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<SEC-DOCUMENT>0000950123-10-048460.txt : 20100512
<SEC-HEADER>0000950123-10-048460.hdr.sgml : 20100512
<ACCEPTANCE-DATETIME>20100512161140
ACCESSION NUMBER:		0000950123-10-048460
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20100331
FILED AS OF DATE:		20100512
DATE AS OF CHANGE:		20100512

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			OMEROS CORP
		CENTRAL INDEX KEY:			0001285819
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				000000000

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-34475
		FILM NUMBER:		10824608

	BUSINESS ADDRESS:	
		STREET 1:		1420 5TH AVE
		STREET 2:		SUITE 2600
		CITY:			SEATTLE
		STATE:			WA
		ZIP:			98101
		BUSINESS PHONE:		206-623-4688
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>v55824e10vq.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<HTML>
<HEAD>
<TITLE>e10vq</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>


<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B><DIV align="center"><DIV style="FONT-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 10-Q</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>(Mark One)</B>
</DIV>


<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT style="font-family: Wingdings">&#254;</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>


<!-- xbrl,dc -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>For the quarterly period ended March&nbsp;31, 2010</B></DIV>
<!-- /xbrl,dc -->

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>or</B></DIV>


<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT style="font-family: Wingdings">&#111;</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>For the transition period from <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> to <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></B></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>
Commission file number: 001-34475</B>
</DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>OMEROS CORPORATION</B>
</DIV>

<DIV align="center" style="font-size: 10pt">
<b>(Exact name of registrant as specified in its charter)</b></DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>Washington<BR>
(State or other jurisdiction of <BR>
incorporation or organization)</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>91-1663741<BR>
(I.R.S. Employer<BR>
Identification Number)</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><B>1420 Fifth Avenue, Suite&nbsp;2600<BR>
Seattle, Washington<BR>
(Address of principal executive offices)</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom"><B>98101<BR>
(Zip Code)</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>(206)&nbsp;676-5000<BR>
(Registrant&#146;s telephone number, including area code)</B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant (1)&nbsp;has filed all reports required to be filed by Section&nbsp;13 or 15(d) of the Securities
Exchange Act of 1934, as amended, during the preceding 12&nbsp;months (or for such shorter period that the registrant was required to file such
reports), and (2)&nbsp;has been subject to such filing requirements for the past 90&nbsp;days. Yes <FONT style="font-family: Wingdings">&#254;</FONT> No <FONT style="font-family: Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule&nbsp;405 of Regulation&nbsp;S-T (&#167;232.405 of this chapter) during the preceding 12&nbsp;months (or for
such shorter period that the registrant was required to submit and post such files). Yes <FONT style="font-family: Wingdings">&#111;</FONT> No <FONT style="font-family: Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of &#147;large accelerated filer,&#148; &#147;accelerated filer&#148; and &#147;smaller reporting company&#148; in Rule&nbsp;12b-2 of the Exchange Act.
(Check one):
</DIV>


<TABLE width="100%" style="FONT-size: 10pt; margin-top: 6pt"><TR valign="top">
<TD>Large accelerated filer&nbsp;<FONT style="font-family: Wingdings">&#111;</FONT></TD>
<TD align="center">Accelerated filer&nbsp;<FONT style="font-family: Wingdings">&#111;</FONT>&nbsp;</TD>
<TD align="center">Non-accelerated filer&nbsp;<FONT style="font-family: Wingdings">&#254;</FONT>
<BR>(Do not check if a smaller reporting company)</TD>
<TD align="right">Smaller reporting company&nbsp;<FONT style="font-family: Wingdings">&#111;</FONT></TD></TR></TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant is a shell company (as defined in Rule&nbsp;12b-2 of the Exchange Act). Yes <FONT style="font-family: Wingdings">&#111;</FONT> No <FONT style="font-family: Wingdings">&#254;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of May&nbsp;7, 2010, the number of outstanding shares of the registrant&#146;s common stock, par value $0.01 per share, was 21,396,141.
</DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>







<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">










<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>OMEROS CORPORATION<BR>
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2010</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>INDEX</B>
</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101"><B>Part I &#151; Financial Information</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#102">Item&nbsp;1. Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#103">Consolidated Balance Sheets as of March&nbsp;31, 2010 and December&nbsp;31, 2009</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#104">Consolidated Statements of Operations for the Three Months Ended March&nbsp;31, 2010 and
2009 and for the period from June&nbsp;16, 1994 (inception)&nbsp;through March&nbsp;31, 2010</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#105">Consolidated Statements of Cash Flows for the Three Months Ended March&nbsp;31, 2010 and
2009 and for the period from June&nbsp;16, 1994 (inception)&nbsp;through March&nbsp;31, 2010</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#106">Notes
to the Consolidated Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#107">Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#108">Item&nbsp;3. Quantitative and Qualitative Disclosures About Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#109">Item&nbsp;4. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#110"><B>Part II &#151; Other Information</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#111">Item&nbsp;1. Legal Proceedings</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#112">Item&nbsp;1A. Risk Factors</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#113">Item&nbsp;6. Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#114">Signatures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v55824exv10w1.htm">EX-10.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v55824exv31w1.htm">EX-31.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v55824exv31w2.htm">EX-31.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v55824exv32w1.htm">EX-32.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="v55824exv32w2.htm">EX-32.2</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART I &#151; FINANCIAL INFORMATION</B>
</DIV>

<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 1. FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>OMEROS CORPORATION<BR>
(A Development Stage Company)</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">
<!-- xbrl,bs -->
<B>CONSOLIDATED BALANCE SHEETS<BR>
<!-- xbrl,body -->

(In thousands)</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">814</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">820</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Short-term investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,485</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Grant and other receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">248</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid expenses and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,777</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,664</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,086</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">53,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">62,062</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Liabilities, convertible preferred stock and shareholders&#146; equity (deficit)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,620</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,267</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,837</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">702</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current portion of notes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,931</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,090</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Notes payable, less current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,827</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shareholders&#146; equity:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Preferred stock, par value $0.01 per share: authorized shares &#151; 20,000,000; issued
and outstanding &#151; none</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common stock, par value $0.01 per share: <br>Authorized shares &#151; 150,000,000
at March&nbsp;31, 2010 (unaudited)&nbsp;and December&nbsp;31, 2009;
Issued and outstanding shares&#151;21,316,189 and 21,285,577 at March&nbsp;31, 2010
(unaudited)&nbsp;and December&nbsp;31, 2009, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">213</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">161,730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">161,227</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accumulated other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deficit accumulated during the development stage</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(124,997</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(118,336</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,988</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,145</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total liabilities and shareholders&#146;
equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">53,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">62,062</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt">See notes to consolidated financial statements
</DIV>
<!-- /xbrl,bs -->


<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>OMEROS CORPORATION<BR>
(A Development Stage Company)</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">
<!-- xbrl,op -->
<B>CONSOLIDATED STATEMENTS OF OPERATIONS<BR>
<!-- xbrl,body -->
(In thousands, except share and per share data)<BR>
(unaudited)</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 16,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>1994</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Inception)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Grant revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">378</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,215</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,245</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Acquired in-process research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,891</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,477</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,613</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,425</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,235</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(129,398</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,394</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(452</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(590</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,283</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,290</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(6,661</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(5,482</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(124,997</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic and diluted net loss per common share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.31</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1.87</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted-average shares used to compute
basic and diluted net loss per common share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,293,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,929,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt">See notes to consolidated financial statements
</DIV>
<!-- /xbrl,op -->


<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>OMEROS CORPORATION<BR>
(A Development Stage Company)</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">
<!-- xbrl,cf -->
<B>CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>
<!-- xbrl,body -->
(In thousands)<BR>
(unaudited)</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 16, 1994</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(Inception)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(6,661</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(5,482</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(124,997</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments to reconcile net loss to net cash used in operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,126</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock-based compensation expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">448</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,125</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Change in fair value of preferred stock warrant values and success fee liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(60</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(253</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Non-cash interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">368</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other than temporary impairment and loss on sale of investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">248</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Write-off of deferred public offering costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,948</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Acquired in-process research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,891</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Changes in operating assets and liabilities, net of nura acquisition in 2006:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Grant and other receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(307</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(28</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">745</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Prepaid expenses and other current and noncurrent assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(160</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(150</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred public offering costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(204</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,948</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts payable and accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,153</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(510</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,712</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(87</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,085</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(685</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,565</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,724</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(95,870</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Investing activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(365</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,437</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchases of investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(148,106</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from the sale of investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,716</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from the maturities of investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,926</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash paid for acquisition of nura, net of cash acquired of $87</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(212</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(53,113</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Financing activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from issuance of common stock upon initial public offering, net of
offering costs of $6,388</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,812</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from borrowings under note payable, net of loan origination costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,928</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments on notes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,327</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(376</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,903</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from issuance of common stock upon exercise of stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">700</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from issuance of convertible preferred stock, net of issuance costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,234</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash (used in) provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,297</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149,797</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net (decrease)&nbsp;increase in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,827</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">814</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">814</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">814</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Supplemental cash flow information</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash paid for interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">393</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred stock and common stock issued in connection with nura acquisition</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14,070</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt">See notes to consolidated financial statements
</DIV>
<!-- /xbrl,cf -->




<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>



<!-- xbrl,ns -->

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><b>OMEROS
CORPORATION<br>
(A Development Stage Company)</b><br>
Notes to the Consolidated Financial Statements<br>
<B>(unaudited)</b>
</div>
<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Note 1 &#151; Organization and Significant Accounting Policies</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-left: 1%; margin-top: 6pt"><I>Organization</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a biopharmaceutical company committed to discovering, developing and commercializing
products focused on inflammation and disorders of the central nervous system. Our most clinically
advanced product candidates are derived from our proprietary PharmacoSurgery&#153; platform designed to
improve clinical outcomes of patients undergoing arthroscopic, ophthalmological, urological and
other surgical and medical procedures. As substantially all of our efforts have been devoted to
conducting research and development of our products, to developing our patent portfolio and to
raising equity capital, we are considered to be in the development stage.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-left: 1%; margin-top: 12pt"><I>Basis of Presentation</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying unaudited consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America, or GAAP, for interim
financial information and with the instructions to Form 10-Q and Rule&nbsp;10-01 of Regulation&nbsp;S-X. The
information as of March&nbsp;31, 2010 and for the three months ended March&nbsp;31, 2010 and 2009, includes
all adjustments, which include only normal recurring adjustments, necessary to present fairly our
interim financial information. The consolidated balance sheet at December&nbsp;31, 2009 has been derived
from the audited financial statements at that date but does not include all of the information and
footnotes required by GAAP for complete financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying unaudited consolidated financial statements and notes to financial statements
should be read in conjunction with the audited consolidated financial statements and related notes
thereto that are included in our Annual Report on Form 10-K for the year ended December&nbsp;31, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our consolidated financial statements include the financial position and results of operations
of Omeros and nura, inc., or nura, our wholly owned subsidiary. The acquisition of nura was
accounted for as a purchase of assets, and the results of nura have been included in our results
since August&nbsp;11, 2006.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-left: 1%; margin-top: 12pt"><I>Use of Estimates</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of financial statements in conformity with GAAP requires us to make estimates
and assumptions that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-left: 1%; margin-top: 12pt"><I>Recent Accounting Pronouncements</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October&nbsp;2009, the Financial Accounting Standards Board, or FASB, issued new guidance for
multiple-deliverable revenue arrangements. The new guidance addresses the accounting for
multiple-deliverable arrangements to enable vendors to account for products or services
(deliverables)&nbsp;separately rather than as a combined unit. This guidance establishes a selling price
hierarchy for determining the selling price of a deliverable, which is based on: (a)
vendor-specific objective evidence; (b)&nbsp;third-party evidence; or (c)&nbsp;estimates. This guidance also
eliminates the residual method of allocation and requires that arrangement consideration be
allocated at the inception of the arrangement to all deliverables using the relative selling-price
method. In addition, this guidance significantly expands required disclosures related to a vendor&#146;s
multiple-deliverable revenue arrangements. We expect to adopt this guidance on January&nbsp;1, 2011 and
to apply it prospectively for revenue arrangements entered into or materially modified after the
date of adoption.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2010, the FASB issued new guidance for recognizing revenue under the milestone
method. This new guidance allows an entity to make a policy election to recognize a substantive
milestone in its entirety in the period in which the milestone is achieved. The new guidance also
requires an entity that makes this policy election to disclose the following: (a)&nbsp;a description of
the overall arrangement, (b)&nbsp;a description of each milestone and related contingent
consideration, (c)&nbsp;a determination of whether each milestone is considered substantive, (d)
the factors considered in determining whether the milestone is substantive and (e)&nbsp;the amount of
consideration recognized during the period for milestones. We expect to adopt this guidance on
June&nbsp;30, 2010 and to apply it prospectively. We do not expect adoption of this guidance to have an
impact on our financial condition or results of operations.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<!-- xbrl -->


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The impact of the above guidance will be dependent on the terms and structure of revenue
generating contracts negotiated in the future.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Note 2 &#151; Net Loss Per Common Share</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-left: 1%; margin-top: 6pt"><I>Net Loss Per Common Share</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic net loss per common share is calculated by dividing the net loss by the weighted-average
number of common shares outstanding for the period, less weighted-average unvested common shares
subject to repurchase. Diluted net loss per common share is computed by dividing the net loss
applicable to common shareholders by the weighted-average number of unrestricted common shares and
dilutive common share equivalents outstanding for the period, determined using the treasury-stock
method and the as if-converted method.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss attributable to common shareholders for each period must be allocated to common stock
and participating securities to the extent that the securities are required to share in the losses.
As a result, basic net loss per common share is calculated by dividing net loss by the
weighted-average shares of common stock outstanding during the period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The basic and diluted net loss per common share amounts for the three months ended March&nbsp;31,
2010 and 2009 were computed based on the shares of common stock outstanding during the respective
periods. The net loss per share for the three months ended March&nbsp;31, 2010 includes the full effect
of the 6,820,000 common shares issued in our initial public offering in the fourth quarter of 2009
and the conversion of our convertible preferred stock into 11,514,508 shares of common stock upon
completion of the offering. As a result of the issuance of these common shares during the fourth
quarter of 2009, there is a lack of comparability in the basic and diluted net loss per share
amounts for the three months ended March&nbsp;31, 2010 and 2009. The following table presents the
computation of basic and diluted net loss per common share (in thousands, except share and per
share data):
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Historical</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Numerator:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(6,661</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(5,482</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Denominator:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted-average common shares outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,293,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,953,919</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less: Weighted-average unvested common shares subject to repurchase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,816</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Denominator for basic and diluted net loss per common share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,293,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,929,103</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic and diluted net loss per common share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.31</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1.87</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historical outstanding dilutive securities not included in diluted loss per common share
calculation:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Convertible preferred stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,514,506</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding options to purchase common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,339,633</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,776,324</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warrants to purchase common stock and convertible preferred stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">209,017</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">234,230</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock subject to repurchase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,385</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,548,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,548,445</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Note 3 &#151; Cash, Cash Equivalents and Investments</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our investment portfolio is made up of cash and cash equivalents and mortgage-backed,
adjustable-rate securities issued by, or fully collateralized by, the U.S. government or U.S.
government-sponsored entities. The mortgage-backed securities have contractual maturities ranging
from six to 28&nbsp;years at March&nbsp;31, 2010 and December&nbsp;31, 2009. Due to
normal annual prepayments, the estimated average life of the portfolio is approximately three
to five years. The adjustable rate feature, which is not dependent on an auction process, further
shortens the duration and interest risk of the portfolio, making it similar to a one-year
government agency security. All investments are classified as short-term and available-for-sale on
the accompanying balance sheets.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the fair value of our investment securities that have
unrealized losses and that are deemed to be only temporarily impaired, aggregated by investment
category and by whether the securities have been in a continuous unrealized loss position for less
than 12&nbsp;months or for 12&nbsp;months or greater as December&nbsp;31, 2009.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>December 31, 2009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Less than 12 Months</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>12 Months or Greater</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealized</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealized</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealized</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description of Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Losses</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Losses</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Losses</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22">(in thousands)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mortgage-backed securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We owned zero and two securities with unrealized loss positions as of March&nbsp;31, 2010 and
December&nbsp;31, 2009, respectively. The two securities with the unrealized loss positions as of
December&nbsp;31, 2009 were immaterial and were not other-than-temporary. We assess the fundamentals of
these securities to identify their individual sources of risk and potential for
other-than-temporary impairment. The assessment includes review of performance indicators of the
underlying assets in the security, loan to collateral value ratios, third-party guarantees,
vintage, geographic concentration, industry analyst reports, sector credit ratings, volatility of
the security&#146;s fair value, current market liquidity, reset indices, prepayment levels, credit
rating downgrades and the intent and ability to retain the investment for a sufficient period of
time to allow for recovery in the market value of the investment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The composition of our investment income is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(in thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross realized gains on investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross realized losses on investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total investment income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">81</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Realized gains and losses on sales of investments are calculated based on the specific
identification method.
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Note 4 &#151; Fair Value Measurements</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accounting standard for fair value measurements provides a framework for measuring fair
value and requires expanded disclosures regarding fair value measurements. Under this standard,
fair value is defined as the exchange price that would be received for an asset or paid to transfer
a liability, an exit price, in the principal or most advantageous market for the asset or liability
in an orderly transaction between market participants on the measurement date. The accounting
standard establishes a fair value hierarchy that requires an entity to maximize the use of
observable inputs, where available. The following summarizes the three levels of inputs required:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These levels include:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Level 1 &#151; Observable inputs for identical assets or liabilities such as quoted prices in
active markets;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Level 2 &#151; Inputs other than quoted prices in active markets that are either directly or
indirectly observable; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Level 3 &#151; Unobservable inputs in which little or no market data exists, therefore developed
using estimates and assumptions developed by us, which reflect those that a market participant
would use.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To determine the fair market value of our mortgage-backed securities, our external investment
manager formally prices securities at least monthly with external market sources. The external
sources have historically been primary and secondary broker/dealers that trade and make markets in
an open market exchange of these securities. Mortgage-backed securities are priced using &#147;round
lot&#148; non-binding pricing from a single external market source for each of the investment classes
within our portfolio. We have used this non-binding pricing information to estimate fair market
value and do not make adjustments to these quotes unless a review indicates an adjustment is
warranted. To determine pricing, the external market sources use inputs other than quoted prices in
active markets that are either directly or indirectly observable such
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">as trading activity that is
observable in these securities or similar or like-kind securities, rate reset margins, reset
indices, pool diversification and prepayment levels. In addition, in evaluating if this pricing
information should be adjusted, the prices obtained from these external market sources are compared
against independent pricing services. Our fair value hierarchy for our financial assets and
liabilities measured at fair value on a recurring basis is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>March 31, 2010</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Level 1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Level 2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Level 3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14"><B>(in thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Money market funds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">48,291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">48,291</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Mortgage-backed securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,752</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">48,291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">51,043</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>December 31, 2009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Level 1</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Level 2</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Level 3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14"><B>(in thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Money market funds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">57,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">57,073</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Mortgage-backed securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,979</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,979</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">57,073</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,979</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">60,052</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash of $223,000 and $446,000 is excluded in our fair value hierarchy disclosure as of
March&nbsp;31, 2010 and December&nbsp;31, 2009, respectively. Additionally, the fair value hierarchy
disclosure includes restricted cash of $193,000 as of March&nbsp;31, 2010 and December&nbsp;31, 2009.
Unrealized gains and losses associated with our short-term investments is included in accumulated
other comprehensive income in the accompanying balance sheets.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Note 5 &#151; Certain Balance Sheet Accounts</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Accrued Expenses</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses consisted of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(in thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Clinical trials</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,868</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Contract preclinical research</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">467</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Employee compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">448</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">324</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other accruals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">742</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">585</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,267</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,837</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Comprehensive Loss</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive loss is comprised of net loss and certain changes in equity that are excluded
from net loss. Our only component of comprehensive loss is unrealized gains (losses)&nbsp;on
available-for-sale securities. The components of comprehensive loss are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(in thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(6,661</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(5,482</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrealized gain (loss)&nbsp;on available-for-sale securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(6,662</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(5,390</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Note 6 &#151;Revenue</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have received Small Business Innovative Research, or SBIR, grants from the National
Institutes of Health totaling $3.7&nbsp;million and $3.2&nbsp;million as of March&nbsp;31, 2010 and December&nbsp;31,
2009, respectively. The purpose of the grants is to support the development of our research for
product candidates. For the three months ended March&nbsp;31, 2010 and 2009, we recorded revenue
related to these grants of $283,000 and $20,000, respectively. As of March&nbsp;31, 2010, $892,000 of
funding remained under these grants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2006, we entered into a funding agreement with The Stanley Medical Research
Institute, or SMRI, to develop a proprietary PDE10 inhibitor product candidate for the treatment of
schizophrenia. The funding is expected to advance our PDE10 program though the completion of Phase
1 clinical trials. Under the agreement, we may receive grant and equity funding of up to $9.0
million upon achievement of research milestones. We hold the exclusive rights to the technology.
In consideration for SMRI&#146;s grant funding, we may become obligated to pay SMRI royalties based on
net income, as defined under the agreement, from commercial sales of a PDE10 inhibitor product, not
to exceed a set multiple of total grant funding received. If a PDE10 inhibitor product candidate
does not reach commercialization, we are not required to repay the grant funds. As of March&nbsp;31,
2010 and December&nbsp;31, 2009, we have received a total of $5.7&nbsp;million from SMRI. As of March&nbsp;31,
2010, amounts included in the accompanying balance sheet pertaining to this agreement included
$607,000 in deferred revenue and $3.2&nbsp;million from the sale of 255,103 shares of Series&nbsp;E
convertible preferred stock, which were recorded at their estimated fair value. For the three
months ended March&nbsp;31, 2010 and 2009, we recognized revenue under this agreement of $95,000 and
$96,000, respectively.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Note 7 &#151; Commitments and Contingencies</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the funding agreement with SMRI, beginning the first calendar year after
commercial sales of a schizophrenia product, if and when a product is commercialized, we may become
obligated to pay royalties based on net income, as defined in the agreement, not to exceed a set
multiple of total grant funding received. Based on the amount of grant funding received as of
March&nbsp;31, 2010, the maximum amount of royalties payable by us is $12.8&nbsp;million. We have not paid
any such royalties through March&nbsp;31, 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July&nbsp;2008, we entered into a discovery and development agreement with Affitech AS, or
Affitech, to isolate and optimize fully human antibodies for our mannan-associated serine
protease-2, or MASP-2, program. Under the terms of the agreement, Affitech applied its human
antibody libraries and proprietary antibody discovery and screening technologies to generate fully
human MASP-2 antibodies for us. In March&nbsp;2010, we amended the antibody development agreement with
Affitech. Under the terms of the amendment, Affitech released us from any future obligations to
make royalty or milestone payments in exchange for $500,000. The agreement also stipulates that we
can request certain optional services for a fee. The agreement may be terminated for cause by
either party, or at any time by us by providing 30&nbsp;day advance written notice to Affitech. For the
three months ended March&nbsp;31, 2010 and 2009, we recognized research and development expense under
this agreement of $500,000 and $200,000, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September&nbsp;2008, we entered into a technology option agreement with Patobios Limited, or
Patobios, to evaluate and potentially acquire the intellectual property rights covering Patobios&#146; G
protein-coupled receptor, or GPCR, technology. Under the terms of the agreement, as amended in
November&nbsp;2009, Patobios granted us an option to evaluate the technology over four option periods
commencing September&nbsp;2008 and continuing up to December&nbsp;2010. In December
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">2009, we exercised our intent to extend the third option period from January&nbsp;2010 to June&nbsp;2010
at a cost to us of $542,000 CAD ($516,000 USD). For the three months ended March&nbsp;31, 2010 and
2009, we recognized research and development expense under this agreement of $10,000 and $0,
respectively. We may also extend the option period for one additional six-month period ending
December&nbsp;2010 at a cost of $500,000 CAD. Under the terms of the agreement, we have the exclusive
option to acquire the intellectual property rights, including patents, covering Patobios&#146; GPCR
technology at any time during any of the option periods for a total acquisition price of $10.8
million CAD in cash and stock. In addition, if we achieve the de-orphanization milestone, we will
be required to pay Patobios a $500,000 CAD milestone payment that would be credited against the
cash portion of the $10.8&nbsp;million CAD purchase price. Also, following achievement of the
de-orphanization milestone, we will be required to purchase the GPCR technology from Patobios for
the $10.8&nbsp;million CAD purchase price if, during the term of the agreement, the sum of the following
items is at least equal to $5.1&nbsp;million CAD: (a)&nbsp;the amount paid by us to Patobios from licenses
granted by us to third parties for the development and commercialization of the de-orphanized
GPCRs, (b)&nbsp;the amount of any government or non-profit funding received by us specifically allocated
for the purchase of the GPCR technology and (c)&nbsp;the $500,000 CAD de-orphanization milestone
payment. The agreement may be terminated for cause by either party, at any time by mutual consent
of us and Patobios, or by us at any time prior to the achievement of the de-orphanization
milestone.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October&nbsp;2008, we entered into an antibody development agreement with North Coast Biologics
LLC, or North Coast, to isolate and optimize antibodies for our MASP-2 program. Under the terms of
the agreement, North Coast will apply its proprietary antibody discovery and screening technologies
to generate MASP-2 antibodies for us. We recorded no research and development expense under this
agreement during the three months ended March&nbsp;31, 2010 and 2009, respectively. Under the
agreement, we may be required to make additional payments to North Coast of up to $4.0&nbsp;million upon
the achievement of certain development events, such as initiation of clinical trials and the
receipt of marketing approval for a drug product containing an antibody developed by North Coast.
The agreement also provides us with an option to have North Coast generate antibodies for
additional targets. If this option is exercised, we may be required to make additional payments to
North Coast for rights to the technology and milestone payments of up to $4.1&nbsp;million per selected
target. In addition, we are obligated to pay North Coast a low single-digit percentage royalty on
any of our net sales of drug products containing an antibody developed by North Coast under the
agreement. The agreement may be terminated for cause by either party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;2009, we entered into a patent assignment agreement with an individual whereby we
acquired all intellectual property rights, including patent applications, related to peroxisome
proliferators activated receptor gamma agonists for the treatment and prevention of addictions to
substances of abuse, as well as other compulsive behaviors. No payments were made related to the
technology acquisition. Under the agreement, we may be required to make payments of up to $2.3
million to the individual upon achievement of certain development events, such as the initiation of
clinical trials and receipt of marketing approval. In addition, we are obligated to pay a low
single-digit percentage royalty on any net sales of drug products that are covered by any patents
that issue from the acquired patent application.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;3, 2010, we entered into a license agreement with Daiichi-Sankyo Company, Limited
(successor-in-interest to Asubio Pharma Co., Ltd.), or Daiichi, pursuant to which we received an
exclusive license to PDE7 inhibitors claimed in certain patents and pending patent applications
owned by Daiichi for use in the treatment of movement disorders and other specified indications.
Under the agreement, we agreed to make milestone payments to Daiichi of up to $23.5&nbsp;million upon
the achievement of certain events, such as successful completion of preclinical toxicology studies;
dosing of human subjects in Phase 1, 2 and 3 clinical trials; receipt of marketing approval of a
PDE7 inhibitor product; and reaching specified sales milestones. In addition, Daiichi is entitled
to receive from us a low single-digit percentage royalty of any net sales of a PDE7 inhibitor
licensed under the agreement by us and/or our sublicensee(s), provided that if the sales are made
by a sublicensee, then the amount payable by us to Daiichi is capped at an amount equal to a low
double-digit percentage of all royalty and specified milestone payments received by us from the
sublicensee. For the three months ended March&nbsp;31, 2010, we recognized research and development
expense under this agreement of $25,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;23, 2010, we entered into an Exclusive License Agreement with Helion Biotech ApS, or
Helion, pursuant to which we received a royalty bearing, worldwide exclusive license in and to all
of Helion&#146;s intellectual property rights related to MASP-2 antibodies, polypeptides and methods in
the field of inhibition of mannan-binding lectin-mediated activation of the complement system for
the prevention, treatment or diagnosis of any disease or condition. Upon execution of the
agreement, we made a one-time payment to Helion of $500,000 and agreed to make development and
sales milestone payments to Helion of up to an additional $6.85&nbsp;million upon the achievement of
certain events, such as
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the filing of an Investigational New Drug application with the U.S. Food and Drug
Administration; initiation of Phase 2 and 3 clinical trials; receipt of marketing approval; and
reaching specified sales milestones. In addition, Helion is entitled to receive from us a low
single-digit percentage royalty of any net sales of a MASP-2 inhibitor product that is covered by
the patents licensed by us under the agreement.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Note 8 &#151; Stock-Based Compensation</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Stock Options</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2008, our board of directors adopted and the shareholders approved the 2008 Equity
Incentive Plan, or 2008 Plan. The 2008 Plan provides for the grant of incentive and nonstatutory
stock options, restricted stock, stock appreciation rights, performance units and performance
shares to employees, directors and consultants and subsidiary corporations&#146; employees and
consultants. 892,857 shares of common stock were initially reserved for issuance under the 2008
Plan. The 2008 Plan also allows any shares returned under our Amended and Restated 1998 Stock
Option Plan, or 1998 Plan, as a result of cancellation of options or repurchase of shares issued
pursuant to the 1998 Plan, to be issued under the 2008 Plan subject to a maximum limit of 3,084,848
shares. As of March&nbsp;31, 2010 and December&nbsp;31, 2009, a total of 340,272 and 321,528 shares,
respectively, have been reserved under the 2008 Plan as a result of the cancellation of options or
repurchase of shares under the 1998 Plan. In addition, the 2008 Plan provides for annual increases
in the number of shares available for issuance thereunder on the first day of each fiscal year,
beginning with the 2010 fiscal year, equal to the lesser of:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>five percent of the outstanding shares of our common stock on the last day of the
immediately preceding fiscal year;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>1,785,714 shares; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>such other amount as our board of directors may determine.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;1, 2010, in accordance with the 2008 Plan annual increase provisions, the
authorized shares in the 2008 Plan increased by 1,064,279.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A summary of stock option activity and related information follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted-</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Available for</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Price per</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Grant</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Share</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at December&nbsp;31, 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,013,256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,847,549</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Authorized increase in 2008 Plan shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,083,023</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,744</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(652,185</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">652,185</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.07</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,612</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancelled</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(129,489</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.68</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at March&nbsp;31, 2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,554,839</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,339,633</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation cost for stock options granted to employees is based on the grant-date fair
value and is recognized over the vesting period of the applicable option on a straight-line basis.
The estimated per share weighted-average fair value of stock options granted to employees during
the three months ended March&nbsp;31, 2010 was $4.16.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As stock-based compensation expense is based on options ultimately expected to vest, the
expense has been reduced for estimated forfeitures. The fair value of each employee option grant
was estimated on the date of grant using the Black-Scholes option pricing model with the following
assumptions:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Three Months Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">77</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">71</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected term (in years)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.08</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk-free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.77</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.13</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock-Based Compensation Summary. </I>Stock-based compensation expense includes amortization
of deferred stock compensation and stock options granted to employees and non-employees&#146; and has
been reported in our consolidated statements of operations as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(in thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">220</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">297</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">228</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">448</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the non-employee options, we recognized expense of $19,000 and $57,000
for the three months ended March&nbsp;31, 2010 and 2009, respectively.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Note 9 &#151; Related-Party Transactions</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We conduct research using the services of one of our founders, Pamela Pierce Palmer, M.D.,
Ph.D. In 2007, we granted Dr.&nbsp;Palmer an option to purchase 20,408 shares of common stock and
recognized $8,000 and $14,000 of non-cash compensation associated with this option for the three
months ended March&nbsp;31, 2010 and 2009, respectively.
</DIV>
<!-- /xbrl,ns -->

