Omeros Corporation (OMER) Earnings Call Transcript & Summary

Good morning, and thanks again for tuning into the JPMorgan Healthcare Conference. I'm Eric Joseph, senior biotech analyst. Our next presenting company is Omeros, and it's my pleasure to welcome CEO, Greg Demopulos, to tell us a little bit about the company. Just a programming note, there is a Q&A after the presentation. Please feel free to submit questions by clicking the Ask A Question button, and I'll offer those on your behalf. With that, Greg, thank you so much for sharing some of your time with us.

Thanks, Eric. Appreciate it. Good morning, everyone, and happy new year. We appreciate the opportunity to participate in the JPMorgan conference. As you know, there will be forward-looking statements in this presentation. So I refer you to our latest 10-Q filing. We're going to be going through a good deal of information today. Since we are all remote, I will periodically call out the slide number to make it easier for you to follow along. I'm now on Slide 3. And here, you see a chart of many of our programs. We have what we believe is the premier complement franchise in the industry with MASP-2, the effector enzyme of the lectin pathway; and MASP-3, the key activator of the alternative pathway. In the interest of time today, I think I'll focus on narsoplimab, our MASP-2 inhibitor in hematopoietic stem cell transplant-associated TMA, in COVID-19 and in IgA nephropathy, with a quick update on OMS906, our MASP-3 inhibitor. We'll also touch briefly on OMIDRIA, our commercial ophthalmic product, which once again, has been granted separate payment by CMS and we'll wrap up with our immuno-oncology program, GPR174. Let's first discuss our MASP-2 programs. I'm now on Slide 5. And here's a bit of background on narsoplimab and where we stand with respect to its development. It's a fully human IgG antibody that inhibits MASP-2. We submitted in November the final sections of our rolling BLA for narsoplimab in transplant-associated TMA. This is an often lethal complication of stem cell transplant. There's no approved treatment for transplant-associated TMA. We also have 2 other Phase III programs running for narsoplimab, one in IgA nephropathy and the other in atypical hemolytic uremic syndrome. Good size population has been exposed to the drug and its safety profile has really been remarkable. We've seen no meaningful safety signal of concern. Narsoplimab is one of the few drugs with 2 breakthrough therapy designations, which the FDA has awarded for each of transplant-associated TMA and IgA nephropathy. The lectin pathway, as you may know, is the complement system's innate immune response. It's a scavenger system that's activated by molecular patterns on damaged cells and microbes. Two additional things that I'd like to highlight about MASP-2 and narsoplimab. First, unlike other complement inhibitors, MASP-2 inhibition preserves the effector function of the adaptive immune response, which is important for fighting infection. So narsoplimab doesn't have the increased infection risk seen with C3 and C5 inhibitors. And this is reflected in the fact that we don't have to vaccinate prior to administration of narsoplimab. MASP-2 also has a direct effect on the coagulation cascade. So it has an effect outside of the complement system. Narsoplimab likely plays a critical role in treating and preventing the thrombosis that are central to the pathology of endothelial injury syndromes such as transplant-associated TMA and COVID-19. Now we'll look first at transplant-associated TMA. So on Slide 8, you see the breakdown of TA-TMA. Transplant-associated TMA is primarily a complication of allogeneic stem cell transplants. In 2018, there were about 25,000 to 30,000 transplants performed annually, and that's in the U.S. and Europe. About 40% of these develop TMAs and 80% of those have high-risk features. The mortality rate in severe TMA can be greater than 90%. And death is usually rapid, measured in this case, 2 weeks. I'm on Slide 9. Now I want to make sure that we're not having any technical difficulties. The manifestations of transplant-associated TMA are broad, pulmonary, GI and CNS, as you see here. And the associated costs can be high. And as I said earlier, the outcome often is still death. I'm on Slide 10 now. This is the study design of the pivotal trial for narsoplimab in transplant-associated TMA. Now there are 2 things to call out on this slide. First, these were very sick patients with multiple comorbidities. This group is highly reflective of the TA-TMA patients seen in the practice of transplanters. Now second, as in all other studies with narsoplimab, the drug was well tolerated and had no safety signal of concern. The primary end point for the trial was response-based and rigorous, requiring improvement in laboratory parameters and improvement in clinical steps. The intent-to-treat or the ITT population, meaning all patients who received at least one dose of narsoplimab, showed a 61% complete response rate. And the per protocol specified group, as you see here, those patients receiving at least 4 doses of narsoplimab, had a 74% complete response rate. A similarly strong response was seen across all subgroups, age, sex, presence or absence of GvHD as well as presence or absence of significant infection and multi-organ involvement. On Slide 13, you also see the 100-day survival rates for the intent-to-treat protocol specified in responder groups. Now these are 68%, 83% and 94%, respectively. Given the severe nature of TMA in the study patients, opinion leaders would have expected a 100-day survival in these patients of less than 20 days. Median survival across the groups was similarly impressive. With narsoplimab, once the patients make it through their respective TMAs, they tend to do well. Patients who respond in narsoplimab are not just having transient improvements based on laboratory values. Instead, it appears that they are benefiting from long-term better outcomes. Again, there was no safety signal of concerns seen with narsoplimab. The adverse events and deaths in the trial were those due to common causes in transplant-associated TMA. The BLA for narsoplimab in transplant-associated TMA was submitted, as I mentioned, to FDA last November and the European submission is in preparation. Our CMC efforts have gone well, and we have more than sufficient drug supply available for a successful market launch. Our preparations for market launch are going well, and we are on track across all milestones for a successful launch of narsoplimab in transplant-associated TMA. Like transplant-associated TMA, COVID-19 is also an endothelial injury syndrome. And here again, narsoplimab has shown really remarkable results. The literature is now replete with studies and publications underscoring the importance and central role of endothelial injury in COVID-19. As you see on Slide 20, while the cause of endothelial injury is different in COVID and TA-TMA, once that endothelial injury occurs, the pathophysiology has been shown to be the same across both diseases. Endothelial injury specifically activates the lectin pathway of complement through MASP-2 