Omeros (OMER) Q2 2026 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Wednesday, Aug. 12, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer - Gregory A. Demopulos
• Chief Accounting Officer - David J. Borges
• Chief Regulatory Officer - Catherine A. Melfi
• Vice President of Clinical - Steve Whitaker
• Chief Commercial Officer - Phil Woodman
• Investor Relations - Jennifer Williams
• President - David W. Ghesquiere

TAKEAWAYS

• Yartemlia Gross Sales -- $32.2 million, representing a 190% increase from $11.1 million in the first quarter of 2026.
• Yartemlia Net Sales -- $28.5 million, reflecting a 188% increase from $9.9 million in the first quarter of 2026.
• Gross-to-Net Adjustment -- 11.5%, primarily reflecting chargebacks and distribution fees.
• Net Income -- $13.2 million, or $0.18 per share, which included an $11.5 million non-cash mark-to-market gain on derivatives.
• Non-GAAP Adjusted Net Income -- $1.8 million, or $0.02 per share, compared to a non-GAAP adjusted net loss of $17.1 million in the first quarter of 2026.
• Cash and Short-term Investments -- $132 million, providing liquidity to fund the Yartemlia launch and clinical operations.
• Operating Cash Flow -- $4.1 million in positive cash flow generated from company-wide operations during the quarter.
• Share Repurchases -- 489,000 shares of common stock retired in the second quarter at an average price of $11.70 per share.
• Debt Principal Reduction -- $30.5 million aggregate principal of 2029 convertible notes repurchased in July, reducing outstanding debt by 43%.
• Interest Expense Reduction -- $8.6 million in future interest payments eliminated through the repurchase of convertible notes.
• Dilution Reduction -- 5.8 million shares removed from the potential fully diluted share count year to date.
• Transplant Center Penetration -- 73 unique accounts ordered Yartemlia as of June 30, representing a 143% increase since March 31.
• Adult Patient Utilization -- 75% of Yartemlia sales, with adult utilization growing at more than twice the rate of pediatric utilization.
• Formulary Adoption -- 55% to 60% across the top cohorts of 10, 20, 40, and 80 U.S. transplant centers tracked by the company.
• Medicare Reimbursement -- $287,000 maximum additional reimbursement per treatment course granted under the New Technology Add-on Payment effective Oct. 1, 2026.
• Medicare Beneficiary Impact -- 30% of U.S. allogeneic transplant recipients, highlighting the importance of the new inpatient reimbursement status.
• Novo Nordisk Collaboration Payments -- $3.3 million recognized as other income for the transfer of zaltenibart inventory.
• Novo Nordisk Potential Milestones -- $2.1 billion in total potential payments, with $240 million in upfront cash already received.
• Research and Development Expenses -- $13.8 million, focusing on the OncotoX-AML program and other pipeline assets.
• Selling, General and Administrative Expenses -- $13.9 million, driven by the commercial infrastructure for the Yartemlia launch.
• Contractual Cash Interest -- $1.7 million, excluding royalty obligations and non-cash amortization.
• Expanded Access Program -- 220 adult and pediatric patients treated with narsoplimab, providing supporting evidence for regulatory filings.
• Distributor Inventory -- 1.5 weeks of supply held by distributors, which management characterized as consistent with the first quarter.

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Demopulos stated, "the committee adopted a negative opinion on our marketing authorization application for Yartemlia in TA-TMA," referring to the European Medicines Agency's Committee for Medicinal Products for Human Use.

SUMMARY

Management reported that Yartemlia achieved $32.2 million in gross sales during its first full quarter on the market, driven by increased adoption in adult transplant centers. The company stated that operations generated $4.1 million in positive cash flow while capital structure improvements reduced outstanding debt by 43%. According to the company, commercial initiatives are focused on establishing Yartemlia as the standard of care for TA-TMA through institutional formulary access and new reimbursement codes.

