x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Washington
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91-1663741
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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201 Elliott Avenue West
Seattle, Washington
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98119
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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x
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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•
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our plans for sales, marketing and distribution of Omidria
®
(phenylephrine and ketorolac injection) 1%/0.3% in the U.S. and for sales, marketing and distribution in the European Union and other international territories;
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•
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our revenues and our estimate regarding how long our existing cash, cash equivalents and short-term investments will be sufficient to fund our anticipated operating expenses, capital expenditures and interest and principal payments on our outstanding notes;
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•
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our ability to raise additional capital through the capital markets or through one or more corporate partnerships, equity offerings, debt financings, collaborations, licensing arrangements or asset sales;
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•
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our ability to forecast accurately wholesaler demand as well as our estimates of chargebacks and rebates, distribution fees and estimated product returns;
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•
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our ability to enter into acceptable arrangements with potential corporate partners, including with respect to Omidria;
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•
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our expectations regarding the clinical, therapeutic and competitive benefits of Omidria and our product candidates;
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•
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our anticipation that we will rely on contract manufacturers to manufacture Omidria for commercial sale and to manufacture our product candidates and our expectations regarding product supply;
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•
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our expectations about the commercial competition that Omidria and our product candidates may face;
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•
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our expectations regarding our exclusive license agreement related to OMS103 including, without limitation, manufacturing and commercialization of OMS103 and the commencement and subsequent continuation of product sales on which we will receive royalty revenue;
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•
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our expectation that the OMIDRIAssure
™
Reimbursement Services Program will increase patient access to Omidria;
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•
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our plans for directly hiring sales representatives currently contracted through Ventiv Commercial Services, LLC and our expectations regarding resultant cost impacts;
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•
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the extent of protection that our patents provide and that our pending patent applications will provide, if patents issue from such applications, for our technologies, programs, products and product candidates;
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•
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our ability to design and successfully complete clinical trials and other studies for our products and product candidates, including our Phase 2 clinical trials for OMS721 and OMS824;
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•
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the expected course and costs of existing claims, legal proceedings and administrative actions, our involvement in potential claims, legal proceedings and administrative actions, and the potential outcomes and effects of both existing and potential claims, legal proceedings and administrative actions, as well as regulatory determinations, on our business, prospects, financial condition and results of operations; and
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•
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our expected financial position, performance, revenues, growth, expenses, magnitude of net losses and availability of resources.
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Page
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Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2015
and 2014 (unaudited)
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September 30,
2015 |
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December 31,
2014 |
||||
Assets
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||||
Current assets:
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||||
Cash and cash equivalents
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$
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601
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$
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354
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Short-term investments
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34,398
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6,532
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Receivables
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2,510
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392
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Inventory
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445
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568
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Prepaid expense
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1,410
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1,191
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Other current assets
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99
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120
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Total current assets
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39,463
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9,157
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Property and equipment, net
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808
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782
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Restricted cash
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679
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679
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Other assets
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467
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472
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Total assets
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$
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41,417
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$
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11,090
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Liabilities and shareholders’ equity (deficit)
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Current liabilities:
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Accounts payable
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$
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4,575
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$
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4,915
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Accrued expenses
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8,121
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7,070
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Current portion of notes payable, net of discount
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9,577
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6,446
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Total current liabilities
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22,273
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18,431
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Notes payable, net of current portion and discount
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18,974
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26,263
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Deferred rent
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9,174
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9,050
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Commitments and contingencies (Note 7)
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Shareholders’ equity:
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||||
Preferred stock, par value $0.01 per share, 20,000,000 authorized; none issued and outstanding at September 30, 2015 and December 31, 2014
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—
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—
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Common stock, par value $0.01 per share, 150,000,000 authorized; 37,969,429 and 34,185,464 issued and outstanding at September 30, 2015 and December 31, 2014, respectively
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380
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342
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Additional paid-in capital
