Omeros Corp Q4 FY2021 Earnings Call

Good afternoon, and welcome to today’s earnings call for Omeros Corporation. At this time, all participants are in a listen-only mode. After the company’s remarks, we will conduct a question-and-answer session. 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 one week from today. I’ll turn over the call to Jennifer Williams, Investor Relations for Omeros.

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 and the risk factor 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. Today’s call will include a discussion of certain non-GAAP financial measures, with a reconciliation of these non-GAAP measures to the corresponding GAAP measures included with Omeros’ earnings press release issued earlier today, which is available on the Investor Relations page of our website and has been furnished with the Form 8-K we filed with the SEC earlier today. Now, I would like to turn the call over to Dr. Greg Demopulos, Omeros’ Chairman and CEO.

Thank you, Jennifer, and good afternoon everyone. We’ll start with a corporate update and a high-level overview of our fourth quarter and year-end 2021 financial results followed by a more detailed financial summary. With me today are Mike Jacobsen, Nadia Dac, Cathy Melfi, and Steve Whitaker; our respective heads of Finance, Commercial, Regulatory, and Clinical. As publicly announced on December 23, 2021, Omeros completed the strategic divestiture of its commercial ophthalmic product OMIDRIA to Rayner Surgical. Rayner has a long heritage in ophthalmology and markets a portfolio of complementary ophthalmology products across more than 80 countries. At the transaction's closing, Omeros received $126 million in cash. In addition, during this first quarter of 2022, Omeros is collecting all accounts receivable outstanding at the closing date, bringing the effective total cash received by Omeros to $165 million. With cash on hand at year-end, this brings our effective cash and accounts receivable at December 31, 2021, to $195 million. Omeros will also receive a milestone payment of $200 million if before 2025, separate payment for OMIDRIA is secured for a continuous period of at least four years. The immediate capital infusion of $165 million, together with the ongoing royalty stream, should provide sufficient capital for Omeros to run through late 2023. The $200 million milestone, if achieved, will substantially extend that run rate. Beyond the upfront payment in milestone, Omeros retains significant upside in the future growth of OMIDRIA, through royalties on both U.S. and ex-U.S. net sales of OMIDRIA. In the U.S. Omeros receives 50% of net sales, approximately 70% of the operating profit from the closing date, until the earlier of either January 1, 2025 or the payment of the $200 million milestone. Thereafter, Omeros will receive 30% of U.S. net sales, equating to over 40% of operating profits until U.S. patent expiration. Outside of the U.S., Omeros will receive a royalty of 15% of net sales, running until the expiration of all relevant regional or national patents. Let's turn to our fourth quarter financials, GAAP net income for the fourth quarter was $281 million or $4.48 per share, including a $306 million gain on the sale of OMIDRIA. As Mike will explain later, the asset sale of OMIDRIA involved the mandatory restatement of our financials, changing the way we need to report our fourth quarter OMIDRIA and transaction-related revenues and expenditures. I'll provide a high-level overview of some key metrics of our fourth quarter financial results adjusted to exclude the accounting impact of the sale. Overall, fourth quarter net sales of OMIDRIA totaled $32.9 million, a growth of 10% over the third quarter. This represents a new quarterly record for OMIDRIA sales in ambulatory surgery centers and closely approaches an all-time record for quarterly sales in both ASCs and hospital outpatient departments despite the current absence of separate payment by CMS in HOPDs. Omeros recognized as revenue all but $1.1 million of that $32.9 million total, originating from direct product sales prior to the acquisition and the remaining from our 50% royalty on Rayner’s net sales in the remainder of Q4 following the acquisition. Absent the sale of OMIDRIA, our fourth quarter loss would have equaled $23 million or $0.37 per share, effectively unchanged from the prior quarters loss. Fourth quarter non-cash expenses were $6.3 million or $0.10 per share, likewise effectively unchanged from the third quarter of 2021. As of year-end, we