Q4 2020 Omeros Corp Earnings Call SEATTLE Mar 2, 2021 (Thomson StreetEvents) — Edited Transcript of Omeros Corp earnings conference call or presentation Monday, March 1, 2021 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Gregory A. Demopulos Omeros Corporation – Co-Founder, Chairman, CEO & President * J. Steven Whitaker Omeros Corporation – VP of Clinical Development & Chief Medical Officer * Michael A. Jacobsen Omeros Corporation – CAO, VP of Finance & Treasurer ================================================================================ Conference Call Participants ================================================================================ * Andreas Argyrides Wedbush Securities Inc., Research Division – Associate * Brandon Richard Folkes Cantor Fitzgerald & Co., Research Division – Analyst * Jason Eron Zemansky BofA Securities, Research Division – VP * Raghuram Selvaraju H.C. Wainwright & Co, LLC, Research Division – MD of Equity Research & Senior Healthcare Analyst * Serge D. Belanger Needham & Company, LLC, Research Division – Senior Analyst * Stephen Gilbertpaul Brozak WBB Securities, LLC, Research Division – Senior Equity Analyst * Yixuan Ma UBS Investment Bank, Research Division – Associate * Jennifer Williams ================================================================================ Presentation ——————————————————————————– Operator  ——————————————————————————– Good afternoon, and welcome to today’s earnings call for Omeros Corporation. (Operator Instructions) 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 for 1 week from today. I’ll turn over the call over to Jennifer Williams, Investor Relations for Omeros. ——————————————————————————– Jennifer Williams,  ——————————————————————————– Good afternoon, and thank you for joining the call today. Dr. Greg Demopulos, Chairman and CEO of Omeros, will take you through a corporate update; and then Mike Jacobsen, our Chief Accounting Officer, will provide an overview of our fourth quarter financial results. We have some time reserved for questions after the financial overview. 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 and the Risk Factors section in the company’s annual report on Form 10-K, which was filed today with the SEC for a discussion of these risks and uncertainties. Now, I would like to turn the call over to Dr. Demopulos. ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Thank you, Jennifer, and good afternoon, everyone. We appreciate you joining us for today’s call. We’ll start today with narsoplimab. Narsoplimab is our fully human antibody targeting MASP-2, the effector enzyme of the lectin pathway of complement. In January, FDA accepted our BLA for priority review for the treatment of hematopoietic stem cell transplant associated thrombotic microangiopathy, or TA-TMA. Priority review shortens FDA’s review period from 10 months to 6 months. As a result, the PDUFA date is July 17. We have continued working closely with FDA during the review of our BLA. As we prepare for the anticipated approval and commercial launch of narsoplimab for TA-TMA, we’re very excited to have recently welcomed Nadia Dac to our senior leadership team as Chief Commercial Officer. Nadia brings impressive breadth and depth of leadership, general management and launch experience at places like Alder, which was acquired by Lundbeck, AbbVie, Novartis and Pfizer. A valuable addition to Omeros, Nadia is already contributing to what we expect will be a successful launch of narsoplimab and the continued growth of OMIDRIA. As those who have followed our progress know, we have been executing for well over a year on our launch strategy for narsoplimab in TA-TMA. And launch readiness activities continued to progress throughout the fourth quarter of 2020. Our sales leadership team has already been hired and is comprised of talented individuals with deep experience in stem cell transplantation, hematology and oncology. With strong engagement from the transplant community, our disease education efforts are successfully driving increased awareness of TA-TMA. And market research demonstrates a growing understanding within the transplant community of the central role of the lectin pathway in the pathophysiology of TA-TMA. As part of our narsoplimab launch activities, we have also been focused on securing appropriate reimbursement. During the fourth quarter, we completed the filing and presentation required to obtain a new technology add-on payment or NTAP. Established by CMS, NTAP is a special payment methodology that applies to new medical technologies such as narsoplimab that will be administered in the hospital inpatient setting. NTAP provides an additional payment to hospitals above Medicare standard all-inclusive DRG payment. We believe that narsoplimab qualifies for an NTAP designation, and we look forward to the posting of the NTAP interim rule next quarter. As part of our reimbursement efforts, we also applied and have received preliminary support from CMS for ICD-10 procedural and diagnostic codes for narsoplimab. Across the NTAP designation and ICD-10 codes, we have closely collaborated with key transplant societies and organizations, and we appreciate the strong support that these groups have provided. They include the Center for International Blood and Marrow Transplant Research, the American Society of Transplanted Cellular Therapy, or ASTCT, the American Society of Hematology, the Pediatric Transplantation and Cellular Therapy Consortium; Be the Match National bone marrow donor program, the European Society for Blood and Marrow Transplantation, or EBMT, and the TA-TMA guidelines working group, which consists of some of the most respected transplant physicians in the U.S. and Europe. At the 2020 annual meeting of the American Society of Hematology, Omeros presented on the pharmacodynamics of narsoplimab in humans and primates. The presentation was subsequently published in the peer-reviewed journal Blood. Omeros also had a significant presence at the 2021 ASTCT Annual Meeting in February, including both a podium presentation by Dr. Samer Khaled, of City of Hope on the pivotal clinical trial results with narsoplimab in TA-TMA as well as a well-attended Omeros sponsored continuing medical education symposium focused on improving outcomes in TA-TMA. Later this month at the annual EBMT meeting, narsoplimab in TA-TMA, again, will be the focus of podium and other presentations. Now let’s turn to the work we’re doing with narsoplimab in COVID-19, while continuing to execute on launch preparations for TA-TMA, we recognize the role that narsoplimab can play and our obligation to participate in fighting the current global pandemic. For these reasons, we continue advancing narsoplimab as a treatment for critically-ill COVID-19 patients. We’ve previously discussed the similarities between TA-TMA and COVID-19. Both are endothelial injury syndromes, meaning endothelial injury is at the pathophysiologic core of each. Omeros and our collaborators were among the first to recognize the importance of endothelial injury in COVID-19, a key to treating COVID-19 now widely confirmed by leading research groups internationally. The lectin pathway of complement is activated