Omeros Corp (OMER) 2016 Q2 法說會逐字稿

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

(Operator Instructions)

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.

I will now turn the call over to Jennifer Williams, Investor Relation for Omeros. Please begin.

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 factor section of the Company's filings with the SEC 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, Jennifer, and good afternoon everyone. Also with me today is Michael Jacobsen, our Chief Accounting Officer. I'll begin today's call with a corporate update and then Mike will provide an overview of our second quarter financial results. We have some time reserved for questions after the financial overview.

For the second quarter, our total revenues were $10 million, all of which resulted from sales of OMIDRIA, our FDA approved product for cataract surgery. OMIDRIA revenues in the second quarter increased $2.8 million or 38% over the prior quarter. This sales growth remains broad-based with increased utilization across both hospitals and ambulatory surgery centers. Consistent with previous quarters, both existing accounts and new accounts have contributed to that growth. Steady state accounts, those that regularly order OMIDRIA and new accounts continue to climb in number; representing an increase of 23% and 28%, respectively, over the first quarter of 2016.

We are seeing these growth measures continuing to increase, largely driven by physician acceptance of and demand for OMIDRIA. Physician demand is a direct reflection of the product's clinical benefits. We believe that we have turned the corner with respect to any question of clinical need for OMIDRIA. Ophthalmic surgeons who use the product overwhelming recognize its benefits. The importance of those benefits are underscored by the increasing number of clinical studies evaluating OMIDRIA in the real world setting.

These studies, which have been designed, conducted, and typically funded by physicians who use OMIDRIA, have been presented, discussed, and positively received at the annual the meetings of the American Society of Cataract and Refractive Surgery, the Association for Research and Vision in Ophthalmology or ARVO, and Kiawah Eye, and most recently at the summer meeting of the American-European Congress, Ophthalmic Surgery.

Manuscripts have been submitted to peer-review journals and more are in preparation detailing the benefits experienced by surgeons, namely decreased complication rates, reduction in use of pupil expanding devices, shorter age adjusted surgical times, prevention of myosis in femtosecond laser assisted surgery, and improved visual acuity on the first post-operative day. Importantly, studies included epinephrine as a control and procedures ranged from routine to complex. The volume, strength, and consistency of the data have convinced a good number of even those surgeons who were the most vocally skeptical about the role of OMIDRIA in cataract surgery.

An additional area of clinical focus now is the preemptive effect of OMIDRIA on the inflammation caused by cataract surgery and the implications of that effect on the use on pre- and post-operative topical steroids and non-steroidal anti-inflammatory drugs or NSAIDs. A manuscript on just this topic is currently being finalized by a world expert on ophthalmic inflammation; an individual integral to the development of the first marketed ophthalmic NSAID. We expect that manuscript to be published later this year.

With our success on the clinical front, we are now focused on continuing to expand reimbursement and streamlining integration of OMIDRIA into facility's administrative processes. OMIDRIA is sure our comprehensive reimbursement program has had a sustained positive impact on OMIDRIA utilization. Enrollment in the OMIDRIAssure program has continued to increase substantially month over month. In addition, we are in the process of expanding our internal reimbursement and access organization with additional hires. We continue to deepen our understanding of our customers' challenges with the reimbursement system, and that really just enables us now to assist with those challenges even more capably.

100% of Medicare administrative contractors reimburse for OMIDRIA. A large number of commercial pairs also reimburse for OMIDRIA, and when they don't, our We Pay the Difference program pays the facility on behalf of the patient the difference between the amount reimbursed and the facility's cost of the drug. The only pair segment that remains variable in reimbursement at this time is Medicare Advantage, which represents approximately 25% of the cataract surgery market.

Medicare Advantage programs cover OMIDRIA, but do not uniformly pay for it often due to specific contractual language with a given surgical facility. We continue to make progress with Medicare Advantage pairs and the contracts that surgical facilities hold with them. But there's more work to be done. Having to determine which patients will receive OMIDRIA based on reimbursement status can be a significant disincentive for some facilities.

