Omeros Corporation (NASDAQ:OMER) Q3 2018 Earnings Conference Call Transcript
Nov 09, 2018 • 08:30 am ET
Good morning, and welcome to today's conference call for Omeros Corporation. At this time all participants are in a listen-only mode. After the company's remarks we will conduct a question-and-answer session. Please be advised that this call is being recorded at the company's request, and a replay will be available on the company's website for 1 week from today. I'll turn over the call to Jennifer Williams, Investor Relations for Omeros.
Good afternoon, and thank you for joining the call today.
(Forward-Looking Cautionary Statements)
Dr. Greg Demopulos, Chairman and CEO of Omeros, will take you through a corporate update; and then Mike Jacobsen, our Chief Accounting Officer, will provide an overview of the company's third quarter financial results. We have some time reserved for questions after the financial overview.
Now I would like to turn the call over to Dr. Demopulos.
Thank you, Jennifer, and good morning, everyone. We appreciate all of you taking the time to join us today. I'd like to first update all of you on our recently announced convertible debt deal. Under this debt deal, we will receive gross proceeds of $210 million in exchange for wholly unsecured convertible notes.
The initial purchasers will have a 30-day option to purchase $40 million of additional notes. The deal was spurred by a reverse inquiry. We're pleased with the quality of the purchasers and appreciate their confidence in the company. We have introduced to our story new blue chip, highest quality credit and equity crossover investors from both the US and Europe. The proceeds will be used primarily to retire our secured debt facility with CRG, and to provide additional working capital, while OMIDRIA revenues continue to ramp up to sufficient levels to support fully our research and development and other operating costs. We believe that this is a good move for the company and that the timing is right. Here's why.
As unsecured debt, the company now has removed all covenants as well as all security interests, including all pledges against our intellectual property and has greater freedom to run our operations. It reduces our interest rate to nearly half from 12.25% to 6.25%, and meaningfully extends our maturity date to late 2023. The structure of this debt allows us to control at our sole discretion how the conversion or repayment is fulfilled. We purchased a call spread, which effectively raises the conversion price to approximately $29. Our overall objective is to minimize or avoid dilution, so we plan to repay this debt in cash. This convertible debt transaction is scheduled to close next Thursday.
Now let's turn to our commercial product, OMIDRIA. As previously announced, pass-through reimbursement status for OMIDRIA initially expired on December 31, 2017. Underpass through the product is paid separately, meaning outside of the packaged facility fee by the Centers for Medicare and Medicaid Services or CMS. As many of you know, Congress stepped in and in March of this year, reinstated pass-through for OMIDRIA effective on the first of last month, and by