Omeros Corporation

Good afternoon and welcome to today's earnings call for Omeros Corporation. At this time, all participants are in listen-only mode. After the company's prepared remarks, we will conduct a question-and-answer session. If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star 9 to raise your hand and star 6 to unmute. I will now hand the conference over to Jennifer Williams, Investor Relations for Omeros. Please go ahead.

Thank you, and good afternoon, everyone. Before we begin, please note that today's discussion will include forward-looking statements. These statements reflect management's current expectations and beliefs as of today and are subject to risks and uncertainties that could cause actual results to differ materially. For a detailed discussion of these risks and uncertainties, please refer to the special note regarding forward-looking statements and the risk factors sections in our annual report on Form 10-K, which was filed with the SEC today. Today's call will include a discussion of certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the corresponding GAAP measures is included with Omeros' earnings press release issued earlier today, which is available on the investor relations page of our website and has been furnished with the Form 8K we filed with the SEC earlier today. With that, I'll turn the call over to Dr. Greg Dimopoulos, Chairman and CEO of Omeros.

Thank you, Jennifer, and good afternoon, everyone. Joining me today are David Borges, our Chief Accounting Officer, Nadia Dock, Chief Commercial Officer, Dr. Andreas Grauer, Chief Medical Officer, Dr. Kathy Melfi, Chief Regulatory Officer, and Dr. Steve Whitaker, Vice President of Clinical. Two major successes made the fourth quarter of 2025 a turning point for O'Meara's. On November 25, we closed our previously announced asset purchase and license transaction with Novo Nordisk for our Phase III ready asset, Zoltenibart. Then on December 23, we received FDA approval for Narsoplimab, now commercialized under the brand name Yartemlia. or the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy, or TATMA. Through the Zaltenibar deal, Novo Nordisk received exclusive global rights to develop and commercialize Zaltenibar, Omeros' proprietary human monoclonal antibody targeting mannion-binding lectin-associated serine protease 3, or MASP3, and a small number of target-related very early stage antibodies and antigen-binding fragments. MASK3 is the key activator and is widely considered the premier target of the alternative pathway of complement. Omeros retains rights to its MASK3 small molecule program, including the ability to develop and commercialize small molecule MASK3 inhibitors across a range of therapeutic areas. including but not limited to ophthalmology, neurology, gastrointestinal disorders, dermatology, musculoskeletal diseases, and oncology. Omeros also retains rights to its grandfathered MASK3 antibodies with temporal and indication restrictions on commercialization. and for use in advancing its small molecule therapeutics. The transaction resulted in an upfront cash payment to Ameros of $240 million with an additional 100 million in achievable near-term milestones. We're also eligible for another $410 million in one-time development and approval milestone payments and up to 1.3 billion in one-time sales and commercial milestones. All told, the deal is valued at up to $2.1 billion in upfront and milestone payments. On top of that, Omeros is set to receive tiered royalties up to the high teens on net sales of commercialized products. As part of the transaction, we entered into a Transition Services Agreement, or TSA, with Novo Nordisk. Under this TSA, we are providing and being reimbursed by Novo Nordisk for our employee costs and other expenses associated with services to facilitate the transfer and to maintain the continuous operation of Zoltenabart studies and programs. Novo Nordisk will also reimburse Omeros for its inventories of Zoltenibart drug substance and drug product. Our partnership with Novo Nordisk is mutually beneficial, underscoring the value of Omeros' science and development expertise while providing us with substantial and ongoing working capital and enabling Novo Nordisk to lever its extensive experience and global reach to unlock the full potential of Zaltanabart. Novo plans to advance Zaltanabart across PNH and multiple other indications. The ultimate beneficiaries will be patients. Omeros' second landmark achievement in the fourth quarter of 25 was FDA's late December approval of Yartemlia, Omeros' lead MASP2 inhibitor, making Yartemlia the first and only approved treatment for TATMA. MASK2 is the effector enzyme of the lectin pathway of complement and TATMA, an often fatal complication of stem cell transplantation, is driven by lectin pathway activation. The FDA approved indication for Yartemlia is