In response to that, we are rolling out initiatives to enable OMIDRIA to be incorporated into practices even more easily and to broaden usage across all patients. Our first initiative is a consignment program, which we established with one of our wholesalers at the request of a number of our ASC customers. From Omeros's perspective, there is no impact on the timing of our revenue. From the ASC's perspective, consignment simplifies ordering as well as simplifying the inventory and cash management processes. It also allows the facility to have product on hand for every cataract case rather than anticipating which cases in the coming week will receive OMIDRIA, and then having to reallocate drug as the week's surgery schedule changes, which it invariably does. In addition, the consignment program is designed to shorten the facility's time between product purchase and reimbursement.

The second initiative is an expanded sampling program designed to allow ophthalmic surgeons and facilities to experience the benefits of OMIDRIA across a wider range of cataract procedures. The initial to the program has been favorable, and the number of facilities taking advantage of this program nationwide continues to grow week-by-week. We expect our expanded sampling program to lead increasingly more surgeons to integrate OMIDRIA across a broader range of cataract procedures in their day-to-day practices. Throughout the remainder of this year, we expect to see the affects of our consignment and sampling programs on product uptake. Additional initiatives to further drive sales have been developed and they're currently being implemented.

We're pleased with the trends that we are seeing in OMIDRIA's sales growth and we continue to build on that momentum. Physician response to the product is increasingly positive, even among those who prior to using OMIDRIA were seemingly unyielding detractors. Our customer-base is broadening across ASCs, hospital outpatient departments, and academic centers. And new accounts are effectively added daily. We also are successfully expanding utilization within existing accounts. This success is driven in good part by the strength and increasing awareness of the real world clinical studies as well as by the expanding dataset of demonstrated reimbursement across payers and our enhanced ability to assist facilities in securing payment for OMIDRIA in all regions of the country.

We're also making good progress in launching OMIDRIA into international markets. Our supply and distribution arrangement with ITROM Pharma covers the sale of OMIDRIA in the kingdom of Saudi Arabia, the United Arab Emirates and other countries in the Middle East. We're working with ITROM to obtain regulatory approval and have been sampling OMIDRIA in key Middle Eastern countries. And assuming the completion of appropriate local regulatory applications, we expect ITROM to begin selling OMIDRIA on a limited basis later this year.

So with revenues continuing to grow, our team's targeting sufficient OMIDRIA sales to fund the ongoing development of our pipeline as we wrap up 2016. Now let's talk about that pipeline. Our MASP-2 Antibody, OMS721, targets the lectin pathway of the complement system which is a key component of the immune response. We have three OMS721 programs currently in progress: a Phase 3 program in atypical hemolytic uremic syndrome, or aHUS, a Phase 2 program in complement mediated thrombotic microangiopathies, or TMAs, including hematopoietic stem cell transplant related TMAs and thrombotic thrombocytopenic purpura. And another Phase 2 program in patients with complement related renal diseases including immunoglobulin A or IgA nephropathy, membranous nephropathy, lupus nephritis and C3 nephropathy.

Last quarter we reported on our successful meeting with FDA regarding the requirements of our Phase 3 program in aHUS; one open label single arm trial for which safety data can be drawn from OMS721 trails in other indications and agreement as well on manufacturing nonclinical and toxicology packages, the majority of which have already been successfully completed.

Last month we announced that we had received advice from the European Medicines Agency regarding requirements for European marketing authorization for OMS721 and the treatment of aHUS. The outcome, again, was successful. We are able to submit applications for approval in the US and in the European Union based on a single dataset. As a result, we plan to run a single Phase 3 clinical trial and overall program to support OMS721 marketing approval applications in both the US and in the European Union for the treatment of aHUS. We plan to begin enrolment in the Phase 3 clinical trial later this year. Importantly, patient enrolment numbers required for European approval are consistent with Omeros's plans for accelerated approval in the US. We also are perusing Orphan Designation for OMS721 in Europe.

Both of our Phase 2 programs in stem cell transplant related TMAs and TTP and in complement related renal diseases continue to enroll. The Phase 2 renal trial is evaluation the effects of OMS721 on kidney function in patients with IgA nephropathy, membranous nephropathy, C3 nephropathy and lupus nephritis. There's good evidence that the complement system, and specifically the lectin pathway, is involved in the pathogenesis of each of these diseases.

