Good afternoon and welcome to today's conference 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 today's 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 Peter Cancelmo, General Counsel of Omeros. You can begin.

Good afternoon and thanks 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 Factor section of the company's annual report on Form 10-K, which was filed with the SEC today 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.

All right. Thank you, Peter, and good afternoon, everyone. I'm joined on today's call by our Chief Accounting Officer, Mike Jacobson; and our Chief Commercial Officer; Nadia Dac; our Chief Medical Officer, Andreas Grauer; our Chief Regulatory Officer, Cathy Melfi; and our Clinical Vice President, Steve Whitaker. Our discussion today will include a brief overview of our financial results for the fourth quarter ended December 31, 2023 as well as a corporate update. Mike will then provide a summary of financial results for the full year and further details on the fourth quarter of 2023. The question-and-answer period will follow Mike's remarks. For those of you that frequently join our call, you will find that today's call will be longer than usual. And that's because there are a lot of exciting things happening at the company, and we want to take the time to share them with you. In our third quarter earnings call, I identified four corporate priorities that represent significant drivers of near to midterm value in our stock price. Those four priorities are. One, extending our cash runway into 2026 without diluting shareholders. Two, obtaining FDA approval of narsoplimab, our MASP-2 inhibitor in hematopoietic stem cell transplant-associated thrombotic microangiopathy or TA-TMA and successfully launching the drug to market. Three, driving our MASP-2 inhibitor, OMS906 into a Phase III clinical program as soon as possible, both in paroxysmal nocturnal hemoglobinuria, or PNH, and in C3 glomerulopathy and four, moving OMS1029, our long-acting MASP-2 inhibitor in the Phase II clinical trial in a large value indication. We'll take these one at a time. First, extending cash runway without dilution. This was accomplished in February through an additional royalty deal with DRI Healthcare, extending our runway into 2026. That transaction brought in $116 million of nondilutive capital with the opportunity…

Thanks, Greg. Our net loss for the fourth quarter was $9.1 million or $0.15 per share compared to a net loss of $37.8 million or $0.60 per share in the third quarter of this year. If we look at just the continuing operations, our net loss for the fourth quarter was $39.3 million or $0.63 per share compared to a net loss of $51.7 million or $0.82 per share in the third quarter. This is an improvement of $12.4 million. The improvement was primarily due to an $8.4 million reduction in operating costs and the $4.1 million gain on the early retirement of a portion of our 2026 notes. As of December 31st, we had $172 million of cash and investments on hand. This is after extinguishing the $95 million outstanding on our 2023 convertible notes on their November due date, using $4.9 million to retire $9.1 million of our outstanding 2026 convertible notes and $4.6 million to repurchase 1.8 million shares or our outstanding common stock. Our cash used for operations in the fourth quarter, which does not include these payments, was $34.8 million. With the additional $116 million payment we received from DRI in February, our total cash and investments at March 31st, 2024, are estimated to be approximately $230 million. This is after repurchasing an additional 3.2 million shares of our outstanding common stock for $11.9 million in the first quarter of 2024. And as Greg said, should be sufficient to fund operations and debt service into 2026. Costs and expenses from continuing operations for the fourth quarter was $39.3 million, which was a decrease of $12.4 million from the third quarter. The decrease was primarily due to the timing of employee compensation costs, the payment of a development milestone under a technology license in the third…

Thanks, Mike. Let's open the call to questions. Operator?

Thank you. [Operator Instructions] And our first question comes from Olivia Brayer from Cantor Fitzgerald. Your line is now open.

Hey, good afternoon, guys. Thank you for the questions. Now that we've seen interim data in-house from the 906 switch study, what are you looking to see from the monotherapy portion of the trial, both in terms of efficacy measures, but also a number of patients and length of time on treatment? And then I have a quick follow-up.

Sure. And you're talking about the Phase III program?

No. The Phase II 906 switch study in PNH, right. Don't you guys have the, what is it, 48 to 52 week monotherapy switch portion of the trial that's coming up.

You're talking about the switchover trial.

Yes, exactly.

Okay. Great. Thanks, Olivia. Let me turn that over to Steve?

Sure, Greg. That trial is our PNH-001 study. And you're correct that it is a switchover trial. The patients receive adjunctive ravulizumab for six months and then the responders move on to monotherapy. We are looking at hemoglobin, we're looking at LDA, absolute reticulocyte counts, clone sizes, your standard efficacy measures as well as safety in that study. We'll have 13 patients, if I remember who are enrolled in that trial, and we anticipate to see data from the monotherapy aspects or the monotherapy part of that trial in late '24, patients are already advancing from the adjunctive treatment to the monotherapy treatment.

Okay. Understood. And then on the narsoplimab BLA, what innings are you in, in terms of reaching an agreement with FDA? I guess what I'm trying to figure out, Greg, is how much engagement you've had with them so far this year? And how close you are to having a more concrete update from them?

Yes. We've had, and I would characterize it as substantial interaction with them. And with respect to when do we expect to be able to say more, as I've said, in the prepared comments, Olivia, first, we really don't discuss back and forth with FDA. But also just given time lines for meetings and the rules associated with those meetings and Type A versus Type B. I think it's going to be difficult and in fact we're not trying to be able to give you right now a time line for when we would be resubmitting the BLA. Obviously, we think we've done the work required under the OND ruling following our apeal and the appeal and the complete response letter. So I think we believe we're in good shape. But I think with respect to timing, I think that's something that we're just going to have to hold on discussing right now. Cathy, do you want to add anything specific to that?

