Omeros Corporation Stock

Good afternoon and welcome to today's earnings call for Omeros Corporation. [Operator Instructions] Please be advised that this call is being recorded at the company's request and a replay will be available on the company's website. I'll now turn the call over to Jennifer Williams, Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. Before we begin, please note that today's discussion will include forward-looking statements. These statements reflect management's current expectations and beliefs as of today and are subject to risks and uncertainties that could cause actual results to differ materially.

For a detailed discussion of these risks and uncertainties, please refer to the special note regarding forward-looking statements and the risk factors in our quarterly report on Form 10-Q filed today with the SEC, as well as our most recent annual report on Form 10-K. Today's call also will include certain non-GAAP financial measures.

A reconciliation of these measures to the corresponding GAAP measures is included in Omeros's earnings release issued earlier today, available on the Investor Relations page of our website and furnished with the Form 8-K we filed today with the SEC.

With that, I'll turn the call over to Dr. Gregory Demopulos, Chairman and CEO of Omeros.

Thank you, Jennifer, and good afternoon, everyone. Joining me today are David Borges, our Chief Accounting Officer, Dr. Cathy Melfi, our Chief Regulatory Officer, Dr. Steve Whitaker, Vice President of Clinical, and Bill Woodman, our Chief Commercial Officer. Promoted from within the company, Bill was recently appointed as our Chief Commercial Officer. Let me tell you a bit more about him.

Bill joined Omeros 6 years ago as our Vice President of Sales and Market Development, bringing more than 25 years of industry experience, including sales and marketing leadership roles at Amgen, Spectrum Pharmaceuticals, and Jazz Pharmaceuticals, where he led the global launch of defibrotide. At Omeros, Bill largely built our commercial team and was instrumental in designing and executing the YARTEMLEA launch.

I have long believed that Bill's background, capabilities, and achievements are ideally suited to Omeros's current and future objectives. Under his leadership, our commercial team is driving YARTEMLEA toward becoming the standard of care for TA-TMA and preparing for its expansion into a broad range of MASP-2 driven indications. Beyond complement, Bill's track record of driving growth across oncology, rare disease, and specialty biopharma products will serve Omeros well.

Before I turn to the financial details, let me highlight 3 points. First, YARTEMLEA generated $32.2 million in gross sales in its first full quarter on the market. Second, operations generated $4.1 million of positive cash flow during the quarter. And third, we meaningfully strengthened our capital structure through our share and note repurchases. So I'll now begin with an overview of our second quarter operations and financial results, followed by program updates. David will then review the financials in more detail, after which we'll open the call for questions.

As you know, the FDA approved YARTEMLEA, our lead MASP-2 inhibitor, in December 2025 for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy, or TA-TMA. YARTEMLEA is the first and only approved treatment for this often fatal complication of stem cell transplantation, and YARTEMLEA is also the first and only approved inhibitor of the lectin pathway of complement. We launched YARTEMLEA in mid-January, with initial distributor shipments beginning mid-month and first sales following shortly thereafter.

The second quarter was our first full quarter of YARTEMLEA sales, and we're pleased to share the results today. As I mentioned, in the second quarter, YARTEMLEA generated $32.2 million in gross sales and $28.5 million in net sales, reflecting strong physician adoption and market penetration and a gross-to-net adjustment of 11.5%. Compared with the first quarter, gross sales increased 190% and net sales increased 188%. We'll discuss the launch in more detail in just a bit.

Net income for the second quarter was $13.2 million, or $0.18 per share. As we have previously discussed, our reported results include non-cash mark-to-market adjustments related to the derivative embedded in our 2029 convertible notes. Excluding non-cash remeasurements of embedded derivatives and other financial instruments, second quarter non-GAAP adjusted net income was $1.8 million, or $0.02 net income per share. David will walk through the quarter-over-quarter comparisons and accounting details shortly.

We ended the quarter with $132 million in cash and investments. Importantly, company-wide, operations provided net positive cash flow in the second quarter of $4.1 million. Our share repurchases and subsequent note repurchases further strengthened our capital structure. During the 6 months ended June 30, we repurchased and retired approximately 843,000 shares of Omeros common stock, nearly 60% of those shares in the second quarter, at a volume-weighted average price of $11.70 per share.

Then in July, through two privately negotiated transactions, we repurchased $30.5 million aggregate principal amount of our 9.5% convertible notes due in 2029, reducing the outstanding principal by 43% to $40.3 million. The repurchases also reduced the number of shares issuable upon conversion from approximately 11.4 million to 6.5 million shares. We achieved this reduction at a weighted average cost of $12.21 per underlying conversion share and concurrently eliminated $8.6 million in future interest payments. Together, our open market share repurchases and our negotiated note repurchases have reduced our potential fully diluted share count by 5.8 million shares year-to-date.

Turning back to YARTEMLEA, our launch remains focused on 4 priorities: one, educating transplant teams to recognize and treat TA-TMA earlier; two, securing institutional access through pharmacy and therapeutics, or P&T, committee approvals and streamlined ordering; three, ensuring timely reimbursement; and four, demonstrating YARTEMLEA's economic value through Health Economics and Outcomes Research, or HEOR.

Together, these priorities are intended to change how transplant centers approach TA-TMA. Historically, particularly at adult transplant centers, TA-TMA often has been treated as a diagnosis of exclusion and considered only after other potential causes are ruled out. We are working to shift that paradigm toward proactive screening, enabling clinicians to identify and treat more patients earlier and ultimately improve transplant outcomes. Execution remains strong.

Our field sales organization is actively engaging all 175 U.S. transplant centers. As of June 30, 73 unique accounts had ordered YARTEMLEA, a 143% increase since March 31. As discussed on our first quarter call, pediatric patients initially represented an outsized share of utilization. With rapid adoption at adult transplant centers, however, the mix has shifted significantly. In the second quarter, adult utilization grew at more than twice the rate of pediatric utilization, and adult patients represented approximately 75% of YARTEMLEA sales.

This mix is closely approaching the historical 85% 15% split between adult and pediatric transplant procedures in the U.S. Formulary adoption also continues to progress rapidly. By quarter-end, we understand that YARTEMLEA had received P&T committee approval at approximately 55% to 60% across the top 10, 20, 40, and 80 U.S. transplant center cohorts that we track. Ordering frequency also increased meaningfully, indicating deeper utilization within centers.

We also achieved key reimbursement milestones during the quarter. The Centers for Medicare and Medicaid Services, or CMS, assigned YARTEMLEA a permanent, product-specific, Healthcare Common Procedure Coding System, or HCPCS, J-code, effective July 1. The J-code establishes a clear and consistent outpatient reimbursement pathway, reduces administrative burden, and supports more predictable payment for providers.

CMS also recommended a New Technology Add-on Payment, or NTAP, for YARTEMLEA under the fiscal year 2027 proposed rule for the Inpatient Prospective Payment System, or IPPS, and has now granted the NTAP in the final IPPS rule. The NTAP provides up to $287,000 in additional Medicare reimbursement for inpatient treatment with YARTEMLEA. This is particularly important because Medicare beneficiaries represent approximately 30% of U.S. allogeneic transplant recipients. The NTAP for YARTEMLEA is expected to become effective October 1.

Commercial payer experience also remains positive. Prior authorization requests are being approved consistently, and centers receiving appropriate payment reflect growing acceptance of YARTEMLEA among commercial insurers. We are preparing our HEOR analyses for presentation at upcoming scientific meetings and for peer-reviewed publication. We expect these analyses to further demonstrate YARTEMLEA's clinical and economic value and support continued adoption.

Overall, early commercial indicators, including strong transplant center engagement, continued formulary and ordering momentum, and payer alignment with the approved label, reinforce our expectation that YARTEMLEA can become the standard of care for TA-TMA. Looking ahead, we continue to pursue expansion opportunities for YARTEMLEA and our broader MASP-2 platform.

In June, following an oral explanation before the European Medicines Agency's Committee for Medicinal Products for Human Use, or CHMP, the committee adopted a negative opinion on our marketing authorization application for YARTEMLEA in TA-TMA. We believe the clinical evidence supports approval and have requested re-examination. The application is supported by our pivotal narsoplimab trial data in TA-TMA, survival analyses comparing narsoplimab-treated patients with an external registry of patients who did not receive narsoplimab, and data from more than 220 adult and pediatric patients treated through our expanded access program.

This same body of evidence supported YARTEMLEA's FDA approval. As part of the re-examination, an Ad Hoc Expert Group, or AHEG, comprising independent external scientific and clinical experts in hematology, stem cell transplantation, and TA-TMA, will review the evidence and address questions central to CHMP's assessment. The AHEG will hear from Omeros and from transplant experts with direct experience using narsoplimab, and new rapporteurs will review the application.

We remain focused on obtaining approval in Europe. Meanwhile, we continue to provide YARTEMLEA to European patients with TA-TMA through our expanded access program, prioritizing children. We also continue to assess opportunities to expand the YARTEMLEA label. We are prioritizing indications with a strong biologic rationale for MASP-2 inhibition, particularly those involving endothelial injury, lectin pathway activation, and thromboinflammation.

These encompass an extensive list of indications, including chemotherapy-induced TMA, acute respiratory distress syndrome, or ARDS, and other transplant-related endothelial injury syndromes. We plan to evaluate new indications through preclinical research, investigator-initiated studies, and clinical trials, each as appropriate. By year-end, we expect enrollment to begin in 2 investigator-sponsored and Omeros-supported studies, one evaluating YARTEMLEA in hyperinflammatory ARDS, and the other assessing prophylactic YARTEMLEA in pediatric patients with predictably severe TA-TMA.

Our MASP-2 platform extends beyond YARTEMLEA. We are advancing our Phase 2-ready long-acting MASP-2 antibody OMS1029 and an oral small molecule MASP-2 inhibitor program. Both are designed for chronic indications requiring long-term administration, including membranous nephropathy and neurodegenerative diseases such as Parkinson's and Alzheimer's. In Phase 1 clinical trials, OMS1029 demonstrated the clear ability to inhibit MASP-2 over an extended duration with once-quarterly subcutaneous or intravenous dosing.

And our small molecule MASP-2 inhibitor is targeting once-daily oral dosing. We are finalizing selection of the initial Phase 2 indication for OMS1029. Clinical drug product and matching placebo have been manufactured and are available. For our MASP-2 small molecule program, we have one ongoing study to complete, after which we expect to select an orally delivered development candidate for that program.

Our collaboration with Novo Nordisk also continues to progress smoothly. The Novo transaction provides up to $2.1 billion in upfront and milestone payments, plus royalties ranging from high single digits to the high teens. At closing in the fourth quarter of 2025, we received $240 million in upfront cash, which funded the YARTEMLEA launch and other operations. We also are eligible to receive up to an additional $100 million in near-term milestone payments. Our interactions with Novo remain collaborative and productive, and we continue to provide transition services at Novo's cost.

Turning now to development programs beyond our complement inhibitor franchise, our PDE7 inhibitor program evaluating OMS527 for cocaine use disorder remains fully funded by a grant from the National Institute on Drug Abuse, or NIDA. Earlier this year, we met with FDA regarding the agency's request for additional non-clinical information before initiating the inpatient study. That non-clinical work has initiated, and we expect to start enrollment in the inpatient clinical trial by year-end.

Based on its mechanism of action and our extensive preclinical data, we believe that OMS527 could be effective across a broad range of addiction and compulsive disorders. Our Targeted Complement Activating Therapy, or T-CAT platform, is a novel class of recombinant antibodies designed to target and directly kill pathogens, including bacteria, fungi, viruses, and parasites. Our initial focus is on infections caused by multidrug-resistant organisms, among medicine's most critical unmet needs.

Unlike antimicrobial agents on the market, T-CAT is designed to kill pathogens regardless of resistance profile and without promoting or enhancing resistance. The foundational manuscript describing our T-CAT technology was published in Science Translational Medicine in June of this year. The manuscript details the technology and demonstrates that T-CAT monoclonal antibodies safely and effectively treated infections in translationally relevant murine models of sepsis and pneumonia caused by multiple different drug-resistant bacterial species prioritized by the World Health Organization as posing the greatest threat to human health. The data underscore T-CAT's potential as a next-generation platform with broad applicability across microbial species, including multidrug-resistant pathogens. And we look forward to advancing T-CAT for the clinic.

Finally, OncotoX-AML, or OMS805, is the lead program in our oncology platform. It's an engineered biologic designed to treat acute myeloid leukemia, or AML, the most common and one of the deadliest acute leukemias in adults.

Across tumor-bearing animal models and in vitro human AML cell line studies, OncotoX-AML has consistently demonstrated efficacy superior to current standards of care, even at very low doses. Importantly, this efficacy was independent of AML-related mutations, including TP53 and FLT3, which historically have been very difficult to treat. In a non-human primate study, a single course of OncotoX-AML produced the desired pharmacologic response, a marked, selective, reversible, and dose-related reduction in myeloid progenitor cells by up to 99%.

Treatment was well tolerated with no safety signal of concern. We have entered into agreement with a leading contract biologics manufacturer for process development and clinical supply of OMS805 drug substance, and IND-enabling studies are underway. Given the novelty of the OncotoX program, its potential applicability across hematologic malignancies, and the breadth of our unpublished data and pending patent claims, we plan to limit further public disclosure until OMS805 enters human studies and begins generating clinical data.

Working with our Advisory Board of leading AML experts, we are preparing for a first-in-human trial to begin in late 2027. So that concludes our corporate and program update.

I'll now turn the call over to David for a more detailed review of our financial results. David?

Thanks, Greg. Our second quarter results reflect continued focus on commercial execution of the YARTEMLEA launch and actions to strengthen our capital structure. Net income for the second quarter of 2026 was $13.2 million, or $0.18 per share, compared with net income of $56.1 million, or $0.78 per share, in the first quarter of 2026.

Second quarter results included a $12.1 million non-cash mark-to-market gain on the embedded derivative associated with our 2029 convertible notes and a $700,000 remeasurement loss on our payment obligation for the 2029 note repurchases. By comparison, first quarter results included a $73.1 million non-cash mark-to-market gain on the embedded derivative associated with the 2029 convertible notes.

To provide additional visibility into our operating performance, we also present non-GAAP adjusted results that exclude non-cash remeasurements of embedded derivatives and other financial instruments. Excluding these non-cash remeasurements, non-GAAP adjusted net income for the second quarter was $1.8 million, or $0.02 net income per share, compared with a non-GAAP adjusted net loss of $17.1 million, or $0.24 net loss per share, for the first quarter.

As of June 30, 2026, we had $132 million in cash and investments, and company-wide net cash provided by operations in the second quarter was $4.1 million. During the second quarter, we repurchased and retired approximately 489,000 shares of our common stock at an average price of $11.70 per share for a total of $5.7 million. Through June 30, 2026, we had repurchased and retired approximately 843,000 shares at the same average price for a total of $9.9 million.

In June and July of '26, we entered into agreements for two privately negotiated cash repurchases totaling $30.5 million aggregate principal amount of our 2029 convertible notes. Both transactions closed in July, reducing our outstanding debt, which consists solely of the '29 notes, by approximately 43%, from $70.8 million to $40.3 million. The aggregate purchase price was $60.2 million, plus $200,000 of accrued and unpaid interest.

These transactions reduce leverage, future cash interest expense, and potential dilution by opportunistically repurchasing and retiring a portion of the '29 convertible notes. We also reduced the number of shares issuable on conversion from approximately 11.4 million to 6.5 million. As Greg noted, YARTEMLEA maintained strong commercial momentum in the second quarter. Gross product revenues were $32.2 million, all from YARTEMLEA sales, compared with $11.1 million in the first quarter, and net revenues were $28.5 million, compared with $9.9 million in the first quarter.

Gross-to-net adjustments were approximately 11.5% compared with approximately 11% in the first quarter and remained within our expectations. These adjustments consisted primarily of chargebacks and distribution fees. Costs and expenses from continuing operations before interest and other income were $28.5 million, an increase of $1.1 million from the first quarter. Under the transition services agreement entered into in connection with the zaltenibart transaction, we continue to be reimbursed for costs incurred in providing transition services, including third-party expenses and internal personnel costs.

We also recognized $3.3 million of reimbursement from Novo Nordisk for zaltenibart inventory transfer during the quarter, which we recorded in other income. Interest expense was $7.6 million. The primary components were the DRI royalty obligation and interest on the 2029 convertible notes. Excluding the OMIDRIA royalty obligations to DRI, which is fully offset by amounts received from Rayner and therefore has no economic impact on Omeros, and non-cash amortization of debt issuance costs and discounts, contractual cash interest expense was $1.7 million, down $100,000 from the first quarter.

Interest and other income totaled $4.6 million in the second quarter compared with $1.5 million in the first quarter. The increase was primarily attributable to the Novo Nordisk inventory reimbursement. As previously noted, we recorded a $12.1 million non-cash mark-to-market gain on the embedded derivative related to our '29 convertible notes. The change was driven primarily by the decline in our stock price from $10.56 per share at March 31 to $9.51 per share at June 30.

Because the derivative's value is closely tied to our stock price, increases in our share price generally produce non-cash losses, while decreases generally produce non-cash gains. This adjustment does not affect our operating performance or liquidity and is excluded from our non-GAAP adjusted results. Following the July note repurchases, future mark-to-market adjustments will reflect the reduced principal balance.

In connection with the June agreement to repurchase the first tranche of our 2029 convertible notes comprising $16 million principal amount, we recorded a $1.9 million loss. The loss reflects the difference between the fair value of the payment obligation, the carrying amount of the repurchased notes, net of unamortized discount and issuance cost, and the derecognition of the associated embedded derivative liability. Because the agreements for the second tranche comprising $14.5 million principal amount were entered into in July 2026, the related accounting will be reflected in our third quarter results. Income from discontinued operations in the second quarter was $6.6 million, up $1.8 million from the first quarter, primarily due to a lower remeasurement adjustment. Because U.S. OMIDRIA royalties pass directly to DRI, fluctuations in these payments do not affect our cash position.

