Q2 2019 Earnings Call
Ladies and gentlemen, please standby during Q2 2018 Ahmadis Corporation earnings Conference call will begin momentarily again, please standby your gun, France will begin in 30 minutes. Thank you.
Good afternoon, and welcome to today's conference call for Omeros Corporation. At this time all participants are in recent only mode I see companies Tomorrow, we will conduct a question and answer session. Please be advised that this call is being recorded at the company's request and a replay will be available on the company's website for one week from today I will turn over the call to Ms., Jennifer Williams Investor Relations for ominous.
[laughter] 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 companys actual results to differ materially. Please refer to the special note regarding forward looking statements in the company's quarterly report on Form 10-Q , which was filed today with the FCC and the risk factor section of the company's 2018 annual report on Form 10-K for a discussion of these risks and uncertainties.
Dr., Greg Demopoulos, Chairman and CEO of bone marrow will take you through a corporate update and then Mike Jacobsen, Our Chief Accounting Officer will provide an overview of our second quarter financial results.
We have some time reserved for questions. After the financial overview now I would like to turn the call over to Dr. Demopolis.
Thank you Jennifer and good afternoon, everyone. We appreciate you joining us today.
The second quarter was another strong one for Omeros with Omidria once again generating record quarterly sales and our pipeline programs, achieving a number of important milestones.
Let's begin our update today with more supplement our MASP two inhibitor and our progress toward regulatory approvals in stem cell transplant associated thrombotic microangiopathy or stem cell Tms.
In the U.S., we've submitted to F.D.A., our proposed schedule for rolling submission of our biologics license application or B.L.A. and are awaiting the agency's response.
Given the usual timing of the scheduling process, we are targeting submission of our B.L.A.'s first module by mid next quarter.
The response based primary endpoint for our clinical data and stem cell T. M. A patient is set and includes both laboratory markers as indicators of disease process.
And measures of organ function.
For competitive reasons, we have not yet released the specific details of the endpoint given that there is no approved drug for stem cell TDMA and that this is the first endpoint on which such an approval would be based.
It's fair to say, though that FDIC would not have agreed to endpoint criteria on which they could not grant approval and we are confident that our data meet them.
No additional patients are required to be enrolled.
A majority of the clinical trial data are already in house.
Collection of the remaining data is underway and narratives describing each patient's disease course and response to in our supplement are already being written for inclusion in the B.L.A.'s clinical module.
The safety profile of Norsok diplomat continues to look good and there have been no adverse safety signals.
Now, let's look at our progress on chemistry manufacturing and controls or CMC.
Here again, we are well position.
In addition to locking down the clinical and Nonclinical requirements for approval, we have completed a successful pre BLE CMC meeting with FDA.
The agency reviewed our CMC data to date, and we discussed with F.D.A. the requirements for approval of our B.L.A.
Again, we are confident that we can meet them.
Lonza, our long standing partner during the clinical development of Norsok Allomap is now operating under a long term agreement for commercial manufacturing of the drug.
We also have established a long term agreement with better a world leader in aseptic filling and packaging under which they will provide their services for commercial in our supplement.
In Europe , we've begun meetings with our rapid tours, who will assist us throughout the preparations and submission of a marketing authorization application or M&A and through the expected approval process.
Our plan is to use the same clinical manufacturing and Nonclinical data for approval in Europe .
With breakthrough therapy designation from F.D.A. and orphan drug designations in both you us in Europe , the BLS and M.A. for in our supplemental been stem cell T. M. A each enjoy savings in review time and fees as well as market exclusivity following any approval.
Our commercial team is actively preparing for that in our supplement launch and continues to engage with transplant centers and thought leaders in the U.S. in Europe .
These members of the transplant community are excited to welcome Omeros has a leader in this space and are providing guidance on how we can establish in our supplement as standard of care for stem cell Tms patients.
The current therapeutic options are not adequately treating patients and this creates an opportunity for a targeted lectin specific complement pathway inhibitor that promises greater efficacy with a favorable safety profile.
There is a need for innovation in the complement space and.
With its MASP, two and MASP three program.
Omarosa is leading the way.
We continue to formulate our market access approach and have also gained insightful feedback from commercial payers on how to position our soft allomap appropriately as a life saving therapeutic.
These payer discussions also focus on the ways that in our supplement is expected to reduce the overall cost associated with treating stem cell TDMA.
Most notably hospitalizations extended extended intensive care units days acute dialysis and organ failure.
In our supplement is expected to be used in both the inpatient and outpatient hospital settings, allowing providers the flexibility to dose across sites of care over the course of therapy.
The value proposition for in our supplement stem cell T. I may have strong.
And based on discussions and feedback to date.
