Good afternoon. And welcome to today’s earnings call from 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 will turn the call over to Jennifer Williams, Investor Relations for Omeros. You may begin.

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 in the company’s annual report on Form 10-K, which was filed today with the SEC, including the Risk Factors section 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, Jennifer, and good afternoon, everyone. We will start with the corporate update and an overview of our fourth quarter and full year 2022 financial results followed by a more detailed financial summary. Joining me on the call today are Mike Jacobsen, Nadia Dac, Cathy Melfi, and Steve Whitaker, our respective heads of finance, commercial, regulatory and clinical. Before diving into the details of our specific program updates and coming events, I’d like to spend just a few minutes on our financial strength that we expect will enable those events without the need for near-term shareholder dilution, continuing to position Omeros for success. To provide some background, in December 2021, we completed the strategic sale of the cataract surgery product that we developed and commercialize, OMIDRIA to Rayner Surgical for an upfront payment of $125 million, $31 million of retained receivables, substantial ongoing royalties on Rayner’s net sales of OMIDRIA and the potential to receive a $200 million milestone payment by securing for OMIDRIA continuous separate payment of at least four years. The initial royalty rate on U.S. net sales of OMIDRIA was 50%, which represented nearly 80% of the total operating profit. Last September, we sold a portion of our future OMIDRIA royalty stream to DRI Healthcare and received $125 million in cash. Because DRI’s annual royalties are capped, and as a result, Omeros received any financial upside in the OMIDRIA royalty stream. The royalty sale was recorded as debt on our balance sheet and no income was recognized related to the sale. Then three months later, in December 2022, Omeros achieved the Rayner milestone, receiving $200 million plus interest in early February. Under our agreement with Rayner after achieving the milestone, the royalty rate that we now receive on Rayner’s U.S. net sales decreased to 30%, which…

Thanks, Greg. As Greg discussed, in December of last year, Rayner required OMIDRIA and associated business operations. The sale required us to restate our financial statements for all periods into continuing operations and discontinued operations. Our net income for the fourth quarter was $128.7 million or net income of $2.05 per share, compared to a loss of $17.5 million or $0.28 per share in the third quarter of 2022. The fourth quarter includes the $200 million milestone we earned from Rayner in December, which is included in discontinued operations. If we look at just continuing operations, our net loss for the fourth quarter was $0.73 per share, compared to a net loss of $0.87 per share in the third quarter, a $14 improvement. At year end, we had $195 million of cash and investments on hand and $213 million in receivables, all of which we have collected. The $213 million year end receivable balance includes the $200 million in payment, as well as the OMIDRIA royalties for November and December, which are due 60 days after respective month ends. We therefore had approximately $408 million in cash available for operations and debt service when you add the cash and investments together with the receivables. Cost and expenses from continuing operations for the fourth quarter were $40 million, which is a decrease of $10.6 million from the third quarter. The decrease was primarily due to manufacturing commercial narsoplimab drug substance in the third quarter, which we expected given that we do not have FDA approval. As we finalize our path forward for TA-TMA, we continue to gauge our narsoplimab’s sales and marketing spend until the timing of FDA approval is clear. Interest expense for the fourth quarter was $7.9 million, compared to $4.9 million in the third quarter. The $3 million…

Thanks, Mike. Operator, why don’t we open the call to questions.

And thank you. [Operator Instructions] And one moment for our first question. And our first question comes from Colin Bristow from UBS. Your line is now open.

Hey. Good afternoon and congrats on all the progress. So on the TMA filing and the regulatory path, I know you anticipate a meeting with the FDA in 2Q. Have you had any additional conversations with the agency or any additional feedback since the last update you provided, which I think was in November? And then with regards to this upcoming FDA meeting, what are the primary questions or points of discussion you are looking to cover? Is it -- since it felt that in last feedback from FDA, there was a sort of fairly prescriptive kind of path to what is required from you to restart the process? Thank you.

Yeah. Hi, Colin. Thanks for the question. First, we don’t discuss specific timing of discussions or details of discussions with FDA. But with respect to your second question, the purpose of the meeting, I think, as we said, is to just confirm and make sure we are all clear on whether what we are proposing as analyses will be acceptable. So this is really to reach agreement with FDA as to what needs to be done, what will suffice with respect to those analyses, so that we can deliver to FDA, specifically what they need so that we can get this drug approved. And Cathy, do you want to add anything to that?

No. I think that pretty much covers that. As Greg said, we will be working with FDA to go over our proposal based on the feedback that we have received to-date and we want to make sure that what’s in our resubmission is what’s needed to approve the drug.

Got it. Thank you.

And I will -- okay. Great. Thank you.

And thank you. And one moment for our next question. And our next question comes from Steve Brozak from WBB Securities. Your line is now open.

