0001558370-23-008814 | 10-Q | XBRL Viewer

Print Document View Excel Document

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 3,829	$ 11,009
Short-term investments	367,527	183,909
OMIDRIA contract royalty asset, short-term	28,940	28,797
Receivables, net	10,033	213,221
Prepaid expense and other assets	6,708	6,300
Total current assets	417,037	443,236
OMIDRIA contract royalty asset	119,681	123,425
Right of use assets	21,025	21,762
Property and equipment, net	1,335	1,492
Restricted investments	1,054	1,054
Total assets	560,132	590,969
Current liabilities:
Accounts payable	6,446	5,989
Accrued expenses	30,821	30,551
Current portion of unsecured convertible senior notes, net	94,554	94,381
Current portion of OMIDRIA royalty obligation	2,943	1,152
Current portion of lease liabilities	4,427	4,310
Total current liabilities	139,191	136,383
Unsecured convertible senior notes, net	221,209	220,906
OMIDRIA royalty obligation	123,057	125,126
Lease liabilities, non-current	21,287	22,426
Other accrued liabilities, non-current	452	444
Commitments and contingencies (Note 10)
Shareholders' equity:
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized; none issued and outstanding at March 31, 2023 and December 31, 2022
Common stock, par value $0.01 per share, 150,000,000 shares authorized at March 31, 2023 and December 31, 2022; 62,828,765 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	628	628
Additional paid-in capital	723,726	720,773
Accumulated deficit	(669,418)	(635,717)
Total shareholders' equity	54,936	85,684
Total liabilities and shareholders' equity	$ 560,132	$ 590,969

Organization and Basis of Presentation (Details) - USD ($) $ in Thousands		3 Months Ended
	Dec. 23, 2021	Mar. 31, 2023	Mar. 31, 2022	Feb. 28, 2023	Dec. 31, 2022
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Milestone Payment to be received under the Asset Purchase Agreement	$ 200,000
Period payment is due after milestone period achieved	30 days
Milestone period	4 years
Milestone Payment receivable					$ 200,000
Cash, cash equivalents and short-term investments		$ 371,400
Receivables, net		10,033			$ 213,221
Net loss		33,701	$ 33,011
Net cash provided by operating activities		174,539	$ (15,193)
Cash from collection of the Milestone Payment		200,000		$ 200,000
Maximum aggregate offering price		$ 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

Certain Balance Sheet Accounts - Receivables, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Certain Balance Sheet Accounts
OMIDRIA royalty receivables	$ 7,600	$ 12,966
Employee retention tax credit	2,131
Sublease and other receivables	302	255
OMIDRIA milestone receivable		200,000
Total receivables, net	$ 10,033	$ 213,221

Unsecured Convertible Senior Notes - 2023 Unsecured Convertible Senior Notes (Details) $ / shares in Units, shares in Millions	1 Months Ended
	Nov. 30, 2018 USD ($) $ / shares shares	Mar. 31, 2023 USD ($) shares
Debt Instrument [Line Items]
Unamortized debt issuance costs \| $		$ 4,267,000
2023 Unsecured Convertible Senior Notes
Debt Instrument [Line Items]
Interest rate (as a percent)	6.25%	6.25%
Unamortized debt issuance costs \| $		$ 446,000
Conversion rate	0.0520183
Value used in calculation of conversion rate \| $	$ 1,000
Conversion price \| $ / shares	$ 19.22
Shares upon conversion \| shares	4.9
Effective interest rate to determine fair value of liability component (as a percent)		7.00%
Number of shares outstanding on the 2023 Capped Call \| shares		4.9
2023 Unsecured Convertible Senior Notes \| Minimum
Debt Instrument [Line Items]
Conversion price \| $ / shares	$ 19.22
2023 Unsecured Convertible Senior Notes \| Maximum
Debt Instrument [Line Items]
Conversion price \| $ / shares	$ 28.84

