Executive Summary / Key Takeaways

• Omeros Corporation stands at a critical juncture, with the FDA's September 25, 2025 PDUFA date for narsoplimab in TA-TMA representing a potential near-term catalyst for its lead asset, supported by robust clinical data showing a significant survival benefit.
• Beyond narsoplimab, Omeros possesses a pipeline of differentiated therapeutic candidates, including zaltenibart targeting the alternative complement pathway and novel preclinical oncology and infectious disease platforms, offering potential long-term value.
• Despite recent debt restructuring efforts, including exchanging convertible notes and arranging for equitization, the company faces significant liquidity challenges and has raised substantial doubt about its ability to continue as a going concern without securing additional capital.
• Management has strategically paused or scaled back certain development programs to conserve capital, prioritizing the narsoplimab launch preparation and ongoing clinical trials with enrolled patients, while actively pursuing partnerships and other financing options.
• The investment thesis hinges on the successful regulatory approval and commercialization of narsoplimab, the ability to secure necessary funding to bridge to potential revenues and advance the promising pipeline, and the competitive positioning of its differentiated technologies in targeted rare and large markets.

Setting the Scene: A Biotech's Pivot Towards Complement and Beyond

Omeros Corporation is a clinical-stage biopharmaceutical company strategically focused on discovering, developing, and commercializing novel small-molecule and protein therapeutics. Its pipeline targets a range of indications, including immunologic diseases, complement-mediated disorders, cancers, and addictive/compulsive disorders. The company operates within the competitive biotechnology landscape, vying for position against both large pharmaceutical players and smaller, specialized biotechs.

A pivotal moment in Omeros' history was the sale of its commercial ophthalmology product, OMIDRIA, in late 2021. This divestiture marked a strategic shift, allowing Omeros to transition from a commercial entity with a single marketed product to a pipeline-focused company leveraging the value generated by OMIDRIA through royalty monetization to fund its ambitious development programs. This history provides essential context for understanding the company's current financial structure and its reliance on pipeline success and external funding.

The competitive environment in Omeros' target areas is intense. In complement-mediated diseases, it faces established giants like AstraZeneca , which acquired Alexion and markets C5 inhibitors like Ultomiris, as well as innovative players like BioCryst Pharmaceuticals (BCRX) with oral inhibitors and Novartis and Regeneron Pharmaceuticals with broad immunology portfolios. In oncology, the landscape is crowded with diverse approaches from large pharma (e.g., AbbVie (ABBV), Roche (RHHBY), Bristol Myers Squibb (BMY)) and numerous biotech firms developing targeted therapies, immunotherapies, and cellular therapies. Omeros' strategy is to carve out value by targeting specific pathways and mechanisms with potentially differentiated technologies.

Technological Edge: Targeting Complement and Cancer with Novel Approaches

Omeros' pipeline is built upon several distinct technological platforms, with a core focus on the complement system. The company is developing inhibitors targeting two key enzymes: MASP-2 and MASP-3.

Narsoplimab (OMS721) is a human monoclonal antibody targeting MASP-2, the effector enzyme of the lectin pathway of complement. This pathway is implicated in various inflammatory and thrombotic disorders. A key differentiator of MASP-2 inhibition is its ability to block the lectin pathway while leaving the antibody-dependent classical pathway, crucial for fighting infections, largely intact. The pivotal clinical trial data for narsoplimab in hematopoietic stem cell transplant-associated thrombotic microangiopathy (TA-TMA) demonstrated a statistically significant and clinically meaningful survival benefit, showing a hazard ratio of 0.32 with a p-value of less than 0.00001 compared to a well-matched historical control group. Sensitivity analyses and data from the Expanded Access Program (EAP) were consistent, and an E-value of 5.7 suggests the results are robust against unmeasured confounders. For refractory TA-TMA patients who had failed other treatments (including C5 inhibitors and defibrotide), narsoplimab treatment in the EAP resulted in over 50% one-year survival, significantly higher than the historically reported survival of less than 20% in this population. This demonstrated survival benefit and the potential to address a high unmet need in a life-threatening condition represent a significant technological advantage over currently used off-label therapies.

