##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 001-34475
 OMEROS CORPORATION
 (Exact name of registrant as specified in its charter)
 Washington
(State or other jurisdiction of 
incorporation or organization)
    
    91-1663741
(I.R.S. Employer
Identification Number)1420 Fifth Avenue, Suite 2600
Seattle, Washington
(Address of principal executive offices)
    
    98101
(Zip Code)
 (206) 676-5000
(Registrants telephone number, including area code)
 o þ
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated
filer þ(Do not check if a smaller reporting company)
Smaller reporting
company o
 o þ




---



##### 



OMEROS CORPORATION
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2009
 INDEX
 PagePart I  Financial Information
    
    
    3Item 1. Financial Statements (unaudited)
    
    
    3Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008
    
    
    3Consolidated Statements of Operations for the Three and Nine
Months Ended September 30, 2009 and 2008 and for the period from June 16, 1994 (inception)
through September 30, 2009
    
    
    4Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and
2008 and for the period from June 16, 1994 (inception) through September 30, 2009
    
    
    5Notes to the Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    29Part II  Other Information
    
    
    30Item 1. Legal Proceedings
    
    
    30Item 1A. Risk Factors
    
    
    30Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    49Item 4. Submission of Matters to a Vote of Security Holders
    
    
    50Item 6. Exhibits
    
    
    51Signatures
    
    
    52EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 
 OMEROS CORPORATION
(A Development Stage Company)
 CONSOLIDATED BALANCE SHEETS
(In thousands)
 September 30,
    
    
    December 31,2009
    
    
    2008(unaudited)
    
    
    Note 1AssetsCurrent assets:Cash and cash equivalents
    
    $
    1,367
    
    
    $
    12,726Short-term investments
    
    
    3,125
    
    
    
    7,256Grant and other receivables
    
    
    320
    
    
    
    207Prepaid expenses and other current assets
    
    
    128
    
    
    
    289Total current assets
    
    
    4,940
    
    
    
    20,478Deferred offering costs
    
    
    1,034
    
    
    
    Property and equipment, net
    
    
    681
    
    
    
    918Intangible assets, net
    
    
    
    
    
    
    60Restricted cash
    
    
    193
    
    
    
    193Other assets
    
    
    62
    
    
    
    32Total assets
    
    $
    6,910
    
    
    $
    21,681Liabilities, convertible preferred stock and shareholders equity (deficit)Current liabilities:Accounts payable
    
    $
    1,530
    
    
    $
    1,229Accrued expenses
    
    
    3,739
    
    
    
    3,764Preferred stock warrant liability
    
    
    902
    
    
    
    1,780Deferred revenue
    
    
    1,019
    
    
    
    232Current portion of notes payable
    
    
    4,750
    
    
    
    16,556Total current liabilities
    
    
    11,940
    
    
    
    23,561Notes payable, less current portion
    
    
    9,244
    
    
    
    118Commitments and contingenciesConvertible preferred stock:Issued and outstanding shares11,514,506 at September 30, 2009
(unaudited) and 11,392,057 at December 31, 2008;Liquidation preference of $93,284 at September 30, 2009 (unaudited) and
$92,084 at December 31, 2008
    
    
    91,019
    
    
    
    89,168Shareholders equity (deficit):Preferred stock, par value $0.01 per share:Authorized shares  13,425,919 at September 30, 2009 (unaudited) and
December 31, 2008Designated convertible  13,425,919 at September 30, 2009 (unaudited)
and December 31, 2008
    
    
    
    
    
    
    Common stock, par value $0.01 per share:Authorized shares  20,410,000 at September 30, 2009 (unaudited) and
December 31, 2008;Issued and outstanding shares2,930,167 and 2,951,406 at September 30,
2009 (unaudited) and December 31, 2008, respectively
    
    
    30
    
    
    
    30Additional paid-in capital
    
    
    7,408
    
    
    
    6,150Accumulated other comprehensive loss
    
    
    23
    
    
    
    (99
    )Deficit accumulated during the development stage
    
    
    (112,754
    )
    
    
    (97,247
    )Total shareholders deficit
    
    
    (105,293
    )
    
    
    (91,166
    )Total liabilities, convertible preferred stock, and shareholders
equity (deficit)
    
    $
    6,910
    
    
    $
    21,681
  3




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##### Table of Contents



OMEROS CORPORATION
(A Development Stage Company)
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(unaudited)
 Period fromJune 16,1994(Inception)Three Months Ended
    
    
    Nine Months Ended
    
    
    throughSeptember 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009Grant revenue
    
    $
    442
    
    
    $
    501
    
    
    $
    1,010
    
    
    $
    989
    
    
    $
    4,403Operating expenses:Research and development
    
    
    3,692
    
    
    
    4,737
    
    
    
    12,291
    
    
    
    12,755
    
    
    
    74,525Acquired in-process research and development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,891General and administrative
    
    
    1,277
    
    
    
    3,428
    
    
    
    4,162
    
    
    
    6,327
    
    
    
