Omeros Corp (OMER) 2015 Q1 法說會逐字稿

Good afternoon and welcome to today's conference call for Omeros Corporation. 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 from one week from today.

I will turn the call over to Mark Metcalf at Omeros.

Good afternoon, and thank you for joining the call today. I'd like to remind you that some of the statements that will be 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. Please refer to the risk factors section of the Company's 10-Q filed with the SEC earlier today for a discussion of these risks and uncertainties. Now I would like to turn the call over to Dr. Greg Demopulos, Chairman and CEO of Omeros.

Thank you Mark and good afternoon everyone. Also with me today is Mike Jacobsen, our Chief Accounting Officer. I will start today's call with a corporate update after which, Mike will provide an overview of our first quarter financial results. We have reserved some time for questions after the financial overview.

I'd like to begin the corporate update with an overview of the recent launch of our commercial product, Omidria. The first and only FDA approved product for intraocular administration. That prevents intraoperative miosis for pupil constriction and reduces postoperative pain providing consistent and predictable management of these problems for ophthalmic surgeons and their patients.

During the first quarter, we successfully completed a controlled launch of Omidria to a small number of ophthalmic surgeons, collectively drawn from the Medicare administrative contractor regions across the U.S. The purpose of this controlled launch was to pressure test our commercial processes, including distribution and reimbursements. The controlled launch was successful with the surgical facilities receiving product quickly and efficiently.

Reimbursement was straightforward with the facilities receiving appropriate payments from Medicare and supplemental payers. In addition to the claims submitted for Medicare Part B, a handful of claims were also submitted to Med Advantage or Medicare Part C payers as well as to commercial carriers. Payments were received for these claims as well.

The clinical feedback from the surgeons who used Omidria during the controlled launch is uniformly positive, including anecdotal but consistent reports of how Omidria precluded the need for pupil expanding devices, and made routine what would otherwise have been stressful cases for the surgeons. In connection with this restricted and limited duration program, we reported first quarter sales revenues of $238,000.

Following the controlled launch in the first part of April, we initiated the broad launch of Omidria, making product available through the specialty groups of the three major wholesalers in the U.S. We have hired a National Head of Reimbursement and Regional Reimbursement account managers; and the team is up and running.

We continue to build a significant presence within the ophthalmic surgery community. A full scale introduction of Omidria at the annual meeting of the American Society of Cataract and Refractive Surgery last month in San Diego was a success with Omidria receiving a substantial amount of attention.

Our speaker's bureau is in force and consists of a group of the top thought leaders in cataract surgery and lens replacement. While still very early in our U.S. launch efforts, the distribution efficiency, the reimbursement's success, and the strongly positive clinical response have carried forward from the controlled launch.

Surgeons have used the product across both routine and difficult cataract cases, including intraoperative floppy iris syndrome or IFIS, and pseudoexfoliation; as well as in conjunction with femtosecond laser. The reported results have been uniformly positive. Consistent with the feedback during the controlled launch, cases in which surgeons expected to need pupil expanding devices were easily completed without them. While these reports are anecdotal, their frequency and consistency across numerous surgeons are noteworthy.

As many of you know, we received transitional pass-through reimbursement status for Omidria from the Center for Medicare and Medicaid Services or CMS. Established by Congress and administered by CMS, pass-through status is designed to promote and foster innovation. Budget neutral with respect to the healthcare system, pass-through status provides reimbursement for Omidria outside of the bundled payment for cataract surgery and lens replacement. We expect pass-through for Omidria to remain in effect through December 31, 2017, near which time, CMS will evaluate the product's utilization and revisit its reimbursement status.

CMS has set the reimbursement rate for a single use vial of Omidria at the product's wholesale acquisition cost or WAC of $465 plus 6%. This reimbursement rate will be in effect under Medicare Part B until September 30, 2015 , after which time the rate will adjust to average selling price or ASP plus 6%. Surgical facilities are now routinely receiving reimbursement for their Medicare Part B patients. In addition, surgical facilities have also received payments for claims submitted to Medicare Part C, or Med Advantage, and to commercial payers.

With respect to our European regulatory efforts for Omidria, in April we attended an oral explanation meeting with Europe's Committee for Medicinal Products for Human Use or CHMP. As previously stated publicly, we expect to receive an opinion this quarter from the CHMP on our marketing authorization application for Omidria. Our European strategy remains to partner for the products marketing and distribution.

Turning to our pipeline programs, let's first focus on our MASP program. Our MASP-2 antibody, OMS721 targets the lectin-pathway of the complement system, a key part of the immune response. Our current Phase 2 clinical program is evaluating OMS721 in patients with complement mediated thrombotic microangiopathies or TMAs; a family of rare debilitating and life threatening disorders characterized by excessive thrombi or clots in the microcirculation of the body's organs, most commonly the kidney and brain.

Our Phase 2 trials specifically is assessing OMS721 in atypical hemolytic uremic syndromes or aHUS. Thrombotic thrombocytopenic purpura or TTP in human stem cell transplant related TMAs. We are pleased by the progress of the Phase 2 trial as well as by the growing enthusiasm for and confidence in OMS721 by the participating physician investigators.

