Apellis Pharmaceuticals Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 4, 2023

There are 16 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to the Q1 2023 Apellis Pharmaceuticals 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 Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, Meredith Kaya.

Operator

Please go ahead.

Speaker 1

Good afternoon, and thank you

Speaker 2

for joining us to discuss Apellas' Q1 2023 financial results. With me on the call are Co Founder and Chief Executive Officer, Doctor. Cedric Francois Chief Commercial Officer, Adam Townsend Chief Medical Officer, Doctor. Caroline Frasmo and and Chief Financial Officer, Tim Sullivan. Before we begin, I would like to point out that we will be making forward looking statements that are based on our current expectations and beliefs.

Speaker 2

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.

Speaker 3

Thank you, Meredith, and thank you all for joining us today. I know that the launch of CyFovir is top of mind for everyone, let me jump right in. We received FDA approval of Cytovery for the treatment of geographic atrophy on February 17. Cytovir is the 1st and only treatment available for GAA disease that affects more than 1,000,000 patients in the U. S.

Speaker 3

Alone And that relentlessly and inevitably leads to vision loss. Prescribing label details SYFOVRI's Proven ability to slow GA progression with increasing effects over a 24 month period, flexible dosing And it will demonstrate a safety profile following nearly 12,000 injections. This approval is the culmination of More than 20 years of hard work and dedication by our team and we are incredibly proud to bring SIFO recruit to patients who until now had no treatment options. DYFCOVRI was launched in the U. S.

Speaker 3

On March 1. In that 1st month, just over 6,000 commercial vials were shipped to physicians and SYFOVRI generated U. S. Net product sales of $18,400,000 for the Q1. We are continuing to see the strong momentum in the 2nd quarter so far And are really encouraged by this early market adoption.

Speaker 3

Initial demand by both eye care professionals as well as patients has exceeded our expectations and we view this strong start as a leading indicator of longer term demand. However, let me temper this by saying that GA is a new uncharted category. We have been in the market for 2 months and are just Starting to learn about how various adoption trends may impact demand. So while we are pleased with our progress in March, We anticipate fluctuations in uptake throughout the temporary J code period. Caroline and Adam will provide more color on what we are seeing in the market, Some of the recent functional analyses presented at ARVO and our progress with the commercial launch.

Speaker 3

We are also making important steps in our efforts to bring intravitrealpexitacoplan to patients globally, With applications now under review in the European Union, Australia, Switzerland, Canada and the United Kingdom. Turning now to Empaveri. We are continuing to see strong momentum with Empaveri as we close out its 2nd year on the market. U. S.

Speaker 3

Net product sales were $20,400,000 in the Q1. We were pleased with the approval of our supplemental NDA, which The PEGASIS and PRINCE results and look forward to the potential approval of the empaverde injector. What really continues to stand out are the compliance rates for Empaveri, which remain around 98%. This is outstanding for a drug this far in switch launch and we view it as a clear testament to how much better patients feel when taking Empaveri. In ALS, we recently made the tough decision to discontinue treatment in the open label portion of the Phase 2 study Following a recommendation by an independent data monitoring committee.

Speaker 3

The committee's recommendation was not based on any unexpected safety signals. All patients in the study have completed the randomized treatment period, and we will analyze the data as planned. I would like to say thank you to the people living with ALS and their caregivers who participated in this study and for the partnerships we have built within the ALS community. We continue to advance nearly a dozen clinical and preclinical programs and you'll hear more about some of these today. Overall, we believe we have only just begun to unlock the potential of complement science and look forward to sharing our continued progress with you going forward.

Speaker 3

With that, I will turn it over to Adam.

Speaker 4

Thank you, Cedric. I am thrilled with the initial enthusiasm that physicians and patients are showing for XIFABRI. As I shared on the approval call in February, we have built best in class commercial and medical teams With extensive experience in retina. They went into the SYFOGRI launch well prepared and highly energized And they have shown flawless execution on the launch to date. On day 1, our commercial leaders joined 10 retina specialists As they treated their first patients, providing us an opportunity to gain operational insights and feedback.

Speaker 4

Many retina specialists posted about their experience on social media, recognizing the importance for patients and the historical nature of the first ever approved treatment for GA. Let me share some of the initial metrics The commercial and medical teams engaged with nearly 2,000 physicians at least once And we have now seen SYFOVRI orders within every sales territory. 6,000 commercial SYFOVRI vials were shipped In addition to commercial vials, we also distributed more than 3,400 samples to physicians Upon request, which is an important indicator of future demand. We have also seen several academic In summary, the launch is off to an excellent start and we're encouraged by what we are seeing already in Q2. A significant amount of demand has come from private equity backed groups.

Speaker 4

However, the majority of demand to date It's coming from independent non PE backed practices, which tells us that there is real patient demand across the country. But as Cedric said earlier, while exciting to see these initial positive indicators, it is still early in a disease Category that has had no approved treatments until Xiphobri. Samples will continue to be an important component of the launch, Representing a meaningful proportion of overall vials. And we have more to learn about market adoption and how certain factors such as reimbursement and dosing frequency may impact demand. As a result, We should expect some bumpiness in both demand and sales until we obtain the permanent J code.

Speaker 4

Looking forward, the teams are focused on continuing to educate both physicians and patients on Xiphobri and geographic atrophy. We have been particularly encouraged by the patient requests for treatment. The media coverage, especially the segment on CBS Morning With a strong push for patients to reach out to their physicians and ask about SYFOVRI. We will continue to educate patients with GA To our physician engagement as well as through our GA direct to consumer campaign, which is aimed at encouraging patients to monitor And talk to their eye doctor about vision changes. Now turning to Emperveli.

