Omeros Corporation (OMER) Q3 2020 Earnings Report, Transcript and Summary

Good afternoon and welcome to today's earnings call for Omeros Corporation. [Operator Instructions]. 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 1 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. 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. 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 Factors section 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 annual report on Form 10-K and quarterly report on Form 10-Q for a discussion of these risks and uncertainties. Today's call will include a discussion of certain non-GAAP financial measures a reconciliation of these non-GAAP to GAAP measures is included with Omeros' earnings press release issued earlier today. 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. I'll start today's call with a discussion of narsoplimab, our fully human antibody targeting MASP-2, which is the effector enzyme of the lectin pathway of complement. Let's first focus on our program in hematopoietic stem cell transplant-associated thrombotic microangiopathy, or TA-TMA. With respect to our rolling biologics license application, or BLA, for narsoplimab in the treatment of TA-TMA, the nonclinical and CMC sections of the BLA have already been submitted and all clinical sections are complete. This includes all detailed narratives on all study patients and on compassionate use patients. The narratives include patient historical data that were obtained at the clinical sites and that predate enrollment in the pivotal clinical trial. These narratives were requested by FDA as part of our agreement to convert our Phase II clinical trial to a pivotal trial. We are submitting them as part of the BLA, which we expect will streamline FDA's overall review process. The last components of the BLA, the clinical sections and the narratives will be submitted next week. A few weeks ago, the final clinical data included in the BLA were presented by Professor Alessandro Rambaldi of the University of Milan and Head of Hematology and Bone Marrow Transplantation at PPG, Papa Giovanni XXIII Hospital; and by Dr. Miguel Perales, chief of the adult Bone marrow transplant service at Memorial Sloan Kettering Cancer Center. The final complete response rate, the primary efficacy endpoint was even higher than the preliminary data reported earlier this year. This was a very sick population with multiple comorbidities. Compared to the agreed efficacy threshold for the primary endpoint of 15%, 61% of all patients who received at least 1 dose of narsoplimab and 74% of patients receiving the protocol-specified narsoplimab treatment for at least 4 weeks were complete responders. The secondary endpoints were similarly impressive. 100-day survival expected to be no more than 20%, again, was multiples of that, 68% in patients receiving at least 1 dose, 83% in the per protocol treated group and 94% in complete responders. Median estimated overall survival was 274 days in all patients, 361 days in those receiving at least 4 weeks of dosing and could not be estimated in the responder group because, given the clinical response to narsoplimab, more than half the patients we're still alive out to as long as roughly 4 years following treatment. As a reminder, narsoplimab has received FDA's Breakthrough Therapy designation and orphan drug designations from both FDA and EMA for the treatment of TA-TMA. We have requested and expect that our BLA will receive priority review. As we look forward to FDA approval of narsoplimab for the first of what we expect will be a series of approved indications, our launch readiness continued to progress throughout the third quarter. We expanded our commercial and medical affairs infrastructure, identified the final candidates of our sales leadership team, expanded our medical science liaison team, developed field and payer training modules, hired our field market development managers and expanded our advocacy initiatives with key organizations throughout the transplant community. Accomplishments in Q3 included the filing and presentation for our international classification of diseases or ICD-10 coding applications for narsoplimab and for TA-TMA. This enables straightforward reimbursement of the drug. In September, in a process hosted by CMS, we requested an ICD-10 procedure code for administration of narsoplimab. At that meeting, CMS made a preliminary recommendation to accept the code, and we are awaiting the final decision in early 2021. We also requested an ICD-10 diagnostic code for TA-TMA from the Centers for Disease Control and Prevention, or CDC. The creation of a diagnostic code would help clinicians payers and others accurately track the incidence and severity of the illness and would likely increase the number of patients who are accurately diagnosed. Here again, CDC has preliminarily indicated its support for a TA-TMA diagnosis code. As we continue to advance toward both procedure and diagnostic ICD-10 codes, we have closely collaborated with and appreciate the strong support from key transplant societies and organizations. These include the Center for International Blood and Marrow Transplant Research, the American Society of Transplant and Cellular Therapy, the American Society of Hematology, the Pediatric Transplantation and Cellular Therapy Consortium; Be the Match National Bone Marrow Donor program, the European Society for Blood and Marrow Transplantation and the TA-TMA Guidelines working group consisting of some of the most respected transplant physicians across the U.S. and Europe. We are executing on a comprehensive publication strategy and a long list of