We previously announced that the low dose cohort of study patients in the Phase 2 trial demonstrated improvements across TMA disease markers; and that the investigators treating these patients at different sites considered the improvements to be both treatment related and clinically meaningful. Based on these clinical improvements, an investigator in the low dose cohort requested continued treatment for his aHUS patients. We are pleased to report that the investigator has now received both approval from his governing European regulatory authority and a sufficient supply of OMS721 from Omeros allowing him to continue treating his patients.

We also recently completed dosing in the mid-cohort of this same Phase 2 trial. Patients in the second cohort demonstrated improvements across the same markers of disease activity as did the low dose patients. As occurred in the first cohort, an investigator in the mid dose cohort has requested extended access to OMS721 for compassionate use so that he can continue to treat his patients.

We are working with this physician as we plan to work with others to provide OMS721 to aHUS and other TMA patients who may benefit from treatment with our drug. The high dose or a third cohort in the OMS721 Phase 2 TMA clinical trial is now open for enrollment. We expect to release detailed data from the dose ranging stage of this trial later this year.

For OMS824, our PDE10 inhibitor in development for the treatment of cognitive disorders, including Huntington's disease and schizophrenia. Clinical trial enrollment as previously reported is currently suspended in connection with an observation in a single nonclinical rat study.

We submitted the package of nonclinical materials requested by the FDA earlier this month seeking to re-initiate the OMS824 programs in the U.S. We look forward to reactivating enrollment in our OMS824 Phase 2 clinical programs in the near future.

Our preclinical programs are also advancing. Our PDE7 inhibitor, OMS527, and our plasma inhibitor, OMS616 are progressing. We currently plan to begin clinical trials for both compounds next year. Our MASP-3 inhibitor program, OMS906 for inhibition of the complement systems alternative pathway is also making significant strides.

With respect to our GPCR program, we continue to strengthen our intellectual property position and a number of specific targets are advancing through medicinal chemistry and pre-clinical testing, including GPR17 for remyelination; GPR101 for cachexia; GPR151 for neuropathic pain; and GPR161 for triple negative breast cancer and other types of malignancies.

That concludes our corporate update. At this point, I'd like to turn the call over to Mike for a summary of our first quarter financial results.

Thanks Greg. For the quarter ended March 31, 2015, we reported a net loss of $18.7 million or $0.51 per share, which includes noncash expenses of $2.8 million or $0.08 per share. This compares to a net loss of $16.6 million or $0.54 per share for the same period in 2014, including noncash expenses of $2.7 million or $0.09 per share.

Revenue for the first quarter of 2015 was $388,000 compared to $100,000 for the same period last year. At the third quarter amount, $238,000 was for Omidria product revenue, and $100,000 was grant revenue. As Greg discussed earlier, we conducted a controlled launch of Omidria to a small number of surgeons beginning mid-February to pressure test our commercial and reimbursement processes.

We initiated the controlled launch -- the controlled launch was a success, and we initiated the broad U.S. launch in the first part of April. Operating expenses for the first quarter were $18.3 million compared to $15.8 million one year ago. The increase was primarily due to sales and marketing expenses related to the U.S. commercial launch of Omidria.

This increase was partially offset by reduced research and development expenses as a result of manufacturing schedules for clinical trial drug supplies; and the suspension of clinical trials related to OMS824. At March 31, 2015, the Company had cash and cash equivalents, and short-term investments of $70.1 million. With that, I'd like to turn the call back over to Greg.

Thanks Mike. I think at this point, operator, we can go ahead and open up the call to any questions.

(Operator Instructions) Our first question comes from Serge Belanger of Needham & Company. Your line is open.

Hi, good afternoon.

Hi.

A couple of questions on the Omidria launch. I think Greg, you had previously mentioned you had a sales force of about 20 reps already out. Then in April with the broader launch, the additional half, the other half of the sales force, the other 20 reps enter the market. I just wanted to know if each of these sales force are addressed in the same market? Are they mirroring each other, or targeting different market segments?

Thanks, Serge. Each is targeting different regions; so with the 40 person sales force that we have, we expect that we're able to access in excess of 80% of the Medicare Part B procedures that are performed. If you look at the volume producers, so the cataract surgeons by volume of the surgical procedures, what you find is that those same 40 reps are able to access greater than 80% of the top 50, top 100, and top 150 of those producers.

Then you mentioned the reimbursement price was set for the first two quarters of the launch. Then in September it would be subject to a different metric. I think, the average selling price; I just wanted to know a little more about that process. I guess what you expect, I guess come September?

Yes. I would expect that -- and you are correct. WAC plus 6% remains in effect for the first two full quarters, which would take us through a Q2 and Q3 of 2015, moving into Q4 or at the start of Q4 (technical difficulty). That will switch to ASP plus 6% or average selling price, as you said, plus 6%. We don't expect that difference to be meaningful.

