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 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 in the Company's 2018 Annual Report on Form 10-K which was filed today with the SEC, and the Risk Factors section also on the Company's 2019 Annual Report 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 financial results. We have some time reserved for questions after the financial overview. Now, I will turn the call over to Dr Demopulos.

Thank you, Jennifer, and good afternoon, everyone. We appreciate you joining us for today's update. As you likely saw, we issued a press release today on the data from our narsoplimab pivotal trial in Hematopoietic Stem Cell Transplant-Associated Thrombotic Microangiopathy or Stem Cell TMA. I'll start today's call with a brief summary of our financial highlights and then immediately run through our narsoplimab data. Net sales of OMIDRIA in the fourth quarter were $33.4 million, another new record. This represents a 52% increase compared to the fourth quarter of 2018 and a 12% increase over last quarter. It's important to note here that wholesaler inventories at December 31, 2019, were consistent with those historically held at year-end by our wholesalers. Our net loss for the fourth quarter of 2019 was $29.2 million or $0.58 per share. This includes non-cash expenses of $6.3 million or $0.13 per share. This also includes a one-time charge of $12.6 million or $0.25 per share due to our accelerating into the fourth quarter the successful manufacture of a set of five lots of narsoplimab at Lonza including three process validation lots. These lots satisfy FDA's requirements for our BLA and all of these lots will be available for commercial sale following approval. under GAAP accounting, manufacturing costs incurred prior to regulatory approval are expensed as R&D. As a result, there will be almost no cost of goods realized when these lots are sold. So when we net out the non-cash expenses and the one-time manufacturer of PV lots, our overall cash burn for the quarter was approximately $10 million. As of year-end, we had approximately $61 million of cash and investments available for general operations. We also have a $50 million accounts receivable baseline of credit, which allows us to borrow up to 85% of…

Thanks, Greg. As Greg noted, OMIDRIA in total revenues for the fourth quarter were $33.4 million, and our net loss was $29.2 million or $0.58 per share. This includes non-cash expenses of $6.3 million or $0.13 per share. The increase in our net loss from the prior quarter was driven by the accelerated and successful manufacture of process validation and commercial lots of narsoplimab at Lonza, or CMO, to support the CMC portion of our BLA filing for stem cell TMA. This represents a one-time $12.6 million expense or $0.25 per share and will save us an equal amount if and when all the lots are sold commercially following approval. After netting out the non-cash expenses and the one-time manufacture of the narsoplimab lots, our overall cash burn for the fourth quarter was approximately $10 million. As of December 31, 2019, we had approximately $51 million of cash, cash equivalents and short-term investments available for general operations. We also have an accounts receivable baseline of credit, which allows us to borrow up to $50 million based on 85% of our available accounts receivable borrowing base. Here are some additional details regarding our fourth quarter results compared to the third quarter. Our revenue for the fourth quarter increased $3.6 million from the third quarter and benefited from the introduction of the new J-code that became effective October 1st which replaced the previous C-code. We anticipate that the new J-code will help our overall reimbursement for procedures covered under Medicare Advantage and commercial insurance plans as we continue to move through 2020. Our fourth quarter gross to net deduction was 27% compared to 28% in the prior quarter. Cost and expenses for the fourth quarter were $57 million or $16.6 million more than the prior quarter. Again, the increase was driven largely…

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

[Operator Instructions] Our first question comes from the line of Steve Brozak with WBB. Your line is open.

Great. Greg, thank you for taking the question. And obviously, congrats on the quarter and the year. Two questions. The first one, going into narsoplimab, you've explained the decision that you made on the acceleration of manufacturing. Can you position this and give us as much color as you can on how this affects the rolling BLA and what it means and what the other parts are so that we can gauge how much you've completed and what you're looking at into the future?

Sure. Thanks, Steve. Well, certainly our objective is to get the product approved, which will require us submitting the BLA as quickly as possible. So what we wanted to make sure was that our manufacturing aligned as best as possible with that timeline. I think it demonstrates certainly high level of confidence that we have here around the potential for this product commercially and also I think for what we see as the likelihood of success in the approval process.

And you going back to obviously everything that you've spoken with FDA, one question I really wanted to just get some more sense of, on the clinicians, what kind of anecdotal information that did you come up for with or did they provide to you because obviously right now you're collecting additional data. I'm just kind of curious to see what they were saying given how devastating the disease is?

Sure. Thank you. Look, we've had a number of patients. Again, when you say anecdotally, remember that these anecdotal patients have all collectively formed a clinical trial with the data that we've just released. But we've spoken publicly about the young Italian patient we have spoken publicly or are experts in this field have spoken publicly about I believe patients in Spain and others. So, I think that collectively the anecdotal data have created the very strong data that we released today. And again, I mean, when you look at their response rates versus the FDA-agreed threshold, I think it it's an impressive set of data that we have provided. And I think we've done it in full transparency. So every piece of that -- just about every piece we're saving some of this for what comes out at EBMT as well, but I mean I think that we've answered just about every question that anyone could have about the pivotal trial.