Now let me turn to our expectations for the third quarter of 2026. We expect total operating expenses from continuing operations to be slightly higher than in the second quarter.

Research and development expenses are expected to increase primarily due to increased spending on our OMS805 Oncotox program. Sales and marketing expenses are also expected to increase, reflecting continued investment in the YARTEMLEA commercial infrastructure, marketing, and launch activities. Although we're encouraged by YARTEMLEA's continued commercial momentum, we're not providing revenue guidance at this time. We believe it is prudent to gain additional experience with prescribing trends, patient demand, and market dynamics.

We remain focused on expanding physician awareness and disease education and ensuring continued timely reimbursement. Interest and other income are expected to be lower in the third quarter, primarily because the Novo Nordisk inventory reimbursement recognized in the second quarter will not recur. Interest expense is expected to be approximately $6.5 million, reflecting the reduction in the outstanding debt following the repurchases. This estimate excludes potential non-cash adjustments related to the OMIDRIA royalty obligation.

Income from discontinued operations is expected to be between $5 million and $6 million, again, excluding any remeasurement adjustments related to the OMIDRIA contract royalty asset. And finally, as a reminder, our reported results will continue to reflect mark-to-market adjustments on the embedded derivative relating to our remaining '29 convertible notes. These adjustments are non-cash. They can be volatile and are driven largely by stock price and other market inputs. We therefore present non-GAAP adjusted income and loss to provide additional visibility into underlying operating performance.

And with that, I'll turn the call back over to Greg. Greg?

Thanks, David. Operator, please open the call to questions.

[Operator Instructions] Your first question comes from the line of Brandon Folkes with H.C. Wainwright. Your line is open. Please go ahead.

Maybe just two from me. I guess firstly, with the AstraZeneca, Ultomiris data release, are you having any updated conversations around C5 use at all? Obviously, it's off-label, right? But I guess any color in terms of why a transplant center would still use the C5 at all for these TA-TMA patients.

And then secondly, obviously a very good quarter here. Congrats on that, meaningfully ahead of a lot of forecasts. So I wanted to see if you could just try to put this in perspective relative to your internal forecasts, especially the company-wide cash flow forecast you put out earlier. And then along those lines, do you still expect month-to-month variability as you called out at your AGM?

Thanks, Brandon. With respect to the first question regarding C5 inhibition, as you noted, ravulizumab previously missed the endpoint on its open-label pediatric study and then recently reported that it as well had missed the endpoint on its controlled adult trial. So as far as we all understand, and you understand, they did not meet their endpoints across any of the ravulizumab TA-TMA trials.

Your question as to whether there remains off-label, primarily eculizumab use, because the dosing, frankly, for ravulizumab is not really conducive to the acute indication of TA-TMA. Eculizumab is more frequently dosed, shorter half-life. There is some continued eculizumab off-label use. We don't really know how much. We don't frankly focus on how much. I'll ask Bill to speak to that and his thoughts around the competition there, which I'll preempt a bit by saying we don't really see it as competition for YARTEMLEA.

I think with respect to why there might be continued use for a while of eculizumab. I think, certainly, it's hard to break old habits among physicians, and that is likely what we're seeing. But when you look at the adoption of narsoplimab, the breadth of the adoption, the depth of the adoption, I think that speaks volumes about how physicians see our drug. I also think certainly the safety profile. I mean, let's put aside the efficacy, which we're very pleased with the efficacy that we're seeing with narsoplimab in the commercial setting.

But let's look at the safety issues. I mean, narsoplimab is not associated with the same issues as C5 inhibition. It's a biological fact. When you inhibit C5, you inhibit the lytic arm of the classical pathway. That increases the risk of infection. Inhibition of MASP-2 with narsoplimab or YARTEMLEA is upstream. So we're inhibiting the lectin pathway at really near the top of the lectin pathway. And by doing so, we maintain that adaptive immune response.

So with respect to why folks would -- physicians would continue for a while to use eculizumab, I think the best answer to that is one of habit and just perhaps not fully understanding the benefits yet that YARTEMLEA brings. But I frankly expect that, that will not be a long-lived challenge for us. But Bill, let me ask you to comment on that.

Sure. Thanks, Greg. Yes, I totally agree. Physicians are humans too, and humans generally do not welcome change with open arms. Eculizumab was their only option for 10 or 12 or 15 years. In peds, it was widely adopted, adults not so much. But in peds, even in peds, we're seeing adoption across centers, use in both first- and second-line. In adults, it's pretty much first-line. So we expect this to be a temporary hiccup to our goal of being really the best-in-class first-line therapy for TA-TMA in both adult and pediatric centers.

Thank you, Bill. Brandon, your next question was how our internal forecasts, I believe, compare to what we've seen. We won't comment today on our internal or external forecast. We won't guide the other part of that question. I think, though, it was around our cash flow forecast. Certainly, we hold to our statement previously that by mid-2027, we expect to be cash flow positive company-wide.

And in fact, you saw the result we generated this quarter from operations, $4.1 million of net positive cash. So I think we're quite comfortable holding to that prediction. David, any comments on that?

I would say that states it really well and agree with what you just said, Greg.

Thank you. Anything else, Brandon?

No, other than to say congrats on a really good quarter and a good launch so far.

Your next question comes from the line of Stephen Brozak with WBB.

Congrats on these numbers. I'm thrilled, and I'm sure that patients being treated with yours are also thrilled. Financial questions. Can you just iterate, are any of these numbers from any kind of channel stocking, or do they represent pure numbers for drug going out? And I've got a follow-up after that, please.

Sure. Thanks, Steve. In answer to that first question, no, categorically no. This drug is available to patients from the wholesaler or distributor to the medical centers within 24 hours. So there really is no incentive or rationale to stock or stuff the channel. And frankly, we have seen inventories at about 1.5 weeks of supply, and that has been consistent since Q1, really since the very first quarter. It's been quite consistent at about 1.5 weeks of supply held by the distributors. So the answer to your question is really no. These are, as you put it, I'll use your term, these are pure numbers.

Okay. Last question and I'll jump back in the queue. NTAPs, okay. I've been familiar with different NTAP programs, but your numbers are obviously much, much higher. Can you tell us in terms of reimbursement, can you tell us the NTAP process and how you're set up for that, because that is something that not that many people are familiar with. And I'll hop back into the queue. Thank you.

Sure. NTAP is a CMS program that frankly subsidizes the cost of new drugs entering the market while that period of time occurs over which the DRGs are adjusted to account for those new drugs. So as you know, CMS has set an amount up to $287,000 for a course of treatment for YARTEMLEA. We're quite pleased with that. It's at that roughly 65% cap that CMS will allow.

CMS, as you saw in their proposed IPPS rule, recommended the NTAP for YARTEMLEA and subsequently in the final rule confirmed it. So I think they recognize the utility and the importance of the drug, and we're quite pleased that becomes effective or is scheduled to become effective on October 1. Cathy, do you want to add anything else?

No, I think, Greg, you explained it well. I mean, as you know, the reimbursement for these DRGs doesn't account for the new technology. And so with the approval of YARTEMLEA and its use in this condition, CMS has to add this on. And so again, we submitted the application, proposed the add-on payment, and we're pleased with the result that we got in terms of what they'll be including for the use of YARTEMLEA.

Steve, did that answer?

Perfectly, on both counts. Thank you, and again, congrats on these strong, strong numbers.

Thank you. We're all pleased and we look forward to the continued growth.

Your next question comes from the line of Samuel Rodriguez Santiago with Cantor Fitzgerald.

This is Sam on for Olivia. Quick question, since you mentioned the adults are making up 75% of the orders now, have you seen a difference in the amount of vials used per patient?

Yes, Sam, to I think our collective knowledge, no. We don't really have great visibility into vial utilization at specific centers. As you understand with all of the HIPAA and confidentiality issues around patient information, we just don't get that information. But certainly the ordering patterns are consistent across the pediatric and the adult centers. So I think my answer to that would be no, but let me ask Bill again, who may have information that I don't have.

No, they're not significantly different between the two. When you launch a new product into a deadly disease, you generally tend to get very severe patients at the beginning. You may need to see a little bit more drug at the beginning because they tend to require more medication. And I don't think there's any difference between peds and adults. Over time, we expect to treat a lot more patients with fewer vials as they start to get better at diagnosing it, treating it early, and getting better outcomes. So that's really kind of the way we expect it to go in the future.

And moving the treatment setting more toward the outpatient, right, Bill? And less so in the inpatient so that the response -- remember, in the absence of really an effective and safe drug, the focus on earlier and earlier treatment has not been there. In fact, the focus has been, how can we get these patients better without having to use some treatment for those patients?

I think as we spoke about during the prepared comments, we're seeing, and we're certainly helping, I think, to implement a paradigm shift to earlier and earlier utilization for increasingly improved outcomes. The sooner you get to these patients, the harder you hit them with YARTEMLEA, I think the data clearly support the better they will do.

Awesome, thank you and congrats on the quarter.

Your next question comes from the line of Serge Belanger with Needham.

First on YARTEMLEA, Greg, can you just talk about maybe the number of patients that have so far been treated with the product and I guess what the market share of the overall opportunity would be based on those patients? And then secondly, you talked about in your prepared comments that TA-TMA is mostly a diagnosis of exclusion. So with the shift paradigm that you're working on, what do you expect the market opportunity could be or what is the under-diagnosis and under-treated rate for the indication?

Sure, Serge, thanks for the questions. First, we can't give you any really definitive numbers on patient use because we don't have patient numbers. We see vials. We see vials that go into a center. We don't have any data beyond that really, other than occasional anecdotal data that we may receive, but we have no way of determining how many patients are being treated with those vials, where in the treatment course those patients are, et cetera. So with respect to patient numbers, can't really provide that information.

With respect to the prepared comment about diagnosis of exclusion, I think what clearly is meant there is prior to an approved product, prior to YARTEMLEA being available, the diagnosis of TA-TMA was quite challenging and really very diverse across centers. So different sets of criteria being used by different centers, by different physicians, a lack of real standardization of the diagnostic criteria. So absent a really good treatment for TA-TMA, you can understand why physicians would look at a constellation of symptoms and say, let's rule out those things that we know we can treat.

And if we can't treat those, then this is going to fall to what we'll call TA-TMA. We do believe that we are simply now scratching the surface. Again, I'll look to Bill to comment on that in just a moment, but I think our collective view on this is we're just scratching the surface. And as there becomes further embedded an effective and a safe treatment for TA-TMA, the diagnosis of TA-TMA accordingly will increase. And I think that the overall incidence numbers are going to continue to move north.

I think the percentage of patients who ultimately end up being diagnosed with TA-TMA as a percentage of stem cell transplantation will also increase. We're already seeing it. The latest MIDAS study shows the incidence of TA-TMA at 56% of allogeneic transplant. And I would think that there's a reasonable possibility that those percentages will increase again. When you have a treatment, there's a good reason to identify the disorder and then the treatment becomes self-fulfilling for that set of diagnostic criteria. But again, let me turn this to Bill and see, Bill, what are your thoughts on this?

Yes, I mean, I totally agree, Greg. We're just scratching the surface. As well as we've done so far, we expect to do better in the future. Institutional organizations, large academic centers, it's very hard to get real change in an institutional center. Not because they don't want to, just because they're a huge organization and there's a lot of levers to push in order to really change the way they look at things.

That could include not just P&T committees, but order sets and EMRs, the way that they diagnose TMA, and that fundamentally has to change. And we've made that change in some centers, but we have a lot more to go. And we think it'll get better over time, pretty consistently over time.

There are no further questions at this time. I will now turn the call back to Dr. Demopulos for closing remarks.

Thank you, Operator. And again, thank you all for joining us this afternoon. As we enter the second half of the year, YARTEMLEA has demonstrated strong commercial momentum in its first full quarter on the market. Reimbursement infrastructure continues to strengthen. Our operations generated positive cash flow in the quarter, and our recent note repurchases reduced debt and reduced potential dilution.

We remain focused on execution, driving YARTEMLEA adoption in TA-TMA, advancing expansion opportunities across the MASP-2 franchise, and moving our other programs across our deep pipeline forward. We have a number of important opportunities and milestones ahead, and we look forward to updating you on our progress. Have a good evening. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon, and welcome to today's earnings call for Omeros Corporation. [Operator Instructions]

Please be advised that this call is being recorded at the company's request, and a replay will be available on the company's website.

I'll now turn the call over to Jennifer Williams, Investor Relations for Omeros. Please go ahead.

Thank you, and good afternoon, everyone. Before we begin, please note that today's discussion will include forward-looking statements. These statements reflect management's current expectations and beliefs as of today and are subject to risks and uncertainties that could cause actual results to differ materially.

For a detailed discussion of these risks and uncertainties, please refer to the special note regarding forward-looking statements and the Risk Factors section in our quarterly report on Form 10-Q filed today with the SEC as well as our most recent annual report on Form 10-K.

Today's call will include a discussion of certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the corresponding GAAP measures is included within Omeros' earnings press release issued earlier today, which is available on the Investor Relations page of our website and has been furnished with the Form 8-K we filed with the SEC earlier today.

With that, I'll turn the call over to Dr. Greg Demopulos, Chairman and CEO of Omeros.

Thank you, Jennifer, and good afternoon, everyone. Joining me today are David Borges, our Chief Accounting Officer; Dr. Cathy Melfi, our Chief Regulatory Officer; and Dr. Steve Whitaker, Vice President of Clinical.

I'll start with an overview of our first quarter 2026 operations and financial results, followed by program updates. After that, David will cover the financials in more detail and then we'll open the call for questions.

We entered 2026 with 2 catalysts: the closing of our previously announced transaction with Novo Nordisk for zaltenibart, our lead investigational MASP-3 inhibitor and the FDA approval of YARTEMLEA, our lead MASP-2 inhibitor for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy, or TA-TMA.

This approval made YARTEMLEA the first and only approved treatment for this often fatal complication and the first and only approved inhibitor of the lectin pathway of complement. We launched in January with initial shipments to distributors beginning mid-month, followed shortly by first sales.

In the first quarter, YARTEMLEA gross revenues were $11.1 million with net revenues of $9.9 million, reflecting gross to net adjustments of approximately 11%. Early demand and uptake are strong.

YARTEMLEA became cash flow positive in the first quarter despite a mid-January launch and we expect it to drive company-wide positive cash flow within 18 months.

Net income for the first quarter was $56.1 million, or $0.78 per share, including a $73.1 million noncash mark-to-market gain on the embedded derivative associated with our 2029 convertible notes. Excluding this noncash item, adjusted net gross loss was -- or net loss was $17.1 million, or $0.24 per share.

We ended the quarter with $135.3 million in cash and investments after retiring our remaining 2026 convertible notes. During the first quarter, we repurchased and retired approximately 360,000 shares of our common stock at an average price of $11.70 per share for a total of $4.2 million.

We may continue to repurchase shares from time to time, subject to market conditions and other considerations. Our transaction with Novo Nordisk provided substantial nondilutive capital to support our growth.

At closing, we received $240 million in upfront cash, funding operations, including the YARTEMLEA launch. We are also eligible for another $100 million in near-term milestone payments from Novo. The deal is valued at up to $2.1 billion in upfront and milestone payments, plus royalties in the high single digit to high-teen range.

Our early launch has been focused on 4 priorities: first, educating transplant care teams to drive earlier recognition and treatment of TA-TMA. Second, securing rapid institutional access through pharmacy and therapeutics, or P&T committee approvals and streamlined ordering.

Third, ensuring consistent, timely reimbursement; and finally, demonstrating strong economic value through health economics and outcomes research, or HEOR.

Execution is ahead of plan. Our field force is fully deployed, detailing all 175 transplant centers nationwide. By March 31, 30 unique accounts had ordered YARTEMLEA, reflecting accelerated adoption.

Despite the typical 6- to 9-month time line for P&T committee approvals, accounts are moving faster than expected. By quarter end, we understand that 60% of the top 10 centers, 40% of the top 20, 38% of the top 40 and approximately 30% of the top 80 U.S. centers had received P&T committee approval.

Looking at reimbursement, all prior authorization requests submitted to third-party commercial payers to date have been approved and centers have begun receiving full payment. HEOR analyses, which support YARTEMLEA pricing and show compelling quality of life improvements are being finalized and prepared for publication.

Early indicators, including strong receptivity from transplant centers, formulary momentum and payer alignment with the label support our expectation that YARTEMLEA can become standard of care for TA-TMA.

In April, the U.S. Centers for Medicare and Medicaid Services, or CMS, assigned a permanent health care common procedure coding system, J-code for YARTEMLEA. This simplifies billing and reimbursement across payers, reduces administrative burden, supports faster patient access and improves reimbursement predictability.

The J-code becomes effective July 1. Also in April, CMS in its Inpatient Prospective Payment System proposed rule, recommended approval of the New Technology Add-On Payment, or NTAP for YARTEMLEA. NTAP provides additional payments to hospitals for certain high-cost innovative technologies, helping bridge the gap until standard payment systems incorporate them. The final rule is expected in August with NTAP effective October 1 of this year.

We remain focused on expansion opportunities for YARTEMLEA and our MASP-2 program. Beyond the U.S., our marketing authorization application for YARTEMLEA in TA-TMA is under review by the European Medicines Agency. We continue to expect a decision midyear.

We are evaluating potential partnerships, including broad ex-U.S. and regional collaborations to support commercialization outside the U.S.

