OMER : Omeros Corporation Stock Analysis and Research Report

2017-11-09 - by Asif, Contributing Analyst

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Omeros is a commercial-stage biopharmaceutical company committed to discovering, developing and commercializing small-molecule and protein therapeutics for large-market as well as orphan indications targeting inflammation, complement-mediated diseases and disorders of the central nervous system.

The company's drug product OMIDRIA ® is marketed in the U.S. for use during cataract surgery or intraocular lens, or IOL, replacement. OMIDRIA is part of its proprietary PharmacoSurgery ® platform, which is designed to improve clinical outcomes of patients undergoing ophthalmological, arthroscopic, urological and other surgical procedures. The company's PharmacoSurgery platform is based on low-dose combinations of FDA-approved therapeutic agents delivered directly to the surgical site throughout the duration of the procedure to inhibit preemptively inflammation and other problems caused by surgical trauma and to provide clinical benefits both during and after surgery.

In its pipeline Omeros has clinical-stage development programs focused on: complement-associated thrombotic microangiopathies; complement-mediated glomerulonephropathies; Huntington’s disease and cognitive impairment; and addictive and compulsive disorders. In addition, Omeros has a diverse group of preclinical programs and two additional platforms: one capable of unlocking new G protein-coupled receptor, or GPCR, drug targets and the other used to generate antibodies. For OMIDRIA and each of its product candidates and its programs, other than OMS103, Omeros has retained control of all commercial rights.

Products, Product Candidates, Development Programs and Platforms

OMIDRIA . OMIDRIA is approved in the U.S. by the FDA for use during cataract surgery or IOL replacement to maintain pupil size by preventing intraoperative miosis (pupil constriction) and to reduce postoperative ocular pain. The company launched OMIDRIA in the U.S. in the second quarter of 2015 primarily through wholesalers which, in turn, sell to ambulatory surgery centers, or ASCs, and hospitals. The Centers for Medicare and Medicaid Services, or CMS, has granted transitional pass-through reimbursement status for OMIDRIA, which the company expect to run until January 1, 2018. Pass-through status allows for separate payment ( i.e. , outside the bundled payment) under Medicare Part B for new drugs and other medical technologies that meet well-established criteria specified by federal regulations governing Medicare spending. Omeros is working through legislative and administrative means to continue to obtain separate or similar reimbursement for OMIDRIA on and after January 1, 2018 and/or to extend the pass-through period; however, in the event that none of these approaches is successful, the company expect that OMIDRIA will be included as part of the packaged procedural payment and, as a result, the per unit price, as well as its net revenues, the company receive for OMIDRIA would likely be reduced, potentially by a significant amount.

The company completed an FDA-required post-marketing OMIDRIA pediatric clinical trial in 2016 that was conducted to fulfill both the post-marketing requirement as well as a Written Request from the FDA to conduct a pediatric study. Successful completion of the trial, including submission of a supplemental New Drug Application, or sNDA, that includes the full clinical study report and proposed labeling, plus confirmation by the FDA that the submission fulfills the FDA’s Written Request, results in eligibility for an additional six months of marketing exclusivity for OMIDRIA and label expansion to include information on dosing for pediatric patients. Omeros has submitted an sNDA, with results of the pediatric study included in proposed label language. Although conducted in patients newborn to three years old, the FDA agreed that results from this trial can be extrapolated to patients through 18 years of age, and a label expansion, if any, would be expected to be applicable to that full age range.

Outside of the U.S., Omeros has received approval from the European Commission, or EC, to market OMIDRIA in the EEA for use during cataract surgery and other IOL replacement procedures to maintain mydriasis (pupil dilation), to prevent miosis (pupil constriction), and to reduce postoperative eye pain. For the European OMIDRIA marketing authorization to remain valid, product must be placed on the market ( i.e. , released into the distribution chain) in at least one EEA country by July 28, 2018. Decisions about price and reimbursement for OMIDRIA are made on a country-by-country basis and may be required before marketing may occur in a particular country. The company do not expect to see sales of OMIDRIA in the EEA and other international territories if Omeros is unable to enter into partnerships for the marketing and distribution of OMIDRIA. Timing of any such partnerships depends on numerous factors, including completion of mutual diligence exercises and domestic sales of OMIDRIA. In addition, Omeros has an exclusive supply and distribution agreement for the sale of OMIDRIA in certain countries in the Middle East, including the Kingdom of Saudi Arabia and the United Arab Emirates, under which sales began on a limited basis in the Kingdom of Saudi Arabia in 2016.

