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Omeros (NASDAQ:OMER)
Q3 2019 Earnings Call
Nov 12, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good afternoon, and welcome to today's conference call for Omeros Corporation. At this time, all participants are in a listen-only mode. After the company's remarks, we will conduct a question-and-answer session. Please be advised that this call is being recorded at the company's request, and a replay will be available on the company's website for one week from today.

I will now turn the call over to Jennifer Williams, investor relations for Omeros. Please go ahead, ma'am.

Jennifer Williams -- Investor Relations

Good afternoon, and thank you for joining the call today. I'd like to remind you that some of the statements that will be made on the call today will be forward-looking. These statements are based on management's beliefs and expectations as of today only and are subject to change. All forward-looking statements involve risks and uncertainties that could cause the company's actual results to differ materially.

Please refer to the special note regarding forward-looking statements in the company's quarterly report on Form 10-Q, which was filed today with the SEC, and the risk factors section of the company's 2018 annual report on Form 10-K, for a discussion of these risks and uncertainties. Dr. Greg Demopulos, chairman and CEO of Omeros, will take you through a corporate update; and then Mike Jacobsen, our chief accounting officer will provide an overview of our third-quarter financial results. We have some time reserved for questions after the financial overview.

Now I would like to turn the call over to Dr. Demopulos.

Greg Demopulos -- Chairman and Chief Executive Officer

Thank you, Jennifer, and good afternoon, everyone. We appreciate you joining us for today's update. Omeros accomplished a great deal last quarter. We submitted the first sections of our rolling BLA for narsoplimab for the treatment of stem cell transplant associated TMA, and we're accelerating toward the anticipated completion of our BLA submission in the first half of next year.

We announced positive results from the Phase 1 trial in our OMS527 program focused on addictions and compulsions, and continued to advance our clinical and pre-clinical pipeline. In addition to all of that, OMIDRIA produced another quarter of record revenues. Today, I'll start with OMIDRIA and our quarterly financials. The third quarter delivered record net sales of OMIDRIA at $29.9 million, an increase of 12% over the first quarter.

The growth in sales came from increased demand, driven by a substantial increase in both the number of ordering accounts and the penetration within those accounts across all channels-- ASCs, hospitals, the VA, and other government customers. The company's net loss for the quarter was $16.5 million or $0.33 per share, which includes non-cash charges of $6.3 million or $0.13 per share. As of September 30, 2019, we had $27.3 million available for general operations, representing a cash burn of $4.5 million for the quarter. We also have a $50 million revolving line of credit facility with Silicon Valley Bank.

This line of credit enabled us to borrow up to 85% of our outstanding accounts receivable balance, subject to applicable reserves. We have not yet borrowed under this line of credit. Q4 is historically strong for OMIDRIA sales, and we expect OMIDRIA revenues will set another record in the fourth quarter. Consistent with previous sales growth, increasing physician demand, and expanding payer coverage are expected to be key drivers, along with the implementation of the J-code within various payer systems.

In Q3, our sales reflect continued execution of our strategy to penetrate a broadening base of accounts by driving demand from the top down, specifically expanding our focus on private equity groups, group purchasing organizations, and academic hospitals. We see significant pull-through from the community of cataract surgeons who continue to generate strong data, further reinforcing and expanding the clinical value of OMIDRIA to cataract patients, surgeons and administrators. Publications, documenting the substantial clinical benefits of OMIDRIA continue to grow in number. In an earlier quarterly call, we discussed prospective, randomized, controlled, clinical trials showing that OMIDIA prevents one of the major problems in cataract surgery-- intraoperative floppy iris syndrome, or IFIS.

We also discussed two independent studies comparing OMIDRIA to epinephrine and assessing the need for postoperative steroids, as well as the incidents of cystoid macular edema, or CME, a sight-threatening complication of cataract surgery. Across the total of approximately 2,800 patients, steroids were shown to be unnecessary when OMIDRIA was used, and the incidence of CME was reduced three- to twelvefold. One of these two studies, authored by Dr. Keith Walter of Wake Forest University, was accepted for publication last month in the Journal of Cataract and Refractive Surgery.