We are encouraged that providers payers and other members of the healthcare community will work with us to establish in our supplement as standard of care for this indication.
Progress continues in the phase III program for in our supplement I gain a property as well.
Enrollment is advancing at numerous sites in the us Europe and Asia.
As a reminder, the trial is enrolling patients with greater than one gram of proteinuria daily as well as a discreet subset of patients with 24 hour proteinuria levels greater than two grams.
Either of these two populations can result in accelerated or full approval based on proteinuria reduction alone.
To our knowledge and our Sop Lamar is the only drug.
That can receive full approval based on proteinuria alone.
All other drugs in development for Jana property require glomerular filtration rate or GF, our data for full approval.
The ability of in our supplement to obtain full approval on proteinuria would likely save two to three years in the full approval process.
And our supplement there is also the only drug with FDA breakthrough therapy designation for AIG nephropathy.
It also has orphan drug designations from both an FDA and the European Medicines agency for this indication.
A manuscript detailing the clinical data from our phase two Iga Nephropathy program has been prepared by our academic leadership Committee and will be submitted for peer reviewed publication within the next few weeks.
An interesting case report has also been prepared for publication.
It describes the impressive response to in our supplement treatment by a patient who has quickly deteriorating due to wide GA vasculitis associated in the fright us and rapidly progressive you'll ameriana freighters.
We also expect the details of this case report to be published soon.
In a separate study pharmacokinetics and pharmacodynamics of subcutaneously administered in our supplement will be evaluated together with potential biomarkers of Vijay nephropathy in patients with this disease.
Enrollment is expected to begin this month or next.
Subcutaneous dosing is also the route of administration in our phase three trial of in our supplement in patients with atypical hemolytic uremic syndrome or A.H.U.S.
This trial continues to enroll at multiple sites internationally.
This is a single arm open label study planned for initial enrollment of 40 patients to support based on guidance from F.D.A., Andy May and accelerated approval in the us and a full approval in Europe .
In our supplement has both ft, a fast track and orphan drug designations for A.H.U.S.
Our mast two lifecycle products are also advancing nicely.
Our second generation MASP two antibody is planned for clinical entry in mid 2021 and is targeting a subcutaneous dosing frequency of once monthly or better.
Development of our orally available mast two small molecules there's also progressing.
Assisted by a structure based drug design using X Ray crystallography, we continue to optimize these compounds in preparation for clinical trials.
With multiple series of highly potent and selective MASP two inhibitors, we expect to achieve our goal of advancing to the clinic by mid 2021, a once a day orally available compound that effectively a blades the lectin pathway.
Now, let's turn to an overview of the numbers for the quarter and the performance of our commercial product Omidria.
The only FDI approved product for use in cataract surgery to prevent pupil constriction and reduce post operative pain.
The second quarter delivered another record for Omidria with net sales at $26.8 million, an increase of 23% over the first quarter.
Days of inventory remained at their historical norms.
The growth in sales came from increased demand driven by both a substantial increase in number of accounts and penetration within accounts across all channels as sees hospitals, the veterans administration and other government customers.
Our net loss for the quarter was $14.5 million or 29 cents per share, which includes non cash charges of $6.3 million or 13 cents per share.
As of June Thirtyth, 2019, we had $31.8 million available for general operations.
We subsequently entered into a revolving line of credit facility with Silicon Valley Bank under which we may borrow up to $50 million with borrowing availability, depending primarily on our outstanding accounts receivable balance.
The line of credit contains no financial covenants, and we were not required to pledge any of our intellectual property as collateral.
With the revolving line of credit at current revenues and expenses, we have over one year of operating capital.
As projected growth of Omidria sales again was strong in the second quarter and we expect continued double digit growth in Q3.
Consistent with previous sales growth, increasing physician demand and expanding payer coverage are key drivers.
Lets first examine our progress made on the payer front, our field and reimbursement teams continue to meet with payers to ensure appropriate coverage for omidria.
Additionally, we are partnering with surgeons and their administrators to advocate for separate payment across all payer plans.
In July CMS issued a permanent unique J code for Omidria.
J codes, our reimbursement codes used by commercial insurance plans Medicare Medicare advantage Medicaid and other government payers for drugs like Omidria that are administered by a physician.
J code standardize the submission and payment of insurance claims facilitating and streamlining billing and reimbursement.
We expect many commercial and Medicare advantage ensures that currently do not reimburse providers for Omidria under the drugs currency code two began reimbursing under the newly assigned permanent J code.
Previously made effective only annually on January one.
CMS has now implementing quarterly awards and we were pleased to learn that the permanent J code for Omidria will be effective in less than two months on October onest.
Our market access payer and sales teams have begun executing their commercialization and implement patient plan to ensure that facilities are fully aware and ready to use the new J code.
