Omeros Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 9, 2023

There are 7 speakers on the call.

Operator

Afternoon, and welcome to today's earnings call for Omeros Corporation. At this time, all participants are in a listen only mode. After the company's remarks, we will conduct a question and answer session. And please be advised that this call is being recorded at the company's request 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.

Operator

Please go ahead.

Speaker 1

Good afternoon 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 10Q, which was filed today with the SEC And the Risk Factors section of the company's most recent Annual Report on Form 10 ks for a discussion of these risks and uncertainties.

Speaker 1

Now, I would like to turn the call over to Doctor. Greg Demopulos, Chairman and CEO of Valmeros.

Speaker 2

Thank you, Jennifer, and good afternoon, everyone. I'm joined Today by Mike Jacobson, Nadia Dach and Kathy Melfi, our respective Heads of Finance, Commercial and Regulatory Along with Steve Whitaker, our VP of Clinical Development and Andreas Grauer, who recently joined Omeros as Chief Medical Officer. Again, welcome, Andreas. We'll have a brief overview of our financial results for the Q3 followed by A corporate update. Mike will then provide a more detailed financial summary before we open the call to questions.

Speaker 2

First though, in the wake of our stopping the ARTEMIS IGAN trial, I'd like to address our near to mid term high level Program strategy. To anyone paying attention to our programs and their development progress, it should be clear That our company is strong and well positioned for success. Of course, we're conducting a deep dive into our ARTEMIS TIGANT trial data and there's more work to be done there to learn what specifically happened, Why we see an outsized placebo effect, whether there are subgroups of patients who responded well to narsoplimab and how we can make use of newly developing biomarkers to understand better the role of lectin pathway inhibition in IgA nephropathy And in kidney diseases more broadly. This examination will not only pay benefits to our MASP-two program, including OMS-ten twenty nine, but will also help us design and execute clinical trials Expect to resolve these and other questions that we have on the ARTEMIS IGAN trial. Our top priorities are focused on near term Value driving catalysts, specifically 1, achieving approval and successful market launch For narsoplimab in hematopoietic stem cell transplant associated thrombotic microangiopathy or TATMA Mid next year.

Speaker 2

2, driving to Phase 3 clinical trials for our MASP-three inhibitor, OMS906, Both in paroxysmal nocturnal hemoglobinuria or PNH and in C3 glomerulopathy, Both Phase 3 programs targeted to initiate in the Q3 of next year. 3, Moving OMS-ten twenty nine, our long acting MASP-two inhibitor into Phase 2 clinical trials by next summer In a larger market indication and for taking our current cash runway, projected to be Well into 2025 and extend it well into 2026 or beyond Without dilution to shareholders, we believe that each of these 4 strategic objectives can be achieved. In parallel, we remain laser focused on cost containment and are assessing a range of additional cost reduction measures For implementation, while balancing them with ensuring that we invest the necessary resources to achieve Our near term value driving objectives. As part of these cost containment efforts, the funds previously earmarked for the 2 year continuation Of the ARTEMIS IGAN trial and related commercialization will be reallocated to extending runway And to our other later stage programs, with a good part of that reallocation going to accelerate and broaden development of OMS906, our alternative pathway targeting MASP-three inhibitor. To summarize, the bulk of our development expenditures in the near to midterm will be directed to approval and market launch of narsoplimab in tATMA, Driving OMS906 towards successful completion of its Phase 3 clinical programs and proving the value of OMS1029.

Speaker 2

Our PDE7 inhibitor, OMS-five twenty seven, will continue advancing through its multiyear funding from the National Institute on Drug Abuse or NIDA. In addition, we intend to move ahead with certain work advancing the seminal discoveries in our immuno oncology program. Our spending on these programs has been relatively small to date as the large majority of the efforts across our five Novel IO platforms are conducted in house by a relatively small, but extremely effective group of scientists. We believe that a limited additional investment in these programs could catalyze Significant asset value in the programs, potentially in the near term. Now let's turn to our financial results.

Speaker 2

Our net loss for the Q3 of 2023 was $37,800,000 or $0.60 per share compared to a net loss of $37,300,000 or $0.59 per share in the 2nd quarter of this year. Cash burn for the Q3 of 2023 was $31,000,000 OMIDRIA royalties For the Q3, we're $10,000,000 and that's a $700,000 decrease over 2nd quarter royalties. This is consistent with historically fewer cataract procedures performed during the summer months. As of September 30, 2023, we had 310 point $3,000,000 of cash and investments on hand. Omeros has $95,000,000 of convertible debt maturing November 15 this year, which we plan to retire.

