Omeros: FDA Appeal On Narsoplimab And Several 2023 Catalysts On Deck (NASDAQ:OMER)

Omeros Corporation (NASDAQ:OMER) is a great speculative biotech play to look into. The reason why I say that is because it has an ongoing appeal with the FDA to possibly obtain regulatory approval in the United States for Narsoplimab for the treatment of patients with hematopoietic stem cell transplant-associated thrombotic microangiopathy (HSCT-TMA). Such a decision is expected before the end of 2022 and if a positive development occurs it could greatly help this biotech move forward with an FDA approved treatment. Not only that, but there are many other catalysts to be released in 2023. Such catalysts provide several other shots on goal for Omeros. There is going to be the release of 9-month results from the phase 3 ARTEMIS-IGAN trial in mid-2023. This late-stage study is using Narsoplimab for the treatment of patients with IgA Nephropathy. Then, there is another major catalyst for investors/traders to keep an eye on. This involves an ongoing phase 1b study using another drug, known as OMS906, for the treatment of patients with Paroxysmal nocturnal hemoglobinuria (PNH) and C3 glomerulopathy. Results from this study, for both of these indications, are expected in early 2023. The important thing to see is if this treatment does well in patients who have failed to respond to Ultomiris for PNH. If positive efficacy is noted with PNH, then the company wants to expand to targeting the treatment naive population (that is those who have not yet taken standard of care treatment for their disease). Lastly, there is a great opportunity to get in while the company has a strong cash position. This is in regards to a cash infusion that was received from a deal made weeks ago. That is, Omeros received $125 million in gross proceeds from the sale of a portion of projected royalties receivable on net sales of OMIDRIA.

Narsoplimab For The Treatment Of Patients With HSCT-TMA

The main product to go over in this pipeline is Narsoplimab, which is being developed for the treatment of patients with hematopoietic stem cell transplant-associated thrombotic microangiopathy (HSCT-TMA). Narsoplimab is also being applied to a few other indications such as IgA Nephropathy, Atypical Hemolytic Uremic Syndrome (aHUS) and lupus nephritis/other renal diseases. Going back to HSCT-TMA it involves injury when a patient has such a transplant done. When either an autologous or allogeneic hematopoietic cell transplantation [HCT] is done there is endothelial damage that may occur. As such, this leads to systemic disease TMA, which involves hemolytic anemia, thrombocytopenia and even organ failure. What makes this program so good for Omeros Corporation, should it eventually receive FDA approval of Narsoplimab for HSCT-TMA, is that there are no FDA approved treatments for it. This means that Omeros can possibly achieve the first FDA approval for this specific patient population.

The thing is that Omeros Corporation had already announced positive results from the ongoing phase 3 study it had. This was a single-arm open-label study using Narsoplimab for the treatment of patients with HSCT-TMA. This was an important study as it was set to be part of a Biologics Licensing Application (BLA) submission. There was a composite primary endpoint that was agreed upon with the FDA and it was:

• Proportion of patients who achieve a highly rigorous set of response criteria that requires both improvement in HSCT-TMA laboratory markers and improvement in clinical status (organ function and transfusions)

This composite primary endpoint was met because both sets of criteria reached a high number of responders. It was noted that about 56% of patients who received at least one dose of Narsoplimab achieved a complete responder status. Then with respect to the second portion of the composite endpoint, it was stated that 68% of patients who received the protocol-defined Narsoplimab treatment of about 4 weeks of dosing also achieved complete responder status. This is a large number of responders, which is what the composite primary endpoint needed to achieve in order for Omeros to be able to file its BLA for Narsoplimab. However, there were a few other important findings relating to survival. There were three 100-day survival numbers noted for outcome, but even just looking at the lowest one, treatment with Narsoplimab was impressive in itself. For instance, when HSCT-TMA diagnosed patients received one dose of Narsoplimab, it was revealed that 100-day survival was 65%. How is this good? Well, that’s because 100-day survival rate for these patients with no treatment is less than 20%. Not only that, but during this 100-day period, only 10% to 15% are responders. As you can see, Narsoplimab delivered in improving clinical outcomes.