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373,932
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285,050
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Accumulated deficit
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(383,316
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)
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(328,046
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)
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Total shareholders’ equity (deficit)
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(9,004
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)
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(42,654
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)
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Total liabilities and shareholders’ equity
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$
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41,417
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$
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11,090
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2015
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2014
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2015
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2014
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||||||||
Revenues
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Product sales, net
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$
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3,244
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$
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—
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$
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6,607
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$
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—
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Grant revenue
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15
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214
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227
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359
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Total revenue
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3,259
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214
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6,834
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359
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Costs and expenses:
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Cost of product sales
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248
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—
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624
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—
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Research and development
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13,264
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11,772
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33,482
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36,196
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Selling, general and administrative
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9,048
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5,574
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25,926
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14,196
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Total costs and expenses
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22,560
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17,346
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60,032
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50,392
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Loss from operations
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(19,301
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)
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(17,132
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)
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(53,198
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)
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(50,033
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)
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Interest expense
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(871
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)
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(944
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)
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(2,765
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)
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(2,555
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)
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Investment income and other income (expense), net
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251
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(251
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)
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693
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(372
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)
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Net loss
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$
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(19,921
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)
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$
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(18,327
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)
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$
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(55,270
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)
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$
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(52,960
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)
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Comprehensive loss
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$
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(19,921
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)
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$
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(18,327
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)
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$
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(55,270
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)
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$
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(52,960
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)
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Basic and diluted net loss per share
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$
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(0.53
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)
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$
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(0.54
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)
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$
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(1.48
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)
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$
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(1.61
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)
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Weighted-average shares used to compute basic and diluted net loss per share
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37,923,353
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34,005,642
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37,417,915
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32,945,346
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Nine Months Ended
September 30, |
||||||
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2015
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|
2014
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||||
Operating activities:
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|
||||
Net loss
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$
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(55,270
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)
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$
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(52,960
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)
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Adjustments to reconcile net loss to net cash used in operating activities:
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|
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||||
Gain on sale of assets
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—
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(9
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)
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Depreciation and amortization
|
161
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|
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246
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|
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Stock-based compensation expense
|
7,273
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|
5,083
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Non-cash interest expense
|
659
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|
532
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Warrant modification expense
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—
|
|
|
863
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|
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Changes in operating assets and liabilities:
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|
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||||
Receivables
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(2,118
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)
|
|
(2
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)
|
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Prepaid expenses, inventory and other current and noncurrent assets
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(159
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)
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|
(842
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)
|
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Accounts payable, accrued expenses and other
|
721
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|
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3,949
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Deferred rent
|
124
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|
787
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|
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Net cash used in operating activities
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(48,609
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)
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(42,353
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)
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Investing activities:
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Purchases of property and equipment, net
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(187
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)
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(12
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)
|
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Purchases of investments
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(79,416
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)
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(58,847
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)
|
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Proceeds from the sale and maturities of investments
|
51,550
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|
|
50,534
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|
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Net cash used in investing activities
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(28,053
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)
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(8,325
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)
|
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Financing activities:
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|
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Proceeds from issuance of common stock and pre-funded warrants, net of offering costs
|
79,076
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|
|
37,754
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|
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Net proceeds from borrowings under notes payable
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—
|
|
|
12,699
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|
||
Principal payments on notes payable
|
(4,738
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)
|
|
(1,464
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)
|
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Proceeds upon exercise of stock options and warrants
|
2,571
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|
|
1,055
|
|
||
Net cash provided by financing activities
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76,909
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|
|
50,044
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|
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Net increase (decrease) in cash and cash equivalents
|
247
|
|
|
(634
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)
|
||
Cash and cash equivalents at beginning of period
|
354
|
|
|
1,384
|
|
||
Cash and cash equivalents at end of period
|
$
|
601
|
|
|
$
|
750
|
|
Supplemental cash flow information
|
|
|
|
||||
Cash paid for interest
|
$
|
2,141
|
|
|
$
|
1,931
|
|
Reduction of equipment cost basis due to assets purchased with grant funding
|
$
|
—
|
|
|
$
|
40
|
|
|
September 30,
|
||||
|
2015
|
|
2014
|
||
Outstanding options to purchase common stock
|
8,356,816
|
|
|
6,779,998
|
|
Warrants and pre-funded warrants to purchase common stock
|
1,149,249
|
|
|
604,327
|
|
Total
|
9,506,065
|
|
|
7,384,325
|
|
|
September 30, 2015
|
||||||||||||||
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Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money-market funds classified as non-current restricted cash
|
$
|
679
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
679
|
|
Money-market funds classified as short-term investments
|
34,398
|
|
|
—
|
|
|
—
|
|
|
34,398
|
|
||||
Total
|
$
|
35,077
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35,077
|
|
|
December 31, 2014
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money-market funds classified as non-current restricted cash
|
$
|
679
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
679
|
|
Money-market funds classified as short-term investments
|
6,532
|
|
|
—
|
|
|
—
|
|
|
6,532
|
|
||||
Total
|
$
|
7,211
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,211
|
|
|
September 30,
2015 |
|
December 31,
2014 |
||||
|
(In thousands)
|
||||||
Consulting and professional fees
|
$
|
2,533
|
|
|
$
|
1,952
|
|
Employee compensation
|
2,228
|
|
|
2,421
|
|
||
Contract research
|
1,700
|
|
|
1,280
|
|
||
Clinical trials
|
1,268
|
|
|
828
|
|
||
Other accruals
|
392
|
|
|
589
|
|
||
Total accrued liabilities
|
$
|
8,121
|
|
|
$
|
7,070
|
|
Outstanding At
September 30, 2015 |
|
Expiration Date
|
|
Exercise Price ($)
|
133,333
|
|
October 21, 2015
|
|
20.00
|
133,333
|
|
October 21, 2015
|
|
30.00
|
133,333
|
|
October 21, 2015
|
|
40.00
|
749,250
|
|
February 3, 2022
|
|
0.01
|
1,149,249
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Estimated weighted-average fair value
|
$
|
8.09
|
|
|
$
|
10.18
|
|
|
$
|
12.08
|
|
|
$
|
8.39
|
|
Weighted-average assumptions
|
|
|
|
|
|
|
|
||||||||
Expected volatility
|
74
|
%
|
|
70
|
%
|
|
70
|
%
|
|
82
|
%
|
||||
Expected term, in years
|
6.0
|
|
|
6.1
|
|
|
5.9
|
|
|
5.9
|
|
||||
Risk-free interest rate
|
1.68
|
%
|
|
1.95
|
%
|
|
1.63
|
%
|
|
1.90
|
%
|
||||
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(In thousands)
|
|
(In thousands)
|
||||||||||||
Research and development
|
$
|
1,231
|
|
|
$
|
879
|
|
|
$
|
3,784
|
|
|
$
|
2,791
|
|
Selling, general and administrative
|
1,145
|
|
|
786
|
|
|
3,489
|
|
|
2,292
|
|
||||
Total
|
$
|
2,376
|
|
|
$
|
1,665
|
|
|
$
|
7,273
|
|
|
$
|
5,083
|
|
|
Options
Outstanding
|
|
Weighted-
Average
Exercise
Price per
Share
|
|
Remaining
Contractual Life
(In years)
|
|
Aggregate
Intrinsic
Value
(In thousands)
|
|||||
Balance at December 31, 2014
|
8,364,469
|
|
|
$
|
7.52
|
|
|
|
|
|
||
Granted
|
265,725
|
|
|
19.26
|
|
|
|
|
|
|||
Exercised
|
(205,894
|
)
|
|
5.51
|
|
|
|
|
|
|||
Forfeited
|
(67,484
|
)
|
|
13.28
|
|
|
|
|
|
|||
Balance at September 30, 2015
|
8,356,816
|
|
|
$
|
7.90
|
|
|
6.38
|
|
$
|
29,156
|
|
Vested and expected to vest at September 30, 2015
|
8,116,603
|
|
|
$
|
7.78
|
|
|
6.31
|
|
$
|
29,035
|
|
Exercisable at September 30, 2015
|
5,989,625
|
|
|
$
|
6.38
|
|
|
5.48
|
|
$
|
27,928
|
|
•
|
MASP - OMS721
. OMS721, our lead MASP-2 antibody, is in a Phase 2 clinical program in patients with complement-mediated thrombotic microangiopathies, or TMAs. OMS721 has received Orphan Drug designation for the prevention (inhibition) of complement-mediated TMAs and Fast Track designation for the treatment of patients with atypical hemolytic uremic syndrome, or aHUS, a form of TMA. In August 2015, we announced positive data from the mid- and high-dose cohorts in the dose-ranging stage of our Phase 2 clinical trial for the treatment of TMAs with consistent and robust improvement in efficacy measures. As in the low-dose cohort, OMS721 was well tolerated by all patients in the mid- and high-dose cohorts throughout the treatment period. Chronic preclinical toxicity studies have been completed and demonstrated no safety concerns, allowing chronic dosing in clinical trials. Additional patients were enrolled in the high-dose cohort, and an additional patient in the high-dose cohort of the dose-ranging stage has completed dosing. This patient has a history of lymphoma for which he underwent hematopoietic stem cell transplant, or HSCT. His post-transplant course has been complicated by a number of life-threatening disorders, including platelet transfusion-requiring TMA. Despite transfusions, the patient’s TMA persisted and he was enrolled in our OMS721 Phase 2 trial. Following the four-week dosing period, platelet count quadrupled, resulting in a count of more than 100,000; haptoglobin level more than doubled and was normal; plasma lactate dehydrogenase level, a measure of damage within blood vessels, decreased by 35 percent but still above normal; and schistocyte (i.e., fragmented red blood cell) count remained at only one. Throughout dosing with OMS721 and since completing OMS721 treatment, the patient has not required platelet transfusions or plasmapheresis. The fixed-dose stage of the Phase 2 clinical trial is expected to continue in 2016. We are preparing to discuss Phase 3 trial design with FDA later this year or in the early part of 2016. In addition, investigator-requested compassionate use for OMS721 continues to be available to European patients with aHUS for whom it has been and will be requested. Based on the positive efficacy and safety data in TMAs, we are currently expanding clinical trials to evaluate OMS721 in IgA nephropathy and other complement-related renal disorders.
|
•
|
PDE10 - OMS824 for Huntington’s disease and Schizophrenia.
