Apellis Pharmaceuticals Reports Third Quarter 2023 Financial Results

• Generated total revenues of $110.4 million in the third quarter, including $75.3 million for SYFOVRE^® (pegcetacoplan injection) and $23.9 million for EMPAVELI^® (pegcetacoplan)
• SYFOVRE showed continued strong demand with growth week-over-week starting in August; permanent J-code effective as of October 1
• Completed corporate restructuring aimed at driving growth of SYFOVRE and EMPAVELI and strengthening operational efficiencies
• Positive top-line data from Phase 2 NOBLE study investigating pegcetacoplan in post-transplant recurrence of primary IC-MPGN and C3G to be presented at Kidney Week
• Cash and cash equivalents of $452 million as of September 30, 2023; expected cash runway into at least 2Q 2025

WALTHAM, Mass., Nov. 01, 2023 (GLOBE NEWSWIRE) -- Apellis Pharmaceuticals, Inc. (Nasdaq: APLS) today announced its third quarter 2023 financial results and business highlights.

“We are thrilled with the progress we have made these past few months, despite the challenges we have faced, and look forward to the many opportunities that we have in front of us. The SYFOVRE launch is back to a strong growth trajectory, underscoring the patient need and the strength of our product profile as we seek to make a difference in the lives of patients with GA,” said Cedric Francois, M.D., Ph.D., co-founder and chief executive officer of Apellis. “We are also pleased with the progress of EMPAVELI, including the continued demand in PNH, the approval of the EMPAVELI Injector in the U.S., and the positive data from the Phase 2 NOBLE study in IC-MPGN and C3G. We believe all of this, combined with the corporate restructuring we undertook in August, puts our company in a stronger position to continue to create value for shareholders and deliver on our mission for patients now and in the future.”

Third Quarter 2023 Business Highlights and Upcoming Milestones

Ophthalmology Highlights

• SYFOVRE for the treatment of geographic atrophy (GA) secondary to age-related macular degeneration (AMD):
  • Generated $75.3 million in SYFOVRE U.S. net product revenue in the third quarter 2023 up approximately 12% compared to the second quarter of 2023.
  • Delivered approximately 37,000 commercial vials and 10,000 samples of SYFOVRE to physician practices in the third quarter 2023.
  • The permanent and product-specific J-code for SYFOVRE became effective on October 1, 2023, helping to simplify and streamline the billing and reimbursement of SYFOVRE.
  • The Lancet published the positive 24-month results from the Phase 3 OAKS and DERBY studies evaluating SYFOVRE for GA.
  • Delivered multiple presentations at the American Society of Retina Specialists Annual Scientific Meeting, the EURETINA Congress and the Retina Society Annual Scientific Meeting.
    • 36-month data from the GALE extension study to be presented at the American Academy of Ophthalmology Annual Meeting on Saturday, November 4, in San Francisco, CA.
  • Marketing applications for intravitreal pegcetacoplan for the treatment of GA are under review in the EU, Canada, Australia, the United Kingdom and Switzerland.
    • A decision by the European Medicines Agency is expected in early 2024; decisions by the local regulatory authorities in the other countries are expected in the first half of 2024.
      

Paroxysmal Nocturnal Hemoglobinuria (PNH) Highlights

• EMPAVELI for the treatment of PNH:
  • Generated $23.9 million in EMPAVELI U.S. net product revenue in the third quarter 2023.
  • More than 250 patients with PNH were on commercial treatment with EMPAVELI as of September 30, 2023.
  • Received U.S. FDA approval for the EMPAVELI Injector, a compact, on-body device designed to enhance self-administration of EMPAVELI.

R&D Highlights

• Immune complex membranoproliferative glomerulonephritis (IC-MPGN) and C3 glomerulopathy (C3G): Apellis announced positive top-line data from its Phase 2 NOBLE study investigating pegcetacoplan for the treatment of post-transplant recurrence of IC-MPGN and C3G, to be presented at the American Society of Nephrology (ASN) Kidney Week Annual Meeting.
  • Data demonstrated that in as early as 12 weeks, pegcetacoplan showed reduced disease activity as measured by C3c staining, as well as improvements across key clinical measures, including a mean reduction in proteinuria and stabilization of kidney function.
  • Apellis continues to enroll patients in the Phase 3 VALIANT study of systemic pegcetacoplan for IC-MPGN and C3G. Top-line data from this study are expected in the third quarter of 2024.
• Cold agglutinin disease (CAD): Sobi, Apellis’ global co-development partner for systemic pegcetacoplan, continues to enroll patients in the Phase 3 CASCADE study of systemic pegcetacoplan for CAD.
• Hematopoietic stem cell transplantation-associated thrombotic microangiopathy (HSCT-TMA): Sobi continues to enroll patients in its Phase 2 study evaluating the efficacy and safety of systemic pegcetacoplan in patients with HSCT-TMA. Sobi expects data from this study in 2024.
  