<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>This Quarterly Report on </I><I>Form 10-Q</I><I> contains forward-looking statements within the meaning of
Section&nbsp;27A of the Securities Act of 1933, as amended, and Section&nbsp;21E of the Securities Exchange
Act of 1934, as amended, which are subject to the &#147;safe harbor&#148; created by those sections.
Forward-looking statements are based on our management&#146;s beliefs and assumptions and on information
currently available to our management. All statements other than statements of historical facts are
&#147;forward-looking statements&#148; for purposes of these provisions. In some cases you can identify
forward-looking statements by terms such as &#147;may,&#148; &#147;will,&#148; &#147;should,&#148; &#147;could,&#148; &#147;would,&#148; &#147;expect,&#148;
&#147;plan,&#148; &#147;anticipate,&#148; &#147;believe,&#148; &#147;estimate,&#148; &#147;project,&#148; &#147;predict,&#148; and &#147;potential,&#148; and similar
expressions intended to identify forward-looking statements. Examples of these statements include,
but are not limited to, statements regarding:</I>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>our ability to release the results from our ongoing Phase 3 clinical trials
of OMS103HP during the second half of 2010;</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>our ability to market OMS103HP by 2011, at the earliest;</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>our expectations regarding the clinical benefits of our product candidates,
including whether OMS103HP will be the first commercially available drug delivered
directly to the surgical site to improve function following arthroscopic surgery;</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>our estimates regarding our future net losses, revenues, research and
development expenses and general and administrative expenses;</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>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; and</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>our involvement in potential claims and legal proceedings, the expected
course and costs of existing claims and legal proceedings, and the potential outcomes and
effects of both existing and potential claims and legal proceedings on our business,
prospects, financial condition and results of operations.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Our actual results could differ materially from those anticipated in these forward-looking
statements for many reasons, including the risks, uncertainties and other factors described in this
Quarterly Report on </I><I>Form 10-Q</I><I> under the heading &#147;Risk Factors&#148; and in our other filings with the
Securities and Exchange Commission. Given these risks,</I>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>uncertainties and other factors, you should not place undue reliance on these forward-looking
statements. Also, these forward-looking statements represent our management&#146;s estimates and
assumptions only as of the date of the filing of this Quarterly Report on </I><I>Form 10-Q</I><I>. You should
read this Quarterly Report on </I><I>Form 10-Q</I><I> completely and with the understanding that our actual
future results may be materially different from what we expect. Except as required by law, we
assume no obligation to update these forward-looking statements publicly, or to update the reasons
actual results could differ materially from those anticipated in these forward-looking statements,
even if new information becomes available in the future.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The following discussion and analysis should be read in conjunction with the unaudited
consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on
Form&nbsp;10-Q.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Overview</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Background</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a clinical-stage biopharmaceutical company committed to discovering, developing and
commercializing products focused on inflammation and disorders of the central nervous system. Our
most clinically advanced product candidates are derived from our proprietary PharmacoSurgery&#153;
platform designed to improve clinical outcomes of patients undergoing arthroscopic,
ophthalmological, urological and other surgical and medical procedures. Our PharmacoSurgery
platform is based on low-dose combinations of therapeutic agents delivered directly to the surgical
site throughout the duration of the procedure to preemptively inhibit inflammation and other
problems caused by surgical trauma and to provide clinical benefits both during and after surgery.
We currently have five ongoing clinical development programs, including four from our
PharmacoSurgery platform and one from our Addiction program. Our most advanced clinical development
program is in Phase 3 clinical trials. In addition, we have leveraged our expertise in inflammation
and the central nervous system to build a deep and diverse pipeline of preclinical programs
targeting large markets as well as a platform capable of unlocking new drug targets. For each of
our product candidates and programs, we have retained all manufacturing, marketing and distribution
rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OMS103HP, our lead PharmacoSurgery product candidate, is in two clinical programs. The first
is a Phase 3 clinical program, expected to include a total of approximately 1,040 patients,
evaluating OMS103HP&#146;s safety and ability to improve postoperative joint function and reduce pain
following arthroscopic anterior cruciate ligament, or ACL, reconstruction surgery. The second
program is evaluating OMS103HP&#146;s safety and ability to reduce pain and improve postoperative joint
function following arthroscopic meniscectomy surgery. We expect to release the results from our
ongoing Phase 3 clinical program for ACL reconstruction surgery during the second half of 2010. We
believe that OMS103HP will, if approved, be the first commercially available drug delivered
directly to the surgical site to improve function following arthroscopic surgery.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our other current PharmacoSurgery product candidates are OMS302, being developed for use
during ophthalmological procedures, including cataract and other lens replacement surgery, and
OMS201, being developed for use during urological surgery, including uroendoscopic procedures. We
recently completed a Phase 1/Phase 2 clinical trial that evaluated the efficacy and safety of
OMS302 added to standard irrigation solution and delivered to patients undergoing cataract surgery
as well as a Phase 2 concentration-ranging clinical trial of the mydriatic API contained in OMS302
as a mydriasis induction agent. We are finalizing preparations to initiate a second Phase 2
clinical trial for OMS302 to assess the effect of the mydriatic API and the anti-inflammatory API
in a full-factorial design. A Phase 1/Phase 2 clinical trial of OMS201 is underway in patients
undergoing ureteroscopic removal of ureteral or renal stones.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to our PharmacoSurgery platform, we have a deep and diverse pipeline of additional
product development programs targeting large market opportunities in inflammation and the CNS
covered by a broad intellectual property portfolio. In our Addiction program, we are developing
proprietary compositions that include peroxisome
proliferator-activated receptor gamma, or PPAR&#947;,
agonists for the treatment and prevention of addiction to substances of abuse, which may include
opioids, nicotine, alcohol and amphetamines, as well as other compulsive behaviors. The
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">National Institute on Drug Abuse has agreed to fund substantially all of the costs of a Phase
2 clinical study to evaluate a PPAR&#947; agonist in the treatment of addiction to opioids. This Phase 2
clinical study will be conducted by researchers at the New York State Psychiatric Institute.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In our mannan-binding lectin-associated serine protease-2, or MASP-2, program, we are
developing proprietary MASP-2 antibody therapies to treat disorders caused by complement-activated
inflammation. In our PDE10 program, we are developing proprietary compounds to treat schizophrenia
and other psychotic disorders. Our PDE7 program is based on our demonstration of a previously
unknown link between PDE7 and any movement disorder, such as Parkinson&#146;s disease and Restless Legs
Syndrome, and we are developing proprietary compounds for the treatment of these and other movement
disorders. In our GPCR program, we believe that we have the capability to complete high-throughput
de-orphanization of orphan GPCRs, or the identification of synthetic molecules that bind the
receptors, and to develop product candidates that act at these new potential drug targets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have incurred significant losses since our inception. As of March&nbsp;31, 2010, our accumulated
deficit was $125.0&nbsp;million and total shareholders&#146; equity was $37.0&nbsp;million. We recognized net
losses of $6.7&nbsp;million and $5.5&nbsp;million for the three months ended March&nbsp;31, 2010 and 2009,
respectively. These losses have resulted principally from expenses incurred in connection with
research and development activities, consisting primarily of preclinical studies, clinical trials
and manufacturing services associated with our current product candidates. Compared to 2009, we
expect our net losses in 2010 to increase as we continue to advance our clinical trials, expand our
research and development efforts and add personnel as well as laboratory and office space for our
anticipated growth.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Revenue</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have recognized $5.2&nbsp;million of revenue from inception (June&nbsp;16, 1994) through March&nbsp;31,
2010, consisting of grant funding from third parties. Other than grant funding, we do not expect to
receive any revenue from our product candidates until we receive regulatory approval and
commercialize the products or until we potentially enter into collaborative agreements with third
parties for the development and commercialization of our product candidates. We continue to pursue
government and private grant funding for our product candidates and research programs. If our
development efforts for any of our product candidates result in clinical success and regulatory
approval or collaboration agreements with third parties, we could generate revenue from those
product candidates.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Research and Development Expenses</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The majority of our operating expenses to date have been for research and development
activities. Research and development expenses consist of costs associated with research activities,
as well as costs associated with our product development efforts, which include clinical trials and
third-party manufacturing services. Internal research and development costs are recognized as
incurred. Third-party research and development costs are expensed at the earlier of when the
contracted work has been performed or as upfront and milestone payments are made. Research and
development expenses include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>employee and consultant-related expenses, which include salaries and benefits;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>external research and development expenses incurred pursuant to agreements
with third-party manufacturing organizations, contract research organizations and clinical
trial sites;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>third-party supplier expenses including laboratory and other supplies.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our internal resources, employees and infrastructure are not directly tied to any individual
research project and are typically deployed across multiple projects. Through our clinical
development programs, we are advancing our product candidates in parallel for multiple therapeutic
indications and, through our preclinical development programs, we are seeking to develop potential
product candidates for additional disease indications. Due to the number of ongoing projects and
our ability to utilize resources across several projects, we do not record or maintain information
regarding the costs incurred for our research and development programs on a program-specific basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses since inception to March&nbsp;31, 2010 were $84.2&nbsp;million. Our
research and development expenses can be divided into clinical research and development and
preclinical research and development activities. The following table illustrates our expenses
associated with these activities:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>(in thousands)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Clinical Research and Development</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Salaries, benefits and related costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">922</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Clinical Trials</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">357</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">552</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Manufacturing services, consulting, laboratory
supplies, and other costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">332</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">278</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">284</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">130</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total Clinical Research and Development Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,553</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,220</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Preclinical Research and Development</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Salaries, benefits and related costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">684</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and preclinical studies, consulting,
laboratory supplies, and other costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">660</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">379</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">369</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Preclinical Research and Development Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,802</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Research and Development Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,022</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Clinical research and development costs consist of clinical trials, manufacturing services,
regulatory activities and related personnel costs, and other costs such as rent, utilities,
depreciation and stock-based compensation. Preclinical research and development costs consist of
our research activities, preclinical studies, related personnel costs and laboratory supplies, and
other costs such as rent, utilities, depreciation and stock-based compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At this time, due to the inherently unpredictable nature of preclinical and clinical
development processes and given the early stage of our preclinical product development programs, we
are unable to estimate with any certainty the costs we will incur in the continued development of
our product candidates for potential commercialization. Clinical development timelines, the
probability of success and development costs can differ materially from expectations. While we are
currently focused on advancing each of our product development programs, our future research and
development expenses will depend on the clinical success of each product candidate, as well as
ongoing assessments of each product candidate&#146;s commercial potential. In addition, we cannot
forecast with any degree of certainty which product candidates may be subject to future
collaborations, when such arrangements will be secured, if at all, and to what degree such
arrangements would affect our development plans and capital requirements. We expect our research
and development expenses to increase in the future as we continue the advancement of our clinical
trials and preclinical product development programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The lengthy process of completing clinical trials and seeking regulatory approval for our
product candidates requires expenditure of substantial resources. Any failure or delay in
completing clinical trials, or in obtaining regulatory approvals, could cause a delay in generating
product revenue and cause our research and development expense to increase and, in turn, have a
material adverse effect on our operations. We do not expect any of our current product candidates
to
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">be commercially available before 2011, if at all. Because of the factors above, we are not
able to estimate with any certainty when we would recognize any net cash inflows from our projects.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>General and Administrative Expenses</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expenses consist principally of salaries and related costs for
personnel in executive, legal, finance, accounting, information technology and human resource
functions. Other general and administrative expenses include facility costs not otherwise included
in research and development expenses, patent costs and professional fees for legal, consulting and
audit services. We expect our general and administrative expenses to increase in the future as we
add additional employees and facilities to support our anticipated growth as a public company.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Interest Expense</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense consists of interest on our notes payable and the amortization of the related
discount.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Other Income (Expense)</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income (expense)&nbsp;consists primarily of rental income received under subleases for use of
a portion of our vivarium and laboratory facility and changes in the fair value of our preferred
stock warrant liability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Critical Accounting Policies and Significant Judgments and Estimates</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our discussion and analysis of our financial condition and results of operations are based on
our consolidated financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of our financial statements
requires us to make estimates and judgments that affect the reported amounts of assets and
liabilities and the disclosure of any contingent assets and liabilities at the date of the
financial statements, as well as reported revenue and expenses during the reporting periods. We
base our estimates on historical experience and on various other factors that we believe are
reasonable under the circumstances. An accounting policy is considered critical if it is important
to a company&#146;s financial condition and results of operations, and if it requires the exercise of
significant judgment and the use of estimates on the part of management in its application.
Although we believe that our judgments and estimates are appropriate, actual results may differ
from our estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe the following to be our critical accounting policies because they are both
important to the portrayal of our financial condition and results of operations and they require
critical management judgment and estimates about matters that are uncertain:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>revenue recognition;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>research and development expenses, primarily clinical trial expenses;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>stock-based compensation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>preferred stock warrant liability; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fair value measurement of financial instruments.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If actual results or events differ materially from those contemplated by us in making these
estimates, our reported financial condition and results of operations for future periods could be
materially affected.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Revenue Recognition</I></DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our revenue since inception relates to grant funding from third parties. We recognize grant
funding as revenue when the related qualified research and development expenses are incurred up to
the limit of the approved funding amounts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accounting standard for revenue provides a framework for accounting for revenue
arrangements. A variety of factors are considered in determining the appropriate method of revenue
recognition under these arrangements, such as whether the various elements can be considered
separate units of accounting, whether there is objective and reliable evidence of fair value for
these elements and whether there is a separate earnings process associated with a particular
element of an agreement.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Research and Development Expenses</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses are comprised primarily of employee and consultant-related
expenses, which include: salaries and benefits; external research and development expenses incurred
pursuant to agreements with third-party manufacturing organizations, contract research
organizations and clinical trial sites; 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. Clinical trial expenses for investigational sites require certain estimates. We
estimate these costs based on a cost per patient that varies depending on the clinical trial site.
As actual costs become known to us, we adjust our accrual; these changes in estimates may result in
understated or overstated expenses at a given point in time. To date, our estimates have not
differed significantly from actual costs. Internal research and development expenses are expensed
as incurred. Third-party research and development expenses are expensed at the earlier of when the
contracted work has been performed or as upfront and milestone payments are made.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Stock-Based Compensation</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We account for stock-based compensation under applicable accounting standards, which requires
that the measurement and recognition of compensation expense for all future share-based payments
made to employees and directors be based on estimated fair values. We are using the straight-line
method to allocate compensation cost to reporting periods over each optionee&#146;s requisite service
period, which is generally the vesting period. We estimate the fair value of our share-based awards
to employees and directors using the Black-Scholes option-valuation model. The Black-Scholes model
requires the input of subjective assumptions, including the expected stock price volatility, the
calculation of expected term and the fair value of the underlying common stock on the date of
grant, among other inputs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As stock-based compensation expense is based on options ultimately expected to vest, the
expense has been reduced for estimated forfeitures. The fair value of each employee option grant
was estimated on the date of grant using the Black-Scholes option pricing model with the following
assumptions during the years ended:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Three Months Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">77</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">71</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected term (in years)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.08</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk-free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.77</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.13</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Expected Volatility. </I>The expected volatility rate used to value stock option grants is
based on volatilities of a peer group of similar companies whose share prices are publicly
available. The peer group was developed based on companies in the pharmaceutical and biotechnology
industry in a similar stage of development.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Expected Term. </I>We elected to utilize the &#147;simplified&#148; method for &#147;plain vanilla&#148; options to
value stock option grants. Under this approach, the weighted-average expected life is presumed to
be the average of the vesting term and the contractual term of the option.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Risk-free Interest Rate. </I>The risk-free interest rate assumption was based on zero-coupon U.S.
Treasury instruments that had terms consistent with the expected term of our stock option grants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Expected Dividend Yield. </I>We have never declared or paid any cash dividends and do not
presently plan to pay cash dividends in the foreseeable future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation guidance requires forfeitures to be estimated at the time of grant
and revised, if necessary, in subsequent periods if actual forfeitures differ from estimates. We
estimate forfeitures based on our historical experience; separate groups of employees that have
similar historical forfeiture behavior are considered separately for expense recognition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock options granted to non-employees are accounted for using the fair value approach. The
fair value of non-employee option grants are estimated using the Black-Scholes option-pricing model
and are re-measured over the vesting term as earned. The estimated fair value is charged to expense
over the applicable service period.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Preferred Stock Warrant Liability</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the completion of our initial public offering in October&nbsp;2009, or IPO, warrants to
purchase our convertible preferred stock were classified as liabilities and were recorded at fair
value. At each reporting period, any change in fair value of the freestanding warrants was recorded
as other expense or income. Such fair values were estimated using the Black-Scholes option-pricing
model and an estimated term equal to each warrant&#146;s contractual life. The preferred stock warrant
liability was reclassified to equity upon the completion of our IPO with the conversion of all of
the convertible preferred stock warrants to common stock warrants.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Fair Value Measurement of Financial Instruments</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our financial assets and liabilities are measured at fair value, defined as the exchange price
that would be received for an asset or paid to transfer a liability, an exit price, in the
principal or most advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. On January&nbsp;1, 2009, we adopted the guidance related to
nonfinancial assets and liabilities that are not recognized or disclosed at fair value on a
recurring basis. The adoption of this guidance did not have a material impact on our financial
position, results of operations or cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In determining the fair value of our financial assets and liabilities, we used various
valuation approaches. The guidance establishes a hierarchy for inputs used in measuring fair value
that maximizes the use of observable inputs and minimizes the use of unobservable inputs by
requiring that observable inputs be used when available. Observable inputs are inputs that market
participants would use in pricing the asset or liability based on market data obtained from
independent sources such as quotes in active markets. Unobservable inputs are those in which little
or no market data exists and reflect our assumptions about the inputs that market participants
would use in pricing the asset or liability and are developed based on the best information
available in the circumstances. The availability of observable inputs can vary among the various
types of financial assets and liabilities. To the extent that the valuation is based on models or
inputs that are less observable or unobservable in the market, the determination of fair value
requires more judgment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whenever the estimated fair value of any of our available-for-sale securities is less than
their related cost, we perform an impairment analysis to determine the classification of the
impairment as &#147;temporary&#148; or &#147;other-than-temporary&#148;. A temporary impairment results in an
unrealized loss being recorded in the other comprehensive income component of shareholders&#146; equity.
Such an unrealized loss does not affect net loss for the applicable accounting period. However, an
other-than-temporary impairment charge is recorded as a realized loss in the consolidated statement
of operations and increases net loss for the applicable accounting period. The primary factors we
consider to differentiate our impairments between temporary and other-than-temporary impairments
include the length of the time and the extent to which the market value has been less than cost,
the financial condition and near-term prospects of the issuer and our intent and
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">ability to retain our investment in the issuer for a period of time sufficient to allow for
any anticipated recovery in market value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that the values assigned to our available-for-sale securities and mortgage backed
securities as of March&nbsp;31, 2010 and December&nbsp;31, 2009 are fairly stated in accordance with GAAP and
are based upon reasonable estimates and assumptions. In addition, we believe that the cost basis
for our available-for-sale securities were recoverable in all material respects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Results of Operations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Comparison of Three Months Ended March&nbsp;31, 2010 and March&nbsp;31, 2009</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Revenue. </I>Revenue was $378,000 for the three months ended March&nbsp;31, 2010 compared with
$197,000 for the three months ended March&nbsp;31, 2009. The increase was primarily due to our
recognition of additional revenue in connection with grants from the National Institutes of Health,
or NIH, and was partially offset by the completion of a research project that was funded by The
Michael J. Fox Foundation, or the MJFF.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Research and Development Expenses. </I>Research and development expenses were $5.1&nbsp;million for
the three months ended March&nbsp;31, 2010 compared with $4.0&nbsp;million for the three months ended March
31, 2009. The $1.1&nbsp;million increase was due primarily to higher contract service and consulting
costs associated with several of our clinical and preclinical programs. This increase included a
one-time payment to Affitech AS of $500,000 in exchange for Affitech&#146;s agreement to release us from
any future obligations to make royalty or milestone payments under our MASP-2 antibody development
agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General and Administrative Expenses. </I>General and administrative expenses were $1.7
million for the three months ended March&nbsp;31, 2010 compared with $1.4&nbsp;million for the three months
ended March&nbsp;31, 2009. The increase was primarily due to higher costs associated with being a public
company and an increase in patent costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Investment Income. </I>Investment income was $17,000 for the three months ended March&nbsp;31, 2010
compared with $81,000 for the three months ended March&nbsp;31, 2009. The decrease was due primarily to
lower market rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest Expense. </I>Interest expense was $452,000 for the three months ended March&nbsp;31, 2010
compared with $590,000 for the three months ended March&nbsp;31, 2009. The decrease was primarily due to
lower interest paid on our notes payable to BlueCrest Venture Finance Master Fund Limited, or
BlueCrest, due to a lower principal balance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other Income (Expense). </I>Other income was $199,000 for the three months ended March&nbsp;31, 2010
compared with $262,000 for the three months ended March&nbsp;31, 2009. The decrease was primarily due to
reduced non-cash income from the change in fair value of warrants compared to the first quarter in
2009. Upon completion of our IPO in October&nbsp;2009, all of our preferred stock warrants were
converted into common stock warrants, resulting in the reclassification of the preferred stock
warrant liability to equity and no further requirement for us to record the change in fair value of
the warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Liquidity and Capital Resources</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since inception, we have financed our operations primarily through the private placement of
equity securities for proceeds totaling $77.4&nbsp;million and through a debt facility with loan
proceeds totaling $17.0&nbsp;million. In October&nbsp;2009, we completed our IPO and issued and sold a total
of 6,820,000 shares of common stock for aggregate net proceeds of $61.8&nbsp;million. The proceeds have
been used to fund our operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2010, we had $51.1&nbsp;million in cash, cash equivalents and short-term
investments. Our cash, cash equivalents and short-term investment balances are held in a variety of
interest-bearing instruments, including money
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">market accounts, mortgage-backed securities issued by or fully collateralized by U.S.
government or U.S. government-sponsored entities. Cash in excess of immediate requirements is
invested in accordance with established guidelines to preserve principal and maintain liquidity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Operating activities. </I>Net cash used in operating activities of $7.6&nbsp;million for the three
months ended March&nbsp;31, 2010 was primarily due to the net loss for the period of $6.7&nbsp;million and
changes in operating assets and liabilities of $1.6&nbsp;million, offset in part by $473,000 of
non-cash stock-based compensation. Net cash used in operating activities of $4.7&nbsp;million for the
three months ended March&nbsp;31, 2009 was primarily due to the net loss of $5.5&nbsp;million, offset in part
by $448,000 of non-cash stock-based compensation expense and $183,000 from changes in operating
assets and liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Investing activities. </I>Net cash provided by investing activities was $8.9&nbsp;million for the three
months ended March&nbsp;31, 2010 primarily due to the proceeds from the sale of investments during the
period. Net cash provided by investing activities was $415,000 for the three months ended March&nbsp;31,
2009 primarily due to the sale and maturities of investments in the amount of $423,000 during the
period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financing activities. </I>Net cash used in financing activities was $1.3&nbsp;million for the three
months ended March&nbsp;31, 2010 primarily as a result of principal payments due under our notes payable
to BlueCrest. Net cash provided by financing activities was $1.5&nbsp;million for the three months ended
March&nbsp;31, 2009 primarily due to the proceeds from issuance of convertible preferred stock to The
Stanley Medical Research Institute, or SMRI.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2010, the balance of notes payable is $11.5&nbsp;million, consisting primarily of
notes payable to BlueCrest. We have classified $6.4&nbsp;million of the $11.5&nbsp;million balance of notes
payable to BlueCrest as a long-term liability. We cannot borrow any additional amounts under the
BlueCrest agreement. Interest on amounts borrowed under the loan agreement accrues at an annual
rate of 12.5%. Payments due under each tranche were interest only for the first three months, and
are interest and principal thereafter for 36&nbsp;months. Under the loan agreement, we must comply with
affirmative and negative covenants and, if any event, condition or change occurs that has a
material adverse effect (as defined in the agreement), BlueCrest may require immediate repayment of
all loan amounts then currently outstanding. We have no indication that we are in default of the
material adverse effect clause, and no scheduled loan payments have been accelerated as a result of
this provision. We are using the proceeds of the loan for working capital, capital expenditures and
general corporate purposes. Our obligations under the loan agreement are collateralized by
substantially all of our assets, other than intellectual property. We may prepay the outstanding
principal amount of all loans then outstanding in whole, but not in part, by providing 30&nbsp;days
written notice. However, a prepayment premium of 2.0% applies if the prepayment is made within 18
months after the borrowing date of the applicable tranche. If a prepayment is made more than 18
months after the date of the applicable tranche, then the prepayment premium is reduced to 1.0%. In
connection with the loan and security agreement, we incurred debt issuance costs of $122,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a condition to BlueCrest making the initial $5.0&nbsp;million loan, we agreed to pay a success
fee to BlueCrest in an amount up to $400,000 prorated based on amounts borrowed should certain exit
events, such as an initial public offering, occur prior to September&nbsp;12, 2018. Following the
completion of our initial public offering in October&nbsp;2009, we paid BlueCrest a success fee in the
amount of $340,000. We have no further obligations to pay a success fee to BlueCrest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the execution of the loan and security agreement, we issued a warrant to
BlueCrest to purchase 25,213 shares of our common stock at an exercise price of $13.48 per share.
This warrant expired upon the closing of our initial public offering in October&nbsp;2009 without being
exercised.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2006, we entered into a funding agreement with SMRI to develop a proprietary
product candidate that inhibits PDE10 for the treatment of schizophrenia. Under the agreement, we
may receive grant and equity funding upon achievement of product development milestones through
Phase I clinical trials totaling $9.0&nbsp;million, subject to our mutual agreement with SMRI. As of
March&nbsp;31, 2010, we had received $5.7&nbsp;million from SMRI, $1.8&nbsp;million of which was recorded as
revenue, $3.2 was recorded as equity funding and $607,000 remains in deferred revenue.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 1%"><I>Funding Requirements</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our existing cash, cash equivalents and short-term investments will be
sufficient to fund our anticipated operating expenses, capital expenditures and note payments for
at least the next 12&nbsp;months. We have based this estimate on assumptions that may prove to be wrong
and we could use our available capital resources sooner than we currently expect. Because of the
numerous risks and uncertainties associated with the development and commercialization of our
product candidates, and to the extent that we may or may not enter into collaborations with third
parties to participate in development and commercialization, we are unable to estimate the amounts
of increased capital requirements and operating expenditures required in the future. Our future
operating and capital requirements will depend on many factors, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the progress and results of our clinical trials for OMS103HP, OMS302, OMS201
and our Addiction program;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>costs related to manufacturing services;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether the hiring of a number of new employees to support our continued
growth during this period will occur at salary levels consistent with our estimates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the scope, rate of progress, results and costs of our preclinical testing,
clinical trials and other research and development activities for additional product
candidates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the terms and timing of payments of any collaborative or licensing agreements
that we have or may establish, including pursuant to our agreements with Daiichi-Sankyo
Company, Limited and North Coast Biologics;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>market acceptance of our approved products;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the cost, timing and outcomes of the regulatory processes for our product
candidates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the costs of commercialization activities, including product manufacturing,
marketing, sales and distribution;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number and characteristics of product candidates that we pursue;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the cost of establishing clinical and commercial supplies of our product
candidates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the cost of preparing, filing, prosecuting, defending and enforcing patent
claims and other intellectual property rights;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the extent to which we acquire or invest in businesses, products or
technologies, although we currently have no commitments or agreements relating to any of
these types of transactions other than our right to acquire assets for our GPCR program
from Patobios Limited for $10.8&nbsp;million CAD in cash and stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether we receive grant funding for our programs; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our degree of success in commercializing OMS103HP and other product
candidates.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not anticipate generating revenue from the sale of our product candidates until 2011 at
the earliest. We expect our continuing operating losses to result in an increasing total amount of
cash used in operations over the next several years. To the extent our capital resources are
insufficient to meet our future capital requirements, we will need to finance our future cash needs
through public or private equity offerings, debt financings or corporate collaboration and
licensing arrangements. We currently do not have any commitments for future external funding.
Additional equity or debt financing or corporate collaboration and licensing arrangements may not
be available on acceptable terms, if at all. If adequate funds are not available, we may be
required to delay, reduce the scope of or eliminate our research and development programs,
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">reduce our planned commercialization efforts or obtain funds through arrangements with
collaborators or others that may require us to relinquish rights to certain product candidates that
we might otherwise seek to develop or commercialize independently, or enter into corporate
collaborations at an earlier stage of development than we might otherwise choose. In addition, any
future equity funding will dilute the ownership of our equity investors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Contractual Obligations and Commitments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There have been no significant changes during the three months ended March&nbsp;31, 2010 to the
items that we disclosed as our contractual obligations and commitments in our Form 10-K for the
year ended December&nbsp;31, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Off-Balance Sheet Arrangements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since our inception, we have not engaged in any off-balance sheet arrangements.
</DIV>
<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our exposure to market risk is primarily confined to our investment securities and notes
payable. The primary objective of our investment activities is to preserve our capital to fund
operations. We also seek to maximize income from our investments without assuming significant risk.
To achieve our objectives, we maintain a portfolio of investments in a variety of securities of
high credit quality. As of March&nbsp;31, 2010, we had cash, cash equivalents and short-term investments
of $51.1&nbsp;million. We have invested these funds in highly liquid, investment-grade securities in
accordance with our investment policy. The securities in our investment portfolio are not leveraged
and are classified as available for sale. We currently do not hedge interest rate exposure. Because
of the short-term maturities of our investments, we do not believe that an increase in market rates
would have a material negative impact on the realized value of our investment portfolio. We
actively monitor changes in interest rates. While our investment portfolio includes mortgage-backed
securities, we do not hold sub-prime mortgages. Our investments in mortgage-backed securities are
issued by, or fully collateralized by, the U.S. government or U.S. government-sponsored entities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are exposed to potential loss due to changes in interest rates. Our principal interest rate
exposure is to changes in U.S. interest rates related to our investment securities. To estimate the
potential loss due to changes in interest rates, we performed a sensitivity analysis using the
instantaneous adverse change in interest rates of 100 basis points across the yield curve. On this
basis, we estimate the potential loss in fair value that would result from a hypothetical 1% (100
basis points) increase in interest rates to be approximately $9,000 as of March&nbsp;31, 2010.
</DIV>
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 4. CONTROLS AND PROCEDURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Evaluation of Disclosure Controls and Procedures</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our management, with the participation of our principal executive and financial officer,
evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act, as of March&nbsp;31, 2010. Management recognizes that
any controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving their objectives and management necessarily applies its judgment in
evaluating the cost-benefit relationship of possible controls and procedures. Based on the
evaluation of our disclosure controls and procedures as of March&nbsp;31, 2010, our principal executive
officer and principal financial officer concluded that, as of such date, our disclosure controls
and procedures were effective at the reasonable assurance level.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Changes in Internal Control over Financial Reporting</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There was no change in our internal control over financial reporting identified in connection
with the evaluation required by Rule&nbsp;13a-15(d) and 15d-15(d) of the Exchange Act that occurred
during the period covered by this report that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART II &#151; OTHER INFORMATION</B>
</DIV>

