OMEROS CORP (OMER) stock intrinsic value fair value estimate & owner earnings analysis

Omeros is a biotech company that has just become a commercial business. Its only product, YARTEMLEA (narsoplimab), was approved by the FDA on December 23, 2025 for transplant-associated thrombotic microangiopathy (TA-TMA), a life-threatening blood-vessel complication of stem-cell transplants, in adults and children aged two and older. It is the first approved drug that blocks MASP-2, the enzyme that drives the lectin pathway of the complement immune system. Unlike other complement inhibitors, including Soliris and Ultomiris, which doctors have used off-label, it carries no boxed warning, needs no special safety program and does not require vaccinations first. Sales began in January 2026 and have ramped quickly: $9.9 million in the first quarter and $28.5 million in the second. In the second quarter the company broke even at the operating level, with research and with selling and administration each costing about $14 million. In November 2025 Omeros also sold its MASP-3 antibody zaltenibart to Novo Nordisk for $240 million upfront. It can earn up to $510 million more in development and approval milestones, up to $1.3 billion in sales milestones, and royalties ranging from high single digits to the high teens. The past tells us little about this business. From 2016 through 2025 Omeros lost cash every year, typically $110 million to $155 million a year in owner earnings (about -$1.10 to -$2.70 a share), paying for research first alongside its earlier eye-surgery drug OMIDRIA and then after selling it. Those years describe a research company, not the one that exists today, so instead of averaging them we built the value from how the YARTEMLEA launch is actually going and from the cost base the company now carries. Two accounting judgements matter. First, the $200 million OMIDRIA milestone collected in 2023 and the gain on the Novo sale are one-time proceeds from selling assets, so we left both out of the earnings history. Second, Omeros has sold its remaining OMIDRIA royalties to DRI Healthcare, and DRI can collect only from those royalties, with no claim on Omeros's other assets. We treat that arrangement as worth nothing to shareholders either way, and we do not count it as debt Omeros must repay. How we treat the cash and the debt. Every one of our cases is a story that ends: YARTEMLEA is the only product, protection for it runs out (in 2037 in the base and bear cases, around 2041 in the bull case), and we give no value to anything that might replace it. A business whose earnings run out cannot roll its debt forward forever, so in each case we settle the debt out of that case's own money, using the cash already on the balance sheet first. At June 30, 2026 Omeros held about $132 million of cash and short-term investments. We set aside $35.6 million for bills already owed to suppliers and for accrued expenses, and keep $25 million as a working balance, leaving about $71 million. Its borrowings are $70.8 million of 9.5% convertible notes due June 15, 2029, which holders can turn into shares at about $6.18 each (roughly 11.5 million shares), plus about $1.2 million of equipment finance leases. The smaller 2026 notes were repaid when they matured in February 2026, and the term loan was repaid in full in November 2025. Where a case's value per share is above $6.18, we assume the holders convert: the notes become shares, and the $70 million of spare cash left after the leases belongs to shareholders. Where it is below $6.18, we assume the notes are repaid in cash at maturity, and that repayment comes out of the case's value. Omeros also has 16.2 million stock options outstanding with an average exercise price of $7.51. Where a case's value is above that price, we count the options as exercised: about 16.2 million more shares, plus the roughly $122 million Omeros would receive for them. Where both apply, the 72.1 million shares outstanding plus 11.5 million from the notes and 16.2 million from options come to about 99.8 million shares. Base case ($7.56 per share): YARTEMLEA U.S. sales reach about $160 million in 2027 and $215 million by 2029, roughly twice the second-quarter pace, then grow about 2% a year from price. Management has a long history of spending heavily on research, so we assume research spending climbs back to about $70 million a year for the long-acting follow-on antibody OMS1029 and other programs, with selling and administration rising to about $62 million. On those assumptions owner earnings reach about $60 million to $70 million a year. Omeros has $386 million of federal operating losses and about $112 million of research tax credits to use, which at this level of profit are enough to cover essentially all federal income tax through 2037. For the first forecast year, compare the trend: owner earnings improved from -$155 million in 2024 to -$124 million in 2025, and we assume about +$17 million in 2027. The reason is specific and dated: the December 2025 approval, the January 2026 launch, and a second quarter that already broke even. Protection ends in 2037. The key YARTEMLEA patents expire as late as 2037, and the FDA cannot approve a copycat biologic (a biosimilar) until 12 years after first approval, which is December 2037. After that we assume biosimilar competition cuts earnings by 20% a year, with nothing counted in its place. We give no value to the Novo milestones, because the timing and size of each payment are not disclosed and depend on Novo's trials, and none to the rest of the pipeline or to Europe, since neither has produced revenue. The business alone is worth about $562 million today. At that value the shares are worth more than $6.18, so the notes convert. The shares are also worth slightly more than the options' $7.51 average exercise price, so we count the options as exercised. Adding the roughly $70 million of spare cash and the $122 million of option proceeds gives about $754 million, spread over about 99.8 million shares, or $7.56 a share. Bear case (-$0.91 per share): AstraZeneca's Ultomiris wins approval in adult TA-TMA. Its adult Phase 3 trial has been completed and results have not been announced, although the pediatric trial missed its main goal. At the same time, part of the second-quarter sales proves to have been initial stocking. YARTEMLEA levels off near $120 million a year and then slips about 3% a year from 2029. Management cuts research to about $50 million a year, and to about $42 million as sales slip, but keeps its sales force. The business hovers around breakeven and then loses money through the 2030s until protection ends in 2037. Those years are worth about -$65 million today. Because the shares are worth far less than $6.18 in this case, the notes are not converted and the full $70.8 million must be repaid in cash in June 2029. The roughly $70 million of spare cash covers almost all of it, but that leaves nothing to fund the roughly $23 million of losses expected through 2028, so the company would have to issue more shares through its existing $150 million at-the-market program. Netting the cash against the notes and the leases, the company is worth about $66 million less than nothing, or about -$0.91 on each of the 72 million shares now outstanding (the notes do not convert and the options are not exercised at these values). In plain terms, in this case the business consumes more cash over its remaining life than it produces, and the shares carry no value. Bull case ($16.78 per share): U.S. sales reach about $315 million by 2030 as more transplant centers adopt the drug and new uses are approved. The European application, now under review, is approved and adds about $30 million a year from 2030. Novo advances zaltenibart and pays about $100 million of the $510 million development pool between 2027 and 2029. Pending patent applications issue, extending protection to around 2041 before earnings fade by 20% a year. In this case the tax losses and credits are used up and full tax is paid from about 2034. The business is worth about $1.48 billion. The notes convert and the options are exercised. With the spare cash and option proceeds, the total is about $1.67 billion over about 99.8 million shares, or $16.78 each. Our central estimate of about $7.50 a share depends on YARTEMLEA roughly doubling from its second-quarter pace and on no approved competitor reaching the TA-TMA market. There is only one product and one approved use, protection ends in 2037, and in the bear case the shares are worth less than nothing. So the margin-of-safety price is a little under half of the base value, around $3.50 a share, and it applies only after the next two quarters confirm that demand is still growing. The analysis would be wrong if second-quarter sales mostly reflected stocking, if Ultomiris is approved for adults and doctors keep using C5 inhibitors, or if management returns to research spending above $100 million a year before the product can pay for it. Compared with our previous estimate, the base and bull values are higher and the bear value is slightly lower because we now settle the convertible notes and count the balance-sheet cash in every case, rather than leaving both out. The full text of the most recent quarterly report was not available, so second-quarter figures come from its financial data, and management's commentary on the launch was not reviewed.