Unsecured Convertible Senior Notes - Unsecured convertible senior notes outstanding (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022	Sep. 30, 2020	Nov. 30, 2018
Debt Instrument [Line Items]
Principal amount	$ 320,030	$ 320,030
Unamortized discount		(4,743)
Unamortized debt issuance costs	(4,267)
Total unsecured convertible senior notes, net	315,763	315,287
2023 Unsecured Convertible Senior Notes
Debt Instrument [Line Items]
Principal amount	$ 95,000	95,000
Interest rate (as a percent)	6.25%			6.25%
Unamortized discount		(619)
Unamortized debt issuance costs	$ (446)
Total unsecured convertible senior notes, net	94,554	94,381
Fair value of outstanding unsecured convertible senior notes (1)	93,575	92,031
2026 Unsecured Convertible Senior Notes
Debt Instrument [Line Items]
Principal amount	$ 225,030	225,030
Interest rate (as a percent)	5.25%		5.25%
Unamortized discount		(4,124)
Unamortized debt issuance costs	$ (3,821)
Total unsecured convertible senior notes, net	221,209	220,906
Fair value of outstanding unsecured convertible senior notes (1)	$ 141,769	$ 118,141

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2023	May 03, 2023
Document Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2023
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	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		62,828,765
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001285819
Amendment Flag	false

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Costs and expenses:
Research and development	$ 24,610	$ 24,087
Selling, general and administrative	11,103	10,959
Total costs and expenses	35,713	35,046
Loss from operations	(35,713)	(35,046)
Interest expense	(7,933)	(4,941)
Interest and other income	3,963	493
Net loss from continuing operations	(39,683)	(39,494)
Net income from discontinued operations, net of tax	5,982	6,483
Net loss	$ (33,701)	$ (33,011)
Basic net income (loss) per share continuing operations	$ (0.63)	$ (0.63)
Basic net income (loss) per share discontinued operations	0.09	0.10
Basic net income (loss) per share	(0.54)	(0.53)
Diluted net income (loss) per share continuing operations	(0.63)	(0.63)
Diluted net income (loss) per share discontinued operations	0.09	0.10
Diluted net income (loss) per share	$ (0.54)	$ (0.53)
Weighted-average shares used to compute basic net income (loss) per share (in shares)	62,828,765	62,724,775
Weighted-average shares used to compute diluted net income (loss) per share (in shares)	62,828,765	62,724,775

Stock-Based Compensation - Fair Value of Employee Option Grant Estimated on Date of Grant (Details) - Outstanding options to purchase common stock	3 Months Ended
	Mar. 31, 2023 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award
Estimated weighted-average fair value (USD per share)	$ 2.34
Weighted Average
Weighted-average assumptions:
Expected volatility	94.00%
Expected life, in years	6 years 1 month 6 days
Risk-free interest rate	3.71%
Expected dividend yield	0.00%

Significant Accounting Policies - Discontinued Operations (Details) - USD ($) $ in Millions			1 Months Ended
	Sep. 30, 2022	Dec. 23, 2021	Dec. 31, 2022	Mar. 31, 2023
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Percentage of royalty receivable		50.00%	30.00%
Milestone Payment receivable			$ 200.0
Effective interest rate earned on outstanding contract royalty asset				11.00%
DRI
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds received upon entering into OMIDRIA royalty obligation	$ 125.0
OMIDRIA royalty obligation	$ 125.0
Effective interest rate on royalty obligation				9.40%

Shareholders' Deficit (Details) - USD ($) $ / shares in Units, $ in Millions	Mar. 31, 2023	Mar. 01, 2021
Class of Stock [Line Items]
Maximum aggregate offering price	$ 150.0
Shares of common stock right to purchase by warrant (in shares)	200,000
Warrant exercise price (in USD per share)	$ 23.00
At The Market (ATM) Program
Class of Stock [Line Items]
Maximum aggregate offering price		$ 150.0