We already have started receiving confirmations from those plans.
Humana for example has informed us that the J code for Omidria is set up in their system and we'll be ready to go on October Onest. The day, the J code becomes effective.
Physician demand continues to grow as the significant benefits and safety of Omidria compared to any other alternative become repeatedly proven.
By the published data and as quality outcome measures are increasingly a focus of surgeons and facility administrators.
Independent studies evaluating Omidria and peer reviewed publications detailing the results play an important role in building the support.
Two independent studies and a total of approximately 2800 patients showed that omidria reduces the incidence of assisted macular edema or see I mean.
Sam is a site sight threatening complication of cataract surgery and the data from these two studies are planned for submission.
Two peer reviewed journals this month.
In each of these studies patients receiving omidria did not receive any steroids, whereas those without omidria were treated with steroids.
The omidria treated patients had a three to 12 fold reduction in the rate of CMV.
One of the studies also examined breakthrough I write us, which is inflammation of the Iris and a challenge to manage and also assessed pain and photophobia, which is extreme sensitivity to light.
Each of these problems occurred about three times less frequent frequently with omidria compared to steroids.
We also now have data on the ability of omidria to mitigate the need for polo for post operative and Perry operative opioids.
An abstract describing results of a new independent study has been accepted for presentation at the meetings of the American Academy of Ophthalmology in October .
This study compares patients receiving omidria during cataract surgery to those receiving up enough front.
And patients were masked to treatment.
Study patients were allowed to request fentanyl an opioid.
For pain or discomfort during the surgical procedure visual analog scale or VA pain scores were also collected.
Patients, who received Omidria were 23 times less likely to request fentanyl or have significant pain than those patients who received up an effort.
A written assessment of the study and its resulting data by an internationally recognized expert in pain management and opioid use disorder makes clear that omidria meaningfully reduces the risk of a cataract surgery patient developing opioid use disorder.
The results will be submitted soon for publication in a peer reviewed journal.
Each of these studies on those previously published in peer reviewed journals continue to support our efforts to obtain permanent separate payment from CMS for Medicare part D patients.
We intend to submit comments to the 2020 proposed rule for CMS is outpatient perspective payment system, which was just published in late July .
This is the rule that governs Medicare payment for Omidria and also helps guide payment.
My other payers.
Omidria was not directly mentioned in the proposed rule, which is not surprising given that the drug is not slated to come off pass through until the fourth quarter of 2020.
Our team is continuing to analyze the proposed rule and to advocate on behalf of our drug.
Early review of the proposed rule indicates that CMS intends to continue its policy of paying separately for a non opioid drugs that provide post operative pain relief when used during surgery, specifically CMS indicates in the 2020 proposed rule. The non opioid drugs that are indicated for reduction of post operative pain may warrant separate payment. If there is evidence to show that such drugs help to deter or avoid prescription opioid use and addiction.
And that package payment presents a demonstrated barrier to access for such drugs.
Based on the opioid sparing data that we just discussed as well as data from our phase three clinical trials together with the clear restriction of access to Omidria during its recent past through hiatus.
Our team believes that omidria fits squarely within the parameters set forth by CMS to qualify for separate payment.
In addition to providing evidence on how omidria meets the non opioid criteria for separate payment.
We intend to ensure that CMS receives additional information.
That makes it clear that characterizing omidria as a supply in order to package that drug into the facility payment for cataract surgery is bad policy.
And harms Medicare beneficiaries.
Providing a lower quality of care than commercial payers.
And the veterans administration system.
Consistent with our previous efforts, we have the support of the American Society of cataract and refractive surgery, the outpatient bottleneck surgery society, and the filmic surgeons and facility administrators nationwide.
In addition, we have strong bipartisan and by Cameral congressional support, including the bipartisan chairs of the house and Senate vision caucuses, who are on record asking CMS to ensure appropriate reimbursement for any new pharmaceutical products like omidria that do not fit neatly into CMS is existing reimbursement mechanisms.
Their letters to CMS directly referenced new ophthalmic drugs approved by the FDA for post operative indications.
And strongly request that CMS reevaluate its package payment policies.
These letters urged CMS to ensure appropriate reimbursement for drugs like Omidria that advance the standard of care for Medicare beneficiaries by minimizing complications during surgery and reducing the reliance on opioids for post operative pain management.
CMS continuing to pay separately for Omidria is the right thing to do for patients and likely will save money for CMS and other payers prior to scheduled termination of pass through in late 2020, we expect that we will get there.
Now, let's go over a few highlights from some of our pipeline programs before we move on to financial results.
We began our comments today with an update on the MASP two part of our complement franchise a second part of this franchise is all amass nine six our antibody targeting MASP three.