Well, the notion was that Omeros Corporation was supposed to receive FDA approval of Narsoplimab for the treatment of patients with HSCT-TMA. However, that’s not exactly what happened. Instead, it received a complete response letter [CRL] from the FDA. The FDA cited that it was difficult to estimate the treatment effect of Narsoplimab for these patients. Not only that, but the agency stated that it needed to have additional information in order to support regulatory marketing approval. There were no issues observed with other CRLs like chemistry, manufacturing, controls [CMC], safety or other non-clinical issues. Being that the FDA gave a CRL and with Omeros not completely understanding the problem, it chose to file a formal dispute resolution request in June. The reason why it did this was to appeal the decision done by the FDA for review of Narsoplimab for the treatment of patients with HSCT-TMA. In essence, what this biotech did was a legal way to file a dispute resolution to a higher-level office within the FDA, known as the Office of New Drugs [OND]. Omeros met with the OND in July of 2022 and it was expected that a decision would be done within 30 calendar days. However, the most recent update as of now is that the official deciding this appeal, needs to collect additional information. A response is now expected within another 30 calendar days but only once the additional information is collected by the official. Thus, it’s hard to say exactly when a decision will be made, but more than likely it should be within the next few months, before end of 2022. This is a huge risky event as a I described above. If the appeal wins, it would be highly good news and the stock will trade much higher. However, if the official denies the appeal, that would cause the stock to trade much lower indeed.

Financials

According to the 10-Q SEC Filing, Omeros Corporation had $122.6 million of cash, cash equivalents and short-term investments as of June 30, 2022. One thing to note is that this biotech makes some cash off an asset it sold back in 2021. This involves an asset known as OMIDRIA and it is obtaining royalties from Rayner Surgical, Inc. for it. In this most recent quarter ending June 30, 2022 Omeros earned $17.2 million on net sales for this asset. Not a huge chunk of cash, but at least it is obtaining something to boost its cash. However, I believe it should be on cash for now. Why is that? Well, that’s because about a month ago it reached a deal to receive $125 million in gross proceeds for the sale of a portion of projected royalties receivable on net sales of OMIDRIA. This was an important deal to accomplish, because it does not dilute shareholders at all. Not only that, but Omeros still retains a majority of its OMIDRIA revenues going forward. It does have other means by which it can raise cash. It has an “at-the-market” equity offering in which it can sell shares of its common stock from time to time. The number of shares of stock it can sell is an aggregate amount of $150 million. Another avenue it states that can be done is to enact debt financings/public offering/private offerings. Being that it made an agreement to receive $125 million from DRI Healthcare Acquisitions LP, I don’t think it will need to raise cash in the near future.

Risks To Business

There are several risk factors that investors should be aware of before investing in Omeros Corporation. The biggest risk factor to consider would be the ongoing review of the appeal by the OND of Narsoplimab for HSCT-TMA. The hope is that the company can win on its appeal, but there is no guarantee of this happening. A few other risk factors to consider would be the additional data readouts expected in 2023. One such catalyst involves the release of 9-month results from the phase 3 ARTEMIS-IGAN trial, which is using Narsoplimab for the treatment of patients with IgA Nephropathy. Results from this late-stage study are expected in mid-2023. The other data readout involves results from a phase 1b study using OMS906 for the treatment of patients with PNH and C3 glomerulopathy. Results from this early-stage study are expected in early 2023.

Conclusion

The final conclusion is that Omeros Corporation is a great speculative biotech play to look into. That’s because it has a huge turning point coming up, should it succeed in its appeal to the FDA of Narsoplimab for the treatment of patients with HSCT-TMA. Even if it doesn’t win its appeal in the short-term, the pipeline is filled with many other target indications and additional drugs to reduce such a risk. For instance, I noted above that Narsoplimab is also being explored in a phase 3 study for the treatment of patients with IgA Nephropathy. Not only that, but another candidate in the pipeline known as OMS906, is being explored for the treatment of patients with PNH and C3 glomerulopathy as well. Lastly, there are many other preclinical assets in the pipeline which are being advanced like OMS1029 and OMS527. OMS1029 is a long-acting MASP-2 inhibitor being explored in a phase 1 study. The reason why this is an important drug to advance is because it could possibly provide superior safety/efficacy over Narsoplimab (MASP-2). OMS527 is a PDE7 inhibitor being explored in a predictive primate model of levodopa-induced dyskinesias. With an FDA appeal decision within coming months, plus several data readouts expected in 2023, these are the reasons why I believe that Omeros Corporation is a great speculative biotech play to look into.