Speaker 2

Even after retiring the 2023 notes, our current available cash and investments Should enable us to fund our operations and continue advancing our multiple programs well into 2025. And as I noted just a few moments ago, we are evaluating options to extend that runway non dilutively well into 2026 or beyond. Last week, CMS issued the final rule for its 20 24 hospital outpatient Payment system. In that rule, CMS recommitted to separate payment for OMIDRIA in ambulatory surgery centers or ASCs throughout 2024. Beginning January 1, 2025, as mandated by Congress in this year's Consolidated Appropriations Act, CMS will pay separately for OMIDRIA in both Hospital outpatient departments and in ASCs until at least January 1, 2028.

Speaker 2

Historically, when OMIDRIA is separately paid in hospital outpatient departments, OMIDRIA sales in those facilities Have represented an additional roughly 33% on top of sales in ASCs. Let's turn now to our program updates, starting first with our family of agents targeting MASP-two, the effector enzyme of the lectin pathway of complement. On October 16, we announced genuinely the surprising and disappointing preliminary results of the pre interim analysis in our Phase 3 ARTEMIS IGAN trial evaluating narsoplimab for the treatment of IgA nephropathy. Top line results showed that narsoplimab did not reach statistically significant improvement over placebo On the primary endpoint of reduction in proteinuria assessed by 24 hour urine protein excretion at 36 weeks In the intent to treat population comprised of 180 IgA nephropathy patients, all of whom Had baseline proteinuria levels above 2 grams per day, so severe IgA patients. Based on the absence of a statistically significant improvement on the proteinuria endpoint and as agreed with FDA, the clinical trial has been discontinued.

Speaker 2

As we noted during our conference call on October 16, the proteinuria reduction observed in the placebo group It was substantially greater than in Phase 3 clinical trials on other agents in IgA nephropathy. Had the placebo effect in our trial been consistent with the placebo effect in those other trials, our trial would have met Statistical significance. Our deep dive analysis of the IGA data from our trial is underway. As I mentioned a bit earlier, what we learned from that analysis should be applicable not only to our MASP-two lectin pathway programs, but also To our programs for our alternative pathway MASP-three inhibitor, OMS906. Remember, that alternative pathway inhibition has now been clinically validated as an effective treatment for kidney disease.

Speaker 2

And this bodes well for OMS906 and its expanding range of potential indications. So despite the outcome of ARTEMIS IGAN, the evidence supporting the role of the lectin pathway in kidney disease and the Therapeutic potential of MASP-two inhibition remains strong. That said, any Future development of electin pathway inhibitor for IgA nephropathy or other indications that similarly require long term Chronic dosing are better suited for OMS-ten twenty nine, our next generation long acting MASP-two inhibitor. OMS-ten twenty nine has successfully completed a Phase 1 single ascending dose study in healthy subjects And the resultant pharmacokinetic and pharmacodynamic or PKPD data support dosing of OMS-ten twenty nine Once quarterly, either subcutaneously or intravenously. A Phase 1 multiple ascending dose study of OMS 1029 is ongoing and we expect to initiate next summer a Phase 2 program for OMS-ten twenty nine.

Speaker 2

Another of our 4 near term strategic objectives, the approval and successful market launch of narsoplimab for patients FTA TMA is right now a key focus of our company. We've submitted to FDA a formal statistical analysis plan to Compare survival from our narsoplimab pivotal clinical trial to that of an External control, specifically a large registry of TA TMA patients. The statistical analysis plan was developed By a well respected biostatistical group independent of Omeros and without Having examined the survival data to be used in the comparative analysis. Assuming FDA agrees with the plan, we expect the Statistical Group to conduct the analysis and if the results are supportive, we intend to resubmit The Biologics License Application or BLA for narsoplimab in TA TMA soon thereafter, which should allow for an FDA decision on approval mid next year. To minimize the time to an approval decision, we've already begun revising those modules of the BLA resubmission that require revision.

Speaker 2

That includes revising the CMC module of the BLA in accordance with the agreements reached During our meeting last month with FDA CMC review team assigned to our BLA. We also intend to include in our BLA resubmission real world data on over 120 TATMA patients Treated with narsoplimab under our compassionate use program. For each of these adult and pediatric patients, We have provided narsoplimab at no charge. Well, not financially sustainable long term, As compassionate use results show more and more evidence of strong survival outcomes, we feel an increasingly strong Obligation to provide access to narsoplimab for high risk TATMA patients while the drug continues to proceed through the regulatory process. The outcomes of a large number of compassionate use TATMA patients treated with narsoplimab Have been reported in peer reviewed journal and International Congress publications.

