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…

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…

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.