Omeros Corporation

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

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 in the company's annual report on Form 10-K, which was filed today with the SDC, including the risk factor section for a discussion of these risks and uncertainties. Now I would like to turn the call over to Dr. Greg Dimopoulos, Chairman and CEO of O'Meara.

Thank you, Jennifer, and good afternoon, everyone. We'll start with a corporate update and an overview of our fourth quarter and full year 2022 financial results, followed by a more detailed financial summary. Joining me on the call today are Mike Jacobson, Nadia Dock, Kathy Melfi, and Steve Whitaker, our respective heads of finance, commercial, regulatory, and clinical. Before diving into the details of our specific program updates and coming events, I'd like to spend just a few minutes on our financial strength that we expect will enable those events without the need for near-term shareholder dilutions. continuing to position Omeros for success. To provide some background, in December 2021, we completed the strategic sale of the cataract surgery product that we developed and commercialized, Omidria, to Rainer Surgical for an upfront payment of $125 million, $31 million of retained receivables, substantial ongoing royalties on Rainer's net sales of Omidria, and the potential to receive a $200 million milestone payment by securing for Omidria continuous separate payment of at least four years. The initial royalty rate on U.S. net sales of Omidria was 50%, which represented nearly 80% of the total operating profit. Last September, we sold a portion of our future Omidria royalty stream to DRI Healthcare and received $125 million in cash. Because DRI's annual royalties are capped, and as a result, Omeros receives any financial upside in the Omidria royalty stream. The royalty sale was recorded as debt on our balance sheet, and no income was recognized related to the sale. Then, three months later, in December 2022, Omeros achieved the Rainer milestone, receiving $200 million plus interest in early February. Under our agreement with Rainer, after achieving the milestone, the royalty rate that we now receive on Rainer's U.S. net sales decreased to 30%. which represents approximately 40% of total Omidria operating profits. Nearly half of all cataract procedures in the U.S. are performed on Medicare Part B patients, with surgical and facility fee payments administered by the Centers for Medicare and Medicaid Services, or CMS. Since Omidria's market launch in the second quarter of 2015 through multiple CMS-awarded and congressionally mandated pass-through periods, and then qualifying under the non-opioid pain management exclusion from packaging, Omidria has received continuous separate payment from CMS, interrupted over those eight years, for a total of only 11 months. nine months in 2018 following successful legislation extending pass-through, and two months in 2020 after qualifying for CMS's non-opioid packaging exclusion. But separate payment repeatedly needed to be won. So we, together with physicians and surgical facilities, could never rely on CMS providing separate payment for Omidria Despite this uncertainty, the drug to date has infused Omeris with effectively $1 billion in non-dilutive funding, fueling the development of our pipeline while minimizing both outstanding share count and shareholder dilution. Now let's look at our financial results for both the fourth quarter and the year. Our net income for the fourth quarter was $128.7 million or $2.05 per share, compared to $280.6 million or $4.49 per share for the fourth quarter of 2021. Both the current and the prior year quarters were significantly affected by Omidria transactions that I just recounted, namely the December 2021 strategic sale of Omidri and the December 22 achievement of the Rainier milestone. Looking only at continuing operations, our net loss for the fourth quarter of 2022 was 73 cents per share compared to 76 cents per share for the same quarter in 2021. Our cash burn for the fourth quarter of 2022 was $26 million. O'Meara's received $17.9 million in royalties from Rainer's Omidria fourth quarter net sales of $35.8 million, a new quarterly record. Our net income for the full year 2022 was $47.4 million, or 76 cents per share, compared to $194.2 million, or $3.12 per share. in 2021. Our full year loss from continuing operations in 2022 was $182 million or $2.90 per share compared to a loss of $191.5 million or $3.07 per share in 2021. As of December 31, 2022, we had $195 million of cash and investments and $213 million in receivables, inclusive of the $200 million milestone payment. All of those receivables have now been collected. So in total, we had $408 million in cash, investments, and receivables at December 31, 2022 to support ongoing operations and debt service. A good number of shareholders contacted us last week asking whether our corporate cash and investments were in any way exposed to Silicon Valley Bank. To be clear, we do not have any assets on deposit with Silicon Valley Bank, nor do we have any other financial relationship with SBB or its affiliates. The $408 million now in hand provides OMEROS the flexibility simply to pay off any or all of the $95 million of convertible debt that matures this November while continuing to fund operations and advancing our multiple development programs well into 2025. The recent signing into law of the Consolidated Appropriations Act of 2023, also known as the 2023 Omnibus Bill, mandates that CMS continue to pay separately for non-opioid pain management drugs like Omidrin in ambulatory surgery centers or ASCs until at least 2028. While the majority of cataract surgery is performed in ASCs, approximately 20% of those procedures occur in hospital