Good afternoon. My name is Valerie, and I will be your conference operator today. At this time, I would like to welcome everyone to the TELUS Pharmaceuticals 4th Quarter and Full Year 2020 Fiscal Results Conference Call. Today's call is being recorded and a replay will be available at apellis.com. I would now like to turn the call over to Tracy Vineeth, Vice President of Communications at Apellus.
Thank you, Valerie. Good afternoon, and thank you for joining us today to discuss Apellis' Q4 and full year 2020 financial results. With me on the call are Co Founder and Chief Executive Officer, Doctor. Cedric Francois Chief Medical Officer, Doctor. Federico Grossi Chief Commercial Officer, Adam Townsend and Chief Financial Officer, Timothy 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. 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'm pleased to turn the call over to Cedric.
Thank you, Tracy, and good afternoon to everyone joining us today for our first quarterly conference call. 2020 was a defining year for Aperis, marked by the positive Phase III PEGSYS data in thyroxysmal nocturnal hemoglobinuria or PNH. The PEGASIS results highlighted the potential of pegzitacopalan to elevate the standard of care in PNH and the broad platform potential of targeting C3 for complements driven diseases. In 2021, we look forward to a transformational year for Aperis as we further build on our global leadership in complement across a broad range of diseases with high unmet need. As you can see on this slide, our corporate strategy is based on 3 strategic objectives, and we expect to make significant progress against each of these this year.
Our first objective is to establish systemic pexitacopalan, a targeted C3 therapy as a disruptive treatment across rare, complements driven diseases. We have a PDUFA date of May 14 for the potential U. S. Approval of pexetacopan in PNH. And our Chief Commercial Officer, Adam Townsend, will discuss our work to prepare for a successful commercial launch.
We also expect to advance 4 additional registrational programs of pexitacopalan with our partner Swedish Orphan Biovitrum or SODI, as we work to maximize the broad potential of targeting C3. The second objective for our company is to be number 1 in treating retinal diseases. In what will be a seminal event for Aperis, we expect top line results from our Phase III clinical studies of plexithacoplan in geographic atrophy, or GA, in the Q3 of this year. GA is a relentless and disabling disease that affects approximately 5,000,000 people around the world, and we have a unique and exciting opportunity to advance what could become the first drug for people living with GA. Our third objective is to develop new technologies to control complement.
Our research team has been very active on a number of fronts, and we look forward to advancing 3 new product candidates into clinical development by the end of next year. As you can see, we have an ambitious strategy and several key milestones in 2021 to advance our global leadership in the treatment of complement driven diseases. Now let's dive deeper into our first objective, establishing systemic pexitacopan as a disruptive therapy for rare diseases. I will now turn the call over to our Chief Medical Officer, Doctor. Federico Grassi, to review our recent data on pexitacopan in PNH.
Federico?
Thank you, Cedric. I'd like to begin by reminding everyone why we believe that pexeta coplan has the potential to elevate the standard of care for people living with PNH. PNH is characterized by the destruction of oxygen carrying red blood cells through both extravascular and intravascular hemolysis caused by uncontrolled complement activation. Current treatments inhibit the complement cascade downstream at C5, controlling intravascular but not extravascular hemolysis. As a result, while C5 inhibitors offer improvement patient survival, they do not add as many debilitating symptoms from which people living with PNH continue to suffer.
Olipexetacoplin target complement centrally at C3, controlling both intra and extravascular hemolysis. As a result, pexeta coupling met the primary endpoint in the Phase III PEGASUS study and became the 1st and only investigational therapy to demonstrate superiority compared to SOLARIS or eculizumab with an improvement in adjusted means of 3.8 grams per deciliter of hemoglobin at week 16 as well as sustained improvements in other key clinical measures. The safety profile of pexetacocan was comparable to solace and the study. Based on these results, we received priority review from the FDA for pegzetacopalan in PNH with a PDUFA date of May 14. Additionally, in December, we announced top line data at week 48 from the PEGASUS study.
