Omeros Corporation
Q1 2022 Earnings Call Transcript

Published: 10 May 2022

[Operator:]

Good afternoon and welcome to today's earnings call for 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'll now turn the call over to Jennifer Williams Investor Relations for Omeros.

[Jennifer Williams:]

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 and the risk factor section 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 2021 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.

[Greg Demopulos:]

Thank you, Jennifer and good afternoon everyone. We appreciate you joining us for today's call. We'll start with a corporate update then an overview of our first quarter 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. Let's begin with our MASP-2 program and specifically narsoplimab in stem cell transplant-associated thrombotic microangiopathy or TA-TMA. In February, we had a Type A post-action meeting with FDA following receipt of our complete response letter. In our briefing package and during the meeting, we addressed all of FDA's stated concerns. FDA was delayed in providing their final meeting minutes to us. When we finally received them, there were no new requests. Yet we found that the division had repeated a number of critiques that we feel had not only been adequately addressed, but also some that we view as demonstrably inaccurate based on FDA's own minutes and other official communications. After close review and discussions with our legal and regulatory advisers, we began drafting a dispute resolution request an official FDA pathway that allows the sponsor to appeal a decision by an FDA division to a higher deciding authority in the agency, in this case the Office of New Drugs. With the assistance of our legal and regulatory advisers including recent former FDA office and division directors, we are now completing the draft request. We believe that it lays out a very strong case across all components

[Mike Jacobsen:]

Thanks Greg. As Greg briefly discussed on December 23, Rayner acquired OMIDRIA in the associated business operations. The sale required us to restate our financial statements for all periods in two components

[Greg Demopulos:]

Thanks Mike. Let's open the call to questions, operator. Thank you.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Eric Joseph with JPMorgan. Your line is open.

[Greg Demopulos:]

Hi. Good morning.

[Eric Joseph:]

Hi. Good evening. Thanks for taking my questions. Thanks. Just a couple from us, first on the narsoplimab like, there have been a lot of dispute resolutions that we can refer to here. So I'm curious, to just get a sense of what the -- really the rosiest outcome could be from the dispute process. Is it an automatic approval, full approval, if CDER's decision were to be overturned? And I wonder whether there's a middle ground that you might be arguing for perhaps like an accelerated approval or conditional approval as you contemplate this? And then, I'll -- a second question as a follow-up.

[Greg Demopulos:]

Okay. Sure. Let me address it. And then, I'll hand it off to regulatory as well. Look, what we are requesting is, regular approval based on the information the data that are in our existing BLA. What is the optimal outcome? The optimal outcome would be agreement with that, which we think is quite clear and well supported. And that would then lead to label discussions and we're off to the races. Your question about

[Cathy Melfi:]

Sure. Thanks Greg. Really all I have to add is, kind of, procedurally speaking in terms of getting a favorable outcome from this formal dispute resolution if the Office of New Drugs agrees with us that the information in the BLA supports approval, procedurally speaking we would have to then put a submission back into the division and then they would classify that as a Class I resubmission because it wouldn't have new data or new analysis in it. And so procedurally FDA then has two months from our submission to reach their final decision. And it's during those two months that as Greg mentioned we'd be talking about final label language. And hopefully they wouldn't even take the two months. But again just procedurally speaking that's basically how it works. But again I think Greg did a nice summary of kind of where we are and the discussion we had at the post-action meeting.

[Eric Joseph:]

Okay, great. Actually these all are quite helpful. And maybe just a follow-up if I could on OMIDRIA. And as it relates to the commercial milestone, you alluded to the NOPAIN act and possible passing legislature -- legislation as a trigger. I just wonder whether there are any other routes by which you might be able to have secure separate Part B payment for that four-year period. I mean as we think about the -- my sense of the review cycle that typically the separate payment is reviewed on an annual basis. Is there any chance that the review cycle might extend beyond more than a year or for multiple years? Yeah.

[Greg Demopulos:]

Understood. The answer is that in fact OMIDRIA's separate payment under the non-opioid exclusion does not come up automatically every year. CMS’s decision on it was a going forward decision, meaning one that does not need to be renewed every year. CMS made the decision that OMIDRIA qualifies under the non-opioid exclusion for separate payment full stop. So again, we follow the OPPS rules that come out annually. We look carefully at those. But this policy has been in place with CMS since 2019. So we expect particularly given the opioid pandemic that's currently underway that this is not something that CMS is going to meaningfully change. And again the data that are published -- OMIDRIA meets all of the criteria for separate payment. So it's not an annual renewal.

[Eric Joseph:]

Okay. Okay. Thanks for the color and thanks for taking the questions.

[Operator:]

Thank you. Our next question comes from Greg Harrison with Bank of America. Your line is open.

[Greg Harrison:]

Good afternoon. Thanks for taking our questions. So after the Type A meeting, what were the critiques that you reference in your press release and in your remarks that were repeated by the agency? And how had you addressed those critiques? And what about your responses to them did the agency disagree with?

[Greg Demopulos:]

Yes. Hi Greg. Thanks for the question. Look, we aren't going to litigate or discuss the specifics of this publicly. I don't think that's going to be helpful to us. But I can say that, there were specific critiques that were laid out by the division in the CRO. And we painstakingly addressed every single one of those critiques. And in a number of cases that wasn't the first time frankly that we had seen or responded to those same critiques. And I think that they were -- our responses were on point and that the responses were quite clear. And so, it is surprising to us that some of that came back as a refrain. And I think that we have addressed those and we think that those responses that we've provided are abundantly clear. And this is why -- I mean this was not an easy decision for us as to what we were going to do. We were surprised by the minutes coming back. And we really needed to draft as I said earlier the request and evaluate that objectively and not only internally, but with our outside experts to look at that and to look at our case overall. And I think given the strength of the case and the strength of our responses that document and other documents that we feel really, look it's kind of time to just move on and get this thing fixed. And that's what we're trying to do. Again, let me see if -- Cathy you've got any comments?