outpatient departments, or HOPDs. Congress addressed this as well, directing CMS to pay separately for drugs like Omidria, not only in ASCs, but also in the HOPD setting, beginning no later than January 2025. The assurance of long-term separate payment in both the ASC and HOPD settings now provides physicians and surgical facility administrators the confidence that they can incorporate Omidria into their practices and plan on being adequately reimbursed for delivering best care to their patients. We expect this increased certainty in CMS payment to result in meaningful Omidria sales growth. Congressionally mandated long-term separate payment by CMS could also have a direct and positive effect on the other two major coverage systems for cataract surgery, Medicare Advantage and commercial insurance plans. driving expansion of separate payment across both of them, which would be good for ophthalmic surgeons and their patients. The fact that many MedAdvantage and commercial plans are administered by the same payers should accelerate this expansion. There are well over 4 million cataract procedures performed annually in the U.S. alone. As U.S. sales of Omidria continue to grow, Omeris will continue to receive 30% of those revenues as royalties. Potentially further adding to our royalty stream, Rainer is planning to begin selling Omidria outside of the U.S. later this year, resulting in 15% of any of those revenues also inuring to Omeris. Both the U.S. and international royalty rates paid to OMEROS should remain extant until the expiration of OMIDRIA patents, which are slated to be no sooner than 2033. So having laid out the current strength of our financial position, let's now turn to updates on OMEROS' programs, beginning with norsoplumab and stem cell transplant-associated thrombotic microangiopathy, or TATMA. following our appeal of FDA's complete response letter on our Biologic License Application, or BLA, for narsoprimab in TATMA. In late 2022, we received guidance from FDA's Office of New Drugs proposing a path forward to resubmit our BLA with additional analyses comparing response from our completed pivotal trial. to a threshold derived from an independent literature analysis. Also requested was evidence of increased survival in our completed trial compared to an appropriate historical control group. We have identified and now can access robust sources of independent and historical response rates and survival in PA-TMA patients not treated with narsopnumab. working with our regulatory and legal advisors led by Hyman Phelps McNamara toward a rapid resubmission of our BLA. We have requested a meeting with FDA's Division of Nonmalignant Hematology to discuss the details of our proposed analyses and to confirm the information required by FDA to support narsophthalmabs approval. This will be a Type B meeting. So we expect it to occur in the first half of the second quarter. For European approval, we have initiated clinical trials assessing narsoplimab in pediatric patients with TATMA to fulfill our pediatric investigation plan agreed with the European Medicines Agency, or EMA. We expect to complete the submission of our marketing authorization application to EMA after resubmission of our BLA. Since our last earnings call, we've seen continued and substantial activity in peer-reviewed publications and presentations directed to TATMA, the lectin pathway, and narsoplumab. An international group of leading transplanters recently published a systemic review of signs and symptoms of TATMA in transplantation and cellular therapy. And a second manuscript on PATMA diagnosis and treatment has been accepted for publication by the journal Bone Marrow Transplantation. Presentation at the recent annual meeting of the American Society of Hematology detailed our clinical trial of narsoplimab in pediatric patients with PATMA. And two additional abstracts on use of narsoplimab in PATMA have been accepted. for presentation at the upcoming European Society for Blood and Marrow Transplantation. Stem cell transplanters internationally are increasingly identifying TATMA in their transplant patients and recognizing it as an urgent and unmet medical need. National diagnostic and procedural billing codes now officially recognize TATMA as a complication of stem cell transplantation. This means that once there's an approved treatment for TATMA, off-label use, which occurs now with C5 inhibitors, should be greatly curtailed, further driving use of any approved treatment. We believe that narsopalimab deserves FDA approval for the treatment of TATMA, and we are committed to continuing to work with FDA to make that a reality. Also in our narsopalimab portfolio, our phase three clinical trial in patients with IgA nephropathy remains on track to read out nine-month proteinuria data in the third quarter of this year. This is expected to form the basis for our BLA to be submitted to FDA, and we expect for our submission to European regulators. Adding to a list of existing publications, a manuscript authored by a group of international experts on the role of the lectin pathway and the pathophysiology of IgA nephropathy has been submitted to a leading peer-reviewed journal. IgA nephropathy represents a multi, billion market opportunity. While FDA has recently approved for IgA patients both a steroid and a representative of a new class of agents that targets blood pressure, clinical experts do not see these as competitors, but rather as complementary to inhibitors of the complement system. There currently is no complement inhibitor approved for IgA nephropathy, and we aim to make narsoplamab the first. As we've discussed in previous calls, our Phase III program in atypical hemolytic uremic syndrome, or AHUS, remains a low priority. Enrollment has been challenging, and due to