Fair-Value Measurements - Fair value of investments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Fair Value of investment [Line items]
Investment income, interest	$ 3,400	$ 2,200
Amortized cost, current	367,527	183,909
Amortized cost, total	368,581	184,963
Gross unrealized gains (losses)	205	22
Estimated Fair Value, Current	367,732	183,931
Estimated Fair Value, total	368,786	184,985
US Treasury Securities
Fair Value of investment [Line items]
Amortized cost, current	293,645	99,027
Gross unrealized gains (losses)	205	22
Estimated Fair Value, Current	293,850	99,049
Money Market Funds
Fair Value of investment [Line items]
Amortized cost, current	73,882	84,882
Estimated Fair Value, Current	73,882	84,882
Certificates of Deposit [Member]
Fair Value of investment [Line items]
Amortized cost, noncurrent	1,054	1,054
Estimated Fair Value, Noncurrent	$ 1,054	$ 1,054

Lease Liabilities

3 Months Ended

Mar. 31, 2023

Lease Liabilities

Lease Liabilities

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 an additional five years each. Restricted investments of $1.1 million represent the security deposit on our office and laboratory facilities. 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 lease obligations for laboratory equipment.

Supplemental lease information is as follows:


	Three Months Ended
	March 31,
	2023		2022

	(In thousands)
Lease cost
Operating lease cost	$	1,633	$	1,196
Finance lease cost:
Amortization		118		197
Interest		51		56
Variable lease cost		790		860
Sublease income		(375)		(491)
Net lease cost	$	2,217	$	1,818

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


	Three Months Ended
	March 31,
	2023		2022

	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
Cash payments for operating leases	$	1,780	$	1,803
Cash payments for financing leases	$	152	$	253

Unsecured Convertible Senior Notes (Tables)

3 Months Ended

Mar. 31, 2023

Debt Instrument [Line Items]

Summary of unsecured convertible senior notes outstanding


	Balance as of March 31, 2023
	2023 Notes		2026 Notes		Total

	(In thousands)
Principal amount	$	95,000	$	225,030	$	320,030
Unamortized debt issuance costs		(446)		(3,821)		(4,267)
Total unsecured convertible senior notes, net	$	94,554	$	221,209	$	315,763

Fair value of outstanding unsecured convertible senior notes (1)	$	93,575	$	141,769


	Balance as of December 31, 2022
	2023 Notes		2026 Notes		Total

	(In thousands)
Principal amount	$	95,000	$	225,030	$	320,030
Unamortized discount		(619)		(4,124)		(4,743)
Total unsecured convertible senior notes, net	$	94,381	$	220,906	$	315,287

Fair value of outstanding unsecured convertible senior notes (1)	$	92,031	$	118,141

(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


2023	$	95,000
2024		—
2025		—
2026		225,030
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
	March 31,
	2023		2022

	(In thousands)
Contractual interest expense	$	1,484	$	1,484
Amortization of debt issuance costs		173		161
Total	$	1,657	$	1,645

2026 Unsecured Convertible Senior Notes

Debt Instrument [Line Items]

Schedule of total interest expense recognized


	Three Months Ended
	March 31,
	2023		2022

	(In thousands)
Contractual interest expense	$	2,954	$	2,954
Amortization of debt issuance costs		304		285
Total	$	3,258	$	3,239

Fair-Value Measurements (Tables)

3 Months Ended

Mar. 31, 2023

Fair-Value Measurements

Fair value of investments


	March 31, 2023
	Amortized Cost		Gross Unrealized Gains/(Losses)		Estimated Fair Value

	(In thousands)

U.S. government securities classified as short-term investments	$	293,645	$	205	$	293,850
Money-market funds classified as short-term investments		73,882		—		73,882
Total short-term investments		367,527		205		367,732
Certificate of deposit classified as non-current restricted investments		1,054		—		1,054
Total	$	368,581	$	205	$	368,786


	December 31, 2022
	Amortized Cost		Gross Unrealized Gains/(Losses)		Estimated Fair Value

	(In thousands)