Beyond TA-TMA, we're assessing opportunities to expand the YARTEMLEA label to other indications involving lectin pathway activation, including acute respiratory distress syndrome, or ARDS, sickle cell disease, acute kidney injury, solid organ transplant-related TMA and delayed graft function.

We're also broadening our MASP-2 inhibitor platform beyond YARTEMLEA, advancing both our Phase II ready long-acting MASP-2 antibody, OMS1029 and our oral MASP-2 small molecule program. Both are well suited for chronic indications, including membranous nephropathy, other renal diseases and neurological disorders such as Parkinson's and Alzheimer's.

We're finalizing the initial Phase II indication for once-quarterly OMS1029. We're now also working to advance our small molecule program to IND-enabling studies, targeting once-daily oral delivery.

Let's now turn to development programs beyond our complement inhibitor franchise. Our PDE7 inhibitor program evaluating OMS527 for cocaine use disorder remains fully funded by a grant from the National Institute on Drug Abuse, or NIDA. We successfully completed animal cocaine interaction studies, supporting a scheduled inpatient human study evaluating OMS527 in cocaine users.

Recently, together with NIDA representation, we met with FDA to discuss the agency's request for additional nonclinical information before starting the inpatient study. The meeting was productive and we are working with FDA to streamline the path to initiate the inpatient clinical trial, which is targeted to start by year-end.

Based on its mechanism of action and our extensive preclinical data, we believe that OMS527 could be effective across a wide range of addictions and compulsive disorders.

Turning to our Targeted Complement Activating Therapy, or T-CAT platform. This represents a novel class of recombinant antibodies designed to target and directly kill pathogens, including bacteria, fungi, viruses and parasites. Our initial focus is on multidrug-resistant organisms, or MDROs, one of the most critical unmet needs in medicine.

Unlike marketed antimicrobials, T-CAT is designed to kill pathogens regardless of resistance profile without promoting resistance. Data from our T-CAT platform were recently featured in a podium presentation at the annual congress of the European Society of Clinical Microbiology and Infectious Diseases and the seminal manuscript describing our T-CAT technology was accepted for publication in Science Translational Medicine.

Last but not least, we're pleased with the continued progress of OncotoX-AML, the lead development program in our OncotoX oncology platform. OncotoX-AML is an engineered biologic agent designed to treat acute myeloid leukemia, or AML, the most common and deadliest form of adult leukemia.

In both human, tumor-bearing animal and in vitro human AML cell line studies, OncotoX-AML has consistently shown superior efficacy to current standard-of-care treatments, even at very low doses and across mutations associated with AML, such as TP53 and FLT3, which have historically been difficult to treat.

In a nonhuman primate study, a single course of OncotoX-AML demonstrated the desired pharmacologic response, a marked selective, reversible and dose-related reduction in myeloid progenitor cells, the cells that can mutate and lead to AML by up to 99%.

Safety was equally strong. The treatment was well tolerated with no safety signal of concern. IND-enabling studies are underway and we are preparing for a first in-human trial targeted for late 2027.

So that concludes our financial, corporate and development program update. I'll now turn the call over to David Borges, our Chief Accounting Officer, for a detailed discussion of our financial results. David?

Thanks, Greg. Net income for the first quarter of 2026 was $56.1 million, or $0.78 per share compared to net income of $86.5 million, or $1.22 per share in the fourth quarter of 2025. First quarter results include a $73.1 million noncash gain related to the mark-to-market adjustment on the embedded derivative associated with our 2029 convertible notes.

By comparison, fourth quarter results included a net gain of $237.6 million on the sale of zaltenibart to Novo Nordisk, partially offset by a $136 million noncash loss related to mark-to-market adjustments on embedded derivatives associated with our 2029 convertible notes and term loan.

A clearer view of the company's operating performance excludes the noncash remeasurements of our embedded derivatives. Excluding the $73.1 million embedded derivative adjustment, non-GAAP adjusted net loss for the first quarter of '26 was $17.1 million and non-GAAP adjusted net loss per share was $0.24 per share.

As of March 31, 2026, we had $135.3 million in cash and investments. This balance includes the repayment of the remaining $17.1 million principal on our notes -- on our 2026 notes at maturity in February of 2026.

Following that repayment, our only remaining debt is $70.8 million of principal outstanding on our unsecured 2029 convertible notes, which are due in June 2029.

During the first quarter, we repurchased and retired approximately 360,000 shares of our common stock at an average price of $11.70 per share for a total of $4.2 million.

As Greg mentioned, YARTEMLEA launched in mid-January 2026. Gross revenues for the first quarter were $11.1 million, all from YARTEMLEA product sales, reflecting strong early demand following launch. Uptake was driven by prescriber adoption and increasing market penetration and we continue to expand access and build awareness.

Net revenues were $9.9 million, reflecting gross to net adjustments of approximately 11%. Gross to net adjustments were relatively modest and consisted of chargebacks and distribution fees.

Costs and expenses from continuing operations for the first quarter before interest and other income were $27.3 million, a decrease of $1.8 million from the fourth quarter of 2025. Concurrently with the closing of the sale of zaltenibart to Novo Nordisk, we entered into a transition services agreement to facilitate the transfer of the acquired assets and support the continued operation of relevant studies and program activities.

Costs incurred by Omeros under the transition services agreement, including third-party expenses and internal full-time employee, or FTE costs are being reimbursed by Novo Nordisk.

Interest expense in the first quarter was $5.9 million. The primary components of interest expense include the DRI royalty obligation and interest on the 2029 convertible notes.

Excluding the DRI OMIDRIA royalty obligation, which represents pass-through interest from Rayner to DRI and has no economic impact to us and excluding noncash amortization of debt issuance costs and discounts, contractual cash interest expense for the first quarter of '26 was $1.8 million compared to $3.2 million in the prior quarter. The decrease was primarily due to the full repayment of our secured term loan in November 2025.

Interest and other income totaled $1.5 million in the first quarter, up from $1.1 million in the fourth quarter of '25, primarily reflecting higher average cash balances. As previously mentioned, during the first quarter, we recorded a $73.1 million noncash gain from mark-to-market adjustment on the embedded derivative related to our 2029 convertible notes.

The change in valuation was primarily driven by the decline in our stock price during the quarter, which decreased from $17.18 per share at December 31, 2025, to $10.56 per share at March 31, 2026. An increase in stock price in the second quarter would similarly result in a noncash loss during the quarter.

Conversely, a decrease in our stock price during the second quarter would result in a noncash gain. This embedded derivative reflects certain features of the notes, including the conversion option and interest make-whole provision available to the noteholders.

Because the valuation of this derivative is influenced by our stock price and other market inputs, it can introduce significant volatility in our reported results from quarter-to-quarter. This adjustment is noncash and does not affect our operating performance or liquidity. Accordingly, we present non-GAAP adjusted net income and net loss to exclude the noncash nature of these volatile swings.

Income from discontinued operations in the first quarter was $4.8 million, a decrease of $1.8 million from the fourth quarter, primarily reflecting lower-than-forecasted U.S.-based OMIDRIA royalties. Because U.S.-based OMIDRIA royalties are fully passed through to DRI, fluctuation in these payments do not affect our cash position.

Now let's look at our expected second quarter 2026 results. We anticipate that overall operating expenses from continuing operations will be slightly higher compared to the first quarter of '26. Sales and marketing expenses are expected to increase, reflecting costs associated with building our commercial infrastructure, including marketing expenses and other commercial launch activities for YARTEMLEA.

As YARTEMLEA is in the early stages of launch, we are not providing revenue guidance at this time. This is consistent with our approach following a new product launch, while market access and physician adoption are still developing and until we are able to estimate revenue with greater accuracy.

We remain focused on building physician awareness, expanding disease education and ensuring continued timely reimbursement. Interest and other income are expected to be higher than in the first quarter.

Interest expense is expected to be approximately $7.1 million, reflecting the reduction in our outstanding debt and excludes any potential noncash adjustments related to the OMIDRIA royalty obligation. Income from discontinued operations is expected to be in the $5 million to $6 million range, excluding any noncash remeasurement adjustment related to the OMIDRIA contract royalty asset.

And finally, as a reminder, our reported results will continue to reflect mark-to-market adjustments on the embedded derivative tied to our 2029 convertible notes. These adjustments are noncash, can be volatile and are driven by -- largely driven by changes in our stock price and other market inputs.

As a result, we present non-GAAP adjusted net income and loss measures to provide additional visibility into our underlying operating performance.

With that, turn the call back over to Greg.

Thanks, David. Operator, now please open the call to questions.

[Operator Instructions] Your first question comes from the line of Steve Brozak with WBB.

I'd like to go into some granularity on YARTEMLEA. First question has to deal with from the time the clinician requests drug to the time you get it, can you detail how long it -- you get it to the hospital, can you detail us how long it takes and the process, please?

Sure. The distributors deliver drug to the sites within about 24 hours of receipt of the request. And process is pretty straightforward. The request is made to the distributors, distributors deliver within 24 hours.

Okay. And can you give us some detail on -- typically on stem cell TA-TMA on the transplant side, you're looking at about roughly 15% of the population are [ PEs ]. How does that reflect in terms of what you've seen so far on the request for YARTEMLEA, please?

Right. And you're correct about that. The split between adult and pediatric patients in TA-TMA is roughly 85-15, as you noted. We only have, again, through the first quarter, a little over 2 months of data.

So these data may be skewed, but we are seeing a greater percentage of these patients being pediatric than the 15% that you cited. So it appears that we're having really rapid adoption across both adult and pediatric patients.

Okay. Now I don't want to put words in your mouth, but typically, you would see the pediatric hematological oncologists being the most conservative. So you're saying that they are asking for YARTEMLEA in a greater number than the distribution.

And look, I know it's only a partial quarter. But so far, you're seeing a trend that these more conservative prescribers are asking for drug at a greater rate than you would expect. Is that what I'm hearing?

Well, I'm not sure that a point would create a trend. But what we're seeing is what I said, which is that there is a larger percentage of pediatric transplanters that is represented by the overall split in TA-TMA between adults and pediatrics. We are seeing those pediatric transplanters requesting narsoplimab or YARTEMLEA.

Okay. I thought I was the only person that was mixing narsoplimab and YARTEMLEA. You may have stated this earlier, but out of -- how many facilities out of the total targeted you started to get prescribing or get requests from so far?

We have at the end of March, so by March 31, we had 30 separate accounts requesting YARTEMLEA. And of that 30, let me just give you a little more color just -- we went through this in the prepared comments, but we were speaking there in percentages.

So I think if I put it in absolute numbers, it may be helpful, may be helpful to everyone. Of the top 10, 6 of the top 10 sites had ordered by March 31, 24 of the top 80 centers had ordered by March 31.

Okay. Okay. Last question, I'll get back in the queue. What kind of feedback, even if it's anecdotal, are you getting from the hematological oncologists in prescribing or anyone else on the clinician side?

Sure. Again, it's early, but the feedback that we have received has been effectively uniformly positive. I think that the results that are being seen with YARTEMLEA are impressive. And again, we're early in the launch, but as I said, all signs look very encouraging. And we do expect that YARTEMLEA will become standard of care for the treatment of TA-TMA.

Great. Well, thank you for the granularity and I'm looking forward to the next call to see the trend after one point. How's that?

Very good. Yes, we look forward to that as well.

Your next question comes from the line of Olivia Saunders with Cantor.

I know it's early, but Greg, how are you thinking about the split between inventory versus U.S. wholesaler sales versus hospital demand? And how that might play out over the course of the year just in terms of how we should think about the proportion of reported sales? And any comments on how many patients are actually on drug as of today?

Sorry, I lost the second question, Olivia, what was that? It was muted on my end maybe.

Yes. Just a question about how many patients are actually on drug as of today that are being treated with YARTEMLEA.

Sure. First of all, with respect to inventory, given the short delivery process, which, as I explained in the last response, is 24 hours, the amount of inventory carried at the distributors and certainly at the centers is relatively small. So on the distributor side, we're seeing 1, 1.5 weeks of inventory on average across those distributors.

I think your next question was the number of patients on drug. That's a difficult number to provide because often, the centers don't share the specific information about the number of patients or the type of patients or really any patient-specific information. So really, what we see is how many vials are going into a center and from which center those vials are being requested.

So that is -- I'm not trying to dodge the question. I'm trying to give you the best information we have. But we expect that it is a larger number of patients, obviously, than the number of accounts. But with respect to specific number, we just don't have that information.

Okay. Fair enough. And can I ask, how are you thinking about the AstraZeneca Ultomiris Phase III study that they're running in TMA? You think they're using disease relapse as an endpoint, and it is a randomized study. So I'm just curious if you have any thoughts on how that might fit into the landscape.

Right. Well, I understand that they've changed their endpoint. Their initial endpoint, as I understand it and again, I want to caveat that this is my understanding, but the initial endpoint, as I understand it, was response.

But following the readout of their pediatric open-label trial, which used response as the endpoint, that response was not clearly what AstraZeneca had hoped to see. I think it had a 17% response rate. So I know that subsequently, or as I understand it, subsequently they revised the endpoint for their adult trial from response to survival.

I don't know if they're looking at relapse. Our understanding is that the patients in that controlled adult trial, by definition, would really -- our expectation would be need to be less severe than the patients we treated by virtue of the fact that in the patients we treated, running a controlled trial would really not be possible.

So I think there's a difference in the severity of the patients. Don't know if they're looking at relapse. I'll open the question up to Steve and/or Cathy, if you have any other information about AstraZeneca and their data.

This is Steve. We only know what's on clinicaltrials.gov at this point. And the primary endpoint is event-free survival and that is death or clinical worsening. So it's not really relapse, as Greg said, it'd be worsening from their baseline condition.

They do look at duration of response and relapse, but those are lower secondary endpoints. And obviously, I don't have the protocol, so I don't know how these were ranked hierarchically, but those are pretty far down the line, if that helps.

Yes, that's great.

Yes. Thanks, Steve. Olivia, I think also that there have been a number of recent publications and data presentations around the increased infection rates and increased infection-related mortality with C5 inhibition.

I know coming out of an adult study at MSK, Memorial Sloan Kettering, a pediatric study out of Children's Hospital in Atlanta associated with Emory and I understand that there also has been additional data generated and presented by Dana-Farber and Boston Children's again in the pediatric center. All of those data align quite nicely with each other. So those might be something that would help you as well.

And Greg, you had mentioned the change in the endpoint, and I did confirm that on clinicaltrials.gov, your understanding was correct. It had been response. And currently, it's, as Steve said, event-free survival.

So thank you, Cathy. So yes, so they had changed from response to survival. Okay. Anything else, Olivia?

No, that's perfect.

Your next question comes from the line of Brandon Folkes with H.C. Wainwright.

Congrats on all the progress. Maybe just one for me, Greg, I think I heard you say, you're working on efforts to recognize TMA earlier. Can you just elaborate on those efforts and whether you believe once NTAP comes into practice, that may facilitate less friction to earlier intervention? Or what do you think drives earlier intervention?

Certainly, we're interested in earlier intervention. We want to save as many patients as possible. Our expectation and the data support that the earlier one jumps on this problem, the greater the likelihood of success in outcome.

So I think that there certainly seems to be an increasing awareness of that within the transplant community. We are receiving incoming questions about the temporarily upstream administration of YARTEMLEA. All of that, I think, bodes well for patients.

With respect to will the NTAP assist that? Yes. The NTAP increases the subsidization. So actually subsidizes in good part for Medicare patients, the payment on the inpatient side. And that's where you would expect that earliest treatment to begin.

So I think your thought around whether the NTAP would help in that respect, I think, is insightful. So we're waiting to see, but we do expect that there will be an increasing move to earlier treatment, particularly given that initially, a good number of the patients we were treating were eculizumab failures.

So we were really catching patients in the first quarter, catching patients who were falling knives. And yet those patients, very many of them responded very well to narsoplimab or to YARTEMLEA.

So I think that there will -- there's a greater understanding and increasing awareness of moving temporarily upstream in the administration process. I think that's a good thing. I think it's good for patients. Does that help? Okay.

It does. Sorry, just dealing with the mute button.

No, that's fine. Any other questions?

Your next question comes from the line of Serge Belanger with Needham.

I guess a few on -- just to get a little more granularity on the 1Q sales number. Greg, can you disclose what the number of vials that were, I guess, dispersed from your distributor over the quarter?

And then secondly, I think you talked about a gross to net of 11% for the first quarter here. Just curious where you expect that gross to net to go once you have more comprehensive formulary coverage? And then I have some -- a couple of reimbursement questions.

Sure. In response to your first question, no, we aren't providing the number of vials. We're providing gross and net revenue numbers.

With respect to your second around what is -- what constitutes that gross to net number, that really is made up of chargebacks and fees. So chargebacks, meaning governmental programs, so 340B and fees being largely bona fide fees to distributors. So that's largely it.

We would expect that over time to increase as 340B participation increases. With respect to a target, I would not expect that to be reaching the 20 percentile. I would be thinking we're going to remain in the teens on that search, but we'll have to see how that plays out. We are not planning at all to discount the drug.

So -- and I think returns are -- I don't think we've had any, but I think that will be negligible. So going forward, I would expect the components of the gross to net to be what they were in Q1, which is the chargebacks and the fees only.

Got it. And then regarding P&T approvals, clearly, you got some good traction through the end of the first quarter here with the numbers you gave us.

Yes.

Curious when do you expect the rest of them to go through the P&T approval process? Are they already scheduled?

And then secondly, you talked that you got approval for a J-code as well as the NTAP for later this year. Curious since you said that most centers have had some very good access to the product, access hasn't been an issue. Will these J-codes and I guess, an NTAP, what kind of impact could they have on further uptake once they are in effect?

Yes. First of all, with respect to P&T committees, there are a number of them that are in process. Remember, we launched this in mid-January, third week of January. So we are really still very early in the process and the P&T committee approvals that we've seen, as I mentioned, are quite satisfying in that they are well ahead of what we would have expected in terms of just time line and number of P&T approvals.

