OMEROS CORPORATION The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.
Overview
Our drug candidate narsoplimab is the subject of a biologics license application
("BLA") pending before the
In
We also have multiple late clinical-stage development programs ongoing with
narsoplimab, which are focused on: complement-mediated disorders, including
immunoglobulin A ("IgA") nephropathy, atypical hemolytic uremic syndrome
("aHUS") and COVID-19. We have successfully completed a Phase 1 study of OMS906,
our lead MASP-3 inhibitor targeting the alternative pathway of complement. We
are initiating a Phase 1b clinical trial evaluating OMS906 in patients with
paroxysmal nocturnal hemoglobinuria ("PNH") who have had an unsatisfactory
response to the C5 inhibitor ravulizumab. We are also working to expand our
program of OMS906 clinical trials to include treatment-naïve PNH patients and
complement 3 ("C3") glomerulopathy patients, as well as one or more related
indications. Dosing in a Phase 1 clinical trial of OMS1029, our long-acting,
next-generation MASP-2 inhibitor began in
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We previously developed and commercialized OMIDRIA® (phenylephrine and ketorolac
intraocular solution) 1%/0.3%, which is approved by FDA 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. We marketed OMIDRIA in
On
On
The annual caps are as follows:
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Clinical Development Programs
Our clinical stage development programs include:
MASP-2 - narsoplimab (OMS721) - Lectin Pathway Disorders. Narsoplimab, also
referred to as OMS721, is our lead fully human monoclonal antibody targeting
mannan-binding lectin-associated serine protease-2 ("MASP-2"), a novel
pro-inflammatory protein target involved in activation of the lectin pathway of
? the complement system. The lectin pathway plays an important role in the body's
inflammatory response and becomes activated as a result of tissue damage or
microbial pathogen invasion. Inappropriate or uncontrolled activation of the
lectin pathway can cause serious diseases and disorders. MASP-2 is the effector
enzyme of the lectin pathway, and the current development focus for narsoplimab
is diseases that are strongly associated with activation of the lectin pathway.
In
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BLA. In the CRL, the FDA review division expressed difficulty in estimating the
treatment effect of narsoplimab in HSCT-TMA and asserted that additional
information would be needed to support regulatory approval. In
In the EU, the EMA has confirmed narsoplimab's eligibility for EMA's centralized
review of a single marketing authorization application ("MAA") that, if
approved, would authorize the product to be marketed in all EU member states and
EEA countries. Although our resources are currently focused primarily on BLA
approval in the
Narsoplimab has received multiple designations from FDA and from the EMA across three current indications. These include:
HSCT-TMA: In the
designation in patients who have persistent TMA despite modification of
? immunosuppressive therapy and (2) orphan drug designation for the treatment of
HSCT-TMA. In the EU, narsoplimab has been granted designation as an orphan
medicinal product for treatment in hematopoietic stem cell transplantation.
IgA nephropathy: In the
therapy designation for the treatment of IgA nephropathy and (2) orphan drug
? designation in IgA nephropathy. In the EU, narsoplimab has been granted
designation as an orphan medicinal product for the treatment of primary IgA
nephropathy.
aHUS: In the
? prevention (inhibition) of complement-mediated TMAs and fast-track designation
for the treatment of patients with aHUS.
In our IgA nephropathy program, patient enrollment in the narsoplimab Phase 3 clinical trial, ARTEMIS-IGAN, continues to progress toward an anticipated readout of 9-month proteinuria data by mid-2023. The single Phase 3 trial design is a randomized, double-blind, placebo-controlled multicenter trial in patients at least 18 years of age with biopsy-confirmed IgA nephropathy and 24-hour urine protein excretion greater than 1 g/day at baseline on optimized renin-angiotensin system blockade. This trial includes a run-in period. Initially, patients are expected to receive an IV dose of study drug each week for 12 weeks; additional weekly dosing can be administered to achieve optimal response. The primary endpoint, which we believe may suffice for regular or accelerated approval depending on the effect size, is reduction in proteinuria at 36 weeks after the start of dosing. In the event of regular approval, estimated glomerular filtration rate ("eGFR") becomes a safety endpoint only. In the event that the primary endpoint at 36 weeks results in accelerated approval from FDA, we expect to assess change in eGFR at approximately 144 weeks after the start of dosing. These eGFR data, if satisfactory, would then likely form the basis for subsequent regular approval. In response to investigators' concerns about extended withholding of narsoplimab treatment from any high-proteinuria patient initially randomized to the placebo-treated group, FDA will allow patients in that sub-population to receive open-label treatment with narsoplimab after at least 18 months of blinded treatment.