had $157 million of cash, cash equivalents, and short-term investments and $38 million in accounts receivable. We also have a $50 million line of credit against our accounts receivable, including our royalty receivables from Rayner, and a $150 million at-the-market sales agreement, which we have not used. We're pleased with OMIDRIA’s overall performance in the fourth quarter and expect OMIDRIA’s sales to continue to grow throughout 2022. In the transaction for OMIDRIA, Rayner acquired a great ophthalmic product, which will help Rayner grow its ophthalmology franchise. Rayner also now has what we collectively believe is the premier surgical facility-focused sales force in ophthalmology. For Omeros, the transaction's economics are highly favorable, allowing the monetization today of substantial downstream revenues, eliminating significant costs and reducing risk, while maintaining roughly 40% to 70% of future operating profits. Rayner plans to expand its U.S. and ex-U.S. sales forces and capitalize on synergies between OMIDRIA and their other ophthalmic products, which should further accelerate sales. Additionally, Rayner plans to launch OMIDRIA in markets outside of the U.S. later this year, which we expect will bring substantial royalty revenues to Omeros from previously untapped regions. Further, we remain optimistic that Omeros will receive the $200 million milestone payment. We're immensely proud to have conceived of, developed, and successfully commercialized OMIDRIA, a drug that improves outcomes in cataract surgery and has been safely used in more than 2 million cataract surgery procedures. I'm also tremendously proud of the OMIDRIA sales force that came together as a cohesive unit, launched a first-of-a-kind drug in ophthalmology, and grew OMIDRIA to a $125 million a year product. I know that under Rayner’s leadership, that team will continue working hard to bring OMIDRIA to more patients who need it. We believe the product is in very good hands with Rayner and we look forward to OMIDRIA’s continued expanding utilization and our ongoing economic participation in that growth worldwide. Before leaving OMIDRIA today, I'd like to give you a brief update on the No Pain Act, a legislative effort led by Voices for Non-Opioid Choices and endorsed by more than 80 major medical societies, patient advocacy groups, and prevention and recovery organizations across the country. The No Pain Act, if passed, will provide long-term separate payment for non-opioid pain management drugs like OMIDRIA in ambulatory surgery centers and in hospital outpatient departments. It now counts 44 senators and 93 representatives as co-sponsors and is truly bipartisan. Momentum around the bill is growing, and new co-sponsors continue to sign on. Sponsors are now focused on identifying the appropriate legislative vehicle to carry the No Pain Act across the finish line soon. The divestiture of OMIDRIA marks a significant transition for Omeros as an organization as well. OMIDRIA is a unique specialty pharmaceutical product. Now, Omeros is a pure biotech, leading scientific advancement across the portfolio of product candidates and development assets in immunology, focusing on the complement system and on immuno-oncology and in addiction. Here's an update on some of our programs. Let's start with narsoplimab, our fully human monoclonal antibody targeting MASP-2, the effector enzyme of the lectin pathway of complement. On October 18, 2021, we announced receipt from the FDA of a complete response letter regarding our biologics license application or BLA for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy or TA-TMA. As we've previously disclosed, the FDA in its CRL expressed difficulty interpreting narsoplimab’s treatment effect given the complexity and severity of both the disease and patient population, indicating that additional information would be necessary to support approval. There were no safety or CMC issues cited, so there's no bleed over to other indications in which narsoplimab is being evaluated. In January, after discussion with our regulatory consultants, including former FDA office and division directors, we submitted a comprehensive response addressing all of FDA's critiques in the CRL in detail. Accompanying that response was a request for a Type A meeting to discuss our responses. The Type A meeting was granted and held last month, during which Omeros responded to each of FDA's issues in the CRL. We believe that the meeting was constructive, and we are currently awaiting feedback from the FDA