0001558370-22-017153 | 10-Q | XBRL Viewer

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OMIDRIA Royalty Obligation - Other Commitments (Details) - DRI $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($)
Royalty Obligation
Proceeds from sale of future royalties	$ 125.0
Maximum payout payable	$ 188.4
Maximum Royalty Payable Percentage	9.40%

Leases (Details) $ in Thousands		3 Months Ended		9 Months Ended
Leases (Details) $ in Thousands	Jan. 14, 2022 USD ($)	Sep. 30, 2022 USD ($) item	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) item	Sep. 30, 2021 USD ($)
Leases
Number of options to extend lease term \| item		2		2
Expected lease term		5 years		5 years
Decrease in right of use asset due to lease termination	$ 4,700
Decrease in lease liability due to lease termination	5,200
Non-cash gain of termination of lease	$ 500			$ 454
Lease cost
Operating lease cost		$ 1,659	$ 1,961	4,529	$ 5,528
Amortization		250	243	570	854
Interest		32	40	123	127
Variable lease cost		813	863	2,395	2,667
Sublease income		(432)	(447)	(1,377)	(1,288)
Net lease cost		$ 2,322	$ 2,660	6,240	7,888
Cash payments for operating leases				5,312	5,521
Cash payments for financing leases				$ 598	$ 684

Stock-Based Compensation - Fair Value of Employee Option Grant Estimated on Date of Grant (Details) - Outstanding options to purchase common stock - $ / shares	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award
Estimated weighted-average fair value (USD per share)	$ 2.97	$ 2.93
Weighted Average
Weighted-average assumptions:
Expected volatility	89.00%	88.00%
Expected life, in years	6 years	6 years
Risk-free interest rate	2.83%	2.81%
Expected dividend yield	0.00%	0.00%

Unsecured Convertible Senior Notes - Future minimum payments (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Long-term Debt, Fiscal Year Maturity [Abstract]
Total future minimum principal payments under 2023 Notes and 2026 Notes	$ 320,030	$ 320,030
2023 and 2026 Convertible Senior Notes
Long-term Debt, Fiscal Year Maturity [Abstract]
2023	95,000
2026	225,030
Total future minimum principal payments under 2023 Notes and 2026 Notes	$ 320,030

Shareholders' Deficit - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended	9 Months Ended
	Mar. 31, 2021	Sep. 30, 2022	Mar. 01, 2021
Class of Stock [Line Items]
Maximum aggregate offering price		$ 150.0
Cashless exercise of warrants	43,115
Exercise of stock options (in shares)		101,160
Shares of common stock right to purchase by warrant (in shares)		200,000
Warrant exercise price (in USD per share)		$ 23.00
Warrant
Class of Stock [Line Items]
Exercise of stock options (in shares)	24,901
At The Market (ATM) Program
Class of Stock [Line Items]
Maximum aggregate offering price			$ 150.0

Discontinued Operations - Narrative (Details) - Discontinued Operation - USD ($) $ in Millions		9 Months Ended
	Dec. 23, 2021	Sep. 30, 2022
Omidria Assets Disposal
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash proceeds on sale of OMIDRIA	$ 126.0
Percentage of royalty receivable after January 1, 2025 or payment of milestone	30.00%
Milestone payment receivable	$ 200.0	$ 200.0
Milestone period	4 years	4 years
Percent of reduction in royalty receivable	10.00%
Percentage of royalty receivable outside US	15.00%
Omidria
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Percentage of royalty receivable	50.00%

Unsecured Convertible Senior Notes - Interest expense recognized (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
2023 Unsecured Convertible Senior Notes
Interest Expense, Debt [Abstract]
Contractual interest expense	$ 1,484	$ 1,484	$ 4,453	$ 4,453
Amortization of debt issuance costs	167	156	493	459
Total	1,651	1,640	4,946	4,912
2026 Unsecured Convertible Senior Notes
Interest Expense, Debt [Abstract]
Contractual interest expense	2,954	2,954	8,861	8,861
Amortization of debt issuance costs	294	277	869	797
Total	$ 3,248	$ 3,231	$ 9,730	$ 9,658

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
CONDENSED CONSOLIDATED BALANCE SHEETS
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	62,730,015	62,628,855
Common stock, outstanding shares	62,730,015	62,628,855

Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2022

Net Loss Per Share

Calculation of Historical Outstanding Dilutive Securities Not Included in Diluted Loss per Share


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2022	2021	2022	2021
2023 Notes convertible to common stock ⁽¹⁾	4,941,739	4,941,739	4,941,739	4,941,739
Outstanding options to purchase common stock	19,292	1,781,619	8,246	2,504,901
Outstanding restricted stock units	201,467	—	208,962	—
Total potentially dilutive shares excluded from net loss per share	5,162,498	6,723,358	5,158,947	7,446,640

(1)The 2023 Notes (defined below) are subject to a capped call arrangement that potentially reduces the dilutive effect as described in “Note 7 — Unsecured Convertible Senior Notes.” Any potential impact of the capped call arrangement is excluded from this table.