Third Quarter 2023 Financial Results

Cash. As of September 30, 2023, Apellis had $452.4 million in cash and cash equivalents, compared to $708.6 million in cash, cash equivalents and marketable securities as of September 30, 2022. Apellis anticipates its cash balance, combined with cash anticipated to be generated from sales of EMPAVELI and SYFOVRE and Sobi reimbursements, will be sufficient to fund operations into at least the second quarter of 2025.

Total Revenue.

• Total revenue was $110.4 million for the third quarter of 2023, which consisted of $23.9 million of U.S. net product revenue of EMPAVELI, $75.3 million of U.S. net product revenue of SYFOVRE, and $11.2 million in revenue associated with the Sobi collaboration.
  • Total revenue was $22.1 million for the third quarter of 2022, which consisted of $17.7 million in U.S. net product revenue from sales of EMPAVELI and $4.4 million in revenue associated with the Sobi collaboration.

Cost of Sales.

• Cost of sales were $22.4 million for the third quarter 2023, compared to $1.4 million for same period in 2022. Cost of sales consists primarily of costs associated with the manufacturing of SYFOVRE and EMPAVELI, royalties owed to our licensor for such sales, costs associated with Sobi revenue, and certain period costs.
  • Prior to receiving FDA approval for EMPAVELI in May 2021 and SYFOVRE in February 2023, costs associated with the manufacturing of EMPAVELI and SYFOVRE inventory were expensed as research and development (R&D) expense. This resulted in inventory being sold during the periods ended September 30, 2023, and September 30, 2022, for which a portion of the costs had been previously expensed prior to FDA approval.

R&D Expenses.

• R&D expenses were $79.4 million for the third quarter of 2023, compared to $95.2 million for the same period in 2022.
  • The decrease in R&D expenses for the third quarter 2023 was primarily attributable to a decrease in personnel related costs, contract manufacturing expenses due primarily to the timing of drug supply and analytical activity and other development costs. The decrease was partially offset by an increase in clinical trial costs due to the completion of our Phase 3 DERBY and OAKS trials.

General and Administrative (G&A) Expenses.

• G&A expenses were $145.7 million for the third quarter of 2023, compared to $78.4 million for the same period in 2022.
  • The increase in G&A expenses for the third quarter of 2023 was primarily attributable to an increase in personnel related costs, an increase in professional and consulting fees and general commercial preparation activities, an increase in travel related expenses, and higher office costs. The increase was partially offset by lower insurance costs.

Net Loss. Apellis reported a net loss of $140.2 million for the third quarter 2023, compared to a net loss of $191.3 million for the same period in 2022.

Corporate Restructuring.

• In August 2023, Apellis announced a corporate restructuring to drive growth of SYFOVRE and EMPAVELI, positioning Apellis for long-term success.
• As part of the restructuring, Apellis reduced its headcount by approximately 225 employees, or approximately 25% of the workforce at that time. Field-based commercial and medical employees were minimally affected. The workforce reduction was substantially completed in the third quarter of 2023.
• Apellis anticipates the restructuring to result in total cost savings of up to $300 million through 2024, which includes more than $70 million in expected net cost savings related to the workforce reduction and up to $230 million related to the elimination of planned external expenses.
• Apellis incurred one-time costs related to the workforce reduction of approximately $10 million in the third quarter of 2023, substantially all of which were cash expenditures. Any additional costs the Company may incur during the remainder of 2023 are not expected to be material.

Conference Call and Webcast
Apellis will host a conference call and webcast to discuss its third quarter 2023 financial results and business highlights today, November 1, 2023, at 8:00 a.m. ET. To access the live call by phone, please pre-register for the call here. A live audio webcast of the event and accompanying slides may also be accessed through the “Events and Presentations” page of the “Investors and Media” section of the company’s website. A replay of the webcast will be available for 30 days following the event.

About SYFOVRE^® (pegcetacoplan injection)
SYFOVRE^® (pegcetacoplan injection) is the first and only approved therapy for geographic atrophy (GA). By targeting C3, SYFOVRE is designed to provide comprehensive control of the complement cascade, part of the body’s immune system. SYFOVRE is approved in the United States for the treatment of GA secondary to age-related macular degeneration.

