax assets before valuation allowance		219,986		182,308
Less valuation allowance		(219,986)		(182,308)
Net deferred tax assets	$	—	$	—

As of December 31, 2020 and 2019, we had federal net operating loss carryforwards of approximately $658.8 million and $564.3 million, respectively, and state net operating losses of approximately $257.1 million and $170.5 million, respectively.

In certain circumstances, due to ownership changes, our net operating loss and tax credit carryforwards may be subject to limitations under Section 382 of the Internal Revenue Code. To date, we have not completed a Section 382 study. Unless previously utilized, net operating losses of $409.0 million generated prior to 2018 will expire between

2021 and 2037. The net operating loss of $144.5 million generated after 2018 should carryforward indefinitely. Unless previously utilized, research and development tax credit carryforward will expire between 2021 and 2040.

We have established a valuation allowance due to the uncertainty of our ability to generate sufficient taxable income to realize the deferred tax assets. Our valuation allowance increased $37.8 million and $23.9 million in 2020 and 2019, respectively, primarily due to net operating losses incurred during these periods.

Reconciliation of income tax computed at federal statutory rates to the reported provisions for income taxes is as follows:


	Year ended December 31,
	2020		2019		2018
U.S. Federal statutory rate on net loss	(21.0)	%	(21.0)	%	(21.0)	%
State tax, net of federal tax benefit	(3.1)	%	(2.7)	%	(2.5)	%
Change in valuation allowance	25.1

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Preferred stock, par value (USD per share)	$ 0.01	$ 0.01
Preferred stock, authorized shares	20,000,000	20,000,000
Preferred stock, Issued shares	0	0
Preferred stock, outstanding shares	0	0
Common stock, par value (USD per share)	$ 0.01	$ 0.01
Common stock, authorized shares	150,000,000	150,000,000
Common stock, Issued shares	61,671,231	54,200,810
Common stock, outstanding shares	61,671,231	54,200,810