and that's the lectin pathway's effector enzyme. The nucleocapsid and spike proteins of SARS-CoV-2 bind directly to MASP-2, activating the lectin pathway of complement. This happens within the first 1 to 2 days of the disease. So it's a very early event and well before the classical pathway of complement is activated. Activation of the lectin pathway is also temporarily upstream to other inflammatory responses, including the cytokine storm. So COVID-19 is really a confluence of 3 processes: complement activation, inflammation and coagulation, and narsoplimab inhibits all 3. On the next slide, you see a table that underscores that COVID and TA-TMA, again, once endothelial injury has been initiated, really share the same pathophysiology. Across these 2 endothelial injury syndromes, we've treated approximately 70 critically ill patients with narsoplimab and the outcomes have been striking. A manuscript in the peer-reviewed journal, Immunobiology, details the first cohort of patients at Papa Giovanni Hospital in Bergamo, Italy. We enrolled only critically ill patients, all with multiple comorbidities and requiring mechanical ventilation. All patients recovered, survived, and were discharged from the hospital. This is in sharp contrast to the retrospective control groups, which were matched for entry criteria and baseline characteristics as well and showed mortality of 32% and 53%. With narsoplimab treatment, we saw rapid and sustained normalization of the inflammatory markers IL-6 and IL-8. Circulating endothelial cell counts, as you see here, are a direct measure of endothelial cell damage and closely track clinical status as well as resolution of disease. On Slide 24, in addition to normalization of other inflammatory markers, you see the normalization of D-dimer levels. D-dimers are a key marker of coagulation. MASP-2 has direct effects on the coagulation cascade, as I mentioned earlier. MASP-2 converts prothrombin to thrombin and Factor XII to XIIa. So the anticoagulant effects of narsoplimab by blocking MASP-2 are really unique among complement inhibitors and are important in the treatment of both COVID and TA-TMA. One of the aspects of COVID-19 that is causing increasing concern, and appropriately so, is the long-term effect of COVID that continues well beyond the resolution of the initial symptoms. These long-term effects have been tied to thrombosis and have been seen in multiple organs: brain, lungs, heart, kidneys, essentially throughout the body. These long-hauler effects are common and often debilitating. So interestingly, we looked at the initial cohort of Bergamo patients treated with narsoplimab. And at 5 to 6 months after treatment, none of the narsoplimab-treated patients had any evidence of long-term effects, either by laboratories or by clinical status. So here, when you look on this, you can see specifically LDH, CRP, AST, which is thought to be an indicator of critical status of COVID as well as D-dimer levels. In all of these patients, those values were normal at 5 to 6 months after treatment. This is unusual given that the majority of patients with COVID disease have been shown to have these long-term sequelae. Since that initial cohort of patients in Bergamo, we have continued to treat critically ill COVID-19 patients, both in the U.S. and in Italy. All of these patients were intubated, all had failed other therapies prior to initiation of narsoplimab. Like the previous narsoplimab-treated patients, outcomes in these critically ill COVID-19 patients have been striking. We also have examined the ability of these patients when treated with narsoplimab to develop endogenous antibodies against SARS-CoV-2. So we asked the question, are these patients, once treated with narsoplimab, still able to mount an antibody response against the virus itself. And as expected, given that narsoplimab does not interfere with the adaptive immune response, these patients are able to develop appropriate levels of anti-SARS-CoV-2 antibodies. We're advancing discussions with BARDA, NIAID, NCATS, and now we're in discussions as well with the Biden-Harris transition COVID-19 advisory board. We're also in talks with international regulatory authorities regarding COVID-19. Narsoplimab also is now part of the Department of Defense and BARDA-funded I-SPY COVID-19 Platform Trial. Narsoplimab is the only complement inhibitor included in that trial. Let's now turn to narsoplimab in IgA nephropathy. Slide 29 includes an illustration of a nephron, which you see here, it's the functional unit of the kidney. The lectin pathway is important at multiple levels of the nephron. It's got a role within the mesangium in the glomerulus, which where the lectin pathway really drives mesangial cell proliferation and activation. It also drives recruitment of inflammatory cells, and its activation can damage the filtration barrier in the kidney. The damage of complement products and proteins passing through this filtration barrier, the inflammatory cytokines that cross the glomerular basement membrane, all of these, in turn, damage the podocytes and can further damage the filtration barrier. Together with its role in the mesangium lectin pathway activation, it is likely to be important as a response to endothelial cell injury leading to thrombotic microangiopathies or TMAs within the glomerular capillaries just as is seen in other types of endothelial injury syndromes like transplant-associated TMA or COVID. TMA lesions are seen in about 10% to 15% of IgA nephropathy cases. And when present, they are associated with a much worse prognosis. These patients are, rather than advancing to end-stage renal disease and dialysis in 10 to 15 years, can unfortunately arrive at that point within 2 to 3 years. Perhaps most important, lectin pathway activation has been shown in a variety of preclinical models to play a significant role in the development of tubular interstitial inflammation and fibrosis. This is really the final common pathway to kidney scarring. So collectin-11, one of the recognition molecules for the lectin pathway, is upregulated locally in the kidney in response to inflammation and proteinuria and appears to play an important role in this kidney scarring. There currently are no drugs in clinical practice that are capable of preventing this final common pathway of kidney scarring, and any drug that would be able to block this generic response to tissue injury would be useful not only for the treatment of IgA nephropathy but for all progressive kidney diseases. So what's exciting here is that the lectin pathway or inhibition of the lectin pathway appears to have a place not only in the treatment of early disease but also in established chronic disease, which traditionally has been thought to be untreatable. In the Phase II program for narsoplimab and IgA nephropathy across the 2 sub-studies, as you see here, one prior to which patients were receiving corticosteroids and the second in which they were steroid-free, narsoplimab treatment was associated with median proteinuria reduction of 60% to 70%. This is a multiple proteinuria reduction shown by other drugs in development for IgA nephropathy. A proteinuria