Good afternoon, and welcome to today's earnings 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 today's – 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 special note regarding forward-looking statements and the risk factor 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 2020 annual report on Form 10-K for a discussion of these risks and uncertainties. Now, I would like to turn the call over to Dr. Greg Demopulos, Omeros' Chairman and CEO.

Thank you, Jennifer, and good afternoon everyone. We appreciate you joining us for today's call. I will go through a corporate update and our second quarter financial results, and will be joined by both Nadia Dac, our Chief Commercial Officer; and Mike Jacobsen, our Chief Accounting Officer. Following the prepared comments, we have some time reserved for questions. I will begin today with an update on narsoplimab, our fully human monoclonal antibody targeting MASP-2. MASP-2 is the effector enzyme of the lectin pathway of complement, our biologics license application, or BLA for the treatment of hematopoietic stem cell transplant associated thrombotic microangiopathy, or TA-TMA is under priority review by FDA. Our PDUFA date for the BLA is October 17 following FDA's extension of the review period. We continue working closely with FDA and look forward to the agency completing its review. We continue to share the data from the TA-TMA pivotal trial publicly across a variety of scientific and medical venues, most recently in June during a podium presentation at the 2021 Annual Congress of the European Hematology Association. In addition, two manuscripts authored by international leaders in both stem cell transplantation and in complement science have been submitted for publication to peer-reviewed journals, the first detailing the findings from the pivotal trial and the second elucidating the role of the lectin pathway on MASP-2 specifically in TA-TMA. Narsoplimab is also being evaluated in three other indications, immunoglobulin A or IgA nephropathy, atypical hemolytic uremic syndrome, or aHUS, and COVID-19. Our Phase 3 ARTEMIS-IGAN trial has approximately 130 sites activated worldwide and given the prevalence of IgA nephropathy in China, we are adding a number of Chinese investigational sites. A presentation focused on the pharmacology, pharmacokinetics and pharmacodynamics of lectin pathway inhibition by narsoplimab will be part of the 16th…

Thank you, Greg. Since our last call, we have continued to make significant strides with narsoplimab launch readiness and sustained recovery of OMIDRIA following the decision last December by CMS for separate reimbursement in the ASCs. Starting with OMIDRIA, we're excited about delivering a 37% increase in revenue over last quarter, driven by strong growth in the ambulatory surgical centers, which is our largest segment representing about 86% of our total current business. Since separate payment has yet to be restored in the hospital segment, the hospital volume is roughly half of the levels of those prior to loss of separate payment, but it's still growing at 32% over last quarter. As I shared with you in May, our efforts with establishing partnerships with ASC chains and groups of ASCs owned and operated by private equity groups has contributed to this overall momentum. In the second quarter, we successfully executed agreements with another PE group and an ASC chain bringing our total to six private equity groups and three chains. More specifically, we drove a combined volume growth in these two categories of 58% quarter-over-quarter. Additionally, cataract surgeons, favorable perception of OMIDRIA continues to strengthen as they gain more experience with its benefits. We held two recent advisory boards in conjunction with major ophthalmology congresses in May and July, gaining insights from different segments of physicians. OMIDRIA's benefits in reducing complication rates were cited by these groups as the most compelling reasons to use OMIDRIA in their centers. Specifically OMIDRIA's effect on the reduction of both intra-operative and post-operative cataract surgery complications, including a reduction in intra-operative floppy iris syndrome or IFA, post-operative cystoid macular edema or CME, breakthrough iritis and post-operative pain all of which have been demonstrated in published studies. Advisers who had significant experience with OMIDRIA reported…