Speaker 4

In the second half of twenty twenty two, we expanded our field team and strengthened our partnerships with key centers. Our efforts are taking hold as there were more than 200 patients on therapy at the end of the Q1. We are gaining momentum in 2023 to date as we received FDA approval of the sNDA with the Phase 3 PRINCE results And the 48 week Phase 3 PEGASYS data, which enables us to have even more robust discussions with physicians about the effects of empovelly. We are also looking forward to the potential approval of the empovelly injector, which we believe will significantly improve the patient's experience on therapy. Now, let me turn the call over To Caroline.

Speaker 1

Thank you, Adam, and good afternoon, everyone. It has been a tremendous Following the approval of Cyfovir, I am proud to see my fellow physicians and peers Embracing the transformative potential of Cyprovary on patients' lives. I have attended several retina meetings since the launch And the feedback from my retina colleagues has been positive. Just last week, we were at the Association For Research Envision and Ophthalmology or RFO. Apellis had a strong presence with 8 presentations showcasing our leadership in GA and retina.

Speaker 1

At this meeting, we shared new Phase 3 post hoc functional analyses. In a presentation given by Doctor. Alan Chang, patients with extrafovial lesions who were treated with Xyfovri showed a visual function and quality of life benefit. Results demonstrated a preservation of 5.6 letters compared to sham, which is equivalent to more than one line of vision as measured by best corrected visual acuity or BCVA over 24 months. Patients also reported a clinically meaningful benefit on VFQ-twenty 5, A validated visual function questionnaire, which measures quality of life outcomes such as social function, driving and dependency on others.

Speaker 1

And in a separate presentation given by Doctor. Ursula Schmidt Erfirth, Patients treated with SYFOVRI demonstrated a substantial reduction in photoreceptor cell loss as compared to sham. Data were also consistent when comparing stifovir treated study eyes to the untreated fellow eyes. Remember that both retinal pigment epithelial or RPE and photoreceptor cells are required for visual function. RPE cells maintain the integrity of photoreceptor cells, which are the light sensitive cells responsible for vision.

Speaker 1

We are also continuing to progress our 3 year GALE extension study and look forward to sharing data from this study in upcoming medical meetings. Now that SYBOVRI is approved in GA, we are exploring other indications where intravitreal pegcetacopalan may offer value for patients, such as Starke Heart disease. We also plan to evaluate the impact of SYFOVRI in those patients who are on the verge of developing GA And specifically the impact SIFOVRI has on preventing photoreceptor loss in these early stages of disease. In the rare disease space, we and our partner Sobei are continuing to advance Empebelli in additional indication. We are enrolling patients in a Phase 3 trial for immune complex membranoproliferative glomerulonephritis and C3 glomerulopathy, both rare kidney diseases.

Speaker 1

And sovi is enrolling patients in a Phase 3 trial for cold agglutinin disease, A rare type of autoimmune hemolytic anemia and in a Phase 2 trial for hematopoietic stem Cell transplantation associated thrombotic microangiopathy, a severe and common complication following hematopoietic stem cell transplant. I will now turn the call over to Tim for a review of the financials. Tim?

Speaker 5

Thank you, Caroline. Since we issued a press release earlier today with the full financial results, I will just focus on the highlights for the Q1 of 2023. Total revenue was $44,800,000 which consisted of $20,400,000 in Empavelli net product revenue, $18,400,000 in SYPOVRI net product revenue and the remainder in collaboration revenue from Sobeys. A few comments on SYFOVRI. Like Empovelli, revenue for SYFOVRI is recorded when it is shipped to the distributor, not when it is shipped to the physician.

Speaker 5

Therefore, revenue includes both products shipped to the physician and product in the channel. We estimate approximately And as you've heard already, we are in the early days of the SYFYVI launch and do not expect that 1 month's results represent the full year's runway. We intend to share more about our learnings in the coming quarters. Turning to the rest of the P and L. R and D expenses were 110,000,000 And G and A expenses were $102,000,000 and we reported a net loss of $178,000,000 As of March 31, 2023, Apellis had $765,000,000 in cash and cash equivalents, which includes the recent follow on offering completed in February.

Speaker 5

We expect our current cash balance to fund our operations into the Q1 of 2025, including the ongoing empaveli and SYPO relaunches and further development of our pipeline. We remain confident in Apellas' financial future as we continue to execute on our upcoming milestones. I will now turn the call back over to Cedric for closing remarks. Cedric?

Speaker 3

Thank you, Tim. This is an incredibly important and exciting time for our company. With CyPho being now available for patients, we are blazing a new trail in GA And our position in the PNH market is expanding. Additionally, we continue to advance a robust Clinical pipeline encompassing multiple late stage rare disease programs as well as several programs heading into the clinic. This broad portfolio gives us a position of strength as we strive to achieve our vision of being the global leader in complement.

Speaker 3

Let us now open the call for questions. Operator?

Operator

Thank you. At this time, we'll conduct a question and answer We ask that you please limit yourself to one question and one follow-up. Please standby while we compile the roster. Our first question will come from the line of Madhu Kumar of Goldman Sachs. Madhu, your line is now open.

Speaker 6

Hey, thanks for taking our question. So maybe to follow-up about And the comments Adam made around future quarters, like what do you think is a way to think about this lumpiness in a very practical way? Like Do you think this is a way to think about it kind of like growth and decline or kind of a flattening or how should we look at kind of where the launch will be in terms of lumpiness? The lumpiness across the quarter or kind of lumpiness the April kind of numbers you have so far Suggest some variance on lumpiness? And then I have a follow-up afterwards for Tim.

