Omeros Corporation

Good afternoon and welcome to today's earnings call for O'Meara's Incorporation. 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 one week from today. I'll turn over the call over to Jennifer Williams, Investor Relations for Omeros.

Jennifer Williams Good afternoon, and thank you for joining the call today. Dr. Greg Dimopoulos, Chairman and CEO of Omeros, will take you through a corporate update, and then Mike Jacobson, our Chief Accounting Officer, will provide an overview of our fourth quarter financial results. We have some time reserved for questions after the financial overview. I'd like to remind you that some of the statements that will be made on the call today will be forward-looking. These statements are based on management's beliefs and expectations as of today only and are subject to change. All forward-looking statements involve risks and uncertainties that could cause the company's actual results to differ materially. Please refer to the special note regarding forward-looking statements and the risk factor section in the company's annual report on Form 10-K, which was filed today with the SEC for a discussion of these risks and uncertainties. Now I would like to turn the call over to Dr. Dimopoulos.

Thank you, Jennifer, and good afternoon, everyone. We appreciate you joining us for today's call. We'll start today with narsoplumab. Narsoplumab is our fully human antibody targeting MASP2, the effector enzyme of the lectin pathway of complement. In January, FDA accepted our BLA for priority review for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy, or TATMA. Priority review shortens FDA's review period from 10 months to 6 months. As a result, the PDUFA date is July 17th. We have continued working closely with FDA during the review of our VLA. As we prepare for the anticipated approval and commercial launch of narsoplimab for TATMA, We're very excited to have recently welcomed Nadia Dock to our senior leadership team as chief commercial officer. Nadia brings impressive breadth and depth of leadership, general management, and launch experience at places like Alder, which was acquired by Lundbeck, AbbVie, Novartis, and Pfizer. A valuable addition to Omeros, Nadia is already contributing to what we expect will be a successful launch of narsoplumab and the continued growth of Omidrea. As those who have followed our progress know, we have been executing for well over a year on our launch strategy for narsoplumab and TATMA. And launch readiness activities continued to progress throughout the fourth quarter of 2020. Our sales leadership team has already been hired and is comprised of talented individuals with deep experience in stem cell transplantation, hematology, and oncology. With strong engagement from the transplant community, our disease education efforts are successfully driving increased awareness of TATMA, and market research demonstrates a growing understanding within the transplant community of the central role of the lectin pathway in the pathophysiology of TATMA. As part of our Narsoplimab launch activities, we have also been focused on securing appropriate reimbursement. During the fourth quarter, we completed the filing and presentation required to obtain a new technology add-on payment, or NTAF, established by CMS NTAP is a special payment methodology that applies to new medical technologies such as Narsoplumab that will be administered in the hospital inpatient setting. NTAP provides an additional payment to hospitals above Medicare standard all-inclusive DRG payment. We believe that Narsoplumab qualifies for an NTAP designation and we look forward to the posting of the NTAP interim rule next quarter. As part of our reimbursement efforts, we also applied and have received preliminary support from CMS for ICD-10 procedural and diagnostic codes for narsoplumab. Across the NTAP designation and ICDN codes, we have closely collaborated with key transplant societies and organizations, and we appreciate the strong support that these groups have provided. They include the Center for International Blood and Marrow Transplant Research, the American Society of Transplant and Cellular Therapy, or ASTCT, the American Society of Hematology, the Pediatric Transplantation and Cellular Therapy Consortium, Be The Match National Bone Marrow Donor Program, the European Society for Bone, Blood, and Marrow Transplantation, or EBMT, and the TA-TMA Guidelines Working Group, which consists of some of the most respected transplant physicians in the US and Europe. At the 2020 Annual Meeting of the American Society of Hematology, Omeros presented on the pharmacodynamics of narsopalimab in humans and primates. The presentation was subsequently published in the peer-reviewed journal Blood. Omeros also had a significant presence at the 2021 ASTCT annual meeting in February, including both a podium presentation by Dr. Samer Khaled of City of Hope on the pivotal clinical trial results with narsoplimab in TATMA, as well as a well-attended OMERO-sponsored continuing medical education symposium focused on improving outcomes in TATMA. Later this month at the annual EBMT meeting, narsoplamab in TATMA again will be the focus of podium and other presentations. Now let's turn to the work we're doing with