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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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Washington
|
|
91-1663741
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
|
|
|
|
201 Elliott Avenue West
Seattle, Washington
|
|
98119
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
|
¨
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|
Accelerated filer
|
|
x
|
Non-accelerated filer
|
|
¨
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
|
¨
|
•
|
our ability to receive regulatory approval for our New Drug Application, or NDA, and our Marketing Authorization Application, or MAA, for the commercialization of OMS302 in the United States and in the European Union, respectively, in 2014;
|
•
|
our ability to successfully complete our Phase 2 clinical trial for OMS824 and our Phase 1 clinical trials for OMS721 and OMS824;
|
•
|
our ability to initiate an additional Phase 3b clinical trial for OMS302 in order to expand our proposed marketing label for use in patients who have a history of using alpha adrenergic antagonists, additional Phase 3 trials for OMS103 and an additional Phase 2 trial for OMS824;
|
•
|
our ability to initiate a Phase 2 clinical trial for OMS721;
|
•
|
our ability to initiate a clinical trial for our PDE7 and plasmin programs in 2014;
|
•
|
our ability to access the capital markets, including under our at-the-market equity facility with MLV & Co. LLC, or MLV;
|
•
|
our expectations regarding the clinical benefits of our potential products, which we refer to as products;
|
•
|
our expectation that 2014 is the earliest year in which any of our products will be commercially available or generate revenue;
|
•
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our anticipation that we will rely on contract manufacturers to develop and manufacture our products for commercial sale;
|
•
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our ability to enter into acceptable arrangements with potential corporate partners;
|
•
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the extent of protection that our patents provide and our pending patent applications may provide, if patents issue from such applications, to our technologies and programs;
|
•
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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 note payments;
|
•
|
our involvement in potential claims, legal proceedings and administrative actions, the expected course and costs of existing claims, legal proceedings and administrative actions, and the potential outcomes and effects of both existing and potential claims, legal proceedings and administrative actions on our business, prospects, financial condition and results of operations; and
|
•
|
our estimates regarding our future net losses, revenues, research and development expenses and selling, general and administrative expenses.
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Page
|
|
September 30,
2013 |
|
December 31,
2012 |
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,150
|
|
|
$
|
1,520
|
|
Short-term investments
|
7,848
|
|
|
20,830
|
|
||
Grant and other receivables
|
881
|
|
|
1,934
|
|
||
Prepaid expenses and other current assets
|
391
|
|
|
416
|
|
||
Total current assets
|
10,270
|
|
|
24,700
|
|
||
Property and equipment, net
|
952
|
|
|
1,037
|
|
||
Restricted cash
|
679
|
|
|
679
|
|
||
Other assets
|
113
|
|
|
159
|
|
||
Total assets
|
$
|
12,014
|
|
|
$
|
26,575
|
|