The Phase 3 clinical program in patients with aHUS, in which patient recruitment
is ongoing, consists of one Phase 3 clinical trial - a single-arm (i.e., no
control arm), open-label trial in patients with newly diagnosed or ongoing aHUS.
This trial is targeting approximately 40 patients for regular approval in the EU
and accelerated approval in the
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prioritizing the use of resources within our narsoplimab programs on HSCT-TMA, COVID-19 and IgA nephropathy.
Narsoplimab also has been administered under compassionate use to treat COVID-19
patients in
The I-SPY COVID-19 trial was designed for rapid screening of agents that show promise for two primary endpoints in critically ill COVID-19 patients: the time to recovery (defined as reduction in oxygen demand) and the risk of mortality. The study utilized Quantum Leap's adaptive platform trial design methodology, which focuses on the simultaneous, efficient assessment of multiple investigational agents. To streamline enrollment and allow rapid assessment of multiple drugs as required during the pandemic, the platform trial's initial design included a requirement that patients be randomized prior to consenting to trial participation. Because such analyses are known to create a risk of bias, Quantum Leap also prespecified analyses based on all randomized patients (the industry-standard intent-to-treat population). Substantial imbalance in the consented population was detected and created a marked and statistically significant bias against the narsoplimab arm, rendering analysis of the consented population meaningless. However, as pre-specified by the analysis plan, the I-SPY trial's data monitoring committee terminated the narsoplimab arm based on this analysis prior to reaching the maximum of 125 patients. Quantum Leap subsequently revised the protocol for its I-SPY COVID trial to obtain patient consent prior to randomization. Neither the trial's futility nor graduation criteria had been met in the analysis of the randomized population at the time the narsoplimab arm was terminated.
Narsoplimab was to be administered at a dose of 4 mg/kg given as a 30-minute intravenous infusion (up to a maximum of 370 mg per infusion) twice weekly for the earlier of a total of 4 weeks (i.e., 9 doses) or until hospital discharge. There were 91 patients randomized to the narsoplimab arm of the trial across 27 participating US sites. The 91 randomized patients were compared to the 116 patients concurrently randomized to the control arm. All patients received standard of care including dexamethasone and remdesivir. Bayesian statistics were prespecified and employed for analyses.
Analysis in the randomized patient population showed that the addition of narsoplimab to treatment of critically ill patients with COVID-19 reduces the mortality risk (hazard ratio [HR]=0.81, with probability [HR <1] equal to 0.77). Narsoplimab showed the largest reduction in mortality risk to date across all drugs reported from the I-SPY COVID Trial. Narsoplimab was not observed to shorten the time to recovery in critically ill patients with COVID-19 in this study. The study did not identify any new safety signals for narsoplimab in the setting of critically ill COVID-19 patients.
Next steps in the development of narsoplimab for COVID-19 are dependent on the
availability of government or other external funding and support. We continue to
engage in discussions with the
MASP 2 - OMS1029 - Lectin Pathway Disorders. We are also developing a
longer-acting second-generation antibody targeting MASP-2. This program is
designated "OMS1029." A Phase 1 clinical trial assessing safety, tolerability
and pharmacokinetics/pharmacodynamics ("PK/PD") of OMS1029 in healthy subjects
? began dosing in
duration of pharmacologic activity than narsoplimab, we anticipate that OMS1029
will enable us to pursue a range of indications complementary to those for
narsoplimab. Based on animal PK/PD data to date, dosing in humans is expected
to be once-monthly to once-quarterly by subcutaneous or intravenous
administration.