narsoplamab in COVID-19. While continuing to execute on launch preparations for TATMA, we recognize the role that narsoplamab can play and our obligation to participate in fighting the current global pandemic. For these reasons, we continue advancing narsoplumab as a treatment for critically ill COVID-19 patients. We've previously discussed the similarities between TATMA and COVID-19. Both are endothelial injury syndromes, meaning endothelial injury is at the pathophysiologic core of each Omeros and our collaborators were among the first to recognize the importance of endothelial injury in COVID-19, a key to treating COVID-19 now widely confirmed by leading research groups internationally. The lectin pathway of complement is activated by cellular damage and microbes. In COVID-19, this lectin pathway activation occurs very early in the disease process. Further, MASP2, the effector enzyme of the lectin pathway, is directly bound and activated by the nucleocapsid and spike proteins of the SARS-CoV-2 virus. The collective result of all of these events in COVID-19 is that very early in the disease, the lectin pathway is activated, which then leads to hyperinflation, hyperinflammation, and hypercoagulation or clotting, all of which are addressed by inhibition of MASK2 with narsoplumab. Following the first cohort of six critically ill COVID-19 patients in Bergamo, Italy, we have continued treating patients with narsoplumab under compassionate use. To date, nine more in Italy and four in the U.S. Prior to receiving narsoplumab, all of these patients were intubated, some for as long as two weeks, and had multiple comorbidities. All had failed other therapies, including antivirals, targeted anti-inflammatory therapeutics, convalescent plasma, and steroids. These were all severely ill patients, and following treatment with narsoplumab, the laboratory improvements and clinical outcomes are consistent with those seen in the initial cohort of Bergamo patients and published in Immunobiology. Of note, the narsoplumab-treated patients for whom serology data are available show appropriately elevated levels of antibodies against SARS-CoV-2. These demonstrate, as expected, that narsoplumab does not interfere with a patient's adaptive immune response, which is important for fighting infection. This is one of the significant advantages of narsoplumab over other potential therapeutics for COVID-19, including other complement inhibitors. Data collection is wrapping up. A manuscript detailing the findings and clinical outcomes of the second cohort of Bergamo patients is in preparation, and we look forward to sharing those data soon. Long-term sequelae or complications from COVID-19 are now widely recognized. A longitudinal controlled study recently published in JAMA Network followed patients for up to nine months and shows that about 30% of even mild COVID-19 cases have significant and persistent problems. To this point, evaluation of the initial cohort of Bergamot patients at five to six months after treatment with Narsoplumab demonstrated no clinical or laboratory evidence of long-term sequelae. we are considering now studying the role of narsoplimab not only in preventing but also in treating long-term sequelae of COVID-19. The interest in narsoplimab for the treatment of COVID-19 is growing internationally. In addition to advancing discussions with U.S. government agencies and advisors to the new administration, we are in talks with regulatory authorities in Europe, and a global healthcare organization regarding potential funding, manufacturing support, and or additional clinical trials for narsoplumab in the treatment of COVID-19 patients. Now part of the I-SPY COVID trial sponsored by Quantum Leap Healthcare Collaborative and funded in part by BARDA with sites across the country, narsoplumab dosing in this study is expected to begin very soon. The I-SPY COVID trial utilizes an adaptive platform design intended to increase trial efficiency by minimizing study patient numbers and duration. Narsoplumab is the only complement inhibitor invited to participate in the I-SPY trial. In addition to our work with narsoplumab in COVID-19 and TATMA, we have two ongoing phase three programs for narsoplumab. one in IgA nephropathy and the other in atypical hemolytic uremic syndrome, or AHUS. Our phase three Artemis IGAN trial evaluating narsoplumab for the treatment of IgA nephropathy now has over 120 sites activated worldwide. While the pace of enrollment slowed some with the COVID-19 pandemic, we expect to see enrollment accelerate as pandemic restrictions ease. We also are working with a leading CRO to bring the Artemis IGAN trial to additional geographies, including China. Regulatory applications are underway, and once completed, we expect that this geographic expansion will significantly accelerate the pace of enrollment. For example, IgA nephropathy is highly prevalent in China. Approximately 25% of all dialysis patients in China reportedly have IgA nephropathy. Even without the easing of COVID restrictions internationally, we expect that expansion across additional geographies will help the Artemis IGAN trial to close out enrollment, and we look forward to reading out the trial's proteinuria data next year. To the best of our knowledge, narsoplumab