OMS1029 is a next-generation, long-acting antibody also targeting MASP-2. Phase 1 studies support once-quarterly dosing, administered intravenously or subcutaneously. This infrequent dosing schedule represents a potential convenience benefit over therapies requiring more frequent administration, particularly for chronic indications. While development activities for OMS1029 are currently paused to conserve capital, preclinical data in a murine model of wet AMD and ongoing evaluation in a primate model suggest potential application in large markets where systemic administration could offer an advantage over frequent intravitreal injections required by current standards of care like Regeneron's Eylea.

Zaltenibart (OMS906) is a monoclonal antibody targeting MASP-3, identified by Omeros as the key and most proximal activator of the alternative pathway of complement. Inhibiting MASP-3 is expected to offer a broad approach to alternative pathway-mediated diseases. Omeros believes zaltenibart's profile differentiates it from other alternative pathway inhibitors, including C3 and Factor B inhibitors, and C5 inhibitors. Potential advantages highlighted by the company and market research include a compelling efficacy and safety profile, low treatment burden with infrequent dosing (4-6 times per year), and infrequent intravenous administration that aligns with physician follow-up and may enhance compliance compared to daily oral therapies. Phase 2 data in PNH have shown strong efficacy, including hemoglobin increases and control of hemolysis, and the planned Phase 3 trials include head-to-head comparisons against C5 inhibitors (eculizumab and ravulizumab) to potentially demonstrate superiority. In C3G, zaltenibart has received Rare Pediatric Disease Designation, highlighting its potential in this ultra-rare kidney disease.

Beyond complement, Omeros is advancing preclinical programs with novel mechanisms. The OncotoX platform in oncology is developing targeted biologics designed to kill only dividing cancer cells. Preclinical studies in AML models have shown superior efficacy compared to current standard-of-care treatments and broad applicability across different genetic mutations, including those associated with poor prognosis (TP53, NPM1, KMT2a, FLT3). The estimated timeline to clinical entry is 18-24 months. This approach aims to overcome limitations of existing therapies like antibody-drug conjugates and immunotherapies by targeting intracellular antigens and potentially enhancing immune response without cellular engineering. The T-CAT platform in infectious disease targets multidrug-resistant pathogens using a novel complement-activating therapy.

These technological differentiators form the basis of Omeros' competitive moat. By targeting specific, validated pathways (complement) or pursuing novel mechanisms (OncotoX, T-CAT), Omeros aims to offer therapies with potentially improved efficacy, safety, dosing convenience, or broader applicability compared to existing or competitor products. While larger competitors like AstraZeneca and Novartis (NVS) benefit from scale and established market presence, Omeros seeks to leverage its scientific insights and differentiated molecules to capture significant market share in niche rare diseases and potentially disrupt larger markets. However, translating these technological advantages into commercial success requires significant capital and successful clinical/regulatory execution.

Financial Performance and the Liquidity Tightrope

Omeros' financial performance reflects its stage as a clinical-stage biopharmaceutical company with significant research and development expenditures and limited ongoing revenue from continuing operations. For the three months ended March 31, 2025, the company reported a net loss of $33.5 million, an improvement from the $37.2 million net loss in the same period of 2024. The loss from operations also decreased to $35.0 million in Q1 2025 from $39.0 million in Q1 2024.

This reduction in operating loss was primarily driven by decreased research and development expenses, which fell by $2.9 million to $23.8 million in Q1 2025. This decrease was attributed to the winding down of the IgA nephropathy program and reduced spending on the OMS1029 program, partially offset by increased costs in the PNH clinical development program. Selling, general, and administrative expenses also saw a decrease, falling by $1.1 million to $11.1 million in Q1 2025.

Interest expense decreased significantly by $4.6 million to $3.7 million in Q1 2025 compared to Q1 2024. This was mainly due to lower non-cash remeasurement adjustments on the OMIDRIA royalty obligation and reduced contractual interest expense on the 2026 Notes following repurchases. However, this was partially offset by increased pass-through interest payments to DRI resulting from the expanded royalty sale agreement in February 2024. Interest and other income decreased by $2.4 million to $1.1 million in Q1 2025, reflecting lower average cash and investment balances.

