Omeros Corporation

Good afternoon and welcome to today's earnings call for Omeros Corporation. At this time, all participants are in a listen-only mode. After the company's remarks, we will conduct a question-and-answer session. 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. 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. I'll now turn the call 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 in our quarterly report on Form 10-Q filed today with the SEC, as well as our most recent annual report on Form 10-K. Today's call also will include certain non-GAAP financial measures. A reconciliation of these measures to the corresponding GAAP measures is included in Omeros' earnings release issued earlier today, available on the investor relations page of our website and furnished with the form 8K we filed today with the SEC. With that, I'll turn the call over to Dr. Gregory Demopoulos, chairman and CEO of Omeros.

Thank you, Jennifer, and good afternoon, everyone. Joining me today are David Borges, our Chief Accounting Officer, Dr. Cathy Melfi, our Chief Regulatory Officer, Dr. Steve Whitaker, Vice President of Clinical, and Bill Woodman, our Chief Commercial Officer. Promoted from within the company, Bill was recently appointed as our chief commercial officer, and let me tell you a bit more about him. Bill joined Omeros six years ago as our vice president of sales and market development, bringing more than 25 years of industry experience, including sales and marketing leadership roles at Amgen, Spectrum Pharmaceuticals, and Jazz Pharmaceuticals, where he led the global launch of Defibrotide. At Omeros, Bill largely built our commercial team and was instrumental in designing and executing the Artemlio launch. I have long believed that Bill's background, capabilities, and achievements are ideally suited to Omeros' current and future objectives. Under his leadership, our commercial team is driving Yard Temalia toward becoming the standard of care for TATMA and preparing for its expansion into a broad range of MASK II-driven indications. Beyond Compliment, Bill's track record of driving growth across oncology, rare disease, and specialty biopharma products will serve O'Meara's well. Before I turn to the financial details, let me highlight three points. Yartemli had generated $32.2 million in gross sales in its first full quarter on the market. Second, operations generated $4.1 million of positive cash flow during the quarter. And third, we meaningfully strengthened our capital structure through our share and note repurchases. So I'll now begin with an overview of our second quarter operations and financial results followed by program updates. David will then review the financials in more detail after which we'll open the call for questions. As you know, the FDA approved Yartemlia, our lead MASP2 inhibitor, in December 2025 for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy, or TATMA. Yartemlia is the first and only approved treatment for this often fatal complication of stem cell transplantation. and Yartemlia is also the first and only approved inhibitor of the lectin pathway of complement. We launched Yartemlia in mid January with initial distributor shipments beginning mid month and first sales following shortly thereafter. The second quarter was our first full quarter of the Artemlia sales, and we're pleased to share the results today. As I mentioned in the second quarter, Yartemlia generated $32.2 million in gross sales and $28.5 million in net sales, reflecting strong physician adoption and market penetration and a gross to net adjustment of 11.5%. Compared with the first quarter, gross sales increased 190% and net sales increased 188%. We'll discuss the launch in more detail in just a bit. Net income for the second quarter was $13.2 million, or 18 cents per share. As we have previously discussed, our reported results include non-cash mark-to-market adjustments related to the derivative embedded in our 2029 convertible notes, excluding non-cash remeasurements of embedded derivatives and other financial instruments. Second quarter non-GAAP adjusted net income was $1.8 million or two cents net income per share. David will walk through the quarter over quarter comparisons and accounting details shortly. We ended the quarter with $132 million in cash and investments. Importantly, company-wide, operations provided net positive cash flow in the second quarter of $4.1 million. Our share repurchases and subsequent note repurchases further strengthened our capital structure. During the six months ended June 30, We repurchased and retired approximately 843,000 shares of Omeros Common Stock, nearly 60% of those shares in the second quarter, at a volume-weighted average price of $11.70 per share. Then in July, through two privately negotiated transactions, we repurchased $30.5 million aggregate principal amount of our 9.5% convertible notes due in 2029, reducing the outstanding principal by 43% to $40.3 million. The repurchases also reduced the number of shares issuable upon conversion from approximately 11.4 million to 6.5 million shares. We achieved this reduction at a weighted average cost of $12.21 per underlying conversion share and concurrently eliminated $8.6 million in future interest payments. Together, our open market share repurchases and our negotiated note repurchases have