The key activator of the complement system's alternative pathway MASP three is responsible for the conversion of pro factor D to factor D.
Unlike other alternative pathway inhibitors on the market or in development.
Oh CMS nine six has the advantage of selectively blocking the alternative pathway without affecting the function of either the classical or lectin pathways.
We expect that RMS nine or six will be dosed subcutaneously once monthly or even less frequently.
Manufacturing scale up is well underway and RMS nine of six is slated to enter the clinic in the first half of 2020.
We're excited about the breadth of proven indications for this molecule.
Our initial focus is paroxysmal nocturnal hemoglobin urea disease in which almost 906 compared to other alternative pathway inhibitors on the market or in development.
<unk> is expected to have a better safety profile more convenient dosing and the ability to inhibit not only in trivascular homologous, but extra vascular homologous as well.
Let's turn now to almost five to seven our phosphodiesterase seven or PD seven program for the treatment of addiction and compulsive disorders.
Here again, we see the potential for important advantages over addiction therapy is on the market or in development.
The data demonstrate that our PDP seven inhibitors are effective across multiple drugs of abuse and compulsive disorders and act without depressing the reward system.
Current marketed drugs for the treatment of addiction due to press the reward system, a major deterrent to their use.
Our initial clinical focus in this program as nicotine addiction.
Which represents a large unmet clinical need.
Dosing has now been completed and the single and multiple ascending cohorts in the phase one trial for our lead PDC seven inhibitor.
The pharmacokinetic data support once daily dosing with or without food.
Data analysis is being finalized and we expect to release detailed study results from both cohorts in the near future.
In addition, a manuscript is being finalized detailing the mechanism of action of PD seven inhibition in addiction and will be submitted soon for publication by a major peer reviewed journal.
We'll wrap up our program summary, with our G protein coupled receptor or GPCR program.
This is a platform technology and Omeros believes that a controls 54, gpcrs for drug development, ranging and indications from CNS to metabolic.
Cardiovascular and cancer.
One of our primary interest in this program recently has been GPR 174.
A receptor with a novel activity important in cancer immunotherapy.
We expect to share more information about this program publicly.
In the very near future.
With that I will turn the call over to Mike for a summary of our second quarter financial results. Thanks, Greg.
As Greg noted a mid via and total revenues for the second quarter were $26.8 million and our net loss was $14.5 million or 29 cents per share.
This includes noncash expenses of $6.3 million or 13 cents per share.
Here's here's some additional details regarding our second quarter results as compared to the first quarter.
Once again Omidria achieved record quarterly sales with total product revenues of $26.8 million compared to $21.8 million in the immediately preceding quarter. This is an increase of $5 million or 23%.
During the second quarter, our overall gross to net deductions were 28%, which is relatively consistent with the 27% from the first quarter.
Costs and expenses for the quarter were $36.1 million.
4.9 million million dollars decrease from the first quarter of this year.
The decrease was primarily due to the timing of manufacturing scale up activities at Lonza.
Our commercial manufacturing partner Furner supplement.
Interest expense was in line with our expectations at $5.5 million and did include $2.2 million of noncash interest.
As of June Thirtyth, 2019, we had $31.8 million of cash cash equivalents and short term investments available for general operations.
Additionally, we recently entered into a three year agreement with Silicon Valley Bank for $50 million revolving line of credit.
Under the terms of the agreement, we can generally borrow up to 85% of our outstanding accounts receivable.
Interest on any of the outstanding balances crews at the greater of 5.5% or the prime rate.
Once again the agreement does not require a pledge of any of our intellectual property.
Nor does it include any financial covenants.
Now, let's take a look ahead for the second half of this year.
With regard to revenue. Despite the fact that third quarter is historically one of the weakest for cataract surgery procedures, we expect solid double digit revenue growth in Q3 compared to Q2 as lean as we continue to increase our market penetration.
We expect an even greater percentage revenue growth in the fourth quarter, one of the historically strongest cataract surgery quarters.
Likely helped by the October Onest effective date of our J code as well as the natural wholesale inventory stocking that occurs in late December .
During the remainder of the year, our research and development expenses are planned to be primarily related to our supplement let's all mass five to seven almost nine of six NRG PCR program contributing lesser amounts.
We expect research and development costs will increase in the second half of this year due to the manufacturing scale up activities at Lonza include including the production of.
Process validation batches in preparation for the commercial for commercialization.
Be filing preparation for stem cell TDMA will also contribute to the increase.
To be clear as I mentioned last quarter, all development and manufacturing cost furnace optimum, including the process validation costs incurred prior to the U.S. So you approval are expensed under research and development as they are incurred.
Selling general and administrative expenses for the Corps third quarter of 2019 could increase modestly from the second quarter total $16.9 million.
