Omeros Corporation

Good afternoon. Welcome to today's earnings call for O'Mears 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 has been 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 to Jennifer Williams, investor relations for O'Mears.

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 quarterly report on Form 10Q, which was filed today with the SEC. and the risk factor section of the company's most recent 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, Chairman and CEO of Omeros.

Thank you, Jennifer, and good afternoon, everyone. Joining me on today's call are Mike Jacobson, Nadia Dock, Kathy Melfi, and Steve Whitaker, our respective heads of finance, commercial, regulatory, and clinical. We'll start today with a brief overview of our first quarter 2023 financial results followed by a corporate update. Mike will then provide a more detailed financial summary before we open up the call to questions. So now let's look at our financial results for the first quarter. Our net loss for the first quarter of 2023 was thirty three point seven million dollars or fifty four cents per share compared to net income of one hundred and twenty eight point seven million dollars or two dollars and five cents per share in the fourth quarter of last year. This difference is the result of the major a related two hundred million dollar milestone that was achieved in the fourth quarter. Payment of the milestone together with accrued interest was later received from Rainer Surgical in February of this year. Cash burn for the first quarter of twenty twenty three was twenty three point six million dollars. Down from twenty six million in the prior quarter. Net sales of Omidria at $30.7 million were in line with expectations for Q1, which historically is the weakest quarter of the year. Omidria royalties for the quarter were $9.2 million, reflecting the new 30% royalty rate on US net sales of Omidria, following our achievement of the milestone and receipt of the milestone payment. The 30% royalty translates to more than 40% of the operating profit from Omidria total sales. As of March 31, 2023, we had $371.4 million of cash and investments available to support ongoing operations. This amount provides Omeros the flexibility simply to pay off the ninety five million dollars of convertible debt that matures this November while still funding operations and advancing our multiple programs well in to twenty twenty five. We expect our royalties from a media to continue to grow as mandated by recent congressional legislation. Omidria now has separate payment from CMS and ambulatory surgery centers until at least January 2028. No later than January 2025, CMS will also pay separately for Omidria when used in hospital outpatient departments or HOPDs. Further, we understand from Rainer that they expect to expand the U.S. sales force as well as to begin selling Omidria internationally later this year. One additional piece of financial information for our shareholders, the rebalancing process for the Russell U.S. indexes is underway. Friday, April 28th was rank day. At the close on that day, index membership eligibility was determined. based on market capitalization. Multiple banking models show that Omero once again will be part of the Russell 3000 index, which based on those models is expected to drive index related buying in the open market of seven and a half million to eight million shares of Omero stock by the 26th of next month, the date when the market opens with the newly reconstituted index. Let's turn now to our program update, starting first with our family of agents targeting MASP2, the effector enzyme of the lectin pathway. Narsoplumab is our lead antibody against MASP2, the Narsoplumab Biologics License Application, or BLA. for hematopoietic stem cell transplant associated thrombotic microangiopathy, or TATMA, is pending with FDA. Consistent with direction from FDA's Office of New Drugs in response to our formal dispute resolution request, and working closely with our regulatory and legal advisors led by Hyman Phelps-McNamara, We have submitted to the Division of Nonmalignant Hematology a proposed plan to assess already existing clinical trial data together with external data on both response rate and survival. We are meeting with the division this month to discuss the details of our proposed analyses and to confirm the information required by FDA. to support resubmission of the BLA for narsoplumab's approval. Once the required package is confirmed, we expect to be able to use substantially the same package for our European regulatory submission as well. The objective, of course, is to bring narsoplumab to market as quickly as possible, helping patients with life-threatening TATMA for whom there is no approved treatment. Alexion and AstraZeneca are also pursuing this indication with their C5 inhibitor, Ravulizumab. As evidence of the difficulty in conducting a clinical trial in TATMA, information available on clinicaltrials.gov indicates that Alexion just delayed its estimated study completion date by 16 months to June 2025 while at the same time reducing the targeted number of enrolled patients by nearly 40 percent. Clinician support for use of narsoplamab to treat TATMA continues to grow and a number of additional manuscripts have recently been published. One in the thrombosis journal describes a six-year-old girl who received a stem cell transplant for severe aplastic anemia and then developed TMA. Treatment with defibrotide was tried but failed. She then received narsoplimab and her TMA resolved. Here also we have a convincing example of challenge-re-challenge in that a parvovirus infection triggered a second episode of TMA in this child. And this recurrence of TMA was again successfully treated with narsoplumab. Another manuscript is in press at Clinical and Experimental Immunology, this one examining patients from our TATMA pivotal trial. The author is a group of clinical