Omeros Corp: Form 10-Q for the period ended Sep 30, 2025

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10‑Q and with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 31, 2025. In addition, you should read the section entitled “Risk Factors” and the disclaimers regarding forward-looking statements included herein and in our Annual Report on Form 10-K for the year ended December 31, 2024, for a discussion of important factors that could cause our results to differ materially from the results described in or implied by any forward-looking statements contained herein.

Overview

We are a clinical-stage biopharmaceutical company committed to discovering, developing, and commercializing first-in-class small-molecule and protein therapeutics for large-market as well as orphan indications targeting immunologic diseases, including complement-mediated diseases and cancers related to dysfunction of the immune system, as well as addictive and compulsive disorders.

Complement Inhibitor Programs

The complement system plays a role in the body’s inflammatory response and becomes activated as a result of tissue damage or trauma or microbial pathogen invasion. Inappropriate or uncontrolled activation of the complement system can cause diseases characterized by serious tissue injury. Three main pathways can activate the complement system: classical, lectin, and alternative. We are focused on development of therapeutics to treat diseases associated with the lectin and/or alternative pathways of complement. We are developing antibodies as well as small-molecule inhibitors of key enzymes known to be centrally involved in the activation of the targeted pathway of complement.

Lectin Pathway / MASP 2

MASP-2 is a novel pro-inflammatory protein target that is the effector enzyme of the lectin pathway and is required for the function of this pathway. We are developing antibodies and small-molecule inhibitors of MASP-2 as potential therapeutics for diseases in which the lectin pathway has been shown to contribute to significant tissue injury and pathology. When not treated, these diseases are typically characterized by significant end-organ damage, such as kidney or central nervous system injury. Importantly, inhibition of MASP-2 has been demonstrated not to interfere with the antibody-dependent classical complement activation pathway, a critical component of the acquired immune response to infection.

The lead product candidate in our pipeline of complement-targeted therapeutics is narsoplimab (OMS721), a proprietary, patented human monoclonal antibody targeting MASP-2, the key activator of the lectin pathway of complement. As previously disclosed, in March 2025, the Company resubmitted to the U.S. Food and Drug Administration (“FDA”) the biologics license application (“BLA”) seeking regulatory approval for narsoplimab in hematopoietic stem cell transplant-associated thrombotic microangiopathy (“TA-TMA”). The resubmission was accepted for review by FDA as a class 2 resubmission and, pursuant to the Prescription Drug User Fee Act (“PDUFA”), was assigned an initial target action date for the FDA decision of September 25, 2025. Following the submission of information in response to a request from FDA, FDA informed us that the PDUFA date has been extended to December 26, 2025. We expect that FDA will meet this PDUFA date. All analyses requested by FDA as part of its review have been consistent with and have provided statistically significant support of narsoplimab’s benefit demonstrated in the analyses submitted as part of the BLA resubmission.

In June 2025, we submitted a Marketing Authorization Application (“MAA”) for narsoplimab for the treatment of TA-TMA in the European Union. The European Medicines Agency (“EMA”) completed validation of the narsoplimab MAA, which confirms that the submission is accepted and starts the formal review process by EMA’s Committee for Medicinal Products for Human Use. We expect an opinion on the MAA in mid-2026.

As with any BLA or MAA, there can be no guarantee that FDA or the EMA will complete their respective reviews within a given timeframe, or that the Company’s BLA or MAA will ultimately be approved.

Our pipeline also includes OMS1029, our long-acting antibody targeting MASP-2 which we expect will be well-suited to indications requiring long-term, chronic administration. In addition, we have a program focused on development of an orally administered small-molecule MASP-2 inhibitor. In the first quarter of 2025 we determined to pause most development activities in our OMS1029 and MASP-2 small-molecule development programs to preserve available capital for narsoplimab and other prioritized programs.

Alternative Pathway / MASP-3

Our pipeline of clinical-stage complement-targeted therapeutic candidates also includes zaltenibart (OMS906), a proprietary, patented monoclonal antibody targeting MASP-3, the key activator of the alternative pathway of complement. We believe zaltenibart has the potential to treat a wide range of alternative pathway-related diseases and that its attributes favorably differentiate zaltenibart from other marketed and in-development alternative pathway inhibitors.

Our clinical development of zaltenibart has been focused on PNH and C3G. We have substantially completed two Phase 2 clinical trials evaluating zaltenibart and have an ongoing open label extension study to assess the long-term efficacy and safety of zaltenibart in PNH patients who have completed either of the two Phase 2 clinical trials. We also have a small, ongoing Phase 2 study evaluating zaltenibart in C3G.

