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Omeros Corporation Reports Third Quarter 2018 Financial Results

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– Conference Call Friday, November 9th at 8:30 a.m. ET –

Omeros Corporation (NASDAQ:OMER) today announced recent highlights and
developments as well as financial results for the third quarter ended
September 30, 2018, which include:

  • 3Q 2018 total and OMIDRIA® revenues were $4.6 million,
    compared to $1.7 million in 2Q 2018 and $21.7 million in last year's
    third quarter. The increase over the last quarter is primarily due to
    revenues from the company's wholesalers in anticipation of renewed
    buying from ambulatory surgery centers (ASCs) and hospitals as a
    result of the reinstatement of pass-through reimbursement on October
    1, 2018. The decrease from 3Q 2017 is due to the significant reduction
    in OMIDRIA usage by ASCs and hospitals in 3Q 2018 as a result of the
    absence of transitional pass-through reimbursement, which expired for
    OMIDRIA on January 1, 2018.
  • Sell-through for October 2018 was 81% of sell-through in October 2017,
    which was our highest month of OMIDRIA sell-through to date.
  • The recently released 2019 Outpatient Prospective Payment System
    (OPPS) final rule for the Centers for Medicare & Medicaid Services
    (CMS) includes provisions that are expected to provide for continued
    separate reimbursement for OMIDRIA after its recently reinstated
    pass-through status expires on October 1, 2020.
  • Net loss in 3Q 2018 was $39.5 million, or $0.81 per share. Non-cash
    expenses were $5.0 million, or $0.10 per share.
  • At September 30, 2018, the company had cash, cash equivalents and
    short-term investments available for operations of $55.2 million.
  • Results from the second reported cohort from Omeros' ongoing Phase 2
    clinical trial in patients with Immunoglobulin A (IgA) nephropathy are
    consistent with the first cohort and demonstrated significant
    reductions in proteinuria ranging from greater than 50% to
    approximately 70% following extended treatment with OMS721.
  • Recent meetings with multiple European national regulatory authorities
    resulted in uniform recommendations to submit a marketing
    authorization application, or MAA, for full approval of OMS721 for
    hematopoietic stem cell transplant-associated thrombotic
    microangiopathy (HSCT-TMA). Based on these meetings, Omeros has filed
    with the European Medicines Agency (EMA) a letter of intent to submit
    a marketing authorization application (MAA) via EMA's centralized
    procedure for approval of OMS721 for the treatment of HSCT-TMA and
    expects to receive assignment of a rapporteur and co-rapporteur by
    year end.
  • The U.S. Food and Drug Administration (FDA) granted orphan drug
    designation to OMS721 for the treatment of HSCT-TMA, and the European
    Commission adopted a decision designating OMS721 as an Orphan
    Medicinal Product in the European Union for treatment in HSCT.
  • Omeros' Phase 1 clinical trial for the company's lead
    phosphodiesterase 7 (PDE7) inhibitor OMS527 is underway, and the
    company has completed dosing in the first six cohorts of subjects,
    which included a food effect study. The compound has been well
    tolerated, and pharmacokinetic data support once-daily dosing, with or
    without food.

"We are pleased with the strong demand that we are seeing for OMIDRIA so
soon following reinstatement of its pass-through payment status," said
Gregory A. Demopulos, M.D., chairman and chief executive officer of
Omeros. "We expect that ramp to continue, generating a growing revenue
stream to support our advancing pipeline. Omeros' lead product in that
pipeline, our MASP-2 inhibitor OMS721, is driving toward U.S. and
European commercialization in stem-cell TMA, we believe that the recent
positive data in IgA nephropathy meaningfully de-risks the program's
Phase 3 pivotal trial, and the aHUS program is enrolling. Our Phase 1
trial for our PDE7 inhibitor OMS527 is progressing nicely and, to date,
the drug is demonstrating a good safety profile and predictable
pharmacokinetics. OMS906, our MASP-3 inhibitor, is targeted for clinical
development in late 2019 followed by our orally administered MASP-2
inhibitors, which are slated to enter the clinic in 2020. Our team has
done a great job managing the advancement of these assets while focusing
on delivering our products to the market to meet the urgent needs of
patients, and I expect that we will see equal or greater achievements in
2019."