manuscripts highlighting the biology and clinical benefits of narsoplimab in TA-TMA have begun appearing in peer-reviewed journals. A manuscript by researchers at Weill Cornell Medical college led by Professor Jeffrey Lawrence was recently published in the peer-reviewed journal Clinical and Experimental Immunology. And next month, Omeros will have a significant presence and a presentation at the annual meeting of the American Society of Hematology. In summary, the regulatory and commercial efforts around narsoplimab and TA-TMA are moving ahead nicely. We expect that FDA will grant us a priority review. And we look forward to bringing this much needed therapy to patients as soon as possible. Our work in TA-TMA and other endothelial injury syndromes allowed us in collaboration with Professor Alessandro Rambaldi to recognize the pathophysiologic similarities between TA-TMA and COVID-19. Both our endothelial injury syndromes and involved as an early and central component, MASP-2 endolectin pathway of complement. I won't on this call, go into detail about how the mechanism of narsoplimab and the pathophysiology of COVID-19 dovetail almost perfectly. Instead, I'll refer you to our Investor Relations website, where you'll find a presentation clearly laying out that information. Suffice to say that numerous leading research groups around the world including Omeros' complement labs at the University of Cambridge, have demonstrated that COVID-19 is caused by overactivation of the innate immune response and is mediated by 3 major components: lectin pathway-driven complement activation, inflammation and coagulation. We believe that narsoplimab is the only drug that effectively blocks all 3. And the dramatic clinical outcome is specifically survival that we've seen in treating critically ill COVID-19 patients with narsoplimab are consistent with those seen with the drug in TA-TMA, underscoring the shared pathophysiology between these two disorders. In August, we announced that 6 COVID-19 patients in Bergamo, Italy, all with high-risk factors and deteriorating respiratory stratus requiring mechanical ventilation were treated with narsoplimab under compassionate use. All 6 patients clinically recovered, survived and were discharged from the hospital. Laboratory values, specifically circulating endothelial cell counts, IL-6, ILH C-reactive protein LDH, AST and D dimers all normalized. Retrospective control groups with similar baseline characteristics and disease severity had mortality rates of 32% and 53%. The results of the study were published in the peer-reviewed journal, Immunobiology. It's now become clear and multiple groups internationally have reported on this that COVID-19 is not a one-and-done disease. Instead, as many as 70% or more patients who have reportedly recovered from the initial bout of COVID-19 suffer serious longer-term effects, cognitive impairment and other CNS problems as well as cardiac pulmonary and multi-organ sequelae. The social health care burden and associated costs of these long-standing disease effects could be staggering. So we evaluated our Bergamo patients 5 to 6 months after their last treatment with narsoplimab. Remarkably, all patients were doing well, and none were found to have any clinical or laboratory evidence of COVID-19-related sequela. All of their clinical assessments and laboratory values, including D dimer levels, a marker of hypercoagulation were entirely normal. As the surge in COVID-19 cases increases, we have continued to create critically ill patients both in the U.S. and in Italy under compassionate use. To our knowledge, no treatment for severely ill COVID-19 patients rationally addresses the biology of the disease nor has shown the same remarkable clinical outcomes as has narsoplimab. The need to make narsoplimab widely and rapidly available was advocated by a panel of experts in September. On the Demi Colton public service webcast and in a recent article featured in the American Council on Science and Health and subsequently published in real clear markets. The article's author, Dr. Henry Miller is Senior Research Fellow at the Pacific Research Institute, former Robert Weston Fellow at Stanford's Hoover Institution and had an impressive 15-year career at FDA. Our discussions have progressed with leadership across BARDA, NIAID, NCAT and NIH regarding narsoplimab for the treatment of critically COVID-19 patients. With COVID-19 surging again globally and other therapeutics with really greater fanfare having failed to show benefit in critically ill COvID-19 patients, the decision-makers in these government agencies are increasingly focused on narsoplimab. This awareness of and interest in narsoplimab extends to a future Biden administration as well. We also have received requests to include narsoplimab and platform trials for COVID-19, and those discussions are advancing. In addition to our work with narsoplimab in COVID-19 and completing the rolling BLA submission in TA-TMA. Our other Phase III programs for narsoplimab continued to progress in the third quarter. Our Phase III trials in atypical hemolytic uremic syndrome or aHUS; and in immunoglobulin a or IgA nephropathy are ongoing. Our focus remains on IgA nephropathy and on our Phase III artemis IGAN trial, which has now nearly 120 sites activated worldwide. Interestingly, data from multiple research groups now indicate that the tubular interstitial disease component in IGA nephropathy involves lectin pathway activation on the surface of damaged tubular cells caused by proteinuria and/or ischemia reperfusion injury associated with, for example, acute kidney injury, leading to tubular interstitial