• The company has requested a re-examination of its European marketing application, which will involve an Ad Hoc Expert Group comprising independent hematology and stem cell transplant experts.
• Management is shifting the TA-TMA treatment paradigm from a diagnosis of exclusion to proactive screening, which they expect will increase the identified patient population.
• The implementation of a permanent J-code on July 1, 2026, established a consistent outpatient reimbursement pathway and reduced administrative burdens for providers.
• Enrollment is scheduled to begin by year-end 2026 for an inpatient clinical trial of OMS527 for cocaine use disorder, which is fully funded by the National Institute on Drug Abuse.
• Omeros entered into an agreement with a contract biologics manufacturer for the process development and clinical supply of OMS805, its lead oncology candidate for acute myeloid leukemia.
• The company published a foundational manuscript in Science Translational Medicine detailing its Targeted Complement Activating Therapy platform for treating multidrug-resistant pathogens.
• CFO Borges noted that future mark-to-market adjustments on derivatives will reflect the reduced principal balance following the $30.5 million note repurchase in July.

INDUSTRY GLOSSARY

• TA-TMA: Hematopoietic stem-cell transplant-associated thrombotic microangiopathy, a life-threatening complication of stem cell transplantation involving blood vessel damage.
• MASP-2: Mannan-binding lectin-associated serine protease-2, an effector enzyme of the lectin pathway of the complement system.
• J-Code: A standardized healthcare coding system used for billing Medicare and other payers for drugs and biologicals that cannot be self-administered.
• NTAP: New Technology Add-on Payment, a CMS program that provides additional reimbursement to hospitals for the cost of new medical technologies used in the inpatient setting.
• CHMP: Committee for Medicinal Products for Human Use, the European Medicines Agency's committee responsible for preparing opinions on questions concerning medicinal products.
• AHEG: Ad Hoc Expert Group, a group of external scientific and clinical specialists convened by the EMA to provide expert advice during the drug review process.
• AML: Acute myeloid leukemia, a type of cancer of the blood and bone marrow.

Full Conference Call Transcript

Operator: Afternoon, and welcome to today's earnings call for Omeros Corporation. After the company's remarks, we will conduct a question and answer session. If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press 9 to raise your hand and 6 to unmute. 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 turn the call over to Jennifer Williams, Investor Relations for Omeros. Please go ahead.

Gregory A. Demopulos: 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' 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 will 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 J. Borges, our chief accounting officer, Dr. Kathy Melfi, our chief regulatory officer, Dr. Steve Whitaker, vice president of clinical and Phil Woodman, our chief commercial officer.

Promoted from within the company, Bill was recently appointed as our chief commercial officer and 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. Atomero's bill largely built our commercial team. And was instrumental in designing and executing the Yartemlia launch.

I have long believed that Bill's background capabilities and achievements are ideally suited to Omeros' current and future objectives Under his leadership, our commercial team is driving Yartemlia 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, Yartemlia 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 will 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 will open the call for questions. As you know, the FDA approved Yartemlia, our lead MASP-2 inhibitor in December 2025 for the treatment of stem cell transplant associated thrombotic microangiopathy. Or TA-TMA. Yartemlia is the first and only approved treatment for this often fatal complication of stem cell transplantation and your Yartemlia is also the first and only approved inhibitor of the lectin pathway of complement.

We launched Yartemlia 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 Yartemlia sales, and we are pleased to share the results today. As I mentioned in the second quarter, Yartemlia 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 will discuss the launch in more detail in just a bit. Net income for the second quarter was $200 thousand or $0.18 per share.

As we have previously discussed our results include non cash mark to market adjustments related to the derivative embedded in our 2029 convertible notes. Excluding noncash 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 detail shortly. We ended the quarter with $132 million in cash and investments, Importantly, company wide, operations provided net positive cash flow in the quarter of $4.1 million. Our share repurchases and sub subsequent note repurchases further strengthened our capital structure.

During the 6 months ended June 30, we repurchased and retired approximately 843 thousand 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 2 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 Yartemlia, our launch remains focused on 4 priorities. 1, educating transplant teams to recognize and treat TA-TMA earlier. 2, securing institutional access through pharmacy and therapeutics or P&T committee approvals, and streamlined ordering. 3, ensuring timely reimbursement. And 4, demonstrating Yartemlia'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, TATMA 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 Yartemlia, 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 Yartemlia sales.

