Omeros Corporation (OMER) Earnings Call Transcript & Summary

Hello, and welcome to the Omeros Corporation Conference Call. My name is Michelle, and I will be the operator for today's call. [Operator Instructions] I will now turn the call over to Mr. Peter Cancelmo, Vice President and General Counsel. Sir, you may begin.

Good morning, and thank you for joining today to discuss data from our compassionate use study of narsoplimab in COVID-19 patients with acute respiratory distress syndrome, or ARDS. These data were announced this morning by a press release and published online by the journal, Immunobiology. I'd like to remind you that some of the statements that will be made on today's call will be forward-looking. These forward-looking statements include, without limitations, statements regarding the efficacy, safety and intended utilization of our investigational product, our plans and expectations regarding the development of narsoplimab for the treatment of COVID-19, or COVID-19 associated ARDS, the therapeutic potential of narsoplimab for treatment of COVID-19 or ARDS, planned publications, discussions with government agencies, plans for future manufacturing of narsoplimab and expectations for the evaluation of narsoplimab in additional COVID-19 patients. You are cautioned not to place undue reliance on these forward-looking statements, which are based on management's beliefs and expectations as of today's date and are subject to change. The company disclaims any obligation to update such statements. All forward-looking statements involve risks and uncertainties that could cause the company's actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings with the Securities and Exchange Commission, including in the Risk Factors section of our 2019 Annual Report on Form 10-K and our quarterly reports on Form 10-Q. On our call today, Dr. Greg Demopulos, our Chairman and Chief Executive Officer, will provide a brief introduction and overview before turning the call over to Dr. Alessandro Rambaldi, Head of the Department of Hematology and Oncology at the Papa Giovanni XXIII Hospital and Professor at the University of Milan. Dr. Rambaldi will present the data and provide the background on the compassionate use program and his perspectives as a physician at the European epicenter of COVID-19 in Bergamo, Italy. Dr. Demopulos will wrap up the presentation with a brief summary. We have some time reserved for questions after the presentation. Now I'd like to turn the call over to Dr. Demopulos.

Thank you, Peter, and good morning, everyone. We appreciate you joining us. First, I want to thank Dr. Rambaldi and all the health care workers in Italy and around the world for their tireless efforts on the frontlines in this global pandemic. We're very excited about the results that we're presenting today and what we believe it means to critically ill COVID-19 patients around the world. As you may know, Omeros is wrapping up a biologics license application for our MASP-2 inhibitor, narsoplimab in hematopoietic stem cell transplant-associated thrombotic microangiopathy or transplant-associated TMA. Endothelial injury plays a central role in transplant TMA and in a number of other problems arising from stem cell transplantation. Endothelial injury activates the lectin pathway of complement and narsoplimab by inhibiting lectin pathway activation by blocking the pathways and Factor enzyme MASP-2 has demonstrated striking results in the treatment of transplant TMA patients. Over the past several months, the importance of endothelial injury as a key initiator and driver in the disease that we all call COVID-19 has become increasingly recognized and documented. Dr. Rambaldi and his collaborators were among the first to recognize the pathophysiologic similarities between transplant-associated TMA and COVID-19, and specifically, the central role of endothelial injury in COVID-19. Now unfortunately, many areas are experienced a resurgence in COVID-19. This is further complicated by what appear to be the longer-term sequela of the disease, for example, persistent thrombi in the lungs, coronary arteries and brain. This is evidenced by an article just this weekend in the New England Journal of Medicine, documenting the patients who were thought to have recovered from COVID-19 now are presenting with cerebrovascular thrombi. We believe that, again, this is further evidence of endothelial injury in the disease. We also believe that if endothelial injury is the key to COVID-19, then narsoplimab is a good and rational answer. I'd now like to turn the call over to Dr. Rambaldi to discuss his experience directly caring for critically ill COVID-19 patients in an epicenter of the disease and the results of the narsoplimab study. Dr. Rambaldi will take us through the data and the slides. So with that, Dr. Rambaldi.

