All right. Good afternoon, everyone. Thanks for being with us for Baird's Global Healthcare Conference. I'm Colleen Kusy, one of the senior analysts covering biotech at Baird. It is my pleasure to have with us Apellis Pharmaceuticals CEO and co-founder Cedric Francois, and CFO, Tim Sullivan. Thanks for being with us, guys. So, Cedric, I'll turn it off to you to give some opening remarks.
Well, thank you, Colleen. Thank you for inviting us. Very happy to be back again. So yeah, it was a very busy summer for us, of course, and a very intense year. Lots of emotions.
You know, I'm gonna start off with what really stood out this summer for us, and that's the fact that we got the, the updated data on SYFOVRE, where we continue to see increasing effects over time, with slowdowns as much as 45% between month 24 and 30. That means that if you are a patient with geographic atrophy who goes on treatments with SYFOVRE, that you have an opportunity to almost cut the growth rate in half, right? I mean, that's an incredible benefit to patients and something that, that really stands out with this drug.
Also EMPAVELI, you know, which we affectionately call our little stepchild because sometimes gets less attention, but is a phenomenal drug in PNH. Has extraordinary compliance rates in the neighborhood of 98%, and is a drug that is turning out to be incredibly safe as well, you know. So we're probably close, gonna be around 1,500 patient years of dosing, and it's a drug that when patients take it, it really makes a difference in their lives. For EMPAVELI, we also have... We're getting close to the full enrollment now on the C3G and IC-MPGN trials, which we view as a very important next opportunity with data next year. We can talk about that more, of course.
And then, a new IND that came out in the spring with an siRNA product that is in the dose escalation phase and a very exciting preclinical program with data coming out as well. Now, of course, in the summer, we had these safety events that presented themselves in this very, very rapid launch that we had with SYFOVRE. What was key there was to kind of put things in context, right? I mean, these are very rare events at a rate of approximately 1 in 10,000. Sporadic in nature, not increasing over time, and I think that is really the key feature here that stands out
The retina community, you know, is not worried about having a safety event that is that rare, but is worried about those safety events becoming more common over time because they've seen that in the past, and that's something that we are absolutely not seeing. So as we move forward, we believe that that rate will continue to stay at around 0.01%, and that is something that I think physicians and patients, in the context of the efficacy profile of the drug, will find absolutely acceptable.
Great. And so, yeah, let's kind of start off from there then on the safety events. So, you provided an update in late August. I guess anything new that you can comment on in terms of any additional cases that have come in?
Yeah. T hank you, Colleen. So, you know, we will provide regular updates on the caseload, and again, establishing very clearly that that rate stays where it is. Hopefully, we have an opportunity to bring it down in our root cause analysis. As you know, the filter needles is one potential site where we can look into bringing those rates down. But the base assumption here should be that that case rate stays at about 0.01%, acceptable to physicians and to patients as part of the risk profile of the drug. And again, most importantly, something that is stable over time.
Great. And so, yes, you mentioned the 19-gauge needle that has come up in your very diligent work. Kind of why did you use that 19-gauge in the first place, and how common is that type of mesh filter that you used?
Yeah. So you have maybe a very brief word on what is a filter needle, right?
When we have the product in the vials at the physician office, you have to get that product out in a way that filters the product. The reason for that is that sometimes when you stick a needle through the stopper, you can introduce rubber material, you may chip a vial in glass, so you wanna make sure that you avoid that from getting into the product that finds its way into the eye, of course. These filter needles are needles with a filter inside of them, so very convenient for physicians to use it. There's not kind of an endless variety of filter needles available. You wanna have redundancy in your supply, and so we chose two needles, an 18-gauge and a 19-gauge needle. That, and that is important, have different types of filter material in them.
And again, in the context of our investigation, what is really important is that the 18-gauge needle has a filter material that is the same as what was used to filter the product in the clinical trials. So that is actually naturally the place where you want to go. The 19-gauge needle was because we wanna have a broad access and broad supply, and the 19-gauge needle with that different filter is one that is used for intravitreal injections under certain circumstances. But with the anti-VEGFs, it's worth noting in the past, mostly the filter material that's in the 18-gauge needle was more common. So, combine that with the analysis that we did where we said: Here are the cases of vasculitis. What filter needle use was associated with these cases? And I wanna dive into that briefly because I think it matters.