This mix is closely approaching the historical 85%/15% split between adult and pediatric transplant procedures in The US. Formulary adoption. Also continues to progress rapidly. By quarter end, we understand that Yartemlia had received PNT committee approval at approximately 55% to 60% across the top 10. 2040, and 80 US 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 Yartemlia a permanent product specific health care common procedure coding system or 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 Yartemlia 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 thousand in additional Medicare reimbursement for inpatient treatment with Yartemlia. 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 Yartemlia 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 Yartemlia's clinical and economic value and support continued adoption. Overall, early commercial indicators, strong transplant center engagement, continued formulary and ordering momentum, and payer alignment with the approved label reinforce our expectation that Yartemlia can become the standard of care for TA-TMA. Looking ahead, we continue to pursue expansion opportunities for Yartemlia, 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 Yartemlia in TA-TMA. We believe the clinical evidence supports approval, and have requested reexamination. 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 Yartemlya's FDA approval.

As part of the reexamination and hoc expert group or AHEG comprising independent external scientific and clinical experts in hematology, stem cell transplantation, and TA-TMA. We 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 Yartemly a to European patients with TATMA through our expanded access program. Prioritizing children. We also continue to assess opportunities to expand the Yartemlia label. We are prioritizing indications with a strong biologic rationale for MASP 2 inhibition.

Particularly those involving endothelial injury, lectin pathway activation, and thrombo inflammation. These encompass an extensive list of indications, including chemotherapy-induced TA, 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, 1 evaluating Yartemlia in hyperinflammatory ARDS, and the other assessing prophylactic Yartemlia in pediatric patients with predictably severe TA-TMA. Our MASP 2 platform extends beyond Yartemlia. We are advancing our phase 2 ready long acting MASP 2 antibody OMS1.03 thousand 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, OMS1.03 thousand showed 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 the initial Phase 2 indication for OMS1.03 thousand. Clinical drug product and matching placebo, have been manufactured and are available. For our MASP-2 small molecule program, we have 1 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 25, we received $240 million in upfront cash, which funded the Yartemlia 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 nonclinical information before initiating the inpatient study. That nonclinical 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 OMS 27 could be effective across a broad range of addiction, and compulsive disorders. Our targeted complement activating therapy or TCAT 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 medicines most critical unmet needs.

Unlike antimicrobial agents on the market, TCAT 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 TCAP 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 TCAT's potential as a next generation platform with broad applicability across microbial species, including multidrug resistant pathogens. And we look forward to advancing TCAT toward the clinic.

Finally, OncotoX-AML, or OMS805, is the lead program in our oncology platform. it is an engineered biologic designed to treat acute myeloid leukemia or AML, the most common and 1 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 nonhuman 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. 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 targeted to begin in late 2027. So that concludes our corporate and program update.

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

David J. Borges: Thanks, Craig. Our second quarter results reflect continued focus on commercial execution of the Yartemlia launch and actions to strengthen our capital structure. Net income for the second quarter of 26 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 26. Second quarter results included a $12.1 million noncash mark to market gain on the embedded derivative associated with our 2029 convertible notes. And a $700 thousand 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 re measurements, 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 thousand 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 thousand shares at the same average price for a total of $9.9 million In June and July 2026, we entered into agreements for 2 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 2029 notes by approximately 43%. from $70.8 million to $40.3 million. The aggregate purchase price was $60.2 million plus $200 thousand of accrued and unpaid interest. These transactions reduced leverage future cash interest expense, and potential dilution by opportunistically repurchasing and retiring a portion of the 2029 convertible notes. They also reduced the number of shares issuable on conversion from 11.4 million to 6.5 million.

As Greg noted, Yartemlia maintained strong commercial momentum in the second quarter, Gross product revenues were $32.2 million, all from Yartemlia 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 entered into in connection with the zaltinibart transaction, we continue to be reimbursed for cost incurred in providing transition services.

Including third party expenses and internal personnel cost. We also recognized $3.3 million of reimbursement from Novo Nordisk for zaltinibart 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 Raynor and therefore has no economic impact on Omeros. And non amortization of debt issuance costs and discounts contractual cash interest expense was $1.7 million, down $100 thousand 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 noncash mark to market gain on the embedded derivative related to our 2029 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 derivatives 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 repurchase notes net of unamortized discounts 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. and Omidria royalties passed 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 26. 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 Yartemlia commercial infrastructure, marketing, and launch activities.