and will provide further updates as we have more information and clarity. We continue to believe that our BLA, as submitted, merits approval and that the data meet or exceed the threshold for substantial evidence of effectiveness. Narsoplimab delivered a highly statistically significant outcome compared to the pre-specified efficacy threshold. All secondary endpoints were also favorable, several reaching statistical significance, and the benefit-risk balance heavily favors benefit. We worked closely with the FDA throughout the clinical development process, followed their guidance on the design and conduct of our pivotal single-arm trial as well as the appropriate registration path and collaborated with them to create the novel primary endpoint. The regulatory history, including agreements with the FDA, are well documented in meeting minutes and official communications. TA-TMA is an orphan indication with no approved treatment, and our goal is to bring narsoplimab to some stem cell transplant patients for whom TA-TMA is often a lethal complication. During our ongoing interactions with the FDA, we have continued to sharpen our launch plans and invest in TA-TMA disease education. We're confident that we'll be launch-ready once narsoplimab is approved. Additionally, more publications and presentations from international experts continue to accumulate. A manuscript detailing the findings from the pivotal trial, authored by a consortium of the trial’s investigators, is in the final stage of review by a peer-reviewed journal. A manuscript elucidating the role of the lectin pathway in MASP-2 and TA-TMA was recently published in the peer-reviewed journal Environmental Hematology and Oncology. In November, a detailed summary of the successful treatment with narsoplimab in a 60-year-old with TA-TMA was published in Blood. There will be three presentations at the upcoming Annual Meeting of the European Society for Blood and Marrow Transplantation later this month. The first details findings from an international working group of experts in stem cell transplantation, establishing the first broad-based diagnostic criteria for TA-TMA, which will be important in helping identify TA-TMA in a greater number of patients early in the disease process. The second describes a systematic literature review of the natural history of TA-TMA in adults, which makes clear that the beneficial effects seen with narsoplimab are substantially better than would be expected in untreated patients or otherwise stated in the natural history of the disease. The third describes resolution of severe TA-TMA with narsoplimab treatment in a 9-month-old girl at Emory University who had failed treatment with eculizumab. Narsoplimab is also being evaluated in three other indications: immunoglobulin A or IgA nephropathy, atypical hemolytic uremic syndrome or aHUS, and COVID-19. Our Phase III ARTEMIS-IGAN is enrolling internationally. Despite the challenge of COVID-19 at hospital investigational sites, enrollment has continued to progress and has even accelerated. An investigational new drug application is under review by the Chinese FDA. Omeros has identified and is working with over 15 Chinese investigational centers, so enrollment can begin as soon as possible after IND clearance. IgA nephropathy accounts for about 45% of primary glomerular disease in China, and the magnitude of its prevalence in that country will meaningfully accelerate further enrollment in the trial. Multiple sites in other European, South American, and Asian countries are also coming online. Proteinuria data are expected in the first part of next year. As reported in our last earnings call and in our press release last November, results of nearly three-year follow-up in IgA nephropathy patients treated with narsoplimab demonstrate unprecedented effects on proteinuria reduction, as well as eGFR stabilization and improvement. These data were presented by international renal experts at both the Annual Meeting of the American Society of Nephrology and at the World Congress of Nephrology, which took place just last week. We look forward to seeing the Phase III data. Our Phase III narsoplimab trial on patients with aHUS remains open. We have de-prioritized that program for commercial reasons in favor of other MASP-2 and MASP-3 inhibitor programs. Narsoplimab is also being evaluated for the treatment of severe COVID-19 in the I-SPY COVID-19 platform trial sponsored by Quantum Leap Healthcare Collaborative. The narsoplimab treatment arm of the trial has now concluded, and