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 Web site for one week from today. I will 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 special note regarding forward-looking statements 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 most recent 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, Chairman and CEO of Omeros.

Thank you, Jennifer, and good afternoon, everyone. Joining me on today’s call today are Mike Jacobsen, Nadia Dac, Cathy Melfi, and Steve Whitaker, our respective heads of finance, commercial, regulatory and clinical. I will start today with the brief overview of our first quarter 2023 financial results followed by a corporate update. Mike will then provide a more detailed financial summary before we open up the call to questions. So now let's look at our financial results for the first quarter. Our net loss for the first quarter of 2023 was $33.7 million or $0.54 per share compared to net income of $128.7 million or $2.05 per share in the fourth quarter of last year. This difference is the result of the OMIDRIA related $200 million milestone that was achieved in the fourth quarter. Payment of the milestone together with accrued interest was later received from Rayner Surgical in February of this year. Cash burn for the first quarter of 2023 was $23.6 million, down from $26 million in the prior quarter. Net sales of OMIDRIA at $30.7 million were in line with expectations for Q1, which historically is the weakest quarter of the year. OMIDRIA royalties for the quarter were $9.2 million, reflecting the new 30% royalty rate on US net sales of OMIDRIA, following our achievement of the milestone and receipt of the milestone payment. The 30% royalty translates to more than 40% of the operating profit from OMIDRIA total sales. As of March 31, 2023, we had $371.4 million of cash and investments available to support ongoing operations. This amount provides Omeros the flexibility simply to pay off the $95 million of convertible debt that matures this November, while still funding operations and advancing our multiple programs well in to 2025. We expect our royalties from OMIDRIA…

Thanks, Greg. Our net loss for the first quarter was $33.7 million or $0.54 per share compared to net income of $128.7 million or $2.05 per share in the fourth quarter of last year. The fourth quarter of last year includes the $200 million milestone we earned from Rayner in December Cash burn for the first quarter of 2023 was $23.6 million and that is exclusive of receiving the $200 million milestone payment. As of March 31st, we had $371 million of cash and investments on hand and $10 million in receivables, which primarily represent OMIDRIA royalties for the February and March, which are due 60 days after the respective month end. Costs and expenses from continuing operations for the first quarter was $35.7 million, which was a decrease of $4.4 million from the fourth quarter of last year. The decrease was primarily due to receiving notification in the current quarter of a $2.1 million employee retention tax credit related to the CARES Act and annual bonuses that were accrued in the fourth quarter. Interest expense for the first quarter was $7.9 million, which is consistent with the fourth quarter of last year. The primary drivers of interest expense are the 2023 and 2026 unsecured senior notes and the DRI OMIDRIA royalty obligations. Now let's take a quick look at the OMIDRIA royalties. From the divestiture the OMIDRIA business to Rayner until the passage of the 2023 omnibus bill in late December of last year, we received royalties of 50% of US net sales. Upon passage of the omnibus bill, OMIDRIA royalties decreased to 30% of US net sales. 30% royalty equates to approximately 40% of the US OMIDRIA operating profit, considering that we don't have any OMIDRIA operating expenses. The 30% royalty rate extends throughout the duration of relevant patent terms, which we expect to be at least through 2033. For the first quarter of 2023, our 30% royalty on Rayner net sales was $9.2 million. Royalties earned are recorded as a reduction in the OMIDRIA contract royalty asset on our balance sheet. Income from discontinued operations in the first quarter was $6 million and included two primary components, $3.9 million of GAAP interest earned on the OMIDRIA contract royalty asset and $1.7 million of income due to remeasurement adjustments to that same OMIDRIA contract royalty asset. Now, let's look at our expected second quarter results. We expect overall operating costs from continuing operations in the second quarter to increase slightly due to the timing of clinical development and certain manufacturing activities. Interest income should be nearly $4 million and interest expense for the second quarter should be consistent with the first quarter approximately $8 million. Income from discontinued operations should be in the $5 million to $6 million range. With that, I'll turn the call back over to Greg. Greg?

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

[Operator Instructions] And I show our first question comes from the line of Steve Brozak from WBB.

I've got one. From what you said very, very early on in the call, specifically on the biomarkers that you've been looking at with the TA-TMA patients. How extensive do you believe these biomarkers can be? Because obviously in previous calls, you talked about collaborations that you had done and shown that the biomarkers were present with SARS-CoV-2. But is this -- this is now something that transcends not just with that particular vital indication but also goes to other indications dealing with the lectin pathway. Can you tell as much as possible about this? Because it's -- I mean, it's scientifically fascinating, but it's more than that as far as what you're looking at for the use of narsoplimab going into the future?