No, no. Your point is well taken, a p-value of 0.0001 is not anecdotal, I get it. Okay. Let me ask one last question and I'll hop back on the queue. You had mentioned something that was really fascinating how with OMIDRIA that you've started to see hospitals starting to use it, and as much as you can, given the fact that hospitals do have residencies where that's a training ground for future clinicians in the field, what can you tell us about that because it's one of those things where I'm always kind of curious to see how it's being -- how the uptake is being taking there? And then I'll hop back in the queue. Thank you.

Sure. Thanks, Steve. Well, we've had a growth in hospital sales for a while. What we reported today was just that this was the first time that that growth had exceeded the growth in the ASCs. The growth in overall across hospitals and ASCs was over 10% growth in new customers. I mean, I think that's an important statistic that's telling you that we're not just expanding by drilling deeper into our existing customer base, but that we're actually expanding the customer base, and in this case, by over 10%. You're absolutely correct in your perception of how hospitals play into future growth. Hospitals are the sites where residents train and that's why we also provided the data that we've provided specifically on the academic centers where now five of the top six on 11 of the top 17 academic centers for ophthalmic surgery have OMIDRIA on formulary use OMIDRIA and that now includes the number one ranked center, which is Bascom Palmer. And yes, the feedback we get is that the product is extremely helpful in the hospital setting with the residents and with the resident training and as I think we all understand that what you do during your training, you often do when you leave training, and I think that this is why we find this increase in the hospitals so encouraging to the overall future of OMIDRIA.

Great. Again, thanks and congrats and look forward to obviously 2020.

Yes. Thank you, Steve.

Your next question comes from the line of Raghuram Selvaraju with HC Wainwright. Your line is open.

Good afternoon, this is Ed [ph] remarks on for Ram. I appreciate you guys taking the questions. Looking at OMIDRIA. I'm just wondering, has the likelihood of pass-through reimbursement extension changed for the worse in recent weeks due to some potential budget constraints around Coronavirus or do you not see this having any bearing on the process?

Thank you. Yes, I don't think that has any bearing. I think that, if anything, the growth of the support and the increase in momentum around our legislative and administrative efforts indicate quite the opposite. I think that when you look at, for example, the NOPAIN Act, and this is just one example, but when you look at the NOPAIN Act, you're seeing an increasing number of sponsors and co-sponsors both in the House and in the Senate, and remember, that it's not just quantity, even though that quantity is increasing in both chambers. And I should underscore, I know we spoke about this in the prepared comments, but this is truly a bipartisan bill. This has effectively equal support, so sponsors and co-sponsors effectively equally divided between both parties and that is growing. So it's not just the quantity though, but it's also are your sponsors on key committees both in the House and in the Senate? So I think that it certainly is helpful, that this is the right policy. I mean, certainly this is something that should be done. It's something that I think both parties, one of the few things maybe, that both parties in Congress agree on. And so I think in short an answer to your question, I think it's quite the opposite. I think what we're seeing is movement toward getting this done as opposed to somehow another impediment placed in front of it.

That's certainly good to hear. And moving on to narsoplimab, do you have any additional color on when the ARTEMIS-IGAN trial will provide some top line data and specifically would the FDA want to see this top line data before they approve stem cell TMA?

First, we guided to next year and we'll be able to dial that in a little better as we progress through this year. As I said, we had what I think 91 clinical trial sites open and running around IgA nephropathy and more coming online, we're quite happy with the increase in enrollment that we're seeing. And remember that we are going to be looking at both the general population and the subset of high protein spillers, so those that are putting out 1 gram a day, those that are putting out 2 grams a day. And you know I believe that we are the only company specifically looking at those high protein spillers. And our data assessment will be on both of those groups. With respect to your second question, no, I do not think at all that there is any link whatsoever between TMA and the assessment of our TMA data for approval and the IgA data. I think the -- and I think I understand your question. I'm -- at least, I think I do that you're wondering about the safety of the product. And I think that we've established that pretty clearly. So, no, I don't see any connection between those two. I think they'll be reviewed independently as the data are submitted.

Okay. Yes, and you absolutely did have that question, right. So thank you for that detail.

Yes. We have not seen a drug-related serious adverse event with narsoplimab.

Okay. Two more quick ones here just on that program. You put out -- you laid out the nice complete response FDA threshold data. I'm wondering if there is an FDA efficacy threshold for 100-day survival in stem cell TMA or is there no agreement with the FDA on this point so far?

Could you repeat that last question, I'm sorry, it broke up.

