Omeros Corporation

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

Good afternoon and thank you for joining the call today. 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 quarterly report on Form 10-Q. which was filed today with the SEC, and the risk factor section of the company's 2020 annual report on Form 10-K for a discussion of these risks and uncertainties. Now I would like to turn the call over to Dr. Greg Dimopoulos, O'Meara's chairman and CEO.

Greg Dimopoulos Thank you, Jennifer, and good afternoon, everyone. We appreciate you joining us for today's call. We'll start with a corporate update and then provide an overview of our third quarter financial results. With me today are Mike Jacobson, Nadia Dock, Kathy Melfi, and Steve Whitaker, our respective heads of finance, commercial, regulatory, and clinical. We'll begin today with narsoplumab, our fully human monoclonal antibody targeting MASP2. MASP2 is the effector enzyme of the lectin pathway of complement. On October 18, we announced receipt from FDA of a complete response letter or CRL regarding our biologics license application or BLA for the treatment of hematopoietic stem cell transplant associated thrombotic microangiopathy or TATMA. We will have a type A meeting with FDA to help determine the most expeditious route to approval. Our briefing package for the Type A meeting with FDA is nearly complete, and once we have received all externally generated components, we will submit the package together with the meeting request to FDA. Because this is a Type A meeting, the meeting request can only be submitted in conjunction with the completed briefing package, and no changes can then be made to those materials. The briefing package will address FDA's concerns noted in the CRL and will include a detailed history of communications with FDA, which has been reviewed and confirmed by outside regulatory legal counsel. Once the briefing package is assembled and submitted with the meeting request, FDA regulation requires that the Type A meeting be scheduled within 30 days. FDA has indicated that they are ready to work with us to identify the most expeditious and least onerous path to approval for narsoplumab in TATMA. In our conference call on October 18, we discussed that in the CRL. FDA expressed difficulty interpreting narsoplumab's treatment effect given the complexity and severity of both the disease and the patient populations. indicating that additional information would be necessary to support approval. There were no safety or CMC issues identified, so there is no bleed over to other indications. This is not a narsoplimab issue. Rather, the issues are restricted to TATMA, and FDA said that they are resolvable. We hope to have more answers after the Type A meeting about whether additional information will be needed, and if so, what exactly that might entail. Our goal is to bring a drug that met its pre-specified efficacy endpoint with a favorable safety profile to patients with TATMA, a too often lethal, ultra-orphan indication with no approved treatment. We worked very closely with FDA throughout the clinical development process, including agreement that approval could be based on a single-arm, open-label trial using a primary efficacy endpoint developed in conjunction with and agreed by FDA. To be clear, we believe that our agreements with FDA are unambiguous and that the Narsoplimab BLA is already submitted is sufficient for approval. Having followed FDA's directions, recommendations, and guidance throughout the program, and having met the primary endpoint with all results from secondary endpoints supporting that achievement, it is unclear to us why FDA Review Division seemingly changed its position. For that reason, we look forward to working collaboratively with FDA to resolve any remaining issues that are also prepared to pursue all avenues for resolution. Again, we are confident in the strength of our data, which have been presented by leaders in stem cell transplantation across a variety of scientific and medical venues internationally. And that international expert support continues. In addition to two manuscripts pending publication, the first detailing the findings from the pivotal trial and the second elucidating the role of the lectin pathway in MASK2 and TATMA, three oral presentations and one poster presentation related to narsoplumab and MASK2 inhibition in TATMA have been accepted for the 2021 International Compliment Workshop in December. Narsoplimab is also being evaluated in three other indications, immunoglobulin A, or IgA nephropathy, atypical hemolytic uremic syndrome, or AHUS, and COVID-19. Our Phase III Artemis IGAN trial is enrolling internationally. We are also advancing to activate sites in China. Given the size of the population and the prevalence of IgA nephropathy in China, we've identified a large number of investigational sites in that country, and we expect that those will help us accelerate significantly the pace of enrollment in the trial. Regulatory submissions have been made, and