Given the absence of available therapies in these serious diseases, if this trial demonstrates evidence that OMS721 improves kidney function, slows disease progression or reduces the need for supportive medication in these patients, we intend to discuss with FDA a Phase 3 program that meets the requirements for accelerated approval.

Similarly, with additional positive data on the treatment of hematopoietic stem cell transplant related TMAs, we plan to meet with the FDA again to discuss a Phase 3 program, accelerated approval and, potentially, breakthrough designation. We look forward to sharing data from the 721 programs later this year.

Turning to the other half of our MASP program, OMS906, that also continues to progress. OMS906 targets MASP-3, which is required for activation of the complement system's alternative pathway. We recently announced results from our OMS906 program that showed that the antibody significantly reduced both incidence and severity of disease in a well-established model of arthritis, which is well known to be mediated by the alternative pathway. The study results, together with other OMS906 data, clearly show that MASP-3 inhibition and specifically OMS906 blocks activation of the alternative pathway.

Compared to control treated animals OMS906 statistically, significantly reduced both the incidence of arthritis by 86% and the severity of disease by 90% at the highest dose tested. A single dose of OMS906 administered intravenously to mice lead to near complete oblation of the systemic alternative pathway activity for at least 14 days.

We currently are initiating the process of manufacturing scale up-up of OMS906 in preparation for clinical trails and we again expect to provide additional data on the ethicacy of OMS906 in the near future. With our OMS721 program targeting MASP-2, which is the effector enzyme of the lectin pathway, and our OMS906 program targeting MASP-3, a protein essential for alternative pathway activation, I think you can see how Omeros controls a substantial real estate across two of the three complement pathways.

Next, let's discuss OMS824, our Phosphodiesterase 10, or PDE10 inhibitor, in development for the treatment of Huntington's disease and other cognitive disorders. To inform our clinical trial design, we continue to await Pfizer's results from its large Phase 2 Huntington's trial with its PDE10 inhibitor, which requires twice daily dosing as opposed to OMS824, which is administered once daily. We also are working to remove any dosing limitation for OMS824.

Now let's turn to our addiction programs OMS405, our PPAR-gamma agonist program, and OMS527, our PDE7 program for addiction and compulsive disorders. Omeros has [broad] issued and pending patents covering the use of any PPAR-gamma agonist or PDE7 inhibitor in the treatment of any form of addiction and, additionally, any PDE7 inhibitor in the treatment of any compulsive disorder.

Addiction costs the US alone approximately $0.5 trillion annually. We expect to provide data later this year on the effects of a PPAR-gamma agonist in patents suffering from addiction. Interest in PDE7 inhibitors for the treatment of addiction is growing as well within the pharmaceutical industry. We expect that there will be data generated by one or more other companies confirming our findings of the importance of PDE7 inhibitors in these devastating diseases.

This becomes increasingly important, given Omeros's broad patent position in this space. We're finalizing a manuscript for submission to a premiere peer reviewed journal that will detail the in vivo efficacy data and mechanism of action of PDE7 inhibitors in the treatment of addiction and compulsions. You may also recall we have broad patent protection directed to any PDE7 inhibitor for the treatment of any form of movement disorder including Parkinson's, ALS and others. We plan to move OMS527 into the clinic next year.

Finally, our GPCR program is also making good progress. We are advancing preclinical programs targeting appetite and eating disorders; triple negative breast cancer; demyelinating diseases such as multiple sclerosis, neuropathic pain and osteoporosis; seasonal affective disorder as well as a receptor that appears to modulate T cell regulation, important in both immunologic disorders and cancer and another receptor tightly linked to epithelial stem cell function. Compound optimization and animal studies are ongoing and we expect to share additional information on our GPCR program later this year.

That concludes our update on Omeros' products and programs. I'll turn the call over to Mike for a summary of our second quarter financial results.