reduced our potential fully diluted share count by 5.8 million shares year to date. Turning back to Yartemliya, our launch remains focused on four priorities. One, Educating transplant teams to recognize and treat TATMA earlier. Two, securing institutional access through pharmacy and therapeutics or P&T committee approvals and streamlined ordering. three, ensuring timely reimbursement, and four, demonstrating Yartemliya's economic value through health economics and outcomes research, or HEOR. Together, these priorities are intended to change how transplant centers approach TATMA. Historically, Particularly at adult transplant centers, TATMA often has been treated as a diagnosis of exclusion and considered only after other potential causes are ruled out. We are working to shift that paradigm toward proactive screening, enabling clinicians to identify and treat more patients earlier and ultimately improve transplant outcomes. Execution remains strong. Our field sales organization is actively engaging all 175 U.S. transplant centers. As of June 30, 73 unique accounts had ordered Yartemlia, a 143% increase since March 31. As discussed on our first quarter call, pediatric patients initially represented an outsized share of utilization. With rapid adoption at adult transplant centers, however, the mix has shifted significantly. In the second quarter, adult utilization grew at more than twice the rate of pediatric utilization, and adult patients represented approximately 75% of Yartemli assails. This mix is closely approaching the historical 85%-15% split between adult and pediatric transplant procedures in the U.S. Formulary adoption also continues to progress rapidly. By quarter end, we understand that Yartemliya had received P&T committee approval at approximately 55 to 60% across the top 10, 20, 40, and 80 U.S. transplant center cohorts that we track. Ordering frequency also increased meaningfully, indicating deeper utilization within centers. We also achieved key reimbursement milestones during the quarter. The Centers for Medicare and Medicaid Services, or CMS, assigned Yartemliyev a Permanent Product-Specific Healthcare Common Procedure Coding System, or HCPCS, JCODE, Effective July 1. The J-code establishes a clear and consistent outpatient reimbursement pathway, reduces administrative burden, and supports more predictable payment for providers. CMS also recommended a new technology add-on payment or NTAP for Yartemliya under the fiscal year 2027 proposed rule for the inpatient prospective payment system or IPPS and has now granted the NTAP in the final IPPS rule. The NTAP provides up to $287,000 in additional Medicare reimbursement for inpatient treatment with Yartemlia. This is particularly important because Medicare beneficiaries represent approximately 30% of US allogeneic transplant recipients. The NTAP for Yartemliya is expected to become effective October 1. Commercial payer experience also remains positive. Prior authorization requests are being approved consistently and centers receiving appropriate payment reflect growing acceptance of Yartemliya among commercial insurers. We are preparing our HEOR analyses for presentation at upcoming scientific meetings and for peer-reviewed publication. We expect these analyses to further demonstrate Yartemlio's clinical and economic value and support continued adoption. Overall, early commercial indicators including strong transplant center engagement continued formulary and ordering momentum and payer alignment with the approved label reinforce our expectation that Yartemlia can become the standard of care for TATMA. Looking ahead, we continue to pursue expansion opportunities for Yartemlia and our broader MASP2 platform. In June, following an oral explanation before the European Medicines Agency's Committee for Medicinal Products for Human Use, or CHMP, the committee adopted a negative opinion on our marketing authorization application for Yartemlia in TATMA. We believe the clinical evidence supports approval and have requested reexamination. The application is supported by our pivotal narsoplimab trial data in TATMA, survival analyses comparing narsoplimab treated patients with an external registry of patients who did not receive narsoplimab and data from more than 220 adult and pediatric patients treated through our expanded access program. This same body of evidence supported Yartemliya's FDA approval. As part of the reexamination, an ad hoc expert group, or AHEG, comprising independent external scientific and clinical experts in hematology, stem cell transplantation, and TATMA, will review the evidence and address questions central to CHMP's assessment. The AHEG will hear from OMEROS and from transplant experts with direct experience using narsoplumab and new rapporteurs will review the application. We remain focused on obtaining approval in Europe. Meanwhile, we continue to provide Yartemlia to European patients with TATMA through our expanded access program, prioritizing children. We also continue to assess opportunities to expand the Yartemlia label. We are prioritizing indications with a strong biologic rationale for MASP2 inhibition, particularly those involving endothelial injury, lectin pathway activation, and thromboinflammation. These encompass an extensive list of indications, including chemotherapy-induced TMA, acute respiratory distress