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Note 8 - OMIDRIA Royalty Obligation | 9 Months Ended
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Sep. 30, 2024
Notes to Financial Statements |
Royalty Obligation [Text Block] | Note 8—OMIDRIA Royalty Obligation In September 2022, we sold to DRI an interest in our future OMIDRIA royalty receipts and received $125.0 million in cash consideration, which was recorded as an OMIDRIA royalty obligation on our condensed consolidated balance sheet. DRI was entitled to receive royalties on OMIDRIA net sales between September 1, 2022 and December 31, 2030, subject to annual caps. In February 2024, Omeros and DRI expanded their royalty purchase agreement under the DRI Amendment, resulting in Omeros receiving an additional $115.5 million in cash consideration, which we accounted for as a modification of our existing debt from DRI. The DRI Amendment eliminated the annual caps on royalty payments and provides that DRI will receive all royalties on U.S. net sales of OMIDRIA payable between January 1, 2024 and December 31, 2031. We retain the right to receive all royalties payable by Rayner on any net sales of OMIDRIA outside the U.S. payable after January 1, 2024, as well as royalties on global net sales of OMIDRIA payable from and after December 31, 2031. To date, international royalties have not been significant. DRI has no recourse to our assets other than its interest in OMIDRIA royalties. We are also entitled to receive a milestone payment ranging between $10.0 million and $27.5 million if U.S. net sales of OMIDRIA reach applicable thresholds ranging between a total of $156.0 million and $160.0 million for any period of four consecutive quarters prior to January 1, 2026. In addition, we are entitled to receive a separate milestone payment ranging between $8.0 million and $27.5 million if U.S. net sales of OMIDRIA reach applicable thresholds ranging between a total of $181.0 million and $185.0 million for any period of four consecutive quarters prior to January 1, 2028. The following schedule is a roll forward of the OMIDRIA royalty obligation (in thousands):
Balance at December 31, 2023 |  | $ | 125,126 |
Additional proceeds |  |  | 115,525 |
Non-cash interest |  |  | (1,553 | )
Principal payments |  |  | (15,125 | )
Balance at September 30, 2024 |  | $ | 223,973 |
We account for the OMIDRIA royalty obligation under the catch-up method. The catch-up method requires that we adjust the carrying amount to match the present value of revised estimated cash flows of Rayner’s U.S. net sales of OMIDRIA. We discounted the OMIDRIA royalty obligation at an implied effective interest rate of 10.27%. The OMIDRIA royalty obligation is classified as a Level 3 liability as its valuation requires substantial judgment and estimation of factors that are not currently observable in the market. As of September 30, 2024, the approximate fair value of our obligation was $213.4 million. We determined the fair market value by discounting the estimated future cash flows based on the initial contractual rate adjusted for any changes in the prime rate through to the measurement date. ​ For the three months ended September 30, 2024 and 2023, we incurred interest expense of $2.2 million and $3.0 million, respectively. For the nine months ended September 30, 2024 and 2023, we incurred interest expense of $13.7 million and $8.9 million, respectively. ​ As of September 30, 2024, future expected principal and interest payments are as follows:
​ |  | ​ |  |  | ​ |  |  |  |  |
​ |  | Principal |  |  | Interest |  |  | Total |
​ |  | (In thousands) |
2024 |  | $ | 3,806 |  |  | $ | 5,403 |  |  | $ | 9,209 |
2025 |  |  | 20,546 |  |  |  | 20,468 |  |  |  | 41,014 |
2026 |  |  | 23,778 |  |  |  | 18,324 |  |  |  | 42,102 |
2027 |  |  | 27,069 |  |  |  | 15,875 |  |  |  | 42,944 |
2028 |  |  | 30,711 |  |  |  | 13,091 |  |  |  | 43,802 |
Thereafter |  |  | 118,063 |  |  |  | 18,672 |  |  |  | 136,735 |
Total scheduled payments |  | $ | 223,973 |  |  | $ | 91,833 |  |  | $ | 315,806 |

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Balance Type: | na
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- References No definition available. + Details
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Namespace Prefix: | us-gaap_
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