Third Quarter and Recent Developments

  • Developments regarding OMIDRIA (phenylephrine and ketorolac
    intraocular solution) 1% / 0.3% include:
    • Pass-through status for OMIDRIA was reinitiated on October 1, 2018
      following a three-quarter hiatus. Sell-through for October 2018
      has already reached 81% of sell-through achieved in October 2017,
      which was our highest month of OMIDRIA sell-through to date.
    • CMS recently released its 2019 final rule for the OPPS. In it, CMS
      indicated that it will separately pay in the ASC setting for
      non-opioid drugs used during surgery that have an FDA-approved
      indication for postoperative pain relief and that are packaged in
      calendar year 2019. Although OMIDRIA is not specifically named
      because it is paid separately until October 1, 2020, Omeros
      believes that OMIDRIA meets the definition for this non-opioid
      exclusion. The preamble to this section of the OPPS Final Rule
      indicates that CMS will apply the exclusion from packaged payment
      to other drugs in the future if they meet the criteria. The OPPS
      Final Rule also states that CMS will consider in future rulemaking
      a policy that pays separately for drugs used during cataract
      surgery that have an FDA-approved indication to address
      postoperative issues. Omeros believes that OMIDRIA also meets this
      definition.
    • The most recent manuscripts published or submitted for publication
      reporting the results of "real-world" clinical studies show that,
      compared to epinephrine in both conventional and femtosecond-laser
      assisted cataract surgery, OMIDRIA decreased the need for pupil
      expansion devices and shortened surgical times for cataract
      surgery, demonstrating how the use of OMIDRIA may increase the
      efficiency and reduce the costs of cataract surgery. These studies
      add to the growing body of published real-world clinical studies
      demonstrating significant benefits of OMIDRIA to both patients and
      surgeons across routine and complex cataract surgery cases.
  • Developments regarding OMS721, Omeros' lead human monoclonal antibody
    in its mannan-binding lectin-associated serine protease-2 (MASP-2)
    programs for the treatment of HSCT-TMA, IgA nephropathy, and atypical
    hemolytic uremic syndrome (aHUS), include:
    • The company met recently with multiple European national
      regulatory authorities focused on approval pathways for OMS721 for
      the treatment of HSCT-TMA. Feedback from the European national
      regulatory authorities has been uniformly positive, each
      recommending that Omeros submit an MAA for full approval of OMS721
      in HSCT-TMA.
    • The company has filed with the European Medicines Agency a letter
      of intent to submit an MAA for OMS721 in HSCT-TMA via the
      centralized procedure and looks forward to receiving assignment of
      a rapporteur and co-rapporteur who will work with the company
      through the MAA submission and review process. Close interactions
      with the FDA and European regulatory agencies are ongoing and the
      company continues preparations for U.S. Biologics License
      Application (BLA) and European MAA submissions.
    • The company is preparing to begin collection of chart-review-based
      historical data following finalization of the data collection and
      analysis plan. The comparison of OMS721-treated patients to the
      historical control is designed to support accelerated approval in
      the U.S. and full approval in Europe.
    • In October 2018, Omeros reported positive results in patients with
      IgA nephropathy from the second reported cohort of the ongoing
      Phase 2 clinical trial. The cohort was designed to provide
      descriptive data on the effects of single and multiple 12-week
      courses of treatment with OMS721 in a small number of patients.
      Unlike the first cohort, patients in the second cohort were not
      taking steroids. Twelve patients were enrolled and data were
      reported for the nine evaluable patients. At the time of
      reporting, all patients had completed at least one 12-week course
      of treatment with either OMS721 or placebo and were eligible for
      OMS721 treatment during the dosing-extension phase of the study.
      • At week 18, median reduction in proteinuria was 18.4 percent
        in the five OMS721-treated patients and 18.0 percent in the
        four placebo patients.
      • Eight patients had at least 18 weeks of data and received at
        least one 12-week course of treatment with OMS721. In these
        patients, median reduction from baseline proteinuria was 56
        percent; and five of the eight had received only one course of
        OMS721 treatment.
      • Four patients in this OMS721 dosing-extension period have
        reached between nine and 12 months beyond baseline, and show
        reductions in proteinuria of 54 percent, 57 percent, 65
        percent, and 68 percent. At most recent assessment, two of
        these four patients continued to demonstrate sustained
        reductions in proteinuria for 2.5 and 5 months, respectively,
        after cessation of treatment with OMS721; the other two
        patients just recently completed treatment courses.
      • The company and international experts in IgA nephropathy
        believe that these data are strongly positive and supportive
        of a disease modifying effect, with the magnitude of
        proteinuria reduction consistent with that from the previously
        reported first cohort of the clinical trial.
    • Omeros announced in October 2018 that the FDA granted orphan drug
      designation to OMS721 for the treatment of HSCT-TMA and announced
      in July 2018 that the European Commission adopted a decision
      designating OMS721 as an Orphan Medicinal Product in the European
      Union for treatment in HSCT.
  • In Omeros' phosphodiesterase 7, or PDE7, program, the company is
    developing proprietary compounds to treat addiction and compulsive
    disorders as well as movement disorders. A Phase 1 single-ascending-
    and multiple-ascending-dose clinical trial is underway with the
    company's lead PDE7 inhibitor and is designed to assess safety and
    pharmacokinetics of the compound in healthy subjects. The company has
    completed dosing in the first six cohorts of subjects, including one
    cohort that assessed food effect. The compound to date has been well
    tolerated and pharmacokinetic data support once-daily dosing, with or
    without food. Completion of the Phase 1 trial is slated for the first
    half of 2019. Following Phase 1 completion, if successful, Omeros
    plans to conduct an initial OMS527 Phase 2 clinical trial in patients
    with nicotine addiction.

