Omeros Corporation: Far More Than Meets The Eye
Summary
- On 2/14/18, FourWorld Capital Management LLC published a report that put forth serious claims against Omeros' business prospects, projecting drastically deteriorating corporate revenues which would be imminent and unavoidable.
- We present an opposing viewpoint which balances an analysis of Omeros' financial position, particularly in light of significant recent developments, against remaining risks.
- We believe that even a worst-case scenario analysis of Omeros' business prospects will show that current investment in the company has the potential to yield significant returns.
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Introduction
Omeros Corporation (NASDAQ:OMER) is a commercial-stage biopharmaceutical company that discovers and develops small-molecule and protein therapeutics and orphan indications targeting inflammation, coagulopathies, and disorders of the central nervous system. The company has a diverse pipeline that most prominently features OMS721, which is currently in Phase 3 programs for three separate indications: Atypical Hemolytic Uremic Syndrome (aHUS), Immunoglobin A Nephropathy (IgAN) and Stem Cell Transplant-Associated TMA (SCT-TMA). However, Omeros comes by its commercial-stage status via its sole FDA-approved drug, OMIDRIA (phenylephrine and ketorolac injection) 1%/0.3%, which is marketed for use during cataract surgery or intraocular lens (IOL) replacement to maintain pupil size by preventing intraoperative miosis (pupil constriction) and to reduce postoperative ocular pain.
Source: www.omeros.com/pipeline/pipeline.htm
The Centers for Medicare and Medicaid Services (CMS) granted pass-through reimbursement status to OMIDRIA, effective January 2015, with such status scheduled to expire three years, hence, on December 31, 2017. Pass-through status is desirable as it provides for Medicare's separate payment for the pass-through product, over and above regular bundled facility fees, when used in ambulatory surgery centers (ASCs) or in hospital outpatient departments (OPDs).
OMIDRIA sales, currently Omeros' sole revenue source, have come to play an increasingly significant role in funding the company's day-to-day operations, including all-important development of the clinical pipeline. Thus, the expiration of the drug's pass-through status and attendant loss of separate reimbursement, although widely anticipated, is understandably an issue that bears thoughtful consideration by those interested in the Omeros story.
In this article, we attempt to put forth a balanced analysis of Omeros' financial position, taking into account the company's underlying business fundamentals, the positive effect that significant recent developments will likely have on this baseline financial position as well as a sober assessment of remaining risks. We will use the arguments put forth by FourWorld in their recent report as the lens by which we engage in this analysis, with our guiding principle being that the individual investor ought carefully evaluate each argument advanced both for and against investment in Omeros, present article not excluded.
Omeros' Business Prospects & Financial Solvency
Recently, FourWorld Capital Management LLC ("FourWorld") weighed in with its thoughts on the effect that loss of pass-through status would have on OMIDRIA revenues. Based on conversations with Ambulatory Surgery Center (ASC) representatives, its discussion with experts and its own channel checks, FourWorld forecasted an 80% YOY revenue decline and a 90% price decline for OMIDRIA. FourWorld went on to posit that these "collapsing revenues" would catalyze Omeros' imminent descent into financial insolvency. The specific mechanisms by which Omeros' financial downfall would be triggered were apparently embedded in Omeros' $125 million term loan agreement with CRG Financial.
From Omeros' most recent 10-Q, we find that the CRG loan facility was signed on October 26, 2016, and is set to mature on October 31, 2022. Omeros originally borrowed $80.0 million in November 2016 and then, in October 2017, both parties amended the loan agreement to permit Omeros to borrow, at its sole discretion and subject only to customary closing conditions, up to an additional $45.0 million, to be made available through March 21, 2018.
The CRG Loan Agreement contains the following requirements:
- Omeros must maintain cash and cash equivalents of $5.0 million during the term of the agreement, which is recorded as restricted cash and investments on the balance sheet.
- Omeros must achieve either:
- Minimum net revenue amounts through the end of 2021, which are $55 million and $65 million for the 2017 and 2018 calendar years, respectively, or
- Minimum market capitalization threshold equal to the product of 6.4 multiplied by the aggregate principal amount of loans outstanding under the loan agreement, determined as of the fifth business day following announcement of earnings results for the applicable year.