what we and others see as a contracting condition, commercial market for AHUS because of the increasing number of C5 biosimilars. We've diverted resources to other clinical programs within our complement franchise. At our labs in the University of Cambridge, collaborative work with multiple UK consortia in acute severe and long COVID is advancing. Dialogue is ongoing with relative branches of the U.S. government and with the resurgence of COVID and related diseases. There's continued interest from these agencies in accessing their supplement and funding their supplement-related activities. A manuscript directed to lectin pathway inhibition and well-established in vitro and animal models of both COVID and influenza-related acute respiratory distress syndrome or ARDS is being prepared for submission. The evidence supporting the central role of the lectin pathway and the utility of narsopalimab in these diseases is only increasing. This is being further highlighted within government agencies as the utility of vaccines under increasing scrutiny becomes more questionable. And the need for therapeutics that directly target the central pathophysiology of COVID and other causes of ARDS moves to the forefront. Now let's look at OMS 1029, our long-acting next-generation antibody targeting MASK2 and the lectin pathway. OMS 1029 is complementary to NIRSOPLIMAT. Whereas narsoplumab is generally administered intravenously once weekly, ideal for acute or episodic treatment, long-acting OMS1029 is designed for chronic use. Our strategy of developing OMS1029 as a long-acting follow-on to narsoplumab is to enable Omeros to control first-line therapies for the large majority of lectin pathway-related disorders. In January of this year, we completed dosing of all cohorts in the OMS-1029 single ascending dose phase one clinical trial. As predicted, given our experience with narsoplumab, OMS-1029 was well tolerated with no safety concerns identified. The trial did deliver excitement, though, in that the pharmacokinetic and pharmacodynamic data demonstrate that OMS 1029 effectively ablates lectin pathway activity and should do so even with markedly protracted dosing intervals of once quarterly administration. Detailed results from the single ascending dose study of OMS 1029 are planned for presentation at an upcoming scientific congress. Dosing in the OMS 1029 multiple ascending dose study in healthy subjects is scheduled to start this summer. Wrapping up our lectin pathway portfolio, we believe that we are very close to selecting a lead drug development candidate from our small molecule, orally active MAST2 inhibitor program. Recent pharmacokinetic and pharmacodynamic data are compelling. and safety data generated to date are clean. Together with our external advisors, including former heads of chemistry, pharmacokinetics, and drug metabolism at GlaxoSmithKline and Merck, we are enthusiastic about these molecules and hope to select a lead compound next quarter. A successful orally dosed small molecule inhibitor of MAST2 together with nirzhoplamab and OMS-1029 should enable OMEROS to control the gamut of diseases and disorders caused by dysregulation of the lectin pathway. We'll now complete the updates on our complement franchise with OMS-906, our antibody targeting MASC-3. MASC-3 is the key activator of the alternative pathway of complement. As previously announced, we successfully completed a single ascending dose phase one study of OMS906, evaluating both intravenous and subcutaneous administration in healthy subjects. The drug was well tolerated and there were no safety signals of concern. Detailed clinical data from that study were presented in December at the annual meeting of the American Society of Hematology. Based on clinical data to date, we expect that we will be able to achieve once-quarterly dosing with OMS 906, either intravenously or subcutaneously. This, along with the other potential differentiating benefits of OMS 906, should serve us very well in the competitive marketplace of alternative pathway inhibitors. Our clinical development strategy is to obtain rapid proof of concept data on the efficacy of OMS906 in multiple validated alternative pathway-related disorders, including paroxysmal nocturnal hemoglobinuria, or PNH, and complement 3 glomerulopathy, or C3G. On schedule. Last December, we began enrolling treatment-naive PNH patients in one of our Phase 1B clinical trials evaluating OMS 906, and dosing began early this year. Our second Phase 1B clinical trial, this one in PNH patients who have had an unsatisfactory response to the C5 inhibitor, Rabulizumab, is also enrolling. We're scheduled to begin the first dosing of OMS-906 in this study later this month once the rabulizumab monotherapy period has ended. The current development plan for OMS-906 and PNH involves a pivotal program consisting of two trials, one in treatment-naive patients and one in patients who don't respond well to approve PNH therapy, both with relatively small numbers of patients, similar to the numbers enrolled for Novartis' iptacopan and Apellis' pegcetacoplan programs. We've also initiated a Phase 1B clinical trial evaluating OMS906 in patients with C3G. Enrollment here is expected to commence next month, with data available in the third quarter of this year. Here again, we're planning for relatively small study populations, similar to the number of C3G patients being enrolled by Novartis or of Tacopin. Regulatory interactions in the U.S. and Europe are ongoing for OMS906 in both PNH and C3G. As discussed earlier, there is good evidence that MASK3 and 906 could prove to be the premier target and drug respectively in the alternative pathway. The potential advantages of OMS 906 over other alternative pathway inhibitors on the market or in development include safety through