Omeros Corporation — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Omeros is a clinical-stage biopharmaceutical company; OMIDRIA is reported as discontinued operations following its sale. Continuing operations reported no revenue.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Research and development expense | $26.8 million | $24.6 million |
| Selling, general and administrative expense | $12.3 million | $11.1 million |
| Total operating expenses / operating loss | $39.0 million | $35.7 million |
| Interest expense | $8.2 million | $7.9 million |
| Interest and other income | $3.4 million | $4.0 million |
| Continuing-operations net loss | $43.9 million | $39.7 million |
| Income from discontinued operations, net of tax | $6.7 million | $6.0 million |
| Net loss | $37.2 million | $33.7 million |
| Net loss per share | $0.63 | $0.54 |
| Cash used in operating activities | $41.8 million | Cash provided of $174.5 million |
Operating expenses rose 9% year over year; the loss from continuing operations widened. The prior-year operating cash inflow was substantially affected by receipt of a $200 million OMIDRIA milestone payment. Q1 2024 discontinued-operations income included $4.3 million of interest earned and a $2.3 million remeasurement adjustment on the OMIDRIA royalty asset.
At March 31, 2024, cash and cash equivalents were $1.8 million and short-term investments were $228.5 million, or $230.3 million combined. Total assets were $437.5 million; shareholders’ deficit was $71.3 million. The company reported $215.9 million principal amount of 5.25% convertible notes due February 2026, with a $213.5 million net carrying value. The OMIDRIA royalty obligation was $236.6 million, including $19.1 million current and $217.5 million non-current.
Material changes and financing
- In February 2024, Omeros received $115.5 million from DRI for an expanded interest in OMIDRIA royalties. DRI receives all U.S. OMIDRIA royalties payable from January 1, 2024 through December 31, 2031, with prior annual caps eliminated. Omeros retains specified non-U.S. royalties and royalties after 2031, and may receive sales-based milestone payments.
- Q1 financing cash flow was $98.4 million, largely reflecting the DRI proceeds; the company used $11.9 million to repurchase and retire 3.2 million shares at an average reported price of $3.71.
- Omeros has an at-the-market equity facility of up to $150 million and reported no sales under it through March 31, 2024. The board’s $50 million repurchase program had approximately $33.8 million remaining as of May 10, 2024.
Outlook, risks and contingencies
- Management stated existing cash and investments are expected to fund operations for at least the next 12 months. Omeros also cautioned that it may need additional capital to execute its plans and address the 2026 notes. Potential options include equity or debt financing, licensing or asset transactions, and spending reductions.
- Management expected Q2 research and development expense to increase, mainly due to narsoplimab manufacturing; SG&A to be similar to Q1; interest expense to increase following the DRI transaction; and interest and other income to be slightly lower.
- Narsoplimab’s TA-TMA application previously received an FDA complete response letter. Omeros is discussing analyses for a potential resubmission and cannot estimate its timing or likelihood of approval.
- OMS906 Phase 3 studies for PNH were targeted to begin in late 2024; Phase 3 development for C3G was targeted for early 2025, subject to Phase 2 results and regulatory discussions. OMS1029’s Phase 1 multiple-dose study was expected to conclude in mid-2024. These are company expectations, not assured outcomes.
- Clinical, regulatory, manufacturing, financing and commercialization outcomes remain uncertain. Management noted that development costs and timelines are difficult to predict. The filing also reports $23.3 million of potential termination fees under certain service contracts and no material legal proceedings as of filing.
Investor verification points
- Track cash burn against management’s stated 12-month funding horizon, and assess whether additional financing or spending reductions become necessary.
- Verify progress, FDA feedback and resubmission timing for narsoplimab in TA-TMA, including the evidence and costs required.
- Monitor OMS906 trial results and regulatory plans for PNH and C3G, and the OMS1029 study timeline.
- Review the DRI royalty agreement’s effect on future OMIDRIA cash receipts, royalty-obligation accretion and potential sales-based milestones.
- Assess the 2026 notes’ repayment, conversion and dilution implications, alongside any ATM issuance and share repurchases.