inflammation in fibrosis. This evidence further underscores the role of the lectin pathway in IgA. Narsoplimab appears to be the only drug with FDA's Breakthrough therapy designation for IgA nephropathy and the only drug that can obtain full approval on proteinuria data alone, potentially shortening the full approval process by years by not needing to show improvement in EGFR. We think that there are good reasons for these singular distinctions afforded in narsoplimab, and we look forward to seeing and sharing the data. We view narsoplimab as not just a drug but as a platform therapeutic. And we continue to expand the scope of indications that we're targeting for narsoplimab and our other MASP-2 inhibitor programs beyond endothelial injury syndromes and proteinuric renal diseases. MASP-2 and the lectin pathway play a central role in the innate inflammatory response and their importance in driving a long list of diseases and disorders is becoming increasingly recognized and understood. Our long-acting MASP-2 antibody, OMS1029 is expected to be in the clinic in early 2022 and to allow once-monthly or even less frequent subcutaneous dosing. We're hoping to follow that up quickly with our orally available MASP-2 inhibitor. Before moving on to OMIDRIA and other programs in our pipeline, I'll bring you up-to-date on our other complement program, OMS906, our MASP-3 inhibitor. MASP-3 is responsible for the conversion of pro Factor D to Factor D and is thought to be the key activator and premier drug target in the alternative pathway. In September, we began dosing human subjects in a placebo-controlled, double-blind, single ascending dose and multiple ascending dose Phase I clinical trial. The trial is running on schedule. Our first cohort has already completed dosing. The second cohort is being dosed now, and the third and fourth cohorts are enrolling. Initial data readout is expected in the coming year. Data from our OMS906 program were presented last month at the Fourth Complement Based Drug Development Summit, and the presentation can be found on our Investor Relations website. As with our MASP-2 program, we're also moving ahead with the development of orally available small molecules that inhibit MASP-3. OMS906 is a long-acting antibody achieved in part by modifications to its Fc region. To avoid primarily any potential encumbrance to the late-stage clinical or commercial manufacturing of OMS906 at its current manufacturing facility, we recently entered into a licensing agreement with Xencor as have a good number of other companies with antibody therapeutics that have long half lives. We expect that this will entail the payment of modest milestone fees and low to mid-single-digit royalties, while Xencor's patents remain extent in the jurisdiction of sale. In parallel with our MASP-2 and MASP-3 clinical work, a great deal of complement research is being done both in our Seattle facilities and in our labs at the University of Cambridge. Our work has previously resulted in redefining the biology of the complement system. Examples include the C4 bypass mechanism by which MASP-2 directly activates C3 and the role of MASP-3 in activation of the alternative pathway. Our team continues to redefine complement biology, and we plan to publish these new discoveries once we have securely established the corresponding patent positions. So let's turn now to OMIDRIA, our commercial ophthalmic drug product. Net revenues from OMIDRIA in the third quarter were $26.1 million after deducting out $8.7 million return reserve associated with the October 1 expiration of pass-through for OMIDRIA. Had we not booked this return reserve, our Q3 revenues would have been an all-time record high. This was despite the headwinds of COVID-19, which because of the additional safety precautions required in the operating room, continue to affect overall cataract surgery volumes by restricting throughput of cases in the surgical facilities. Our net loss for the quarter was $38.5 million or $0.66 per share, of which $13.6 million or $0.23 per share were noncash charges. Our non-GAAP adjusted net loss for the quarter was $19.9 million or $0.34 per share. This non-GAAP adjusted net loss also conservatively includes the $8.7 million or $0.15 per share deduction from our third quarter revenues for the return reserve. If and when reinstatement of separate payment for OMIDRIA occurs, we expect to recover the $8.7 million reserve. As of September 30, 2020, we had $153.5 million of cash and investments available for general operations. This includes the receipt of net proceeds from our third quarter financing activities. Specifically, $93.7 million from the issuance of 6.9 million shares of stock and an additional $76.9 million from issuing new unsecured convertible debt after repurchasing $150 million of unsecured debt that was previously outstanding. We also purchased a capped call on the new debt that effectively increases the initial conversion price of $18.49 per share to $26.1 per share. This substantially reduces dilution or cash expense in the event of a conversion. We saw some encouraging trends in OMIDRIA sales in the third quarter as well. Despite reportedly longer surgical turnover times and reduced cataract surgery procedural throughput due to COVID protocols in surgical facilities, per facility utilization of OMIDRIA in Q3 increased over Pre-COVID levels. Also, overall units sold progressively increased throughout the quarter. We expect that this momentum will be restored and continue to grow if and when OMIDRIA is granted separate payment. As previously discussed, our extension of pass-through reimbursement for OMIDRIA expired