Omeros Corporation (NASDAQ:OMER) Q2 2023 Earnings Call Transcript

Omeros Corporation (NASDAQ:OMER) Q2 2023 Earnings Call Transcript August 9, 2023

Omeros Corporation misses on earnings expectations. Reported EPS is $-0.59 EPS, expectations were $0.6.

Operator: Good morning, and welcome to today’s earnings call for Omeros Corporation. [Operator Instructions]. 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 1 week from today. I’ll turn the call over to Jennifer Williams, Investor Relations for Omeros.

Jennifer Williams: 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 Factors 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 Demopulos, Chairman and CEO of Omeros.

Gregory Demopulos: Thank you, Jennifer, and good morning, everyone. Joining me here are Mike Jacobsen, Nadia Dac and Cathy 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 GAAP net loss for the second quarter of 2023 was $37.3 million or $0.59 per share compared to a net loss of $33.7 million or $0.54 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 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 MASP-2, the effector enzyme of the lectin pathway of complement. Narsoplimab is our lead antibody against MASP-2, our biologics license application or BLA for narsoplimab in hematopoietic stem cell transplant-associated thrombotic microangiopathy, or TA-TMA is pending with FDA. Following a recent meeting with FDA at which the agency reiterated its commitment to work with Omeros for the submission 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 analysis 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 narsoplimab 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 narsoplimab despite failing treatment with eculizumab, ravulizumab and/or defibrotide. TA-TMA patients treated with narsoplimab 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 narsoplimab in 15 adult and pediatric compassionate use patients with severe TA-TMA. I’ll turn now to our Phase III clinical program evaluating narsoplimab 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 and 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 mannan-binding lectin or MBL, together with IgA1 and 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 and 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 2 grams per day. These high proteinuria patients represent about 50% to 60% of all IgA patients globally. And to our knowledge, narsoplimab 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 IgAN 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 in acute respiratory distress syndrome or ARDS. Our work continues at the Omeros labs at the University of Cambridge. In patients with acute severe and long COVID-19, we have been collaborating with multiple U.K. consortium. We expect a number of important publications from this work. In addition, a manuscript detailing the beneficial effects of MASP-2 inhibition on both symptoms and survival, in chemically induced ARDS was published at the end of May in Frontiers and immunology. Another manuscript has been submitted for publication describing the pulmonary and central nervous system benefits of MASP-2 blockade on symptoms and survival in well-established animals of COVID-19 ARDS.

Animal studies evaluating a MASP-2 inhibitor in 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 MASP-2 inhibitor, OMS1029 designed to be complementary to narsoplimab. Data from our successfully completed Phase I 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 OMS1029 in healthy subjects began last month and a Phase II program is slated to begin next summer. We’ve also made good progress in our orally administered MASP-2 inhibitor program together with intravenous narsoplimab and our long-acting subcutaneous inhibitor, OMS1029.

We expect our oral MASP-2 blocker to complete a franchise of antibody and small molecule MASP-2 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 MASP-3, 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 3 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 and 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 ravulizumab, 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. The 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 prespecified interim analysis and 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 5 late-breaking submissions and delivered in a special oral session is available on the Investor Relations page of our website.

OMS906 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. OMS906 has restored not just women, but also men to truly normal gender-specific hemoglobin levels. The trial evaluating OMS906 in treatment-naive patients is over enrolled and patient treatment and data collection are ongoing.

Although enrollment has been completed, we have 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 7 with others in screening.

These patients are receiving combination therapy of ravulizumab and OMS906 and the first will begin receiving OMS906 monotherapy shortly. We anticipate providing data on this cohort late this year or early next. It’s important to remember that all OMS906 data already made public result from the lowest dose of OMS906 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 a plastic anemia and 2 others have myelodysplastic syndrome, both of which suppress bone marrow production of mature red blood cells. Despite not having formal diagnosis, other patients in the trial beyond these 4 also had evidence of bone marrow failure at study entry. Those other patients similarly have shown a strong response to OMS906 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 MASP-3 but that MASP-3 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 MASP-3 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 MASP-3 in the drug, OMS906 have multiple expected advantages over other alternative pathway targets and drugs already on the market or in development. First, MASP-3 blockers do not inhibit the infection-fighting function of the classical pathway. By contrast, both C3 and C5 inhibitors block the classical pathways adaptive immune response and increased infection risk.