Speaker 3

Thank you, Madhu. Great to hear you. I will let Adam comment on this.

Speaker 4

Thanks, Madhu. Thanks for your question. Obviously, we're thrilled with the Q1 sales And the $18,400,000 And more importantly for me, the 6,000 commercial demand vials, that's a real strong indicator with the 3,400 Samples that also went out about demand. And we're continuing to see that momentum into 2Q so far. So everything is progressing really well.

Speaker 4

I will say obviously keep in mind that GA is relatively new, it's uncharted category. We've only been on the market for 2 months and we're starting to learn about the various Adoption trends and some of those may impact demand. We have a little bit more to learn around reimbursement, dosing frequency, etcetera. So That leads to a little bit of the bumpiness until we get to our permanent J code in October. Now Tim, you might want to comment a little bit on One way of running that forward from a forecast perspective.

Speaker 5

Sure. So the way we think about it is the quarter the Q1 numbers Really are kind of a 5 week month, if you will. So if you take that 6,000 or so vials and divide that over 5 weeks, it's roughly 1200 vials We look at this as sort of an average weekly growth rate potentials in terms of forecasting. So you can do what you want with that. Obviously, there is a portion of the vials that we recognize as revenue instead of distributor because those are included in our revenue number.

Speaker 5

And we like to basically the distributors like to keep roughly 2 to 3 weeks on hand. So as you grow that sort of those vials that go out to The Red Belt Specialists on a weekly basis, you also have to grow that inventory a little bit. But that's how we like to think about it. But again, each week is different and we've seen some Yes, lumpiness as Adam said, but we have seen continued strong demand in April.

Speaker 6

Okay, great. Maybe to follow from that With you, Tim. So as you think about this 1Q number, which is basically 1 month of sales, how does this Shift or kind of refine your perspective about a path to breakeven for Apellis as a company overall?

Speaker 5

Yes, sure. So we obviously forecast a number of different scenarios. This is the best And when we guide to our kind of cash runway, we take a conservative view. Again, it's early, so we're going to continue to evaluate this. But Again, like I said, that's a conservative number that Q1 of 2025.

Speaker 5

So

Speaker 6

we'll see. Okay. I guess maybe

Speaker 5

one more to follow-up

Speaker 6

on that. Is there any kind of external leverage you think you guys have that could Kind of move things further or could actually get you to have a little more clarity on kind of a path to breakeven?

Speaker 5

Yes, I think we've been really creative in terms of how we finance the company and how we've managed our I think we've managed our expenses, especially in terms of the when we finance and how we've kind of built out that commercial Infrastructure relative to when our approval came. So look, I think we're pretty careful about this, but I don't think we can guide specifically on how we're going to bridge that gap Profitability, but we're pretty confident it will be the right thing for shareholders when we do that.

Speaker 6

Okay, great. Thanks very much everybody.

Speaker 4

Thanks, Marty.

Operator

Thank you. One moment for our next question. Our next question comes from the line of John Miller of Evercore. Your line is open, John.

Speaker 7

Hi, guys. Thanks for taking my question and congrats on a great first quarter number. I think you actually gave a lot of great color on the dynamics there, but I'd love to dive into that ARVO presentation actually. I would love to get a sense for how you view the impact of functional post talk analyses On the commercial market from here, and maybe if you could provide a little bit more color on where those functional analysis Cut offs came from. Where did 250 micron cut off for folio, post folio come from, etcetera?

Speaker 7

And did you run The time to event analysis like your competitor did.

Speaker 3

Thank you, John. Well, I'll start off by giving the word to Caroline to talk about What we really saw and why that is important and then briefly hand it over to Adam to talk about kind of the commercial impact of that.

Speaker 1

Thank you, Cedric. We've always believed that there is a link between the functional data and slowing the growth of geographic atrophy. And sometimes post hoc analysis are necessary to confirm that, especially within the noise of the measurements that we get in patients with GA. In our post hoc analysis, we show that there was a functional benefit with regards to visual acuity and quality of life measurements Demonstrated inside ovary treated eye with extraphobia lesions. And this is really consistent with what I would expect As a clinician that we would be able to show this benefit in patients before the lesions affected the phobia.

Speaker 1

250 microns, well, that is the size of the foveal avascular zone. And why didn't we do the same Analysis as either I think that we're pleased that they were able to do the type of analysis that they did to show their benefit. And we have our recent functional analysis and we also have micropermatry data that was presented at ARVO last year that confirms our functional benefit.

Speaker 4

Hey, John, it's Adam. Just following up. Obviously, the commercial team is laser focused on executing against our label. So all of our focus is there and targeting our 2,600 retina doctors around the U. S.

Speaker 4

So while this is great data, I think there's a great usage from educating the medical community, but our sales team is focused on executing our plan And talking about our 24 months data and everything that's within our label.

Speaker 7

Just as a quick follow-up guys, will you be including that Functional analysis in your ex U. S. Filings? I know there's been a lot of attention on the from the EU especially on functional benefit.

Speaker 3

Absolutely, we will. So it is part of the bigger functional story, more functional data will come out as well as we Continues to track of course in the GALE extension study, but this is of course an important piece as we had expected to follow Lesion size reduction and we're very excited to see it materialize.

Speaker 7

Thanks so much guys. Congrats again.