In July 2015, the company received a Notice Letter from Par Pharmaceutical, Inc. and its subsidiary, Par Sterile Products, LLC, or collectively, Par, that Par had filed with the FDA an Abbreviated New Drug Application, or ANDA, containing a Paragraph IV Certification under the Hatch-Waxman Act seeking approval to market a generic version of OMIDRIA prior to the expiration of three patents listed in the Orange Book for OMIDRIA, or the Orange Book Patents. In September 2015 the company filed a patent infringement lawsuit in the U.S. District Court for the District of Delaware against Par and a three-day bench trial was held on this matter in July 2017. For more information regarding this matter, see Part II, Item 1, “Legal Proceedings.”

In May 2017, the company received a Notice Letter from Sandoz, Inc., or Sandoz, and a Notice Letter from Lupin Ltd. and Lupin Pharmaceuticals, Inc., which the company refer to collectively as Lupin, stating that each of Sandoz and Lupin had filed with the FDA an NDA containing a Paragraph IV Certification under the Hatch-Waxman Act seeking approval to market a generic version of OMIDRIA prior to the expiration of six Orange Book Patents. On June 21, 2017, Omeros filed a patent infringement lawsuit in the U.S. District Court for the District of Delaware and a patent infringement lawsuit in the U.S. District Court for the District of New Jersey against Sandoz and on June 22, 2017, Omeros filed a patent infringement lawsuit in the U.S. District Court for the District of Delaware and a patent infringement lawsuit in the U.S. District Court for the District of New Jersey against Lupin. For more information regarding these matters, see Part II, Item 1, “Legal Proceedings.”

Product Candidates. Omeros has the following clinical-stage programs in its pipeline:

  • MASP-2 - OMS721 . OMS721 is its lead human monoclonal antibody targeting mannan-binding lectin-associated serine protease-2, or MASP-2, the effector enzyme of the lectin pathway of the complement system. OMS721 is being developed for diseases in which the lectin pathway is believed to contribute to significant tissue injury and pathology. One group of such diseases is thrombotic microangiopathies, or TMAs, including atypical hemolytic uremic syndrome, or aHUS, and hematopoietic stem-cell transplant, or HSCT, -related TMA. Omeros has a Phase 3 clinical program in patients with aHUS and enrollment has opened in the Phase 3 clinical trial. The Phase 3 clinical program in patients with aHUS consists of one clinical trial - a single-arm ( i.e. , no control arm), open-label trial in patients with newly diagnosed or ongoing aHUS. The company also have initiated a Phase 3 program for OMS721 in patients with IgA nephropathy. Discussions with the FDA are ongoing and the Phase 3 clinical trial in IgA nephropathy is expected to begin by the end of 2017. Omeros has continued to enroll patients in its ongoing OMS721 Phase 2 IgA nephropathy clinical trial and in its OMS721 Phase 2 clinical trial in patients with HSCT-TMA and with aHUS. The company also expect to initiate a Phase 3 clinical program in HSCT-TMA before year-end.
  • In its OMS721 program, Omeros has received from the FDA orphan drug designation for the prevention (inhibition) of complement-mediated TMAs and fast track designation for the treatment of patients with aHUS. In June 2017 the company announced that the FDA granted breakthrough therapy designation to OMS721 for the treatment of IgA nephropathy. In August 2017 OMS721 was granted by the FDA orphan drug designation in IgA nephropathy. Omeros is seeking breakthrough designation for OMS721 in HSCT-TMA and plan to pursue accelerated approval in one or more of the indications in development. In addition, in Europe Omeros is pursuing orphan designation and Priority Medicines designation for the treatment of IgA nephropathy.
  • PDE10 - OMS824 for Huntington’s disease and Schizophrenia. OMS824, its lead phosphodiesterase 10, or PDE10, inhibitor, is in a Phase 2 clinical program for the treatment of Huntington’s disease and a Phase 2 clinical program evaluating OMS824 for the treatment of schizophrenia. Omeros is also evaluating other neurological indications for OMS824. Plans for continuation of the OMS824 program will be based on internal ongoing work and on discussions with the FDA. Clinical trials in its Huntington’s program may progress, but if so are currently subject to dosing limitations pending agreement with the FDA. Clinical trials evaluating OMS824 in schizophrenia remain suspended at the request of the FDA until the company submit to the FDA a protocol for a schizophrenia trial and receive its clearance to proceed.
  • PPARγ - OMS405 . In its peroxisome proliferator-activated receptor gamma, or PPARγ, program, Phase 2 clinical trials have been conducted by its collaborators to evaluate a PPARγ agonist, alone or in combination with other agents, and have yielded positive data in the treatment of addiction to cocaine, heroin and nicotine.