and research investigators from Weill Cornell Medicine. evaluated clinical plasma samples from our trial patients treated with narsoplumab. The authors showed that increased levels of caspase-8, a biomarker of endothelial injury, are highly correlated with TATMA. When looking at the patients in our pivotal trial, those patients that responded to narsoplumab showed a marked reduction in those caspase-8 levels, while non-responders did not. These data might well help explain why some of our pivotal trial patients did not respond to narsoplimab and further strengthen our understanding of narsoplimab's mechanism of action in TATMA. Growing physician support for use of narsoplimab in TATMA is also reflected in the frequent presentations at recent and upcoming scientific congresses. At the annual meeting of the European Society for Blood and Marrow Transplantation, or EBMT, there were multiple presentations on the use of narsoplumab to treat TATMA. In reports of both pediatric and adult patients, all of whom had failed treatment with eculizumab, or both eculizumab and defibrotide, narsoplumab was given under compassionate use and TMAs resolved. Just this week at the annual meeting of the American Society of Pediatric Hematology Oncology, which begins tomorrow, another transplant expert will detail the course of a three-year-old little girl with recurrent high-risk cancer. After her second stem cell transplant, she developed refractory TATMA. Here again, physicians attempted to treat her with first eculizumab and then defibrotide. Both failed, and narsoplimab, requested under compassionate use, successfully treated her TATMA. Let's now turn to our narsoplimab phase three clinical program in IgA nephropathy. We remain on track to read out nine month proteinuria data next quarter. We expect that these data will form the basis for both a BLA in the US and a marketing authorization application or MAA in Europe. Our team is committed to making narsoplumab the first approved complement inhibitor in what's expected to be a multibillar IgA nephropathy market. As in TATMA, there's strong physician support for use of narsoplumab in IgA nephropathy. The disease continues to represent a significant unmet need despite recent market entries of a steroid and a blood pressure medication. A recent narsoplimab presentation at the annual meeting of the Korean Society of Nephrology was the first reported use of complement inhibition in a patient with recurrent IgA nephropathy. Narsoplimab stabilized both proteinuria and EGFR, and these beneficial effects were further confirmed by kidney biopsy. Also another manuscript authored by a group of international experts and recently accepted for publication in Kidney International details the role of the lectin pathway across the important pathophysiologic components of IgA nephropathy, namely glomerular injury thrombotic microangiopathy and tubulointerstitial fibrosis. As previously discussed, our other narsoplumab phase 3 program in atypical hemolytic uremic syndrome remains a low priority for us. Turning to narsoplumab and COVID-19 as well as acute respiratory distress syndrome, or ARDS, our work continues at Omeros' labs in the University of Cambridge, where we are collaborating with multiple UK consortia in the study of acute, severe, and long COVID-19. A manuscript detailing the central role of lectin pathway inhibition in well-established in vitro and animal models of both COVID-19 and ARDS has been submitted to and reviewed for peer-reviewed publication, and we expect that it will be accepted. Discussions are ongoing with relevant branches of the US government, which have been public their focus and their intention to fund development of agents to treat both COVID and ARDS. Now let's look at OMS1029, our long-acting next-generation antibody targeting MASP2 and the lectin pathway. Complementary to narsoplimab, OMS1029 is designed for chronic use. Earlier this year, we successfully completed the phase one single ascending dose clinical trial and data support our plans for once quarterly subcutaneous or intravenous dosing of OMS 1029. There have been no safety concerns and dosing in the OMS 1029 multiple ascending dose study in healthy subjects is scheduled to start this summer. We're also nearly ready to select our lead drug development candidate from our orally active MASP2 inhibitor program. Our strategy here of developing an orally available MASP2 inhibitor together with narsoplumab and our long-acting follow-on antibody OMS1029 could well enable Omeros to control first-line therapy for most, if not all, lectin pathway-related diseases. Okay, so we've completed the update on our MASP2 and lectin pathway inhibitors. Let's turn now to the other major part of our complement franchise, MASP3 and OMS906. OMS906 is our lead antibody targeting MASP3, the key activator of the alternative pathway of complement. Based on our data and those generated around our potential competitors, we believe that MASP3 and OMS906 are the premier target and therapeutic for indications related to the alternative pathway. We recently disclosed publicly data from our pre-specified interim analysis of our clinical trial of OMS906 in treatment naive patients with paroxysmal nocturnal hemoglobinuria, or PNH, a life-threatening form of hemolytic anemia. We've continued enrolling and following patients in this trial. Before sharing with you our most recent data, let's first review the expected advantages of MASP3 and OMS906 over other alternative pathway targets and drugs either on the market or in development. First, MASP3 is the most upstream target in the alternative pathway. Its inhibition leaves the infection-fighting function of the classical pathway intact. This is a meaningful advantage over C3 and C5 inhibitors, which block the classical pathway's adaptive immune response and increase infection risk. Second, MASK3 is known not to be an acute phase reactant and has very low native