U.S. government securities classified as short-term investments	$	99,027	$	22	$	99,049
Money-market funds classified as short-term investments		84,882		—		84,882
Total short-term investments		183,909		22		183,931
Certificate of deposit classified as non-current restricted investments		1,054		—		1,054
Total	$	184,963	$	22	$	184,985

Financial Assets and Liabilities Measured at Fair Value on Recurring Basis


	March 31, 2023
	Level 1		Level 2		Level 3		Total

	(In thousands)
Assets:
U.S. government securities classified as short-term investments	$	293,850	$	—	$	—	$	293,850
Money-market funds classified as short-term investments		73,882		—		—		73,882
Total short-term investments		367,732		—		—		367,732
Certificate of deposit classified as non-current restricted investments		1,054		—		—		1,054
Total	$	368,786	$	—	$	—	$	368,786


	December 31, 2022
	Level 1		Level 2		Level 3		Total

	(In thousands)
Assets:
U.S. government securities classified as short-term investments	$	99,049	$	—	$	—	$	99,049
Money-market funds classified as short-term investments		84,882		—		—		84,882
Total short-term investments		183,931		—		—		183,931
Certificate of deposit classified as non-current restricted investments		1,054		—		—		1,054
Total	$	184,985	$	—	$	—	$	184,985

Fair-Value Measurements - Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Fair-Value Measurements
Cash held in demand deposit accounts	$ 3,829	$ 11,009

Stock-Based Compensation - Narrative (Details) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($) $ / shares shares
Outstanding options to purchase common stock
Share-based Compensation Arrangement by Share-based Payment Award
Unvested options outstanding (shares)	3,600,000
Period for recognition	2 years 1 month 6 days
Unrecognized compensation expense \| $	$ 17.0
Employee restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award
Restricted stock units, unvested	92,250
Weighted average grant-date fair value (USD per share) \| $ / shares	$ 7.53

Shareholders' Deficit

3 Months Ended

Mar. 31, 2023

Shareholders' Equity

Shareholders' Equity

Note 11—Shareholders’ Deficit

Common Stock and Warrants

On March 1, 2021, we entered into a sales agreement to sell shares of our common stock having an aggregate offering price of up to $150.0 million, from time to time, through an “at the market” equity offering program. As of March 31, 2023, we have not sold any shares under this program.

As of March 31, 2023, warrants to purchase 200,000 shares of our common stock remained outstanding with an exercise price of $23.00 per share. The warrants expired without being exercised on April 12, 2023.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI https://asc.fasb.org/topic&trid=2208762

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI https://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 16
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496180-112644

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 50
-Paragraph 6
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126731327&loc=SL126733271-114008

+ Details

Commitments and Contingencies

3 Months Ended

Mar. 31, 2023

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 $26.1 million as of March 31, 2023 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 on 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 ended March 31, 2023 and March 31, 2022, 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

3 Months Ended

Mar. 31, 2023

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 disorders, including complement-mediated diseases, cancers and 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).

The lead drug candidate in our pipeline of complement-targeted therapeutics is narsoplimab, a proprietary, patented human monoclonal antibody targeting mannan-binding lectin-associated serine protease 2 (“MASP-2”), the key activator of the lectin pathway of complement. Clinical development of narsoplimab is currently focused primarily on hematopoietic stem cell transplant-associated thrombotic microangiopathy (“HSCT-TMA”) and immunoglobulin A (“IgA”) nephropathy. Our pipeline of clinical-stage development programs includes: our long-acting MASP-2 inhibitor OMS1029, our inhibitor of mannan-binding lectin-associated serine protease-3 (“MASP-3”) OMS906 and our phophodiesterase 7 (PDE7) inhibitor OMS527.

Sale of OMIDRIA Assets

On December 23, 2021, we sold our commercial product OMIDRIA and certain related assets including inventory and prepaid expenses to Rayner Surgical Inc. (“Rayner”). Rayner paid us $126.0 million in cash at closing, and we retained all outstanding accounts receivable, accounts payable and accrued expenses as of the closing date.

