Many investors have made tons of money by investing in small-cap biotech stocks, especially those that are still relatively obscure. One potential investment candidate that's slipped under the radar due to the coronavirus pandemic is Omeros Corporation (NASDAQ:OMER). A biotech company that first went public in 2009, Omeros has already received U.S. Food and Drug Administration (FDA) approval for an earlier candidate.

With a couple of major catalysts coming up this year, could this company make early investors a fortune? Let's take a deeper look at what's going on with Omeros and whether it's worth a spot in your portfolio.

Stethoscope superimposed against a  stock chart.

Image source: Getty Images.

Pipeline overview

Omeros has eight different clinical programs, but six of them are still in early clinical testing. While there are definitely some interesting programs here, investors should focus primarily on the company's two most developed drugs, Omidria and Narsoplimab.

Omidria is a treatment that's used during cataract and lens replacement surgery to prevent intraoperative miosis (dilation of the pupil during surgery). The drug doubles as a postoperative pain treatment. Omidria received Food and Drug Administration (FDA) approval back in 2014 and has since been the primary revenue source for Omeros.

What really has some investors excited, however, is Narsoplimab. This late-stage candidate is currently being tested on four separate indications right now, with three of those having progressed to stage 3 trials while the fourth is still in stage 2.

Among the most notable indications is for atypical hemolytic uremic syndrome (aHUS), a condition in which abnormal blood clots form in the kidneys. While it's relatively rare -- only 1 in 500,000 Americans is diagnosed with the condition annually -- the few aHUS treatments out there come with a staggering price tag.

Alexion Pharmaceuticals' Soliris is one of the few drugs approved to treat aHUS. The drug costs nearly $500,000 per year, making it one of the highest-priced treatments in the world. It's easy to see how Narsoplimab could make a fortune for Omeros if its aHUS trial works out well.

Upcoming catalysts

The first major upcoming catalyst has to do with Omeros' rolling Biologics License Application (BLA) for Narsoplimab to treat HSCT-TMA (hematopoietic stem cell transplant-associated thrombotic microangiopathy). This is a condition in which patients undergoing stem cell transplants end up having blood clots throughout the capillaries and arterioles of their bodies.

BLAs are quite similar to New Drug Applications (NDAs). The main difference is that BLAs pertain to biological products while NDAs generally focus on small-molecule drugs. While the company first started the process back in Q4 2019, management went on to say that it expects to finish up its rolling BLA and hopefully receive approval sometime this quarter.

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Image source: Getty Images.

Another major catalyst for Omeros ties back to Omidria. Back in October 2018, the drug received a crucial two-year reinstatement of its pass-through status, which provides financial incentives encouraging Medicare to use newly approved drugs. This program is a big reason Omidria has been successful so far: Eye surgeons prefer to use the drug because they can bill more to Medicare thanks to Omidria's pass-through status.

The big question is whether Omidria will receive pass-through status once again by October, when its current status is scheduled to expire. Omeros's management feels confident this will happen, mainly thanks to a new piece of legislation that's been introduced in the U.S. pertaining to alternative opioid treatments. The bill in question, the Non-Opioids Prevent Addiction in the Nation (NOPAIN) Act, would encourage separate payments for alternative non-opioid drugs. Omidria would qualify under this act, allowing the drug a further five years of much-needed pass-through status.

A look at the financials

First-quarter revenues for Omeros were relatively small, at just $23.5 million. Despite already having a product on the market that's bringing in revenue, Omeros is still losing money. The company reported a net loss of $29 million for the quarter.

The real problem is that the company has relatively little in the way of cash. Omeros has about $54 million in cash and short-term investments, enough to last less than two quarters at the current rate of expenditure. This pretty much guarantees that Omeros will need to seek funding sometime soon.

Could Omeros make you rich?

It could, but the stars really would need to align perfectly in order for this to happen. However, things could also go terribly wrong. Omidria sales aren't very high at this point, and if the drug's pass-through status isn't renewed, sales could plummet. In its cash-strapped state, that's the last thing Omeros needs as it tries to secure further funding.

Speculating on promising small-cap biotech stocks can be fun, but it's not always smart. Right now, it's better to take a wait-and-see approach with Omeros, but this is definitely a company to keep on your radar.