meaningfully decreased infection risk by not blocking the adaptive immune response, compliance and convenience with significantly better dosing profile at once quarterly intravenous or subcutaneous administration, and efficacy through greatly decreased risk of breakthrough of the underlying disease given that MASK3 first is not an acute phase reactant and that OMS906 has a long half-life, allowing MASK3 to be blocked consistently and effectively. These advantages are well recognized by scientific and clinical experts across both academia and industry. The question that remains is whether MATH3 inhibition, and specifically OMS906, can demonstrate efficacy in any alternative pathway disorder. If it does, then the widely held expectation is that OMS906 will be efficacious across the full scope of alternative pathway associated diseases and disorders. This is particularly true if we demonstrate efficacy in PNH, which, because of the severity of the disease, sets a very high bar for alternative pathway inhibition. But efficacy in any alternative pathway disorder should readily allow a value calculation of the OMS 906 program based on predicate Alternative pathway drugs and programs such as c3 factor B and even c5 inhibitors should OMS 906 demonstrate efficacy We're confident that the safety compliance and convenience and efficacy advantages that I described just a minute ago would significantly differentiate OMS 906 from those predicate alternative pathway inhibitors and others in development Again, based on the science and evidence to date, we believe that NASP3 is the premier target. And by extension, and because of its attributes, OMS906 has the potential to be the premier drug in the alternative pathway market. So we look forward to sharing publicly clinical data from our OMS906 program. Turning now to OMS 527, our PD7 inhibitor program, discussions continue regarding third-party funding for continued development of OMS 527 as a treatment for addictive disorders. As has been widely and frequently broadcast, addiction is an enormous and worsening problem in the U.S. and worldwide. In the U.S. alone, in 2019, tangible measured costs of substance abuse were half a trillion dollars, with intangible costs such as loss of life, injury, reduced quality of life, all of those estimated at a staggering $3.2 trillion annually. With the Centers for Disease Control and Prevention reporting that one in seven Americans 12 years of age or older have experienced a substance use disorder. A therapeutic that could treat the cause of abuse could change the lives of tens of millions of patients just in the U.S. We look forward to securing external funding and moving ahead with further clinical development of OMS 527. In addition to the wide field of addiction and compulsion disorders, AmeriHouse also controls broad intellectual property directed to PD7 inhibition for the treatment of movement disorders. With collaborators at Emory University, we're evaluating OMS 527 as potential treatment for L-DOPA induced dyskinesias or LID. These dyskinesias are crippling involuntary movements in Parkinson's patients caused in part and ironically by prolonged treatment with L-DOPA, the most prescribed and most effective therapy for Parkinson's. More than 10 million patients are living with Parkinson's worldwide, and reportedly 50% or more of those treated with L-DOPA suffer from LID. Only one drug, extended release amantadine, is approved for the treatment of LID, and it has limited efficacy with multiple significant adverse side effects. Here again, LID represents a large unmet patient need and a substantial market opportunity. Data to date in a clinically predictive primate model of LID have been encouraging. We await data from one additional primate, which took longer to develop LID than anticipated by our Emory collaborators. Treatment with our PD-7 inhibitor is underway, and data are expected next month. We'll close the update today with our immuno-oncology programs. These are platform programs for both cellular and molecular therapies for cancer. All are derivatives of our work on GPR174, our proprietary target in cancer immunity. For cellular therapies, we've developed and are evaluating novel approaches for both CAR T and adoptive T cell therapies. We've identified specific T cell signaling pathways which, once inhibited, significantly and preferentially enhance the expansion of memory T cells that distinctively recognize and efficiently kill tumor cells. Our team is validating these novel approaches and establishing a broad position. We believe that these proprietary cellular technologies could markedly improve response rates for cancer patients receiving either engineered or native T cell therapies for both liquid and solid tumors. On the molecular front, we've developed novel biologic platforms to target specifically and kill cancer cells. We expect that some of these biologics will function as therapeutic vaccines against a broad range of tumors. Successful development of therapeutic cancer vaccines, though widely pursued, have proven difficult to achieve, with the current industry approaches inducing only transient and ineffective immune responses. We believe that we've overcome this challenge, having now engineered novel molecules that combine tumor antigens with a potent adjuvant. These combinations show high levels of killing in cancer cells, and demonstrate the potential to transform the treatment of both solid tumors and hematological cancers. Here again, we're constructing a broad intellectual property estate around these multiple immunotherapy platforms. With that, I'll turn the call over now to Mike Jacobson, our Chief Accounting Officer, who will go through a more detailed discussion of the financial results for the fourth quarter of the year. Mike?