So clearly, there is an urgency, I think, that's being recognized and manifest across the sites with physicians and pharmacists recognizing the value of YARTEMLEA and moving quickly to make it available.

There are centers, obviously, that are approving access to the drug absent P&T approvals, but additional P&T approvals will certainly help that access, streamline it, make it more quick, more efficient. With respect to when we would expect all of those to have gone through the P&T process, all is an absolute number, I would expect that the large majority of them will be coming through in the next few months.

Your second question about the J-code and the NTAP. Well, the J-code certainly streamlines the billing process and the reimbursement process. So certainly, having the J-code now awarded and going into effect on July 1, I think, will be very helpful.

The NTAP, CMS has in its proposed Inpatient Prospective Payment Systems rule has indicated that they support the approval of the NTAP for YARTEMLEA. That we expect will be finalized in the inpatient final rule in August.

Assuming that's the case, it will become or should become finalized and available for use on November 1st or sometime very close to November 1st. It runs on CMS' schedule.

Both of those, the J-code and the NTAP, I expect will obviously help with reimbursement anytime you have secured reimbursement, that certainly helps with utilization. So I think -- I'm quite -- it's been quite surprising, frankly, how broadly YARTEMLEA has been used in the absence of the historical reimbursement already in place.

But once -- as you know, Serge, once that reimbursement becomes much more standard and much more well-recognized, that just drives front-end utilization as it should.

There are no further questions at this time. I will now turn the call back to Dr. Demopulos for closing remarks.

All right. Thank you, operator, and thank you all for joining us this afternoon. As we've said, we're pleased with the strength of the YARTEMLEA launch and the continued progress across our pipeline and our platform programs with expanding commercial momentum, multiple near-term catalysts and continued execution across the organization, we believe Omeros is well positioned for continued growth and long-term value creation.

As always, we appreciate your continued support and confidence. Have a good evening.

This concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon, and welcome to today's earnings call for Omeros Corporation. [Operator Instructions] Please be advised that this call is being recorded at the company's request, and a replay will be available on the company's website. I will now hand the conference over to Jennifer Williams, Investor Relations for Omeros. Please go ahead.

Thank you, and good afternoon, everyone. Before we begin, please note that today's discussion will include forward-looking statements. These statements reflect management's current expectations and beliefs as of today and are subject to risks and uncertainties that could cause actual results to differ materially.

For a detailed discussion of these risks and uncertainties, please refer to the special note regarding forward-looking statements and the Risk Factors sections in our annual report on Form 10-K, which was filed with the SEC today. Today's call will include a discussion of certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the corresponding GAAP measures is included with Omeros' earnings press release issued earlier today, which is available on the Investor Relations page of our website and has been furnished with the Form 8-K we filed with the SEC earlier today.

With that, I'll turn the call over to Dr. Greg Demopulos, Chairman and CEO of Omeros.

Thank you, Jennifer, and good afternoon, everyone. Joining me today are David Borges, our Chief Accounting Officer. Nadia Dac, Chief Commercial Officer; Dr. Andreas Grauer, Chief Medical Officer; Dr. Cathy Melfi, Chief Regulatory Officer; and Dr. Steve Whitaker, Vice President of Clinical.

Two major successes made the fourth quarter of 2025 a turning point for Omeros. On November 25, we closed our previously announced asset purchase and license transaction with Novo Nordisk for our Phase III ready asset, zaltenibart. Then on December 23, we received FDA approval for narsoplimab now commercialized under the brand name YARTEMLEA for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy, or TA-TMA.

Through the zaltenibart deal, Novo Nordisk received exclusive global rights to develop and commercialize zaltenibart, Omeros' proprietary human monoclonal antibody targeting mannan-binding lectin-associated serine protease-3 or MASP-3 and a small number of target-related very early-stage antibodies and antigen binding fragments. MASP-3 is the key activator and is widely considered the premier target of the alternative pathway of complement.

Omeros retains rights to its MASP-3 small molecule program, including the ability to develop and commercialize small molecule MASP-3 inhibitors across a range of therapeutic areas, including, but not limited to, ophthalmology, neurology, gastrointestinal disorders, dermatology, musculoskeletal diseases and oncology.

Omeros also retains rights to its grandfathered MASP-3 antibodies with temporal and indication restrictions on commercialization and for use in advancing its small molecule therapeutics. The transaction resulted in an upfront cash payment to Omeros of $240 million with an additional $100 million in achievable near-term milestones. We're also eligible for another $410 million in onetime development and approval milestone payments and up to $1.3 billion in onetime sales and commercial milestones.

All told, the deal is valued at up to $2.1 billion in upfront and milestone payments. On top of that, Omeros is set to receive tiered royalties up to the high teens on net sales of commercialized products. As part of the transaction, we entered into a transition services agreement, or TSA, with Novo Nordisk. Under this TSA, we are providing and being reimbursed by Novo Nordisk for our employee costs and other expenses associated with services to facilitate the transfer and to maintain the continuous operation of zaltenibart studies and programs.

Novo Nordisk will also reimburse Omeros for its inventories of zaltenibart drug substance and drug product. Our partnership with Novo Nordisk is mutually beneficial, underscoring the value of Omeros' science and development expertise while providing us with substantial and ongoing working capital and enabling Novo Nordisk to lever its extensive experience and global reach to unlock the full potential of zaltenibart. Novo plans to advance zaltenibart across PNH and multiple other indications.

The ultimate beneficiaries will be patients. Omeros' second landmark achievement in the fourth quarter of '25 was FDA's late December approval of YARTEMLEA, Omeros' lead MASP-2 inhibitor, making YARTEMLEA the first and only approved treatment for TA-TMA. MASP-2 is the effector enzyme of the lectin pathway of complement in TA-TMA and often fatal complication of stem cell transplantation is driven by lectin pathway activation.

The FDA-approved indication for YARTEMLEA is broad, covering all TA-TMA in both adults and children at least 2 years of age. Unlike C5 and C3 inhibitors sometimes used off-label, YARTEMLEA by blocking upstream MASP-2 preserves the infection fighting functions of the classical and alternative pathways of complement. This important mechanistic benefit is reflected in YARTEMLEA's approved label, in which there are none of the safety-related obligations usually required for complement inhibitors.

Specifically, no box warning, no risk evaluation and mitigation strategy or REMS program and no required vaccinations. As previously disclosed, we began preparations for the U.S. commercial launch of YARTEMLEA well before receiving approval, allowing us to hit the ground running. We've hired and deployed our entire field force of account managers and directors, market development managers, market access leads and medical science liaisons across all territories.

Having supplied our distributors within the first 3 weeks of January, first sales occurred shortly thereafter. Within 24 hours of placing an order, both adult and pediatric TA-TMA patients are now receiving YARTEMLEA, including patients who have recently failed prior off-label C5 or C3 inhibitor regimens. Patients are receiving YARTEMLEA in both hospital and outpatient settings and third-party payer reimbursement has been received. The per vial price for YARTEMLEA is approximately $36,000. Each vial represents a single dose.

Across the pivotal clinical trial and the expanded access program, median utilization was 8 to 10 vials per treatment course. We expect the majority of the TA-TMA patients course to be administered in hospital outpatient departments where the drug typically is purchased and billed by the hospital. With our field force fully deployed, we remain focused on the 80 highest volume transplant centers across the country. Those 80 centers represent approximately 80% of annual stem cell transplants in the U.S.

At this early stage, our primary launch objectives are fourfold: First, to educate the entire transplant care team, including transplant physicians, nurses, pharmacists and reimbursement teams regarding the recently harmonized TA-TMA diagnostic criteria, thereby driving awareness, early diagnosis and treatment of the disorder. On that front, beyond the 80 highest volume transplant centers, our field force has actively met with and detailed centers representing nearly 90% of the allogeneic stem cell transplant procedures performed nationally.

Second, to support transplant centers in quickly obtaining their pharmacy and therapeutics or P&T committee approvals, adding YARTEMLEA to their formularies and streamlining their ordering processes to continue ensuring seamless access to YARTEMLEA in both the hospital and outpatient settings. Our progress has exceeded our expectations. YARTEMLEA has obtained P&T committee approval and is now on formulary at 50% of the top 10 U.S. transplant centers, 40% of the top 20 centers, 35% of the top 40 centers and approximately 30% of the top 80 transplant centers across the country.

Third, to work with third-party payers to continue ensuring timely reimbursement consistent with the YARTEMLEA label and published diagnostic criteria. To date, third-party payers have approved all pre-authorization requests for YARTEMLEA, meaning that insurers have agreed to prospectively cover those patients.

Fourth, to finalize the Health Economics and Outcomes Research or HEOR analysis using the uniformly strong clinical efficacy data and favorable safety profile of YARTEMLEA to demonstrate its compelling cost effectiveness to health care providers and payers. We plan to publish the HEOR analysis for YARTEMLEA soon, and the results strongly support YARTEMLEA's clinical, economic and real-world value.

We look forward to providing additional detail regarding the launch of YARTEMLEA during our upcoming earnings call for the first quarter of 2026. Beyond the U.S., our marketing authorization application for YARTEMLEA in TA-TMA is pending with the European Medicines Agency. We continue to expect a decision midyear. For commercialization of YARTEMLEA outside the U.S., we are evaluating potential partnerships, both broad ex-U.S. arrangements and regional collaborations.

We believe that these opportunities are substantial. As we have discussed in previous calls, the underlying biology of TA-TMA, endothelial injury and cellular damage spans a broad range of therapeutic areas. For YARTEMLEA, we are evaluating expansion opportunities in additional indications, including acute respiratory distress syndrome or ARDS, solid organ transplant-related TMA and other endothelial injury-related disorders.

We also intend to advance our once-quarterly dosed MASP-2 antibody, OMS1029, which is Phase II ready as well as our MASP-2 small molecule program designed for once-daily oral administration. We expect that both our long-acting antibody, OMS1029 and our small molecule inhibitor programs are well suited for chronic indications, including those in nephrology and in neurology.

Let's now examine our fourth quarter and full year 2025 financials. For the fourth quarter, Omeros reported net income of $86.5 million or $1.22 per share compared to the third quarter's net loss of $30.9 million or a loss of $0.47 per share. Fourth quarter results include a net gain of $237.6 million resulting from the zaltenibart transaction with Novo Nordisk.

In the fourth quarter, Omeros also incurred a $136 million noncash charge associated with the mark-to-market adjustment on the embedded derivatives related to our 2029 convertible notes and term loan. Excluding this charge, our fourth quarter non-GAAP adjusted net income was $222.5 million and our fourth quarter non-GAAP adjusted income per share was $3.14.

Further strengthening our balance sheet in the fourth quarter in November, we used a portion of our $240 million upfront payment from Novo Nordisk to repay in full our $67.1 million secured term loan. Last month, we used another portion of the upfront to repay at maturity the remaining $17.1 million principal balance on our 2026 convertible notes.

As a result, all indebtedness under our senior secured term loan and 2026 notes has been extinguished, leaving us with only a $70.8 million principal amount outstanding in 2029 convertible notes. As of December 31, 2025, we had $171.8 million in cash and investments, an increase of $135.7 million from the quarter ended September 30, 2025. We anticipate that the YARTEMLEA program will be financially self-sustaining this year, and we expect the company to achieve positive cash flow in 2027.

Let's turn now to development programs beyond our complement franchise. Our PDE7 inhibitor program evaluating OMS527 for cocaine use disorder is fully funded by a grant from the National Institute on Drug Abuse or NIDA. Animal cocaine interaction studies designed with NIDA toxicologists were completed and showed no drug interaction or safety issues, supporting the scheduled inpatient human study in cocaine users.

FDA subsequently requested additional preclinical information before initiation of the inpatient study. Together with our collaborators at NIDA, we are scheduled to meet with FDA in the coming quarter to discuss that request. Our targeted complement activating therapy or T-CAT platform has also made substantial strides. Our T-CAT platform represents a novel class of pathogen targeting recombinant antibodies designed for broad use against diverse pathogens, including multidrug-resistant organisms or MDROs.

MDROs are predominantly bacteria that are resistant to antimicrobial agents and are rapidly becoming a global threat. In 2024, sales of anti-infectives were $46 billion in the U.S. alone and $135 billion globally. Over the next 25 years, more than 39 million people worldwide are estimated to die from MDR bacteria alone.

Unlike marketed antimicrobials, T-CAT is designed to kill pathogens regardless of resistance profile without promoting resistance. In well-established in vivo animal models considered predictive of efficacy in humans, T-CAT recombinant antibodies demonstrated effectiveness in treating life-threatening infections caused by both gram-negative and gram-positive bacteria, including those designated by the World Health Organization as priority pathogens. Patents have now been filed and a publication on our T-CAT platform is expected in the coming weeks.

Finally, our oncology platform continues to progress rapidly. IND-enabling studies are underway for OncotoX-AML, our biologic agent designed to treat acute myeloid leukemia or AML. AML is an aggressive and often fatal bone marrow and blood cancer. OncotoX-AML has shown broad application across AML genotypes, including historically difficult-to-treat mutations like TP53, NPM1, KMT2A and FLT3.

These genetic mutations are collectively found in approximately 90% of AML patients. Across human tumor-bearing animal and in vitro human AML cell line studies, OncotoX-AML has consistently shown superior efficacy to current AML standard of care treatments.

In a pilot study assessing the efficacy and safety of OncotoX-AML in nonhuman primates, a single course of OncotoX-AML resulted in selective, reversible and dose-related killing of myeloid progenitor cells, the cells that can mutate and lead to AML by up to 99%. OncotoX-AML was tolerated with no safety signal of concern.

Together with our clinical steering committee comprised of AML experts from leading academic cancer centers, we are designing our first-in-human clinical trial targeted for late next year. That concludes our financial corporate and development update. And I'll now turn the call over to David Borges, our Chief Accounting Officer, for a detailed discussion of our financial results. David?

Thanks, Greg. Net income for the fourth quarter of 2025 was $86.5 million or $1.22 of net income per share compared to a net loss of $30.9 million or $0.47 net loss per share in the third quarter of 2025. Fourth quarter results include a net gain of $237.6 million on the sale of zaltenibart to Novo Nordisk, which I will discuss in more detail in a moment.

Results also include a $136 million noncash charge associated with the mark-to-market adjustment on the embedded derivatives related to our 2029 convertible notes and term loan. Excluding this charge, non-GAAP adjusted net income for the quarter was $222.5 million and non-GAAP adjusted net income per share was $3.14. This charge represents a noncash remeasurement adjustment and excluding it, provides a clearer view of the company's operating performance during the quarter.

As of December 31, 2025, we had $171.8 million of cash and investments on hand. This balance includes the gross proceeds of the $240 million upfront payment received from Novo Nordisk in connection with the sale of zaltenibart and the full repayment of our $67.1 million term loan in the fourth quarter. In connection with the repayment of the term loan, all liens and covenants associated with the credit agreement, including the $25 million minimum liquidity covenant were eliminated.

In February 2026, we repaid at maturity the remaining $17.1 million principal balance on our 2026 notes. Following these repayments, our only remaining debt is a $70.8 million in principal amount of unsecured 2029 convertible notes, which are not due until June 2029. Costs and expenses from continuing operations for the fourth quarter before interest and other income were $29.1 million, an increase of $2.7 million from the third quarter of 2025.

Research and development expenses in the fourth quarter were primarily focused on YARTEMLEA and zaltenibart. Interest expense in the fourth quarter was $8.7 million. The primary components of interest expense include the DRI royalty obligation, the 2029 notes, the 2026 notes and the term loan. Excluding the DRI OMIDRIA royalty obligation, which represents pass-through interest from Rayner to DRI and has no economic impact to us, as well as noncash amortization of debt issuance costs, discounts and premiums, contractual cash interest expense was $3.2 million compared to $4.2 million in the prior quarter, a decrease of $1 million.

The decrease was primarily due to the repayment of the term loan in November 2025. In connection with the closing of the sale of zaltenibart to Novo, we recognized a net gain of $237.6 million. This reflects the $240 million upfront payment less $2.4 million in transaction costs. Concurrent with the closing of the transaction, we entered into a transition services agreement with Novo Nordisk to facilitate the transfer of acquired assets and liabilities and support the continued operation of relevant studies and program activities.

Costs incurred by the company under the transition services agreement, including third-party expenses and internal FTE costs are expected to be reimbursed by Novo. Interest and other income totaled $1.1 million in the fourth quarter compared to $616,000 in the third quarter of '25, primarily reflecting higher average cash balances. In connection with the repayment of the term loan in November '25, we recognized a $17 million noncash gain related to the derecognition of the remaining unamortized premium. This was a onetime accounting adjustment associated with the repayment of the loan.

And during the fourth quarter, we reported $135 million noncash loss on the mark-to-market adjustment on the embedded derivative related to our 2029 convertible notes. The change in valuation was primarily driven by the increase in our stock price during the quarter, which rose from $4.10 per share at September 30, '25 to $17.18 per share at December 31, '25. This embedded derivative reflects certain features of the notes, including the conversion option and interest make-whole provisions available to noteholders.

Because the valuation of this derivative is influenced by our stock price and other market inputs, it can introduce significant volatility in our reported results from quarter-to-quarter. This adjustment is noncash and does not affect our operating performance or liquidity. As a result, we present non-GAAP adjusted net income and net loss to exclude the noncash nature of these volatile swings.

Income from discontinued operations in the fourth quarter was $6.6 million, an increase of $16.2 million from the third quarter. The increase primarily reflects the absence of a large noncash remeasurement expense recorded in the third quarter following a downward revision of the forecast for U.S.-based OMIDRIA royalties.