Hi. Thanks for taking the question. Just one quick one. Can you go into and give us much detail on your diagnostic collaboration with Cambridge and what can you tell us about what kind of data you are seeing there and what are the ramifications from that? And I will jump back in the queue. Thank you.

Yeah. We will be publishing more data, Steve, coming out of Cambridge, so I don’t want to preempt that. But with respect to the diagnostics, specifically, what we have identified is a pattern of complement factor changes that occur with severe acute COVID and even moderate COVID. But hospitalized COVID patients that specifically linked to the lectin pathway and we are in discussions with government agencies around that panel of assets that we are working through. This may also have applicability to long COVID or past, but it is, I think, currently premature to make any definitive statements about the

Got it. Okay. Thanks very much. Let me hop back in the queue.

All right, Steve.

And thank you. And one moment for our next question. And our next question comes from Greg Harrison from Bank of America. Your line is now open.

Hi, there. It’s Mary Kate on for Greg. Congrats with the milestone payment and thanks for taking our question. I guess looking at the narsoplimab program here in IGAN and given the Phase 3 data expected, what are your commercial expectations for narsoplimab is approved in this indication? Thank you.

Well, we think the opportunities for narclumab is lot. As I said, the IGAN market is a large market. It’s a multibillion-dollar opportunity as you know. And what’s been approved in orally available steroid, one that works primarily within the gut and an agent that is another approach to blood pressure control. But what we are talking about with narsoplimab specifically, is an anti-complement agent. And we think the utility of that could be substantial particularly in patients with high proteinuric, so patients with high levels of protein spillage in the urine. And when I say that, I mean, those patients somewhat arbitrarily, but those patients who have 24-hour urine proteins of 2 grams or more per day. We think that there is a very large opportunity for the treatment of those patients, as well as those with lesser degrees of proteinuria and we think that, certainly, there’s a need for complement inhibition and specifically lectin pathway inhibition. As I think we have discussed before, lectin pathway inhibition is important not only at the glomerular, but also in the tubular endothelium, and as you know, that is where all end-stage proteinuric renal diseases pass. So really if you can affect the tubular interstitial, you are effectively treating or potentially treating all proteinuric renal disease. So we think the opportunity is very large.

Great. Thank you.

And thank you. And one moment for our next question. And our next question comes from Brandon Folkes from Cantor. Your line is now open.

Hi. Thanks for taking my question and congratulations on all the progress. I just want to come back to that first question around narsoplimab and the TA-TMA meeting with the FDA. Is there a way to contextualize sort of the level of work you have done ahead of this meeting? And what I mean for that is, if you do have a meeting of the minds on the approach to sort of addressing the CRL, is this something we should expect a submission relatively shortly thereafter or is it more just going to agree on an approach and then it could be a couple of months or quarters of work behind it?

Yeah. Let me first say that, in the prepared comments, I think, I made it clear that we have identified and now can access the sources of information that we need or we believe we need to address FDA’s concerns. So I think it would be premature though on the front end of that FDA meeting to talk about how long it will take us to satisfy FDA. Let’s get through the meeting first and then I think we can speak more definitively about that, otherwise it’s pure speculation. But I think part of your question is what have we been doing, and certainly, in the meantime, since our last public statement around this, there’s been a tremendous amount of work being done; one, in identifying those sources of information; two, obtaining access to those. Certainly, we aren’t running analysis upfront, because we want to make sure that we with FDA agree one analysis we are going to run. But then, I think, running them, if we are all in agreement on what we are doing, should not be a lengthy process. But let me see, again, I will ask Cathy and/or Steve, if you have any other comments on this.

Thanks, Greg. Yeah. We have been working quite a bit since the last update. And also, as Greg mentioned earlier, we are working with our regulatory consultants and working closely with them to make sure that we are providing the best information that we can and trying to set ourselves up for success.

Great. Thank you very much. That’s very helpful. One more if I may. You have done a tremendous job shoring up the balance sheet and I think the commentary in the press release was sort of funded through at least 2025. Can you just give us a sense of which programs you include in that runway? Is that your sort of the whole breadth of the pipeline or just how you are thinking about kind of maybe focusing on some? Anything you can do to speed up these trials just given your strong balance sheet? Thank you.

Yeah. Sure. Thanks again, Brandon. Well, certainly, our focus on narsoplimab is a high priority, similarly, our focus on 906. I think as we made clear we began enrolling last December, we began dosing in January. We are pushing hard on that program. We think that that’s going to be a very important program not only for us, but for patients with alternative pathway disorder. So that’s a priority. When we kind of march down, you look at OMS1029, which is our backup to narsoplimab, that program is sailing through, everything looks good there. Similarly, the small molecule program, let’s see if we select, if we select a development candidate next quarter, we will be looking at advancing that. But as you know, that’s really a lot of pre-IND work and that’s pretty contained with respect to cost. 527, we are looking for external funding, and once we have that, assuming we get it, we expect that to fund clinical work and further development. If we turn over a positive card the levodopa-induced dyskinesias. That’s another area that we would consider a clinical trial. But again, that would be limited in size first. It would be proof-of-concept, so cost would be pretty contained. Then when you look at our immuno-oncology programs, those are preclinical, but we hope to, over the coming months, be able to start to move one or more of them into IND-enabling work, which again, those costs are pretty contained. So I think I have answered your question, but let me be very specific about it. All of the programs I have just mentioned are laid out there for the budget and fall within what we are doing all the way well into 2025.