Speaker 2

The patients have ranged in age from 3 months to over 70 years. The most recent publication and abstract to be presented at the upcoming Annual Meeting of the American Society Of hematology, details the clinical and survival benefits of narsoplimab in 15 adult And pediatric compassionate use patients, 14 of whom had high risk TATMA. 73% were deemed responders with 100 day survival achieved by 80% Of all patients in the study and by 100% of the responders. As in all other studies, narsoplimab was generally well tolerated without any safety signals of concern. Our work with narsoplimab in COVID-nineteen in acute respiratory distress syndrome or ARDS Presents another opportunity for continued development of narsoplimab and a group of indications centered Around ARDS for which there is strong and widely published mechanistic evidence as well as proof of concept clinical data.

Speaker 2

Narsoplimab is particularly well suited for diseases like ARDS, acute indications Requiring hospitalization. We continue making significant progress in further characterizing the Lectin Pathways Central role in COVID-nineteen and ARDS. 2 weeks ago, a manuscript was published in the Journal of Infectious Diseases Describing the benefits of MASP-two blockade and lectin pathway inhibition on diseased lungs and brains As well as on survival in a well established animal model of COVID-nineteen related ARDS. Treatment of infected mice with MASP-two inhibitor significantly reduced disease severity scores And improved survival rates compared to the control antibody. Specifically MASP-two inhibition significantly reduced Lung infiltrates, edema and hemorrhage, while also significantly reducing and normalizing Brain inflammation and associated hyperactivation of brain microglia.

Speaker 2

Discussions continue With U. S. Government agencies around both COVID-nineteen and ARDS. Multiple labs have recently identified lectin pathway hyperactivation as prominently present in patients with Long COVID at both 6 12 months following resolution of their acute SARS CoV-two infection. Here again, the data suggest a potential role of narsoplimab and MASP-two inhibition in the treatment of not only acute, But also long COVID.

Speaker 2

To date, the challenges in assessing a therapeutic in long COVID are the lack of standardization in diagnostic criteria and in clinical endpoints. Progress is being made internationally on both fronts And we are assessing next steps. In parallel, we have developed, published and filed A broad patent internationally on an assay platform that can identify and discriminate between mild COVID-nineteen patients And those who have moderate or severe COVID-nineteen requiring hospitalization. The assay's novelty and core measurement Is the MASP-two C1 inhibitor complex, a highly sensitive and specific marker of lectin pathway Hyperactivation. We believe that this assay has the potential to predict Those patients who have a high likelihood of progressing to severe COVID and COVID related ARDS.

Speaker 2

This would be a win win for patients, physicians and the payer system. We also believe that our assays utility could well expand beyond acute COVID to include both Long COVID and other disease related ARDS. To our knowledge, there's no commercially available assay that can similarly identify at risk patients in acute COVID, long COVID or ARDS. We're evaluating our options for completing development and commercialization of this assay. We've also made good progress in our orally administered MASP-two inhibitor program.

Speaker 2

Our objective across the MASP-two To franchise is to control exclusively the full range of therapeutics for lectin pathway related diseases And that includes oral therapies. We've selected a drug development candidate as well as a backup candidate, Both of these orally delivered and testing to enable the filing of an investigational new drug application is underway. Okay. Let's now focus on OMS906, our Lead antibody targeting MASP-three and the alternative pathway of complement. Inhibition of the alternative pathway Continues to be validated clinically by other alternative pathway inhibitors in a wide range of diseases.

Speaker 2

This growing set of indications endures to the value of OMS906. Recent examples of this are the clinical validation of alternative pathway inhibition in IgA nephropathy and in geographic atrophy. In our PNH program, we previously disclosed encouraging data from an interim analysis in our Phase 2 clinical trial, Evaluating OMS906 in PNSD patients who have not previously been treated With a complement inhibitor. An abstract with new and updated data from this study of treatment naive PNH patients has been selected for oral presentation at the Annual Congress of the American Society of Hematology For ASH, coming up this December. The presentation describes the clinically meaningful beneficial effects of OMS906 on hemoglobin, LDH and red blood cell clone size in PNH patients.

