Omeros Corp: Form 10-Q for the period ended Mar 31, 2026

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, 2025, which was filed with the SEC on March 31, 2026. 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, 2025 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 an innovative, commercial-stage biotechnology company that discovers and develops first-in-class protein and small-molecule therapeutics for large-market and orphan indications, with particular emphasis on complement-mediated diseases, cancers, and addictive or 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 in 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 antigen-antibody complex-dependent classical complement activation pathway, a critical component of the acquired immune response to infection.

The lead product and 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. Our lead lectin pathway inhibitor YARTEMLEA® (narsoplimab-wuug) was approved by the Food and Drug Administration (“FDA”) in December 2025 and is commercially available in the U.S. for the treatment of TA-TMA in adult and pediatric patients aged two years and older. For more information, see “Commercial Product – YARTEMLEA” below.

Clinical development of narsoplimab is anticipated to continue expanding the approved label in TA-TMA and to develop the drug in additional indications. Clinical development efforts have previously been directed to acute respiratory distress syndrome (“ARDS”), including severe acute COVID-19, which can result in post-acute sequelae of SARS-CoV-2 infection (“PASC,” i.e., long COVID). We are also developing 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 selected a development candidate for our MASP-2 small molecule program, which is advancing to Investigational New Drug (“IND”)-enabling studies targeting once-daily oral administration.

Commercial Product – YARTEMLEA

Our commercial product, YARTEMLEA, is the first and only approved inhibitor of the lectin pathway of complement. On December 23, 2025, FDA approved YARTEMLEA for the treatment of TA-TMA in adults and in children ages two years and older. TA-TMA is a severe and often-fatal complication of hematopoietic stem cell transplantation in adults and children, driven by systemic endothelial injury triggered by conditioning regimens, immunosuppressants, infection, graft-versus-host disease, and other transplant-related factors. Activation of the lectin pathway of complement plays a central role in disease pathogenesis. YARTEMLEA selectively inhibits MASP-2, blocking pathway activation while preserving classical and alternative complement pathway functions important for host defense. In TA-TMA, MASP-2 inhibition prevents lectin pathway-mediated cellular injury, including endothelial damage in small blood vessels, and thrombus formation. Unlike other complement inhibitors, YARTEMLEA has no boxed warning and no Risk Evaluation and Mitigation Strategy (REMS), and vaccinations are not required prior to treatment.

Commercial distribution and sales of YARTEMLEA began in January 2026. Both adult and pediatric patients with TA-TMA are now receiving YARTEMLEA, including patients who have recently failed prior off-label C5- and C3-inhibitor regimens, in both hospital and outpatient settings.

We are commercializing YARTEMLEA in the U.S. market and have deployed our field force of account managers and directors, market development managers, access leads, and medical science liaisons to engage directly with transplant centers across the U.S. There are 175 stem-cell transplant centers across the U.S., with the top 80 centers representing approximately 80% of procedures. Our field force is detailing all 175 transplant centers nationwide. By March 31, 2026, 30 unique accounts had ordered YARTEMLEA.

At this early stage, our primary launch objectives are fourfold: (i) educate the entire transplant care team, including transplant physicians, nurses, hospital pharmacies, and reimbursement teams, regarding the recently harmonized TA-TMA diagnostic criteria, thereby driving awareness, early diagnosis, and treatment of TA-TMA; (ii) support transplant centers in obtaining their pharmacy and therapeutic committee approvals and adding YARTEMLEA to their formularies to streamline the ordering process and facilitate access to YARTEMLEA in both the in- and out-patient settings; (iii) work with third-party payers to provide timely reimbursement consistent with the YARTEMLEA label and published diagnostic criteria; and (iv) finalize and prepare for publication of the health economics and outcomes research analysis using the strong clinical efficacy data and favorable safety profile of YARTEMLEA to demonstrate its compelling cost-effectiveness to healthcare providers and payors.