Primarily due to the incremental sales and marketing activities associated with associated with pre commercialization activities for stem cell Tammy.
Similarly, we would expect the fourth quarter sales and marketing expenses to increase slightly over those incurred in the third quarter for the same reason.
Interest expense for the third and the fourth quarter should be in line with the second quarter at approximately $5.6 million.
With that I'll turn the call back over to Greg.
Okay. Thank you Mike.
Operator, let's open the call to questions.
Ladies and gentlemen, you have a question at this time please press the star.
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Our first question from.
Comes from the line Alfie, Steve Brozak from WBB. Your line is open.
Great. Thanks for taking the questions and and I I'm, just going to dive right in with two on two items on Omidria. What would you say the current market penetration is I know, there's familiarity I know that you've hit accounts, but what would you say the current market penetration is and what what can we take away from this right now and into the near future and then I, obviously have a question on or supplement please.
Sure. Thanks, Dave.
No. We we would expect that currently we're running at about eight to nine 8% to 10% of cataract surgeries that are performed annually.
Okay and are there there's a I mean, obviously there is a significant room for growth in that number.
And <unk> as much as you can tell us obviously, there's a there's a specific focus in congress dealing with opioids and opioid addiction.
How does how is omidria positioned in in a way that kind of discussion how would you how would you look to describe it and then I'd like to go back and in our supplement please.
Sure.
I as I went through and then sort of the prepared comments, we think weve fits squarely within the criteria set by CMS not just last year or in last year's Oh, P.P.S. proposed and final rule, but this years Oh P.P.S. proposed rule Oh, we have data, which will be published showing that omidria reduces the need for fentanyl, which as you know is one of the most concerning opioids.
Nationally, but also is of high focus in DC and the data clearly show that omidria reduces the patient need for for Fentanyl. Our phase three programs show again, the same thing reduction and the need for opioids and all of that while concurrently decreasing VA as pain scores I mean as you know normally you hold one of those two parameters fixed while you measure the other so if you're measuring if you're measuring pain medication use you hold to be asked pain scores fixed and then measure the amount of drug needed or Conversely, you hold the amount of drug that you administer fixed and then assess V.A. asked pain scores here just as in our phase three trials or both.
Both of those variables were allowed to float.
And yet we consistently see not only a reduction in the need for opioids in in this most recent study fentanyl specifically, but also marked reduction in VA gas pain scores. So nearly an 80% reduction in the need for opioids are fentanyl and a concurrent greater than 50% reduction in VA chest pain scores that.
Thats really quite impressive and so in addition to that there is a corresponding memo.
From one of the world's leaders in.
Drug addiction pain management opioid use disorder, who has commented specifically on the data coming out of this recent study and the.
And the.
Direct correlation of those data to opioid use disorder, and specifically, reducing the risk of opioid use disorder in cataract surgery patients. So I think you know.
In short.
We are.
We are right in the center of it and I can't imagine, how we would otherwise.
Not meet those criteria.
Okay.
Going in or supplement you, obviously, just and you know you detailed the lonza manufacturing relationship and you've been telling us about the on the clinical side with F.D.A. and your and your dealings with them. The one component I'd like you to talk about and I'll hop back in the queue is the clinical reception, what you know given yes, how much you've done so far.
Are you seeing as far as the clinical demand I know of course Theres clinic, you know Theres self described clinical demand, but what are you seeing from the clinicians that that we should know in terms of they're understanding.
And everything else than anything else actually you can tell us and I'll hop back in the queue. Thank you.
Sure. Thanks, Steve you know look obviously, we're we're dealing closely with the opinion leaders in stem cell Tammy and they are eager and in fact, a one could describe it as a passionate about being able to access the drug.
For their patients.
A number of these.
Opinion leaders have used the drug.
Others are requesting it our compassionate use program is expanding all of these things indicate I think and and underscore the clinical response to tune our Sop Lamar been in this indication.
So our objective is to get this onto the market as quickly as possible.
We are collaborating closely with F. da to get that done and we're collaborating as well closely with CMS to get that done in Europe .
Great Congrats on the quarter and thanks very much for taking the questions.
Thanks, Steve Thank you.
Again, ladies and gentlemen, if you have a question at this time. Please press the star and then the numbers.
I get that stone telephone if your question has been answered or you wish to move it sounds like you just press the pound key.
You have a next question from the line of Brandon Your line is open.
Hi, Brandon.
Hi, Thanks for taking my question my apologies add so apologies if you covered even the corgis can hopping between a few calls, but I'd love to get your thoughts on the Twinkie Twinkie Atps proposed rule from my side of the quite positive in relation to that made good just given that yeah.
It seems that you have.
And if it in fact, you know not having posture.