Second, MASP-3 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 MASP-3 allowing more effective blockade of alternative pathway activation. Importantly, it’s expected that these MASP-3 characteristics will translate to a substantially lower risk of breakthrough of the underlying disease with inhibition of MASP-3 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 drugs dosing, leaving patients less protected from their life-threatening disease.

The third important advantage is better patient convenience and compliance. We expect that MASP-3’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 MASP-3 target and drug, our objective is to make OMS906, 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 OMS527, 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 [indiscernible] . 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.

OMS527 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 3-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 received concurrent intravenous cocaine. Omeros also controls broad patents surrounding PDE7 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 5 years of levodopa 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 in Emory have developed a primate model of LID, which is highly predictive of clinical efficacy. Extended release of amantadine 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 antigen 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 modifications significantly potentiates the efficacy and sustained response of Omeros’ 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, our 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 will widely pursued remains difficult to achieve with the current approach is 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 it’s 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 caring 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 Jacobsen, our Chief Accounting Officer to go through a more detailed discussion of our second quarter financial results. Mike?

Michael Jacobsen: Yes. Thanks, Greg. Our net loss for the second quarter was $37.3 million or $0.59 per share compared to a net loss of $33.7 million or $0.54 per share in the first quarter of this year. Cash burn for the second quarter of 2023 was $30.1 million. Royalties are generally paid 60 days after the month they are earned. Although the $3.4 million payment due on June 30 was received on July 3. This late payment artificially increased our second quarter cash burn by $3.4 million. As of June 30, 2023, we had $341 million of cash and investments on hand and $11 million in receivables, which primarily consists of the OMIDRIA royalties. Costs and expenses from continuing operations for the second quarter was $40.9 million, an increase of $5.2 million from the first quarter of this year.

The increase was primarily due to additional research and development costs related primarily to drug manufacturing and to clinical costs associated with our Phase III clinical trial of narsoplimab in IgA nephropathy as well as site start-up expenses for our 906 studies. Interest expense for the second quarter was $7.9 million, which was consistent with the first quarter of this year. The primary drivers of interest expense are the 2023 and 2026 unsecured convertible senior notes and the DRI OMIDRIA royalty obligation. Now let’s look at OMIDRIA royalties. Under our current contract with the Rayner, OMIDRIA royalties decreased from 50% to 30% of U.S. net sales up on earning the $200 million milestone payment at the end of last year. While separate payment for OMIDRIA is in effect, the 30% royalty rate will apply throughout the duration of the relevant patent terms, which we expect to be at least through 2033.

For the second quarter of 2023, our royalties on OMIDRIA net sales were $10.7 million. Royalties earned are recorded as a reduction in the OMIDRIA contract royalty asset on the balance sheet. Income from discontinued operations in the second quarter was $7 million, includes 2 primary components. $3.8 million of interest earned on the OMIDRIA contract royalty asset and $3.1 million of income due to remeasurement adjustments on our OMIDRIA contract royalty asset. Now let’s take a minute and talk about expected third quarter results. We expect overall operating costs from continuing operations in the third quarter to increase by approximately $5 million to $6 million. The increase is primarily due to our planned payment of a $5 million milestone obligation tied to advancing clinical development in our OMS906 program and the timing of certain manufacturing activities.

Interest income in the third quarter should be nearly $4 million and interest expense for Q3 should be consistent with the second quarter at approximately $8 million. Income from discontinued operations for the third quarter should be approximately $6 million. With that, I’ll turn the call back over to Greg. Greg?

Gregory Demopulos: Thanks, Mike. Operator, let’s open the call to questions.

Q&A Session

Operator: [Operator Instructions]. Our first question comes from the line of Colin Bristow with UBS.

