Omeros Corp Q2 FY2023 Earnings Call

Good morning, and welcome to today's earnings call for Omeros Corporation. Please be advised that today's call is being recorded at the company's request, and a replay will be available on the company's website for 1 week from today. I'll turn the call over to Jennifer Williams, Investor Relations for Omeros.

Good morning, and thank you for joining the call today. I'd like to remind you that some of the statements made during this call will be forward-looking. These statements are based on management's beliefs and expectations as of today only and are subject to change. All forward-looking statements involve risks and uncertainties that could cause the company's actual results to differ materially. Please refer to the special note regarding forward-looking statements in the company's quarterly report on Form 10-Q, which was filed today with the SEC and the Risk Factors section of the company's most recent annual report on Form 10-K for a discussion of these risks and uncertainties. Now I'd like to turn the call over to Dr. Greg Demopulos, Chairman and CEO of Omeros.

Thank you, Jennifer, and good morning, everyone. Joining me here are Mike Jacobsen, Nadia Dac, and Cathy Melfi, our respective heads of finance, commercial, and regulatory. We'll start today with a brief overview of our financial results for the second quarter, followed by a corporate update. Mike will then provide a more detailed financial summary before we open the call to questions. Now let's look at our financial results. Our GAAP net loss for the second quarter of 2023 was $37.3 million or $0.59 per share compared to a net loss of $33.7 million or $0.54 per share in the first quarter of this year. The increase was primarily due to research and development costs. Cash burn for the second quarter of 2023 was $30.1 million, which, as Mike will explain later, includes an artificially driven accounting component of $3.4 million. OMIDRIA royalties for the second quarter were $10.7 million, a $1.5 million increase over first quarter royalties. As of June 30, 2023, to support ongoing operations and debt service, we had $341.3 million of cash and investments available and an additional $11.2 million in receivables, primarily consisting of OMIDRIA royalties. Omeros has $95 million of convertible debt maturing in November. Our available cash and investments enable us to pay off these notes at maturity while continuing to fund operations and advancing our multiple programs well into 2025. As mandated by congressional legislation late last year, OMIDRIA secured separate payment from CMS and ambulatory surgery centers until at least January 2028. The legislation further mandates that beginning no later than January 2025, CMS will also pay separately for OMIDRIA when used in hospital outpatient departments. Last month, CMS issued its proposed 2024 rule for the outpatient prospective payment system, consistent with the legislation calling for ongoing separate payment of OMIDRIA. Let's turn now to our program update, starting first with our family of agents targeting MASP-2, the effector enzyme of the lectin pathway of complement. Narsoplimab is our lead antibody against MASP-2. Our biologics license application, or BLA, for narsoplimab in hematopoietic stem cell transplant-associated thrombotic microangiopathy, or TA-TMA, is pending with the FDA. Following a recent meeting with FDA, in which the agency reiterated its commitment to working with Omeros for the submission and provided useful guidance on our proposal to collect and analyze external survival data, we expect to submit to FDA early next month a detailed plan of how we intend to analyze those survival data from already identified external sources. This proposal will be submitted as a Type B meeting request with FDA's response expected within 60 days. After receiving FDA's feedback on our detailed plan, we intend to conduct the analysis and, together with additional new supporting data, plan to resubmit the BLA. Assuming the full duration of relevant FDA review periods, we're targeting an approval decision by FDA in mid-2024. We'll update you when we have resubmitted the BLA. We continue to make narsoplimab available to both pediatric and adult patients worldwide under our expanded access or compassionate use program. To date, we've treated more than 125 compassionate use patients. Interestingly, a good number of patients have responded to narsoplimab despite failing treatment with eculizumab, ravulizumab, and/or defibrotide. TA-TMA patients treated with narsoplimab under compassionate use have been the subject of numerous presentations by investigators at International Congresses. Most recently, a group of investigators in Italy submitted an abstract to the Annual Meeting of the American Society of Hematology, detailing the clinical and survival benefits of narsoplimab in 15 adult and pediatric compassionate use patients with severe TA-TMA. I'll turn now to our Phase III clinical program evaluating narsoplimab in IgA nephropathy. We remain on track to read out 36-week proteinuria data from our Phase III ARTEMIS-IGAN trial later this quarter. Despite the recent market entry of a steroid and a blood pressure medication, significant unmet need persists in IgA nephropathy. The lectin pathway of complement is increasingly recognized as a key immunologic driver of kidney injury and IgA nephropathy. A review article authored by an international group of experts and published in the most recent issue of Kidney International describes kidney biopsies from IgA nephropathy patients, which consistently showed glomerular deposition of mannan-binding lectin, or MBL, together with IgA1 in up to 50% of patients with IgA nephropathy. Glomerular deposition of lectin pathway pattern recognition molecules, like MBL, is known to be associated with more severe glomerular damage