Unsecured Convertible Senior Notes - Unsecured convertible senior notes outstanding (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Principal amount	$ 320,030	$ 320,030
Unamortized discount		(6,572)
Unamortized debt issuance costs	(5,211)
Total unsecured convertible senior notes, net	314,819	313,458
2023 Unsecured Convertible Senior Notes
Debt Instrument [Line Items]
Principal amount	95,000	95,000
Unamortized discount		(1,282)
Unamortized debt issuance costs	(789)
Total unsecured convertible senior notes, net	94,211	93,718
Fair value of outstanding unsecured convertible senior notes (1)	88,113	87,163
2026 Unsecured Convertible Senior Notes
Debt Instrument [Line Items]
Principal amount	225,030	225,030
Unamortized discount		(5,290)
Unamortized debt issuance costs	(4,422)
Total unsecured convertible senior notes, net	220,608	219,740
Fair value of outstanding unsecured convertible senior notes (1)	$ 132,543	$ 171,867

- Definition

Amount, after unamortized (discount) premium and debt issuance costs, of long-term debt. Includes, but not limited to, notes payable, bonds payable, debentures, mortgage loans and commercial paper. Excludes capital lease obligations.

+ References + Details

Net Loss Per Share (Details) - shares	3 Months Ended		9 Months Ended
Net Loss Per Share (Details) - shares	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive shares excluded from net loss per share	5,162,498	6,723,358	5,158,947	7,446,640
2023 Unsecured Convertible Senior Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive shares excluded from net loss per share	4,941,739	4,941,739	4,941,739	4,941,739
Outstanding options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive shares excluded from net loss per share	19,292	1,781,619	8,246	2,504,901
Restricted Stock Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive shares excluded from net loss per share	201,467		208,962

Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies.

Commitments and Contingencies

Note 10—Commitments and Contingencies

Contracts

We have various agreements with third parties that collectively require payment of termination fees totaling $20.6 million as of September 30, 2022 if we cancel the work within specific time frames, either prior to commencing or during performance of the contracted services.

Development Milestones and Product Royalties

We have licensed a variety of intellectual property from third parties that we are currently developing or may develop in the future. These licenses may require milestone payments during the clinical development processes or upon approval of commercial sale as well as low single- to low double-digit royalties on the net income or net sales of the product. For the three months and nine months ended September 30, 2022 and September 30, 2021, development milestone expenses were insignificant. Should narsoplimab be approved, we would owe milestone payments to development partners and be obligated to pay low single-digit royalties on net sales of the product.

Organization and Basis of Presentation

9 Months Ended

Sep. 30, 2022

Organization and Basis of Presentation

Organization and Basis of Presentation

Note 1—Organization and Basis of Presentation

General

Omeros Corporation (“Omeros,” the “Company” or “we”) is a clinical-stage biopharmaceutical company committed to discovering, developing and commercializing small-molecule and protein therapeutics for large-market as well as orphan indications targeting immunologic diseases, including complement-mediated diseases and cancers related to dysfunction of the immune system, as well as addictive and compulsive disorders. We marketed our first drug product, OMIDRIA^® (phenylephrine and ketorolac intraocular solution) 1% / 0.3% for use during cataract surgery or intraocular lens replacement in the United States (the “U.S.”) until we sold OMIDRIA and related business assets on December 23, 2021 (see “Sale of OMIDRIA Assets” below for additional information).

Our drug candidate narsoplimab, targeting mannan-binding lectin-associated serine protease-2 (“MASP-2”) and the lectin pathway of complement, is the subject of a biologics license application (“BLA”) pending before the U.S. Food and Drug Administration (“FDA”) for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy (“HSCT-TMA”). On October 18, 2021, we announced the receipt of a Complete Response Letter (“CRL”) from FDA indicating that the BLA could not be approved as submitted. In November 2022, we received the decision by FDA’s Office of New Drugs (“OND”) denying our appeal of the CRL. Although our appeal was denied, the decision proposes a path forward for resubmission of the BLA based on survival data from the completed pivotal trial versus a historical control group, with or without an independent literature analysis.

Clinical development of narsoplimab also includes programs focused on complement-mediated disorders, including immunoglobulin A (“IgA”) nephropathy, atypical hemolytic uremic syndrome (“aHUS”) and COVID-19. Our pipeline of investigational agents also includes: our long-acting MASP-2 inhibitor OMS1029, which is currently in a Phase 1 clinical trial, and OMS906, our inhibitor of mannan-binding lectin-associated serine protease 3 (“MASP-3”) targeting the alternative pathway of complement, which has completed a Phase 1 clinical trial and is being advanced into clinical programs for paroxysmal nocturnal hemoglobinuria (“PNH”) and complement 3 (“C3”) glomerulopathy.

