Good afternoon, and welcome to today's conference 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 one 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. 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 Risk Factors section of the company's annual report on Form 10-k, which was filed today with the SEC, for discussion of these risks and uncertainties. Dr. Gregory Demopulos, Chairman and CEO of Omeros, will take you through a corporate update; and then, Michael Jacobsen, our Chief Accounting Officer, will provide an overview for our fourth quarter financial results. We have some time reserved for questions after the financial overview. Now I would like to turn the call over to Dr. Demopulos.

Thank you, Jennifer. And good afternoon, everyone. And we appreciate you taking the time to join us today. I'd like to begin this afternoon's report with an update on OMIDRIA, our FDA approved ophthalmic product. Total revenues from OMIDRIA sales reported in the fourth quarter were $13.8 million and 2017 OMIDRIA revenues totaled $63.8 million, an increase of 56% over 2016. Our fourth quarter net loss was $16.6 million, or $0.34 per share which includes non-cash expenses of $4.5 million, or $0.09 per share. During the fourth quarter, we nearly reached breakeven cash flow status with our overall decrease in cash, cash equivalent and short-term investments equaling only $3.1 million. So now let's examine the numbers more closely. As part of this discussion, it's important to note that past -through reimbursement for OMIDRIA expired its schedule at midnight on December 31, 2017. During October and November, vials sold to ASCs and hospitals or sell through increased 18% over the corresponding in the third quarter. In early December, however, likely given uncertainly regarding OMIDRIA reimbursement beginning January 1, a large number of ASCs and hospitals began to pleading their respective on hand inventories without reordering. Despite this December reduction in sell through volume, OMIDRIA sell through for the entire fourth quarter was in fact the same as that for the third quarter. Also, unit pricing has not changed. So if the number of unit vial sold and the pricing were the same in both Q3 and Q4 why were fourth quarter net sales nearly $8 million less than those for Q3. The answer is accounting requirement. Under our accounting policies, we are not able to recognize a majority of the revenue related to OMIDRIA inventories held by our wholesalers at December 31 because of uncertainty around OMIDRIA reimbursement and the result…

Thanks Greg. As Greg noted, revenues for the fourth quarter were $13.8 million all from OMIDRIA product sales and our net loss was $16.6 million or $0.34 per share. This includes non-cash expenses of $4.5 million $0.09 per share. On an overall basis, during the fourth quarter, we continue to advance toward cash flow breakeven with our overall decrease in cash and cash equivalents being only $3.1 million. Here are some specifics regarding the fourth quarter results as compared to the third quarter. Our reported revenue for the fourth quarter was $13.8 million, a decrease of $7.9 million from the third quarter, while the unit cells of OMIDRIA by our wholesaler ASCs and hospitals or sell-through remain constant from the third quarter even considering the uncertainty surrounding pass through. In fact, prior to December, our daily sell-through volume was approximately18% above what we achieved during the third quarter. The large difference between reported revenue and sell-through was attributed to a couple of key factors. Under our accounting policy, we are made able to recognize revenue on wholesaler inventory in excess of eight weeks of projected ASC and Hospital demand, with a substantial majority of our customers currently waiting for resolution regarding reimbursement, and only using a OMIDRIA on a very selected basis, sell through volumes since January 1 has substantially declined from peak sales in November. Consequently, we did not recognize revenue in the fourth-quarter for nearly all the December shipments to our wholesalers. This inventory will be recognized as revenue in the future to the extent that ASC and hospital demand is reestablished. The second item is the returns we are accepting in support of our ASC and hospital customers. We recorded a returned reserve of $2.4 million for product in the possession of the ASC and hospitals at…

Thanks Mike. Let's go ahead and open the call to questions.

[Operator Instructions] And our first question comes from the line of Steve Brozak from WBB. Your line is now open.

