Omeros Corporation

Good morning, and welcome to today's earnings call for Ameris Corporation. At this time, all participants are in a listen-only mode. After the company's remarks, we'll conduct a question and answer session. Please be advised that today's 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 Ameris.

Good morning, 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 10-Q, 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.

Greg Dimopoulos Thank you, Jennifer, and good morning, everyone. Joining me here are Mike Jacobson, Nadia Dock, and Kathy Melfi, our respective heads of finance, commercial, and regulatory. We'll start today with a brief overview of our financial results for the second quarter, followed by a corporate update. Mike will then provide a more detailed financial summary before we open the call to questions. Now let's look at our financial results. Our gap net loss for the second quarter of 2023 was $37.3 million, or 59 cents per share. compared to a net loss of $33.7 million, or 54 cents per share, in the first quarter of this year. The increase was primarily due to research and development costs. Cash burn for the second quarter of 2023 was $30.1 million, which, as Mike will explain later, includes an artificial accounting-driven component of 3.4%. million. Omidria royalties for the second quarter were $10.7 million, a $1.5 million increase over first quarter royalties. As of June 30, 2023, to support ongoing operations and debt service, we had $341.3 million of cash and investments on hand and an additional $11 $2.2 million in receivables primarily consisting of Omidria royalties. Omeros has $95 million of convertible debt maturing in November. Our available cash and investments enable us to pay off these notes at maturity while continuing to fund operations and advancing our multiple programs well into 2025. As mandated by congressional legislation late last year, OMIDRIA secured separate payment from CMS and ambulatory surgery centers until at least January 2028. The legislation further mandates that beginning no later than January 2025, CMS will also pay separately for OMIDRIA when used in hospital outpatient departments. Last month, CMS issued its proposed 2024 rule for the outpatient prospective payment system and, consistent with the legislation, called for ongoing separate payment of Omidria. Let's turn now to our program update, starting first with our family of agents targeting MASP2, the effector enzyme of the lectin pathway of complement. Narsoplumab is our lead antibody against MASP2, our biologics license application or BLA for narsoplumab in hematopoietic stem cell transplant associated thrombotic microangiopathy or TATMA is pending with FDA. Following a recent meeting with FDA at which the agency reiterated its commitment to work with O'Meara's toward a resubmission, and provided helpful guidance on our proposal to collect and analyze external survival data. We expect to submit to FDA early next month a detailed plan of how we intend to analyze those survival data from already identified external sources. This proposal will be submitted as a Type B meeting request with FDA's response expected within 60 days. After receiving FDA's feedback on our detailed plan, we intend to conduct the analyses and, together with additional new supportive data, plan to resubmit the BLA. Assuming the full duration of relevant FDA review periods, we're targeting an approval decision by FDA in mid-2024. We'll update you when we have resubmitted the BLA. We continue to make narsoplumab available to both pediatric and adult patients worldwide under our expanded access or compassionate use program. To date, we've treated more than 125 compassionate use patients. Interestingly, a good number of patients have responded to narsoplumab despite failing treatment with eculizumab, ravulizumab, and or defibrotide. TATMA patients treated with narsoplumab under compassionate use have been the subject of numerous presentations by investigators at international congresses. Most recently, a group of investigators in Italy submitted an abstract to the annual meeting of the American Society of Hematology detailing the clinical and survival benefits of narsoplumab in 15 adult and pediatric compassionate use patients with severe TATMA. I'll turn now to our Phase III clinical program, evaluating narsoplumab and IgA nephropathy. We remain on track to read out 36-week proteinuria data from our Phase III Artemis IGAN trial later this quarter. Despite the recent market entry of a steroid and a blood pressure medication, significant unmet need persists in IgA nephropathy. The lectin pathway of complement is increasingly recognized as a key immunologic driver of kidney injury in IgA nephropathy. A review article authored by an international group of experts and published in the most recent issue of Kidney International describes kidney biopsies from IgA nephropathy patients. These biopsies consistently showed glomerular deposition of man and binding lectin, or MBL, together with IgA1 in up to 50% of patients with IgA nephropathy. Glomerular deposition of lectin pathway pattern recognition molecules like MBL is known to be associated with more severe glomerular damage as well as more severe proteinuria and hematuria, all of this meaning more severe IgA nephropathy. Studies also show that the lectin pathway contributes to tubulointerstitial fibrosis and IgA nephropathy. The lectin pathway is the only complement pathway linked to tubulointerstitial damage, which is thought to be the common road to a wide range of end-stage kidney diseases, not just IgA nephropathy. The primary