Liabilities and shareholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
3,361
|
|
|
$
|
2,632
|
|
Accrued expenses
|
4,520
|
|
|
4,757
|
|
||
Deferred revenue
|
—
|
|
|
970
|
|
||
Current portion of notes payable, net of discount
|
4,019
|
|
|
—
|
|
||
Total current liabilities
|
11,900
|
|
|
8,359
|
|
||
Notes payable, net of current portion and discount
|
16,376
|
|
|
20,103
|
|
||
Deferred rent
|
7,631
|
|
|
4,644
|
|
||
Commitments and contingencies (Note 8)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, par value $0.01 per share:
|
|
|
|
||||
Authorized shares—20,000,000 at September 30, 2013 (unaudited) and December 31, 2012;
|
|
|
|
||||
Issued and outstanding shares—none
|
—
|
|
|
—
|
|
||
Common stock, par value $0.01 per share:
|
|
|
|
||||
Authorized shares—150,000,000 at September 30, 2013 (unaudited) and December 31, 2012;
|
|
|
|
||||
Issued and outstanding shares—29,849,830 and 25,897,483 at September 30, 2013 (unaudited) and December 31, 2012, respectively
|
298
|
|
|
259
|
|
||
Additional paid-in capital
|
228,337
|
|
|
207,787
|
|
||
Accumulated deficit
|
(252,528
|
)
|
|
(214,577
|
)
|
||
Total shareholders’ deficit
|
(23,893
|
)
|
|
(6,531
|
)
|
||
Total liabilities and shareholders’ equity
|
$
|
12,014
|
|
|
$
|
26,575
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Revenue
|
$
|
196
|
|
|
$
|
1,417
|
|
|
$
|
1,431
|
|
|
$
|
4,439
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
9,420
|
|
|
7,764
|
|
|
26,111
|
|
|
22,568
|
|
||||
Selling, general and administrative
|
4,210
|
|
|
2,736
|
|
|
11,934
|
|
|
7,270
|
|
||||
Litigation settlement
|
—
|
|
|
3,953
|
|
|
—
|
|
|
3,953
|
|
||||
Total operating expenses
|
13,630
|
|
|
14,453
|
|
|
38,045
|
|
|
33,791
|
|
||||
Loss from operations
|
(13,434
|
)
|
|
(13,036
|
)
|
|
(36,614
|
)
|
|
(29,352
|
)
|
||||
Investment income
|
2
|
|
|
14
|
|
|
10
|
|
|
32
|
|
||||
Interest expense
|
(592
|
)
|
|
(413
|
)
|
|
(1,768
|
)
|
|
(1,360
|
)
|
||||
Other income (expense), net
|
154
|
|
|
159
|
|
|
421
|
|
|
(30
|
)
|
||||
Net loss
|
$
|
(13,870
|
)
|
|
$
|
(13,276
|
)
|
|
$
|
(37,951
|
)
|
|
$
|
(30,710
|
)
|
Comprehensive loss
|
$
|
(13,870
|
)
|
|
$
|
(13,276
|
)
|
|
$
|
(37,951
|
)
|
|
$
|
(30,710
|
)
|
Basic and diluted net loss per share
|
$
|
(0.46
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
(1.36
|
)
|
|
$
|
(1.30
|
)
|
Weighted-average shares used to compute basic and diluted net loss per share
|
29,844,507
|
|
|
25,834,730
|
|
|
27,984,133
|
|
|
23,578,724
|
|
|
Nine months ended September 30,
|
||||||
|
2013
|
|
2012
|
||||
Operating activities
|
|
|
|
||||
Net loss
|
$
|
(37,951
|
)
|
|
$
|
(30,710
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
222
|
|
|
232
|
|
||
Stock-based compensation expense
|
4,364
|
|
|
2,276
|
|
||
Non-cash interest expense
|
371
|
|
|
290
|
|
||
Warrant modification expense
|
41
|
|
|
511
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Grant and other receivables
|
1,053
|
|
|
408
|
|
||
Prepaid expenses and other current and noncurrent assets
|
31
|
|
|
(242
|
)
|
||
Accounts payable and accrued expenses
|
453
|
|
|
1,702
|
|
||
Accrued settlement costs
|
—
|
|
|
3,953
|
|
||
Deferred revenue
|
(970
|
)
|
|
(3,278
|
)
|
||
Other liabilities
|
2,987
|
|
|
3,091
|
|
||
Net cash used in operating activities
|
(29,399
|
)
|
|
(21,767
|
)
|
||
Investing activities
|
|
|
|
||||
Purchases of property and equipment
|
(137
|
)
|
|
(235
|
)
|
||
Purchases of investments
|
(22,963
|
)
|
|
(38,819
|
)
|
||
Proceeds from the sale of investments
|
35,945
|
|
|
29,815
|
|
||
