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’ll turn over the call to Erin Cox, Investor Relations for Omeros.

Good afternoon. I’d like to remind you that some of the statements that will be made today on the call will be forward-looking. These statements are based on management’s beliefs and expectations as of today only and are subject to change. All forward-looking statements involve risks and uncertainties that could cause the company’s actual results to differ materially. Please refer to the risk factors section of the company’s Annual Report filed with the SEC earlier today for a discussion of these risks and uncertainties. Now, I would like to turn the call over to Dr. Greg Demopulos, Chairman and CEO of Omeros.

Thank you and good afternoon everyone. The voice you just heard is of Erin Cox. Before we start today’s program update, I’d like to take a moment to let you all know that Erin is our new in-house Senior Manager of Investor Relations. Omeros Investor Relations is currently transitioning from Jennifer Williams of Cook Williams Communications to Erin and I would like to take this opportunity to thank Jennifer for her years of service, support and friendship. With me also today is Mike Jacobsen, our Chief Accounting Officer. I’ll start today’s call with a corporate update and after which Mike will provide an overview of our fourth quarter and year-end financial results. We have reserved some time for Q&A after the financial overview. To provide some financial context for the discussion of our commercial and development programs at Omeros, I would like to remind you that Omeros completed a successful equity financing in February of this year with a group of top-tier life science focused funds netting proceeds of approximately 79.1 million. This financing further strengthened our institutional shareholder base providing the required capital for both the successful launch of Omidria and for the advancement of our pipeline programs. Now let's turn to our programs. As many of you know, our first commercial product Omidria was approved last year by the FDA for use during cataract and intraocular lens replacement surgery. Omidria is the only FDA approved intraocular product that maintains pupil diameter by preventing intraoperative miosis or pupil constriction and reduces postoperative pain providing consistent and predictable management of these problems for ophthalmic surgeons and their patients. The need to maintain pupil size throughout the surgical procedure particularly the prevention of miosis or pupil constriction and the need to inhibit postoperative pain are two key challenges facing ophthalmic surgeons…

Thanks, Greg. For the quarter ended December 31, 2014, we reported net loss of 20.7 million or $0.61 per share, which includes non-cash expenses of 4.2 million or $0.12 per share. This compares to a net loss of 1.8 million or $0.05 per share for the same period in 2013 including non-cash expenses of 2.6 million or $0.09 a share. As you may recall, during the fourth quarter of 2013, we received a 12.5 million or $0.41 per share litigation settlement. Excluding the effects of the litigation settlement, our net loss would have been 14.3 million or $0.47 per share. For the full year of 2014, we reported a net loss of 73.7 million or $2.22 per share which again includes non-cash expenses of 11.7 million or $0.35 per share. This compares to a net loss of 39.8 million or $1.39 per share in 2013, including non-cash expenses of 10.6 million or $0.37 per share. Excluding the litigation settlement, the 2013 net loss would have been 52.3 million or $1.83 per share. Operating expenses for this quarter were 20.2 million compared to 14.1 million one year ago. The increase was primarily related preparing for the U.S. commercial launch of Omidria, non-cash expenses related to stock-based compensation, some increased employee cost and the U.S. pediatric clinical trial for Omidria which began in 2014. Operating expenses for the year ended December 31, 2014 were 70.5 million compared to 52.1 million in 2013. The 2014 increase related primarily to our clinical trials evaluating OMS824 and OMS721 preparing for the U.S. commercial launch of Omidria and increased employee cost, non-cash expenses related to the stock-based compensation. These increased expenses were partially offset by lower preclinical activity on our PVE7 program. Revenue for the current quarter was 180,000 compared to 169,000 for the same period…

Thanks Mike and I think now what we'll do is open the call to questions from those out there.

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

Congratulations on all good news. Obviously the question has to deal with the launch, but I know that you can't be specific. What I would like if you could itemize is, why would a physician, a clinicians use Omidria versus the compound being product. And specially since I think it was three days ago the journal talked about there were four major compound issues in the last two years if you could go over both the medical necessity and also the financial benefits of Omidria and one follow up after that please.