These long term results show that pexeteproblem has the potential to help P and A patients gain and maintain more complete control of the disease. At week 48, hemoglobin increases were sustained with pegzetacopan treated patients with a mini improvement from baseline equal to the increase seen at week 16 in pegzetacopan treated patients. Importantly, as you can see in the graph, SOLIRIS treated patients who switched to pexetacopalan during the open label period also experienced sustained improvement in hemoglobin and other key clinical measures, similar to patients treated with pachymetacotam monotherapy during the randomized control period. Sustained improvements in transfusion avoidance, reticulocyte count, lactate dehydrogenase or LDH levels and functional assessment of chronic illness therapy or phasipathic scores were also observed in patients treated with pexetacoplan. At BRIG-forty 8, the safety profile of pegcetacopalan was consistent with previously reported data and non new safety signals were identified.
Also in December, at ASH, we presented a matching adjusted indirect comparison or NAIC analysis across the pivotal studies for pexetacopalan and ottomiris or rasulishimab, a longer C5 inhibitor. In the absence of clinical head to head study, MAIC is a valid and accepted method for comparative effectiveness research used by health technology assessment bodies across the world. The MAIC showed that on pegcetecoplan, 76% more patients achieved hemoglobin stabilization compared to patients on Ophthalmarius. Also, 64 more patients in pegcetagoplan achieved LDH normalization. This is remarkable because LDH is a biomarker of intravascular hemolysis, the type of hemolysis that C5 inhibitor like Ultomiris control well.
Additionally, on major important key patient quality of life, 71% more patients treated with pexadepochaline were transfusion free, and there was a 9 point difference on the facet fatigue score of pexadepochaline over Ultomiris. These results reinforce the potential of pexertagoplan to elevate the standard of care by targeting C3. As with other MAIC analysis, MACI may not adjust for confounding factors due to difference inherent in the standard design and entry criteria. I would like now to move to our ongoing Phase III PRIN study. What we believe that Xetacoflan has the potential to receive broad label based on the results from Pegasus.
The PRIM study evaluates pegzotecofen in patients that are more representative of the overall treatment naive population. On this slide, you can see the PRINCE study design. 53 treatment naive PNH patients were enrolled. The 2 primary endpoints evaluated after 26 weeks are hemoglobin stabilization in the absence of transfusions and reductions in LDH level. As noted in this slide, patients in the control group have the option to escape to pegzetagoplan if their hemoglobins levels drop by 2 or more grams per deciliter below their baseline.
I'd like to discuss a couple of key points about this study. 1st, PRINCE used the standard regulatory endpoint for PNH studies that were designed for C5 inhibitors and therefore, focused on intravascular hemolysis. As we all know, PNH is characterized by both intra- and extravascular hemolysis. So we believe that some of the secondary endpoints, such as hemoglobin levels, transfusions and facetratic score are equally as important since they truly reflect the impact this disease has on patients. Additionally, even on measures of hemolysis, we have set a higher bar for exosacoplim.
Patients in PRINCE are considered to have unstable hemoglobin levels if they lose only 1 gram per distributor in hemoglobin levels. Historically, in studies with T5 inhibitors, patients were allowed to drop by 2 grams per deciliter before being considered unstable. We have been fortunate to be minimally impacted by COVID-nineteen across our PNH clinical studies. However, the timing of SPRINT's top line data will now be at the end of May or beginning of June, in line with a public guidance but later than initially expected. This is due to COVID-nineteen related delays in local regulatory approvals of the extension study, which have precluded us from transitioning whole patients in 2 countries and delayed our database lock.
We are very excited to see the impact of tekzretacoplin on treatment naive patients and look forward to sharing these results later next quarter. I will now hand the call over to our Chief Commercial Officer, Adam Townsend, to provide an update on our PNH launch preparations. Adam?
Thank you, Fede. The positive Phase III PEGASIS results showed the potential of pegzetagoplin to elevate the standard of care in PNH. And we are working hard to prepare for its successful U. S. Launch in anticipation of our May PDUFA date.