OMS824, our lead phosphodiesterase 10, or PDE10, inhibitor, is in a Phase 2 clinical program for the treatment of Huntington’s disease and a Phase 2 clinical program evaluating OMS824 for the treatment of schizophrenia. Clinical trials evaluating OMS824 in Huntington’s were previously suspended at the request of the FDA. Recently, based on review of our submission of requested data, the FDA notified us that we are permitted to resume clinical trials in our Huntington’s program, with dosing limitations. The dosing limitations are subject to removal pending submission and FDA review of additional information. We are moving forward with the Huntington’s program and will generate additional data for further discussion with the FDA. Given that there was no active schizophrenia trial at the time of program suspension, the FDA will address the OMS824 schizophrenia program when we have a related trial protocol ready for initiation. OMS824 has received Orphan Drug designation for the treatment of Huntington’s disease and Fast Track designation for the treatment of cognitive impairment in patients with Huntington’s disease.
|
•
|
PPARγ - OMS405
. In our peroxisome proliferator-activated receptor gamma, or PPARγ, program, Phase 2 clinical trials have been conducted by our collaborators to evaluate a PPARγ agonist, alone or in combination with other agents, for treatment of addiction to opioids and to nicotine. Data are expected to be available later this year or in the early part of 2016.
|
•
|
OMS201-Urology.
OMS201, our PharmacoSurgery product candidate for use during urological procedures, including uroendoscopic procedures, completed a Phase 1/Phase 2 clinical trial in 2010 and is not currently in active clinical trials.
|
•
|
PDE7.
In our PDE7 program, we are developing proprietary compounds to treat addiction and compulsive disorders as well as movement disorders.
|
•
|
Plasmin
. In our Plasmin program, we are advancing novel antifibrinolytic agents for the control of blood loss during surgery or resulting from trauma as well as for other hyperfibrinolytic states (e.g., liver disease).
|
•
|
MASP-3
. In our MASP-3 program, OMS906, we are developing MASP-3 inhibitors for the treatment of disorders related to the alternative pathway of the complement system and currently are optimizing potent and functionally active antibodies in preparation for scale-up of one or more clinical candidates.
|
•
|
GPCR
. In our orphan GPCR program, we are conducting
in vivo
preclinical efficacy studies and optimizing compounds for a number of targets including GPR17 linked to myelin formation, GPR101 linked to obesity, GPR151 linked to neuropathic pain, GPR161 linked to cancer and GPR174 and GPR183 linked to immune disorders.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(In thousands)
|
|
(In thousands)
|
||||||||||||
Product sales, net
|
$
|
3,244
|
|
|
$
|
—
|
|
|
$
|
6,607
|
|
|
$
|
—
|
|
Small Business Innovative Research Grants (SBIR)
|
15
|
|
|
214
|
|
|
227
|
|
|
359
|
|
||||
Total revenue
|
$
|
3,259
|
|
|
$
|
214
|
|
|
$
|
6,834
|
|
|
$
|
359
|
|
|
Chargebacks and Rebates
|
|
Distribution Fees and Product Return Allowances
|
|
Total
|
||||||
|
(In thousands)
|
||||||||||
Balance as of December 31, 2014
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Provision related to current period sales
|
103
|
|
|
285
|
|
|
388
|
|
|||
Payments/credits for current period sales
|
(39
|
)
|
|
(85
|
)
|
|
(124
|
)
|
|||
Balance as of September 30, 2015
|
$
|
64
|
|
|
$
|
200
|
|
|
$
|
264
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(In thousands)
|
|
(In thousands)
|
||||||||||||
Direct external expenses:
|
|
|
|
|
|
||||||||||
Clinical research and development:
|
|
|
|
|
|
|
|
||||||||
OMS721
|
$
|
5,576
|
|
|
$
|
1,778
|
|
|
$
|
9,971
|
|
|
$
|
6,421
|
|
Omidria
|
647
|
|
|
1,479
|
|
|
2,374
|
|
|
3,933
|
|
||||
OMS824
|
266
|
|
|
2,940
|
|
|
1,317
|
|
|
9,700
|
|
||||
Other clinical programs
|
11
|
|
|
41
|
|
|
29
|
|
|
56
|
|
||||
Total clinical research and development
|
6,500
|
|
|
6,238
|
|
|
13,691
|
|
|
20,110
|
|
||||
Preclinical research and development
|
281
|
|
|
413
|
|
|
1,110
|
|
|
1,403
|
|
||||
Total direct external expenses
|
6,781
|
|
|
6,651
|
|
|
14,801
|
|
|
21,513
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Internal, overhead and other expenses
|
5,252
|
|
|
4,242
|
|
|
14,897
|
|
|
11,892
|
|
||||
Stock-based compensation expense
|
1,231
|
|
|
879
|
|
|
3,784
|
|
|
2,791
|
|
||||
Total research and development expenses
|
$
|
13,264
|
|
|
$
|
11,772
|
|
|
$
|
33,482
|
|
|
$
|
36,196
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(In thousands)
|
|
(In thousands)
|
||||||||||||
Selling, general and administrative expenses, excluding stock-based compensation expense
|
$
|
7,903
|
|
|
$
|
4,788
|
|
|