Good morning, everybody, from Bergamo, Italy that exactly, as it has just been reminded, was the first dramatic epicenter of the COVID-19 outback in Western countries in Europe, and this story began in February 23. And when we suddenly were exposed to this dramatic problem. At the very beginning, I have to tell you that we were completely unprepared, not only in the setting of the organization of our hospital and our health care system, but also, we had quite confused ideas about this disease. We were expecting to be dealing with a flu-like quite severe, but the flu-like syndrome. But early -- during the early days of the crisis, we realized that the problem was much more complicated and very different. So it became soon evident that the endothelial -- the vascular problem was the most relevant one because many patients died quite rapidly due to thromboembolism complication of the heart, the lungs and the CNS. And this was completely unexpected when thinking into to like syndrome. And so we started performing autopsies. And what we found was quite dramatic pictures because we saw extensive massive thrombotic events in the vasculature, particularly of the lungs, but also of the coronary arteries. And this was clearly a main reason of dying. And also, the shunt that was occurring in the lung circulation was explained much of the respiratory failure that was going on in these patients. By chance that during the early days, we did this short assay -- an in vitro assay that allow us to measure the number of circulating endothelial cells. This assay has been set up a few years ago in here in Italy by some labs working on the issue of graft versus host disease. And they have found that in the setting of graft versus host disease, you can measure an increased number of circulating endothelial cells. Endothelial cells normally do not circulate in the peripheral blood. But if you have a damage, an acute inflammatory damage, like in the setting of graft versus host disease, this can happen. And so given the -- what we found in the autopsies, we had a look to this simple assay. And surprisingly, we found an increased number of circulating endothelial cells. So this was a clear, simple observation, suggesting that the endothelial vasculature was dramatically challenged during the early phase of the COVID infections. So that was the spark that pushed me to call Dr. Demopulos, with whom I had a long-standing collaboration due to the rare complication that is called transparent-associated microangiopathy that is a very dramatic severe complication taking place in about -- not significant number of patients, but that can lead the patients to die quite rapidly. And the disease is related to an acute injury that in the setting of graft versus host disease in the setting of a patient receiving an allogeneic stem cell transplantation can develop due to an immune aggression and immune attack played by T lymphocytes against the endothelial cells in the vasculature. And similarly, other key factors have a role like viral infections, particularly cytomegalovirus infections, but also bacterial infections. And the drugs that we are commonly working with in the setting of graft versus host disease that are the calcineurin inhibitors, cyclosporine A and tacrolimus, they are very well-known as aggressive drugs against the endothelial cells. So in that setting, we were working with Omeros Corporation with this new antibody because the drug can tackle a very important pathway that MASP-2 that is involved in the complement activation on the subsurface of endothelial cell, and in the end, this may be a key component of the acute damage that in the setting of post-transplant microangiopathy. And presumably, that was my thought in the setting of COVID-19 infection could take place early on during the development of disease. So this was my thinking, and I called Dr. Demopulos because we were desperately looking for and seeking for potentially active drugs in the dramatic situation. Just to give you an idea, we had recovered in our hospital [ 250,000 ] patients in 2.5 months. And for the same period of time, we had 100 patients in the intensive care unit. So -- and we have no active treatment, particularly at the very beginning. So this was my thinking and my thoughts, and I asked Dr. Demopulos for narsoplimab, with the intent to interact with this complement pathway. So this was not the only treatment, say, the experimental treatment that we tried to start with. We also tried to work with anti IL-6 antibody because there was a rationale. And there was a recommendation at that time coming from the Chinese colleagues and the WHO not to work with steroids. So we were looking for active anti-inflammatory drugs trying to avoid the use of steroids. And so we set up one -- only one simple rule to elect patients to any so-called experimental treatment. The patient should have been in a very severe respiratory distress. And this inclusion criteria should have been defined shortly. So we should not be dealing with long-standing patients in need of mechanical ventilation, but just patients that were put under mechanical ventilation within the first 48 hours. So say quite simple but clear inclusion criteria. And so the adventure began in this way and we start treatment with narsoplimab, originally planned twice a week for 1 month. And then we decided once that we saw that there was a clear benefit of at least this was our evaluation to prolong it for a longer period of time. And what happened early on was that we saw some evidence of a positive interaction with the acute inflammatory evidence of the disease. We saw a reduction of the circulating endothelial cells circulating in the peripheral blood. And so as other anti-inflammatory drugs, we saw the decrease in the cytokine storm and with decreased levels of IL-6, ILA, CRP, LDH, and also -- and not -- as a secondary point, we also documented a decrease in the D-dimer. The D-dimer is a blood coagulation value that is almost constantly elevated -- dramatically elevated in these patients. And we had the opportunity to see that also this parameter was going down. The concomitant treatment that our patient received was based on the few reasonable drugs to give, some antibiotics as azithromycin, hydroxychloroquine, and darunavir/cobicistat. We had no possibility to treat these patient with remdesivir. And early on during the treatment, it became also evident that the recommendation against the use of steroids was not appropriate. So we decided, given the severity, the dramatic severity of the patients that we were dealing with, we allow the use of steroids. So what happened? These were patients that almost invariably had some comorbidities. They had diabetes, hypertension, dyslipidemia and all of them were obese or overweight. What happened was that the patient responded. And the first 2 patients were rapidly improving. But what impressed me the most was the resolution that we saw in 2 of the patients that we treated with the drug, since they were both showing severe thromboembolic complication of the lungs, and they were in need of being intubated. And they recovered. And this, of course, within the limits of the few patients that, of course, we have treated, this was very remarkably -- remarkable in my understanding. So I put together the data, the biology -- the biological data that we were able to collect, the reduction in the number of circulating endothelial cells, the tapering of the inflammatory reaction and the clinical improvement. In the end, all of these 6 patients -- of course, that is not a formal clinical trial. It's just a simple compassionate use treatment of 6 patients who were clearly in dramatically condition and all of them improved and survived. That is the clinical story that, just to sum up, started because there was some biological and pathological evidence of a new setting of a new insight into the pathogenesis of the disease. Now everybody is aware that the endothelial damage, the vascular complication is the key pathogenetic factor in this disease, that most patients die because of vascular complication. And this is definitely a path that must be tackled with any future therapeutic approach. I just like to conclude that coming back to what Dr. Demopulos alluded at the beginning of this conference. Of course, we have to deal with the acute phase of the COVID-19 disease. But from now on, it is very evident that we must be dealing with the long-term sequela. And we will be dealing with a huge number of patients coming to our hospitals with long-term problems, in terms of cardiac, respiratory and unfortunately also brain problems. And this most likely has to deal with the vascular chronic injury that it's taking place in this disease. Thank you.