<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 1. LEGAL PROCEEDINGS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;21, 2009, our former chief financial officer, Richard J. Klein, filed a lawsuit
against us and some of our current and former directors in the United States District Court for the
Western District of Washington. Mr.&nbsp;Klein alleges in his complaint that we, among other things,
violated the Federal False Claims Act, wrongfully discharged his employment in violation of public
policy and defamed him. Mr.&nbsp;Klein seeks, among other things, damages in an amount to be proven at
trial, actual litigation expenses and his reasonable attorneys&#146; fees and damages for loss of future
earnings. On October&nbsp;4, 2009, we filed with the court our amended answer to Mr.&nbsp;Klein&#146;s
allegations, generally denying his claims and bringing counterclaims against Mr.&nbsp;Klein for breach
of contract, misappropriation of trade secrets and breach of fiduciary duty. Mr.&nbsp;Klein filed an
answer with the court generally denying our counterclaims. On January&nbsp;8, 2010, the court dismissed
all of our non-executive directors from the case with prejudice. We intend to vigorously defend
ourselves against Mr.&nbsp;Klein&#146;s claims and to seek, among other things, our attorneys&#146; fees and costs
incurred in defending this action.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2008, Mr.&nbsp;Klein used our Whistleblower Policy procedures to report to the chairman
of our audit committee that we had submitted grant reimbursement claims to the National Institutes
of Health, or NIH, for work that we had not performed. In accordance with the Whistleblower Policy
and its charter, our audit committee, with special outside counsel, commenced an independent
investigation of our NIH grant and claims procedures. The investigation concluded that we had not
submitted claims to the NIH for work we had not performed. In January&nbsp;2009, we terminated Mr.
Klein&#146;s employment for reasons other than this incident. We subsequently voluntarily reported to
the NIH Mr.&nbsp;Klein&#146;s whistleblower report and the audit committee findings; the NIH confirmed to us
in writing that it was satisfied with our handling of these grant matters. Although we deny Mr.
Klein&#146;s allegations and believe that we have substantial and meritorious defenses to his claims,
neither the outcome of the litigation nor the amount and range of potential damages or exposure
associated with the litigation can be assessed with certainty.
</DIV>
<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 1A. RISK FACTORS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Our business, prospects, financial condition or operating results could be materially
adversely affected by any of the risks described below, as well as other risks not currently known
to us or that we currently deem immaterial. You should carefully consider these risks before making
an investment decision. The trading price of our common stock could decline due to any of these
risks and you may lose all or part of your investment. In assessing the risks described below, you
should also refer to the other information contained in this Quarterly Report on </I><I>Form 10-Q</I><I>.</I>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Risks Related to Our Product Candidates and Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Our success largely depends on the success of our lead PharmacoSurgery</B><FONT style="FONT-variant: SMALL-CAPS"><SUP style="FONT-size: 85%; vertical-align: text-top"><B>tm</B></SUP></FONT>
<B>product candidate, OMS103HP, and we cannot be certain that it will receive regulatory approval or
be successfully commercialized. If we are unable to commercialize OMS103HP, or experience
significant delays in doing so, our business will be materially harmed.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a biopharmaceutical company with no products approved for commercial sale and we have
not generated any revenue from product sales. We have incurred, and will continue to incur,
significant costs relating to the clinical development and commercialization of our lead product
candidate, OMS103HP, for use during arthroscopic anterior cruciate ligament, or ACL, reconstruction
surgery as well as arthroscopic meniscectomy surgery. We have not yet obtained regulatory approval
to market this product candidate for ACL reconstruction surgery, arthroscopic meniscectomy surgery
or any other indication in any jurisdiction and we may never be able to obtain approval or, if
approvals are obtained, to commercialize this product candidate successfully. We are currently
conducting a Phase 3 clinical program of OMS103HP for ACL reconstruction and expect to release the
results during the second half of 2010. There can be no assurance that the data will be positive.
Even if the data is positive, the FDA may decide that our data are insufficient for approval of
OMS103HP and require additional preclinical, clinical or other studies. If OMS103HP does not
receive regulatory approval for ACL reconstruction surgery or arthroscopic meniscectomy surgery or
if approval is delayed
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">beyond our current expectations, or if it is not successfully commercialized for one or both
uses, we may not be able to generate revenue, become profitable, fund the development of our other
product candidates or preclinical development programs or continue our operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not know whether our clinical trials for OMS103HP will be completed on schedule or
result in regulatory approval or in a marketable product. If approved for commercialization, we do
not anticipate that OMS103HP will reach the market until 2011 at the earliest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our success is also dependent on the success of our additional PharmacoSurgery product candidates,
OMS302 and OMS201, and we cannot be certain that either will advance through clinical testing,
receive regulatory approval or be successfully commercialized.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to OMS103HP, our success will depend on the successful commercialization of one or
both of two additional PharmacoSurgery product candidates, OMS302 and OMS201. We are finalizing
preparations to initiate a second Phase 2 clinical trial for OMS302 to assess the effect of the
mydriatic API and the anti-inflammatory API in a full-factorial design. We are also conducting a
Phase 1/Phase 2 clinical trial evaluating the efficacy, safety and systemic absorption of OMS201
when used during ureteroscopy for removal of ureteral or renal stones. We have incurred and will
continue to incur significant costs relating to the clinical development and commercialization of
these PharmacoSurgery product candidates. We have not obtained regulatory approval to market these
product candidates for any indication in any jurisdiction and we may never be able to obtain
approval or, if approvals are obtained, to commercialize these product candidates successfully. If
OMS302 and OMS201 do not receive regulatory approval, or if they are not successfully
commercialized, we may not be able to generate revenue, become profitable, fund the development of
our other product candidates or our preclinical programs or continue our operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not know whether our planned and current clinical trials for OMS302 and OMS201 will be
completed on schedule, if at all. In addition, we do not know whether any of our clinical trials
will be successful or result in approval of either product for marketing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>We have a history of operating losses and we may not achieve or maintain profitability.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not been profitable and have generated substantial operating losses since we were
incorporated in June&nbsp;1994. We had net losses of approximately $6.7&nbsp;million and $5.5&nbsp;million for the
three months ended March&nbsp;31, 2010 and 2009, respectively. As of March&nbsp;31, 2010, we had an
accumulated deficit of approximately $125.0&nbsp;million. We expect to incur additional losses for at
least the next several years and cannot be certain that we will ever achieve profitability. As a
result, our business is subject to all of the risks inherent in the development of a new business
enterprise, such as the risks that we may be unable to obtain additional capital needed to support
the preclinical and clinical expenses of development and commercialization of our product
candidates, to develop a market for our potential products, to successfully transition from a
company with a research and development focus to a company capable of commercializing our product
candidates and to attract and retain qualified management as well as technical and scientific
staff.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>We are subject to extensive government regulation, including the requirement of approval before our
products may be marketed.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Both before and after approval of our product candidates, we, our product candidates, and our
suppliers and contract manufacturers are subject to extensive regulation by governmental
authorities in the United States and other countries, covering, among other things, testing,
manufacturing, quality control, labeling, advertising, promotion, distribution, and import and
export. Failure to comply with applicable requirements could result in, among other things, one or
more of the following actions: warning letters; fines and other monetary penalties; unanticipated
expenditures; delays in approval or refusal to approve a product candidate; product recall or
seizure; interruption of manufacturing or clinical trials; operating restrictions; injunctions; and
criminal prosecution. We or the U.S. Food and Drug Administration, or FDA, or an
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->25<!-- /Folio -->
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">institutional review board, or IRB, may suspend or terminate human clinical trials at any time
on various grounds, including a finding that the patients are being exposed to an unacceptable
health risk.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our product candidates cannot be marketed in the United States without FDA approval, and can
only be marketed for the indications, if any, for which they may be approved. The FDA has not
approved any of our product candidates for sale in the United States. All of our product candidates
are in development, and will have to be approved by the FDA before they can be marketed in the
United States. Obtaining FDA approval requires substantial time, effort, and financial resources,
and may be subject to both expected and unforeseen delays, and there can be no assurance that any
approval will be granted on a timely basis, if at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The FDA may decide that our data are insufficient for approval of our product candidates and
require additional preclinical, clinical or other studies. As we develop our product candidates, we
periodically discuss with the FDA clinical, regulatory and manufacturing matters, and our views
may, at times, differ from those of the FDA. For example, the FDA has questioned whether our
studies evaluating OMS103HP in patients undergoing ACL reconstruction surgery are adequately
designed to evaluate efficacy. If these studies fail to demonstrate efficacy, we will be required
to provide additional information, including possibly the results of additional clinical trials.
Also, the FDA regulates those of our product candidates consisting of two or more active
ingredients as combination drugs under its Combination Drug Policy. The Combination Drug Policy
requires that we demonstrate that each active ingredient in a drug product contributes to the
product&#146;s effectiveness. The FDA has questioned the means by which we intend to demonstrate such
contribution and whether available data and information demonstrate contribution for each active
ingredient in OMS103HP. If we are unable to resolve these questions, we may be required to provide
additional information, which may include the results of additional preclinical studies or clinical
trials.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are required to conduct additional clinical trials or other testing of our product
candidates beyond those that we currently contemplate for regulatory approval, if we are unable to
successfully complete our clinical trials or other testing, or if the results of these and other
trials or tests fail to demonstrate efficacy or raise safety concerns, we may be delayed in
obtaining marketing approval for our product candidates, or may never be able to obtain marketing
approval.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Even if regulatory approval of a product candidate is obtained, such approval may be subject
to significant limitations on the indicated uses for which that product may be marketed, conditions
of use, and/or significant post approval obligations, including additional clinical trials. These
regulatory requirements may, among other things, limit the size of the market for the product. Even
after approval, discovery of previously unknown problems with a product, manufacturer, or facility,
such as previously undiscovered side effects, may result in restrictions on any product,
manufacturer, or facility, including, among other things, a possible withdrawal of approval of the
product.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>If our clinical trials are delayed, we may be unable to develop our product candidates on a timely
basis, which will increase our development costs and delay the potential commercialization of our
products and the subsequent receipt of revenue from sales, if any.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot predict whether we will encounter problems with any of our completed, ongoing or
planned clinical trials that will cause regulatory agencies, IRBs or us to delay our clinical
trials or suspend or delay the analysis of the data from those trials. Clinical trials can be
delayed for a variety of reasons, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>discussions with the FDA or comparable foreign authorities regarding the scope or
design of our clinical trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>delays or the inability to obtain required approvals from IRBs or other governing
entities at clinical sites selected for participation in our clinical trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>delays in enrolling patients into clinical trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>lower than anticipated retention rates of patients in clinical trials;</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the need to repeat or conduct additional clinical trials as a result of problems such
as inconclusive or negative results, poorly executed testing or unacceptable design;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an insufficient supply of product candidate materials or other materials necessary to
conduct our clinical trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the need to qualify new suppliers of product candidate materials for FDA and foreign
regulatory approval;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an unfavorable FDA inspection or review of a clinical trial site or records of any
clinical investigation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the occurrence of drug-related side effects or adverse events experienced by
participants in our clinical trials; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the placement of a clinical hold on a trial.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, a clinical trial may be suspended or terminated by us, the FDA or other
regulatory authorities due to a number of factors, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>failure to conduct the clinical trial in accordance with regulatory requirements or
our clinical protocols;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>inspection of the clinical trial operations or trial sites by the FDA or other
regulatory authorities resulting in the imposition of a clinical hold;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>unforeseen safety issues or any determination that a trial presents unacceptable
health risks; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>lack of adequate funding to continue the clinical trial, 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, or CROs, and other third parties.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in regulatory requirements and guidance may occur and we may need to amend clinical
trial protocols to reflect these changes. Amendments may require us to resubmit our clinical trial
protocols to IRBs for reexamination, which may impact the costs, timing or successful completion of
a clinical trial. If the results of our clinical trials are not available when we expect or if we
encounter any delay in the analysis of data from our clinical trials, we may be unable to file for
regulatory approval or conduct additional clinical trials on the schedule we currently anticipate.
Any delays in completing our clinical trials may increase our development costs, would slow down
our product development and approval process, would delay our receipt of product revenue and would
make it difficult to raise additional capital. Many of the factors that cause, or lead to, a delay
in the commencement or completion of clinical trials may also ultimately lead to the denial of
regulatory approval of a product candidate. In addition, significant clinical trial delays also
could allow our competitors to bring products to market before we do and impair our ability to
commercialize our future products and may harm our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>If we are unable to raise additional capital when needed or on acceptable terms, we may be unable
to complete the development and commercialization of OMS103HP and our other product candidates, or
continue our other preclinical development programs.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operations have consumed substantial amounts of cash since inception. We expect to
continue to spend substantial amounts to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>complete the Phase 3 clinical trials of OMS103HP for use in arthroscopic ACL
reconstruction surgery and begin related commercialization activities;
</TD>
</TR>
</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>initiate, conduct and complete the Phase 3 clinical trials of OMS103HP for use in
arthroscopic meniscectomy surgery, should we elect to proceed with these Phase 3 clinical
trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>conduct and complete the clinical trials of OMS302 for use during lens replacement
surgery;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>conduct and complete the clinical trials of OMS201 for use in endoscopic surgery of
the urological tract;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>continue our research and development;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>make milestone payments to our collaborators;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>make principal and interest payments due under our debt facility with BlueCrest
Venture Finance Master Fund Limited, or BlueCrest;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>initiate and conduct clinical trials for other product candidates; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>launch and commercialize any product candidates for which we receive regulatory
approval.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, if we elect under our Exclusive Technology Option Agreement with Patobios Limited
to purchase assets for use in our GPCR program, we will be required to pay Patobios approximately
$10.8&nbsp;million CAD, of which approximately $7.8&nbsp;million CAD is payable in cash and the remaining is
payable in shares of our common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our clinical trials for OMS103HP may be delayed for many of the reasons discussed in these
&#147;Risk Factors,&#148; which would increase the development expenses of OMS103HP and may require us to
raise additional capital beyond what we raised in our October&nbsp;2009 IPO to complete the clinical
development and commercialization of OMS103HP and to decrease spending on our other clinical and
preclinical development programs. Although we plan to seek to raise additional funding, we have no
commitments for additional funding and cannot be certain that it will be available on acceptable
terms, if at all. Continued disruptions in the global equity and credit markets may further limit
our ability to access capital. To the extent that we raise additional funds by issuing equity
securities, our shareholders may experience significant dilution. Any debt financing, if available,
may restrict our operations similar to the description in the following risk factor. If we are
unable to raise additional capital when required or on acceptable terms, we may have to
significantly delay, scale back or discontinue the development or commercialization of one or more
of our product candidates or one or more of our other research and development initiatives. We also
could be required to seek collaborators for one or more of our current or future product candidates
at an earlier stage than otherwise would be desirable or on terms that are less favorable than
otherwise might be available or to relinquish or license on unfavorable terms our rights to
technologies or product candidates that we otherwise would seek to develop or commercialize
ourselves. We also may have insufficient funds or otherwise be unable to advance our preclinical
programs, such as potential new drug targets developed from our GPCR program, to a point where they
can generate revenue through partnerships, collaborations or other arrangements. Any of these
events could significantly harm our business and prospects and could cause our stock price to
decline.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>The terms of our debt facility place restrictions on our operating and financial flexibility and if
we raise additional capital through debt financing the terms of any new debt could further restrict
our ability to operate our business.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2008 we borrowed $17.0&nbsp;million pursuant to the terms of a loan and security agreement with
BlueCrest and pledged substantially all of our assets, other than intellectual property, as
collateral for this loan. Our agreement with BlueCrest restricts our ability to incur additional
indebtedness, pay dividends and engage in significant business transactions such as a change of
control of Omeros, so long as we owe any amounts to BlueCrest under the agreement. Any of these
restrictions could significantly limit our operating and financial flexibility and ability to
respond to changes in our business or competitive activities. In addition, if we default under our
agreement, BlueCrest may have the right to accelerate all of our repayment obligations under the
agreement and to take control of our pledged assets, which include our cash, cash equivalents and
short-term investments, potentially requiring us to renegotiate our agreement on terms less
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">favorable to us. Further, if we are liquidated, BlueCrest&#146;s right to repayment would be senior
to the rights of the holders of our common stock to receive any proceeds from the liquidation. An
event of default under the loan and security agreement includes the occurrence of any material
adverse effect upon our business operations, properties, assets, results of operations or financial
condition, taken as whole with respect to our viability, that would reasonably be expected to
result in our inability to repay the loan. If BlueCrest declares a default upon the occurrence of
any event that it interprets as having a material adverse effect upon us as defined under our
agreement, we will be required to repay the loan immediately or to attempt to reverse BlueCrest&#146;s
declaration through negotiation or litigation. Any declaration by BlueCrest of an event of default
could significantly harm our business and prospects and could cause our stock price to decline. If
we raise any additional debt financing, the terms of such debt could further restrict our operating
and financial flexibility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our lead product candidate OMS103HP or future product candidates may never achieve market
acceptance even if we obtain regulatory approvals.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Even if we receive regulatory approvals for the commercial sale of our lead product candidate
OMS103HP or future product candidates, the commercial success of these product candidates will
depend on, among other things, their acceptance by physicians, patients, third-party payors and
other members of the medical community. If our product candidates fail to gain market acceptance,
we may be unable to earn sufficient revenue to continue our business. Market acceptance of, and
demand for, any product candidate that we may develop and commercialize will depend on many
factors, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to provide acceptable evidence of safety and efficacy;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>availability, relative cost and relative efficacy of alternative and competing
treatments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the effectiveness of our marketing and distribution strategy to, among others,
hospitals, surgery centers, physicians and/or pharmacists;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>prevalence of the surgical procedure or condition for which the product is approved;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>acceptance by physicians of each product as a safe and effective treatment;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>perceived advantages over alternative treatments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>relative convenience and ease of administration;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the availability of adequate reimbursement by third parties;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the prevalence and severity of adverse side effects;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>publicity concerning our products or competing products and treatments; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to obtain sufficient third-party insurance coverage.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of operations in which our PharmacoSurgery products, if approved, would be used may
be significantly less than the total number of operations performed according to the market data
obtained from industry sources. If our lead product candidate OMS103HP or future product candidates
do not become widely accepted by physicians, patients, third-party payors and other members of the
medical community, it is unlikely that we will ever become profitable, and if we are unable to
increase market penetration of OMS103HP or our other product candidates, our growth will be
significantly harmed.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>We rely on third parties to conduct portions of our preclinical research and clinical trials. If
these third parties do not perform as contractually required or otherwise expected, we may not be
able to obtain regulatory approval for or commercialize our product candidates.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We rely on third parties, such as CROs and research institutions, to conduct a portion of our
preclinical research. We also rely on third parties, such as medical institutions, clinical
investigators and CROs, to assist us in conducting our clinical trials. Nonetheless, we are
responsible for confirming that our preclinical research is conducted in accordance with applicable
regulations, and that our clinical trials are conducted in accordance with applicable regulations,
the relevant protocol and within the context of approvals by an IRB. Our reliance on these third
parties does not relieve us of responsibility for ensuring compliance with FDA regulations and
standards for conducting, monitoring, recording and reporting the results of preclinical research
and clinical trials to assure that data and reported results are credible and accurate and that the
trial participants are adequately protected. If these third parties do not successfully carry out
their contractual duties or regulatory obligations or meet expected deadlines, if the third parties
need to be replaced or if the quality or accuracy of the data they obtain is compromised due to
their failure to adhere to our clinical protocols or regulatory requirements or for other reasons,
our preclinical and clinical development processes may be extended, delayed, suspended or
terminated, and we may not be able to obtain regulatory approval for our product candidates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>If we are unable to establish sales and marketing capabilities or enter into agreements with third
parties to market and sell our product candidates, we may be unable to generate product revenue.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not have a sales and marketing organization and have no experience in the sales,
marketing and distribution of biopharmaceutical products. Developing an internal sales force is
expensive and time-consuming and should be commenced 12 to 18&nbsp;months in advance of product launch.
Any delay in developing an internal sales force could impact the timing of any product launch. If
we enter into arrangements with third parties to perform sales, marketing and distribution
services, our product revenues are likely to be lower than if we market and sell any approved
product candidates that we develop ourselves. Factors that may inhibit our efforts to commercialize
our approved product candidates without collaboration partners include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our inability to recruit and retain adequate numbers of effective sales and marketing
personnel;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the inability of sales personnel to obtain access to or persuade adequate numbers of
hospitals, surgery centers, physicians and/or pharmacists to purchase, use or prescribe
our approved product candidates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>unforeseen costs and expenses associated with creating an independent sales and
marketing organization.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are unsuccessful in building a sales and marketing infrastructure or unable to partner
with one or more third parties to perform sales and marketing services for our product candidates,
we will have difficulty commercializing our product candidates, which would adversely affect our
business and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>We have no ability to manufacture clinical or commercial supplies of our product candidates and
currently intend to rely solely on third parties to manufacture clinical and commercial supplies of
all of our product candidates.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently do not intend to manufacture our product candidates for our clinical trials or on
a commercial scale and intend to rely on third parties to do so. Our clinical supplies of OMS103HP
were manufactured in a freeze-dried, or lyophilized, form by Catalent Pharma Solutions, Inc. in its
Albuquerque, New Mexico facility. In May&nbsp;2008, Catalent announced that it sold this facility to OSO
Biopharmaceuticals Manufacturing, LLC, or OSO, which continues to manufacture of lyophilized drug
products at this facility. We have not entered into a binding agreement with Catalent or OSO for
the commercial supply of lyophilized OMS103HP, and cannot be certain that we will be able to do so
on
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">commercially reasonable terms. Qualification of any other facility to manufacture lyophilized
OMS103HP would require transfer of manufacturing methods, the production of one or more additional
registration batches of lyophilized OMS103HP and the generation of additional stability data, which
could delay the availability of commercial supplies of lyophilized OMS103HP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have also formulated OMS103HP as a liquid solution and, if approved for marketing, intend
to launch OMS103HP as a liquid solution. We have entered into an agreement with Hospira Worldwide,
Inc. for the commercial supply of liquid OMS103HP. We do not believe that the inactive ingredients
in liquid OMS103HP, which are included in the FDA&#146;s Inactive Ingredient Guide due to being present
in drug products previously approved for parenteral use, impact its safety or effectiveness. The
FDA will require us to provide comparative information and complete a stability study in connection
with a potential NDA submission. We are currently conducting a nonclinical study to demonstrate
that liquid OMS103HP is as safe as lyophilized OMS103HP; however, the FDA may require us to conduct
additional studies. Delays, unexpected results in these studies or any requirement to conduct
additional studies could delay the commercial availability of liquid OMS103HP. Any significant
delays in the manufacture of clinical or commercial supplies could materially harm our business and
prospects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>If the contract manufacturers that we rely on experience difficulties with manufacturing our
product candidates or fail FDA inspections, our clinical trials, regulatory submissions and ability
to commercialize our product candidates and generate revenue may be significantly delayed.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract manufacturers that we select to manufacture our product candidates for clinical
testing or for commercial use may encounter difficulties with the small- and large-scale
formulation and manufacturing processes required for such manufacture. These difficulties could
result in delays in clinical trials, regulatory submissions, or commercialization of our product
candidates. Once a product candidate is approved and being marketed, these difficulties could also
result in the later recall or withdrawal of the product from the market or failure to have adequate
supplies to meet market demand. Even if we are able to establish additional or replacement
manufacturers, identifying these sources and entering into definitive supply agreements and
obtaining regulatory approvals may require a substantial amount of time and cost and such supply
arrangements may not be available on commercially reasonable terms, if at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we and our contract manufacturers must comply with current good manufacturing
practice, or cGMP, requirements strictly enforced by the FDA through its facilities inspection
program. These requirements include quality control, quality assurance and the maintenance of
records and documentation. We or our contract manufacturers may be unable to comply with cGMP
requirements or with other FDA, state, local and foreign regulatory requirements. We have little
control over our contract manufacturers&#146; compliance with these regulations and standards or with
their quality control and quality assurance procedures but we are responsible for their compliance.
Large-scale manufacturing processes have been developed only for lyophilized OMS103HP. For the
liquid formulation of OMS103HP and our other product candidates, development of large-scale
manufacturing processes will require validation studies, which the FDA must review and approve.
Failure to comply with these requirements by our contract manufacturers could result in the
issuance of untitled letters and/or warning letters from authorities, as well as sanctions being
imposed on us, including fines and civil penalties, suspension of production, suspension or delay
in product approval, product seizure or recall or withdrawal of product approval. If the safety of
any product candidate supplied by contract manufacturers is compromised due to their failure to
adhere to applicable laws or for other reasons, we may not be able to obtain or maintain regulatory
approval for or successfully commercialize one or more of our product candidates, which would harm
our business and prospects significantly.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If one or more of our contract manufacturers were to encounter any of these difficulties or
otherwise fail to comply with its contractual obligations, our ability to provide product
candidates to patients in our clinical trials or on a commercial scale would be jeopardized. Any
delay or interruption in the supply of clinical trial supplies could delay the completion of our
clinical trials, increase the costs associated with maintaining our clinical trial programs and,
depending on the period of delay, require us to commence new trials at significant additional
expense or terminate the trials completely. If we need to change to other commercial manufacturers,
the FDA and comparable foreign regulators must
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">first approve these manufacturers&#146; facilities and processes, which would require new testing
and compliance inspections, and the new manufacturers would have to be educated in or independently
develop the processes necessary for the production of our product candidates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Ingredients necessary to manufacture our PharmacoSurgery product candidates may not be available on
commercially reasonable terms, if at all, which may delay the development and commercialization of
our product candidates.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We must purchase from third-party suppliers the ingredients necessary for our contract
manufacturers to produce our PharmacoSurgery product candidates for our clinical trials and, if
approved, for commercial distribution. Suppliers may not sell these ingredients to us at the time
we need them or on commercially reasonable terms, if at all. Although we intend to enter into
agreements with third-party suppliers that will guarantee the availability and timely delivery of
ingredients for our PharmacoSurgery product candidates, we have not yet entered into and we may be
unable to secure any such supply agreements or guarantees. Even if we were able to secure such
agreements or guarantees, our suppliers may be unable or choose not to provide us the ingredients
in a timely manner or in the minimum guaranteed quantities. If we are unable to obtain and then
supply these ingredients to our contract manufacturer for our clinical trials, potential regulatory
approval of our product candidates would be delayed, significantly impacting our ability to develop
our product candidates, which would materially affect our ability to generate revenue from the sale
of our product candidates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>We may need licenses for active ingredients from third parties so that we can develop and
commercialize some products from some of our current preclinical programs, which could increase our
development costs and delay our ability to commercialize products.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Should we decide to use active ingredients in any of our product candidates that are
proprietary to one or more third parties, we would need to obtain licenses to those active
ingredients from those third parties. For example, we intend to use proprietary active ingredients
that we have exclusively licensed from Daiichi-Sankyo Company, Limited for our PDE7 program and we
may use proprietary active ingredients in some of our future GPCR product candidates. We do not
have licenses to any of the proprietary active ingredients we may elect to use in these potential
future GPCR product candidates. If we are unable to access rights to these active ingredients prior
to preclinical toxicology studies intended to support clinical trials, we may need to develop
alternate product candidates from these programs by either accessing or developing alternate active
ingredients, resulting in increased development costs and delays in commercialization of these
product candidates. If we are unable to access rights to the desired active ingredients on
commercially reasonable terms or develop suitable alternate active ingredients, we may not be able
to commercialize product candidates from these programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our ability to pursue the development and commercialization of product candidates from our MASP-2
program depends on the continuation of licenses from third parties.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our MASP-2 program is based in part on intellectual property rights that we licensed on a
worldwide exclusive basis from the University of Leicester, the UK Medical Research Council, or
MRC, and Helion Biotech, ApS, or Helion. The continued maintenance of these agreements requires us
to undertake development activities and, if regulatory approval for marketing is obtained, to pay
royalties to each of these organizations upon commercialization of a MASP-2 product candidate. In
addition, we are obligated to pay Helion up to $6.85&nbsp;million upon the achievement of certain events
related to a MASP-2 product candidate, such as the filing of an Investigational New Drug
application with the FDA, initiation of clinical trials, receipt of marketing approval and reaching
specified sales milestones. Our ability to continue development and commercialization of product
candidates from our MASP-2 program depends on our maintaining these exclusive licenses, which
cannot be assured.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our ability to pursue the development and commercialization of product candidates from our MASP-2
program depends on third-party antibody developers and manufacturers.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any product candidates from our MASP-2 program would be antibodies and we do not have the
internal capability to sequence, hybridize or clone antibodies or to produce antibodies for use in
clinical trials or on a commercial scale. We have entered into development agreements with Affitech
AS and North Coast Biologics for the development of MASP-2 antibodies; however, we do not have
agreements in place with antibody manufacturers to manufacture clinical or commercial quantities of
MASP-2 antibodies and cannot be certain that such agreements could be entered into on commercially
reasonable terms, if at all. There are only a limited number of antibody manufacturers. If we are
unable to obtain clinical supplies of MASP-2 antibody product candidates, clinical trials or the
development of any such product candidate could be substantially delayed until we can find and
qualify a manufacturer, which may increase our development costs, slow down our product development
and approval process, delay receipt of product revenue and make it difficult to raise additional
capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our programs may not produce product candidates that are suitable for clinical trials or that can
be successfully commercialized.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any product candidates from our preclinical programs, including our MASP-2, PDE10, PDE7 and
GPCR programs, must successfully complete preclinical testing, which may include demonstrating
efficacy and the lack of toxicity in established animal models, before entering clinical trials.
Many pharmaceutical and biological product candidates do not successfully complete preclinical
testing and, even if preclinical testing is successfully completed, may fail in clinical trials. In
addition, there can be no assurance that positive results from preclinical studies will be
predictive of results obtained from subsequent preclinical studies or clinical trials. For example,
our studies of PDE7 inhibitors in different animal models of Parkinson&#146;s disease, which may or may
not be relevant to the mechanism of action of PDE7 inhibitors, have produced varying results.
Further, we cannot be certain that any of our preclinical product development programs will
generate product candidates that are suitable for clinical testing. For example, we have not yet
generated any product candidates from our GPCR program. We may discover that there are fewer
druggable targets among the orphan GPCRs than we currently estimate and that, for those
de-orphanized GPCRs that we develop independently, we are unable to develop related product
candidates that successfully complete preclinical or clinical testing. We also cannot be certain
that any product candidates that do advance into clinical trials will successfully demonstrate
safety and efficacy in clinical trials. Even if we achieve positive results in early clinical
trials, they may not be predictive of the results in later trials.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Because we have a number of development programs and are considering a variety of product
candidates, we may expend our limited resources to pursue a particular candidate or candidates and
fail to capitalize on candidates or indications that may be more profitable or for which there is a
greater likelihood of success.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because we have limited resources, we must focus on preclinical development programs and
product candidates that we believe are the most promising. As a result, we may forego or delay
pursuit of opportunities with other product candidates or other indications that later prove to
have greater commercial potential. Our resource allocation decisions may cause us to fail to
capitalize on viable commercial products or profitable market opportunities. Further, if we do not
accurately evaluate the commercial potential or target market for a particular product candidate,
we may relinquish valuable rights to that product candidate through collaboration, license or other
royalty arrangements in cases in which it would have been advantageous for us to retain sole
development and commercialization rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>It is difficult and costly to protect our intellectual property and our proprietary technologies,
and we may not be able to ensure their protection.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our commercial success will depend in part on obtaining and maintaining patent protection and
trade secret protection for the use, formulation and structure of our product candidates and the
methods used to manufacture them, and related to therapeutic targets and methods of treatment, as
well as successfully defending these patents against potential third-party challenges. Our ability
to protect our product candidates from unauthorized making, using, selling, offering to
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">sell or importing by third parties is dependent upon the extent to which we have rights under
valid and enforceable patents that cover these activities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The patent positions of pharmaceutical, biotechnology and other life sciences companies can be
highly uncertain and involve complex legal and factual questions for which important legal
principles remain unresolved. No consistent policy regarding the breadth of claims allowed in
biotechnology patents has emerged to date in the United States, and tests used for determining the
patentability of patent claims in all technologies are in flux. The pharmaceutical, biotechnology
and other life sciences patent situation outside the United States is even more uncertain. Changes
in either the patent laws or in interpretations of patent laws in the United States and other
countries may diminish the value of our intellectual property. Further, the determination that a
patent application or patent claim meets all of the requirements for patentability is a subjective
determination based on the application of law and jurisprudence. For example, in the United States,
a determination of patentability by the USPTO or validity by a court or other trier of fact
requires a determination that the claimed invention has utility and is both novel and non-obvious
to those of ordinary skill in the art in view of prior known publications and public information,
and that the patent specification supporting the claim adequately describes the claimed invention,
discloses the best mode known to the inventors for practicing the invention, and discloses the
invention in a manner that enables one of ordinary skill in the art to make and use the invention.
The ultimate determination by the USPTO or by a court of other trier of fact in the United States,
or corresponding foreign national patent offices or courts, on whether a claim meets all
requirements of patentability cannot be assured. Although we have conducted searches for
third-party publications, patents and other information that may impact the patentability of claims
in our various patent applications and patents, we cannot be certain that all relevant information
has been identified. Accordingly, we cannot predict the breadth of claims that may be allowed or
enforced in our patents or patent applications, our licensed patents or patent applications or in
third-party patents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our issued PharmacoSurgery patents have terms that will expire December&nbsp;12, 2014 and, if our
pending PharmacoSurgery patent applications issue as patents, October&nbsp;20, 2019 for OMS103HP, July
30, 2023 for OMS302 and March&nbsp;17, 2026 for OMS201, not taking into account any extensions due to
potential adjustment of patent terms resulting from USPTO delays. We cannot assure you that any of
these patent applications will issue as patents or of the scope of any claims that may issue from
these pending and future patent applications, or the outcome of any proceedings by any potential
third parties that could challenge the patentability, validity or enforceability of our patents and
patent applications in the United States or foreign jurisdictions, which could limit patent
protection for our product candidates and materially harm our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The degree of future protection for our proprietary rights is uncertain, because legal means
afford only limited protection and may not adequately protect our rights or permit us to gain or
keep our competitive advantage. For example:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we might not have been the first to make the inventions covered by any of our
patents, if issued, or our pending patent applications;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we might not have been the first to file patent applications for these inventions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>others may independently develop similar or alternative technologies or products or
duplicate any of our technologies or products;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>it is possible that none of our pending patent applications will result in issued
patents or, if issued, these patents may not be sufficient to protect our technology or
provide us with a basis for commercially viable products and may not provide us with any
competitive advantages;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>if issued, the patents under which we hold rights may not be valid or enforceable; or</TD>
</TR>