    36,645Total operating expenses
    
    
    4,969
    
    
    
    8,165
    
    
    
    16,453
    
    
    
    19,082
    
    
    
    122,061Loss from operations
    
    
    (4,527
    )
    
    
    (7,664
    )
    
    
    (15,443
    )
    
    
    (18,093
    )
    
    
    (117,658
    )Investment income
    
    
    47
    
    
    
    114
    
    
    
    189
    
    
    
    574
    
    
    
    5,352Interest expense
    
    
    (540
    )
    
    
    (52
    )
    
    
    (1,705
    )
    
    
    (90
    )
    
    
    (2,334
    )Other income (expense)
    
    
    1,104
    
    
    
    222
    
    
    
    1,452
    
    
    
    165
    
    
    
    1,886Net loss
    
    $
    (3,916
    )
    
    $
    (7,380
    )
    
    $
    (15,507
    )
    
    $
    (17,444
    )
    
    $
    (112,754
    )Basic and diluted net loss per common share
    
    $
    (1.34
    )
    
    $
    (2.54
    )
    
    $
    (5.29
    )
    
    $
    (6.07
    )Weighted-average shares used to compute
basic and diluted net loss per common share
    
    
    2,930,391
    
    
    
    2,909,688
    
    
    
    2,929,728
    
    
    
    2,871,704Pro forma basic and diluted net loss per
common share
    
    $
    (0.33
    )
    
    $
    (0.52
    )
    
    $
    (1.14
    )
    
    $
    (1.21
    )Weighted-average pro forma shares used to
compute pro forma basic and diluted net loss
per share
    
    
    14,444,897
    
    
    
    14,301,745
    
    
    
    14,422,465
    
    
    
    14,263,761
  4




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##### Table of Contents



OMEROS CORPORATION
(A Development Stage Company)
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
 Period fromJune 16, 1994(Inception)Nine Months Ended
    
    
    throughSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009Operating activitiesNet loss
    
    $
    (15,507
    )
    
    $
    (17,444
    )
    
    $
    (112,754
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    348
    
    
    
    317
    
    
    
    1,899Stock-based compensation expense
    
    
    1,242
    
    
    
    1,598
    
    
    
    11,400Change in fair value of preferred stock warrant values and success fee liability
    
    
    (863
    )
    
    
    216
    
    
    
    (268
    )Non-cash interest expense
    
    
    191
    
    
    
    9
    
    
    
    246Loss on sale of investment securities
    
    
    30
    
    
    
    71
    
    
    
    75Write-off of deferred public offering costs
    
    
    
    
    
    
    1,462
    
    
    
    1,948Acquired in-process research and development
    
    
    
    
    
    
    
    
    
    
    10,891Other than temporary impairment loss on investments
    
    
    
    
    
    
    
    
    
    
    163Changes in operating assets and liabilities, net of effect from nura
acquisition in 2006:Grant and other receivables
    
    
    (113
    )
    
    
    (193
    )
    
    
    980Prepaid expenses and other current and noncurrent assets
    
    
    93
    
    
    
    31
    
    
    
    (79
    )Deferred public offering costs
    
    
    (1,034
    )
    
    
    
    
    
    
    (2,982
    )Accounts payable and accrued expenses
    
    
    314
    
    
    
    (470
    )
    
    
    4,972Deferred revenue
    
    
    787
    
    
    
    (500
    )
    
    
    (281
    )Net cash used in operating activities
    
    
    (14,512
    )
    
    
    (14,903
    )
    
    
    (83,790
    )Investing activitiesPurchases of property and equipment
    
    
    (51
    )
    
    
    (144
    )
    
    
    (1,844
    )Purchases of investments
    
    
    (3,201
    )
    
    
    
    
    
    
    (87,098
    )Proceeds from the sale of investments
    
    
    6,545
    
    
    
    5,572
    
    
    
    39,216Proceeds from the maturities of investments
    
    
    879
    
    
    
    4,550
    
    
    
    44,543Cash paid for acquisition of nura, net of cash acquired of $87
    
    
    
    
    
    
    
    
    
    
    (212
    )Net cash provided by (used in) investing activities
    
    
    4,172
    
    
    
    9,978
    
    
    
    (5,395
    )Financing activitiesProceeds from borrowings under note payable, net of loan origination costs
    
    
    
    
    
    
    4,883
    
    
    
    16,928Payments on notes payable
    
    
    (2,833
    )
    
    
    (1,010
    )
    
    
    (5,289
    )Proceeds from issuance of common stock and exercise of stock options
    
    
    11
    
    
    
    39
    
    
    
    653Proceeds from the repayment of related party notes receivable
    
    
    
    
    
    
    
    
    
    
    239Proceeds from issuance of convertible preferred stock, net of issuance costs
    
    
    1,851
    
    
    
    
    
    
    
    73,034Issuance of Series E convertible preferred stock for $5.00 per share concurrent
with acquisition of nura
    
    
    
    
    
    
    
    
    
    
    5,200Repurchase of Series A convertible preferred stock and unvested common stock
    