on October 1. The result of that is that OMIDRIA, when used for Medicare Part B beneficiaries, is now reimbursed as part of the ambulatory payment classification for cataract surgery. We have had multiple meetings with CMS and HHS and have made a compelling case based on regulatory law, that CMS must pay separately for OMIDRIA as a non-opioid alternative used during surgery in the ASC setting now that the drug's pass-through status has ended and it is packaged under CMS' outpatient prospective payment system. The criteria for separate payment are strictly objective, and OMIDRIA meets them all. We are optimistic that CMS will comply with its own regulation and provide separate payment for OMIDRIA in the ASC during the fourth quarter of 2020 and throughout calendar year 2021, which subsequently could be further extended. In parallel, a broad coalition led by Voices for Non-opioid Choices and supported by over 50 bipartisan house representatives and over 20 bipartisan senators continues to advocate for the No Pain Act. This bill would extend separate payment in the ASCs and in the hospital outpatient surgery departments for a period of at least 5 years for OMIDRIA and other non-opioid alternatives used during surgery. In addition to strong support from surgical and nursing societies, trade organizations as well as patient advocacy groups and individual practitioners, 2 large and influential societies, the American Medical Association and the American Society of Anesthesiologists have recently endorsed the No Pain Act. An opportunity for enactment of this bill could come during the next session of Congress. You might recall that a peer-reviewed publication in the Journal of Cataract and Refractive Surgery showed that OMIDRIA significantly reduced the need for intraoperative fentanyl, a highly addictive opioid while also reducing patients' pain. Another manuscript demonstrating that OMIDRIA is opioid sparing was recently published in the peer-reviewed journal current medical research and opinion. The study demonstrates that patients who received OMIDRIA during cataract surgery were prescribed fewer postoperative opioid pills than patients who did not receive OMIDRIA. Despite the OMIDRIA-treated group having a greater incidence of preoperative comorbidities and higher risk for surgical complexity. To continue to build validation of the opioid-sparing benefits of OMIDRIA within the published literature, we have partnered with the Cataract Surgery Pain Study Group. The Cataract Surgery Pain Study Group is led by Dr. Terry Kim, president of the American Society of Cataract and Refractive Surgery and Professor of Ophthalmology and Head of the Cornea and refractive Surgery Services at Duke University. Together with other cataract surgery thought leaders from across the nation. The group's mission is to examine the role of non-opioid alternatives like OMIDRIA in cataract surgery. Based on the group's research, multiple publications will likely be generated, adding to the body of literature supporting the role of OMIDRIA in reducing the need for intraoperative and postoperative opioids in cataract surgery. The pain study group's research and publications should further strengthen the case for the separate payment of OMIDRIA by CMS. In the meantime, our commercial team is focusing its OMIDRIA efforts on driving utilization in hospitals across commercially insured patients and NVA facilities. The advocacy and relationships we have in the ophthalmology community remains strong. We have multiple avenues to secure separate payment for OMIDRIA. And we will let them play out. While we are planning for success, we also have established alternative sales strategies. If needed, these can be implemented quickly to ensure that OMIDRIA will be available for the long term and providing value to both patients and our shareholders. Moving on to our phosphodiesterase 7 or PD 7 inhibitor program, OMS527 targets addiction. Our Phase I clinical trial was successful, both with respect to safety and achieving daily oral dosing. While our current clinical focus remains on expanding indications for our MASP-2 and MASP-3 complement franchise, we plan to advance our OMS527 Phase II program pending resource availability. We also continue to see a unique opportunity in targeting GPR174 for cancer immunotherapy. GPR174 is an immunosuppressive G protein coupled receptor, whose activity is intimately linked to the tumor microenvironment. Our recent data with mouse tumor models further validate GPR174 as an important and novel target for enhancing a T cell's capacity for killing cancer cells. We have found that GPR174 deficiency in tumor-specific CD8-positive cytotoxic T cells, increases their activation, resulting in anti-tumor immune responses that markedly reduce tumor growth. Similar to GPR174, the adenosine GPCRS A2A and A2B are also activated by products of the tumor microenvironment. With all 3 receptors, GPR174 A2A and A2B using the same cyclic AMP signaling pathway. Our ongoing in-vitro signaling experiments continue to reveal that inhibition of all 3 receptors synergistically enhances T cell activity. So we believe that new and more effective cancer immunotherapy approaches will involve GPR174 inhibitors alone or in combination with adenosine receptor inhibitors. Motivated by this understanding, we are aggressively developing both small molecule and antibody inhibitors of GPR174. Our team continues to make discoveries around the GPR174 program, and we plan to make those public after filing additional patent protection. With that, I'll turn the call over to Mike for an overview of our third quarter financial results. Mike?