On October 10, 2025, we entered into an Asset Purchase and License Agreement (the “APLA”) with Novo Nordisk Health Care AG (“Novo Nordisk”), pursuant to which Novo Nordisk will receive exclusive global rights in all indications to develop and commercialize zaltenibart in consideration of certain upfront and contingent payments payable to us (the “Transaction”) upon the Closing (as defined below). Our ongoing and planned clinical programs for zaltenibart will be transitioned to Novo Nordisk following the Closing of the Transaction throughout which we will provide certain transition services to Novo Nordisk. Subject to the satisfaction or waiver of the foregoing conditions and the other terms and conditions contained in the APLA, the Transaction is expected to close in the fourth quarter of 2025.

Following the Closing and during the term of the APLA, we and our affiliates will be restricted from exploiting products directed to MASP-3 and certain other alternative pathway targets, subject to certain exceptions for retained preclinical program rights (outside of zaltenibart), products of an acquirer, and non-competing indications. We will retain rights to continue development of our existing MASP-3 small-molecule program, including the ability to develop and commercialize small-molecule inhibitors with limited indication-related restrictions. We will also retain rights to our “grandfathered” MASP-3 antibodies, with temporal and indication restrictions on commercialization and for use in advancing our small-molecule therapeutics.

See 2025 Asset Purchase and License Agreement below for further information regarding the Transaction.

PDE7 Inhibitor Programs

Our PDE7 inhibitor program, which we refer to as OMS527, comprises multiple PDE7 inhibitor compounds and is based on our discoveries of previously unknown links between PDE7 and any addiction or compulsive disorder, and between PDE7 and any movement disorders. In April 2023, we were awarded a grant from the National Institute on Drug Abuse (“NIDA”), part of the National Institutes of Health, to develop our lead orally administered PDE7 inhibitor compound for the treatment of cocaine use disorder. NIDA awarded the grant to us for a total of $6.24 million over three years, of which we expensed $2.1 million and have claimed and received $1.6 million of funding to date. The grant is intended to support preclinical cocaine interaction/toxicology studies to assess safety of the therapeutic candidate in the presence of concomitant cocaine administration, as well as an in-patient, placebo-controlled clinical study evaluating the safety and efficacy of OMS527 in adult cocaine users who receive concurrent intravenous cocaine. The preclinical studies, which were designed with NIDA toxicologists, have been successfully completed with no safety findings and provide drug-interaction safety data in support of the planned in-patient human study of OMS527 in cocaine users. FDA has requested that we provide additional preclinical information prior to initiating the clinical in-patient study in cocaine users, which we are targeting for the second half of 2026.

Preclinical Programs - Oncology Platform

We are developing a portfolio of signaling-driven immunomodulators, oncotoxins, and an adoptive T-cell technology combined with an immunostimulator that, unlike other cellular therapy approaches requires no cellular engineering, may reduce manufacturing costs and timelines, and may maintain an enhanced anti-cancer immune response through subsequent repetitive and simple therapeutic administrations.

We continue on a limited basis to progress pre-clinical studies within our novel oncology program, including IND-enabling studies in our program to develop novel, proprietary large molecule therapeutics designed to target and kill only dividing cancer cells. Acute myeloid leukemia (“AML”) is the lead indication for development in this program, which we refer to as OncotoX-AML. In preclinical models both in vivo – in immunocompromised mice with human tumors – and in vitro, our potential AML therapeutic has consistently demonstrated superior efficacy to current AML standard of care treatments and has been well-tolerated in preliminary, preclinical tolerability studies. A non-human primate safety study is underway, with encouraging results to date. Our OncotoX-AML therapeutic also shows broad potential application across AML regardless of genetic mutation, including TP53, NPM1, KMT2A, and FLT3.

In April 2025, we established the Omeros Oncology Clinical Steering Committee to help advance our OncotoX-AML program. The clinical steering committee is composed of leaders in AML treatment and research at the premier cancer centers across the United States. These experts in the treatment of AML are expected to help guide clinical development of our potential AML therapeutic. IND-enabling work is ongoing with an estimated timeline to clinical entry of 18-24 months.

We continue to confirm our results and to generate new data which we expect will contribute to our intellectual property position.

Preclinical Programs - T-CAT

We are also advancing our Targeted Complement Activating Therapy (“T-CAT”) platform – a new class of pathogen-targeting recombinant antibodies intended for broad action against bacteria, fungi, viruses, and parasites. T-CAT is designed to harness complement activation to kill pathogens directly, which represents a novel approach to infectious disease treatment.

As preclinical animal data continue to accumulate across multiple pathogen classes and species, we believe that T-CAT demonstrates potential against multidrug-resistant organisms (“MDROs”). Effective MDRO therapies remain one of the most urgent and unmet needs in medicine, and we believe that T-CAT has the potential to address this need without contributing to drug resistance.