    
    (48
    )
    
    
    
    
    
    
    (213
    )Net cash provided by (used in) financing activities
    
    
    (1,019
    )
    
    
    3,912
    
    
    
    90,552Net (decrease) increase in cash and cash equivalents
    
    
    (11,359
    )
    
    
    (1,013
    )
    
    
    1,367Cash and cash equivalents at beginning of period
    
    
    12,726
    
    
    
    5,925
    
    
    
    Cash and cash equivalents at end of period
    
    $
    1,367
    
    
    $
    4,912
    
    
    $
    1,367Supplemental cash flow informationCash paid for interest
    
    $
    1,514
    
    
    $
    48
    
    
    $
    2,030Purchase of equipment included in accounts payable and accrued expenses
    
    $
    
    
    
    $
    78
    
    
    $
    Purchase of software financed with note payable
    
    $
    
    
    
    $
    
    
    
    $
    143Vesting of early-exercised stock options
    
    $
    5
    
    
    $
    
    
    
    $
    106Issuance of warrants in connection with notes payable
    
    $
    
    
    
    $
    241
    
    
    $
    253Issuance of common stock in exchange for note receivable from related party
    
    $
    
    
    
    $
    
    
    
    $
    239Preferred stock and common stock issued in connection with nura acquisition
    
    $
    
    
    
    $
    
    
    
    $
    14,070
  5




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##### Table of Contents



OMEROS CORPORATION
(A Development Stage Company)
 
 NOTES TO CONOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 Note 1  Organization and Significant Accounting Policies
 Organization
  Basis of Presentation
    Reverse Stock Split
  Initial Public Offering
  6




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##### Table of Contents



Liquidity
    Use of Estimates
  Deferred Public Offering Costs
  Intangible Assets
  7




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##### Table of Contents



Accrued Expenses
  September 30,
    
    
    December 31,2009
    
    
    2008(in thousands)Clinical trials
    
    $
    1,754
    
    
    $
    1,644Contract
preclinical research
    
    
    100
    
    
    
    423Employee compensation
    
    
    287
    
    
    
    319Success fee liability related to notes payable
    
    
    340
    
    
    
    310Public offering costs
    
    
    640
    
    
    
    345Other accruals
    
    
    618
    
    
    
    723Accrued expenses
    
    $
    3,739
    
    
    $
    3,764
  Preferred Stock Warrant Liability
   Revenue
     8




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##### Table of Contents



Research and Development
  In-Process Research and Development
  Income Taxes
  Other Comprehensive Loss
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Net loss
    
    $
    (3,916
    )
    
    $
    (7,380
    )
    
    $
    (15,507
    )
    
    $
    (17,444
    )Unrealized gain (loss) on available-for-sale securities
    
    
    (32
    )
    
    
    (21
    )
    
    
    122
    
    
    
    (18
    )Other comprehensive loss
    
    $
    (3,948
    )
    
    $
    (7,401
    )
    
    $
    (15,385
    )
    
    $
    (17,462
    )
 9




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##### Table of Contents



Net Loss Per Common Share
    Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008HistoricalNumerator:Net loss
    
    $
    (3,916
    )
    
    $
    (7,380
    )
    
    $
    (15,507
    )
    
    $
    (17,444
    )Denominator:Weighted-average common shares outstanding
    
    
    2,938,965
    
    
    
    2,950,824
    
    
    
    2,948,653
    
    
    
    2,933,278Less: Weighted-average unvested common shares subject to
repurchase
    
    
    (8,574
    )
    
    
    (41,136
    )
    
    
    (18,925
    )
    
    
    (61,574
    )Denominator for basic and diluted net loss per common share
    
    
    2,930,391
    
    
    
    2,909,688
    
    
    
    2,929,728
    
    
    
    2,871,704Basic and diluted net loss per common share
    
    $
    (1.34
    )
    
    $
    (2.54
    )
    
    $
    (5.29
    )
    
    $
    (6.07
    )
  September 30,2009
    
    
    2008Convertible preferred stock
    
    
    11,514,506
    
    
    
    11,391,534Outstanding options to purchase common stock
    
    
    2,809,426
    
    
    
    2,879,843Warrants to purchase common stock and convertible preferred stock
    
    
    234,230
    
    
    
    216,417Common stock subject to repurchase
    
    
    
    
    
    
    37,142Total
    
    
    14,558,162
    
    
    
    14,524,936
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Pro Forma (unaudited)Numerator:Net loss
    
    $
    (3,916
    )
    
    $
    (7,380
    )
    
    $
    (15,507
    )
    
    $
    (17,444
    )Plus: other (income) expense attributable to the
convertible preferred stock warrants assumed to have been
converted to common stock warrants
    
    
    (918
    )
    
    
    (69
    )
    
    
    (878
    )
    
    
    216Pro forma net loss
    
    $
    (4,834
    )
    
    $
    (7,449
    )
    
    $
    (16,385
    )
    
    $
    (17,228
    )
 10




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Denominator:Denominator for basic and diluted net loss per common share
    