- If Omeros is unable to satisfy the minimum annual revenue requirement or the market capitalization threshold for any given year, the company may avoid a related default by repaying the shortfall between actual revenues and the minimum net revenue requirement for such year using proceeds generated by an equity or subordinated debt issuance.
In addition to these covenant requirements, the loan agreement also includes customary events of default that include:
"inaccuracy of representations and warranties, covenant breaches… the occurrence of any material adverse effect upon our business, condition (financial or otherwise), operations, performance or property taken as a whole. If there is an event of default under the CRG Loan Agreement, the lenders may have the right to accelerate all of our repayment obligations under the CRG Loan Agreement and to take control of our pledged assets, which include substantially all of our assets including our intellectual property."
After first suggesting that, even with a drawdown of the final $45 million tranche of the loan, Omeros would be unable to meet either the minimum revenue or the minimum market capitalization requirement in 2018, FourWorld went on to make pointed observations about possible preemptive actions that CRG could take with respect to the loan agreement.
While admitting that it had not spoken with CRG about the matter, FourWorld contended that CRG could construe the projected deterioration of the company's overall financial condition stemming from OMIDRIA's loss of pass-through reimbursement status as a "Material Adverse Change" and assert an event of default on the loan. Alternatively, FourWorld speculated that if Omeros had failed to promptly notify CRG on loss of OMIDRIA sales or developments on OMIDRIA's pass-through reimbursement status, such failure would also constitute an event of default. In either case, the argument went, with an event of default asserted, CRG would not only deny Omeros access to the additional $45 million but it would further seek immediate repayment of all loan obligations.
What Say You, CRG?
So then, with investors invited to use CRG and its continuing evaluation of the loan agreement with Omeros as proxy for the company's financial situation and business prospects, the table set with a veritable cornucopia of dire consequences to corporate liquidity stemming from a drastic decline in OMIDRIA revenue, let us see what CRG actually decided to do.
During the Q4 2017 earnings call, Omeros' CEO, Gregory Demopulos, revealed that, not only did CRG continue to make the additional $45 million tranche available for Omeros' drawdown at the company's sole discretion but that the lender had, in fact, agreed to extend, from 3/21/18 to 5/20/18, the date by which Omeros could decide to draw the additional funds. The motivations behind this development, viewed both from the eyes of the lender and borrower, instructs our further discussion.
That a disciplined, purportedly aggressive lender such as CRG would not only make the final tranche of the loan facility available to Omeros but extend the potential drawdown period plainly indicates that CRG, a lender well-seasoned in the biopharmaceutical space, was satisfied that the current terms of the loan continue to provide a satisfactory return, commensurate with all perceived underwriting risks. Moreover, by inference, it seems clear that CRG did not feel that a "Material Adverse Change" had occurred, nor was the lender particularly concerned of the occurrence of same in the near future. Notably, the loan's repayment terms, which require Omeros' making of interest-only payments through December 31, 2020 (with a possible extension of this interest-only payment period on the basis of Omeros' achievement of certain milestones), provide further support for the case that CRG remains comfortable with Omeros' continuing business prospects - it is, after all, their principal that remains on the line.
An analysis of Omeros' actions with respect to the loan agreement is no less interesting. We can reasonably assume that CRG agreed to extend the date by which Omeros could borrow additional funds at Omeros' request. The only logical reason that Omeros would seek such an extension would be that the company did not yet know if it would need to borrow the additional funds at all. No doubt, anticipation of possible extension of pass-through reimbursement status for OMIDRIA factored heavily in the company's thought process.
Just Passing Through on the Omnibus
In its recently filed 8-K, Omeros confirmed that extension of pass-through status for OMIDRIA had been achieved via a provision in the Consolidated Appropriations Act, 2018 ("the Omnibus"), which was signed into law on 3/23/18. The specific provision (pp. 802-803) states, in part:
"(G) PASS-THROUGH EXTENSION FOR CERTAIN DRUGS AND BIOLOGICALS.-In the case of a drug or biological whose period of pass-through status under this paragraph ended on December 31, 2017, and for which payment under this subsection was packaged into a payment for a covered OPD service (or group of services) furnished beginning January 1, 2018, such pass-through status shall be extended for a 2-year period beginning on October 1, 2018."