Basis of Presentation

Our condensed consolidated financial statements include the financial position and results of operations of Omeros and our wholly owned subsidiaries. All inter-company transactions have been eliminated. The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain prior year amounts in the condensed consolidated balance sheets, statements of operations, statements of stockholders’ equity (deficit) and statements of cash flows and the notes to the condensed consolidated financial statements have been reclassified in the condensed consolidated financial statements to conform to the current year presentation.

Sale of OMIDRIA Assets

On December 23, 2021, we completed the sale of OMIDRIA and certain related assets and liabilities to Rayner Surgical Inc. (“Rayner”) pursuant to an Asset Purchase Agreement dated December 1, 2021 (the “Asset Purchase Agreement”). We received a payment of $126.0 million at closing and receive royalty payments on worldwide sales of OMIDRIA and potentially a $200.0 million milestone payment if separate payment for OMIDRIA is secured in the U.S. for a continuous period of at least four years before January 1, 2025.

As a result of the divestiture, the results of OMIDRIA operations (e.g., revenues and operating costs) are included in discontinued operations in our condensed consolidated statements of operations and comprehensive loss for all periods presented (see “Note 3 – Discontinued Operations”).

Risks and Uncertainties

As of September 30, 2022, we had cash, cash equivalents and short-term investments of $221.0 million and outstanding accounts receivable of $13.9 million. Our loss for the quarter ended September 30, 2022 was $17.5 million. Included in our loss for the quarter was a $29.0 million noncash benefit related to the revaluation of our OMIDRIA contract royalty asset, which was partially offset by $4.6 million of noncash operating expenses. Our loss for the nine months ended September 30, 2022 was $81.3 million and included $30.5 million of noncash benefit related to the revaluation of our OMIDRIA contract royalty asset along with differences between actual and estimated royalties in the third quarter, which was partially offset by $12.5 million of noncash operating expenses.

We plan to continue to fund our operations for the next twelve months with our existing cash and investments, our current accounts receivable, and our portion of OMIDRIA royalties. There is also the potential for us to receive a $200.0 million milestone related to achievement of long-term OMIDRIA separate payment if, prior to January 1, 2025, separate payment for OMIDRIA is secured under Medicare Part B for at least four continuous years. If FDA approval is granted for narsoplimab for HSCT-TMA, we expect that sales of narsoplimab will also provide funds for our operations. We have a sales agreement through which we may, from time to time, offer and sell shares of our common stock in an “at the market” equity offering for aggregate sales proceeds of up to $150.0 million. Should it be determined to be strategically advantageous, we could pursue debt financings as well as public and private offerings of our equity securities, similar to those we have previously completed, or other strategic transactions, which may include licensing a portion of our existing technology.

Management believes the assets on hand along with our portion of expected OMIDRIA royalties to be received are adequate to finance our operations at least through November 9, 2023. Accordingly, the accompanying condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant items subject to such estimates include OMIDRIA contract royalty asset valuation, stock-based compensation expense, and accruals for clinical trials and manufacturing of drug product. We base our estimates on historical experience and on various other factors, including the impact of the COVID-19 pandemic, that we believe are reasonable under the circumstances; however, actual results could differ from these estimates.

Leases

9 Months Ended

Sep. 30, 2022

Leases

Leases

Note 9—Leases

We have an operating lease for our office and laboratory facilities with an initial term that ends in November 2027 and two options to extend the lease term by five years each. On January 14, 2022, we entered into an agreement with our landlord to early terminate a portion of the rentable square footage of our office and laboratory facilities, which reduced the right of use asset by $4.7 million and related liability by $5.2 million. We recorded a non-cash gain of $0.5 million upon early termination of this portion of the lease. In addition, we carry various finance leases for laboratory equipment.

Supplemental lease information is as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021

	(In thousands)				(In thousands)
Lease cost
Operating lease cost	$	1,659	$	1,961	$	4,529	$	5,528
Finance lease cost:
Amortization		250		243		570		854
Interest		32		40		123		127
Variable lease cost		813		863		2,395		2,667
Sublease income		(432)		(447)		(1,377)		(1,288)
Net lease cost	$	2,322	$	2,660	$	6,240	$	7,888

Cash paid for amounts included in the measurement of lease liabilities is as follows:


	Nine Months Ended
	September 30,
	2022		2021

	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
Cash payments for operating leases	$	5,312	$	5,521
Cash payments for financing leases	$	598	$	684

Organization and Basis of Presentation (Details) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended
	Dec. 23, 2021	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash, cash equivalents and short-term investments		$ 221,000	$ 221,000
Receivables, net		13,854	13,854		$ 38,155
Net loss		17,500	81,316	$ 86,386
Non cash benefit		29,000	30,500
Noncash operating expenses		4,600	12,500
Maximum aggregate offering price		150,000	150,000
Discontinued Operation \| Omidria Assets Disposal
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash proceeds on sale of OMIDRIA	$ 126,000
Milestone payment receivable	$ 200,000	$ 200,000	$ 200,000
Milestone period	4 years		4 years