broad, covering all TATMA in both adults and children at least two years of age. Unlike C5 and C3 inhibitors sometimes used off-label, Yartemlia, by blocking upstream MASK2, preserves the infection-fighting functions of the classical and alternative pathways of complement. This important mechanistic benefit is reflected in Yartemlia's approved label. in which there are none of the safety-related obligations usually required for complement inhibitors. Specifically, no boxed warning, no risk evaluation and mitigation strategy or REMS program, and no required vaccinations. As previously disclosed, we began preparations for the US commercial launch of Yartemliya well before receiving approval, allowing us to hit the ground running. We've hired and deployed our entire field force of account managers and directors, market development managers, market access leads, and medical science liaisons across all territories. Having supplied our distributors within the first three weeks of January, first sales occurred shortly thereafter. Within 24 hours of placing an order, both adult and pediatric TATMA patients are now receiving Yartemlia, including patients who have recently failed prior off-label C5 or C3 inhibitor regimens. Patients are receiving Yartemlea in both hospital and outpatient settings, and third-party payer reimbursement has been received. The per vial price for Yartemlea is approximately $36,000. Each vial represents a single dose. Across the pivotal clinical trial and the expanded access program, median utilization was 8 to 10 vials per treatment course. We expect the majority of a TA-TMA patient's course to be administered in hospital outpatient departments where the drug typically is purchased and billed by the hospital. With our field force fully deployed, we remain focused on the 80 highest volume transplant centers across the country. Those 80 centers represent approximately 80% of annual stem cell transplants in the US. At this early stage, our primary launch objectives are fourfold. First, to educate the entire transplant care team, including transplant physicians, nurses, pharmacists, and reimbursement teams regarding the recently harmonized TATMA diagnostic criteria, thereby driving awareness, early diagnosis, and treatment of the disorder. On that front, beyond the 80 highest volume transplant centers, our field force has actively met with and detailed centers representing nearly 90% of the allogeneic stem cell transplant procedures performed nationally. Second, to support transplant centers in quickly obtaining their pharmacy and therapeutics or P&T committee approvals, adding Yartemliya to their formularies and streamlining their ordering processes to continue ensuring seamless access to Yartemliya in both the hospital and outpatient settings. Our progress has exceeded our expectations. Yartemliya has obtained P&T committee approval and is now on formulary at 50% of the top 10 U.S. transplant centers, 40% of the top 20 centers, 35% of the top 40 centers, then approximately 30% of the top 80 transplant centers across the country. Third, to work with third-party payers to continue ensuring timely reimbursement consistent with the Yartemlia label and published diagnostic criteria. To date, third-party payers have approved all preauthorization requests for Yartemlia, meaning that insurers have agreed to prospectively cover those patients. Fourth, to finalize the health economics and outcomes research or HEOR analysis using the uniformly strong clinical efficacy data and favorable safety profile of Yartemlia to demonstrate its compelling cost effectiveness to healthcare providers and payers. We plan to publish the HEOR analysis for Yartemlia soon, and the results strongly support Yartemlia's clinical, economic, and real-world value. We look forward to providing additional detail regarding the launch of Yartemlia during our upcoming earnings call for the first quarter of 2026. Beyond the US, our marketing authorization application for Yartemlia in TATMA is pending with the European Medicines Agency. We continue to expect a decision mid-year. For commercialization of Yartemlia outside the US, we are evaluating potential partnerships both broad ex-US arrangements and regional collaborations. We believe that these opportunities are substantial. As we have discussed in previous calls, the underlying biology of TATMA, endothelial injury, and cellular damage spans a broad range of therapeutic areas. For Yartemlio, we are evaluating expansion opportunities and additional indications, including acute respiratory decess syndrome, or ARDS, solid organ transplant-related TMA, and other endothelial injury related disorders. We also intend to advance our once quarterly dosed MASP2 antibody, OMS1029, which is phase two ready, as well as our MASP2 small molecule program designed for once daily oral administration. We expect that