Thanks, Greg. As Greg discussed, in December of last year, Raynor acquired Omidria and the associated business operations. The sale required us to restate our financial statements for all periods into continuing operations and discontinued operations. Our net income for the fourth quarter was $128.7 million. or net income of $2.05 per share, compared to a loss of 17.5 million or 28 cents per share in the third quarter of 22. The fourth quarter includes the $200 million milestone we earned from Raynor in December, which is included in discontinued operations. If we look at just continuing operations, Our net loss for the fourth quarter was 73 cents per share compared to a net loss of 87 cents per share in the third quarter, a 14 cent improvement. At year end, we had $195 million of cash and investments on hand and $213 million in receivables, all of which we have collected. The $213 million year-end receivable balance includes the $200 million milestone payment, as well as the mid-year royalties for November and December, which are due 60 days after the respective month ends. We therefore have approximately $408 million in cash available for operations and debt service when you add the cash and investments together with the receivables. Cost and expenses from continuing operations for the fourth quarter were $40 million, which is a decrease of $10.6 million from the third quarter. The decrease was primarily due to manufacturing commercial norsoprimab drug substance in the third quarter, which we expense given that we do not have FDA approval. As we finalize our path forward for TATMA, We continue to gauge on our supplement sales and marketing spend until the timing of FDA approval is clear. Interest expense for the fourth quarter was $7.9 million compared to $4.9 million in the third quarter. The $3 million increase is due to interest on the DRI agreement, which we entered on September 30th of this year. Now let's look at Omidria royalties. As I've mentioned previously, royalties earned are recorded as a reduction in the Omidria contract royalty asset on our balance sheet. Since the sale of Omidria in December of 2021, we have been receiving royalties of 50% of U.S. net sales of Omidria. Upon the achievement of the $200 million milestone on December 29th, 2022, amenity royalties decreased to 30% of U.S. net sales. The 30% royalty equates to approximately 40% of U.S. amenity operating profit, considering the amenity operating expenses we no longer have to pay. The 30% royalty rate extends for the duration of the relevant patent. terms, which we expect to be at least through 2033. For the fourth quarter, our 50% royalty on Rainer net sales was $17.9 million on sales of $35.8 million. The $35.8 million is a $2.0 million increase in net sales over Q3 and establishes a new all-time high for a mid-year quarterly sale. Income of discontinued operations in the fourth quarter includes four key components. The $200 million milestone payment, $4.9 million of interest earned on the mid-year contract royalty asset, $26.2 million of expense due to the remeasurement adjustments to the mid-year contract royalty asset, and state income tax expense of $4 million. We do not owe any federal income tax due to the utilization of a portion of our outstanding net operating losses. The re-measurement of the contract royalty asset is primarily due to the reduction of future omitted royalties when the rate was reduced from 50% to 30% of net sale. Now let's take a quick look at our first quarter of expected results. We expect overall operating costs from continuing operations in the first quarter to remain relatively consistent from the fourth quarter. Interest income should be nearly $3 million, and interest expense for the first quarter should be consistent with the fourth quarter at approximately $8 million. Income from discontinued operations should be in the $7 to $8 million range. With that, I'll turn this call back over to Greg. Greg?