2025 Asset Purchase and License Agreement

On October 10, 2025, we entered into the APLA with Novo Nordisk, pursuant to which Novo Nordisk will receive exclusive global rights in all indications to develop and commercialize zaltenibart and certain related monoclonal antibodies and antigen-binding fragments (collectively, the “Compounds”), and related pharmaceutical products (“Products”) upon the Closing. Under the APLA, we agreed to sell and transfer, and Novo Nordisk agreed to purchase and assume, certain assets and liabilities related to the Compounds and Products, and the parties agreed to grant and receive certain intellectual property licenses, as further described below.

Pursuant to the terms and subject to the conditions of the APLA, we are eligible to receive $340.0 million in upfront and near-term milestone payments, of which $240.0 million is to be received by us at the closing of the Transaction (the “Closing”). Beyond the $340.0 million, we can receive (i) an additional $410.0 million in one-time milestone payments upon the first achievement by Novo Nordisk or its affiliates or sublicensees of each of the development and approval milestone events as set forth in the APLA and (ii) up to $1.3 billion in one-time milestone payments upon the first achievement by Novo Nordisk or its affiliates or sublicensees of certain sales-based milestone events as set forth in the APLA. We are also eligible under the APLA to receive tiered royalties on annual net sales of Products at percentage rates ranging from high single digit to high teens, subject to reduction in certain circumstances, as set forth in the APLA.

2024 Term Loan and Repurchase of 2026 Notes

On June 3, 2024 (the “Closing Date”), we, with certain subsidiaries, as guarantors, entered into the Credit and Guaranty Agreement (the “Credit Agreement”) with Athyrium Capital Management, LP and certain funds managed by Highbridge Capital Management, LLC, as lenders (together with additional lenders from time to time, the “Lenders”) and Wilmington Savings Fund Society, FSB, as administrative agent and collateral agent. The Credit Agreement provides for a senior secured term loan facility of $67.1 million (the “Term Loan”).

In 2024, we used the $67.1 million Term Loan proceeds, along with $21.7 million of cash on hand to repurchase from the Lenders $118.1 million aggregate principal amount of our existing 5.25% convertible senior notes due on February 15, 2026 (the “2026 Notes”), which resulted in a $51.0 million reduction in our total outstanding debt. The $29.3 million difference between the total consideration paid at closing of $88.8 million and the $118.1 million aggregate principal amount of the 2026 Notes was recorded as a premium (i.e., an increase) on the Term Loan. The premium is being amortized as both a non-cash reduction of long-term debt in the condensed consolidated balance sheets and interest expense in the condensed consolidated statement of operations and comprehensive loss over the duration of the Term Loan.

All indebtedness outstanding under the Credit Agreement is guaranteed by certain of our direct and indirect subsidiaries, other than certain foreign subsidiaries that are not material (we and the guarantors, collectively, the “Credit Parties”). Pursuant to a Pledge and Security Agreement, dated June 3, 2024, the indebtedness under the Credit Agreement is secured by a first-priority security interest in and lien on substantially all tangible and intangible property of the Credit Parties, subject to customary exceptions, and excluding royalty interests in OMIDRIA and certain related rights.

Amounts outstanding under the Term Loan accrue interest at an adjusted term secured overnight financing rate, (“adjusted term SOFR”) (with a 3.00% floor) plus 8.75% per annum, payable quarterly. The Credit Agreement has a scheduled maturity date of June 3, 2028. As of September 30, 2025, the contractual interest rate on the Term Loan was 13.02%.

The Credit Agreement contains certain customary default provisions, representations and warranties and affirmative and negative covenants, including a covenant for the Credit Parties to maintain at all times unrestricted cash, cash equivalents and short-term investments of at least $25.0 million in accounts subject to control agreements, and a covenant limiting the use of cash for open market or privately negotiated repurchases of any outstanding 2026 Notes.

The Credit Agreement requires mandatory prepayments of outstanding Term Loans in an amount equal to 60% of the net cash proceeds (excluding research and development and certain other milestone-based payments) received by the Credit Parties from asset sales and licenses, including the Transaction with Novo Nordisk.

The Transaction with Novo Nordisk is expected to close in the fourth quarter of 2025 and would provide us with $240.0 million in upfront cash, a portion of which will be applied to the mandatory repayment of the entire $67.1 million principal outstanding under the Term Loan, along with a 5.0% prepayment premium, certain expenses and accrued and unpaid interest. The repayment will result in the release in full of all liens and covenants thereunder including the $25.0 million minimum liquidity covenant.