I know it's early in the launch. But I guess what portion of the Omidria market do you expect to be covered by Medicare?

I'm sorry, which -- you have to clarify a bit what you mean by that, when you say which portion do we expect to be covered by Medicare? Medicare will cover the Medicare Part B procedures.

As I mentioned in my update, what we have been seeing is that Medicare Part C or Med Advantage, it has also been reimbursing for Omidria as have some of the commercial carriers to which billings have been submitted. Remember, we're early in the process, but we're getting this information in as close to real time as we can get it. That is what I have provided.

Then just a couple on the pipeline. First on OMS721; so coming out of this open label study, do you think you'll be in a position to advance to a Phase 2 proof-of-concept? Do you think it will have the dosing, enough dosing information to proceed to that step?

Yes. Remember that the OMS721 Phase 2 trial is in two parts. The first stage of that is a dose ranging stage; which is currently set for three cohorts. As I mentioned, we are currently open to enrollment in the third highest dose cohorts. The second stage of the 721 Phase 2 trial is one that will be treating patients at a selected dose.

In the dose ranging stage, it really is open to all types of patients that we are studying, meaning aHUS, TTP, and stem cell transplant [like the TMAs]. In the second stage of the study, it is 50% open to aHUS and 50% will be enrolled as currently written from the TTP and stem cell transplant related patients.

Okay. On 8/24, you submitted the package of nonclinical materials. What do you expect the timelines to be there in terms of FDA response? I guess, what are the current plans to proceed forward? Can you continue enrolling in the existing study? Or, you'll start anew?

Well, two questions there; one is, yes, we have submitted the materials to the FDA. We are waiting to hear back from them. We will keep you advised as we get any further information from the FDA. With respect to once cleared as we expect and hope that we will be, we will then move ahead with work in the Huntington's program initially and to clinically assess what we plan to do or want to do on the schizophrenia program.

Thanks for the update and congrats on the progress.

Thank you very much, Serge, take care.

Our next question comes from Steve Brozak of WBB.

Yes, hi Greg. Obviously, this is really probably the most important quarter barring obviously the approval. I really do want to go back over this. Because knowing physicians pretty well, they obviously do care about their patients. But they obviously do care about making sure they do not lose money.

The reimbursement has to be critical. What are you seeing as far as doctors using Omidria? What are you seeing in terms of their feedback and the specifics to how you're assisting them and facilitating them? I've got one follow-up question after that.

I think it's a good question, Steve. I think it's astute. Look, the most important thing initially is what is the physician response to the product? Are they seeing the product as a nice to have or as something that has a really meaningful impact on their practice and on the ease of doing those procedures?

Again, while anecdotal only; and I want to underscore that because we are early in the launch. I think that it is as I said sort of uniformly falling into the latter; meaning that the docs are really quite impressed and pleased with the performance of the drug product.

The second sort of hurdle there is the one that you're also identifying, which is will I be reimbursed for this product? One might imagine that physicians and facilities take a somewhat cautious or stepwise approach to that. You do not want to put in 1,000 unit orders for a product that you may end up having to eat.

The idea here which would make sense is that to test drive that reimbursement process. Reimbursement has been really quite successful across the country. We're very pleased with that component as well. Does that answer your question?

Yes. You just opened up a question with that. I will hop on after you answer it. Being conservative; obviously physicians, first do no harm. How are physicians looking at this considering the liability that they might have given you're talking about a compounded versus an FDA regulated manufactured product versus the compounded product that doesn't have the same amount of controls over it as what you're looking at. If you could answer that? What do you think about with the liabilities that we're talking about might be? I'll hop back in the queue.

Interesting question Steve; look I can't speak for specific physicians and their thoughts on that topic. I think probably the safest thing for me to do is provide my own. I think that prior to Omidria there was no FDA approved product available that could address the miosis problem during surgery. There now is.

I think that likely has a meaningful potential impact on overall questions of gee, what should we as docs be using? We'll have to see how all of that plays out. Again, I think that the FDA's position on compounding versus FDA approved products is clear. I don't think there's much frankly that I can add to that or really would feel comfortable adding to that. I think the FDA has made their position on that quite clear.

I mean, look you just answered in volumes obviously. It is one of those things where I am really looking forward to seeing the position adoption. Because obviously when they start to use it, and they start to get paid, that will be as clear cut as you can get. Well, thank you, and good luck on this quarter.

Thank you, Steve.

Our next question comes from Raghuram Selvaraju of MLV & Co.

Thank you very much for taking my questions. Very quickly, could you give us an idea of what you expect the time lag to potentially be between receiving European approval of Omidria and inking a partnership in order to commercialize the drug in that territory.

Secondly, could you give us an idea of how we should anticipate R&D expenses to evolve going forward? It looked as though they were markedly lower the current quarter versus the last quarter of last year. I wanted to get a better understanding of what we should view as the baseline level from which to build our assumptions on that front.