we are working with authorities and our contract research organization to finalize those clearances and begin recruitment. Here again, we see international thought leader support for narsoplumab. Last month, a manuscript for which the senior author is Dr. Mohamed Daha, Professor Emeritus of Leiden University in the Netherlands, was published in the Journal of Clinical Medicine. The publication examined the role of the lectin pathway and specifically MASP2 and its inhibitor, narsoprimab, in IgA nephropathy. Last week, at the annual meeting of the American Society of Nephrology, or ASN, narsoprimab and IgA-related disease was the subject of two presentations. The first, presented by Dr. Richard Lafayette, professor of medicine and nephrology at Stanford University, detailed results of nearly three years of follow-up on the narsoplumab Phase II IgA nephropathy patients. During that time period, patients received a median of one 12-week course of narsoplumab annually, with 58% of patients receiving only one course per year or less. Overall, patients' renal function is assessed by estimated glomerular filtration rate, or EGFR, improved or stabilized versus a control group matched for proteinuria and EGFR. Using the same analytical approach adopted by other companies to determine the impact of proteinuria reduction on long-term risk of need for dialysis, the proteinuria reduction seen in the Phase II narsoplimab-treated patients, an unprecedented reduction of 64%, is predicted to delay progression to renal dialysis by more than 41 years compared to standard of care. This represents a substantially greater reduction in proteinuria and a substantially longer projected delay to need for dialysis or end-stage renal disease than has been reported by any other drug in development for the treatment of renal disease. The second presentation at ASN summarized the work conducted by a consortium from Denmark and the U.K. led by Dr. Peter Garrett, Chair and Professor of Clinical Molecular Medicine at the University of Copenhagen. This was the first report describing the effects of lectin pathway inhibition by narsoplumab on urinary complement levels in kidney disease. The study assessed complement levels in urinary samples collected during the clinical course of a rapidly deteriorating young woman with IgA vasculitis. Narsoplumab treatment was associated with substantial reduction in markers of local complement activation and with stabilization of kidney function as measured by EGFR. Further studies are ongoing to evaluate the use of urine as a non-invasive and readily accessible resource to monitor responses to narsoplumab treatment. Our other Phase III narsoplumab program is in patients with AHUS. Our AHUS Phase III trial remains open, although we have prioritized resources to other programs. Narsoplumab also continues to be evaluated as part of the nationwide iSpy COVID-19 trial, a platform trial in severe COVID-19 patients. The I-SPY trial is sponsored by Quantum Lead Healthcare Collaborative and is funded in part by BARDA. Narsoplumab is the only complement inhibitor selected for inclusion in the trial. Omeros has no involvement in running the trial other than providing drug and we look forward to seeing the results. In the meantime, field leading work in COVID-19 has continued at our laboratories in the University of Cambridge. Two manuscripts are being prepared for publication. The first is directed to a profile of disease-specific complement marker abnormalities that were identified by our team studying hospitalized COVID-19 patients in the two major hospitals affiliated with the University of Cambridge and a large number of CIRA from the UK's National COVID Response Biobank. The data demonstrate that very early in severe COVID-19, lectin pathway activation is exceedingly high. This lectin pathway hyperactivation causes consumption of the complement components shared between the lectin and classical pathways, impairing classical pathway function. The classical pathway plays a central role in antibody production and the adaptive immune response. Narcoplumab has now been shown to restore this classical pathway function in COVID-19 patients. Specifically, evaluation of blood samples from the Bergamo trial show that lectin pathway inhibition through narcoplumab can restore the loss of classical pathway functional activity caused by hyperactivation of the lectin pathway. OMEROS is developing a broad intellectual property position directed to the profile of complement biomarkers and their associated assays as an early indicator of severe COVID-19 and as a means to assess therapeutic response. This could also prove to be relevant in post-acute sequelae of SARS-CoV-2 or long-haul disease, and we are exploring this as well. The second manuscript, builds on the first. As just discussed, lectin pathway activation is extremely high very early in severe COVID-19. As a result, the classical complement activation pathway, which critically supports the infection-fighting adaptive immune response, is severely impaired