    
    2,930,391
    
    
    
    2,909,688
    
    
    
    2,929,728
    
    
    
    2,871,704Plus: weighted-average pro forma adjustments to reflect
assumed conversion of convertible preferred stock
    
    
    11,514,506
    
    
    
    11,392,057
    
    
    
    11,492,737
    
    
    
    11,392,057Denominator for pro forma basic and diluted net loss per
common share
    
    
    14,444,897
    
    
    
    14,301,745
    
    
    
    14,422,465
    
    
    
    14,263,761Pro forma basic and diluted net loss per common share
    
    $
    (0.33
    )
    
    $
    (0.52
    )
    
    $
    (1.14
    )
    
    $
    (1.21
    )
  Stock-Based Compensation
    Segments
  Adoption of Standards
   11




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##### Table of Contents




    
    Additional guidance on measuring the fair value of financial instruments when market
activity has decreased and quoted prices may reflect distressed transactions.
    
    Expanded guidance for recognition and presentation of other-than-temporary impairments on
debt and equity securities in the financial statements.
    
    Expanded fair value disclosures required for financial instruments to interim reporting
periods, including disclosure of the significant assumptions used to estimate the fair value
of those financial instruments.
  Subsequent Events
  Note 2  Cash, Cash Equivalents and Investments
  September 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(in thousands)Cash and cash equivalents
    
    $
    1,561
    
    
    $
    
    
    
    $
    
    
    
    $
    1,561Mortgage-backed securities
    
    
    3,102
    
    
    
    24
    
    
    
    (1
    )
    
    
    3,125Total
    
    $
    4,663
    
    
    $
    24
    
    
    $
    (1
    )
    
    $
    4,686Amounts classified as cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,367Amounts classified as restricted cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    193Amounts classified as short-term investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,125Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    4,685December 31, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(in thousands)Cash and cash equivalents
    
    $
    12,919
    
    
    $
    
    
    
    $
    
    
    
    $
    12,919Mortgage-backed securities
    
    
    7,355
    
    
    
    3
    
    
    
    (102
    )
    
    
    7,256Total
    
    $
    20,274
    
    
    $
    3
    
    
    $
    (102
    )
    
    $
    20,175Amounts classified as cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    12,726Amounts classified as restricted cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    193Amounts classified as short-term investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,256Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    20,175
  12




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##### Table of Contents



September 30, 2009Less than 12 Months
    
    
    12 Months or Greater
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedDescription of Securities
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses(in thousands)Mortgage-backed securities
    
    $
    991
    
    
    $
    (1
    )
    
    $
    54
    
    
    $
    
    
    
    $
    1,045
    
    
    $
    (1
    )December 31, 2008Less than 12 Months
    
    
    12 Months or Greater
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedDescription of Securities
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses(in thousands)Mortgage-backed securities
    
    $
    4,512
    
    
    $
    (59
    )
    
    $
    2,123
    
    
    $
    (43
    )
    
    $
    6,635
    
    
    $
    (102
    )
     Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Gross interest income
    
    $
    70
    
    
    $
    130
    
    
    $
    220
    
    
    $
    645Gross realized gains on investments
    
    
    7
    
    
    
    5
    
    
    
    7
    
    
    
    14Gross realized losses on investments
    
    
    (29
    )
    
    
    (21
    )
    
    
    (38
    )
    
    
    (85
    )Total investment income
    
    $
    48
    
    
    $
    114
    
    
    $
    189
    
    
    $
    574
  Note 3  Fair Value Measurements
  13




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September 30, 2009Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total(in thousands)Assets:Money market funds
    
    $
    1,357
    
    
    $
    
    
    
    $
    
    
    
    $
    1,357Mortgage-backed securities
    
    
    
    
    
    
    3,125
    
    
    
    
    
    
    
    3,125Total
    
    $
    1,357
    
    
    $
    3,125
    
    
    $
    
    
    
    $
    4,482Liabilities:Preferred stock warrant liability
    
    $
    
    
    
    $
    
    
    
    $
    902
    
    
    $
    902Notes payable success fee liability
    
    
    
    
    
    
    
    
    
    
    340
    
    
    
    340Total
    
    $
    
    
    
    $
    
    
    
    $
    1,242
    
    
    $
    1,242December 31, 2008Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total(in thousands)Assets:Money market funds
    
    $
    12,783
    
    
    $
    
    
    
    $
    
    
    
    $
    12,783Mortgage-backed securities
    
    
    
    
    
    
    7,256
    
    
    
    
    
    
    
    7,256Total
    
    $
    12,783
    
    
    $
    7,256
    
    
    $
    
    
    
    $
    20,039Liabilities:Preferred stock warrant liability
    
    $
    
    
    
    $
    
    
    
    $
    1,780
    
    
    $
    1,780Notes payable success fee liability
    
    
    
    
    
    
    
    
    
    
    310
    
    
    
    310Total
    
    $
    
    
    
    $
    
    
    