Thanks, Mike. Operator, why don't we open the call to questions?

And thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by. We'll compile the Q&A roster. And one moment for our first question. And our first question comes from Colin Bristow from UBS. Your line is now open.

Hey, good afternoon, and congrats on all the progress. So on the TMA filing and the regulatory path, I know you anticipate a meeting with the FDA in 2Q. Have you had any additional conversations with the agency or any additional feedback since the last update you provided, which I think was in November? And then with regards to this upcoming FDA meeting, what are the primary questions or points of discussion you're looking to cover? Since it felt that in the last feedback from FDA, there was a sort of fairly prescriptive kind of path to what is required from you to restart the process. Thank you.

Yeah, hi, Paul. Thanks for the question. First, we don't discuss specific timing of discussions or details of discussions with FDA. But with respect to your second question, the purpose of the meeting, I think, as we said, is to just confirm and make sure we're all clear on whether what we are proposing as analyses will be acceptable. So this is really to reach agreement with FDA as to what needs to be done. what will suffice with respect to those analyses so that we can deliver to FDA specifically what they need so that we can get this drug approved. Kathy, do you want to add anything to that?

No, I think that pretty much covers it as Greg said we will be working with FDA to go over our proposal based on the feedback that we've received today. And we want to make sure that what's in our resubmission is what's needed to approve the drug.

Okay, great. Thank you.

And thank you. And one moment for our next question. And our next question comes from Steve Brozak from WBB Securities. Your line is now open.

Hi. Thanks for taking the question. It's just one quick one. Can you go into and give as much detail on your diagnostic collaboration with Cambridge, and what can you tell us about what kind of data you're seeing there, and what are the ramifications from that? And I'll jump back in the queue. Thank you.

Yeah, we'll be publishing more data, Steve, coming out of Cambridge, so I don't want to preempt that. But with respect to the diagnostics specifically, what we have identified is a pattern of complement factor changes that occur with severe acute COVID. and even moderate COVID, but hospitalized COVID patients that specifically link to the lectin pathway. And we are in discussions with government agencies around that panel of assays that we are working through. This may also have applicability to long COVID or PASC, but it is, I think, currently premature to make any definitive statements about that.

Got it. Okay. Thanks very much. Let me hop back into the queue. Thanks.

And thank you. And one moment for our next question.

And our next question comes from Greg Harrison from Bank of America.

Your line is now open.

Hi there. It's Mary Keaton for Greg. Congrats on the milestone payment, and thanks for taking our question. I guess looking at the narsoplamab program here in IGAN and given the Phase III data expected, what are your commercial expectations for narsoplamab if approved in this indication? Thank you.