Income from discontinued operations, representing OMIDRIA royalties, contributed $4.1 million to the net result in Q1 2025, down from $6.7 million in Q1 2024, primarily due to lower underlying OMIDRIA net sales by Rayner.

The most critical aspect of Omeros' financial position is its liquidity. As of March 31, 2025, the company held $52.4 million in cash, cash equivalents, and short-term investments. With cash used in operations totaling $35.8 million for Q1 2025, the current cash balance is insufficient to fund operations for a full year at this burn rate. The company is also required to maintain a minimum of $25.0 million in unrestricted cash under its Credit Agreement. These factors, combined with the upcoming maturity of the remaining 2026 Notes in February 2026, have led the company to conclude that there is substantial doubt about its ability to continue as a going concern through one year from the financial statement issuance date.

Recognizing this challenge, Omeros has undertaken strategic financial maneuvers. In May 2025, the company completed an exchange of $70.8 million aggregate principal amount of its 2026 Notes for newly issued 2029 Notes, extending a significant portion of its debt maturity. Additionally, agreements were made to convert another $10.0 million of 2026 Notes into common stock by September 2025. These actions are expected to reduce the outstanding principal of the 2026 Notes to $17.1 million upon completion of the equitization, significantly lowering near-term repayment obligations and, importantly, eliminating a $20.0 million mandatory prepayment of the Term Loan that would have been required in November 2025.

While these steps provide some breathing room and improve the balance sheet structure, Omeros still requires substantial additional capital to fund its operations through the anticipated narsoplimab approval and launch and to advance its pipeline. The company has an ATM facility with up to $150.0 million available, from which it raised $3.5 million net proceeds subsequent to Q1 2025. It is also actively pursuing partnerships, additional debt, future royalty sales, or asset sales. However, the ability to access these funding sources is not guaranteed, and some may trigger mandatory prepayments under the existing Term Loan agreement.

Compared to larger competitors like AstraZeneca (AZN) or Regeneron (REGN), Omeros operates with significantly lower cash reserves and negative profitability and cash flow margins. While this is typical for a clinical-stage biotech, the current liquidity position is precarious. The recent debt restructuring is a positive step in managing liabilities, but the need for substantial external funding remains paramount and is a key factor for investors to monitor.

Outlook and Strategic Prioritization

Management's outlook is heavily focused on achieving key regulatory and clinical milestones while tightly managing expenses and securing necessary funding. The most immediate and significant event is the FDA's target action date of September 25, 2025, for the narsoplimab BLA in TA-TMA. The company is actively preparing for a potential commercial launch in the U.S. following approval, leveraging the established ICD-10 and CPT codes for TA-TMA which are expected to facilitate reimbursement for narsoplimab and create barriers for off-label treatments. Concurrently, Omeros is targeting submission of a Marketing Authorization Application for narsoplimab in TA-TMA to the European Medicines Agency in the second quarter of 2025.

To conserve capital and extend its cash runway, Omeros has made difficult decisions to pause or suspend certain development activities. This includes temporarily pausing the initiation of the Phase 3 zaltenibart program in PNH, despite having initiated site activation in Q1 2025 and having FDA/EMA agreement on the trial designs. The company is working to ensure these studies can be restarted quickly once additional capital is secured. Development activities for the long-acting MASP-2 inhibitor OMS1029 and small molecule complement programs have also been reduced. The Expanded Access Program for narsoplimab is being suspended (except for current patients and the pediatric study) to eliminate associated costs.

Management has provided specific guidance for the second quarter of 2025, projecting overall operating expenses from continuing operations to be lower than Q1 2025 due to the pause in clinical trials and reduced development activities. Selling, general, and administrative expenses are expected to be comparable to Q1 2025. Interest and other income are projected to decrease to approximately $625,000 due to lower cash balances, while interest expense (excluding non-cash remeasurement adjustments) is expected to increase to around $7.6 million, reflecting the impact of the recent debt transactions. Income from discontinued operations is expected to be in the $6 million to $7 million range.

