Omeros Corp (OMER) 2009 Q3 法說會逐字稿

Good afternoon and welcome to the Omeros Corporation third quarter 2009 financial results and corporate update conference call. At this time, all participants are in a listen-only mode. After the Company's remarks, we will conduct a question-and-answer session.

Please be advised that this call is being recorded at the Company's request and a replay will be available on the Company's website for one week from today. Before I turn the call over, management has asked me to remind you that some of the statements made on the call today will be forward-looking. These statements are based on management's beliefs and expectations as of today only and are subject to change. All forward-looking statements involve risks and uncertainties that could cause the Company's actual results to differ materially. I'd like to refer you to the Risk Factors section of the Company's quarterly report filed with the SEC earlier today for discussion of the risks and uncertainties.

Now I'd like to turn the call over to Dr. Gregory Demopulos, Omeros Chairman and CEO. Please go ahead.

Thanks, Anthony. Welcome and thank you for joining us today. My name's Greg Demopulos, I'm the Chairman and CEO of Omeros. With me is Dave Toll, our Director of Finance. For today's call, Dave will first summarize our third quarter financial results. When he's finished I'll provide a corporate update on our development programs and discuss the milestones that we've recently achieved. We'll wrap up the call with the Q&A session.

Now I'd like to turn the call over to Dave.

Thanks, Greg. Good afternoon, everyone.

We'd like to thank you for joining us on our first earnings call. As you are likely aware, we priced our IPO on October 7, at $10 per share raising approximately 62 million net of operating costs and other expenses. Turning to our financials, for the three months ended September 30, 2009, Omeros reported a net loss of 3.9 million or $1.34 per share as compared to a net loss of 7.4 million or $2.54 per share for the same period in 2008.

For the nine months ended September 30, 2009, we reported a net loss of 15.5 million or $5.29 per share. This is compared to a net loss of 17.4 million or $6.07 per share for the same period in 2008. Total operating expenses for the three months ended September 30, 2009, were 5 million compared to 8.2 million for the same period in 2008. This decrease in operating expenses was primarily a result of the write-off of 1.9 million of deferred operating costs related to a delay in our IPO during the 2008 period. In addition, there were decreases in contract service costs associated with several of our programs as well as a decrease in clinical trial expenses primarily due to the prior completion of enrollment in our Phase 2, meniscectomy study.

Total operating expenses for the nine months ended September 30, 2009 were 16.5 million compared to 19.1 million for the corresponding period in 2008. This decrease in operating expenses was primarily a result of the same items I noted for the third quarter of 2009.

That's all for the financial update. I'll now turn it back over to Greg for a corporate update.

Thanks, Dave. As Dave mentioned, last month we completed our initial public offering and that resulted in net proceeds to Omeros of approximately 62 million, which will fund our ongoing development efforts. As part of those efforts, we continued to advance our clinical program. Enrollment for the OMS103HP program remains on track, OMS1 03HP for use during arthroscopy surgery is our lead PharmacoSurgery product candidate. When complete, the 103 program will include over 1,000 patients. We plan to file an MDA for 103 in late 2010, and expect it to be the first commercially available drug delivered directly to the surgical site to improve postoperative functional recovery.

We've also made progress on our other clinical program. In the third quarter we announced positive results from the 61 patient Phase 1/2 clinical trial of OMS302 , our PharmacoSurgery product candidate being developed for use during ophthalmological procedures. Data from this study showed that cataract surgery patients treated with OMS302 had less postoperative pain and demonstrated statistically significant improvement in maintenance of mydriasis or pupil dilation during the surgical procedure compared to the vehicle control group. We've also just completed a Phase 2 dose ranging trial evaluating the mydriasis component of OMS302. Based on that trial as well as our previously reported Phase 1/2 trial we're now designing a more robust Phase 2 trial to evaluate the efficacy and safety of OMS302 during cataract surgery. The Phase 1/2 trial evaluating OMS201 our PharmacoSurgery product for use during urologic surgery continues to enroll.

We're also making good progress on our preclinical program. In our addiction program we currently are preparing an IND and expect our first clinical study in addiction to evaluate the effects of the PPAR gamma agonist in the setting of opioid use. For each of our [MASP-2] PDE10 and PDE7 programs we continue to advance toward the selection of clinical candidates. And many of you I expect reviewed the 8-K that we released last week in connection with our GPCR program. The 8-K outlined the recently modified terms of our exclusive option agreement with Patobios for the cellular redistribution assay which is the assay that we believe can de-orphanize orphan GPCRs in high through-put. Under the previous agreement Omeros was required to pay the entire one-time technology acquisition fee of 10.8 million Canadian on successful de-orphanization of a single orphan GPCR. Under the revised agreement we would now pay only 500,000 upon de-orphanization and the remaining 10.3 million can be paid with proceeds from partnering deals related to those de-orphanize receptors.

So that concludes our corporate update. Now let's turn the call back to the operator for the question-and-answer

Thank you. (Operator Instructions). Our first question comes from Mark May with Needham.

Thank you. Good afternoon and congratulations on your first conference call and being a public company.

Thanks, Mark.

You -- I have a couple questions. You talked about the NDA in 2010. Would you be kind enough to go over what steps are needed before that and so we can keep track of the timeline before that's sent and all of that?

Sure. We will obviously have to complete enrollment in the Phase 3 studies and we have three ongoing studies in the Phase 3 OMS103HP program, two safety and efficacy studies and then a third safety study. So we'll have to complete enrollment. We'll have to have last patient out. We'll then have to collect the data, scrub the data, the database, evaluate that data and we will release those findings from the data sometime in mid-2010 and then we expect to file the NDA in the latter part of 2010.