</TABLE>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, to the extent we are unable to obtain and maintain patent protection for one of
our product candidates or in the event such patent protection expires, it may no longer be
cost-effective to extend our portfolio by pursuing additional development of a product candidate
for follow-on indications.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also may rely on trade secrets to protect our technologies or products, especially where we
do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult
to protect. Although we use reasonable efforts to protect our trade secrets, our employees,
consultants, contractors, outside scientific collaborators and other advisors may unintentionally
or willfully disclose our information to competitors. Enforcing a claim that a third-party entity
illegally obtained and is using any of our trade secrets is expensive and time-consuming, and the
outcome is unpredictable. In addition, courts outside the United States are sometimes less willing
to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge,
methods and know-how.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>We may incur substantial costs as a result of litigation or other proceedings relating to patent
and other intellectual property rights.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we choose to go to court to stop someone else from using our inventions, that individual or
company has the right to ask the court to rule that the underlying patents are invalid or should
not be enforced against that third party. These lawsuits are expensive and would consume time and
other resources even if we were successful in stopping the infringement of these patents. There is
also the risk that, even if the validity of these patents is upheld, the court will refuse to stop
the other party on the ground that such other party&#146;s activities do not infringe the patents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further, a third party may claim that we or our contract manufacturers are using inventions
covered by the third party&#146;s patent rights and may go to court to stop us from engaging in the
alleged infringing activity, including making, using or selling our product candidates. These
lawsuits are costly and could affect our results of operations and divert the attention of
managerial and technical personnel. There is a risk that a court would decide that we or our
contract manufacturers are infringing the third party&#146;s patents and would order us or our partners
to stop the activities covered by the patents. In addition, there is a risk that a court will order
us or our contract manufacturers to pay the other party&#146;s damages for having violated the other
party&#146;s patents. We have indemnified our contract manufacturers against certain patent infringement
claims and thus may be responsible for any of their costs associated with such claims and actions.
The pharmaceutical, biotechnology and other life sciences industry has produced a proliferation of
patents, and it is not always clear to industry participants, including us, which patents cover
various types of products or methods of use. The coverage of patents is subject to interpretation
by the courts and the interpretation is not always uniform. If we were sued for patent
infringement, we would need to demonstrate that our products or methods of use either do not
infringe the patent claims of the relevant patent or that the patent claims are invalid, and we may
not be able to do this. Proving invalidity, in particular, is difficult since it requires clear and
convincing evidence to overcome the presumption of validity enjoyed by issued patents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we have conducted searches of third-party patents with respect to our OMS103HP,
OMS302, OMS201, MASP-2, Addiction, PDE10, PDE7 and GPCR programs, these searches may not have
identified all third-party patents relevant to these programs. Consequently, we cannot assure you
that third-party patents containing claims covering our product candidates, programs, technologies
or methods do not exist, have not been filed, or could not be filed or issued.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because some patent applications in the United States may be maintained in secrecy until the
patents are issued, because patent applications in the United States and many foreign jurisdictions
are typically not published until eighteen months after filing, and because publications in the
scientific literature often lag behind actual discoveries, we cannot be certain that others have
not filed patent applications for technology covered by our patents, our licensors&#146; patents, our
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">pending applications or our licensors&#146; pending applications, or that we or our licensors were
the first to invent the technology. Our competitors may have filed, and may in the future file,
patent applications covering technologies similar to ours. Any such patent application may have
priority over our or our licensors&#146; patent applications and could further require us to obtain
rights to issued patents covering such technologies. If another party has filed a U.S. patent
application on inventions similar to ours, we may have to participate in an interference proceeding
declared by the USPTO to determine priority of invention in the United States. The costs of these
proceedings could be substantial, and it is possible that such efforts would be unsuccessful,
resulting in a loss of our U.S. patent position with respect to such inventions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some of our competitors may be able to sustain the costs of complex patent litigation more
effectively than we can because they have substantially greater resources. In addition, any
uncertainties resulting from the initiation and continuation of any litigation could have a
material adverse effect on our ability to raise the capital necessary to continue our operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>We use hazardous materials in our business and must comply with environmental laws and regulations,
which can be expensive.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our research operations produce hazardous waste products, which include chemicals and
radioactive and biological materials. We are subject to a variety of federal, state and local
regulations relating to the use, handling, storage and disposal of these materials. Although we
believe that our safety procedures for handling and disposing of these materials comply with
applicable legal regulations, the risk of accidental contamination or injury from these materials
cannot be eliminated. We generally contract with third parties for the disposal of such substances
and store our low-level radioactive waste at our facilities until the materials are no longer
considered radioactive. We may be required to incur further costs to comply with current or future
environmental and safety regulations. In addition, although we carry insurance, in the event of
accidental contamination or injury from these materials, we could be held liable for any damages
that result and any such liability could exceed our insurance coverage and other resources.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>The loss of members of our management team could substantially disrupt our business operations.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our success depends to a significant degree on the continued individual and collective
contributions of our management team. The members of our management team are at-will employees, and
we do not maintain any key-person life insurance policies except for on the life of Gregory
Demopulos, M.D., our president, chief executive officer and chairman of the board of directors.
Losing the services of any key member of our management team, whether from death or disability,
retirement, competing offers or other causes, could delay execution of our business strategy, cause
us to lose a strategic partner, or otherwise materially affect our operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>We rely on highly skilled personnel and, if we are unable to retain or motivate key personnel or
hire qualified personnel, we may not be able to maintain our operations or grow effectively.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our performance is largely dependent on the talents and efforts of highly skilled individuals.
Our future success depends on our continuing ability to identify, hire, develop, motivate and
retain highly skilled personnel for all areas of our organization. If we are unable to hire and
train a sufficient number of qualified employees for any reason, we may not be able to implement
our current initiatives or grow effectively. We have in the past maintained a rigorous, highly
selective and time-consuming hiring process. We believe that our approach to hiring has
significantly contributed to our success to date. If we do not succeed in attracting qualified
personnel and retaining and motivating existing personnel, our existing operations may suffer and
we may be unable to grow effectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To manage our anticipated future growth, we must continue to implement and improve our
managerial, operational and financial systems and continue to recruit and train additional
qualified personnel. Due to our limited financial resources, we may not be able to effectively
manage the expansion of our operations or recruit and train additional qualified personnel. The
physical expansion of our operations may lead to significant costs and may divert our
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">management and business development resources. Any inability to manage growth could delay the
execution of our business plans or disrupt our operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our former chief financial officer has filed a lawsuit against us and our current and former
directors, the defense of which may consume our time and resources, harm our reputation and the
reputations of our current and former directors, and materially negatively affect our financial
position and cause our stock price to decline.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2008, our former chief financial officer, Richard J. Klein, used our Whistleblower
Policy procedures to report to the chairman of our audit committee that we had submitted grant
reimbursement claims to the National Institutes of Health, or NIH, for work that we had not
performed. In accordance with the Whistleblower Policy and its charter, our audit committee, with
special outside counsel, commenced an independent investigation of our NIH grant and claims
procedures. The investigation concluded that we had not submitted claims to the NIH for work we had
not performed. In January&nbsp;2009, we terminated Mr.&nbsp;Klein&#146;s employment for reasons other than this
incident. Mr.&nbsp;Klein alleged that he was wrongfully terminated and claimed it was retaliatory. We
subsequently voluntarily reported to the NIH Mr.&nbsp;Klein&#146;s whistleblower report and the audit
committee findings; the NIH confirmed to us in writing that it was satisfied with our handling of
these grant matters.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;21, 2009, Mr.&nbsp;Klein filed a lawsuit against us and some of our current and former
directors in the United States District Court for the Western District of Washington, alleging,
among other things, that we violated the Federal False Claims Act, wrongfully discharged his
employment in violation of public policy and defamed him. Mr.&nbsp;Klein seeks, among other things,
damages in an amount to be proven at trial, actual litigation expenses and his reasonable
attorneys&#146; fees and damages for loss of future earnings. On January&nbsp;8, 2010, the court dismissed
all of our non-executive directors from the case with prejudice. Although we have been advised by
outside employment and corporate counsel that we have meritorious defenses to Mr.&nbsp;Klein&#146;s
allegations, and we intend to defend against the claims vigorously, neither the outcome of the
litigation nor the amount and range of potential damages or exposure associated with the litigation
can be assessed with certainty. Further, defending this lawsuit may consume our time and resources,
harm our reputation and the reputations of our current and former directors, and materially
negatively affect our financial position and cause our stock price to decline.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>As a public company we incur increased costs and demands on management as a result of complying
with the laws and regulations affecting public companies, which could affect our operating results.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a public company we incur significant legal, accounting and other expenses that we did not
incur as a private company, including costs associated with public company reporting requirements.
We also have incurred and will continue to incur costs associated with corporate governance
requirements, including first-year compliance under the Sarbanes-Oxley Act, as well as rules
implemented by the SEC and the NASDAQ Stock Market. These rules and regulations have increased our
legal and financial compliance costs and made some activities more time-consuming and costly. We
also expect that these rules and regulations may make it more difficult and more expensive for us
to obtain director and officer liability insurance, and we may be required to accept reduced policy
limits and coverage or incur substantially higher costs to obtain the same or similar coverage than
used to be available. As a result, it may be more difficult for us to attract and retain qualified
individuals to serve on our board of directors or as our executive officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are not currently required to comply with Section&nbsp;404 of the Sarbanes-Oxley Act of 2002,
and are therefore not required to make an assessment of the effectiveness of our internal controls
over financial reporting. Further, our independent registered public accounting firm has not been
engaged to express, nor has it expressed, an opinion on the effectiveness of our internal controls
over financial reporting. We will be required under Section&nbsp;404 to perform system and process
evaluation and testing of our internal controls over financial reporting to allow management and
our independent registered public accounting firm to report on the effectiveness of our internal
controls over financial reporting for fiscal years ending after December&nbsp;31, 2009. Our testing, or
the subsequent testing by our independent registered public accounting firm, may reveal
deficiencies in our internal controls over financial reporting that are deemed to be material
weaknesses.
</DIV>