Net cash provided by (used in) investing activities
|
12,845
|
|
|
(9,239
|
)
|
||
Financing activities
|
|
|
|
||||
Proceeds from issuance of common stock
|
16,120
|
|
|
32,306
|
|
||
Payments on notes payable
|
—
|
|
|
(4,596
|
)
|
||
Proceeds from issuance of common stock upon exercise of stock options
|
64
|
|
|
351
|
|
||
Net cash provided by financing activities
|
16,184
|
|
|
28,061
|
|
||
Net (decrease) in cash and cash equivalents
|
(370
|
)
|
|
(2,945
|
)
|
||
Cash and cash equivalents at beginning of period
|
1,520
|
|
|
4,005
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,150
|
|
|
$
|
1,060
|
|
Supplemental cash flow information
|
|
|
|
||||
Cash paid for interest
|
$
|
1,243
|
|
|
$
|
1,103
|
|
Reduction of equipment cost basis due to assets purchased with grant funding
|
$
|
—
|
|
|
$
|
59
|
|
|
September 30,
|
||||
|
2013
|
|
2012
|
||
Outstanding options to purchase common stock
|
6,909,332
|
|
|
4,120,225
|
|
Warrants to purchase common stock
|
609,016
|
|
|
609,016
|
|
Total
|
7,518,348
|
|
|
4,729,241
|
|
|
September 30, 2013
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money-market funds classified as cash equivalents
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
Money-market funds classified as current restricted cash
|
193
|
|
|
—
|
|
|
—
|
|
|
193
|
|
||||
Money-market funds classified as non-current restricted cash
|
679
|
|
|
—
|
|
|
—
|
|
|
679
|
|
||||
Money-market funds classified as short-term investments
|
7,848
|
|
|
—
|
|
|
—
|
|
|
7,848
|
|
||||
Total
|
$
|
8,739
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,739
|
|
|
December 31, 2012
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(In thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money-market funds classified as cash equivalents
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21
|
|
Money-market funds classified as current restricted cash
|
193
|
|
|
—
|
|
|
—
|
|
|
193
|
|
||||
Money-market funds classified as non-current restricted cash
|
679
|
|
|
—
|
|
|
—
|
|
|
679
|
|
||||
Money-market funds classified as short-term investments
|
20,830
|
|
|
—
|
|
|
—
|
|
|
20,830
|
|
||||
Total
|
$
|
21,723
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,723
|
|
|
September 30,
2013 |
|
December 31,
2012 |
||||
|
(In thousands)
|
||||||
National Institute of Health reimbursement (see Note 8)
|
$
|
1,064
|
|
|
$
|
—
|
|
Legal
|
740
|
|
|
323
|
|
||
Clinical trials
|
697
|
|
|
1,842
|
|
||
Contract research
|
594
|
|
|
1,447
|
|
||
Employee compensation
|
588
|
|
|
458
|
|
||
Consulting & professional fees
|
467
|
|
|
252
|
|
||
Other accruals
|
370
|
|
|
435
|
|
||
Total
|
$
|
4,520
|
|
|
$
|
4,757
|
|
•
|
five percent
of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year;
|
•
|
1,785,714
shares; or
|
•
|
such other amount as our board of directors may determine.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Estimated weighted-average fair value
|
$
|
6.77
|
|
|
$
|
6.63
|
|
|
$
|
6.73
|
|
|
$
|
3.32
|
|
Weighted-average assumptions
|
|
|
|
|
|
|
|
||||||||
Expected volatility
|
88
|
%
|
|
84
|
%
|
|
87
|
%
|
|
89
|
%
|
||||
Expected term, in years
|
5.8
|
|
|
6.0
|
|
|
5.8
|
|
|
5.7
|
|
||||
Risk-free interest rate
|
1.66
|
%
|
|
0.83
|
%
|
|
1.65
|
%
|
|
1.05
|
%
|
||||
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(In thousands)
|
|
(In thousands)
|
||||||||||||
Research and development
|
$
|
1,371
|
|
|
$
|
282
|
|
|
$
|
2,518
|
|
|
$
|
1,135
|
|
Selling, general and administrative
|
840
|
|
|
294
|
|
|
1,846
|
|
|
1,141
|
|
||||
Total
|
$