Of course, it would be far too facile to suggest now, with full benefit of hindsight, that legislative extension of pass-through reimbursement status for OMIDRIA was anything even approaching an inevitability. Indeed, during the Q4 2017 earnings call, even Demopulos struck a tone of, at best, measured confidence about the prospects, stating: "So while there are no guarantees we remain optimistic that separate payment will be restored in the near term for OMIDRIA and for other drugs that recently came off pass-through." Let us look now, then, not at the ultimate result, but rather the rationale put forth both for and against the probability of legislative extension of pass-through reimbursement status.
Again, from the earnings call, Omeros' case for the possibility of procuring pass-through extension was relatively straightforward:
"To be clear, the prospect for ongoing separate payment for OMIDRIA remain viable. One option is legislation. There is bipartisan, bicameral, multi organizational and broad corporate support for legislation already introduced in Congress that extends the pass-through period from 3 to 5 years, which would apply to OMIDRIA and other drugs for which pass through expired as of January 1. But for procedural issues, we expect that this legislation would have been included in the recently passed continuing resolution. There are near-term opportunities for Congress to address this provision directed to pass through extension, and we support efforts in the house and senate to enact into law."
That FourWorld's report took the opposite side of that coin is unsurprising; however, the evidence it used in support of its contention bears further analysis. Citing consultation with "government experts in Washington, D.C.", FourWorld noted that "the chances any new Medicare spending legislation will be introduced are effectively nil for the foreseeable future." FourWorld further supported its conclusion that extension of pass-through status was "effectively dead" by reasoning that:
- "Congress dealt with healthcare spending in the Bipartisan Budget Act of 2018", which did not include a provision for the extension of pass-through reimbursement status;
- neither HR 4679 nor HR 4683, the bills in which pass-through extension provisions were first introduced to the House, had "received serious consideration for inclusion in any must-pass legislation that might be considered this year" as evidenced by the fact that "neither bill [had] been scored by the Congressional Budget Office ("CBO"), an initial step essential for any bill to be legislatively considered by the House."
To evaluate the legitimacy of these arguments, it may be beneficial to first take a brief look at what the Omnibus is and the role that such consolidated appropriations measures have increasingly played in the funding of the federal government. The Pew Research Center, in a recent article, notes that the Omnibus spending bill is a legislative tool that has been and continues to be used largely because Congress has been unable to follow its own annual appropriations process:
Each year, "Congress is supposed to pass a series of separate bills funding various agencies and activities of the federal government. (For the past decade, the number of spending bills has stood at 12, one for each subcommittee of the House and Senate appropriations committees.)" Notably, the annual deadline for Congress to pass these spending measures is October 1, the start of the Federal fiscal year. However, "rather than pass stand-alone spending bills as it's supposed to, Congress has increasingly used omnibus bills (which bundle several appropriations measures into a single, giant law)."
Congress, finding itself nearly six months behind schedule and with subject matter spanning the gamut of all 12 appropriations subcommittees yet unfunded, turned to the Omnibus. Given the circumstances, one might reasonably expect such a spending bill to have something of a hasty and motley quality. In a recent article, Roll Call describes it thusly:
"Omnibus bills in recent years have become as synonymous with passing unrelated policy measures as they have with the annual appropriations process, so much so that the spending legislation is generally referred to as a 'Christmas tree' bill."
So then, with it being widely understood that the Omnibus would be a "Christmas tree" bill that by definition must include a number of wide-ranging and unrelated measures cobbled together at the eleventh hour, one wonders which "government expert" would conclude, with virtual certainty, that the Omnibus would not include any Medicare or healthcare spending at all. Perhaps more to the point, which such expert would categorically dismiss the possible inclusion of such provisions on the grounds that "Congress dealt with healthcare spending in the Bipartisan Budget Act of 2018"? In point of fact, a cursory search of the text of the Omnibus now reveals that the words "healthcare" and "Medicare" appear no less than 11 and 24 times, respectively.