once all data are available, they will be analyzed. We look forward to a readout of the data once that analysis is completed. Two manuscripts from Omeros’ laboratories at the University of Cambridge have been submitted for peer-reviewed publication and detail some of our recent discoveries in the pathophysiology of COVID-19. The first covers the discovery of a profile of complement markers of broad complement dysfunction seen in all patients examined during the acute phase of severe COVID-19, appearing to be driven by hyperactivation of the lectin pathway. Narsoplimab restores complement function in these severe COVID-19 patients, while in patients not treated with narsoplimab, the broad complement dysfunction persists throughout hospitalization or until death. The second manuscript demonstrates that the complement dysfunction in severe COVID-19 patients reported in the first manuscript results in impairment of the adaptive immune response necessary to fight infection, leading to an increased risk of life-threatening secondary infection. Treatment with narsoplimab normalizes the adaptive immune response, which should restore the body's ability to prevent or fight secondary infection and reduce COVID-19 mortality. We look forward to both manuscripts being made available soon and expect that they will spur important discussions and future research. Our MASP-2 life cycle management programs beyond narsoplimab are also moving ahead quickly. OMS1029 is our second-generation, long-acting MASP-2 antibody. A clinical trial application is planned for submission next quarter and OMS1029 remains on track to begin enrolling its Phase I trial this summer. We expect that OMS1029 will be able to be dosed subcutaneously or intravenously at a frequency of once monthly and perhaps even once quarterly. We expect that OMS1029 will allow us to pursue different and complementary sets of indications for this molecule than planned for narsoplimab. In addition to OMS1029 for subcutaneous delivery, our small molecule MASP-2 inhibitors continue to progress. Designed for once-daily oral administration, we look forward to moving a lead candidate into the clinic when ready. Turning now to OMS906, which is our antibody targeting MASP-3. Our Phase I clinical work and healthy subjects is now complete and shows high-level suppression of alternative pathway activity, favorable pharmacokinetics, and a good safety profile to date. We are moving ahead with a Phase 1b trial in patients with paroxysmal nocturnal hemoglobinuria or PNH, who have an unsatisfactory response to the C5 inhibitor ravulizumab. A successful meeting was held between Omeros and the medicines and healthcare products regulatory agency or MHRA to discuss the design and conduct of the Phase 1b trial, and enrollment is expected to begin this summer. We expect that OMS906, unlike C5 inhibitors, will address both intravascular and extravascular hemolysis in PNH and will have significant advantages over agents either on the market or in development to treat PNH. In our phosphodiesterase 7 or PDE7 inhibitor program, OMS527 work is ongoing. OMS527 completed its Phase I program in humans without a safety signal. Given resource constraints, we have been limiting clinical activities. However, discussions are underway with an external funding source to accelerate clinical work. If successful in accessing external financial support for the program, we plan to advance OMS527 through additional clinical trials. Finally, let's turn to our immuno-oncology portfolio. Part of our recent efforts have revolved around methods to improve the potency and durability of adaptive T-cell therapies. Our novel approach, which enforces memory phenotypes in cultured T-cells through a previously unexplored pathway, has demonstrated marked tumor regression following transfer of expanded mouse T-cells in an aggressive solid tumor model. We continue to explore the universality of our approach in human CAR-T and adoptive T-cell therapy systems, and we believe our platform has the potential to significantly improve response rates for patients receiving either engineered or native T-cell therapies for liquid or solid tumors. Furthermore, we continue to explore the effects of GPR174 inhibitors and other novel biologics in promoting immune responses against tumors and overcoming the immunosuppressive tumor microenvironment. With that, I'll turn the call over to Mike Jacobsen, our Chief Accounting Officer for a more detailed discussion of our fourth quarter and year-end financial results.