|
2,211
|
|
|
$
|
576
|
|
|
$
|
4,364
|
|
|
$
|
2,276
|
|
|
Options
Outstanding
|
|
Weighted-
Average
Exercise
Price per
Share
|
|
Remaining
Contractual Life
(in years)
|
|
Aggregate
Intrinsic
Value
(In thousands)
|
|||||
Balance at December 31, 2012
|
5,390,582
|
|
|
$
|
5.18
|
|
|
|
|
|
||
Granted
|
1,734,301
|
|
|
9.31
|
|
|
|
|
|
|||
Exercised
|
(49,343
|
)
|
|
1.29
|
|
|
|
|
|
|||
Forfeited
|
(166,208
|
)
|
|
7.42
|
|
|
|
|
|
|||
Balance at September 30, 2013
|
6,909,332
|
|
|
$
|
6.19
|
|
|
7.34
|
|
$
|
25,351
|
|
Vested and expected to vest at September 30, 2013
|
6,605,953
|
|
|
$
|
6.08
|
|
|
7.25
|
|
$
|
24,973
|
|
Exercisable at September 30, 2013
|
3,873,323
|
|
|
$
|
4.26
|
|
|
5.82
|
|
$
|
21,525
|
|
•
|
employee and consultant-related expenses, which include salaries and benefits, and non-cash stock-compensation;
|
•
|
external research and development expenses incurred pursuant to agreements with third-party manufacturing organizations, clinical research organizations, or CROs, clinical trial sites, and collaborators or licensors;
|
•
|
facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities and depreciation of leasehold improvements and equipment; and
|
•
|
third-party supplier expenses including laboratory and other supplies.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(In thousands)
|
|
(In thousands)
|
||||||||||||
Revenue
|
$
|
196
|
|
|
$
|
1,417
|
|
|
$
|
1,431
|
|
|
$
|
4,439
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(In thousands)
|
|
(In thousands)
|
||||||||||||
Direct external expenses:
|
|
|
|
|
|
||||||||||
Clinical research and development:
|
|
|
|
|
|
|
|
||||||||
OMS302
|
$
|
1,099
|
|
|
$
|
2,921
|
|
|
$
|
3,414
|
|
|
$
|
6,739
|
|
OMS721
|
898
|
|
|
—
|
|
|
898
|
|
|
—
|
|
||||
OMS103
|
5
|
|
|
575
|
|
|
373
|
|
|
2,480
|
|
||||
OMS824
|
2,104
|
|
|
249
|
|
|
4,423
|
|
|
266
|
|
||||
Other clinical programs
|
9
|
|
|
8
|
|
|
27
|
|
|
61
|
|
||||
Total clinical research and development
|
4,115
|
|
|
3,753
|
|
|
9,135
|
|
|
9,546
|
|
||||
Preclinical research and development
|
470
|
|
|
885
|
|
|
4,081
|
|
|
4,003
|
|
||||
Total direct external expenses
|
4,585
|
|
|
4,638
|
|
|
13,216
|
|
|
13,549
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Internal, overhead and other expenses
|
3,464
|
|
|
2,844
|
|
|
10,377
|
|
|
7,884
|
|
||||
Stock-based compensation expense
|
1,371
|
|
|
282
|
|
|
2,518
|
|
|
1,135
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total research and development expenses
|
$
|
9,420
|
|
|
$
|
7,764
|
|
|
$
|
26,111
|
|
|
$
|
22,568
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(In thousands)
|
|
(In thousands)
|
||||||||||||
Selling, general and administrative, excluding stock-based compensation expense
|
$
|
3,370
|
|
|
$
|
2,442
|
|
|
$
|
10,088
|
|
|
$
|
6,129
|
|
Stock-based compensation expense
|
840
|
|
|
294
|
|
|
1,846
|
|
|
1,141
|
|
||||
Total selling, general and administrative expenses
|
$
|
4,210
|
|
|
$
|
2,736
|
|
|
$
|
11,934
|
|
|
$
|
7,270
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(In thousands)
|
|
(In thousands)
|
||||||||||||
Interest expense
|
$
|
592
|
|
|
$
|
413
|
|
|
$
|
1,768
|
|
|
$
|
1,360
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(In thousands)
|
|
(In thousands)
|
||||||||||||
Other income (expense), net
|
$
|
154
|
|
|
$
|
159
|
|
|
$
|
421
|
|
|
$
|
(30
|
)
|
|
Nine months ended September 30,
|
||||||
|
2013
|
|
2012
|
||||
|
(In thousands)
|
||||||
Selected cash flow data
|
|
|
|
||||
Cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(29,399