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</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are not able to implement the requirements of Section&nbsp;404 in a timely manner or
with adequate compliance, management may not be able to assess whether our internal controls over
financial reporting are effective, which may subject us to adverse regulatory consequences and
could result in a negative reaction in the financial markets due to a loss of confidence in the
reliability of our financial statements. In addition, if we fail to develop and maintain effective
controls and procedures, we may be unable to provide the required financial information in a timely
and reliable manner or otherwise comply with the standards applicable to us as a public company.
Any failure by us to provide the required financial information in a timely manner could materially
and adversely impact our financial condition and the market value of our securities.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Risks Related to Our Industry</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our competitors may develop products that are less expensive, safer or more effective, or which may
otherwise diminish or eliminate the commercial success of any potential products that we may
commercialize.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If our competitors market products that are less expensive, safer or more effective than our
future products developed from our product candidates, that reach the market before our product
candidates, or that otherwise negatively affect the market, we may not achieve commercial success.
For example, we are developing PDE10 inhibitors to identify a product candidate for use in the
treatment of schizophrenia and other psychotic disorders. Other pharmaceutical companies, many with
significantly greater resources than we have, are also developing PDE10 inhibitors for the
treatment of schizophrenia and other psychotic disorders and these companies may be further along
in development. The failure of a PDE10 inhibitor product candidate from any of our competitors to
demonstrate safety or efficacy in clinical trials may negatively reflect on the ability of our
PDE10 inhibitor product candidates under development to demonstrate safety and efficacy. In
addition, we believe that other companies are attempting to de-orphanize orphan GPCRs. If any of
these companies are able to de-orphanize an orphan GPCR before we do, we may be unable to establish
an exclusive or commercially valuable intellectual property position around that orphan GPCR.
Further, the failure of any future products developed from our product candidates to effectively
compete with products marketed by our competitors would impair our ability to generate revenue,
which would have a material adverse effect on our future business, financial condition and results
of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect to compete with other biopharmaceutical and biotechnology companies, and our
competitors may:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>develop and market products that are less expensive or more effective than any future
products developed from our product candidates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>commercialize competing products before we can launch any products developed from our
product candidates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>operate larger research and development programs, possess commercial-scale
manufacturing operations or have substantially greater financial resources than we do;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>initiate or withstand substantial price competition more successfully than we can;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>have greater success in recruiting skilled technical and scientific workers from the
limited pool of available talent;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>more effectively negotiate third-party licenses and strategic relationships; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>take advantage of acquisition or other opportunities more readily than we can.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect to compete for market share against large pharmaceutical and biotechnology
companies, smaller companies that are collaborating with larger pharmaceutical companies, new
companies, academic institutions,
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">government agencies and other public and private research organizations. In addition, the
pharmaceutical and biotechnology industry is characterized by rapid technological change. Because
our research approach integrates many technologies, it may be difficult for us to remain current
with rapid changes in each technology. If we fail to stay at the forefront of technological change,
we may be unable to compete effectively. Our competitors may render our technologies obsolete by
advances in existing technological approaches or the development of new or different approaches,
potentially eliminating the advantages in our product discovery process that we believe we derive
from our research approach and proprietary technologies and programs. In addition, physicians may
continue with their respective current treatment practices, including the use of current
preoperative and postoperative treatments, rather than adopt our PharmacoSurgery product
candidates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our product candidates could be subject to restrictions or withdrawal from the market and we may be
subject to penalties if we fail to comply with regulatory requirements, or if we experience
unanticipated problems with our product candidates, if and when any of them are approved.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any product candidate for which we obtain marketing approval, together with the manufacturing
processes, post-approval clinical data, and advertising and promotional activities for such product
candidate, will be subject to continued regulation by the FDA and other regulatory agencies. Even
if regulatory approval of a product candidate is granted, the approval may be subject to
limitations on the indicated uses for which the product candidate may be marketed or to the
conditions of approval, or contain requirements for costly post-marketing testing and surveillance
to monitor the safety or efficacy of the product candidate. Later discovery of previously unknown
problems with our product candidates or their manufacture, or failure to comply with regulatory
requirements, may result in:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>restrictions on such product candidates or manufacturing processes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>withdrawal of the product candidates from the market;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>voluntary or mandatory recalls;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fines;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>suspension of regulatory approvals;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>product seizures; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>injunctions or the imposition of civil or criminal penalties.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are slow to adapt, or unable to adapt, to changes in existing regulatory requirements or
adoption of new regulatory requirements or policies, we may lose marketing approval for our product
candidates when and if any of them are approved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Failure to obtain regulatory approval in foreign jurisdictions would prevent us from marketing our
products internationally.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to have our product candidates marketed outside the United States. In order to
market our products in the European Union and many other non-U.S. jurisdictions, we must obtain
separate regulatory approvals and comply with numerous and varying regulatory requirements. We may
be unable to file for regulatory approvals and may not receive necessary approvals to commercialize
our products in any market. The approval procedure varies among countries and can involve
additional testing and data review. The time required to obtain foreign regulatory approval may
differ from that required to obtain FDA approval. The foreign regulatory approval process may
include all of the risks associated with obtaining FDA approval discussed in these &#147;Risk Factors.&#148;
We may not obtain foreign regulatory approvals on a timely basis, if at all. Approval by the FDA
does not ensure approval by regulatory agencies in other countries, and approval by
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">one foreign regulatory authority does not ensure approval by regulatory agencies in other
foreign countries or by the FDA. The failure to obtain these approvals could harm our business.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>If we are unable to obtain adequate reimbursement from governments or third-party payors for any
products that we may develop or if we are unable to obtain acceptable prices for those products,
they may not be purchased or used and, as a result, our revenue and prospects for profitability
could suffer.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our future revenue and profit will depend heavily upon the availability of adequate
reimbursement for the use of our approved product candidates from governmental and other
third-party payors, both in the United States and in other countries. Even if we are successful in
bringing one or more product candidates to market, these products may not be considered
cost-effective, and the amount reimbursed for any product candidates may be insufficient to allow
us to sell our product candidates profitably. Reimbursement by a third-party payor may depend on a
number of factors, including the third-party payor&#146;s determination that use of a product is:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a covered benefit under its health plan;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>safe, effective and medically necessary;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>appropriate for the specific patient;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>cost-effective; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>neither experimental nor investigational.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Obtaining reimbursement approval for a product from each government or third-party payor is a
time-consuming and costly process that will require the build-out of a sufficient staff and could
require us to provide supporting scientific, clinical and cost-effectiveness data for the use of
our products to each payor. Because none of our product candidates have been approved for
marketing, we can provide you no assurances at this time regarding their cost-effectiveness and the
amount, if any, or method of reimbursement. There may be significant delays in obtaining
reimbursement coverage for newly approved product candidates and we may not be able to provide data
sufficient to gain acceptance with respect to reimbursement. Even when a payor determines that a
product is eligible for reimbursement, coverage may be more limited than the purposes for which the
product candidate is approved by the FDA or foreign regulatory agencies. Increasingly, third-party
payors who reimburse healthcare costs, such as government and private payors, are requiring that
companies provide them with predetermined discounts from list prices, and are challenging the
prices charged for medical products. Moreover, eligibility for coverage does not mean that any
product candidate will be reimbursed at a rate that allows us to make a profit in all cases, or at
a rate that covers our costs, including research, development, manufacturing, sale and
distribution. In non-U.S. jurisdictions, we must obtain separate reimbursement approvals and comply
with related foreign legal and regulatory requirements. In some countries, including those in the
European Union, our product candidates may be subject to government price controls. Pricing
negotiations with governmental authorities can take a considerable amount of time after the receipt
of marketing approval for a product candidate. If the reimbursement we are able to obtain for any
product candidate we develop is inadequate in light of our development and other costs or is
significantly delayed, our business could be materially harmed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Product liability claims may damage our reputation and, if insurance proves inadequate, these
claims may harm our business.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may be exposed to the risk of product liability claims that is inherent in the
biopharmaceutical industry. A product liability claim may damage our reputation by raising
questions about our product candidate&#146;s safety and efficacy and could limit our ability to sell one
or more product candidates, if approved, by preventing or interfering with commercialization of our
product candidates. In addition, product liability insurance for the biopharmaceutical industry is
generally expensive to the extent it is available at all. There can be no assurance that we will be
able to obtain and
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">maintain such insurance on acceptable terms or that we will be able to secure increased
coverage if the commercialization of our product candidates progresses, or that future claims
against us will be covered by our product liability insurance. Although we currently have product
liability insurance coverage for our clinical trials, our insurance coverage may not reimburse us
or may be insufficient to reimburse us for any or all expenses or losses we may suffer. A
successful claim against us with respect to uninsured liabilities or in excess of insurance
coverage could have a material adverse effect on our business, financial condition and results of
operations.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Risks Related to Our Common Stock</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our stock price has been and may continue to be volatile, and the value of an investment in our
common stock may decline.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We completed the initial public offering of shares of our common stock in October&nbsp;2009 at a
price of $10.00 per share. Subsequently, our common stock has traded as low as $5.27 per share. The
trading price of our common stock is likely to continue to be highly volatile and could be subject
to wide fluctuations in response to various factors, some of which are beyond our control. These
factors include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>results from our clinical trial programs, including our ongoing Phase 3 clinical
trials for OMS103HP for use in ACL reconstruction surgery, our ongoing Phase 2 clinical
trial for OMS302, our ongoing Phase 1/Phase 2 clinical trial for OMS201, and our ongoing
Phase 2 clinical trial for our Addiction program;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>FDA or international regulatory actions, including failure to receive regulatory
approval for any of our product candidates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>failure of any of our product candidates, if approved, to achieve commercial success;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>quarterly variations in our results of operations or those of our competitors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to develop and market new and enhanced product candidates on a timely
basis;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>announcements by us or our competitors of acquisitions, regulatory approvals,
clinical milestones, new products, significant contracts, commercial relationships or
capital commitments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>third-party coverage and reimbursement policies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>additions or departures of key personnel;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>commencement of, or our involvement in, litigation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to meet our repayment and other obligations under our debt facility with
BlueCrest, pursuant to which we have borrowed $17.0&nbsp;million;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in governmental regulations or in the status of our regulatory approvals;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in earnings estimates or recommendations by securities analysts;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any major change in our board or management;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>general economic conditions and slow or negative growth of our markets; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>political instability, natural disasters, war and/or events of terrorism.</TD>
</TR>