An MAA for YARTEMLEA in TA-TMA has been submitted to the EMA and is being reviewed under EMA’s centralized review procedure, which allows review of a single marketing authorization application. If the MAA is approved, it would authorize the product to be marketed in all European Union (“EU”) member states and European Economic Area countries. The European Commission has granted narsoplimab designation as an orphan medicinal product for treatment in hematopoietic stem cell transplantation. For commercialization of YARTEMLEA outside the U.S., we are evaluating potential partnerships, including broad ex-U.S. and regional collaborations.

Sale of Zaltenibart / MASP-3

On November 25, 2025, we completed a transaction (the “Transaction”) pursuant to our Asset Purchase and Licensing Agreement (“APLA”) with Novo Nordisk Healthcare AG (“Novo Nordisk”) for our candidate drug zaltenibart (formerly OMS906). Zaltenibart is a first-in-class, late-stage clinical humanized monoclonal antibody targeting MASP-3, the most upstream and key activator of the alternative pathway of the complement system. Zaltenibart has shown multiple potential advantages over other alternative pathway inhibitors in development and on the market.

At the closing of the Transaction, we received an upfront cash payment of $240.0 million. In addition, we are eligible to receive (i) up to $510.0 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. In total, we are eligible to receive up to an additional $1.8 billion in potential development and commercial milestones, plus tiered royalties on net sales.

Pursuant to the APLA, we sold and transferred, and Novo Nordisk purchased zaltenibart and certain related assets, and the parties agreed to grant and receive certain intellectual property licenses to facilitate the continued development and commercialization activities of both companies. We retain rights to our MASP-3 small-molecule program unrelated to zaltenibart, including the ability to develop and commercialize small-molecule MASP-3 inhibitors, across a range of therapeutic areas, including, but not limited to, ophthalmology, neurology, gastrointestinal disorders, dermatology, musculoskeletal diseases, and oncology. We 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.

In accordance with the APLA, at the closing of the Transaction, Omeros and Novo Nordisk entered into a transition services agreement (the “Transition Services Agreement”) pursuant to which we are providing certain transition services to Novo Nordisk to facilitate the transfer of the acquired assets and liabilities under the APLA and to provide for the continued operation of relevant studies and program activities during the applicable term. Subject to certain exceptions and limitations, Novo Nordisk reimburses us for costs and expenses we incur under the Transition Services Agreement, including third-party costs and expenses, costs associated with delivery of transition services by Omeros personnel on an hourly basis at rates specified in the Transition Services Agreement, and for our inventories of zaltenibart drug substance and product.

Other Development Programs

PDE7 Inhibitor Program

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 disorder. 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 which we have successfully completed a Phase 1 study, for the treatment of cocaine use disorder. With NIDA funding, we successfully completed preclinical cocaine interaction/toxicology studies to assess safety of the OMS527 compound when co-administered with cocaine. FDA subsequently requested additional nonclinical information prior to initiating the clinical in-patient study. Following a meeting with FDA to discuss that request, we are working with FDA to streamline the path to initiate the in-patient clinical trial, which which is targeted for initiation by year-end 2026.

Preclinical Program - OncotoX-AML

We continue to progress preclinical studies within our novel oncology program, which is focused on developing novel, proprietary large molecule therapeutics designed to selectively target and kill dividing cancer cells. We have completed selection of a drug development candidate, and IND-enabling studies are underway for this program, which we refer to as OncotoX-AML. Acute myeloid leukemia (“AML”), an aggressive and highly fatal bone marrow and blood cancer, is the lead indication for development. The effectiveness of current AML treatments, such as chemotherapeutics and antibody-drug conjugates, is limited by a number of factors, including high relapse rates and substantial side effects.

OncotoX-AML is an engineered biologic designed to selectively kill both AML blasts (abnormal myeloid cells) and relapse-related leukemia stem cells. Its unique mechanism of action is independent of myeloid cell genetic mutations, including TP53, NPM1, KMT2A, and FLT3, which are collectively found in approximately 90% of AML patients and are historically difficult to treat.