Results of the other study conducted by Dr. Denise Visco are expected to be published after Dr. Walter's study, and expand the benefits beyond CME to include breakthrough iritis and pain. Just last week, another important study was published in the peer-reviewed journal Clinical Ophthalmology, demonstrating the profound effect of OMIDRIA on reducing opioid use.

In this prospective, well-controlled clinical trial, OMIDRIA in cataract surgery reduced use of the dangerous opioid fentanyl by nearly 80%, while also cutting visual analog scale, or VAS pain scores in half. The author and the study's investigator is Dr. Eric Donnenfeld, recent past president of the American Society of Cataract and Refractive Surgery. The expanding and compelling set of peer-reviewed publications documenting the scope of OMIDRIA benefits that improve patient outcomes and safety are helping to drive sales across commercial, Med Advantage, CMS or Medicare Part B, and other government payers.

Regarding OMIDRIA's use with Medicare Part B beneficiaries, we continue to enjoy separate payment from CMS until our drug schedule pass-through expiration on September 30, 2020, and we are working to ensure continued payment for this sector beyond that expiration date. One avenue is through continued efforts to qualify under CMS' non-opioid exclusion. CMS established its non-opioid exclusion in response to a congressional mandate, specifically the Support Act. Through the Support Act, Congress means to ensure that there are no financial incentives within the outpatient perspective payment system, or OPPS, to use opioids rather than non-opioid pain medications.

The non-opioid exclusion enables CMS to pay separately for a drug administered during surgery, when there is evidence showing, using CMS' claims data, that absence of separate payment limits utilization of the drug, and for which peer-reviewed published data demonstrate the drug's benefit of reducing opioid use. As many of you are aware, on November 1, CMS issued the 2020 OPPS final rule. In that rule, CMS, despite Congress' directive, did not grant the exclusion to a single additional product including OMIDRIA. Yet OMIDRIA, and likely other products, fit squarely within the congressional mandate of the Bipartisan Support Act.

The agency was provided with CMS' own utilization data for OMIDRIA, and clinically meaningful and statistically significant results from prospective, well-controlled, peer-reviewed, published clinical trials. CMS was also provided with the not-yet-published Donnenfeld data, and received an expert review of these data conducted by David Clark, professor of anesthesiology perioperative and pain medicine at Stanford University, and an international leader in pain management and opioid use disorder. In his review, Dr. Clark underscores the importance of OMIDRIA in reducing fentanyl use in the at-risk population of cataract surgery patients.

With these collective data, OMIDRIA clearly meets CMS' own criteria for its non-opioid exclusion and warrants separate payment. Lack of access to FDA-approved medications presents concerns beyond incentives to utilize opioids. When access to OMIDRIA is limited, cataract surgeons often turn to non-FDA approved products from compounding pharmacies. The results can be tragic, as we saw in Dallas, where 68 patients were blinded by a compounded product used during cataract surgery.

This event, and other examples of the dangers of products from compounding pharmacies recently was brought to mainstream media, when television host John Oliver had a 20-minute segment about compounding pharmacies on his show Last Week Tonight. As I said earlier, we see continued growth in utilization across all payer groups, CMS, commercial, Med Advantage, and the VA. On October 1, OMIDRIA received a permanent J-code, which enables us to expand separate payment across commercial Med Advantage and Medicaid insurers, as well as in the office setting. Many of these previously would not reimburse for OMIDRIA under the drug's now retired C-code.

With respect to CMS, or Medicare Part B, we will continue to advance our legislative and administrative efforts to secure separate payment for OMIDRIA beyond September 30, 2020. We've overcome this same challenge before, and we remain as committed as ever to ensuring that Medicare Part B beneficiaries can continue to access the important and well-published clinical benefits of OMIDRIA. As part of our broad-based legislative, administrative and clinical efforts, additional clinical studies are under way. We believe these collective efforts will be successful.