</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, we estimate the timing of the accomplishment of various scientific,
clinical, regulatory and other product development goals or milestones. These milestones may
include the commencement or completion of scientific studies and clinical trials and the submission
of regulatory filings. Also, from time to time, we expect that we will publicly announce the
anticipated timing of some of these milestones. All of these milestones are based on a variety of
assumptions. The actual timing of these milestones can vary dramatically compared to our estimates,
in some cases for reasons beyond our control. If we do not meet these milestones as publicly
announced, our stock price may decline and the commercialization of our product and product
candidates may be delayed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the stock market has experienced extreme price and volume fluctuations that have
often been unrelated or disproportionate to the operating performance of publicly traded companies.
Broad market and industry factors may seriously affect the market price of companies&#146; stock,
including ours, regardless of actual operating performance. These fluctuations may be even more
pronounced in the trading market for our stock. In addition, in the past, following periods of
volatility in the overall market and the market price of a particular company&#146;s securities,
securities class action litigation has often been instituted against these companies. This
litigation, if instituted against us, could result in substantial costs and a diversion of our
management&#146;s attention and resources.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Future sales of shares by existing shareholders could cause our stock price to decline.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approximately 14.5&nbsp;million shares of our common stock became available for sale by our
shareholders upon the expiration of lock-up agreements in April&nbsp;2010. If these shareholders sell,
or indicate an intention to sell, substantial amounts of our common stock in the public market, the
trading price of our common stock could decline. In addition, approximately 5.1&nbsp;million shares of
common stock that are either subject to outstanding warrants or subject to outstanding options or
reserved for future issuance under our employee benefit plans will become eligible for sale in the
public market to the extent permitted by the provisions of various vesting agreements. If these
additional shares are sold, or if it is perceived that they will be sold, in the public market, the
trading price of our common stock could decline.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Anti-takeover provisions in our charter documents and under Washington law could make an
acquisition of us, which may be beneficial to our shareholders, more difficult and prevent attempts
by our shareholders to replace or remove our current management.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provisions in our articles of incorporation and bylaws and under Washington law may delay or
prevent an acquisition of us or a change in our management. These provisions include a classified
board of directors, a prohibition on shareholder actions by less than unanimous written consent,
restrictions on the ability of shareholders to fill board vacancies and the ability of our board of
directors to issue preferred stock without shareholder approval. In addition, because we are
incorporated in Washington, we are governed by the provisions of Chapter&nbsp;23B.19 of the Washington
Business Corporation Act, which, among other things, restricts the ability of shareholders owning
ten percent or more of our outstanding voting stock from merging or combining with us. Although we
believe these provisions collectively provide for an opportunity to receive higher bids by
requiring potential acquirors to negotiate with our board of directors, they would apply even if an
offer may be considered beneficial by some shareholders. In addition, these provisions may
frustrate or prevent any attempts by our shareholders to replace or remove our current management
by making it more difficult for shareholders to replace members of our board of directors, which is
responsible for appointing the members of our management.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our management has broad discretion over the use of the net proceeds we received from our initial
public offering and may not use the net proceeds in ways that increase the value of our stock
price.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have broad discretion over the use of the net proceeds we received from our initial public
offering and we could spend the proceeds in ways that do not improve our results of operations or
enhance the value of our common stock. Our failure to apply these funds effectively could have a
material adverse effect on our business, delay the development of our product candidates and cause
the price of our common stock to decline.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>We have never declared or paid dividends on our capital stock, and we do not anticipate paying
dividends in the foreseeable future.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our business requires significant funding, and we have not generated any material revenue. We
currently plan to invest all available funds and future earnings, if any, in the development and
growth of our business. Therefore, we currently do not anticipate paying any cash dividends on our
common stock in the foreseeable future. As a result, a rise in the market price of our common
stock, which is uncertain and unpredictable, will be your sole source of potential gain in the
foreseeable future, and you should not rely on an investment in our common stock for dividend
income.
</DIV>
<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 6. EXHIBITS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">License Agreement between the registrant and Daiichi-Sankyo Company, Limited
(successor-in-interest to Asubio Pharma Co., Ltd.) entered into on March&nbsp;3, 2010.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.2*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">First Amendment to Agreement for Antibody Discovery and Development between the
registrant and Affitech AS dated March&nbsp;30, 2010.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Principal Executive Officer Pursuant to Rule&nbsp;13-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section&nbsp;302
of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Principal Financial Officer Pursuant to Rule&nbsp;13-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section&nbsp;302
of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">32.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section&nbsp;1350, as
Adopted Pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">32.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section&nbsp;1350, as
Adopted Pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential treatment has been requested for portions of this exhibit. These portions are
omitted from this Quarterly Report on Form 10-Q and have been filed separately with the
Securities and Exchange Commission.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference from Exhibit&nbsp;10.1 to the registrant&#146;s Current Report on Form 8-K
filed on March&nbsp;30, 2010 (File No.&nbsp;001-34475).</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->43<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>OMEROS CORPORATION</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date: May 12, 2010&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Gregory A. Demopulos
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Gregory A. Demopulos, M.D.&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">President, Chief Executive Officer<br>
and Chairman of the Board of Directors&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->44<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>INDEX OF EXHIBITS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">License Agreement between the registrant and Daiichi-Sankyo Company, Limited
(successor-in-interest to Asubio Pharma Co., Ltd.) entered into on March&nbsp;3, 2010.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.2*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">First Amendment to Agreement for Antibody Discovery and Development between the
registrant and Affitech AS dated March&nbsp;30, 2010.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Principal Executive Officer Pursuant to Rule&nbsp;13-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section&nbsp;302
of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Principal Financial Officer Pursuant to Rule&nbsp;13-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section&nbsp;302
of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">32.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section&nbsp;1350, as
Adopted Pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">32.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section&nbsp;1350, as
Adopted Pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential treatment has been requested for portions of this exhibit. These portions are
omitted from this Quarterly Report on Form 10-Q and have been filed separately with the
Securities and Exchange Commission.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporated by reference from Exhibit&nbsp;10.1 to the registrant&#146;s Current Report on Form 8-K
filed on March&nbsp;30, 2010 (File No.&nbsp;001-34475).</TD>
</TR>

