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 the call over 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 quarterly report on Form 10-Q, which was filed today with the SEC, for a discussion of these risks and uncertainties. Dr. Greg Demopulos, Chairman and CEO of Omeros, will take you through a corporate update; and then, Mike Jacobsen, our Chief Accounting Officer, will provide an overview of our second 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. We appreciate all of you taking the time to join us today. We’ll start today’s call with an update on our OMS721 program. As many of you know OMS721 inhibits MASP-2 the effector enzyme of the lectin pathway. The lectin pathway is part of the complement system, a key component of the immune response. We continue to advance each of our three OMS721 Phase 3 clinical programs in hematopoietic stem cell transplant-associated thrombotic microangiopathy, or stem cell TMA, in immunoglobulin A or IgA nephropathy and in atypical hemolytic uremic syndrome or aHUS. We also have two ongoing OMS721 Phase 2 clinical trials, one in stem cell TMA and the other in renal diseases currently focused on patients with IgA nephropathy. We’ll first focus on our stem cell TMA program, which has received breakthrough therapy designation from FDA for OMS721, in the treatment of stem cell transplant patients with high-risk TMA, or those who have persistent TMA, despite modification of immunosuppressive therapy. Since our last earnings call, we’ve continued to make good progress in our OMS721 Phase 3 program for the treatment of stem cell TMA. As you may remember, we previously disclosed the results of data analyses on the first 19 stem cell TMA patients treated with OMS721. Responses in patients treated with OMS721 were markedly and statistically significantly superior to a matched historical control, demonstrating an order of magnitude improvement on overall survival, and a fivefold improvement, 53% versus 10% on survival at 100 days following TMA diagnosis. P values for these two outcomes were less than 0.001 and 0.002, respectively. These data were presented at the 23rd Congress of the European Hematology Association in June of this year, by Professor Alessandro Rambaldi of the University of Milan. Since June, we’ve had…

Thanks, Greg. As Greg noted OMIDRIA in total revenues for the second quarter were $1.7 million and our net loss was $33.7 million or $0.70 per share. This includes noncash expenses of $4.6 million or $0.10 per share. During the quarter, after favorably renegotiating the covenants under our loan agreement with CRG, we borrowed the remaining $45 million available under the debt facility. Here are some specifics regarding the second quarter results. Our reported revenue for the second quarter increased from the first quarter but continued to be significantly impacted by the loss of pass-through reimbursement on January 1, 2018. A substantial majority of our customers continue to wait for pass-through reimbursement to be reinstated October 1st, and are using OMIDRIA on a selected basis only. We expect to see utilization pattern generally to continue during the third quarter. Costs and expenses for the current quarter were $32.3 million, a $3 million increase from the first quarter of 2018. The increase was primarily due to manufacturing scale-up activities for OMS721, higher third-party development costs incurred on 721, and our other product candidates together with increased patent application costs. Interest expense was $3.7 million for the current quarter, which is in line with our expectations. As of June 30, 2018, we had $88.4 million of cash, cash equivalents and short-term investments available for general operations, and $5.8 million of restricted cash in support of our CRG loan agreement and our building lease. Now, let’s take a look ahead. We expect that our third quarter reported revenues will continue to be significantly affected by the lack of pass-through reimbursement. On a positive note, we expect to see an increase in purchases from ASCs and hospitals near the end of the third quarter as they stock OMIDRIA in anticipation of the October 1st,…

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

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

Thanks for taking the question. I’ve got one, and one follow-up, please. On OMIDRIA, if I’m interpreting what you’re talking about on the opioid side as being something that we should look at. The way I would look at it would somewhere along the lines of that you would see continued pass-through or continued reimbursement even after the current resumption in a few months. Is that correct, and is that the way you’re interpreting as well?