Thanks, Greg. As Greg noted, OMIDRIA and total revenues for the third quarter were $26.1 million. Our net loss for the quarter was $38.5 million or $0.66 per share, which does include a technology access fee of $5 million or $0.09 per share and noncash expenses of $13.6 million or $0.23 per share. And as the noncash expenses, $6.4 million or $0.11 per share were directly associated to the closing of our recent debt financing. Adjusting for these items, our adjusted net loss on a non-GAAP basis was $19.9 million or $0.34 per share. Both the GAAP net loss and adjusted net loss also included a deduction of $8.7 million or $0.15 per share from total revenues in the third quarter for a major return reserve related to the October 1 expiration of pass-through. Upon statement is separate payment for OMIDRIA we expect to recover the $8.7 million reserve. As of September 30, 2020, we had $153.5 million of cash, cash equivalents and short-term investments available for general operations. The increase in the second quarter is due to 2 factors: the first being $93.7 million in net proceeds received from the sale of the 6.9 million shares of our common stock in an underwritten public offering. In addition, during the third quarter, we issued $225 million of 5.25% unsecured senior convertible debt and repurchased $115 million of our outstanding 6.25% unsecured senior convertible debt. The new notes are callable after 3 years and are due in February of 2026. In conjunction with the issuance of the new convertible notes, we did purchase a cap call that offsets the dilutive impact or potential cash expenditure associated with the conversion of the new notes, while the market price of our stock trades between the initial conversion price of $18.49 per share and the cap price of $26.1 per share. As I previously stated, our midyear revenue for the third quarter includes a deduction of $8.7 million or $0.15 per share of return reserve. As you may recall from our -- from some previous calls, on the expiration of pass-through reimbursement, we recorded a return reserve for any product that's at our wholesalers that might not be sold to ASCs and hospitals should separate payment not be reinstated and for any unused inventory at the ASCs or hospitals that may be returned to us. In the event that separate payment is reinstated in the near term, the inventory should be used, and we would reverse the return reserve accrual, resulting in incremental OMIDRIA revenue. Research and development expenses were $31.3 million for the third quarter, an increase of $7.2 million over the second quarter. The increase was primarily related to the $5 million technology license agreement for OMS906, our MASP-3 product candidate, removing any potential encumbrance to the late-stage clinical or commercial manufacturing of OMS906 at its current facility. With respect to our manufacturing activities for narsoplimab, 6 additional batches of drug substance are underway at Lonza. And next month, we will begin -- we will be making additional drug product at Better. All of the drug substance and drug product being made at Lonza and better are expected to be available for commercial sale following the anticipated approval of narsoplimab in TA-TMA for use in treating critically or for use in treating critically ill COVID-19 patients. As you may recall, manufacturing costs are generally expensed to R&D, if incurred prior to the first approval in the U.S. or Europe. After approval, these manufacturing costs will be capitalized as inventory on the balance sheet. Selling, general and administrative expenses were $19.8 million an increase of $2.9 million from the prior quarter. The increase was primarily due to sales and marketing activities in connection with the U.S. launch of narsoplimab. Interest expense for the current quarter was $6.9 million. The $900,000 increase in the second quarter primarily reflects the $110 million in net new borrowings. In connection with the repurchase of a portion of our previously outstanding convertible debt, we incurred a noncash loss of $13.4 million related primarily to the unamortized discounts that remained on the retired debt. The debt transaction also triggered the recognition of a $7.9 million tax benefit for the third quarter. Now let's take a look ahead to the fourth quarter. As we've discussed, pass-through reimbursement expired on October 1. We believe we have multiple avenues to obtain separate payment from CMS for Medicare Part B patients receiving OMIDRIA, but we cannot guarantee if and when we will be successful. Therefore, we cannot predict future OMIDRIA product sales at this time. Our R&D expenses for the fourth quarter should be slightly higher than the third quarter of 2020. This is due to the additional commercial drug substance lots being made at Lonza, which should be ready for delivery in the fourth quarter of this year and in the first quarter of next year. We are also making additional commercial drug product at Better during the fourth quarter. As mentioned earlier, these costs are generally expensed to R&D until narsoplimab is approved by the FDA. SG&A costs are expected to increase slightly in Q4 as we continue to prepare for the U.S. launch of narsoplimab for TA-TMA. Interest costs for the fourth quarter should be approximately $8 million, approximately half of which is noncash. With that, I'll turn the call back over to Greg. Greg?