Okay.

Again, based…

Great. Thank you very much.

Yeah. Based on where we see success, we can always push the hammer down even more on those specific programs. But we are looking for additional revenue beyond OMIDRIA coming in and continuing to drive further development of the pipeline.

And…

Thank you very much.

And thank you. And one moment for our next question. And our next question comes from Serge Belanger from Needham & Company. Your line is now open.

Hi. Good afternoon. A couple of questions for us, the first one on the ARTEMIS Phase 3 trial that I think is expected to read out in the third quarter of this year. Greg, I think, you mentioned that, you expect this trial to support the BLA filing. Just curious when you would expect that the BLA filing, assuming that we get positive results in the third quarter. What kind of other data would you need to complete that filing?

Yeah. Remember what we are -- thanks, Serge. What we are going to be looking at as the primary endpoint is proteinuria data. So if those data are positive and we hope, and frankly, expect that they will be, but we need to see those data. When we see those, assuming they are positive, we would be moving quickly to put those data into the BLA. The safety data, all of the other components of the BLA are already being pulled together. So I think on timing, conservatively, I would look at a four-month to six-month timeframe from data to submission. But let me look to Steve and to Cathy to see if there are any other comments.

No. I think we have identified everything that we go in the BLA and have plans together at all. So try to put in quickly.

Thanks, Steve.

Yeah. And…

Okay. So you could have -- go ahead.

The topline data -- once we have the topline data, that kind of what triggers the pre-BLA meeting with FDA and so I concur with the timing that Greg had proposed.

So there would be no issues in having two separate BLA filings, one for just the TA-TMA and another one for IgA nephropathy?

Yeah. You are talking about, I think, resource allocation and workload. We -- remember that we are looking for Q3 data on IgA. So we would expect that they would blend well. But, Steve, this is partly your group as well. So why don’t you address this?

We have identified resources we need so they can run it fairly well and there’s overlap between the two as well. So I wouldn’t see any one blocking the other.

Thanks, Steve.

Got it. And then a couple on OMIDRIA.

Sure.

Now that the -- you have gotten the milestone payments and the royalty rates knocked us down from 50% to 30%. Does that have any implication for DRI royalty agreements and respectively…

No. Not at all. Yeah. Let me just answer that first. No. I think our agreement with DRI, frankly, anticipated. Our success in achieving a milestone and DRI was and is very aware of that 30%. But we also -- all of us, I think, DRI included expect overall sales to continue to increase with the legislative successes that have been achieved for all non-opioid pain management drugs and also as we start to focus on, I hope, Med Advantage as well.

And the last question, your partner Rayner now has a lot more visibility on the overall coverage of OMIDRIA. Do you expect they will increase their commercial support for the product going forward?

That’s a great question for Rayner. I would expect they would. You now have secure long-term separate payment in the ASC. You also have HOPD payment beginning in 2025, January 1, 2025. That’s another 20% of the market. And so I would expect that they would be capitalizing on the broad support of the product and ramping up to do the same. But let me see, Mike, any comments on that?

No. I think, Rayner’s obviously looking at it, they are very aware that we have gotten the milestone and preserve the long-term payments and the HOPD side increases the potential there as well. So I think Rayner is really aware of the opportunities they have sitting there.

There’s a tremendous opportunity as well on the Med Advantage side.

Yeah.

And I think I am sure that Rayner realizes that and is focused as they should be on expanding Med Advantage payments, not just coverage, but payment. And there are ways, I think, that the Congressional action can carry through and we have looked at that as well, that that can carry through to Med Advantage and help educate the Med Advantage payers, which often are the same payers as commercial as to why they should be separately paying for OMIDRIA in the same way that Congress has mandated CMS too.

Yeah. Thanks.

All right, Serge.

And thank you. And I am showing no further questions. I would now like to turn the call back over to Dr. Demopulos for closing remarks.

All right. Thank you very much, Operator. Once again thank you everyone for joining us today. As I think you can see and as I think we were just discussing some of the analysts, Omeros is well positioned financially to develop the deep pipeline of assets that we control. So with multiple and frequent near- and mid-term milestone events, the financial strength that Omeros now has really despite the tumultuous times globally and macroeconomically will allow us to remain focused throughout 2023 and beyond on really bringing life saving products to patients and value to our shareholders. We will continue to keep you updated on our progress. As always, we appreciate your continued support. Have a good evening.

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