[Cathy Melfi:]

Sure. Thanks, Greg. I think we said before that, FDA's critiques involved difficulty interpreting treatment response. And at the Type A meeting, we were able to address these. We -- as Greg said, we felt it was a constructive meeting in that -- maybe it was a teleconference as required by FDA. But we felt that we had made good progress toward approval. And so again to get the minutes back and not even on time and to feel like some of the same critiques the difficulty interpreting the data were still there. Again, after reviewing what we pulled together, speaking to a lot of experts including ex-FDA people, we feel that this process that FDA has in place specifically for this purpose is the best way to move forward and so that's the route that we're taking.

[Greg Harrison:]

Got it. Understood. And then on the dispute resolution pathway, Greg you mentioned some -- that you have a database of examples of companies that have gone through this pathway. Do you have any information on how many of them were successful the first time around as is your goal? And what gives you the confidence that that's I think in your view likely to happen potentially and that the FDA would essentially overrule itself at that point?

[Greg Demopulos:]

Yes. As I said if you look at Covington & Burling and Hyman Phelps & McNamara, both groups that we use frankly both for legal and regulatory advice -- now the collective experience there has been that -- and let me back up a moment and just kind of put this in context Greg. If you go to the published statistics, the statistics will say that well less than half of these are successful. But success is defined as whether the specific application is granted. And what ends up happening at least in our understanding with these two firms that do certainly a large amount of these relative to other firms is that in the good majority of these cases that the outcome is favorable for the company. So, obviously, we're betting. And I think on appropriate data and based on our own BLA that we're going to be successful here. So, again, all of these things have been factored in which is why it took us a bit to get to this decision. But at some point kind of going back and forth and discussing the same specific sets of critiques responding to those critiques and then having them come back again every time that takes time right? You're going through Type A or Type B meetings and those take time. And our position was just, look for whatever reason there's a difficulty interpreting the data within the division. And it is a complex indication and it is a complex -- complication of a complex disease set, right? We're talking about stem cell transplantation and the complication of stem cell transplantation. So, the complexity is a factorial issue. But we believe that the data are abundantly clear. And I would frankly love to get into the details of that. I don't think that's going to be productive here. I can just tell you that our position is that we should carry the day. So we're confident. Is that a guarantee? Of course, it's not a guarantee. But I and our team are confident in the outcome and also in the approach. And so when you look at that success, that Covington and Hyman, Phelps have had, I think we're making the right bet.

[Greg Harrison:]

Got it. Thanks again for taking the question.

[Operator:]

Thank you. Our next question comes from Brandon Folkes with Cantor Fitzgerald. Your line is open.

[Brandon Folkes:]

Hi. Thanks for taking my questions and thank you for all the updates. Greg, I hear your confidence in prevailing in this dispute resolution process. But can you just maybe help us think through the other scenario, if you don't prevail. Could you provide any color in terms of maybe what the FDA is asking for or what the path forward may be here? I mean, are you committed to an additional trial? You have a tremendously deep pipeline. Just taking the other side of the coin. But glad to hear your confidence? Thank you.

[Greg Demopulos:]

Sure Brandon. Thanks. Well, no look, I think that certainly we have considered what the other side of that coin would look like. But remember that we are the ones that propose to FDA what we would do. FDA has requested additional information, as we have explained previously. We believe that we have met -- not just met, but exceeded the threshold for substantial evidence of effectiveness with this drug. And so our position here is that, look we've done it. And for whatever reason we're not communicating on this point. So let's go to another group and let's get this effectively adjudicated. So the result of not being successful on that I think -- look as I said the majority of these come back with something favorable for the company. What would that mean? I can't speak to that right now. But again, I think that our position is that we will be successful. We warrant a successful outcome. The BLA warrants a successful outcome. And we are looking forward to getting this process ongoing and then behind us and having this drug approved. I mean again Cathy, Steve any additional comments?

[Cathy Melfi:]

None for me. Thanks.

[Steve Whitaker:]

The data is strong, Greg, and I agree with you completely that in my view, there's certainly substantial evidence of effectiveness. And when we compare it to historical precedent. There's certainly strong evidence here.

[Greg Demopulos:]

And I think Steve raises a good point. I know I mentioned it earlier, but I just want to underscore it, they're substantial precedent, not just within FDA, but within this specific division. And those precedents are certainly when compared to what we have produced, we think again put our BLA in a substantially favorable light. And I think that again, when you look at the data as Steve said, when you look at the precedent, when you look at the literature and when you look at the regulatory history, you put all that together it is just very hard for us to understand frankly, why we were not approved in October of last year. But -- how someone looking at this truly objectively, could come to some other outcome. Of course, that can always happen. But we've tried very hard to look at this as critically, as we can

[Operator:]

Okay. I'm showing no further questions, at this time. I'd like to, turn the call back to Dr. Demopulos for closing remarks.

[Greg Demopulos:]

Well, thank you again, everyone, for joining the call today. We look forward, as I said, to completing the dispute resolution process quickly and bringing narsoplimab over the finish line. In parallel, our other programs continue pushing forward. Near-term value-driving milestones are coming up throughout 2022. We'll continue to keep you updated on our progress, as always. We appreciate your continued support and we hope you all have a good evening. Take care.

[Operator:]

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone have a great day.