Turning now to the remaining rationale against possible legislative extension of pass-through, FourWorld used the fact that neither HR 4679 nor HR 4683 had been scored by the Congressional Budget Office ("CBO") to support its contention that the bills had not "received serious consideration for inclusion in any must-pass legislation that might be considered this year". In truth, however, it would have been most unusual if either bill (or indeed any provision that would eventually find its way into the Omnibus) had received such scoring. Because while FourWorld characterized CBO scoring as "an initial step essential for any bill to be legislatively considered by the House", we need to go no further than the CBO's own explanation of its work processes to see that:
While "CBO is required by law to produce a formal cost estimate for nearly every bill that is approved by a full committee of either the House or the Senate; the only exceptions are appropriation bills, which do not receive formal written cost estimates…" (emphasis added)
CBO notes that it does estimate the budgetary effects of appropriation bills for the Appropriations Committees, and all Omnibus spending measures did go on to receive such informal estimate, notably published on the same day (3/22/18) as the text of the Omnibus itself.
OMIDRIA, the Once and Future King?
FourWorld also went to the experts to assess the perceived efficacy of OMIDRIA. Citing consultations with ophthalmologists, FourWorld contended that "at best OMIDRIA provides a very mild clinical benefit, but did not justify much, if any, pricing premium over generic alternatives." Other experts would likely beg to differ.
During the Q4 2017 earnings call, Demopulos noted that OMIDRIA enjoyed strong, nationwide support from surgeons and administrators for the continuation of separate reimbursement. Their observations regarding OMIDRIA's clinical value aligned with the findings of numerous investigator-initiated clinical studies published in peer-reviewed journals confirming superior performance and improved patient outcomes obtained with OMIDRIA as against previous standard practices. Notably, the use of OMIDRIA was seen to yield distinct benefits that accrued to patient and provider:
For the patient, OMIDRIA improved patient outcomes, including:
- enhanced post-surgery visual acuity
- greater patient safety both during and after surgical procedure
- reduced complication rates
For the provider, the use of OMIDRIA allowed for substantial cost savings stemming from:
- decreased use of pupil expansion devices, as OMIDRIA is superior than either phenylephrine or ketorolac alone in maintenance of pupil diameter
- reduced surgical time
- reduced need for pre and/or post-operative topical NSAIDs used during cataract surgery
In fact, these benefits, along with the lack of suitable OMIDRIA alternatives, were likely behind the FDA's own recent approval for expansion of the indication for OMIDRIA to include use in pediatric patients, for which label expansion the FDA expressly requested that Omeros pursue.
In any case, the ultimate proof of OMIDRIA's clinical value will be in prospective revenue numbers:
While the achievement of two-year extension of pass-through reimbursement status for OMIDRIA is a substantial victory that should ultimately provide Omeros with both financial clarity and security, the delayed start date of the additional pass-through period of 10/1/18 could introduce some near-term revenue headwinds. ASCs and OPDs have held off on using and replenishing OMIDRIA stock due to the uncertainty on product pricing, and it seems clear that these customers will not be willing to pay the unreimbursed, full unit price for OMIDRIA. It follows that OMIDRIA's unit price will likely fall during this interim period of 1/1/18 through 9/30/18, resulting in a temporary decrease in overall OMIDRIA revenues.
How much OMIDRIA revenue numbers drop in this interim period will likely depend on how successfully Omeros can implement its alternative sales strategy, by which it will seek to establish an acceptable OMIDRIA price point (likely within the CMS' packaged procedural payment for cataract surgery) with ASCs and hospitals.
However, this interim period will also give Omeros the opportunity to explore what life after pass-through reimbursement will look like for OMIDRIA - a matter of some significance as OMIDRIA is scheduled to continue enjoying patent protection until April 23, 2033 (this includes the additional six months of market exclusivity granted upon approval of sNDA for OMIDRIA's use with pediatric patients). And of course, this OMIDRIA "dry run" would take place within the backdrop of security provided by the restoration of separate reimbursement status in due time.
Omeros' Financial Condition and Prospective OMIDRIA Revenues
As of 12/31/17, Omeros had $83.7 million in cash and cash equivalents available for general operations. In addition to the $83.7 million, Omeros collected $17.1 million of receivables in Q1 which were outstanding at year-end. Finally, Omeros has $5.8 million of restricted cash in support of the CRG loan agreement requirement, with the ability to borrow up to an additional $45 million under the credit facility with CRG at the company's sole discretion at any point up till 5/20/18.