Yes. So, I'm just wondering what is the FDA efficacy threshold for 100-day survival in stem cell TMA or do you not have agreement with the FDA on this point yet?

No, it's a secondary endpoint. We're not going to need a threshold for that. I think it's pretty clear though, the experts believe that these patients should have had a less than 20% 100-day survival and what you're seeing are the data that we generated, what I believe it's 65% in all patients, 83% in the protocol-specified for a dose and 93% in the response group. So those numbers are however you turn them or look at them or cut them, those data are extremely impressive. And when you again balance the benefit-risk here, as I mentioned, we really have not seen a meaningful safety signal with narsoplimab.

Right. And then just a last quick question. I'm wondering how many patients you expect to be on narsoplimab through your work with myTomorrows' program?

Yes, that's -- it's a question one that I'm not going to answer right now, that's a -- it's a compassionate use program that we have running with myTomorrows and that sort of information we're just generally not putting out there for reasons that you would understand.

Absolutely. Well, that's all from me. Thank you. I appreciate all the details and congrats on the data.

Thank you very much.

Your next question comes from the line of Serge Belanger with Needham & Company. Your line is open.

Hey, thanks. This is Chen [ph] on for Serge. I just had a couple of questions. So the first one is about the pass-through status. So as we approach the expiration in about six months, how do you expect the sales for OMIDRIA to trend beyond September if there isn't any -- there is no extensions? Should we expect something more in line to what we saw in 2018 or potentially a little bit better now that it's a more established product in the hospital and the ASC settings?

Right. I would agree with what you just said, we would not expect to see the same sort of decrease that we saw when the original pass-through came off at the end of 2017. So this is a product now that has significantly more data published around it. We would expect the sales to continue to ramp we think through the next couple of quarters, and we'll have to see, we're not placing all of our bets on an extension of pass-through, we think that that will be successful. But you would also expect that we have built multiple backup plans to that one, and that expectation would be correct.

Okay, great, thanks. And then, just on the impact and the penetration of the J-code. Can you just describe a little bit more in detail in terms of the penetration that you've seen on the commercial, the Medicaid, Medicare Advantage so far and how do you expect this trend to play out in 2020 and beyond? A – Gregory Demopulos: Right. We have seen, as I said, an increase of plans reimbursing under the J-code that were not reimbursing under the C-code, and that's cutting across Med Advantage and commercial plans. We would expect that that trend will continue to increase as physicians continue to contact their payers, and as more and more of these Med Advantage and commercial payers are reimbursing both regionally and nationally for OMIDRIA.

Great.

So, that would include both not only the number of plans reimbursing but the amount that they do reimburse.

Great. And then lastly, just on OMS721, is there any feedback or update from the FDA as far as the priority review status. Is that something that you're still thinking about first six-month review?

Sure, let me turn that question over to our Chief Regulatory Officer, Cathy Melfi.

Sure. Hi, thanks for the question. Regarding priority review, again, that's something that's determined at the time of filing, we would certainly apply for it and we've spoken to FDA about it. And given our breakthrough therapy designation, FDA has agreed that typically we would be granted a priority review. So again, we are expecting it, but it wouldn't be official until we have the submission and the final ruling by the FDA.

Great. Thank you for the details.

Your next question comes from the line of Brandon Folkes with Cantor Fitzgerald. Your line is open.

Hi, thanks for taking my questions and congratulations on the quarter and the data. And could you just help us think about the timeline from here to approval for narsoplimab in terms of news flow that we will see from our side, I know you talked about the potential for the clinical submission in early part of 3Q 2020. What else should we expect between now and year-end? Thank you.

Well, with respect to the timeline, we -- first thing we'll need to do is complete the clinical section as well as the CMC sections and submit those to FDA. Once that's been filed, as you know, Brandon, the FDA has six months from the date of filing and -- but you have also recently seen that FDA has acted more quickly in some situations than that. So we'll have to see how all that -- how all of those pieces come together for the full timeline. Our priority in addition to getting this submitted is to submit a quality BLA and one that will not come back with questions, that would be time consuming. So we want to make sure we submit a quality product. I fully expect we will, based on the data that we have and the work by this team that has already gone into it. I have really no doubt about that. And we'll just see how that timeline moves following filing.

Great. Thank you, and congratulations again.

Thank you, Brandon.

And I'm showing no further questions at this time, I would now like to turn the conference back to Dr. Demopulos.

Thank you, operator, and that wraps up our call for today. Thank you again everyone for taking the time to listen in. We're proud of what we accomplished as a company in 2019 and are very appreciative of our shareholders for their interest and support. At the heart of everything we do at Omeros is really a devotion to improving the lives of patients and their families, our employees really do live that mission each day. And I'd like to thank them and all our advisors and collaborators for their collective contributions to our success last year, and to our expected continued successes in 2020. As always, we appreciate your support and have a have a good evening.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.