Yes hi Steve, well in part you've already answered the question with the reference to the problems with compounding. But look we believe that Omidria is really superior clinically to any compounded product out there. The combination of the mydriatic and the anti-inflammatory not only dilates the people as any other mydriatic does. But it's the Ketorolac that provides the in ambition of pupil constriction which is really the key to protecting that pupil, keeping it wide open during the surgical procedure. In addition, as you know the Ketorolac reduces postoperative pain and that overall experience for the patient of postoperative comfort is important and surgeons really are graded so to speak by their patients based on their overall experience, of which comfort plays a really central role. So I think -- again the issues here are around compounded products; they are not FDA approve; they have not under gone any kind of clinical efficacy or safety testing. Of course Omidria having been FDA approve has gone through all of the safety and efficacy testing, has been found to be efficacious and has been found obviously to be safe for use. So these are the differences I think that they are stark and I think that ophthalmic surgeons understand those differences and frankly appreciate those differences. With respect to your second question around cost, I'm not going to speak to cost advantages of Omidria I don’t think that would be so appropriate. But I will just talk to you about the facts. The facts are that Omidria has received pass through from CMS. What that means is that for the first two full quarters of sales Omidria is reimbursed at WAC which is 465 plus 6%. Following those two quarters reimbursement shifts to ASP or Average Selling Price plus 6%. Currently surgeons are paying for compounded products out of there bundled reimbursement for cataract surgery. Omidria is reimbursed separate from the bundle meaning outside of the bundle. So those physicians, those surgeons using Omidria very likely would not need to spend what they are currently spending on those compounded products from there bundled payment. There is also I believe appropriately a handling fee effectively this 6% on top of the WAC or ASP and this does require likely some additional effort by surgeons or by their facilities and I think that’s why CMS provides that additional 6%. So, let me stop there and see if I answered your question.

No, you really did, and the last question because obviously a soft launch isn’t going to tell you anything. But what were the KOL feedbacks that you got based on, obviously the trials and how strong were they and I’ll hop back into the queue because I'm sure there's a lot of people that have questions.

You are talking about the feedback specifically during the controlled launch?

No, more prior to the controlled launch, because it's too early to tell on the controlled launch.

Actually, interestingly I think that the feedback from the controlled launch has been very much in line or representative of what we were hearing during the clinical trials. The feedback has -- as I think I said been uniformly positive. In fact the responses from docs have been from a number of them that they thought the product would be good, they didn't realize how good until they actually had it in their hands and were using it. Again I want to underscore that these are anecdotal statements only and they should be taken as that which they are only. But I think that clearly the docs are understand what the product does, I think they're seeing clearly the advantages and we're excited about what the full launch is going to bring us.

Wow, that's a great answer. Thank you

Thank you. Our next question comes from Yatin Suneja with Cowen & Company. Your line is now open.

Thank you very much for taking my questions and congrats on all the progress you have made this past year. So with regard to the controlled launch, could you give us a sense how many centers have been contacted so far. And then as you go into the full mode -- full launch, how are you going to prioritize the centers that you will be contacting? Is there any specific threshold or physician that you are looking for at a particular surgery center and basically what's your strategy around it?

Thank you, Yatin. Good question. Let me first address the question about the controlled launch. We have not released the number of sites. The focus on the controlled launch has really been to have a set of sites within each of the MAC regions or the Medicare Administrative Contractor regions. This again is to make sure that the MACs are aware of the product, that the reimbursement processes are in place, that they're running really without any kinks or hiccups and that all of this then will translate to the full launch, which as we've said will be in early April. So, I think we're getting a lot of good information from the controlled launch, it was done strategically and again to sort of pressure test all of the commercial processes, not just reimbursement but distribution and frankly utilization processes within the surgical facilities where the products currently being used. And I think again the information has been very helpful, and will just better refine for us the large launch -- the full scale launch in early April. With respect to how, during that full scale of launch we're targeting specific surgery centers or specific surgeons. I think better let me just tell you what our 40% sales force can access. With that 40% sales force, we're really able to access effectively 80% or greater than that of the top 8 deciles -- of the top 50, top 100, top 150 surgeons across the U.S., we again are able to access with that 40% sales force as their areas have been setup, 80% or greater of each of those group. So the top 50, 100, 150 producing cataract surgeons in the country. Where we really have that small gap is in the areas of sort of Wyoming, New Mexico, Kansas I believe and those were looking at how to access through additional means. So I think actually with respect to prioritization I would say we're kind of prioritizing all of the top cataract surgeons out there and as I said really the top 80% or more than the top 80% of the top 8 deciles.

