Omeros Corporation Reports Second Quarter 2018 Financial Results

– Conference Call Today at 4:30 p.m. ET –

SEATTLE–(BUSINESS WIRE)–Omeros Corporation (NASDAQ: OMER) today announced recent highlights and
developments as well as financial results for the second quarter ended
June 30, 2018, which include:

  • 2Q 2018 total and OMIDRIA® revenues were $1.7 million,
    compared to $17.2 million in 2Q 2017; the decrease was due to the
    significantly reduced usage of OMIDRIA by ambulatory surgery centers
    (ASCs) and hospitals during the period (January 1, 2018 through
    September 30, 2018) in which transitional pass-through reimbursement
    for OMIDRIA is unavailable. Pass-through status for OMIDRIA will
    reinitiate on October 1, 2018 and is scheduled to remain in effect
    through September 30, 2020.
  • Net loss in 2Q 2018 was $33.7 million, or $0.70 per share. Non-cash
    expenses for 2Q 2018 were $4.6 million, or $0.10 per share.
  • At June 30, 2018, the company had cash, cash equivalents and
    short-term investments available for operations of $88.4 million.
  • Successful meetings held with the U.S. Food and Drug Administration
    (FDA) and a European regulatory agency focused on pathways to
    accelerated, conditional and full approval for OMS721 in “high-risk”
    stem cell transplant-associated thrombotic microangiopathy.
    Interactions with U.S. and European regulatory agencies are ongoing
    and the company continues preparations for Biologics License
    Application (BLA) and Marketing Authorization Application (MAA)
    submissions.
  • Settled patent infringement lawsuit against Lupin on favorable terms
    in May 2018, and patent infringement lawsuit against Sandoz was
    dismissed in July 2018 because Sandoz stipulated to no longer pursue
    its Abbreviated New Drug Application (ANDA) prior to OMIDRIA patent
    expiration in 2033, resolving all litigation with ANDA filers.
  • In July 2018, the first patient was dosed in the Phase 1 clinical
    trial for Omeros’ lead phosphodiesterase 7 (PDE7) inhibitor OMS527.
    Dosing has been completed in the first two cohorts of this Phase 1
    clinical trial and to date the drug remains well-tolerated.

“During the last quarter, we made significant strides across multiple
fronts,” said Gregory A. Demopulos, M.D., chairman and chief executive
officer of Omeros. “For OMS721, our MASP-2 inhibitor, Phase 3 clinical
trials are advancing in both IgA nephropathy and aHUS, and our stem-cell
TMA program is moving toward regulatory filings for marketing approval
in both the U.S. and Europe. Our PDE7 inhibitor OMS527 is demonstrating
good drug behavior in its Phase 1 clinical trial. We are also excited
about our MASP-3 inhibitor OMS906, our MASP-2 small molecules for oral
administration and our multiple GPCR cancer therapeutic programs, all of
which look promising and are slated to begin entering the clinic as
early as late 2019. And to help fund our pipeline’s continuing progress,
OMIDRIA is rapidly approaching its return to pass-through status on
October 1. All of the pieces appear to be coming together, and we look
forward to realizing the near- and long-term prospects for Omeros.”

Second Quarter and Recent Developments

  • Developments regarding OMS721, Omeros’ lead human monoclonal antibody
    in its mannan-binding lectin-associated serine protease-2 (MASP-2)
    programs for the treatment of hematopoietic stem cell
    transplant-associated thrombotic microangiopathy (HSCT-TMA),
    Immunoglobulin A (IgA) nephropathy, and atypical hemolytic uremic
    syndrome (aHUS), include:

    • The company recently held successful meetings with the FDA and a
      European regulatory agency covering pathways to accelerated,
      conditional and full approval for OMS721 in “high-risk” HSCT-TMA.
      Interactions with U.S. and European regulatory agencies are
      ongoing and the company continues preparations for BLA and MAA
      submissions.
    • Omeros announced in April 2018 that the FDA granted breakthrough
      therapy designation to OMS721 for the treatment of patients with
      “high-risk” HSCT-TMA, specifically those patients who have
      persistent TMA despite modification of immunosuppressive therapy.
      This is the second breakthrough therapy designation for OMS721,
      which last year received the designation from FDA for the
      treatment of IgA nephropathy.
    • In April 2018, Omeros reported new results in patients with
      HSCT-TMA from the ongoing OMS721 Phase 2 study. The analysis of
      100-day mortality, an important endpoint previously used as an
      approval endpoint in another condition related to HSCT, showed
      that OMS721-treated patients had improved survival relative to the
      historical control (53% vs 10%; p = 0.0002).
    • Dosing in the U.S. cohort has been completed in the
      placebo-controlled portion of the company’s Phase 2 trial of
      OMS721 in IgA nephropathy. Data are expected in September.
    • In July 2018, the European Medicines Agency’s (EMA’s) Committee
      for Orphan Medicinal Products (COMP) issued a positive opinion
      recommending orphan drug designation of OMS721 for treatment in
      hematopoietic stem cell transplantation. The positive opinion is
      expected to be adopted by the European Commission in August.
  • Developments regarding OMIDRIA include:

    • In the recently released 2019 proposed rule for the Centers for
      Medicare & Medicaid Services’ (CMS’) outpatient prospective
      payment system (OPPS), CMS indicated that it will separately pay
      in the ASC setting for non-opioid drugs with an FDA-approved
      indication for postoperative pain relief. Although not
      specifically named, Omeros believes that OMIDRIA meets this
      definition.
    • Commercial activities have been focused on re-engaging and
      expanding ASC and hospital customers in anticipation of the
      recommencement of Medicare Part B separate payment beginning
      October 1, 2018 through September 30, 2020.
    • In May 2018, the company entered into a settlement agreement and
      consent judgment with Lupin Ltd. and Lupin Pharmaceuticals, Inc.
      (collectively, Lupin) concerning Lupin’s filing of an ANDA seeking
      approval from the FDA to market a generic version of OMIDRIA. A
      similar settlement was reached with Par Pharmaceutical late last
      year. In July 2018, the company announced that its patent
      infringement lawsuit against Sandoz Inc. (Sandoz) had been
      dismissed by stipulation of the parties. All of Omeros’ litigation
      with ANDA filers has now been favorably concluded. The earliest
      ANDA entry date for any of the three generic manufacturers is
      April 2032 unless otherwise subsequently authorized pursuant to
      the settlement agreements.
    • In July 2018, Omeros reported that OMIDRIA had been made available
      in the European Union (EU) on a limited basis, which maintained
      the ongoing validity of the European marketing authorization for
      OMIDRIA.
    • OMIDRIA was added to the Veterans Health Administration (VA)
      National Formulary in April 2018.
    • In April 2018, Omeros announced that the results of four
      “real-world” clinical studies were presented at the American
      Society of Cataract and Refractive Surgery and American Society of
      Ophthalmic Administrators Annual Meeting. The studies demonstrate
      significant benefits of OMIDRIA to both patients and surgeons
      across routine and complex cataract surgery cases performed in
      high-volume surgery centers, with and without femtosecond laser.
  • In Omeros’ PDE7 program, the company is developing proprietary
    compounds to treat addiction and compulsive disorders as well as
    movement disorders. In June 2018, Omeros reported that it had obtained
    regulatory authority and ethics committee clearance to start the Phase
    1 clinical trial evaluating the safety, tolerability, pharmacodynamics
    and pharmacokinetics of its lead PDE7 inhibitor, OMS527, in healthy
    subjects. Dosing has been completed in the first two cohorts of this
    Phase 1 clinical trial and to date, the drug remains well-tolerated.
    Data are expected in the first half of 2019. The initial target
    planned for OMS527 is nicotine addiction.
  • As reported previously, the company’s credit facility with CRG was
    amended in April 2018 to eliminate the revenue and market
    capitalization covenants with respect to the 12-month period ending on
    December 31, 2018 and to reduce the market capitalization threshold
    for future periods to three times the aggregate principal amount of
    loans outstanding (i.e., $375.0 million based on June 30, 2018
    borrowings) on the applicable determination date. In May 2018, the
    company borrowed the remaining $45.0 million available under this
    facility.

Financial Results

For the quarter ended June 30, 2018, revenues were $1.7 million, all
relating to sales of OMIDRIA. This compares to OMIDRIA revenues of $17.2
million for the same period in 2017. The decrease in revenue from the
comparable quarter in 2017 was due to the significantly reduced usage of
OMIDRIA by ASCs and hospitals during the period (January 1, 2018 through
September 30, 2018) in which transitional pass-through reimbursement for
OMIDRIA is unavailable. On a sequential quarter-over-quarter basis,
OMIDRIA revenues increased by $0.1 million from the $1.6 million
achieved in the first quarter of 2018. Pass-through status for OMIDRIA
will reinitiate on October 1, 2018 and is scheduled to remain in effect
through September 30, 2020.

Total costs and expenses for the three months ended June 30, 2018 were
$32.3 million compared to $29.1 million for the same period in 2017. The
increase in the current year quarter was primarily due to higher
manufacturing scale-up costs for the OMS721 programs and to incremental
costs associated with initiating the OMS721 IgA nephropathy Phase 3
clinical trial. These increases were partially offset by decreased
OMIDRIA patent litigation costs.

For the three months ended June 30, 2018, Omeros reported a net loss of
$33.7 million, or $0.70 per share, which included non-cash expenses of
$4.6 million ($0.10 per share). In comparison, for the prior year’s
second quarter Omeros reported a net loss of $14.4 million, or $0.33 per
share including non-cash expenses of $4.3 million ($0.10 per share).

As of June 30, 2018, the company had $88.4 million of cash, cash
equivalents and short-term investments available for operations and
another $5.8 million in restricted investments. This includes the
remaining $45.0 million available under the company’s existing credit
facility, which was drawn down in May 2018.