|
)
|
|
$
|
(21,767
|
)
|
Investing activities
|
12,845
|
|
|
(9,239
|
)
|
||
Financing activities
|
16,184
|
|
|
28,061
|
|
•
|
the progress and results of our preclinical and clinical programs;
|
•
|
costs related to manufacturing services;
|
•
|
whether the hiring of a number of new employees to support our continued growth will occur at salary levels consistent with our estimates;
|
•
|
the terms and timing of payments of any collaborative or licensing agreements that we have or may establish;
|
•
|
the cost, timing and outcomes of the regulatory processes for our products;
|
•
|
the costs of commercialization activities, including product manufacturing, marketing, sales and distribution;
|
•
|
the commercial success of OMS302, if and when OMS302 is approved for sale in the U.S. and/or the European Union;
|
•
|
the cost of preparing, filing, prosecuting, defending and enforcing patent claims and other intellectual property rights;
|
•
|
the extent to which we acquire or invest in businesses, products or technologies, although we currently have no commitments or agreements relating to these types of transactions;
|
•
|
whether we receive grant funding for our programs;
|
•
|
the extent to which we raise capital by selling our stock through our at-the-market equity facility with MLV, under which MLV is required to use its commercially reasonable efforts to sell up to
$44.4 million
of our stock in accordance with our instructions;
|
•
|
the extent to which we otherwise access the capital markets; and
|
•
|
the outcomes of our existing administrative proceedings.
|
•
|
our ability to provide acceptable evidence of safety and efficacy;
|
•
|
the availability, relative cost and relative efficacy of alternative and competing treatments;
|
•
|
the effectiveness of our marketing and distribution strategy to, among others, hospitals, surgery centers, physicians and/or pharmacists;
|
•
|
prevalence of the condition for which the product is approved or frequency of the related surgical procedure;
|
•
|
acceptance by physicians of each product as a safe and effective treatment;
|
•
|
perceived advantages over alternative treatments;
|
•
|
relative convenience and ease of administration;
|
•
|
the availability of adequate reimbursement by Medicare and other third parties;
|
•
|
the frequency and severity of adverse side effects; and
|
•
|
publicity concerning our products or competing products and treatments.
|
•
|
a covered benefit under its health plan;
|
•
|
safe, effective and medically necessary;
|
•
|
appropriate for the specific patient;
|
•
|
cost-effective; and
|
•
|
neither experimental nor investigational.
|
•
|
our inability to recruit in a timely manner, and retain, adequate numbers of effective sales and marketing personnel, or to partner or contract with a third party to provide sales and marketing services, in the applicable region of the world, particularly before our planned market launch of OMS302, if approved, in the second half of 2014;
|
•
|
the inability of sales personnel to sell our product(s) to adequate numbers of hospitals, surgery centers, physicians and/or pharmacists;
|
•
|
our inability to develop and maintain adequate internal information systems to monitor sales by distribution channel, report pricing, maintain customer lists and track selling and marketing operations;
|
•
|
the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and
|
•
|
unforeseen costs and expenses associated with creating an independent sales and marketing organization.