Thanks, Vivek you add in craggy ideally and then as you mentioned earlier the Sentinel side of things you do have that.
Yeah, Hi, just any color on that proposal.
Sure, we and our team.
Have really come through that rule very closely.
And it's interesting that as I mentioned I think in my opening remarks that Omidria is not specifically named and again on their Omidria is currently enjoying pass through designation and so I think that may explain it.
But when we look at this.
As you said, we clearly meet those criteria and not only do we have data, which will be published that demonstrate the reduction and opioid use but you pointed out an important the second component, which is that CMS has asked that that CMS claims data support that packaging.
Such a drug would limit access to that drug and I can tell you that we have.
Data.
With CMS claims data that clearly make that case, all that nine month hiatus that we had beginning January one of 2018 and running until pass through was reinstated by Congress on October Onest 2018.
Well painful as that was I think may have been fortunate at least in this respect where it clearly allowed us to generate those kind of claims data and those show again as as just as you would expect a marked reduction in patient access to the drug. So I think you know as we read it and again, we're still digesting different parts of it and trying to make sure. We put all the pieces together. It's as you know, it's an awfully large document and there are multiple components that sometimes even seem to conflict a little bit, but as we put all of the pieces together I think we're quite confident that we squarely fit within the non opioid exclusion then there's the entire other question about the drugs of supplies and I think we have.
We continue to enjoy in our.
Frankly building on what we currently have support legislatively I mentioned, the bipartisan by Cameral vision caucus.
Which has gone on record with CMS, saying you know luck. This this is a situation that just not working and that.
This needs to be fixed to ensure access for patients two important drugs. Remember. This is this is all about patient access others try to to describe it in other ways, but the distillate of all of this is.
His patient access should Medicare part b patients be denied access to important drugs that other patients.
Our readily able to access whether those big commercial payer patients or med advantage patients or VA patients as you know the drugs been placed on the national formulary for the V.A. that means that every VA facility in the country that performs ophthalmic surgery.
He is mandated to must make.
Mid drea available upon request to its physicians I mean, that's a pretty powerful statement. So I think I think again, we're pretty well situated and why why don't I stop there and see if you've got any other questions about it.
No that's very helpful.
Maybe one additional question again.
I am sure we covered some of this on the call, but yes, the agreements with the FDA on the endpoint seemed very positive on.
No Matt So if I look I have another question I get from investors is when will we see additional data on the product is your main meeting and the agreement.
Coming to an agreement with M- potentially a catalyst for us to see more data on that product.
Yes, I understand the question. Thank you.
Yeah, Brendan look first of all let me it loud and I'll address those in reverse order. We are working with you I may.
So that we can also make the drug quickly available in Europe for the European transplant physicians, who are frankly requesting it and want access to it for their patients.
Is that related to our release of data you know no not really.
The data will be released as we put together the clinical module and finalized the clinical module to be law, but I think what people need to recognize and then I understand the question of well Gee, if they're not sharing the data there must be something wrong with the data you know I can understand that perspective, I can simply tell you that that perspective.
As flatly wrong, we put a tremendous amount of effort time and resources into developing what we propose to FDA as the criteria for the primary endpoint.
And remember it was F.D.A. that frankly asked us to change the endpoint from overall survival to a response based endpoint. So lot of time effort and resources went in to developing that reaching agreement with the FDIC a on it and also generating the data that we have we don't feel a particularly burning need to make all of that information potentially available are publicly available to any competitors, who want to follow us.
Oh, we're setting the bar, we plan to set the bar high and we plan to obviously meet that bar, we expect we will.
The data will come out and when they do others will be able to look at it and see Gee. This is how omeros did it how do we now if we want a follow on Merrell us into this space.
How do we design our end points, how do we design, our our programs, but we don't see any real need at this point to to accelerate.
That possibility for any competitors.
Completely understood and I think that the rocket pranks there thanks very much.
Thank you Brandon.
Thanks for joining.
Okay.
We have another question from the line up for you on the South Korea from H.C. Wainwright. Your line is open.
Hi, Thanks, very much for taking my questions and congrats on the good quarter.
Just a couple on Omidria first I was wondering if you could elaborate Greg on what you saw as the main drivers of Omidria sales momentum in the second quarter and if you saw any meaningful new sales trend.
Emerge sales trends emerging or if it was sort of more of the same that you've seen earlier in the year and if you could also comment on the reorder rate or the re utilization rate for Omidria. Please.
Sure.
First with respect to the drivers of the growth Q2 over Q1, you know bromday were largely the same I mean, it was increasing number of accounts and it was increasing penetration within accounts well, let me give you a little more color on that which I think might be helpful.
We are very focused on expanding the base of our customers and those using omidria. It's important that we increase the number of facilities for reasons, which you of course.