endpoint in our Phase III Artemis IGAN trial is reduction in proteinuria at 36 weeks in a population of patients at high risk. for progressive worsening to end-stage renal disease and dialysis, meaning those patients with baseline proteinuria greater than two grams per day. These high proteinuria patients represent about 50 to 60 percent of all IgA patients globally, and to our knowledge, narsoplumab is the only drug being evaluated in this specific population. Underscoring the importance of proteinuria reduction and our focus on high proteinuria patients, a poster presented by international experts at the 60th Congress of the European Renal Association in June described an analysis of data from IGAM patients along with quality of life measures associated with kidney disease. The study showed that higher urine protein excretion was associated with higher symptom burden and worse quality of life overall. Artemis IGAN is a double-blind placebo-controlled trial. Assuming positive data, we will submit both a BLA in the U.S. and a marketing authorization application, or MAA, in Europe. IgA nephropathy is a multibillion-dollar market opportunity worldwide, and there is no approved complement inhibitor for this disease. Our other narsoplimab phase III program in an atypical hemolytic uremic syndrome remains a low priority, as we have noted previously. Turning to narsoplimab in COVID-19 and acute respiratory distress syndrome, or ARDS, our work continues at the O'Meara's labs at the University of Cambridge in patients with acute severe and long COVID-19, we have been collaborating with multiple UK consortia. We expect a number of important publications from this work. In addition, a manuscript detailing the beneficial effects of MASK2 inhibition on both symptoms and survival in chemically induced ARDS was published at the end of May in Frontiers in Immunology. Another manuscript has been submitted for publication describing the pulmonary and central nervous system benefits of MASP2 blockade on symptoms and survival in well-established animals of COVID-19 ARDS. Animal studies evaluating a MASP2 inhibitor and H1N1-driven ARDS are now underway. Discussions are ongoing with BARDA, which has declared its interest in helping to develop agents to treat both COVID and ARDS. Following behind narsoplimab in the clinic is our next-generation long-acting MASK2 inhibitor, OMS1029, designed to be complementary to narsoplimab. Data from our successfully completed phase one single ascending dose clinical trial support both subcutaneous and intravenous dosing just once quarterly. So very well suited for chronic use. Dosing in the multiple ascending dose study of OMS 1029 in healthy subjects began last month, and a phase two program is slated to begin next summer. We've also made good progress in our orally administered MASP2 inhibitor program, together with intravenous narsoplumab and our long-acting subcutaneous inhibitor, OMS1029. We expect our oral MASP2 blocker to complete a franchise of antibody and small molecule MASP2 inhibitors, enabling OMEROS to control first-line therapy for lectin pathway-related diseases. And Omeros' complement franchise just continues to expand and strengthen. Our lead antibody targeting MASK3, the key activator of the alternative pathway of complement, continues to prove its prominence as an alternative pathway inhibitor. We're currently advancing OMS906 across three clinical trials designed to build rapidly on the clinical efficacy data already in hand for OMS906. Two of these trials are evaluating OMS906 for the treatment of paroxysmal nocturnal hemoglobinuria, or PNH. The first is evaluating OMS906 in PNH patients who have not previously been treated with a complement inhibitor. The second trial has a switchover design, enrolling PNH patients receiving the C5 inhibitor raviolizumab adding OMS906 to provide combination therapy with ravulizumab for 24 weeks, and then providing OMS906 monotherapy in patients who demonstrate a hemoglobin response with the combination therapy. A third OMS906 clinical program is underway in patients with complement 3 glomerulopathy, or C3G, a rare kidney disease. We are amending the dose in this trial due to information already learned in the PNH program. In June, data from a pre-specified interim analysis in our ongoing trial of OMS906 in treatment-naive PNH patients were presented at a late-breaker session of the 2023 Congress of the European Hematology Association, or EHA. The presentation identified by EHA's scientific program committee as one of the top five late-breaking submissions and delivered in a special oral session is available on the investor relations page of our website. OMS-906 is the only drug that has been reported to be able to restore gender normal hemoglobin levels in PNH patients. Gender normal meaning hemoglobin levels that based on gender are normal for women and men respectively. This is important because normal hemoglobin levels are meaningfully higher in men than in women. Other drug companies in the PNH space have been using the lower limit of normal for women as the threshold for normal hemoglobin for all patients. Yet this level is substantially below the normal level for men. OMS 906 has restored not just women but also men to truly normal gender-specific hemoglobin levels. The trial evaluating OMS 906 in treatment-naive patients is over-enrolled, and patient treatment and data collection are ongoing. Although enrollment has been completed, we've been informed by investigators that additional patients are requesting participation. We are evaluating a protocol amendment that could increase enrollment but not delay