Although we are encouraged by Yartemlia's continued commercial momentum, we are 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 contact 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 2029 convertible notes. These adjustments are noncash, They can be volatile, and are driven largely by stock price and other market inputs. We therefore present non GAAP adjusted net income and loss to provide additional visibility into underlying operating performance. And with that, I will turn the call back over to Greg.

Gregory A. Demopulos: Gregory? Thanks, David. Operator, please open the call to questions.

Operator: We will now begin the question and answer session. If you would like to ask a question, please raise your hand now. The raise hand button can be found in the center of the toolbar at the bottom of your screen on Zoom desktop and on the left side of the toolbar on Zoom mobile. If you have dialed in to today's call, please press 9 to raise your hand and 6 to unmute. Your first question comes from the line of Brandon Folkes with H. C. Wainwright. Your line is open. Please go ahead.

Brandon Folkes: Hi, thanks for taking my questions and congrats on a very good quarter. Maybe just 2 from me. I guess, firstly, with the AstraZeneca Ultomiris data release are you having any updated conversations around C5 use at all? Obviously, it is off label. Right? But, you know, 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, very big quarter here. Congrats on that. You know, meaningfully ahead of a lot of forecasts.

So wanted to see if you could just try 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? Thank you.

Gregory A. Demopulos: Thanks, Brandon. With respect to the first question regarding C5 inhibition. As you noted, rabulizumab 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 TATMA 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 t a t m a. Eculizumab is more frequently dosed shorter half life. There is some continued eculizumab off label use. We do not really know how much.

We do not frankly focus. On how much I will ask Bill to speak to that and his thoughts around the competition there which I will I will preempt a bit by saying we do not really see it as competition for Yartemlia. I think with respect to why there might be continued use for a while of eculizumab, I think certainly, it is hard to break old habits. Among physicians, and that is likely what we are 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 are very pleased with the efficacy that we are 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 is just it is a biological fact when you inhibit c 5, you inhibit the lytic arm of the classical pathway that increases the risk of infection. Inhibition of NARSOP of MASP 2 with narsoplimab or Eartemlia is upstream. So we are inhibiting the lectin pathway at really the 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 1 of habit and just perhaps not fully understanding the benefits yet that YARTEMLEA brings. But I frankly expect that will not be a long lived challenge for us. But Bill, let me ask you. To comment on that Sure.

David W. Ghesquiere: Thanks, Gregory. Yeah. I totally agree. Know, physicians are humans too, and humans generally do not welcome change with open arms. Eglisumab was their only option for 10 or 12 or 15 years. And in peds, it was widely adopted. Adults, not so much. But in peds even in peds, we are seeing adoption across centers use in both first and second line. Adults, it is 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 TATMA in both adult and pediatric centers.

Gregory A. Demopulos: Thank you, Bill. Brandon, your next question was how our internal forecasts, I believe, compare to what we have seen We will not comment today on our internal or external. Forecast. We will not guide the other part of that question, I think, though, was around our cash flow forecast. Certainly, we hold to our statement previously that by mid 27, 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 are quite comfortable holding to that prediction. David, any comments on that?

David J. Borges: No. I would say that states it really well, and I agree with what you just said, Gregory.

Gregory A. Demopulos: Thank you. Anything else, Brandon?

Brandon Folkes: Nope. Other than to say congrats on a really good quarter, and a good launch. Thanks, Brandon.

Gregory A. Demopulos: Thank you very much.

Operator: Your next question comes from the line of Steve Brozak with WBB. Your line is open. Please go ahead.

Stephen Brozak: Yes. Hey. Good afternoon, Gregory, and obviously, thank you for taking these questions, and congrats on these numbers. I am thrilled, and I am sure the patient is being treated with Yartemlia 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 have got a follow-up after that, please.

Gregory A. Demopulos: Sure. Thanks, Steve. An answer to that first question no. Categorically, no. This drug is available to patients when 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 is 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 will use your term, these are pure numbers.

Stephen Brozak: Okay. Thank you. Last question, and I will jump back in the queue. NTAPs. Okay? I have been familiar with different NTAPs 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 are set up for that because that is something that not that many people are familiar with. And I will hop back in the queue. Thank you.