Great, that’s helpful. Greg, you've mentioned that you've had uniformly positive feedback, is there any pushback that you got so far?

During the controlled launch there has been -- I got to frankly say -- and again this is a limited number, so I don’t want to extrapolate this to the large launch, but I would have to say that frankly there has been really no push back that we have received from those involved in the controlled launch. Understand again that in this controlled launch, we are also using surgeons who have been familiar with the product or have some understanding of the product and this is in part how they have been selected; that and again their location within each of the MAC regions that we wanted to pressure test.

Moving on to the MASP-2 inhibitor OMS721, have you started dosing patients in the second cohort? And then with regard to the two patients in which you saw meaningful activity, what needs to be done? Do you have to share any data with EMA before they can get access to the drug? And then how quickly could we see a follow-up from those patients? Thank you very much.

So your first question is yes enrolment has begun in the second cohort. So at the higher dose. Your second question I believe, Yatin was tied to the two patients, actually remember those were three patients in the first cohort; all of which demonstrated disease markers all moving in the right direction. So and you also recall that one of those patients actually went through sort of a challenge/de-challenge meaning patient moved out of the acute phase of aHUS, resolve those symptoms while on drug, once drug was stopped patient went back into the acute phase and that’s what I mean by challenge/de-challenge. With respect to the compassionate use or extended access, that is correct that it's going to need the approval of the regulatory authority in the country in which that investigator is located. We do not anticipate any difficulty there, the surgeon -- the physician is very enthusiastic about the effects that he believe are due to OMS721 and obviously he and we are advocating on behalf of those patients and their health. So, I think I do expect that this will move forward expeditiously.

Thank you. Our next question comes from Ram Selvaraju with MLV & Co. your line is open.

Firstly, with regard to Omidria, could you perhaps provide us with some color on the European situation? And if hypothetically stitch for us what a -- what a possibly an ideal collaboration target might look like? What you're looking for them to bring to the table? Assuming that you go down that route, with regard to commercialization in regard to Europe? And then secondly with respect to the potential compassion use plan for the 721 product candidate, maybe give us an idea of what that would look like, whether you could be able to charge for the drug and if you're able to charge for the drug; what we might potentially be able to see as a revenue stream going forward prior to its actual formal regulatory approval? Thanks.

I’ll try to remember all of those Ram, good questions. First with respect to Omidria and Europe, as I’ve said we do expect that we will receive a positive opinion from the CHMP in the first-half of this year that would translate to a launch of Omidria in Europe in the second half of 2015. With respect to what kind of partner, obviously we’re looking for someone there who has strength in ophthalmology and one who can handle the marketing and distribution in Europe and potentially in other regions. I think that those are what you would expect to be and are our areas of focus with respect to partner. More than that I probably shouldn’t say, we really as you know don’t comment on the status of our business development effort. With respect to Omidria -- sorry with respect to now 721, I believe was the second part of your question, I don’t believe that we’re going to be charging for the product as part of the compassionate use. This is going to be a product that we are providing truly on a compassionate basis to maintain the -- these people out of the acute phase of aHUS. So we don’t expect the revenue stream from that compassionate use. The data from those patients of course would be usable as we talk to regulatory authorities about next steps following completion or termination of the Phase 2 study.

And then just as a very quick follow up. Do you anticipate advancing another monoclonal antibody candidate targeting the compliment pathway later this year or should we expect that to occur for example next year?