study completion. At the end of July, we performed another analysis of the data in hand. The results are robust and impressive, and we plan to present them at the upcoming Congress of the American Society of Hematology in December. The second PNH trial, the switchover trial, has already been amended to a Phase II study, and the first low-dose cohort has been enrolled. At study entry, these patients had all received ravulizumab but had an inadequate response with hemoglobin levels remaining below 10.5 grams per deciliter. We're targeting 12 patients in this study and already have dosed seven with others in screening. These patients are receiving combination therapy of ravulizumab and OMS-906 and the first will begin receiving OMS 906 monotherapy shortly. We anticipate providing data on this cohort late this year or early next. It's important to remember that all OMS 906 data already made public result from the lowest dose of OMS 906 that we plan to evaluate in this program. and we are now moving 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 given that of the 10 OMS906 treated patients publicly reported, in addition to the hemolytic anemia or red blood cell destruction caused by PNH, two patients also have aplastic anemia and two others have myelodysplastic syndrome, both of which suppress bone marrow production. of mature red blood cells. Despite not having formal diagnoses, other patients in the trial beyond these four also had evidence of bone marrow failure at study entry. Those other patients similarly have shown a strong response to OMS 906 treatment. The OMS906 data to date underscore the potential of OMS906 as a premier therapy for PNH. But beyond that, they also demonstrate the expected utility of OMS906 across a broad range of diseases and disorders involving the alternative pathway. clinical data have demonstrated that OMS906 not only inhibits MAS3, but that MAS3 inhibition provides a marked level of alternative pathway suppression sufficient to inhibit complement-driven hemolysis in PNH, a high bar for efficacy. Given that our competitors in the field have already validated the alternative pathway inhibition is effective, in multiple other diseases and disorders. Our data in PNH provide us with good reason to expect that MASK3 inhibition with OMS906 will also be effective across these other indications. So how do we expect to differentiate OMS906 from its potential competitors? Well, both The target, MASP3 and the drug, OMS906, have multiple expected advantages over other alternative pathway targets and drugs already on the market or in development. First, MASP3 blockers do not inhibit the infection-fighting function of the classical pathway. By contrast, both C3 and C5 inhibitors 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. This should allow OMS906 to maintain inhibition of MASK3, allowing more effective blockade of alternative pathway activation. Importantly, it's expected that these MASP3 characteristics will translate to a substantially lower risk of breakthrough of the underlying disease with inhibition of MASP3 than with C3, C5, and factor B, all of which are acute phase reactants whose concentrations increase in the setting of inflammation such as infection or any other inflammatory condition. When these increased target concentrations occur, they can exceed the inhibitory capability of the respective drug's dosing, leaving patients less protected from their life-threatening disease. The third important advantage is better patient convenience and compliance. We expect that MASP3's favorable target characteristics together with the pharmacokinetics and pharmacodynamics of OMS906 will allow once quarterly subcutaneous and intravenous administration of our drug. These are expected to enhance patient convenience and compliance compared to other alternative pathway inhibitors on the market or in development. Based on our substantial data in hand and the significant expected advantages of our MASK3 target and drug, Our objective is to make OMS 906 the first line standard of care for the treatment of PNH and a large number of other alternative pathway diseases and disorders. Okay, let's now move on to OMS 527, our PDE7 inhibitor program. We've shown and or published that PDE7 inhibition in animal models blocks both craving and relapse across multiple substances of abuse, including opioids, cocaine, nicotine, and alcohol. PDE7 inhibition has also been shown in animals to be effective in treating compulsive disorders, specifically binge eating. Current anti-addiction agents depress the reward system, significantly diminishing enjoyment of other aspects of a patient's life, while having only a limited effect on craving. In contrast, PDE7 inhibitors block craving and relapse, and importantly, do not appear to depress the reward system. So patients treated with our PDE7 inhibitors would be expected to avoid the negative effects on life enjoyment seen with other anti-addiction drugs. 