by cellular damage and microbes. In COVID-19, this lectin pathway activation occurs very early in the disease process. Further, MASP-2, the effector enzyme of lectin pathway is directly bound and activated by the nucleocapsid and spike proteins of the SARS-CoV-2virus. The collective result of all of these events in COVID-19 is that very early in the disease, the lectin pathway is activated, which then leads to hyper inflammation, and hyper coagulation or clotting, all of which are addressed by inhibition of MASP-2 with narsoplimab. Following the first cohort of 6 critically-ill COVID-19 patients in Bergamo, Italy. We have continued treating patients with narsoplimab under compassionate use. To date, 9 more in Italy and 4 in the U.S. Prior to receiving narsoplimab, all of these patients were intubated, some for as long as 2 weeks and had multiple comorbidities. All had failed other therapies, including antivirals, targeted anti-inflammatory therapeutics, convalescent plasma and steroids. These were all severely ill patients and following treatment with narsoplimab, the laboratory improvements and clinical outcomes are consistent with those seen in the initial cohort of Bergamo patients and published in immunobiology. Of note, the narsoplimab treated patients for whom serology data are available, show appropriately elevated levels of antibodies against SARS-CoV-2. These demonstrate as expected that narsoplimab does not interfere with the patient’s adaptive immune response, which is important for fighting infection. This is one of the significant advantages of narsoplimab over other potential therapeutics for COVID-19, including other complement inhibitors. Data collection is wrapping up a manuscript detailing the findings and clinical outcomes of the second cohort of Bergamo patients is in preparation, and we look forward to sharing those data soon. Long-term sequelae or complications from COVID-19 are now widely recognized. A longitudinal controlled study recently published in JAMA Network followed patients for up to 9 months and shows that about 30% of even mild COVID-19 cases have significant and persistent problems. To this point, evaluation of the initial cohort of Bergamo patients at 5 to 6 months after treatment with narsoplimab demonstrated no clinical or laboratory evidence of long-term sequelae. We are considering now studying the role of narsoplimab not only in preventing but also in treating long-term sequelae of COVID-19. The interest in narsoplimab for the treatment of COVID-19 is growing internationally. In addition to advancing discussions with U.S. government agencies and advisers to the new administration, we are in talks with regulatory authorities in Europe and other global health care organization regarding potential funding, manufacturing support and/or additional clinical trials for narsoplimab in the treatment of COVID-19 patients. Now part of the I-SPY COVID trial sponsored by Quantum Leap Healthcare Collaborative and funded in part by BARDA with sites across the country, and narsoplimab dosing in this study is expected to begin very soon. The I-SPY COVID trial utilizes an adaptive platform design intended to increase trial efficiency by minimizing study patient numbers and duration. Narsoplimab is the only complement inhibitor invited to participate in the I-SPY trial. In addition to our work with narsoplimab and COVID-19 and TA-TMA, we have 2 ongoing Phase III programs for narsoplimab. One in IgA nephropathy and the other in atypical hemolytic uremic syndrome or aHUS. Our Phase III ARTEMIS-IGAN trial evaluating narsoplimab for the treatment of IgA nephropathy now has over 120 sites activated worldwide. While the pace of enrollment slowed some with the COVID-19 pandemic, we expect to see enrollment accelerate, as pandemic restrictions eased. We also are working with a leading CRO to bring the ARTEMIS-IGAN trial to additional geographies, including China. Regulatory applications are underway and once completed, we expect that this geographic expansion will significantly accelerate the pace of enrollment. For example, IgA nephropathy is highly prevalent in China. Approximately 25% of all dialysis patients in China reportedly of IgA nephropathy. Even without the easing of COVID restrictions internationally, we expect that expansion across additional geographies will help the ARTEMIS-IGAN trial to close out enrollment and we look forward to reading out the trial’s proteinuria data next year. To the best of our knowledge, narsoplimab is the only drug in development for IgA nephropathy that can obtain full approval on proteinuria data alone. As in TA-TMA and COVID-19, a growing body of research conducted by multiple international groups of leading experts increasingly support, the central role of the lectin pathway in IgA nephropathy and more generally, in progressive renal diseases as a whole. In addition to the lectin pathway’s central role in producing glomerular inflammation, endothelial injury and thrombotic microangiopathy have been recently identified in glomerular capillaries. These TMA lesions are seen in 10% to 15% of IgA nephropathy cases and are associated with a greatly accelerated path to end-stage renal disease. Lectin pathway activation has also been shown to play a key role in the development of tubular interstitial inflammation and fibrosis. The final common pathway to kidney scarring. There are no drugs approved to prevent this kidney scarring. And to date, chronic kidney disease has been widely considered untreatable. The data suggests that inhibition of the lectin pathway by narsoplimab could possibly be a treatment not only for IgA nephropathy, but more broadly for progressive and chronic kidney diseases as a whole. As part of this increased understanding about the central role of the lectin pathway in kidney disease last October at the annual meeting of the American Society of Nephrology, Omeros sponsored a symposium featuring presentations by international experts on progressive and chronic renal disease. A focus of the symposium was the mechanism and rationale for lectin pathway inhibition as a treatment for renal disease and provided an overview of the Phase II clinical trial results of narsoplimab in IGA nephropathy. While preparing to expand the indications explored for narsoplimab, we also are planning ahead to life cycle management for our MASP-2 in lectin pathway franchise. We expect our second-generation longer-acting MASP-2 antibody OMS1029 to enter the clinic early next year. We are targeting for this antibody once-monthly or less frequent subcutaneous dosing. We’re also advancing our program of small molecule MASP-2 inhibitors for oral administration. The role of the lectin pathway across a rapidly growing set of indications is increasingly recognized and understood within the complement community. And we look forward to making our MASP-2 inhibitors in all of their forms available to help patients. Like our MASP-2 platform, our other complement program, OMS906 is advancing quickly. OMS906 is our MASP-3 inhibitor. We’re building a broad and exclusive intellectual property position directed to MASP-3, which is the key activator, and we believe the premier target