Summary of Apellis Pharmaceuticals Conference Call on Empivalli FDA Approval Company and Industry Overview - **Company**: Apellis Pharmaceuticals - **Product**: Empivalli (systemic pegcetacoplan) - **Indications**: Approved for C3 glomerulopathy (C3G) and primary immune complex membranoproliferative glomerulonephritis (ICMPGN) in patients aged 12 years and older Key Points and Arguments 1. **FDA Approval Milestone**: Empivalli is the first C3-targeting therapy approved for C3G and primary ICMPGN, marking a significant milestone for Apellis and the treatment landscape for these diseases [4][7][24] 2. **Broad Label**: The approval includes pediatric patients and those with post-transplant C3G disease recurrence, addressing previously underserved populations [5][15] 3. **Trifecta of Outcomes**: Empivalli demonstrated significant efficacy by achieving proteinuria reduction (68% reduction compared to placebo), stabilization of estimated glomerular filtration rate (eGFR), and substantial clearance of C3 deposits [12][14] 4. **Clinical Trial Data**: The FDA approval was based on the phase three Valiant study, which enrolled 124 patients, making it the largest trial for these conditions [11] 5. **Safety Profile**: Empivalli's safety profile is well established, consistent with existing treatments for paroxysmal nocturnal hemoglobinuria (PNH) [5][7] 6. **Commercial Launch Plans**: Apellis has prepared a field team to educate physicians and secure access to Empivalli for patients, with expectations for meaningful revenue generation starting in 2025 [6][19][20] 7. **Market Size and Patient Population**: The U.S. market is estimated to have approximately 5,000 patients with C3G and primary ICMPGN, with a conservative methodology based on diagnostic codes [17][60] 8. **Pricing Strategy**: The annual wholesale acquisition cost (WAC) is approximately $505,000 per patient, with expectations for gross-to-net in the mid-teens for 2025 [19] 9. **Patient Compliance**: High compliance rates are anticipated, with over 90% adherence observed in clinical trials for both Empivalli and PNH [99] Additional Important Content 1. **Payer Engagement**: Apellis has engaged extensively with payers to ensure broad coverage and access for patients, with a focus on navigating prior authorization processes typical for rare disease treatments [53][55] 2. **Physician Education**: The company is actively working to raise awareness among nephrologists about the importance of treating key disease markers and establishing Empivalli as the treatment of choice [21][22] 3. **Future Clinical Programs**: Apellis is advancing registrational programs for additional complement-driven kidney diseases, including focal segmental glomerulosclerosis (FSGS) and delayed graft function (DGF) [7][8] 4. **Market Dynamics**: The launch is expected to be gradual due to the rarity of the disease, with initial uptake driven by pent-up demand and subsequent growth as awareness increases [18][134] This summary encapsulates the critical aspects of the conference call regarding the FDA approval of Empivalli, highlighting the company's strategic direction, market potential, and the transformative impact of the treatment on patient care.

Core Insights - The U.S. FDA has approved EMPAVELI (pegcetacoplan) as the first treatment for C3 glomerulopathy (C3G) and primary immune complex membranoproliferative glomerulonephritis (IC-MPGN) in patients aged 12 and older, aimed at reducing proteinuria [2][3][4] Company Overview - Apellis Pharmaceuticals has achieved its third approval in four years with EMPAVELI, highlighting its focus on targeting C3 to improve patient outcomes [4][27] - The company is committed to supporting patients through programs like ApellisAssist, which offers assistance with insurance coverage, financial aid, and disease education [8][27] Clinical Study Results - The Phase 3 VALIANT study demonstrated a 68% reduction in proteinuria, stabilization of kidney function, and significant clearance of C3 deposits compared to placebo [3][12] - The study included 124 patients aged 12 and older, making it the largest trial for these rare kidney diseases [11] Disease Context - C3G and primary IC-MPGN are rare kidney diseases affecting approximately 5,000 individuals in the U.S., with a high risk of progression to kidney failure [10][12] - About 50% of patients with these conditions may experience kidney failure within five to ten years of diagnosis [10] Safety Profile - EMPAVELI has a well-established safety profile, with over 2,200 patient years of data across approved indications [5][7] - Common adverse reactions (≥10%) include infusion site reactions, pyrexia, and nasopharyngitis [7][25] Future Directions - Apellis plans to advance pivotal studies of EMPAVELI in other rare kidney diseases, building on the momentum from this approval [6][27]