527 treated patients would simply lose their craving for the substance of abuse or for the compulsion. Now with funding support from the National Institute on Drug Abuse, we are moving ahead at NIDA's request and in collaboration with them to develop our lead orally administered PDE7 inhibitor to treat cocaine use disorder. The three-year, $6.7 million grant from NIDA 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. Omeros also controls broad patents surrounding PD7 inhibition and movement disorders. With our collaborators at Emory University, we are evaluating OMS527 as a potential treatment for levodopa-induced dyskinesias or LID. LID manifests as crippling involuntary movements in Parkinson's patients caused primarily by prolonged treatment with levodopa. Levodopa, though, is the most widely prescribed and most effective drug used to treat Parkinson's disease. As a result, LID represents a large unmet patient need and a large market opportunity. More than 10 million patients are living with Parkinson's worldwide, and reportedly 50% or more of those with at least five years of L-DOPA treatment suffer from LID. If treated long enough with levodopa, it's thought that effectively all Parkinson's patients will develop LID. Only one drug, extended release amantadine, is approved for the treatment of LID. In addition to its only marginal efficacy, amantadine is fraught with multiple significant adverse side effects, a more effective and safer treatment is needed. Our collaborators at Emory have developed a primate model of LID which is highly predictive of clinical efficacy. Extended release of Matadine has been evaluated in the Emory model. The Emory investigators have also used this model to assess OMS527 in LID. we're evaluating the data and we'll file patent applications as appropriate. We'll wrap up today's corporate review with our immuno-oncology programs. There are two broad arms of our IO franchise, our cellular platforms and our molecular platforms. In our two cellular platforms, we have developed novel approaches to both adoptive T cell therapy and chimeric antigen receptor or CAR T cell therapy. Both of these proprietary platforms are based on the novel identification of specific T cell signaling pathways which once inhibited significantly and preferentially potentiate and enhance the expansion of tumor-specific memory T cells that distinctively recognize and efficiently kill tumor cells. Our adoptive T cell platform is designed to target both cell surface and intracellular cancer antigens significantly, broadening its range of indications. Further, unlike existing CAR T therapies, our adoptive T cell technology does not require cellular modification, or engineering. This represents a potentially major advance over currently available adoptive T cell therapies, markedly decreasing cost and the time required for treatment preparation while enhancing efficacy by enabling multiple repetitive administrations. The result, we expect, will be a better and sustained antitumor response. Also in our modified CAR-T technology, we've incorporated an immunomodulator of T cell signaling, which protects T cells from the immunosuppressive environment promoted by cancer cells, another important benefit over existing CAR-T therapies. Our CAR-T modification significantly potentiates the efficacy and sustained response of OMEROS's CAR-T therapy. Our team is validating these novel cellular adoptive T cell and CAR T platforms and is establishing a broad patent estate around them. We believe that these proprietary technologies could meaningfully and substantially improve response rates for cancer patients receiving either engineered or native T cell therapies for not just liquid tumors, like existing cellular therapies, but for both liquid and solid tumors. Our other IO platforms, our molecular therapy platforms, are biologics designed to be injected directly into the patient and include therapeutic cancer vaccines, immunomodulators, and modified toxins, or what we term our Oncotox platform. Successful development of therapeutic cancer vaccines, though widely pursued, remains difficult to achieve, with the current approaches inducing only transient and ineffective immune responses. We believe that we've discovered a way to overcome this challenge, having now generated novel molecules that combine tumor antigens with a potent adjuvant. These molecules activate antigen-presenting cells, which in turn lead to amplification of cancer-specific T and B cells. When injected into the body, these novel biologics should result in not only elimination of currently present tumor cells, but importantly, immune memory against future cancer relapse. Our immunomodulator platform is designed to target and activate immune cells to convert cold tumors into hot. A cold tumor is one that is refractory to immune therapy because its microenvironment suppresses the activation and function of therapeutic immune cells. Omeros's immunomodulators are designed to make the immune cells resistant to these suppressive conditions. and restore the functionality of the therapeutic immune cells. As a consequence, lymphocytes, macrophages, antigen-presenting, and other immune cells can infiltrate the tumor, converting it from a cold to a hot tumor, allowing the tumor to be destroyed. Finally, our Oncotox platform uses engineered toxins to kill only cancer cells that are actively proliferating while not affecting organs or any healthy cells. We expect that this novel approach will avoid the deleterious side effects resulting from currently available toxin-carrying therapeutics, especially damage to endothelial cells. Vascular leak as well as serious complications including death have severely hindered the use of currently marketed toxins. We expect our Oncotox platform to have a significantly higher safety margin and broader applications than those currently marketed approaches. Based on the preclinical data generated to date, all three of our molecular platforms, namely cancer vaccines, immunomodulators, and Oncotox, have the potential to be long-acting and to improve survival rates significantly across both solid and hematologic or liquid tumors. I'll now turn the call over to Mike Jacobson, our Chief Accounting Officer, to go through a more detailed discussion of our second quarter financial results. Mike?