Under the Asset Purchase Agreement with Rayner (“Asset Purchase Agreement”), we were entitled to receive a milestone payment of $200.0 million (the “Milestone Payment”) within 30 days following an event (the “Milestone Event”) that establishes separate payment for OMIDRIA for a continuous period of at least four years when furnished in the ambulatory surgery center (“ASC”) setting. In December 2022, the Milestone Event occurred and we recorded a $200.0 million milestone receivable. We received the Milestone Payment together with accrued interest in February 2023.

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 and excluded from continuing operations for all periods presented (See “Note 3 – Discontinued Operations”).

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”).

Liquidity and Capital Resources

As of March 31, 2023, we had cash, cash equivalents and short-term investments of $371.4 million and outstanding accounts receivable of $10.0 million. Our loss for the quarter ended March 31, 2023 was $33.7 million and our cash provided by operations was $174.5 million. Included in our cash provided by operations was the $200.0 million collection of the Milestone Payment.

Historically, we have incurred net losses from continuing operations and negative operating cash flows. We have not yet established an ongoing source of revenue sufficient to cover our operating costs and, therefore, could need to raise additional capital to accomplish our business plan and to retire our outstanding convertible senior notes due in 2026. We plan to continue to fund our operations for at least the next twelve months with our existing cash and investments, royalties from Rayner and our outstanding accounts receivable. If FDA approval is granted for narsoplimab for treatment of HSCT-TMA within the next twelve months, sales of narsoplimab may also provide funds for our operations. We have a sales agreement to sell shares of our common stock, from time to time, in an “at the market” equity offering facility through which we may offer and sell shares of our common stock equaling an aggregate amount 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.

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 that we believe are reasonable under the circumstances; however, actual results could differ from these estimates.

Discontinued Operations - Narrative (Details) - USD ($) $ in Millions		1 Months Ended
	Dec. 23, 2021	Dec. 31, 2022
Discontinued Operations
Milestone period	4 years
Milestone Payment to be received under the Asset Purchase Agreement	$ 200.0
Percentage of royalty receivable	50.00%	30.00%
Milestone Payment receivable		$ 200.0
Percent of potential reduction in royalty receivable per Asset Purchase Agreement	10.00%

Discontinued Operations - Cash Flow (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Feb. 28, 2023
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash from collection of the Milestone Payment	$ 200,000		$ 200,000
Discontinued Operation \| Omidria Assets Disposal
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net cash provided by discontinued operations from operating activities	$ 213,876	$ 27,616

Certain Balance Sheet Accounts - Contract Royalty Asset (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Certain Balance Sheet Accounts
Short-term contract royalty asset	$ 28,940	$ 28,797
Long-term contract royalty asset	119,681	123,425
Total OMIDRIA contract royalty asset	$ 148,621	$ 152,222

Net Loss Per Share

3 Months Ended

Mar. 31, 2023

Net Loss Per Share

Net Loss Per Share

Note 4—Net Loss Per Share

Our potentially dilutive securities include potential common shares related to our stock options, warrants, RSUs and unsecured convertible senior notes. Diluted earnings per share (“Diluted EPS”) considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect. Diluted EPS excludes the impact of potential common shares related to our stock options in periods in which the option exercise price is greater than the average market price of our common stock for the period.

Potentially dilutive securities excluded from Diluted EPS are as follows:


	Three Months Ended
	March 31,
	2023	2022
2026 Notes convertible to common stock ⁽¹⁾	12,172,008	12,172,008
2023 Notes convertible to common stock ⁽¹⁾	4,941,739	4,941,739
Outstanding options to purchase common stock	17,454	4,429
Outstanding restricted stock units	92,250	222,000
Total potentially dilutive shares excluded from net loss per share	17,223,451	17,340,176

(1)The 2023 Notes and 2026 Notes (defined below) are subject to capped call arrangements that potentially reduce the dilutive effect as described in “Note 7 — Unsecured Convertible Senior Notes.” Any potential impact of the capped call arrangements is excluded from this table.