Discontinued Operations - Net Income Loss (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net income from discontinued operations	$ 37,336	$ 21,575	$ 54,665	$ 57,848
Discontinued Operation \| Omidria Assets Disposal
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Royalty interest income and other	8,229		23,857
Remeasurement adjustments	29,043		30,513
Other income (expenses), net	64	(8,429)	295	(22,040)
Net income from discontinued operations	$ 37,336	21,575	$ 54,665	57,848
Discontinued Operation \| Omidria Assets Disposal \| Product sales, net
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenue		$ 30,004		$ 79,888

- Definition

Amount after tax of income (loss) from a discontinued operation attributable to the parent. Includes, but is not limited to, the income (loss) from operations during the phase-out period, gain (loss) on disposal, gain (loss) for reversal of write-down (write-down) to fair value, less cost to sell, and adjustments to a prior period gain (loss) on disposal.

+ References + Details

Stock-Based Compensation - Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation in continuing operations	$ 3,872	$ 5,350	$ 10,947	$ 11,322
Discontinued operations	(28)	344	(139)	760
Total stock-based compensation	3,844	5,694	10,808	12,082
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation in continuing operations	1,672	2,444	4,777	5,284
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation in continuing operations	$ 2,200	$ 2,906	$ 6,170	$ 6,038

Stock-Based Compensation - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($) shares
Outstanding options to purchase common stock
Share-based Compensation Arrangement by Share-based Payment Award
Unvested options outstanding (shares)	4,400,000
Period for recognition	2 years 4 months 24 days
Unrecognized compensation expense \| $	$ 22.6
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award
Restricted stock units, unvested	200,000
Yearly vesting percentage	50.00%

Certain Balance Sheet Accounts - Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Accrued expenses
Clinical trials	$ 4,958	$ 2,430
Interest payable	3,703	5,172
Employee compensation	3,704	3,706
Contract research and development	2,639	3,916
Consulting and professional fees	2,338	7,455
Sales rebates, fees and discounts		8,442
Other accrued expenses	674	2,013
Total accrued expenses	$ 18,016	$ 33,134

OMIDRIA Royalty Obligation (Details) - DRI $ in Millions	Sep. 30, 2022 USD ($)
Royalty Obligation
Remainder of 2022	$ 1.7
Calendar year 2023	13.0
Calendar year 2024	20.0
Calendar years 2025 through 2028	25.0
Calendar year 2029	26.3
Calendar year 2030	$ 27.5

Unsecured Convertible Senior Notes - 2026 Unsecured Convertible Senior Notes (Details) $ / shares in Units, shares in Millions	2 Months Ended
	Sep. 30, 2020 USD ($) $ / shares shares	Sep. 30, 2022 USD ($)
Debt Instrument [Line Items]
Unamortized debt issuance costs		$ 5,211,000
2026 Unsecured Convertible Senior Notes
Debt Instrument [Line Items]
Principal amount	$ 225,000,000.0
Interest rate (as a percent)	5.25%
Unamortized debt issuance costs		$ 4,422,000
Effective interest rate to determine fair value of liability component (as a percent)		5.90%
Conversion rate	0.0540906
Value used in calculation of conversion rate	$ 1,000
Conversion price \| $ / shares	$ 18.4875
Shares upon conversion \| shares	12.2
2026 Unsecured Convertible Senior Notes \| Minimum
Debt Instrument [Line Items]
Conversion price \| $ / shares	$ 18.49
2026 Unsecured Convertible Senior Notes \| Maximum
Debt Instrument [Line Items]
Conversion price \| $ / shares	$ 26.10

Leases (Tables)

9 Months Ended

Sep. 30, 2022

Leases

Schedule of lease costs


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021

	(In thousands)				(In thousands)
Lease cost
Operating lease cost	$	1,659	$	1,961	$	4,529	$	5,528
Finance lease cost:
Amortization		250		243		570		854
Interest		32		40		123		127
Variable lease cost		813		863		2,395		2,667
Sublease income		(432)		(447)		(1,377)		(1,288)
Net lease cost	$	2,322	$	2,660	$	6,240	$	7,888

Schedule of supplemental cash flow information


	Nine Months Ended
	September 30,
	2022		2021

	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
Cash payments for operating leases	$	5,312	$	5,521
Cash payments for financing leases	$	598	$	684

Discontinued Operations - OMIDRIA contract royalty asset (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
OMIDRIA contract royalty asset, ending balance	$ 191,385	$ 191,385
Discontinued Operation \| Omidria Assets Disposal
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
OMIDRIA contract royalty asset, beginning balance		184,570
Royalties earned	(16,500)	(47,555)
Royalty interest income and other	8,229	23,857
Remeasurement adjustments	29,043	30,513
Royalty interest income and remeasurement adjustments	$ 37,300	$ 54,700

Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2022

Discontinued Operations

Schedule of contract royalty asset


OMIDRIA contract royalty asset at December 31, 2021	$	184,570
Royalties earned		(47,555)
Royalty interest income and other		23,857
Remeasurement adjustments		30,513
OMIDRIA contract royalty asset at September 30, 2022	$	191,385