syndrome or ARDS and other transplant related endothelial injury syndromes. We plan to evaluate new indications through preclinical research, investigator initiated studies and clinical trials each as appropriate. By year end, we expect enrollment to begin in two investigator-sponsored and OMERO-supported studies, one evaluating Yartemlia in hyperinflammatory ARDS and the other assessing prophylactic Yartemlia in pediatric patients with predictably severe TATMA. Our MASP2 platform extends beyond Yartemlia. We are advancing our phase two ready long-acting MASP2 antibody OMS1029 and an oral small molecule MASP2 inhibitor program. Both are designed for chronic indications requiring long-term administration, including membranous nephropathy and neurodegenerative diseases such as Parkinson's and Alzheimer's. In phase one clinical trials, OMS 1029 demonstrated the clear ability to inhibit MASP2 over an extended duration with once quarterly subcutaneous or intravenous dosing. And our small molecule MASP2 inhibitor is targeting once daily oral dosing. We are finalizing selection of the initial Phase II indication for OMS 1029. Clinical drug product and matching placebo have been manufactured and are available. For our MASK II small molecule program, we have one ongoing study to complete, after which we expect to select an orally delivered development candidate for that program. Our collaboration with Novo Nordisk also continues to progress smoothly. The Novo transaction provides up to $2.1 billion in upfront and milestone payments, plus royalties ranging from high single digits to the high teens. At closing in the fourth quarter of 2025, we received $240 million in upfront cash, which funded the Artemlia launch and other operations. We also are eligible to receive up to an additional $100 million in near-term milestone payments. Our interactions with Novo remain collaborative and productive, and we continue to provide transition services at Novo's cost. Turning now to development programs beyond our complement inhibitor franchise, our PD7 inhibitor program evaluating OMS527 for cocaine use disorder remains fully funded by a grant from the National Institute on Drug Abuse or NIDA. Earlier this year, we met with FDA regarding the agency's request for additional non-clinical information before initiating the inpatient study. That non-clinical work has initiated and we expect to start enrollment in the inpatient clinical trial by year end. Based on its mechanism of action and our extensive preclinical data, we believe that OMS 527 could be effective across a broad range of addiction and compulsive disorders. Our targeted complement activating therapy or TCAT platform is a novel class of recombinant antibodies designed to target and directly kill pathogens, including bacteria, fungi, viruses, and parasites. Our initial focus is on infections caused by multi-drug resistant organisms, among medicine's most critical unmet needs. Unlike antimicrobial agents on the market, TCAT is designed to kill pathogens regardless of resistance profile and without promoting or enhancing resistance. The foundational manuscript describing our TCAD technology was published in Science Translational Medicine in June of this year. The manuscript details the technology and demonstrates that TCAT monoclonal antibodies safely and effectively treated infections in translationally relevant murine models of sepsis and pneumonia caused by multiple different drug-resistant bacterial species prioritized by the World Health Organization as posing the greatest threat to human health. The data underscored TCAT's potential as a next generation platform with broad applicability across microbial species, including multi-drug resistant pathogens. And we look forward to advancing TCAT toward the clinic. Finally, Oncotox AML or OMS805 is the lead program in our oncology platform. It's an engineered biologic designed to treat acute myeloid leukemia or AML, the most common and one of the deadliest acute leukemias in adults. Across tumor-bearing animal models and in vitro human AML cell line studies, Oncotox AML has consistently demonstrated efficacy superior to current standards of care, even at very low doses. Importantly, this efficacy was independent of AML related mutations, including TP53 and FLT3, which historically have been very difficult to treat. In a non-human primate study, a single course of Oncotox AML produced the desired pharmacologic response, a marked selective reversible and dose-related reduction in myeloid progenitor cells by up to 99%. Treatment was well tolerated with no safety signal of concern. We have entered into agreement with a leading contract biologics manufacturer for process development and clinical supply of OMS805 drug substance. IND enabling studies are underway. Given the novelty of the Oncotox program, its potential applicability across hematologic malignancies, and the breadth of our unpublished data and pending patent claims, we plan to limit further public disclosure until OMS 805 enters human studies and begins generating clinical data. Working with our advisory board of leading AML experts, we are preparing for a first in human trial targeted to begin in late 2027. So that concludes our corporate and program update. I'll now turn the call over to David for a more detailed review of our financial results. David.