What happened

Shares of Omeros (NASDAQ:OMER), a biopharmaceutical company, are losing ground after the company announced an unenthusiastic price for shares to be offered in a secondary offering. As of 11:49 a.m. EST, the stock has fallen 11.9% from its previous close.

So what 

Since Omeros is going to unload $57.5 million worth of new shares at $13.10 each on or before Dec. 9, 2019, nobody's willing to buy the stock at the previous day's closing price of $15.24 per share. What's surprising is the company's plan to price the offering 14% below its average share price over the past 50 trading sessions.

Stock chart that changed course and started sloping down.

Image source: Getty Images.

Omeros might have been a little more enthusiastic about its secondary offering if a recent announcement of positive pivotal trial data for Omeros' lead candidate, narsoplimab, hadn't drawn so much criticism. This is the antibody formerly known as OMS721 that failed to significantly lower concentrations of protein in the urine of IgA nephropathy patients compared to a placebo group last year.

On Dec. 4, 2019, Omeros reported 56% of hematopoietic stem cell transplant-associated thrombotic microangiopathy (HSCT-TMA) patients treated with narsoplimab achieved a complete response per criteria set out in agreement with the FDA. While that seems pretty good on the surface, it's important to realize the company refused to clarify what constitutes a response, and the FDA isn't allowed to say a word, even if its suggestions have been mischaracterized.

Now what

The company's only revenue stream is from Omidria, a solution that eye surgeons use to keep pupils dilated during surgery. The active ingredients, phenylephrine and ketorolac, have been available for decades, but surgeons can bill Medicare a lot more for employing Omidria than they can for using a solution they can prepare themselves at a fraction of the cost.

Unfortunately for eye surgeons and Omeros, Omidria's transitional pass-through reimbursement is set to expire next September. Recently the company's been pivoting toward cancer immunotherapy development at a time when it should be plowing every resource into narsoplimab's late-stage development. Until Omeros appears serious about sending the FDA an application for its lead candidate supported by results from a controlled clinical trial, this stock is not worth the risk.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.