reduction in narsoplimab-treated patients were sustained with a legacy effect for 9 to 12 months following the end of treatment. So as well, when we looked at estimated glomerular filtration rate or eGFR, a key measure of kidney function, that also appeared to stabilize. Interestingly, lupus nephritis patients treated with narsoplimab showed a similar proteinuria reduction of about 70%. So the results of the studies of narsoplimab in IgA nephropathy are detailed in Kidney International Reports. Based on the results of the Phase II program, the Phase III trial is underway. It's enrolling 280 patients, 140 in each arm. The general population has proteinuria levels greater than 1 gram per day. A subset of these patients have more severe proteinuria at 2 or more grams per day. The primary end point, as you see here, is change in 24-hour proteinuria and is assessed at 36 weeks from baseline. Narsoplimab is the only drug in development for IgA nephropathy that can receive full approval on proteinuria alone. So narsoplimab can achieve success in Phase III in really 4 different ways, a full or accelerated approval in either the overall or the high-protein spiller population. With over 100 trial sites internationally and more in activation, we're pushing hard on enrollment. Enrollment in this trial have been slowed by COVID. A number of clinical trial sites are not allowing patient screenings and/or patient visits. So we are also moving ahead to add sites in China, which can enroll very quickly, given the prevalence of IgA nephropathy. But data readout will extend now beyond 2021. Turning now to OMIDRIA, our commercial product for use during cataract surgery. Slide 36 is an overview of OMIDRIA. OMIDRIA has been used safely in now well over 1 million procedures. It's been granted a permanent J-code. And last month, CMS confirmed that OMIDRIA has continued separate payment when used in ambulatory surgery centers or ASCs. About 80% of cataract surgery procedures nationally are performed in ASCs. The NOPAIN Act also continues to gain bipartisan and bicameral support and would provide at least 5 years of separate payment for OMIDRIA and other non-opioid alternatives, regardless of whether those drugs are used in the ASCs or in hospital outpatient departments. Net sales in the third quarter of 2020 for OMIDRIA were about $35 million, and that was prior to an $8.7 million return reserve. The majority of which was recovered last quarter, the fourth quarter of 2020. There are over 20 publications in peer-reviewed journals citing the many benefits of OMIDRIA. OMIDRIA reduces complication rates, including site-threatening cystoid macular edema, it prevents floppy iris syndrome, decreases the use of pupil expansion devices, increases operating room throughput by shortening the time for surgical procedures, and precludes the need for steroids. It's also been shown to reduce the use of intraoperative fentanyl. And the number of opioids prescribed postoperatively following cataract surgery with OMIDRIA also are lower. So additional publications are expected regarding OMIDRIA's opioid-sparing capabilities and the drug's ability to prevent cystoid macular edema. Let's briefly turn now to OMS906, our MASP-3 inhibitor, and the other half of our complement franchise. MASP-3 is considered the key activator of the alternative pathway. It has, as you see here, the lowest native circulating concentration of all complement factors in the alternative pathway. That, combined with a low clearance rate, make MASP-3 an attractive target. Like MASP-2 inhibition, MASP-3 inhibition also does not interfere with the effector function of the adaptive immune response, which is critical for fighting infection. Highly potent and selective against MASP-3, OMS906 is a fully human monoclonal antibody. It works by blocking the conversion of pro-factor D to mature factor D and is expected to have broad applicability. We're targeting for OMS906 monthly subcutaneous dosing. The Phase I single ascending dose and multiple ascending dose clinical trial began dosing last September. And initial Phase I data are expected later this year. We'll wrap up with a brief look at GPR174, which comes from our GPCR or G protein-coupled receptor platform program. I'm on Slide 42 and here, I'm going to focus on just a few key points of our proprietary GPR174 program. First, inhibition of GPR174, we now know, amplifies the tumor-killing properties of T-cells and natural killer cells. Second, GPR174 appears to play a key role in the tumor microenvironment. It's activated by phosphatidylserine or PS and lysoPS, which are both abundant in the tumor microenvironment. GPR174 activation is even further enhanced. And this, I think, will prove to be important following chemotherapy or radiation therapy. Third, GPR174 inhibition holds the significant promise of improving outcomes from adenosine and checkpoint inhibitors as well as from cellular and cytotoxic therapy. So we see GPR174 not only as a single agent but an agent that can be used in combination with other therapies, oncologic therapies, and can actually enhance the outcomes from those other therapies. Finally, because of its exquisitely specific expression profile, which really only express in immune cells, GPR174 has a low risk of toxicity in other organ systems. So this is in contrast to, for example, adenosine receptors, which are found more broadly throughout the body, including the brain. Slide 43. GPR174, as you see, is likely to be highly activated in the T-cells in the microenvironment of the tumor, where phosphatidylserine and lysoPS are abundant. Adenosine receptors share the same signaling pathway as GPR174. So as we know, adenosine suppresses T-cell activity. So because adenosine is also highly expressed in the tumor microenvironment, inhibition of both GPR174 and adenosine or GPR174 and other popular targets in clinical trials within the adenosine pathway, such as CD39 or CD73, should provide important synergy. And we've confirmed this experimentally. Phosphatidylserine suppresses T-cells only through GPR174. And our GPR174 inhibitor reverses that suppression. In the absence of GPR174, our inhibitor has no effect, demonstrating the specificity of the inhibitor for GPR174. So also in response to GPR174 inhibition, we see upregulation of interferon gamma and TNF, and we also see decreases in tumor-promoting regulators. All of these are moving in the direction you'd like to see to fight the tumor. The data on Slide 45 show that to activate T-cell activity fully, you need inhibition of both adenosine and GPR174 in the tumor microenvironment. However, even in the absence of adenosine pathway inhibition, we found in mouse tumor models that GPR174 inhibition improves survival, again, demonstrating the potential of a GPR174 inhibitor as a single or monotherapeutic agent. And as predicted by our in vitro data on Slide 46, you see a reduction in tumor growth and increased survival in vivo, even in an aggressive -- even in an aggressive tumor line. And again, all of that is with GPR174 deficiency. So with that, let me stop and answer any questions that you have. Thank you. Thank you for your attention.