Leases Liabilities (Details) $ in Thousands		3 Months Ended
Leases Liabilities (Details) $ in Thousands	Jan. 14, 2022 USD ($)	Mar. 31, 2023 USD ($) item	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)
Lease Liabilities
Number of options to extend lease term \| item		2
Restricted investments		$ 1,054		$ 1,054
Expected lease term		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		$ 1,633	1,196
Amortization		118	197
Interest		51	56
Variable lease cost		790	860
Sublease income		(375)	(491)
Net lease cost		2,217	1,818
Cash payments for operating leases		1,780	1,803
Cash payments for financing leases		$ 152	$ 253

Stock-Based Compensation - Summary of Stock Option Activity and Related Information (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) $ / shares shares
Options Outstanding
Beginning balance (shares) \| shares	13,872,973
Granted (shares) \| shares	38,500
Forfeited (shares) \| shares	(195,052)
Ending balance (shares) \| shares	13,716,421
Vested and expected to vest (shares) \| shares	13,342,280
Exercisable (shares) \| shares	10,142,013
Weighted-Average Exercise Price per Share
Beginning balance (USD per share) \| $ / shares	$ 11.02
Granted (USD per share) \| $ / shares	3.00
Forfeited (USD per share) \| $ / shares	10.78
Ending balance (USD per share) \| $ / shares	11.00
Vested and expected to vest (USD per share) \| $ / shares	11.08
Exercisable (USD per share) \| $ / shares	$ 12.06
Weighted- Average Remaining Contractual Life
Balance (in years)	5 years 7 months 6 days
Vested and expected to vest (in years)	5 years 6 months
Exercisable (in years)	4 years 6 months
Aggregate Intrinsic Value
Balance \| $	$ 2,172
Vested and expected to vest \| $	1,982
Exercisable \| $	$ 380

Unsecured Convertible Senior Notes - Future minimum payments (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
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 (remainder)	95,000
2026	225,030
Total future minimum principal payments under 2023 Notes and 2026 Notes	$ 320,030

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2021	$ 626	$ 706,288	$ (683,134)	$ 23,780
Balance (in shares) at Dec. 31, 2021	62,628,855
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options and warrants	$ 1	413		414
Exercise of stock options and warrants (in shares)	101,160
Stock-based compensation		3,892		3,892
Net loss			(33,011)	(33,011)
Balance at Mar. 31, 2022	$ 627	710,593	(716,145)	(4,925)
Balance (in shares) at Mar. 31, 2022	62,730,015
Balance at Dec. 31, 2022	$ 628	720,773	(635,717)	85,684
Balance (in shares) at Dec. 31, 2022	62,828,765
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		2,953		2,953
Net loss			(33,701)	(33,701)
Balance at Mar. 31, 2023	$ 628	$ 723,726	$ (669,418)	$ 54,936
Balance (in shares) at Mar. 31, 2023	62,828,765

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(22))
-URI https://asc.fasb.org/extlink&oid=120399700&loc=SL114874048-224260

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 4
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22595-107794

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(18))
-URI https://asc.fasb.org/extlink&oid=120400993&loc=SL114874131-224263

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 65
-Paragraph 1
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126732423&loc=SL123482106-238011

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 50
-Paragraph 6
-URI https://asc.fasb.org/extlink&oid=124431353&loc=SL124452729-227067

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(5))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(20))
-URI https://asc.fasb.org/extlink&oid=126953954&loc=SL114868664-224227

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 230
-SubTopic 10
-Section 45
-Paragraph 28
-URI https://asc.fasb.org/extlink&oid=126954810&loc=d3e3602-108585

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (b)(2)
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22499-107794

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iv))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iii)(A))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(i))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(i))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 9
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22663-107794

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iv))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 17: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(ii))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=123596393&loc=d3e14064-108612

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 3
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22583-107794

Reference 20: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(g)(1)(ii))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 21: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 60B
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126958026&loc=SL5780133-109256

Reference 22: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 323
-SubTopic 10
-Section 50
-Paragraph 3
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=114001798&loc=d3e33918-111571

