Market Overview

Omeros Corporation Reports First Quarter 2017 Financial Results

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Omeros Corporation (NASDAQ:OMER), a biopharmaceutical company committed
to discovering, developing and commercializing both small-molecule and
protein therapeutics for large-market as well as orphan indications
targeting inflammation, coagulopathies and disorders of the central
nervous system, today announced recent highlights and developments as
well as financial results for the first quarter of 2017, which include:

  • 1Q 2017 total and OMIDRIA® revenues were $12.3 million.
    Revenues from OMIDRIA sales rose 69.2% from the prior year's first
    quarter.
  • OMIDRIA units shipped by wholesalers ("sell-through") increased 14.2%
    over 4Q 2016 and 107.2% over 1Q 2016.
  • The difference in sell-through and sales revenues in 1Q 2017 was
    primarily due to transient reductions in wholesaler inventories, which
    was replenished by wholesaler purchases during the first week in April.
  • Net loss in 1Q 2017 was $15.1 million, or $0.34 per share, including
    $4.4 million ($0.10 per share) of non-cash expenses.
  • Positive data were announced from Phase 2 clinical trials of OMS721 in
    both renal disorders and hematopoietic stem cell transplant-associated
    thrombotic microangiopathy (HSCT-TMA).
  • Successful meeting was held with FDA to discuss OMS721 Phase 3 program
    for immunoglobin A (IgA) nephropathy; company submitted an application
    for breakthrough therapy designation.
  • Ability to access, at Omeros' election, $25.0 million debt tranche
    from affiliates of CRG LP (CRG).

"The first quarter of 2017 was largely a story of progress for OMIDRIA
and our MASP-2 inhibitor OMS721," said Gregory A. Demopulos, M.D.,
chairman and chief executive officer of Omeros. "Utilization of OMIDRIA
continued its double-digit growth as ophthalmic surgeons increasingly
recognize the drug's clinical benefits, driving expansion across and
within surgical facilities. We began the quarter with one OMS721 Phase 3
program in aHUS and are now poised to initiate two additional Phase 3
programs in IgA nephropathy and stem cell transplant-associated
thrombotic microangiopathies. In addition, one part of our addiction
franchise is in Phase 2, the other is expected to enter the clinic early
next year and our GPCR program continues to break new ground.
Collectively, these achievements and the related milestones that follow
we expect bode well for the remainder of 2017 and beyond."

First Quarter and Recent Highlights and Developments

  • Highlights and developments regarding OMS721, Omeros' lead human
    monoclonal antibody in its mannan-binding lectin-associated serine
    protease-2 (MASP-2) programs for the treatment of thrombotic
    microangiopathies (TMAs), including aHUS and HSCT-TMA, and for the
    treatment of complement-related renal diseases, including IgA
    nephropathy, include:
    • In March 2017, Omeros reported positive data from its Phase 2
      clinical trial evaluating OMS721 in the treatment of HSCT-TMA.
      Consistent with previously reported results, statistically
      significant and clinically meaningful improvements in TMA disease
      activity were observed over the course of treatment, specifically
      in mean platelet count, mean lactate dehydrogenase and mean
      haptoglobin. Mean creatinine also improved but did not reach
      statistical significance.
    • The company announced positive data from its Phase 2 clinical
      trial of OMS721 for the treatment of serious kidney disorders,
      including IgA nephropathy, in March 2017. Treatment effects across
      all IgA nephropathy patients were consistent, the magnitude of
      which are associated with improved renal survival. The trial
      assesses the effect of OMS721 on urine protein measures that are
      predictive of kidney failure, namely urine albumin-to-creatinine
      ratio (uACR) and total 24-hour urine protein excretion, and on the
      ability to reduce steroid dosing. As reported for the three
      patients who completed treatment, mean improvement in uACR values
      was 76% and mean decrease in 24-hour urine protein levels was 66%.
      Concurrently, daily steroid doses for all patients were
      substantially reduced or completely eliminated.
    • Following discussion with the FDA regarding a Phase 3 program for
      OMS721 in IgA nephropathy, the company submitted an application
      for breakthrough therapy designation. Omeros plans to pursue
      breakthrough therapy or fast track designation for OMS721 in
      HSCT-TMA. Omeros also is pursuing accelerated approval for OMS721
      in aHUS. The FDA has already granted fast track designation for
      OMS721 in patients with aHUS and orphan designation for OMS721 in
      patients with complement-mediated TMAs, including aHUS and
      HSCT-TMA.
    • In February, Phase 2 clinical data in HSCT-TMA were presented at
      the 2017 Tandem Meeting of the American Society for Blood and
      Marrow Transplantation and the Center for International Blood and
      Marrow Transplant Research.
    • In March, a case report describing resolution of HSCT-TMA in a
      15-year old patient was presented at the 43rd Annual Meeting of
      the European Society for Blood and Marrow Transplantation.
    • In April, Phase 2 clinical data in aHUS were presented at the
      International Society of Nephrology's World Congress of Nephrology.
  • IND-enabling toxicology studies were initiated for OMS527, the
    company's phosphodiesterase 7, or PDE7, inhibitor for the treatment of
    addiction and compulsive disorders.
  • CRG has agreed to provide the next tranche of $25.0 million in debt
    financing under the company's existing credit facility, which can be
    drawn at Omeros' election. The election to borrow must be made by the
    end of August.