Thank you very much, Alessandro. It's an inspiring story, and we're honored to partner with you. Again, as this and myriad other studies demonstrated, it certainly appears that like transplant-associated TMA, COVID-19 is initiated and driven by endothelial damage. That makes it highly likely that the lectin pathway plays an important role in COVID-19 and that narsoplimab is a rational mechanistically based therapeutic. And this is the first study that puts many of the pieces of the COVID story together. Endothelial injury as a pathophysiologic driver of COVID-19 complement activation and treatment with the lectin pathway inhibitor narsoplimab. So here are some details about what we're doing now on the COVID front. We're in discussions with BARDA, NIH and ACTIV regarding manufacturing. As you may know, we're preparing to launch narsoplimab in another often fatal disorder transplant TMA. We've prepared well for that launch, including successful manufacturing. To be able to expand our use of narsoplimab broadly to COVID patients, we'll need to arrange for additional manufacturing resources. With respect to trials, we're looking at the different options for current and future trials, including participation in ACTIV. The nucleocapsid or N protein of SARS-CoV-2 binds directly to MASP-2. And our researchers and our complement science labs at Cambridge are actively involved in elucidating the mechanism of COVID-19 and specifically the role of MASP-2 and the lectin pathway. We need to corroborate our results from Bergamo, but we're very excited about where we currently stand. So operator, with that, let's open the call to questions.

[Operator Instructions] The first question in the queue comes from Brandon Folkes with Cantor Fitzgerald.