Now let's look at our expected first quarter 2026 results. We anticipate that overall operating expenses from continuing operations in the first quarter of '26 will be comparable to the fourth quarter of '25. Research and development expenses are expected to be lower as zaltenibart-related expenses will be reimbursed under the transition services agreement with Novo.

Sales and marketing expenses are expected to increase in the first quarter, reflecting costs associated with building our commercial infrastructure, including the hiring of a field sales force, marketing expenses and other commercial launch activities for YARTEMLEA. As YARTEMLEA is in the early stages of launch, we are not providing revenue guidance at this time. We typically do not provide guidance following a new product launch while the market access and physician adoption are developing until -- and until we're able to estimate revenue with greater accuracy.

In the near term, we're focused on building physician awareness, expanding disease education and working with third-party payers to ensure timely reimbursement. Interest and other income are expected to be slightly higher than in the fourth quarter of 2025, primarily reflecting higher average cash balances. Interest expense is expected to be approximately $8.1 million, reflecting the reduction in our outstanding debt and excluding any potential noncash adjustments related to the OMIDRIA royalty obligation.

Income from discontinued operations is expected to be in the $5 million to $6 million range, again, excluding any noncash remeasurement adjustments related to the OMIDRIA contract royalty asset. And finally, one thing to keep in mind is that our reported results will continue to reflect mark-to-market adjustments on the embedded derivative tied to our 2029 convertible notes. These adjustments generally move with our stock price and can create significant volatility from quarter-to-quarter. Because these adjustments are noncash and unpredictable, we present non-GAAP adjusted net income and loss measures, and they do not affect our operating guidance.

And with that, I'll turn it back over to Greg.

Thanks, David. Operator, please, would you open the call to questions.

[Operator Instructions] Your first question comes from the line of Brandon Folkes with H.C. Wainwright.

Congrats on all the progress. Maybe just 2 from me. How should we think about the progress of formulary additions across the top 80% of transplant centers in 2026? Obviously, you got off to a strong start there. So just sort of how should we think about the progress for the rest of the year?

And then secondly, I know it's very early on in the YARTEMLEA launch, so kind of asking this with an asterisks. But any color on the real-world vial usage to date? Sort of any early data suggesting a different number of vials in the real world versus what we saw in the clinical data?

Brandon, thanks. With respect to the first question, we're quite pleased with the P&T committee approvals that we've received so far that YARTEMLEA has received. It was really ahead of schedule, which I think indicates the strong interest and frankly, the recognized need for the drug.

I expect -- I think we expect that we will continue to see additional P&T approvals over the next several months. And our objective, of course, is to have P&T committee approvals across all of the top 80 and frankly, beyond the top 80 sites. But I'll check with Nadia. Nadia, do you have any additional thoughts on that?

Yes, I completely agree with everything you said, Greg. And I will underscore how pleased we are with the speed with which these P&T decisions are being taken, which isn't always the case in a launch. Here, they're seeing the value and the urgency to treat patients with YARTEMLEA's value proposition.

And I will add that in places where we don't have P&T approval yet, if it's still underway, it's not standing in the way of getting YARTEMLEA to the patients. And so we are seeing the use of YARTEMLEA in the hospitals even without a P&T approval in place.

I would just underscore that latter point from Nadia, which is despite in some of these centers not having P&T approval yet, we continue to see requests and sales of YARTEMLEA, use of YARTEMLEA for the benefit of the patients in those centers. So it's really been very encouraging and frankly, validating on what we believe the importance and the need for YARTEMLEA is in these patients, both adult and pediatric, really both in the hospital setting and in the outpatient setting.

Your second question, Brandon, was tied to vial usage. And I assume you're asking whether it's once weekly, twice weekly, but let me just make sure I understand the question.

Yes. Ideally. Just anything you're learning early on in the launch, which may be different to what we saw in the clinical data?

Yes, not really different. We are seeing once weekly and twice weekly usage right now, at an estimate, the split is about 70% once weekly, 30% twice weekly, twice weekly being more common in the pediatric patients than in the adult patients. We do expect that shift to move more heavily toward twice weekly dosing.

Really what needs to occur and what our field force is doing is educating the transplant teams on their ability to dose twice weekly. It is allowed under our label. And I think that, that information is being really well received by the transplant teams across the centers nationally. And so I would expect that we would see that split to move more heavily toward twice weekly dosing. But again, I'll ask Nadia her thoughts on this.

Yes, absolutely. And one of the execution tactics and the messaging that the field is focused on is the sense of urgency and not to wait because our label allows twice weekly dosing. And so in several instances, we're seeing that there is an urgency to treat and move a little faster if they need it for the patients.

And the other thing that's very encouraging is the published policies that we've seen to date with third-party payers are, they're supporting prior authorization to label. And so it's not restricting the use of twice weekly dosing as needed.

Does that help, Brandon?

Very helpful. Congrats on the early launch progress.

Thank you.

Your next question comes from the line of Olivia Brayer with Cantor.

This is Sam on for Olivia. I have a quick one on -- you mentioned that you plan to be financially sustainable this year and then cash flow positive by 2027. Is that implying that you received the $100 million from Novo and you had to pay the 29 notes?

And then under YARTEMLEA launch, what feedback have you gotten from the sales force when educating the teams? And has there been any like pushback or like what kind of roadblocks or things have you seen that you expect to like smooth out by the rest of the year?

Sam, with respect to your first question, the comment about self-sustainability was really directed at the YARTEMLEA business in 2026, meaning the business itself would be self-sustaining in 2026. 2027 is our target for company positive cash flow. So I'm hoping that, that helped and cleared up any misunderstanding.

Yes. That's awesome. And then on YARTEMLEA, what kind of bumps in the road have you encountered? And what can you do to like smooth those out?

Yes. Again, we'll get into this more in our Q1 call, which will be in about 6 weeks. But I can tell you that our sales team is really very excited, very enthusiastic about the responses that they are receiving from the medical centers that they're detailing.

And as I said, we are -- we've been in already sites that represent about 90% of the allogeneic transplants done nationally every year. So the response has been from those centers really uniformly positive. I think that -- there's an education process that's going on. But the eagerness to learn the recognition of the urgency and the need for YARTEMLEA and the benefits with the really quite favorable safety profile, I think, is resonating very strongly with the sites, really all the sites that I am aware of have been very receptive.

But again, I'll turn it to Nadia and see if she has more information on that.

Yes. The receptivity has been extremely positive. Our value proposition is viewed as significant and addressing an unmet need. And I will say that all of the effort we put into the prelaunch period of educating on TA-TMA, the signs of symptoms to identify it and the urgency to treat, we're seeing the payoff of that education.

And so now with the first and only approved product for TA-TMA, that sense of urgency is playing out. And if I were to pick on anything that we want to smooth out, what we're working on as a commercial team is to make sure that we have even more education out there that supports our on-the-ground efforts and seeing how we can do more through nonpersonal efforts because as we see, the patient can come from anywhere, 175 centers. So we want to make sure that we're supporting any of the HCPs out there that are looking for treatment and wanting to learn more about YARTEMLEA.

And I would agree with what Nadia said that really we're focused on educating. But I've been personally quite impressed by the steep upswing of that education across all of these sites. They understand it, they get it.

And as Nadia said, they're quite receptive to the value proposition here for their patients. I mean this is a drug that works well. And when you look at the safety profile, that's quite a favorable benefit risk profile that I think YARTEMLEA represents.

And if I can squeeze one last one in. Regarding the EMA decision by midyear and like partnership discussions, do you expect any impact from MFN and like ex U.S. pricing?

Yes. It's too early right now to discuss what we expect with respect to pricing in the EU. We are really sort of laser-focused on achieving that approval. There is, as you know, no approved treatment other than narsoplimab or YARTEMLEA anywhere in the world, and that includes Europe.

So I think it is a needed product. We see the interest in it to be high as was clearly evident at the recent EBMT meeting, the European Blood and Marrow Transplantation meeting. The interest in YARTEMLEA there was very high. And our focus is getting it approved, making it available for European patients as we've already made it available through our expanded access program.

Your next question comes from the line of Steve Brozak with WBB.

I'd like to go back to something you raised on the last series of questions in terms of the value proposition. I mean, given your compassionate use programs and all the drug that you've given out and all the literature that's been published, I'm certain that the hem-oncs are very, very familiar with YARTEMLEA.

But can you go into as much detail as possible as to the value proposition because these are sick patients, of course. But a lot of resources have been expended on them financially and obviously, in the medical care. Can you tell us about that? Because I'd like to put into perspective the criticality of what has just been done and what you're now doing. And I've got a follow-up after that, please.

Steve, yes, with respect to the value proposition, I think I mentioned or I know I mentioned in the prepared remarks, the work we're doing on HEOR, on the Health Economics and Outcomes Research, and we'll be publishing. We plan to publish those analyses soon, but they're compelling.

I think they make a very clear case for the economic, clinical and really, as I said, real-world benefits of YARTEMLEA. So we think that there is obviously a strong case to be made, and we are making it, and we'll be publishing that. So did that answer your question? Or was it something additional?

No, no. It's answered the question, but frankly, I was looking more for dollars and cents as to the scale order of magnitude when you're seeing these transplant patients, those are not just critical procedures, but they're also very, very expensive. Can you give us an idea of what we're looking at as far as what patients or the insurers, the hospital systems are spending right now?

And also, I know this has been the classical unmet need, but what were some of the products that were used before in the order of magnitude and frankly, they were spending and where they really weren't working. If you could give us anything there, and I've got one more again after.

Sure. Well, look, the overall transplant cost and related costs run about $1 million. So you spend a lot of money, you spend a lot of time, energy, there's a lot of patient involvement, patient family involvement. And then TMA hits, right?

And it is really unpredictable. You cannot -- there's no test that will tell you this patient versus another patient is going to have a TA-TMA. So I think what I want to be careful about is speaking directly to numbers. With respect to your question about what has been used previously. Well, we know that off-label C-5 and to a much lesser extent, C-3 inhibitors have been used.

You know the costs associated with those. Those are quite public. What we do know and what we're seeing in the published literature out of Memorial Sloan Kettering directed to adults, out of Emory directed to children, really now controlled trials with specifically in these cases, C-5 inhibition.

But what we have seen and what have been -- what has been published is the markedly increased infection rate associated with C-5 inhibition, I mean up to a sixfold increase in infection-related mortality as reported in this set of publications. So that carries, I think, a significant cost beyond the cost of the agents themselves. So we think that where we are priced, the economic value proposition for narsoplimab or YARTEMLEA is really quite clear.

And then when you layer on the clinical benefits of that, it becomes really something that I think is pretty compelling. Is that addressing your question, Steve?

Absolutely. Okay. A follow-up. You've been very transparent in saying that the hem-oncs, the hematological oncologists have been accepting YARTEMLEA. Question I've got for you is, since it is obviously a critical mishap, how fast are you in being able to respond?

Because part of this is obviously being able to get the drug to the patients, but how quick can you respond to these clinicians who are obviously watching their patients deteriorate, but that those first few days are critical in understanding it. How -- what feedback can you give us there? And I'll hop back in the queue.

Sure. Well, as we have set up our distribution channels, we can deliver drug. We are delivering drug within 24 hours of the request. So we can reach the site very quickly, which, of course, is the objective, right? Our preference would be not to wait until the patient is severely or critically ill, as you just noted, but to move it upstream temporarily, right, to be able to treat patients earlier, jump on it quickly, jump on it hard, meaning appropriately dosing.

And in that way, really bring the full effect of narsoplimab or YARTEMLEA to these patients. That's the objective. That's what we've -- that's the purpose behind establishing really 24-hour delivery of the drug. Request comes in, drug goes out. And I think the effects of that we're seeing, and I think we'll continue to see. Nadia, do you have something you'd like to add to that?

Yes, absolutely. So even before the shipment goes out, if there's any questions or any support that they need with the prior authorization, we have our team on the ground that will either go there in person or jump on a Zoom and address those questions, whether it be our reimbursement manager, our account manager or our MSLs.

So we have a model that is designed to act immediately, and we have multiple examples of that. In addition to the 800 number that we have, our in-person phone calls that come in, we jump on that immediately and then drug is delivered within 24 hours.

And with respect to what Nadia just said about pre-authorizations, as I mentioned in the prepared comments, all pre-authorization requests have been approved by the third-party payers. So we're quite pleased with -- we're quite early in this launch. Our launch was really January. And here we are at the end of March, talking pharmacy and therapeutic committee approvals.

And to the extent that we have we're very pleased. And we think those are going to continue to move through. Remember, I've given you those that are already approved. I did not mention those that are actively in process for being approved. And those numbers are even substantially higher than what I just gave you. So we're really quite pleased by that and look forward to sharing additional information at our Q1 call.

Speaker.

Congrats on, obviously, the developments of 2025 and what you've just told us about Q1.

Your next question comes from the line of Serge Belanger with Needham.

Greg, you mentioned all requests for access to YARTEMLEA have been granted. Just curious if these were via medical exceptions or there's formal formulary coverage for the product at this point? And then since we're at the last day of the quarter, 1Q here, is it too early to talk about how many patient starts we've seen so far that have started treatment on the product?

And the second question I broke up a little bit was how the response has been to the drug?

No. The second question was since we're on the last day of the first quarter, whether it was too early to start -- to get an idea of how many patient starts you have seen so far on the product.

You're asking about numbers. Right. We aren't going to provide those today, Serge. We'll be talking about those, obviously, in the Q1 call. But I think we've given you color as to how we see the launch going with respect to your first question, let me turn that over to Nadia.

Yes. So the question is about the PA approval and whether those were handled by medical exception or by policy. The answer is both. And what's really encouraging is, as many of you probably can see, there are published policies already for YARTEMLEA in the public domain and that they are PA to label.

And in the places where we don't see a published policy yet, they are being handled by medical exception, also PA to label. Our intent going into the launch, we built a strategy where we would have policies that are PA to label, and that is playing out. And we have a strong national account manager team that is following up with any of the payer requests for in-services, presentations and the value narrative that we spoke about earlier is going to be very critical to those conversations. But we are very encouraged and really strong success to date.

Great. And Greg, regarding the $100 million milestone that you described as near term from Novo. I guess just how confident are you in this -- in receiving this milestone? And can you give us color on what triggers it?

Yes. We are, by agreement with Novo Nordisk, not able to specify what those -- that collection of milestones ties to. But I will tell you that we're confident around the receipt of those. Again, I can never guarantee these things, but I think our level of confidence is high.

There are no further questions at this time. I will now turn the call back to Dr. Demopulos for closing remarks.

Thank you, operator. Thank you all for joining this afternoon. 2025 ended strong, and 2026 has continued that momentum. The strategy we set for the company is playing out, and we are well positioned now for success. We look forward to speaking with all of you again in about 6 weeks when we'll provide a more detailed update on our YARTEMLEA launch. We appreciate your continued support, and have a good evening.

This concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon, and welcome to Omeros Corporation's conference call. Today's call is being recorded at the company's request, and a replay will be available on the Omeros website.

I'll now turn the call over to Jennifer Williams, Investor Relations for Omeros. Please go ahead.

Thank you, and good afternoon, everyone. Before we begin, please note that today's discussion will include forward-looking statements regarding Omeros' operations and assets, including its newly approved drug, YARTEMLEA. Forward-looking statements regarding YARTEMLEA include, without limitation, expectations and projections regarding anticipated demand, manufacturing capacity, commercial sales, reimbursement and development in additional indications.

These and other statements on today's call reflect management's current expectations and beliefs as of today and are subject to risks and uncertainties that could cause actual results to differ materially. For a detailed discussion of these risks and uncertainties, please refer to Risk Factors sections in our most recent annual report on Form 10-K and our subsequently filed quarterly reports on Form 10-Q. With that, I'll now turn the call over to Dr. Gregory Demopulos, Chairman and CEO of Omeros.

Thank you, Jennifer, and good afternoon, everyone. Thank you for joining us. With me today are David Borges, our Chief Accounting Officer; Nadia Dac, Omeros' Chief Commercial Officer; Dr. Andreas Grauer, Omeros' Chief Medical Officer; and Dr. Cathy Melfi, our Chief Regulatory Officer.

We're also fortunate to have with us today 3 leading stem cell transplant experts, Dr. Rafael Duarte, Head of Hematology and Hematopoietic Transplantation, University Hospital, Puerta de Hierro; Dr. Miguel Perales, Chief of the Adult Bone Marrow Transplantation Service at Memorial Sloan Kettering Cancer Center; and Dr. Alessandro Rambaldi, Professor of Hematology University of Milan and Head of Hematology and Bone Marrow Transplantation at Papa Giovanni XXIII. Narsoplimab commercialized under the brand name YARTEMLEA, received FDA approval on December 23, 2025. This approval establishes several important firsts.

YARTEMLEA is the first and only therapy approved by FDA or any regulatory authority for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy, or TA-TMA. TA-TMA is a life-threatening complication of stem cell transplantation. And even among those who survive, morbidity is often severe and chronic, including kidney failure requiring long-term dialysis. YARTEMLEA is also the first and only FDA-approved inhibitor of the lectin pathway of complement and the first and only approved inhibitor of MASP-2, which is the effector enzyme of that pathway.

This approval marks another major milestone for Omeros, our second FDA-approved product following OMIDRIA, which we successfully commercialized for use in cataract surgery. YARTEMLEA's approval underscores our track record of translating cutting-edge science into approved medicines addressing significant unmet need. The YARTEMLEA label reflects the full scope of disease sought by Omeros. Specifically, all TA-TMA patients, both standard risk and high risk are included in this indication and the label covers both adult and pediatric patients 2 years of age and older. FDA approval was based on our 28-patient single-arm pivotal trial supported by a 221-patient expanded access program. Collectively, these data form the clinical foundation for approval.