See “Note 6 — Debt” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

Convertible Note Exchange and Equitization Transaction

On May 14, 2025, we completed with a limited number of holders of the 2026 Notes the exchange (the “Convertible Note Exchange”) of $70.8 million aggregate principal amount of our 2026 Notes on a one-for-one basis for newly-issued convertible senior notes maturing on June 15, 2029 (the “2029 Notes”).

On May 12, 2025, we entered into note conversion agreements (each, a “Note Conversion Agreement”) with two holders of the 2026 Notes to convert $10.0 million aggregate principal amount of 2026 Notes into shares of our common stock (the “Equitization Transaction”) in three tranches. As of September 30, 2025, we completed the Equitization Transaction, resulting in the issuance of an aggregate of 2,819,866 shares to the two holders.

The aggregate principal balance of our 2026 Notes was reduced from $97.9 million to $17.1 million as a result of the Convertible Note Exchange and Equitization Transaction. No new cash was received as a result of these transactions.

We also retain all potential future value of the capped call purchased in connection with the issuance of the 2026 Notes covering all shares underlying the aggregate principal amount of the originally issued 2026 Notes. The capped call will expire on the maturity date of the 2026 Notes.

See “Note 1 — Organization and Basis of Presentation” and “Note 6 — Debt” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

Financial Summary

As of September 30, 2025, we had cash, cash equivalents and short-term investments of $36.1 million. For the nine months ended September 30, 2025, our cash used in operations was $76.3 million and included a net loss for the nine months ended September 30, 2025 of $89.8 million.

We expect to receive an upfront cash payment, of $240.0 million upon Closing of the Transaction with Novo Nordisk, a portion of which will be applied to the full and immediate repayment of our $67.1 million Term Loan along with a related prepayment premium, certain expenses, and accrued and unpaid interest. Repayment will result in termination of the Credit Agreement and the release in full of all liens and covenants thereunder including the covenant whereby we must maintain a minimum of $25.0 million of unrestricted cash, cash equivalents and short-term investments at all times.

See “Note 1 — Organization and Basis of Presentation, Liquidity and Capital Resources” in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

OMIDRIA Sale and Royalty Monetization Transactions

We previously developed and commercialized OMIDRIA® (phenylephrine and ketorolac intraocular solutions) 1%/0.3%, which is approved by FDA for use during cataract surgery or intraocular lens replacement to maintain pupil size by preventing intraoperative miosis (pupil constriction) and to reduce postoperative ocular pain. We marketed OMIDRIA in the U.S. from the time of its commercial launch in 2015 until December 2021.

On December 23, 2021, we closed on an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Rayner Surgical Inc. (“Rayner”) for the sale of OMIDRIA and related business assets, which we recorded as an OMIDRIA contract asset on our condensed consolidated balance sheet. The results of OMIDRIA activities, which includes royalties earned and the effect of any remeasurement adjustments, are classified as discontinued operations in our condensed consolidated statements of operations and comprehensive loss. We currently earn royalties from Rayner on all U.S. based net sales of OMIDRIA through December 31, 2031 at a royalty rate of 30%. Our royalty rate would be reduced to 10% upon the occurrence of certain events described in the Asset Purchase Agreement, including during any specific period in which OMIDRIA is no longer eligible for separate payment (i.e., becomes included in the packaged payment rate for the surgical procedure) under Medicare Part B, or in certain circumstances involving entry of generic competition for OMIDRIA. We are entitled to earn royalties until the expiration or termination of the last issued and unexpired U.S. patent, which we expect to occur no earlier than 2035. Pursuant to legislation enacted in late 2022, we also expect separate payment for OMIDRIA under Medicare Part B to extend until at least January 1, 2028.

We previously sold to DRI Healthcare Acquisition LP (“DRI”) our future U.S. based OMIDRIA royalty receipts through December 31, 2031 which we record as an OMIDRIA royalty obligation on our condensed consolidated balance sheet. All U.S. based royalties through December 31, 2031 are remitted by Rayner to an escrow account established by Omeros, from which payments are made to DRI. We retain the rights to receive all ex-U.S. royalties through December 31, 2031 and royalties on global net sales of OMIDRIA after this date, including royalties on U.S. OMIDRIA net sales. Interest expense on the OMIDRIA royalty obligation is recorded as a component of continuing operations.