Thanks Greg. As Greg noted, our overall GAAP revenue for the second quarter was $10 million and our net loss was $12.6 million or $0.32 per share. Our net loss includes non-cash expenses of $3.2 million or $0.08 per share. All of our second quarter revenue was from OMIDRIA product sales, while in the first quarter we had $7.2 million of OMIDRIA product sales and $173,000 of grant revenue. This equates an increase OMIDRIA product sales of $2.8 million or 38% over the first quarter.

With regard to the OMIDRIA pricing, net revenue per vials sold remained relatively constant between the first and the second quarter. In contrast to $173,000 in grant revenue in the first quarter, we received no grant revenue in the second quarter and currently we don't anticipate any additional grant revenue on a go forward basis.

Our cost and operating expenses for the second quarter were $20.9 million, a decrease of $5.9 million from the first quarter. The decrease was primarily related to the timing of costs and OMS721 research and development activities, and the decrease non-cast off comp related to annual employee stock option grants we made during the first quarter of 2016. The completion of the enrollment in our post-marketing OMIDRIA pediatric trial also contributed to the decrease in operating expenses.

Turning to the balance sheet; as of the end of the second quarter, we had $21.2 million in cash available for general operations and $10.7 million of restricted cash primarily tied to our loan with the Oxford Finance in East West Bank. As you may recall, in May we accelerated the $20 million of borrowing available under our loan agreement, bringing our total outstanding balance to $70 million. The amendment did not modify the interest rate or any terms or covenants other than to increase the final payment fee applicable to the $20 million from 5.25% to 6.25%, which reflects the interest earned on the longer period the $20 million will be outstanding. We also issued the lenders warrants to purchase up to approximately 100,000 shares of our common stock at the then current market price of our common stock. We are making interest-only payments at 9.25% through July of 2017, and beginning in August of 2017 we'll begin making principal and interest payments through the January 2020 maturity date.

Now let's take a look ahead at what we're expecting regarding operating expenses as we go forward. With regard to research and development, we anticipate that during the remainder of 2016 the majority of our research and development expenses will be related to our Phase 3 and Phase 2 clinical programs for OMS721, and the continuation of the tech transfer of OMIDRIA commercial manufacturing to Hospira. We anticipate this amount will likely grow somewhat during Q3 and Q4 compared to Q2.

Selling general administrative expenses for 2016 are expected to increase during the remainder of the year due to enforcing of patents against Par Pharmaceutical and additional sales cost related to incremental head count and expanded marketing programs.

With that, I'd like to turn the call back over to Greg. Greg?

Thank you, Mike. Let's up the call up to questions.

(Operator Instructions) Steve Brozak of WBB.

To make a long story short, Greg, I'm looking at a big question here, and that has to be - it's too early for you to go out there and start to talk about guidance. But in terms of what can you give us as a takeaway that you're comfortable with. And I just have a MASP-2 question after that, please.

Well, I agree with you; we don't provide guidance as you know, Steve. We're still working through the launch of this product and how things are moving through that. But as I said, we're comfortable with the sales of OMIDRIA.

Going back to MASP-2, you guys have actually gotten a program off the ground with OMIDRIA. What can you tell us about the difference that you're going to look at on the MASP-2 programs as far as regulatory approval? What are you looking at the difference? And you can be as specific as you like on that, please.

I want to make sure I understand the question, Steve. When you're saying what difference are we looking, you're saying between OMIDRIA and 721?

No, between OMIDRIA and the clinical hurdles that you face between the two programs; because there's obviously seismic differences between the two.

Well first, we're talking about a small molecule in OMIDRIA versus a biologic in 721. OMIDRIA we're talking about a very large population of patients undergoing that procedure; 4 million effectively close to that number of 4 million in the US versus ultra-orphan a population with aHUS. Similarly, stem cell transplant related TMAs - relatively rare. IgA nephropathy, however, not so rare; about 120,000 150,000 patients in the US alone.

So obviously, you've got differences in accessing those patients. But otherwise, for OMIDRIA remember we needed to run not just two Phase 3 trials, but we needed to run a full factorial Phase 2B trial. For 721, for aHUS in both the US and Europe we're talking about one single, meaning the study being used for both US. and European regulatory purposes. One single-armed trial for both US and European regulatory approval packages, and that's an open-label study. So I think the differences are stark, there are advantages, obviously, to both of those programs.