Speaker 2

11 patients are enrolled in the study, all of whom had reached the 4 week time point and 3 of whom had reached The 24 week time point at the time of interim data capture. Following initiation of OMS906 mean hemoglobin increased From baseline by 3.1 grams per deciliter at 4 weeks and by 9.5 grams per deciliter at the latest time point of 24 weeks. All but 3 of the patients achieved Gender Specific Normalization of Hemoglobin Levels. The remaining patients had concomitant diseases causing bone marrow suppression of red blood cell production, unrelated to PNH, but preventing normalization of hemoglobin levels. No patients required transfusion following OMS906 treatment.

Speaker 2

Mean LDH levels decreased from baseline By approximately 1500 units per liter at 4 weeks and by nearly 2,000 units Per liter at 24 weeks. Mean PNH RBC clone size increased by up to 39% versus baseline. The second OMS-nine zero six abstract was also Accepted for presentation at ASH, this one is directed to in vitro and in vivo mechanistic support For the clinical efficacy of OMS906 in PNH patients. Our second Phase 2 study in PNH patients, our Switch over study is now fully enrolled. As designed, this study enrolls PNH patients receiving The C5 inhibitor, ravulizumab, adds OMS906 to provide combination therapy with ravulizumab For 24 weeks and then in those patients who demonstrate a hemoglobin response with the combination therapy Switches to OMS906 monotherapy.

Speaker 2

We anticipate sharing data publicly from this study later this year or early next. As part of our strategy to move as rapidly as possible through Clinical development of OMS906 in this indication. We have now initiated an extension study designed To assess the long term efficacy and safety of OMS906 in PNH patients. The study will enroll patients who have completed either of the 2 Phase 2 studies that I've just described, Which both evaluate OMS906 for the treatment of PNH. Patients will roll from either of those trials directly into the extension study without a break in OMS906 treatment.

Speaker 2

Data from this study will contribute to the planned BLA for OMS906 in the treatment of PNH. In addition to our clinical work in PNH, we have an OMS906 Phase 2 clinical program Ongoing in C3 gs, a rare and debilitating kidney disease. Enrollment for this trial is slated to begin next month. Consistent with our prioritized objectives, We are targeting to begin enrollment in our Phase 3 PNH trial and in our Phase 3 C3 gs trial in the Q3 of next year. The latest OMS906 data now made public by Ash, in advance of the presentation at the Society's Annual Congress in December, add To the compelling case that MASP-three might well be the premier alternative pathway target and OMS906, The premier alternative pathway drug.

Speaker 2

We previously have detailed that we see as the major Differentiators between MASP-three and OMS906 versus other alternative pathway targets and therapeutics On the market or in development, I won't repeat those detailed explanations of their advantages. They can be found in transcripts of earlier calls and in a slide presentation on our website. Instead, I'll simply summarize the highlights And they are as follows. 1, MASP-three blockers do not inhibit the infection fighting function of the classical pathway of complement. By contrast, both C3 and C5 inhibitors block the classical pathways adaptive immune response, thereby increasing infection risk.

Speaker 2

2, MAT3 is known not to be an acute phase reactant and has very low native circulating levels relative to other alternative pathway targets. In contrast, Factor B, C3 and the terminal factor C5 are all acute phase reactants. This means that the concentrations of Factor B, C3 and C5 increase in the setting of inflammation such as infection Or any other inflammatory condition. As a result, OMS906 should maintain more consistent Pathway inhibition, then drugs targeting Factor B, C3 or C5, Providing better protection against potentially life threatening breakthrough

Speaker 3

of a

Speaker 2

patient's underlying disease. And 3, OMS906 should deliver better patient convenience and compliance than the competition by allowing once quarterly intravenous and subcutaneous administration. While we expect these 3 major advantages to provide significant differentiation over our competitors, Those competitors also help us. They help us by continuing to validate indications clinically, providing a derisked road map for us to follow with what we expect is a better target MASP-three And a better drug, OMS906. So the data around OMS906 continue to strengthen and the breadth of potential indications continues to expand.

Speaker 2

As a result, the value story for the entirety of the 906 program continues to improve. Our objective remains unchanged To make OMS906 the first line standard of care for the treatment of PNH and a host of other alternative pathway diseases and disorders. Let's now move on to OMS-five 27, our PDE7 inhibitor program targeting treatment of addictions and compulsive disorders. PDE7 inhibition It's been shown in animal models to block both craving and relapse across multiple substances of abuse, including opioids, cocaine, nicotine and alcohol. Importantly, PDE7 inhibition, unlike other anti addiction agents on the market, does not appear To depress the reward system, depression of the reward system results in diminished enjoyment of other life Activities, food, socialization, sex, sports and is a major cause of non compliance with currently marketed anti addiction agents.