In fact, bipartisan legislation is expected to be introduced in the House of Representatives this week. This bipartisan bill was born out of a number of groups' growing frustration with CMS' unwillingness to provide appropriate reimbursement and access to non-opioid alternatives. The bill directs CMS to provide separate Medicare reimbursement in the hospital outpatient setting and in ASCs for non-opioid treatments like OMIDRIA that have demonstrated the ability to replace or reduce use of opioids in a clinical trial or through clinical data published in a peer-reviewed journal. Separate payment would run for five years.

The similar companion Senate bill is planned for introduction within the coming weeks. Bipartisan members of Congress are paying attention to this issue, and we expect that OMIDRIA will continue to be appropriately reimbursed by CMS beyond September 30, 2020. Let's turn now from our commercial product to an update on our development pipeline. We'll start with narsoplimab, our antibody targeting MASP-2, which is moving rapidly toward regulatory approvals.

In September, FDA agreed with our proposed schedule for the rolling review of our BLA for narsoplimab for the treatment of stem cell transplant-associated TMA. Rolling review can accelerate the time to approval because it allows for FDA to review the sections as they receive them rather than waiting to begin its review until the entire BLA has been submitted. Last month, in line with the agreed schedule, we submitted to FDA the non-clinical sections of the BLA, including toxicology, pharmacology and pharmacokinetics. The clinical sections of the BLA are scheduled for submission, next, to be followed by the CMC sections.

Work to complete the remaining sections of the BLA is on track for completion in the first half of next year. We anticipate that FDA will grant the BLA for narsoplimab a priority review, which would further shorten FDA's overall review time. In Europe, we recently received a positive opinion from the Pediatric Committee of the European Medicines Agency, or EMA. A pediatric investigation plan, or PIP, outlining a development program for the investigational product in the pediatric population, is a prerequisite to EMA's acceptance of a marketing authorization application, or MAA.

EMA's acceptance of the PIP now paves the way for submission of our MAA for narsoplimab in stem cell TMA. EMA will also allow us to defer completion of the pediatric plan until after approval of the MAA. Successful completion of the PIP makes narsoplimab eligible for up to two additional years of marketing exclusivity. Although EMA does not have a rolling submission procedure, we intend to harmonize the contents of both the MAA and BLA.

We plan to submit for European marketing approval soon after our BLA in the U.S. has been filed. Our preparations for the anticipated commercial launch of narsoplimab in the U.S. and Europe are also progressing well.

As stated previously, we have been working with top leaders from the top transplant centers internationally to increase awareness of stem cell TMA and to establish common guidelines for the diagnosis and treatment of this often fatal complication of stem cell transplantation. Recently, Omeros convened a group of top US transplanters to discuss the current stem cell TMA diagnostic paradigm and to begin establishing guidelines for treatment. We anticipate that the new guidelines will help improve patient outcomes by enabling centers to identify and appropriately treat stem cell TMA patients earlier. We will have a significant presence at the upcoming American Society of Hematology meeting next month in Orlando.

There, we will continue our educational campaign directed to increasing awareness of TMA with a focus on its cause, endothelial damage, which is a known and strong activator of MASP-2 and the lectin pathway. Based on discussions with our advisors and other opinion leaders, there is growing recognition of the substantial unmet need in stem cell TMA. Last quarter, I updated you on our payer interactions and value story creation for narsoplimab. In Q3, we continued to advance this effort working with payers, physicians and transplant centers to evaluate the cost of stem cell TMA and the potential value that narsoplimab can bring to both patients and the centers that treat them.

Based on these interactions and the data derived from them, we remain confident that narsoplimab will offer a strong value proposition. As for the other commercial preparations, our targeting work indicates that about 90% of the allogeneic transplants in the US occur within the top 120 US stem cell transplant centers with the top 25 of these centers, making up about 50% of US allogeneic transplant. This concentration within a relatively small number of centers allows us to focus our resources, bringing on the right expertise and market approach for narsoplimab in this indication and we expect to begin building our focused U.S. salesforce early next year.

