Rodman & Renshaw raise their target price for Omeros Corp to $16/share.

1. Omeros Corp (OMER)
®
RAISING TARGET PRICE Elemer Piros, Ph.D.
212-430-1754
epiros@rodm.com
LIFE SCIENCES Suy Anne Martins, M.D., Ph.D.
212-430-1778
smartins@rodm.com
March 13, 2012 Market Outperform / Speculative Risk
Pivotal Eye Data Achieved All Endpoints – Raising Target Price
Raising Target Price
MARKET DATA Intraday - 3/13/2012
Today Omeros announced positive data from its Phase 3 clinical trial
Price $9.40
evaluating its combination drug OMS302 in patients undergoing
Exchange NASDAQ
Target Price $16.00
intraocular lens replacement surgery. The study achieved its primary
52 Wk Hi - Low $9.91 - $3.16 endpoint, which was the successful maintenance of pupil dilation
Market Cap(MM) $210.2 (mydriasis) in intraocular lens replacement surgeries, coupled with
EV(MM) $197.7 reduction of postoperative pain (secondary endpoint). Therefore, we are
Shares Out (MM) 22.4 maintaining our Market Outperform rating and raising our Target Price
Avg. Daily Vol 64,534 from $13 to $16/sh on Omeros Corporation.
Short Interest 55,769
BALANCE SHEET METRICS Maintaining Pupil Dilation and Reducing Pain
Cash (MM) $32.9 Today Omeros announced the results from a large 405-patient Phase 3
LTD (MM) $20.0 study. OMS302 met its primary endpoint in maintaining pupil dilation
Total Debt/Capital NA (intraoperative mydriasis) compared to placebo during intraocular lens
Cash/Share $1.46
replacement surgery (p<0.00001). In addition, OMS302 also showed
Book Value(MM) NA
Book Value/Share $0.18
statistical significance (p<0.00001) over placebo in reducing pain in the
early postoperative period.
EARNINGS DATA ($)
FY - Dec 2009A 2010A 2011E
OMS302 is a combination agent applied during eye surgery that causes
Q1 (Mar) (1.87) (0.31) (0.30)A
Q2 (Jun) (2.09) (0.36) (0.24)A
pupil dilation and decreases inflammation. Patients were randomized 1:1
Q3 (Sep) (0.27) (0.35) (0.29)A in this multicenter, double-blinded, vehicle-controlled Phase 3 trial to
Q4 (Dec) (0.35) (0.34) (0.36) receive either OMS302 or placebo.
Full Year EPS (2.92) (1.37) (1.18)
The primary endpoint was maintenance of pupil dilation. A well-dilated
VALUATION METRICS pupil is imperative for a safe and successful surgery, as most of lens
EV/Sales replacement procedures – in particular cataract surgeries – are
performed behind the pupil. If the pupil fails to dilate properly (decreasing
INDICES the surgeon’s operative field), there is an increased risk of complications.
DJIA 12,994.4
OMS302 not only successfully maintained pupil dilation during surgery,
SP-500 1,376.7 but also decreased pain in the postoperative period compared to
NASDAQ 2,665.1 placebo. Both outcomes are clinically relevant for surgeons and patients.
NBI 1,248.4 OMS302 was well tolerated, and the adverse event profile for the drug
was similar to placebo.
1 Year Price History
10
8 Following Omeros’ recent meetings with U.S. and European regulators,
6
4
the company plans to begin enrolling patients in the second Phase 3 trial
Q1 Q2 Q3 Q1
2 early in April 2012. Omeros is planning to submit marketing applications
2011 2012
3
in both the U.S. and Europe in 1H13.
2
1
0 Maintaining our Market Outperform with a $16/sh Target Price
Created by BlueMatrix
Given these positive results, we believe OMS302 could be widely used
by eye surgeons. We value Omeros’ shares based on a universe of
comparable companies. We believe that Omeros could be valued at par
with the average of a comparable group of drug developers which trade
at an enterprise value of approximately $291MM. To calculate the fair
value of $12/sh to the late-stage assets, we assume 24MM shares
outstanding and a cash position of ~$2MM by YE12. We also ascribe a
value of $4/sh for additional early stage indications and the GPCR
platform. Therefore, we are maintaining our Market Outperform and
raising our Target Price to $16/sh for Omeros Corporation.