No, I would not expect that this year just to scale up process alone. We've actually made very rapid -- what appears to be very rapid progress and tremendous progress on our MASP-3 program. As I mentioned, we have antibodies. They have very high affinity for the MASP-3 protein and we are currently doing additional preclinical work on those, but we are expecting to in the relatively near term be able to select which one or which couple or small number of these antibodies we want to move forward into manufacturing scale up. That process as you know takes time and therefore I would not expect that we would be in the -- and when I say that process, it's the manufacturing scale up that is just sort of a fixed process, not a way to really accelerate that. So I would not expect to see a MASP-3 inhibitor or 906 program in the clinic this year. We'll talk more about that program as we go forward, but I think the opportunities here are pretty significant. You look at MASP-2 and OMS721, we really control at the affecter enzyme, at the activation of the lectin pathway. We control the intellectual property there, so one could say we really control in that way the lectin pathway. Now it appears that we also control the activation or the activator of the alternative pathway. One can see lectin pathway specific antibodies like 721. One could also see alternative pathway specific antibodies like we would be developing under the 906 program. One could also see bi-specific antibodies targeting both the lectin and the alternative pathway meaning MASP-2 and MASP-3 by specific inhibitor for a number of other indications. The distillate of all of that is that we really do expect that we will be a significant player now and going into the future in the complement space.

And then with 824, could you give us some color on how rat specific the pharmacokinetic issues that may have led to the clinical hold are. And what the evidence might be for this being a rat specific issue? I know that in the non-human primates, you haven’t seen any similar spikes.

Well I mean that's a good part of it, right. I mean we -- this finding was seen at a very high dose only, in rat only. Similar dosing in cynomolgus monkeys has produced no similar change. You recall that what the FDA asked us to do was to go back and to look at all of our preclinical studies in both rat and monkey knowing now what we're looking for to see if we saw a similar change in any of those other studies. And I can tell you and because this is a webcast this I will say that we saw no other changes in any of those other studies, so this is the information that we'll be providing to the FDA. We'll be providing as well the multiples of safety over the dose where we saw this finding and I think that, as again as we've said, we think that we will not be able to reinitiate enrollment in the Phase 2, 824 program in the near future.

Thank you. Our next question comes from Liana Moussatos with Wedbush Securities. Your line is open.

I just have a couple of [indiscernible]. So OMS 721, we get the high dose data for the Phase 2 TMA trial. Will that be a similar press release that what we got from the low dose or will there be more patients and will there be quantitative data in it -- or similar to what we’ve already seen?

I think it's going to be different, remember why we put the initial press release out. The initial press release was put out because the investigator had requested compassionate use or extended use of OMS721 and that had been submitted to ClinicalTrials.gov. I was receiving calls from a number of individuals -- some actually on this call with us today who had identified that notification on ClinicalTrials.gov and we're calling asking what is promoting this and asking for more detail around that posting on ClinicalTrials.gov. In order to be able to at least address the question other than just saying I can say nothing else than what is on ClinicalTrials.gov that is why we put that initial release out on that small number of patient. As we collect additional data, as more patients are enrolled and patients at higher doses we will put out more information; frankly as is warranted remember that this was the low dose that we put out. This was really a dose where frankly we weren’t expecting to see a response. The fact that we did, clearly exciting to all of us here at Omeros and obviously to the investigators involved in the study. So additional information will be forth coming the timing of that and the nature of that will be as appropriate.

And the next steps for OMS527 and 616, OMS527 has already been tested in the clinic or is being tested now. What are your next step this year and to get 616 into the clinic next year?

Right just for clarification neither of those programs is currently in the clinic. 527 we are pushing to get into the clinic this year, 616 we expect would be able to go into the clinic in 2016. So that’s the timing we're excited about both of the programs. I think the data we continue to mass around PDE7 inhibition and addiction only makes that story better. The mechanisms of action remember we also have elucidated and that whole story is just really a beautiful one and we’ll be publishing at some point here, data on the mechanism of that will include also additional pre-clinical data again ultimately the proof of all of this in the clinic and that’s why we are pushing to get 527 into the clinic this year followed by 2016 with 616.

And will the trial this year for 527 be in healthy volunteers or patients.

The initial study would be in healthy volunteers. We would run a traditional -- the current plan is to run a traditional Phase 1 healthier volunteer study.

Our next question comes from Jason Kolbert with Maxim Group. Your line is open.

This is Robert [indiscernible] from Maxim and first of all congratulates all the great progress you've been making lately. And the question just a follow up on 824, when you say near future any expected time frame between submission of the data and getting an answer?

That is a I believe a 30 day cycle I would have to check with our regulatory group to confirm that. But I don’t want to put any tighter time constraints on what I said the near term, we have to share those data with the FDA; I've given you what the findings have been which is that we did not see any of these similar findings outside of the smaller number of rat in which they were originally identified.