Our commercial preparations in Europe indicate that there is a similar dynamic across the top EU countries. Our team is doing the right things to prepare for a successful launch of narsoplimab for patients, physicians, centers, payers and our shareholders. We are also advancing our Phase 3 program for narsoplimab and IgA nephropathy. Overall, enrollment in our Phase 3 trial continues to accelerate at an increasing number of sites across North America, Europe and other international catchments.

In addition to the general population of patients with at least one gram of proteinuria daily, this trial is also enrolling a subset of patients with 24-hour proteinuria levels greater than two grams. Either of these two populations can result in accelerated or full approval, based on proteinuria reduction alone. To the best of our knowledge, narsoplimab is the only drug in development for IgA nephropathy that can obtain full approval on proteinuria alone. This singular distinction would avoid the long timeframe required to collect eGFR data, truncating the full approval process by as much as three years.

A manuscript prepared by Omeros' academic leadership committee, which is comprised of world leaders in IgA nephropathy and renal clinical research detailing the clinical data from the Phase 2 IgA nephropathy program, is expected to be published in a peer-reviewed journal. A report detailing the response to narsoplimab treatment by a patient with IgA vasculitis-associated nephritic, and rapidly progressive glomerulonephritis has been submitted for publication. In September, we began enrolling patients in a separate study evaluating the pharmacokinetics and pharmacodynamics of subcutaneously administered narsoplimab and IgA nephropathy. The study is also evaluating potential biomarkers in patients with this disease, which could aid in earlier diagnosis, as well as an identification of the patients most responsive to MASP-2 inhibition.

Chronic subcutaneous dosing of narsoplimab is being used in our Phase 3 trial for atypical hemolytic uremic syndrome, or aHUS. This trial includes multiple sites across the U.S. and Europe and is actively enrolling. Now let's turn to another component of our complement franchise, OMS906, our antibody targeting MASP-3.

We, along with others in the industry, and in the complement research community, believe that MASP-3 is the key activator and premier drug target in the alternative pathway. Potential indications for OMS906 include a broad range of alternative pathway disorders. Our initial focus is on paroxysmal nocturnal hemoglobinuria, or PNH. We expect OMS906 to have significant advantages over other alternative pathway inhibitors currently on the market or in the development for PNH.

The collective advantages of MASP-3 inhibition include the ability to inhibit extravascular hemolysis, while providing more potent inhibition of intravascular hemolysis, a favorable safety profile, and a more convenient route of administration with much lower frequency of self-administered dosing. OMS906 is expected to be dosed subcutaneously twice monthly or less frequently. Toxicology studies in GMP manufacturing are under way, and OMS906 is slated to enter the clinic in the first half of next year. As we continue to progress in our Narsoplimab and OMS906, we also are advancing our strategy for life cycle management of our complement franchise as a whole.

We're developing both the longer-acting second generation antibody, as well as orally available small molecule inhibitors against MASP-2, both of which we are targeting for clinical entry in 2021. We also continue developing small molecule inhibitors of MASP-3. Moving to our phosphodiesterase 7, or PDE7 program to treat addictions and compulsions, in September, we reported positive results from our Phase 1 trial. In the double-blind randomized study, our drug was well-tolerated and demonstrated good safety.

Its PK profile was consistent with once-daily dosing. Our focus is nicotine addiction, and we are planning our Phase 2 development program. Tobacco use of the single largest preventable cause of death and disease in the U.S., with a national death toll of nearly half a million people. The popularity of e-cigarettes, especially among young people, represents a newly emerging epidemic of nicotine dependence, further underscoring the need for new treatments for nicotine addiction.

Let's close our pipeline discussion with an update on our GPCR program. Last week, we announced that a team from Omeros along with academic collaborators from the University of Toronto were awarded the Prix Galien Canada Research Award for 2019 in recognition of the discoveries underlying Omeros' proprietary GPCR platform. Validating the strength and importance of our GPCR program, the Prix Galien is North America's most prestigious award in the field of pharmaceutical research and innovation. As a result of our GPCR platform technology, we controlled 54 GPCRs drug targets and corresponding compounds.