For definitions and the distribution of analyst ratings, and other disclosures, please refer to pages 5 - 6 of this report.

2. Omeros Corp March 13, 2012
INVESTMENT THESIS
Omeros Corporation is a pharmaceutical company with a diversified clinical-stage pipeline, and an
extensive lead generating engine across multiple indications. The company’s lead platform is
PharmacoSurgery™, which is a combination of existing generic drugs which are added to irrigation
solution during surgical procedures. The components of PharmacoSurgery™ are designed to block
different parts of the inflammation pathway, with the objective of minimizing overall inflammation
associated with the trauma of the surgery and to improve recovery. One of the PharmacoSurgery™
candidates is OMS103HP, which is a combination of ketoprofen, amitriptyline, and oxymetazoline in
development for arthroscopic procedures. The drug is dosed locally and only a negligible fraction is
systemically absorbed. Omeros demonstrated in Phase 1 and Phase 2 studies that OMS103HP
decreases inflammation and pain following the surgical procedure, and improves recovery. The drug
appears to be well tolerated. The company announced results from two large Phase 3 studies of
OMS103HP in ACL knee surgery. The trials were inconclusive. The company moved forward with
OMS103HP into meniscectomy Phase 3 trials.
The OMS103HP Phase 3 clinical program in meniscectomy would assess the drug's safety and efficacy
in improving postoperative joint function and reducing pain following arthroscopic partial meniscectomy
surgery. The program includes two randomized, double-blind, vehicle-controlled, multicenter trials
conducted in North America and Europe.
While the same irrigation solution had inconclusive results in the Anterior Cruciate Ligament (ACL) Phase
3 study, we have reasons to believe that it could be successful in the meniscectomy setting. In the ACL
trial, patients were evaluated by raters comprised of physical therapists. There were imbalances
observed amongst physical therapists, confounding the score results which became uninterpretable. The
primary endpoint for the meniscectomy trials is the performance on the symptoms domain of the Knee
Injury and Osteoarthritis Outcome Score (KOOS), a validated patient-reported outcomes measure already
used in the successful Phase 2 meniscectomy trial. KOOS consists of five subscales: pain, other
symptoms, function in daily living (ADL), function in sport and recreation and knee related quality of life.
The primary endpoint would focus only in the “symptoms” relief reported by the patients.
Omeros is also developing a PharmacoSurgery™ formulation for ophthalmologic indications (OMS302).
Lens replacement surgeries (cataract and refractive lens exchange) are common ophthalmological
surgical procedures. A usual problem during these surgeries is that the pupil starts to constrict,
increasing the risk of complications. OMS302 is Omeros’ proprietary ophthalmologic PharmacoSurgery™
product which combines anti-inflammatory agents with an agent to dilate pupils. OMS302 is included in a
standard irrigation solution used during the eye surgery. In a Phase 2b study evaluating OMS302 in eye
surgery (221 patients), OMS302 successfully achieved the co-primary endpoints: maintaining pupil
dilation and decreasing postoperative pain. As announced in March 2012, these results were confirmed
in a pivotal Phase 3 trial.
Following Omeros’ recent meetings with U.S. and European regulators, the company plans to begin
enrolling patients in the second Phase 3 trial early in April 2012. Omeros is planning to submit marketing
applications in both the U.S. and Europe in 1H13.
In addition, on November 29, 2011, Omeros announced that it has submitted to the EMA a letter of intent
to file its Paediatric Investigation Plan (PIP) for OMS302. A PIP is part of the EMA approval process and
must be agreed prior to submission of a Marketing Authorization Application (MAA) for the drug in the
European Union, unless the requirement is waived.