MASP-3 - OMS906 - Alternative Pathway Disorders. As part of our MASP program,
? we have identified mannan-binding lectin-associated serine protease 3
("MASP-3"), which has been shown to be the key activator
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of the complement system's alternative pathway (the "APC"). We believe that we
are the first to make this and related discoveries associated with the APC. The
complement system is part of the immune system's innate response, and the APC is
considered the amplification loop within the complement system. MASP-3 is
responsible for the conversion of pro-factor D to factor D; converted factor D
is necessary for the activation of the APC. Based on our alternative
pathway-related discoveries, we have expanded our intellectual property position
to protect our inventions stemming from these discoveries beyond MASP-2
associated inhibition of the lectin pathway to include inhibition of the
alternative pathway. Our current primary focus in this program is developing
MASP-3 inhibitors for the treatment of disorders related to the APC.
OMS906 received designation from FDA as an orphan drug for the treatment of PNH
in
We have completed a placebo-controlled, double-blind, single-ascending-dose
Phase 1 clinical trial to evaluate the safety, tolerability, pharmacodynamics
and pharmacokinetics of OMS906 in healthy subjects. Preliminary data from the
Phase 1 trial were previously reported. OMS906 was well-tolerated at all doses
tested and preliminary human pharmacokinetic and pharmacodynamic data were
consistent with once-monthly subcutaneous dosing and every-other-month or less
frequent IV dosing. The data also showed high level suppression of alternative
pathway activity. Clinical results of the Phase 1 study are scheduled to be
presented at the annual meeting of the
We are initiating a Phase 1b clinical trial in patients with PNH who have had an unsatisfactory response to the C5 inhibitor ravulizumab. We are also initiating clinical trials in our OMS906 program to include treatment-naïve PNH patients and C3 glomerulopathy patients, as well as one or more related indications.
PDE7 - OMS527. Our PDE7 inhibitor program is based on our discoveries of
previously unknown links between PDE7 and any addiction or compulsive disorder,
and between PDE7 and any movement disorders, such as Parkinson's disease. PDE7
? appears to modulate the dopaminergic system, which plays a significant role in
regulating both addiction and movement. We believe that PDE7 inhibitors could
be effective therapeutics for the treatment of addictions and compulsions as
well as for movement disorders. Data generated in preclinical studies support
the continued study of PDE7 inhibitors in both of these therapeutic areas.
In
In addition to our work in addiction, researchers at
Preclinical Development Programs and Platforms
Our preclinical programs and platforms include:
Other MASP Inhibitor Preclinical Programs. We have generated positive
preclinical data from MASP-2 inhibition in in vivo models of age-related
macular degeneration, myocardial infarction, diabetic neuropathy, stroke,
traumatic brain injury, ischemia-reperfusion injury, and other diseases and
disorders. In our OMS906 monoclonal antibody program, we have generated
? positive data from MASP-3 inhibition in a well-established animal model
associated with PNH as well as positive data in a well-established animal model
of arthritis. Development efforts are also directed to a small-molecule
inhibitor of MASP-2 designed for oral administration as well as to
small-molecule inhibitors of MASP-3 and bispecific small- and large-molecule
inhibitors of MASP-2/-3.
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GPR174, GPCR Platform and
proprietary cellular redistribution assay which we use in a high-throughput
manner to identify synthetic ligands, including antagonists, agonists and
inverse agonists, that bind to and affect the function of orphan GPCRs. We have
screened Class A orphan GPCRs against our small-molecule chemical libraries
using the cellular redistribution assay and have identified and confirmed
compounds that interact with 54 of the 81 Class A orphan GPCRs linked to a wide
range of indications including cancer as well as metabolic, cardiovascular,
immunologic, inflammatory and central nervous system disorders. One of our
priorities in this program is GPR174, which is involved in the modulation of
the immune system. In ex vivo human studies, our small-molecule inhibitors
targeting GPR174 upregulate the production of cytokines, block multiple
checkpoints and tumor promoters, and suppress regulatory T cells. Based on our
data, we believe that GPR174 controls a major, previously unrecognized pathway
? in cancer and modulation of the receptor could provide a seminal advance in
immuno-oncologic treatments for a wide range of tumors. Our studies in mouse
models of melanoma and colon carcinoma found that GPR174-deficiency resulted in
significantly reduced tumor growth and improved survival of the animals versus
normal mice. Our discoveries suggest a new approach to cancer immunotherapy
that targets inhibition of GPR174 and can be combined with and significantly
improve the tumor-killing effects of other oncologic agents, including
radiation, adenosine pathway inhibitors and checkpoint inhibitors. These
discoveries include (1) identification of cancer-immunity pathways controlled
by GPR174, (2) the identification of phosphatidylserine as a natural ligand for
GPR174, (3) a collection of novel small-molecule inhibitors of GPR174 and (4) a
synergistic enhancement of "tumor-fighting" cytokine production by T cells
following the combined inhibition of both GPR174 and the adenosine pathway,
another key metabolic pathway that regulates tumor immunity. We are developing,
and plan to advance to clinical trials, inhibitors of GPR174 and of the
pathways affected by this receptor and/or adenosine receptors.