For further details, see “Note 2 – Significant Accounting Policies, Discontinued Operations and OMIDRIA Royalty Obligations,” and “Note 8 — OMIDRIA Royalty Obligation” in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Results of Operations

Research and Development Expenses

Our research and development expenses can be divided into three categories: direct external expenses, which include clinical research and development and preclinical research and development activities; internal overhead and other expenses; and stock-based compensation expense. Direct external expenses consist primarily of expenses incurred pursuant to agreements with third-party manufacturing organizations prior to receiving regulatory approval for a product candidate, contract research organizations, clinical trial sites, collaborators, licensors and consultants. Preclinical research and development includes costs prior to beginning Phase 1 studies in human subjects. Internal overhead and other expenses primarily consist of costs for personnel, overhead, rent, utilities, and depreciation. Our accounting policy is to expense all manufacturing costs related to product candidates until regulatory approval is reasonably assured in either the U.S. or European Union.

The following table illustrates our expenses associated with these activities:

(In thousands)

For the three months ended September 30, 2025, clinical research and development expenses decreased $6.2 million. We began initiating clinical trial sites in our Phase 3 program for zaltenibart in PNH during the first quarter of 2025; however, based on considerations of capital availability and the anticipated ramp up in spending on those trials, we determined in the second quarter of 2025 to pause this program temporarily in order to prioritize the use of our available capital to other programs. Clinical research activity also decreased in the third quarter due to the coincidental wind down of several of our Phase 2 zaltenibart studies. Additionally, we incurred non-recurring expenses related to the wind-down of our IgAN program in the prior year and consultancy charges related to BLA submission for narsoplimab in TA-TMA.

For the nine months ended September 30, 2025, clinical research and development expenses decreased $31.2 million primarily due to the inclusion in the prior year period of drug substance manufacturing expenses of $17.8 million for narsoplimab and $4.3 million for zaltenibart. In addition, we incurred $4.7 million of expenses in the prior year period related to the wind-down of our narsoplimab IgAN program.

We expect research and development expenses in the fourth quarter of 2025 to be comparable to the third quarter of this year.

At this time, we are unable to estimate with certainty the longer-term costs we will incur in the continued development of our product candidates due to the inherently unpredictable nature of our preclinical and clinical development activities. Clinical development timelines, the probability of success, and development costs can differ materially as new data become available and as expectations change. Our future research and development expenses will depend, in part, on the preclinical or clinical success of each product candidate as well as ongoing assessments of each program’s commercial potential. In addition, we cannot forecast with precision which product candidates, if any, may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

We are required to expend substantial resources in the development of our product candidates due to the lengthy process of completing clinical trials and seeking regulatory approval. Any failure or delay in completing clinical trials, or in obtaining regulatory approvals, could delay our generation of product revenue and increase our research and development expenses.

Selling, General and Administrative Expenses

(In thousands)

Total selling, general and administrative expenses, excluding stock-based compensation, decreased by $4.3 million for the nine months ended September 30, 2025, compared to the same period in the prior year. The decrease was primarily due to a reduction in employee compensation expenses in the current year.

The $0.5 million and $1.3 million decrease in stock-based compensation for the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year is due to the valuation and timing of the vesting of employee stock options.

We expect selling, general and administrative expenses in the fourth quarter of 2025 to be higher than those in the third quarter of this year, primarily due to increased marketing expenses associated with the anticipated launch of narsoplimab in TA-TMA, if approved by regulatory authorities.

Interest Expense

Interest expense, net of premiums, discounts, issuance costs and remeasurement adjustments is shown below:

(In thousands)

Interest on our OMIDRIA royalty obligation is calculated under the effective interest method and represents a portion of the royalties remitted by Rayner to our administrative agent, Wilmington Savings Fund Society, FSB, along with principal. Pass through interest paid to DRI is offset by non-cash remeasurement adjustments taken to properly reflect the OMIDRIA royalty obligation for changes in probable cash flows on our future expected Rayner royalties.

Contractual interest expense is comprised of cash interest paid during the year and the net change in accrued interest. Amortization of debt discounts, premiums, and issuance costs are reflected as non-cash interest expense. Debt discounts on the 2026 Notes and 2029 Notes are accretive whereas the premium on the Term Loan is deducted from contractual interest expense.

For the three months ended September 30, 2025, interest expense decreased $17.5 million compared to the same period in 2024. The decrease primarily relates to $22.3 million of non-cash remeasurement costs on the OMIDRIA royalty obligation to reflect a change in forecasted OMIDRIA cash flows from Rayner. Excluding the OMIDRIA royalty obligation and any non-cash amortization of debt discount, premium, or issuance costs, contractual interest expense increased $0.5 million primarily due to incurring a full quarter of interest expense on the 2029 Notes issued in May 2025 at a higher rate of interest than the 2026 Notes.