Colin Bristow: Thanks for all the helpful color here. First on narsoplimab in the TA-TMA. Can you give a little more color on what were the agencies’ key concerns or points of focus in the May meeting? And then any detail on the specifics of the survival assets plan would also be helpful. And then just second, on the IgAN, what are you having to see in the proteinuria data and any of the components of this update that you would highlight at this stage?

Gregory Demopulos: Sure. I think having — we’re having a little trouble hearing you here. But I think the first question was, are there any concerns or what if any, concerns does FDA have with respect to our BLA resubmission process. And I think that the answer to that would be, I don’t think there are specific concerns. I think that FDA is wanting to make sure that the data we provide are robust that the data we provide demonstrate a survival benefit in the narsoplimab treated group versus the external control sources. So I think really, the onus is on us at Omeros to make sure that we satisfy all of those requests by FDA. So I’ll look to Cathy, who is here and our Head of Regulatory, to add anything to that she’d like.

Catherine Melfi: Yes. And as Greg mentioned in the call, FDA have indicated that they’re committed to working with us in terms of the resubmission of the BLA. And we believe the data that we have are will be strong and the approach consistent with the path forward that was presented to us. And so again, we’re just continuing to work with FDA.

Gregory Demopulos: Okay. And Colin, I’m sorry, really, I think everyone in the room sort of did not quite hear your second question. I know it was tied to IgAN but it sort of trailed off and we could not hear it here. Would you mind just repeating your second question?

Colin Bristow: Just on the upcoming IgAN readout. I was just wondering what are you hoping to see in the proteinuria data, any specific thresholds? And any other components of the update that you would highlight to us or have a focus on.

Gregory Demopulos: Okay. No, thank you for repeating that. Understood. We don’t have a specific threshold that we’re targeting in IgAN. I mean, I think it’s important to look at how other agents that have been approved have performed. And I think those numbers are ranging as a delta over placebo at around high 20s and I think that clearly indicates what is approvable. As you know, there is no approved complement inhibitor. So we really don’t see our competitors as either a steroid or additional RAS blockade. I mean always in IgA patients you’re going to want to optimize RAS blockade. And steroids, KDIGO has recommended when you can’t — when a clinician cannot get a handle on the IgA that a 6-month course of steroids is warranted, but that’s really only 6 months.

And the budesonide that has been approved has been approved really for only 1 9-month period. So we don’t see either of those as competitors. What we need to do is see the data understand the data and go forward from there. I mean we expect the data to be positive. Of course, we can’t guarantee that. But if we look at all the data we have generated with narsoplimab as well as the mechanism of action. As I said earlier, MASP-2 inhibition not only is important in the glomerulus, but also in the tubulointerstitial which is why in patients with long-standing IgA nephropathy patients whose disease in the glomerulus should have long ago burned out. We saw marked reduction in proteinuria and stabilization even improvement in some patients in eGFR.

So as to the best of our knowledge, MASP-2 inhibition is the only mechanism that works at both those sites. So we’re looking forward to the data. We look forward to sharing the data. I think with respect to the question is, is there anything else that we want to see. Look, we’re looking specifically at high protein spillers, patients with 2 or more grams of proteinuria per day. We’re doing that because that’s of high interest to FDA. These are patients who rapidly and continue to progressively advance to end-stage renal disease and dialysis. We’ve selected that group for a specific reason, and as I’ve just laid out. So I think we’re eager to see the data. We’re eager to share the data. Once we have them in hand, we’ll have a lot more to say.

Operator: One moment for your next question, please. Our next question comes from the line of Steve Brozak with WBB Securities.

Stephen Brozak: One quick question and one housekeeping question, but let me go to the question. On the compassionate use that you mentioned early in the call, can you give us any details on what’s taking place there and specifically around — any changes, any increase, what the clinicians are telling you? Anything you can do to help that, obviously, specifically in the TA-TMA space, please?