Serge Belanger of Needham & Company.

A couple questions first on OMIDRIA. If you could just comment on whether pricing has remained stable and I guess if reimbursement cycles are still decreasing? And then I think in the past couple quarters you've also talked about how the product was selling on the sell-through basis; not sure if you mentioned in your prepared comments.

Sure. Let me answer them in the order that you've given. I mean, effectively, the pricing is about the same; there hasn't been a meaningful or significant decrease in pricing. The second question was around I think the hurdles on reimbursement?

Yes, those are continuing to be removed or we are continuing to overcome them. Some still remain, but I think our team is doing a very good job of addressing those and addressing those quickly. I mean, as those reimbursements - any issues arise, our team really jumps on top of those, addresses those, and I think satisfactorily addresses those. With respect to sell-through, we're a year in now and the sell-through really isn't meaningfully different than the GAAP sell-in. And we've had a lot of confusion expressed by investors about sell-in and sell-through and which one are we referencing. So I think we've decided here to just kind of stick with one and where we're going to go is you know, obviously with the appropriate use of the GAAP number.

I guess just to follow up on the prior guidance question. I think in the past you've talked about reaching cash flow positive status at some point in 2016. Does that remain a year-end target?

Yes, certainly. That's our objective. We continue to work hard at that. We like what we're seeing in the sales growth. We like what we're seeing in the adoption, as I said. It appears that we've really turned a corner on the clinical impediment to the adoption of the drug. I mean, you recall that when we first launched OMIDRIA, one of the major questions was why do we need this drug?

That has been sort of soundly answered and I think the answer is clearly the use of OMIDRIA has significant benefit for the patient but also for the surgeon. And so when we see this, when we see that the traction we're getting on the reimbursement side, we're pleased with how things are moving with OMIDRIA. And our objective, again, remains our teams objective certainly internally remains to be able to fund those development programs as we exit 2016.

One last one on 721 before I go back in queue. Do you think we should expect some of the Phase 2 results from the aHUS patients at some point this year?

The Phase 2 from the aHUS patient?

Yes.

Potentially; I mean, I think we're going to putting out more data on 721 across a number of the 721 programs. Our focus is getting the Phase 3 program and aHUS enrolling. Now, we provided all of our data, which obviously was more than we've put out to date to both the FDA and the EMA. And we're moving ahead on the Phase 3 program with buy-in from both of those regulatory agencies. I expect that we'll have something to say as well on the renal study and potentially the TMA stem cell studies, as well.

Liana Moussatos of Wedbush Securities.

Can you give us - you just mentioned releasing Phase 2 data on the renal diseases and the TMA stem cell Phase 2. Can you give us a little more detail on when you think that those data releases? Is it going to be the second half, fourth quarter, next year?

No, I actually expected that will be in this year. So I guess an answer to your question will be the second half of this year. So I think we'll be able to put something out on those programs later this year.

All of them? All the kidney diseases and the stem cell?

Again, what I'll commit to is you'll be seeing more data from the Phase 2 programs. Which we put out, that will depend on whether we run those studies to full completion, whether we stop then early for any reason and provide information. I think the best way to answer that Liana is look for data coming out of those programs - out of the Phase 2 721 set of programs sometime later this year.

Thomas Yip of FBR Bank & Company.

I just have a couple questions, mostly about OMIDRIA. First, Greg, can you go into a little bit more specifics regarding where some challenges that you face when you try to get reimbursement for OMIDRIA?

I think, look; roughly 50% of cataract procedures are Med Part B. There there is really no challenge to speak of. 100% of Medicare administrative contractors reimburse for OMIDRIA. So Med Part B is readily covered. Similarly, with the commercial payers, a good number of the commercial payers pay for OMIDRIA. And where they don't we have our We Pay the Difference program where, on behalf of the patient, we cover the difference.