For the nine months ended September 30, 2025, interest expense decreased $31.2 million compared to the same period in 2024. The decrease primarily relates to $32.6 million of non-cash remeasurement costs on the OMIDRIA royalty obligation to reflect a change in forecasted OMIDRIA cash flows from Rayner. Excluding the OMIDRIA royalty obligation and any non-cash amortization of debt discount, premium, or issuance costs, contractual interest expense increased $1.9 million due to (i) incurring nine months of interest on our Term Loan compared to four months of interest in the prior year period as the Term Loan was issued in June 2024 and (ii) incurring interest on the 2029 Notes at a higher coupon rate of interest than the 2026 Notes for which they were exchanged.

For further information see “Note 6 — Debt” and “Note 8 – OMIDRIA Royalty Obligation” in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

We expect that interest expense for the fourth quarter of 2025 will be higher compared to the third quarter, under the assumption that there is no remeasurement adjustment to the OMIDRIA contract royalty obligation.

Interest and Other Income

(In thousands)

Interest and other income decreased $1.7 million and $6.0 million, respectively, for the three and nine months ended September 30, 2025 as compared to the same periods in 2024 primarily due to holding a lower average cash and investment balance than in the prior year periods.

We expect interest and other income for the fourth quarter of 2025 to be slightly higher compared to the third quarter of this year due to higher anticipated cash balances.

Loss on early extinguishment of 2026 convertible senior notes

(In thousands)

In May 2025, we exchanged $70.8 million principal amount of 2026 Notes for the same principal of 2029 Notes and entered into agreements to equitize $10.0 million of 2026 Notes, realizing a $3.0 million non-cash loss on extinguishment. The extinguishment reflects marking-to-market the 2029 Notes and the expensing of capitalized debt issuance costs on the retired portion of the 2026 Notes.

Net loss on change in fair value of financial instruments

(In thousands)

Our embedded derivatives comprise call and put options related to our 2029 Notes and Term Loan. The $8.8 million increase in net loss for the three months ended September 30, 2025 reflects (i) a $7.1 million net liability increase in the fair value of our 2029 Notes embedded derivative reflecting the option of holders to convert their notes into shares of common stock, which is affected by an increase in our stock price, and (ii) a $1.7 million net liability change in our Term Loan embedded derivative reflecting a greater likelihood of a prepayment occurring due to signing of the APLA and the anticipated Closing of the Transaction with Novo Nordisk.

The $0.7 million increase in net loss for the nine months ended September 30, 2025 reflects a $1.8 million net liability change in our Term Loan embedded derivative, offset by a $0.8 million net liability decrease in our 2029 embedded derivative and a $0.3 million remeasurement of the share-settled liability.

Discontinued operations and the OMIDRIA contract royalty asset

Net income from OMIDRIA discontinued operations, net of tax is shown below:

(In thousands)

Net income (loss) from discontinued operations decreased $14.6 million and $25.7 million, respectively, for the three and nine months ended September 30, 2025 due to remeasurement of the OMIDRIA contract royalty asset. The decrease was primarily attributable to a remeasurement of our OMIDRIA contract royalty asset to reflect lower forecasted sales of OMIDRIA.

The following schedule presents a roll forward of the OMIDRIA contract royalty asset (in thousands):

Financial Condition – Liquidity and Capital Resources

As of September 30, 2025, we had cash, cash equivalents, and short-term investments of $36.1 million. For the nine months ended September 30, 2025, our cash used in operations was $76.3 million and included a net loss for the period of $89.8 million.

Pursuant to a covenant in the Credit Agreement entered into on June 3, 2024, we must maintain $25.0 million of unrestricted cash, cash equivalents, and short-term investments at all times. We have maintained a balance of unrestricted cash, cash equivalents, and short-term investments greater than $25.0 million and at no time during the quarter or through the date of issuance of these condensed consolidated financial statements have we been in violation of any of our debt covenants.

In recent years, Omeros has incurred net losses from continuing operations and negative cash flows from operations.

We will be entitled to receive an upfront cash payment of $240.0 million upon Closing of the Transaction with Novo Nordisk, which is expected to occur in the fourth quarter of 2025. As such, the Closing will result in the mandatory prepayment of all outstanding obligations under our Credit Agreement and a portion of the proceeds will be applied at the Closing to fund full repayment of the $67.1 million outstanding principal amount of Term Loan, along with a 5.0% prepayment premium, certain expenses, and accrued and unpaid interest. Repayment will result in termination of the Credit Agreement and the release in full of all liens and covenants thereunder.

On July 28, 2025, in a registered direct offering, we issued and sold to entities managed by Polar Asset Management Partners 5,365,853 shares of our common stock at a price of $4.10 per share, representing a 14% premium to the closing price of our common stock on the date of the definitive agreement for the purchase of the shares. We received $20.3 million in cash proceeds net of offering expenses.

