Apellis(US:APLS)2023-05-03 16:00Financial Performance - For the three months ended March 31, 2023, the company generated $18.4 million in net product revenue from sales of SYFOVRE and $20.4 million from EMPAVELI, totaling $38.8 million in net product revenue [128][130]. - Product revenue for Q1 2023 reached $38.8 million, a 220% increase from $12.1 million in Q1 2022, driven by EMPAVELI and SYFOVRE sales [174]. - Total revenue for Q1 2023 was $44.8 million, up 212% from $14.4 million in Q1 2022 [173]. - The company incurred net losses of $177.8 million for the three months ended March 31, 2023, compared to $138.9 million for the same period in 2022, with an accumulated deficit of $2.5 billion [137]. - Net loss for Q1 2023 was $177.8 million, a 28% increase from a net loss of $138.9 million in Q1 2022 [173]. - Interest income surged to $5.4 million in Q1 2023, compared to $0.1 million in Q1 2022, reflecting higher money market rates [181]. Cash and Funding - As of March 31, 2023, the company had cash and cash equivalents of $765.1 million, which is expected to fund operations at least into the first quarter of 2025 [136]. - The company expects to fund operating expenses and capital expenditures at least into the first quarter of 2025, based on current cash and anticipated sales [203]. - The company has financed operations through $1.6 billion in net proceeds from public offerings and $535.8 million from convertible notes [186]. - Net cash used in operating activities was $177.6 million for the three months ended March 31, 2023, compared to $111.6 million for the same period in 2022 [197][199]. - Net cash provided by financing activities was $391.1 million during the three months ended March 31, 2023, primarily from a follow-on common stock offering [200][201]. - The company may need to seek additional funding to support ongoing commercialization and development activities [205]. Expenses and Costs - The company anticipates significant increases in expenses related to commercialization and ongoing clinical trials [138]. - Research and development expenses are expected to increase as product candidate development programs progress, with costs primarily related to employee expenses and third-party agreements [164][167]. - General and administrative expenses are anticipated to increase to support ongoing research and development activities and potential commercialization of product candidates [168]. - Research and development expenses increased by 21% to $110.0 million in Q1 2023, compared to $90.9 million in Q1 2022 [179]. - General and administrative expenses rose by 99% to $102.1 million in Q1 2023, up from $51.2 million in Q1 2022 [180]. - Cost of sales increased to $7.8 million in Q1 2023 from $1.2 million in Q1 2022, primarily due to higher product sales volume [176]. - Significant commercialization expenses are anticipated for the product manufacturing, marketing, and sales of EMPAVELI and SYFOVRE [202]. Product Development and Collaborations - The company launched SYFOVRE in the United States in March 2023, targeting a market of over one million people affected by geographic atrophy [128]. - The company expects a decision from the European Medicines Agency on the marketing authorization application for intravitreal pegcetacoplan in early 2024 [129]. - The company is co-developing systemic pegcetacoplan for five indications in collaboration with Sobi, including C3 glomerulopathy and amyotrophic lateral sclerosis [132]. - The company plans to advance additional product candidates into clinical development in 2023, including an oral alternative pathway inhibitor and a novel compound for GA and wet AMD [134]. - The company has a development funding agreement with SFJ Pharmaceuticals Group, which includes potential payments of up to $60.0 million upon achieving specified development milestones [139]. - The company received a total of $250.0 million upfront from Sobi under a collaboration agreement, with potential milestone payments of up to $915.0 million and reimbursement of up to $80.0 million in development costs [158]. - The company earned a $50.0 million payment from Sobi related to the first regulatory and reimbursement milestone in Europe in March 2022 [159]. Debt and Liabilities - The company recognized a total of $149.7 million in net debt increase and net equity reduction upon adopting ASU 2020-06, which included reclassifications from equity to debt for the Convertible Notes [151]. - The effective interest rate used to determine the liability component of the 2019 and 2020 Convertible Notes was 10.5%, resulting in liabilities of $145.1 million and $204.5 million for the respective notes [150]. - The company entered into exchange agreements in January 2021, July 2021, and July 2022, resulting in a reduction of net debt by $122.8 million, $197.0 million, and $96.8 million respectively, and an increase in shares outstanding by 3,906,869, 5,992,217, and 3,027,018 shares [152][155][156]. - The company may redeem all or a portion of the Convertible Notes for cash on or after September 20, 2023, if the last reported sale price of common stock has been at least 130% of the conversion price for at least 20 trading days [148]. Market and Revenue Recognition - Product revenues are derived from sales of EMPAVELI and SYFOVRE in the United States, with revenue recognized upon satisfying performance obligations [160][161]. - Licensing and other revenue for Q1 2023 was $6.0 million, up from $2.3 million in Q1 2022, driven by product supply and royalty revenue from Sobi [175]. - The company expects continued impact on cost of sales as remaining pre-FDA approval inventory is sold [178]. - The company is closely monitoring credit risk related to deposits, particularly following the closure of Silicon Valley Bank, which held approximately 20% of the company's total cash [195]. - An immediate 10% change in interest rates would not have a material effect on the fair market value of the company's investment portfolio due to its low risk profile [208].