Schedule of net income from discontinued operation


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021

	(In thousands)
Product sales, net	$	—	$	30,004	$	—	$	79,888
Royalty interest income and other		8,229		—		23,857		—
Remeasurement adjustments		29,043		—		30,513		—
Other income (expenses), net		64		(8,429)		295		(22,040)
Net income from discontinued operations	$	37,336	$	21,575	$	54,665	$	57,848

Schedule of cash flow from discontinued operation


	Nine Months Ended
	September 30,
	2022		2021

	(In thousands)
Total operating inflows (outflows) from discontinued operations	$	12,037	$	(23,828)

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

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+ Details

Fair-Value Measurements

9 Months Ended

Sep. 30, 2022

Fair-Value Measurements

Fair-Value Measurements

Note 6—Fair-Value Measurements

As of September 30, 2022, and December 31, 2021, all investments were classified as short-term and available-for-sale on the accompanying condensed consolidated balance sheets. 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 and liabilities measured at fair value on a recurring basis are as follows:


	September 30, 2022
	Level 1		Level 2		Level 3		Total

	(In thousands)
Assets:
Money-market funds classified as short-term investments	$	75,431	$	—	$	—	$	75,431
Money-market funds classified as non-current restricted investments		1,054		—		—		1,054
Total	$	76,485	$	—	$	—	$	76,485


	December 31, 2021
	Level 1		Level 2		Level 3		Total

	(In thousands)
Assets:
Money-market funds classified as short-term investments	$	56,458	$	—	$	—	$	56,458
Money-market funds classified as non-current restricted investments		1,054		—		—		1,054
Total	$	57,512	$	—	$	—	$	57,512

Cash held in demand deposit accounts of $145.5 million and $100.8 million is excluded from our fair-value hierarchy disclosure as of September 30, 2022 and December 31, 2021, respectively. There were no unrealized gains or losses associated with our investments as of September 30, 2022 or December 31, 2021. The carrying amounts reported in the accompanying condensed consolidated balance sheets for receivables, accounts payable, other current monetary assets and liabilities approximate fair value.

See “Note 7—Unsecured Convertible Senior Notes” for the carrying amount and estimated fair value of our outstanding convertible senior notes.

- 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 - Contract Royalty Asset and Accounts Receivable, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Certain Balance Sheet Accounts
Short-term contract royalty asset	$ 47,744	$ 44,319
Long-term contract royalty asset	143,641	140,251
Total OMIDRIA contract royalty asset	191,385	184,570
Royalty and trade receivables, net	13,113	36,505
Sublease and other receivables	741	1,650
Total receivables, net	$ 13,854	38,155
Chargeback and product return allowances		$ 2,000

Unsecured Convertible Senior Notes (Tables)

9 Months Ended

Sep. 30, 2022

Debt Instrument [Line Items]

Summary of unsecured convertible senior notes outstanding


	Balance as of September 30, 2022
	2023 Notes		2026 Notes		Total

	(In thousands)
Principal amount	$	95,000	$	225,030	$	320,030
Unamortized debt issuance costs		(789)		(4,422)		(5,211)
Total unsecured convertible senior notes, net	$	94,211	$	220,608	$	314,819

Fair value of outstanding unsecured convertible senior notes (1)	$	88,113	$	132,543



	Balance as of December 31, 2021
	2023 Notes		2026 Notes		Total

	(In thousands)
Principal amount	$	95,000	$	225,030	$	320,030
Unamortized discount		(1,282)		(5,290)		(6,572)
Total unsecured convertible senior notes, net	$	93,718	$	219,740	$	313,458

Fair value of outstanding unsecured convertible senior notes (1)	$	87,163	$	171,867

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

Schedule of future minimum payments of debt


	(In thousands)
2023	$	95,000
2024		—
2025		—
2026		225,030
2027		—
Total future minimum principal payments under the 2023 Notes and 2026 Notes	$	320,030

2023 Unsecured Convertible Senior Notes

Debt Instrument [Line Items]

Schedule of total interest expense recognized


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021

	(In thousands)				(In thousands)
Contractual interest expense	$	1,484	$	1,484	$	4,453	$	4,453
Amortization of debt issuance costs		167		156		493		459
Total	$	1,651	$	1,640	$	4,946	$	4,912

2026 Unsecured Convertible Senior Notes

Debt Instrument [Line Items]

Schedule of total interest expense recognized


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021

	(In thousands)				(In thousands)
Contractual interest expense	$	2,954	$	2,954	$	8,861	$	8,861
Amortization of debt issuance costs		294		277		869		797
Total	$	3,248	$	3,231	$	9,730	$	9,658

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2022

Stock-Based Compensation.