About EMPAVELI^®/Aspaveli^® (pegcetacoplan)
EMPAVELI^®/Aspaveli^® (pegcetacoplan) is a targeted C3 therapy designed to regulate excessive activation of the complement cascade, part of the body’s immune system, which can lead to the onset and progression of many serious diseases. It is approved for the treatment of paroxysmal nocturnal hemoglobinuria (PNH) in the United States, European Union, and other countries globally. The therapy is also under investigation for several other rare diseases across hematology and nephrology.

U.S. Important Safety Information for SYFOVRE® (pegcetacoplan injection)

CONTRAINDICATIONS

• SYFOVRE is contraindicated in patients with ocular or periocular infections, and in patients with active intraocular inflammation.
  

WARNINGS AND PRECAUTIONS

• Endophthalmitis and Retinal Detachments
  • Intravitreal injections, including those with SYFOVRE, may be associated with endophthalmitis and retinal detachments. Proper aseptic injection technique must always be used when administering SYFOVRE to minimize the risk of endophthalmitis. Patients should be instructed to report any symptoms suggestive of endophthalmitis or retinal detachment without delay and should be managed appropriately.
• Neovascular AMD
  • In clinical trials, use of SYFOVRE was associated with increased rates of neovascular (wet) AMD or choroidal neovascularization (12% when administered monthly, 7% when administered every other month and 3% in the control group) by Month 24. Patients receiving SYFOVRE should be monitored for signs of neovascular AMD. In case anti-Vascular Endothelial Growth Factor (anti-VEGF) is required, it should be given separately from SYFOVRE administration.
• Intraocular Inflammation
  • In clinical trials, use of SYFOVRE was associated with episodes of intraocular inflammation including: vitritis, vitreal cells, iridocyclitis, uveitis, anterior chamber cells, iritis, and anterior chamber flare. After inflammation resolves, patients may resume treatment with SYFOVRE.
• Increased Intraocular Pressure
  • Acute increase in IOP may occur within minutes of any intravitreal injection, including with SYFOVRE. Perfusion of the optic nerve head should be monitored following the injection and managed as needed.

ADVERSE REACTIONS

• Most common adverse reactions (incidence ≥5%) are ocular discomfort, neovascular age-related macular degeneration, vitreous floaters, conjunctival hemorrhage.
  

Please see accompanying full Prescribing Information for more information.

U.S. Important Safety Information for EMPAVELI

BOXED WARNING: SERIOUS INFECTIONS CAUSED BY ENCAPSULATED BACTERIA

• Meningococcal infections may occur in patients treated with EMPAVELI and may become rapidly life-threatening or fatal if not recognized and treated early. Use of EMPAVELI may predispose individuals to serious infections, especially those caused by encapsulated bacteria, such as Streptococcus pneumoniae, Neisseria meningitidis types A, C, W, Y, and B, and Haemophilus influenzae type B.
• Comply with the most current Advisory Committee on Immunization Practices (ACIP) recommendations for vaccinations against encapsulated bacteria.
• Vaccinate patients at least 2 weeks prior to administering the first dose of EMPAVELI unless the risks of delaying therapy with EMPAVELI outweigh the risk of developing a serious infection.
• Vaccination reduces, but does not eliminate, the risk of serious infections. Monitor patients for early signs of serious infections and evaluate immediately if infection is suspected.
• EMPAVELI is available only through a restricted program under a Risk Evaluation and Mitigation Strategy (REMS). Under the EMPAVELI REMS, prescribers must enroll in the program.
  

CONTRAINDICATIONS

• Hypersensitivity to pegcetacoplan or to any of the excipients
• Not currently vaccinated against certain encapsulated bacteria, unless the risks of delaying EMPAVELI treatment outweigh the risks of developing a bacterial infection with an encapsulated organism
• Unresolved serious infection caused by encapsulated bacteria including Streptococcus pneumoniae, Neisseria meningitidis, and Haemophilus influenzae
  

WARNINGS AND PRECAUTIONS

Serious Infections Caused by Encapsulated Bacteria
The use of EMPAVELI may predispose individuals to serious, life-threatening, or fatal infections caused by encapsulated bacteria, including Streptococcus pneumoniae, Neisseria meningitidis types A, C, W, Y, and B, and Haemophilus influenzae type B (Hib). To reduce the risk of infection, all patients must be vaccinated against these bacteria according to the most current ACIP recommendations for patients with altered immunocompetence associated with complement deficiencies. Revaccinate patients in accordance with ACIP recommendations considering the duration of therapy with EMPAVELI.