Financial Results

For the quarter ended March 31, 2017, total revenues were $12.3 million,
all relating to sales of OMIDRIA. This compares to OMIDRIA revenues of
$7.2 million and grant revenue of $173,000 for the same period in 2016.
Our 1Q 2017 OMIDRIA revenues decreased from those in 4Q 2016 by
$648,000. The decrease was primarily due to the timing of wholesaler
orders, resulting in transient reductions in wholesaler inventories at
March 31, 2017 compared to December 31, 2016, and, to a lesser extent,
the first full quarter of operation for the company's OMIDRIA purchase
volume discount programs. This March 31, 2017 deficit in wholesaler
inventories was replenished in the first week of April when wholesalers
purchased a net amount of $2.1 million of OMIDRIA, returning inventories
to traditional levels and supporting ongoing demand.

OMIDRIA units sold by wholesalers to customers increased 14.2% from 4Q
2016 to 1Q 2017 and 107.2% from 1Q 2016 to 1Q 2017.

Total costs and expenses for the three months ended March 31, 2017 were
$25.0 million (including $4.4 million of non-cash expenses) compared to
$26.9 million (including $4.7 million of non-cash expenses) for the same
period in 2016. The decrease in the first quarter was primarily due to
decreased clinical research and development costs associated with the
timing of clinical trials and manufacturing and reduced stock
compensation. These decreases were partially offset by increased legal
costs associated with the Par lawsuit.

Interest expense for the three months ended March 31, 2017 was $2.7
million as compared to $1.4 million in the prior year first quarter. The
increase is due to interest on incremental borrowings Omeros made in 2Q
and 4Q 2016.

For the three months ended March 31, 2017, Omeros reported a net loss of
$15.1 million, or $0.34 per share, which included non-cash expenses of
$4.4 million ($0.10 per share). This compares to the prior year's first
quarter, when Omeros reported a net loss of $20.5 million, or $0.54 per
share, which included non-cash expenses of $4.7 million ($0.12 per
share).

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 17386705. 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 17386705.

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 biopharmaceutical company committed to discovering,
developing and commercializing both small-molecule and protein
therapeutics for large-market as well as orphan indications targeting
inflammation, coagulopathies and disorders of the central nervous
system. Part of its proprietary PharmacoSurgery® platform,
the company's first drug product, OMIDRIA® (phenylephrine and
ketorolac injection) 1%/0.3%, is the first and only FDA-approved drug
(1) 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 and (2)
that contains an NSAID for intraocular use. In the European Union, the
European Commission has approved OMIDRIA for use in cataract surgery and
lens replacement procedures to maintain mydriasis (pupil dilation),
prevent miosis (pupil constriction), and to reduce postoperative eye
pain. Omeros has clinical-stage development programs focused on:
complement-associated thrombotic microangiopathies; complement-mediated
glomerulonephropathies; Huntington's disease and cognitive impairment;
and addictive and compulsive disorders. In addition, Omeros has a
proprietary G protein-coupled receptor (GPCR) platform, which is making
available an unprecedented number of new GPCR drug targets and
corresponding compounds to the pharmaceutical industry for drug
development, and a platform used to generate antibodies.

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," "look forward to,"
"may," "plan," "potential," "predict," "project," "should," "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, financial reimbursement
coverage from governmental and third-party payers for products and
related treatments, 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 May 10, 2017. 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
March 31,
2017   2016
Revenues:
Product sales, net $ 12,257 $ 7,246
Grant revenue     173
Total revenue   12,257   7,419
Costs and expenses:
Cost of product sales 271 327
Research and development 12,240 15,434
Selling, general and administrative   12,471   11,110
Total costs and expenses   24,982   26,871
Loss from operations (12,725 ) (19,452 )
Interest expense (2,663 ) (1,375 )
Other income (expense), net   299   288
Net loss $ (15,089 ) $ (20,539 )
Basic and diluted net loss per share $ (0.34 ) $ (0.54 )
Weighted-average shares used to compute

basic and diluted net loss per share

  43,828,572   38,317,084
 
   
OMEROS CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
 
March 31, December 31,
2017 2016
Cash, cash equivalents and short-term investments $ 33,653 $ 45,331
Working capital 34,381 44,191
Restricted cash and investments 5,835 5,835
Total assets 58,404 67,278
Total current liabilities 16,973 16,071
Notes payable and lease financing obligations 80,731 79,710
Accumulated deficit (484,976 ) (469,887 )
Total shareholders' deficit (48,113 ) (37,447 )

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