Omeros has also created a high-throughput platform for the discovery of novel G Protein-Coupled
Receptor (GPCR) modulators. GPCRs are one of the most important drug targets, with an estimated 40-
50% of all marketed drugs targeting GPCRs. While both industry and academia focused extensively on
this field over the last 20 years, approximately 120 GPCRs remain without known modulators. Omeros’
technology enables efficient screening of these GPCRs and biological characterization of the discovered
compounds, potentially generating a valuable pipeline of drug leads that may be licensed to partners
and/or developed internally.
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3. Omeros Corp March 13, 2012
Omeros’ preclinical programs (MASP-2 inflammation, addiction, PDE7, PDE10) and in particular, the
GPCR program, all have the potential to open a host of new therapeutic targets that can translate into
significant license and future revenue opportunities for the company. Omeros now has a total of 33
unlocked orphan GPCRs in its portfolio.
RISK ANALYSIS
We ascribe a Speculative Risk rating to Omeros shares. In additional to development, marketing, and
financial risks associated with emerging companies, specific additional risk factors to be considered are
as follows:
Development Risk
In 1Q11 Omeros disclosed inconclusive results of OMS103HP from two well-controlled Phase 3 trials in
the ACL knee surgery setting. Apparently, variability in rater assessment led to uninterpretable results.
The trials took years to enroll the requisite number of patients. Omeros moved forward OMS103HP in
meniscectomy setting, but investors may not place much value to the program until positive results are
announced.
Regulatory Risk
Omeros is developing numerous compounds, all of which will require FDA approval prior to marketing.
Some of the company’s programs, such as PharmacoSurgery™, do not have a clear precedent.
Additionally, the components of PharmacoSurgery™ are themselves approved potent agents. In animal
studies Omeros showed a synergy between all three constituents of PharmacoSurgery™, and that either
component individually, or any permutation of the two component, does not generate the equivalent anti-
inflammatory effect compared to the triple combination. The FDA may place additional data requirements
for such combination drugs.
Commercial Risk
Omeros is developing pharmaceuticals for a wide range of indications. This includes novel indications,
such as inflammation management during surgical procedure, to well-established indications, such as
schizophrenia and Parkinson’s disease. Given the competitive nature of these markets, there is a
commercial risk associated with the market adoption of Omeros’ drugs if they are approved.
Generic Substitution Risk
Omeros’ leading program, PharmacoSurgery™, is a combination of existing generic drugs, which is
added to an irrigation solution. Although we believe that surgeons would prefer not to take the risk of
using a compounded version of PharmacoSurgery™, it is possible that some compounding pharmacies
may decide to combine these drugs themselves.
Discovery Risk
Omeros is engaged in high throughput screening of compounds in order to identify ligands that bind
GPCR (G-Protein Coupled Receptor) targets. While the company has been successful in identifying
candidate molecules, high throughput screening carries a risk that even if the compounds are identified
by the initial screen, they may not be suitable pharmaceutical agents for various reasons.
Partnering
Omeros presently fully owns all of its programs, with the exception of the PDE7 program, which was
licensed from Asubio Pharma (Private, Not Rated). The company will likely have to partner some
programs or compounds given the breadth of compounds currently in development, as well as the cost of
moving these compounds through clinical development. Additionally, partnership may bring non-dilutive
financing which may be utilized for the advancement of non-partnered programs. Omeros may not be
successful in finding partners on favorable terms or at all.
Financing Risk
Omeros is a development stage pharmaceutical company with multiple programs in clinical development.
The company presently does not generate revenue, beyond grant funding, and may need capital to
RODMAN & RENSHAW EQUITY RESEARCH 3

4. Omeros Corp March 13, 2012
advance its clinical program and to launch the PharmacoSurgery™ product if approved by the FDA.
Omeros ended 3Q11 with ~$33MM on the balance sheet, and we estimate the company’s cash burn at
~$29MM over the next 12 months.