Reference 23: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 8
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22658-107794

Reference 24: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1A
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126968391&loc=SL7669619-108580

Reference 25: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599

Reference 26: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 11
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22694-107794

Reference 27: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 11
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22694-107794

Reference 28: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 7
-URI https://asc.fasb.org/extlink&oid=109222650&loc=SL51721683-107760

Reference 29: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1B
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126968391&loc=SL7669625-108580

Reference 30: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 31: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(5))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 32: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(B))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 33: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(A))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 34: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8906-108599

Reference 35: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

+ Details

- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(g)(1)(ii))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 852
-SubTopic 10
-Section 55
-Paragraph 10
-URI https://asc.fasb.org/extlink&oid=84165509&loc=d3e56426-112766

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 4.E)
-URI https://asc.fasb.org/extlink&oid=122038336&loc=d3e74512-122707

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(31))
-URI https://asc.fasb.org/extlink&oid=120391452&loc=d3e13212-122682

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(29))
-URI https://asc.fasb.org/extlink&oid=120391452&loc=d3e13212-122682

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(30))
-URI https://asc.fasb.org/extlink&oid=120391452&loc=d3e13212-122682

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=123596393&loc=d3e14064-108612

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 323
-SubTopic 10
-Section 50
-Paragraph 3
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=114001798&loc=d3e33918-111571

+ Details

Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2023

Net Loss Per Share

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


	Three Months Ended
	March 31,
	2023	2022
2026 Notes convertible to common stock ⁽¹⁾	12,172,008	12,172,008
2023 Notes convertible to common stock ⁽¹⁾	4,941,739	4,941,739
Outstanding options to purchase common stock	17,454	4,429
Outstanding restricted stock units	92,250	222,000
Total potentially dilutive shares excluded from net loss per share	17,223,451	17,340,176

Unsecured Convertible Senior Notes

3 Months Ended

Mar. 31, 2023

Unsecured Convertible Senior Notes

Unsecured Convertible Senior Notes

Note 7—Unsecured Convertible Senior Notes

We carry $95.0 million in aggregate principal on our 6.25% Convertible Senior Notes (the “2023 Notes”) and $225.0 million in aggregate principal on our 5.25% Convertible Senior Notes (the “2026 Notes”) as shown below:


	Balance as of March 31, 2023
	2023 Notes		2026 Notes		Total

	(In thousands)
Principal amount	$	95,000	$	225,030	$	320,030
Unamortized debt issuance costs		(446)		(3,821)		(4,267)
Total unsecured convertible senior notes, net	$	94,554	$	221,209	$	315,763

Fair value of outstanding unsecured convertible senior notes (1)	$	93,575	$	141,769


	Balance as of December 31, 2022
	2023 Notes		2026 Notes		Total

	(In thousands)
Principal amount	$	95,000	$	225,030	$	320,030
Unamortized discount		(619)		(4,124)		(4,743)
Total unsecured convertible senior notes, net	$	94,381	$	220,906	$	315,287

Fair value of outstanding unsecured convertible senior notes (1)	$	92,031	$	118,141

(1)

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

2023 Unsecured Convertible Senior Notes

Our 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.

The unamortized debt issuance costs of $0.4 million as of March 31, 2023 will be amortized to interest expense at an effective interest rate of 7.0% over the remaining term.

Subject to the satisfaction of certain conditions, 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), which equals approximately 4.9 million shares of common stock issuable upon conversion, subject to adjustment in certain circumstances.