Readily understand at the same time within those facilities, we want to make sure that we are maximizing.
As much as possible the utilization of omidria across physicians and frankly across procedures and payors. So we don't want.
Physicians only to use this with med part B patient that's why we're so focused on the commercial payers now and were having tremendous success. There. Our commercial team has been doing a wonderful job of expanding payer access it's real it's very interesting often these payers reply that they really didnt even.
No much about the drug and now that they are learning about it and understanding and frankly hearing about it there understanding that payment is the right thing to provide.
I think with respect to trends, we are seeing growth in the hospitals.
That is you know always takes a little longer.
It has to go through multiple committees.
For that that kind of approval for use in hospitals, but we're really seeing quite an uptick in the number of hospitals I think now.
Even if you look at.
This may seem like somewhat of an odd statistic, but if you look at the top 17 academic centers I think we're now at about 12 of those that are that are using omidria and that's that's impressive because you want the residents in training.
To have access to this drug realize the benefits of the Dragon.
That only will help both the physician and the patient as well as us temporarily downstream I think also were seeing an increase in VA sales and veteran administration sales.
We started.
At a relatively low number.
Starting point.
Given just when this came on national formulary and having to.
Work and get get those facilities on board, but now that they are onboard the growth rate was pretty steep.
Q2 over Q1, we expect that to continue to grow so its really across all channels I think what is.
Helping drive this are the data when you start to talk to physicians and administrators about prevention of systemwide macular edema. That's a very big deal that is probably the biggest concern.
Although it occurs on a relatively small number of patients so big problem. When it occurs it's one of the real sight threatening complications of cataract surgery. Then when you look at our data on prevention of inter operative floppy Iris syndrome.
That affects a lot of patients and there hasn't been to my knowledge any drug that Jay or any frankly therapy, that's been able to prevent it other than sticking in a big ring or hooks and kind of hoping you hold.
The the pupil open.
To perform the procedure and you still get the billowing still makes the case difficult omidria prevents it.
So I think also though the ability to use the drug without needing any steroids.
Is is an important part of the equation for facilities and for physicians, who are trying to move to a truly dropless cataract procedure.
Then we also look at.
At.
The potential to replace not only steroids.
But post operative end said, making the procedure.
Completely dropless.
With Omidria.
We'll see how that turns out but.
I am optimistic that the data there will be good as well.
So when you put all of this together I think.
It's the clinical data and it's also frankly.
Concerns about liability.
Docs docs want an FDA approved product they want to protect their patient safety.
This is the way that you can do that while improving efficacy and well being reimbursed I mean, it's it's sort of the trifecta I don't see how it gets much better than that.
Thank you that's very helpful and just on the reorder rate if you could maybe just.
Refresh me on that.
Sure.
And I'm I'm I understand the question I believe which is really one of inventory and I can just tell you that inventory on hand at the wholesalers.
Has remained consistent with historical norms. So number of days of inventory at the wholesalers stays about the same.
Which is at about one and a half weeks usually remember this is a drug that can be accessed very quickly. So its turned around and effectively a day. So there's not a lot of inventory that's held at the wholesalers and there's not there's not really stockpiling of the drugs. So.
The sales that you're seeing in this quarter, our our real sales I mean these are these translate to sell through.
To the facilities.
Yes, that's that's definitely helpful. But what I also wanted to know why is the degree to which you get repeat orders from customers. How many cars are on a percentage basis are reordering the product.
Very high.
Very high very high.
I think once once once physicians and facilities see the advantages of the drug.
It's it's I think frankly difficult for them to give it up.
So certainly we see we see some attrition, but the reordering is highly consistent.
Across across groups.
Okay. That's very helpful. Thank you.
I also wanted to ask about the R&D expense that you reported in the second quarter.
It's a bit lower than we had originally expected is this sort of more in line with what we should anticipate for the remainder of this year.
The reported our rate or do you expect it to go up in the second half.
It's going to be variable ROM as I think Mike mentioned, I mean manufacturing of antibodies as you know is an expensive proposition and so it really depends in part on on where those manufacturing runs fall. So I would expect sort of.
Choppy or lumpy.
Operating expenses, which will be that variability is in good part driven by the.
By just the manufacturing of in our supplement.
Okay, and then just a few questions on our supplement beside me I wanted to clarify the long acting version talked about in the press release that I believe you mentioned potentially provide a subcutaneous monthly administration to be possible.
That compares to daily subcutaneous injection using the current formulation is that correct.
Subcutaneously now we are administering this in the H.U.S. study.
Daily that doesn't mean that we're required to administer a daily but we currently are for frankly convenience as well.
If you are.
If if you are going to administer this twice a week. It so it's a little more difficult to remember which days of the week you take it in which days you don't so.