circulating levels relative to other alternative pathway targets. Together, these translate to a substantially lower risk of breakthrough occurrence of the underlying disease with OMS906 than with C3, C5, or factor B inhibitors, all of which are acute phase reactants, meaning that in the setting of inflammation, such as even an infection or any other inflammatory condition, circulating concentrations of the target can increase beyond the inhibitory capability of the drug's dosing, leaving a patient less protected from their life-threatening disease. A third potential advantage is better patient convenience and compliance. Dosing for OMS-906 should be once quarterly, either subcutaneously or intravenously. This is expected to be more convenient for patients improving their compliance with treatment compared to other alternative pathway inhibitors that are marketed or in development. Now, here are some important updates since our recent press release on our trial data of OMS 906 and treatment-naive PNH patients. Enrollment, as I said, is ongoing. And for these data, N, or the number of patients, ranges from three to nine, depending on where the data points fall on the timeline, earlier time points capturing more patients. we'll look first at hemoglobin. So as a reference point, mean baseline hemoglobin in the study is 6.8 grams per deciliter. The laboratory normal hemoglobin range for women is 12 to 15.6 grams per deciliter and for men 13.5 to 17.2. So at day 29 in our study, the mean absolute increase in hemoglobin is 3.4 grams per deciliter, 6.3 at day 85, and at day 113, mean absolute increase in hemoglobin is 9.7 grams per deciliter. So what hemoglobin levels have been achieved? Well, By day 29, following only the first dose, 67% of patients increased their hemoglobin level by 2 grams per deciliter or more. And after only two doses, all patients achieved this threshold of a 2-gram increase with 80% of them achieving at least twice that, meaning an increase of 4 grams per deciliter or more. By day 85, two-thirds of the patients had a hemoglobin level greater than 12 grams per deciliter. And by day 113, all patients had a hemoglobin level of 15.7 grams per deciliter or higher. So by definition, they all had been restored to well within normal hemoglobin levels. Also at all time points, the mean reduction in absolute reticulocyte counts from baseline was at least 70,000 per microliter, ranging from 70,000 to 136,000 per microliter. Hemoglobin improvement remains statistically significant at all time points throughout the study. And no patient has had a clinical breakthrough None have had a thrombotic event and none have required a transfusion while receiving OMS 906 treatment. Now let's examine the LDH data. Mean baseline LDH is 1931 units per liter. Now that's nearly eight-fold higher than the upper limit of normal. 15 days after the first dose of OMS 906, the mean reduction in LDH from baseline is 83%. And at day 29, the mean reduction in LDH is 80%. At the last available time point following four doses, day 113, LDH reduction is 87%, with all patients having either normal LDH or LDH levels less than one and a half times the upper limit of normal. Just like the hemoglobin data, LDH reduction remains statistically significant at all time points throughout the study. It's important to point out here that all of these data result from the lowest dose of OMS906 that we plan to evaluate in this study. and we're now preparing to move to higher doses and exposures to allow for a longer dosing interval. Yet, even at this lowest dose, our hemoglobin and LDH results compare very favorably to the detailed and publicly available data on other alternative pathway inhibitors on the market or in development. This comparison is even more impressive in that of the nine PNH patients enrolled to date in our study, in addition to the red cell destruction caused by PNH, two patients also have aplastic anemia, which suppresses the production of red blood cells. And two others have myelodysplastic syndrome, a type of cancer that blocks the production of mature red blood cells and often increases LDH levels. So OMS906, despite these challenges, appears to be performing extremely well in all of these PNH patients. The second OMS906 clinical trial in PNH is ongoing. This trial has a switchover design, enrolling PNH patients receiving ravulizumab, then adding OMS906 to provide combination therapy with ravulizumab for 24 weeks, and then providing OMS906 monotherapy in patients who demonstrate a hemoglobin response with combination therapy. Treatment with OMS906 has already begun. We also have a third clinical trial evaluating OMS906, this one treating patients with complement 3 glomerulopathy, or C3G, a rare kidney disease. Here we plan to provide data updates, really on all three of our PNH trials in the second half of this year. And we plan to present data as well at upcoming medical congresses. The data to date though, really clearly demonstrate that OMS906 is a highly effective inhibitor of MAS3 and of the alternative pathway. Given those data, and the requirement of nearly complete inhibition of the alternative pathway to be effective in PNH, which OMS 906 has met. We're confident that our drug should perform well across the other alternative pathway diseases and disorders. Those other indications already have been and continue to be identified and validated by our competitors who are already in the field. This should significantly accelerate our development programs given that much of the guesswork has already been removed. Our next steps are to evaluate higher doses of OMS 906 so that we can quickly identify the optimal dose for phase three trials. The aim is to initiate and complete phase three trials across multiple indications as soon as possible. And the team is focused on and committed to achieving this goal. Turning now to OMS 527, our PD7 inhibitor program, we've shown and published that PD7 inhibition