In February 2026, we announced the successful completion of our initial study in nonhuman primates evaluating the efficacy and safety of OncotoX-AML. Administration of only one course of OncotoX-AML treatment to immunocompetent primates demonstrated the desired pharmacologic response, specifically marked, selective, reversible, and dose-related reduction in myeloid progenitor cells — the cells that can mutate and lead to AML — by up to 99%. OncotoX-AML was well tolerated, without causing broader or lasting hematologic changes while preserving hematopoietic stem cells. There were no observed safety signals or meaningful changes in blood chemistry values often seen with current AML treatments.

In April 2025, we established the Omeros Oncology Clinical Steering Committee to help advance our OncotoX-AML program. The clinical steering committee is comprised of leaders in AML treatment and research at premier cancer centers. Together with this steering committee, we are designing our first in-human clinical trial.

IND-enabling studies and manufacturing development work is ongoing within our OncotoX-AML program with the goal of entering the clinic by late 2027.

Preclinical Program - T-CAT

We are also advancing our targeted complement activating therapy (“T-CAT”) platform: a new class of recombinant antibodies intended for broad action against pathogens, including 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. We are currently working to complete preclinical proof of concept studies and evaluate data for several infectious diseases.

Debt Financing Transactions

Exchange of 2026 Notes for 2029 Notes

On May 14, 2025, we completed the exchange (the “Convertible Note Exchange”) of $70.8 million of our 5.25% convertible senior notes (the “2026 Notes”) on a one-for-one basis for newly issued convertible senior notes maturing on June 15, 2029 (the “2029 Notes”). The Convertible Note Exchange was conducted with a limited number of holders of the 2026 Notes pursuant to exchange agreements dated as of May 12, 2025. The 2029 Notes are convertible at the option of the holders into shares of common stock, cash or a combination thereof, as elected by the Company, at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date. Holders who convert their 2029 Notes prior to June 1, 2029 (except for any conversion in connection with a make-whole fundamental change) are entitled to an interest make-whole payment equal to the sum of the remaining scheduled payments of interest that would have been made had the 2029 Notes remained outstanding from their conversion date through the earlier of (i) the date that is 18 months following their conversion date, and (ii) June 15, 2029, the maturity date. The initial conversion rate for the 2029 Notes is equivalent to an initial conversion price of approximately $6.18 per share of our common stock. The conversion rate is subject to adjustment in certain circumstances.

The 2029 Notes include both a derivative for the interest make-whole feature and a derivative for the conversion feature available to holders allowing them to convert their notes to common stock, cash or a combination thereof. At each reporting date, we remeasure the embedded derivative instruments to fair market value. Increases or decreases in our stock price may materially affect the fair value of the derivative. The remeasurement of the derivative is presented in our condensed consolidated statement of operations and comprehensive income (loss). At contract inception, we recorded a net $23.0 million embedded derivative as a component of our 2029 Notes. See “Note 6 — Debt — 2029 Notes — Embedded Derivative” in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

Repayment of Debt

On November 25, 2025, concurrent with the closing of the sale and licensing of zaltenibart to Novo Nordisk under the APLA, we were required under that certain Credit and Guarantee Agreement, dated June 3, 2024 (the “Credit Agreement”) to repay in full the $67.1 million principal balance outstanding (the “Term Loan”) along with a 5% prepayment premium. Repayment of our obligations under the Credit Agreement resulted in the release in full of all liens and covenants thereunder.

On February 17, 2026, we repaid the remaining $17.1 million aggregate principal balance outstanding on our 2026 Notes in full upon maturity.

Equity Financing Transactions

At the Market Sales Agreement

We have an “at the market” (“ATM”) facility agreement under which we have the capability to sell shares of our common stock from time to time, through an ATM equity offering program. On November 14, 2025, the Company filed a shelf registration statement and prospectus supplement renewing the ATM program for an aggregate offering price up to $150.0 million. We did not sell any shares under the ATM program during the three months ended March 31, 2026.

Share Repurchase Programs

On November 29, 2025, the Board of Directors approved a share repurchase program under which we are permitted to repurchase from time to time up to $100.0 million of our common stock in the open market or through privately negotiated transactions. During the three months ended March 31, 2026, we repurchased and retired 0.4 million shares of common stock pursuant to our share repurchase program, at an average cost of $11.70 per share, for an aggregate purchase price of $4.2 million.