Company Overview - Apellis Pharmaceuticals, Inc. is a global biopharmaceutical company focused on developing therapies for challenging diseases, having introduced the first new class of complement medicine in 15 years [3] - The company has two approved medicines targeting C3, including the first-ever therapy for geographic atrophy, a leading cause of blindness globally [3] Upcoming Events - The company will host a conference call and webcast to discuss its second quarter 2025 financial results on July 31, 2025, at 8:30 a.m. ET [1] - A live audio webcast and accompanying slides will be available on the company's website, with a replay accessible for 90 days post-event [2]

Group 1 - Morgan Stanley analyst Judah Frommer raised the target price for Apellis Pharmaceuticals (APLS.US) from $25 to $26 while maintaining a "Hold" rating, based on the company's market position and recent financial strategy [1] - The significant licensing agreement between Apellis and Sobi is strategically important, ensuring Apellis can receive up to $300 million in revenue, including a $275 million upfront payment, while reducing Sobi's royalty obligations on Aspaveli sales by 90% [1] - This agreement provides immediate financial benefits to Apellis and may alleviate investor concerns regarding its profitability [1] Group 2 - Apellis is a commercial-stage biopharmaceutical company focused on discovering, developing, and commercializing innovative therapies for unmet medical needs [2] - The company's core product lines include EMPAVELI, used for treating paroxysmal nocturnal hemoglobinuria (PNH), and SYFOVRE, which treats geographic atrophy (GA) secondary to age-related macular degeneration [2]

Core Insights - Apellis Pharmaceuticals (APLS) shares increased by 3.2% following a capped royalty agreement with Sobi, allowing Apellis to receive up to $300 million for 90% of its future ex-U.S. royalties from Aspaveli [1][5] - The deal significantly enhances Apellis' financial position, providing operational flexibility with cash and marketable securities totaling $358.4 million as of the end of Q1 2025 [2] - The agreement includes a $275 million upfront payment and potential milestone payments of up to $25 million upon EU approval for Aspaveli in two severe kidney diseases [3][5] Financial Impact - The capped royalty deal will allow Sobi to receive 90% of ex-U.S. royalties until performance-based caps are met, after which all royalties will revert to Apellis [4] - Year-to-date, APLS shares have decreased by 44%, contrasting with a 3.4% decline in the industry [4] Regulatory Developments - Apellis and Sobi are seeking label expansion for Empaveli, with FDA and EU reviews currently underway for C3 glomerulopathy and primary immune complex membranoproliferative glomerulonephritis [7] - A decision from the FDA is anticipated on July 28, 2025, while the EU decision is expected by year-end [7] Clinical Study Results - The phase III VALIANT study demonstrated a statistically significant 68% reduction in proteinuria for patients treated with Empaveli compared to placebo, indicating its effectiveness in C3G and IC-MPGN [9] - The study also showed that patients experienced stabilized kidney function, with 71% achieving complete clearance of C3c staining intensity [10][12]

Core Viewpoint - Apellis Pharmaceuticals has entered into a capped royalty purchase agreement with Sobi, allowing Apellis to receive up to $300 million in exchange for 90% of its future ex-U.S. royalties for Aspaveli, which is a treatment for rare diseases [1][2][3] Transaction Details - Apellis will receive $275 million upfront and may earn up to $25 million in milestone payments upon EMA approval for Aspaveli in treating C3G and IC-MPGN [3][7] - The agreement includes defined caps tied to Aspaveli's performance, after which 100% of ex-U.S. royalties will revert to Apellis [4] Product Information - Aspaveli (systemic pegcetacoplan) is approved in the EU and the U.S. for treating paroxysmal nocturnal hemoglobinuria (PNH) and is under review for C3 glomerulopathy (C3G) and primary immune complex membranoproliferative glomerulonephritis (IC-MPGN) [2][5] - Approximately 50% of patients with C3G and IC-MPGN may experience kidney failure within five to ten years of diagnosis, highlighting the urgency for effective treatments [6] Strategic Implications - The transaction is seen as a non-dilutive funding method that strengthens Apellis' balance sheet and provides operational flexibility as the company approaches sustainable profitability [2][7] - Sobi's expertise in rare diseases and its commercial footprint are expected to enhance the reach of Aspaveli globally following regulatory approvals [3]

