Omeros Corporation (OMER) — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Omeros is a commercial-stage biopharmaceutical company; reported product sales were from OMIDRIA. Financial amounts below are in millions unless otherwise noted.
Financial performance and position
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Net product sales | $30.0 | $26.1 | $79.9 | $63.2 |
| Operating loss | $(18.3) | $(25.4) | $(72.9) | $(76.8) |
| Net loss | $(22.7) | $(38.5) | $(86.4) | $(100.8) |
| Basic and diluted loss per share | $(0.36) | $(0.66) | $(1.39) | $(1.81) |
- Q3 revenue increased $3.9 million year over year; nine-month revenue increased $16.7 million. Management attributed growth to OMIDRIA’s separate Medicare payment status in ambulatory surgery centers and, for the year-to-date comparison, the absence of 2020 pandemic-related procedure shutdowns.
- Approximate gross margin, calculated as product sales less product-sale costs, was 98.9% in Q3 and 98.8% for the first nine months of 2021. The filing reports product-sale costs of $0.3 million and $0.9 million, respectively.
- Research and development expense was $27.1 million in Q3 and $91.4 million year to date; SG&A was $20.9 million and $60.5 million. Nine-month R&D and SG&A increased from 2020 by $7.0 million and $5.7 million, respectively.
- Q3 net loss improved by $15.8 million year over year, partly reflecting the absence of 2020’s $13.4 million debt-extinguishment loss and $7.9 million income-tax benefit. Nine-month net loss improved by $14.4 million. Interest expense declined to $14.7 million year to date from $18.8 million, partly because of the 2021 accounting change for convertible notes.
- Cash used in operating activities was $91.5 million for the first nine months, versus $81.7 million in 2020. Cash, cash equivalents and short-term investments totaled $50.4 million at September 30; accounts receivable was $33.9 million.
- Convertible notes had $320.0 million principal outstanding ($313.0 million net carrying value): $95.0 million due 2023 and $225.0 million due 2026. No line-of-credit borrowings were outstanding; approximately $30.0 million was available, subject to the borrowing base, under a facility maturing August 2022.
Material developments, outlook and risks
- On October 18, 2021, after quarter-end, FDA issued a Complete Response Letter on narsoplimab for HSCT-TMA, stating that additional information was needed to support approval. Omeros planned to request a Type A meeting to discuss the letter and a path forward. The BLA remained pending.
- OMIDRIA continued to qualify for separate Medicare payment in the ASC setting; CMS’s November 2021 final rule reconfirmed the policy for 2022. The company said the return of separate payment supported OMIDRIA sales.
- Management expected R&D and SG&A expense in Q4 2021 to be relatively unchanged from Q3. No numerical revenue or earnings guidance was provided. Management expected continuing operating losses until revenue and other sources cover operating costs and debt service.
- The filing states that conditions raised substantial doubt about Omeros’s ability to meet obligations through November 9, 2022 and continue as a going concern. The company cited cash and investments, OMIDRIA sales, potential narsoplimab sales if approved, possible credit-line use, and possible financing or strategic transactions as funding sources. It also said it could delay trials, reduce R&D, or restructure to lower cash needs.
- Other risks include clinical and regulatory uncertainty across narsoplimab and pipeline programs, financing needs, COVID-19-related disruption, and reliance on a single OMIDRIA drug-product manufacturer while a second supplier was being established. Clinical-trial enrollment and development costs may vary; management noted aHUS enrollment had been slow.
- The filing reported no material legal proceedings and no off-balance-sheet arrangements. It listed $51.3 million of remaining non-cancelable rent under the current facility lease term and $34.8 million of firm goods-and-services commitments.
Important facts for investors to verify
- FDA’s requested additional information, the outcome of the Type A meeting, and the timing and requirements for any narsoplimab resubmission or approval.
- OMIDRIA sales, gross-to-net deductions, and continued CMS separate-payment eligibility and reimbursement in the ASC setting.
- Cash burn, receivables collection, available borrowing base, and the company’s ability to fund obligations as the credit line approaches its August 2022 maturity.
- Convertible-note repayment or conversion terms and any potential financing, dilution, licensing, or expense-reduction actions.
- Clinical enrollment, milestones, and spending priorities for narsoplimab, OMS906, and other development programs.