Great. Thanks, Greg, for that presentation and overview. A couple of questions, the first related to narsoplimab in TA-TMA. Just how should we be thinking about the breadth of initial label indication? You kind of speak to some high-risk characteristics. Would a label be limited to high-risk patients? Can you talk about some of those high-risk features are and how they might be identified?

Yes. It's a good question. Obviously, we will be looking for the broadest indication possible. And I'd come back to the patients that we treated. I think this set of patients is about as close as you can get to a patient population that the transplanters see in their practice. So I don't think that really, when you look at the population, one could say that somehow, we cherry-picked specific types of patients. We really took all comers. So from that perspective, I would think that we could certainly justify a broad indication. You mentioned the comorbidities associated with these patients that we studied, and those include GvHD infection, significant infections, multi-organ involvement, mismatch in donor recipient, and a number of others. But these are really what the transplanters see. So yes, our patients were very sick. And I think what is kind of most striking about the data are that when you look specifically at the patient narratives, which are part of our BLA, we submitted those narratives to FDA, when one looks closely at those, and I can tell you that when transplanters have looked at those, it's very clear that with the administration of narsoplimab, the trajectory of the patient changes. And there's really no other way to account for that other than drug effect. So again, coming back kind of full circle, we'll be looking for the broadest indication possible.