Congratulations on the data this morning. Could you perhaps just elaborate a little bit on the difference in the control groups used for the retrospective study versus the 6 patient on narsiplomab? Were they on any treatment as well? And then secondly, maybe just how do you think about the results you got today just in terms of the rest of your development pipeline and in terms of priorities?

Sure, sure. Let me lead, and then I'll ask Alessandro to comment as well. Yes. We chose the retrospective control groups, specifically for their similarity. Actually, the same entry criteria into the study and baseline characteristics of the patients involved. Yes, at least 2 of those groups had other agents. Those agents being IL-6 and/or steroids in their background treatment. So with that, let me see if Alessandro has any further comments on that, and then I'll answer your other question, Brandon.

Yes, of course, that the control issues is very important. And unfortunately, we were plenty of controls in this hospital and to see -- but again, you must select your controls according to the severity of the disease. And we know that patients who are in need of being mechanically ventilated or intubated, at most, they have a survival that is no higher than 70% at 1 month. So that is the best result that the recovery trial with dexamethasone has reached. So with comparable patients, you must expect to have a 30% death rate at 1 month. That is what we can say at best of our supportive treatment.

So getting back to your other question, Brandon, how does this fall into our priorities? Well, certainly, we're focused on getting our BLA completed for stem cell transplant-associated TMA. But with the resurgence of COVID and the need for drugs, I mean there really is no good drug available right now to treat critically ill COVID-19 patients. We -- again, the data we have are strong, but we need to further corroborate them. But I think when you put all of it together, the mechanism that has been now repeatedly demonstrated and published, tying the pathophysiology of COVID-19 specifically to endothelial injury, and then you look at the mechanism of our MASP-2 inhibitor, narsoplimab, you look at the role of the lectin pathway that is being shown in COVID-19, not just by us, but by a number of groups now. The direct link, not only to the lectin pathway, but specifically to MASP-2. You start to think about what is a truly rational treatment for COVID-19, and you'd have to think that this certainly is right up there. So look, we believe this is important. We are going to continue to do what we can. And for that reason, we have been speaking for quite a while with the U.S. government about how to move forward. And I think probably that's all I should say about that now. But that is how we view it. So yes, this is obviously a global priority. And as part of that, this becomes certainly a focus and a priority for Omeros.

The next question in the queue comes from Steve Brozak with WBB.

Congratulations. This is obviously very, very stunning work. 2 questions and 1 quick item. The markers are fascinating and obviously critical. Can you tell us a little bit more about this? Because it obviously does a lot to explain COVID, but also can you explain how -- you've mentioned this rational approach. How does narsoplimab specifically work in this -- with this COVID mechanism? And then 1 quick follow-up after that.

Sure. I'll turn the marker question over to Alessandro, and maybe he can -- Alessandro, maybe you could walk through some of the slides a little bit that might help people in understanding those markers.

Yes. The endothelial cell marker, as I told you during my presentation is something that is commonly associated with damage in the vasculature -- in the setting of stem cell transplantation. And it's interesting that other groups have confirmed that and published that the endothelial cells increased during the early phase of COVID-19. On a larger number of patients, I have also confirmed that this is true. And in the end, even in patients that have not been exposed to narsoplimab, when the patient recover, the number of endothelial cells recover as well. So it's a general marker of damage during the disease. And it is a robust marker of recovery when the patient overcomes the infection. So that is -- the narsoplimab mechanism of action has been illustrated by Dr. Demopulos. Its ability to interact with this initial phase of the lectin pathway activation leading to the complement activation on the cell surface of endothelial cells. But we have also data suggesting that narsoplimab through its ability to block the MASP-2 binding may be able to interact also in the coagulation cascade. And this is another very interesting potential mechanism of action, potential extremely benefit mechanism of action in this setting because MASP-2 is involved in the conversion of prothrombin to thrombin, and this, may be of paramount importance in the setting of COVID-19, as I told you. Now the observation that 4 out of 6 of the patients that we treated, in which we had baseline levels and levels of D-dimer at the end of the treatment, who they were normalized is in strong agreement with this postulated mechanism of action of narsoplimab. And this remains something on which we will be working quite hardly in the near future.

