Good afternoon and welcome to today's conference 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 will now turn the call over to Jennifer Williams, Investor Relations for Omeros. Please go ahead, ma'am.

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 10-Q, which was filed today with the SEC, and the Risk Factors section of the company's 2018 Annual Report on Form 10-K, for a discussion of these risks and uncertainties. Dr. Greg Demopulos, Chairman and CEO of Omeros, will take you through a corporate update, and then Mike Jacobsen, our Chief Accounting Officer will provide an overview of our third quarter financial results. We have some time reserved for questions after the financial overview. Now I would like to turn the call over to Dr. Demopulos.

Thank you, Jennifer, and good afternoon, everyone. We appreciate you joining us for today's update. Omeros accomplished a great deal last quarter. We submitted the first sections of our rolling BLA for narsoplimab for the treatment of stem cell transplant associated TMA, and we're accelerating toward the anticipated completion of our BLA submission in the first half of next year. We announced positive results from the Phase 1 trial in our OMS527 program focused on addiction and compulsions and continued to advance our clinical and pre-clinical pipeline. In addition to all of that, OMIDRIA produced another quarter of record revenues. Today I'll start with OMIDRIA and our quarterly financials. The third quarter delivered record net sales of OMIDRIA at $29.9 million, an increase of 12% over the first quarter. The growth in sales came from increased demand, driven by a substantial increase in both the number of ordering accounts and the penetration within those accounts across all channels, ASCs, hospitals, the VA, and other government customers. The company's net loss for the quarter was $16.5 million, or $0.33 per share, which includes non-cash charges of $6.3 million, or $0.13 per share. As of September 30, 2019, we had $27.3 million available for general operations, representing a cash burn of $4.5 million for the quarter. We also have a $50 million revolving line of credit facility with Silicon Valley Bank. This line of credit enabled us to borrow up to 85% of our outstanding accounts receivable balance, subject to applicable reserves. We have not yet borrowed under this line of credit. Q4 is historically strong for OMIDRIA sales and we expect OMIDRIA revenues will set another record in the fourth quarter. Consistent with previous sales growth, increasing physician demand, and expanding payer coverage are expected to be key drivers along with…

Thanks, Greg. As Greg noted, OMIDRIA and total revenues for the third quarter were $29.9 million, and our net loss was $16.5 million, or $0.33 per share. This includes non-cash expenses of $6.3 million or $0.13 per share. Here are some additional details regarding our third quarter results, compared to the prior quarter. OMIDRIA once again achieved record sales, with total product revenue of $29.9 million compared to $26.8 million in Q2. This is an increase of $3.1 million or 12%. During the third quarter, our overall gross to net deductions were 28%, remaining consistent with the second quarter. Cost and expenses for the third quarter were $4.9 million, higher than in Q2 at $41 million, although approximately $4 million of that total represented non-cash charges. The increase was primarily due to scaling drug substance manufacturing at Lonza. These process validation batches will form key components of the CMC portion of our BLA filing for stem cell TMA. Third-party manufacturing costs related to our OMS906 program also contributed to the increase. Interest expense was in line with our expectations at $5.7 million, and included $2.4 million of non-cash interest. As of September 30, 2019, we had $27.3 million of cash, cash equivalents and short-term investments available for general operations. In addition, we have a three-year $50 million revolving line of credit available with Silicon Valley Bank. Under the terms of the agreement, we can generally borrow up to 85% of our outstanding accounts receivable. Interest on any outstanding balance accrues at the greater of 5.5% or the primary. As Greg mentioned, we have not made any draws under this line of credit to-date. Now let's take a look ahead to the fourth quarter of 2019. With regard to revenue, Q4 is historically a strong quarter for OMIDRIA sales and we expect fourth quarter OMIDRIA revenues to once again set a record. In the fourth quarter, our research and development expenses will primarily be related to narsoplimab. We expect research and development costs will increase in the fourth quarter, due to the continued manufacture of drug substance, to support our BLA filing for stem cell TMA. As I mentioned last quarter, all development and manufacturing costs for narsoplimab incurred prior to the US or EU approval are expensed as research and development. Selling, general and administrative expenses for the fourth quarter of 2019 are expected to increase modestly from the third quarter total of $16.9 million, primarily due to incremental narsoplimab sales and marketing activities. Interest expense for the third and fourth quarter -- interest expense for the fourth quarter should be in line with the third quarter at approximately $5.8 million. With that, I'll turn the call back over to Greg.

All right. Thanks, Mike. Let's open the call to questions.

[Operator Instructions] And our first question comes from Ram Selvaraju with H.C. Wainwright. Please proceed with your question.