Then, with respect to 721, I wanted to get a sense of whether you anticipate seeing significantly more human clinical data from the European [compassionate access] program by the end of this year? Or, with what time frame we should expect to see significantly more efficacy information on that product coming from the compassionate use program? Thanks.

Yes. I think your first question which was the partnering question tied to what we hope and expect will be a European approval. We don't, Ragh, I'm sorry provide rejected dates around partnering. We don't speak in detail around partnering discussion. On that one, I'm going to have to tell you that we'll just keep you informed.

The first step of course, that we're looking for is the European approval. As I mentioned earlier, we do expect to receive the CHMP opinion this quarter. We'll go from there and keep everyone advised. With respect to your second question, which if I remember correctly, it was around OpEx, operating expenses and R&D expenses in particular. Going forward, I know that last quarter we put out a number that was, I think a bit large to some.

What I think might have been missed in that call was that those R&D expenses were really driven by; and assuming that all programs within the Company were operating at full throttle. Now what you've seen in third quarter is that with OMS824, on clinical hold pending the response from the FDA, those R&D expenses decreased a little bit.

You can also look across all of our program. What you see there are dials that we can dial up or down around each of the programs to adjust our R&D spend. We can adjust those expenses really based on revenues from Omidria. We need to see and watch. We are optimistic about how those revenues will turn out with Omidria. But what you see here is that based on revenue and based on what's coming in the door, we can certainly adjust what we spend on the R&D side. I think that's what you've seen there.

I think that's actually a very positive thing for Omeros, which allows us to kind of fine tune how we run our business. Your third question was around OMS721. When we would be releasing additional data from the Phase 2 program? Look we are open to enrollment in the third cohort now. I would expect that certainly this year, we're putting out additional data on that program, additional efficacy and safety data on that program. Is that helpful, Ragh?

Definitely, just to clarify though -- when you talk about additional data for 721 from your Phase 2 program. How does this dovetail with the data that might come out from Europe? How many more patients do you think might potentially be treated 721 assuming that efforts are currently underway to get the approvals necessary to make 721 available in the second European country are successful?

Well, I think certainly there will be more patients that can potentially be treated through those programs than would otherwise be able to access our drug OMS721. The numbers, I'm probably at this point, Ragh not comfortable predicting or projecting. I think that if you look at the enrollment rate for the second cohort, that was actually pretty quick.

I don't expect really anything too different for the third cohort and continuing to move forward. Although, again these were simply my musings more than anything else. I think what we have to do is just see as the data roll in. We will be sharing those.

With respect to your specific question, certainly, I think there will be more patients that we will be including in the program; which is again very good for us from just even purely a safety perspective, a safety population. I think that all of that is favorable for us.

Thank you.

Thanks, Ragh.

Our next question comes from Yatin Suneja of Cowen and Company.

Hi guys, thank you for taking my question. The first one is on Omidria. Could you help us understand how physicians are deciding in which patients to use Omidria? Is there an algorithm, a diagnostic algorithm that you have laid out? Then where do you think that primarily the use will come from? Will it only be high risk or everybody will use it? But it will be used in mostly all of the patients?

Well, I think first, Yatin, how are you? I think that in answer to your first question, really the criteria that is being used initially is if this is a Medicare Part B patient? Reimbursement should be sort of right down the fairway. As I mentioned in our update, a number of physicians, a number of surgeons and facilities have been submitting to Medicare Part C or Med Advantage, as well as to commercial carriers; and again, anecdotally, have been getting reimbursed.

I think that utilization will continue to expand across multiple different types of carriers. I think with respect to your specific question about, gee, is this really more for difficult cases or routine cases? Miosis is a difficult problem to predict. The data are very clear about that in the literature.

Again, I'm not an ophthalmologist, but I am a surgeon. I feel I can speak to this with some understanding. I think that what we're hearing from the surgeon is that they would like to use this product. Those that are using it, would really like to use it in all of their cases. Again, the discriminator there is are they getting reimbursed or not? Because this would be something that they would not like to have to just absorb at this point while they are still assessing the usefulness and the benefits of the product to them and to their patients. I think that is really the driver at this point.

Our next question comes from Robert LeBoyer of Maxim Group.

Good afternoon, and congratulations on the launch results so far. I have just a question for you on the expectations for the product for the full year, and if there are any updates to guidance that you can give for revenues or utilization in any particular segments? Or, anything at all like that?

As much as I'd like to, Rob, I think that right now; I think clearly what we need to say is we are collecting information. We actually don't expect to be providing guidance on sales for the first year of sale. I think we're taking a conservative approach. I think again I'll step back and look at this in sort of the big picture perspective, which is are the surgeons feeling that, and finding -- not just feeling, but actually finding, observing that this product has a significant place in their procedure?

To date, anecdotal only from the early controlled launch and from the first days and weeks of the broad launch. But I think the answer to that based on again those limited data is a resounding yes. That's important. The second component is are they getting reimbursed? I think the answer to that again is yes.