as well as more severe proteinuria and hematuria, indicating more severe IgA nephropathy. Studies also show that the lectin pathway contributes to tubulointerstitial fibrosis in IgA nephropathy. The lectin pathway is the only complement pathway linked to tubulointerstitial damage, thought to be the common road to a wide range of end-stage kidney diseases, not just IgA nephropathy. The primary endpoint in our Phase III ARTEMIS-IGAN trial is reduction in proteinuria at 36 weeks in a population of patients at high risk for progressive worsening to end-stage renal disease and dialysis, specifically those patients with baseline proteinuria greater than 2 grams per day. These high proteinuria patients represent about 50% to 60% of all IgA patients globally. To our knowledge, narsoplimab is the only drug being evaluated in this specific population. Underscoring the importance of proteinuria reduction and our focus on high proteinuria patients, a poster presented by international experts at the 60th Congress of the European Renal Association in June described an analysis of data from IgAN patients along with quality of life measures associated with kidney disease. The study showed that higher urine protein excretion was associated with higher symptom burden and worse quality of life overall. ARTEMIS-IGAN is a double-blind, placebo-controlled trial. Assuming positive data, we will submit both a BLA in the U.S. and a marketing authorization application, or MAA, in Europe. IgA nephropathy is a multi-billion dollar market opportunity worldwide, and there is no approved complement inhibitor for this disease. Our other narsoplimab Phase III program in atypical hemolytic uremic syndrome remains a low priority as we have noted previously. Turning to narsoplimab in COVID-19 in acute respiratory distress syndrome, or ARDS, our work continues at the Omeros labs at the University of Cambridge. In patients with acute severe and long COVID-19, we have been collaborating with multiple U.K. consortiums. We expect a number of important publications from this work. Additionally, a manuscript detailing the beneficial effects of MASP-2 inhibition on both symptoms and survival in chemically induced ARDS was published at the end of May in Frontiers in Immunology. Another manuscript has been submitted for publication describing the pulmonary and central nervous system benefits of MASP-2 blockade on symptoms and survival in well-established animal models of COVID-19 ARDS. Animal studies evaluating a MASP-2 inhibitor in H1N1 driven ARDS are now underway. Discussions are ongoing with BARDA, which has expressed interest in helping to develop agents to treat both COVID and ARDS. Following behind narsoplimab in the clinic is our next-generation long-acting MASP-2 inhibitor, OMS1029, designed to be complementary to narsoplimab. Data from our successfully completed Phase I single ascending dose clinical trial support both subcutaneous and intravenous dosing just once quarterly, making it very well-suited for chronic use. Dosing in the multiple ascending dose study of OMS1029 in healthy subjects began last month, and a Phase II program is slated to begin next summer. We've also made good progress in our orally administered MASP-2 inhibitor program together with intravenous narsoplimab and our long-acting subcutaneous inhibitor, OMS1029. We expect our oral MASP-2 blocker to complete a franchise of antibody and small molecule MASP-2 inhibitors, enabling Omeros to control first-line therapy for lectin pathway-related diseases. Omeros' complement franchise continues to expand and strengthen. Our lead antibody targeting MASP-3, key activator of the alternative pathway of complement, continues to prove its prominence as an alternative pathway inhibitor. We're currently advancing OMS906 across three clinical trials designed to build rapidly on the clinical efficacy data already in hand for OMS906. Two of these trials are evaluating OMS906 for the treatment of paroxysmal nocturnal hemoglobinuria (PNH). The first is evaluating OMS906 in PNH patients who have not previously been treated with a complement inhibitor. The second trial has a switchover design, enrolling PNH patients receiving the C5 inhibitor ravulizumab, adding OMS906 to provide combination therapy with ravulizumab for 24 weeks, followed by OMS906 monotherapy in patients who demonstrate a hemoglobin response with the combination therapy. The third OMS906 clinical program is underway in patients with complement 3 glomerulopathy (C3G), a rare kidney disease. We are amending the dose in this trial due to information already learned in the PNH program. In June, data from a pre-specified interim analysis of our ongoing trial of OMS906 in treatment-naive PNH patients were presented at a late-breaker session of the 2023 Congress of the European Hematology Association (EHA). The presentation was identified by EHA's Scientific Program Committee as one of the top 5 late-breaking submissions delivered in a special oral session available on the Investor Relations page of our website. OMS906 is the only drug reported to restore gender-normal hemoglobin levels in PNH patients—meaning hemoglobin levels that are normal based on gender for women and men, respectively. This is important because normal hemoglobin levels are meaningfully higher in men than in women. Other drug companies in the PNH space have been using the lower limit of normal for women as the threshold for normal hemoglobin for all patients, yet this level is substantially below the normal level for men. OMS906 has restored not just women but also men to truly normal gender-specific hemoglobin levels. The trial evaluating OMS906 in treatment-naive patients is over-enrolled, and patient treatment and data collection are ongoing. Although enrollment has been completed, we have been informed by investigators that additional patients are requesting