Thank you, Nadia. Now I'll provide an update on the rest of our pipeline. Our MASP-2 life cycle management programs beyond narsoplimab are also progressing well. OMS1029, our second generation and long-acting MASP-2 antibody is slated to enter the clinic next summer. We expect that OMS1029 will be dosed subcutaneously with no greater frequency than once monthly. The current plan is to conduct a combination Phase I and Phase 2a clinical trial accelerating our development timeline. In addition to OMS1029, we're advancing our small molecule MASP-2 inhibitors. These are being designed for once-daily oral administration, and we look forward to their joining narsoplimab and OMS1029 in the clinic. Our MASP-3 program is also on-track in forging ahead, while there are multiple alternative pathway targets currently in development. C3 factor B, factor D, Omeros controls exclusive intellectual property rights around MASP-3. MASP-3 is the key activator of the alternative pathway and the enzyme responsible for the conversion of pro-factor D to mature factor D. Our MASP-3 inhibitor OMS906 is being evaluated in a placebo controlled double-blind single and multiple ascending dose Phase 1 trial. Last quarter, we announced preliminary results from the trials showing that OMS906 was well tolerated at all doses tested and given the pharmacokinetic and pharmacodynamic data, we again expect no more frequent dosing than once monthly subcutaneously. Finally, let's turn to GPR174, a central plank of our immuno-oncology platform. GPR174 is also part of our broad GPCR program. Exclusively expressed in immune cells, GPR174 controls a cancer immunity pathway discovered by Omeros. We're developing both small molecule and antibody inhibitors of GPR174 as novel immunotherapy agents and are building abroad and exclusive intellectual property position around those inhibitors as well as around the GPR174 target itself. We've found that GPR174 deficiency or exposure to GPR174 inhibitors enhances tumor killing phenotypes in T-cells such as increased production of IL-2, TNF, interferon gamma and granzyme B and also reduces expression of certain immune checkpoint molecules. Consistent with these observations, tumor growth is attenuated in GPR174 deficient mice. We know that tumor cell death results in the production of immunosuppressive GPR174 stimulating molecules. So we believe that a GPR174 inhibitor will be necessary to maximize tumor killing immune responses following commonly used radiation and chemotherapy. We also expect that inhibitors of GPR174 could be combined with existing cancer immunotherapies to improve response rate. For example, GPR174 inhibitors could be combined with Yervoy or Keytruda as well as with emerging immunotherapies, such as next generation IL-2 and adenosine access inhibitors, again, improving response rates. Beyond GPR174, we continue to advance other components of our immuno oncology platform, including our CAR-T and adoptive cell therapy programs. We expect that these programs both wholly new approaches around, which we continue to build broad patent estates could fundamentally change the immune-oncology landscape. With that, I'll turn the call over to Mike Jacobsen, our Chief Accounting Officer for an overview of our second quarter financial results.

Thanks Greg. As Greg noted, OMIDRIA and total revenues for the second quarter were $28.8 million, an increase to $7.8 million or 37% from the first quarter. Our net loss for the quarter was $28.6 million or $0.46 per share. This includes non-cash expenses of $3.9 million or $0.06 per share. As of June 30, 2021, we had $73.7 million of cash, cash equivalents and short-term investments available for general operations. We also have a $50 million accounts receivable baseline line of credit, which allows us to borrow up to 85% of our available accounts receivable borrowing base after certain reserves. As you may recall in March, we also entered into an aftermarket sales agreement that allows us to sell from time-to-time, up to $150 million of our common stock. During the second quarter, we have seen a steady increase in OMIDRIA sales to ASCs and our weekly sell-through to these customers are at the level seen prior to the October 1, 2020 loss of separate payment. Costs and expenses for the second quarter were $52.8 million; an increase of $1.2 million from the first quarter of this year. The increase was due to additional selling, general and administrative costs as we continue to prepare for the plan U.S. launch of narsoplimab. This increase was partially offset by a decrease in research and development expenses due to the timing of narsoplimab manufacturing activities. As I stated previously, we are expensing narsoplimab manufacturing costs until we are certain that we will obtain marketing approval in the United States. Interest expense for the current quarter was $4.9 million and consistent with the first quarter. As Greg mentioned earlier reimbursement scenario for a Omeros continuing to strengthen. So we expect the OMIDRIA revenues will further increase as our ASC customer's ramp-up, their use of OMIDRIA and our customer base continues to grow. We expect overall research and development costs in the third quarter of 2021 to increase compared to the quarter ended June 30, 2021. Due to increased medical affairs and clinical costs for TA-TMA and additional development costs related to OMS1029. SG&A costs are expected to increase throughout the remainder of the year, largely to support narsoplimab launch preparations in the hiring of our regional hospital sales managers. Interest expense for the third quarter should be consistent with the second quarter at $4.9 million. With that, I'll turn the call back over to Greg. Greg?

Thanks Mike. Operator, let's please open the call to questions.

Okay. [Operator Instructions] First question comes from the line of Geoff Meacham from Bank of America. Your line is now open.

Hi, guys. This is Greg Harrison on for Geoff. Thanks for taking our question. Just wanted to get your thoughts and expectations around when we may see data from the I-SPY trial assuming that things go as you'd like them to. How long do you think it would take to before that reads out? And then what would your expectations be as far as efficacy that we would really convince you that it makes sense to continue moving forward in that indication?