Well, as you know, Steve, CMS sets its rules on a yearly basis, rarely do they extend beyond the one year, unless there is some sort of statutory component to it. But, what I can say is, certainly our interpretation of that provision and the rule directed to non-opioid treatments, which have an FDA-approved indication for the reduction of post-operative pain, fits OMIDRIA, or probably better stated, conversely, OMIDRIDA clearly fits that definition. So, we believe that that provision applies to OMIDRIA. It would be our hope and frankly expectation that, should that rule be -- or should that provision be included in the final OPPS rule for 2019, coming likely in November that that would be a provision that that would be continued, given that the opioid crisis at hand is not one that will likely be remedied next year. So, I think in short, I would expect that that would continue. Again, I can't speak directly for CMS or to any kind of ability to predict what will come. But, that would be my expectation.

Got it. Great. Let me let me jump into 721 and then I'll hop back in the queue. On 721, looking at transplant, one of the things that I would like greater clarity on, and if you could provide as much specificity as possible, what are -- why is this significantly important for transplants, and what are the current standards of care, what are the costs, what are you looking at in terms of what happens as far as patient debilitation, what are the clinicians looking for, and how do you see 721 fitting all of that? And again, thank you, and as much detail as you can given. And I’ll hop back in the queue.

Yes. Thanks, Steve. In answer to that question, well, currently, there is no approved treatment for stem cell TMA. So, with respect to the current standard of care, really first line management for stem cell TMA now includes modulation or modification or stopping any immunosuppressive regimen that is currently in place, treating appropriately any infections or GvHD that may be concurrently present; jumping on hypertension, so aggressively managing hypertension and providing really any other supportive therapy that the treating physician deems appropriate. So, you get the sense that this is clearly supportive, supportive therapy. Plasma therapy has been tried, but is really thought to have no utility in this patient population. And the patients who don't respond to modification of their immunosuppressive agents, really have a terribly poor prognosis. Adult mortality has been reported to be as high as 100%, and even another recently published large series, again, the survival was quite poor, in patients who underwent immunosuppression modification, and then subsequently received treatment with plasmapheresis, defibrotide or rituximab, I think survival at one year was pretty poor. So, that really is the current landscape. And again, no approved treatment for stem cell associated TMA. I think you also asked about the cost…

Yes. What the current cost is?

Yes. I understand. And, again, I want to be careful that this is secondhand information. But, I understand that there will be one or more publications soon out, demonstrating the costs associated with this kind of supportive management of these high-risk TMA. And that cost is about, as I understand it -- and again I'm receiving the secondhand, but it's about $3 million. So, obviously, the outcomes are poor, the cost is high, and there is a clear need for an approved and effective therapy for stem cell associated TMAs, particularly these high risk TMAs that 721 is targeting.

Again, thanks for taking the questions. And obviously, we look forward to the resumption of OMIDRIA. Thank you.

Thanks, Steve.

Our next question is from Corey Davis with Seaport. Your line is open.

Thanks very much. The first question is, am I right in interpreting your language that filing a BLA this year for TMA is no longer a foregone conclusion? Can you kind of go into the details on what you need to do before you have more certainty with the filing timelines on that ruling application?

Well, I will say that our objective really remains initiating the filing of a BLA this year. So, I don't think that objective -- I don’t think that’s on our end. Corey, that might be on your end. I think though that remains our objective.

Okay, thanks. And, I think, you mentioned that you're going to start looking at the historical controls, later this year. Did I mishear that, or..

No. That's correct.

Is that different than the 10% comparator that you've been citing.

Yes. The 10% -- correct. The 10% comparator, I think, we've put out publicly as a literature-based historical control. We're talking about -- and again a matched literature-based historical controls. So, these were patients from the literature that met specific criteria that had been set ahead of time to assess versus the OMS721-treated patients. What we're talking about with the historical controls later this year are really chart reviews. So, in-depth chart reviews of patients, again, on a prospective basis. So, defining prospectively, a protocol to assess the outcomes and other factors, so confounding factors or other concomitant problems such as GvHD or DAH, diffuse alveolar hemorrhage. So, this is all prospectively defined, but it would be a chart review again for matched historical controls.