Speaker 2

The ability of PDE7 inhibitors to avoid this side effect represents a significant advance in the treatment of substance use disorders. The potential indications for PDE inhibitors are not limited to substance use disorders, but extend to compulsive disorders with Clear efficacy data in a well established animal model have been cheating. The development of our PDE7 inhibitor Program for addiction is currently fully funded by a grant from the National Institute on Drug Abuse, dollars 6,700,000 over 3 years. NIDA requested that we first develop OMS-five twenty seven for the treatment of adults with cocaine use disorder. The grant supports both preclinical and clinical work, including a randomized double blind inpatient clinical trial.

Speaker 2

In addition to the Treatment of addictions and compulsions, Omeros controls broad patents surrounding PDE7 inhibition and movement disorders. Our clinical focus in movement disorders is the potential treatment of levodopa induced dyskinesias or LID. LID is a nearly universal and debilitating side effect of long term treatment With L dopa in patients with Parkinson's disease, causing crippling and involuntary movements in L dopa treated patients. LID is estimated to affect millions of Parkinson's patients worldwide, representing Both a large unmet patient need and market opportunity. The only approved drug for LID has marginal efficacy And is fraught with significant adverse side effects, a more effective and safer treatment Primate studies assessing OMS-five twenty seven and LID have been conducted at Emory University And we are discussing next steps with our Emory colleagues.

Speaker 2

We'll end today's corporate review with our immuno oncology Our broad IO franchise consists of 2 cellular platforms and 3 molecular platforms. Our 2 cellular platforms are CAR T and adoptive T cell therapy. Our 3 molecular platforms are immunomodulators, Immunotoxins and cancer vaccines. All of these five platforms are entirely novel And based on substantial in vitro and in vivo data, all look to be viable. During our last quarterly call, I described each of these 5 programs.

Speaker 2

In the interest of time, I'll focus on only 2, our adoptive cell therapy and our cancer vaccine platforms, Specifically, what we believe will prove out to be their respective major advantages over competitor programs. Our adoptive cell therapy platform or ACT like our CAR T platform is 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. These tumor specific memory T cells recognize and efficiently kill tumor cells. The potential advantages of our ACT platform over other cellular approaches are 1. Rather than targeting just Cell Surface Antigens, our ACT platform is designed to target both cell surface and Intracellular cancer antigens significantly broadening its range of indications.

Speaker 2

2, Instead of increasing predominantly either CD4 or CD8 T cells, both of which are needed To successfully kill the tumor, our ACT technology markedly increases levels of both CD4 And CD8 cancer specific T cells. This should lead to more effective Any tumor responses. In addition, the increase in memory cells is expected to mitigate the treatment exhaustion or the wearing off of the treatment effect seen with many currently available cellular therapies. This would result And the ability to treat the tumor repeatedly and prevent relapses. Unlike existing CAR T therapies, our ACT technology does not require cellular engineering.

Speaker 2

Instead, Cells from the patient are simply treated outside the body and administered to the patient. This would represent a major advance over currently available T cell therapies, markedly decreasing both cost and preparation time. Together with enhanced efficacy by enabling multiple repetitive administrations, The expected result is better and sustained any tumor response. As with our other Molecular IO platforms, immunomodulators and immunotoxins, we're excited about the potential of our cancer vaccine platform as well and the potential for that platform To have a significant impact on the survival of cancer patients. Though widely pursued, Successful development of therapeutic cancer vaccines remains difficult to achieve.

Speaker 2

Current approaches induce only transient and ineffective immune responses. We believe that we've discovered a way to overcome this challenge, generating novel molecules that combine tumor antigens With a potent adjuvant, these biologic molecules activate antigen presenting cells. This ultimately leads to efficient killing of tumor cells by both T cell and antibody mediated activities. The vaccine also promotes a long lasting immune response through the generation of memory T and B cells. The major advantages of our platform over other vaccine approaches are 1, our platform should be applicable To all or nearly all tumors.

Speaker 2

And 2, when injected into the body, our novel biologic molecule should result Not only in elimination of tumor cells, but importantly in immune memory against future cancer relapse. If needed, this immune memory could be further enhanced with subsequent vaccine boosters. As I noted earlier today, the large majority of the efforts across our 5 novel cellular and molecular platforms are conducted In house by a relatively small, but highly effective group of scientists. We believe that the moderate investment required To continue advancing our IO program could create opportunities for meaningful non dilutive So I'll now turn the call over to Mike Jacobson, our Chief Accounting Officer to go through a more detailed discussion Our Q3 financial results. Mike?