Stock-Based Compensation Expense


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021

	(In thousands)
Continuing operations
Research and development	$	1,672	$	2,444	$	4,777	$	5,284
Selling, general and administrative		2,200		2,906		6,170		6,038
Total stock-based compensation in continuing operations		3,872		5,350		10,947		11,322
Discontinued operations		(28)		344		(139)		760
Total stock-based compensation	$	3,844	$	5,694	$	10,808	$	12,082

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions


	Three Months Ended			Nine Months Ended
	September 30, 2022			September 30, 2022
Estimated weighted-average fair value	$	2.97		$	2.93
Weighted-average assumptions:
Expected volatility		89	%		88	%
Expected life, in years		6.0			6.0
Risk-free interest rate		2.83	%		2.81	%
Expected dividend yield		—	%		—	%

Schedule of Stock Option Activity


		Weighted-
		Average			Aggregate
		Exercise		Remaining	Intrinsic
	Options	Price per		Contractual Life	Value
	Outstanding	Share		(In years)	(In thousands)
Balance at December 31, 2021	12,709,887	$	12.61
Granted	2,631,334		3.96
Exercised	(101,160)		4.10
Forfeited	(574,203)		13.58
Balance at September 30, 2022	14,665,858	$	11.08	5.7	$	78
Vested and expected to vest at September 30, 2022	14,202,672	$	11.16	5.6	$	70
Exercisable at September 30, 2022	10,277,595	$	12.11	4.2	$	—

Fair-Value Measurements (Tables)

9 Months Ended

Sep. 30, 2022

Fair-Value Measurements

Financial Assets and Liabilities Measured at Fair Value on Recurring Basis


	September 30, 2022
	Level 1		Level 2		Level 3		Total

	(In thousands)
Assets:
Money-market funds classified as short-term investments	$	75,431	$	—	$	—	$	75,431
Money-market funds classified as non-current restricted investments		1,054		—		—		1,054
Total	$	76,485	$	—	$	—	$	76,485


	December 31, 2021
	Level 1		Level 2		Level 3		Total

	(In thousands)
Assets:
Money-market funds classified as short-term investments	$	56,458	$	—	$	—	$	56,458
Money-market funds classified as non-current restricted investments		1,054		—		—		1,054
Total	$	57,512	$	—	$	—	$	57,512