    $
    2,090
    
    
    $
    2,090
  Preferred Stock
    
    
    Notes PayableWarrant
    
    
    Success FeeLiability
    
    
    Liability(in thousands)Fair value at December 31, 2008
    
    $
    1,780
    
    
    $
    310Change in fair value
    
    
    (878
    )
    
    
    30Fair value at September 30, 2009
    
    $
    902
    
    
    $
    340
 14




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Note 4  Notes Payable
 Loan and Security Agreement
     15




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Note 5  Commitments and Contingencies
    16




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17




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Note 6  Warrants
   September 30,
    
    December 31,2009
    
    2008Risk-free interest rate
    
    
    1.20 - 2.72
    %
    
    
    2.3
    %Weighted-average expected life (in years)
    
    
    2.5 - 5.00
    
    
    
    3.25 - 5.00Expected dividend yield
    
    
    
    
    
    
    Expected volatility rate
    
    
    78
    %
    
    
    60
    %
   Note 7  Convertible Preferred Stock
  Note 8  Stock-Based Compensation
 Stock Options
  
    
    five percent of the outstanding shares of the Companys common stock on the last day of
the immediately preceding fiscal year;
    
    1,785,714 shares; or
    
    such other amount as the Companys board of directors may determine.
 18




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Weighted-AverageShares
    
    
    
    
    
    
    ExerciseAvailable for
    
    
    Options
    
    
    Price perGrant
    
    
    Outstanding
    
    
    ShareBalance at December 31, 2008
    
    
    1,020,728
    
    
    
    2,839,850
    
    
    $
    1.40Authorized increase in 2008 Plan shares (unaudited)
    
    
    164,049
    
    
    
    
    
    
    
    Expired (unaudited)
    
    
    (164,157
    )
    
    
    
    
    
    
    Repurchased (unaudited)
    
    
    25,968
    
    
    
    
    
    
    
    Granted (unaudited)
    
    
    (112,496
    )
    
    
    112,496
    
    
    
    12.41Exercised (unaudited)
    
    
    
    
    
    
    (4,731
    )
    
    
    2.33Cancelled (unaudited)
    
    
    138,189
    
    
    
    (138,189
    )
    
    
    1.72Balance at September 30, 2009 (unaudited)
    
    
    1,072,281
    
    
    
    2,809,426
    
    
    $
    1.82
   Three Months Ended September 30,
    
    Nine Months Ended September 30,2009
    
    2008
    
    2009
    
    2008Expected volatility
    
    
    78
    %
    
    
    60
    %
    
    
    71% - 78
    %
    
    
    60
    %Expected term (in years)
    
    
    6.08
    
    
    
    6.08
    
    
    
    6.08
    
    
    
    6.08Risk-free interest rate
    
    
    2.72
    %
    
    
    3.29
    %
    
    
    2.13% - 2.72
    %
    
    
    2.8% - 3.40
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
 Stock-Based Compensation Summary.
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Research and development
    
    $
    91
    
    
    $
    146
    
    
    $
    528
    
    
    $
    631General and administrative
    
    
    212
    
    
    
    286
    
    
    
    714
    
    
    
    967Total
    
    $
    303
    
    
    $
    432
    
    
    $
    1,242
    
    
    $
    1,598
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Note 9  Related-Party Transactions
  
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, which are subject to the safe harbor created by those sections.
Forward-looking statements are based on our managements beliefs and assumptions and on information
currently available to our management. All statements other than statements of historical facts are
forward-looking statements for purposes of these provisions. In some cases you can identify
forward-looking statements by terms such as may, will, should, could, would, expect,
plan, anticipate, believe, estimate, project, predict, and potential, and similar
expressions intended to identify forward-looking statements. Examples of these statements include,
but are not limited to, statements regarding:
 
    
    assuming that we receive positive results from our ongoing Phase 3 clinical
trials of OMS103HP in patients undergoing ACL reconstruction surgery, our ability to
submit a related NDA to the FDA during the second half of 2010;
    
    our ability to review the data from our first Phase 2 trial of OMS103HP in
patients undergoing arthroscopic meniscectomy surgery in the second half of 2009;
    
    our ability to market OMS103HP by 2011, at the earliest;
    
    our expectations regarding the clinical benefits of our PharmacoSurgery
product candidate, including whether OMS103HP will be the first commercially available
drug product for the improvement of function following arthroscopic surgery;
    
    the magnitude of any royalty obligations that we may become obligated to pay
to our service providers or others;
    
    the extent of protection that our patents provide and our pending patent
applications may provide, if patents issue from such applications, to our technologies and
programs;
    
    our estimate regarding how long our existing cash, cash equivalents and
short-term investments, along with the net proceeds from our IPO, will be sufficient to
fund our anticipated operating expenses and capital expenditures and the factors impacting
our future capital expenditures;
    
    our ability to obtain commercial supplies of our PharmacoSurgery product
candidates and our competition;
    
    our ability to enter into a new employment agreement with our chief executive
officer;
    
    our ability to meet our repayment and other obligations under our debt
facility with BlueCrest, pursuant to which we have borrowed $17.0 million; and
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
    
    our estimates regarding our future net losses, revenues and research and development
expenses.
 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 Form 10-Q under the heading Risk Factors and in our other filings with the
Securities and Exchange Commission. Given these risks, uncertainties and other factors, you should
not place undue reliance on these forward-looking statements. Also, these forward-looking
statements represent our managements estimates and assumptions only as of the date of the filing
of this Quarterly Report on Form 10-Q . You should read this Quarterly Report on Form 10-Q
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.
 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 10-Q.
 Overview
 Background
    21