Financial Summary

As of March 31, 2026, we had cash, cash equivalents and short-term investments of $135.3 million. For the three months ended March 31, 2026, our cash used in operations was $14.5 million.

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.

Results of Operations

Product Sales, Net

Distribution and sales of our only commercial product, YARTEMLEA, commenced in January 2026. Product sales, net for the three months ended March 31, 2026 were $9.9 million, compared to no product revenue for the same period in the prior year. Revenue in the current period reflects initial sales of YARTEMLEA to wholesalers in the U.S.

As this represents the first period of commercial sales, period-over-period comparisons are limited, and revenue mayfluctuate in future periods as we continue to expand patient access and physician adoption.

Product sales, net were as follows:

(In thousands)

Gross-to-Net Deductions

We record YARTEMLEA product sales net of estimated chargebacks and distribution fees, or gross-to-net deductions. Gross-to-net deductions are estimates based on contractual terms and expected utilization and require some judgment. For the three months ended March 31, 2026, no chargebacks were recorded related to Medicaid claims. As this represents the initial period of commercial sales, these estimates are preliminary and subject to change as additional information becomes available. A summary of our gross-to-net related accruals for the three months ended March 31, 2026 is as follows:

(In Thousands)

Chargebacks

We record a provision for estimated chargebacks when YARTEMLEA product sales are recognized and reduce the accrual as payments are made or credits are granted. Chargebacks represent the difference between the price we charge wholesalers and the contracted or statutorily required prices available to eligible purchasers under government programs, including our federal supply schedule agreement, and are estimated based on known pricing terms and expected utilization.

Distribution Fees

We pay our wholesalers a distribution fee for services they perform for us based on the dollar value of their purchases of YARTEMLEA. We record a provision for these charges as a reduction to revenue at the time of sale to the wholesaler and make payments to our wholesalers based on contractual terms.

Cost of Product Sales

Cost of product sales is as follows:

(In thousands)

Cost of product sold for the period was low, primarily reflecting the sale of inventory manufactured prior to regulatory approval, for which the associated manufacturing costs were expensed as research and development in prior periods. Accordingly, this inventory carries a low or no cost basis, resulting in lower cost of product sold and higher gross margin during the initial commercialization period.

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 EU.

The following table illustrates our expenses associated with these activities:

(In thousands)

For the three months ended March 31, 2026, clinical research and development expenses decreased $7.2 million as compared to the prior year period as a result of reduced expenditures on OMS906 due to the sale of zaltenibart to Novo Nordisk. Internal overhead and other expenses decreased $2.8 million as compared to the prior year period primarily due to Novo Nordisk reimbursing the Company for hours worked under the Transition Services Agreement and decreased employee compensation costs.

We expect research and development expenses in the second quarter of 2026 to be higher than in the first quarter of this year, driven primarily by increased investment in our YARTEMLEA and broader lectin pathway inhibitor programs as well as in our OncotoX-AML program, including costs associated with manufacturing and related activities, clinical development efforts, and regulatory support for our YARTEMLEA MAA in Europe.

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

Selling, general and administrative expenses are as follows:

(In thousands)

Total selling, general and administrative expenses, excluding stock-based compensation, increased $2.6 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to the build-out of our U.S. commercial organization, including the hiring of a sales force and increased marketing and market access activities in support of the YARTEMLEA launch.

The $0.3 million decrease in stock-based compensation for the three months ended March 31, 2026 compared to the same period 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 second quarter of 2026 to be higher than in the first quarter of 2026, driven primarily by increased selling and marketing activities associated with YARTEMLEA.

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 March 31, 2026, interest expense increased $2.2 million compared to the same period in 2025. The increase primarily relates to incurring a full quarter of interest on our 2029 Notes, which were not yet issued in the same period in the prior year, and to a lesser extent a non-cash remeasurement of our OMIDRIA royalty obligation. These increases are partiallyoffset by decreases in interest related to the remainder of our 2026 Notes, which were repaid in February 2026, and the Term Loan, which was repaid in November 2025.

For further information see “Note 6 — Debt” 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.