First, the biomarkers that I was describing in the prepared comments were those or really is that used by the group at Weill Cornell, and that is Caspase-8 as a biomarker of microvascular cell injury, and that's been well documented. So really what this does is tie our clinical data, our pivotal trial data of OMS721 and narsoplimab in TA-TMA to specifically Caspase-8 levels and the difference between responders and non-responders. I think what you're referencing with respect to our work in COVID, which is ongoing as well as our work and ARDS, those are biomarkers that in part we have developed. And when I say, we, that's the collective we of our group in Cambridge as well, where we have an assay or a set of assays that we are looking to effectively put on a single multiplex, which identifies those patients who have moderately severe to severe COVID. We're also doing work in ARDS, but also I think as you mentioned or I think you mentioned, we are looking at that as well in long COVID. And we are seeing some interesting data in long COVID as well, but I'm not at a point where I think we want to discuss that today.

Thanks for separating the two between the biomarkers at Cornell and the ones that you have got working in collaboration elsewhere. But I guess the point I'm getting back too is that this now shows that there is a quantifiable response, a quantifiable path for showing the effect in this, of narsoplimab, and specifically in dealing with the upregulation of lectin pathway. I would think that you would probably also be able to look at it for theoretically a number of other disease indications that you are looking for or looking at. And what does this mean as far as the ability for you to go into the future and say, you have a, designer diagnostic, that specifically references your drug?

Yes, I see where you are going with that. I think there is more work that needs to be done. I would point you though to the publication that are out, one by [indiscernible] in Frontiers in Immunology, the other by [Lynch] in Clinical and Translational Medicine, I believe, and these are both last year publications, if I'm remembering correctly, that speak directly to the biomarker. So let me just point you there. I don't think going into detail on all of that now is going to be a useful expenditure of time given the limitations, but happy to address those offline if that would be helpful.

And I show our next question comes from the line of Greg Harrison from Bank of America.

Just wanted to talk about your expectations for the IgA nephropathy readout for narsoplimab. What would you view there as successful data and then how do you think about potential place in the market now that there are a couple of approved therapies in IgAN?

With respect to what we would consider a successful readout, I guess, the answer to that is, let's see what the data look like and we will tell you at that point. I think that certainly we are expecting that narsoplimab will work and work well in IgA nephropathy. As you understand, the question is also in what specific subsets, are there specific subsets, is it in high protein? Is it in those that are generally across the board in IgA nephropathy? These are all questions that I think the data will answer, and I think it's really premature Greg to put a stake in any of those, the data. The trial that we're running is placebo controlled, double blind. So we don't have any sense of those data now. But if you look at the publications, I referenced a few in the prepared comments, but there are others. I mean, if you take the time and actually read those, I think it's clear that the lectin pathway plays a key role, not only in the glomerular injury of IgA nephropathy but in the tubulointerstitial disease. And that's really important, because the tubulointerstitial is sort of the point of convergence of all of the end stage renal diseases, the end stage protein, uric renal diseases, certainly. So we're really talking about something that is well beyond just IgA nephropathy. With respect to how I think we will fare or how I think we fit into the market with these other drugs, I don't see those other drugs creating any impediment to our market entry. One, as you know, is a steroid that has reportedly increased activity in the gut but that is really only approved for a six month course just like any other steroid. And the interesting thing is when you look at the use of steroids in IgA nephropathy, they can be effective but the testing study made it pretty clear that mortality was increased. So that study actually needed to be stopped with steroids. So the [indiscernible] recommendations are six months only for treatment, and those recommendations hold as well for this new steroid. With respect to any of the blood pressure medications, RAAS blockade is a standard part of all IgA treatment. So again, I don't see that affecting us in any way. But let me turn the call over to commercial and clinical and see if they've got any other thoughts that that they'd like to add. Nadia, do you want to go first?

The market opportunity is really significant. The way we look at this is IgA nephropathy market has been dormant, without anything that has been approved up until now. The nephrologist are open to combination use as well, which is something that they're not afraid of and doing with limited options that they have. And certainly, when they look at a profile of a drug that isn't dosed on a daily basis, has sort of a shorter course, they're very excited by that. So we look at this as significant opportunity of a market that's yet to wake up.

If you look back at the data from the previous studies in proteinuria, as well as EGFR, narsoplimab has -- and this is all data dependent, of course, tremendous potential to really help these patients and differentiate itself from the current competitors on the market as well as others that may appear.

Thank you.

And I show our next question comes from the line of Elliott Bosco from UBS.