Yes. So I think, Steve, Alessandro went through those pretty clearly. I'd like to underscore that really Alessandro did the, kind of, did the yeoman's work internationally in the endothelial cell counts -- circulating endothelial cell counts. It's very interesting that in one of the early patients, Alessandro said that we had initially started thinking we could treat these patients for 2 weeks. And interestingly, the patient that we first treated endothelial cell counts as in all the patients came down very quickly. And that at 2 weeks, we stopped treatment. And I think Alessandro certainly recalls this better than I, and the endothelial cell counts increased. And we treated for another week and endothelial cell counts came right back down. So what we saw was really a challenge, rechallenge. And -- Or if you want to phrase it a challenge, de-challenge. And what we saw there was the response and how the endothelial cell counts not only track the clinical status, but also track the resolution of the disease. And what we believe happened there was, I mean, we -- you have to allow enough time for the innate antibody production to take over in these patients. And that's what narsoplimab does. And that's an important point. Again, with respect specifically to narsoplimab in MASP-2 inhibition, which remember, we've made an emphasis on this before, which is inhibition of MASP-2 does not affect the lytic arm of the classical pathway. And that's an important piece here because it is -- that antigen-antibody complex mediated lytic response and the -- and that adaptive immune response, which ultimately activates the T-cell response to viral killer. So you don't want to interfere with that and narsoplimab does not. I think it's also important to underscore what Dr. Rambaldi just said about the D-dimer data. We had data on 4 patients, 4 of the 6, and all 4 of those showed, which you see on the slide is, again, the same kind of picture you see for LDH, for AST, for CRP, for all of the endpoints or assessments we perform, you see those come again right now. And again, that speaks to the, what we believe is the anticoagulant effect of narsoplimab. And that's really because MASP-2 sits -- appears to sit at the nexus of the complement system, the coagulation cascade and the contact system. Because in addition to prothrombin converting to thrombin by MASP-2, MASP-2 also activates Factor-12 to 12A and activates kallikrein in the contact system. So as Dr. Rambaldi pointed out, we think that this is a very important part of the story. And in narsoplimab or MASP-2, it has a unique role in that coagulation cascade, unique among complement targets. It's sort of its crosstalk to the coagulation and contact system. So this is something that, as Alessandro said, we do plan to continue to pursue quite aggressively.

And if I just can add a point, Greg, that the viral interaction with the endothelial cells and the activation of the lectin pathway is most likely, a very early event. And all of the well-known problems that we have subsequently, the so-called cytokine storm is something that happens later on. And so it is important to have the hope to interact at very early beginning of the interaction of the viral -- of the virus with the endothelial cells. That, in the end, induce all the other events that are so dangerous and problematic and leading to the hyperinflammation that is the ultimate consequence of the viral infection.

And that's a very important point. And so it looks like, I mean, others have published on this. I know that the Chinese have published on this. I believe that Jeffrey Lawrence also has published on this, but MASP-2 binds directly to the nucleocapsid N-Protein. And that appears to -- that activates complement, which then leads to the overall vascular injury that you see in COVID-19. So I think, as Alessandro is saying, if you interact with this early on, the cytokine storm is a temporarily downstream result of what looks to be that initial interaction, the upstream interaction and the complement activation. So that's how we're seeing it. And I think the literature is increasingly supporting and confirming those postulates. And everybody collectively, I think we're all getting a better sense of how this disease works, and we need to continue to do work on our side.

The next question in the queue comes from Liana Moussatos with Wedbush Securities.

This is Andreas for Liana. Congrats on the data. And thank you for sharing. Dr. Rambaldi, a question for you. Could you please comment on the concomitant use of antibiotics, steroids and the anticoagulants? And perhaps elaborate as to what you think going forward would be a potential combination therapy or some type of regimen going forward in combination with these?