Well, we think the opportunity for narsoplamab is locked. As I said, the IGAN market is a large market. It's a multi-billion dollar opportunity, as you know. And what's been approved has been an orally available steroid, one that works primarily within the gut, and an agent that is another approach to blood pressure control. But what we're talking about with narsoplumab specifically is an anti-complement agent. And we think the utility of that could be substantial, particularly in patients with high protein urine. So patients with high levels of protein spillage in the urine. And when I say that, I mean those patients somewhat arbitrarily, but those patients who have 24-hour urine proteins of two grams or more per day. We think that there is a very large opportunity for the treatment of those patients as well as those with lesser degrees of proteinuria, and we think that certainly there's a need for complement inhibition and specifically lectin pathway inhibition. As I think we've discussed before, lectin pathway inhibition is important not only at the glomerulus, but also in the tubuloendothelium. And as you know, that is where all end-stage proteinuric renal diseases pass. really, if you can affect the tubular interstitium, you are effectively treating or potentially treating all proteinuric renal disease. So we think the opportunity is very large.

Great. Thank you.

And thank you. And one moment for our next question. And our next question comes from Brandon Volk from Cantor. Your line is now open.

All right, thanks for taking my questions, and congratulations on all the progress. I just want to come back to that first question around nosoprimab and the TA-TMA meeting with the FDA. Is there a way to contextualize sort of the level of work you've done ahead of this meeting? And what I mean by that is, If you do have a meeting of the minds on the approach to sort of addressing the CRL, is this something we should expect a submission relatively shortly thereafter, or is it more just going to agree on an approach and then it could be a couple months or quarters of work behind that?

Yeah, let me first say that in the prepared comments, I think I made it clear that we've identified and now can access the sources of information that we need or we believe we need to address FDA's concerns. So I think it would be premature, though, on the front end of that FDA meeting to talk about how long it will take us to satisfy FDA. Let's get through the meeting first, and then I think we can speak more definitively about that. Otherwise, it's pure speculation. But I think part of your question is what have we been doing? And certainly in the meantime, since our last public statement around this, there's been a tremendous amount of work being done. One, in identifying those sources of information. Two, obtaining access to those. Certainly we aren't running analyses up front because we want to make sure that we with FDA agree what analyses we're going to run, but then I think running them, if we're all in agreement on what we're doing, should not be a lengthy process. But let me see, you know, again, I'll ask Kathy and or Steve if you have any other comments on this.

Thanks, Greg. Yeah, we have been working quite a bit since the last update. And also, as Greg mentioned earlier, we're working with our legal regulatory consultants and working closely with them to make sure that we're providing the best information that we can and trying to set ourselves up for success.

Great. Thank you very much. It's very helpful. One more if I may. Yeah, you've done a tremendous job shoring up the balance sheet. I think the commentary in the press release was sort of funded through at least 2025. Can you just give us a sense of which programs you include in that runway? Is that your sort of the whole breadth of the pipeline or just how you're thinking about kind of maybe focusing on some, anything you can do to speed up these trials, just given your strong balance sheet? Thank you.

Yeah, sure. Thanks again, Brendan. Well, certainly our focus on our supplement is a high priority. Similarly, our focus on 906. I think as we made clear, we began enrolling last December. We began dosing in January. We are pushing hard on that program. We think that that's going to be a very important program, not only for us, but for patients with alternative pathway disorders. So that's a priority. When we kind of march down, you look at OMS 1029, which is our backup in our supplement. That program is sailing through. Everything looks good there. Similarly, the small molecule program, let's see, if we select a development candidate next quarter, we'll be looking at advancing that. But as you know, that's really a lot of pre-IND work, and that's pretty contained with respect to cost. 527, we're looking for external funding. And once we have that, assuming we get it, we expect that to fund clinical work. and further development. If we turn over a positive card on the levodopa-induced dyskinesias, that's another area that we would consider a clinical trial. But again, that would be limited in size first. It would be proof of concept, so costs would be pretty contained. Then when you look at our immuno-oncology programs, those are preclinical. But we hope to, over the coming months, be able to start to move one or more of them into IND enabling work, which again, those costs are pretty contained. So I think I've answered your question, but let me be very specific about it. All of the programs I've just mentioned are laid out there for the budget. and fall within what we're doing all the way well into 2025. Again, based on where we see success, we can always push the hammer down even more on those specific programs. But we are looking for additional revenue beyond Omidria coming in and continuing to drive further development of the pipeline.