$
|
22,437
|
|
|
$
|
11,904
|
|
Stock-based compensation expense
|
1,145
|
|
|
786
|
|
|
3,489
|
|
|
2,292
|
|
||||
Total selling, general and administrative expenses
|
$
|
9,048
|
|
|
$
|
5,574
|
|
|
$
|
25,926
|
|
|
$
|
14,196
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
(In thousands)
|
|
(In thousands)
|
||||||||||||
Investment income and other income (expense), net
|
$
|
251
|
|
|
$
|
(251
|
)
|
|
$
|
693
|
|
|
$
|
(372
|
)
|
|
Nine Months Ended
September 30, |
||||||
|
2015
|
|
2014
|
||||
|
(In thousands)
|
||||||
Selected cash flow data
|
|
|
|
||||
Cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(48,609
|
)
|
|
$
|
(42,353
|
)
|
Investing activities
|
(28,053
|
)
|
|
(8,325
|
)
|
||
Financing activities
|
76,909
|
|
|
50,044
|
|
|
Payments Due Within
|
||||||||||||||||||
|
1 Year
|
|
2-3 Years
|
|
4-5 Years
|
|
More than
5 Years |
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Operating leases
|
$
|
4,083
|
|
|
$
|
8,410
|
|
|
$
|
8,750
|
|
|
$
|
34,389
|
|
|
$
|
55,632
|
|
Capital leases (principal and interest)
|
54
|
|
|
103
|
|
|
13
|
|
|
—
|
|
|
170
|
|
|||||
Notes payable (principal and interest)
|
12,256
|
|
|
18,384
|
|
|
—
|
|
|
—
|
|
|
30,640
|
|
|||||
Goods & services
|
5,061
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,061
|
|
|||||
Total
|
$
|
21,454
|
|
|
$
|
26,897
|
|
|
$
|
8,763
|
|
|
$
|
34,389
|
|
|
$
|
91,503
|
|
•
|
a lack of acceptance by physicians, patients, third-party payers and other members of the medical community;
|
•
|
our limited experience in marketing, selling and distributing Omidria or any other product;
|
•
|
our limited experience managing third-party commercial manufacturing of Omidria or any other product;
|
•
|
our reliance on a sole manufacturer or limited number of manufacturers and our reliance on a limited number of suppliers of the product’s active pharmaceutical ingredients, excipients and packaging materials;
|
•
|
pricing, reimbursement and coverage policies of government and private payers such as Medicare, Medicaid, the Department of Veterans Affairs, or VA, group purchasing organizations, insurance companies, health maintenance organizations and other plan administrators;
|
•
|
the availability, relative price and efficacy of the product as compared to alternative treatment options or competing products;
|
•
|
an unknown safety risk of Omidria or any product candidate;
|
•
|
the failure to obtain regulatory approval;
|
•
|
the failure to enter into and maintain acceptable partnering arrangements for marketing and distribution of products, including for Omidria, outside of the U.S.;
|
•
|
an inability to recruit and retain adequate numbers of effective sales and marketing personnel;
|
•
|
changed or increased regulatory restrictions in the U.S., EU and other foreign territories; and
|
•
|
a lack of adequate financial or other resources to commercialize the product successfully.
|
•
|
the level of demand for Omidria;
|
•
|
the level and timing of commercial sales of Omidria;
|
•
|
the extent to which coverage and reimbursement for Omidria is available from government and private third-party payers such as Medicare, Medicaid, the VA, insurance companies, group purchasing organizations, health maintenance organizations and other plan administrators;
|
•
|
the amount of chargebacks, rebates and product returns for Omidria;
|
•
|
the ability of the OMIDRIAssure Reimbursement Services Program to increase meaningfully patient access to Omidria;
|
•
|
the continued availability of adequate reimbursement for Omidria once transitional pass-through reimbursement expires;
|
•
|
the timing, cost and level of investment in our sales and marketing efforts to support Omidria sales;
|
•
|
the ability and commitment of Fagron to manufacture and commercialize OMS103 successfully and the level of royalties, if any, paid to Omeros by Fagron;
|
•
|
the timing, cost and level of investment in our research and development activities involving Omidria and our product candidates; and
|
•
|
the timing and cost of conducting required post-approval studies for Omidria and expenditures we will or may incur to acquire or develop additional technologies, products and product candidates.
|
•
|
continue the commercialization of Omidria;
|
•
|
continue research and development in all of our programs;
|
•
|
make principal and interest payments under the Oxford/MidCap Loan Agreement;
|
•
|
initiate and conduct clinical trials for other programs and product candidates; and
|
•
|
commercialize and launch any product candidates for which we receive regulatory approval.
|
•
|
a covered benefit under its health plan;
|
•
|
safe, effective and medically necessary;
|
•
|
appropriate for the specific patient;
|
•
|
cost-effective; and
|
•
|
neither experimental nor investigational.