Elliott Bosco on for Colin Bristow from UBS. For the TA-TMA resubmission, last quarter, you noted the threshold for comparison would be based on an independent literature analysis. I was curious if there are any updates on this? And if so, could you elaborate on the thresholds? And then regarding the meeting, assuming positive feedback, what are the next steps and potential timeline for resubmission?

First, with respect to the literature review, I think we listed that as one of a number of options, all of those being external sources of data for comparison. So I think that is -- we talked about chart reviews, we talked about registries and we talked about literature reviews. So I think it's all part and parcel of the same effort, and really that that will depend on our discussions with FDA. What I would see as next steps and again, I'll turn this over to regulatory to comment as well. But obviously, we need to reach agreement with FDA on what needs to be included in the BLA, what do they want to see, what do we need to do? And once we know that then we can get that work done, we believe, pretty quickly. And then that requires pulling together most of the BLAs that would be the same, but we need to update the safety part of the BLA, put the new data in and provide all of this to FDA, which would then have a six month timeline to review. I would hope they wouldn't take that long, but they well could, they're busy. And so I think from that you can establish a timeline. But let me see, Cathy, do you want to comment?

Just to say, as Greg mentioned in his prepared remarks, our proposal to FDA is consistent with the decision that we had received in response to our formal dispute resolution request. But I mean, we do have to run it by the review division before we can embark on it. So that's what our next step is and consistent with what we heard. So that's where we are right now.

Could I get one more in if we have time?

Yes, sure.

So on 906, you mentioned your intention to pursue geographic atrophy. And I was curious if you could give a little more color on this and what your thoughts are on the competitive landscape?

We are looking at geographic atrophy as a possible indication to pursue. Again, we haven't finalized any of our plans. Our focus is sort of pushing hard on PNH and C3G. But clearly, we are thinking about what else to start. The potential there is obviously the potential for systemic delivery versus intravitreal. MASP-3, to our knowledge, is not generated in the eye or specifically in the retina. And so clearing MASP-3 from circulation should be sufficient. But we are also obviously looking at the commercial aspects, and systemic versus intravitreal and how might we want to pursue, is it a different molecule that we take forward. These are all questions that the team is currently addressing. So again, I don't want to get out ahead of ourselves there. How I think we would compare, I think, we would compare very well. When you look at the PNH data, again, I think we have referenced this, but maybe not as clearly as we should. PNH really represents a pretty high bar in alternative pathway inhibition. It is a life threatening indication and the inhibition of the alternative pathway needs to be effectively complete. So you are talking about as close to ablation as you can get to be effective. Clearly, 906 is showing that capability even at this low dose. And so we are pushing, we're going to push the dose. We have the headroom to do that in terms of our safety studies. So we can push dose and exposure. So we think we compare very well. But I should after having said all that, I want to make sure that clinical is in agreement. So Steve, can you feel free to comment on that?

Geographic atrophy is a really attractive indication for a lot of reasons, commercial, as well as Greg said the differentiation, if we can provide it systemically. We are obviously focused on PNH and C3G and pushing those as hard as we can. But I can say that we are looking into resource, not just strategy but resourcing to get a GA program going as quickly as we can, because it represents such a substantial opportunity.

And I show our next question comes from the line of Brandon Folkes from Cantor Fitzgerald.

Thanks for taking my questions and congratulations on all the progress. I just want to come back to OMS906. Obviously, that looks really good there. So maybe just two questions on that from my side. One, any way to speed up development given your strong balance sheet you have now? And then secondly, given the good data you are seeing at the lower dose, do you think you can get quarterly dosing with this lower dose, or do we need to go to the high doses to achieve that quarterly dosing?

I think I caught most of that, you were trailing off at the end. But first, with respect to you, can we accelerate it. We are absolutely looking at that. We want to put the throttle all the way down on this program. I mean, the data are clear. The endpoints are objective. These are not subjective endpoints. These are endpoints that have been used for approval. So we know where FDA stands on those. So yes, we are going to push very hard on the 906 program. We think that it has tremendous value. And I think that that's abundantly clear when you look at potential competitors, and then you look at the advantages of or potential advantages of 906 over those. But the other question that you had, yes, absolutely, we believe that we can reach, we're quite comfortable that we can reach once quarterly dosing, which would be a tremendous advantage over either the subcu or oral agents already approved or are in development.

Thank you. I'm showing no further questions in the queue. At this time, I'd like to turn the conference back to Dr. Demopulos for closing remarks.

All right. Again, everyone, thank you for joining us today. We hope that the call was helpful and that we've made clear the team's substantial and steady progress. The remainder of 2023 holds a good number of important milestones, and we look forward to sharing more information with you over the coming months. Now 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.