Omeros Corporation 2026 Q2 Earnings Call

Please go ahead. Thank you, and good afternoon, everyone.

Before we begin, please note that today's discussion will include forward-looking statements. These statements reflect management's current expectations and beliefs as of today and are subject to risks and uncertainties that could cause actual results to differ materially. For a detailed discussion of these risks and uncertainties, please refer to the special note regarding forward-looking statements and the risk factors in our quarterly report on Form 10-Q, filed today with the SEC, as well as our most recent annual report on Form 10-K. Today's call also will include certain non-GAAP financial measures. A reconciliation of these measures to the corresponding GAAP measures is included in Omeros' earnings release issued earlier today, available on the Investor Relations page of our website and furnished with the Form 8-K we filed today with the SEC.

With that, I will turn the call over to Dr. Gregory Demopulos, Chairman and CEO of Omeros.

Thank you, Jennifer, and good afternoon, everyone. Joining me today are David Borges, our Chief Accounting Officer, Dr. Kathy Melfi, our Chief Regulatory Officer, Dr. Steve Whitaker, Vice President of Clinical, and Bill Woodman, our Chief Commercial Officer. Promoted from within the company, Bill was recently appointed as our Chief Commercial Officer. Let me tell you a bit more about him. Bill joined Omeros six years ago as our Vice President of Sales and Market Development, bringing more than 25 years of industry experience, including sales and marketing leadership roles at Amgen, Spectrum Pharmaceuticals, and Jazz Pharmaceuticals, where he led the global launch of defibrotide. At Omeros, Bill largely built our commercial team and was instrumental in designing and executing the YARTEMLEA launch. I have long believed that Bill's background, capabilities, and achievements are ideally suited to Omeros' current and future objectives.

Under his leadership, our commercial team is driving YARTEMLEA toward becoming the standard of care for TA-TMA and preparing for its expansion into a broad range of MASP-2-driven indications. Beyond complement, Bill's track record of driving growth across oncology, rare disease, and specialty biopharma products will serve Omeros well. Before I turn to the financial details, let me highlight three points. First, YARTEMLEA generated $32.2 million in gross sales in its first full quarter on the market. Second, operations generated $4.1 million of positive cash flow during the quarter. And third, we meaningfully strengthened our capital structure through our share and note repurchases. I'll now begin with an overview of our second quarter operations and financial results, followed by program updates. David will then review the financials in more detail, after which we'll open the call for questions.

As you know, the FDA approved YARTEMLEA, our lead MASP-2 inhibitor, in December 2025 for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy, or TA-TMA. YARTEMLEA is the first and only approved treatment for this often fatal complication of stem cell transplantation, and YARTEMLEA is also the first and only approved inhibitor of the lectin pathway of complement. We launched YARTEMLEA in mid-January, with initial distributor shipments beginning mid-month and first sales following shortly thereafter. The second quarter was our first full quarter of YARTEMLEA sales, and we're pleased to share the results today. As I mentioned, in the second quarter, YARTEMLEA generated $32.2 million in gross sales and $28.5 million in net sales, reflecting strong physician adoption and market penetration, and a gross to net adjustment of 11.5%. Compared with the first quarter, gross sales increased 190% and net sales increased 188%.

We'll discuss the launch in more detail in just a bit. Net income for the second quarter was $13.2 million, or $0.18 per share. As we have previously discussed, our reported results include non-cash mark-to-market adjustments related to the derivative embedded in our 2029 convertible notes. Excluding non-cash remeasurements of embedded derivatives and other financial instruments, second quarter non-GAAP adjusted net income was $1.8 million or $0.02 net income per share. David will walk through the quarter-over-quarter comparisons and accounting detail shortly. We ended the quarter with $132 million in cash and investments. Importantly, company-wide operations provided net positive cash flow in the second quarter of $4.1 million. Our share repurchases and subsequent note repurchases further strengthened our capital structure. During the six months ended June 30, we repurchased and retired approximately 843,000 shares of Omeros common stock.

Nearly 60% of those shares in the second quarter at a volume-weighted average price of $11.70 per share. Then in July, through two privately negotiated transactions, we repurchased $30.5 million aggregate principal amount of our 9.5% convertible notes due in 2029, reducing the outstanding principal by 43% to $40.3 million. The repurchases also reduced the number of shares issuable upon conversion from approximately 11.4 million to 6.5 million shares. We achieved this reduction at a weighted average cost of $12.21 per underlying conversion share and concurrently eliminated $8.6 million in future interest payments. Together, our open market share repurchases and our negotiated note repurchases have reduced our potential fully diluted share count by 5.8 million shares year to date. Turning back to YARTEMLEA, our launch remains focused on four priorities. One, educating transplant teams to recognize and treat TA-TMA earlier.