Significant Accounting Policies (Policies)	9 Months Ended
Significant Accounting Policies (Policies)	Sep. 30, 2022
Significant Accounting Policies
General	Omeros Corporation (“Omeros,” the “Company” or “we”) is a clinical-stage biopharmaceutical company committed to discovering, developing and commercializing small-molecule and protein therapeutics for large-market as well as orphan indications targeting immunologic diseases, including complement-mediated diseases and cancers related to dysfunction of the immune system, as well as addictive and compulsive disorders. We marketed our first drug product, OMIDRIA^® (phenylephrine and ketorolac intraocular solution) 1% / 0.3% for use during cataract surgery or intraocular lens replacement in the United States (the “U.S.”) until we sold OMIDRIA and related business assets on December 23, 2021 (see “Sale of OMIDRIA Assets” below for additional information). Our drug candidate narsoplimab, targeting mannan-binding lectin-associated serine protease-2 (“MASP-2”) and the lectin pathway of complement, is the subject of a biologics license application (“BLA”) pending before the U.S. Food and Drug Administration (“FDA”) for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy (“HSCT-TMA”). On October 18, 2021, we announced the receipt of a Complete Response Letter (“CRL”) from FDA indicating that the BLA could not be approved as submitted. In November 2022, we received the decision by FDA’s Office of New Drugs (“OND”) denying our appeal of the CRL. Although our appeal was denied, the decision proposes a path forward for resubmission of the BLA based on survival data from the completed pivotal trial versus a historical control group, with or without an independent literature analysis. Clinical development of narsoplimab also includes programs focused on complement-mediated disorders, including immunoglobulin A (“IgA”) nephropathy, atypical hemolytic uremic syndrome (“aHUS”) and COVID-19. Our pipeline of investigational agents also includes: our long-acting MASP-2 inhibitor OMS1029, which is currently in a Phase 1 clinical trial, and OMS906, our inhibitor of mannan-binding lectin-associated serine protease 3 (“MASP-3”) targeting the alternative pathway of complement, which has completed a Phase 1 clinical trial and is being advanced into clinical programs for paroxysmal nocturnal hemoglobinuria (“PNH”) and complement 3 (“C3”) glomerulopathy.
Basis of Presentation	Basis of Presentation Our condensed consolidated financial statements include the financial position and results of operations of Omeros and our wholly owned subsidiaries. All inter-company transactions have been eliminated. The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain prior year amounts in the condensed consolidated balance sheets, statements of operations, statements of stockholders’ equity (deficit) and statements of cash flows and the notes to the condensed consolidated financial statements have been reclassified in the condensed consolidated financial statements to conform to the current year presentation.
Risks and Uncertainties	Risks and Uncertainties As of September 30, 2022, we had cash, cash equivalents and short-term investments of $221.0 million and outstanding accounts receivable of $13.9 million. Our loss for the quarter ended September 30, 2022 was $17.5 million. Included in our loss for the quarter was a $29.0 million noncash benefit related to the revaluation of our OMIDRIA contract royalty asset, which was partially offset by $4.6 million of noncash operating expenses. Our loss for the nine months ended September 30, 2022 was $81.3 million and included $30.5 million of noncash benefit related to the revaluation of our OMIDRIA contract royalty asset along with differences between actual and estimated royalties in the third quarter, which was partially offset by $12.5 million of noncash operating expenses. We plan to continue to fund our operations for the next twelve months with our existing cash and investments, our current accounts receivable, and our portion of OMIDRIA royalties. There is also the potential for us to receive a $200.0 million milestone related to achievement of long-term OMIDRIA separate payment if, prior to January 1, 2025, separate payment for OMIDRIA is secured under Medicare Part B for at least four continuous years. If FDA approval is granted for narsoplimab for HSCT-TMA, we expect that sales of narsoplimab will also provide funds for our operations. We have a sales agreement through which we may, from time to time, offer and sell shares of our common stock in an “at the market” equity offering for aggregate sales proceeds of up to $150.0 million. Should it be determined to be strategically advantageous, we could pursue debt financings as well as public and private offerings of our equity securities, similar to those we have previously completed, or other strategic transactions, which may include licensing a portion of our existing technology. Management believes the assets on hand along with our portion of expected OMIDRIA royalties to be received are adequate to finance our operations at least through November 9, 2023. Accordingly, the accompanying condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant items subject to such estimates include OMIDRIA contract royalty asset valuation, stock-based compensation expense, and accruals for clinical trials and manufacturing of drug product. We base our estimates on historical experience and on various other factors, including the impact of the COVID-19 pandemic, that we believe are reasonable under the circumstances; however, actual results could differ from these estimates.
Sale of OMIDRIA Assets and Discontinued Operations	Sale of OMIDRIA Assets On December 23, 2021, we completed the sale of OMIDRIA and certain related assets and liabilities to Rayner Surgical Inc. (“Rayner”) pursuant to an Asset Purchase Agreement dated December 1, 2021 (the “Asset Purchase Agreement”). We received a payment of $126.0 million at closing and receive royalty payments on worldwide sales of OMIDRIA and potentially a $200.0 million milestone payment if separate payment for OMIDRIA is secured in the U.S. for a continuous period of at least four years before January 1, 2025. As a result of the divestiture, the results of OMIDRIA operations (e.g., revenues and operating costs) are included in discontinued operations in our condensed consolidated statements of operations and comprehensive loss for all periods presented (see “Note 3 – Discontinued Operations”). Discontinued Operations We review the presentation of planned or completed business dispositions in the condensed consolidated financial statements based on the available information and events that have occurred. The review consists of evaluating whether the business meets the definition of a component for which the operations and cash flows are clearly distinguishable from the other components of the business and, if so, whether it is anticipated that after the disposal the cash flows of the component would be eliminated from continuing operations and whether the disposition represents a strategic shift that has a major effect on operations and financial results. Planned or completed business dispositions are presented as discontinued operations when all the criteria described above are met. For those divestitures that qualify as discontinued operations, all comparative periods presented are reclassified in the consolidated balance sheets. Additionally, the results of operations of a discontinued operation are reclassified to income from discontinued operations, for all periods presented in the condensed consolidated statements of operations and comprehensive loss. Results of discontinued operations include all revenues and expenses directly derived from such businesses; general corporate overhead is not allocated to discontinued operations. The OMIDRIA assets sold to Rayner qualify as a discontinued operation (see “Note 3 – Discontinued Operations”).
OMIDRIA Royalties and OMIDRIA Contract Royalty Assets	OMIDRIA Royalties and OMIDRIA Contract Royalty Assets We have rights to receive future royalties from Rayner on OMIDRIA net sales at rates that vary based on geography and certain regulatory contingencies. Therefore, future OMIDRIA royalties are treated as variable consideration. The sale of OMIDRIA qualified as an asset sale under GAAP. To measure the OMIDRIA contract royalty asset, we used the expected value approach, which is the sum of the discounted probability-weighted royalty payments, net of tax, we would receive using a range of potential outcomes, to the extent that it is probable that a significant reversal in the amount of cumulative income recognized will not occur. Accordingly, the contract royalty asset excludes the achievement of the potential $200.0 million milestone payment and any non-U.S. royalties to the extent it is probable that a significant reversal in the amount of cumulative income recognized will not occur. Royalties earned are primarily recorded as a reduction to the OMIDRIA contract royalty asset. The amounts recorded in discontinued operations will reflect interest earned on the outstanding OMIDRIA contract royalty asset and any amounts received that are different from the expected royalties recorded at closing. The OMIDRIA contract royalty asset is re-measured periodically using the expected value approach based on actual results and future expectations. Any required adjustment to the OMIDRIA contract royalty asset will be recorded into discontinued operations.
OMIDRIA Royalty Obligation	OMIDRIA Royalty Obligation On September 30, 2022, we sold to DRI Healthcare Acquisitions LP (“DRI”) an interest in a portion of our future OMIDRIA royalty receipts for a purchase price of $125.0 million in cash (see “Note 8 – OMIDRIA Royalty Obligation”). The $125.0 million cash consideration obtained is classified as liability and is recorded as an “OMIDRIA royalty obligation” on our condensed consolidated balance sheet. The liability is being amortized over the term of the arrangement using the implied effective interest rate of 9.4% and interest expense is recorded as a component of continuing operations. To the extent our estimates of future royalties are greater or less than previous estimates, we will adjust the carrying amount of the liability for future OMIDRIA royalties to the present value of the revised estimated cash flows, discounted at the original effective interest rate utilizing the cumulative catch-up method. The offset to the adjustment would be recognized as a component of net income (loss) from continuing operations.
OMIDRIA Revenue Recognition	OMIDRIA Revenue Recognition Prior to the sale of OMIDRIA on December 23, 2021, when we entered into a customer contract, we performed the following five steps: (i) identified the contract with a customer; (ii) identified the performance obligations in the contract; (iii) determined the transaction price; (iv) allocated the transaction price to the performance obligations in the contract; and (v) recognized revenue when (or as) we satisfy a performance obligation. We generally recorded OMIDRIA product sales when the product was delivered to our wholesalers. OMIDRIA product sales were recorded net of wholesaler distribution fees and estimated chargebacks, rebates, returns and purchase-volume discounts. Accruals or allowances were established for these deductions in the same period when revenue was recognized, and actual amounts incurred were offset against the applicable accruals or allowances. We reflected 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.
Inventory	Inventory We expense inventory costs related to product candidates as research and development expenses until regulatory approval is reasonably assured in the U.S. or the European Union (the “EU”). Once approval is reasonably assured, costs, including amounts related to third-party manufacturing, transportation and internal labor and overhead, will be capitalized.
Right of Use Assets and Related Lease Liabilities	Right of Use Assets and Related Lease Liabilities 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.
Stock-Based Compensation	Stock-Based Compensation Stock-based compensation expense is recognized for all share-based payments, including grants of stock option awards and restricted stock unit awards (“RSU”), 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.
Income Taxes	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 - Summary of Stock Option Activity and Related Information (Details) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($) $ / shares shares
Options Outstanding
Beginning balance (shares) \| shares	12,709,887
Granted (shares) \| shares	2,631,334
Exercised (shares) \| shares	(101,160)
Forfeited (shares) \| shares	(574,203)
Ending balance (shares) \| shares	14,665,858
Vested and expected to vest (shares) \| shares	14,202,672
Exercisable (shares) \| shares	10,277,595
Weighted-Average Exercise Price per Share
Beginning balance (USD per share) \| $ / shares	$ 12.61
Granted (USD per share) \| $ / shares	3.96
Exercised (USD per share) \| $ / shares	4.10
Forfeited (USD per share) \| $ / shares	13.58
Ending balance (USD per share) \| $ / shares	11.08
Vested and expected to vest (USD per share) \| $ / shares	11.16
Exercisable (USD per share) \| $ / shares	$ 12.11
Weighted- Average Remaining Contractual Life
Balance (in years)	5 years 8 months 12 days
Vested and expected to vest (in years)	5 years 7 months 6 days
Exercisable (in years)	4 years 2 months 12 days
Aggregate Intrinsic Value
Balance \| $	$ 78
Vested and expected to vest \| $	$ 70