|
•
|
a lack of acceptance by physicians, patients, third-party payers and other members of the medical community, including based on any conclusion that may be reached regarding the efficacy or lack of efficacy of OMS103;
|
•
|
pricing, reimbursement and coverage policies of government and private payers such as Medicare, Medicaid, the VA, group purchasing organizations, insurance companies, health maintenance organizations and other plan administrators;
|
•
|
the availability, relative price and efficacy of OMS103 as compared to alternative treatment options or competing products;
|
•
|
an unknown safety risk of OMS103;
|
•
|
failure to comply with applicable regulatory requirements;
|
•
|
failure to comply with applicable cGMPs;
|
•
|
changed or increased regulatory restrictions in the U.S.; and
|
•
|
a lack of adequate financial or other resources by Fagron to commercialize the product successfully.
|
•
|
discussions with the FDA, the European Medicines Agency, or EMA, or other foreign authorities regarding the scope or design of our clinical trials;
|
•
|
delays or the inability to obtain required approvals from Institutional Review Boards, Ethics Committees or other responsible entities at clinical sites selected for participation in our clinical trials;
|
•
|
delays in enrolling patients into clinical trials;
|
•
|
lower than anticipated retention rates of patients in clinical trials;
|
•
|
the need to repeat or conduct additional clinical trials as a result of problems such as inconclusive or negative results, failure to replicate positive early clinical data in subsequent clinical trials, poorly executed testing, a failure of a clinical site to adhere to the clinical protocol or an unacceptable study design;
|
•
|
adverse findings in clinical or nonclinical studies related to the safety of our product candidates in humans;
|
•
|
an insufficient supply of product candidate materials or other materials necessary to conduct our clinical trials;
|
•
|
the need to qualify new suppliers of product candidate materials for FDA and foreign regulatory approval;
|
•
|
an unfavorable FDA inspection or review of a clinical trial site or records of any clinical investigation;
|
•
|
the occurrence of unacceptable drug-related side effects or adverse events experienced by participants in our clinical trials; or
|
•
|
the placement by a regulatory agency of a trial on a clinical hold.
|
•
|
failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;
|
•
|
inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;
|
•
|
the failure to remove a clinical hold in a timely manner (which we cannot predict with certainty) or at all;
|
•
|
unforeseen safety issues or any determination that a trial presents unacceptable health risks; or
|
•
|
lack of adequate funding to continue the clinical trial or development program, including the incurrence of unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies and increased expenses associated with the services of our CROs and other third parties.
|
•
|
the severity of the disease under investigation;
|
•
|
the design of the trial protocol;
|
•
|
the size of the patient population (e.g., for orphan diseases or for some pediatric indications);
|
•
|
the availability of competing therapies and clinical trials;
|
•
|
the regional differences in diagnosis and treatment;
|
•
|
the eligibility criteria of the study in question;
|
•
|
the perceived risks and benefits of the product or product candidate under study;
|
•
|
the efforts to facilitate timely enrollment in clinical trials;
|
•
|
the patient referral practices of physicians;
|
•
|
the ability to monitor patients adequately before and after treatment; and
|
•
|
the proximity and availability of clinical trial sites for prospective patients.
|
•
|
we might not have been the first to make the inventions covered by any of our pending U.S. patent applications filed or having priority dates prior to the U.S. having adopted a first-to-file standard on March 16, 2013, or any U.S. patents issued based on such patent applications;
|
•
|
we might not have been the first to file patent applications on inventions that are the subject of pending foreign patent applications or that are the subject of pending U.S. patent applications filed or having priority dates after March 16, 2013, or any patents issued based on such foreign or U.S. patent applications;
|
•
|
others may independently develop similar or alternative technologies or products or duplicate any of our technologies or products or product candidates;
|
•
|
we may not be able to generate sufficient data to support fully patent applications that protect the entire breadth of developments expected to result from our development programs, including the GPCR program;
|
•
|
it is possible that none of our pending patent applications will result in issued patents or, if issued, that these patents will be sufficient to protect our technology or provide us with a basis for commercially viable products or provide us with any competitive advantages;
|
•
|
if our pending applications issue as patents, they may be challenged by third parties as not infringed, invalid or unenforceable under U.S. or foreign laws;
|
•
|
if issued, the patents under which we hold rights may not be valid or enforceable; or
|
•
|
we may develop additional proprietary technologies or products or product candidates that are not patentable and which are unlikely to be adequately protected through trade secrets if, for example, a competitor were to develop independently duplicative, similar or alternative technologies or products.
|
•
|
operate larger research and development programs, possess commercial-scale manufacturing operations or have substantially greater financial resources than we do;
|
•
|
initiate or withstand substantial price competition more successfully than we can;
|
•
|
have greater success in recruiting skilled technical and scientific workers from the limited pool of available talent;
|
•
|
more effectively negotiate third-party licenses and strategic relationships; and
|
•
|
take advantage of acquisition or other opportunities more readily than we can.
|
•
|
restrictions on such products or manufacturing processes;
|
•
|
withdrawal of the products from the market;
|
•
|
voluntary or mandatory recalls;
|
•
|
fines;
|
•
|
suspension or withdrawal of regulatory approvals;
|
•
|
product seizures; or
|
•
|
injunctions or the imposition of civil or criminal penalties.