participation. We are evaluating a protocol amendment that could increase enrollment without delaying study completion. At the end of July, we performed another analysis of the data on hand. The results are robust and impressive, and we plan to present them at the upcoming Congress of the American Society of Hematology in December. The second PNH trial, the switchover trial, has already been amended to a Phase II study, and the first low-dose cohort has been enrolled. At study entry, these patients had all received ravulizumab but had an inadequate response, with hemoglobin levels remaining below 10.5 grams per deciliter. We're targeting 12 patients in this study and have already dosed 7, with others in screening. These patients are receiving combination therapy of ravulizumab and OMS906, and the first will begin receiving OMS906 monotherapy shortly. We anticipate providing data on this cohort late this year or early next. It's important to remember that all OMS906 data already made public result from the lowest dose of OMS906 that we plan to evaluate in this program, and we are now moving to higher doses and exposures to allow for a longer dosing interval. Yet, even at this lowest dose, our hemoglobin and LDH results compare favorably to the detailed and publicly available data on other alternative pathway inhibitors on the market or in development. This comparison is even more impressive, given that of the 10 OMS906-treated patients publicly reported, in addition to the hemolytic anemia or red blood cell destruction caused by PNH, two patients also have aplastic anemia, and two others have myelodysplastic syndrome, both of which suppress bone marrow production of mature red blood cells. Despite lacking formal diagnosis, other patients in the trial beyond these four also showed evidence of bone marrow failure at study entry. Those other patients similarly displayed a strong response to OMS906 treatment. The OMS906 data to date underscore the potential of OMS906 as a premier therapy for PNH; they also demonstrate the expected utility of OMS906 across a broad range of diseases and disorders involving the alternative pathway. Clinical data have shown that OMS906 not only inhibits MASP-3, but that MASP-3 inhibition provides a marked level of alternative pathway suppression sufficient to inhibit complement-driven hemolysis in PNH, establishing a high bar for efficacy. Given that our competitors in the field have already validated that alternative pathway inhibition is effective in multiple other diseases and disorders, our data in PNH provide us with good reason to expect that MASP-3 inhibition with OMS906 will also be effective across these other indications. So how do we expect to differentiate OMS906 from its potential competitors? Both the target MASP-3 and the drug OMS906 have multiple expected advantages over other alternative pathway targets and drugs already on the market or in development. First, MASP-3 blockers do not inhibit the infection-fighting function of the classical pathway. By contrast, both C3 and C5 inhibitors block the classical pathway's adaptive immune response, increasing infection risk. Second, MASP-3 is known not to be an acute phase reactant and has very low native circulating levels relative to other alternative pathway targets. This should allow OMS906 to maintain MASP-3 inhibition, enabling more effective blockade of alternative pathway activation. Importantly, these MASP-3 characteristics are expected to translate to a substantially lower risk of breakthrough of the underlying disease with inhibition of MASP-3 than with C3, C5, and Factor B, all of which are acute phase reactants whose concentrations increase in the setting of inflammation, such as infection or any other inflammatory condition. When these increased target concentrations occur, they can exceed the inhibitory capability of the respective drugs' dosing, leaving patients less protected from their life-threatening disease. The third important advantage is better patient convenience and compliance. We expect that MASP-3's favorable target characteristics, combined with the pharmacokinetics and pharmacodynamics of OMS906, will allow for quarterly subcutaneous and intravenous administration of our drug, enhancing patient convenience and compliance compared to other alternative pathway inhibitors on the market or in development. Based on our substantial data in hand and the significant expected advantages of our MASP-3 target and drug, our objective is to make OMS906 the first-line standard of care for the treatment of PNH and a large number of other alternative pathway diseases and disorders. Okay. Let's now move on to OMS527, our PDE7 inhibitor program. We've shown and/or published that PDE7 inhibition in animal models blocks both craving and relapse across multiple substances of abuse, including opioids, cocaine, nicotine, and alcohol. PDE7 inhibition has also been shown to be effective in animals for treating compulsive disorders. Current anti-addiction agents depress the reward system, significantly diminishing enjoyment of other aspects of a patient's life while having only a limited effect on craving. Conversely, PDE7 inhibitors block craving and relapse and do not seem to depress the reward system. Therefore, patients treated with our PDE7 inhibitors would be expected to avoid the negative effects on life enjoyment seen with other anti-addiction drugs. OMS527 treated patients would simply lose their craving for the substance of abuse or for the compulsion. Now, with funding support from the National Institute on Drug Abuse, we are moving ahead at NIDA's request and in collaboration with them to develop our lead orally administered PDE7 inhibitor to treat cocaine use disorder. The three-year, $6.7 million grant from NIDA is intended to support both preclinical and clinical work, including a randomized double-blind