With the delay in reestablishment of separate pass-through reimbursement for OMIDRIA, it is likely that Omeros will make use of the additional $45 million tranche under the CRG loan facility. With the use of such funds, the company would find itself within range of its previous forecast. From the company's most recent 10-Q:
"We believe our assets and these incremental sources of funds are adequate to fund our future financial obligations as they become due through November 9, 2018 regardless of the outcome of the separate-payment status for Medicare patients treated with our commercial product, OMIDRIA."
So, regardless of separate reimbursement for OMIDRIA, Omeros anticipated having enough funding for continued business operations until 11/9/18. And, we now know that OMIDRIA will have separate reimbursement status reinstated on 10/1/18. With that said, OMIDRIA revenues for 2018 will be comprised of:
- backlog of full unit price OMIDRIA sales from Q4 2017 that could not be recognized as revenue previously because of an accounting requirement - these revenues, which should be in the range of $5.6 million, will likely be recognized in Q1 2018, as OMIDRIA sell-through volume at ASCs and hospitals resumes (albeit at a temporarily lower unit price under the "alternative sales strategy");
- revenues from OMIDRIA sold under the alternative sales strategy during the interim period of 1/1/18 through 9/30/18;
- OMIDRIA sold at full unit price, under restored separate reimbursement, for the period 10/1/18 to 12/31/18.
The Worst-Case Scenario for OMIDRIA Leaves Plenty of Room for Upside for Current Omeros Investors
With potential OMIDRIA revenue headwinds acknowledged, let's take things one step further by stress-testing Omeros' prospective financial situation under a worst-case scenario. Throughout our analysis, the investor is invited to evaluate: 1) the likelihood that such a worst-case scenario will come to pass, and 2) even if it does, just how bad would things actually be?
Recall that the CRG Loan Covenants require that Omeros must achieve either:
- Minimum net revenue amounts through the end of 2021, which are $55 million and $65 million for the 2017 and 2018 calendar years, respectively, OR
- Minimum market capitalization threshold equal to the product of 6.4 multiplied by the aggregate principal amount of loans outstanding under the loan agreement, determined as of the fifth business day following announcement of earning results for the applicable year.
And, further:
- If Omeros is unable to satisfy the minimum annual revenue requirement or the market capitalization threshold for any given year, the company may avoid a related default by repaying the shortfall between actual revenues and the minimum net revenue requirement for such year using proceeds generated by an equity or subordinated debt issuance.
Under our hypothetical worst-case scenario, Omeros would not be able to meet the minimum net revenue requirement for 2018, which is $65 million. Note that such a failure would occur only if the sum total of 2018 OMIDRIA revenues (discussed in detail, above), as well as all other possible sources of overall GAAP revenues, which Demopulos, during the Q4 2017 earnings call, noted, could include "grants and partnering related revenues such as licensing fees, milestones, and royalties" were less than $65 million.
Having failed the minimum net revenue test, Omeros would then find itself having to meet the minimum market capitalization test, to be measured in late February or early March of 2019. As the loan covenant states, the market capitalization requirement threshold would be 6.4 times the amount of outstanding borrowed principal. Given the previously noted likelihood that Omeros does make use of the remaining $45 million tranche, the required minimum market capitalization would be: $125 million x 6.4 = $800 million. As of market close on 4/2/18, Omeros' market cap stood at $539 million. While Omeros' future stock price (in February or March of 2019) is not susceptible to exact analysis, we simply note that, as recently as January 2018, Omeros' market cap was nearly double its present value - and that at a time when there was substantially less certainty about the future of OMIDRIA.
But, onward with the worst case. Having failed both the minimum revenue and market cap tests, Omeros would find itself in the position of having to repay the shortfall between actual revenues and the minimum net revenue requirement of $65 million via a secondary equity offering. As our worst-case scenario assumptions dictate that Omeros had no revenues to speak of for 2018, Omeros' secondary offering would have to make up for the full shortfall of $65 million. As of the company's market cap on 4/2/18, a $65 million secondary offering would represent shareholder dilution of approximately 12%.
So, there we have it, the worst-case scenario. Can Omeros investors withstand the possibility of approximately 12% dilution? And how likely is it that such dilution would actually be necessary? In any case, with the eventual restoration of separate reimbursement for OMIDRIA promising a stable revenue picture for 2019 and 2020, any such secondary offering would just as likely be Omeros' last.