We expect interest expense for the second quarter of 2026 to be higher than in the first quarter of 2026, assuming no remeasurement adjustment to the OMIDRIA contract royalty obligation.

Interest and Other Income

(In thousands)

Interest and other income increased $0.4 million for the three months ended March 31, 2026 as compared to the same period in 2025 primarily due to the receipt of $0.7 million of additional investment income as a result of holding higher average cash and investment balances than in the prior year period, partiallyoffset by decreased sublease income of $0.3 million for laboratory space.

We expect interest and other income for the second quarter of 2026 to be higher than in the first quarter of 2026.

Net Gain (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. As of March 31, 2026, the $73.1 million net gain on the embedded derivatives reflects marking to market the option of the holders of the 2029 Notes to convert their notes into shares of common stock, cash or a combination thereof. As of March 31, 2026, we no longer have the derivative on our Term Loan as it was repaid on November 25, 2025.

Swings in our stock price could significantly affect the valuation of the 2029 Note conversion derivative. In addition, a decrease in interest rates could increase the valuation of the derivative.

Income tax expense

(In thousands)

Income tax expense reflects income tax payments to state jurisdictions.

Discontinued operations and the OMIDRIA contract royalty asset

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

(In thousands)

Net income from discontinued operations increased $0.7 million for the three months ended March 31, 2026, primarily due to remeasurement of the OMIDRIA contract royalty asset in the prior year.

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

Financial Condition – Liquidity and Capital Resources

As of March 31, 2026, we had cash, cash equivalents, and short-term investments of $135.3 million. For the three months ended March 31, 2026, our cash used in operations was $14.5 million.

On February 17, 2026, we repaid at maturity the remaining $17.1 million outstanding aggregate principal amount of our 2026 Notes. Omeros expects that it will be able to fund more than 12 months of operations from the date the financial statements are issued, utilizing our current cash, cash equivalents, and short-term investments, along with funds we expect to receive from commercial sales of YARTEMLEA.

Should it be necessary or determined to be strategically advantageous, we also could pursue public and private offerings of our equity securities, debt transactions or restructurings, 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. In addition, we have an ATM facility agreement under which we have the capability to sell shares of our common stock, from time to time, in an ATM equity offering through which we may offer and sell shares of our common stock equaling an aggregate amount of up to $150.0 million.

Cash Flow Data

(In thousands)

19

Operating Activities. Net cash used in operating activities for the three months ended March 31, 2026 decreased $21.3 million as compared to the same period in 2025, driven primarily by a $89.5 million change in net income from a net loss in the prior year period, partiallyoffset by a $73.1 million non-cash remeasurement of our 2029 Notes embedded derivative. Other changes related to a $4.1 million reduction in accounts payable and accrued expenses.

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 three months ended March 31, 2026 decreased $9.8 million, reflecting the timing of purchase of investments from proceeds received on maturities and sales.

Financing Activities. Net cash used in financing activities for the three months ended March 31, 2026 increased $20.1 million compared to the same period in the prior year primarily due to the repayment of $17.1 million in aggregate principal amount of our 2026 Notes at maturity in February 2026 and the repurchase of $4.2 million of our common stock under our share repurchase program during the three months ended March 31, 2026.

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, 2025. 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, each by five years. In addition, we carry various finance lease obligations for laboratory and office equipment. As of March 31, 2026, the remaining aggregate non-cancelable rent payable under the initial term of the lease, excluding common area maintenance and related operating expenses, is $11.1 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

The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our estimates on historical experience, current conditions and other factors we believe to be reasonable under the circumstances; however, actual results could differ materially from those estimates. We consider an accounting policy to be critical if it requires significant judgment and has a material impact on our financial condition and results of operations.

Revenue Recognition

We recognize revenue from product sales when title of the product is transferred to our customers, which generally occurs upon delivery to wholesalers. At that point, our performance obligations are satisfied. Activities performed by wholesalers after delivery are not considered separate performance obligations.