|
•
|
prepare for the potential commercialization of OMS302;
|
•
|
continue the Phase 3 clinical program of OMS103 for use in arthroscopic partial meniscectomy surgery;
|
•
|
continue the clinical development of OMS824 and OMS721;
|
•
|
continue our development efforts in our GPCR program to advance this program for potential partnering or for internal development of products targeting GPCRs;
|
•
|
scale-up and produce clinical and commercial supplies of products, and conduct clinical studies for our products, including for OMS302, OMS103, OMS824, OMS721, and products being developed in our PDE7 and Plasmin programs;
|
•
|
continue research and development in all of our programs;
|
•
|
make principal and interest payments when due under our debt facility with Oxford;
|
•
|
initiate and conduct clinical trials for other products;
|
•
|
make milestone payments to our collaborators; and
|
•
|
launch and commercialize any products for which we receive regulatory approval.
|
•
|
discussions with the FDA or comparable 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, poorly executed testing, a failure of a clinical site to adhere to the clinical protocol or an unacceptable study design;
|
•
|
an insufficient supply of product materials or other materials necessary to conduct our clinical trials;
|
•
|
the need to qualify new suppliers of product 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 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;
|
•
|
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 contract research organizations, CROs, and other third parties.
|
•
|
we might not have been the first to make the inventions covered by any of our patents, if issued, or our pending patent applications;
|
•
|
we might not have been the first to file patent applications for these inventions;
|
•
|
others may independently develop similar or alternative technologies or products or duplicate any of our technologies or products;
|
•
|
we may not be able to generate sufficient data to fully support 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 that are not patentable and which are unlikely to be adequately protected through trade secrets if, for example, a competitor were to independently develop duplicative, similar or alternative technologies or products.
|
•
|
develop and market products that are less expensive or more effective than any future products that we may develop;
|
•
|
commercialize competing products before we can launch any products that we may develop;
|
•
|
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 of regulatory approvals;
|
•
|
product seizures; or
|
•
|
injunctions or the imposition of civil or criminal penalties.
|
•
|
FDA or EMA actions related to our NDA and MAA submissions for OMS302;
|
•
|
results from our clinical development programs, including the data from our ongoing clinical development programs evaluating OMS302, OMS103, OMS824 and OMS721;
|
•
|
FDA or foreign regulatory actions related to any of our other products;
|
•
|
announcements regarding the progress of our preclinical programs and our GPCR program;
|
•
|
failure of any of our products, if approved, to achieve commercial success;
|
•
|
quarterly variations in our results of operations or 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, or our involvement in, litigation;
|
•
|
our ability to meet our repayment and other obligations under our loan facility with Oxford, pursuant to which our outstanding principal balance was $20.0 million as of
September 30, 2013
;
|
•
|
the inability of our contract manufacturers to provide us with adequate commercial supplies of our products;
|
•
|
changes in governmental regulations or in the status of our regulatory approvals;
|
•
|
changes in earnings estimates or recommendations by securities analysts;
|
•
|
any major change in our board or management;
|
•
|
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
|
Seventh Amendment to Loan and Security Agreement dated May 7, 2013 between Omeros Corporation, Oxford Finance LLC, Oxford Finance Funding Trust 2012-01 and Oxford Finance Funding I, LLC
|
10.2
|
Form of Stock Option Award Agreement under the 2008 Equity Incentive Plan
|
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
|
**
|
XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under those sections.
|
|
OMEROS CORPORATION
|
|
|
Dated: November 7, 2013
|
/s/ Gregory A. Demopulos
|
|
Gregory A. Demopulos, M.D.