Gregory Demopulos: Yes. Sure, Steve. Thanks. With respect to compassionate use in TA-TMA for narsoplimab, as I said, we have provided drug under compassionate use for over 125 patients. These are both adult and pediatric patients worldwide. We don’t have full case report forms or case report forms really to speak up for these patients, given that it’s an extended use or compassionate use program. But we do get feedback. And that feedback is also made public through the multiple presentations at International Congresses by the investigators who request and then use narsoplimab to treat their patients. It is, I think, notable that we receive multiple requests from the same institutions and this is not a small set of institutions, obviously, with 125-plus patients.

But we — across that 125-plus patient number, we’re receiving repeated requests from institutions. And obviously, our conclusion from that is the drug must be doing something good. Otherwise, they would not be repeatedly requesting it for their patients, both adult and pediatric. As I mentioned in the prepared comments, interestingly also, we are seeing patients who have failed other therapies, C5 inhibitors, eculizumab, ravulizumab defibrotide as well, who are then treated with narsoplimab. So effectively, at that point, we’re catching a falling knife. These are patients who are very, very sick, have gone for a while with the TA-TMA progressing, moving to end-stage organ failure or having organ failure. And yet we treat them because we do not want to deny these patients.

We treat them and they recover. If you see that once you see that twice, you might say, [indiscernible], that’s just coincidence or an act of God. You see that enough times and I think it becomes pretty clear that the drug is effective. And the latter is what we’re seeing. So let me see if that answers your question.

Stephen Brozak: No, thank you for the answer and obviously, these patients thank you for the answer and what you’ve done. So that is a succinct an explanation as you can ask for. On the housekeeping side, and then I’ll jump back in the queue. Earlier in the call, you reiterated and I looked online, and you basically stated that the loss was $0.59, but I’m seeing some other places reporting a $0.70 loss I believe that’s a typo, but I just want to make sure that you reiterate that number at $0.59 and there’s no other issues around the — what we’re seeing elsewhere.

Gregory Demopulos: No, there’s not. The $0.59 per share loss is the correct GAAP number. I think what is happening, and we’ve tried to correct this multiple times on our earnings calls. But I think what’s happening is the $0.70 is being lifted from continuing operations. But we are required by accounting rules to account for our royalties in noncontinuing operations. So that whole piece is clearly being missed. I think when many report our EPS. So it’s looking at just continuing operations, ignoring noncontinuing operations and within the noncontinuing operations are all of our royalties that we receive. But it’s just — it’s a function of accounting and accounting requirements. Let me see if Mike, do you have anything to add to that or make that more clear.

Michael Jacobsen: Yes. I think the key to know is our discontinued operations is going to continue as long as we get OMIDRIA royalty. A lot of times, discontinued operations is a year or 2 when it’s gone. But in our case, the way the accounting made us do this, we will continue to have discontinued operations. OMIDRIA royalties are obviously a significant positive cash flow for us and using discontinuing operations miss is a big part of our finance.

Operator: One moment for our next question, please and our next question comes from the line of Greg Harrison with Bank of America.

Gregory Harrison: Is there any color you can provide about your latest interim analysis on OMS906, you mentioned in the press release and how consistent those results were with what you presented at EHA?

Gregory Demopulos: Sure. Thanks, Greg. We want to be careful here that we don’t preempt what we have submitted for presentation at ASH. But I think we can speak to it in general terms. We are seeing very consistent results. And as we move further out in time, one might expect that we are seeing continued improvement. So we’re very encouraged by what we’re seeing. The latest cut of the data only reinforces, I think, our confidence in the target and our confidence in the drug. But again, not just in PNH, but more broadly across really a very wide range of alternative pathway-related diseases and disorders. PNH is a good litmus test because you really do need to effectively ablate alternative pathway activity and if you don’t do that, you see it pretty quickly in your LDH levels and shortly thereafter in your hemoglobin levels.

So it’s a very good litmus test on how effective a drug is in inhibiting alternative pathway activation. And we’re clearly seeing that OMS906 is highly effective. And then that should be translatable to the other alternative pathway indications. And really, with the other therapeutics in the space, it’s pretty easy for us to identify what is an alternative pathway-related disease or disorder and what is not. And we can then follow those other agents and what will be with an agent that we expect has significant advantages as well as the target having significant advantages over other drugs and other targets. I’ll see if Nadia, do you have any additional comments?