in the alternative pathway. Unlike our lectin pathway inhibitor in narsoplimab, for which we have had to blaze the trail to indications, given that our broad intellectual property position around the lectin pathway has effectively kept others from pursuing lectin pathway inhibitors. The alternative pathway has been successfully targeted by other agents across multiple indications. So a successful Phase I clinical program, showing that OMS906 blocks alternative pathway activation, has a good likelihood of translating to efficacy in those same and other diseases linked to the alternative pathway. In September, we began our Phase I placebo-controlled double-blind single ascending and multiple ascending dose trial. The trial is running on schedule, and we continue to expect initial data readout from our Phase I trial for OMS906 next quarter. Now let’s turn to OMIDRIA, our commercial ophthalmic drug used in cataract and lens replacement surgery. The extension of pass-through status for OMIDRIA expired as scheduled on October 1, 2020, and CMS packaged reimbursement for the drug within the ambulatory payment classification for cataract surgery. Given that OMIDRIA was then packaged, it met all criteria for separate payment under CMS’ established policy to pay separately in the ambulatory surgery centers or ASCs for non-opioid pain management surgical drugs. This was confirmed by CMS in December 2020, making separate payment for OMIDRIA effectively retroactive to October 1. We anticipate that CMS will continue its policy to pay separately for non-opioid pain management surgical drugs as it is done since 2019. Because CMS has already determined that OMIDRIA qualifies under the policy’s objective criteria, we expect that OMIDRIA will continue to be separately reimbursed when used in the ASC setting. Given that CMS did not issue its decision to restore separate payment for OMIDRIA until December, utilization of the drug in the fourth quarter was limited. Net revenues from the sale of OMIDRIA in the fourth quarter were still $10.6 million, reflecting both customer demand and fourth quarter units sold. Our net loss for the fourth quarter was $37.3 million or $0.60 per share, of which $3.5 million or $0.06 per share were noncash charges. As of December 31, 2020, we had available for general operations, $135 million of cash, cash equivalents and short-term investments and up to an additional $50 million through our accounts receivable based line of credit. In the first quarter of 2021, we have seen a sustained and continuing recovery in the number of purchasing facilities as well as in daily average sales volumes. To accelerate uptake of OMIDRIA among ASCs, one of our areas of focus has been establishing partnerships with ASC chains and groups of ASCs owned and operated by private equity groups, and we’re pleased with our progress. As we have experienced with OMIDRIA January and most of February are historically slow months for ophthalmic surgical procedures in general. March, however, is 1 of the strongest months for cataract surgery volumes, and we look forward to seeing how OMIDRIA sales close out the current quarter. CMS’ confirmation that OMIDRIA qualifies for separate payment in ASCs was a significant milestone for Omeros. We also continue to expand reimbursement among Medicare Advantage and commercial payers. In addition, the coalition for non-opioid choices has continued to lead a large, broad-based alliance, including the American Medical Association, the Ambulatory Surgery Center Association, the American Association of Colleges of Nursing and the National Safety Council, to pass into law, The Non-Opioids Prevent Addiction in the Nation Act or the NOPAIN Act. With strong bipartisan and leadership support in both chambers of the 116th Congress, the NOPAIN Act sponsored numbered 63 in the House of Representatives and 25 or 1/4 of all U.S. senators. A large majority of those sponsors have remained in office for the new 117th Congress, and we expect support for the bill to continue to grow. The NOPAIN Act is expected to be reintroduced in the Senate this week and in the house soon thereafter. I think we all agree that opioid addiction continues to ravage our country, and this tragedy has only worsened during COVID. In December, the U.S. Centers for Disease Control reported that the rate of overdose deaths has accelerated throughout the pandemic, rising 38.4% during the year leading up to May 2020, driven primarily by abuse of the synthetic opioid fentanyl. As you might recall, in 2019, the Journal of Cataract and Refractive Surgery published the results of a 60-patient prospective, double masked controlled study, demonstrating that use of OMIDRIA and cataract surgery reduced the need for intraoperative fentanyl by nearly 80%, while concurrently decreasing pain scores by approximately 50%. A subsequent prospective double masked randomized controlled study in 112 eyes, using a similar design and generating similar results. Showed that again, OMIDRIA reduced both fentanyl use and pain scores and a manuscript detailing these data is being submitted for publication. Consistent with previously published clinical data showing that OMIDRIA significantly reduces the incidence of site threatening cystoid macular edema, while precluding the need for perioperative steroids, a new study showing that OMIDRIA significantly decreases retinal thickness and macular edema and cataract surgery has been selected for podium presentation at the upcoming 2021 annual meeting of the American Society of Cataract and Refractive Surgery. Now let’s look quickly at our phosphodiesterase 7 program, OMS527. Here again, we control a broad and exclusive intellectual property position. This one covering PDE7 inhibitors for the treatment of addiction and compulsions as well as movement disorders. Having successfully completed a Phase I clinical trial, continued clinical development in this program is subject to allocation of financial and other resources, which are currently prioritized for other programs. We’ll close our program update today with GPR174 for cancer immunotherapy. GPR174 is an immunosuppressive G protein coupled receptor around which Omeros is also building a broad and exclusive intellectual property position. We have found that in mouse tumor models, GPR174 deficiency enhances T-cell proliferation and tumor-killing phenotypes, leading to markedly reduced tumor growth. Importantly, GPR174 is activated by products of the tumor micro environment, specifically phosphatidylserine and lysophosphatidylserine or PS and lysoPS. These molecules are released during processes associated with tumor growth, including the proliferation and death of tumor cells and tumor-associated immune cells. Cell death is also caused by radiation and chemotherapy commonly used to treat cancer. And we believe that GPR174 inhibition will be necessary to maximize the tumor-killing immune responses following these frontline cytotoxic therapies. Because the mechanism of action of GPR174 is separate from those of clinically validated checkpoint molecule, CTLA-4 and PD-1, combination with a GPR174 inhibitor should improve response rates observed with existing checkpoint inhibitors