Importantly, YARTEMLEA achieved approval with a differentiated safety profile. While other agents, including C5 and C3 complement inhibitors often used off-label in TA-TMA, YARTEMLEA's approved label carries no box warning, no risk evaluation and mitigation strategy or REMS and no vaccination requirement. The efficacy data and important safety information for YARTEMLEA are detailed in the prescribing information and can be found on the YARTEMLEA website. I would encourage clinicians to review the full label.

Turning to efficacy. YARTEMLEA demonstrated clinically meaningful benefit. Efficacy was assessed by TMA complete response defined as improvement in key laboratory markers, platelet counts and LDH levels, together with either improved organ function or transfusion independence. Complete response was achieved in 17 of 28 patients or 61% in the pivotal TA-TMA study and in 13 of 19 evaluable patients or 68% in the expanded access program. Importantly, across the pivotal study and the expanded access program, 100-day survival from the time of TMA diagnosis was 73% and 74%, respectively, based on all-cause mortality. While the approved label includes all TA-TMA patients, it's important to note that all patients in these studies met international harmonization criteria for high-risk TA-TMA, a population with a high risk of death and historically poor outcomes. In peer-reviewed publications, treatment with YARTEMLEA was associated with a three to fourfold lower risk of mortality compared with an external control cohort.

In the expanded access program, YARTEMLEA was used both as first-line therapy and in high-risk TA-TMA patients who had failed or discontinued one or more prior regimens, namely off-label C5 and C3 complement inhibitors and/or defibrotide. Even in these refractory high-risk patients, YARTEMLEA delivered 50% 1-year survival compared with historical 1-year survival rates of less than 20%. The favorable safety profile of YARTEMLEA including no box warning, no REMs and no required vaccinations stands in contrast to therapies historically used off-label in TA-TMA.

Two recent publications underscore why this matters. In a pediatric TA-TMA cohort reported from Emory University, use of the terminal complement blockade with the C5 inhibitor eculizumab was associated with an eightfold increase in infection risk and a sixfold increase in infection-related mortality. And in -- apologies for that interruption. We're not quite sure where that originated, but to continue. In adults reported by Memorial Sloan Kettering Cancer Center, the C5 inhibitor eculizumab was associated with a 5 to 6-fold increase in the risk of death driven by higher non-relapsed mortality with deaths predominantly due to infection. Against this backdrop, there has been strong anticipation within the transplant community for an FDA-approved therapy, specifically for TA-TMA. It was into this setting characterized by a clearly defined unmet need a highly favorable benefit risk balance as well as strong interest from clinicians that we initiated the commercial launch of YARTEMLEA on the 2nd of January. Our entire commercial team has been hired.

On Friday, our fully trained field force of account managers and directors, market development managers, access lead and medical science liaisons began contacting U.S. transplant centers across the nation, detailing the efficacy and safety benefits of YARTEMLEA and preparing the centers to place orders. Our focus is to educate the entire transplant care team, including the transplant physicians, nurses, hospital pharmacies and reimbursement teams for seamless and timely access to YARTEMLEA. TA-TMA can occur after both autologous and allogeneic stem cell transplantation, but it occurs most commonly following allogeneic transplants.

Approximately 11,000 allogeneic transplants are performed each year in the U.S. and another 20,000 annually in Europe. Recent studies estimate that TA-TMA develops in up to 56% of allogeneic transplant recipients. TA-TMA, though, is still thought to be frequently underdiagnosed and time to diagnosis can be a key factor in outcomes. There are 175 stem cell transplant centers across the U.S. The top 40 centers account for about 60% of procedures with the top 80 centers representing approximately 80%. These 80 centers are our initial priority. And there are strong YARTEMLEA physician supporters at each. We are prioritizing centers with the greatest transplant volume and established TA-TMA expertise, and we expect early utilization to concentrate in these programs.

We expect that our recently completed YARTEMLEA manufacturing campaigns together with existing inventory and a drug product shelf life of 5 years, provide sufficient drug supply to meet commercial demand into late 2029. Drug product packaging included the printed FDA-approved package insert is underway, and we are targeting transfer to the wholesaler in the third week of January. We expect delivery of initial orders to transplant centers almost immediately thereafter. Our distribution model is designed to support next-day delivery. Pricing has been carefully considered, reflecting YARTEMLEA's position as the first and only approved therapy for TA-TMA, its strong efficacy and reassuring safety and the known risks associated with off-label agents, all of this informed by input from health care providers, pharmacists, third-party payers and P&T committee decision-makers. We have determined an appropriate initial per vial price for YARTEMLEA to be approximately $36,000. Each vial represents a single dose. Across the pivotal clinical trial in the expanded access program, median utilization was 8 to 10 vials per treatment course.

We expect the majority of a TA-TMA patient's course to be administered in hospital outpatient departments where the drug is typically purchased and billed by the hospital. Our reimbursement efforts and coding strategy initiated prelaunch are progressing well. We've established a national ICD-10 diagnostic code for TA-TMA and 2 associated product-specific CPT procedure codes for YARTEMLEA. Together, these support consistent coding and reimbursement for YARTEMLEA and create a meaningful barrier to the routine reimbursement and use of off-label therapies in TA-TMA. We've already applied for and expect to receive a HCPCS Level II J-code for YARTEMLEA to support clear identification and more standardized, predictable reimbursement across all payers. To assist with the cost of YARTEMLEA in the inpatient setting for Medicare patients, Omeros has applied for a new technology add-on payment or NTAP. NTAP is a government reimbursement program that provides additional payments to hospitals for certain high-cost innovative medical technologies, really helping to bridge the gap until standard payment systems or DRGs incorporate these new therapies.

We expect NTAP to become effective in October of this year and to remain active over the subsequent 3 years. Telephone support is already live. Providers and practice staff can access personalized assistance by calling [ 1844R101 ]. Our YARTEMLEA Assist program, which helps our customers identify coverage and financial assistance options will be fully operational in early February.

Turning briefly to our balance sheet. As of December 31, 2025, we had approximately $172 million of cash and short-term investments available for operations. Beyond the U.S., our marketing authorization application is pending with the European Medicines Agency. A decision is expected midyear. For commercialization of YARTEMLEA outside the U.S., we are evaluating potential partnerships, both global and regional. We view the ex-U.S. opportunity as substantial. Taken together, the U.S. launch of YARTEMLEA and our ex-U.S. strategy extend the commercial opportunity for TA-TMA and further strengthen the MASP-2 platform. And with FDA approval having validated the science of MASP-2 inhibition and YARTEMLEA now a commercial product, we plan to expand its indications. The underlying biology, endothelial injury and cellular damage writ large spans multiple therapeutic areas. And as we build the business, we intend to advance both our long-acting MASP-2 inhibitor, OMS1029, which is Phase II ready and our MASP-2 small molecule program. We expect to have more to say about these assets as well as the rest of our pipeline programs in the coming months.

With that, operator, please open the line to questions.

[Operator Instructions]

Our first question comes from the line of Brandon Folkes of H.C. Wainwright.

Congratulations, Greg and your team on the approval. Maybe, Greg, if we just look at the pricing that's been set and we look at the label, can you talk about when you expect providers to intervene with these patients now that we have something approved that's on label, pricing seems reasonable to perhaps intervene earlier than you may have with other off-label expensive treatments. Just any elaboration there in terms of when you now expect intervention would be helpful.

Sure. Thanks, Brandon. Let me turn that over to our 3 experts. I'll start with Dr. Duarte.

Thank you very much, Greg. I'm Rafael Duarte. I'm speaking from Madrid and the President of the upcoming European Bone Marrow Transplant Congress. I've been at the Board of the EBMT, the European Society for a decade. I've participated in the studies, I've treated patients with YARTEMLEA. It is true, and I think the question is key because it is true that in the development of the drug and these and other drugs, we've been primarily focused on very severe cases in high-risk cases. And as Greg said in his introduction, all cases treated with YARTEMLEA thus far have been high-risk patients.

Nevertheless, the reason that the outcomes of these patients are overall poor, even though much better with the new drug is that we tend to intervene late in the absence of normally effective but safe drugs. I'm sure that as we become familiar with the drug and the drug is available and thankfully, with the broad approval in all TA-TMA cases, we're going to learn to use this drug earlier on. We're going to learn that we don't need to change all other parts of these patients' treatments. We've been sacrificing immuno calcineurin inhibitors therapies just to prevent worsening of this disease. And we're going to be able to manage these patients much more efficiently and also earlier in the process and that way, improve overall outcomes for this condition. Thank you.

Thank you, Rafa. Dr. Duarte. Dr. Rambaldi, Dr. Perales, any thoughts on that as well?

This is Miguel Parales. I'm the Chief of the Adult BMT program at Memorial Sloan Kettering. And I do need to disclose that I have financial interest related to merit. I think as you've heard, the drug is FDA approved for patients with TA-TMA. And I do think that it's going to be a paradigm shift in the sense that I've actually treated some patients already on the expanded access study, and we have intervened early in the disease course. We have not waited for them to get really sick because we know that those patients are harder to recover. And I think where the big difference has been that historically, you would withdraw the immunosuppressive drugs, typically tacrolimus, cyclosporine, which were among the main offenders and patients typically would develop acute GvHD despite whatever you did. And many patients died either of GvHD or of TA-TMA or of complications related to eculizumab, particularly infectious complications.

And what we've done in the patients that I personally treat on the expanded access study is actually maintained the immunosuppressive drug, and we were sort of able to treat through that. And therefore, we had much better outcomes. And I've had a couple of patients who were treated successfully are now off drug and are doing well and just in long-term follow-up with me in my practice. So I think it's a paradigm shift because in the old approach, you would stop the calcineurin inhibitor and then intervene later in the disease course. And now we're moving this up already even on the expanded access study, we're already treating patients earlier.

Thank you, Dr. Perales. Dr. Rambaldi, anything that you'd like to add?

Yes. This is Alessandro Rambaldi. I'm working at the University of Milan and the Papa Giovanni Hospital in Bergamo. And I think that the question was very well taken. And I'd like to emphasize the point that both in the pivotal trial and in the large experience that we have done in the subsequent expanded access program, the patients had to wait for a while because in the pivotal trial, you have to fulfill rigorously all the inclusion and exclusion criteria. And in the subsequent generous expanded access it was not immediate by definition to have the access to the drug.

So I think that when the drug is made available in the real life in the clinical practice, patients will have access to this innovative treatment much earlier. And I guess that this will be of very much importance for the clinical outcome of our patients with this frequently lethal transplant complication.

Any thoughts on what Dr. Perales mentioned as well about treating directly through...

Absolutely, Greg, if I may. I think that overall, the paradigm shift is true and it's going to happen. And we've seen that also in other complications, and we start treating more severe cases, but then we move on to earlier cases. Some of the times, as Miguel Perales was saying, these patients really have with other complications. It's not only that by discontinuing cyclosporine, tacrolimus, we're going to generate GvHD. Sometimes these patients suffer TA-TMA in the context of GvHD. And we've all treated within the expanded program, patients, even patients already with severe organ damage forms of TA-TMA in whom we could not discontinue that. And we've treated through the GvHD and through the calcineurin inhibitors therapy being continued, and we've managed to rescue these patients.

So the whole paradigm is changing. It's going to change for those very severe cases, but it's also going to change for earlier intervention in other patients.

Our next question comes from the line of Olivia Brayer of Cantor.

Greg, my congrats as well on the approval. Can you walk us through how YARTEMLEA fits into hospital DRG economics today and really how that changes once the NTAP is in place? Just trying to better understand how sensitive utilization will be to NTAP timing in some of those transplant centers considering that I think you said it won't be implemented until October. So that's the first question. And then second question is, did the FDA approval include any post-marketing study requirements?

Sure. Let's take your first question first. And what I would underscore initially before handing the response off to Nadia as well to address is that we really see YARTEMLEA being very much primarily used now in the outpatient setting for all of the reasons that you just heard our experts articulate, which is earlier treatment should certainly reduce the need for treatment in-house or in the hospital and moving the majority of the dosing to the outpatient setting, which, as you understand, is an appropriate place and also a favorable place from the facility perspective with respect to treatment. But having said that, let me ask Nadia to comment further on your question regarding the NTAP and inpatient use.

Yes. We do expect that YARTEMLEA will be initiated inpatient and coverage decisions are largely determined at the institutional and prescribing physician level with 3 reimbursement managed through existing DRG or the case rate mechanisms, which are -- which vary across the institutions. Given YARTEMLEA's strong value proposition and early physician interest, we expect high demand with inpatient initiation followed by outpatient continuation where we expect the majority of the dosing to occur. And come October, we would expect that the new technology add-on payment and NTAP will provide an add-on payment to cover additional costs potentially, and that's under review, and we feel very confident about the submission in that process. And so we're also very encouraged, I have to add that the messages that we're receiving on a daily basis that many of the institutions even before we've reached out to them have started the P&T approval reviews and discussions about adding YARTEMLEA to formulary.

Your second question was tied, Olivia, to do we have any post-marketing commitments? And Cathy, would you just walk through what we have there?

Sure. With respect to post-marketing commitments and post-marketing requirements, there is only one post-marketing requirement and the report for it is due in 2034. It's a registry that includes a total of 50 adult and pediatric TA-TMA patients with 1 year of follow-up to assess any major safety findings. There's also a post-marketing commitment to collect PK/PD and safety data on pediatric TA-TMA patients who are treated with narsoplimab. The report for this study is due in 2033.

In addition to those, there are 5 CMC-related post-marketing commitments, all of which are quite typical for approved products. Two of these have already been completed, in fact, and will be submitted to FDA this month. And the other 3 are all on track to be completed this year.

Okay. Great. That's helpful. And just quickly, I wanted to ask a follow-up for Nadia or Greg. You mentioned that the majority of dosing will potentially happen in the outpatient setting versus the inpatient setting. Can you characterize that at all for us and just put maybe how many doses or vials you expect to happen inpatient versus outpatient? I'm sure it will depend on a case-by-case basis, but any kind of guardrails there?

Right. Thank you, Olivia. Well, certainly, it will depend on case-by-case basis. But we do have an expectation that 2 to 3 doses probably inpatient then moving to the outpatient facility to the HOPD. And Miguel, I'll ask the -- before we move on, I'll just ask -- I'll ask our experts on the call if they have anything to add given that they live this situation.

Yes. So I can comment from a U.S. center perspective. I mean, obviously, it's not a cheap drug. But if you think of the complication is a life-threatening complication and transplant is not a cheap procedure and the importance of transplant, it's a curative option for patients with hematologic malignancies that otherwise would be fatal. So in that context, I think if you have a patient who develops TAT post-transplant, you are going to treat them with an FDA-approved drug that's effective.

And I can tell you that the most recent patient I treated who happens to live in Eastern Long Island, even on the expanded access study, we were able to ship drug to our regional site out in Commack for those of you who are familiar with Long Island. And she received most of her treatment there and was followed in part through a nurse practitioner who practices there and with me via telemedicine. So I think we will see patients quickly transition to the outpatient. And I could even imagine that some patients may be treated outpatient if they're not requiring a heavy transfusion load.

If I can add something, I think that the safety profile of this treatment of this drug will greatly facilitate the outpatient use of this treatment. And this is very much important in the setting of the early transplanted patients. So I don't see any major obstacle for delivering this drug in an outpatient setting.

Thank you, Dr. Rambaldi. All of those are...

Also, Greg, perhaps another -- I mean, get perspective from a big U.S. center where distances for patients are perhaps longer than they are for Alessandro and me here in Italy or in Spain. But another difference with other transplant complication is that very early transplant complications occur at a time where patients are still very dependent on the transplant center very close by. So most things are done as inpatients. TA-TMA can occur early, but can also occur later in the disease. And at those points, lots of these patients are already being managed at home. So I think that, that versatility of the treatment and availability of treatment, and I agree with you, perhaps a couple of doses, 3 doses as in patients where you're still working with complication, but then the treatment is very feasible to be carried on -- in ambulatory care as outpatients.

Very good. Very good. Thank you all. Olivia, does that give you the color, I think, that you were looking for? Or do you have anything else on that, that you'd like to follow up?

No, that was great.

Our next question comes from the line of Steve Brozak of WBB Securities.

Obviously, congratulations on the approval of YARTEMLEA and the launch. This is a little bit of a different question. How do you view YARTEMLEA in terms of the C5 inhibitor comparison on, let's say, an off-label use? What are your thoughts there? And I'll hop back in the queue.

Thanks, Steve. You broke up here just a little bit. Would you mind just maybe repeating that? We can now. Yes, go ahead.

Okay. How do you view YARTEMLEA in the C5 inhibitor comparison and on an off-label type of use? Or what would your views be there going forward?

Yes. Great. Look, we think that the off-label use of C5 inhibitors, as we said, really don't stack up to what we've been able to show. I think a great way to address this would be first to, I think, have Dr. Perales. I know that he's looked specifically at C5 inhibitor use. And it might be, I think, helpful to hear from him. Dr. Perales?

Yes. Thank you, Greg. So I think that's an obvious question to ask because before the approval or even access to narsoplimab, many of us use off-label eculizumab. I had personally experienced patients who had a response to eculizumab, but then died of infectious complications. And so we recently reported in the journal BMT in late 2025, our experience with eculizumab in patients with TA-TMA. And what the results show are quite sobering is that there is a very high risk of mortality in these patients, and it's driven by non-relapsed mortality.