Nadia Dac: I think one of the things I’ll add and not only for 906, but our portfolio is also the advantage of lessening treatment burden on these patients. And having patients taking daily pills or very often injections and things like that is another key differentiator. And so we’re excited across the entire portfolio, including 906 for this additional advantage.

Gregory Demopulos: Thank you, Nadia. So as you see, I mean, we’ve got relatively short-acting IV. We have long-acting IV or subcu and now in MASP-2, we’re moving pretty quickly on our oral. And that’s looking good as well. So we have the landscape covered, and we control the effector enzyme of the lectin pathway, which effectively means we control the lectin pathway. And we also control the key activator of the alternative pathway with all of the advantages that Nadia just mentioned and that I went through in the prepared comments. So we really do believe that we can make a very strong case that we have the premier complement franchise in the industry full stop.

Operator: Next question comes from Serge Belanger with Needham.

Serge Belanger: A couple on the IgAN program. Maybe can you talk about the statistical powering of the trial that’s going to read out later this quarter? And secondly, do you believe the ARTEMIS trial is the only Phase III trial required to support BLA and MAA filing in Europe? And then my second question — I guess, third question, regarding the nonpaying coverage in OMIDRIA. OMIDRIA had some good traction in the ASC setting. Just curious how the no paying coverage that takes effect in 2025 will change the overall coverage of the product and whether it will see increased usage beyond the ASC study?

Gregory Demopulos: Sure. Thanks, Serge. In answer to your first question, the IgAN powering, our statisticians believe that and are quite confident that we are overpowered. So I think we’re in good shape there. And yes, we expect that the one Phase III clinical trial will be sufficient to support a BLA and MAA, and that’s consistent with other therapeutics that have received approval recently. So we see no difference there. With respect to OMIDRIA and HOPD use. Look, we know what happens in the HOPDs. HOPDs represent about 20% of the total procedures. So once we again receive our OMIDRIA again, received separate payment in the HOPDs. We expect to see about a 20% boost in our total revenues or net sales from OMIDRIA at least.

And again, I think the key here — and when I say a 20% boost, I guess that would really be about a 25% increase over where we are given that it’s 20% of total net sales. I think that the key here is also in the amount of time that we now have secured, so long-term separate payment. How quickly can Rayner lock down Med advantage or Med Part C, separate payment reimbursement. That’s the key to this. Because right now, I think still physicians and centers mostly call their patients. They’ll look for patients who are Med Part B. And the reason they do that is the concern that if they use OMIDRIA on a Med Part C patient, a Med Advantage patient and are not paid, that is a meaningful cost to them, but there becomes a threshold beyond which if you can access Med Advantage for doesn’t need to be 100% of the patients.

It just needs to be enough of the patients where physicians and centers then are willing to use it broadly. And once it has that kind of met advantage coverage, then you really — you don’t even need to increase the number of sites or number of customers. You simply are drilling down on those customers on those sites and moving from Med Part B to Med Advantage, which, by definition, then effectively includes commercial because the payers are the same for Med Advantage and commercial. And all of a sudden, you’ve opened this up and you’ve made the drug available to not only Med Part B, but Med Advantage and commercial patients as well, which is really what should happen, right? I mean the drug clearly works. It works well. the benefit-risk ratio is so heavily weighted to the benefit.

I know that when we had OMIDRIA, we did not have a single safety signal of concern, 0 associated with the drug. Nothing came to us there. So yes, this is pretty clear but it is really a reimbursement issue. And I think — I know that Rayner is working on that, and we look forward to their success, which I think will be not only good for Rayner and by extension Omeros. But I think most importantly, it’s going to be good for patients. And we need to get that. So let me see Nadia again, anything you want to add to that?

Nadia Dac: The only thing I will add, I agree with everything you just said is even going back to the hospital outpatient department question, the request for OMIDRIA continue even without the NOPAIN Act previously. So we know there’s demand and there’s significant opportunity that we’re excited about.