both our long-acting antibody OMS-1029 and our small molecule inhibitor programs are well-suited for chronic indications, including those in nephrology and in neurology. Let's now examine our fourth quarter and full year 2025 financials. For the fourth quarter, Omeros reported net income of $86.5 million, or $1.22 per share, compared to the third quarter's net loss of $30.9 million, or a loss of $0.47 per share. Fourth quarter results include a net gain of $237.6 million, resulting from the Zaltanabar transaction with Novo Nordisk, In the fourth quarter, Omeros also incurred a $136 million non-cash charge associated with the mark-to-market adjustment on the embedded derivatives related to our 2029 convertible notes and term loan. Excluding this charge, our fourth quarter non-GAAP adjusted net income was $222.5 million, and our fourth quarter non-GAAP adjusted income per share was $3.14. Further strengthening our balance sheet in the fourth quarter in November, we used a portion of our $240 million upfront payment from Novo Nordisk to repay in full our $67.1 million secured term loan. Last month, we used another portion of the upfront to repay at maturity the remaining $17.1 million principal balance on our 2026 convertible notes. As a result, all indebtedness under our senior secured term loan and 2026 notes has been extinguished, leaving us with only a $70.8 million principal amount outstanding in 2029 convertible notes. As of December 31, 2025, we had $171.8 million in cash and investments, an increase of 135.7 million from the quarter ended September 30, 2025. We anticipate that the Artemlia program will be financially self-sustaining this year, and we expect the company to achieve positive cash flow in 2027. Let's turn now to development programs beyond our complement franchise. Our PD7 inhibitor program evaluating OMS527 for cocaine use disorder is fully funded by a grant from the National Institute on Drug Abuse or NIDA. Animal cocaine interaction studies designed with nitotoxicologists were completed and showed no drug interaction or safety issues, supporting the scheduled inpatient human study in cocaine users. FDA subsequently requested additional preclinical information before initiation of the inpatient study. Together with our collaborators at NIDA, we are scheduled to meet with FDA in the coming quarter to discuss that request. Our targeted complement activating therapy or TCAT platform has also made substantial strides. Our TCAT platform represents a novel class of pathogen-targeting recombinant antibodies designed for broad use against diverse pathogens, including multidrug-resistant organisms or MDROs. MDROs are predominantly bacteria that are resistant to antimicrobial agents and are rapidly becoming a global threat. In 2024, sales of anti-infectives were $46 billion in the U.S. alone and $135 billion globally. Over the next 25 years, more than 39 million people worldwide are estimated to die from MDR bacteria alone. Unlike marketed antimicrobials, TCAT is designed to kill pathogens regardless of resistance profile without promoting resistance. In well-established in vivo animal models considered predictive of efficacy in humans, TCAT recombinant antibodies demonstrated effectiveness in treating life-threatening infections caused by both gram-negative and gram-positive bacteria, including those designated by the World Health Organization as priority pathogens. Patents have now been filed, and a publication on our TCAT platform is expected in the coming weeks. Finally, our oncology platform continues to progress rapidly. IND-enabling studies are underway for Oncotox AML, our biologic agent designed to treat acute myeloid leukemia, or AML. AML is an aggressive and often fatal bone marrow and blood cancer. Oncotox AML has shown broad application across AML genotypes, including historically difficult-to-treat mutations like TP53, NPM1, KMT2A, and FLT3. These genetic mutations are collectively found in approximately 90% of AML patients. Across human tumor-bearing animal and in vitro human AML cell line studies, Oncotox AML has consistently shown superior efficacy to current AML standard of care treatments. In a pilot study assessing the efficacy and safety of Oncotox AML in non-human primates, a single course of Oncotox AML resulted in selective, reversible, and dose-related killing of myeloid progenitor cells, the cells that can mutate and lead to AML. by up to 99%. Oncotox AML was tolerated with no safety signal of concern. Together with our clinical steering committee comprised of AML experts from leading academic cancer centers, we are designing our first in human clinical trial targeted for late next year. That concludes our financial, corporate, and development update, and I'll now turn the call over to David Borges, our Chief Accounting Officer, for a detailed discussion of our financial results. David?