Hi, Greg. Thanks. Well, first with respect to timing of the I-SPY trial I know it may be not a satisfying answer, but we really don't have a good sense of where they are with enrollment. They keep the sponsors not just Omeros, but all sponsors involved in the trial at arm's length. And they do that so that they can preserve the credibility of the trial. They began enrolling in March. I would expect that enrollment probably slowed down a bit over the past several months, but I would guess that recently that enrollment has picked up again. I mean, as we talked about earlier and I think very well there, the number of new infections of COVID-19 are increasing. The question is how many of those are making it into the hospital and how many of those would meet the criteria for I-SPY. So, our hope is that we hear something soon there. They do initially a cut of the data to see if there is a lack of feasibility and we haven't heard anything there. But we really don't have a good sense of when they'll complete it as soon as we know, we'll share that information. With respect to what we would be looking for from efficacy to make a determination as to how we would proceed with narsoplimab, look, I think we already have pretty substantial data showing that narsoplimab is at least appears to be in the studies that we have done or have been done by others for us. It appears to be quite effective in the critically ill COVID patients. So we're pretty confident in the strength of those data. Now, what we need to do is see what comes out of I-SPY. Again, it's a slightly different patient population. The patients enrolled in I-SPY aren't required to be as sick as those that we have treated both in the U.S. and in Italy, outside of I-SPY. And it also – we're counting on, and I believe this is the case, but we're certainly counting on the rigor of the trial, the rigor of the protocol and the management of that trial to deliver the data that we believe we would see with narsoplimab. So let me stop there and see if you've got any question about that.

No, that's really helpful. Maybe just one follow-up. What would be your idea of path forward in COVID-19 commercially there has been talk of government funding? And have you had any talks with BARDA or NIH about that? Or do you think that's something that would be more likely to happen after you have the results from I-SPY?

No, as we have – yes, so, as we've said, discussions with governments, both U.S. and international are ongoing. What we – the main focus of our discussions are manufacturing, right. What – we need to increase our manufacturing capabilities in order to support the use of narsoplimab more broadly in COVID-19. And I think that clearly is the first priority for us. And those discussions are ongoing as well as discussions around funding of other opportunities be those clinical trials et cetera. But I think certainly the appropriate move here would be to fund additional manufacturing and scale up of manufacturing for narsoplimab supplement, because, let's just say, what if the data come back as we expect, what will be the next step. Well, the next step would be how do we make that drug more broadly available? And I think we would be challenged given the requirements that we already have for narsoplimab across TA-TMA, our ongoing IgA, and aHUS studies and other areas that we're moving forward. So I think that needs to be the focus. Assuming positive response in the I-SPY trial, we would certainly look to be talking with FDA about in EUA or some other approach to make the drug available to patients who need it.

Great, that's very helpful. Thank you.

Thanks, Greg

Next question comes from the line of Steve Brozak from WBB. Your line is now open.

Hi, thanks for taking the questions. Just one quick one, given you – on the last question, there was a specific reference to obviously, unfortunately, the resurgence of COVID. How do you believe the system is prepared given COVID and its resurgence and specifically vis-à-vis OMIDRIA in terms of clinical use now? And I'll hop back into the queue after that. Thanks.

Thanks. Thanks, Steve. Well look I think with respect to – and I expect what you're asking is elective procedures and how those might be affected by resurgence and COVID. So I'll answer that question if I'm off base, please correct me. But I would think that we are through that initial challenge that we had nationally with respect to PPE or the personal protective equipment, which was one of the major impediments in keeping elective procedures running in ambulatory surgery centers. So I think my expectation, although I don't know this, my expectation would be that we don't have those same challenges that PPE generally is readily available. And so I would expect that a resurgence in COVID would not meaningfully affect what's happening in the ASCs with respect to elective procedures, and specifically with respect to cataract procedures. Now, what I can't assess is the patient's response, right, will patients still want to undergo their elective procedures in the setting of COVID, but what we're seeing currently is that there appears to be very little impact on OMIDRIA from any sort of patient concern around their safety in ASCs. So let me stop and see if that was even the question that you were asking or was it something else.

No, no, that was actually the exact question and I appreciate the direct response. Look, congratulations on this quarter and looking forward to obviously all the progress that you're making with I-SPY. Thanks again.

Thanks Steve.

Next question comes from the line of Ram Selvaraju from H.C. Wainwright. Your line is now open?

Hi, thanks very much for taking my questions. Real quickly on narsoplimab and COVID-19; do you anticipate being able to do any kind of anecdotal investigational work specifically in patients infected with the Delta variant?