Conference Call Details

Omeros’ management will host a conference call to discuss the financial
results and to provide an update on business activities. The call will
be held today at 1:30 p.m. Pacific Time; 4:30 p.m. Eastern Time. To
access the live conference call via phone, please dial (844) 831-4029
from the United States and Canada or (920) 663-6278 internationally. The
participant passcode is 3989669. Please dial in approximately 10 minutes
prior to the start of the call. A telephone replay will be available for
one week following the call and may be accessed by dialing (855)
859-2056 from the United States and Canada or (404) 537-3406
internationally. The replay passcode is 3989669.

To access the live or subsequently archived webcast of the conference
call on the internet, go to the company’s website at www.omeros.com
and select “Events” under the Investors section of the website. To
access the live webcast, please connect to the website at least 15
minutes prior to the call to allow for any software download that may be
necessary.

About Omeros Corporation

Omeros is a commercial-stage biopharmaceutical company committed to
discovering, developing and commercializing small-molecule and protein
therapeutics for large-market as well as orphan indications targeting
inflammation, complement-mediated diseases and disorders of the central
nervous system. The company’s drug product OMIDRIA®
(phenylephrine and ketorolac intraocular solution) 1% / 0.3% is marketed
for use during cataract surgery or intraocular lens (IOL) replacement to
maintain pupil size by preventing intraoperative miosis (pupil
constriction) and to reduce postoperative ocular pain. In the European
Union, the European Commission has approved OMIDRIA for use in cataract
surgery and other IOL replacement procedures to maintain mydriasis
(pupil dilation), prevent miosis (pupil constriction), and to reduce
postoperative eye pain. Omeros has multiple Phase 3 and Phase 2
clinical-stage development programs focused on: complement-associated
thrombotic microangiopathies; complement-mediated
glomerulonephropathies; cognitive impairment; and addictive and
compulsive disorders. In addition, Omeros has a diverse group of
preclinical programs and a proprietary G protein-coupled receptor (GPCR)
platform through which it controls 54 new GPCR drug targets and
corresponding compounds, a number of which are in preclinical
development. The company also exclusively possesses a novel
antibody-generating platform.

Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, which are subject to the “safe
harbor” created by those sections for such statements. All statements
other than statements of historical fact are forward-looking statements,
which are often indicated by terms such as “anticipate,” “believe,”
“could,” “estimate,” “expect,” “goal,” “intend,” “likely,” “look forward
to,” “may,” “plan,” “potential,” “predict,” “project,” “prospects,”
“should,” “slated,” “will,” “would” and similar expressions and
variations thereof. Forward-looking statements are based on management’s
beliefs and assumptions and on information available to management only
as of the date of this press release. Omeros’ actual results could
differ materially from those anticipated in these forward-looking
statements for many reasons, including, without limitation, risks
associated with product commercialization and commercial operations,
unproven preclinical and clinical development activities, regulatory
oversight, intellectual property claims, competitive developments,
litigation, and the risks, uncertainties and other factors described
under the heading “Risk Factors” in the company’s Quarterly Report on
Form 10-Q filed with the Securities and Exchange Commission on August 9,
2018. Given these risks, uncertainties and other factors, you should not
place undue reliance on these forward-looking statements, and the
company assumes no obligation to update these forward-looking
statements, even if new information becomes available in the future.

 
OMEROS CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
 
    Three Months Ended     Six Months Ended
June 30, June 30,
2018     2017 2018     2017
Revenue:
Product sales, net $ 1,655 $ 17,151 $ 3,244 $ 29,408
 
Costs and expenses:
Cost of product sales 116 157 319 429
Research and development 19,412 13,137 37,551 25,377
Selling, general and administrative   12,744     15,796     23,678     28,267  
Total costs and expenses   32,272     29,090     61,548     54,073  
Loss from operations (30,617 ) (11,939 ) (58,304 ) (24,665 )
Interest expense (3,676 ) (2,723 ) (6,502 ) (5,386 )
Other income   597     303     1,056     603  
Net loss $ (33,696 ) $ (14,359 ) $ (63,750 ) $ (29,448 )
Comprehensive loss $ (33,696 ) $ (14,359 ) $ (63,750 ) $ (29,448 )
Basic and diluted net loss per share $ (0.70 ) $ (0.33 ) $ (1.32 ) $ (0.67 )

Weighted-average shares used to compute basic and diluted net loss
per share

  48,384,460     44,037,471     48,333,610     43,933,022  
 
 
OMEROS CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
 
   

June 30,
2018

   

December 31,
2017

Cash, cash equivalents and short-term investments $ 88,404 $ 83,749
Working capital 72,062 82,065
Restricted investments 5,779 5,835
Total assets 106,349 116,328
Total current liabilities 24,442 26,307
Notes payable and lease financing obligations, net 130,358 84,607
Accumulated deficit (587,118 ) (523,368 )
Total shareholders’ deficit (56,297 ) (2,814 )
 

Contacts

Cook Williams Communications, Inc.
Jennifer Cook Williams,
360-668-3701
Investor and Media Relations
jennifer@cwcomm.org