If we had a case of vasculitis, and we didn't know which filter needle was used by the practice or the physician, we do know how many of each we sent to that practice. So if we were to have a case of vasculitis, we can split the probability up between 0.8% for one or 0.8 for one, 0.2 for the other, 0.5 for one, 0.5 for the other. And if you do that analysis, we found a pretty staggering difference in association with those two needles in the rate of approximately 1 in 30,000 associated with the 18-gauge and 1 in 5,750 associated with the 19-gauge.
So that, combined with what we then found were structural variations in the filter material of the 19-gauge needle, led to that field action that we did a few weeks ago, where we said: "Look, we don't know whether these filter needles are the cause, but between the structural variations and the association with vasculitis, let's remove them and find out if it makes a difference." That will take tens of thousands of injections more to evaluate, but it's something exciting to look forward to.
Absolutely. And when you say variations, can you just explain a little bit more about what you mean there and what you saw in the 19-g auge?
Yes. So the 19-gauge needle is a mesh of monomeric nylon, and that mesh sometimes can get double or even triple stacked, inside the housing, you know, which is a variation that doesn't necessarily have to be out of spec, but that in the context of intravitreal injections, is something that we found to be something of concern.
Got it. And so you've moved exclusively to this 18- gauge needle. Do you have sufficient supply now in the market with the 18- gauge needle?
We do.
Great. And so going forward, you mentioned you would provide additional updates. I guess, any more clarity on how frequently you expect to write updates?
We're not going to commit to something because I think, what's really important here is the fear factor needs to come out of this, right? And the fear factor, to be clear, at a physician level, is not a case rate of 1 in 10,000. Today you see one in 10,000, tomorrow it's one in 1,000, after tomorrow, it's one in 100. That is absolutely not the case. For us to provide the confidence and the trust and to build on that with the retina community, that is going to determine how often we communicate, how we communicate, et c.
Got it. And on those communications, are you working with ASRS and any insight into when they're gonna provide any sort of update on these safety events?
Yeah. So we have a very friendly relationship with ASRS. But of course, we're not the same entity, and they have a very different, you know, purpose than we do, right? I mean, the purpose of the ASRS is to communicate with the retina community, to provide information that is valuable to retina doctors to understand what they do in their practice, et cetera. I thought that what happened in July was actually incredibly useful and helpful to the retina community and by extension, to us, in the sense that... And to be clear, of the whole phase, the only week where I was truly concerned was the week after the alert went out, because in that week, you don't know what's going to happen.
And normally, when you issue an alert around the safety events, you know, there's a manifold bigger problem than you could have expected. It was remarkable and a real reflection on the quality of our pharmacovigilance, how little more there was compared to what we already knew, compared to what the ASRS already knew. And yeah, the ASRS and us may disagree on, you know, is it vasculitis or not? Because there's not a fixed definition. Is it intraocular inflammation or not? All of these cases are very rare, and we were remarkably close to each other. So are we always going to agree? Of course not. If you put four retina docs in a room, let alone the ASRS, they're all gonna have a different opinion on everything.
But you know, you've tried to find consensus, and what stands out is how rare these events are, how sporadic in nature they are, and should it stay where it is, it's going to be, we believe, fully acceptable to the physicians and to the patients that are treated.
Great. We have a couple retina meetings coming up, Retina Society in October, AAO in early November. Anything we should be expecting from Apellis or ASRS at those two updates?
Yeah. So in many ways, kind of within the complexities, to put it gently, of what we had to go through, the sequence of these retina conference actually is helpful to us. First of all, the ASRS meeting took place at the end of July. That means that going into the month of August with the uncertainty around, is this a problem that is stable or getting worse? We had a monthly opportunity to have a, you know, imagine a patient-physician conversation with a new patient coming in saying: "Oh, I'd like to get on treatment with SYFOVRE," and the physician being able to say: "Well, there's something that came up. Why don't you go on holiday, come back in the fall and we'll revisit it?" No harm, no foul.
I think that is a conversation that happened quite a bit. So now here we are in September. In October, we have a chance to really, you know, kind of, again, provide that confidence that this rate of 0.01% is something that you can hang your hat on. We are now north of what we believe are 100,000 injections. I mean, an important milestone. I mean, it's a massive volume right? I mean, to wrap your head around to kind of, I think, put to rest kind of the whole discussion around these cases and say, like: "Sure, it's there, but it's extremely rare. Talk about it with your patients," and going to AAO early November, focus on the benefits.