Yes. Thanks, Greg. As Greg briefly discussed, on December 23, Rayner acquired OMIDRIA and the associated business operations, including the OMIDRIA commercial and sales teams devoted to the product. The sale was accounted for as an asset sale, which required us to restate our financial statements into two components. The first being continuing operations and the second being discontinued operations for all of the historical periods presented. This means that all OMIDRIA revenue, operating expenses and the $306 million gain related to the sale of OMIDRIA are shown in a single line on our income statement as discontinued operations. All of our other activities are included in continuing operations. I will provide more detail in a few minutes. Also, our Form 10-K provides additional details regarding the sale, and I suggest you look there if you have any additional questions on the accounting treatment, following our call today. I would like to now summarize the deal and why we believe it is positive for Omeros. We received an upfront payment of $126 million in December and retained all of our outstanding OMIDRIA related accounts receivable, which amounted to $39 million as of December 23. We also have the opportunity to achieve an additional $200 million milestone payment tied to the achievement of long-term separate payment from CMS. The OMIDRIA transaction includes royalties on all sales worldwide. Omeros will continue to receive 50% of the net sales in the U.S. until the earlier date of either January 1 of 2025 or the payment of the $200 million milestone. Thereafter, we will receive a 30% royalty on U.S. net sales for the duration of the relevant patent terms, which extend to at least 2033. We will also receive a 15% royalty on non-U.S. net sales from OMIDRIA over the life of the relevant patents. From an overall standpoint, considering the U.S. royalties and our reduction in operating expenses, we will receive approximately 70% of U.S. operating profit when royalties are 50% and over 40% when the royalty is 30%. Turning to our actual results, overall net income for the fourth quarter was $281 million or $4.48 per share. The results include the $306 million gain on the sale of OMIDRIA. Without this gain, our fourth quarter loss would have been $23 million or $0.37 per share. This is consistent with the last quarter where our net loss per share was $22.7 million and $0.36 per share. Our non-cash expenses for this quarter were $6.3 million or $0.10 per share. As of year-end, we had $157 million of cash, cash equivalents, and short-term investments available for general operations. We also have $38 million in accounts receivable being collected this quarter. As you may recall, we have an aftermarket sales agreement that allows us to sell from time-to-time up to $150 million of our common stock. Fourth quarter sales from OMIDRIA are all included in discontinued operations as either sales or royalties. On a GAAP basis, we recognized $30.8 million of the sales as product revenue from pre-closing sales of OMIDRIA and $1 million as our 50% share of royalties on Rayner’s sales post-closing. Overall sales for OMIDRIA in the fourth quarter, both pre and post-closing, was at $32.9 million, an increase of $2.9 million or 10% over third quarter reported OMIDRIA revenues. We are very satisfied with the overall fourth quarter sales of OMIDRIA. Sales and ASCs reached another all-time high and overall sales for the quarter were nearly an all-time high even with the absence of separate Medicare payment in the hospital setting. Together with Rayner, we are continuing to pursue a variety of options to ensure long-term reimbursement for OMIDRIA in both the ASC and hospital settings that would trigger the $200 million milestone payment to Omeros. Continuing operating costs and expenses for the fourth quarter were $43 million. This is an increase of $3 million from the third quarter, due to the timing of additional narsoplimab clinical trial activities. As Greg mentioned earlier on our call, we continue to gate narsoplimab sales and marketing spending until the timing of the FDA approval is clear. As I've stated previously, we continue to expense narsoplimab manufacturing costs until the timing of approval in the U.S. is certain. Interest expense for the fourth quarter was $4.9 million and consistent with the previous quarter. Net income from discontinued operations for the year is $386 million and includes the $306 million gain on the sale of OMIDRIA as well as the $80 million in net operating profit from OMIDRIA prior to the sale to Rayner. The gain on the sale of OMIDRIA has two key components: an upfront cash payment of $126 million that we received upon closing in December and $182 million for the minimum expected net present value of future U.S. royalty payments. These minimum expected future royalties are quite conservative for several reasons. One, the objective in booking the future royalty payments is to ensure that no downward adjustment would need to be made to the assessment in the future. Two, the required accounting assessment of future royalties is not a fair value assessment. Three, the accounting assessment uses net present value with a double-digit discount factor in the computation. Four, the assessment does not include any gain related to the $200 million milestone payment because it's not yet final certainty. And five, the assessment does not include any revenues from ex-U.S. sales. Lastly, the assessment includes a 20% effective tax rate in coming up with the amount, and we expect most of that would be avoided through the use of our historic net operating losses and tax credit carry-forwards. Now, let's take a look at the first quarter 2022 and the expected results. We recorded $185 million in future minimum royalty payments on our balance sheet at closing in December 2021; thus, cash received for royalty earned will primarily be recorded as a reduction in this OMIDRIA account royalty asset on our balance sheet versus revenue in our income statement. If and when we achieve the $200 million milestone event, we will record the payment as income from discontinued operations in our income statement. We would also adjust our OMIDRIA contract royalty asset to reflect the reduction in future royalties earned as the royalty rate goes to 30%. We expect overall operating costs in the first quarter of 2022 to remain essentially unchanged from those in the fourth quarter of 2021. Interest expense for the fourth quarter should be consistent with the third quarter at approximately $5 million. As we discussed, net income from discontinued operations should have minimal amounts recorded as the OMIDRIA royalties earned next quarter. The first quarter will primarily be recorded as a reduction of the established OMIDRIA contract royalty asset value on the balance sheet.

