Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) Q3 2023 Earnings Call Transcript

Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) Q3 2023 Earnings Call Transcript November 1, 2023

Apellis Pharmaceuticals, Inc. misses on earnings expectations. Reported EPS is $-1.17 EPS, expectations were $-0.86.

Operator: Good morning ladies and gentlemen. Thank you for standing by and welcome to the Apellis Pharmaceuticals Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please note that today’s conference is being recorded. I will now hand the conference over to your speaker host, Meredith Kaya, Senior Vice President of Investor Relations and Strategic Finance. Please go ahead.

Meredith Kaya: Good morning and thank you for joining us to discuss Apellis’ third quarter 2023 financial results. With me on the call are Co-Founder and Chief Executive Officer Dr. Cedric Francois; Chief Commercial Officer, Adam Townsend; Chief Medical Officer, Dr. Caroline Baumal; and Chief Financial Officer, Tim Sullivan. Before we begin, let me point out that we will be making forward-looking statements that are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. Now, I’ll turn the call over to Cedric.

Cedric Francois: Thank you, Meredith, and thank you all for joining us this morning. It has been a busy few months here at Apellis and the period is not without its share of ups and downs. That said, I am thrilled with where our company is today and then more confident than ever in the opportunities that we have in front of us. Importantly we are delivering on our goals of bringing EMPAVELI and SYFOVRE to patients with nearly $100 million in total of the U.S. net product revenue generated in the third quarter and continuing to be [indiscernible] potentially transformative new treatments. I’ll begin with SYFOVRE. We reported $75 million in SYFOVRE U.S. net product revenue in the third quarter, up about 12% quarter-over-quarter resulting in more than $160 million in U.S. net product revenue generated in the first seven months since launch.

A few key highlights include more than 100,000 vials of SYFOVRE have been distributed since launch through our last update on October 5th which we believe underscores the positive impact it is having on the lives of thousands of patients across the U.S. The permanent J-code effective on October 1st, driving even stronger demand to date with some of our largest weeks ever in October. The long-term data emerging from our GALE extension study continues to show increasing effects over time. [Indiscernible] feature of SYFOVRE’s efficacy profile and additional analyses have been presented this fall demonstrating the visual function benefits of SYFOVRE in GA patients. And finally, the estimated rate of retinal vasculitis with SYFOVRE continues to be rare at 0.01%.

Visual outcomes in these cases are really important and the rate of events that that resulted in this year irreversible vision loss is substantially less than 0.01%. Given the continuous stability in the rates, we plan to continue provide the estimated rate of events which we will no longer discuss in the visual cases. The success of SYFOVRE reinforces the unmet need in GA and the strength of our product profile. We faced unexpected challenges with the rare events of vasculitis emerging this summer, but we have worked hard to build trust with the retina community through continued transparency and sharing the learnings from our investigation. In doing so, we have provided retina specialists with the information they need to make the right treatment decisions for their patients.

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Q&A Session

I had the privilege of spending time with some of our key opinion leaders this fall at both EURETINA and Retina Society. It was encouraging to hear the discussions shifting back to what this product can do for patients. After a challenging few months, we have turned the corner and believe we are now back to the demand growth trajectory that we were on in July. Globally, we are looking forward to the decision on our MAA submission for the European Medicines Agency, which is on track for early 2024. At EURETINA, I was impressed with the incredible amount of work our European team has been doing to prepare for the launch. There was also a lot of enthusiasm from the European physicians about the possibility of finally having a treatment for their GA patients.

Turning to EMPAVELI, we generated $24 million in third quarter U.S. net product revenue and $67 million year-to-date. With EMPAVELI we now have over 1300 patient years and compliance rates at 97% and still not a single case of meningococcal infection. One of the key highlights for EMPAVELI during the quarter was receiving FDA approval for the EMPAVELI Injector, an innovative and first of its kind high tech volume injector. With this approval, we are further enhancing the patient’s experience by offering greater mobility and simplifying administration. We also announced top line data from our Phase 2 NOBLE study with systemic pegcetacoplan and IC-MPGN and C3G, which will be presented this Saturday at the American Society of Nephrology. The strength of this data is driven by the speed and magnitude of effect, especially that pegcetacoplan had in the kidney which is unprecedented in these diseases.