Operator

Our next question comes from the line of Tazeen Rawat of BofA. Your line is open.

Speaker 8

Hi, guys. Good afternoon and congrats from me as well on a really good start to the launch. I'm just wondering how much details do you get about the granularity? So you shipped 6,000 plus files. Do you get in real time updates on how many of those vials are actually being used?

Speaker 8

And is it your expectation that the initial grouping of patients that are going to be put on the drug will be every month

Speaker 4

Yes. Hey, Jazeen, it's Adam. So obviously, what we do see in this initial phases of the launch is vials ordered by our retina practice And then the link to that is the revenue number that you've seen. So initially, all of our feedback is based on an interaction from either someone from the Affairs team or the commercial team having a discussion with the physician, but we don't see that level of granular detail of how these vials are used or what type of patients Thank you, Stan. What I can tell you is that we expect physicians to carry only 1 to 2 weeks of stock in their fridge.

Speaker 4

So My belief is the vast majority of those demand files as I call them, the 6,000 commercial and the 3,400 samples in the 1st month I'll likely going into eyes relatively quickly. The second part of your question was what The patients and its monthly or every other month likely to be dominant. So what we are hearing anecdotally is it's The type of patients that physicians are using SYFOG3 for is as we expected within the initial phases prior to launch. So you tend to hear physicians say that they're treating a patient who's blind in one eye and GA is progressing, vision loss in the second eye, Where AMD in 1 eye and GA in the second eye and bilateral GA, that was consistent with our market research. And we are also hearing that every other month, It's a bit of a game changer in this disease and every other month is the dominant player at the moment.

Speaker 4

So hopefully that answers your question.

Speaker 8

Okay. Yes, that's helpful, Adam. And then just with the recent news that Astellis would be managing the next complement launch if it does get approved, What's your view of them being your competitor in this market? Thanks.

Speaker 3

Thank you, Sebastien. First of all, we're Happy for both Astellas and for IVERIC, and we wish them a very good and productive partnership together. Look, from our angle, it doesn't Change anything, we are very focused on the job at hand at making SYFOVRI available to every patient that needs in the U. S. For now and other countries in So importantly, we have the every other month dosing, of course, which gives us, we believe, an important Competitive advantage that we feel materializing in the most to come as well.

Speaker 9

Okay. Thank you.

Operator

This question comes from the line of Anupam Rama with JPMorgan. Your line is now open.

Speaker 5

Hey guys, thanks so much for taking the question and congrats on the initial launch here. I have a quick question for On Xyfobri sampling, when a physician asks for samples, like how many samples do you give per patient? And I guess what is Assumed in terms of that patient transitioning to commercial drug, the timeframe to switch to commercial drug? Thanks so much.

Speaker 4

Thanks, Annupam. Great hearing you. Yes. Hey, Annupam, it's Adam. So thanks for your question.

Speaker 4

So obviously, samples are really important component of our launch. And they're going to represent a meaningful proportion of overall files. Now physicians tend to request samples The reason why they do so is that they want to understand the patient's clinical experience with the drug, gain experience with the drug and also learn how to administer it It's a new drug in this class. A few things, obviously, only a physician who has a medical certification can file to receive samples And they have to formally request to do so. So they tend to know, the level of samples they need based on how they want to use it.

Speaker 4

And we expect it's an important piece of our business moving forward as we progress towards the permanent J code. Now I do think the majority of samples Lead to commercial vials in the end. Caroline, from your perspective, is there anything you want to add?

Speaker 1

Well, I think samples are important for physicians. They fill a gap and also gives us an experience with how to use the medication. And my colleagues have been really pleased to have this option available. They're excited to finally have this treatment for GA. They're I think the flexible label meets all of their needs and they're really having a great interaction with Apellis That's my input so far.

Speaker 5

Thank you. Thanks so much.

Operator

Thank you.

Speaker 5

Thank you.

Operator

One moment for our next question. This question comes from the line of Colleen Cusi with Baird. Your line is now open.

Speaker 8

Great. Good afternoon. Thanks for taking our questions and congrats on the quarter. So of the 6,000 demand vials, as Adam called them in the 3,400 samples, How many different prescribers does that cover? Kind of what's the breadth of prescribers you're seeing in this early stage?

Speaker 4

Thank you, Colleen. Handing it over to Adam. Yes. Hi, Colleen. It's Adam.

Speaker 4

So obviously, we're targeting 2,600 retina physicians and we continue to do that. The commercial and medical teams, they've engaged already 2,000 physicians at least once. And the thrill for me is that actually every sales

Speaker 10

territory has actually ordered a commercial wireless LIFOBI.

Speaker 4

So we're getting usage has actually ordered commercial wireless Lifovery. So we're getting usage across the

Speaker 5

whole of

Speaker 4

the country. We're also seeing usage from private equity backed practices, but the majority is coming from independent practices. So again, A good mix of the type of center that's using. Now the challenge we have initially in the early stages of this launch is that We only see vials going to centers. So we don't have a physician by physician knowledge of who's using apart from anecdotal.

Speaker 4

But physicians are wanting to speak to us and we're already getting through our 2,600 target list. So I think there's a wide spread of physicians who are using across the country.

Speaker 8

That's helpful. Thank you. And then just as a follow-up, Can you remind us your strategy for distribution? How many distribution how many distributors you're working with? And could we expect more to come online

Speaker 1

in the future?

Speaker 4

Yes. Thanks, Colleen. It's Adam too. So we're not public on our distribution strategy, but we have all of the distributors that meet the needs of All of our 2,600 physicians and all of the coverage plans that they may have. So we're very happy with our distribution process at the moment, but we're not public on it.

