Omeros Corporation (OMER) is a clinical-stage biopharmaceutical company dedicated to discovering, developing, and commercializing first-in-class small-molecule and protein therapeutics for a diverse range of therapeutic areas, including immunologic disorders, complement-mediated diseases, cancers, and addictive/compulsive disorders. Over its two-decade history, Omeros has faced various challenges, yet its unwavering commitment to innovation and determination to bring novel therapies to patients has been a defining feature of the company.
Business Overview and Financials Omeros Corporation, founded in 1994 and headquartered in Seattle, Washington, has undergone significant evolution since its inception. The company went public in 2009, raising $64.9 million in its initial public offering. In 2015, Omeros achieved a major milestone with the launch of OMIDRIA, its first FDA-approved commercial product used during cataract surgery or intraocular lens replacement to maintain pupil size and reduce postoperative ocular pain. This product provided the company with revenue from product sales for several years.
However, in a strategic move in 2021, Omeros sold the rights to OMIDRIA and related assets to Rayner Surgical Inc. for $125 million upfront and a potential $200 million milestone payment, which was achieved in 2022. This divestiture allowed Omeros to redirect its resources towards advancing its pipeline of complement-targeted therapeutics and other programs. The sale has provided Omeros with a royalty stream and potential milestone payments, contributing to its financial position.
Financials Despite these developments, Omeros has faced financial challenges typical of clinical-stage biotechnology firms. The company has incurred net losses from continuing operations and negative cash flows from operations in recent years as it has invested heavily in research and development activities. As of September 30, 2024, Omeros had $123.2 million in cash, cash equivalents, and short-term investments, a decrease of $48.7 million from December 31, 2023.
For the nine months ended September 30, 2024, Omeros reported a net loss of $125.5 million, or $2.15 per share, compared to a net loss of $108.8 million, or $1.73 per share, in the prior-year period. This increase in net loss was primarily driven by higher research and development expenses related to the manufacturing of narsoplimab drug substance and the advancement of the company's zaltenibart program.
For the most recent quarter ended September 30, 2024, Omeros reported no revenue and a net loss of $32.2 million. The company's operating cash flow (OCF) for the quarter was negative $32.1 million, while free cash flow (FCF) was negative $32.1 million. The decrease in net income, OCF, and FCF compared to the prior year quarter was primarily due to $17.6 million of narsoplimab drug substance manufacturing costs recorded as an expense in the prior quarter.
Omeros' OMIDRIA royalties were $9.3 million in the third quarter, down from $10.9 million in the second quarter, a decrease of $1.6 million. The company expects income from discontinued operations (OMIDRIA royalties) to be in the $7 million to $8 million range for the fourth quarter of 2024.
Looking ahead, Omeros expects overall operating costs from continuing operations in the fourth quarter of 2024 to be similar to the third quarter. Interest income for the fourth quarter is expected to be nearly $1.2 million, and interest expense is expected to be approximately $7.2 million, an increase of $3.1 million from the third quarter.
It's worth noting that Omeros is a small-cap company and only sells in the US market.
Liquidity As of September 30, 2024, Omeros had $123.2 million in cash, cash equivalents, and short-term investments. This represents a decrease of $48.7 million from December 31, 2023, reflecting the company's ongoing investment in research and development activities. The company's ability to maintain sufficient liquidity to fund its operations and advance its pipeline remains a key focus area for management.
Omeros' debt-to-equity ratio stands at -0.7592, indicating a negative equity position. The company's current ratio and quick ratio are both 2.9650, suggesting a relatively strong short-term liquidity position. In addition to its cash and short-term investments, Omeros has a $25 million delayed draw term loan facility available, subject to certain conditions.
However, it's important to note that the company's recurring losses and current cash position raise substantial doubt about its ability to continue as a going concern, as disclosed in its financial statements.
Complement Inhibitor Programs Narsoplimab, Omeros' lead product candidate, is a first-in-class monoclonal antibody targeting mannan-binding lectin-associated serine protease-2 (MASP-2), the key activator of the lectin pathway of complement. The company has been working closely with the U.S. Food and Drug Administration (FDA) to address the complete response letter (CRL) received in late 2021 for its biologics license application (BLA) for narsoplimab in hematopoietic stem cell transplant-associated thrombotic microangiopathy (TA-TMA).