With that, I'll turn the call back over to Greg. Thanks, Mike. Okay. Operator, let's please open the call to questions.

Thank you. Our first question comes from Eric Joseph with JP Morgan. Your line is open.

Good evening. Thanks for taking the questions. Appreciating that you're still awaiting feedback or the minutes from the FDA, but nevertheless, I'm wondering if you could just walk us through some of the alternative scenarios going forward in TA-TMA with narsoplimab. Would you be able to resubmit the BLA with the additional responses, discuss the Type A meeting, or if additional clinical data are needed, would you look to conduct an additional study? How do you prioritize that versus focusing on the ongoing programs? Thanks.

Hi, Eric. Thank you. Well, let me take a first answer to that, and then I'll probably ask others to respond as well. But again, I think it's obviously difficult for us to assess what we expect we’ll need to do in the absence of the feedback from the last meeting. As I said, the last meeting we had with the FDA we felt was constructive. And we really went through each of FDA's stated issues. And I think we responded quite strongly to those based on the data. With respect to where we go and what we do, I think we really need to see what comes back from the FDA; until then, I would be guessing, and I'm sure that's not what you want me to do. But let me see. I'll turn the question over to Cathy Melfi, our Head of Regulatory, and see – Cathy, do you want to add anything to that?

Again, just to reiterate that the meeting we had with the FDA was constructive. We're waiting for their feedback and so we really can't speculate on what that might be. But again, just to reiterate that the data for narsoplimab and TA-TMA are strong and we feel that the BLA submitted merits approval, but right now we're still in this waiting game.

So, thanks. Yes. I mean, I think again, summing up, we think that we should be able to resubmit with the data we have. But we really need feedback and guidance, and right now, we're waiting for that as I'm sure you are.

Okay, great. Thanks for taking the questions and for the color.

Thanks, Eric.

Thank you. Our next question comes from Greg Harrison with Bank of America. Your line is open.

Hey, good afternoon. Thanks for taking the question.

Hi, Greg.

Hey. Are you able to provide any other details as to the additional information that was requested? And maybe whether your response to the CRL contained any additional data or if it was more explaining your take on the data that you provided in the initial BLA? And then if you have any description you could provide of the FDA's receptiveness to your arguments during that meeting?

Sure. Well, first, I would say that a lot of our responses to these stated concerns from the FDA, I would characterize really as clarification of existing data and perhaps representation of existing data to address those issues. With respect to the FDA's response, as you know, that's often very tough to read. And I wouldn’t want to speak for the FDA at this point other than to say we await their responses to what we think was a very strong package and a very strong set of responses to those issues. But again, let me ask Steve Whitaker, our Head of Clinical, or Cathy Melfi please feel free to add anything you’d like here.

Greg, I agree with you. It's hard to read the FDA, and we don’t comment on FDA interactions anyway. But the data that we have are strong. We had strong responses to each of the points they raised and we addressed every point that was raised in the CRL. In my view, the BLA does deserve approval on the first round, and certainly now with our responses that should clarify things for the FDA in my view.

Yes. And again, I would just reiterate as we said when we received the CRL that there were questions that really got into the complexity of the disease and the patient population, so it was important for us to provide some clarification. So, as Greg said, a lot of it was really re-clarification of some of the data and we feel that our responses were strong. And again, the meeting was constructive.

Great. Thanks. If I could sneak one more in on another topic, what are the steps going forward now that the narsoplimab arm is completed within the I-SPY trial? Is there anything you can imply as to the efficacy we could see or just the results in general, just considering the length of time that narsoplimab was included in the trial?

Yeah, Steve, would you like to?

Sure. I doubt if this will be a very satisfactory answer, but this is, as you know, the I-Spy group is very hands-off with the providers of the drugs that are included in that trial. Right now, we're just looking forward to getting the data set. So, the full data set and we can then, at that point, all the analyses can be done, and we can have a – then we will publicly disclose the results. I've never even talked to these people.

Got it. Well, thanks for answering the question.

Sure.

Thank you. Our next question comes from Ram Selvaraju with H.C. Wainwright. Your line is open.

Thanks very much for taking my questions. I was wondering if you could elaborate on specifically what you expect the usage pattern of narsoplimab to be in TA-TMA if it is approved and to what extent you anticipate if you might succeed the deployment of eculizumab?

Well, let me take – I'll answer that maybe at the back and move forward. With the approval of narsoplimab, that will be the only drug approved in stem cell TMA. So, I think that that would make the use of any off-label drug for TA-TMA difficult at best. So, I think that becomes pretty clear. With respect to the usage pattern, I guess I will look to Steve and to Nadia to answer that from clinical and perhaps a commercial perspective?