Speaker 4

Got it.

Speaker 8

Thanks so much for taking our questions and congrats again.

Speaker 3

Thank you, Colleen.

Operator

Thank you. One moment for our next question. This question comes from the line of Yigal Nochomovitz from Citigroup. Your line is now open.

Speaker 11

Hi, Cedric and team congrats on the very strong launch. Just a really basic question, Just so I'm clear, the WACC is $21.90 per vial and you've done 6,000 or maybe a little more vials. So that's getting me to $13,000,000 So I must be missing something. Can you just clarify how you're getting $18,400,000 from the over just over $6,000 commercial, please? Thanks.

Speaker 5

Sure. Hey, Yigal, it's Tim. I'll take that. So we recognize revenue when the vials are shipped, they go to the distributor and then The distributor will when the doctor requests them to distributor, we'll ship them to the doctor. And so the 6,000 is that second step, but we recognize revenue That's the first step.

Speaker 5

So there are some of the stick vials that say at the distributor level, we've already recognized as revenue. We won't tell you about those.

Speaker 4

And Yigal, it's Adam. Just as a reminder, right, we expect our distributors Keep between 2 to 3 weeks of inventory on hand and physicians about 1 to 2 weeks.

Speaker 11

Okay. So there's another 2 to 3 weeks Of distributor revenue that's not in the 6,000,000. Okay. And then regarding the sampling, can you give us a sense as to what Percent of the 2,000 physicians that you've engaged with so far have actually requested samples?

Speaker 4

Yes. So we've seen samples being used across the vast number of those 2,000 physicians that we've Across all of our regions in all of our geographies.

Speaker 11

Okay. And then we've talked in the past about the dynamic with So called recalendaring some of the wet AMD patients to make room for cytober capacity. Have you seen any evidence of that practice yet?

Speaker 4

Yes, we've seen and anecdotally heard that physicians are looking at managing both our wet AMD patients as well as their GA patients and managing the calendars there. Caroline, anything you want to add from your experience?

Speaker 1

Well, I think that this has fit really nice Within the treatment paradigm that we already have with anti VEGF. And so this fits well into that. Doctors are physicians are really enjoying our educational materials for patients, the brochures that they have and able to explain this to patients. And patients are Really enthusiastic about this treatment. They recognize that their vision was going down before and we want to save and reduce the burden of GA.

Speaker 1

So, but as retina physicians and retinal surgeons, we know how to adapt to treat our patients. And I have no doubt that my colleagues will be able to adapt to the increased injection burden, finding new ways to do that.

Speaker 11

Great. Thank you.

Speaker 3

Thank you.

Operator

Thank you. One moment for our next question. This question comes from the line of Steven Seedhouse with Raymond James. Your line is now open.

Speaker 12

Thank you. Good afternoon and congratulations. I wanted to ask there have been various news reports of course discussing strategic takeover interest in Apelles. Cedric, Any comments you wanted to make on that subject and Apellis' strategic priorities? Thanks.

Speaker 3

Yes. Thank you, Steve. Well, there's always a lot of speculation. Of course, we are in a stage of Commercialization that draws a lot of interest, but we are squarely focused on making cystophory available to every patient in need in the U. S.

Speaker 12

Roger, can I follow-up and just ask the, when is the first update from Gale coming And what would that initial data sort of entail if you can just get us current on that? Thanks.

Speaker 3

So we are going to be presenting a full update on Gail at the ASRS conference at the end of July. Very excited about sharing what happens to the increasing effect over time that we mentioned already is 34 month data, so this is going to be the 30 month update on the subject as they continue to be

Speaker 12

Thanks so much.

Speaker 3

Thank you.

Operator

Thank you. One moment please. Our next question comes from the line of Phil Nadeau with TD Cohen. Your line is now open.

Speaker 10

Good afternoon. Let us add our congratulations on the initial launch of SYFOVRI. A couple of questions from us. First,

Speaker 13

Adam, I think

Speaker 10

you mentioned that you expect physicians to keep 1 to 2 weeks of inventory on hand. So at 1200 vials approximately per week, You should have seen some reorders during March. Would you be willing to share the proportion of those 6,000 that were reorders versus first time orders?

Speaker 4

Hey, Phil, thanks for the question. Yes, we've seen reorders, but we're not going to go into the details of those reorders.

Speaker 10

Got it. And then, second question, there were recent reports about endophthalmitis. It seems like something that's going to happen at a background rate. How should investors Put into context any future ARRIS database settings of Endophthalmitis or other side effects.

Speaker 3

Thank you, Phil. I'll let Caroline answer that question.

Speaker 1

Thank you. There was a single case of culture positive endophthalmitis and that was deemed related to the intravitreal injection procedure. This is well within the reported rates Based on the number of intravitreal injections performed thus far and as you had mentioned, it was misquoted as blindness in fares and this is being corrected. I'd say that overall we are encouraged by the safety profile thus far with Cybovir and this has been consistent with the clinical trial.

Speaker 10

Perfect. Thanks for taking our questions and congrats again.

Speaker 3

Yes. Thank you, Seth.

Operator

Our next question comes from the line of Justin Kim of Oppenheimer. Your line is now open.

Speaker 14

Hi, thanks for taking the question and congrats on the quarter. Maybe just following up on the observed initial adopters of therapy for SYFOPRI. Is there a lag in reaching patients with GA in a single eye and there's nothing in the contralateral Is it is that driven by the fact that these patients might not be seen by a retinal specialist and maybe even just Being seen by an optometrist or an ophthalmologist.