Given the absence of any adverse safety signal with the drug we felt comfortable with daily Subcu, but yes, I fully expect that we will have the longer acting or.
Longer duration antibody.
In the clinic as I've said.
And by Middle of 2021 and.
With that we expect to be bringing on the orally available small molecule MASP two inhibitor. So I think what we've tried to do here is canvas kind of the entire MASP two area.
And which means we are canvassing the entire lectin pathway.
At the same time, our MASP three inhibitors coming.
That will be out of the gate.
Likely once monthly.
Certainly looks that way, we'll know when we get it into phase one studies, which we plan to do by the Middle of 2020 Boy, that's coming very soon as I say that.
But we expect that that will be one once monthly or something.
No.
Close either up or down.
And.
Also small molecules of MASP three coming.
So we believe that we're creating quite quite a franchise on on the complement the upfront and that.
Each of those drugs will have a use.
Across a number of indications and we'll just figure out how we how we target.
Can you just confirm that this second generation.
Two antibody is a different molecule entirely to our supplement correct entire entirely different.
Okay, and then just very quickly can you just give us a sense of what the current size is if the compassionate use program sort of supplement and how many patients are currently receiving therapy and then if you could also give us a sense of what that timing interval is likely to be between module submissions for their non stop them at B. Riley. Thank you.
Yes with respect to your first question no. We haven't talked about the specific number of compassionate use patients I'll just tell you that that number is growing.
And in fact, we're going to be even needing to use an outside group to help us manage the number of compassionate use requests and the number of compassionate use patients that we have so that we can make sure that all those patients who are requesting the drug and physicians who are requesting the drug can actually access it in a timely way to help their patients. There's there's nothing more disappointing than getting a request for use of omidria and by the time, we can get the drug to them. The patient has died.
We are working to expand and and and accelerate.
The delivery of the drug so I think that's.
Thats, where we are on.
On the compassionate use piece with respect to your second question about intervals of timing.
Between modules I think it's a little premature to say Ive told you that what were targeting and you know that targeting factors in the sort of just the.
The.
Submission of the.
Proposal for the timeline that we have already made.
Also factoring in F D A's time to respond to that and you know so what we've said we are targeting there is mid next quarter. So we're really talking about October or November .
Mid part of November to get our first module in and again Thats, assuming the timeline works as we expect and FDA gets back to US and says yes, we're comfortable with the overall schedule and we will review it at these times I think it's premature to talk about the timing of of subsequent modules until we hear back from Ftn. FDA has said these times that you've proposed work for us or no. They don't and we need you to move them this way or that way. So once but you know we have.
Made proposals for each of the modules and FDA has those and.
And we'll wait for their response I mean, they're usually.
Quite responsive.
Despite frankly, how busy they are I mean this this division is extremely busy and yet they seem to respond.
Pretty quickly to us so we're very pleased about that.
Relationship.
Great. Thank you very much congrats again on all the progress.
Thank you.
We do have another question from the line.
See somebody from Needham.
Your line is open.
Thanks for the question. This is 10 officers. So I think you mentioned that.
Humana.
I'm, sorry, I can't hear you.
Hey can you hear me I can now yes. Thanks, Okay. So thanks for the question. So I think you mentioned that.
After their first Humana is adding the J code into their plan. So do you have any expectation as to the rate or the number of plan.
You might be expecting to add in the next few quarters.
Future how should we.
Expect going forward. Thanks, Yeah, I think that certainly surge the numbers of Payors, who will reimburse for omidria under the J code will increase relative to those that we have under a C code. There are a number of payers, who simply just won't reimburse under a C code. So those will quickly I think transfer over and we will see reimbursement from them and J code in terms of getting other payers to put the J code on I expect will be quite successful.
With that I don't have any projections.
At this time.
We have.
Multiple communications with.
With those plans on going and we're tracking we're tracking their responses. So I expect we'll do well I can't give you right now a specific.
A specific slope of the curve that I think we're going to see but I expect that it will be a upward moving pretty quickly.
Thanks very helpful.
Thanks.
I am showing no further questions at this time I would now like to obtain the conference back decades Lewis.
Thank you operator and.
Thank you everyone. We really appreciate all of you taking the time to listen in.
2019 is living up to its promise.
To our shareholders. We thank you for your continued support.
We've now improved the lives of cataract surgery patients.
With Omidria, having been used in over 800000 procedures.
And our sample of Mab continues to save lives.
The drugs advancing quickly and our pipeline will I believe.
Do similarly wonderful things to help patients.
So again, we plan to be putting out some additional information in the relatively near term as I went through in the comments.
But until then good evening to all of you. Thank you.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation you have a wonderful day you may all disconnect.