Sure. Let me briefly explain that in the war scenario in which we were operating at that time. We had to simplify our therapeutic approach. So the patients were coming in. And to everybody, we were offering basically the same supportive treatment that was based in the use of azithromycin. And we gave to all patients a heparin prophylaxis. And after a few weeks, I decided -- I might say, I, because this is exactly what happened, to introduce steroids, despite the fact that at those days there was a clear contraindication recommended by WHO and the Chinese colleagues who were concerned about the late recovery of the immune response against the virus. But as a hematologist used to treat patients dying from TMA or acute graft versus host disease or CMV infection and dying for interstitial pneumonia, I knew that steroids could be important. So as all the other patients in the hospital, also these patients were exposed to steroids. And you see in the slide that the timing in which the patients were exposed was different because for the first 2 patients, steroid was introduced later on after the use of narsoplimab. And for other, it was introduced much earlier. So we cannot exclude a beneficial role of steroids. We know that -- by the way, we didn't use the dose of dexamethasone that have been used in the recovery trial. But we cannot rule out the beneficial role of steroids in our series of patients. But definitely, if you look -- if you go through the slide and the timing which the steroids were introduced, you see that most likely, this doesn't explain the whole effect, clinical effect that we saw in our patients. So no other drugs use concomitant at that time could have played a significant role in the natural history of the disease observed in this patient. That is my strong feeling and statement about that.

So just to add a little bit to what Alessandro said, the -- we had 6 patients in the study. One received no steroids. The second and third patients received steroids only after they had already recovered from their requirement for mechanical ventilation. So they were off mechanical ventilation already simply on narsoplimab and then steroids were added late in that course. And then the other 3 received steroids. Remember too, that the comparator groups that we chose received steroids and IL-6 inhibitors. And when you look at the recovery trial that Dr. Rambaldi mentioned, what you're really seeing is about a -- in the intubated patients, I believe, it's about a 28% improvement in mortality; in patients on CPAP and others, it's about 14%; and in those on simple oxygen support, I believe there's no difference. So certainly, we think that steroids have a role. But steroids, I think, and I believe Alessandro would agree, are not going to be the answer to this disease.

And we have time for 1 more question, and it comes from Steve Brozak with WBB.

Obviously, the focus of narsoplimab has been the lectin pathway. Can you tell us where you stand, given everything that's going on right now as far as that goes? And thank you again, just that quick question.

I'm sorry, narsoplimab with respect to?

The lectin pathway, specifically around how you control it? And how Omeros works with it?

Sure. Well, as you know, our close collaborator, Wilhelm Schwaeble now at Cambridge, was the one who sequenced with his group, sequenced MASP-2. So this story is -- and that collaboration is a long-standing one. It resulted, Steve, in very broad intellectual property around the lectin pathway around specifically MASP-2. We, from an intellectual property position, really exclusively control therapeutics against that target MASP-2 and MASP-2 really is the only rationally targetable enzyme or target within the lectin pathway. And -- so we have, we believe, a very solid position there. We are the only ones pursuing lectin pathway inhibition, primarily, I believe, for that reason. And similarly, we've created similarly broad intellectual property position around this specific indication. But the important thing here, I think, is what we believe this can do for patients, what it has done. I mean when you look at the 6 patients -- I would ask Alessandro to just make a quick comment on the 2 patients who had massive bilateral pulmonary thrombi, 1 intubated, 1 on CPAP and just to get his thoughts on that as well.

Yes. The recovery of those patient was not only quick, but I would say also unexpected, at least in the days that this happened. So this was -- that gave me the impression of something that was impacting very significantly on the pathogenetic mechanism of this thrombotic events. Again, I underline that these are 2 patients, but it's -- what happens was very, very much impressive.

Okay. So I think, operator, then we need to get wrapping up here. I'd like to thank you again, Dr. Rambaldi for participating this morning and everyone for taking the time to listen in. Like all of you, I'm sure, we're concerned about our communities and our families, as COVID-19 continues to surge. An effective mechanistically based therapeutic is clearly needed. And we look forward to providing all of you with additional updates. As always, we appreciate your support, and have a good day. Thank you very much.

Thank you.

And this will conclude today's teleconference. Thank you for participating. You may now disconnect.