Speaker 3

Thank you so much, Justin. Great to hear you, Adam, I don't think I can share too much color. Yes. Thanks, Justin.

Speaker 4

Good to talk to you. So yes, based on our initial research we did prior to launch and The feedback we're hearing from physicians. The prioritized patients that I described earlier in the call tended to be the 1st wave of treatment, purely because they On the books of retina physicians. So your assumption can be quite accurate that a lot of these physicians that have GAN-1I that might be Extrophobia and not impacting vision might tend to have been sent back to their ophthalmologist or their optometrist. Now moving forward, we believe that you might have seen that we're doing some direct to consumer work with Henry Winkler.

Speaker 4

And We are launching the GA one weight campaign. That's a really important part of our marketing strategy. We think that a lot of people basically believe The vision loss is just a natural part of their aging. And what we want to do is we want to drive those patients to go and see their eye doctors. So our GA won't wait campaign is going to be a really important tool for us to educate patients and move patients to go see their physicians.

Speaker 4

And we're really thrilled that Henry Winkler has decided to partner with us because of his really emotional story of looking after his father-in-law as his father-in-law went through vision So that will help us and that addresses the piece of your question about patients not naturally sitting with the retina doctor.

Speaker 14

Okay, great. And maybe just a follow-up, maybe thinking about safety for empeveli, any updates on the meningococcal infection profile and Saccol infection profile and just any update on there given sort of the profile to date?

Speaker 3

No, thank you so much. So then Paveri, I mean importantly, We have crossed into north of a 1,000 patient years of dosing and we have yet we've not seen a single case of new And Panamadol, if you want to add something to that, we're extremely happy with what we've seen.

Speaker 4

No, it's great. Thank you, Justin, for asking. And Abella Question is, I think it's a massive, massive fan of all things Empella and PNH and I think we're making great progress there. So as Cedric said, we still know cases over a 1,000 patient years and we still see really, really high compliance 98%. It Shows me that the efficacy and safety of Bempo Valley continues to be a strong driver within the P and H market.

Speaker 4

So I'm thrilled with what that team is doing and And continue to make great growth quarter on quarter.

Speaker 14

All right, great. Thanks so much everyone.

Speaker 3

Thank you.

Operator

This question comes from the line of Derek Akyla with Wells Fargo. Your line is now open.

Speaker 13

Hey, everyone, and congrats on the quarter. Well done. Just a couple of questions from us. So maybe just first off, I was kind of wondering if you got any feedback from physicians Kind of on how the patient journey and the logistics are working in the practices. So how has Cyphobri impacted their practices?

Speaker 13

And are you finding areas to optimize for future in the launch. And then the second question, and maybe I missed this earlier, how long do you plan to actually run the sampling program? Thanks.

Speaker 3

Thank you so much. Well, I will hand the physician feedback on to Caroline and then Adam will talk about the sampling.

Speaker 1

Well, the physician feedback has been really positive. It's amazing that Apellis and my colleagues As a company relatively new to the retina space has contacted and impressed so many of my colleagues. I don't know anyone who doesn't know the members of the Apellis team who contacted them for Medical and sales information. So I think that that's all helped bring the patient story Into light and patients are really pleased with their initial interaction with Cyclovrid.

Speaker 4

Yes, I think you said it nicely there, Caroline. Hey, Derek, it's Adam. So yes, something we still believe it's going to be pretty important for us during this Launch phase, particularly before we get a permanent J code in October. And as I said previously, just in case

Speaker 3

you did miss it,

Speaker 4

Some of physicians want to gain a bit of experience. They want to try the drug, make sure that when they got a patient in the chair that They understand how everything goes, etcetera. So it's going to be an important tool for us. I do see samples as a sign of demand.

Speaker 13

Got it. And maybe just one follow-up to my first question. So I guess, is there any kind of pushback or issues with like the time and the chair for these patients, As you know, again, the communication, the education around CyFovari, I just kind of compared to wet AMD, we've heard some feedback on that. So just

Speaker 1

Well, this is really an opportunity to change the treatment paradigm. I mean, I think back to when we initially had treatments for wet AMD, it was the same sort of thing. We had to explain to patients they were having an injection. We had to educate patients. And we were able to completely change wet AMD from a blinding disease to something where we see patients earlier, we have All eye care providers involved in which we can save vision.

Speaker 1

So now that we have Clyfogre, it's the first treatment for GA, we're able to Start the treatment paradigm for GA and kind of roll it back so we can start to treat these patients earlier, Get all eye care providers involved, not just retina docs, but teleract docs, optometrists, geriatricians And treat these patients. And I haven't really heard anything, but it's of course anything new takes a little bit of education for patients and the community.

Speaker 4

Hey, Derek, it's Adam. I'll just jump in on that too, right. So obviously, we were doing disease day education from the end of last Yes. So we've done a really solid job with our field teams to educate physician centers and also patients compliantly Around geographic atrophy. Anecdotal feedback from all the physicians that we've been speaking to have been using is that Patient physician conversation goes incredibly well.

Speaker 4

These patients are educated. They are very comfortable within the chair and physicians They're doing a really solid job of describing Cyfobri in the disease. So, so far those conversations have been going very, very well.

Speaker 13

Super helpful. Thanks guys and congrats again.

Operator

Thank you. One moment for our next question. This question comes from the line of Ellie Merle with UBS. Your line is now open.