|
|
President, Chief Executive Officer
and Chairman of the Board of Directors
|
|
|
Dated: November 7, 2013
|
/s/ Michael A. Jacobsen
|
|
Michael A. Jacobsen
|
|
Vice President, Finance, Chief Accounting Officer and Treasurer
|
LENDER:
OXFORD FINANCE LLC
By:
/s/ Mark Davis
Name:Mark Davis
Title:Vice President - Finance, Secretary and Treasurer
LENDER:
OXFORD FINANCE FUNDING TRUST 2012-01
BY: Oxford Finance LLC, as servicer
By:
/s/ Mark Davis
Name:Mark Davis
Title:Vice President - Finance, Secretary and Treasurer
LENDER:
OXFORD FINANCE FUNDING I, LLC
BY: Oxford Finance LLC, as servicer
By:
/s/ Mark Davis
Name:Mark Davis
Title:Vice President - Finance, Secretary and Treasurer
|
BORROWER:
OMEROS CORPORATION
By:
/s/ Gregory A . Demopulos
Name:Gregory A. Demopulos, M.D.
Title:Chairman and CEO
|
|
|
EXHIBIT 12.1
|
|
|||||||||||||||
|
|
|
||||||||||||||||
Omeros Corporation
|
||||||||||||||||||
Computation of Deficiency in the Coverage of Fixed Charges by Earnings Before Fixed Charges
|
||||||||||||||||||
|
|
|
||||||||||||||||
|
|
|
||||||||||||||||
|
For the
|
|
||||||||||||||||
|
ninemonths
|
|
||||||||||||||||
|
ended
|
|
||||||||||||||||
|
September 30,
|
Year Ended December 31,
|
||||||||||||||||
|
2013
|
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||
|
(in thousands, except share data)
|
|||||||||||||||||
Earnings before fixed charges:
|
|
|
|
|
|
|||||||||||||
Loss from continuing operations before income taxes
|
$
|
(37,951
|
)
|
$
|
(38,444
|
)
|
$
|
(28,546
|
)
|
$
|
(29,251
|
)
|
$
|
(21,089
|
)
|
$
|
(23,827
|
)
|
Add fixed charges
|
4,132
|
|
2,305
|
|
2,144
|
|
2,104
|
|
2,596
|
|
834
|
|
||||||
Add amortization of capitalized interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Add distributed income of equity investees
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Subtract capitalized interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Loss before fixed charges
|
$
|
(33,819
|
)
|
$
|
(36,139
|
)
|
$
|
(26,402
|
)
|
$
|
(27,147
|
)
|
$
|
(18,493
|
)
|
$
|
(22,993
|
)
|
Fixed Charges:
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
$
|
1,365
|
|
$
|
1,355
|
|
$
|
1,532
|
|
$
|
1,328
|
|
$
|
1,948
|
|
$
|
280
|
|
Amortization of debt expense and loss from extinguishment of debt
|
371
|
|
374
|
|
352
|
|
503
|
|
254
|
|
55
|
|
||||||
Estimate of interest expense within rental expense
|
2,396
|
|
576
|
|
260
|
|
273
|
|
394
|
|
499
|
|
||||||
Preference security dividend requirements of consolidated subsidiaries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Total fixed charges
|
$
|
4,132
|
|
$
|
2,305
|
|
$
|
2,144
|
|
$
|
2,104
|
|
$
|
2,596
|
|
$
|
834
|
|
Deficiency of earnings available to cover fixed charges
|
$
|
(37,951
|
)
|
$
|
(38,444
|
)
|
$
|
(28,546
|
)
|
$
|
(29,251
|
)
|
$
|
(21,089
|
)
|
$
|
(23,827
|
)
|
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 7, 2013
|
|
|
|
/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):
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a.
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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
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b.
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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.
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Dated: November 7, 2013
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/s/ Michael A. Jacobsen
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Michael A. Jacobsen
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Principal Financial and Accounting Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated: November 7, 2013
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/s/ Gregory A. Demopulos
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Gregory A. Demopulos, M.D.
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Principal Executive Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated: November 7, 2013
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/s/ Michael A. Jacobsen
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Michael A. Jacobsen
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Principal Financial and Accounting Officer
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