Two, securing institutional access through Pharmacy and Therapeutics or P&T committee approvals and streamlined ordering. Three, ensuring timely reimbursement. And four, demonstrating YARTEMLEA's economic value through health economics and outcomes research or HEOR. Together, these priorities are intended to change how transplant centers approach TA-TMA. Historically, particularly at adult transplant centers, TA-TMA often has been treated as a diagnosis of exclusion and considered only after other potential causes are ruled out. We are working to shift that paradigm toward proactive screening, enabling clinicians to identify and treat more patients earlier and ultimately improve transplant outcomes. Execution remains strong. Our field sales organization is actively engaging all 175 U.S. transplant centers. As of June 30, 73 unique accounts had ordered YARTEMLEA, a 143% increase since March 31. As discussed on our first quarter call, pediatric patients initially represented an outsized share of utilization.

With rapid adoption at adult transplant centers, however, the mix has shifted significantly. In the second quarter, adult utilization grew at more than twice the rate of pediatric utilization, and adult patients represented approximately 75% of YARTEMLEA sales. This mix is closely approaching the historical 85%/15% split between adult and pediatric transplant procedures in the U.S. Formulary adoption also continues to progress rapidly. By quarter end, we understand that YARTEMLEA had received P&T committee approval at approximately 55%-60% across the top 10, 20, 40, and 80 U.S. transplant center cohorts that we track. Ordering frequency also increased meaningfully, indicating deeper utilization within centers. We also achieved key reimbursement milestones during the quarter. The Centers for Medicare & Medicaid Services, or CMS, assigned YARTEMLEA a permanent product-specific Healthcare Common Procedure Coding System or HCPCS J-code effective July 1.

The J-code establishes a clear and consistent outpatient reimbursement pathway, reduces administrative burden, and supports more predictable payment for providers. CMS also recommended a new technology add-on payment or NTAP for YARTEMLEA under the fiscal year 2027 proposed rule for the Inpatient Prospective Payment System, or IPPS, and has now granted the NTAP in the final IPPS rule. The NTAP provides up to $287,000 in additional Medicare reimbursement for inpatient treatment with YARTEMLEA. This is particularly important because Medicare beneficiaries represent approximately 30% of U.S. allogeneic transplant recipients. The NTAP for YARTEMLEA is expected to become effective October 1. Commercial payer experience also remains positive. Prior authorization requests are being approved consistently, and centers receiving appropriate payment reflect growing acceptance of YARTEMLEA among commercial insurers. We are preparing our HEOR analyses for presentation at upcoming scientific meetings and for peer-reviewed publication.

We expect these analyses to further demonstrate YARTEMLEA's clinical and economic value and support continued adoption. Overall, early commercial indicators, including strong transplant center engagement, continued formulary and ordering momentum, and payer alignment with the approved label, reinforce our expectation that YARTEMLEA can become the standard of care for TA-TMA. Looking ahead, we continue to pursue expansion opportunities for YARTEMLEA and our broader MASP-2 platform. In June, following an oral explanation before the European Medicines Agency's Committee for Medicinal Products for Human Use, or CHMP, the committee adopted a negative opinion on our marketing authorization application for YARTEMLEA in TA-TMA. We believe the clinical evidence supports approval and have requested re-examination.

The application is supported by our pivotal narsoplimab trial data in TA-TMA survival analyses comparing narsoplimab-treated patients with an external registry of patients who did not receive narsoplimab and data from more than 220 adult and pediatric patients treated through our expanded access program. This same body of evidence supported YARTEMLEA's FDA approval. As part of the re-examination, an Ad Hoc Expert Group, or AHEG, comprising independent external scientific and clinical experts in hematology, stem cell transplantation, and TA-TMA, will review the evidence and address questions central to CHMP's assessment. The AHEG will hear from Omeros and from transplant experts with direct experience using narsoplimab, and new rapporteurs will review the application. We remain focused on obtaining approval in Europe. Meanwhile, we continue to provide YARTEMLEA to European patients with TA-TMA through our expanded access program, prioritizing children. We also continue to assess opportunities to expand the YARTEMLEA label.