I mean, slowing down a disease that can make you blind in almost half, you know—I mean, for patients that are aging and that, you know, could look forward to having many more years of functionality with their vision is absolutely huge, and has never happened before. And that needs to become the focal point of attention again.
Yeah, let's shift away from the safety events and a little bit on the launch—'cause as you said, you know, first two quarters were much, much higher than I think anybody had expected. You right now have a DTC outreach at this stage, more focused on disease awareness. So maybe kind of talk to us a little bit about what the feedback has been on that campaign, and when you might shift towards more drug-related promotion.
Yeah. So since Tim approached me a few months ago, very, very excited, and said, "Cedric, we have The Fonz." And I gave him a blank stare because I had no idea what he was talking about or who he was talking about. We'll let him answer that question.
Sure. Well, yeah, so we obviously have Henry Winkler doing our disease awareness campaign, and he's been great. He tested incredibly high with our target audience. Our target audience wasn't just the people who have GA, but their caretakers, people from our generation, or my generation, I should say—who all know The Fonz. So he does it very well, and that's been an incredibly successful campaign. People... You know, I get emails from people in the company that say that their cousin or their, you know, aunt or whatever, saw the campaign, and we even heard one story that Dick Van Dyke called up Henry Winkler and said, "Hey, I got my eyes checked 'cause I saw your ad." So it's been incredibly successful.
You know, and I do think some of that awareness has driven some patients to get their eyes checked, and maybe even some patients to come in and visit a retinal specialist. It's been good.
We'll have to get you to Milwaukee and get you a picture with the Bronze Fonz statue.
Oh, that's right.
Who's Dick Van Dyke?
So maybe you, you've talked about some of the vial numbers. Included in that number is free samples as well. So, kind of what can you tell us about kind of what relative proportion of free drug in 3Q versus 2Q, perhaps if you can make any comments?
Sure. So, what I can say is that the sampling has been relatively consistent on a number basis, so the proportion will change based on the commercial demand, right? But I think the important thing to remember is that a sample is a demand vial, just as a commercial drug is. The physician has to ask us for a sample.
There are certain parameters, legal parameters, that, you know, control how much we can and can't put into the, you know, into the world, but it is a demand vial.
And then do you have any sense of how long you'll keep open the sampling program?
Yeah, I mean, it's certainly gonna dwindle in importance over time, but I don't think we'll ever, I don't think you ever really shut one down. Most companies have them open and, you know, there always will be some samples, but it's never gonna be, it's not gonna be a big proportion overall.
Got it. What's been your rebate strategy at this point in launch, and how might that change over time?
Okay, so with any buy- and- bill drug, typically you'll have some sort of rebate, you know, thing that, that deals maybe with volume type of, tiers and so forth, and that's typically rebated or paid at the end of each quarter. But it's not really a primary focus of our marketing effort, really. You know, the primary focus of our effort is the merit of the drug, you know, the, the strong efficacy, the increased effects over time, and the differentiated, nature of the drug. So ultimately, the rebates aren't, you know, they're not, they're not a huge component of the sale.
Got it. And the permanent J-code, you guys are expecting in early October. Kinda help us put it into context. Obviously, you've seen a lot of docs use the drug so far without the permanent J-code. So help us understand what kind of impact you expect the permanent J-code to have.
It's hard to say, but it's not- It's definitely not gonna be a negative, right? That we know. The reimbursement that we've been able to. And we have a really strong team that's been able to, you know, facilitate reimbursement very successfully, and so it hasn't been, you know, a huge drag on those physicians that say to themselves: "You know, I'll deal with the reimbursement hassle." I mean, they do get very good payment terms, and so they, they aren't at a, like, a real amount of risk to get, you know, to, to sort of get reimbursed in time and then to, to pay for the drug. You know, but it is something psychological, right? And so we- you know, it's hard to quantify the exact effect.
The bigger effect will probably be in the smaller practices, where they have less infrastructure or people who deal with reimbursement and have to deal with all of the paperwork and everything. Because without the permanent J-code, each submission has to get reviewed individually by a human being.