Financial Data and Key Metrics Changes - The company ended the quarter with just under $360 million in cash on the balance sheet, with outstanding debt obligations of $375 million in senior notes and approximately $187 million in convertible debt [42] - The normalized quarterly revenue is estimated to be in the range of $145 million to $150 million, which will serve as the new baseline for future growth [46][47] Business Line Data and Key Metrics Changes - The company has two commercial products: Empavedi and Cyfovri, with Cyfovri showing a gradual increase in market share, now at approximately 55% for new treatments compared to 45% for competitors [25] - Empavedi is positioned strongly in the market with a robust efficacy profile across various patient demographics, including adolescents and adults [28][29] Market Data and Key Metrics Changes - The company estimates approximately 5,000 patients in the U.S. with conditions treated by Empavedi, split roughly 50-50 between the two conditions [33] - The market for Cyfovri is large, with only about 10% of patients currently treated, indicating significant room for growth [16] Company Strategy and Development Direction - The company aims to enhance physician and patient education regarding the efficacy and safety of its products, particularly focusing on the long-term data available for Cyfovri [19][20] - There is a strategic focus on leveraging new imaging technologies to improve patient-physician communication and treatment adherence [20][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a cautious view from the market but believes that the growth trajectory for Empavedi and Cyfovri will become clearer in the near future [4] - The company is optimistic about achieving profitability with modest growth and has built out necessary commercial capabilities in nephrology and ophthalmology [44] Other Important Information - The company is preparing for the launch of Empavedi, with commercial teams already profiling accounts and understanding patient locations [36] - The company has a developmental program targeting C3, which aims to enhance the efficacy of Cyfovri by significantly reducing systemic C3 levels [39][40] Q&A Session Summary Question: What is the company's outlook for Cyfovri given the first quarter's performance? - Management believes that the revenue has stabilized and that the impact of the Good Day's situation has been absorbed, setting a new baseline for growth [45][46] Question: How does the company differentiate its products from competitors? - The company emphasizes the superior efficacy of its products, particularly Cyfovri, which has shown a gradual increase in market share against competitors [25][24] Question: What is the competitive landscape for Empavedi? - The company highlights its strong efficacy profile across various patient demographics, which sets it apart from competitors [28][29]

Core Viewpoint - Apellis Pharmaceuticals has seen a 7.2% increase in share price over the past month, outperforming the S&P 500, but estimates have trended downward, indicating potential challenges ahead [1][2]. Financial Performance - The consensus estimate for Apellis Pharmaceuticals has shifted downward by 48.19% in the past month, reflecting a negative outlook [2]. - The company currently holds a Zacks Rank of 4 (Sell), suggesting expectations of below-average returns in the coming months [4]. VGM Scores - Apellis Pharmaceuticals has a subpar Growth Score of D and a Momentum Score of F, placing it in the bottom 40% for value strategy, resulting in an overall VGM Score of F [3]. Industry Comparison - In contrast, Vertex Pharmaceuticals, a peer in the same industry, reported revenues of $2.77 billion for the last quarter, with a year-over-year increase of 3% [5]. - Vertex is expected to post earnings of $4.24 per share for the current quarter, reflecting a significant year-over-year change of +133.1%, and holds a Zacks Rank of 3 (Hold) [6].

Core Insights - Apellis Pharmaceuticals and Sobi presented new data from the Phase 3 VALIANT study for EMPAVELI (pegcetacoplan) targeting C3 glomerulopathy (C3G) and primary immune complex membranoproliferative glomerulonephritis (IC-MPGN) at the European Renal Association Congress [1][5] Study Results - EMPAVELI showed a statistically significant 68% reduction in proteinuria compared to placebo at Week 26, with effects sustained for one year [2][4] - Patients switching from placebo to EMPAVELI also experienced similar benefits in proteinuria reduction and kidney function stabilization [3] Efficacy and Safety - The study confirmed EMPAVELI's efficacy and safety profile across a diverse patient population, including adults and adolescents with both native and post-transplant kidney disease [4][7] - No new safety signals were reported, indicating favorable safety and tolerability consistent with its established profile [4][7] Clinical Significance - The results highlight the urgent need for effective treatments for patients with C3G and primary IC-MPGN, as approximately 50% of these patients may face kidney failure within five to ten years of diagnosis [6] - The VALIANT study is the largest trial conducted in these populations, involving 124 patients aged 12 and older [8] Future Prospects - Marketing applications for EMPAVELI are currently under review with the FDA and EMA, with an FDA decision expected this summer [4][7] - The collaboration between Apellis and Sobi aims to expedite the availability of EMPAVELI for patients suffering from these rare kidney diseases [10]

Company Announcement - Apellis Pharmaceuticals, Inc. will present at the Goldman Sachs 46th Annual Global Healthcare Conference on June 11, 2025, at 10:40 a.m. ET [1] - A live conference webcast will be available on the company's website, with a replay accessible for approximately 90 days post-event [1] Company Overview - Apellis Pharmaceuticals is a global biopharmaceutical company focused on developing therapies for challenging diseases [2] - The company has introduced the first new class of complement medicine in 15 years, with two approved medicines targeting C3 [2] - Apellis has launched the first-ever therapy for geographic atrophy, a major cause of blindness globally, and aims to explore the potential of targeting C3 in various serious diseases [2]