Gregory Demopulos: Thank you, Nadia. Yes, I would underscore what Nadia just said. I mean there are a number of HOPDs that are using the product really at their cost because they believe that strongly in it, and they believe that patients should have it. So I think once that HOPD separate payment begins as well, I think it has an amplifying effect across ASCs and HOPDs.

Operator: Our next question comes from the line of Olivia Brayer with Cantor Fitzgerald.

Unidentified Analyst: This is [indiscernible] on for Olivia. Could you give us any more color on what type of survival analysis is included in the proposal you’re submitting next month for TA-TMA and once you’re in agreement with the FDA on those, how quickly do you think you can turn around the survival data for the submission package?

Gregory Demopulos: Sure. Thank you. first, with respect to what we are proposing. These are just specific analyses that we think to run that will allow a robust and a meaningful comparison of the survival data from our clinical trial, the TA-TMA trial to survival in the external sources. So there’s not really anything magical about this. We just want to submit a detailed proposal so that we hopefully have alignment with FDA. After having done that, submitted that proposal, as I said, this will be part of a Type B meeting, we would expect a response from FDA within 60 days. Then it is largely for us pushing a button and I don’t want to minimize this. I’m sure that our statisticians and data management group might not want me representing it that way.

But again, these analyses will already have been set and it is pushing the button, getting the readout. What it will take for us to submit, it’s going to be work, but we are resubmitting a BLA. So it’s updating safety, it’s adding the new information into the BLA and then resubmitting and I think as we said, our objective here is even with the full duration of a 6-month review cycle by FDA. Our objective or our target is to have a decision from FDA in mid 2024. But let me turn to Cathy and see Cathy, what would you like to add to that?

Catherine Melfi: Yes. Only to say that for parts of the resubmission that don’t count on the analysis that we still have to do, we are already doing the work and preparing the documents that we need for us. So we’re trying to do everything we can sort of in advance and in parallel, so that, as Greg said, we minimize the amount that we need to do once we get the feedback from FDA. So we’re working very hard on it right now.

Gregory Demopulos: The objective, of course, on our side, and thanks, Cathy. The objective, of course, is to get the BLA resubmitted as quickly as possible, right? I mean this has been in arduous task, and we want to and expect to get narsoplimab over the finish line in the relatively near term. So we’ve laid out the time lines. We think that those are reasonable. And I can tell you internally, it’s really all hands on deck pushing to get this completed. We had an earlier question about compassionate use. I mean there’s clearly a need and a desire for the product. And we get these compassionate use requests, I would say, weekly. I mean we just had — I think, Cathy, we just had one or more this week already. And when we get those, we don’t ask can they pay.

We ask particularly if these are children. The question we ask is how quickly can we get it there? How quickly can we get the drug there. So we’re trying. We’re making this available and we do make it available because we are very confident it works. And obviously, the requests that we’re getting, I think, indicate the confidence within the transplant community that it works. So our objective as fast as possible, get it over the finish line and make this available broadly to patients, hopefully, adult and pediatric patients make this available so that we can continue to save lives, which I can tell you with complete certainty we’re doing right now. Nadia?

Nadia Dac: Yes, I’ll add something as well in terms of the needs out there and the demand. We’ve recently attended a couple of payer conferences and continued interactions with the transplant centers. And the #1 question is when are we going to have this because they are eager to have a product that is specifically indicated for TA-TMA. So that they can add it to their formularies, they can get it to patients and not have to deal with off-label use that unfortunately is what is the standard of care and all that’s available now. So that is the top question that we have to answer repeatedly.

Gregory Demopulos: All right. I hope that answers your question. If not, let us know.

Operator: And at this time, I’d like to hand the conference back over to Dr. Gregory Demopulos for closing remarks.

Gregory Demopulos: All right. Thank you, operator, and thanks to all of you for joining this morning. As you can see, across our programs, we have a handful of value-driving milestones this quarter and over the next 6 months. All of us at Omeros are looking forward to seeing how they play out. So with that, enjoy the rest of your summer. And as always, we appreciate your continued support. Have a good day.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.