Financial Results

For the quarter ended September 30, 2018, revenues were $4.6 million,
all relating to sales of OMIDRIA. This compares to OMIDRIA revenues of
$1.7 million in 2Q 2018 and $21.7 million for the third quarter of 2017.
The increase over the last quarter is primarily due to revenues from the
company's wholesalers in anticipation of renewed buying from ASCs and
hospitals as a result of the reinstatement of pass-through reimbursement
on October 1, 2018. The decrease from 3Q 2017 is due to the significant
reduction in OMIDRIA use by ASCs and hospitals in 3Q 2018 as a result of
the absence of transitional pass-through reimbursement, which expired
for OMIDRIA beginning January 1, 2018.

During the last week of September and for October 2018, the company saw
OMIDRIA sales from the company's wholesalers to its customers
(sell-through) increase significantly compared to the first three
quarters of 2018. In addition, in October 2018, the company's ASC and
hospital customers purchased approximately 17,500 units of OMIDRIA from
its wholesalers. October 2017 was the single highest sell-through month
for OMIDRIA and in October 2018, the first month of pass-through
reinstatement for OMIDRIA, the drug achieved 81% of this record high.

Total costs and expenses for the three months ended September 30, 2018
were $40.1 million compared to $26.8 million for the same period in
2017. The increase from the prior quarter was primarily due to higher
manufacturing scale-up costs including the acquisition of manufacturing
materials for the OMS721 programs and to incremental costs associated
with initiating the OMS721 IgA nephropathy Phase 3 clinical trial and
the July 2018 initiation of the company's Phase 1 clinical trial in
OMS527. These increases were partially offset by decreased OMIDRIA
patent litigation costs.

For the three months ended September 30, 2018, Omeros reported a net
loss of $39.5 million, or $0.81 per share, which included non-cash
expenses of $5.0 million ($0.10 per share). In comparison, for the prior
year's third quarter Omeros reported a net loss of $7.5 million, or
$0.16 per share including non-cash expenses of $4.2 million ($0.09 per
share).

As of September 30, 2018, the company had $55.2 million of cash, cash
equivalents and short-term investments available for operations and
another $5.8 million in restricted investments.

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 at 5:30 a.m. Pacific Time; 8:30 a.m. Eastern Time tomorrow,
Friday, November 9, 2018. 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 7771247. 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 7771247.

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, the ability for OMIDRIA to obtain separate reimbursement as
part of CMS' OPPS, 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
November 8, 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

Nine Months Ended

September 30,

September 30,

2018 2017 2018 2017
Revenue:
Product sales, net $ 4,608 $ 21,658 $ 7,852 $ 51,067
 
Costs and expenses:
Cost of product sales 36 184 355 613
Research and development 26,862 14,835 64,414 40,212
Selling, general and administrative   13,152     11,749     36,830     40,016  
Total costs and expenses   40,050     26,768     101,599     80,841  
Loss from operations (35,442 ) (5,110 ) (93,747 ) (29,774 )
Interest expense (4,602 ) (2,780 ) (11,104 ) (8,166 )
Other income   572     408     1,628     1,010  
Net loss $ (39,472 ) $ (7,482 ) $ (103,223 ) $ (36,930 )
Comprehensive loss $ (39,472 ) $ (7,482 ) $ (103,223 ) $ (36,930 )
Basic and diluted net loss per share $ (0.81 ) $ (0.16 ) $ (2.13 ) $ (0.83 )
Weighted-average shares used to compute basic and diluted net loss
per share
  48,647,416     46,262,211     48,437,870     44,709,418  
 
 
OMEROS CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
       
September 30, December 31,
2018 2017
 
Cash, cash equivalents and short-term investments $ 55,156 $ 83,749
Working capital 41,414 82,065
Restricted investments 5,779 5,835
Total assets 75,610 116,328
Total current liabilities 24,587 26,307
Notes payable and lease financing obligations, net 132,255 84,607
Accumulated deficit (626,591 ) (523,368 )
Total shareholders' deficit (88,997 ) (2,814 )
 

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