To reduce the dilutive impact or potential cash expenditure associated with the conversion of the 2023 Notes, we entered into a capped call transaction (the “2023 Capped Call”), which covers the number of shares of our common stock underlying the 2023 Notes when our common stock share price is trading between the initial conversion price of $19.22 and $28.84. However, should the market price of our common stock exceed the $28.84 cap, then the conversion of the 2023 notes could have a dilutive impact or may require a cash expenditure to the extent the market price exceeds the cap price. In connection with the partial repurchase of the 2023 Notes, we entered into a capped call termination contract to unwind a proportionate amount of the 2023 Capped Call. As of March 31, 2023, 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:


	Three Months Ended
	March 31,
	2023		2022

	(In thousands)
Contractual interest expense	$	1,484	$	1,484
Amortization of debt issuance costs		173		161
Total	$	1,657	$	1,645

2026 Unsecured Convertible Senior Notes

Our 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 unamortized debt issuance costs of $3.8 million as of March 31, 2023 will be amortized to interest expense at an effective interest rate of 5.9% over the remaining term.

Subject to the satisfaction of certain conditions, the 2026 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 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 of common stock issuable upon conversion, subject to adjustment in certain circumstances.

To reduce the dilutive impact or potential cash expenditure associated with the conversion of the 2026 Notes, we entered into capped call transactions (the “2026 Capped Calls”), which cover the number of shares of our common stock underlying the 2026 Notes when our common stock share price is trading between the initial conversion price of $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 a dilutive impact or may require a cash expenditure to the extent the market price exceeds the cap price. As of March 31, 2023, approximately 12.2 million shares remained outstanding on the 2026 Capped Call.

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


	Three Months Ended
	March 31,
	2023		2022

	(In thousands)
Contractual interest expense	$	2,954	$	2,954
Amortization of debt issuance costs		304		285
Total	$	3,258	$	3,239

Future Minimum Principal Payments

Future minimum principal payments for the 2023 Notes and 2026 Notes as of March 31, 2023 are as follows (in thousands):


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

OMIDRIA Royalty Obligation (Tables)

3 Months Ended

Mar. 31, 2023

OMIDRIA Royalty Obligation

Schedule of maximum scheduled principal and interest payments


					Total
	Principal		Interest		Annual Cap

	(In thousands)
2023	$	874	$	8,876	$	9,750
2024		8,576		11,424		20,000
2025		14,641		10,359		25,000
2026		16,081		8,919		25,000
2027		17,664		7,336		25,000
Thereafter		68,164		10,586		78,750
Total scheduled payments	$	126,000	$	57,500	$	183,500

OMIDRIA Royalty Obligation - Narrative (Details) - USD ($) $ in Millions		3 Months Ended
	Sep. 30, 2022	Mar. 31, 2023
Royalty Obligation
Cash contractual interest expense		$ 3.0
DRI
Royalty Obligation
Proceeds received upon entering into OMIDRIA royalty obligation	$ 125.0
Maximum payout payable		$ 183.5
Maximum Royalty Payable Percentage		9.40%

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating activities:
Net loss	$ (33,701)	$ (33,011)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation expense	2,953	3,892
Non-cash interest expense on unsecured convertible debt	477	446
Depreciation and amortization	186	278
Non-cash interest earned on OMIDRIA contract royalty asset	(3,925)	(4,838)
Remeasurement on OMIDRIA contract royalty asset	(1,677)	(2,158)
Accretion on U.S. government treasury bills, net	(2,316)
Early termination of operating lease		(454)
Changes in operating assets and liabilities:
Receivables	203,188	21,900
Prepaid expenses and other	(582)	592
OMIDRIA contract royalty asset	9,203	13,831
Accounts payable and accrued expense	733	(15,671)
Net cash provided by (used in) operating activities	174,539	(15,193)
Investing activities:
Purchases of investments	(523,941)	(83,013)
Proceeds from the sale and maturities of investments	342,610	6,200
Net cash used in investing activities	(181,331)	(76,813)
Financing activities:
Principal payments on OMIDRIA royalty obligations	(278)
Principal payments on finance lease obligations	(110)	(253)
Proceeds upon exercise of stock options and warrants		414
Net cash provided by (used in) financing activities	(388)	161
Net decrease in cash and cash equivalents	(7,180)	(91,845)
Cash and cash equivalents at beginning of period	11,009	100,808
Cash and cash equivalents at end of period	3,829	8,963
Supplemental cash flow information
Cash paid for interest	$ 7,933	$ 5,967