Gregory A. Demopulos: 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 thousand for a course of treatment for Yartemlia. We are quite pleased with that. it is at that roughly 65% cap that CMS will allow. CMS, as you saw, in there, proposed IPPS rule recommended the NTAP for Yartemlia and subsequently, in the final rule, confirmed it.

So I think they recognize the utility and the importance of the drug and we are quite pleased that becomes effective or is scheduled to become effective on October 1. Kathy, do you wanna add anything else?

Catherine A. Melfi: Yeah. No. I think, Gregory, you explained it well. I mean, it as you know, the reimbursement for these DRGs you know, does not account for the new technology. And so with the approval of Yartemlia, 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 are pleased with the result that we got in terms of they will be including for the use of Yartemlia.

Gregory A. Demopulos: Thank you.

Stephen Brozak: Steve, did that answer you? Perfectly on both counts. Thank you. And again, congrats on these on these strong, strong numbers.

Gregory A. Demopulos: Yes. Thank you. We are all pleased, and we look forward to the continued growth Your next question comes from the line of Samuel Rodriguez Santiago with Cantor Fitzgerald.

Operator: Your line is open. Please go ahead.

Samuel Rodriguez: Hey. This is Samuel 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?

Gregory A. Demopulos: To I think our collective knowledge, no. We do not 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 do not 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 do not have.

David W. Ghesquiere: No. They are not significantly different between the 2. You know, when you launch, a new product into a deadly disease that you generally tend to get very severe patients at the beginning. So you may need to see a little bit more drug at the beginning. Because they are they tend to require more medication. And I do not think this is not different 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 and treating it early, and getting better outcomes. So that is really kind of the way we expected to go. In the future.

Gregory A. Demopulos: 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 a really effective and safe drug, They 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 are seeing and we are 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 Yartemlia I think the data clearly support the better. They will do.

Samuel Rodriguez: Awesome. Thank you, and congrats on the quarter.

Gregory A. Demopulos: Thank you, Samuel.

Operator: Your next question comes from the line of Serge Belanger with Needham. Your line is open. Please go ahead.

Serge Belanger: Hi. Good afternoon, and thanks for taking my questions. First, on Yartemlia, Gregory, can you just talk about maybe the number of patients that have so far been treated with the product and I guess, what the kind of the market share of the overall opportunity would be based on those patients. And then secondly, you talked about in your prepared comments that TATMA is mostly a diagnosis of exclusion. So with the shift paradigm that you are working on, what do you expect market opportunity could be? Or what is the underdiagnosis and undertreated rate for, the indication? Thank you.

Gregory A. Demopulos: Sure, Serge. Thanks for the questions. First, we cannot give you any really definitive numbers on patient use because we do not have patient numbers. We see vials. We see vials that go into a center We do not 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, etcetera. So with respect to patient numbers, cannot 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 Yartemlia, 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 cannot treat those, then this is going to fall to what we will call TA-TMA.

We do believe that we are simply now scratching the surface. Again, I will look to Bill to comment on that in just a moment. But I think our collective view on this is we are just scratching the surface. And as there becomes further embedded an effective and a safe treatment for TATMA the diagnosis of TATMA 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 TATMA as a percentage of stem cell transplantation will also increase. We are already seeing it. The latest Midas studies shows the incidence of TA-TMA at 56 percent of allogeneic transplant.

And I would think that there is a reasonable possibility that those percentages will increase. Again, when you have a treatment, there is 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?

David W. Ghesquiere: Yeah. I mean, I totally agree, Gregory. We are just scratching the surface. You know, as well as we have done so far, we expect to do better in the future. It Institutional organizations, large academic centers, it is very hard to get real change in a in an institutional center. Not because they do not want to, just because they are a huge organization. there is a lot of levers to push in order to really change the way they look at things. Not just P&T committees, but order sets and EMRs, the way that they diagnose TMA, and that fundamentally has to change.

We have made that change in some centers, but we have a lot more to go and we think it will get better over time. You know, pretty consistently over time.

Gregory A. Demopulos: Great. Thank you.

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

Gregory A. Demopulos: Thank you, operator, and again, thank you all for joining us this afternoon. As we enter the second half of the year, Yartemlia 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 Yartemlia 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.

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

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.