That's about another 25% of total procedures. So as I said, where we're really having any sort of variability in reimbursement, and that's how I would characterize it is really variability, is on the Med Advantage side. And as you know, Med Advantage by definition in its name, Med Advantage is supposed to provide services that Med Part B does not. Sometimes what happens with Med Advantage is that they take the position that they cover, like Med Part B, but that they don't have to reimburse or pay like Med Part B. And I know that seems like a pretty interesting semantic argument, but that's the position that they take.

Our job is to convince Med Advantage payers that they should be paying, that they need to be paying, that it's frankly good for them. It's certainly good for their patients. And the other problem there that we see on occasion is - and this is accounting for the variability - is that even though a Med Advantage or Med Part C payer will cover and pay OMIDRIA, if there has been a specific contract with a specific facility to carve out reimbursement for OMIDRIA, then that contract needs to be addressed by the facility with that Med Part C or Med Advantage payer.

That's really when I speak about the variability, the variability can even be not just the cross payers, but within a specific Med Advantage payer. Whereas the Med Advantage payer may be paying some facilities, not paying other facilities due to the language specifically in that facility's contract.

So since given its not a straightforward problem, what's your primary approach in trying to resolve the issue with the physician education and kind of patient outreach?

We're actually taking multiple approaches there, Thomas, and just probably better that we not go into all the details about what we're doing there. But as you know, we have a reimbursement team within the Company. We've expanded that team really to address the Medicare Advantage. And remember that we're talking about 25%, roughly, and it varies region-to-region. But nationally, we're talking about 25%, 75% between the Med Part B and the commercial are really not a problem in any way.

Our focus is on that 25%; we're taking a multi-pronged approach to that, but some of the things that you've mentioned certainly fall within the approaches that we're pursuing.

I just have two more questions, more about the numbers side. I'm looking at OMIDRIA cost of goods sold in second quarter 2016 compared to first quarter 2016 and the numbers are more or less the same. Does that reflect some R&D leftover inventory costs there, or how should we look at the costs for the second half of 2016?

Generally speaking, I think if you use around 5% as a cost to sales you should be in the general ballpark. I mean, in the beginning we had some inventory that was expensed prior to approval and then we've had some inventory we wrote off just based on the timing of the dating of the products. If you use 5% I think you're in the ballpark.

So like I said, the first two quarter numbers, they're more or less the same because of the pre-approval inventory?

Yes, a little bit of that. It's also a little bit to do with just some packaging materials and that kind of stuff that we've expensed. So if you use around 5%, you're pretty accurate. It just happens to be that two came out to not even close to the same number. I think, if I remember right, they're the exact same number and it just looks funny. But use the 5% and you should be pretty close.

One final question. You guys also mentioned revenue per vial for OMIDRIA is more or less unchanged. Can you remind us what the exact number is?

Yes, we haven't provided that. We can tell you that the ASP on that is stayed relatively close to what it came out at, which the is 465.

Jason Kolbert of Maxim Group.

This is actually Diane calling for Jason. And can you review with us the strategy to launch OMIDRIA in Europe without a partner?

I don't think that we've said that we plan to launch OMIDRIA in Europe without a partner. I think our strategy has been that we're certainly - we have a focus on partnering OMIDRIA in Europe. Our primary focus remains on the US and expanding utilization in the US.

Any partnership in Europe will be one in which Omeros is receiving potentially milestone payments, upfront payments. But the bulk of that we would expect would be royalties. Clearly the revenue driver for OMIDRIA and for Omeros is in the US. As we expanded that market in the US, as we demonstrate just as we have the value of the product in the US, the ability to generate sales in the US, all of that is going to translate positively across the pond to Europe.

And we would expect then that that will drive better terms on any kind of partnership in Europe. We don't of course discuss status of any partnering discussions with Europe or for Europe or really for any of our programs, not just OMIDRIA.

Are you going to be more focused on the premium or refractive lens compared to the cataract market?

No, I don't see that we need to do that given the broad reimbursement that we're experiencing across cataract surgery even with standard lens. There's no need for us to focus only on, or primarily on, the premium lenses. Obviously, we're focused on not just ASCs, but we're focused on HOPDs and we're focused on 340B facilities.