Speaker 3

Yes. Thanks, Greg. Our net loss for the Q3 was $37,800,000 Or $0.60 per share compared to a net loss of $37,300,000 or $0.59 per share in the Q2 of this year. Cash burn, as Greg mentioned, for the Q3 was $31,000,000 As of September 30, 2023, we had $310,000,000 of cash and investments on hand And $7,000,000 in receivables, primarily consisting of OMIDRIA royalties. Expenses from continuing operations for the Q3 were $48,200,000 an increase of $7,300,000 from the Q2 of this The increase was primarily due to a licensing milestone payment made in connection with our OMS906 program And compensation expense.

Speaker 3

Interest expense for the Q3 was $7,900,000 Consistent with the Q2 of this year, the primary drivers of interest expense are the 2023 2026 Convertible notes and our OMIDRIA royalty obligation to DRI. Our 20 23 notes totaling $95,000,000 are due next week. We plan on retiring the notes with a portion of our existing cash and investments. Now let's look at OMIDRIA royalties. Under our contract with Rayner, we are entitled to receive royalties on net sales of OMIDRIA For the duration of the relevant patent terms, which in the U.

Speaker 3

S. Now extend into 2,035. Under the terms of the contract, the applicable royalty rate decreased from 50% to 30% of U. S. Net sales Upon earning the $200,000,000 milestone payment at the end of last year.

Speaker 3

The 30% royalty rate will continue to apply While separate payment for OMIDRIA is in effect and while sales of OMIDRIA have not been materially affected by the entry of a generic competitor. Under our settlement agreements with the generic manufacturers, we do not expect generic entry into the market Until 2,032 at the earliest. But should generic entry occur in 2,032, any such Generic would be at risk of infringing the recent issued patent that extends to 2,035. As previously mentioned, separate payment for the OMIDRIA or separate payment for OMIDRIA will continue under statutory mandate until at least January, 2028. For the Q3, our royalties on OMIDRIA net sales were $10,000,000 Down $700,000 from the Q2.

Speaker 3

This is consistent with the historical decline in cataract procedures during the summer months. Royalties earned are recorded as a reduction in the OMIDRIA contract royalty asset on our balance sheet. Income from discontinued operations in the Q3 was $13,900,000 and includes 2 primary components, $3,700,000 of interest earned on the OMIDRIA contract royalty asset and $10,100,000 of income due to remeasurement adjustments on our OMIDRIA contract royalty asset. The remeasurement adjustment expected incremental OMIDRIA net sales during the patent term. Now let's take a look at our expectations for the Q4.

Speaker 3

During the Q4, we will incur various costs to close out the ARTEMIS IGAN trial. Additionally, we expect our manufacturing spend on OMS906 will increase as well our costs for the OMS-ten twenty nine clinical trials. These increases are offset by the OMS-nine zero six development milestone we incurred in the 3rd Overall, we expect 4th quarter R and D costs to be similar to the 2nd quarter just completed. 4th quarter SG and A costs should be consistent with historical levels, which have been in the $12,000,000 range. Interest income in the 4th quarter should be approximately $2,500,000 The decrease from the 3rd quarter reflects The use of $95,000,000 of cash to retire the 2023 notes.

Speaker 3

Interest expense for Q4 will be approximately $7,000,000 down $900,000 from the 3rd quarter due to the November 15 retirement of the 2023 notes. Income from discontinued operations for the 4th quarter should be approximately $6,000,000 With that, I'll turn the call back over to Greg. Greg?

Speaker 2

Thanks, Mike. Operator, let's open the call to questions.

Operator

Your first question comes from the line of Steve Brozak of WBB Securities, your line is now open.

Speaker 4

Hey, good afternoon and thank you for taking questions. There's a word that keeps coming up compassionate use. And you've mentioned it a couple of times, obviously, in the number of patients you've been treating. But also as far as in the ASH document that is being published, Can you go into as much detail as is possible on that please?

Speaker 2

Hi, Steve. Sure. We went through, I think, the data from, that compassionate use Abstract during the prepared comments, but I can summarize, I think those for you. These were 15 compassionate use patients. They were adult and children, 14 of them were high risk.

Speaker 2

When we looked or when those investigators looked at those patients, The response rate was high. The 100 day survival across the study was 80%. So that's all patients in the study, including non responders. And when you look only at responders, the survival rate It was 100%. So again, similar to what we had seen in our Pivotal trial.