is the only drug in development for IgA nephropathy that can obtain full approval on proteinuria data alone. As in TATMA and COVID-19, a growing body of research conducted by multiple international groups of leading experts increasingly supports the central role of the lectin pathway in IgA nephropathy, and more generally, in progressive renal diseases as a whole. In addition to the lectin pathway's central role in producing glomerular inflammation, endothelial injury and thrombotic microangiopathy have been recently identified in glomerular capillaries. These TMA lesions are seen in 10 to 15% of IgA nephropathy cases and are associated with a greatly accelerated path to end-stage renal disease. Lectin pathway activation has also been shown to play a key role in the development of tubulointerstitial inflammation and fibrosis, the final common pathway to kidney scarring. There are no drugs approved to prevent this kidney scarring, and to date, chronic kidney disease has been widely considered untreatable. The data suggests that inhibition of the lectin pathway by narsoplumab could possibly be a treatment not only for IgA nephropathy but more broadly for progressive and chronic kidney diseases as a whole. As part of this increased understanding about the central role of the lectin pathway in kidney disease, last October at the annual meeting of the American Society of Nephrology, Omeros sponsored a symposium featuring presentations by international experts on progressive and chronic renal disease. A focus of the symposium was the mechanism and rationale for lectin pathway inhibition as a treatment for renal disease and provided an overview of the Phase II clinical trial results of narsoplumab in IgA nephropathy. While preparing to expand the indications explored for narsoplumab, We also are planning ahead to lifecycle management for our MASK2 and lectin pathway franchise. We expect our second generation longer acting MASK2 antibody, OMS1029, to enter the clinic early next year. We are targeting for this antibody once monthly or less frequent subcutaneous dosing. We're also advancing our program of small molecule MASK2 inhibitors for oral administration. The role of the lectin pathway across a rapidly growing set of indications is increasingly recognized and understood within the complement community. And we look forward to making our MASK2 inhibitors in all of their forms available to help patients. Like our MASK2 platform, our other complement program, OMS906, is advancing quickly. OMS906 is our MASP3 inhibitor. We're building a broad and exclusive intellectual property position directed to MASP3, which is the key activator and we believe the premier target in the alternative pathway. Unlike our lectin pathway inhibitor and our soplumab for which we have had to blaze the trail to indications given that our broad intellectual property position around the lectin pathway has effectively kept others from pursuing lectin pathway inhibitors, the alternative pathway has been successfully targeted by other agents across multiple indications. So a successful Phase I clinical program showing that OMS906 blocks alternative pathway activation has a good likelihood of translating to efficacy in those same and other diseases linked to the alternative pathway. In September, we began our phase one placebo controlled double blind single ascending and multiple ascending dose trial. The trial is running on schedule and we continue to expect initial data readout from our phase one trial for OMS906 next quarter. Now let's turn to Omidrea, our commercial ophthalmic drug used in cataract and lens replacement surgery. The extension of pass-through status for Omidria expired as scheduled on October 1, 2020, and CMS packaged reimbursement for the drug within the ambulatory payment classification for cataract surgery. Given that Omidria was then packaged, it met all criteria for separate payment under CMS's established policy to pay separately in the ambulatory surgery centers or ASCs for non-opioid pain management surgical drugs. This was confirmed by CMS in December 2020, making separate payment for Omidrea effectively retroactive to October 1st. We anticipate that CMS will continue its policy to pay separately for non-opioid pain management surgical drugs, as it has done since 2019. Because CMS has already determined that Omidrea qualifies under the policy's objective criteria, we expect that Omidrea will continue to be separately reimbursed when used in the ASC setting. Given that CMS did not issue its decision to restore separate payment for Omidrea until December, utilization of the drug in the fourth quarter was limited. Net revenues from the sale of Omidrea in the fourth quarter were still $10.6 million, reflecting both customer demand and fourth quarter units sold. Our net loss for the fourth quarter was $37.3 million, or 60 cents per share, of which $3.5 million, or 6 cents per share, were non-cash charges. As of December 31, 2020, we had available for general operations $135 million of cash cash equivalents and short-term investments, and up to an additional $50 million through our accounts receivable-based line of credit. In the first quarter of 2021, we have seen a sustained and continuing recovery in the number of purchasing