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5. Omeros Corp March 13, 2012
RODMAN & RENSHAW RATING SYSTEM: Rodman & Renshaw employs a three tier rating system for evaluating both the potential
return and risk associated with owning common equity shares of rated firms. The expected return of any given equity is measured on a
RELATIVE basis of other companies in the same sector, as defined by First Call. The price objective is calculated to estimate the potential
movement in price a given equity could achieve given certain targets are met over a defined time horizon. Price objectives are subject to
exogenous factors including industry events and market volatility. The risk assessment evaluates the company specific risk and accounts
for the following factors, maturity of market, maturity of technology, maturity of firm, cash utilization, and valuation considerations.
Potential factors contributing to risk: relatively undefined market, new technologies, immature firm, high cash burn rates, intrinsic value
weighted toward future earnings or events.
RETURN ASSESSMENT
q
Market Outperform (Buy): The common stock of the company is expected to outperform a passive index comprised of all the
common stock of companies within the same sector, as defined by First Call.
q
Market Perform (Hold): The common stock of the company is expected to mimic the performance of a passive index comprised
of all the common stock of companies within the same sector, as defined by First Call.
q
Market Underperform (Sell): The common stock of the company is expected to underperform a passive index comprised of all
the common stock of companies within the same sector, as defined by First Call.
RISK ASSESSMENT
q
Speculative - The common stock risk level is significantly greater than market risk. The stock price of these equities is
exceptionally volatile.
q
Aggressive - The common stock risk level is materially higher than market level risk. The stock price is typically more volatile
than the general market.
q
Moderate - The common stock is moderately risky, or equivalent to stock market risk. The stock price volatility is typically in-line
with movements in the general market.
Rating and Price Target History for: Omeros Corp (OMER) as of 03-12-2012
09/10/10 04/01/11 12/05/11
I:MO:$20 MP:NA MO:$13
10
8
6
4
2
Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1
2009 2010 2011 2012
Created by BlueMatrix
RATING SUMMARY
Distribution of Ratings Table
IB Serv./Past 12 Mos
Rating Count Percent Count Percent
Market Outperform(MO) 96 61.10% 15 15.62%
Market Perform(MP) 30 19.10% 3 10.00%
Market Underperform(MU) 6 3.80% 0 0.00%
Under Review(UR) 25 15.90% 4 16.00%
Total 157 100% 22 100%
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securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its
RODMAN & RENSHAW EQUITY RESEARCH 5

6. Omeros Corp March 13, 2012
affiliates or subsidiaries within the past 12 months.
ADDITIONAL DISCLOSURES
Rodman & Renshaw, LLC. (the "Firm") is a member of FINRA and SIPC and a registered U.S. Broker-Dealer.
ANALYST CERTIFICATION
I, Elemer Piros, Ph.D., hereby certify that the views expressed in this research report accurately reflect my personal views about the
subject company(ies) and its (their) securities.
None of the research analysts or the research analyst's household has a financial interest in the securities of Omeros Corp (including,
without limitation, any option, right, warrant, future, long or short position).
As of Feb 29 2012 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Omeros Corp.
Neither the research analyst nor the Firm has any material conflict of interest with Omeros Corp, of which the research analyst knows or
has reason to know at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific
investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a
substantial portion of which is derived from investment banking services.
The Firm or its affiliates did not receive compensation from Omeros Corp for any investment banking services within twelve months
before, but intends to seek compensation from the companies mentioned in this report for investment banking services within three
months, following publication of the research report.
Neither the research analyst nor any member of the research analyst's household nor the Firm serves as an officer, director or advisory
board member of Omeros Corp.
The Firm does make a market in Omeros Corp securities as of the date of this research report.
Any opinions expressed herein are statements of our judgment as of the date of publication and are subject to change without notice.
Reproduction without written permission is prohibited. The intraday prices of securities mentioned in this report are as of Mar 13 2012.
Additional information is available to clients upon written request. For complete research report on Omeros Corp, please call (212)
356-0500.
Readers are advised that this analysis report is issued solely for informational purposes and is not to be construed as an offer to sell or
the solicitation of an offer to buy. The information contained herein is based on sources which we believe to be reliable but is not
guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. Past performance
is no guarantee of future results.
RODMAN & RENSHAW EQUITY RESEARCH 6