Further, we have a sales agreement pursuant to an at-the-market (“ATM”) equity offering facility through which we may, from time to time, offer and sell shares of our common stock equaling an aggregate amount of up to $150.0 million. During the three and nine months ended September 30, 2025, we received $9.0 million and $15.3 million, respectively, of net proceeds from the sale of our common stock through the ATM facility and have received $3.6 million subsequent to September 30, 2025.

If the ATM facility is needed but inaccessible, we are not able to close the Transaction with Novo Nordisk when anticipated, or we are not able to obtain debt and/or royalty-related financing and/or partnering funding in connection with a near-term regulatory approval of narsoplimab, it would have a significant negative impact on our financial condition. For purposes of determining available capital resources, any future royalty and/or milestone receipts are excluded. We have taken steps to manage our operating expenses and reduce our projected cash requirements by delaying clinical trials and reducing selected research and development efforts. Should it be necessary, we may determine to further reduce or delay these or other aspects of our operations and/or implement other restructuring activities. Furthermore, as we currently do not have an ongoing source of revenue sufficient to cover our operating costs, should the need arise to raise further capital for our operations, we may pursue public and private offerings of our equity securities, debt financings, future royalty sales, or other strategic transactions, which may include licensing or selling a portion or all of one or more of our existing technologies.

The conditions described above, including the need to raise additional capital, when evaluated in accordance with the relevant accounting literature, raise substantial doubt with respect to our ability to meet our obligations through one year from the issuance of the Company's condensed consolidated financial statements. Our ability to continue as a going concern will require us to generate positive cash flow from operations, obtain additional financing, enter into strategic alliances, and/or sell assets, and this determination is made without considering any such potential future activities. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to our ability to continue as a going concern or to the expected Closing of the Transaction with Novo Nordisk.

Cash Flow Data

(In thousands)

21

Operating Activities. Net cash used in operating activities for the nine months ended September 30, 2025 decreased by $43.6 million as compared to the same period in 2024, driven primarily by a $35.7 million decrease in net loss and a $17.4 million increase in accounts payable, partially offset by $9.8 million of non-cash items, which is primarily comprised of remeasurement adjustments on forecasted OMIDRIA royalties affecting both the OMIDRIA contract royalty asset and OMIDRIA royalty obligation.

Investing Activities. Cash flows provided by investing activities primarily reflects cash used to purchase short-term investments and proceeds from the sale of those investments. This frequently causes a shift between our cash, cash equivalents, and short-term investment balances. As we manage our usage with respect to total cash, cash equivalents, and short-term investments, we do not consider fluctuations in cash flows from investing activities to be important to the understanding of our liquidity and capital resources.

Net cash provided by investing activities during the nine months ended September 30, 2025 increased by $5.7 million, reflecting the timing of purchase of investments from proceeds received on maturities and sales.

Financing Activities. Net cash provided by financing activities for the nine months ended September 30, 2025 decreased by $44.7 million, primarily due to the change in financing activities between the current year and the prior year. In the current year, we received proceeds from our registered direct offering from Polar of $20.3 million and ATM proceeds of $15.3 million. In the prior year, we received $115.5 million in cash from DRI related to the sale of expanded OMIDRIA royalties in February 2024, which was partially offset by repurchases of $21.2 million in aggregate principal amount of our 2026 Notes and $11.9 million of shares of our common stock.

Contractual Obligations and Commitments

Our future minimum contractual commitments and obligations were reported in our Annual Report on Form 10-K for the year ended December 31, 2024. Other than the following, our future minimum contractual obligations and commitments have not changed materially from the amounts previously reported. See “Note 10 — Commitments and Contingencies” in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Operating Leases

Our lease for our office and laboratory space ends in November 2027. We have two options to extend the lease term by five years each. In addition, we carry various finance lease obligations for laboratory and office equipment. As of September 30, 2025, the remaining aggregate non-cancelable rent payable under the initial term of the lease, excluding common area maintenance and related operating expenses, is $15.1 million.

Convertible Senior Notes and Long-Term Debt

See “Note 6 — Debt” in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

OMIDRIA Royalty Obligation

See “Note 8 — OMIDRIA Royalty Obligation” in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Goods and Services Contracts, Development Milestones and Product Royalties

See “Note 10 — Commitment and Contingencies” in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Significant Judgments and Estimates

There have not been any material changes in our critical accounting policies and significant judgments and estimates as disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 31, 2025 except as what we have disclosed in the notes to our financial statements regarding embedded derivatives. For further details see “Note 2 — Significant Accounting Policies” in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Our exposure to market risk is primarily confined to our investment securities, debt instruments and embedded derivatives.