inpatient study comparing the safety and effectiveness of our PDE7 inhibitor to placebo in the treatment of adults with cocaine use disorder who receive concurrent intravenous cocaine. Omeros also controls broad patents surrounding PDE7 inhibition and movement disorders. With our collaborators at Emory University, we are evaluating OMS527 as a potential treatment for levodopa-induced dyskinesias. LID manifests as crippling involuntary movements in Parkinson's patients caused primarily by prolonged treatment with levodopa. While levodopa is the most widely prescribed and effective drug for treating Parkinson's disease, LID represents a large unmet patient need and significant market opportunity. More than 10 million patients live with Parkinson's worldwide, and it is reported that 50% or more of those with at least 5 years of levodopa treatment suffer from LID. If treated long enough with levodopa, all Parkinson's patients are thought to develop LID. Only one drug, extended-release amantadine, is approved for treating LID. In addition to its marginal efficacy, amantadine has multiple significant adverse side effects; therefore, a more effective and safer treatment is needed. Our collaborators at Emory have developed a primate model of LID that is highly predictive of clinical efficacy. Extended-release amantadine has been evaluated in the Emory model. The Emory investigators have also used this model to assess OMS527 in LID. We're evaluating the data and will file patent applications as appropriate. We will wrap up today's corporate review with our immuno-oncology programs. There are two broad arms of our IO franchise: our cellular platforms and our molecular platforms. In our cellular platforms, we have developed novel approaches to both adoptive T-cell therapy and chimeric antigen receptor (CAR) T-cell therapy. These proprietary platforms are based on the novel identification of specific T-cell signaling pathways, which once inhibited, significantly and preferentially potentiate and enhance the expansion of tumor-specific memory T-cells that efficiently recognize and kill tumor cells. Our adoptive T-cell platform targets both cell surface and intracellular cancer antigens, significantly broadening its range of indications. Unlike existing CAR T therapies, our adoptive T cell technology does not require cellular modification or engineering. This represents a potentially major advance over currently available adoptive T-cell therapies, markedly decreasing cost and the time required for treatment preparation while enhancing efficacy by enabling multiple repetitive administrations. The result is expected to provide better and sustained antitumor response. Also in our modified CAR T technology, we've incorporated an immunomodulator of T-cell signaling, which protects T-cells from the immunosuppressive environment promoted by cancer cells. Another crucial benefit over existing CAR T therapies is that our CAR T modifications significantly enhance the efficacy and sustained response of Omeros' CAR T therapy. Our team is validating these novel cellular adoptive T-cell and CAR-T platforms and establishing a broad patent estate around them. We believe these proprietary technologies could meaningfully and substantially improve response rates for cancer patients receiving either engineered or native T-cell therapies for not just liquid tumors like existing cellular therapies but also for both liquid and solid tumors. Our molecular therapy platforms represent biologics designed to be injected directly into patients and include therapeutic cancer vaccines, immunomodulators, and modified toxins, what we term our Oncotox platform. Successful development of therapeutic cancer vaccines has been widely pursued but remains difficult to achieve with the current approaches inducing only transient and ineffective immune responses. We believe we've discovered a way to overcome this challenge, having generated novel molecules that combine tumor antigens with a potent adjuvant. These molecules activate antigen-presenting cells, leading to amplification of cancer-specific T and B cells. When injected into the body, these novel biologics should result in the elimination of currently present tumor cells, as well as immune memory against future cancer relapse. Our immunomodulator platform targets and activates immune cells to convert cold tumors into hot tumors. A cold tumor is one that is refractive to immune therapy due to its microenvironment suppressing the activation and function of therapeutic immune cells. Omeros's immunomodulators are designed to make immune cells resistant to these suppressive conditions, restoring the functionality of therapeutic immune cells. Consequently, lymphocytes, macrophages, antigen presenting cells, and other immune cells can infiltrate the tumor, converting it from cold to hot, allowing the tumor to be destroyed. Finally, our Oncotox platform employs engineered toxins to kill only cancer cells that actively proliferate while sparing organs and healthy cells. We expect this novel approach will avoid the deleterious side effects resulting from currently available toxin-carrying therapeutics, particularly damage to endothelial cells, vascular leaks, and severe complications, including death, which have significantly hindered the use of currently marketed toxins. We expect our Oncotox platform to provide a notably higher safety margin and broader applications than currently marketed approaches. Based on the preclinical data generated to date, all three of our molecular platforms—cancer vaccines, immunomodulators, and Oncotox—have the potential to be long-acting and to significantly improve survival rates across both solid and hematologic tumors. I'll now turn the call over to Mike Jacobsen, our Chief Accounting Officer, to provide a more detailed discussion of our second quarter financial results.

