Omeros Corporation Further Strengthens its Balance Sheet through Series of Financing Transactions Extending Maturity on a Majority of its Outstanding Debt into 2028
Omeros (NASDAQ: OMER) has completed a series of strategic financial transactions aimed at strengthening its balance sheet and extending the maturity of its debt. The company repurchased $118.1 million, or 55%, of its outstanding convertible notes due in 2026 at 75% of their notional value, resulting in $51 million in total debt extinguishment. The repurchase was funded through a new $67 million secured four-year term loan maturing in June 2028 and $21 million in cash. The new credit facility includes a $25 million delayed draw term loan for potential narsoplimab commercialization, with no equity component, preventing shareholder dilution.
The transactions strengthen Omeros' financial position, enabling flexibility to manage the remaining 2026 notes and support potential narsoplimab commercialization. Omeros retains all future potential value of capped calls associated with the original 2026 notes. The loans carry a competitive interest rate of adjusted term SOFR plus 8.75%, maturing on June 3, 2028. The company maintains a cash balance of $230.3 million, sufficient to fund operations and debt service into 2026.
- Repurchased $118.1 million of 2026 convertible notes, reducing debt by $51 million.
- New $67 million secured term loan maturing in June 2028 improves liquidity.
- Credit facility includes $25 million delayed draw term loan for narsoplimab commercialization.
- No equity component in new financing, preventing shareholder dilution.
- Competitive interest rate on new loans, enhancing financial stability.
- Cash balance of $230.3 million sufficient to fund operations and debt service into 2026.
- Interest rate on loans is adjusted term SOFR plus 8.75%, which could be considered high.
- $97.9 million of the 2026 convertible notes remain outstanding.
- Possibility of mandatory prepayment of loans if certain conditions are not met by November 1, 2025.
Insights
Omeros Corporation's recent financing transactions offer several strategic advantages for the company and its investors. By repurchasing $118.1 million of its outstanding convertible notes due in 2026 at approximately 75% of notional value, Omeros has managed to extinguish $51 million in debt. This move significantly reduces the company's liabilities and extends the maturity date of a substantial portion of its debt to 2028. This is a noteworthy financial strategy, as it helps improve the company's leverage and liquidity profile, making it more attractive to investors in the long run.
Additionally, the fact that these transactions do not include any equity components is a positive factor for existing shareholders since it avoids dilution. The company has demonstrated prudent use of its cash reserves and secured term loans to manage its debt effectively. The $25 million delayed draw term loan, which is contingent upon FDA approval of narsoplimab, shows forward-thinking in securing funds for potential commercialization of their product, adding to the company's growth prospects.
In terms of financial health, the extension of debt maturity, combined with the extinguishment of a portion of its existing debt, will likely lead to a stronger balance sheet. This move also offers Omeros flexibility in managing its remaining convertible notes, which is important for maintaining financial stability. Investors should view these actions as a strong indication of the company's commitment to improving its financial standing and supporting future growth.
From a market perspective, Omeros Corporation's strategic financial maneuvers are likely to enhance investor confidence. The repurchase of convertible notes at a discount not only reduces overall debt but also reflects the company's effective debt management strategies. By extending the maturity date of a large portion of its debt to 2028, Omeros has effectively bought itself more time to achieve commercial milestones, such as the approval and commercialization of narsoplimab and other pipeline candidates like OMS906 and OMS527.
The delayed draw term loan, contingent upon FDA approval, indicates that the company is preparing for future commercialization efforts, which could potentially result in significant revenue streams. This proactive approach to financing and debt management is likely to be perceived positively in the market, as it shows the company's readiness to capitalize on future growth opportunities.
Moreover, the absence of shareholder dilution in these transactions is a key point for retail investors. It ensures that their equity stake in the company remains intact while the company strengthens its financial position. This strategic move could lead to a more favorable market sentiment and potentially drive the stock price higher as investors recognize the long-term benefits of these transactions.