Development Programs and Platforms. The company's preclinical programs and platforms include:

  • PDE7 - OMS527. In its phosphodiesterase 7, or PDE7, program, Omeros is developing proprietary compounds to treat addiction and compulsive disorders as well as movement disorders. Omeros has selected a clinical candidate and have initiated toxicology studies intended to support the submission of an Investigational New Drug application, or IND, or Clinical Trial Application, or CTA, and subsequent clinical trials. The company expect to submit an IND or CTA for OMS527 in early 2018.
  • MASP-3 - OMS906 . In its mannan-binding lectin-associated serine protease-3, or MASP-3 program, Omeros is developing MASP-3 inhibitors for the treatment of disorders related to the alternative pathway of the complement system. In preparation for clinical trials, the company will be initiating manufacturing scale-up and are evaluating a number of alternative pathway-related disorders ( e.g. , paroxysmal nocturnal hemoglobinuria, or PNH) as the first clinical indication for OMS906.
  • GPCR Platform and Programs . Omeros has developed a proprietary cellular redistribution assay, or CRA, which the company use in a high-throughput manner to identify synthetic ligands, including antagonists, agonists and inverse agonists, that bind to and affect the function of orphan GPCRs. Omeros is conducting in vitro and in vivo preclinical efficacy studies and optimizing compounds for a number of targets including: GPR151, linked to schizophrenia and cognition; GPR161, which is associated with triple negative breast cancer and various sarcomas; GPR183, linked to osteoporosis and to Epstein-Barr virus infections and related diseases; GPR174, which appears to be involved in the modulation of the immune system and, in particular, increases cytokine production and inhibits production of regulatory T cells, or “T-regs,” both which are known to be important in autoimmune disease, such as multiple sclerosis, in cancer and in organ transplantation; and OPN4, linked to seasonal affective disorder, mood disorders and photophobia.
  • Antibody Platform. The company's proprietary ex vivo platform for the discovery of novel, high-affinity monoclonal antibodies, which was in-licensed from the University of Washington and then further developed by its scientists, utilizes a chicken B-cell lymphoma cell line. Using its platform and other know-how and techniques, Omeros has generated antibodies to several clinically significant targets, including highly potent antibodies against MASP-3 and MASP-1, and its platform continues to add to its pipeline antibodies against additional important targets.

PharmacoSurgery Product Candidates. OMS103, part of its PharmacoSurgery platform, was developed for use during all arthroscopic procedures, including knee and shoulder arthroscopy, and completed Phase 3 trials in patients undergoing arthroscopic anterior cruciate ligament reconstruction and arthroscopic partial meniscectomy. In June 2015, the company entered into an exclusive licensing agreement, or the OMS103 Agreement, with Fagron Compounding Services, LLC, d/b/a Fagron Sterile Services, and JCB Laboratories, LLC, or collectively Fagron, an FDA-registered human drug outsourcing facility, under which Fagron is obligated to produce under Good Manufacturing Practices, or GMP, and to commercialize OMS103 in the U.S. Fagron has not performed its performance diligence obligations under the OMS103 Agreement, including initiating sales, and the company continue to evaluate its options regarding the OMS103 Agreement and its OMS103 program. OMS201, its PharmacoSurgery product candidate for use during urological procedures, including uroendoscopic procedures, completed a Phase 1/Phase 2 clinical trial in 2010 and is not currently in active clinical trials.

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