Thanks, Mike. And with that, we'll open the call to questions, operator?

[Operator Instructions]. Your first question is from Geoff Meacham from Bank of America.

Congratulations on the quarter. This is Jason [ph] calling in for Geoff. Just a couple of quick questions if you will. We think about the PMA submission for narsoplimab. In terms of how it could be potentially differentiated versus other complement inhibitors being studied, if you could talk a little bit to that point especially with ULTOMIRIS moving ahead in that indication? And then when thinking about the COVID-19 program, any status regarding kind of -- or at least your projection for government funding if we think about the treatment of severe patients now with the new administration and potentially the vaccine kind of taking care of a lot of the maybe less severe patients? Where do you see that going, and how might it evolve?

Sure. Thanks, Jason. In response to your first question about how MASP-2 inhibition or specifically narsoplimab is differentiated from other complement inhibitors in TA-TMA, it's really along a few fronts. First is the role of the lectin pathway and specifically MASP-2 in endothelial injury, right? We know that TA-TMA is caused by endothelial injury. And that endothelial injury specifically activates the lectin pathway, MASP-2 being the effector enzyme of the lectin pathway. We also know that MASP 2, at least to the best of our knowledge, is the only complement factor or complement enzyme that has coagulation activity outside of the lectin pathway. So MASP-2 directly acts on the coagulation system, and that function is independent of its role in the complement system. And narsoplimab, by inhibiting MASP-2, specifically blocks that MASP-2-mediated coagulation activity, which is specifically the conversion of prothrombin to thrombin and the conversion of Factor 12a -- Factor 12 to 12a, so the activation of Factor 12. Those activities are blocked by narsoplimab. We don't know of another complement enzyme or that is involved in that and by extension, we don't know of another complement inhibitor that has those same effects on the coagulation cascade. And when you look at stem cell TMA, just as in COVID, obviously, there is a significant component, which is driven by the coagulation cascade or the hypercoagulability, which is why you see thrombi in the thrombotic microangiopathy, which is TA-TMA. An additional difference, and I think we've hit on this several times before, is that these are patients who are very sick. And MASP-2, by inhibiting -- or narsoplimab by inhibiting MASP-2 leaves intact the effector function of the adaptive immune response. And that's very different than, for example, a C5 or C3 inhibitor, which blocks the effector function of the adaptive immune response, which is important -- kind of critically important in fighting infection. And that's why some have reported that in adults with use of C5 inhibitors in TA-TMA, that the survival rates are actually decreased, very different than what we're seeing in stem cell TMA with narsoplimab treatment. So let me stop there and see if that answers your first question about the differentiation.

It does. It sounds like you think that there's going to be enough differentiation that you could at least see the difference at some level in terms of kind of the tissue damage and kind of hemorrhagic output versus another more additional complement inhibitor.

I think the simple answer to that is yes. Yes, we do. And a traditional complement inhibitor I guess, you're referring to a C5 inhibitor in that sense. Traditional because there are a number of groups targeting C5. Remember that we are the only group that really can target MASP-2 because of the intellectual property position we hold around it. So while we may seem unique in targeting MASP-2, I don't think that's driven by the biology around the target or the biology around the lectin pathway. I think it's, frankly, mandated by the intellectual property position we control around MASP-2 and the inhibition of the lectin pathway and lectin pathway-associated disorders. So let me jump to your second question, which is around our work in Bergamo on COVID-19 patients. We are continuing to treat under compassionate use patients both in the U.S. and in Bergamo with narsoplimab. And what we are seeing is similar striking results, to those which we saw in the first 6 patients in Bergamo. Our discussions with the government agencies are progressing and I think, progressing well. You had a specific question with respect to funding. We're not going to predict at this point if or when we would receive funding, simply to point out that, clearly, that is our objective in those discussions. With respect to timing, again, I think best not to speak to that now, but to say, look, it's pretty clear that there is no other drug that we know of that has shown the results in really critically ill COVID-19 patients that narsoplimab has shown. We think that narsoplimab has a role to play in fighting this disease. I mean, I think today, the news that Johnson & Johnson put up, tremendous news, I mean, very exciting. I mean, imagine if we can -- I'm sorry, that Pfizer put up that -- tremendous news. I mean we may all be able to get back to work at some point, and our children can go back to school. That would be great. I think despite that, there's always going to be a need for the treatment of critically COVID patients, assuming those vaccine data continue to show the same efficacy long term. But I think that, clearly, I think there's a focus on narsoplimab as the surge in COVID-19 cases increases. And I think we're well positioned for that.

Your next question is from Steve Brozak from WBB. .

I've got two, and I'll jump back in the queue. The first one is on OMIDRIA. Can you tell us or differentiate why, in this particular case, it's different with CMS today as it was vis-à-vis, let's say, 1 year ago when you were looking for ruling from them? And then I'll ask 1 more question, please.

Sure. There's a significant difference between this year and last. Last year, as you know, OMIDRIA was separately paid, and so we did not qualify under the criteria laid out by CMS. For separate payment other than under pass-through, which is what we've had. The criteria that CMS has laid out are not discretionary, and they do not depend, for example, on some subjective determination of the efficacy of the drug. But rather, it's really the objective characteristics of the drug. So to be clear about that, let me just specify, to qualify, a drug must be a non-opioid drug. It has to be used in pain management. It has to be employed in the ASC setting, has to be policy packaged and has to function as a supply in a surgical procedure. Really, each of these is binary. Each of these is objective, and each applies to OMIDRIA now because it is no longer under pass-through. That pass-through status has expired, which means that we are now functioning as a supply in a surgical procedure and we are policy packaged. So it's not that CMS, in any way, needs to reverse itself from a year ago. That's not the situation at all. It is just simply that the situation has changed. And now that it has changed, OMIDRIA clearly qualifies, and that's why we believe the case is quite compelling, and we believe, certainly, we're confident that CMS will comply with its own regulation and provide us with that separate payment.