So there is an increase of relapse of the underlying disease, but they're essentially dying of transplant complications. And in most patients, it's actually infections. I mean I remember vividly a patient who was doing fine with outpatient got admitted with sepsis and died within 48 hours. And there was nothing we could do to save that patient. And the other relevant publication is a pediatric study that was published recently by Michelle Schoettler from Omeros, who is an expert in TA-TMA, particularly in kids. And what she looked at was a comparison of patients with TA-TMA who received eculizumab with sort of a match control group of pediatric patients showed also increased risk of life-threatening infections and increased risk of mortality due to infection. So I think the major issue with eculizumab and drugs that target that pathway is that you knock out sort of a key aspect of our defenses against infections. And quite frankly, at MSK at least, we stopped using eculizumab a while ago because of that. So we just haven't been using it. And then once narsoplimab became available, there was really no reason to use it.

Thank you. Any comments or additions from the other -- from our other experts?

Well, I would just echo what Miguel said. I think an important part of it is that we've all had long experience. We are one of the largest departments in the country in Spain in use of C5 inhibitors in PNH and other complications. But the level of profound immunosuppression cellular humoral that these patients have, that TA-TMA allogeneic transplant recipients have is a completely different scenario. It's not the same clinical scenario of using C5 inhibitors in other complications. We've also moved away from C5 inhibition in our adult patients. We are adult transplant center. And I think that the safety profile of narsoplimab apart from the efficacy but safety profile is most welcome to our patients and to our practice.

Thank you, Dr. Duarte. Dr. Rambaldi, anything else?

The only thing I would like to add that I'm glad that in Italy, it's very difficult to use off-label drugs in this -- in any situation. But here, in particular, I'm glad that there is a very high caution in allowing the use of off-label drugs that may interfere so profoundly in the immunological balance of heavily immunocompromised patients like the transplant patients. And I think that we have now, as Miguel recalled us good evidence to say that eculizumab may be indeed a very dangerous treatment for these patients.

Thank you. And I think to add from a slightly different perspective is that there is now an ICD-10 code specifically for TA-TMA, stem cell transplant-associated thrombotic microangiopathy as the only approved drug for TA-TMA, that really only applies to YARTEMLEA. And then there are also, as I think I mentioned or I know I mentioned in the opening comments that there are 2 specific procedural codes, the CPT codes for the administration of YARTEMLEA, one through peripheral vein, one through central vein. And those, again, are very specific to YARTEMLEA. So all of this, I think, in yours, first of all, to the benefit of patients, but also certainly to the benefit of YARTEMLEA. Andreas, anything that you'd like to add there?

Well, I just -- I can only echo your thoughts. I think this is a unique opportunity to use a drug that is approved in this condition. It's well studied in this condition that has excellent data in this condition for patients that need it. And if you picture these patients, how they get into this situation, these are patients that often have survived the hematologic malignancy. They've gone through the grueling transplant procedures. They've come through all of that. And now they're developing a complication that with high likelihood may kill them. And you really don't want that to happen. You want to treat these patients and you want to improve their outcomes and hope that they can get the benefit of all the ruling procedures that they have gone through. That's always what keeps me going in this field when I think what we're doing for these patients.

And thank you, Andreas. And I think, obviously, when we were considering the commercial aspects of YARTEMLEA into that calculus to some extent, came the off-label use of C5 inhibitors. Nadia, do you want to comment on that at all?

Absolutely. Yes. As we looked at this, we looked at it from 2 angles, right? Nothing else is approved, what is the value proposition and then the realistic analog that physicians without other options would compare us to. And beyond drug acquisition cost, off-label eculizumab dosing, which in TA-TMA is often extrapolated from higher-end aHUS dosing with standardized guidance lacking, particularly in severe adult patients. It drives substantial total cost of care through REMS certification requirements, intensive monitoring, mandatory vaccination, antibiotic prophylaxis infection management that we've talked about and treatment failure. And taken together, these cumulative economic burdens materially exceed the carefully calibrated price and value proposition that we have with YARTEMLEA . And the biggest value driver really that came back consistently from all the insights is the proven survival benefit as published in Mitsui in 2025 and in [ Shutler ] 2025 as well, even when other off-label treatments failed and/or were stopped, we still had a survival benefit in salvage therapy. So not that we would position ourselves as second line, but as you heard in the comments earlier, with a broad label like we have and the safety profile, the benefit risk profile lends itself to broad use early and even in salvage therapy when there are no other options.

Thank you, Nadia. Steve, I think you had a lot of information delivered to you from, I think, a pretty straightforward question. But do you have any follow-up on that?

No, I very much appreciate the directness and the breadth of the answer.

Thank you. I would now like to turn the conference back to Dr. Demopulos for closing remarks. Sir?

Thank you very much, operator, and thank you all. In closing, the approval and launch of YARTEMLEA really mark a fundamental shift in how TA-TMA can be treated. For the first time, transplant teams have an FDA-approved therapy specifically indicated for this disease. So -- and that is supported by the compelling clinical data, a differentiated safety profile and a clear pathway for access and reimbursement. We want to thank the patients, the caregivers, the investigators, the number on the call, the experts on the call as well who fit into that and their clinical teams who made this approval possible. Our objective is pretty clear. It's to make YARTEMLEA the standard of care in TA-TMA.

So our job now is execution, start with early adopters, expand quickly across the transplant center network, support timely diagnosis and treatment and let clinical experience, some of which you heard today, guide the adoption. In parallel, we're working to extend YARTEMLEA's reach through ex-U.S. commercialization and additional indications while continuing to invest in the MASP-2 platform as a whole. Our priorities for the launch are clear. Ensuring reliable supply, appropriate access and thoughtful engagement with the transplant community while remaining grounded in what matters most, which is saving the lives of patients facing a life-threatening disease with previously inadequate treatment options.

I think we may have another question. Is that right? Operator, do we have another question?

We do, sir. Are you ready for it? Our next question comes from the line of Serge Belanger of Needham.

So Greg, just I guess, a couple of questions to help us frame -- help us and investors frame the TA-TMA opportunity here. First on prevalence. When we look in the literature, the theme of underdiagnosis is prevalent, but the -- also the prevalence ranges anywhere from high single digits to as high as that 60% that was referenced previously. So just curious where does the real prevalence rate for TA-TMA stand? And within those prevalent patients, how many will be -- will require treatment with YARTEMLEA? And then the second question, just regarding duration of treatment.

I think in your prepared comments, you mentioned that in the clinical trial that supported approval. The median treatment or the dosage was 8 to 10 different doses. In the real world, what should we expect in terms of the number of treatments that these patients will undergo with YARTEMLEA?

Yes, sure. First, the -- let's take the second question first. The number of doses really are derived from a real-world experience because those are representative of our expanded access program. So the median there was the 8 to 10 doses that I think I've stated in the opening remarks and I think which you just referenced. So I think, again, there's going to be variability. There always is variability in dosing any disorder, as you know. But based on the real-world experience that came out of our expanded access program. And interestingly, those numbers were very tightly supported by our pivotal trial. Those numbers were 8 to 10 doses per therapy course.

With respect to the incidence of TA-TMA, which I think was your first question. And you noted that the literature is replete with reference to underdiagnosis. And we fully subscribe to that view. This has been a disease that has to date been frankly, somewhat amorphous in its diagnosis and its identification. And I think with the work done by the International Harmonization Committee, there has started to be a substantial amount of really kind of palpable and recognizable diagnostic criteria there. So they've turned this amorphous thing into something, I think, more structured. I think there's still -- I'll look to the experts, but I think that our view is there's certainly still more work to do there. There's more education. There's greater identification. So yes, we believe that this is still underdiagnosed. With respect to your number that you asked, we believe the number that I cited in the opening remarks, which comes from the [ MITA ] study. It's very recent. It's well respected at 56% TMA incidents in stem cell transplant procedures. We think that, that is probably now the best representation of that incidence. But let me stop there and again, see if our external experts have anything to add or frankly, any other comments they'd like to make before we continue with the wrap-up. Miguel, Alessandro, Rafael, any thoughts?

I just can -- this is Alessandro speaking. I mean, an important point beyond the data that we can talk about is that the incidence and severity of TA-TMA increase for the more fragile patients. And I would like to spend a few words for the pediatric patients in which the allogeneic transplant is offered as the last treatment option in medicine in very different clinical conditions. So the patient may be transplanted where their clinical condition is very poor. So the incidence of TA-TMA in those patients receiving frequently a very myeloablative conditioning regimen may be higher than in other situation. But those are exactly the patients who need an effective treatment the most. So I think it's very important now to have this treatment option for the most fragile patients.

Thank you, Dr. Alessandro. Dr. Rafael, Dr. Perales?

No. I think -- I mean, Greg, this is -- I mean, that's a critical question. It's a very important question. I think that you see a very nice summary of what's been changing criteria and changing ways of addressing this amorphous complication as you put it. I think that the international consensus is -- with the evidence there is, but it's the best we've got thus far. And I think that we have to also move from just diagnosing the very severe cases in which disease is at the end of the development of it to also being able to diagnose earlier these patients.

So I agree with you, Greg. I think that that's the best we've got right now. And I think that if anything, we'll be more aware and more able to diagnose the disease earlier in these patients, more so now that we have an effective and safe treatment to offer them.

Thank you, Rafael. Dr. Perales?

Yes, it's hard to add much to what my colleagues and what you already highlighted. I agree fully that it's currently a disease that's very much underdiagnosed. I think the harmonization working group has really done major work there to help us diagnosis condition. And I think the fact that we now have an FDA-approved drug that is both effective and safe, which is a critical aspect, will actually lead to more patients being diagnosed because we'll be more likely to use screening tools to actually look for TA-TMA and that's already been implemented at centers across the U.S.

Okay. Very good. Serge, did that answer your question? Or do you have anything else that would be helpful?

No, that was great. And thanks again for squeezing at the buzzer here.

Your timing was impeccable, no problem. But no, this is great. Operator, are there any more questions?

I show no further questions in queue, sir.

All right. So great. I think what -- the distillate, I think, of what you've heard is that our clear objective, our intention here is to make YARTEMLEA what we believe it will be, the standard of care in TA-TMA. And to repeat what -- a bit of what I had said earlier, really, where our job falls now is execution. I mean we received from FDA in our collaboration with FDA appropriately a label that is really what we were looking for in breadth with the absence of the safety concerns or the safety components that are often seen with other drugs.

All of this translates to really, it's on us now to execute to make sure that we can deliver the drug, make it accessible to the patients who need it. And the purpose of that, of course, is to save the lives of those patients. I think that, frankly, it's been a while we have had an expanded access program, but we clearly have not been able to reach all of the patients or even a large proportion of the patients who needed it. And now we can. So I think that all of that translates to execution for us, and I think we're very well ready and very eager to do that. I think that if we look beyond MASP-2, we'll continue to advance the broader Omeros pipeline really with the same discipline that we have approached the MASP-2 program and the MASP-3 program. We're going to be allocating resources to programs where we see the potential for both meaningful clinical impact and significant value creation. done well the execution of this strategy. So launching YARTEMLEA, extending its reach beyond the U.S. and into additional indications and really advancing the broader pipeline. We believe that, that will serve both patients and clinicians and create the foundation for durable long-term value for Omeros and its shareholders. So with that, let me sign off. Thank you all for your participation, for your attention today. And again, I want to thank very much our 3 experts who have joined from around the world at times now that are late in their evenings for 2 of them and dinner time for another. Thank you very much, and we'll continue to keep you all updated.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good afternoon, and welcome to today's earnings call for Omeros Corporation. [Operator Instructions] Please be advised that this call is being recorded at the company's request, and a replay will be available on the company's website for 1 week from today.

I'll now turn the call over to Jennifer Williams, Investor Relations for Omeros.

Thank you, and good afternoon, everyone. Before we begin, please note that today's discussion will include forward-looking statements. These statements reflect management's current expectations and beliefs as of today and are subject to risks and uncertainties that could cause actual results to differ materially. For a detailed discussion of these risks and uncertainties, please refer to the special note regarding forward-looking statements and the Risk Factors sections in our quarterly report on Form 10-Q filed today with the SEC as well as our most recent annual report on Form 10-K. Today's call will include a discussion of certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the corresponding GAAP measures is included with Omeros' earnings press release issued earlier today, which is available on the Investor Relations page of our website and has been furnished with the Form 8-K we filed with the SEC earlier today.

With that, I'll now turn the call over to Dr. Greg Demopulos, Chairman and CEO of Omeros.

Thank you, Jennifer, and good afternoon, everyone. Joining me today are David Borges, our Chief Accounting Officer; Nadia Dac, Chief Commercial Officer; Dr. Andreas Grauer, Chief Medical Officer; Dr. Cathy Melfi, Chief Regulatory Officer; and Dr. Steve Whitaker, Vice President of Clinical. I'll begin with an overview of our third quarter results and key corporate developments, followed by an update on our development programs. David will then provide more details on the financials before we open the call for questions.

For the third quarter of 2025, Omeros reported a net loss of $30.9 million or $0.47 per share compared to a net loss of $25.4 million or $0.43 per share in the second quarter. The third quarter results include $8.8 million in noncash charges related to a mark-to-market adjustment of embedded derivatives associated with our debt. Excluding this charge, our adjusted net loss was $22.1 million and our adjusted loss per share was $0.34. Cash burn for the quarter was $22 million. And as of September 30, we had $36.1 million in cash and investments.

During the third quarter, we continued to strengthen our balance sheet, including a registered direct offering that generated $20.3 million in net proceeds, was priced at a 14% premium to the market and was completed without warrant coverage. This financing supports our ongoing operation and commercial launch preparations. In October, we announced a definitive agreement with Novo Nordisk for an asset purchase and license transaction centered on our late clinical stage MASP-3 antibody, Zaltenibart. The deal is valued at up to $2.1 billion in upfront and milestone payments plus royalties in the high single-digit to high-teen percentages on global net sales.

The transaction remains subject to customary closing conditions, including expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. HSR filings continued to be accepted during the government shutdown and the applicable waiting periods continued to run as usual during the shutdown. We anticipate closing later this quarter. Upon closing, Omeros will receive $240 million in upfront cash with an additional $100 million in achievable near-term milestones. With the upfront $240 million alone, we intend to fully repay our $67.1 million secured term loan, repay at maturity the remaining $17.1 million principal balance on our 2026 convertible notes and fund more than 12 months of post-closing operations including the anticipated U.S. launch of narsoplimab for the treatment of transplant-associated thrombotic microangiopathy, or TA-TMA.

In exchange, Novo Nordisk will receive exclusive global rights in all indications to develop and commercialize Zaltenibart and certain related antibodies and antigen binding fragments. Omeros will, with certain exceptions, be broadly restricted from exploiting antibodies against MASP-3 as well as against other specific alternative pathway targets in a small number of indications that are of high priority to Novo Nordisk. Omeros retains rights to continue development and commercialization of our MASP-3 small molecule inhibitor program with only limited restrictions on indications.

We've also retained rights to certain research antibodies and grandfathered MASP-3 antibodies with temporal and indication-related restrictions on commercialization. This transaction represents a strategic and financial milestone for Omeros. It provides capital to advance our other high-value programs, including MASP-2, oncology, T-CAT and PDE7 while validating the depth of our science and development expertise. Zaltenibart is a pipeline in a drug, and both companies expect it to become the premier alternative pathway inhibitor, significantly advancing Novo Nordisk's rare disease franchise.

Novo is a global leader in therapeutic innovation and development. Its commitment and global reach will help fully unlock Zaltenibart's therapeutic potential, maximizing its benefits for patients. Let's turn now to our MASP-2 antibody narsoplimab, which when approved, will be marketed as YARTEMLEA. The Biologics License Application, or BLA, for the treatment of TA-TMA remains under FDA review with a December 26, 2025 PDUFA date. Because PDUFA reviews are funded by industry fees, the current government shutdown, which just ended, was -- is not expected to affect this time line. We remain optimistic for an approval decision by or before December 26.

In Europe, the Marketing Authorization Application, or MAA, for YARTEMLEA in TA-TMA was validated in June by the European Medicines Agency, or EMA, and is under review by the committee for medicinal products for human use. We anticipate an EMA decision in mid-2026. While regulatory review proceeds toward anticipated approval of YARTEMLEA in both the U.S. and Europe, Omeros is preparing to execute on our commercial launch plan. Our U.S. commercial organization from leadership and market access to field teams and market development liaisons is assembled and launch ready.

We've established a national ICD-10 diagnostic code for TA-TMA and an associated CPT procedural code specific to YARTEMLEA. Together, these position YARTEMLEA once approved as the only reimbursable TA-TMA treatment. We also expect to receive from Medicare a new technology add-on payment or NTAP to support hospital reimbursement. Engagement with transplant centers, payers and key hospital decision-makers on YARTEMLEA has been highly positive. This has been driven by the drug's demonstrated response and survival benefits, clean safety profile and clear dosing regimen.

Our team stands ready to initiate the commercial launch of YARTEMLEA upon FDA approval. Awareness and support for YARTEMLEA in the transplant community continue to grow. Several recent publications in leading peer-reviewed journals by global transplant experts further strengthen the profile of YARTEMLEA specifically, its compelling survival outcomes and strong safety record. The first paper, survival in adults with high-risk TA-TMA, a comparative analysis of narsoplimab versus supportive care was published last month in Blood Advances, the Journal of the American Society of Hematology.

It shows significantly improved survival in TA-TMA patients treated with YARTEMLEA, both in the pivotal clinical trial and the global expanded access program. compared to a well-matched external control group receiving standard supportive care. The second publication titled Narsoplimab Results and -- excellent Survival in Adults and Children with Hematopoietic cell transplant-associated thrombotic microangiopathy appeared earlier this month in the American Journal of Hematology. It reports strong survival outcomes in patients treated under expanded access with the YARTEMLEA used as both first line and as salvage therapy in those who failed one or more prior regimens with other complement agents, including C5 inhibitors and/or defibrotide.