Those facilities, as you know, receive a mandatory discount we actually have associated with OMIDRIA, a slightly larger discount than that which is required federally. And again, these are areas that we are just beginning to tap into. So we see sales growth, as I've said, continuing. And we see that broadly across cataract surgery, no reason at this point to slowe our access in any way.

Tyler Van Buren of Cowen & Company.

I apologize if something similar to this was already asked, as I'm juggling multiple calls here. We get consistent positive feedback from doctors on your OMIDRIA sales and marketing efforts, which appear to be appropriately aggressive. But could you potentially go into a bit more detail in terms of the number of institutions you have signed up or formulary approval in as well as how you plan to further increase pull through at these accounts or potential product flow to eventually further inflect the launch?

One, we don't provide the number of accounts or which accounts are using OMIDRIA. But to your question of how do we increase the pull through, I mean, one is obviously new accounts, so new facilities. We continue, as I've said, to focus on new accounts broadening the base of the utilization of OMIDRIA.

At the same time, the percentage utilization at really almost any of the facilities where we are selling OMIDRIA is not even close to being maxed out. For example, in a given facility you may have 1 or 2 physicians using, but there may be another 10 that haven't become habitual users of OMIDRIA.

And even within a given practice, so even a specific surgeon may be using OMIDRIA only 15%-20%, 10%-20% of that physician's current procedural volume. The way that we're really looking at pull through is, again, a multi-pronged approach; one in accessing and adding new accounts, so in new facilities, but also within those facilities driving utilization across a broader number of surgeons, and within specific surgeons, increasing their utilization from perhaps 10%, 15%, 20% to 50%, 60%, 70%. Those are the objectives. I think we're being pretty successful at doing that.

So it's really the approach, the strategy to that and specifically the tactics are multi-level and depending on specifically what challenge we're facing.

Elemer Piros of Cantor.

I was wondering if you could give us a little bit of guidance for the second half or in the SG&A spend. On the R&D line, I saw a significant decline from $15 million to $10 million roughly. How should we think about this line item, specifically and maybe combined operating expenses going forward in the second half?

One, I think we manage expenses very tightly here. As you know, we have strong project management, we have strong development, we look closely at what spend and we monitor closely what we spend and how to get the most out of the least amount of capital. I think we've shown a pretty good track record of doing that. I think that what you've seen in this quarter is a reflection of just that.

I don't expect our approach or philosophy to change going forward. As additional work in 721 ramps up, one could expect to potentially see higher R&D cost that what you saw this quarter. But again, we continue to - remember, we have a number of knobs on the dashboard that we can dial up or down with pretty tight precision to manage our expenses. And we do that.

They could be higher, I think as Mike said in his presentation, that R&D cost may more higher in the second half of this year. But again, let's see. We continue to try to ratchet those down while still being able to move all of these programs ahead without a hitch.

Since we are almost through half of this - third quarter - the momentum that you experienced in the Q2, do you see it carried through during this first six weeks, if you have that information?

Again, I'm going to avoid any kind of guidance there, Elemer, other than to say what I've already said, which is we're comfortable with the sales growth that we're seeing with OMIDRIA.

What would be the nature of the update on the GPCR program? If you could characterize it in any way.

Again, I want to be careful about providing any guidance there. But obviously when we put out information, we think that the information that we're putting out is meaningful and is important for our shareholder to understand. I hear sometimes that we don't put out enough information; I think our approach there is we'd rather say less but say things that really are meaningful than to be issuing releases and disclosures about things that really aren't so meaningful and that shareholders have then a hard time sort of sifting through what's relevant and what's not.

So when we put it out, I will tell you that we will believe that what we put out is relevant. We expect that shareholders will find it relevant as well.

Thank you. And at this time, I would like to turn the call back over to Dr. Demopulos for closing remark.

All right. Well again, thank you every one for taking the time this afternoon to listen in to the call. We're, again, pleased with the outcome of this quarter. And we'll have more information to share with you on a good number of our programs as the year continues to unfold.

As always, I'd just like to let you know that we do sincerely appreciate your continued interest and support in Omeros. And have a good day, everyone. Thank you.

Thank you. Ladies and Gentlemen, this concludes today's conference. You may now disconnect.