Yes, thanks, Greg. Our net loss for the second quarter was $37.3 million, or $0.59 per share, compared to a net loss of $33.7 million, or $0.54 per share in the first quarter of this year. Cash burn for the second quarter of 2023 was $30.1 million. Royalties are generally paid 60 days after the month they are earned. Although the $3.4 million payment due on June 30 was received on July 3, this late payment artificially increased our second quarter cash burn by $3.4 million. As of June 30, 2023, we had $341 million of cash and investments on hand and $11 million in receivables, which primarily consists of the OMIDRIA royalties. Costs and expenses from continuing operations for the second quarter were $40.9 million, an increase of $5.2 million from the first quarter of this year. The increase was primarily due to additional research and development costs related primarily to drug manufacturing and clinical costs associated with our Phase III clinical trial of narsoplimab in IgA nephropathy, as well as site start-up expenses for our 906 studies. Interest expense for the second quarter was $7.9 million, which was consistent with the first quarter of this year. The primary drivers of interest expense are the 2023 and 2026 unsecured convertible senior notes and the DRI OMIDRIA royalty obligation. Now let's look at OMIDRIA royalties. Under our current contract with Rayner, OMIDRIA royalties decreased from 50% to 30% of U.S. net sales upon earning the $200 million milestone payment at the end of last year. While separate payment for OMIDRIA is in effect, the 30% royalty rate will apply throughout the duration of the relevant patent terms, which we expect to be at least through 2033. For the second quarter of 2023, our royalties on OMIDRIA net sales were $10.7 million. Royalties earned are recorded as a reduction in the OMIDRIA contract royalty asset on the balance sheet. Income from discontinued operations in the second quarter was $7 million, which includes 2 primary components: $3.8 million of interest earned on the OMIDRIA contract royalty asset and $3.1 million of income due to remeasurement adjustments on our OMIDRIA contract royalty asset. Now let's take a minute and talk about expected third-quarter results. We expect overall operating costs from continuing operations in the third quarter to increase by approximately $5 million to $6 million. The increase is primarily due to our planned payment of a $5 million milestone obligation tied to advancing clinical development in our OMS906 program and the timing of certain manufacturing activities. Interest income in the third quarter should be nearly $4 million, and interest expense for Q3 should be consistent with the second quarter at approximately $8 million. Income from discontinued operations for the third quarter should be approximately $6 million. With that, I'll turn the call back over to Greg.