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Revenue
  Research and Development Expenses
  
    
    employee and consultant-related expenses, which include salaries and benefits;
 22




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
    
    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.
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Clinical Research and DevelopmentSalaries, benefits and related costs
    
    $
    873
    
    
    $
    886
    
    
    $
    2,784
    
    
    $
    2,682Clinical Trials
    
    
    589
    
    
    
    839
    
    
    
    1,751
    
    
    
    2,423Manufacturing services, consulting, laboratory
supplies, and other costs
    
    
    510
    
    
    
    549
    
    
    
    1,222
    
    
    
    1,469Other costs
    
    
    249
    
    
    
    274
    
    
    
    826
    
    
    
    460Stock-based compensation
    
    
    53
    
    
    
    88
    
    
    
    306
    
    
    
    379Total Clinical Research and Development Expenses
    
    
    2,274
    
    
    
    2,636
    
    
    
    6,889
    
    
    
    7,713Preclinical Research and DevelopmentSalaries, benefits and related costs
    
    
    602
    
    
    
    658
    
    
    
    1,933
    
    
    
    1,894Research and preclinical studies, consulting,
laboratory supplies, and other costs
    
    
    423
    
    
    
    1,039
    
    
    
    2,134
    
    
    
    1,907Other costs
    
    
    354
    
    
    
    346
    
    
    
    1,113
    
    
    
    989Stock-based compensation
    
    
    39
    
    
    
    58
    
    
    
    222
    
    
    
    252Total Preclinical Research and Development Expenses
    
    
    1,418
    
    
    
    2,101
    
    
    
    5,402
    
    
    
    5,042Total Research and Development Expenses
    
    $
    3,692
    
    
    $
    4,737
    
    
    $
    12,291
    
    
    $
    12,755
   23




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General and Administrative Expenses
  Interest Expense
  Other Income (Expense)
  Critical Accounting Policies and Significant Judgments and Estimates
    24




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Results of Operations
 Comparison of Three Months Ended September 30, 2009 and September 30, 2008
 Revenue.
 Research and Development Expenses.
 General and Administrative Expenses.
 Investment Income.
 Interest Expense.
 Other Income (Expense).
 Comparison of Nine Months Ended September 30, 2009 and September 30, 2008
 Revenue.
 Research and Development Expenses.
 25




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General and Administrative Expenses.
 Investment Income.
 Interest Expense.
 Other Income (Expense).
 Liquidity and Capital Resources
   Operating activities.
 Investing activities.
 26




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Financing activities.
      Funding Requirements
  27




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
    
    the progress and results of our clinical trials for OMS103HP, OMS302 and OMS201;
    
    costs related to manufacturing services;
    
    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;
    
    the scope, rate of progress, results and costs of our preclinical testing, clinical
trials and other research and development activities for additional product candidates;
    
    the terms and timing of payments of any collaborative or licensing agreements that we
have or may establish, including pursuant to our agreements with Affitech AS and North
Coast Biologics;
    
    market acceptance of our approved products;
    
    the cost, timing and outcomes of the regulatory processes for our product candidates;
    
    the costs of commercialization activities, including product manufacturing, marketing,
sales and distribution;
    
    the number and characteristics of product candidates that we pursue;
    
    the cost of establishing clinical and commercial supplies of our product candidates;
    
    the cost of preparing, filing, prosecuting, defending and enforcing patent claims and
other intellectual property rights;
    
    the extent to which we acquire or invest in businesses, products or technologies,
although we currently have no commitments or agreements relating to any of these types of
transactions other than our right to acquire assets for our GPCR program from Patobios
Limited for $10.8 million CAD in cash and stock;
    
    whether we receive grant funding for our programs; and
    
    our degree of success in commercializing OMS103HP and other product candidates.
  28




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Contractual Obligations and Commitments
  Off-Balance Sheet Arrangements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  29




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PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
    
 ITEM 1A. RISK FACTORS
 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 Form 10-Q .
 Risks Related to Our Product Candidates and Operations
 Our success largely depends on the success of our lead PharmacoSurgery tm 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.
  30




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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.
   We have a history of operating losses and we may not achieve or maintain profitability.
  We are subject to extensive government regulation, including the requirement of approval before our
products may be marketed.
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If our clinical trials are delayed, we may be unable to develop our product candidates on a timely
basis, which may increase our development costs and could delay the potential commercialization of
our products and the subsequent receipt of revenue from sales, if any.
  