Okay. And how many more patients are likely to comprise that filing? Do you have an idea, how many patients you have enrolled and how many would be able to be included in the data package beyond the ‘19?

Yes. I do have an idea of how many we have enrolled. But, we haven't put them out yet. And we've made it clear that we continue to enroll. And as I mentioned in the prepared comments, our objective there is to continue to enroll all the way up through the database lock. So, to be collecting data on patients treated with OMS721 up to database lock. The objective is to bring in as many as we can. And as you're pointing out, I think, very much on point, to include as many as we can in that submission.

Okay. Then, last question, your IgaN trial that you mentioned, you're going to be able to release in September, how like the results, if at all, affect your ongoing Phase 3 trial, giving that this is the first time you're going to have a blinded study result in this population?

Yes. I mean, obviously, we'll look at those data. We're not expecting those data to change in any meaningful way, what we're doing in the Phase 3 program. The way we've structured the endpoints for the Phase 3 program, I think would accommodate the data that we would expect to be receiving across really a range of outcomes in these patients. Remember that what we're looking at in this Phase 2 program are relatively small number of patients on the treated side, on the control side, they're ranging in proteinuria levels. The inclusion threshold is a gram, but they can range into the nephrotic, and well into the nephrotic range. The objective here is really to get some sense of what's going on there and also to get a sense of what's happening in the Asian population, just to make sure that there's not a difference as you know. And I know you know this well Corey that the Asian population has a significantly higher incidence of IgA nephropathy. So, our interest in enrolling those patients in Hong Kong is to just get a sense of whether as we expect, but to confirm that we're really dealing with the same disease, the same set of issues in both the non-Asian and Asian populations. So, in short, I don't expect any real change to our Phase 3 program.

So, would you expect those results to be very predictive of the ongoing Phase 3 when that matures, are there reasons to suspect it that the patient population excluding the Asian trial you mentioned would be any different than Phase 3?

Yes. It's a good question. We won't know that until we see all the data. And we dig into -- number one, we see what the effects on proteinuria are? Are there similarities, dissimilarities? Are there any factors that would make the response stronger in some, not in others? Again, we're still sort of learning about the disorder. And again, this is a disorder for which there is no approved treatment. So, here again, we're somewhat blazing a new trail. And I think, this is this is largely information gathering to help us, as we move forward. But, we're eager to get the data. We are looking forward to making those data available to everyone next month.

Our next question from Ram Selvaraju with H.C. Wainwright. Your line is open.

Hi. Thanks very much for taking my questions. These are relatively straightforward, I believe. With respect to OMS721. I believe in the press release, you made allusion to different indications that utilize the same 100-day mortality endpoint. Could you clarify for us what that indication was? Where in that 100-day mortality endpoint was used for an approval?

That I'm going to have to check with our clinical group and get back to you. I don't have the specific study on that. But, I can make that available to you, Ram.

Okay, perfect. And then, with respect to the Phase 2 trial in IgaN, can you just clarify a little bit for us what you expect to be able to directly extrapolate from that study into the pivotal study for OMS721 in this indication?

Well, the major similarity between those two studies is the absence of steroids. So, I think, we'll be looking at that. I think, also, we'll be very interested in seeing incoming proteinuria levels and responses. I think, in this trial, we have the ability to retreat. Remember, in the first set of patients, we did not retreat. So, this allows us the ability to retreat the patients. And that is already structured into the Phase 3 program. So, I think that there, again, it gives us some further insight. And, I think we see the Phase 2 program as really supportive of the Phase 3.

Okay, perfect. And then, just two strategic things. For OMS721, given the epidemiology of IgaN among Asian subjects, can you comment on whether or not at this time you are seeking to identify a potential Asian regional partner for the drug? And then, on OMIDRIA, could you speak to whether or not the European commercial strategy is likely to be optimally series of relationships with regional partners, each potentially covering an individual country within the European Union or that you're currently looking at this as being better off in the hands of a larger European partner that has established commercial presence in multiple European territories? Thank you.