|
•
|
failure of Omidria, or any of our product candidates if approved, to achieve commercial success;
|
•
|
the pace of acceptance of Omidria by physicians, patients, third-party payers and other members of the medical community, or the timing and level of insurance coverage and reimbursement;
|
•
|
FDA or foreign regulatory actions related to Omidria or any of our product candidates, including our programs evaluating OMS824 for the treatment of Huntington’s disease and for the treatment of schizophrenia;
|
•
|
our ability to partner in the EU with respect to Omidria;
|
•
|
results from our clinical development programs, including the data from our ongoing clinical development programs evaluating Omidria, OMS721, OMS824, and PPARγ;
|
•
|
failure of Fagron to manufacture and commercialize OMS103 successfully or in accordance with the terms of the OMS103 Agreement;
|
•
|
announcements regarding the progress of our preclinical programs, including without limitation our GPCR program;
|
•
|
quarterly variations in our results of operations, including potential product returns and timing of revenue recognition, or in those of our competitors;
|
•
|
our ability to develop and market new and enhanced products on a timely basis;
|
•
|
announcements by us or our competitors of acquisitions, regulatory approvals, clinical milestones, new products, significant contracts, commercial relationships or capital commitments;
|
•
|
third-party coverage and reimbursement policies;
|
•
|
additions or departures of key personnel;
|
•
|
commencement of, our involvement in and resolution of litigation;
|
•
|
our ability to meet our repayment and other obligations under the Oxford/MidCap Loan Agreement;
|
•
|
the inability of our contract manufacturers to provide us with adequate commercial supplies of Omidria and our product candidates;
|
•
|
changes in governmental regulations or in the status of our regulatory approvals;
|
•
|
changes in earnings estimates or recommendations by securities analysts or failure of our financial performance to meet estimates or guidance provided to the public;
|
•
|
any major change in our board or management;
|
•
|
the extent to which we raise funds by issuing equity or debt securities;
|
•
|
general economic conditions and slow or negative growth of our markets; and
|
•
|
political instability, natural disasters, war and/or events of terrorism.
|
Exhibit
Number
|
Description
|
10.1††
|
First Amendment to Commercial Supply Agreement dated August 1, 2015 by and between Omeros Corporation and Hospira Worldwide, Inc.
|
10.2††
|
First Amendment to Pharmaceutical Manufacturing and Supply Agreement between Patheon Manufacturing Services (successor-in-interest to DSM Pharmaceuticals, Inc.) and Omeros Corporation dated July 7, 2015
|
10.3
|
Fourth Amendment to Lease dated September 8, 2015 between Omeros Corporation and BMR-201 Elliott Avenue LLC
|
12.1
|
Ratio of Earnings to Fixed Charges
|
31.1
|
Certification of Principal Executive Officer Pursuant to Rule 13-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
Certification of Principal Financial Officer Pursuant to Rule 13-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
††
|
Portions of this exhibit are redacted in accordance with a request for confidential treatment.
|
|
OMEROS CORPORATION
|
|
|
Dated: November 9, 2015
|
/s/ Gregory A. Demopulos
|
|
Gregory A. Demopulos, M.D.
|
|
President, Chief Executive Officer and Chairman of the Board of Directors
|
|
|
Dated: November 9, 2015
|
/s/ Michael A. Jacobsen
|
|
Michael A. Jacobsen
|
|
Vice President, Finance, Chief Accounting Officer and Treasurer
|
Stability Testing
|
Req.
|
Not Req.
|
N/A
|
Responsibility
|
Cost
|
Comment
|
|
Hospira
|
Client
|
||||||
Engineering batch stability
|
|
X
|
|
|
|
|
|
Registration batch stability (Optional)
|
X
|
|
|
X
|
|
[†]
|
[†]
|
Annual Marketed Product stability
|
X
|
|
|
X
|
|
[†]
|
[†]
|
Total Cost:
|
[†]
|
[†]
|
|||||
Payment:
|
Mutually agreed upon yearly schedule
|
|
|||||
Timing:
|
Per stability matrix
|
|
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
|||
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
|||
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
|||
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
[†]
|
|||
[†]
|
[†]
|
|||
[†]
|
[†]
|
▪
|
[†]
|
▪
|
Cost of two active ingredients (phenylephrine HCl, ketorolac tromethamine) are not included in quote and will be added as a pass through charge without mark-up
|
▪
|
API storage conditions –
[†]
|
▪
|
Finished product storage conditions –
[†]
|
▪
|
In-process and release testing to meet
[†]
standards
|
▪
|
[†]
.
|
▪
|
[†]
|
§
|
[†]
.
|
§
|
Drug product release testing to be performed by Hospira with issuance of a Certificate of Analysis to Omeros, with released product to have
[†]
.
|
§
|
A Quality Agreement must be executed prior to GMP batch production.
