NEW YORK, Feb. 21, 2018 /PRNewswire/
-- Investment adviser FourWorld Capital
Management, which recently issued a research report analyzing
the potential financial deterioration of biopharmaceutical company
Omeros Corp. (Nasdaq: OMER), has uncovered new data showing
that sales of the company's principal commercial product have
fallen dramatically in the past two months. FourWorld believes this
casts serious doubt about Omeros' future viability.
In its initial report issued February
14, FourWorld outlined seven key takeaways questioning
Omeros' financial health, raising the prospect of a default or the
need for a series of large, dilutive equity raises by the
Seattle-based company.
"In our view, the first sign is a collapse in sales of OMIDRIA -
the company's only FDA approved drug and sole source of revenue –
and that now appears to have started," FourWorld says. The firm's
report described how at the start of the year Omeros lost critical
Medicare pass-through reimbursement status, which supported an
average price for OMIDRIA of roughly $350 per dose for the past three years.
OMIDRIA is a cocktail of legacy generic pupil dilation and pain
relief drugs used in cataract procedures. However, FourWorld notes
the drug has readily available generic alternatives that price at a
fraction of the company's version.
Through its own independent research, FourWorld states: "We
predict an 80% year-over-year decline in revenue, based on our
channel checks with surgeons at ASC's across the country, who
characterized the clinical benefits of OMIDRIA as mild at best, and
not worth much, if any, additional cost over alternatives available
for $30 per dose."
As outlined in its report, FourWorld believes a sudden collapse
in revenue will result in financial deterioration for Omeros that
could be significant enough to trigger a Material Adverse Change
(MAC) or a covenant breach under Omeros' $125 million term loan with CRG Financial. "In
our view, the loan agreement provides CRG with opportunities to not
only deny the additional $45 million
available under the term loan – which Omeros needs - but this new
data goes much further and opens avenues for CRG to declare an
event of default or covenant breach," FourWorld states.
"Since the release of our February
14 report, Omeros has chosen to ignore the major issues
we've raised," FourWorld says. Instead, the firm notes that Omeros
issued a press release on February 15
that was strikingly similar to an announcement from last
October 26 "and provided little
additional information of value on a speculative drug in its
pipeline with a very limited addressable market."
"We reiterate seven key takeaways from our report below and call
upon Omeros management to address these important issues, explain
the collapse in OMIDRIA sales, and provide a viable plan to its
shareholders," FourWorld states. "We reiterate our $4 per share price target for Omeros common
stock."
FourWorld's Key Takeaways from Omeros Corporation: Far
Less Than Meets the Eye
- We forecast an 80% YoY revenue decline and a 90% price decline
for OMIDRIA as Omeros has exhausted all viable regulatory and
legislative options to extend reimbursement status.
- Cracks in OMIDRIA revenues are now visible; data from Symphony
Health shows a 26% decline in December
2017 sales volume for OMIDRIA and a further 87% decline in
January. Channel checks with several surgeons representing major
ASC's in six states indicated none of them were purchasing OMIDRIA
after January 1, 2018, and all
planned to discontinue use of the drug in their normal practice
given the loss of Medicare support.
- OMER's term loan contains provisions that leave Omeros in a
Catch 22 – it needs to draw the additional liquidity in the face of
collapsing revenues, but doing so will very likely cause a default
on the loan or necessitate a series of large equity dilution
events.
- We believe legislative options to extend OMIDRIA reimbursement
status are now effectively dead, as Congress dealt with healthcare
spending in the Bipartisan Budget Act of 2018 that was signed into
law on February 9.
- We believe OMER management squandered an opportunity to secure
a pricing model independent of the 'transitional' Medicare program
and continued promoting legislative and regulatory solutions for
reimbursement even though there appeared to be a very low chance of
success, given CMS explicitly denied the Company's requests to
extend the pass-through period for OMIDRIA on multiple
occasions.
- Without OMIDRIA, Omeros faces a potential funding shortfall of
$400 million over the next four
years. We believe Omeros must raise this capital to realize any
commercial value from its speculative pipeline.
- We believe OMS721 represents the only drug of any value in the
Omeros drug pipeline, and estimate that OMS721 will not produce any
clinical trial data until 2020 due to complications with enrollment
for Phase 3 trials in aHUS and IgA Nephropathy.
The full report is available at fourworldcapital.com
About FourWorld Capital
FourWorld Capital Management LLC is an SEC-registered investment
adviser based in New York.
FourWorld focuses on event-driven investment opportunities. For
more, visit www.fourworldcapital.com.
Following the publication of this report, FourWorld intends to
continue transacting in the securities covered herein. The firm may
be long, short, or neutral at any time hereafter regardless of its
initial recommendation.
FourWorld Capital Management LLC ("FourWorld") is an SEC
registered investment advisor based in New York, New York. The views expressed in
this research paper represent the opinions of FourWorld. As of the
publication date of this presentation, FourWorld, and FourWorld
managed accounts, have a direct or indirect short position in
Omeros Corporation. ("Omeros") stock, and therefore stand to
realize significant gains in the event that the price of Omeros
stock declines. Following publication of this presentation, we
intend to continue transacting in the securities covered herein,
and we may be long, short, or neutral at any time hereafter
regardless of our initial recommendation. Please see the full
Disclaimer appearing in the report available on the FourWorld
website at fourworldcapital.com.
1 According to their website, "Symphony Health's
Integrated Dataverse (IDV)® provides the most comprehensive and
interconnected source of healthcare data in the industry."
Additional information is available at symphonyhealth.com
FourWorld Capital Management, LLC is a member of the Financial
Industry Regulatory Authority, CRD number 284138.
Contact: Allan Ripp
212-262-7477 aripp@rippmedia.com
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SOURCE FourWorld Capital Management LLC