That was helpful. And then in addition to the -- you spoke about the local administration of the medicines. Is it your feeling that this will eliminate the need for systemic administrations for pain medicines or will it greatly reduce the use of other pain medicines including the opiates? Is this an important endpoint measured in the trial and are you doing Pharmaco economic analysis around these trying to avoid the side effects associated with systemic therapy?

Yes. That's a good question, Mark. Actually whether or not we reduce the use of systemic medications, we're not evaluating in this study. You have to either hold -- one of the variables has to be held constant. So what we did was hold constant the drugs that are used and measured the effects of OMS103HP in the treatment versus the vehicle group. Now, we expect that we will see improved reduction in postoperative pain, improved postoperative function, improved range of motion and improved return to work and earlier return to work. With respect to systemic medications, we've really designed the product to be used as the physicians see fit. So could this reduce the amount of postoperative pain medication? Absolutely, but really what we've done is design a product that is intended to replace the current standard of use which is the irrigation solution alone.

Sure.

What you may use as a physician in combination with that is really up to the physician. So yes, we are looking at some of the Pharmaco economic components of this. Primarily it's the rehab costs, right? Because as you know, rehabilitation is expensive in the postoperative care for arthroscopy patients and if we can accelerate patients through rehab, then there's a substantial cost savings associated with that.

Thanks for the added information and we'll look forward to upcoming events.

Thanks, Mark.

Our next question will come from Adam Cutler with Canaccord Adams.

Hi, Adam.

Hi. Thanks for taking the question. Wondering if you can give us a sense what we should expect from the Phase 2 data from the meniscus surgeries. So what would be a good result from that and what you hope to do with that data, whether it is to consider further studies in that area or in the event that the Phase 3 studies in the ACL surgeries are successful, do you even need to pursue further development in the meniscus surgeries?

Yes, again a good question. Look, the meniscectomy studies were designed as really providing a second shot on goal for the OMS103HP program, but the endpoints are really different than those used for our ACL studies. So the meniscectomy study itself was designed not to be statistically significant. So it was not powered for statistical significance. It was really designed to allow us enough information to design subsequent studies looking at meniscectomy should we choose to do so. So I would not expect the meniscectomy data to in any way be predictive of the ACL studies. They weren't powered to be so and we're actually again looking at slightly different endpoints. What we do with that meniscectomy program is really in part dependent on the success of the ACL program as you pointed out. So we'll look at the data. We will evaluate that in total as we look at the ACL data and decide what to do with that program as we go forward.

Okay. Great. And then just one other question, given what you walked through in your prepared comments about the change in the structure of your agreement relative to the GPCR de-orphanization can you talk about how that might impact your strategy in terms of your work there going forward?

Well, it obviously decreases our cash needs for that program because instead of 10.8 million Canadian due upon de-orphanization it's now simply 500,000 the remaining 10.3 million we can pay out of proceeds from deals that we structure around those orphan GPCRs that we are able to de-orphanize. We remain confident that we will de-orphanize one or more orphan GPCRs in the first half of 2010. As we de-orphanize we will be looking to partner some of those orphan GPCRs. We expect that we can actually de-orphanize a good percentage of the orphans in high through-put and we believe that this would represent a significant advance in the pharmaceutical industry and that the industry would ascribe a substantial value to those unlocked GPCRs and by virtue of that also to the Company. So -- but it's a bit early to predict revenues about are tied to that program. So our strategy is simply to move forward to de-orphanize those orphan GPCRs and obviously the structure of the deal is favorable to us from a cash flow perspective.

Okay, great. And then one last question, if I may. Just wondering if you can give us any guidance on what we should expect in terms of operating expenses for the fourth quarter and for 2010.

We currently have not decided how we're going to handle guidance. So at this point I'll just say that we're not providing guidance and we'll address that as we go forward.

Okay. Thanks a lot.

Our next question comes from David Steinberg with Deutsche Bank.

Hi, David.

Thanks. Hey, Greg. Couple questions. First just following up on the question about the amendment on your deal with Patobios. Sounds like a favorable amendment to you because you only have to pay a 0.5 million it looks like as opposed to 10 or 11 million. What did they get out of it or was it just a one-way beneficial to you transaction?

No. And I can see how you might see it that way, but remember that what Patobios would like us to do is acquire the technology, so the agreement that we reached with Patobios really makes that objective more readily or easily met and that's really good for Patobios and it's good for Omeros. So I see the agreement that we structured is really not so one sided. I think it is beneficial to both parties because it will make more possible the acquisition of the technology which is Patobios' hope for us to acquire that.

Okay. Just speaking to the broader corporate collaboration you hoped to do one or more on the GPCR technology so as you look ahead to 2010 any guidance you could share in terms of you expect to do a collaboration? Do you expect to do a number of collaborations? Any sense in which area you might collaborate first on? Can you help us with that?

Yes. All of our programs, Dave, we consider open to partnership. We are exploring partnerships around a number of our programs. With respect to specific deals, I think it's premature to talk about that, but we would hope to have one or more deals over the next couple of years tied to one or more of our programs.

Okay. And just one brief final question, I know you've had the CFO slot open for a while. Do you have plans to hire anyone to fill the slot in the near-term?

Yes. Absolutely. We have an ongoing search for the CFO. As you know, we were a little distracted with the IPO, but that search is ongoing and the most important thing for us there is to make sure that we fill that well and so -- but we do expect to fill that spot.

Okay. Thanks.

Thanks, Dave.

That completes the question-and-answer portion of the call. I'd like to turn the conference back over to Dr. Demopulos for closing comments.

Thanks, Anthony. Well, thank you all again for joining us today. We look forward to updating you again as the Company progresses. So with that, have a good afternoon and we'll talk to you next time.

Once again this does conclude today's conference call. We thank you for your participation.