    
    discussions with the FDA or comparable foreign authorities regarding the scope or design
of our clinical trials;
 32




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
    
    delays or the inability to obtain required approvals from IRBs or other governing
entities at clinical sites selected for participation in our clinical trials;
    
    delays in enrolling patients into clinical trials;
    
    lower than anticipated retention rates of patients in clinical trials;
    
    the need to repeat or conduct additional clinical trials as a result of problems such as
inconclusive or negative results, poorly executed testing or unacceptable design;
    
    an insufficient supply of product candidate materials or other materials necessary to
conduct our clinical trials;
    
    the need to qualify new suppliers of product candidate materials for FDA and foreign
regulatory approval;
    
    an unfavorable FDA inspection or review of a clinical trial site or records of any
clinical investigation;
    
    the occurrence of drug-related side effects or adverse events experienced by
participants in our clinical trials; or
    
    the placement of a clinical hold on a trial.
  
    
    failure to conduct the clinical trial in accordance with regulatory requirements or our
clinical protocols;
    
    inspection of the clinical trial operations or trial sites by the FDA or other
regulatory authorities resulting in the imposition of a clinical hold;
    
    unforeseen safety issues or any determination that a trial presents unacceptable health
risks; or
    
    lack of adequate funding to continue the clinical trial, 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.
  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.
 33




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
    
    complete the Phase 3 clinical trials of OMS103HP for use in arthroscopic ACL
reconstruction surgery;
    
    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;
    
    conduct and complete the clinical trials of OMS302 for use during lens replacement
surgery;
    
    conduct and complete the clinical trials of OMS201 for use in endoscopic surgery of the
urological tract;
    
    continue our research and development;
    
    make milestone payments to our collaborators;
    
    make principal and interest payments due under our debt facility with BlueCrest Venture
Finance Master Fund Limited, or BlueCrest;
    
    initiate and conduct clinical trials for other product candidates; and
    
    launch and commercialize any product candidates for which we receive regulatory
approval.
   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.
  34




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Our lead product candidate OMS103HP or future product candidates may never achieve market
acceptance even if we obtain regulatory approvals.
  
    
    our ability to provide acceptable evidence of safety and efficacy;
    
    availability, relative cost and relative efficacy of alternative and competing
treatments;
    
    the effectiveness of our marketing and distribution strategy to, among others,
hospitals, surgery centers, physicians and/or pharmacists;
    
    prevalence of the surgical procedure or condition for which the product is approved;
    
    acceptance by physicians of each product as a safe and effective treatment;
    
    perceived advantages over alternative treatments;
    
    relative convenience and ease of administration;
    
    the availability of adequate reimbursement by third parties;
    
    the prevalence and severity of adverse side effects;
    
    publicity concerning our products or competing products and treatments; and
    
    our ability to obtain sufficient third-party insurance coverage.
  35




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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.
  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.
  
    
    our inability to recruit and retain adequate numbers of effective sales and marketing
personnel;
    
    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;
    
    the lack of complementary products to be offered by sales personnel, which may put us at
a competitive disadvantage relative to companies with more extensive product lines; and
    
    unforeseen costs and expenses associated with creating an independent sales and
marketing organization.
  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.
 36




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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.
   37




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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.
  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.
  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.
  38




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Our ability to pursue the development and commercialization of product candidates from our
MASP-2 program could be jeopardized by third-party patent rights.
  Our ability to pursue the development and commercialization of product candidates from our MASP-2
program depends on third-party antibody developers and manufacturers.
  Our programs may not produce product candidates that are suitable for clinical trials or that can
be successfully commercialized.
  39




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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.
  It is difficult and costly to protect our intellectual property and our proprietary technologies,
and we may not be able to ensure their protection.
    40




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##### Table of Contents




    
    we might not have been the first to make the inventions covered by any of our
patents, if issued, or our pending patent applications;
    
    we might not have been the first to file patent applications for these
inventions;
    
    others may independently develop similar or alternative technologies or
products or duplicate any of our technologies or products;
    
    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;
    
    if our pending applications issue as patents, they may be challenged by third
parties as not infringed, invalid or unenforceable under U.S. or foreign laws;
    
    if issued, the patents under which we hold rights may not be valid or
enforceable; or
    
    we may develop additional proprietary technologies or products that are not
patentable and which are unlikely to be adequately protected through trade secrets if, for
example, a competitor were to independently develop duplicative, similar or alternative
technologies or products.
   We may incur substantial costs as a result of litigation or other proceedings relating to patent
and other intellectual property rights.
  41




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We use hazardous materials in our business and must comply with environmental laws and regulations,
which can be expensive.
  42




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The loss of members of our management team could substantially disrupt our business operations.
  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.
   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.
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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.
    44




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Risks Related to Our Industry
 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.
   