Additionally, we are advancing preclinical research on potential molecular and cellular therapies for cancer. On the molecular front, we are generating potential drug candidates that could specifically target cancer cells and kill them directly or indirectly through the potentiation of the immune system. On the cellular front, we are evaluating novel approaches for both CAR T and adoptive T cell therapies. Our proprietary technology resulted in preferential expansion of tumor specific T cells with enhanced tumor killing ability. It also increased cytokine production and skewed T cells towards a central memory phenotype, preventing potential relapse associated with a lack of memory T cells. We continue to develop and validate our novel approach, which we believe could improve response rates for patients receiving either engineered or native T cell therapies for liquid or solid tumors.
Financial Summary
On
As a result of the OMIDRIA divestiture, all the revenues and expenses related to OMIDRIA have been reclassified to net income from discontinued operations in our condensed consolidated statements of operations and comprehensive loss and excluded from continuing operations for all periods presented (see "Net Income from Discontinued Operations" below for additional information).
As of
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Results of Operations
Research and Development Expenses
Our research and development expenses can be divided into three categories: direct external expenses, which include clinical research and development and preclinical research and development activities; internal, overhead and other expenses; and stock-based compensation expense. Direct external expenses consist primarily of expenses incurred pursuant to agreements with third-party manufacturing organizations prior to receiving regulatory approval for a drug candidate, contract research organizations ("CROs"), clinical trial sites, collaborators, and licensors and consultants. Costs are reported in preclinical research and development until the program enters the clinic. Internal, overhead and other expenses consist of personnel costs, overhead costs such as rent, utilities and depreciation and other miscellaneous costs. The following table illustrates our expenses associated with these activities:
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(In thousands)
Continuing research and development
expenses:
Direct external expenses:
Clinical research and development:
MASP-2 program - OMS721 (narsoplimab) $ 23,097 $ 10,057 $ 40,839 $ 36,652
MASP-3 program - OMS906 2,015 1,582 3,997 4,743
MASP-2 program - OMS1029 1,502 - 1,502 -
Other 171 200 389 463
Total clinical research and development 26,785 11,839 46,727 41,858 Preclinical research and development
1,125 1,998 6,374 10,091
Total direct external expenses 27,910 13,837 53,101 51,949
Internal overhead and other expenses 8,986 9,537 28,294 31,215
Stock-based compensation expenses 1,672 2,444 4,777 5,284
Total continuing research and development
expenses $ 38,568 $ 25,818 $ 86,172 $ 88,448 Clinical research and development expenses increased
The
The
Internal overhead and other expenses decreased
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The decreases in stock-based compensation for the three and nine months ended
We expect overall research and development costs will decrease in the fourth quarter of 2022 compared to the third quarter of 2022 as we do not expect to manufacture additional narsoplimab drug substance in the fourth quarter of 2022.
At this time, we are unable to estimate with certainty the longer-term costs we will incur in the continued development of our drug candidates due to the inherently unpredictable nature of our preclinical and clinical development activities. Clinical development timelines, the probability of success and development costs can change materially as new data become available and as expectations change. Our future research and development expenses will depend, in part, on the preclinical or clinical success of each drug candidate as well as ongoing assessments of each program's commercial potential. In addition, we cannot forecast with precision which drug candidates, if any, may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
We are required to expend substantial resources in the development of our drug candidates due to the lengthy process of completing clinical trials and seeking regulatory approval. Any failure or delay in completing clinical trials, or in obtaining regulatory approvals, could delay our generation of product revenue and increase our research and development expenses.