On our last quarterly call in August, I indicated that we would soon share our data demonstrating the relevance of GPR174 to cancer immunotherapy. In September, we announced a series of discoveries showing that GPR174 controls a new axis in cancer immunity. While GPR174 inhibition has significant potential as a solo anti-cancer agent, we have shown that the combined inhibition of both GPR174 in the adenosine pathway, another key metabolic pathway that regulates tumor immunity, synergistically enhances cytokine production by T-cells. Adenosine pathway inhibitors are the focus of cancer immunotherapy development efforts by a number of companies.

It now turns out though that combined inhibition of both pathways, an adenosine receptor antagonist combined with one of Omeros' novel GPR174 inhibitors, results in maximal enhancement of T-cell response. The importance of this lies in the tumor microenvironment, where the tumor is able to suppress the body's own immune response to kill the tumor. This tumor immunosuppression is a major limitation on the efficacy of the anti-cancer agents, including checkpoint inhibitors like KEYTRUDA or OPDIVO, which work, at best, in only about 20% of patients today. The data show that GPR174 inhibitors could well shift this balance, making checkpoint inhibitors and other anti-cancer drugs significantly more effective.

Our work with human cells, as well as new and exciting animal tumor model data, will be presented later this month in Boston, at the conference of the American Association for Cancer Research. Next month, we are scheduled to present at a similar conference in Geneva. The response from both the scientific community and industry to our GPR174 program has been strongly positive, and we look forward to bringing GPR174 inhibitors to the clinic as soon as possible. With that, I'll turn the call over to Mike for an overview of our third-quarter financial results.

Mike Jacobsen -- Chief Accounting Officer

Thanks, Greg. As Greg noted, OMIDRIA and total revenues for the third quarter were $29.9 million, and our net loss was $16.5 million, or $0.33 per share. This includes non-cash expenses of $6.3 million or $0.13 per share. Here are some additional details regarding our third-quarter results compared to the prior quarter: OMIDRIA once again achieved record sales, with total product revenue of $29.9 million, compared to $26.8 million in Q2.

This is an increase of $3.1 million or 12%. During the third quarter, our overall gross-to-net deductions were 28%, remaining consistent with the second quarter. Cost and expenses for the third quarter were $4.9 million, higher than in Q2 at $41 million, although approximately $4 million of that total represented non-cash charges. The increase was primarily due to scaling drug substance manufacturing at Lonza.

These process validation batches will form key components of the CAMC portion of our BLA filing for stem cell TMA. Third-party manufacturing costs related to our OMS906 program also contributed to the increase. Interest expense was in line with our expectations at $5.7 million, and included $2.4 million of non-cash interest. As of September 30, 2019, we had $27.3 million of cash, cash equivalents and short-term investments available for general operations.

In addition, we have a three-year $50 million revolving line of credit available with Silicon Valley Bank. Under the terms of the agreement, we can generally borrow up to 85% of our outstanding accounts receivable. Interest on any outstanding balance accrues at the greater of 5.5% or the primary. As Greg mentioned, we have not made any draws under this line of credit to-date.

Now, let's take a look ahead to the fourth quarter of 2019. With regard to revenue, Q4 is historically a strong quarter for OMIDRIA sales, and we expect fourth-quarter OMIDRIA revenues to once again set a record. In the fourth quarter, our research and development expenses will primarily be related to narsoplimab. We expect research and development costs will increase in the fourth quarter due to the continued manufacture of drug substance to support our BLA filing for stem cell TMA.

As I mentioned last quarter, all development and manufacturing costs for narsoplimab incurred prior to the U.S. or EU approval are expensed as research and development. Selling, general and administrative expenses for the fourth quarter of 2019 are expected to increase modestly from the third-quarter total of $16.9 million, primarily due to incremental narsoplimab sales and marketing activities. Interest expense for the third and fourth quarter -- interest expense for the fourth quarter should be in line with the third quarter at approximately $5.8 million.