Yes, hi, Greg and thanks for the detailed itemization of everything going around OMIDRIA. Greg, I'm looking at this and obviously there have been a lot of critics, and I'm reminded of how critics had started by saying that a OMIDRIA couldn't get out of the clinic then it couldn't get regulatory approval then it wouldn't get reimbursement and then you wouldn't see a ramp up in sales. Now obviously there's a lot of criticism saying, well, what's the solution here, and everything you've talked about is providing that you've got flexibility on what you decide to do into the future, but what I'd like to really know about is that flexibility is predicated on two things. Patient-physician demand and the benefit for OMIDRIA. What can you tell us about that? And what can you tell us about why you're comfortable with that --with what the options are for you? And now next question after that will be on 721 please.

All right. Well, thanks Steve. Let me address something you said at the outset which is that we have had critics on OMIDRIA sort of early on in the process and that has continued, you're correct about that you. You recall that many told us that we should jettison OMIDRIA because it was a drag on the overall development programs in the company, and that we would not see sufficient revenue, it's interesting that now the discussion is somehow around reimbursement from CMS and the effect just on those revenues which have largely been funding our operations. So let me specifically respond to your question, which is what are the clinical benefits, why do we think that's important, and why are we comfortable pursuing the option that we're pursuing. Look, the clinical benefits around OMIDRIA have been demonstrated time and time again in multiple publications, multiple studies by multiple different investigators those benefits are very clear. It's reduced complication rates, it's reduced use of pupil expansion devices, it is faster surgical time, it is better outcomes for patients and frankly it provides better safety for patients than anything that could even be thought of being used as an alternative. The physician response around the OMIDRIA this hiatus or reduction in sales has really demonstrated frankly the level of support by physicians and their demand for the product on behalf of their patients. The letters that have come to us; the letters that have gone to congressional members; the letters that have gone to CMS; the latter two obviously we haven't seen, but understand those have been sent. All of that really points very clearly to a high level of demand from the physicians for the product. Our level of comfort with the past that we are pursuing is again quite…

All right, it's obviously a well thought out strategy but the only reason it can work is because of that demand so that's answering that question. Now 721 is obviously what everyone else is focused on and given your experience everything that you went through with OMIDRIA and its approval. What can you tell us in terms of similarities, differences and what are the advantages that you've got in terms of the development of 721 into the future? And I'll hop back on the line because I obviously don't want to hog the questions.

Sure, thanks, thanks again. Look, we have three Phase 3 programs running in OMS721. aHUS, IgA nephropathy and now stem-cell associated TMA. We began with the aHUS program I think we've been pretty clear that we expect both IgA and stem-cell TMA to leapfrog aHUS in the development process. Based on our data with stem cell TMA, I think there's actually a reasonable possibility that stem cell could in fact also leapfrog IgA. We've been pretty clear about the data that we've put out. We are very excited about the data that we have put out on stem cell TMA. Whether you look at the median overall survival data, whether you look at the transfusion data; whether you look at the biomarker data; whether you look at the patient's clinical course. What you see I think is based on those studies clear evidence that support our contention that OMS721 is having a positive effect and frankly is saving lives. Our intention there is to discuss the next steps with both FDA and EMA. Certainly part of each of those sets of discussions would be directed to accelerated approval in the setting of the FDA and conditional approval in the setting of EMA. So what would differentiate us I think is pretty clear. There is no treatment for stem cell TMA just as there is no approved treatment for IgA nephropathy. We think clearly now turning to IgA if you look at our data there and if you look at the response from regulators. Again first drug to receive breakthrough therapy designation for IgA nephropathy. We believe the first drug to be offered full approval based on proteinuria alone. I mean I think those things pretty much speak for themselves as how we believe we differentiate. So let me stop there and make sure that I've answered your question.

No, now you've covered it perfectly. Look, we all look forward to what the resolution is going to be and your announcement. So let me hop back in the queue. Thanks again for taking the call.

At this time, I'm showing no further questions. I'd like to turn the call over to --back to over to Dr. Gregory Demopulos for any closing remarks.

All right, thank you very much. Well that wraps up our call for today. Thanks again everyone for joining us on the call. As always, we appreciate your continued interest and support. Have a good evening, everyone.

Ladies and gentlemen, thank you for your participation in today's conference. This does include the program. And you may all disconnect. Everyone have a great day.