We have a submitted investor question here. In pursuing the COVID treatment opportunity, I guess, how should we think about sort of reconciling price? You'd be kind of targeting a different patient population. There might be sort of pricing constraints in the COVID segment versus what you might face in TA-TMA. Can you just sort of speak to sort of the opportunity for differential pricing or the pricing considerations as you pursue the COVID-19 opportunity?

Yes. Yes. Yes. And again, a good question. We've looked hard at that. And that's been something that we have addressed. I think, again, when you think about narsoplimab, we certainly believe that it is the premier treatment for really critically ill COVID-19 patients. So as I've said, the patients that we have now treated, both in the U.S. and in Italy, even beyond that first cohort of patients we treated in Italy, these are all really sick patients. These are patients who have been intubated, many of them -- for days, multiple days, some as long as 2 weeks, have failed all other therapeutic interventions. And then they're given narsoplimab. So I think that when you look at the cost associated with the ICU care -- the long-term ICU care and all of the components that go with that and then at the end of all of that, most of these patients would otherwise die, I think there's a strong health economics argument to be made for narsoplimab. As you know, we're also working on a small molecule MASP-2 inhibitor. So behind narsoplimab, we have a long-acting MASP-2 inhibitor for what we expect will be at least monthly, meaning no more frequent than monthly subcu administration. That will be in the clinic in early next year. We're also developing a small molecule. And when you think about a small molecule MASP-2 inhibitor, you don't just think about COVID-19, right? I mean, COVID-19 is an endothelial injury syndrome. But other viruses cause very similar problems. So Marburg, Ebola, when you look at those or really other coronaviruses, I mean I don't think that SARS-CoV-2 is going to be the last virus that causes a pandemic with the kind of symptoms that -- or pathophysiology that we're seeing. So I think we're addressing that. I think we're in pretty good shape.

Okay, okay. Just one housekeeping item type question. Has the BLA been accepted for narsoplimab? And I guess just looking a little longer-term in preparation for launch, can you just speak to some of the key priorities from a commercial execution standpoint, maybe just speaking to the sort of the breadth of the target physician or provider base? And any hurdles to kind of getting payer access that need to be worked through?

Yes. The date for approval, the 60-day window is coming up here shortly. So we're expecting to hear soon. With respect to the commercial launch, we're on track really across all of the milestones we've set internally. Everything is tracking right along. With respect to accessing the physicians, the sites, we're -- we really have great inroads there as well. Reimbursement also going well with ICD-10, both procedural and diagnostic. NTAP, also progressing. So all of the areas that we need to be really cognize of and tracking are moving right along as we would like. Hiring, similarly, our personnel that we're bringing on are really top-notch and have experience in this area. So I think we're really well set.

All right. Great. We'll have to leave it there for time. But thanks, again, Greg, for joining us today, and thanks, everybody, for tuning in to the webcast. Everybody, have a great afternoon.

Thank you, Eric. Take care.