No, I think you covered it, Greg, but the interactions are ongoing, but we feel good about the commission.

Okay, that's helpful. Thank you, guys.

Thank you. [Operator Instructions] And our next question comes from Steve Brozak from WBB Securities. Your line is now open.

Hey, good afternoon and thanks for taking the questions. With, as you mentioned earlier, Danicopan approval, how does this affect 906. And how does it change it, if at all? Can you be as detailed as possible, please?

Sorry, how does it change what, Steve?

How does it change how you look at 906 going forward if at all?

Yes. Thanks for the question. I think this is going to be a bit repetitive of what I've said in the comments. But I think the distillate of the Danicopan approval really is all positive as we see it for OMS906 number one. It certainly validates inhibition of MASP-3 as an alternative pathway inhibitor and as an effective alternative pathway inhibitor. Remember that MASP-3 is one step proximal in the pathway to Factor D. So it's MASP-3 that actually converts pro Factor D to Factor D. The advantage of inhibiting MASP-3 over Factor D is that Factor D turns over very, very quickly. 50% of Factor D turns over in circulation every hour and that makes it an obviously more difficult target to drive. And the result of that is likely in a three times daily oral dosing of Danicopan. So I think when we look at it, we see wonderful. I mean, what they've done is validate the alternative pathway, validate the proximal part of the alternative pathway, of which we are the most proximal. And then when you look at their need to be in conjunction with C5 inhibitors. And we are coming with a monotherapy that addresses both intravascular and extravascular hemolysis can do that with every 8 week or every 12-week dosing. When you start to look at these advantages, we think all of this really inures to the benefit of OMS906 and certainly underscores the value of the program. But let me stop and I'm going to look both to Andreas and Steve and to Nadia as well and see if they have other thoughts or other comments.

Yes. Thanks, Greg. Danicopan addresses a gap in the AZ and the Alexion portfolio. However, it doesn't address the patient needs of reducing their treatment burden, with something like a novel efficacy that's dosed as infrequently as four times a year. Each time the patient has to take a pill, three times a day with Danicopan or even twice a day is with atacapan, the patient, as we've learned from market research has to think about their sickness versus living their lives. Physicians tell us that they're additionally concerned about the risk of noncompliance with the orals, resulting in the risk for breakthrough disease and a novel upstream treatment like OMS906 represents a patient-friendly option that really puts the efficacy into the doctor's hands and the subsequent confidence. So we think it's addressing some small unmet needs, but the opportunity for 906 really is significant.

Thanks, Nadia. I could just add medically that we only see this as a validation the upstream target. And if you look at the data that we've disclosed so far, we're going to have more coming out of EHA, where we still remain very excited about the medical potential of treating these patients with OMS906 as a monotherapy.

Yes. So I thank, Steve. Andreas any?

Well, I think the ultimate learning from this is also that it's a big market of the currently available C5 inhibitors is not meeting the needs of the PNH patients. They need something to take care of the extravascular hemolysis and we think OMS906 will do that better.

Thank you. And Steve, I think also a point to underscore, I touched on it briefly, but just to come back and make sure we emphasize it one more time. It was Jefferies, the research group that came out just on the heels of the announcement of the approval pointing to peak annual sales of Danicopan at $750 million. And remember that, that is going to be on top of C5 inhibitors. So it's going to be the cost of Danicopan plus the cost of eculizumab and/or ravulizumab. That's going to be a difficult hill to climb. I think certainly, when we come with a monotherapy in dosing every 8 to every 12 weeks, that addresses all of the issues that, frankly, the C5 inhibitors and Danicopan together are intended to address, I think, will fare quite well.

Got it. Thank you for making sure you provided that clarity. I very much appreciate it. Let me hop back into the queue. Thanks.

Thank you. [Operator Instructions] And our next question comes from Serge Belanger from Needham. Your line is now open.

Hi. Good afternoon. Thanks for taking my questions. Greg, just wanted to go back to narsoplimab and HSCT-TMA. Just curious if there's been a change in FDA stance here around the path of resubmission, just given that the last time you spoke about this back in November five months ago, just seem to be close to the finish line. And now there's obviously been some additional delays, but just curious if this is an FDA change or just the slow FDA process? Thanks.

Yes. I think the way that we can answer that is I think what we outlined, which was we submitted our SAP. FDA came back with detailed questions. We responded with detailed answers and the dialogue continues. I mean, certainly, our expectation is that we have satisfied what we need to satisfy for the Office of New Drugs direction to both us and the division which, again, was to one of the pathways was to look at survival, and we've done that. And I would say that the data we have now collectively are stronger than where we were with the initial BLA submission, I think, meaningfully stronger with respect to our survival. So we will need to continue those discussions. We're optimistic about where we end up with this. I know that whatever one is wondering is, when, when. And we'd love to answer that with a specific data. We don't have one right now as soon as we do, we'll let you know. But I think when you look again at the data that we have, I think it is -- one would be hard-pressed to make the case that the drug is not working in PNH patients. That's my view. And I think it's the view shared by the rest of our team. In fact, I'm quite confident it is. And I think these discussions will continue. And hopefully, that resolution will be soon.

Okay. Thanks.

Thank you. That completes the Q&A part of the call. I'd like to turn the call back over to Dr. Demopoulos for closing remarks.

All right. Thank you, operator. And again, thank you all for joining this afternoon. As always, we appreciate your continued support. Have a good afternoon or good evening.

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