Importantly, no safety concerns were identified. consistent with all prior YARTEMLEA studies. The third paper also published last month in the American Journal of Hematology focused on increasingly recognized safety concerns with the use of off-label C5 inhibitors. The study by [indiscernible] at Emory University looked specifically at the C5 inhibitor eculizumab in pediatric TA-TMA and reported a remarkably high infection rate. In this prospective matched analysis, eculizumab-treated patients showed an 8.5-fold increase in bacteremia. And about a sixfold increase in infection-related mortality compared with controls.

This likely reflects the mechanism of C5 inhibition, which impairs host defense. In contrast, MASP-2 inhibition by YARTEMLEA preserves immune protection. With the YARTEMLEA approval decision approaching in TA-TMA, we've identified other commercially attractive MASP-2 related indications for our pursuit. Our MASP-2 franchise includes YARTEMLEA optimized for acute conditions like TA-TMA; OMS1029, our long-acting MASP-2 antibody for chronic diseases designed for dosing as infrequently as once quarterly and our MASP-2 small molecule inhibitors intended for those indications in which once-daily oral dosing would be preferable. OMS1029 is Phase II ready with both active drug and placebo already manufactured and released.

Our lead small molecule MASP-2 inhibitor is close to beginning IND-enabling studies. Okay. Turning now to programs beyond our complement franchise. Our PDE7 inhibitor program evaluating OMS527 for cocaine use disorder continues to progress under a fully funded grant from the National Institute on Drug Abuse, or NIDA. Animal cocaine interaction studies designed with NIDA toxicologists have been completed and show no drug interaction or safety issues, supporting the planned inpatient human study in cocaine users.

FDA has requested additional preclinical information, and we now expect to begin this inpatient clinical trial in the second half of 2026. We are also advancing our targeted complement activating therapy, or T-CAT platform, a new class of pathogen targeting recombinant antibodies designed for broad action against bacteria, fungi, viruses and parasites. T-CAT represents a novel approach to infectious disease treatment, harnessing complement activation to kill pathogens directly. As preclinical animal data continue to accumulate across multiple pathogen classes and species, excitement continues to grow among infectious disease experts, particularly regarding T-CAT's potential against multidrug-resistant organisms or MDROs.

These pathogens represent a global health crisis with enormous mortality and cost burdens. Effective MDRO therapies remain one of the most urgent and unmet needs in medicine and T-CAT has the potential to address it without contributing to drug resistance. Finally, turning to our oncology platform. Our Oncotox biologics program is advancing rapidly with acute myeloid leukemia, or AML, as the lead indication. Our Oncotox AML therapeutic has consistently shown superior efficacy to current standard of care treatments, both in vivo in human tumor-bearing mice and in vitro in human AML cell lines.

Our Oncotox therapeutics demonstrate broad activity across AML genotypes, including TP53, NPM1, KMT2A and FLT3 mutations. A nonhuman primate safety study is underway with encouraging results to date. Guided by our clinical steering committee of AML leaders, we remain on track to enter the clinic in 2027. That concludes our financial corporate and development program update.

I'll now turn the call over to David Borges, our Chief Accounting Officer, for a detailed description of our financial results. David?

Thanks, Greg. Our net loss for the third quarter of 2025 was $30.9 million or $0.47 per share compared to a net loss of $25.4 million or $0.43 per share in the second quarter of this year. Third quarter results include noncash charges of $8.8 million associated with marking to market our embedded derivatives related to our debt. Excluding this charge from current quarter results, our adjusted net loss was $22.1 million and our adjusted loss per share was $0.34 per share. The $8.8 million charge is solely a noncash remeasurement adjustment and removing it provides a more accurate measure in gauging the company's operating performance.

As of September 30, 2025, we had $36.1 million of cash and investments on hand. And as Greg mentioned, we closed a registered direct offering in July in which we received net proceeds of $20.3 million. We also raised net proceeds of $9 million from our ATM program during the quarter. The closing of our agreement with Novo Nordisk, which is expected to occur in the fourth quarter of this year, will provide Omeros with $240 million in upfront cash. At closing, a portion of the proceeds will be used to fully repay all outstanding obligations under our secured credit agreement. This includes the $67.1 million outstanding under the term loan, along with an applicable prepayment premium and accrued interest.

The repayment will eliminate all liens covenants associated with the credit agreement, including the $25 million minimum liquidity covenant. In connection with the May 2025 conversion of our 2026 convertible notes, we exchanged $70.8 million in aggregate principal amount of those notes on a one-for-one basis for newly issued 2029 notes, extending the maturity to June 2029, a period more than 3 years out. Additionally, we reached agreements with 2 holders to convert $10 million of their 2026 notes to Omeros's common stock, which was completed in September 2025. Following these transactions, [indiscernible] the principal balance of our 2026 notes has been reduced from $97.9 million to $17.1 million, which becomes due in February 2026.

After repayment of the $67.1 million term loan and the $17.1 million of the '26 notes, the company's only remaining debt will be $70.8 million of the 2029 notes, which again are not due until June of 2029. Costs and expenses from continuing operations for the third quarter before interest and other income were $26.4 million, which was a decrease of $6 million from the second quarter of this year. Research and development expenses in the third quarter were primarily focused on Zaltenibart and YARTEMLEA.

The primary components of interest expense include the 2026 notes, the DRI OMIDRIA royalty obligation, the secured term loan and the 2029 notes. For the third quarter, interest expense was a net credit of $13.4 million, primarily due to a $22.3 million noncash remeasurement adjustment related to our DRI OMIDRIA royalty obligation. This adjustment reflects updated forecast of royalty receipts provided by Rayner. Excluding the DRI royalty obligation, which is entirely pass-through interest from Rayner to DRI and amortization of debt issuance cost, discounts and premiums, contractual cash interest expense was $4.2 million compared to $3.9 million in the prior quarter.

The increase was due to higher interest on the '29 notes relative to the '26 notes. Interest and other income totaled $616,000 in the third quarter of '25 compared to $1.2 million in the second quarter of this year. During the third quarter, we reported an $8.8 million noncash loss on marking to market our embedded derivatives related to our debt. Our derivatives are primarily comprised of a put call option on our unsecured 2029 notes and represents the conversion and interest make-whole features available to holders, allowing them to convert the notes into common stock.

The loss from discontinued operations in the third quarter was $9.7 million, a decrease of $10.1 million from the second quarter. This decline was primarily due to a remeasurement adjustment stemming from Rayner's downward revision of its forecast for U.S.-based royalties of OMIDRIA. As a result, we were required under GAAP to revise downward our OMIDRIA contract royalty asset and our DRI OMIDRIA royalty obligation. As a reminder, in February 2024, we amended our agreement with DRI, granting them rights to all U.S. OMIDRIA royalties from Rayner through December 31, 2031.

Omeros retains royalties from ex U.S. sales and will receive all global OMIDRIA royalties starting January 1, 2032. It's important to note that the bulk of these transactions involve U.S.-based royalties, which are pass-through in nature and net cash neutral to Omeros. Rayner remits these royalties to DRI via an escrow agent. However, because both Rayner and DRI are contractual counterparties to us, we are required to recognize these amounts as assets and liabilities on our balance sheet. Now let's look at our expected fourth quarter 2025 results. We expect that overall operating expenses from continuing operations in the fourth quarter of 2025 will be higher than the third quarter, primarily due to increased marketing costs associated with the anticipated launch of YARTEMLEA. Research and development expenses in the fourth quarter are expected to be consistent with those in the third quarter of this year.

Interest income in the fourth quarter should be slightly higher than in the third quarter, primarily due to higher average cash balances. Other income will be significantly higher this quarter, reflecting the expected gain on the Novo transaction after related expenses. In addition, we expect to record a noncash gain upon repayment of our term loan related to the removal of the unamortized premium and debt issuance costs and an embedded derivative associated with that instrument. Interest expense, excluding any noncash adjustments related to the OMIDRIA royalty obligation and amortization of debt discounts and issuance costs should be around $8 million.

This represents a noncash increase of $23.1 million from the third quarter, primarily reflecting the absence of a significant noncash adjustment tied to the OMIDRIA royalty obligation. One thing to keep in mind, our reported results will continue to reflect noncash mark-to-market adjustments on the embedded derivative tied to our debt. These adjustments generally move with our stock price and can create volatility quarter-to-quarter because they're noncash and unpredictable, they're excluded from our adjusted net loss and don't affect our operational guidance. And finally, income from discontinued operations is expected to be in the $5 million to $6 million range, excluding any noncash remeasurement adjustments to the OMIDRIA contract asset.

With that, I'll turn it back over to you, Greg.

All right, David. Thank you. Operator, would you please open the call to questions?

[Operator Instructions]

Our first question comes from Brandon Folkes with H.C. Wainwright.

Congrats on all the progress in the quarter. Greg, I want to just understand sort of post approval kind of till launch and sort of maybe until we see significant revenue pull-through on narsoplimab. Once you gain approval, maybe when would you look to launch? Do you need to get into any guidelines? Or can you just begin detailing narsoplimab at launch? And then can you just help me understand selling to these transplant centers? Is it a sort of similar process to the hospitals in terms of formularies? Anything you can help just in terms of thinking about this launch activities post approval?

Sure. Well, as -- thank you, Brandon, first of all. As I mentioned in the prepared comments, those launch preparations are already well underway. The expectation is upon what we expect and hope will be an approval, we would move very quickly to launch the product. With respect to revenues, we do not -- as you know, we just customarily don't talk about our revenue projections for a reasonable period of time until we're able to see the same revenue trend lines that everyone else is.

So I'm going to beg off of the revenue question other than to say that we believe that through the Novo transaction and the narsoplimab or YARTEMLEA approval that we would expect to potentially be cash flow positive in '27. So that is how we're viewing it. Also, I think with respect to your question regarding hospitals and formularies, let me turn that question over to Nadia who will be able to give you, I think, more detail.

Thanks, Greg. As we've said on previous calls, we've identified and prioritized accounts that we call ready to go. And in the accounts, we know the exception process to the formulary, and we know a champion already exists for TA-TMA and is eager to have an approved treatment. So formulary approvals will happen over time, but they're not critical to actually having narsoplimab ordered and administered to patients in those hospitals. And we do have a process that we will be providing the formulary kits and walking the P&T committees through, but that will be happening in parallel.

Thank you, Nadia. Brandon, does that cover it?

Our next question comes from Steve Brozak with WBB Securities.

I just want to got used in narsoplimab this many years. YARTEMLEA is now, I guess, the new way to describe it. You mentioned something on the call and in the press release on NTAPs. I'm familiar with some previous NTAP awards and you say that you would expect -- can you give us as much detail as you can on the NTAP section? Because obviously, it's a good way for hospital systems to get additional payments. So what can you tell us about it and your estimation of how it will work for YARTEMLEA?

Sure. Again, I'll answer that in general and then hand that over to Nadia as well. But as you know, the NTAP provides assistance in payment or subsidizes payments in the hospital setting, so to the hospital. And we have -- we are in the process of applying. And we do expect that we will receive, as I said, an NTAP for YARTEMLEA. So I think that is intended to obviously be helpful within the hospital system to help defray the cost of the drug when DRGs have not yet obviously adjusted to the additional cost of a drug like YARTEMLEA in TA-TMA. So that's the purpose. Let me hand it over to Nadia, who can give a little detail about perhaps next steps, time line, et cetera.

Yes. So you described it well. And we're very proud of the fact that we submitted on time. And as CMS has publicly shared, they will have a town hall in December, where we are prepared to present our data there. And then the decisions, which we're very confident in a positive decision would then go into effect in their fiscal year that begins in 2026.

Our next question comes from Olivia Brayer with Cantor.

Congratulations on the recent Novo deal. Can you comment, Greg, on whether or not you all have had labeling discussions with the FDA yet? And is there anything that we should be taking into consideration as we think about what a potential label might look like just based on the historical control analysis that you ran? And then I did have a quick question on that historical control database. I noticed that those data from the Kyoto transplantation group are from 2000 to 2016. Is there any reason that it didn't include data from beyond 2016?

Sure. Let me take those questions, I believe, in order. I caught the first and the third, but I may ask you then to repeat the second. So maybe I'll go 1, 3, come back to 2. With respect to labeling, we do not -- I mean, just historically and consistent with Omeros guidelines, we really just do not comment on play-by-play discussions with FDA. With respect to -- well, your question about the Kyoto data and the years that those data were collected, frankly, there's good overlap with the data from our trial. And the reason that those data are running that time frame for Kyoto is, remember, those data came -- the initiation of accessing those data came from the publication.

And the Kyoto stem cell transplant group pulled all those data from 17 different institutions throughout Kyoto. So the amount of data that is really well beyond anything that we could find anywhere else, not only the amount of the data, but frankly, the quality of the data. Significantly beyond what we would have been able to grab or could grab since we actually attempted this from CIBMTR, EBMT, none of those really collect the patient level data and the specificity detail of TA-TMA. So that's how those data were collected. That's really what's driving the time frame, but I'll come back to my initial comment, which is that the overlap is there between our patients treated and the Kyoto patients.

And [ Kathy ] do you want to have any further statement on that?

Well, on the Kyoto, as you said, Greg, the database was collected very rigorously up to a particular point and published. And so to try to start that up again would certainly take years. And if you ask me to comment on the first question, again, the communications with FDA have been interactive and collaborative. And we've been able to provide FDA what they've asked for in their information request.

Okay. And I'm sorry, Olivia, the third, I caught something about what it might look like with respect to the control. You're speaking about what we would anticipate labeling looks like with.

Is there anything for us to kind of keep in mind as we go into that PDUFA and as we potentially get a label in December?

No. I mean, again, I just will -- I'll just default back to the same answer, which is that we don't discuss labeling. We don't discuss the play-by-play interactions with FDA. We just don't think, frankly, that's a wise thing for Omeros to do. But look, I'm going to speak now generally about the data that we have provided to FDA. We've provided adult data. We have also provided substantial pediatric data through the expanded access program. Certainly, our objective would be to include both adult and pediatric patients in any kind of label. I think that, that is clear. And I think we've said something to that same effect previously.

Our next question comes from Serge Belanger with Needham & Co.

This is John on for Serge today. So first, just to piggyback a bit on the previous question. Curious whether there's been any recent FDA commentary to you guys on your data package and the use of historical controls. I only ask again just trying to gain some clarity around it, considering some of the recent CRLs have come out for products that use historical controls. And then second, on operating expenses. Just curious whether you're at steady state there or expect changes heading into 2026. You mentioned there should be a little bit of a bump in 4Q this year. Curious what your outlook is for '26.

Yes. First, with respect to our interactions or information requests, whatever may come from FDA, we're in a review process. One would expect that throughout that period, information requests come, information requests are responded to in a timely manner. And I don't think it's any different for our application than for any others. So I think that, that is -- that's pretty clear. I think that the other products, which have run into issues around historical controls, I think you may be referring to potentially, is that the Biohaven product that you're referencing?

Yes, that's correct. And [indiscernible] also uniQure as well.

UniQure and Biohaven. Yes. I mean when you look closely at those, John, it's a very different situation, I think, than what we have. And I think it's very different broadly than just kind of pointing out historical control, historical control. Therefore, these 2 things must be the same. Those are very different products. I think the packages are -- we haven't seen all of the package for either of those products, either UniQure's or Biohaven. They haven't made those public. But what is there publicly, I think, makes it pretty clear that there are differences here. So we really don't see those as having any impact or any meaningful impact on our application or on our drug. With respect to our expenses moving into '26, I would expect, again, that I think as David went through, those we would expect to increase.

But again, everything is being predicated on really 2 events. One is the closing of the [indiscernible] and the second is the approval decision from FDA. And we can dial up or dial down as needed. But certainly, what we're expecting to do are sort of the things that I went through in the prepared comments. I mean there are a number of programs that we intend to push. And those include 1029 -- they include MASP-2 small molecules as well. They include our PDE7 program, our T-CAT program.

And they very much include what we have as our oncology platform. We're really excited about all of these programs. But I think there's a breadth of applicability across each of these programs. But we are excited. And we do expect at some point to share more information on these programs. I would just sort of say, stay tuned. And we'll share information as it becomes available and appropriate to share. Did that satisfy, John?

I'm showing no further questions at this time. I would now like to turn it back to Dr. Demopulos for closing remarks.

All right. Thank you, operator, and thanks to all of our analysts for their questions. Before ending today's call, I'd like to just step back and reflect on what's been accomplished and what lies ahead. Today, Omeros is entering one of the most exciting phases in our history. With YARTEMLEA approaching an approval decision, we're preparing to deliver the first and only approved treatment for TA-TMA, a therapy that we expect will really transform outcomes for transplant patients worldwide.

The continued recognition from the global transplant community highlights the impact we expect YARTEMLEA to have once launched. Equally important, our strategic transaction with Novo Nordisk underscores the scientific and value of our complement franchise. This collaboration not only provides substantial nondilutive capital, but also brings the strength, scale and expertise of one of the world's leading biopharmaceutical companies to accelerate and expand the reach of Zaltenibart and MASP-3 inhibition globally.

It is a strong external validation of our science, our platform and our team's ability to translate innovation into long-term value. At the same time, we continue to advance a deep and diversified pipeline. from OMS1029 and our MASP-2 small molecules to our PDE7 program, the T-CAT platform and our oncology franchise. Each targets major unmet needs and carries significant potential to create both clinical and shareholder value. Our focus now is clear, securing YARTEMLEA approval, executing a successful commercial launch and driving forward the next wave of programs that will define Omeros' future.

We are scientifically differentiated -- and upon closing, the Novo Nordisk transaction will be financially strong and well positioned to deliver sustained growth. I want to thank our employees for their dedication, our collaborators and partners, including Novo Nordisk, for their confidence in our science and our shareholders for their continued support. We look forward to updating you again as we continue to execute on what we expect will be a truly transformative period for Omeros. Have a good evening.

This concludes today's conference call. Thank you for participating. You may now disconnect.