I think that we'll just wait to see how all of this goes. I know our sales team is working hard. Our reimbursement team, which is now and up and running will also be working hard, working with facilities to answer any questions, help navigate the reimbursement landscape. But it's, I think as I said, we're pleased with where we stand right now.

Thank you very much.

You're welcome.

Our next question comes from Liana Moussatos of Wedbush Pac Grow.

Thank you for taking my question and congratulation on all of your progress. Are we going to be able to track Omidria sales on IMS or Symphony Health?

You're not. This isn't a prescription. This is not a prescription product. I just wanted to make sure that my isn't didn't get interpreted as an is. This is not a product for which prescriptions are written. IMS will not be helpful. We will have to report on a quarterly basis, the sales. I know that's not what you were hoping to hear, Liana. But that is the reality.

All right, thank you very much.

Thank you.

Our next question comes from Chip Saye of AWH Capital.

Hello Greg, nice to speak with you again. Thanks for taking my question.

You're welcome, Chip.

My first question is you have the only FDA approved product in Omidria. At the same time, you've spoken of this. The FDA seems to be cracking down, and going after some compounders, and shutting them down. When I look on the website of the FDA, there's 50 or so compounders that have been approved in the last year. How does that approval, the FDA approval of those compounders, how does that impact your competitive advantage?

Frankly, I don't think it has a meaningful effect there. Remember that our product is broadly protected from an intellectual property position. Second, those compounded products, while if you're talking about 503, 503B Compounding Pharmacies or outsourcing facilities. Those are ones that are authorized by the FDA to sell in bulk.

Remember that those still have to meet some GMP manufacturing requirements. But they are still not approved in the sense of an FDA approval. The overall clinical efficacy and safety testing are just not performed on those products as they are the very rigorous standards that are set for FDA approved products. The short answer to that, Chip is I don't think it changes anything.

Okay.

We have a broad IP position, and we are FDA approved, which means we actually meet all of those efficacy and safety standards required by multiple sets of clinical trials to get that FDA approval. These 503B compounded products, while allowed to sell in bulk, don't have those same requirements.

Okay. My second question is Leiter's, for example, is one of those compounders that I speak to my local ophthalmologist. That's who he gets some product from. As I understand, they sell a combination of Phenylephrine, which addresses the dilation.

Then lidocaine, which addresses the numbing intraoperatively. How does the Omidria compete with this product given that Omidria, I don't think has a numbing agent since the ketorolac is for pain?

Yes, a great question, let's take a step back. A combination of Phenylephrine and lidocaine. Remember that Phenylephrine is a dilating agent only. What is providing the prevention of miosis or a constriction in the case of Omidria is not the Phenylephrine. It is the Ketorolac. It is the nonselective COX-1 and COX-2 inhibitor that is blocking the prostaglandin production and the generation of COX-1 and COX-2.

That's important because what causes the pupil to come down during surgery is prostaglandin. Prostaglandin is acting on the iris sphincter muscle, which causes it to contract. A combination of Phenylephrine and lidocaine is not going to get you there.

It's Omidria, the Phenylephrine and the Ketorolac that gets you there. I will cite for you data from our Phase IIb clinical trial. There, remember that as part of this rigorous FDA approval process, we had to run a full factorial study that the FDA requires so that you can demonstrate that each agent included in the final product actually contributes to the claimed effect.

What we did there was run a four armed full-factorial study. Omidria versus Phenylephrine, versus Ketorolac, versus vehicle controlled. What we saw was that the vehicle -- and what we measured there just for those who don't quite recall the study. What we measured were the percentage of patients who any time during surgery experienced a pupil diameter of less than 6 millimeters.

That's an important number. It is one that Dr. Wiley Chambers at the FDA specifically asked us to address. Because the literature is replete with data around the increased -- really the multiply, so meaning many fold increased risk of complications when pupil diameters fall below six millimeters.

When we looked at those patients during the Phase II who had pupil diameters of less than six millimeters across both four arms, what we found was in the vehicle group, 46%; in the Ketorolac group, 35%; in the Phenylephrine group, 22%; and in the Omidria group, 6%.

Now remember also that all of those patients in that study just like all of the patients in our Phase 3 clinical program received standard preoperative topical mydriatic agents, so pupil dilating agents. All of the data that I just gave you are on top of all of the patients in the studies receiving those preoperative, topic pupil dilating agents.

I'll run through those numbers again for you: vehicle, 46%,;Ketorolac, 35%; Phenylephrine, 22%; Omidria,6%. There is nearly a four-fold difference between Omidria and Phenylephrine. Well, what is causing that difference? Well, clearly it's the Ketorolac. I think that I'll stop there and see if that pretty much answered your question.

Okay. I'll just admit I was at the show in San Diego for a day where I met you. That really wasn't made clear. I mean, I listened to a presentation. I was under the impression that the Ketorolac was an NSAID for pain.

No, I explained the other thing that we have seen. In our data, Ketorolac certainly reduced pain. It not only reduced pain, it reduced the incidence of moderate to severe pain, which was a Visual Analogue Scale score of 40 or greater; which is similar to sort of the hip -- your pain that you get from a total hip replacement.