That's just a long and more laborious process, and it's fraught with more errors. So some physicians just sit out, on the sidelines, until the permanent J-code's there. And so it's typically, again, the smaller practices, probably. So is that 10, 15% or 20% of... I don't know. Something in that ballpark, probably.
Got it. And so, so far in launch, you've given us the metrics of vials and sales. Going forward, would you expect to give any metrics on kind of how broad the uptake has been? Like, how many different physicians or clinics are using SYFOVRE?
I think... So right now, the only thing we're committing to is the vials and the sales.
Beyond that, I think we will give more color and more metrics over time. I don't think we've committed to what those are. We do monitor that, and, you know, it's certainly one thing we'll put into our thought process. We ultimately report to Meredith on this.
So talk to us a little bit about the capacity, anecdotally, maybe. Obviously, this is a high-prevalence indication and that these docs are already busy, so kind of how does SYFOVRE fit into the capacity limits of retina specialists?
Yeah, I think, I think physicians are surprised by how many patients they see-
I've heard that, too.
With Geographic Atrophy. And I think there's kind of two interesting things that happened there, that in conjunction lead to this. The first one is, and it's interesting, there was a survey around this. Retina doctors think on a daily basis, right?
They're like: How many GA patients do I see in a day? But they forget that a wet AMD patient comes in every month or every two months to see them.
A GA patient, before there was treatment, would come in once a year, if you're lucky. Because there's nothing to be done, right? And nobody wants to go in and hear, "Well, there's nothing I can do. So when I think about an average day in a physician practice this year in January, before our approval, you know, you're like: Oh, there's not that many patients with GA. But now they come in, right? I mean, they hear Henry say Hey, there's something available for you. They come into the office, they're all asking about the product. And in addition, not just those that were being seen once a year or every two years, but there's a lot of patients that were not even there and being seen by ophthalmologists o r quite frankly, that had seen an optometrist.
The optometrist may have told them there's nothing that can be done. So there's just an enormous amount of patients that are coming in. I think what that drives is really the fondness, for lack of a better term, of that every other month dosing regimen.
Which is convenient to patients, convenient to physicians, which minimizes, of course, also the side effects associated with the intravitreal injections. And when you take—it's kind of interesting at this point in time, when you're going to compare the physicians that have dabbled in SYFOVRE, you know, tried it here and whatever, versus practices that really are used to having it, you know, in their inventory, are treating massive amounts of patients. Those are the ones that are really interesting. One is they generally really love working with SYFOVRE. You know, it's a little bit more viscous, so you have to kind of get used to, get the hang of it, be patient, et cetera. Once the system is in place, everybody's well trained. It's a product that we hear is very easy to use and on large volume.
I think just an interesting question will become, you know, when does the capacity with the anti-VEGFs become kind of a stumbling block? Hard to tell. You know, as you know, the new anti-VEGFs have that feature, whether it's high-dose EYLEA or VABYSMO, of, you know, trending towards fewer and fewer treatments. So that's helpful to us as well. But I think one of the great features that we have with our label is that to be able to dose between 25 and 60 days, beyond the fact that it's every two months, dosing is good is you have the flexibility of scheduling your next appointments. These practices are extremely busy, and if I have 2 weeks up or down of 6 weeks to match my schedule with my physician, that's incredibly helpful and important.
You do have a competitor on the market now. I think it launched a couple of weeks ago. Maybe just as docs are deciding which drug to use, you know, what is the sales pitch for your drug?
Well, I think first of all, it's, it's a great thing that we have a treatment for patients, whether it's one or two treatments. I mean, there's an incredible and high unmet need. I think one of the things that really stand out for us that we're very proud of is the totality of the data that we generated, right? We have about 1,500 patients between our clinical trial experience. We have north of 24,000 injections. I mean, just wrap your head around that, right?
Full two-year data set with every two months imaging, which when you take DERBY and OAKS, incredible similarities between these two studies for both re-dosing regimens, clearly showing these increasing effects over time, and as I mentioned earlier, as much as 45% slowdown. With a safety profile that has been very good. You could say, well, there's these vasculitis cases. Well, they're extremely rare. We are now north of 100,000 injections, so we, you know, we know exactly what we have in front of us. So I think that is something that really stands out, and, you know, we wish our competitor good luck. At the end of the day, only 300 subjects have been treated.