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

Our first question comes from Colin Bristow with UBS.

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

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

Yes. As Greg mentioned in the call, the FDA has indicated that they're committed to working with us in terms of the resubmission of the BLA. We believe the data we have is strong and the approach is consistent with the path forward that was presented to us. So again, we're just continuing to work with the FDA.

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

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

Okay. No, thank you for repeating that. Understood. We don't have a specific threshold that we're targeting in IgAN. It is important to look at how other agents that have been approved have performed. Those numbers are ranging as a delta over placebo in the high 20s, and clearly, that indicates what is approvable. As you know, there is no approved complement inhibitor, so we really don't see our competitors as either a steroid or additional RAS blockade. In IgA patients, you're always going to want to optimize RAS blockade, and KDIGO recommends that when clinicians cannot manage the IgA, a 6-month course of steroids is warranted, but that's only 6 months. The budesonide has been approved for only 1 9-month period. We don’t see either of those as competitors. We need to see the data, understand the data, and go forward from there. We expect the data to be positive, of course, we can't guarantee it. But looking at all the data generated with narsoplimab and its mechanism of action, which not only is important in the glomerulus, but also in the tubulointerstitial, we saw marked reduction in proteinuria and stabilization in some patients in eGFR. As far as we know, MASP-2 inhibition is the only mechanism working at both sites. Therefore, we are looking forward to the data and are eager to share them. We are specifically looking at high protein spillers, patients with 2 or more grams of proteinuria per day. We’re doing that because it is of high interest to the FDA, as these patients rapidly advance to end-stage renal disease and dialysis.

One moment for your next question, please.

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

Yes. Sure, Steve. With respect to compassionate use in TA-TMA for narsoplimab, as I said, we have provided drug under compassionate use for over 125 patients. These are both adult and pediatric patients worldwide. We don't have full case report forms for these patients, given that it's an extended use program. But we do get feedback, and that feedback is often made public through the multiple presentations at International Congresses by the investigators who request and then use narsoplimab for their patients. It is notable that we receive multiple requests from the same institutions - this is a not small set of institutions, obviously, with 125-plus patients. But across that 125-plus patient number, we receive repeated requests from institutions, indicating that the drug must be doing something good. Otherwise, they wouldn't be requesting it continuously for both adult and pediatric patients. As mentioned in my prepared comments, we interestingly also see patients who have failed other therapies, C5 inhibitors, eculizumab, ravulizumab, defibrotide, treated with narsoplimab. Effectively, we’re treating patients who are very sick and have been progressing to end-stage organ failure. Yet we treat them because we do not want to deny these patients access. We treat them, and they recover. You see that once, you might say it’s coincidence, you see it a few times, and it becomes clear the drug is effective. And that’s what we are seeing. So, let me see if that answers your question.