We all like to think that cataract surgery is relatively painless. Yet, 14% of all patients even though they receive preoperative anesthetic agents including lidocaine or tetracaine, 14% of them had VAS pain scores greater than 40; only half of that in the Omidria group.

When we looked at those patients postoperatively who had pain scores of zero at all time points measured in the early postoperative period; so after 12 hours postop. They had to have a VAS of zero at all of those time points to be considered pain free; the Omidria group, 50% more than the control. Then, when you looked at the amount of pain medication taken, even though all of the pain scores were lower, the Omidria group also used 40% less pain medication.

That is pretty odd that you would see. Normally you don't even run a pain study that way. You hold one of the two variables constant; meaning you hold the amount of pain medication constant. You measure VAS pain scores. Or, you hold the VAS pain score level constant and measure the amount of pain medication. We did not do that here.

What we found was lower pain scores and lower pain med uses. I think it clearly does what you're suggesting. But I'm sorry that somehow at ASCRS, Chip, that point wasn't clearly brought out about the miosis. I can tell you that working with our speaker bureau, all of these thought leaders get that point very well, actually, are very focused on that point. I think it will be clearly there in any subsequent presentation that you see.

Okay. One last question, if you don't mind? What are doctors doing now for pain? Because you mentioned that pain may be an issue. Is pain an issue that is not currently being addressed?

Look, I think that patients use postoperative pain meds. I think that and I can this being a surgeon. I am not trying to rap other surgeons. But I will say that surgeons, we all like to think that our patients don't really have postoperative pain. Frankly, that all pain ultimately resolves. When you are the patient, you have a very different perspective on that situation. In the setting of a ophthalmic surgery specifically cataract surgery where the outcome is expected to be perfect.

Remember that there are 3.9 cataract and lens replacement procedures, 3.9 million cataract and lens replacement procedures performed in the U.S. and Europe. Those are very common procedures. The outcomes are expected to be perfect. A large part of the patient experience is the postoperative pain. Our key opinion leaders, our thought leaders talked to us about how they can send a patient out with 20/20 vision following cataract surgery.

If that patient has postoperative pain when they come back, what they're hearing about is not the 20/20 vision, but the postoperative pain. Yet, if they send the patient out postoperatively with 20/40 vision and no postoperative pain, the patient comes back and is very happy. I think that speaks volumes to the importance of pain to the overall patient experience. I think that probably answers your question.

Just one quick follow-up; on the whole, if you ask ophthalmologists is pain an issue now in cataract surgery? Is it a yes or a no?

I think Chip, what you need to do is it's depending on which cataract surgeons you're talking with. You're asking me to make a blanket statement to that kind of a question. I just don't think there is one.

Okay.

I think that if you ask -- let me rephrase the question. Is the patient's experience important to the cataract surgeon and to his or her patient? I think 100% or nearly 100% of cataract surgeons will answer that question with a certainly it is. I think that may be the question that you might want to be asking.

Okay. Yes, it is. Thanks for taking my questions. I'll try to follow up with [Aaron] and talk to you offline. Thank you.

Thank you very much.

Our next question comes from George Zavoico of Jones Trading.

Thank you. Hi Greg and hi, everyone. Congratulations on the launch.

Hi George.

Hello. A couple of quick questions -- regarding the transition from the controlled for the broad launch, and from 20 to 40 reps. Before the broad launch, were the 20 reps slated to start for the broad launch? Did they have time before the April start time to actually meet their potential customers and sort of prime them for when they're actually able to provide product? Or, is this going to be a little bit of a delay in getting the reps in front of the docs?

I think we're conflating a couple of things here. One is that the controlled launch began in mid-February. It ran for several weeks. Then we moved in April to the broad launch. That is in the first part of April. That is the temporal relationship between those two.

With respect to the rest, we had our 40 sales reps in place as of early January. The controlled launch was not run with 20 and now we're running the broad launch with 40. The controlled launch is really not referring to the reps. It's referring to the facilities and the number of docs -- that the number of surgeons that were included in that controlled launch.

This was simply our way of really, as I think Mike and I have said, pressure testing our processes to get the product to the facilities. Whether reimbursement was running smoothly. What we didn't want was to initiate a broad launch and find that we had either problems in distribution. Or problems in reimbursement that had not yet been addressed. That was the reason.

That is why it was done in a very controlled way with a small number of facilities and surgeons drawn from the Medicare administrative contractor regions across the U.S. We wanted to make sure that we were touching those [macs] so that they were familiar with the product. We could make sure that they would appropriately handle and reimburse the product as expected by CMS.

For the customers not in the controlled launch, their first opportunity for the reps to detail them came in April?

Well, their first opportunity to purchase the product came in the first part of April. Those relationships and communications with the rep have been in place for a while.

Okay. That was what I wanted to know. That is important. That lead time to build their relationship, that is already over and done with. The purchasing could happen almost right away after. When you opened it up in April. Next question, regarding 721 and the compassionate use in Europe. The two physicians, were those both aHUS, if you can answer that?