With that, I'll turn the call back over to Greg.

Greg Demopulos -- Chairman and Chief Executive Officer

All right. Thanks, Mike. Let's open the call to questions.

Questions & Answers:


Operator

[Operator instructions] And our first question comes from Ram Selvaraju with H.C. Wainwright. Please proceed with your question.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Thanks very much for taking my questions, and congratulations on an excellent quarter. I wanted to ask about when, during the course of 2020, it might be possible for CMS to revisit the reimbursement status of OMIDRIA, and specifically the OPPS inclusion. Are there specific time points during 2020 when CMS formally do that? Or is it on likely to occur more on an ad-hoc basis? And then secondly, I wanted to ask about the status of the narsoplimab ARTEMIS trial. If you could just give us a sense of how many clinical sites are up and running and enrolling patients in that study, and if possible, where you are with respect to the enrollment target there.

And finally, with respect to potential future applications for narsoplimab, and indeed other MASP-2 AND MASP-3 inhibitor compounds, whether you have evaluated the possibility of applying these in the context of an indication called neuromyelitis optica spectrum disorder, or NMOSD? Thank you.

Greg Demopulos -- Chairman and Chief Executive Officer

Yeah, thanks, Ram. First, your question about CMS, CMS uses its annual rulemaking as its formal vehicle to promulgate new rules within the agency, so the scheduling for that is well-known and pretty regular. This, of course, does not then include any other discussions potentially with CMS or any sort of legislative action. As I mentioned, the house is putting forth a bill, introducing a bill, expected to be this week.

The sponsors or co-sponsors of that bill are bipartisan. They are the right group to be introducing such a bill, and that can happen at any time. The question that you had on narsoplimab and the enrollment, we've got about 90 sites activated across U.S., Europe and internationally in the ARTEMIS trial. We continue to grow that number.

Enrollment has, as I think I mentioned, accelerated, so it's ramping, and we're pretty pleased with the rate of enrollment at this point. So your third question, I believe was around the use of narsoplimab in opti-myelitis optica, is that correct?

Ram Selvaraju -- H.C. Wainwright -- Analyst

That was neuromyelitis optica [Inaudible].

Greg Demopulos -- Chairman and Chief Executive Officer

Neuromyelitis, yes. OK. That is primarily an alternative pathway disorder as I understand it, right, and so I think we haven't looked at that with MASP-2 inhibition. But certainly with our MASP-3, that is something that we would look at.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Thank you.

Operator

Thank you. And our next question comes from Steve Brozak with WBB. Please proceed with your question.

Steve Brozak -- WBB Securities -- Analyst

Hey, Greg. Thanks for taking the questions. I'm just going to go into narsoplimab. You were very, very detailed in terms of the rolling BLA submission.

What are you seeing in terms of preparation by the clinicians? And what kind of effect do you see this taking place in transplant medicine? And I've got one more follow-up question on narsoplimab after that, please.

Greg Demopulos -- Chairman and Chief Executive Officer

Yeah, I mean, thanks Steve. I think certainly look there is no treatment for stem cell transplant associated TMA. And we believe that OMS721 or narsoplimab will be the first drug approved for them. In fact, I think we're well on our way to getting there.

I think that the impact on that is going to be substantial. I mean, this represents a clear unmet medical need. There is no satisfactory treatment with current approaches, so we are clearly hearing from our advisors who represent the premier transplanters, really, in the world, that what OMS721 or narsoplimab will bring will be substantial. So they're excited they're excited to be able to use it.

We're excited, we expect, to be able to make it available for their use. And out of this, it's going to be the patients who benefit. I mean, it's very clear when you look at the narratives on these patients that we have, that these are patients who should not do well. These are patients who should not survive.

And yet with narsoplimab, they do survive. And so that's -- the impact of that, I think, is clear. I think, obviously, the community views it that way, and we're looking forward as quickly as possible to making it available for patients.