    
    develop and market products that are less expensive or more effective than any
future products developed from our product candidates;
    
    commercialize competing products before we can launch any products developed
from our product candidates;
    
    operate larger research and development programs, possess commercial-scale
manufacturing operations or have substantially greater financial resources than we do;
    
    initiate or withstand substantial price competition more successfully than we
can;
    
    have greater success in recruiting skilled technical and scientific workers
from the limited pool of available talent;
    
    more effectively negotiate third-party licenses and strategic relationships;
and
    
    take advantage of acquisition or other opportunities more readily than we can.
  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.
  45




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
    
    restrictions on such product candidates or manufacturing processes;
    
    withdrawal of the product candidates from the market;
    
    voluntary or mandatory recalls;
    
    fines;
    
    suspension of regulatory approvals;
    
    product seizures; or
    
    injunctions or the imposition of civil or criminal penalties.
  Failure to obtain regulatory approval in foreign jurisdictions would prevent us from marketing our
products internationally.
  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.
  
    
    a covered benefit under its health plan;
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
    
    safe, effective and medically necessary;
    
    appropriate for the specific patient;
    
    cost-effective; and
    
    neither experimental nor investigational.
  Product liability claims may damage our reputation and, if insurance proves inadequate, these
claims may harm our business.
  Risks Related to Our Common Stock
 Our stock price has been and may continue to be volatile, and the value of an investment in our
common stock may decline.
  47




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
    
    results from our clinical trial programs, including our ongoing Phase 3
clinical trials for OMS103HP for use in ACL reconstruction surgery, our Phase 2 clinical
trial for OMS103HP for use in meniscectomy surgery, our ongoing Phase 2 clinical trial for
OMS302, and our ongoing Phase 1/Phase 2 clinical trial for OMS201;
    
    FDA or international regulatory actions, including failure to receive
regulatory approval for any of our product candidates;
    
    failure of any of our product candidates, if approved, to achieve commercial
success;
    
    quarterly variations in our results of operations or those of our competitors;
    
    our ability to develop and market new and enhanced product candidates on a
timely basis;
    
    announcements by us or our competitors of acquisitions, regulatory approvals,
clinical milestones, new products, significant contracts, commercial relationships or
capital commitments;
    
    third-party coverage and reimbursement policies;
    
    additions or departures of key personnel;
    
    commencement of, or our involvement in, litigation;
    
    our ability to meet our repayment and other obligations under our debt
facility with BlueCrest, pursuant to which we have borrowed $17.0 million;
    
    changes in governmental regulations or in the status of our regulatory
approvals;
    
    changes in earnings estimates or recommendations by securities analysts;
    
    any major change in our board or management;
    
    general economic conditions and slow or negative growth of our markets; and
    
    political instability, natural disasters, war and/or events of terrorism.
   48




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Future sales of shares by existing shareholders could cause our stock price to decline.
  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.
  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.
  We have never declared or paid dividends on our capital stock, and we do not anticipate paying
dividends in the foreseeable future.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Unregistered Sales of Equity Securities
  49




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Use of Proceeds
    Purchase of Equity Securities by the Issuer and Affiliated Purchasers
  Total Number ofSharesPurchased as
    
    Maximum NumberPart of Publicly
    
    of Shares that MayTotal Number
    
    Average
    
    Announced
    
    Yet Be Purchasedof Shares
    
    Price Paid
    
    Plans or
    
    Under the Plans orPeriod
    
    Purchased
    
    per Share
    
    Program
    
    Programs7/1/09 - 7/31/09
    
    
    0
    
    
    
    0
    
    
    NA
    
    NA8/1/09 - 8/31/09
    
    
    23,384
    (1)
    
    $
    1.96
    
    
    NA
    
    NA9/1/09 - 9/30/09
    
    
    0
    
    
    
    0
    
    
    NA
    
    NA
 
 (1)
    
    Represents unvested shares of common stock that we repurchased from a former
employee at their original issuance price pursuant to a restricted stock purchase
agreement. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  50




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ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description10.1*
    
    First Amendment of Exclusive Technology Option Agreement between the registrant,
Patobios Limited, Susan R. George, M.D., Brian F. ODowd, Ph.D. and U.S. Bank
National Association as escrow agent dated November 10, 2009.31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.32.2
    
    Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
 
 *
    
    Incorporated by reference from Exhibit 10.1 to the registrants Current Report on Form 8-K
filed on November 12, 2009 (File No. 001-34475). 51




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SIGNATURES
  OMEROS CORPORATIONDate: November 19, 2009
    /s/ Gregory A. DemopulosGregory A. Demopulos, M.D.President, Chief Executive Officer
and Chairman of the Board of Directors 52




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INDEX OF EXHIBITS
 ExhibitNumber
    
    Description10.1*
    
    First Amendment of Exclusive Technology Option Agreement between the registrant,
Patobios Limited, Susan R. George, M.D., Brian F. ODowd, Ph.D. and U.S. Bank
National Association as escrow agent dated November 10, 2009.31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.32.2
    
    Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
 
 *
    
    Incorporated by reference from Exhibit 10.1 to the registrants Current Report on Form 8-K
filed on November 12, 2009 (File No. 001-34475). 53