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

No, there's not. The $0.59 per share loss is the correct GAAP number. I think what is happening—and we've tried to correct this multiple times on our earnings calls—is that the $0.70 is being lifted from continuing operations. But we are required by accounting rules to account for our royalties in non-continuing operations, so that whole piece is clearly being missed. I think when many report our EPS, they look at just continuing operations and ignore the non-continuing operations where all our royalties that we receive are recorded. But it's just a function of accounting requirements. Let me see if Mike has anything to add to that.

Yes, the key to know is that our discontinued operations will continue as long as we get OMIDRIA royalties. A lot of times, discontinued operations equals a year or two and then it's gone. In our case, the way the accounting made us do this, we will continue to have discontinued operations. OMIDRIA royalties are obviously a significant positive cash flow for us, and using discontinued operations miss is a big part of our finance.

One moment for your next question, please. And our next question comes from the line of Greg Harrison with Bank of America.

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

Sure. Thanks, Greg. We want to be careful here that we don't preempt what we have submitted for presentation at ASH. But I think we can speak to it in general terms. We are seeing very consistent results, and as we move further out in time, we would expect continued improvement. So we're very encouraged by what we're seeing. The latest cut of the data reinforces our confidence in the target and in our drug; we believe this is clearly effective. And that should translate to other indications as well. PNH is a good litmus test because effectively, to ablate alternative pathway activity is necessary; otherwise, you see quickly in your LDH levels and hemoglobin levels what is happening. So we know OMS906 is effective. This will translate to the other indications. And really, we can identify other agents that are alternative pathway-related diseases or disorders. So this is something that we are very confident about. Nadia, do you have any additional comments?

I think one of the things I'll add not only for 906 but our entire portfolio is also the advantage of lessening treatment burden on these patients. Having patients take daily pills or having frequent injections is another key differentiator, and we are excited across the entire portfolio, including 906, for this additional advantage.

Thank you, Nadia. As you see, we have relatively short-acting IV. We have long-acting IV or subcutaneous, and now in MASP-2 we're moving quickly on our oral. That's also looking good. So we have the landscape covered and control the effector enzyme of the lectin pathway, meaning we control the lectin pathway. We also manage the key activator of the alternative pathway with all the advantages Nadia just mentioned and those I outlined during the prepared comments. We believe that we can make a strong case that we have the premier complement franchise in the industry.

Next question comes from Serge Belanger with Needham.

A couple of questions on the IgAN program. Can you talk about the statistical powering of the trial that's going to read out later this quarter? And secondly, do you believe the ARTEMIS trial is the only Phase III trial required to support BLA and MAA filing in Europe?

Sure. Thanks, Serge. Regarding the IgAN powering, our statisticians believe, and are quite confident, that we are overpowered. So I think we're in good shape there. Yes, we expect that one Phase III clinical trial will be sufficient to support a BLA and MAA, and that's consistent with other therapeutics that have received approval recently.

And then regarding the nonpaying coverage in OMIDRIA. OMIDRIA had some good traction in the ASC setting. Just curious how the no paying coverage that takes effect in 2025 will change the overall coverage of the product and whether it will see increased usage beyond the ASC study?