</TABLE>




<P align="center" style="font-size: 10pt"><!-- Folio -->45<!-- /Folio -->
</DIV>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>v55824exv10w1.htm
<DESCRIPTION>EX-10.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>LICENSE AGREEMENT</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>between</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>ASUBIO PHARMA CO., LTD. and OMEROS CORPORATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This license agreement (this &#147;<B>Agreement</B>&#148;) is made effective the 3<SUP style="FONT-size: 85%; vertical-align: text-top">rd</SUP> day of March
2010 (the &#147;<B>Effective Date</B>&#148;) between Asubio Pharma Co., Ltd., a Japanese Corporation having a place
of business at 9-11 Akasaka 2-Chome, Minato-Ku, Tokyo 107-8541 Japan (&#147;<B>Asubio</B>&#148;), and Omeros
Corporation, a Washington corporation having a principal place of business at 1420 Fifth Avenue,
Suite&nbsp;2600, Seattle, WA 98101 USA (&#147;<B>Omeros</B>&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS Asubio owns rights to certain phosphodiesterase-7 (&#147;<B>PDE7</B>&#148;) inhibitors and derivatives
thereof, claimed in certain related patents and pending patent applications owned by Asubio;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS Asubio and Omeros entered into a Mutual Confidential Disclosure Agreement executed on
June&nbsp;6, 2008 and amended on June&nbsp;18, 2009 (the &#147;<B>Mutual CDA</B>&#148;) and a Material Transfer Agreement
executed on October&nbsp;20, 2008 (the &#147;<B>MTA</B>&#148;) to permit Omeros to evaluate certain of Asubio&#146;s PDE7
inhibitors and related confidential information;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS Omeros owns rights to certain pending patent applications directed to the use of PDE7
inhibitors for the treatment of movement disorders;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS Omeros wishes to undertake an exclusive license to Asubio&#146;s rights in certain of
Asubio&#146;s PDE7 inhibitors under Asubio&#146;s related patents for development and commercialization by
Omeros for the treatment of movement disorders &#091;&#134;&#093;; and
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">WHEREAS Asubio wishes to grant Omeros an exclusive license to such inhibitors and related patents
and patent applications in the field of movement disorders &#091;&#134;&#093; in consideration of the milestone
and royalty payments set forth in this Agreement;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW THEREFORE, in consideration for the mutual covenants and obligations set forth herein as
well as other good and valuable consideration, the parties hereby agree as follows:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Key Definitions</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Affiliate</B>&#148; as used herein shall include any affiliate, subsidiary or parent of either party
and in each case shall mean any corporation or other entity directly or indirectly controlled
by, controlling or under common control with the party, and for such purposes &#147;control&#148; shall
mean the direct or indirect ownership of more than fifty percent (50%) of the voting interest
in such other corporation or other entity, or the power to direct the management of such other
corporation or other entity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Asubio Patents</B>&#148; means the patents and patent applications owned by Asubio that are listed on
<B>Schedule&nbsp;A </B>attached to this Agreement, as well as all foreign and national counterparts, all
continuations, divisionals, reissues and reexaminations corresponding thereto or claiming
priority therefrom, and all patents, inventor certificates and utility models issuing
therefrom.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Asubio Know-How</B>&#148; means Asubio&#146;s data and information listed in <B>Schedule&nbsp;B</B></TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>attached to this
Agreement, which data was disclosed by Asubio to Omeros under the Mutual CDA and/or the MTA,
and any additional data, information and records disclosed from Asubio to Omeros in accordance
with this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Compounds</B>&#148; means the Parent Compounds, samples of some of which were previously supplied by
Asubio to Omeros in accordance with the terms of the MTA, and any Improved Compounds. Asubio
and Omeros agree that the Excluded Compounds are not included in the Compounds.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Compound Improvement Patents</B>&#148; mean all patents and patent applications claiming substances
that are new improvements (including any structural derivatives or analogs), variations,
updates, modifications, and enhancements to the Parent Compounds made by or for Omeros at any
time commencing upon execution of the MTA and ending upon the termination of this Agreement,
but excluding any patent or patent application claims to new uses or methods of use of the
Compounds.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Excluded Compounds</B>&#148; means the compounds described in <B>Schedule&nbsp;D </B>attached to this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Field</B>&#148; means all movement disorders described in WHO ICD-10 (G20-G26) and/or in Omeros&#146;
published International PCT Patent Application WO 2008/119057 A2, including, without
limitation, Parkinson&#146;s Disease, Restless Legs Syndrome, Post-encephalitic Parkinsonism,
Dopamine-Responsive Dystonia, Shy-Drager Syndrome, Periodic Limb Movement Disorder, Periodic
Limb Movements in Sleep, Tourette&#146;s Syndrome, all other movement disorders treatable with a
dopamine receptor agonist or a precursor of a dopamine receptor agonist, <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.8</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Field Improvement Patents</B>&#148; means all patents and patent applications claiming new uses or
methods of use of the Compounds solely in the Field made by or for Omeros at any time
commencing upon execution of the MTA and ending upon the termination of this Agreement, but
excluding any claim to the chemical structure of the Compounds and excluding any claim to uses
or methods of use relating to treatment of diseases in the dermatology and dermatologic
affections defined as any diseases of the skin, hair/scalp or nails.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.9</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Improved Compounds</B>&#148; means any compound, other than the Parent Compounds, encompassed by the
claims of the Asubio Patents and/or Compound Improvement Patents, including new improvements
(including any structural derivatives or analogs), variations, updates, modifications, and
enhancements to the Parent Compounds, made by or for Omeros at any time commencing upon
execution of the MTA and ending upon the termination of this Agreement. Asubio and Omeros
agree that the Excluded Compounds are not included in the Improved Compounds. Improved
Compounds shall include Improved Compounds that are encompassed only by valid claim(s) of the
Asubio Patents (&#147;<B>Minor Improved Compounds</B>&#148;), Improved Compounds that are encompassed by valid
claim(s) of both the Asubio Patents and the Compound Improvement Patents (&#147;<B>Major Improved
Compounds</B>&#148;) and Improved Compounds that are encompassed only by valid claim(s) of the Compound
Improvement Patents (&#147;<B>Other Improved Compounds</B>&#148;).</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.10</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Measure Date</B>&#148; means any given point in time when a determination is being made.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.11</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Net Sales</B>&#148; means (a)&nbsp;the gross total of the monetary amounts collected by Omeros, when
Omeros is the initial seller and distributor, and by Omeros&#146; sublicensee(s), when such
sublicensee(s) are the initial seller(s) and distributor(s), for the sale or distribution of
the Products to independent third parties, less (b)&nbsp;the sum of the following actual and
customary deductions where applicable: cash, trade, or quantity discounts; sales, use, tariff,
import/export duties or other excise taxes, and any other governmental taxes imposed on
particular sales; transportation charges and allowances; sales commissions to third parties
(but excluding sales commissions to Omeros&#146; employees); wholesale charge backs; distributor
fees; Medicare/Medicaid rebates; customer rebates; refunds for recalls; and allowances or
credits to customers because of rejections or returns, provided such deductions are
documented.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.12</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Parent Compounds</B>&#148; means the seven compounds listed in <B>Schedule&nbsp;C </B>attached to this Agreement
that are claimed in one or more of the Asubio Patents.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.13</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Product</B>&#148; or &#147;<B>Products</B>&#148; means all drug product(s) and drug product candidate(s) containing
one or more Compounds that are encompassed by any valid and subsisting claim(s) of any issued
patent within the Asubio Patents or the Compound Improvement Patents in the country or
countries in which such products are offered for sale, sold, manufactured or used.
Notwithstanding the foregoing, any certain drug product or drug product candidate that
initially meets the definition of a Product set forth in the foregoing sentence of this
Subsection 1.13 shall still be deemed to be a Product after the expiration of all claim(s) of
all issued patent within the Asubio Patents or the Compound Improvement Patents covering the
Compound contained in such product if, and only if, the use of such Compound is encompassed by
any valid and subsisting claim(s) of any issued patent within the Field Improvement Patents in
the country or countries in which such drug product or drug product candidate is used.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.14</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Third Party Marketing and Distribution Agreement</B>&#148; means any agreement conveying a sublicense
of the marketing and distribution rights for a Product to a third party entity other than any
Affiliate of either party.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Grant of License</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Asubio hereby grants to Omeros for the term of this Agreement a royalty-bearing, exclusive
worldwide license in the Field under the Asubio Patents and the Asubio Know-How, including the
right to grant sublicenses, to use (including, without limitation, manufacture, formulate,
preclinical and clinical research and development and commercialization), apply for approval,
sell, offer for sale, market, distribute, import and export the Compounds and the Products
(the &#147;<B>License</B>&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If requested by Omeros, Asubio will consider in good faith expanding the License in the
Field, on terms consistent with this Agreement, to include additional PDE7 inhibitors created
by Asubio, other than the Compounds, that are claimed in the Asubio Patents and that are not
reasonably expected, based on a preclinical assessment, to have a clinically meaningful
immunologic function.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If requested by Omeros, Asubio will consider in good faith expanding the Field to include
other central nervous system diseases and disorders that do not involve meaningful immunologic
dysfunction.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If, in accordance with Omeros&#146; right to grant sublicenses under the License, Omeros elects to
convey to any third party other than an Affiliate of Omeros any rights to offer for sale,
sell, and market a Product in any ex-U.S. country in the world, Omeros will consider in good
faith the exclusive licensing of such Product to Asubio or its Affiliates in such country.
Omeros shall give Asubio prompt notification of the identity of each third party who is
conveyed such sublicense rights. Omeros shall ensure that such third parties are bound by the
same obligations, to the extent practicable and applicable, as those set forth in this
Agreement, and shall be responsible to Asubio for the acts and omissions of such third party.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Asubio shall, as part of the Asubio Know-How, disclose and provide to Omeros any and all
additional data, information and records it may have or may develop or obtain during the term
of this Agreement that would facilitate Omeros&#146; development, manufacture, approval for
marketing and commercialization of any of the Parent Compounds, and Omeros shall have the
right to reference the Asubio Know-How in any regulatory submission.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Milestone Payments</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">3.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Omeros shall pay Asubio the following one-time milestone fees (each a &#147;<B>Milestone Fee</B>&#148;) in
U.S. dollars following the satisfaction of the following corresponding milestone events (each
a &#147;<B>Milestone</B>&#148;):</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">3.1.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon execution of this Agreement, Omeros shall pay Asubio a Milestone Fee of <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">3.1.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon Omeros&#146; or its sublicensee(s)&#146; receipt of positive data from completed toxicology
studies, each of three-months minimum duration, of a first Product in a rodent species and in
a non-rodent species, which studies have been conducted in conformance with current good
laboratory practice guidance (&#147;<B>GLP</B>&#148;) promulgated by the U.S. Food and Drug Administration
(&#147;<B>USFDA</B>&#148;), which data and studies are sufficient to support the submission by Omeros or its
sublicensee(s) to USFDA of an Investigational New Drug Application (&#147;<B>IND</B>&#148;), Omeros shall pay
Asubio a Milestone Fee of <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">3.1.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon the first dosing of a human subject in the first Phase 1 clinical study sponsored or
authorized by Omeros or its sublicensee(s) of a first Product anywhere in the world, which
study has been cleared by USFDA or a corresponding foreign regulatory agency, Omeros shall pay
Asubio a Milestone Fee of <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">3.1.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon the first dosing of a human subject in the first Phase 2 clinical study sponsored or
authorized by Omeros or its sublicensee(s) of a first Product anywhere in the world, which
study has been cleared by USFDA or a corresponding foreign regulatory agency, Omeros shall pay
Asubio a Milestone Fee of <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT>.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">3.1.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon the first dosing of a human subject in the first Phase 3 clinical study sponsored or
authorized by Omeros or its sublicensee(s) of a first Product anywhere in the world, which
study has been cleared by USFDA or a corresponding foreign regulatory agency, Omeros shall pay
Asubio a Milestone Fee of <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">3.1.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon receipt of the first new drug application (&#147;<B>NDA</B>&#148;) marketing approval for a first
Product obtained by or on behalf of Omeros or its sublicensee(s) from USFDA, Omeros shall pay
Asubio a Milestone Fee of <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">3.1.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon receipt of the first marketing authorization for a first Product obtained by or on
behalf of Omeros or its sublicensee(s) from an ex-U.S. regulatory authority corresponding to
USFDA, Omeros shall pay Asubio a Milestone Fee of <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">3.1.8</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon reaching an aggregate of all Net Sales of <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT>, Omeros shall pay Asubio a
Milestone Fee of <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">3.1.9</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon reaching an aggregate of all Net Sales of <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT>, Omeros shall pay Asubio a
Milestone Fee of <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">3.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If any Milestone above is achieved with respect to a particular Product before a prior
Milestone has been achieved, then all prior Milestones that have not previously been paid with
respect to that Product shall be deemed achieved upon achievement of the subsequent Milestone,
and the corresponding payment shall become payable, provided, however, that the NDA approval
Milestone set forth in Subsection 3.1.6 shall not be treated as a &#147;prior Milestone&#148; when the
ex-U.S. marketing authorization Milestone set forth in Subsection 3.1.7 is achieved, and the
ex-U.S. marketing authorization Milestone set forth in Subsection 3.1.7 shall not be treated
as a &#147;prior Milestone&#148; when the NDA approval Milestone set forth in Subsection 3.1.6 is
achieved.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Royalty Payments</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">4.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Omeros shall pay Asubio a royalty (the &#147;<B>Royalty</B>&#148;) as a percentage of Net Sales. The Royalty
shall be computed in accordance with the applicable one of the following subsections:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">4.1.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For Products containing one or more Parent Compounds, the Royalty shall be either
(a) prior to the expiration of all applicable valid claims of the Asubio Patents,
<FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT> of Net Sales of such Products, and then (b)&nbsp;after the expiration of all
applicable valid claims of the Asubio Patents, <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT> of Net Sales of such Products if
the use of such Products is encompassed by valid claim(s) in the Field Improvement Patents
in the countries in which such Products are used; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">4.1.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For Products containing one or more Minor Improved Compounds, the Royalty shall be either
(a)&nbsp;prior to the expiration of all applicable valid claims of the Asubio Patents, <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT>
of Net Sales of such Products, and then (b)&nbsp;after the expiration of all applicable valid</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>claims of the Asubio Patents, <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT> of Net Sales of such Products if the use of such
Products is encompassed by valid claim(s) in the Field Improvement Patents in the countries in
which such Products are used; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">4.1.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For Products containing one or more Major Improved Compounds, the Royalty shall be (a)&nbsp;prior
to the expiration of all applicable valid claims of the Asubio Patents, <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT> of Net
Sales of such Products, and then (b)&nbsp;after the expiration of all applicable valid claims of
the Asubio Patents and prior to the expiration of all applicable valid claims of the Compound
Improvement Patents, <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT> of Net Sales of such Products, and then (c)&nbsp;after the
expiration of all applicable valid claims of the Asubio Patents and the Compound Improvement
Patents, <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT> of Net Sales of such Products if the use of such Products is encompassed
by valid claim(s) in the Field Improvement Patents in the countries in which such Products are
used; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">4.1.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For Products containing one or more Other Improved Compounds, the Royalty shall be either
(a)&nbsp;prior to the expiration of all applicable valid claims of the Compound Improvement
Patents, <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT> of Net Sales of such Products, and then (b)&nbsp;after the expiration of all
applicable valid claims of the Compound Improvement Patents, <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT> of Net Sales of such
Products if the use of such Products is encompassed by valid claim(s) in the Field Improvement
Patents in the countries in which such Products are used.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">4.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that the provisions of multiple Subsections 4.1.1 through 4.1.4 apply to any
Product at any Measure Date, the Subsection that provides the highest Royalty shall be
utilized for only so long as the conditions set forth in the corresponding Subsection apply.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">4.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the royalty provisions of Subsections 4.1 and 4.2, in the event that Omeros
enters into a Third Party Marketing and Distribution Agreement for a Product, then at any
Measure Date the sum of all Royalty payments paid or payable over the life of this Agreement
up to the Measure Date based on the Net Sales collected by the sublicensee under such Third
Party Marketing and Distribution Agreement (the &#147;<B>Summed Royalties</B>&#148;) shall not exceed
<FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT> of the gross total of the monetary amounts collected up to the Measure Date by
Omeros in the form of royalty payments and milestone payments under the Third Party Marketing
and Distribution Agreement; provided, that such gross total shall exclude (i)&nbsp;any Net Sales
independent of the Third Party Marketing and Distribution Agreement, (ii)&nbsp;any amounts received
as funding for further research and development activities; (iii)&nbsp;any amounts received in
connection with the conveyance of other rights not specifically and directly pertaining to
such Product; (iv)&nbsp;any amounts received subject to a repayment obligation by Omeros; and (v)
any amounts reasonably received as consideration for the purchase of equity of Omeros and not
as consideration for sublicense from Omeros, (the &#147;<B>Adjusted Gross Partnering Revenue</B>&#148;). If on
any Measure Date the Summed Royalties exceeds <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT> of the Adjusted Gross Partnering
Revenue, then no further Royalty shall be paid under Section&nbsp;4 until the Summed Royalties on a
subsequent Measure Date falls below <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT> of the Adjusted Gross Partnering Revenue for
that Measure Date, provided, however, that Asubio shall not be required to refund any Royalty
payments that have already been paid to Asubio by Omeros.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Payment Procedures</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">5.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Omeros shall promptly notify Asubio of the achievement of each Milestone, and Asubio shall
then invoice Omeros for the corresponding Milestone Fee. All Milestone Fees shall be paid
within thirty (30)&nbsp;days of receipt of the corresponding invoice.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">5.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Omeros shall pay Asubio Royalty payments on a quarterly basis for Net Sales realized during
each respective quarter. Royalty payments for each quarter shall be made within sixty (60)
days of the end of the quarter. If Omeros is required to use any estimated figures to meet
this royalty payment time frame, Omeros shall note such figures as estimated in an
accompanying report and shall adjust the Royalty paid the next quarter when actual figures are
available for the prior quarter. Net Sales and Royalty payments shall be computed based on a
conversion from any other denomination to U.S. Dollars for any revenues received or costs and
expenses incurred by Omeros during the relevant quarter, as provided herein, using the
exchange rate published in The Wall Street Journal, West Coast edition, on the last business
day of the applicable calendar quarter. Each quarterly Royalty payment shall be accompanied by
(a)&nbsp;a report specifying the source and amount of the Royalty itemized by Product-by-Product
basis and country-by-country basis including information reasonably necessary and sufficient
for Asubio to calculate the Adjusted Gross Partnering Revenue under any Third Party Marketing
and Distribution Agreements for the Products, (b)&nbsp;the total of all discounts, returns, credits
and commissions deducted from gross proceeds to determine Net Sales, and (c)&nbsp;other information
as Asubio may reasonably request from time to time and as Omeros may agree.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">5.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Milestone Fees and Royalty payments shall be made in U.S. Dollars by wire transfer in
accordance with payment instructions to be provided by Asubio in writing. Asubio shall be
responsible for updating its payment instructions as may be required. Any and all charges from
Omeros&#146; bank and similar fees incurred by Omeros in processing such payments shall be borne by
Omeros. If any of the payments made or to be made by Omeros to Asubio become subject to
withholding taxes under any applicable law, then Omeros shall withhold the amount of such
taxes for the account of Asubio to the extent required by such applicable laws, and shall pay
the amounts of such taxes to the proper governmental authorities in a timely manner and
promptly transmit to Asubio an official tax certificate or other evidence of such tax
obligations together with proof of payment from the relevant governmental authorities of all
amounts withheld sufficient to enable Asubio to claim such payment of taxes. Omeros will
provide Asubio with reasonable assistance (not including professional advice or
representation) to enable Asubio to recover such taxes as permitted by applicable laws. Any
other taxes levied on Omeros arising out of or in connection with Omeros&#146; activities hereunder
shall be borne by Omeros.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">5.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Asubio reserves the right to employ a certified public accountant to review and reconcile the
directly relevant accounting records and procedures of Omeros as they relate to the
determination of Royalty payments during reasonable business hours and no more than</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>twice a year, and Omeros agrees to make available at Omeros&#146; place of business all such directly
relevant accounting records for that purpose within 30 (thirty)&nbsp;days of written request by
Asubio. The cost of such review shall be borne by Asubio, unless it is found that Omeros
under-paid a quarterly Royalty for any quarter by an amount of <FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT> or greater, in
which case the cost of such review shall be borne by Omeros.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">5.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that any Milestone Fees or Royalty payments are not timely paid by Omeros when
due, Omeros shall pay to Asubio interest charges on such late payments at a rate of
<FONT style="FONT-variant: SMALL-CAPS">&#091;&#134;&#093;</FONT> per annum.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">5.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding anything to the contrary herein, Omeros shall have no obligation to pay any
Royalty or Milestone Fee for any Product based on any patent claim that has been declared
invalid or unenforceable by a court or governmental body of competent jurisdiction or based on
any patent claim that is not enforceable in the jurisdiction(s) where such Product is
manufactured, used, sold, offered for sale, imported or distributed.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Progress Reports and Reversion Rights</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">6.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Omeros shall, commencing on the one-year anniversary of the Effective Date of this Agreement
and annually thereafter, deliver to Asubio a written progress report summarizing the status of
Omeros&#146; efforts to develop and commercialize one or more Products.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">6.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Asubio shall have the right to terminate the License and this Agreement, at its discretion,
if Omeros and each of its sublicensee(s) for a period of at least six (6)&nbsp;consecutive months
ceases to conduct, or to cause to have conducted, all research, development and/or
commercialization activities for all Products, including without limitation the cessation for
such period of time all medicinal chemistry efforts, all formulation activities, all
chemistry, manufacturing and control activities, all preclinical research and development, all
clinical research and development, and all regulatory, patent and business partnering
activities concerning all Products, and Asubio sends Omeros a notice of termination prior to
recommencement by Omeros of such activities; provided, however, that any cessation or delay of
such activities due to a regulatory process, availability of compounds, materials or necessary
processes, the procurement of intellectual property rights, any dispute or legal proceeding
concerning third party intellectual property rights that are necessary to the research,
development and/or commercialization of a Product, or any other material factor not reasonably
within Omeros&#146; or its sublicensee&#146;s control (e.g., strikes, terrorism, natural disasters,
war), shall be excused. In the event of such a termination under this provision, the License
and other rights held by Omeros under the Asubio Patents shall revert to Asubio, and Omeros
and Asubio shall be relieved of all further obligations under this Agreement except for the
surviving clauses as set forth in Section&nbsp;11.4 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Patent Prosecution and Enforcement</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">7.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Asubio shall retain ownership of the Asubio Patents, which Asubio Patents cannot be assigned
to a third party other than the Affiliate of Asubio without Omeros&#146; advance</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>written consent (not to be unreasonably withheld); provided, however, that this provision shall not
act to prohibit Asubio from granting other licenses under the Asubio Patents consistent with
the provisions of Section&nbsp;2 above. Asubio shall also retain the sole right and the obligation
to diligently use commercially reasonable efforts to file, prosecute and maintain the patent
applications and patents included in the Asubio Patents that include claims encompassing the
Compounds, including the filing of continuation applications, divisional applications,
appeals, reissues and reexaminations where reasonably warranted.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">7.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Asubio shall keep Omeros timely informed of all actions reasonably considered to be
important, including, without limitation, all application filings, search reports, examination
reports, office actions, responses, amendments and appeal proceedings, that are taken in the
filing, prosecution and maintenance of any patent or patent application included in the Asubio
Patents that include claims encompassing the Compounds. Omeros shall cooperate with Asubio in
the course of the procedure for extension of the Asubio Patents, including any supplemental
protection certificates. Should Asubio determine not to proceed with or to abandon the filing,
prosecution or maintenance of any patent or patent application included in the Asubio Patents
that claims any of the Compounds, Asubio shall provide Omeros timely advance notice of its
determination and Omeros shall be entitled at its discretion and upon written notice to Asubio
to assume the right to file, prosecute and maintain such patent or patent application, at
Omeros&#146; sole expense, which such patent or patent application shall thereafter be excluded
from the basis for payment of any Milestone Fee or Royalty to Asubio.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">7.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Omeros shall own and retain ownership of the Compound Improvement Patents and the Field
Improvement Patents, which Compound Improvement Patents and Field Improvement Patents cannot
be assigned to a third party other than an Affiliate of Omeros without Asubio&#146;s advance
written consent (not to be unreasonably withheld). Omeros shall also retain the sole right and
the obligation to diligently use commercially reasonable efforts to file, prosecute and
maintain the patent applications and patents included in the Compound Improvement Patents and
the Field Improvement Patents, including the filing of continuation applications, divisional
applications, appeals, reissues and reexaminations where reasonably warranted.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">7.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Should Omeros determine not to proceed with or to abandon the filing, prosecution or
maintenance of any patent or patent application included in the Compound Improvement Patents
or the Field Improvement Patents, Omeros shall provide Asubio timely advance notice of its
determination and Asubio shall be entitled at its discretion and upon written notice to Omeros
to assume the right to file, prosecute and maintain such patent or patent application, at
Asubio&#146;s sole expense.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">7.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Whenever either party becomes aware of the possible infringement of the Asubio Patents, the
Compound Improvement Patents or the Field Improvement Patents by a third party, such party
shall promptly notify the other party of any such infringement and provide such other party
with any available evidence of such infringement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">7.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Asubio shall have the first right, but not the obligation, to bring any suit or action for</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>infringement of the Asubio Patents. Any infringement action brought by Asubio shall be solely at
Asubio&#146;s expense and in such actions in which Omeros has not elected to participate and share
in the expenses, Asubio shall have no duty to account to Omeros for any award, settlement or
any other recovery resulting from such enforcement action. Omeros shall provide reasonable
assistance at Asubio&#146;s reasonable expense in the prosecution of such suit or action. Omeros
shall have the right, but not the obligation, at its cost to join as a party in any
infringement action brought by Asubio. In the event that monetary damages are awarded or
obtained by Asubio whether by judgment, award, decree, settlement or otherwise, as a result of
such enforcement action brought by ASB in which Omeros joins as a party, the money actually
received shall be divided appropriately between Asubio and Omeros with reference to the
relative monetary injury suffered by the party hereto by reason of the infringement, after
first deducting the expenses incurred by Asubio and Omeros in filing, prosecuting, and
maintaining such suit or action. Asubio shall not settle any such action in any manner that
conflicts with Omeros&#146; rights in the Asubio Patents, without the prior written consent of
Omeros (which shall not be unreasonably withheld).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">7.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that Asubio fails to or elects not to commence any infringement suit or action
under Subsection 7.6, Omeros shall have the sole right in its discretion to enforce, in its
name or Asubio&#146;s name, the Asubio Patents against any third party that infringes one or more
claims of the Asubio Patent by the use, manufacture, offering for sale or sale of a product
that competes with a Product in the Field or that is a generic or reformulated version of a
Product. Any such enforcement action in accordance with this Subsection 7.7 shall be
undertaken at Omeros&#146; sole cost and Omeros shall have no duty to account to Asubio for any
award, settlement or any other recovery resulting from such enforcement action. Asubio shall
provide reasonable assistance requested by Omeros in connection with such enforcement action
at Omeros&#146; reasonable expense. Asubio shall have the right, but not the obligation, at its
cost to join as a party in any infringement action brought by Omeros. Omeros shall not settle
such action in any manner that conflicts with Asubio&#146;s rights in the Asubio Patents without
the prior written consent of Asubio (which shall not be unreasonably withheld).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">7.8</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Except as expressly set forth in Section&nbsp;2 or elsewhere in this Agreement, neither party
grants any license under its preexisting or independently created or obtained intellectual
property rights to the other party.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">7.9</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each party shall execute and cause its employees and agents to execute any assignment,
declaration or other document required to effectuate the patent ownership, application,
prosecution and enforcement provisions of this Section&nbsp;7.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">8</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Representations, Warranties</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">8.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each party represents and warrants that it has the requisite corporate power and authority
and the legal right to enter into this Agreement and to perform its obligations hereunder.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">8.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Asubio warrants, as of the Effective Date, to Asubio&#146;s knowledge that: the Asubio Patents
include valid issued claims and/or patentable pending claims that encompass each</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B></B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>of the Parent Compounds and the Parent Compounds do not infringe the intellectual property of
any third party; and Asubio has complied with its duty of disclosure of prior art and other
material information, where applicable, to national and regional patent offices with respect
to the Asubio Patents. Asubio also warrants that Asubio has not granted any other license,
right, security interest or lien, or undertaken any other obligation, that limits its ability
to grant the License; and Asubio will diligently use all reasonable efforts to apply for,
prosecute, maintain and enforce (except as provided for Omeros in Section&nbsp;7 above) all patents
and patent applications in the Asubio Patents.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">8.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Prior to Omeros&#146; marketing of any Product or making any Product available for use in any
human patients, Omeros will obtain and maintain reasonably adequate product liability
insurance.<FONT style="FONT-variant: SMALL-CAPS"> </FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">8.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="FONT-variant: SMALL-CAPS">EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING,
BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR
NON-INFRINGEMENT.</FONT></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">9</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Confidentiality</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">9.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Asubio and Omeros hereby affirm and incorporate by reference the terms of the Mutual CDA, a
copy of which is attached hereto as <B>Exhibit&nbsp;A</B>, except to the extent that the terms of the
Mutual CDA may conflict with the terms of this Agreement, in which case the terms of this
Agreement shall prevail. The parties further agree that all Confidential Information (as
defined in the Mutual CDA) disclosed by either party to the other party during the term of
this Agreement shall be subject to the terms of the Mutual CDA, and that the mutual
obligations of nondisclosure and non-use set forth in the Mutual CDA shall subsist for a
period of five (5)&nbsp;years after the termination of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">9.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The terms of this Agreement shall be maintained in strict confidence by both Asubio and
Omeros, and may not be disclosed by either party without the consent of the other party,
except to each party&#146;s Affiliates, employees, directors, auditors, counsel, financial
advisers, consultants, shareholders, investors, as part of due-diligence reviews by
prospective corporate partners, financers and acquirers, and as may be required under a court
order or decree or as required to comply with any governmental law, rule or regulation. Asubio
also acknowledges and agrees that Omeros will be legally required and shall be permitted to
disclose this Agreement and its terms in filings with the U.S. Securities and Exchange
Commission.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">10</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Indemnification</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">10.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each party (the &#147;Indemnifying Party&#148;) shall indemnify, hold harmless and defend the other
party and its Affiliates, and their employees, officers, directors, consultants and agents
(the &#147;Indemnified Party&#148;) against any and all claims, suits, losses, liabilities, damages,
costs, fees, and expenses (&#147;Claims&#148;) resulting from or arising directly out of the
Indemnifying Party&#146;s breach of any representation, warranty or obligation under this</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Agreement, or the Indemnifying Party&#146;s exercise of the rights and obligations under the License or
any sublicense, except that such obligation to indemnify, hold harmless and defend shall not
extend to any Claims to the extent such Claims result from or arise directly from the
negligence or misconduct of the Indemnified Party. Neither party shall be liable to the other
party under this Agreement for any indirect, incidental, consequential or special damages.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Term and Termination</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unless terminated earlier as set forth in Subsections 6.2, 11.2 or 11.3, this Agreement and
the License shall remain in full force and effect so long as there is a valid, subsisting and
enforceable claim in any patent included within the Asubio Patents, the Compound Improvement
Patents or the Field Improvement Patents or any patentable claim included in any pending
patent application included in the Asubio Patents, the Compound Improvement Patents or the
Field Improvement Patents.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Omeros may terminate this Agreement by providing ninety (90)&nbsp;days advance written notice of
termination under this Subsection 11.2 to Asubio, with or without cause; provided that if
Omeros terminates this Agreement under this Subsection then Omeros shall thereafter not make,
use, offer for sale, sell or sublicense any Product that is encompassed by one or more
unexpired, valid and enforceable claim(s) of the Asubio Patents, the Compound Improvement
Patents or the Field Improvement Patents.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Either party may terminate this Agreement at any time in the event that the other party
(a) breaches any material obligation of this Agreement by first submitting written notice of
breach to the breaching party, which breach is not substantially cured within ninety (90)
days of the receipt of such notice, followed by written notice of termination then being
sent to the breaching party, or (b)&nbsp;declares or is adjudged by a court of competent
jurisdiction to be insolvent, bankrupt or in receivership, and such insolvency, bankruptcy
or receivership materially limits such party&#146;s ability to perform its obligation under this
Agreement, excluding reorganizations entered into by such party with the consent of the
other party, which consent shall not be unreasonably withheld.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The provisions of Sections and Subsections 7.1 (limited to the patent ownership provisions),
7.3 (limited to the patent ownership provisions), 8 (Representations, Warranties, but
excluding continued obligations regarding patent prosecution and maintenance), 9
(Confidentiality), 10 (Indemnification), 12 (Use of Names) and 13 (Miscellaneous) above shall
survive expiration or termination of this Agreement for the period set forth therein or, if no
period is set forth therein, then indefinitely.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Termination of this Agreement for any reason shall not release any party hereto from any
liability which at the time of such termination has already accrued to the other party or
which is attributable to a period prior to such termination, nor preclude either party from
pursuing all rights and remedies it may have hereunder or at law or in equity with respect to
any breach of this Agreement.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">12</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Use of Names</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">12.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Nothing contained in this Agreement confers any right to either party to use in advertising,
publicity, or other promotional activities any name, trade name, trademark, or other
designation of the other party hereto, and neither party shall make such use without the prior
written consent of the other party. The parties agree not to make any press release or public
announcement, written or oral, relating to this Agreement without the prior written approval
of the other party. Asubio acknowledges that Omeros intends to issue a press release legally
required or advised by its legal counsel concerning this Agreement concurrent with making a
legally required filing of a Form 8-K disclosing the signing of this Agreement with the U.S.
Securities and Exchange Commission, and shall provide Asubio with a draft of such press
release for approval, which approval shall not be unreasonably withheld. When filing of a copy
of this Agreement with the U.S. Securities and Exchange Commission, which may be subsequent to
the filing of the Form 8-K disclosure of the signing of this Agreement, Omeros shall use
reasonable efforts to redact commercially sensitive information in a confidential treatment
request, shall provide Asubio a copy of such request for approval and comment, and shall
incorporate all timely received reasonable comments to the extent legally permissible.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">13</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Miscellaneous</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">13.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement including appended Schedules A-D and appended Exhibit&nbsp;A constitutes the entire
understanding of the parties hereto regarding the subject matter of this Agreement, and no
other representation, agreement, promise or undertaking altering, modifying, taking from or
adding to the terms of this Agreement shall have any effect unless the same is reduced to
writing and duly executed by the parties hereto. In the event of any conflict between the main
body of this Agreement and any attachments thereto or documents incorporated by reference
therein, the provisions of the main body of this Agreement shall control. This Agreement
expressly supersedes the MTA.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">13.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Either party&#146;s failure to enforce any provision of this Agreement will not be considered a
waiver of future enforcement of that or any other provision.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">13.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The laws of the state of Delaware, United States, without regard to its conflict-of-laws
provisions, shall govern this Agreement, its interpretation and its enforcement, and any
disputes arising out of or related to this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">13.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The parties agree that the U.S. Federal Courts located in the state of Delaware, United
States will have sole and exclusive jurisdiction over any disputes arising under this
Agreement, and each party hereby consents to the jurisdiction and venue of such courts for
such purposes.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">13.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that it is necessary for either party of this Agreement to take legal action to
enforce any of the terms, conditions or rights contained herein, or to defend any such action,
then the prevailing party in such action shall be entitled to recover from the other party all
reasonable costs and expenses, including attorneys fees, related to such legal action.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">13.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that any portion of this Agreement is held invalid or unenforceable by a court
of law, that provision will be construed and reformed to permit enforcement of the provision
to the maximum extent permissible consistent with the parties&#146; original intent, and if such
construction is not possible, such provision shall be struck from this Agreement, and the
remainder of the Agreement shall remain in full force and effect as if such provision had
never been part of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">13.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the purposes of this Agreement, the parties hereto are independent contractors, and
nothing in this Agreement shall be construed to place them in the relationship of partners,
principal and agent, employer/employee or joint venturers. Except as provided expressly
herein, each party agrees that it shall have no authority to bind or obligate the other party,
nor shall any party hold itself out as having such authority.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">13.8</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Neither party will be liable for failure or delay in performing any obligation under this
Agreement, or will be considered in breach of this Agreement, if such failure or delay is due
to a natural disaster or any cause reasonably beyond such party&#146;s control, provided that such
party resumes performance as soon as possible following the end of the event that caused such
delay or failure of performance.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">13.9</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement including all right and obligations hereunder shall not be assignable by
either party without the prior written consent of the other party except in connection with
any acquisition or merger of such party or sale of all or substantially all of its assets;
provided, however, that this Agreement shall be assignable by either party to its Affiliates.
This Section shall not be construed in any way to limit Omeros&#146; rights to grant, at Omeros&#146;
sole discretion, sublicenses under the License. Subject to these restrictions, this Agreement
will be binding upon and will inure to the benefit of the parties&#146; permitted successors and
assignees, including each party&#146;s successor-Affiliates.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">13.10</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Either party shall be permitted to cause its Affiliates to perform any and all obligation
under this Agreement on behalf of such party. Such party shall guarantee and be responsible
all obligations and performances undertaken by its Affiliates.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">13.11</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any notice required or permitted to be given hereunder by either party shall be in writing
and shall be (a)&nbsp;delivered personally, (b)&nbsp;sent by an internationally recognized courier
service, charges prepaid, or (c)&nbsp;delivered by facsimile (with the original promptly sent by
any of the foregoing manners) to the addresses or facsimile numbers of the other party set
forth below, or at such other addresses as may from time to time be furnished by similar
notice by either party. The effective date of any notice hereunder shall be the date of
receipt by the receiving party.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">If to Omeros:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">If to Asubio:</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Omeros Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Asubio Pharma Co., Ltd.</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1420 Fifth Avenue, Suite&nbsp;2600
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">9-11, Akasaka 2-Chome</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Seattle, WA 98101
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="left" valign="top">Minato-Ku, Tokyo 107-8541</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">U.S.A.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Japan</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Attention: Gregory A. Demopulos, M.D.,
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attention: General Manager</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:60px; text-indent:-0px">Chairman &#038; CEO
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Intellectual Property and</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Licensing Department</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">And copy to: Marcia S. Kelbon,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:75px; text-indent:-0px">Patent &#038; General Counsel</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Fax: (206)&nbsp;676.5005
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fax: &#043;81-3-3588-9602</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Phone: (206)&nbsp;676.5000
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Phone: &#043;81-3-3588-9710</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">13.12</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement may be executed in one or more counterparts, each of which will be considered
an original, and all of which will constitute the same instrument.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, Omeros and Asubio have each acknowledged and accepted this Agreement by
causing it to have been signed by their respective duly authorized officials.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">OMEROS CORPORATION</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">ASUBIO PHARMA CO., LTD.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Gregory A. Demopulos
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Seiichi Yokoyama
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name: Gregory A. Demopulos, M.D.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name: Seiichi Yokoyama</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title: &nbsp;&nbsp;Chairman &#038; CEO
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title: &nbsp;&nbsp;President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
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</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date: 3/3/10</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Schedule&nbsp;A</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Asubio Pharma Co., Ltd. &#151; Omeros Corporation</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>License Agreement</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>Asubio Patents</B></U>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">1) &#091;&#134;&#093; having PDE7 inhibitory activity<BR>
International Publication Number: &#091;&#134;&#093;
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
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    <TD width="30%">&nbsp;</TD>
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<TR style="font-size: 8pt" valign="bottom">
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</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
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</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
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</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
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<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">2) &#091;&#134;&#093; having PDE7-inhibitory activity<BR>
International Publication Number: &#091;&#134;&#093;
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
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<TR style="font-size: 8pt" valign="bottom">
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<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
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</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
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</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Schedule&nbsp;B</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Asubio Pharma Co., Ltd. &#151; Omeros Corporation</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>License Agreement</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>Asubio Know-How</B></U>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
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<TR style="font-size: 8pt" valign="bottom">
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<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Schedule&nbsp;C</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Asubio Pharma Co., Ltd. &#151; Omeros Corporation</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>License Agreement</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>Parent Compounds</B></U>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="21%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="21%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="21%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="21%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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<TR style="font-size: 8pt" valign="bottom">
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
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</TR>
<TR style="font-size: 8pt" valign="bottom">
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Applicable European</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
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    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Molecular Weight</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Patent Application</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&#091;&#134;&#093;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Schedule&nbsp;D</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Asubio Pharma Co., Ltd. &#151; Omeros Corporation</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>License Agreement</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>Excluded Compounds</B></U>
</DIV>
<P>
<DIV style="width: 100%; border: 1px solid black; padding: 11px;">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&#091;&#134;&#093;
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&nbsp;
</DIV>