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$118.1 million 55% , of outstanding convertible notes due in 2026 repurchased at approximately75% of notional value, resulting in$51 million -
Repurchase funded from new
$67 million $21 million -
Credit facility includes
$25 million - Transactions include no equity component, preventing shareholder dilution, and enable additional debt reduction
Today, Omeros entered into a Credit and Guaranty Agreement with certain funds managed by Athyrium Capital Management, LP (collectively, “Athyrium”) and certain funds managed by Highbridge Capital Management, LLC (collectively, “Highbridge”) as lenders. The agreement provides for a senior secured term loan facility initially of up to
The
“We are pleased to partner with Athyrium and Highbridge on these strategic transactions and we appreciate their ongoing commitment to Omeros’ continued success,” said Gregory A. Demopulos, M.D., chairman and chief executive officer of Omeros. “Through these transactions, in addition to strengthening our balance sheet materially, we have extinguished or extended maturity on the bulk of our debt out to mid-2028. Prior to that, we expect not only that narsoplimab will be established in the market but that we will have commercialized OMS906, our MASP-3 inhibitor planned to enter Phase 3 trials later this year, and that our other programs, including OMS527 for addictions and movement disorders and our immuno-oncology platforms, will have markedly advanced and added substantial shareholder value. Consistent with our efforts to protect and grow shareholder value, evidenced through our recent programmatic accomplishments and repurchase of 8 percent of our outstanding common shares, today’s transaction-related achievements required no contribution of Omeros equity, further preventing shareholder dilution.”
After effecting the repurchase of the initial
The loans accrue interest at a competitive rate of adjusted term SOFR (with a
All indebtedness outstanding under the agreement is guaranteed by certain of Omeros’ subsidiaries, other than certain foreign subsidiaries that are not material. The indebtedness is secured by a first-priority security interest in and lien on substantially all tangible and intangible property of the credit parties, subject to customary exceptions, and excluding royalty interests in OMIDRIA® and certain related rights.
As of March 31, 2024, Omeros had
Cantor Fitzgerald LP served as financial advisor and Covington & Burling LLP as legal counsel to Omeros Corporation on the transactions. King & Spalding LLP and Paul Hastings LLP acted as legal counsel to the lenders.
The transactions described in this press release are further described in a Current Report on Form 8-K to be filed today with the
About Omeros Corporation
Omeros is an innovative biopharmaceutical company committed to discovering, developing and commercializing small-molecule and protein therapeutics for large-market and orphan indications targeting immunologic disorders including complement-mediated diseases, cancers, and addictive and compulsive disorders. Omeros’ lead MASP-2 inhibitor narsoplimab targets the lectin pathway of complement and is the subject of a biologics license application pending before FDA for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy. Omeros’ long-acting MASP-2 inhibitor OMS1029 is currently in a Phase 1 multi-ascending-dose clinical trial. OMS906, Omeros’ inhibitor of MASP-3, the key activator of the alternative pathway of complement, is advancing toward Phase 3 clinical trials for paroxysmal nocturnal hemoglobinuria and complement 3 glomerulopathy. Funded by the National Institute on Drug Abuse, Omeros’ lead phosphodiesterase 7 inhibitor OMS527 is in clinical development for the treatment of cocaine use disorder and, in addition, is being developed as a therapeutic for other addictions as well as for a major complication of treatment for movement disorders. Omeros also is advancing a broad portfolio of novel immuno-oncology programs comprised of two cellular and three molecular platforms. For more information about Omeros and its programs, visit www.omeros.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are subject to the “safe harbor” created by those sections for such statements. All statements other than statements of historical fact are forward-looking statements, which are often indicated by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “goal,” “intend,” “likely,” “look forward to,” “may,” “objective,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “slate,” “target,” “will,” “would” and similar expressions and variations thereof. Forward-looking statements, including regarding the future regulatory status of narsoplimab, anticipated success of our drug development programs and commercialization objectives, forecasts of the sufficiency our capital resources, expectations regarding uses of proceeds of loans, and the potential for future repurchases of 2026 Notes, are based on management’s beliefs and assumptions and on information available to management only as of the date hereof. Omeros’ actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including, without limitation, regulatory processes and oversight, market factors, and the risks, uncertainties and other factors described under the heading “Risk Factors” in Omeros’ Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2024. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements, and the Company assumes no obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240603889120/en/
Jennifer Cook Williams
Cook Williams Communications, Inc.
Investor and Media Relations
IR@omeros.com
Source: Omeros Corporation
FAQ
What is the impact of Omeros' recent debt repurchase on its balance sheet?
How is Omeros funding its debt repurchase?
Will Omeros shareholders experience dilution from the new financing?
When do the new loans Omeros secured mature?
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How much cash does Omeros have available for operations and debt service?
