Omeros Corporation — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; filed May 10, 2021. Omeros is a commercial-stage biopharmaceutical company whose marketed product is OMIDRIA. Its lead candidate, narsoplimab, was under FDA priority review for HSCT-TMA.
Financial performance and position
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Net product sales | $21.1 million | $23.5 million; down 10.5% |
| Gross profit / margin | $20.8 million / approximately 98.8% | $23.3 million / approximately 98.9% |
| Research and development | $33.4 million | $28.9 million |
| Selling, general and administrative | $18.1 million | $18.0 million |
| Operating loss | $30.6 million | $23.7 million |
| Net loss | $35.1 million; $0.57 per share | $29.0 million; $0.53 per share |
| Net cash used in operations | $40.3 million | $9.1 million |
| Cash, cash equivalents and short-term investments | $100.5 million | $135.0 million at December 31, 2020 |
| Convertible notes | $320.0 million principal; $312.2 million net carrying value | $320.0 million principal; $236.3 million net carrying value at December 31, 2020 |
At March 31, cash and cash equivalents were $9.0 million and short-term investments were $91.5 million. Accounts receivable was $24.8 million, up from $3.8 million at year-end, reflecting the timing of collections. The company had no borrowings on its revolving credit facility, which provides up to $50 million subject to eligible receivables and reserves. Current assets were $132.5 million versus current liabilities of $43.4 million. The notes mature in 2023 ($95.0 million principal) and 2026 ($225.0 million).
Material changes versus the prior comparable period
- OMIDRIA sales fell $2.5 million, which the company attributed to delayed confirmation of separate Medicare payment in ASCs, lack of Medicare Part B reimbursement in hospitals during the quarter, and the continuing pandemic-related reduction in cataract procedures.
- Operating loss widened by $6.9 million and net loss by $6.1 million. R&D spending rose $4.4 million, principally from narsoplimab manufacturing and launch-related medical affairs work, and OMS906 moving into clinical development.
- Operating cash outflow increased $31.1 million. Management cited lower receivable collections, higher net loss and changes in non-cash items, partly offset by lower prepaids and higher payables and accruals.
- Interest expense decreased $1.0 million, mainly because adoption of ASU 2020-06 eliminated amortization of the notes’ non-cash debt discount. That accounting adoption increased the reported net carrying value of the notes and reduced shareholders’ equity; it did not change principal outstanding.
Outlook, risks and unusual items
- FDA’s action date for narsoplimab in HSCT-TMA was July 17, 2021. Management anticipated a possible U.S. approval and launch in 2021, but emphasized that approval and revenue timing and magnitude were uncertain.
- Management expected OMIDRIA revenue to increase in Q2 as ASC reimbursement verification resumed, and expected Q2 R&D spending to be comparable to Q1. It expected SG&A to rise with narsoplimab pre-commercialization activities.
- The company said it planned to fund operations for the next 12 months using cash and investments, OMIDRIA sales and, if approved, narsoplimab sales. This plan depends on product sales and regulatory outcomes; the filing does not provide a precise cash-runway estimate. Management identified potential alternatives including use of the credit facility, equity or debt financing, licensing, and expense reductions.
- CMS confirmed separate payment for OMIDRIA for Medicare Part B patients in ASCs retroactive to October 1, 2020. The policy remains subject to CMS rulemaking; the company’s expectation that it will continue is not assured.
- Omeros reported positive results from its single-arm, open-label pivotal HSCT-TMA trial, including a 61% complete response rate among all 28 treated patients and a 74% rate among patients treated for at least four weeks. These are company-reported trial results, not FDA approval; the filing also describes the trial’s small size and serious underlying patient condition.
- COVID-19 continued to affect operations and cataract procedures, with future effects described as difficult to predict. The company reported no material legal proceedings and no material change in internal control over financial reporting.
- The company established a $150 million at-the-market equity program in March; no shares had been sold under it by quarter-end. If used, it could dilute existing shareholders.
Important facts for investors to verify
- FDA’s decision and any subsequent launch, reimbursement, uptake and revenue for narsoplimab.
- Whether CMS separate-payment policy for OMIDRIA continues, and whether ASC demand and sales recover.
- Cash burn, receivable collections and available liquidity relative to the company’s stated 12-month funding plan.
- Debt service and refinancing or conversion implications for the $320 million of convertible-note principal, including the 2023 maturity.
- Clinical-trial progress, costs and outcomes across narsoplimab and other pipeline programs, alongside any equity issuance under the ATM program.