|
Dates
|
Square Feet of Rentable Area
|
Annual Base Rent per Square Foot of Rentable Area
|
Monthly Base Rent
|
Annual Base Rent
|
Fourth Amendment Execution Date - November 15, 2015
|
2,244
|
$63.65
|
$11,902.55
|
$142,830.60
|
November 16, 2015 - November 15, 2016
|
2,244
|
$65.56
|
$12,259.72
|
$147,116.64
|
November 16, 2016 - November 15, 2017
|
2,244
|
$67.53
|
$12,628.11
|
$151,537.32
|
November 16, 2017 - November 15, 2018
|
2,244
|
$69.56
|
$13,007.72
|
$156,092.64
|
November 16, 2018 - November 15, 2019
|
2,244
|
$71.64
|
$13,396.68
|
$160,760.16
|
November 16, 2019 - November 15, 2020
|
2,244
|
$73.79
|
$13,798.73
|
$165,584.76
|
November 16, 2020 - November 15, 2021
|
2,244
|
$76.01
|
$14,213.87
|
$170,566.44
|
November 16, 2021 - November 15, 2022
|
2,244
|
$78.29
|
$14,640.23
|
$175,682.76
|
November 16, 2022 - November 15, 2023
|
2,244
|
$80.63
|
$15,077.81
|
$180,933.72
|
November 16, 2023 - November 15, 2024
|
2,244
|
$83.05
|
$15,530.35
|
$186,364.20
|
November 16, 2024 - November 15, 2025
|
2,244
|
$85.55
|
$15,997.85
|
$191,974.20
|
November 16, 2025 - November 15, 2026
|
2,244
|
$88.11
|
$16,476.57
|
$197,718.84
|
November 16, 2026 - November 15, 2027
|
2,244
|
$90.76
|
$16,972.12
|
$203,665.44
|
|
|
|
|
|
EXHIBIT 12.1
|
|
|||||||||||||||||
|
|
|
|
||||||||||||||||||||
Omeros Corporation
|
|||||||||||||||||||||||
Computation of Deficiency in the Coverage of Fixed Charges by Earnings Before Fixed Charges
|
|||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
For the
|
|
|
||||||||||||||||||||
|
nine months
|
|
|
||||||||||||||||||||
|
ended
|
|
|
||||||||||||||||||||
|
September 30,
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||||||||||
Earnings before fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss from continuing operations before income taxes
|
$
|
(55,270
|
)
|
|
$
|
(73,673
|
)
|
|
$
|
(39,796
|
)
|
|
$
|
(38,444
|
)
|
|
$
|
(28,546
|
)
|
|
$
|
(29,251
|
)
|
Add fixed charges
|
5,327
|
|
|
6,824
|
|
|
5,621
|
|
|
2,305
|
|
|
2,144
|
|
|
2,104
|
|
||||||
Add amortization of capitalized interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Add distributed income of equity investees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Subtract capitalized interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Loss before fixed charges
|
$
|
(49,943
|
)
|
|
$
|
(66,849
|
)
|
|
$
|
(34,175
|
)
|
|
$
|
(36,139
|
)
|
|
$
|
(26,402
|
)
|
|
$
|
(27,147
|
)
|
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
$
|
2,104
|
|
|
$
|
2,710
|
|
|
$
|
1,865
|
|
|
$
|
1,355
|
|
|
$
|
1,532
|
|
|
$
|
1,328
|
|
Amortization of debt expense and loss from extinguishment of debt
|
658
|
|
|
759
|
|
|
502
|
|
|
374
|
|
|
352
|
|
|
503
|
|
||||||
Estimate of interest expense within rental expense
|
2,565
|
|
|
3,355
|
|
|
3,254
|
|
|
576
|
|
|
260
|
|
|
273
|
|
||||||
Preference security dividend requirements of consolidated subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total fixed charges
|
$
|
5,327
|
|
|
$
|
6,824
|
|
|
$
|
5,621
|
|
|
$
|
2,305
|
|
|
$
|
2,144
|
|
|
$
|
2,104
|
|
Deficiency of earnings available to cover fixed charges
|
(55,270
|
)
|
|
$
|
(73,673
|
)
|
|
$
|
(39,796
|
)
|
|
$
|
(38,444
|
)
|
|
$
|
(28,546
|
)
|
|
$
|
(29,251
|
)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Omeros Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Dated: November 9, 2015
|
|
|
|
/s/ Gregory A. Demopulos
|
|
Gregory A. Demopulos, M.D.
Principal Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Omeros Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Dated: November 9, 2015
|
|
|
|
/s/ Michael A. Jacobsen
|
|
Michael A. Jacobsen
|
|
Principal Financial and Accounting Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
Dated: November 9, 2015
|
|
|
|
/s/ Gregory A. Demopulos
|
|
Gregory A. Demopulos, M.D.
|
|
Principal Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
Dated: November 9, 2015
|
|
|
|
/s/ Michael A. Jacobsen
|
|
Michael A. Jacobsen
|
|
Principal Financial and Accounting Officer
|