</DIV>








<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>








<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Exhibit&nbsp;A</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Mutual Confidential Disclosure Agreement of June&nbsp;6, 2008 and<BR>
Amendment of June&nbsp;18, 2009</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>OMEROS CORPORATION</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>MUTUAL CONFIDENTIAL DISCLOSURE AGREEMENT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Confidential Disclosure Agreement (&#147;Agreement&#148;) is entered into as of June&nbsp;6, 2008 by and
between OMEROS CORPORATION (&#147;Omeros&#148;) and ASUBIO PHARMA CO., LTD. (&#147;Asubio&#148;). In the course of
business negotiations and transactions between the parties hereto, either or both parties and
agents thereof (including without limitation, attorneys and consultants representing the parties)
may disclose certain confidential and proprietary information for the sole purpose of evaluating a
potential business relationship and/or performing in accordance with any separate agreement that
may be reached between the parties that does not supersede this Agreement (&#147;Purpose&#148;). The parties
want to provide for the protection of any such confidential and proprietary information disclosed
by one party (the &#147;disclosing party&#148;) to which the other party receiving the information (the
&#147;recipient&#148;) may have access. Omeros and Asubio agree that this Agreement shall be binding on each
company&#146;s affiliates. For purposes of this Agreement, the term &#147;affiliates&#148; shall include each
party&#146;s subsidiary corporations, other corporations or business entities for which the party owns
or controls at least a majority interest. In consideration of continuing negotiations for or
entering into business transactions, the parties agree:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Covenant Not to Disclose. </B>For a period of five (5)&nbsp;years from the date of last disclosure
hereunder, the recipient of any Confidential Information (defined in Section&nbsp;2) will not at
any time disclose or otherwise make known or available to any person, firm, corporation
(including, without limitation, any parent corporation) or other entity, or use for its own
account or for any purpose other than the Purpose, any Confidential Information prior to or
during the term of this Agreement, without the express prior written consent of the disclosing
party. The recipient shall utilize reasonable procedures to safeguard Confidential
Information, including releasing Confidential Information only to employees or consultants who
have agreed to abide by the recipient&#146;s obligations hereunder on a &#147;need-to-know&#148; basis. All
Confidential Information shall be disclosed in writing or, if first disclosed orally or
visually, shall be summarized in writing and then provided to the recipient within thirty (30)
days of initial disclosure.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Confidential Information.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For information disclosed by Omeros, &#147;Confidential Information&#148; means any and all information
relating to Omeros&#146; programs concerning agents, compositions and therapeutic methods targeting
phosphodiesterase 7 (&#147;PDE7&#148;), and includes, without limitation, research and development
information, know-how, inventions, trade secrets, patent applications, technical data, targets
(genes or proteins), knock-out and knock-in mouse strains, gene expression profiles,
behavioral and physiological assays, phenotypes, cell lines, cellular, biochemical and
chemical assays, chemical structures, chemical structure-activity relationships, formulae,
treatment methods, clinical trial design criteria, protocols, investigators&#146; brochures,
drawings, designs, models, samples, processes, chemistry, manufacturing and controls
information, regulatory information, and any type

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->-1-<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>of product development, business or
marketing plans or strategies, financial information, customer lists or other customer
information.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For information disclosed by Asubio, &#147;Confidential Information&#148; means any and all
information relating to Asubio&#146;s compounds and programs targeting PDE7, and includes,
without limitation, research and development information, know-how, inventions, trade
secrets, patent applications, technical data, targets (genes or proteins), knock-out and
knock-in mouse strains, gene expression profiles, behavioral and physiological assays,
phenotypes, cell lines, cellular, biochemical and chemical assays, chemical structures,
chemical structure-activity relationships, formulae, treatment methods, clinical trial
design criteria, protocols, investigators&#146; brochures, drawings, designs, models, samples,
processes, chemistry, manufacturing and controls information, regulatory information, and
any type
of product development, business or marketing plans or strategies, financial information,
customer lists or other customer information.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the foregoing, Confidential Information does not include any information
concerning any agents, compositions or therapeutic methods for the treatment of diseases that
are currently classified as immune diseases or skin diseases. In addition, Confidential
Information does not include information that the recipient can establish:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>is or becomes generally available to the public other than as a result of a disclosure by
the recipient;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>was in the possession of the recipient prior to its being furnished to the recipient under
this Agreement, provided that the source of such information was not known to the recipient to
be bound by a confidentiality agreement with, or other contractual, legal, or fiduciary
obligation of confidentiality to the disclosing party or any other party with respect to such
information and that such prior possession can reasonably be proven by the recipient by
written records;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.2.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>becomes available to the recipient on a non-confidential basis from a source other than the
disclosing party, provided that such source is not bound by a confidentiality agreement with,
or other contractual, legal, or fiduciary obligation of confidentiality to the disclosing
party or any other party with respect to such information; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.2.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>is independently developed by the recipient without reference to the Confidential
Information, provided that such independent development can reasonably be proven by the
recipient by written records.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">2.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If the recipient is required by order of a court of law, administrative agency, or other
governmental body to disclose any of the Confidential Information, the recipient will promptly
provide the disclosing party with reasonable advance written notice if at all possible to
enable the disclosing party the opportunity to seek a protective order or to otherwise prevent
or limit such legally required disclosure, will use reasonable efforts to cooperate with the
disclosing party to obtain such protection, and will disclose only the legally required
portion of the Confidential Information. Any such legally required disclosure will not
relieve recipient from its obligations under this Agreement to otherwise limit the disclosure
and use of such information as Confidential Information.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Limitations on Use</B>. In further recognition of the value of Confidential Information, the
recipient acknowledges that it shall not engage in the reproduction of Confidential
Information through the techniques of &#147;reverse engineering&#148;. The recipient shall not make any
use, either directly or indirectly, of any Confidential Information to which the recipient has
been, is or will be exposed, except in the ordinary course of business</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->-2-<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>pursuant to this Agreement for the Purpose or as may be expressly authorized in a separate specific
written agreement between the parties. Nothing in this Agreement shall be construed as giving
recipient any license or other right under any intellectual property of the disclosing party.
Neither party shall disclose the existence and nature of this Agreement or the fact that it is
evaluating the other party&#146;s Information, except that such disclosure to a party&#146;s present and
potential employees, consultants, officers, directors, shareholders and investors is
permitted, and neither party shall use the name of the other party in any publicity or
advertising without that party&#146;s prior written approval.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Return of Confidential Information</B>. When requested by the disclosing party or at the
termination of the relationship giving rise to this Agreement, whichever first occurs, the
recipient immediately shall deliver all Confidential Information and all copies thereof in its
possession or in the possession of its employees, provided that the recipient&#146;s legal counsel
may retain one archival copy of the Confidential Information solely for purposes of ensuring
compliance with this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Specific Performance</B>. The parties acknowledge that (a)&nbsp;the covenants set forth in Sections
1, 3 and 4 are essential elements of the transactions contemplated in this Agreement and that,
but for the agreement to comply with such covenants, the parties would not have entered into
such transactions, and that the parties have consulted with, or have had the opportunity to
consult with, counsel and have been advised in all respects concerning the reasonableness of
such covenants as to scope and limit of time; (b)&nbsp;the disclosing party will not have any
adequate remedy at law if the recipient violates the terms of Sections&nbsp;1, 3 or 4 fails to
perform any of its other obligations hereunder; and (c)&nbsp;the disclosing party shall have the
right, in addition to any other rights it may have, to obtain in any court of competent
jurisdiction temporary, preliminary and permanent injunctive relief to restrain any breach,
threatened breach, or otherwise to specifically enforce any of such covenants or any other
obligations of the recipient if the recipient fails to perform any of its obligations under
this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Term</B>. This Agreement and the obligations of nondisclosure and nonuse set forth herein shall
terminate five (5)&nbsp;years after the date of the last disclosure of Confidential Information
under this Agreement, provided that the obligations concerning improvements of Section&nbsp;5 of
this Agreement shall survive termination of the Agreement. Prior to termination of this
Agreement, either party may deliver written notice to the other party that it no longer wishes
to receive Confidential Information under this Agreement, after receipt of which any
information subsequently sent in writing or orally disclosed by either party shall be deemed
non-confidential.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Miscellaneous</B>. This Agreement shall be binding upon and inure to the benefit of the parties&#146;
successors and assigns. The waiver of any breach of any provision of this Agreement or
failure to enforce any provision hereof shall not operate or be construed as a waiver of any
subsequent breach by any party. The invalidity of all or any part of any section of this
Agreement shall not render invalid the remainder of this Agreement or the remainder of such
section. If any provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable. In any litigation or
disputes arising out of this Agreement, the substantially prevailing party will be entitled to
recover all reasonable costs and attorneys&#146; fees, including costs and fees on appeal. The
provisions of this Agreement shall not be construed as limiting any rights or remedies that
either party may otherwise have under the applicable law.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->-3-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Governing Law</B>. This Agreement shall be governed by and construed in accordance with the laws
of the State of New York, USA.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">OMEROS CORPORATION<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Marcia S. Kelbon
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Printed name Marcia S. Kelbon&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Its VP, Patent &#038; General Counsel&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">ASUBIO PHARMA CO., LTD.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD align="left">By&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left"> /s/ Keijiro Sugimura
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD align="left">&nbsp;</TD>

    <TD colspan="2" align="left">Printed name Keijiro Sugimura, Ph. D.&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD align="left">&nbsp;</TD>

    <TD colspan="2" align="left">Its General Manager, Intellectual Property &#038; Licensing Department&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>








<P align="center" style="font-size: 10pt"><!-- Folio -->-4-<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>AMENDMENT TO MUTUAL CONFIDENTIAL DISCLOSURE AGREEMENT</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AMENDMENT TO MUTUAL CONFIDENTIAL DISCLOSURE AGREEMENT (this &#147;<I>Amendment</I>&#148;) is made and entered
into this 18<SUP style="FONT-size: 85%; vertical-align: text-top">th</SUP> day of June, 2009, by and between Asubio Pharma Co., Ltd., with an
address at 9-11 Akasaka 2-Chome, Minato-Ku, Tokyo 107-8541 Japan (&#147;<I>Asubio</I>&#148;) and Omeros Corporation,
with an address at 1420 Fifth Avenue, Suite&nbsp;2600, Seattle. WA 98101, U. S. A. (&#147;<I>Omeros</I>&#148;),
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">WITNESSETH:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>, Asubio and Omeros have entered into a mutual confidential disclosure agreement dated
June&nbsp;6, 2008 (the &#147;<I>CDA</I>&#148;); and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>, Asubio and Omeros now wish to amend the CDA to provide for the disclosure of the
Confidential Information to certain officers and employees of Asubio&#146;s affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW, THEREFORE</B>, the parties agree as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;Any initially capitalized terms not otherwise defined herein shall have the meanings given
in the CDA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;Notwithstanding the Section&nbsp;1 of the CDA, Asubio may disclose the Confidential Information
to its Affiliates&#146; officers and employees who have a need to know for the Purpose, provided that
Asubio has first advised such officers and employees of the confidential nature of the Confidential
Information and ensures that such officer and employee is subject to confidentiality obligations
substantially similar to those set forth in the CDA. For purposes of this Amendment, &#147;Affiliates&#148;
shall mean any corporation or other entity directly or indirectly controlled by, controlling or
under common control with Asubio, and for such purpose &#147;control&#148; shall mean the direct or indirect
ownership of more than fifty percent (50%) of the voting interest in such corporation or other
entity, or the power to direct the management of such corporation or other entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;Except as expressly amended hereby, all terms of the CDA, shall remain unchanged and in
full force and effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;This Amendment may be executed in two (2)&nbsp;counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN WITNESS HEREOF </B>the parties hereto have executed this Amendment as of the day and year first
above written.
</DIV>




<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>ASUBIO PHARMA CO., LTD.</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>OMEROS CORPORATION</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-bottom: 1px solid #000000">/s/ Keijiro Sugimura
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-bottom: 1px solid #000000">/s/ Marcia S. Kelbon</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name: Keijiro Sugimura, Ph. D.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name: Marcia S. Kelbon</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:30px; text-indent:-30px">Title:&nbsp;&nbsp; General Manager, Intellectual<BR>
&nbsp;&nbsp;&nbsp;Property &#038; Licensing Department</div>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:&nbsp;&nbsp; VP, Patent &#038; General Counsel</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION</TD>
</TR>

</TABLE>




<P align="center" style="font-size: 10pt"><!-- Folio -->-1-<!-- /Folio -->
</DIV>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>v55824exv31w1.htm
<DESCRIPTION>EX-31.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv31w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;31.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a)/15d-14(a) OF THE<BR>
SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY<BR>
ACT OF 2002</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">I, Gregory A. Demopulos, M.D., certify that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I have reviewed this quarterly report on Form 10-Q of Omeros Corporation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e)
and 15d-15(e)) for the registrant and have:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Evaluated the effectiveness of the registrant&#146;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</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">c.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Disclosed in this report any change in the registrant&#146;s internal control
over financial reporting that occurred during the registrant&#146;s most recent fiscal
quarter (the registrant&#146;s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant&#146;s internal control over financial reporting; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrant&#146;s
auditors and the audit committee of the registrant&#146;s board of directors (or persons
performing the equivalent functions):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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&#146;s ability to record, process, summarize, and
report financial information; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant&#146;s internal control over
financial reporting.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Dated: May 12, 2010<BR><BR>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Gregory A. Demopulos
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Gregory A. Demopulos, M.D.&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Principal Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>v55824exv31w2.htm
<DESCRIPTION>EX-31.2
<TEXT>
<HTML>
<HEAD>
<TITLE>exv31w2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;31.2</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a)/15d-14(a) OF THE<BR>
SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY<BR>
ACT OF 2002</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">I, Gregory A. Demopulos, M.D., certify that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I have reviewed this quarterly report on Form 10-Q of Omeros Corporation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e)
and 15d-15(e)) for the registrant and have:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Evaluated the effectiveness of the registrant&#146;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</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">c.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Disclosed in this report any change in the registrant&#146;s internal control
over financial reporting that occurred during the registrant&#146;s most recent fiscal
quarter (the registrant&#146;s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant&#146;s internal control over financial reporting; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrant&#146;s
auditors and the audit committee of the registrant&#146;s board of directors (or persons
performing the equivalent functions):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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&#146;s ability to record, process, summarize, and
report financial information; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant&#146;s internal control over
financial reporting.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Dated: May 12, 2010<BR><BR>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Gregory A. Demopulos
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Gregory A. Demopulos, M.D.&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Principal Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>5
<FILENAME>v55824exv32w1.htm
<DESCRIPTION>EX-32.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv32w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;32.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED<BR>
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Quarterly Report on Form 10-Q of Omeros Corporation (the &#147;Company&#148;) for
the quarter ended March&nbsp;31, 2010, as filed with the Securities and Exchange Commission on the date
hereof (the &#147;Report&#148;), the undersigned officer of the Company certifies, pursuant to 18 U.S.C.
Section&nbsp;1350, as adopted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002, that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This certification accompanies the Report pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of
2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed
filed by the Company for purposes of Section&nbsp;18 of the Securities Exchange Act of 1934, as amended
(the &#147;Exchange Act&#148;), or incorporated by reference in any filing under the Securities Act of 1933,
as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such
filing.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Dated: May 12, 2010<BR><BR>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Gregory A. Demopulos
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Gregory A. Demopulos, M.D.     &nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Principal Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>6
<FILENAME>v55824exv32w2.htm
<DESCRIPTION>EX-32.2
<TEXT>
<HTML>
<HEAD>
<TITLE>exv32w2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;32.2</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED<BR>
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Quarterly Report on Form 10-Q of Omeros Corporation (the &#147;Company&#148;) for
the quarter ended March&nbsp;31, 2010, as filed with the Securities and Exchange Commission on the date
hereof (the &#147;Report&#148;), the undersigned officer of the Company certifies, pursuant to 18 U.S.C.
Section&nbsp;1350, as adopted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002, that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This certification accompanies the Report pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of
2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed
filed by the Company for purposes of Section&nbsp;18 of the Securities Exchange Act of 1934, as amended
(the &#147;Exchange Act&#148;), or incorporated by reference in any filing under the Securities Act of 1933,
as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such
filing.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Dated: May 12, 2010<BR><BR>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Gregory A. Demopulos
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Gregory A. Demopulos, M.D.     &nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Principal Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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