Steve Brozak -- WBB Securities -- Analyst

Got it. Now, going to a broader picture, given the fact that this is obviously as important a drug as we all hope it is, and the fact that you have different indications that are possible later on and also different geographical regions, can you give us anything on partnering, potential partnering, thoughts on partnering that we should be looking at or thinking about? And I will hop back in the queue. Thank you.

Greg Demopulos -- Chairman and Chief Executive Officer

Yeah. No, thanks, Steve. Look we don't discuss our partnering discussions. But I mean,look, I don't think it would surprise anybody that given our programs, given our assets -- I mean, even if you look at the ones we were just discussing OMS721, narsoplimab and our MASP-3 program or 906, I don't think it would surprise anyone that there would be significant interest around those programs.

I think, as I said, I think a good number in industry and a good number in the complement research community view each of those targets as respectively the premier target in the lectin and in the alternative pathways. So we don't discuss it, but look, with the right partner, that could make a lot of sense. But I think, again, let's see how things all play out, but we continue to march ahead, and we're very excited about both of those programs.

Steve Brozak -- WBB Securities -- Analyst

Great. And thanks again for taking the questions.

Greg Demopulos -- Chairman and Chief Executive Officer

You're welcome.

Operator

Thank you. And our next question comes from Serge Belanger with Needham & Company. Please proceed with your question.

Serge Belanger -- Needham and Company -- Analyst

Hi, good afternoon. Just a couple of questions for me. First, Greg, can you discuss the initial impact of the J-code implementation? I know it's only been a month, and I guess, other than streamlining the reimbursement process, I just wanted to get a little more color on what other – what segments of the market this J-code will allow you to penetrate a little better now?

Greg Demopulos -- Chairman and Chief Executive Officer

Yeah, thanks Serge, certainly. I mean look, it allows us to penetrate the commercial payers, the Med Advantage payers, the Medicaid payers. It also allows us to, as I said, penetrate the in-office setting. All of those areas are significantly advantaged for us with the J-code.

It simplifies the billing. We had seen initially maybe some doubts that CMS would appropriately reimburse under the J-code. Those concerns have been quickly allayed, and reimbursement is running smoothly with the J-code. So we think that overall, this is going to be a significant enhancement for us because it does expand our user base and our payer base beyond just CMS Part B.

I mean, when we looked two years ago at -- or if you look at the data from two years ago around CMS and Med Part B, that sector of the market, again, with two-year trailing CMS data, represented about 60% of our overall market for OMIDRIA, or I should say of our overall utilization of OMIDRIA. But over the past two years, you know, we've expanded commercial, we've expanded Med Advantage, we've expanded the VA system, we've expanded these other payers, so that that percentage, although we don't have the CMS data, because again, CMS data trail by two years, but we expect that percentage has dropped. And so, the national average is about 45% is Med Part B, and we may -- again, don't have the data to show it, but we may very well be tracking that.

Serge Belanger -- Needham and Company -- Analyst

OK. And then in terms of -- I guess if you can just give us maybe potential timelines ad when you think there'll be a resolution of a permanent pass-through reimbursement solution? And if that does materialize, or when it does materialize, is there a possibility that there could be additional commercialization efforts behind this program to drive further growth?

Greg Demopulos -- Chairman and Chief Executive Officer

Sure. You know, that's the big question. When? Look, there is unhappiness generally, not just with OMIDRIA anymore, but generally in the industry, which frankly helps us significantly, right? I mean, if you think about the last time we faced this issue with CMS and were successful, this was largely a very limited number of products, one of them being OMIDRIA. The problem now expands much more broadly than OMIDRIA, which is good.

I mean, it shows that there is a concerted frustration and eagerness to get this problem resolved across multiple products, multiple sectors, and frankly, multiple regions of the country, which translates to substantial bipartisan, bicameral support, and that's why you see the legislation that we mentioned that's coming out. We expect that to be introduced this week. And as I think I mentioned previously, the co-sponsors of that are strong. This also shares the support of other groups, one of those groups being Voices for Non-Opioid Choices, a very vocal group.