Sure. I'll take the first, Greg, from a clinical perspective. The population we studied, I think, as you all know, was a high-risk population. That high-risk population was actually a large population. And these patients can deteriorate quickly. And so, I think that with approval, narsoplimab would be used in a substantial percentage of these patients because many of them have these risk factors. I think two-thirds had comorbidities; I'm going off the top of my head now. This data has been presented, 80% had infections, something like that. So, a very large number have these risk factors in the entire TA-TMA population, and I think that because patients do poorly and can deteriorate quickly, physicians with an approved drug would want to use this pretty aggressively.

And the only thing I’ll add is just a reminder that the diagnostic code was also approved back in October. And so prior to this, we haven’t had that for TA-TMA, which may make it even more difficult for off-label use if narsoplimab is approved since it would be the only one approved for TA-TMA.

So, Ram, I think what you're hearing is, we think the pattern of utilization would be strong. Narsoplimab would be the only FDA-approved product in that space, and the data, I think, are pretty clear. One thing I would add is, I think I mentioned the work that's being done by the expert group of transplanters who are looking through their data and identifying really criteria for diagnosis of TA-TMA. I think that’s going to be helpful when that ultimately is solidified and published; it will likely increase the number of diagnoses or the frequency of diagnosis in TA-TMA. Remember, this is still largely a condition where physicians use a number of different sets of criteria. I think that having a more unified and consistent set of diagnostic criteria will serve to increase the base and by extension utilization of narsoplimab.

Great. I was just wondering if you had any further clarity regarding the timing of potential top-line data release from the ARTEMIS-IGAN trial, given the commentary that enrollment has accelerated? And if you think it might still be possible for us to see that data before the end of this year?

No, I think realistically, that's going to be in, as I said, the first part of next year. The team is working hard to do it. We are hospital-based and so enrollment is a function of being able to access those hospitals. In the setting of COVID, that can be quite a challenge. We’re pleased with the progression of enrollment that we've seen, and as I said, it has even seen acceleration. But I think realistically, Ram, I would guide you into 2023 for those data. We’re excited to see them. I think that the Phase II long-term three-year data really demonstrate an unprecedented picture of effect, not only on proteinuria but on estimated glomerular filtration rate or eGFR. What we're seeing with narsoplimab, I just labeled that unprecedented, but I want to underscore it hasn't been seen with any other drug. So, we are excited to see the data. The renal experts are excited to see the data. Believe me, we're pushing as hard as we can to get those out.

Thank you very much. And then last question is if you have any additional thoughts or perspectives on the positioning of narsoplimab in COVID-19, given the rise not only of the Omicron variant but sub-variants in that lineage and the fact that multiple therapeutic antibodies that were originally approved for use against SARS-CoV-2 do not appear to have retained significant binding activity versus Omicron? And what potential opportunities this may create for narsoplimab as a novel non-SARS-CoV-2 binding antibody therapeutic within COVID-19?

Well, yes. And I think Ram, what you're pointing out was not unexpected to you or to many. I mean when you are targeting the spike protein or other parts of the virus and what we know is that this virus mutates like other viruses do, but this virus seems to have a very elegant escape mechanism for mutation largely driven by the spike protein. The advantage that we see here with narsoplimab is that the effect, the beneficial effect of narsoplimab would be downstream from that specific virus or the spike protein. The end protein, any of that; the focus of narsoplimab is not on the virus. The focus of narsoplimab is on the damage that the virus inflicts, and that's the endothelial damage. So, really narsoplimab is not subject to the same limitations that the antivirals are. To be more specific, it isn't affected or shouldn't be affected by the mutational changes in the virus. All of those virus mutations that you have noted affect the endothelial in the same way and create the disease, and that's where narsoplimab works. Now, I mentioned some data, and really I should underscore some of the discoveries that have come out of our collective group here at Omeros and in our labs at Cambridge. Those I expect will be illuminating for many. Our focus, which is part of your question – we are looking at treatment, but we’re looking beyond treatment. We’re also looking at PASC or the post-acute sequelae of SARS-CoV-2, long-haul disease or long-COVID. We believe that based on what we're seeing in our Cambridge Labs, the lectin pathway may very well be a contributor to long-COVID. We have to do more work to have that borne out, but early on, I think that looks pretty promising. So, we’re not just focused on treatment; we’re also focused on how we can treat long-COVID or PASC.