I think I can. I don think there is a problem. Anyway, we're a webcast. Yes, they were both aHUS patients.

You mentioned really good feedback from the physicians who were using it. Have you commented at all or can you comment at all about any AEs that were noted?

Other than what we put out in the first cohort where there was a patient who had an inflammatory condition years previously. Who subsequently developed that inflammatory condition while running the course of Omidria, I can tell you that the latest result is that there was no infection. That's actually very good news. Other than that, we've released no other AEs associated with that product on 721.

As long as we're on the complement pathway, there's the new product or the new compound for the alternative pathway. Do you see that as going for separate indications? Any overlap between the alternatives and lectin-pathway in terms of where you might go with it?

I think the answer to that is yes. There are separate indications for both the lectin-pathway and the alternative pathway. We're very excited as well about the OMS906 program. We believe that MASP-3 is an important component. It is actually the activator of the alternative pathway.

We believe we've created a strong and growingly strong intellectual property position around that. Could there be indications where you would want to inhibit both the lectin and the alternative pathway? Yes, there are. Are we looking at those? Certainly yes, and our planning strategies for how to do that.

I will look forward to more news on that for sure.

Thank you very much (inaudible). It is exciting.

Yes. About post-marketing studies with Omidria, I mean, there's a lot of obvious benefits that -- well, I suppose that you've made obvious in your educational materials to the docs. Now that Omidria is available to the docs, are you actually performing any more rigorous post-marketing surveys to quantitate the anecdotal responses that you're getting back to the [groups]?

We actually have a number of studies that our medical affairs group is assessing currently. I expect that some number of those, we will be running. For example, in connection with a question that came earlier around pain and Omidria. Certainly one of those studies that we're considering is to look specifically at pain during surgery with Omidria versus other treatments. But these are all things that our med affairs group has a handle on. They are assessing all of the proposed protocols that come into us from our thought leaders and from others. They've got a lot of work to do there. There's a lot to go through it. But we'll likely be proceeding with some number of those in the coming months and years.

That includes the pharmacoeconomics, I would presume?

I'm sorry. Can you repeat that George? You're sounding a little faint.

Sorry, that would include the pharmacoeconomics as well?

Sure, we're keenly aware of the pharmacoeconomic points around the product; and believe that we can make very solid cases for that.

Okay. Then one last quick question hopefully regarding your commercial reimbursement that you've seen some of the physicians paying. Is that an arrangement between the physician and the provider? Or, have you had any discussions with commercial providers to provide the reimbursement?

Well, with respect to the commercial payers, clearly our reimbursement team is going to be reaching out to commercial payers and to Med Advantage payers to assist physicians and providers in obtaining reimbursement for the product with those carriers. I think we'll just see how all of that plays out. Again we're optimistic that those carriers will see the value in the product to patients.

Ultimately I think despite what is rumored to be the case, I think that payers truly do want to do what is in the best interest of the patient. I think that it's very clear that Omidria at least based on the data we've generated as well as the data being and the experience being generated by the thought leaders and others now using the products across the country that Omidria is pretty clearly a good thing for patients.

Okay. Thank you very much, Greg, and good luck with the launch in this quarter.

Thank you very much, George.

Our next question comes from [David Cahn] of [Mishowe].

Hi David.

(Operator Instructions). Our next question comes from David Lundquist of UBS.

Hi Greg, thanks for taking my questions and congratulations. The focus has understandably been around Omidria. But I'd like to shine the light on a couple of the other parts of your platform just quickly. If you could comment around your PharmaSurgery products that are focused on knee surgery and urology indications?

I know that may not be a near-term focus. But if I have the right impression, there might be a revenue opportunity for those. I'm curious how that would look.

The second question is around your intellectual property development on your GPCR program. Obviously licensing opportunities probably follow those developments. Any comments around those would be great.

Sure, let me start with the first. As we've stated publicly, we are exploring ways and avenues by which we can commercialize OMS103, which is our arthroscopic product and OMS201, which is our neurologic product. That both of those products have been through clinical trials; so 103 through a successful Phase 2s, and missed in Phase 3. But I think the impression certainly of the orthopedic surgeons, the arthroscopic sports medicine surgeons is that the product works and has an important place in that it inhibits inflammation at the time of surgery.

What we're learning as orthopedic surgeons or have learned over the recent decade is that inflammation is detrimental to the long-term health of the joint. I think they're excited about the product. We're exploring the opportunities available to us. We may in fact avail ourselves of one of those opportunities to commercialize the 103 product quickly.

With respect to OMS201, that's been through a Phase 1 and 2 study. We don't have as much data on that program or in that product as we do on the 103. But certainly, when you look at the composition and you think about the pharmacology, the utilization and the applications or indications for that product become again pretty clear to urologists. We're exploring a similar commercialization path for OMS201 at this time.

Your second question, if you would remind me?

Yes, I'm sorry Greg.