My -- another question for Mike is when you book the revenues is it going to be [what shift] or is going to be on a sell through method or any hybrid method of recognizing them?

The general thought is definitely one things were up and running it will be on a sell in basis; like Greg talked about in the initial launched we sold directly from ourselves to certain customers in the February and continue in the March time frame those in all likelihood are going to be booked in the first quarter based on direct sales into those people since they are the ultimate consumers of the drug.

Thank you. Our next question comes from George Zavoico with Jones Trading. Your line is open.

Greg a question about to pass through designation going forward in 2017, what was the criteria that the CMS may use in choosing to continue to pass through or to deny it?

The pass through is not continued, pass through run for a minimum of two and a maximum of three years. The question is really what could be done with Omidria after expiration of pass through, one is obviously CMS can look at the utilization, look at the value proposition and decide to do something with Omidria outside of the bundle, CMS has the potential to bundle Omidria within the Cataract procedure aAPC or the ambulatory payment classification, if that is done then one would expect that the APC would increase to accommodate and to reflect the utilization of Omidria within Cataract surgery. So really I think it's a little premature right now to -- for us to address what we’re going to see there. I think right now we’re focused on maximizing the efficiency and the success of the launch and we’ll talk more about what happens, what we expect that date to be again 12/31/17 what happens after that.

And regarding the a mid-year launch as well, you mentioned manufacturing and expanding on manufacturing, are you doing that third-party or you're building at in-house and --?

All contracted George, it will all be contracted. We’re looking at U.S. and European manufacturers, the idea here is to make sure that we have necessary supply both domestically and internationally.

And with regard to the limited launch, clearly the way you stated the limited launch you're going to one of the high volume provider, is -- I would have mentioned you could also be [indiscernible] to support Omidria in educational efforts and outreach efforts, is that -- are you doing that as well? And is there a patient advocacy group that you might also employ for patient to looking to get Cataract or IOR surgery that might help you get the word out to the patients?

Yes, there really is no patient advocacy group around Cataract surgery. Obviously, the surgeons who used the product and are positive about the product; those folks are supportive and we have a speaker bureau that’s established and that these groups may or may not overlap with that.

And finally, you touched upon pharmacoeconomics here in the acceleration and facilitation of the operation and potentially lack of comprising side effects, it may have a pharmaeconomic benefits and try to do that obviously pre-clinically. But once it gets out in the field do you have any plans for these sorts of studies that would further help promote Omidria?

Sure there are and remember that you made a very good point which is; these are procedures that have a high success rate already, right. There are 4 million of these in the U.S. alone. The differentiator really is the complication rate and I think that’s our area of focus. It is clear that patients with less than 6 millimeters of pupil diameter during surgery have a multiply increased, so increase rate of complications that has multiply higher than those procedures in which their pupil does not constrict below 6 millimeters. So while it may be difficult to run specific studies because patients, these are still somewhat rare complications, but when there are 4 million of them done a year those even small percentages become large numbers. So using literature based reviews, studies that have been published it is pretty straight forward to draw the connection between complication rates, pupil diameter and then Omidria and pupil diameter. So I think that’s really the focus. I think you’ll see some publications at least one publication on that coming in the future, but the idea here is really around complications, making that operation safer for the patient and less stressful for the surgeon.

And then similarly, I’ve mentioned it could probably leverage the recent FDA draft guidance for compiling to your benefit as well, are you leveraging that is well?

We are very aware of it, we’re looking at it. I think it speaks for itself. The FDA is sitting on compounding, the restrictions are only increasing with the drug quality and Security Act of November of 2013; that was a pretty good first step in controlling compounding with the generation of 503B outsourcing facilities or compounders as well as and the 503A. So I think we’re certainly aware of it. We think that we could not have really [script] it a better scenario for the launch of Omidria than the one that we have and compounding and the difficulties and risks associated with compounding clearly play into that.

Thank you. Our next question comes from the Norman Hale with Stifel. Your line is open.

On Omidria with that product, so you guys -- you have the U.S. launch, you’re looking for potentially launch second half of this year for Europe, are you intending the launch them to any of their geographic regions beyond Europe?