For patients without known history of vaccination, administer required vaccines at least 2 weeks prior to receiving the first dose of EMPAVELI. If immediate therapy with EMPAVELI is indicated, administer required vaccine as soon as possible and provide patients with 2 weeks of antibacterial drug prophylaxis.

Closely monitor patients for early signs and symptoms of serious infection and evaluate patients immediately if an infection is suspected. Promptly treat known infections. Serious infection may become rapidly life-threatening or fatal if not recognized and treated early. Consider discontinuation of EMPAVELI in patients who are undergoing treatment for serious infections.

EMPAVELI REMS
Because of the risk of serious infections, EMPAVELI is available only through a restricted program under a REMS. Under the EMPAVELI REMS, prescribers must enroll in the program and must counsel patients about the risk of serious infection, provide the patients with the REMS educational materials, and ensure patients are vaccinated against encapsulated bacteria. Enrollment and additional information are available by telephone: 1-888-343-7073 or at www.empavelirems.com.

Infusion-Related Reactions
Systemic hypersensitivity reactions (e.g., facial swelling, rash, urticaria) have occurred in patients treated with EMPAVELI. One patient (less than 1% in clinical studies) experienced a serious allergic reaction which resolved after treatment with antihistamines. If a severe hypersensitivity reaction (including anaphylaxis) occurs, discontinue EMPAVELI infusion immediately, institute appropriate treatment, per standard of care, and monitor until signs and symptoms are resolved.

Monitoring PNH Manifestations after Discontinuation of EMPAVELI
After discontinuing treatment with EMPAVELI, closely monitor for signs and symptoms of hemolysis, identified by elevated LDH levels along with sudden decrease in PNH clone size or hemoglobin, or reappearance of symptoms such as fatigue, hemoglobinuria, abdominal pain, dyspnea, major adverse vascular events (including thrombosis), dysphagia, or erectile dysfunction. Monitor any patient who discontinues EMPAVELI for at least 8 weeks to detect hemolysis and other reactions. If hemolysis, including elevated LDH, occurs after discontinuation of EMPAVELI, consider restarting treatment with EMPAVELI.

Interference with Laboratory Tests
There may be interference between silica reagents in coagulation panels and EMPAVELI that results in artificially prolonged activated partial thromboplastin time (aPTT); therefore, avoid the use of silica reagents in coagulation panels.

ADVERSE REACTIONS
Most common adverse reactions in patients with PNH (incidence ≥10%) were injection-site reactions, infections, diarrhea, abdominal pain, respiratory tract infection, pain in extremity, hypokalemia, fatigue, viral infection, cough, arthralgia, dizziness, headache, and rash.

USE IN SPECIFIC POPULATIONS

Females of Reproductive Potential
EMPAVELI may cause embryo-fetal harm when administered to pregnant women. Pregnancy testing is recommended for females of reproductive potential prior to treatment with EMPAVELI. Advise female patients of reproductive potential to use effective contraception during treatment with EMPAVELI and for 40 days after the last dose.

Please see full Prescribing Information, including Boxed WARNING regarding serious infections caused by encapsulated bacteria, and Medication Guide.

About Apellis
Apellis Pharmaceuticals, Inc. is a global biopharmaceutical company that combines courageous science and compassion to develop life-changing therapies for some of the most challenging diseases patients face. We ushered in the first new class of complement medicine in 15 years and now have two approved medicines targeting C3. These include the first-ever therapy for geographic atrophy, a leading cause of blindness around the world. We believe we have only begun to unlock the potential of targeting C3 across serious retinal, rare, and neurological diseases. For more information, please visit http://apellis.com or follow us on Twitter and LinkedIn.