And thank you. And one moment for our next question. And our next question comes from Serge Bellinger from Needham & Company. Your line is now open.

Hi, good afternoon. A couple questions for us. The first one on the Artemis phase three trial. that I think is expected to lead out in the third quarter this year. Greg, I think you mentioned that you expect this trial to support a BLA filing. Just curious when you would expect that BLA filing, assuming that we get positive results in the third quarter. What kind of other data would you need to complete that filing?

Yeah, remember what we're – thanks, Serge. What we're going to be looking at as the primary endpoint is proteinuria data. So if those data are positive, and we hope and frankly expect that they will be, but we need to see those data. When we see those, assuming they are positive, we would be moving quickly to put those data into the BLA. The safety data, all of the other components of the BLA are already being pulled together. So I think on timing, You know, conservatively, I would look at a four- to six-month time frame from data to submission. But let me look to Steve and to Kathy to see if there are any other comments.

No, I think we've identified everything. Did we go into VLA and have plans to gather it all? So try to put in quickly. Thanks, Steve.

Steve, you could have that question.

The top-line data, once we have the top-line data, that kind of is what triggers the pre-BLA meeting with FDA. And so, again, I concur with the timing that Greg had proposed.

So there would be no issues with having two separate BLA filings, one for HSCT TMA and another one for IgA nephropathy?

Yeah, you're talking about, I think, resource allocation and workload. We remember that we're looking for Q3 data on IGA. So we would expect that they would blend well. But, you know, Steve, this is partly your group as well, so why don't you address this?

We've identified resources we need so they can run in parallel, and there's overlap between the two as well. So I wouldn't see any one blocking the other. Thank you.

And then a couple on Omidria. Sure. Now that you've gotten the milestone payment and the royalty rate notches down from 50% to 30%, does that have any implication for the DRI royalty agreement?

No, none at all. Let me just answer that first. No. I think our agreement with DRI, frankly, anticipated. success in achieving a milestone and DRI was and is very aware of that 30% but you know we also all of us I think DRI included expect overall sales to continue to increase with with with the legislative successes that that have been achieved for all non-opioid pain management drugs. And also, as we start to focus on, I hope, MedAdvantage as well.

And the last question, your partner Rainer now has a lot more visibility on the overall coverage of Omidria. Do you expect they'll increase their commercial support for the product going forward?

You know, that's a great question for Rainer. I would expect they would. You know, you now have secured long-term separate payment in the ASC. You also have HOPD payment beginning in 2025, January 1 of 2025. You know, that's another 20% of the market. And so I would expect that they would be capitalizing on the broad support of the product and ramping up to do the same. But let me see, Mike, any comments on that?

No, I think Rainer's obviously looking at it. They're very aware that we've gotten the milestones and preserve the long-term payment. And the HOPD side increases the potential there as well. So I think Raynor's really aware of the opportunities they have sitting there.

There's a tremendous opportunity as well on the MedAdvantage side. Yes. And I think I'm sure that Raynor realizes that and is focused as they should be on expanding MedAdvantage payment, not just coverage, but payment. And there are ways, I think, that the congressional action can carry through. And we've looked at that as well, that that can carry through to MedAdvantage and help help educate the MedAdvantage payers, which often are the same payers as commercial, as to why they should be separately paying for Omidria in the same way that Congress has mandated CMS do. Thanks.

All right. And thank you. And I am showing no further questions. I would now like to turn the call back over to Dr. Dimopoulos for closing remarks.

All right. Thank you very much, operator. Once again, thank you, everyone, for joining us today. As I think you can see, and as I think we were just discussing with some of the analysts, Merrill is well-positioned financially to develop the deep pipeline of assets that we control. So with multiple and frequent near and midterm milestone events, the financial strength that Ameros now has, really despite the tumultuous times globally and macroeconomically, will allow us to remain focused throughout 2023 and beyond. on really bringing life-saving products to patients and value to our shareholders. We'll continue to keep you updated on our progress. As always, we appreciate your continued support. Have a good evening.

This concludes today's conference call. Thank you for participating. You may now disconnect.