We believe that we have an opportunity to significantly expand the number of patients who are benefiting from pegcetacoplan and IC-MPGN and C3G affect more than three times the treated PNH population. We look forward to the top line results from our Phase 3 Valium study expected in the third quarter of 2024. Before I turn it over to Adam, I would like to comment on our recent corporate restructuring. In late August, we took actions to streamline our organization, prioritizing the growth of SYFOVRE and EMPAVELI and positioning the company for continued long-term success. This was a difficult decision and we are grateful for the commitment and contributions of all of our colleagues. As a reminder, key elements of our reprioritization includes maximizing SYFOVRE’s global leadership in GA, streamlining the EMPAVELI business, focused on the commercialization and PNH and development in IC-MPGN and C3G, prioritizing certain CNS and retina research initiatives and continuing our collaboration with Beam and finally improving operational efficiencies.

We anticipate total cost savings of up to $300 million through 2024 as a result of this restructuring. And as Tim will speak to later, we expect our cash runway to now extend into at least the second quarter of 2025. As a more focused organization, we believe we are in a stronger position to create value for shareholders and deliver on our mission for patients now and in the future. With that, I will now turn it over to Adam to discuss our commercial activities.

Adam Townsend: Thank you, Cedric. It was a strong quarter commercially for both SYFOVRE and EMPAVELI. Starting with SYFOVRE, in the third quarter we delivered 37,000 commercial vials and 10,000 samples to physician practices generating $75 million in U.S. net product revenue. We are encouraged by this performance. In particular, the quarter-over-quarter growth compared to Q2 and the return of weekly demand growth beginning in August. We believe this was driven by physicians and patients having a better understanding of the real world safety profile of SYFOVRE and the long-term data including increasing treatment effects seen in our GALE extension study. On October, the first, the permanent J-code for to SYFOVRE became effective simplifying the billing and reimbursement process.

This is a significant milestone that will help ensure efficient reimbursement of SYFOVRE, building on our goal of bringing this important treatment to all GA patients in need. As a result of our commercial execution, excellent payer coverage with more than 95% of Medicare payers now covering SYFOVRE and the addition of the permanent J-code demand is higher than where we were in July and growing. We continue to see weekly orders coming from both new and existing sites of care, with a double digit number of new sites of care ordering SYFOVRE every week since launch. Additionally, we are seeing the vast majority of physicians treating patients with SYFOVRE every six to eight weeks, reinforcing how important dosing flexibility is for this patient population.

Our commercial strategy going forward is to remain laser focused on engaging our key stakeholders; patients, physicians and payers. We plan to leverage this current momentum by building breadth, depth and retention among retina specialists. We are also preparing to bring SYFOVRE to patients globally. We are thoughtfully building out the European commercial infrastructure and subject to approval, plan to launch initially in Germany where we can sell products immediately while we work simultaneously to obtain reimbursement in other EU countries. Europe represents a significant opportunity for us as there are more than 2.5 million people living with GA and no treatment available. We recently submitted our dossier to the National Institute for Health and Care Excellence, or NICE, for reimbursement in the United Kingdom.

We expect a decision by the local regulatory authorities in the UK as well as Canada, Australia and Switzerland in the first half of 2024. Turning to EMPAVELI, in the third quarter, we continued to see positive trends across the key leading indicators for this patient population, including more than 250 patients on therapy. Over 75% of C5 inhibitor patient switches coming from Ultomiris since launch, patient compliance rates remaining high at 97% and continued strong access among the top 20 players. We are also seeing continued growth coming from the treatment naive population given the inclusion of the print data in the label and more experience with EMPAVELI. This progress resulted in $24 million in U.S. net product revenue for the third quarter.