In September 2024, Omeros held a pre-submission meeting with the FDA, during which the agency provided minor feedback on the company's proposed statistical analysis plan for the primary endpoint of its pivotal narsoplimab trial. Omeros has since incorporated the requested sensitivity analyses and expects to receive the FDA's response imminently. Assuming alignment on the revised analysis plan, the company plans to quickly conduct the pre-specified analyses and resubmit the narsoplimab BLA as soon as possible. Omeros is targeting to resubmit the BLA for narsoplimab in TA-TMA in 2025, pending alignment with the FDA on the statistical analysis plan.
Omeros is also developing OMS1029, a long-acting antibody targeting MASP-2, which could enable the company to pursue chronic indications where dosing convenience would benefit patients.
Omeros is also advancing its pipeline of complement-targeted therapeutics, including zaltenibart (OMS906), a first-in-class monoclonal antibody targeting mannan-binding lectin-associated serine protease-3 (MASP-3), the key activator of the alternative pathway of complement. The company has multiple ongoing Phase 2 clinical trials evaluating zaltenibart for the treatment of paroxysmal nocturnal hemoglobinuria (PNH) and C3 glomerulopathy (C3G), a rare and debilitating kidney disease.
The results from Omeros' Phase 2 PNH studies have been promising, with patients demonstrating statistically significant and clinically meaningful improvements in hemoglobin levels and other markers of hemolysis. Based on these data, as well as feedback from regulatory agencies, Omeros has finalized the design of its Phase 3 PNH program, which is expected to begin enrollment in early 2025 after receiving feedback from FDA and European regulators.
Furthermore, Omeros recently announced that zaltenibart received a rare pediatric disease designation from the FDA for the treatment of C3G. This designation makes the company eligible to receive a rare pediatric disease priority review voucher upon the first approval of zaltenibart for the pediatric indication. Omeros plans to initiate a Phase 3 program for zaltenibart in C3G in the first half of 2025.
PDE7 Inhibitor Program In addition to its complement-focused pipeline, Omeros is advancing OMS527, its phosphodiesterase 7 (PDE7) inhibitor program, which is aimed at treating addictions, compulsions, and movement disorders. The company's ongoing work to develop OMS527 as a treatment for cocaine use disorder remains fully funded by the National Institute on Drug Abuse (NIDA).
Omeros expects to report results later this year from a toxicology study in primates and rodents exposed to both cocaine and OMS527, which will support the next step of beginning a randomized, double-blind, inpatient clinical trial evaluating OMS527 in individuals with cocaine use disorder. This clinical trial will also be fully funded by NIDA.
Oncology Platform Omeros is also developing a portfolio of novel therapeutic programs targeting a wide range of cancers. Building on its understanding of both innate (complement-mediated) and adaptive (B-cell and T-cell) immunity, the company is pursuing a unique approach to move beyond existing targeted biologics and immunotherapies. These programs, which operate in stealth mode, include signaling-driven immunomodulators, oncotoxins, and an adoptive T-cell technology combined with an immunostimulator.
Omeros has been actively engaging with therapeutic area experts and advisors under confidentiality and has received uniformly positive feedback on the potential of its oncology programs. The company plans to share more information on these initiatives publicly in the coming months as it continues to expand its intellectual property position.
Challenges and Milestones Omeros has faced several challenges throughout its history, including the CRL received for its narsoplimab BLA in 2021. The company's ability to navigate these obstacles and maintain a relentless pursuit of innovation has been a defining characteristic.
Looking ahead, key milestones for Omeros include the resubmission of the narsoplimab BLA, the initiation of its Phase 3 clinical programs for zaltenibart in PNH and C3G, and the continued advancement of its PDE7 inhibitor and oncology programs. Additionally, the company will be closely monitoring the potential impact of any short reports or other external factors that may affect its operations and financial position.
Conclusion Omeros Corporation's unwavering commitment to innovation and its diverse portfolio of clinical-stage programs make it a unique player in the biopharmaceutical industry. Despite the challenges it has faced, the company's determination to bring novel therapies to patients has been a consistent theme throughout its history. As Omeros continues to navigate the complexities of drug development and commercialization, investors will be closely watching the company's progress in achieving key milestones and its ability to overcome future obstacles that may arise.