Speaker 2

And we think again consistent and kind of Clearly underscoring, the role of lectin pathway inhibition in this disease. We have, as we mentioned, over 120 patients that we have treated With compassionate use, narsoplimab. Many of those are from sites That have put in multiple requests. So if you're getting multiple requests from a large number of sites, You would expect that those sites are having success with the treatment. Otherwise, I would expect you would not receive multiple requests.

Speaker 2

Further to that point, You have to think about the patients for whom compassionate use narsoplimab is being requested. These are for the most part, obviously very sick patients. They may be patients or in the Case of a good number of these, they are patients who have failed prior treatments either with Eculizumab, ravalizumab, defibrotide, pegcita co plan. And We are being asked effectively to catch a falling knife. We do not deny treatment.

Speaker 2

We try to get the treatment there as quickly as possible. So I think the results are even More impressive, given what we would expect to be the severity of the patients and the fact That a good number of them have failed prior treatment with other Off label drugs and then we see this response with narsoplimab. I guess you could explain that. If it happened once, it could be just chance to Maybe an act of God, but at some point, the number of those patients responding to narsoplimab, I think Really point to, what the drug is doing, to help these patients. And that's why We genuinely believe it's important we make it available.

Speaker 2

It is at our cost and that cost is substantial. So, we want to continue to do it Throughout the regulatory process, but at some point it really does become I think untenable. But we try to do what we can here.

Speaker 4

Just along those lines and I'll hop back in the queue. Thank you. The clinicians, because you're mentioning these patients that are obviously in critical in critical straits. The clinicians, what are I'm sure that these are the people that have been convinced. So what feedback are you getting from them?

Speaker 4

And I'll hop back in the queue. Thank you.

Speaker 2

Yes, it's a good question. Clearly, we're receiving positive feedback from them and that Feedback is not only coming to us, it's being put in to abstracts And potentially publications are already published on these patients and their responses. So this is what we're seeing and this is It's all consistent, I guess, would be my point. And I think if you look at the data, I think those are pretty clear.

Speaker 4

Got it. Thank you. I'll hop back in the queue.

Speaker 2

Okay.

Operator

Thank you, guys. Thank you so much. And your next question comes from the line of Serge Belanger of Needham, your line is now open.

Speaker 5

Hi, good afternoon. Just One question for us. On HSCT TMA, what kind of feedback are you expecting from FDA Regarding the analysis plan, is this something that could drag out beyond year end this year? Thanks.

Speaker 2

Yes. Hi, Serge. Look, I think clearly what we hope to receive from FDA Is acknowledgment and alignment on the statistical analysis plan that's been submitted? As I stated earlier, this analysis plan has been put together not by Omeros, But by an external and very well respected, well known Biostatistical Group, we believe that it is frankly conservative. We think it should be Acceptable.

Speaker 2

So what we are hoping to hear back in the near term Is that the approach that has been proposed is acceptable. We can go ahead and run the analyses, which have not yet been run. And based on the outcome Of those analyses, if those analyses are supportive of a BLA, we will resubmit the BLA. So with respect to timing, I think what we have guided to is what we continue To hold to and drive to, which is we are really pushing To get an FDA response on a resubmitted BLA in mid next year, which would Be followed very shortly thereafter by the commercial launch of narsoplimab for TATMA. Did that answer your question?

Speaker 2

Kathy, do you want to add anything to that or Andreas or Steve?

Speaker 5

Sorry, go ahead.

Speaker 2

No, go ahead, Serge. Just ask and then I'll All right.

Speaker 5

I was going to say, so refiling is still pending And now, assisted data, that hasn't been completed at this point?

Speaker 2

Sure. We have not analyzed the data. We have built the analysis plan or I should say our external biostatisticians have built the analysis plan, But we are waiting to get alignment with FDA, so that we can analyze those data. And it is then done without foreknowledge of the outcome. That's been our approach.

Speaker 2

We think it's the right approach. Frankly, the analysis after having built the programs, That analysis should take 1 to 2 days to complete. So that's not going to be Any kind of meaningful time delay in moving forward. But Kathy, do you want to add

Speaker 6

Sure. Sure. I think you had asked about, what feedback we expect that sort of thing. And The plan that we've put together, the proposal is consistent with the feedback that we received not just from the Office of New Drugs, But following the meeting that we had with the review division in the summer and also as you may know, FDA has come out with a lot of recent Guidance documents on use of external control groups and real world data and our proposal is consistent with all of those things. So We feel confident in what we've proposed to FDA and we await their response.