We’ve spoken to date only about the U.S. and the European launch and I think I’d like to just stop there for now.

Okay that’s fine. On the OMS721 program, the MASP-3 will that be included in that category to have both MASP-2 and MASP-3, considered part of OMS721?

No, OMS721 is a specific MASP-2 inhibitor. We’re developing antibodies that targets specifically MASP-3. So that will be a wholly different antibody or therapeutic and again I don’t want to limit ourselves just to antibodies here we’re also clearly looking at other therapeutics targeting MASP-2 and MASP-3, but that will be a different compound.

Is -- MASP-3 currently is in preclinical, correct?

That is correct. MASP-3 inhibitors are currently preclinical.

Do you have any kind of rough timetable at which it could get into some clinical trial?

Yes, I think -- let me provide an update on that perhaps at our next call. I think what we really want to do is make sure that we have selected the antibodies against MASP-3 for scale up; once we have done that, then I think I’ll have a much firmer date to provide. Right now it would be speculation and I prefer not to do that. So let me first -- once we have selected those antibodies to scale up I’ll be able to guide much more specifically to that timeframe.

The data that you have received to-date relative to OMS721, is it too early or is there enough data where you can do some sort of a comparative analysis compared to Soliris?

To-date the data are of small set -- on a small set of patients and again we released them for the reason that I gave, I won’t repeat that, but I think it is too early certainly to make direct comparisons. Look, it’s obvious that we’re both -- they have an approved product for aHUS. We’re targeting TMA one of which is aHUS. We believe that our administration will be able to be subcutaneous. We believe that’s an advantage. We also believe that buy not inhibiting the [lyric] arm of the classical pathway that that’s favorable for a lectin pathway or a MASP-2 inhibitor, but all of these things will need to be borne out through more patience and at some point will put all of those data out.

And great to realize, I am not a scientist okay, so the next question maybe kind of stupid from your perspective, assuming that both MASP-2 -- your research on both MASP-2 and on MASP-3 both turned out to be very positive, that both of those therapeutic agents turnout to be very efficient in terms of the objective. Would there be a situation where both drugs would be combined so that it would have a higher beneficial impact on some of the TMA indications?

Well not just TMA, but others as well, yes. Those are the bi-specific antibodies that I was mentioning Norm which are targeting both MASP-2 and MASP-3, so the beauty of the program that we're developing is that it's -- we have MASP-2 specific, MASP-3 specific and then potentially MASP-2 and MASP-3 bi-specific. So it really allows us to cover the waterfront with respect to the alternative in the lectin pathways.

That's exciting stuff that you're progressing on. On your GPCR platform, is there anything in that category that is going to be moving from preclinical to actually Phase 1 clinical trial in term in the relative near future?

Yes again, we are as we said, we're working through the medicinal chemistry on a number of targets GPR 17 myelinating or de-myelinating diseases OMS, ALS, et cetera. Even some of the cognitive disorders the Alzheimer's, et cetera are de-myelinating. GPR 151 for neuropathic pain, GPR 161 for a number of cancer types including sarcomas and triple negative breast cancer, so these are all being developed. They're being moved forward with respect to timing. It won't be this year and I think it would be a push to even expect those into the clinic next year, but we'll give you a further guidance as we make better headway.

And without any real specifics as you indicated earlier, your business development activities you try to keep that confidential; but are you still maintaining discussions with other entity relative to collaborative or licensing agreements for certain of your products?

Sure, sure we are. And again, we don’t as you know don’t discuss the specifics of that so, we'll provide update as tangible events occur.

Thank you. That concludes the Q&A part of the call. I'd now like to turn the call back over to Dr. Demopulos for closing remarks.

Okay, thank you operator and so that wraps up our call for today. Thanks again to all of you for taking the time to listen-in. As always, all of us at Omeros appreciate your continued interest and support. Omeros is now a commercial as well as an R&D company. The launch of Omidria is underway, the Omeros Team is working hard and really within the company and among many in the ophthalmic surgery community there is a palpable excitement about what the coming months will bring. Again we'll continue to keep you updated on our progress toward commercial success of Omidria as well as on our efforts to advance all of the products in our pipeline. Have a good afternoon everyone.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.