Sure. Thanks, Serge. In answer to your first question, the IgAN powering, our statisticians believe that and are quite confident that we are overpowered. So I think we're in good shape there. And yes, we expect that the one Phase III clinical trial will be sufficient to support a BLA and MAA, and that's consistent with other therapeutics that have received approval recently. So we see no difference there. Regarding OMIDRIA and HOPD use: HOPDs represent about 20% of total procedures. Once we again receive our OMIDRIA separate payment for the HOPDs, we expect to see about a 20% boost in our total revenues or net sales from OMIDRIA at least. I think the key here—and when I say a 20% boost, I guess that would be about a 25% increase over where we are given that it's 20% of total net sales—is the amount of time that we now have secured and the long-term separate payment. How quickly can Rayner lock down Medicare Advantage or Medicare Part C, separate payment reimbursement? That is crucial here. Right now, I think physicians and centers still primarily call their patients. They look for patients who are Medicare Part B. They do this out of concern that if they use OMIDRIA on a Medicare Part C patient and are not paid, that is a meaningful cost to them. But there becomes a threshold—if you can access Medicare Advantage for even under 100% of patients, it just needs enough of the patients to make it worthwhile for physicians and centers to use it broadly. Once that situation arises and they've got that network, you increase the utilization widely. We need to see that, as the use of the drug benefits the patients greatly. We will continue to see demand from physicians. It is a clear benefit to them. As more patients are needed, Rayner has been actively working on this issue, and we look forward to their success, which is not just positive for Rayner and Omeros, but most importantly, for patients as well.

The only thing I will add is, I agree with everything you just said. There has been demand for OMIDRIA continuing even without the NOPAIN Act previously. So we know there is significant opportunity that we're excited about.

Thank you, Nadia. Yes, I would underscore what Nadia just said. Many HOPDs are using the product effectively at their cost because they believe in its efficacy and its necessity for their patients. Therefore, once the HOPD separate payment begins, I believe it has an amplifying effect across ASCs and HOPDs.

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

This is an analyst on for Olivia. Could you give us any more color on what type of survival analysis is included in the proposal you're submitting next month for TA-TMA? Once you're in agreement with the FDA on those, how quickly do you think you can turn around the survival data for the submission package?

Sure. Thank you. First, regarding what we are proposing, these are specific analyses we think to run that will allow for a robust and meaningful comparison of the survival data from our clinical trial, the TA-TMA trial, to survival in the external sources. There's nothing particularly out of the ordinary. We just want to submit a detailed proposal to gain alignment with the FDA. After this submission, as I said, it will be part of the Type B meeting, and we expect a response from the FDA within 60 days. Then it’s largely just us pushing a button to get the readout. We are resubmitting a BLA; thus, we have to update safety information and incorporate the new data into the BLA before resubmitting. Our target, even accounting for a full review cycle by the FDA, is to expect a decision from the FDA in mid-2024. Cathy, do you want to add anything?

Yes. Only to say that for parts of the resubmission that don’t depend on the analysis that we still need to conduct, we are already documenting and preparing the necessary materials. So we're trying to complete as much as we can in advance and in parallel to minimize the amount that needs to be done once we receive the FDA feedback. We're working very hard on it now.

The objective is, of course, to resubmit the BLA as quickly as possible. This has been a challenging task, and we want to take narsoplimab to fruition as quickly as we can. We've laid out the timelines that we believe are reasonable, and I assure you internally, we are all hands-on deck working to get this finalized. In previous discussions, we mentioned compassionate use; there is a clear need and demand for the product. We receive compassionate use requests weekly. We received at least one request this week already, and we don’t ask about payment for these; rather, the question is how quickly we can deliver the drug, especially when its pediatric patients are involved. We make it available because we are confident in its effectiveness, and the requests we receive show the confidence within the transplant community that it is effective. Our objective is to get this over the finish line quickly to offer broad availability to patients, both adult and pediatric. We know we are saving lives with this drug.

Yes, I'll add something as well. Regarding the needs and demand out there, we've recently participated in a couple of payer conferences and continued our interactions with transplant centers. The #1 question we are asked is when can we have this available, as they are eager to add it to their formularies to provide patients with a specific indication for TA-TMA without the hassle of off-label use.

I hope that answers your question. If not, please let us know.

At this time, I'd like to hand the conference back over to Dr. Gregory Demopulos for closing remarks.

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

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