Apellis Forward-Looking Statement
Statements in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding the expected timing of clinical data, timing of receipt of regulatory approvals of SYFOVRE, the safety profile of SYFOVRE, the expected benefits and costs of the Company’s corporate restructuring and related reduction in workforce and the period for which Apellis believes its cash resources will be sufficient to fund its operations. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including whether the benefit/risk profile of SYFOVRE following the events of retinal vasculitis will impact our commercialization efforts; whether SYFOVRE will receive approval from foreign regulatory agencies for GA when expected or at all, including the impact of the reported events of retinal vasculitis on the likelihood and timing of such approvals ; whether the company’s clinical trials will be fully enrolled and completed when anticipated; whether results obtained in clinical trials will be indicative of results that will be generated in future clinical trials; whether pegcetacoplan will successfully advance through the clinical trial process on a timely basis, or at all; whether the results of the company’s clinical trials will warrant regulatory submissions and whether systemic pegcetacoplan will receive approval from the FDA or equivalent foreign regulatory agencies for C3G and IC-MPGN or any other indication when expected or at all; the period for which the Apellis believes that its cash resources will be sufficient to fund its operations; and other factors discussed in the “Risk Factors” section of Apellis’ Annual Report on Form 10-K with the Securities and Exchange Commission filed on February 21, 2023 and Quarterly Report on Form 10-Q filed on November 1, 2023 and the risks described in other filings that Apellis may make with the Securities and Exchange Commission. Any forward-looking statements contained in this press release speak only as of the date hereof, and Apellis specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Media Contact:
Lissa Pavluk
media@apellis.com
617.977.6764

Investor Contact:
Meredith Kaya
meredith.kaya@apellis.com
617.599.8178

APELLIS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share amounts)
		September 30,				December 31,
			2023				2022
Assets		(Unaudited)
Current assets:
Cash and cash equivalents		$	452,414			$	551,801
Accounts receivable			169,258				7,727
Inventory			98,545				85,714
Prepaid assets			44,617				36,350
Restricted cash			1,086				1,273
Other current assets			30,847				36,658
Total current assets			796,767				719,523
Non-current assets:
Right-of-use assets			15,484				18,747
Property and equipment, net			4,790				6,148
Other assets			1,175				15,799
Total assets		$	818,216			$	760,217
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$	18,192				37,342
Accrued expenses			117,089				95,139
Current portion of development liability			44,610				29,504
Current portion of right of use liabilities			5,739				5,625
Total current liabilities			185,630				167,610
Long-term liabilities:
Long-term development liability			295,532				315,647
Convertible senior notes			92,957				92,736
Right-of-use liabilities			10,880				14,352
Other liabilities			946				—
Total liabilities			585,945				590,345
Stockholders' equity:
Preferred stock, $0.0001 par value; 10,000 shares authorized and zero shares issued and outstanding at September 30, 2023 and December 31, 2022			—				—
Common stock, $0.0001 par value; 200,000 shares authorized at September 30, 2023 and December 31, 2022; 118,359 shares issued and outstanding at September 30, 2023, and 110,772 shares issued and outstanding at December 31, 2022			12				11
Additional paid-in capital			2,982,236				2,479,596
Accumulated other comprehensive loss			(1,065	)			(875	)
Accumulated deficit			(2,748,912	)			(2,308,860	)
Total stockholders' equity			232,271				169,872
Total liabilities and stockholders' equity		$	818,216			$	760,217

APELLIS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Amounts in thousands, except per share amounts)
	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2023				2022				2023				2022
	(Unaudited)								(Unaudited)
Revenue:
Product revenue, net	$	99,182			$	17,676			$	227,626			$	45,439
Licensing and other revenue		11,217				4,380				22,588				7,320
Total revenue:		110,399				22,056				250,214				52,759
Operating expenses:
Cost of sales		22,410				1,381				38,598				2,711
Research and development		79,421				95,207				285,040				287,813
General and administrative		145,648				78,406				359,179				192,795
Operating expenses:		247,479				174,994				682,817				483,319
Net operating income/(loss)		(137,080	)			(152,938	)			(432,603	)			(430,560	)
Loss on conversion of debt		-				(32,890	)			-				(32,890	)
Interest income		4,989				2,809				16,386				4,339
Interest expense		(7,310	)			(7,903	)			(22,179	)			(24,888	)
Other (expense)/income, net		(603	)			99				(946	)			(42	)
Net loss before taxes		(140,004	)			(190,823	)			(439,343	)			(484,041	)
Income tax expense		233				446				709				2,140
Net income/(loss)	$	(140,237	)		$	(191,269	)		$	(440,052	)		$	(486,181	)
Other comprehensive (loss)/gain:
Unrealized (loss)/gain on marketable securities		—				435				—				(383	)
Foreign currency gain/(loss)		(269	)			(268	)			(190	)			(554	)
Total other comprehensive income/(loss)		(269	)			167				(190	)			(937	)
Comprehensive loss, net of tax	$	(140,506	)		$	(191,102	)		$	(440,242	)		$	(487,118	)
Net loss per common share, basic and diluted	$	(1.17	)		$	(1.75	)		$	(3.73	)		$	(4.65	)
Weighted-average number of common shares used in net loss per common share, basic and diluted		120,292				109,126				117,827				104,608