Thank you.

Thanks, Ram.

Thank you. Our next question comes from Brandon Folkes with Cantor Fitzgerald. Your line is open.

Thanks for taking my questions and congratulations on the progress. Maybe just a quick one from me; just coming back to narsoplimab in stem cell TMA, just given your interaction at the Type-A meeting, if the agency did come back and say, we agree with your response, would you expect an AdCom to evaluate that data or do you expect just a stake review following, should you not do – have to do additional clinical work? Thank you.

Hi, Brandon. I think, again, we have no basis on which to make any statement about a potential AdCom other than to say that we have discussed AdCom more than once with the FDA during the review process. The response was that an AdCom would not be necessary; but other than that, I have no basis to make any statement or guide you in any way with respect to an AdCom.

And if, I mean, Greg, would you be able to maybe just elaborate if you feel an AdCom could actually be beneficial in such a situation, just given the rarity of this disease? I think it's not the first company we've seen where the company feels the FDA may have not fully understood the disease in terms of making the decision. Are you prepared to comment whether you think in an AdCom, if it would happen, would actually be favorable?

Well, Brandon, are you trying to talk me into an AdCom? I can tell you what happened when we laid the data out in front of expert transplanters. Okay. That is a uniform evaluation and then determination that what we have identified as responders are responders. I’ll underscore the uniformity of that response to date. Do I think that experts understand the data? Yes, I do. And that's not surprising. This is a complex disease and TA-TMA is a complicated disorder on top of a complex disease. It's not surprising that the experts will be able to interpret data that other very skilled people may have more difficulty sorting out. So, I guess, let me stop my answer there, but we know how the data are viewed. You see it yourselves. I mean, you're going to see it at EBMT again. I mean, why are we getting requests for compassionate use?

No, that's fantastic. I appreciate the follow-up.

Okay, thanks, Brandon.

Thank you and we have a question from Serge Belanger with Needham. Your line is open.

Hi, this is Rohit on for Serge. Thanks for taking my question. In terms of narsoplimab, is there any scenario where you don't move forward with it and in that scenario, what becomes the next focus in your pipeline?

Well one, I think, and how are you doing? So sorry. Thanks. But one, I think, look, it is entirely premature to address any thought that we would not move forward with narsoplimab. The data for narsoplimab that we see and that the experts see are pretty clear. As Cathy mentioned earlier, and as I stated in our prepared comments, we believe that narsoplimab merits approval. We think that it meets or exceeds the threshold for substantial evidence of effectiveness and all of the components we believe are there. So, for us to abandon that is really not even in our thought process or lexicon at this point. We think that the drug warrants approval, and we think that we will get there with the FDA. We’re hoping we get there soon. But again, I can't comment other than to say we're awaiting a response. But with respect to what other things we have in the pipeline, in addition to TA-TMA and narsoplimab for TA-TMA, you know, obviously, we're focused on IgA nephropathy and there’s a list of other indications on our whiteboard that we are targeting, not only with narsoplimab but with OMS1029, as our long-acting MASP-2 inhibitor. We really see a set of indications for narsoplimab, and we see a complementary set of indications for a long-acting subcutaneously delivered or IV delivered OMS1029. We have another set of indications all tied to OMS906, which targets MASP-3, which we believe and others believe is the key activator of the alternative pathway, and the premier target in the alternative pathway. We’re moving fast and hard on that as well. As I said, we plan to be enrolling in PNH patients this summer with OMS906. So, the franchise around complement for Omeros is broad and it is deep. And we see TA-TMA as the first step there, certainly not the last.

Thank you.

Thanks.

Thank you. And I’m showing no further questions in the queue. I'd like to turn the call back to Dr. Demopulos for closing remarks.

Thank you, operator, and thanks again, everyone for joining us today. As we've discussed, we're confident in our financial position and in the strength and value across our programs. With narsoplimab, we hope to bring our second product to market soon, and we look forward to what 2022 holds for the rest of our pipeline. As always, we appreciate your continued support and have a good evening. Thank you.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.