Okay. That is obviously something we're all going to be waiting for. So second question, and I'll hop back in the queue. Can you give us any kind of details as far as narsoplimab goes with Bergamo? Any additional information coming back? Anything that you can tell us?

Well, as I said earlier, look, the results that we're seeing in Bergamo and the additional patients that we're treating under compassionate use are really very similar to what we saw in the initial 6 patients on whom we've already reported. We've publicly spoken about 1 patient. One of those new patients, I believe, was a 76-year-old fellow, a diabetic, obese, long history of smoking, long history of COPD status post-surgical treatment for prostate cancer, and this patient was rapidly deteriorating, right? He came in, was admitted, put on nasal cannula, quickly moved to mass, quickly moved to CPAP and from there to intubation. And we were given that patient after he had already been intubated and was deteriorating. Very quickly, the patient began to recover. We've made public, in fact, I believe on our website are the laboratory values, the longitudinal laboratory values on this patient, which show that those laboratory values progressively improved and quickly improved, as did the patient's clinical status. I believe now the patient has been discharged. So these are patients who certainly you wouldn't expect very many of them to survive. And yet, we're showing very strong survival with the use of narsoplimab.

Your next question is from Ram Selvaraju from H.C. Wainwright. .

Are you seeing any new restrictions on OMIDRIA because of COVID-19 for surgeons?

I'm sorry. I think I heard the question. Are we seeing any new restrictions on OMIDRIA because of COVID 19?

Yes, that's the question.

Yes. You mean restrictions specific to OMIDRIA or just changes in practice because of COVID?

More practice level.

Yes. I'll actually answer both. First, with respect to the general practice around cataract surgery, what we are seeing is longer turnover times between cases, and that's to increase the focus on cleaning and making sure that all protocols for cleaning the ORs are followed. So the result of that is, I believe, and I think our commercial team has seen a reduction in the throughput of cataract surgery cases at any -- effectively at any given facility, right? If your turnover time between cases is lengthened, the number of cases you can do in any given amount of time will be less. So certainly, we've seen that. I think surgeons are trying to get as many cases as they can done. So those surgeons are working longer hours. They may be increasing their OR days to be able to accommodate the number of patients that need cataract surgery. With respect specifically to OMIDRIA, no, we haven't seen any additional restrictions placed on OMIDRIA. In fact, I would think we're seeing quite the opposite. I mean I think the heightened sense of safety in this period of COVID and all of the things that I just talked about being tied to safety, I think, have really put a focus or a spotlight on OMIDRIA because of its safety, I mean relative to really what is a potential alternative and really quite an inferior alternative of compounded products. I think that this sense of and need for safety has really increased probably the utilization. And I think that's consistent with what I mentioned in the prepared remarks, which was that we are seeing a per facility increase in the utilization of OMIDRIA to -- and that's compared to pre-COVID levels. So I don't want to be -- add 2 and 2 and getting 22, but certainly, I think those 2 findings seem to support each other.

Very encouraging. How many dose of narsoplimab do you expect to have manufactured by mid-2021?

We have -- I don't know if we've given the specific number. Although what we have done is we've run now 2 separate sets of manufacturing runs. So I think we've previously reported that in January of this year that we had manufactured a number of lots of narsoplimab and that those were successful, both with respect to drug substance and drug product and that those alone were sufficient to support the launch of narsoplimab for TA-TMA. What we've also mentioned, and I think Mike spoke to it in his comments, we, again, are manufacturing and are in the process of manufacturing another set of runs of narsoplimab. And I think Mike may have even given the specific number, which is another 6 runs. So clearly, we're looking at it as we have substantial, and certainly, what we expect would be more than enough for our launch. And I think what we're really looking at as well is in the setting of critically ill COVID-19 patients having drug available to at least initially start treating those patients

And just lastly very quickly, what clinical development path do you expect to pursue in regards to narsoplimab in COVID-19? And what, if anything, do you expect to benchmark it against?