Selling, General and Administrative Expenses
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(In thousands)
Continuing selling, general and
administrative expenses:
Selling, general and administrative
expenses, excluding stock-based
compensation expense $ 9,998 $ 11,104 $ 30,909 $ 36,242
Stock-based compensation expense 2,200 2,906 6,170 6,038
Total continuing selling, general and
administrative expenses $ 12,198 $ 14,010 $ 37,079 $ 42,280 Total selling, general and administrative expenses decreased by
The changes in stock-based compensation expense for the three and nine months
ended
We expect selling, general and administrative expenses in the fourth quarter of 2022 will be similar to the third quarter.
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Interest Expense
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(In thousands)
Interest expense $ 4,932 $ 4,911 $ 14,799 $ 14,718 Interest expense is primarily comprised of contractual interest and amortization of debt issuance and debt discount related to our 6.25% Convertible Senior Notes (the "2023 Notes") and 5.25% Convertible Senior Notes (the "2026 Notes") as well as interest on our finance leases (see "Note 7- Unsecured Convertible Senior Notes" in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q).
Interest and Other Income
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(In thousands)
Interest and other income $ 906 $ 461 $ 2,069 $ 1,212 Other income principally includes interest earned on our cash and investments
and sublease rental income. The increases in other income for the three and nine
months ended
OMIDRIA Royalties
On
On
DRI is entitled to receive royalties on OMIDRIA net sales between
During the nine months ended
OMIDRIA contract royalty asset at
(47,555)
Royalty interest income and other 23,857
Remeasurement adjustments 30,513
OMIDRIA contract royalty asset at
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Net Income from Discontinued Operations
As a result of the OMIDRIA divestiture, all the revenue and expenses related to OMIDRIA have been reclassified to discontinued operations in our condensed consolidated statements of operations and comprehensive loss for all periods presented.
Net income from discontinued operations is as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(In thousands)
Product sales, net $ - $ 30,004 $ - $ 79,888
Royalty interest income and other 8,229 - 23,857 -
Remeasurement adjustments 29,043 - 30,513 -
Other income (expenses), net 64 (8,429) 295 (22,040)
Net income from discontinued operations
In
Financial Condition - Liquidity and Capital Resources
For the three months ended
We plan to continue to fund our operations with our cash and investments,
OMIDRIA royalties and, potentially, the
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Cash Flow Data
Nine Months Ended
September 30,
2022 2021
(In thousands)
Selected cash flow data
Cash provided by (used in):
Operating activities $ (61,101) $ (91,507)
Investing activities $ (19,073) $ 81,292
Financing activities $ 124,899 $ 7,129 Operating Activities. Net cash used in operating activities for the nine months
ended
Investing Activities. Cash flows from investing activities primarily reflect cash used to purchase short-term investments and proceeds from the sale of short-term investments, thus causing a shift between our cash and cash equivalents and short-term investment balances. Because we manage our cash usage with respect to our total cash, cash equivalents and short-term investments, we do not consider fluctuations in cash flows from investing activities to be important to the understanding of our liquidity and capital resources.
Net cash used by investing activities during the nine months ended
Financing Activities. Net cash provided by financing activities during the nine
months ended
Contractual Obligations and Commitments
Our future minimum contractual commitments and obligations were reported in our
Annual Report on Form 10-K for the year ended
Operating Leases
Our lease for our office and laboratory space ends in
Convertible Notes
See "Note 7 - Unsecured Convertible Senior Notes" in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.
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OMIDRIA Royalty Obligation
See "Note 8 - OMIDRIA Royalty Obligation" in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.
Goods and Services
We have certain other non-cancelable obligations under various agreements that
relate to goods and services. As of
We may be required, in connection with in-licensing or asset acquisition agreements, to make certain royalty and milestone payments. We cannot, at this time, determine when or if the related milestones will be achieved or whether the events triggering the commencement of payment obligations will occur. Therefore, such payments are not included in the amounts described above.
Critical Accounting Policies and Significant Judgments and Estimates
Aside from using the catch-up method to account for our OMIDRIA royalty
obligation (see "Note 2 - Significant Accounting Policies - OMIDRIA Royalty
Obligation" in the Notes to Condensed Consolidated Financial Statements included
elsewhere in this Quarterly Report on Form 10-Q), there have not been any
material changes in our critical accounting policies and significant judgments
and estimates as disclosed in Part II, Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in our
Annual Report on Form 10-K for the year ended
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