Of course, within the realm of biopharmaceutical companies, the initiation of a secondary offering would hardly be considered novel. What is rather novel, however, is a company with a drug candidate that is simultaneously in phase 3 clinical programs for three separate indications, two of which have no FDA-approved treatment. But, as Omeros investors well know, that is exactly what the company has in its complement inhibitor candidate, OMS721.
We have seen and evaluated the remaining risks involved with an investment in Omeros. In our next article, we turn to the potential rewards - and they are manifold.
This article was written by
Analyst’s Disclosure: I am/we are long OMER. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
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Comments (40)
BY Dow Jones & Company, Inc.
— 2:15 PM ET 04/26/2018
FDA Grants Breakthrough Therapy Designation to Omeros' ( OMER
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) MASP-2 Inhibitor OMS721 for the Treatment of High-Risk Hematopoietic Stem Cell Transplant-Associated Thrombotic Microangiopathy-- Discussions Ongoing with FDA and European Regulators for Expedited Approval -- SEATTLE--(BUSINESS WIRE)--April 26, 2018--Omeros Corporation ( OMER
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) today announced that the U.S. Food and Drug Administration (FDA) has granted breakthrough therapy designation to OMS721 for the treatment of patients with high-risk hematopoietic stem cell transplant-associated thrombotic microangiopathy (HSCT-TMA), specifically those patients who have persistent TMA despite modification of immunosuppressive therapy. This is the second breakthrough therapy drug designation for OMS721, which last year received the designation from FDA for the treatment of Immunoglobulin A (IgA) nephropathy. OMS721 is Omeros' ( OMER
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) lead human monoclonal antibody targeting mannan-binding lectin-associated serine protease-2 (MASP-2), the effector enzyme of the lectin pathway of the complement system."TMA is an increasingly common complication following stem cell transplantation and is devastating when conservative treatment of immunosuppressive modification fails," stated Rafael Duarte, M.D., Ph.D., F.R.C.P.(Lon), Associate Professor, Head of Hematopoietic Transplantation and Hemato-oncology Section, University Hospital Puerta de Hierro Majadahonda, Madrid, Spain, and Secretary of the European Society for Blood and Marrow Transplantation. "Patients with HSCT-TMA who cannot undergo or do not respond to modification of immunosuppressive therapy are at very high risk of death from this complication. Currently, there is no approved treatment for HSCT-TMA, which remains one of the most pressing therapeutic needs in the field of HSCT. The impressive effect on survival and other results seen in OMS721- treated patients are quickly apparent following initiation of OMS721 therapy and can't be explained by other factors. The HSCT community looks forward to the drug's broad availability for our patients."Breakthrough therapy designation was granted based on data from Omeros' ( OMER ) Phase 2 clinical trial evaluating OMS721 in patients with high-risk HSCT-TMA. To be eligible for enrollment in the clinical trial, HSCT-TMA patients are required to be adults with post-transplant TMA persisting for at least two weeks following immunosuppressive regimen modification (conservative treatment) or more than 30 days post-transplant. This population was chosen to represent a population at risk for poor outcomes, including mortality. These patients often have serious, life threatening co-existing conditions, and mortality rates have been reported to be as high as 100 percent. As reported previously, the estimated median survival for OMS721-treated patients was an order of magnitude greater than that for a matched historical control (p< 0.0001). Further analysis of the data examined 100-day mortality, an important endpoint previously used as an approval endpoint in HSCT. That analysis also showed that OMS721-treated patients had improved survival relative to the historical control (53% vs 10%; p = 0.0002). As previously reported, biomarkers of disease (i.e., mean platelet count and mean levels of lactate dehydrogenase and haptoglobin) demonstrated statistically significant improvement. Study patients also showed substantial improvement in red blood cell and platelet transfusion requirements. Other serious co- existing conditions in the patients treated with OMS721 included graft versus host disease (GvHD), cytomegalovirus and human herpes virus 6 infections, prior sepsis, diffuse alveolar hemorrhage, and residual underlying malignancies."I have treated several stem-cell TMA patients with OMS721 and seen marked and unexpected improvements that can't be otherwise explained," stated Professor Alessandro Rambaldi, from the University of Milan and Director of Department of Hematology and Oncology, Azienda Ospedaliera Papa Giovanni XXIII. "Most notable was