Thanks very much for taking my questions and congratulations on an excellent quarter. I wanted to ask about when during the course of 2020 it might be possible for CMS to revisit the reimbursement status of OMIDRIA, and specifically the OPPS inclusion? Are there specific time points during 2020 when CMS formally do that, or is it on likely to occur more on an ad-hoc basis? And then secondly, I wanted to ask about the status of the narsoplimab ARTEMIS trial, if you could just give us a sense of how many clinical sites are up and running and enrolling patients in that study, and if possible, where you are with respect to the enrollment target there? And finally, with respect to potential future applications for narsoplimab, and indeed other MASP 2 and MASP 3 inhibitor compounds, whether you have evaluated the possibility of applying these in the context of an indication called neuromyelitis optica spectrum disorder, or NMOSD? Thank you.

Thanks, Ram. First, your question about CMS, CMS uses its annual rulemaking as its formal vehicle to promulgate new rules within the agency, so the scheduling for that is well known and pretty regular. This of course does not then include any other discussions potentially with CMS, or any sort of legislative action. As I mentioned, the House is putting forth a bill, introducing a bill, expected to be this week. The sponsors or co-sponsors of that bill are bipartisan. They are the right group to be introducing such a bill, and that can happen at any time. The question that you had on narsoplimab and the enrollment, we've got about 90 sites activated across US, Europe and internationally in the ARTEMIS trial. We continue to grow that number. Enrollment has, as I think I mentioned, accelerated so it's ramping and we're pretty pleased with the rate of enrollment at this point. So your third question, I believe was around the use of narsoplimab in neuromylelitis optica, am I correct?

Neuromyelitis optica.

Neuromyelitis optica. Okay. That is primarily an alternative pathway disorder as I understand it, right, and so I think we haven't looked at that with MASP 2 inhibition but certainly with our MASP 3, that is something that we would look at.

Thank you.

Thank you. And our next question comes from Steve Brozak with WBB. Please proceed with your question.

Hey, Greg. Thanks for taking the questions. I'm just going to go into narsoplimab. You were very, very detailed in terms of the rolling BLA submission. What are you seeing in terms of preparation by the clinicians? And what kind of effect do you see this taking place in transplant medicine? And I've got one more follow-up question on narsoplimab after that, please.

Thanks Steve. I think certainly look there is no treatment for stem cell transplant associated TMA and we believe that OMS721 or narsoplimab will be the first drug approved for them. In fact, I think we're well on our way to getting there. I think that the impact on that is going to be substantial. I mean this represents a clear unmet medical need. There is no satisfactory treatment with current approaches, so we are clearly hearing from our advisors who represent the premier transplanters, really in the world, that what OMS721 and narsoplimab will bring will be substantial so they're excited; they're excited to be able to use it. We're excited. We expect to be able to make it available for their use and out of this it's going to be the patients who benefit. I mean it's very clear when you look at the narratives on these patients that we have, that these are patients who should not do well. These are patients who should not survive, and yet with narsoplimab they do survive. And so that's the impact of that, I think, is clear. I think obviously the community views it that way and we're looking forward as quickly as possible to making it available for patients.

Got it. Now going to a broader picture, given the fact that this is obviously as important a drug as we all hope it is, and the fact that you have different indications that are possible later on, and also different geographical regions, can you give us anything on partnering, potential partnering, thoughts on partnering that we should be looking at or thinking about? And I will hop back in the queue. Thank you.

Yes. No, thanks, Steve. Look we don't discuss our partnering discussions, but I mean -- look, I don't think it would surprise anybody that given our programs, given our assets. I mean even if you look at the ones we were just discussing OMS721, narsoplimab and our MASP 3 programs, our 906, I don't think it would surprise anyone that there would be significant interest around those programs. I think, as I said, I think a good number in industry and a good number in the complement research community view each of those targets as respectively the premier target in the lectin and in the alternative pathways. So, we don't discuss it, but look, with the right partner, that could make a lot of sense. But I think again, let's see how things all play out, but we continue to march ahead and we're very excited about both of those programs.

Great. And thanks again for taking the questions.

You're welcome.

Thank you. And our next question comes from Serge Belanger with Needham & Company. Please proceed with your question.

Hi, good afternoon. Just a couple of questions for me. First Greg, can you discuss the initial impact of the J-code implementation? I know it's only been a month and I guess, other than streamlining the reimbursement process, I just wanted to get a little more color on what segments of the market this J-code will allow you to penetrate a little better now?

