Omeros Banks on First FDA Filing Next Year, Plans to “Unlock” Inaccessible Drug Targets

Xconomy Seattle — 

Seattle-based Omeros expects to apply for FDA clearance to start selling its first product by the second half of next year, and it also hoping to strike at least one partnership over the next couple of years with a bigger drugmaker, CEO Greg Demopulos said today in his first quarterly update running a public company.

Omeros (NASDAQ: OMER) is “on track” to finish enrollment next year of more than 1,000 patients in clinical trials of its lead anti-inflammatory drug candidate that’s supposed to help patients recover faster from arthroscopic knee surgery, Demopulos said on a conference call with analysts. Results from those pivotal studies should be available by the middle of 2010, and if the results are good, the company will ship off an application to the FDA to start marketing the product before the end of 2010, he said.

The clinical trial update was an important point for Omeros to make in the first week it has been legally allowed to make public statements since the 15-year-old company completed its initial public offering on October 7. Omeros raised about $62 million through the transaction, but its shares lost more than a third of their value in the first two weeks, earning it the dubious distinction of having the worst performing IPO of the year. Omeros has rebounded a bit since then, although its shares are still down 23 percent. Now the company is setting up expectations of events in the year ahead—like an FDA filing or a big corporate alliance—which could entice more investors to lift its stock out of the doldrums.

If the clinical trials go well, “we’ll have the first commercially available drug delivered directly to the surgical site to improve recovery” of knee surgery patients, Demopulos said.

The treatment, called OMS103HP, combines a couple of generic anti-inflammatory drugs into an injection designed to reduce post-operative swelling and speed up recovery time, Demopulos said. The clinical trials aren’t designed to see if the Omeros drug can wean patients off opioid-based pain relievers that circulate throughout the bloodstream, but it’s possible that could be one of the benefits, Demopulos said in response to a question from analyst Mark Monane of Needham & Company. Omeros is also looking at health economic analyses that might help justify the drug’s expense by showing how it speeds up recovery time, reducing rehab costs, and allows people to get back to work sooner than they otherwise would, Demopulos said.

While investors are certainly interested in the knee surgery drug candidate, Omeros has made plain that it isn’t putting all its eggs in that basket.

One key piece of the strategy is based on scientific work that it hopes will enable the company to hit a whole new class of targets on cells that have long been considered “undruggable.” This is the group of targets known as G-protein coupled receptors (GPCRs). They are complex spaghetti-like protein receptors that weave in and out of the surface of cells, and which are the targets of an estimated 30 to 40 percent of all marketed pharmaceuticals, including best-sellers for depression, allergies, and high blood pressure. Many such GPCRs are “undruggable” because scientists haven’t been able to identify a naturally occurring or synthetic molecule, called a ligand, that binds with the receptor.

Omeros says it believes it can make these GPCR targets “druggable” with the help of technology from Toronto-based PatoBios. But the catch was that under their old agreement, Omeros would have to pay PatoBios $10.8 million when it achieved this goal against the first GPCR target, Demopulos said. Even though Omeros just raised a lot of money in its IPO, it apparently didn’t want to quickly fork over a big chunk of this to its collaborator, at least not right away.

To that end, the deal has been revised so that Omeros only has to pay $500,000 upfront when it unmasks the first GPCR target, Demopulos says. The company can defer the rest until it forms a collaboration with a bigger drugmaker with the money and manpower to pursue the other GPCR targets, he says.

“We believe this will be a significant advance, and the industry will ascribe a lot of value to the unlocked GPCRs,” Demopulos said. The company expects to nail the first of these targets in the first half of 2010, he said.

Demopulos didn’t make any promises that any such deal is right around the corner. When asked by analyst David Steinberg of Deutsche Bank—the lead underwriter of the Omeros IPO—about any forecasts for when Omeros might strike a drug development collaboration, Demopulos said he is hoping to form “one or more deals over the next couple years, tied to one or more of our programs.”

Financially, there wasn’t much to say. It was down to its last $4.5 million of cash in the bank on September 30, about a week before the IPO infusion, according to its quarterly report. The company isn’t yet providing any forecast on its spending rate for the fourth quarter or for 2010. Omeros is looking to hire a new chief financial officer, Demopulos says.

While that search continues, the company is defending itself in a wrongful termination lawsuit brought by former CFO Richard Klein, who says he was fired after he made a whistleblower complaint. Demopulos didn’t provide any update on the suit.