We generally record revenue from product sales when the product is delivered to our wholesalers and title for the product is transferred, upon which we have satisfied our performance obligations. Fulfillment activities by the wholesalers are not considered to be a separate performance obligation. Product revenue is recorded net of variable consideration, including wholesaler distribution fees, chargebacks, returns and discounts. We estimate variable consideration using the expected value approach. This estimate is based on several factors, including: historical return rates, expiration date by product, estimated levels of inventory in the wholesale channel. Since there is often a timing lag between the product sale and the settlement of accruals relating to these programs, our net product revenue may incorporate revisions of accruals for several periods. We include such estimates in the transaction price only to the extent that it is probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Chargebacks represent discounts provided to eligible covered entities under government programs, including the 340B Drug Pricing Program and the Medicaid Drug Rebate Program. In addition, we are subject to pricing obligations under our Federal Supply Schedule agreement with the U.S. government (the “FSS Agreement”), which establishes maximum prices for sales to certain federal agencies and may give rise to additional discounts and rebates. Chargebacks are recorded as a reduction of gross product revenue at the time of sale. Reserves for chargebacks are generally recorded as reductions of accounts receivable, while reserves for Medicaid rebates and patient co-pay assistance, if applicable, are recorded as accrued liabilities.

We also maintain programs that may give rise to similar deductions, including patient co-pay assistance programs. For the three months ended March 31, 2026, chargebacks were primarily attributable to discounts under the 340B Drug Pricing Program, and no material reductions to gross product revenue were recorded for other programs. We will continue to evaluate utilization of these programs and recognize the related reductions to revenue in the period in which they occur.

For further details of our other Critical Accounting Policies, 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 and 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, 2025, which was filed with the SEC on March 31, 2026.

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

Cash, Cash Equivalents, and Short-Term Investments

Our exposure to market risk is primarily confined to our investment securities. 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. To achieve our objectives, we maintain a portfolio of investments in high-credit-quality securities. As of March 31, 2026, we had cash, cash equivalents and short-term investments of $135.3 million. In accordance with our investment policy, we invest funds in highly liquid, investment-grade securities. 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 material negative effect 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 significant potential loss due to changes in interest rates.

Convertible Notes, Term Debt, and Embedded Derivatives

As of March 31, 2026, we had fixed-rate borrowings from our 2029 Notes, and as of December 31, 2025, we had fixed-rate borrowings from our 2026 Notes and 2029 Notes. We record all our fixed-rate borrowings at carrying value and, therefore, do not experience any risk for changes in interest rates. However, we include an embedded derivative along with our debt in our reporting of our 2029 Notes. The derivative on our 2029 Notes is marked to fair value every reporting period. The fair value inputs to the 2029 Notes’ derivative valuation include stock price, unsecuritized discount rate, risk-free rate, volatility, and term. Swings in our stock price could significantly affect the valuation of the 2029 Note conversion derivative. In addition, a decrease in interest rates could increase the valuation of the derivative. As of March 31, 2026, a 20% decrease or increase in our stock price would result in an approximate $23.8 million change in the fair value of the 2029 Notes embedded derivative within the range of $60.2 million to $107.0 million.

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 March 31, 2026. 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 March 31, 2026, 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, 2025, as filed with the SEC on March 31, 2026. In assessing the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025, 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.

Our share repurchase program could affect the price of our common stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock.

In November 2025, our board of directors authorized a share repurchase program to repurchase, from time to time, up to $100.0 million of our common stock in the open market or through privately negotiated transactions. The share repurchase program does not have a fixed expiration date, may be suspended or discontinued at any time, and does not obligate us to acquire any amount of our common stock. The timing, manner, price, and amount of any repurchases may be determined by us at our discretion and will depend on a variety of factors, including business, economic and market conditions, prevailing stock prices, corporate and regulatory requirements, and other considerations. As of May 11, 2026, approximately $95.9 million remained available to repurchase our outstanding shares of common stock under the share repurchase program.

Repurchases pursuant to our share repurchase program could affect our stock price and increase its volatility. The existence of a share repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our common stock. There can be no assurance that any repurchases will enhance shareholder value because the market price of our common stock may decline below the levels at which we repurchased our common stock. Although our share repurchase program is intended to enhance long-term shareholder value, short-term stock price fluctuations could reduce the share repurchase program’s effectiveness.