Thanks Serge, certainly. I mean look, it allows us to penetrate the commercial payers, the Med Advantage payers, the Medicaid payers and also allows us to, as I said, penetrate the in-office setting. All of those areas are significantly advantaged for us with the J-code. It simplifies the billing, we had seen initially maybe some doubts that CMS would appropriately reimburse under the J-code. Those concerns have been quickly allayed and reimbursement is running smoothly with the J-code. So we think that overall, this is going to be a significant enhancement for us, because it does expand our user base and our payer base beyond just CMS Part B. I mean, when we looked two years ago, or if you look at the data from two years ago around CMS and Med Part B, that sector of the market, again with two-year trailing CMS data, represented about 60% of our overall market for OMIDRIA, or I should say of our overall utilization of OMIDRIA. But over the past two years, we've expanded commercial, we've expanded Med Advantage. We've expanded the VA system. We've expanded these other payers, so that that percentage, although we don't have the CMS data, because again, CMS data trails by two years, but we expect that percentage has dropped. And so the national average is about 45% is Med Part B, and we may, again, don't have the data to show it, but we may very well be tracking that.

Okay. And then in terms of, I guess if you can just give us maybe potential timelines on when you think there'll be a resolution of a permanent pass through reimbursement solution? And if that does materialize, or when it does materialize, is there a possibility that there could be additional commercialization efforts behind this program to drive further growth?

Sure, you know, that's the big question. When? Look, there is unhappiness generally, not just with OMIDRIA anymore, but generally in the industry, which frankly helps us significantly, right. I mean, if you think about the last time we faced this issue with CMS and were successful, this was largely a very limited number of products, one of them being OMIDRIA. The problem now expands much more broadly than OMIDRIA, which is good. I mean, it shows that there is a concerted frustration and eagerness to get this problem resolved across multiple products, multiple sectors and frankly multiple regions of the country, which translates to substantial bipartisan, bicameral support, and that's why you see the legislation that we mentioned that's coming out. We expect that to be introduced this week and as I think I mentioned previously, the co-sponsors of that are strong. This also shares the support of other groups, one of those groups being Voices for Non-Opioid Choices, a very vocal group, this problem needs to be fixed. Opioids are a big problem, continuing to create financial disincentives, to frankly use opioids over opioid alternatives makes no sense. And it flies counter to this administration's clearly stated and strong policy about trying to reduce opioid use. So we think that with respect to timing, look, the Congress is currently tied up with a focus on, I think drug pricing. I think that would probably have to clear, but certainly there's an emphasis to get this taken care of as quickly as possible, and we'll see. The Senate, as I said, is expected to bring forth its companion bill within the next couple of weeks, and all of that I think makes pretty clear -- and these, by the way, I want to be very clear. These are not Omeros-sponsored bills. These are not bills that Omeros has put forth. These are bills that have been put forth wholly independent of us. So these are all, I think, positive signs, and look this just needs to get fixed. So our objective, of course, is to get this fixed prior to the expiration of pass-through, but the idea that somehow with loss of Part B separate payment, that somehow OMIDRIA is mortally wounded, I think are greatly -- those assumptions are greatly overstated. There are a lot of markets for OMIDRIA and there are other things that we continue to look at. Our objective now is to make this consistently available for Med Part B patients. I think we will be successful and I think groups in Washington are all mobilizing to fix this general problem.

Okay. And just one question on 721. I think in your prepared comments you talked about, you started enrollment in a small pharmacokinetic, pharmacodynamic study to look at biomarkers. Is that part of the overall regulatory strategy or is it just exploratory?

It's largely exploratory. I mean, obviously having a biomarker for MASP-2 inhibition, and response to MASP-2 inhibition, would be exceedingly helpful for us. There currently is none, but we think that's a reasonable approach. We think it's something that we can accomplish. And if we do, then I mean you understand very well the implications of that. You understand the implications of that not only in IgA, but in every other disease in which we are pursuing MASP-2 inhibition. So, all of those things, I think, kind of play in. But sure, I think a biomarker will be exceedingly helpful and we think we'll have one.

Yeah. Thanks for taking my questions.

Thanks, Serge.

Thank you. And we have a follow-up question from Ram Selvaraju with H.C. Wainwright. Please proceed with your question.

Hi. Yes, just a very quick one from me. Greg, do you anticipate any potential deployment of narsoplimab through the Right To Try Program? And if so, in what indications might this potentially occur? Thanks.

We don't at this time, Ram. We have our Compassionate Use Program and that is how we're making the drug available to those who need it and can't access it in a clinical trial. So that has been our approach that continues to be our approach, I expect in the foreseeable future that will remain our approach.

Thank you.

Thank you.

Thank you. And this concludes our Q&A session. I will now turn the call over to Dr. Demopulos for any further remarks.

All right. Well, that wraps up the call for today. Thanks again, everyone, for taking the time to listen in. Clearly, we're excited about the progress that we're making in 2019. We look forward to further progress in 2020, and we'll continue to provide you with updates as we continue to execute on our mission to move these products forward and really do good for patients and their families. Until then, thanks again for listening and have a good afternoon.

Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.