in its ability to fend off opportunistic infections. This could well explain why a substantial incidence of life-threatening secondary infections occurs in severe COVID-19. Again, our supplement blocks the uncontrolled consumption of the complement components shared between the lectin and classical pathways, allowing the recovery of classical pathway functional activity and restoring its ability to prevent and fight secondary infections in severe COVID-19 patients. This clearly suggests an important additional benefit of narsoplumab in reducing morbidity and mortality in severe COVID-19. Also, it should further clarify that narsoplumab, unlike other complement inhibitors and immunomodulators, likely does not increase the infection risk in COVID-19 patients, but rather protects against infection by maintaining the complement-dependent antimicrobial defense of the adaptive immune response. We look forward to publishing these two important manuscripts. Let's look now at our third quarter financial results. Net revenue from sales of Omidri in the third quarter were $30 million, up 4.1% from the prior quarter's revenue of $28.8 million. Our net loss for the third quarter was $22.7 million, or 36 cents per share. of which $6.4 million, or 10 cents per share, were non-cash expenses. As of September 30, we had $54.4 million in cash, cash equivalents, and short-term investments. We are tightly managing our expenditures as we work to resolve the Narsoplimab BLA matter. Given that we have not yet hired the Narsoplimab field sales force, the delay in narsoplimab approval is either cash flow neutral or slightly positive. We are temporarily deferring some of our research and development costs as we focus primarily on our complement programs. In addition, we have an unused line of credit with borrowing availability up to $50 million based on our accounts receivable and an additional $150 million available through an at-the-market facility. During the fourth quarter, Omidria revenues have continued to grow, with weekly sales achieving repeated all-time highs in the ambulatory surgery centers or ASCs. Our ASC customers continue to express increasing confidence in CMS's durable separate payment for Omidria. In its outpatient prospective payment system final rule for 2022 issued last week, CMS reconfirmed separate payment for Omidria in the ASC setting. It was gratifying to see the strong public support for Omidria separate payment in both ASCs and hospitals from physicians as well as from national and state hospital associations and ophthalmic professional societies. These include the American Hospital Association, the Ohio Hospital Association, the California Hospital Association, America's Essential Hospitals, the American Academy of Ophthalmology, the American Society of Cataract and Refractive Surgery, the Outpatient Ophthalmic Surgery Society, the American Society of Retina Specialists, and the Society for Excellence in Eye Care. From a legislative standpoint, we continue to see momentum gathering behind the Non-Opioids Prevent Addiction in the Nation or the No Pain Act. If passed, the bill would provide separate payment for non-opioid pain management drugs like Omidria, not only in ASCs, but also in hospital outpatient departments for a renewable period of five years. Introduced in the spring of this year in both chambers of Congress, the No Pain Act now has 34 senators and 74 representatives co-sponsoring the bill. As previously reported, the growing roster of cosponsors is truly bipartisan, with effectively equal support from Democrats and Republicans in both the House and Senate, and includes leadership and key members on the committees of jurisdiction in both chambers. The bill is also well supported by a long list of major medical societies and public health organizations, and we look forward to its passage in the current Congress. It's important to note that Omidrea has been shown in peer-reviewed publications to significantly reduce the use of opioids. In addition to the two publications already detailing the benefits of Omidrea in reducing opioid use, two recent manuscripts further supporting those Omidrea benefits were recently accepted for publication in the Journal of Cataract and Refractive Surgery. The first demonstrates that the administration of Omidrea during cataract surgery significantly reduced use of interoperative fentanyl while concurrently decreasing pain scores versus an active comparator. This publication, which is currently available online at JCRS, further confirms the results of an earlier study published in Clinical Ophthalmology. The second manuscript discusses the evolution of pain management and the use and associated risks of opioids in cataract surgery. The manuscript, which should be available online at JCRS any day now, underscores the benefits of Omidrea in limiting the risks of opioid use in cataract surgery patients. With that, I'll ask Nadia Dock, our Chief Commercial Officer, to provide an update on commercial activities for both narsoplumab and Omidrea. Nadia?