Okay. So, first with respect to -- and both again good questions. First with respect to Asia. Without speaking specifically about our partnering activities, because as you know, we don’t comment specifically on those. But certainly, one would expect that we are broadly in discussions around potential partnering of OMS721. And one would think that those partnerships could be either global or they could be regional. And I guess -- I expect that one would also anticipate that within that regional subset, Asia or parts of Asia would be included. So, I think that's about as much as I'll comment in response to your first question. With respect to OMIDRIA and our plans in Europe, whether as you're asking those would be regional or really more national, I think, probably all withhold comment there, other than to say that we're exploring and have been exploring both. I think, the important piece to understand here is that pricing is obviously very different in Europe currently than in the U.S. And the focus for Omeros with respect to OMIDRIA is to further drive its adoption in the U.S. I think, if we are successful as we believe we will be, should be, in establishing OMIDRIA as a standard of use in cataract surgery where there are a list of really indications within cataract surgery subsets where that can really become standard of use, I think that Europe would potentially, I might even say, would likely follow. And I think it's at that point that really putting something together in Europe makes the most sense. Remember that anything we've put together in Europe, if we're not selling it there ourselves, and your question I think implies the understanding that likely we're not going to be selling, at least our current plan is not to be selling directly into Europe that we're going to be dealing with a royalty basis. And from that perspective, you want to make sure that the utilization is as high as possible, and that the pricing accurately reflects the value of the drug. And I think that in order to establish both of those components, you really need to establish the drug and its value within the U.S. I think this extension of pass-through certainly allows us the opportunity to build on that approach.

And our next question is from Jason McCarthy with Maxim. Your lines open.

Hi. Thanks for taking my question. So, in addition to OMIDRIA in 721, I'd like to discuss a bit about 527. So, obviously, it's widely known that addiction is a major problem in the U.S., in particular, relating to opioid and nicotine. So, with the first two cohorts dose in the Phase 1 and without getting ahead of ourselves here, could you give us a bit more color on a clinical path forward in nicotine addiction, such as possible endpoints, or what kind of timelines we could expect in a Phase 2 down the road?

Sure. I think -- let me take several steps back and remind everyone, and you this, Jason, I know, but just that what we've demonstrated with PDE7 inhibition and OMS-527 specifically, but generally with all of our PDE7 heaven inhibitors. Remember, we’re the ones who discovered the link between PDE7 and any form of addiction and also PDE7 and any form of movement disorder. Focusing on the addiction and compulsion side, we have data in nicotine, cocaine, alcohol, opioids and on the compulsive side again binge-eating. So, we really think that the mechanism here is widely applicable and probably central to -- at least currently our thinking is currently central to any form of addiction or compulsive disorder. The reason that we focused first on nicotine was because there was a clear roadmap for the development of OMS527, and that roadmap is Chantix. So, kind of to short circuit my response here to your question, I would say, look, the roadmap is Chantix. You look at Chantix, you look at the endpoints, you look at the development program for Chantix. That's what we're focused on with respect to OMS527 and nicotine. As you know OMS527, the core of that mechanism for PDE7 inhibition is dopamine, PDE7 inhibitors in general. And in that I include OMS527. But in general, what we have elucidated in the mechanism for PDE7 inhibitors is that they make the parts of the brand responsible for addiction or compulsion U dopamine dopaminergic. So, in the acute addictive phase where the brain is -- the VTA and the nucleus accumbens are hyperdopaminergic, you really bring those levels down largely through the VTA to U dopaminergic or normal dopamine levels in the chronic addictive phase. You're working largely postsynaptically in the nucleus accumbens to elevate those dopamine levels back…

I'm not showing any further questions. So, I'll now turn the call back over to Dr. Demopulos for closing remarks.

All right. Well, thank you, operator. That wraps up our call for today. Thanks again, everyone for joining us. We like the way the things are coming together for OMIDRIA and our pipeline. And we expect we'll keep you updated periodically on our progress going forward. As always, we appreciate your continued interest and support. And have a good afternoon, everyone. Thank you.

Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone, have a great day.