facilities, as well as in daily average sales volumes. To accelerate uptake of amidri among ASCs, one of our areas of focus has been establishing partnerships with ASC chains and groups of ASCs owned and operated by private equity groups. And we're pleased with our progress. As we have experienced with Omidria, January and most of February are historically slow months for ophthalmic surgical procedures in general. March, however, is one of the strongest months for cataract surgery volumes, and we look forward to seeing how Omidria sales close out the current quarter. CMS's confirmation that OMIDRIA qualifies for separate payment in ASCs was a significant milestone for OMEROS. We also continue to expand reimbursement among Medicare Advantage and commercial payers. In addition, the Coalition for Non-Opioid Choices has continued to lead a large, broad-based including the American Medical Association, the Ambulatory Surgery Center Association, the American Association of Colleges of Nursing, and the National Safety Council. To pass into law the Non-Opioids Prevent Addiction in the Nation Act or the No Pain Act. With strong bipartisan and leadership support in both chambers of the 116th Congress, the No Pain Act sponsored numbered 63 in the House of Representatives and 25, or a quarter of all, U.S. Senators. A large majority of those sponsors have remained in office for the new 117th Congress, and we expect support for the bill to continue to grow. The No Paying Act is expected to be reintroduced in the Senate this week and in the House soon thereafter. I think we all agree that opioid addiction continues to ravage our country, and this tragedy has only worsened during COVID. In December, the U.S. Centers for Disease Control reported that the rate of overdose deaths has accelerated throughout the pandemic, rising 38.4% during the year leading up to May 2020, driven primarily by abuse of the synthetic opioid fentanyl. As you might recall, in 2019, the Journal of Cataract and Refractive Surgery published the results of a 60-patient prospective double-mass controlled study demonstrating that use of amidri and cataract surgery reduced the need for interoperative fentanyl by nearly 80%, while concurrently decreasing pain scores by approximately 50%. A subsequent prospective double-mask randomized controlled study in 112 eyes using a similar design and generating similar results showed that, again, Omidria reduced both fentanyl use and pain scores, and a manuscript detailing these data is being submitted for publication. Consistent with previously published clinical data showing that Omidrius significantly reduces the incidence of site-threatening cystoid macular edema while precluding the need for perioperative steroids, a new study showing that Omidrius significantly decreases retinal thickness and macular edema in cataract surgery has been selected for podium presentation at the upcoming 2021 annual meeting of the American Society of Cataract and Refractive Surgery. Now, let's look quickly at our phosphodiesterase 7 program, OMS527. Here again, we control a broad and exclusive intellectual property position, this one covering PDE7 inhibitors for the treatment of addiction and compulsions, as well as movement disorders. Having successfully completed a phase 1 clinical trial, continued clinical development in this program is subject to allocation of financial and other resources which are currently prioritized for other programs. We'll close our program update today with GPR174 for cancer immunotherapy. GPR174 is an immunosuppressive G protein coupled receptor around which OMEROS is also building a broad and exclusive intellectual property position. We have found that in mouse tumor models, GPR174 deficiency enhances T-cell proliferation and tumor-killing phenotypes, leading to markedly reduced tumor growth. Importantly, GPR174 is activated by products of the tumor microenvironment, specifically phosphatidylserine and lysophosphatidylserine, or PS, and lysops. These molecules are released during processes associated with tumor growth, including the proliferation and death of tumor cells and tumor-associated immune cells. Cell death is also caused by radiation and chemotherapy commonly used to treat cancer, and we believe that GPR174 inhibition will be necessary to maximize the tumor-killing immune responses following these frontline cytotoxic therapies. Because the mechanism of action of GPR174 is separate from those of clinically validated checkpoint molecules CTLA-4 and PD-1, combination with a GPR174 inhibitor should improve response rates observed with existing checkpoint inhibitors, such as Yervoy and Keytruda. Furthermore, GPR174 and the adenosine receptors utilize the same immunosuppressive cyclic AMP signaling pathway, and we have found in multiple in vitro systems that combined inhibition of GPR174 and adenosine receptors synergistically enhances T cell activation and tumor-killing phenotypes. We plan to publish these data in the near future, and our team is aggressively developing both small molecule and antibody inhibitors of GPR174 to unlock the potential of what we view as a very exciting new cancer immunotherapy target. With that, I'll turn the call over to Mike for an overview of our fourth quarter financial results.