Cash, Cash Equivalents and Short-Term Investments

The primary objective of our investment activities is to preserve our capital to fund operations, and we do not enter into financial instruments for trading or speculative purposes. We also seek to maximize income from our investments without assuming significant risk. As of September 30, 2025, we had cash, cash equivalents, and short-term investments of $36.1 million. In accordance with our investment policy, we invest funds in high credit quality securities such as money market funds, certificates of deposit and U.S. treasury bills to limit credit risk. The money market funds in our investment portfolio are not leveraged and are classified as available-for-sale. We currently do not hedge interest rate exposure. Because of the short-term maturities of our investments, we do not believe that an increase in market rates would have a materially negative impact on the realized value of our investment portfolio. We actively monitor changes in interest rates and, with our current portfolio of short-term investments, we are not exposed to potential loss due to changes in interest rates.

Convertible Notes, Term Debt and Embedded Derivatives

As of September 30, 2025 and December 31, 2024, we had fixed-rate borrowings from our 2026 Notes and 2029 Notes. We record all of our fixed-rate borrowings at amortized cost and, therefore, do not experience any risk for changes in interest rates. However, we include embedded derivatives along with our debt in our reporting of our 2029 Notes in our condensed consolidated balance sheet. The derivatives on our 2029 Notes are marked to fair value every reporting period. The fair value inputs to the derivative valuation include stock price, unsecuritized discount rate, risk-free rate, volatility, and term. Consequently, we may incur gains and losses on the derivative as changes occur in any of these inputs at each reporting period. For further details see “Note 4 — Fair Value Measurements” and “Note 6 — Debt” in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

As of each of September 30, 2025 and December 31, 2024, our Term Loan borrowings were recorded at amortized cost. However, interest is calculated based on adjusted SOFR, subject to a 3.00% floor, plus 8.75% per annum. Therefore, we experience exposure to any adjustments in the adjusted SOFR. Our Term Loan includes embedded derivatives that may be affected by provisions under the Credit Agreement requiring prepayment. The Closing of the Transaction with Novo Nordisk would require mandatory prepayment of the full loan balance along with a 5.00% prepayment premium, payment of accrued and unpaid interest and certain expenses.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of September 30, 2025. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2025, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) under the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We operate in an environment that involves a number of risks and uncertainties. Before making an investment decision you should carefully consider the risks described in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 31, 2025. In assessing the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2024, you should also refer to the other information included therein and in this Quarterly Report on Form 10-Q, including the supplemental risk factor below. In addition, we may be adversely affected by risks that we currently deem to be immaterial or by other risks that are not currently known to us. Due to these risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. The trading price of our common stock could decline due to any of these risks and you may lose all or part of your investment.

The Transaction with Novo Nordisk may not close when anticipated, or at all, and a significant delay or failure to close the Transaction would materially adversely affect our business, financial condition, results of operations, strategic plans, future operating performance, and, ultimately, ability to continue as a going concern.

We have entered into the APLA pursuant to which Novo Nordisk will receive exclusive global rights to develop and commercialize zaltenibart in all indications. Under the terms and conditions of the APLA, we will be eligible to receive up to a total of $2.1 billion in upfront and milestone-based payments, plus tiered royalties on net sales of commercialized products. This total includes an upfront payment of $240.0 million payable in cash upon Closing of the Transaction. The receipt of this upfront payment would enable us to (i) repay in full all obligations outstanding under our Credit Agreement, (ii) repay at maturity the remaining $17.1 million principal balance of our 2026 Notes, and (iii) provide sufficient capital for at least 12 months of post-closing operations, including the potential launch of narsoplimab. We do not have sufficient cash on hand to fund these expenses without receipt of the upfront payment from Novo Nordisk.

Completion of the Transaction is subject to customary closing conditions, including the expiration or early termination of the ongoing waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”). The Transaction is expected to close in the fourth quarter of 2025. However, there can be no assurance that the waiting period under the HSR Act will expire or be terminated or that any other closing conditions will be satisfied. The pendency of the Transaction may create uncertainty or disruption in our business relationships, including with personnel and vendors, and could divert management’s attention from ongoing operations. If the Transaction does not close, whether due to the inability to obtain HSR Act clearance or the failure of any other closing condition, we will not receive the upfront payment and, further, will not realize the anticipated benefits of the Transaction as a whole. This would materially adversely affect our business, financial condition, and results of operations, including our ability to comply with affirmative covenants under our Credit Agreement. It would also materially adversely affect our strategic plans, including those related to the potential launch of narsoplimab, and would, in turn, materially adversely affect our future operating performance. Ultimately, the failure to close the Transaction may materially adversely affect our ability to continue as a going concern.