Speaker 2

Thanks, John.

Speaker 5

Thanks for your time. All

Speaker 2

right. Thank you. Andreas, anything want to

Speaker 3

add to that? No, I think that sums it up and we're awaiting FDA feedback and are excited to interact with them on this.

Operator

All right. Thank you. And we have a follow-up question from Steve Brozak of WBB Securities. Your line is now open.

Speaker 4

Hey, thanks again for taking the follow-up. The question just came asked in terms of Your plan as far as following up on the statistical review, but just to go over everything you've got in terms of other items in the submission, CMC and everything else. Those you have and are have prepared concurrently, so there would be no delay by anything that You would see with that and just to go over it that you would be basically looking at that As something that would frankly be already accomplished, is that correct as well?

Speaker 2

We have been in the process of assembling all of the information that we plan to Include in the resubmission. So, in direct answer to your question, none of those should represent Any kind of delay. So again, as Kathy pointed out, everything that we built in Or was built into the analysis plan is really consistent with the guidance we've received, not only from the division, not only from the Office New drugs where you recall, we had appealed the initial CRL, but also with the guidance documents set forth by FDA, in the recent past. So we think we have done what we need to do. The pieces of the BLA are coming together now.

Speaker 2

We don't want to delay. So we don't see any of those other components resulting in a delay.

Speaker 4

Got it. Great. Thank you for that further clarity.

Operator

Thank you so much. And there are no further questions at this time. I would now like to turn the conference back to Doctor. Dimopoulos for closing remarks.

Speaker 2

All right. Thank you. Thank you, operator, and thank you all for joining this afternoon. Everyone at Omeros is working hard to recover, sustain and ultimately grow value for our shareholders following the ARTEMIS IGAN results. I hope that today's presentation helped To identify the opportunities for value creation across our late stage and even our earlier stage programs.

Speaker 2

Remember, for those of you who have or can obtain access to ASH either in person or remotely, the Phase Two clinical update on our OMS906 program will be presented by Doctor. Jens Pons on Sunday, December 10 at 5 pm Pacific Time, the presentation will provide a good sense Where our MASP-three alternative pathway inhibitor program stands relative to other alternative pathway inhibitor programs. As underscored today, we believe that we control the premier target in MASP 3 in the premier drug in OMS906 in the alternative pathway space. The other 2 ASH abstracts on our programs, one detailing comes of the high risk TATMA patients treated with narsoplimab under compassionate use that we were just discussing and the other describing The mechanistic support for MASP-three inhibition in PNH, those both We'll be presented on Sunday, December 10 and then Monday, December 11 respectively. The time slot for both is 6 to 8 pm Pacific Time.

Speaker 2

So with that, thanks again. And as always, we appreciate your continued support. Have a good day. Thank you.

Operator

Thank you, presenters. And this concludes today's conference call. Thank you for participating, and you may now disconnect. Have a good day.

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Key Takeaways

  • Omeros has discontinued its Phase 3 ARTEMIS-IgAN trial after narsoplimab failed to show a statistically significant proteinuria reduction versus placebo, and is conducting a deep-dive analysis to inform future MASP-2 programs like OMS1029.
  • The company’s four near-term value-driving priorities are: FDA approval and launch of narsoplimab in HSCT-TMA by mid-2024; starting Phase 3 trials of the MASP-3 inhibitor OMS906 in PNH and C3 glomerulopathy in Q3 2024; initiating Phase 2 studies of long-acting MASP-2 inhibitor OMS1029 by next summer; and extending its cash runway into 2026 without dilution.
  • At Q3 close, Omeros reported a net loss of $37.8 million, cash and investments of $310 million, $10 million in OMIDRIA royalties, and plans to retire $95 million of convertible notes—maintaining funding into 2025 and targeting non-dilutive extension into 2026.
  • OMS906’s Phase 2 PNH data are compelling: mean hemoglobin rose by 9.5 g/dL at 24 weeks, LDH fell by nearly 2,000 U/L, no patients required transfusions, and the program is on track for Phase 3 initiation in PNH and C3 glomerulopathy in Q3 2024.
  • The BLA resubmission for narsoplimab in HSCT-TMA will incorporate an external control survival analysis plus real-world data on over 120 compassionate-use patients—among whom 80% achieved 100-day survival (100% in responders)—with an FDA decision targeted for mid-2024.
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Earnings Conference Call
Omeros Q3 2023
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