blocks both craving and relapse across substances of abuse with positive data and animal models of opioid, cocaine, nicotine, and alcohol addiction. PD7 inhibition in animals is also effective in compulsion, specifically We've shown that in binge eating. In addition to blocking both craving and relapse, PD-7 inhibitors do not appear to depress the reward system, a significant advantage over current anti-addiction agents, all of which do depress the reward system. So while having only a limited effect on craving, these other agents can cause a reduction in the enjoyment of other aspects of a patient's life, making compliance with treatment quite challenging. In all of the animal and human Phase I clinical studies run with OMS 527, we've seen no evidence of reward system depression. This would be a major differentiator between OMS 527 and frankly PDE7 inhibitors in general, over other anti-addiction agents on the market or in development. Last month we announced the award of a three-year $6.7 million grant from the National Institute on Drug Abuse, or NIDA, to support the continued development of our lead orally administered PDE7 inhibitor. NIDA, a part of the National Institutes of Health, had reached out to us last year to explore ways in which NIDA and OMEROS could collaborate on advancing the development of OMS 527 for the treatment of substance use disorders. NIDA wanted to begin with cocaine use disorder, so our team prepared and submitted a grant application, and based on review by leaders in the addiction field from both industry and academia, the grant was awarded. The $6.7 million in funding is intended to support both preclinical and clinical work, including a randomized double-blind inpatient study comparing the safety and effectiveness of our PDE7 inhibitor to placebo in the treatment of adults with cocaine use disorder who receive concurrent intravenous cocaine. There are no FDA-approved drug treatments for cocaine use disorder. An estimated 1.4 million people in the U.S. have cocaine use disorder and more than 24,000 Americans died in 2021 from cocaine overdoses. Research by our team and others shows that the mechanism of cocaine use disorder, specifically tied to the dopamine system in the brain, is the same or highly similar to that of other addictions and compulsions, including opioids, nicotine, alcohol, and binge eating. One in six Americans 12 years of age or older experienced a substance use disorder in 2021. And the societal costs of epidemic substance abuse runs well into the trillions. We look forward to working with NIDA and expect that PDE7 inhibition could be a major part of the solution to this massive societal challenge of addiction. Lomeros also controls broad intellectual property surrounding PD7 inhibition and movement disorders with our collaborators at Emory University. We're evaluating OMS527 as a potential treatment for L-DOPA induced dyskinesias or LID. These dyskinesias are crippling. Involuntary movements in Parkinson's patients caused in good part by prolonged treatment with L-DOPA. L-DOPA is the most prescribed and most effective drug used to treat Parkinson's disease itself, and as a result, LID represents a large unmet patient need and a substantial market opportunity. More than 10 million patients are living with Parkinson's worldwide, and reportedly 50% of more of those treated with L-DOPA suffer from LID. Only one drug, extended release amantadine, is approved for the treatment of LID, but its use is limited by suboptimal efficacy as well as by numerous and significant adverse side effects. The investigators at Emory have developed a primate model of LID that is highly predictive of clinical efficacy. and have evaluated OMS 527. Extended release amantadine has also been evaluated extensively in the Emory model. We've recently received data on OMS 527 from Emory and will disclose them publicly after filing all appropriate patent applications. We'll end today's corporate update with our immuno-oncology programs. There are two broad subsets or platforms of our IO franchise, namely cellular and biologic therapies. And we're building expansive patent estates around each. Our cellular platform is comprised of novel approaches to adoptive T cell and CAR T therapies. Both of these follow from our work on GPR174 and are based on our identification of specific T-cell signaling pathways, which, once inhibited, expand the body's population of tumor-specific memory T-cells that recognize and effectively kill tumor cells. Our adoptive T-cell therapies, unlike currently available CAR-T approaches, do not require cellular modification or engineering and are not limited to cell surface expressing antigens. This represents a potentially revolutionary advance beyond currently available adoptive T cell therapies. Increasing rapidity of treatment preparation, decreasing cost, and enhancing efficacy by enabling multiply repetitive administration. If our data to date hold in the clinic, Both our adoptive T-cell and CAR-T programs could substantially improve response rates for cancer patients across both liquid and solid tumors. Our biologic platform is equally or even more broad, consisting of classes of novel molecules combining tumor antigen binders with potent adjuvants. Based on our work, we expect some to function in the body as therapeutic vaccines against a wide range of tumors. Here again, our data suggests that we might well have overcome the challenges limiting the efficacy of currently available tumor vaccines, specifically that the beneficial effects of the available vaccines are only transient. Based on the data generated to date, the products from our biologic platform have the potential to be long-acting and to improve greatly the survival rates across solid and hematologic tumors. I'll now turn the call over to Mike Jacobson, our Chief Accounting Officer, to go through a more detailed discussion of our first quarter financial results. Mike?