That's an interesting question. Thanks Ram. I expect that what's being enrolled in the I-SPY trial includes those patients who have the Delta variant. I don't think that and in fact, I know that their enrollment criteria or exclusion criteria do not include the Delta variant, meaning that they are not excluding patients with the Delta variant. So I would expect very much that the patients that are currently being enrolled in the I-SPY trial are in large part Delta variant patients. Independent of that though, the mechanism of action of narsoplimab should be wholly independent of the variant of the SARS-CoV-2 virus, right? What narsoplimab addresses is the endothelial injury and really the resultant activation of the lectin pathway due to endothelial injury. And that is – that is going to be present in the original virus, in the Delta variant, in the lambda variant, and I would expect really in any variant of the SARS-CoV-2 virus. So I don't see any impact or any detrimental effect on the role of narsoplimab in SARS-CoV-2 writ large based on the variant.

That's very helpful. Can you also elucidate for us, positing a scenario in which narsoplimab already has approval in TA-TMA? What would be the perspective on the use of the I-SPY study as potential basis for regulatory approval, either via EUA or some other routes, probably via EUA specifically in COVID-19? Do you have any sort of feedback or sense that this trial could be kind of on a standalone basis. The foundation for a potential approval, or if there's likely to be a need for additional clinical work to be done, and how does potential approval of narsoplimab in a non-COVID-19 indication potentially impact the ease with which narsoplimab might get EUA?

Well, first, I'll make the general comment that we don't discuss our communications with FDA around specific programs. I would also make the broad statement that we would not and do not promote or push off label use of any of our drugs. Having said all of that, I think, look if you have a positive outcome from the I-SPY trial that we would be in discussions with FDA about how to make that drug more broadly available for COVID-19 patients. And I think that would be appropriate, and I think that I would hope that given the collaborative working relationships that we've had throughout the years with FDA, that – that we would all work to figure out how to do that. With that, let me stop and see if Cathy Melfi, our Head of Regulatory has any additional comments on that.

Thanks, Greg. And yes, as Greg said, without getting into specifics about discussions we have with regulatory agencies, I do think that given the similarities that there are between COVID-19 and stem cell TMA, it would certainly speak to FDA about you're taking that into account and then the decisions they make and that sort of thing. But other than that, and what Greg said I think that's really all that we can say for now.

Okay, great. And just one last question on the ARTEMIS trial, can you comment at all on enrollment status and any kind of updated timeline to top-line data release, particularly in the context of the additional sites being brought online in China?

Yes. We don't – yes, hi, Ron. We don't give updates on enrollment. We are continuing to target – target data at the latter part of next year. We have to see what happens with a number of factors including COVID whether that will have any effect. We know that COVID slowed us down before that may slow us down as we expand sites in China; we'll need to see how that goes. But again, what we're targeting is data in the latter part of next year. We'll see if – we'll see if we're able to hit that. That is the objective.

Thank you.

Next question comes from the line of Brandon Folkes with Cantor Fitzgerald. Your line is now open.

Hi, thanks for having me question, and congratulations on a good quarter. Firstly, maybe just on OMIDRIA within new PE and ASC contracts. Was there any stocking in the quarter or was that all demand? And then secondly, on narsoplimab on pricing, are you still going to price narsoplimab to maximize the TA-TMA opportunity or should I find data read out before narsoplimab comes to market for TMA? Could this have a potential impact on how you view pricing? Thank you.

Yes. In response to your first question, there was no stocking. So I think that that should answer that Brandon. On your second question, I think that again the objective is to get narsoplimab approved for TA-TMA and I think that we will continue to work through these other indications, and how we handle those commercially once we get to that point. I don't know if that answered your question, if not – if not come with another and I'll try to answer it more directly.

No. I think – I think you did answer it. I think, ask more directly, I was just – if the I-Spy data comes read out positively that you sort of compelling that you think you're definitely going to get approval there, whether you may price it to get more approval and more usage in COVID, but yes, my understanding is, it sounds like you're going to focus on the TA-TMA opportunity and sort of then, address the next opportunities as they come up. Is that fair?

Yes. It is. And I think – I think Brendan specifically look, the focus as you've said is on TA-TMA. Remember that the population in which we have studied narsoplimab in COVID-19 is really the critically ill population. And that is a relatively smaller part of the overall COVID-19 subset and even a smaller part of the hospitalized subset of COVID-19 patients. So we need to look at the overall numbers, and again, I think best thing we can do is focus on getting narsoplimab approved for TA-TMA. These other problems would be – would be nice to have, and ones that we certainly would work to sort through, but I would expect that that we would do that well.

Great. Thanks so much. Greg, appreciate the extra color.

Thank you.

There are no further questions at this time. I will also turn the call over back to Dr. Dimopoulos.

Okay. Well, thank you operator, and thank you again everyone for taking the time to join us today. We're pleased with Omarosa's progress across our commercial and development programs. And we really like how the remainder of the year the milestones and our likelihood of achieving them are shaping up. In the meantime as always all of us at Omeros appreciate your continued support. Have a good evening. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.