It's a good question. We are, as I said previously, we're in discussions with government agencies. We also have been approached around whether we would be willing. The request has come for us to include narsoplimab in platform trials. So we're considering specifically that option. It is one that we really can't discuss in detail given the confidentiality requirements around those clinical trials or the confidentiality requirements by those running those clinical trials. But certainly, we're considering that. Look, from our perspective, we believe we have a drug that works well. I think that the data kind of clearly show that, works well in critically ill COVID-19 patients. We're confident in that. We think that there's a significant need for a therapeutic in that setting. When we look at the overall benefit/risk balance of narsoplimab, it is heavily weighted toward the benefit. And this is not just in COVID-19. But if you look across all of the indications in which narsoplimab has been used. So TMA or TA-TMA, aHUS, IgA nephropathy and in COVID itself, what we have seen or maybe better stated what we haven't seen is a safety signal of concern. So when you weigh the benefits of the drug versus any potential risk, and you're looking at patients who have no treatment and who are dying with severe COVID-19 ARDS or A-R-D-S, acute respiratory distress syndrome. It becomes, I think, difficult to deny these patients a drug that appears to be working. We're increasing the number of patients that we're treating. But again, I think it's important to look at it from the other end of the telescope. This is an endothelial injury, meaning COVID-19, as is TA-TMA. The pathophysiology appears to be very similar between those 2 disorders. So when you look at it, it's not that we have only treated small numbers of patients with COVID-19. We've treated pretty good numbers of patients with endothelial injury syndrome of which TA-TMA and COVID-19 are counted among that group. And so our objective would be to make it available as quickly as possible, and those are the objectives of our discussions.

Your next question is from Brandon Folkes from Cantor Fitzgerald.

Congratulations on the quarter. Maybe firstly on OMIDRIA reimbursement. If you do regain reimbursement through the 2021 ops, does that preclude or delay reimbursement potentially through the No Pain Act? Secondly, how do you think about your commercial footprint for TMA compared -- you did call out that you have a higher number of commercial people, but compared to where you want to get to? And then lastly, apologies if [indiscernible] this. But did you give more granular timing on the Phase III data for the IGAN trial and aHUS trial?

Okay. First, with respect to your question on OMIDRIA, the administrative avenue that we're taking with CMS and HHS is entirely independent of the No Pain Act. So assuming that CMS grants us separate payment in the ambulatory surgery setting, which is what we're requesting and what we are confident is in accordance with regulation and regulatory law, then, certainly, that is not independent of what could happen or would happen with enactment of the No Pain Act. The No Pain Act, as you know, would provide separate payment not only in the ASC setting but in the ASC and in the HOPD settings. And the duration of that is currently written at 5 years renewable on a 5-year basis thereafter. So really no overlap or no restriction that 1 approach places on the other. They're truly independent. Your other question about, I believe it was timing on IgA first, and then I'll hand you over to Dan Kirby, our Head of Commercial, to address the specific commercial question you had. But we are continuing to push with the IgA trial. Enrollment was initially slowed due to COVID-19 as with many drugs, but our objective there is to get that completed and at least have data out of the proteinuria group. Again, the target remains next year. Dan?

Sure. So the commercial footprint, your question was regarding the commercial footprint build-out of IgA nephropathy or was it about our commercial activities regarding HSCT TMA? I just wanted to clarify that to make sure I answer it correctly. Okay. Well, what I heard over there. You heard during the call about our commercial footprint that we're building out for HSCT TMA. Things are progressing according to the plan. Greg talked about our current activities. We also are pursuing an NTAP. We have filed for that. We'll have a meeting later on this quarter. But things are progressing exactly as we've planned, along with the filing to ensure that we'd be ready to not only launch but successfully launch and capitalize the market. From an IgA nephropathy standpoint, we currently are, from a marketing perspective, going through market, scoping exercises and market research, looking specifically at the narsoplimab target profile up against other alternatives. In regard to advocacy initiatives, we are engaging actively with the advocacy groups, both patient and physician across the nephrology community. And then from a medical affairs standpoint, we are building on our footprint on medical education there. In 2021, we plan on expanding those activities, looking at product positioning as well as looking at building out more of the medical information standpoint as we get closer to reaching a point where we're ready to file for IgA nephropathy. Thank you.

Thanks, Dan. Brandon, I don't know if you're still there or if that answers your question. Are you on or some how have you dropped? Okay. Well, are there any other questions? Operator?

I am showing no further questions at this time. I would now like to turn the conference back to Dr. Demopulos. .

Thank you very much. So thank you again, everyone, for taking the time to listen in. These are unprecedented times, and I'm proud of the work that our team has done. These have been challenging times for everyone, and you see the progress that the team has made. With the progress on narsoplimab specifically, we look forward to it becoming our second commercial drug. And we expect the therapeutic indications for narsoplimab to be broad and that from our pipeline along line of important drugs will follow narsoplimab into the market. With that, again, we wish you and your families good health, and all of us at Omeros appreciate your continued support. Thank you, and have a good afternoon or evening.

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