Speaker 9

Hey, guys. Thanks so much for taking the question and congrats on all the progress. Maybe just a couple on Europe. Just first on the regulatory review. Can you any color that you can provide On how the European review is going and any feedback that you've gotten and the latest there in terms of your confidence On European approval?

Speaker 9

And then second, just in terms of the commercialization strategy in Europe, I guess how should we think about the commercial opportunity and strategy ex U. S. Versus the U. S. And any key differences there?

Speaker 9

And then just on the ex U. S. Commercial Preparations have been built out. Can you comment just where you are on that front, Wolf, in terms of like the sales force build out and your commercial preparations, but then also From a spend perspective where you are in terms of the ex U. S.

Speaker 9

Build out? Thanks.

Speaker 3

Thank you so much, Ellie. Great hearing you. Well, look, I mean, Europe is the next frontier, the rest of the world as well. I mean we have as you know our filing was accepted by the consortium between Yes, Switzerland, Canada and the UK as well. European regulatory process is going as we had expected and going very well.

Speaker 3

We expect an approval there Early next year. And I think it's important to point out that we established our commercialization force in Europe many, many years ago. So Adam has been with us, I believe, longer than 4 years now. And as soon as he came in, we established our force in ZUK, Switzerland. This is important because in Europe, as many of you know, the work involves many, many layers.

Speaker 3

There is a whole level of awareness that needs to be established, not just with the retina doctors, but also with regulators, Which of course EMEA has its supporters, but regulators, the payers and quite frankly also kind of political landscape for people to understand what this disease is And how we are going to bring this to the mic. And Adam will talk a little bit more about how we have forgotten about that.

Speaker 4

Hey, Eli, it's Adam. So yes, Obviously, 5,000,000 GA patients worldwide. And if your assumption is 1,000,000 to 1,200,000 of those are in the U. S, you can see there's a massive opportunity for us ex U. S.

Speaker 4

So as Cedric beautifully said, right, we've been building out the commercial and medical affairs infrastructure. Our corporate European office is based In Zuggen, Switzerland, that's where our strategy is driven from. And we started to put feet on the ground from a medical affairs and country leadership perspective In the UK, France, Italy, Nordics and more importantly our first potential launch outside of the U. S, Germany. And we also have footprints in Canada and Australia.

Speaker 4

So we're getting ready for this launch. We're also going to do it in a very Apellis way, right. We're going to be super thoughtful in when we onboard people and we'll wait for milestones as we go through the European regulatory process. We've been really lucky in attracting very talented people to join our teams. So we're ready to go As we work towards a potential approval towards the end of the year.

Speaker 1

Great. Thanks.

Speaker 3

Thank you, Eddie.

Operator

Thank you. One moment for our next question. This question comes from the line of Annabel Samimy with Stifel. Your line is now open.

Speaker 15

Hi, thanks for taking my question and great quarter. Congratulations. So I want to go back to the functional data that was Presented at ARVO. Clearly, it's the first evidence of function that you demonstrated in addition to the anatomical data. So I guess the first question is, What was the reception that you got from the physician population at arvo?

Speaker 15

And I guess, Given that the benefit was seen in patients who are earlier or have lesions that are further away from the center, so Technically, extra foveal. How does that square with your current strategy of targeting patients? Do you think that there's going to be a shift to maybe go earlier since you're seeing the functional benefit there. And then the follow-up is, I noticed that you mentioned that you're going to be exploring The drug in patients that are at risk of developing GA, is this different from intermediate disease, which I thought that you had moved away from a little bit. So, yes, just if you could help us understand any change in strategy based on the Interesting information presented at ARVO.

Speaker 15

Thanks.

Speaker 3

Thank you. Thank you, Annabel. Well, I will let Caroline comment on the reception. I think it's important for people to remember that Visual acuity is only the measurement of central vision, right. Visual function is much, much more than just your ability to read a And I always give the example, imagine walking through New York, looking through a straw, you would have 2020 vision on a Snellen Chart, but obviously your function and your ability to operate would be severely impaired.

Speaker 3

So with that context in mind, the visual acuity It is determined by the presence of photoreceptors within the fovea. So when we look at visual acuity and you look at extra foveal patients, that means that these patients Baseline in the study still theoretically have the ability to have central vision. And then the question, does that central vision get impaired over time and can we Slow that down. So in that sense, it was a very important study. But again, within the limitations of how we measure function, just focused on that element of Clinical acuity.

Speaker 3

You may recall that last year in September, we presented data on microperimetry. That is something that looks more at the periphery. So then the question as it relates to intermediate AMD versus risk of GA, you bring up an excellent point, which is that one of the most Spealing features of CyPhoVary are the increasing effects over time. So the ability to slow down the progression of the disease Increases from approximately 20% or so in the 1st year to well north of 30% when you go into year 3. So the longer you treat, the better it appears that this drug is able to slow down the progression of GA and hence The ability to treat as early as possible is important.

Speaker 3

Intermediate AMD is a term that gets used Randomly and not very precisely all the way for patients who have just cruising in the eye to patients that may have kind of the early onset of geographic atrophy. What we did in an intermediate MD and this is direct feedback from the regulators at the FDA is neither an indication Or an endpoint. I cannot overemphasize that. So in that context, what we want to do is go treat as early as possible Before you actually have the presence of geographic atrophy. So we can do that now at OCT Imaging and that's where we want to go next to study with safe omiconductor.

Speaker 3

So Caroline, if you want to maybe briefly comment on the feedback that you got on the stem cell endpoint.