This problem needs to be fixed. Opioids are a big problem, continuing to create financial disincentives to, frankly, use opioids over opioid alternatives makes no sense. And it flies counter to this administration's clearly stated and strong policy about trying to reduce opioid use. So we think that with respect to timing, look, the Congress is currently tied up with a focus on, I think, drug pricing.

I think that would probably have to clear. But certainly, there's an emphasis to get this taken care of as quickly as possible, and we'll see. The Senate, as I said, is expected to bring forth its companion bill within the next couple of weeks, and all of that, I think, makes pretty clear that -- and these, by the way, I want to be very clear, these are not Omeros-sponsored bills. These are not bills that Omeros has put forth.

These are bills that have been put forth wholly independent of us. So these are all, I think, positive signs, and look, this just needs to get fixed. So our objective, of course, is to get this fixed prior to the expiration of pass-through. But the idea that somehow, with loss of Part B separate payment, that somehow, OMIDRIA is mortally wounded, I think, are greatly -- those assumptions are greatly overstated.

There are a lot of markets for OMIDRIA and there are other things that we continue to look at. But our objective now is to make this consistently available for Med Part B patients. I think we'll be successful and I think groups in Washington are all mobilizing to fix this general problem.

Serge Belanger -- Needham and Company -- Analyst

OK. And just one question on 721. I think in your prepared comments, you talked about, you started enrollment in a small pharmacokinetic, pharmacodynamic study to look at biomarkers. Is that part of the overall regulatory strategy or is it just exploratory?

Greg Demopulos -- Chairman and Chief Executive Officer

It's largely exploratory. I mean, obviously having a biomarker for MASP-2 inhibition and response to MASP-2 inhibition would be exceedingly helpful for us. There currently is none, but we think that's a reasonable approach. We think it's something that we can accomplish.

And if we do, then I mean, you understand very well the implications of that. You understand the implications of that not only in IgA, but in every other disease in which we are pursuing MASP-2 inhibition. So all of those things, I think, kind of play in. But sure, I think a biomarker will be exceedingly helpful and we think we'll have one.

Serge Belanger -- Needham and Company -- Analyst

OK. Thanks for taking my questions.

Greg Demopulos -- Chairman and Chief Executive Officer

Thanks, Serge.

Operator

Thank you. And we have a follow-up question from Ram Selvaraju with H.C. Wainwright. Please proceed with your question.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Hi. Yes, just a very quick one from me. Greg, do you anticipate any potential deployment of narsoplimab through the Right To Try program? And if so, in what indications might this potentially occur? Thanks.

Greg Demopulos -- Chairman and Chief Executive Officer

We don't at this time, Ram. We have our compassionate use program and that is how we're making the drug available to those who need it and can't access it in a clinical trial. So that has been our approach. That continues to be our approach, I expect.

In the foreseeable future, that will remain our approach.

Ram Selvaraju -- H.C. Wainwright -- Analyst

Thank you.

Greg Demopulos -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. And this concludes our Q&A session. I will now turn the call over to Dr. Demopulos for any further remarks.

Greg Demopulos -- Chairman and Chief Executive Officer

All right. Well, that wraps up the call for today. Thanks again, everyone, for taking the time to listen in. Clearly, we're excited about the progress that we're making in 2019.

We look forward to further progress in 2020, and we'll continue to provide you with updates as we continue to execute on our mission to move these products forward and really do good for patients and their families. Until then, thanks again for listening and have a good afternoon.

Operator

[Operator signoff]

Duration: 50 minutes

Call participants:

Jennifer Williams -- Investor Relations

Greg Demopulos -- Chairman and Chief Executive Officer

Mike Jacobsen -- Chief Accounting Officer

Ram Selvaraju -- H.C. Wainwright -- Analyst

Steve Brozak -- WBB Securities -- Analyst

Serge Belanger -- Needham and Company -- Analyst

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