You know, with a few thousand injections. We still have a lot to learn. You know, we're gonna find out the 24-month data, what that looks like. We're gonna know whether there are increasing effects over time, which we believe are very important for patients. And again, the efficacy standard, 45% is a lot. I think even at one year, we were at 26% with monthly, 23% with every other month. I think it's important for drugs in this disease to up the ante on the efficacy profile.
Absolutely. So I know we only have a few minutes left, so let's shift gears a little bit. As you said, the stepchild, EMPAVELI. So maybe just talk to us about what the launch focus is for EMPAVELI at this stage.
Yeah. So to be clear, EMPAVELI is our firstborn baby.
The firstborn.
Not our stepchild, and we love her just as much as SYFOVRE. You know, again, like, like I mentioned in the beginning, it's an extraordinary product for PNH. The question that we do get around EMPAVELI, of course, is: What with the oral introduction?
Like in geographic atrophy, it is great for patients, but there are options available, and I think these oral drugs look very promising, and they will provide an incredible alternative for patients that could benefit from something convenient like that. I do think in PNH, the study is a little bit more complex than just saying: Oh, it's oral versus subcutaneous, why would you do the latter? It's a lethal disease. It's a disease that requires very tight control, and with these oral products, being very diligent in your pharmacokinetic window, meaning taking that drug twice a day, trying to stick as closely to making it every 12 hours pill ingestions is really important, and that's probably not for everyone.
What we know from our subjects who are on EMPAVELI, and we have about 15% penetration of the PNH population in the U.S., is once they're used to it, it's absolutely not an issue twice a week to spend 30 minutes while watching a series or whatever it is, right? Injecting this drug at home in that convenience, and to have the benefit of, "Oh, I forgot to take it," or, "I can't because I have traveling," whatever it is, right? You have 1, 2, 3, some we think maybe up to a week to catch up for that dosing.
That is a benefit combined now with a very large and substantial safety database that we can build on. EMPAVELI is here to stay in PNH. It's just a question of how large can it become with the orals on the market, but it will forever be a staple, and it's the first drug that established the important role of extravascular hemolysis in providing that benefit to these patients.
In that context, it's worth mentioning that Novartis will now come out and help us have hematologists understand that their PNH patients are not doing well if they're only on a C5 inhibitor. Next step, of course, is C3G, IC-MPGN, 18,000 subjects, more or less, between these two indications. These are typically younger individuals, and they have about a 50% chance of end-stage renal disease over 10 years. If you're 20 years, 10 years is not a long time. There, too, we will of course be competing with the orals, but as I get closer to end-stage renal disease, let alone after transplantation, when I have a 50%-70% chance of relapse, I don't care about convenience.
I care about efficacy. I care about taking care as much as I can of what I have left in my kidney or of my transplanted kidney. And the data that we have, both in the phase II trial that we, that we've of course presented, but also in the compassionate use cases, of which we've had many with EMPAVELI, the efficacy profile looks incredibly promising. So that's something that we count on building on and that we think will become an important next step for this drug.
Great. And so you recently announced the 25% reduction in your workforce, and you had ended 2Q with a little over $600 million in cash. Maybe just kind of where does that leave you now in terms of your cash runway?
Yeah. So we're gonna guide on our cash runway probably around earnings, you know, with the... It's a little bit difficult to project exactly where the world is.
You know, post, post ASRS and, and then August. But I think with September and October under our belts, we'll have a pretty good sense. But that, that, you know, that restructuring was done really in response to the fact that we, we want to ensure we have that cash runway, but we'll update that later.
Great. And so just as, as we wrap up here, you know, obviously, been a very interesting last two years, a, a busy summer for you guys. So maybe just looking forward the next six to 12 months, you know, what—why should investors and kind of what, what makes you really excited about Apellis in the near future?
It's great to be a boring company, right? We just wanna make it interesting for you.
Look, I think at the end of the day, the privilege of having an amazing team like we do at Apellis, the privilege of being able to deliver that very first treatment for one of the leading causes of blindness is impossible to describe, and it comes with a lot of responsibility. Guiding us through these periods where we learn all these new things and these new patients with this drug providing so much hope to such a large population is something that gives us joy every day, even though it's not always easy, obviously and even though it comes with a lot of ups and downs. And, but we're very excited about the future, both for SYFOVRE and EMPAVELI, and about what's to come, in the next year.
Great. Well, with that, we'll end it there. Thanks so much.
Thank you.