such as YERVOY and KEYTRUDA. Furthermore, GPR174 and the adenosine receptors utilize the same immunosuppressive cyclic AMP signaling pathway. And we have found in multiple in vitro systems that combined inhibition of GPR174 and adenosine receptors synergistically enhances T-cell activation and tumor-killing phenotypes. We plan to publish these data in the near future. And our team is aggressively developing both small molecule and antibody inhibitors of GPR-174 to unlock the potential of what we view as a very exciting new cancer immunotherapy target. With that, I’ll turn the call over to Mike for an overview of our fourth quarter financial results. ——————————————————————————– Michael A. Jacobsen, Omeros Corporation – CAO, VP of Finance & Treasurer  ——————————————————————————– Thanks, Greg. As Greg noted, OMIDRIA and total revenues for the fourth quarter were $10.6 million. Our net loss for the quarter was $37.3 million or $0.60 per share. And noncash expenses were $3.5 million or $0.06 per share. Our reoccurring noncash expenses are usually around $6.5 million to $7 million or $0.12 to $0.13 per share. During the fourth quarter, we recognized a noncash income tax benefit of $4.2 million related to the issuance of our 2026 convertible unsecured notes. Recognizing this benefit reduced our overall noncash expenses by $0.07 per share. As of December 31, 2020, we had $135 million of cash, cash equivalents and short-term investments available for general operations. We also have an accounts receivable-based line of credit, which allows us to borrow up to $50 million based on 85% of our available accounts receivable borrowing base, less certain reserves. Here are some additional details regarding our fourth quarter 2020 results compared to the third quarter of last year or the third quarter of 2020. Our revenues for the fourth quarter were severely affected by the uncertainty around the availability of separate payment for OMIDRIA, following the October 1 expiration of pass-through reimbursement. During the period from mid-September through December 2, at which time, CMS confirmed that OMIDRIA qualifies for separate payment in the ASCs, sales to our wholesalers were greatly reduced. Once CMS announced confirmation of separate payment, sales improved, and then we entered the holiday season. Some customers also waited for their respective regional Medicare administrative contract or MAC, to post on its website, CMS’ decision and reimbursement details for OMIDRIA, verifying CMS’ decision to pay separately for OMIDRIA. By the end of January of ’21, all MACs had posted the correct OMIDRIA reimbursement information and were appropriately reimbursing for the use of the drug. During the fourth quarter, we reduced our previously recorded reserve for wholesaler returns. As you may recall, in the third quarter, we recorded an $8.7 million return reserve due to the uncertainty surrounding OMIDRIA reimbursement. Subsequent to receiving separate payment, we reduced this reserve by $5.7 million as the OMIDRIA drug product at our wholesalers is now expected to be fully utilized. The remaining $3 million is being recognized through incremental purchases in the first quarter of 2021 as ASCs increased their usage of OMIDRIA and restock for the product they returned to us following the expiration of reimbursement on October 1, 2020. Our fourth quarter gross to net deductions, excluding return reserves, were generally consistent with prior quarters. Cost and expenses for the fourth quarter were $44.4 million or $7.1 million less than the third quarter. The relatively higher expenses in Q3 were primarily due to an outgoing $5 million technology license payment made during that quarter to ensure that OMS906 can be manufactured for a potential commercial use without impediment. Interest expense for the current quarter was $8 million and included a full quarter of interest on the 2026 convertible notes. This was in line with our expectations. As we mentioned earlier, we recorded an income tax benefit of $4.2 million related to the issuance of the 2026 convertible notes. This was recorded in the fourth quarter rather than in the third quarter due to interperiod income tax allocation rules. Looking ahead, we assume separate payment by CMS for OMIDRIA and the ASCs will continue. Any change to that reimbursement will require a fundamental revision to CMS’ broader policy to pay separately for non-opioid pain management drugs used during surgery. Accordingly, we are confident that OMIDRIA revenues will increase significantly in the first quarter of ’21 compared to the fourth quarter of 2020. As previous, ASC customers continue resuming their use of OMIDRIA and as the ranks of new customers continued to grow. We expect our research and development expenses for the first quarter of 2021 will be slightly higher than in the fourth quarter of 2020 as we continue our ongoing narsoplimab Phase III programs and manufacture additional commercial drug supply, in preparation for the expected market launch and subsequent sales growth of narsoplimab for the treatment of TA-TMA. As we’ve previously explained, manufacturing costs are generally expensed as incurred rather than included as inventory until regulatory approval is highly assured. SG&A costs are expected to increase in the first quarter and across the year, driven in good part by the hiring of narsoplimab-focused field sales staff and TA-TMA launch preparations. With that, I’ll turn the call back over to Greg. Greg? ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Thanks, Mike. Operator, let’s please open the call to questions. ================================================================================ Questions and Answers ——————————————————————————– Operator  ——————————————————————————– (Operator Instructions) And your first question comes from the line of Steve Brozak with WBB. ——————————————————————————– Stephen Gilbertpaul Brozak, WBB Securities, LLC, Research Division – Senior Equity Analyst  ——————————————————————————– Just one and a follow-up after that, please. Can you give more clarity on OMIDRIA? Because one of the things that, that I’m reading into this is specifically that you received reimbursement authorization as of December, but December is a short month given the holidays and everything else. So can you be more specific in how many weeks you actually had for selling for OMIDRIA? And I’ll give you a follow-up after that, please. ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Thanks, Steve. Well, as you point out, CMS restored separate payment for OMIDRIA in early December. So you’re right. I mean this quarter was a relatively short quarter. We — a lot of the customers, ASCs and HOPDs, just like anyone else, don’t like uncertainty. And the fourth quarter was filled with uncertainty with respect to OMIDRIA reimbursement until CMS decided and confirmed. That it would be restoring separate payment in early December. Once that happened, I think, as Mike pointed out, sales again picked up. But as you understand during the holiday season, surgical procedures largely grind to a halt. So that likely affected sales. But we’re quite pleased with what we saw in the fourth quarter, and we’re, again, pleased with what we’re seeing as our progress in Q1. ——————————————————————————– Stephen Gilbertpaul Brozak, WBB Securities, LLC, Research Division – Senior Equity Analyst  ——————————————————————————– Okay. Thank you for that more detailed explanation. And going back to narsoplimab, I was, I think, sometime early last week, where Francis Collins basically started going out there and memorializing specifics around the Long Haulers. And I think it was just about $1.15 billion for Long Hauler investigation and Long Hauler resourcing over the next 3 years. Can you give us more detail about how you’re proposing to look at narsoplimab specifically for Long Haulers? Because obviously, I know that you’re looking at it specifically for the treatment of serious patients. But what can you tell us in as much detail on the Long Hauler side and why that would make sense? And I’ll jump back in the queue. ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Sure. Well, first. We are aware of the NIH initiative. As you said, it’s a $1.15 billion initiative to look effectively at the sequelae of COVID. So looking at the long-term sequelae and complications of patients whose initial symptomatic disease has resolved. So this is, as I think I mentioned in the prepared comments, an area of increasing recognition and concern. What we do know about the patients treated with narsoplimab is that those patients for whom we have data, which includes the entire first cohort of the Bergamo patients show no evidence of sequelae. And when I say no evidence, I mean no laboratory or clinical evidence of sequelae. And for other patients that we have treated for whom we have data. Again, we have not seen any evidence of long-term sequelae. So it’s interesting. Again, we’re not talking about large numbers. But when you look at the percentage of patients across the spectrum for those who have — who had COVID had, those percentages are pretty high. So perhaps one would have expected that you would have seen some signal of long-term sequelae and the patients treated with narsoplimab, but we have not seen any. So again, this is an interesting area. We believe that the long-term sequelae or a good part of them are tied to endothelial injury, which again matches, I think, quite well the mechanism of action of narsoplimab and specifically the pathophysiology tied to the lectin pathway. So we see an opportunity here. Again, we’re familiar with that initiative. And as I said earlier, we are considering looking not only at potentially preventing those sequelae, but also treating those sequelae. ——————————————————————————– Operator  ——————————————————————————– Our next question comes from the line of Alice [Middleton] with UBS. ——————————————————————————– Yixuan Ma, UBS Investment Bank, Research Division – Associate  ——————————————————————————– Greg, this is Alice also calling (inaudible). So in the past few months, there seem to be — there seems to have been some additional trial delays within the IgAN space, including with your trial. The reason seems to be slow enrollment, perhaps worsened by the pandemic. Could you expand on why this seems to be an issue in the IGN — IgAN trial? And how you see your potential enrollment improving? ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Sure. Thanks, Alice. Well, as we’ve seen in other trials, not just in the IgA trial, meaning not just in Omeros’ trial but as you point out in other trials, trials that are largely are in good part, hospital based, are experiencing challenges in enrollment just because of specific hospital restrictions around patient access and also around screening, et cetera. So we are continuing, as I think I mentioned, to expand the number and the geographic regions from which we are drawing patients. But we also look to the easing of these COVID restrictions to help accelerate that enrollment. I think, though, again, as I mentioned, even without, we aren’t counting on those restrictions being lightened or removed. We are continuing to approach this as if those restrictions will stay in place. And that’s why we’re increasing the number of sites and expanding those geographic regions from which we’re drawing. Did that answer your question? ——————————————————————————– Yixuan Ma, UBS Investment Bank, Research Division – Associate  ——————————————————————————– Yes. And I guess I’m wondering as well, is this something to do with the disease itself that outside of the pandemic, this kind of problems with enrollment would also happen? ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– No. Again, I can’t — absolutes are always dangerous statement. So I’m not going to say absolutely no or across all patients, no. But that certainly is not a primary driver in this. It’s really just hospital specific restrictions and the ability to access these patients, enroll these patients, screen these patients and treat these patients. ——————————————————————————– Yixuan Ma, UBS Investment Bank, Research Division – Associate  ——————————————————————————– Great. And then I have 1 follow-up, if you don’t mind. We’re expecting data from 2 alternative pathway inhibitors in IgAN in 2021, the Novartis drug, LNP023 and then the Ionis-Roche drug. Can you explain what you’ll be looking for in that data in terms of read-through to narsoplimab? ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Sure. Sure. I think what we’ll be looking for is, of course, the level of proteinuria reduction that those drugs deliver. We have a good level of confidence that the driver in IgA nephropathy. And as the more recent data now are showing even more broadly in progressive and chronic renal diseases as a whole, but the real driver is the lectin pathway. The alternative pathway is subsequently up-regulated in response to the initial activation of the lectin pathway. So from our perspective and from the, I think, the perspective of many IgA experts with whom we work is that the initiating event or the real driver is the lectin pathway. If you inhibit the lectin pathway, the response will be significantly better. And I think our data have really borne that out. When you look at the data with narsoplimab versus what other drugs have made public around level of proteinuria reduction. Narsoplimab-related proteinuria reduction is a multiple of what other drugs have been able to deliver. And that’s really pretty — and that’s — I shouldn’t say pretty uniform, that’s uniform. So I think that, that is why also, narsoplimab is the only drug that can obtain, as far as we know, full approval on proteinuria alone. That is really a reflection of the magnitude and the rapidity of proteinuria reduction that we see with narsoplimab. So we’ll be looking at obviously proteinuria reduction. We’ll also be very interested to see eGFR, what’s happening with eGFR. There are drugs and companies with drugs that have reported out on stabilization of eGFR, et cetera. But often, they don’t report what happens with proteinuria. And I think you really need to look at both of those components to understand what the drug is really doing. So I think let me stop there and see if you have any other question about that. ——————————————————————————– Operator  ——————————————————————————– Your next question comes from the line of Ram Selvaraju with H.C. Wainwright. ——————————————————————————– Raghuram Selvaraju, H.C. Wainwright & Co, LLC, Research Division – MD of Equity Research & Senior Healthcare Analyst  ——————————————————————————– Just wanted to touch quickly on the narsoplimab I-SPY program involvement. And what you expect in terms of readout from I-SPY? And specifically, what the context of that would be, what the nature of that data is likely to be, given the fact that there are multiple candidates being assessed within that program, if you could provide us with more of a framework on what we should legitimately expect from I-SPY? And how long it’s going to take to yield data? ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Sure. So I think, first, you have to understand that, that trial is really independent of narsoplimab and independent — I’m sorry, independent of Omeros other than the provision of narsoplimab. So it is — it really is an investigator sponsored trial. So what we do is provide the drug, and they run the study as they have designed. It is, as you pointed out an adaptive and a platform trial so that they run 5 arms, 1 of those being a control arm and I believe, 4 actives. Narsoplimab is the only complement inhibitor that has been invited or I expect, will be invited to participate in that trial. The readout is really 1 of length of stay in the hospital, mortality rate, all of the things that you would expect in a trial like that. The patients that we’re treating there may not be quite as sick as those that we’re treating through compassionate use. As you know, in compassionate use, we’re treating really now only patients who are intubated and have failed all other therapies. I mean, we’re really kind of treating the uncurable at this point in those patients — curing the uncurable. But I think in this study, there are going to be patients, as you can see in their protocol, who are hospitalized and requiring oxygen support. ——————————————————————————– Raghuram Selvaraju, H.C. Wainwright & Co, LLC, Research Division – MD of Equity Research & Senior Healthcare Analyst  ——————————————————————————– So it would be reasonable to expect, therefore, given this kind of clinical readout that if narsoplimab has a positive impact on length of stay in the hospital that’s been proven to be an approvable endpoint. The FDA has granted EUA on the basis of such an endpoint before, that at least hypothetically, it’s not out of the question for this to be sufficient evidence on which the FDA could grant an EUA to narsoplimab in COVID-19 based on the [maybe] effective criteria? ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Sure, and mortality as well for reduction in mortality. I will say, and I probably should have mentioned this earlier, that the I-SPY group, the Quantum group, is working very closely with FDA on that trial. So they’re in close communication. So I — the objective of that trial is to find a drug or drugs that are effective in COVID-19. That is the single objective. So I would expect — and I think I’m pretty confident in saying that, of course, success in that program should lead to making a successful drug more widely available to the general population. ——————————————————————————– Raghuram Selvaraju, H.C. Wainwright & Co, LLC, Research Division – MD of Equity Research & Senior Healthcare Analyst  ——————————————————————————– Okay. Then just a couple of very quick ones for me. ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Sure. ——————————————————————————– Raghuram Selvaraju, H.C. Wainwright & Co, LLC, Research Division – MD of Equity Research & Senior Healthcare Analyst  ——————————————————————————– The OMS906 post Phase I clinical development. I was just wondering if you anticipate once the drug transitions into the next stage of development, prioritizing subcutaneous administration or if you’re going to pursue both subcutaneous as well as intravenous administration? ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– I’m sorry, that was a question around 906? ——————————————————————————– Raghuram Selvaraju, H.C. Wainwright & Co, LLC, Research Division – MD of Equity Research & Senior Healthcare Analyst  ——————————————————————————– 906, yes. ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Yes. Certainly, in our Phase I trial, we’re looking at both subcutaneous and intravenous. Intravenous is the reference point, but the objective is clearly to move that program through clinical development as a subcutaneous administration. And again, subcutaneous administration that we’re targeting once-monthly or less frequent administration. Well, let me see if Steve has any comments to add to that. ——————————————————————————– J. Steven Whitaker, Omeros Corporation – VP of Clinical Development & Chief Medical Officer  ——————————————————————————– No, Greg, I think you summed it up well. It could go either way, depending on the Phase I results. ——————————————————————————– Raghuram Selvaraju, H.C. Wainwright & Co, LLC, Research Division – MD of Equity Research & Senior Healthcare Analyst  ——————————————————————————– Okay. And then lastly would you expect clinical development time lines as you originally laid them out for OMS527 and GPR174, those 2 programs, to continue to be impacted in any way in terms of the timing of initiation of future studies by COVID-19 pandemic? Or do you anticipate that those 2 programs could advance even if the pandemic continues to persist as it currently is today? ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Well, I want to make sure that I’m tracking on the programs that you mentioned. We have not given any time line previously around GPR174 entering the clinic. So I just — I want to make sure that I’m answering your question. ——————————————————————————– Raghuram Selvaraju, H.C. Wainwright & Co, LLC, Research Division – MD of Equity Research & Senior Healthcare Analyst  ——————————————————————————– Yes. No, I think the question is not so much in terms of getting guidance, it’s more in terms of whether you consider the pandemic to be impacting the forward progress of those programs at all. ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Yes. It really depends on which way we go with respect to indication, trial design, et cetera. I mean, obviously, if COVID is remaining with us for an extended period of time. All of those factors will be brought into our discussions and decisions about how we proceed. So I think the best way to answer that would be our objective would certainly be to avoid as best as possible any obstacles in clinical development. ——————————————————————————– Operator  ——————————————————————————– Your next question comes from the line of Geoff Meacham with Bank of America. ——————————————————————————– Jason Eron Zemansky, BofA Securities, Research Division – VP  ——————————————————————————– This is Jason on for Geoff. Greg, a question on the commercial launch preparations for narsoplimab, thanks so much for the color. I’m curious what do you envision to be the greater bottlenecks or hurdles here? I’m just trying to think ahead to when you anticipate an inflection in terms of uptake? And then as a second part of the question, to the extent that you can, can you talk a little bit about your pricing considerations, again, kind of longer-term thinking about a number of different other indications and complement? And then how that shapes your thinking? ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Sure. Jason, with respect to bottlenecks, look, I think that our commercial team has really been all over this. And they are really very well prepared and very well equipped to commercialize narsoplimab in TA-TMA. There are a number of advantages that you understand. Specifically, the relatively small number of sites that perform these procedures, meaning the relatively contained group of a sales force that’s needed to do that. It’s accessing the facilities, it’s accessing the key opinion leaders, really, all of that our Med affairs team has been very successful in doing. And I would say we have the broad support of key opinion leaders, not just in the U.S. but internationally. So with respect to bottlenecks, there are always things that will come up as you know that we will have to deal with. But I think the groundwork that’s already been laid and the preparations. And frankly, the expertise of the commercial team we have, not just broadly, but even specifically in this area of transplantation, I really think is pretty tremendous. So I think anything that does arise, that team will be able to address quickly. So we’re always looking, we’re always aware, but we like the way things are headed. With respect to pricing, we haven’t given any guidance on pricing. Other than to say that TA-TMA is an ultra-orphan indication. Certainly, these patients appear otherwise to do quite poorly when TA-TMA is severe. So if you think about the health economics of a treatment like narsoplimab in this setting, I think those are significant. And — but certainly, we’re looking at that. I think also, there may even be some rough comparables. It’s — I think, as you know, Soliris has been used. Eculizumab has been used off-label intermittently in TA-TMA. And so again, I think there are some data points out there, but our reimbursement team and our commercial team are working through all of those. And the objective is to make the drug available to patients at a price that works for everyone. ——————————————————————————– Operator  ——————————————————————————– Your next question comes from the line of Serge Belanger with Needham & Company. ——————————————————————————– Serge D. Belanger, Needham & Company, LLC, Research Division – Senior Analyst  ——————————————————————————– Just a couple of questions on OMIDRIA. Greg, based on the CMS decision from last December, it was granted for calendar year 2021, but do you expect it provides basis for a long-term reimbursement solution for the product? And have you made any changes to the commercialization strategy for OMIDRIA for 2021? ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Serge, thanks. First, yes, we do see it as long term. And here’s why. It is true that when CMS issued their determination or their confirmation of separate payment for OMIDRIA, it came in the form of the 2021 calendar year, OPPS and ASC final rule, right? And that’s an annual — that’s an annual vehicle for CMS. But that is very different now than us, meaning Omeros, being required to reapply for this exclusion under that policy of paying separately for non-opioid pain management surgical drugs. So the determination has been made that we meet the objective criteria. That is now done. So what would CMS have to do to change that? Well, really, CMS would have to change the policy, revise generally the policy. So this isn’t something that — in the same way that CMS can revisit any of their policies through the annual rule making and comment period. That can occur for any of their policies any year. But you also have to take a look at this specific policy and see that it has remained in effect with CMS since 2019. It hasn’t changed. So we do not expect it to change in the near future. So I see there — I know that’s a subtle distinction because there’s this idea that, well, it’s for calendar year 2021. But CMS is not required to revisit this next year, as they are not required to revisit any policy, and we do not need to reapply for it. ——————————————————————————– Serge D. Belanger, Needham & Company, LLC, Research Division – Senior Analyst  ——————————————————————————– Great. So now that you have more visibility in the reimbursement of the product. Does that change your commercialization strategy? Do you invest more and expand the sales force to grow that revenue line. ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– It’s a good question. I think we’ve got a sufficient sales force currently to manage all territories across the country and to manage them well. The team, I think, is really one of the premier sales forces for the ASC or the surgical setting, so ASC, HOPD call point. So we’re quite happy with what we’re doing there. With respect to the strategy, it really hasn’t changed. I mean I mentioned one thing that we are doing, I think, in the prepared comments, which is that we are specifically working now with ASC chains and private equity groups that control large numbers of ASCs. And the reason for that and the focus there in putting together partnerships with those groups is very clear. They control very large numbers of cataract surgery. So cataract surgery volume, annual volume is controlled in good part by those ASC chains and by those growing private equity groups. So that is part of our strategy. But I think, generally, we’re seeing this as OMIDRIA has been appropriately recognized as meeting the exclusion as a non-opioid pain management surgical drug. And therefore, qualifies and will continue to qualify for separate payment in the ASCs. So we’re pushing ahead. Now the other thing that we are doing is watching very closely what’s happening in D.C. with respect to the NOPAIN Act. Right? I mean, this is a bill that really enjoys broad-based and strong bipartisan and bicameral support, including leadership of the key committees in the house and key committee in the Senate. So this is one of those rare, I think, examples where you really can engender bipartisan — strong bipartisan support. This is talking about opioid abuse and the way to prevent or treat that. And one of the ways is to prevent the wide use of opioids during surgical procedures. And we’ve gone through before what the risks are to those patients. So I won’t go through it again other than to say that cataract surgery patients, in particular, are at significant risk of long-term opioid use disorder following exposure to opioids intra-operatively. So it’s the right approach. The important part of the NOPAIN Act is that it would expand separate payment from ASCs to also include HOPDs. Now the majority of cataract procedures, 80-plus percent are performed in ASCs but it would also be nice to have the same access to drugs like OMIDRIA readily available. It’s already available. Hospitals are making use of OMIDRIA, but it would be, I think, very helpful for them to have the same access that ASCs have. And that NOPAIN Act would enable that for a 5-year period, renewable on a 5-year revolving basis. ——————————————————————————– Serge D. Belanger, Needham & Company, LLC, Research Division – Senior Analyst  ——————————————————————————– Great. Congrats on the progress. ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Thanks, Serge. ——————————————————————————– Operator  ——————————————————————————– Your next question comes from line of Andreas Argyrides with Wedbush Securities. ——————————————————————————– Andreas Argyrides, Wedbush Securities Inc., Research Division – Associate  ——————————————————————————– This is Andreas on for Liana Moussatos. Most of our questions were already asked. So just a quick follow-up from the previous. So there’s been a noticeable trend growth in elective surgical procedures shifting to the [ASC] setting. How you guys see this trend impacting future sales of OMIDRIA? And then for narsoplimab, do you guys plan on hosting a commercial day for investors just to give us an analyst to give us an idea of your thoughts on how to go ahead with that launch? ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Sure. And answer to your first question, certainly there is being a shift — there is a shift underway and has been underway for quite a while from HOPDs to ASCs for elective surgical procedures. And that’s really, as you understand very well the cost efficiencies associated with ASCs. Certainly, that I think would enure to the benefit of OMIDRIA, right? I think, again, the idea there is in ASCs is quick turnover of cases, high volumes running through those ASCs. OMIDRIA really does allow that, right? It takes away — significantly diminishes, those risks of complications that can slow procedures down and really slow down surgical volume throughput. So yes, I see, certainly, the shift to ASCs further enhancing the utilization of OMIDRIA. With respect to your second question, yes, we are considering an Analyst Day, and that would address the science and the commercial aspects of the indications for narsoplimab and obviously, with a focus on TA-TMA and our launch preparations there. ——————————————————————————– Andreas Argyrides, Wedbush Securities Inc., Research Division – Associate  ——————————————————————————– Okay. Congrats on the progress. ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Thank you. ——————————————————————————– Operator  ——————————————————————————– Your next question comes from the line of Brandon Folkes with Cantor Fitzgerald. ——————————————————————————– Brandon Richard Folkes, Cantor Fitzgerald & Co., Research Division – Analyst  ——————————————————————————– Congratulations on all the progress in the quarter. So maybe just on this I-SPY. Obviously, I heard what you said earlier that sort of a true investigator sponsored trial. But do you have a sense of whether we may see data in terms of what they’re looking at before, I guess, the July PDUFA date for narsoplimab. And the reason I ask is as kind of segue into my next question is, how should we think about narsoplimab commercial supply. Let’s say, narsoplimab does show good results in this I-SPY data readout. It sounds like they are looking at it in earlier patients. So I assume it’s a [larger] patient population. What should we think about in terms of the dynamics of the I-SPY data readout, and wanting to move very quickly there from a government perspective versus the narsoplimab TA-TMA commercial launch from your guys’ side? ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– All right. Right. Thanks, Brandon. I understand the question. And I apologize in advance for the somewhat circular response that I’m going to give you. But with respect to when we have data is really dependent upon how quickly the I-SPY trial enrolls. And as I understand it the patients that are enrolled are sort of evenly distributed across the active treatment arms. So I think they have been enrolling well. We’ve been getting updates on their enrollment. And they’ve certainly ramped up and are enrolling well. In fact, I would say probably if not the best, probably one of the best in rolling trials that we have seen. But I think it’s going to depend on how quickly they do that and then how quickly they look at data. They do have a data monitoring committee safety committee as well, and they’ll be looking at those data. So we’ll have to see how quick that readout comes. We’re hoping that readout will come pretty quickly from that study. But again, that’s largely out of our or as effectively out of our hands, out of our control. Let me answer the question about how we would address drug supply across a TA-TMA launch, assuming the drug is approved and COVID. And that’s a great question. Obviously, our initial plans were really focused on TA-TMA. And we initially manufactured and generated a drug supply to be sufficient for an ultra-orphan indication. As the data have continued to come in, not just clinical data, but frankly, nonclinical data as well, either out of research laboratories here in the U.S. at some of the top sites as well as our complement research laboratories at the University of Cambridge. All arrows point, I think, to the lectin pathway and to the role of MASP-2 in COVID-19. It’s very interesting how all of the data fit together. As that has happened, we’ve had to think quite seriously and plan how we would manage having to supply potentially drug for both. And even drug for potentially other clinical trials that some might want to run using our drug. Again, what we don’t want to do is cannibalize the TA-TMA drug supply. Because that too is an indication where mortality rates are high. So we’re trying to balance that, one of the clear answers is increased manufacturing. And that’s why I think on a number of calls and in our discussions with government agencies, whether they’d be in the U.S. or ex U.S., are sort of manufacturing is front and center in those discussions because that support would be needed to make narsoplimab broadly available. That — does that help? Brandon? Operator? ——————————————————————————– Operator  ——————————————————————————– Okay. So I believe he probably muted himself. ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Okay. All right. I hope that answered his question. ——————————————————————————– Operator  ——————————————————————————– And there are no further questions at this time. I would now like to turn the call over to Dr. Demopulos for closing remarks. ——————————————————————————– Gregory A. Demopulos, Omeros Corporation – Co-Founder, Chairman, CEO & President  ——————————————————————————– Thank you, operator, and thanks, everyone, again, for taking the time to listen in. As we look across our programs narsoplimab, OMIDRIA, OMS906, GPR174 and others, it’s clear that our team has really made tremendous progress. 2021 has continued to build on the successes from 2020, and we look forward to updating you on pending milestones. Until then, all of us at Omeros appreciate your continued support, and we hope that you and your families are remaining safe and healthy. Have a good evening. Thank you. ——————————————————————————– Operator  ——————————————————————————– This concludes today’s conference call. We thank you for your participation. You may now disconnect.