a deteriorating patient with co- existing GVHD, TMA and neurological disability that confined him to bedridden hospitalization. Following treatment with OMS721, his TMA resolved quickly and his neurological status progressively improved, allowing him to leave the hospital and return to part-time work. This effect on TMA was observed in the absence of other specific treatments. The improvement seen in my patients has convinced me that lectin pathway inhibition by OMS721 is a scientifically sound and highly promising treatment strategy for a range of disorders associated with endothelial cell injury that commonly occur following stem cell transplantation."FDA's breakthrough therapy designation enables expedited development and review of a drug candidate for the treatment of a serious or life-threatening disease. Preliminary clinical evidence indicating that the drug may demonstrate substantial improvement over existing therapies is required. Benefits of breakthrough therapy designation include the eligibility for priority review of the application and rolling submission of portions of the application. FDA works closely with the company to provide guidance to determine the most efficient route to approval."High-risk TMA following hematopoietic stem cell transplant carries an extremely high mortality rate, and no treatments are approved for this devastating disorder," stated Gregory A. Demopulos, chairman and chief executive officer of Omeros ( OMER
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). "We appreciate FDA's recognition of the potential for OMS721 to improve outcomes -- most importantly survival -- for these patients, and we look forward to working closely with the Agency to accelerate the development and approval of OMS721."Persistent thrombotic microangiopathy is a life-threatening complication of HSCT. Approximately 20,000 HSCT procedures are performed in the U.S. annually, and TMA is reported to occur in approximately 10 to 25 percent of HSCT patients. Reported mortality in high-risk patients is greater than 90%.OMS721 is also being evaluated in ongoing Phase 3 clinical trials in IgA nephropathy and atypical hemolytic uremic syndrome. Across all clinical trials with OMS721, the drug has been well tolerated and no safety concerns have been identified.
BY Business Wire— 9:15 AM ET 04/11/2018
SEATTLE--(BUSINESS WIRE)-- Omeros Corporation today announced that it has entered into an amendment to its existing credit facility with certain affiliates of CRG LP, a healthcare-focused investment firm. With respect to the twelve-month period beginning on January 1, 2018, the amendment deems Omeros (OMER) to have met the financial covenants requiring the company to achieve a minimum net revenue or market capitalization amount. The net revenue and market capitalization covenants will continue to apply for 2019 and subsequent years, but the minimum market capitalization threshold for future periods will be reduced from 6.4x to 3.0x the aggregate principal amount of loans outstanding (excluding any payment-in-kind loans). Under the credit facility, Omeros (OMER) may borrow up to an additional $45.0 million on or before May 20, 2018 at its sole discretion, subject to customary closing conditions.In connection with the execution of the amendment, Omeros (OMER) will issue warrants to the lenders, exercisable for five years for up to 200,000 shares of the company’s common stock at an exercise price of $23.00 per share, which represents an approximately 70 percent premium to the closing price of the company’s common stock on April 6, 2018. The warrants, and underlying common stock if and when the warrants are exercised, will be subject to a one-year restriction on sale or transfer if any amount of debt remains outstanding under the credit facility.“It’s a pleasure working with CRG – they’ve been good partners and their support enhances Omeros’ freedom to advance aggressively the expansion of our commercial product OMIDRIA and our development pipeline,” stated Gregory A. Demopulos M.D., chairman and chief executive officer of Omeros. “This amendment makes clear that the revenue and market capitalization covenants under our loan agreement have been met for 2018. In addition, Omeros (OMER) has been further protected from potential future broader market volatility by the permanent reduction in the market capitalization requirement for 2019 and beyond.”“CRG believes in Omeros’ direction, its potential and its management’s proven ability to deliver,” stated Luke Duster, Managing Director of CRG. “With the recent extension of CMS pass-through status for OMIDRIA restoring access to this important product for Medicare beneficiaries, we expect that utilization of the product will quickly return to prior growth rates. In addition, OMS721 leads an exciting pipeline toward additional commercial opportunities in the future. We clearly support Omeros’ continued success.”----------------------...Please note Robert Laughlin's prescient article, noting the probability of such amendment. Long OMER.