Speaker 1

Thank you, Cedric. I would say the feedback was very positive And because it really is consistent with what we would expect as a clinician. For example, like when we see patients and they have GA through the fovea For any patient who has a severe disease, the visual acuity measurements can have a lot of noise and be really variable. And so we would expect to have more stable and reproducible visual results as the lesion gets further away from the fovea. And that's why we're able to demonstrate this.

Speaker 1

The other thing that's notable is we had a really big trial looking at GA patients, the 2nd largest study in GA and we enrolled a really heterogeneous group of patients in this. So that's why we're able Demonstrate this more easily with our extrafovial patients. The reception was really positive and clinicians were really excited about this data.

Speaker 15

Okay. I guess, to just follow-up on that point, would that mean that you might want To target a different population in the 4 categories that you had mentioned. So maybe those that do have lesions that are further away From the center and just really be able to get the maximum benefit for those patients?

Speaker 3

Well, again, Annabel, if the benefit to the patients focuses only on visual acuity, then in extra foveal patients, you're going to see it better than you would in foveal patients, but we know for a fact that many patients who have foveal involvement at the start of the study, So called subfovial patients also will benefit from slowing down photoreceptor sell offs. That is something that we clearly established and studied in our 1200 patients that we studied in Verdelenworks.

Speaker 15

Okay, great. Thank you.

Speaker 3

Thank you.

Operator

Thank you. One moment for our next question. This question comes from the line of Joseph Springer of Needham and Company. Your line is now open.

Speaker 5

Hi, thanks for taking our questions. Two quick ones from us. Just curious if you can walk us through the immediate impact on Both demand and sales in the permanent J code becomes available at the

Speaker 6

start of 4Q this year. And then on growth to net,

Speaker 5

I know you're not guiding for it, But you I guess you sort of guide for a normal range, but do you expect this to remain relatively constant as you progress through the launch?

Speaker 4

Hey, Joey. I had a hard time hearing your first question, but I think it was about permanent J code. So A few things about that is obviously a permanent J code gives physicians and guarantees that confidence of Reimbursed in a timely manner. So I do think that that will have a nice impact for us as we get to that stage of the launch in October. At the moment, obviously, we're working claim by claim and working for reimbursement claims.

Speaker 4

And one thing that I think is probably good for us to know And you guys know since launch as of today as well, our understanding is that there have been more than 50 paid claims. So obviously the permanent J code has a real solid impact for us as we get there in October, but we're doing pretty well to make sure that we're working through Claim by claim. Now the spin side to that is that the majority of the challenges we've seen tend to be basically process related. And we also anticipate that that will smooth as we get over time.

Speaker 3

This is the first time some

Speaker 4

of these payers are seeing these GA patients come through their system. And it's manually done during the temporary J code period. So that will improve post the permanent J code. So considering I didn't hear your question, I'm Hoping I answered it. Yes, and I can

Speaker 5

answer the gross to net question. Did you answer your first part? Yes. Very helpful. Thank you.

Speaker 5

So on gross to net, we won't be guiding on gross to net and it will Changed a little bit over time. What we're willing to say is that it's within pharmaceutical margins, which you can or typical pharmaceutical gross to net, which is 10% to 20% range and I realize that's very wide. In our 10 Q, we do add additional disclosure that we haven't in the past, but it does blend Embovelly and Cypholvary. And we give detail on chargebacks, discounts and fees, government and other rebates and also returns On a year to date basis. So you can get a sense on a blended basis what that looks like, but we're not going to break it up by individual product.

Speaker 5

Great. Thanks for taking our

Speaker 4

questions. Thank you, Joey.

Operator

Thank you. One moment for our next question. This question comes from the line of Douglas Tsao with H. C. Wainwright, your line is now open.

Speaker 14

Hi, good afternoon and thanks for taking the questions.

Speaker 4

Just Adam, you've spoken a bit about Seeing demand from sort of smaller individual practices versus the PE backed ones. Could you maybe provide a little more color In terms of what you think that means and ultimately how it will play off play out across both of those different practice sets? Thank you. Congrats on all the progress. Yes.

Speaker 4

Thank you so much, Douglas. So yes, so actually I see it as a really strong leading indicator for us That we're seeing usage across the board of retina practices. So, those who are private equity backed and have a different process Potentially on how they order and use Xiphobri, but the majority is coming from independent retina practices All across the U. S. And as I said before, a metric for me as a commercial guy, I'm thrilled that each one of our sales territories has had commercial sales.

Speaker 4

So for me, this is a sign of demand that we're not just getting the initial PE back to usage. We're also Working appropriately with those retina centers and independent retina centers to work through to get patients On the drug side, I can only see that progressing as we get broader within our target list and we continue to drive repeat prescription, etcetera. So I think it's a really strong sign across the board. So it's a great metric for us. Okay, great.

Speaker 4

And if I can just a quick follow-up. In terms of Samples, do doctors need to request samples for an individual patient or are doctors able to keep samples just around in their offices? Yes, great question. So yes, doctors need to request samples, but they don't need to request them for individual patients. So They can request samples and then use them as they appropriately see fit.

Speaker 4

Okay, great. Thank you so much.

Operator

Thank you. I would now like to turn the call back to Cedric Francois for closing remarks.

Speaker 3

Thank you so much. And in closing, thank you all for joining us today. We were around later today and Tomorrow, if you have any additional questions, feel free to reach out to Meredith. This was a great start to the year for us and we look forward Sharing more in the months to come. Thank you.

Operator

Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.

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Earnings Conference Call
Apellis Pharmaceuticals Q1 2023
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