Looking further ahead, the timeline for key pipeline advancements is contingent on securing funding. The zaltenibart Phase 3 PNH program is ready to restart, with data needed for BLA submission anticipated in Q4 2025 (based on prior guidance, though subject to change with the pause). The Phase 3 C3G program for zaltenibart is planned for initiation in H1 2025. The NIDA-funded OMS527 CUD study is expected to begin enrollment in 2025, with data anticipated late 2025 or early 2026. The OncotoX-AML program is targeting clinical entry in 18-24 months.

The successful approval and launch of narsoplimab are critical to the company's outlook, potentially providing a revenue stream to support further development and alleviate liquidity concerns. However, the timing and magnitude of this revenue are uncertain, and the need for additional capital remains pressing in the near term. Management's strategy of prioritizing key programs and seeking non-dilutive funding through partnerships is essential to bridge the gap to potential commercial revenues and unlock the value of the broader pipeline.

Risks and Challenges

Investing in Omeros involves significant risks, prominently highlighted by the company's disclosure of substantial doubt about its ability to continue as a going concern. The recurring net losses and negative cash flows necessitate raising substantial additional capital, which may not be available on favorable terms or at all. Failure to secure adequate funding would severely impact the company's ability to continue operations, advance its pipeline, and meet its debt obligations.

Regulatory risk is significant, particularly concerning the narsoplimab BLA. Despite positive clinical data and FDA acceptance of the resubmission, there is no guarantee of approval within the assigned PDUFA timeline or at all. A negative regulatory outcome would eliminate the potential for near-term revenue from this lead asset and could further exacerbate liquidity issues.

Clinical trial risk persists for the pipeline programs. The temporary pause of the zaltenibart Phase 3 PNH program due to funding constraints highlights the dependency of pipeline advancement on capital availability. Delays or failures in clinical trials for zaltenibart, OMS527, or other programs would push back potential market entry and revenue generation.

Competition is a constant challenge. While narsoplimab aims to be the first approved TA-TMA treatment, off-label use of other complement inhibitors and defibrotide exists. In PNH and C3G, zaltenibart faces competition from approved C5 inhibitors and other alternative pathway inhibitors in development. The success of Omeros' programs depends on demonstrating clear advantages and securing favorable market access and reimbursement in competitive environments.

Financial risks extend beyond liquidity, including the terms and conditions of existing debt (Credit Agreement, convertible notes) and the potential impact of future financing activities on debt covenants and mandatory prepayments. The OMIDRIA royalty stream, while providing some financial benefit, is subject to the performance of Rayner's sales and the terms of the royalty monetization agreements with DRI.

Operational risks include the potential negative impact of pausing development programs on timelines, momentum, and relationships with clinical sites and investigators. Successfully restarting paused trials and efficiently managing ongoing programs with limited resources are critical operational challenges.

Conclusion

Omeros Corporation is a high-risk, high-reward biotechnology investment currently navigating a critical period defined by an impending regulatory decision for its lead asset, narsoplimab, and significant financial constraints. The company possesses a scientifically compelling pipeline, particularly within the complement space with narsoplimab and zaltenibart, and promising preclinical programs in oncology and infectious disease that leverage differentiated technological approaches. The robust clinical data for narsoplimab in TA-TMA, demonstrating a remarkable survival benefit, underpins the primary near-term investment thesis, with the September 25, 2025 PDUFA date serving as a pivotal catalyst.

However, the company's financial situation, marked by recurring losses, negative cash flow, and limited cash reserves, presents a substantial challenge, raising doubt about its ability to continue operations without securing additional funding. While recent debt restructuring has improved the near-term debt profile, the need for significant external capital remains urgent to bridge the gap to potential commercial revenues from narsoplimab and to advance the broader pipeline, including the temporarily paused zaltenibart Phase 3 program. The ability to successfully raise this capital through partnerships, equity, or other means, and on terms that do not excessively dilute shareholders or constrain operations, is paramount. The competitive landscape in Omeros' target markets is challenging, requiring its differentiated technologies to translate into clear clinical and commercial advantages to capture market share against established players and emerging therapies. For investors, Omeros represents a binary opportunity heavily dependent on regulatory success and financial execution, with the narsoplimab approval decision being the most immediate factor determining the company's trajectory.