No. I have got it. I remembered, Dave.

Yes.

You asked about GPCRs and IP. Yes, look we continue to advance the intellectual property front for our GPCR program. I think again I remain confident and optimistic that we'll have success there. I think that with respect to partnering, which you were asking; I think you were asking about licensing. Again, I'll have to repeat that same answer, which is we really don't provide updates on partnering discussions. When we announce the partnership is when we will make all of that public.

Okay, thanks Greg.

Thank you.

We have a follow-up from Raghuram Selvaraju of MLV & Co.

Yes, thanks for taking my very quick follow-up. Just let me pull this up here very quickly. Yes, two very quick things -- a noncash compensation, I believe you reported $2.7 million a quarter. Can we expect that to remain pretty much the same going forward or no?

For 2015, yes, I expect that will pretty much stay the same.

Okay. Then the second question was -- I'm just trying to find it here. Did you mention when the second antibody targeting complements pathway would likely -- sorry, the complement related pathway I should say would likely enter the clinic?

I'm not. We've not made a statement about that. We are pushing that program ahead with a lot of vigor. We're excited about that program as we are about the 721 program certainly. What's coming out of the 721 program is very encouraging to us.

I think it is as I said is encouraging to the participating physician investigators. Clearly, by the request for compassionate use there's increasing confidence in the product as well. I think we're excited by that and certainly excited as well with the alternative pathway inhibitor of the MASP-3 inhibitor.

Then just a very quick thing on the potential for institution of formal guidance in the future. I think we've visited this topic a couple of times before. But do you think that there would be a point in the launch when you can see a more defined sales trajectory for Omidria when you would be comfortable providing us with more formalized guidance on what to expect there?

At this point Ragh, we said well prior to even our controlled launch that our approach was going to be to not provide sales guidance at least for the first year of Omidria's commercial life. If we change our position on that, we will let everyone know.

I think I understand the question. I understand your desire to know that. Certainly, I empathize with that. I think that the most conservative approach for the company is to say look, we're going to for the first year hold off on providing any revenue estimates and projections.

Let's get a handle on how the product is doing. Once we do that, then we can talk intelligently about what we're seeing as opposed to projecting things that could miss. It could miss high. It could miss low. Frankly, we've all seen enough of those that create problem that we'd like to avoid it where there are things we can -- where we can avoid problems, I think. I think we'd like to try and do that. In this case, we're going to hold to our position there. If it changes, we will certainly let you know.

Okay, thanks guys, I appreciate that.

Thanks, Ragh, take care.

Our next question comes from David Cahn of Mishowe. Your line is open.

Hi Greg, can you hear me now?

Yes, hi David. How are you?

I'm well. Thank you so much for taking my questions.

Good to hear from you. I thought you dropped off.

No, unfortunately, too many calls at one time. I had it on mute, my bad. I appreciate you taking my question. I also appreciate the length and detail on the call. I just had a couple of follow-ups. Most of the questions had already been asked. Initially, you had hired 20 sales people. Then you hired an additional 20. The first 20 that you hired, had you had to let anyone go?

I think that, I would have to check with our group about that. I don't know David that we have released any of that information. I think what I do know is that clearly the bulk of the group is entirely in tact. If I'm giving any other information, I'd be largely speculating.

Okay. You have so many programs, and I recognize that you're still limited with respect to sales data for Omidria. Could you give me some idea how you will prioritize what your R&D spend is going to be? If you could even provide me with some kind of a maybe top to bottom of priorities of the programs that you're currently working on?

Well, I can do the latter. I think again remember as I said, we have a lot of dials here that we can turn on a lot of programs that allow us to really refine and very precise --

You know what? It's very prudent to wait and see what the revenue is going to look like before you decide to spend.

Yes.

I'm in favor of that. But what I would like to get an idea is how you prioritize?

Let me give you the prioritization. Yes, let me give you the prioritization. Because I think that's your question as you asked it. That's one certainly that I can answer. Clearly the priorities for the Company right now are Omidria. After that I would say that clearly OMS721 followed by OMS824.

The GPCR programs, we're moving forward. The 527 and the 616 programs, we are moving forwards. But I would say that if you just look at our current structure of the pipeline, I don't think there's any doubt. I think that you would agree that it makes abundant sense that our priority really is as I said Omidria followed by 721 and 824. I think that's clearly what we're pursuing within Omeros.

Thank you. I am appreciative of your hard work for all shareholders.

Thank you, David, I appreciate it.

I'm showing no further questions. At this time I'd like to turn the call over to Greg Demopulos for any closing remarks.

Well, that wraps up our call then for today. Thank you very much, operator. Thanks to all who are on the call. Thanks for all who had questions. We appreciate all of you taking the time to join us today. Clearly we're excited about the prospects for Omidria as well as for OMS721 and OMS824, and our other programs.

All of us at Omeros really do appreciate your continued interest and support. We expect that we'll be back to you over the next few months with further updates on these programs. Have a good afternoon, everyone, and again thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone, have a great evening.