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 145,533	$ 100,808
Short-term investments	75,431	56,458
OMIDRIA contract royalty asset, short-term	47,744	44,319
Receivables, net	13,854	38,155
Prepaid expense and other assets	5,983	8,216
Total current assets	288,545	247,956
OMIDRIA contract royalty asset	143,641	140,251
Right of use assets	22,464	28,276
Property and equipment, net	1,847	1,731
Restricted investments	1,054	1,054
Total assets	457,551	419,268
Current liabilities:
Accounts payable	17,089	13,400
Accrued expenses	18,016	33,134
Current portion of lease liabilities	4,409	5,255
Total current liabilities	39,514	51,789
Unsecured convertible senior notes, net	314,819	313,458
OMIDRIA royalty obligation	125,000
Lease liabilities, non-current	23,533	29,126
Other accrued liabilities - noncurrent	999	1,115
Commitments and contingencies (Note 10)
Shareholders' equity (deficit):
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized; none issued and outstanding at September 30, 2022 and December 31, 2021.
Common stock, par value $0.01 per share, 150,000,000 shares authorized at September 30, 2022 and December 31, 2021; 62,730,015 and 62,628,855 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	627	626
Additional paid-in capital	717,509	706,288
Accumulated deficit	(764,450)	(683,134)
Total shareholders' equity (deficit)	(46,314)	23,780
Total liabilities and shareholders' equity (deficit)	$ 457,551	$ 419,268