As you can see on this slide, people with PNH continue to suffer from significant unmet need despite their current treatment with C5 inhibitors like Soliris and ULTOMIRIS. Clinical data and our own market research have shown that about onethree of patients on C5 inhibitors continue to require transfusions to address their falling hemoglobin levels. Another third of these patients continue to be severely anemic and experience other symptoms like severe fatigue. This has a huge impact on these patients. The final third of patients have closer to normal hemoglobin levels, but only achieve that at the expense of maximum output of red blood cells from their bone marrow.
As these data show, there is an urgent need for new treatments within PNH. Over the last 2 years, we have built a robust commercial organization in preparation for our first launch of pegcethoscoplin within PNH. Our integrated team is focused on ensuring that we are ready to effectively address the needs of patients at launch and our progress is highlighted on this slide. Our value and access team is fully staffed and engaging with high priority payers representing more than 80% of all U. S.
PNH patients. Our discussions with those payers have yielded positive feedback on the clinical profile of pegcetacopan. Apellis is also in the late stages of finalizing our distribution model and patient support resources and programs. We will aim to provide patients with a consistent positive experience, both at the time of treatment initiation with pegzetagoplan as well as long term assistance as and when needed. As an example, we have established Apellis Assist, a patient focused program designed to ensure a high quality patient treatment experience, including the recruitment of our care educator team, which will interact directly with patients through product and drug administration education.
In parallel with our commercial activities, our medical team has also been preparing for launch. As shown on this slide, our medical affairs colleagues have been actively engaging with the top treating physicians via our virtual presence at medical meetings and in person engagements when appropriate. They have also initiated an early access program for pegzetagoplan in the U. S. And already established multiple sites to treat PNH patients who are experiencing ongoing disease activity despite treatment with Soliris or ULTOMIRIS.
On marketing efforts, early activities with healthcare professionals or HCPs have been really strong and positive, showing high engagement above industry benchmarks. Almost 90% of targeted U. S. PNH HCPs have accessed our content focused on the unmet need in PNH, examples of which can be seen on the left hand side of this slide. Separately, over 2,000 patients, caregivers, advocates and other PNH community members have opted in to communicate with Apellis via our community outreach and patient marketing efforts, which can be seen on the right hand side of this slide.
Patients and caregivers are also spending considerable time on our website, which tells us they are interested in our information, particularly around the existing unmet need. Finally, our focused and experienced sales team will be deployed to cover the top 1,000 to 2,000 HCPs, including more than 90 key treatment centers. We are excited about the commercial team we are building and honored to have the opportunity pending approval to bring pegzetacoplin to PNH patients this year. As well as preparing to elevate the standard of care for PNH patients, we are quietly preparing for the future potential approvals in new indications. The commercial organization is excited to see our GA results later in the year.
I will now turn the call back over to our Chief Medical Officer, Doctor. Federico Grossi, to review the additional systemic program indications as well as geographic atrophy. Fede?
Thank you, Adam. The LPNH were advancing full registration of programs of systemic pecetagoplan in rare diseases with high unmet need with our partner, Sobe. As seen on this slide, in the second half of the year, Aperis expects to initiate a Phase III study to further our registrational program in immune complex meningranopuloriferative glomerulonephritis or ICMPGN and C3 glomerulopathy or C3G. And so we plan to start registration of problems in cholangutinin disease, TAD and hematopoietic stem cell transplantation associated thrombotic microangiopathy or HSCT GMA. Also in the second half of this year, Apellis expects to complete enrollment for our potentially registrational Phase II MRIdian study in amyotrophic lateral sclerosis, or ALS.
In parallel to our work in systemic pegzetacopalan, we continue to execute our Phase III studies of intravitreal pegzetacopalan in GA with top line results expected in the Q3. We believe that our GA program represents a unique opportunity to make a difference in the life of 5,000,000 people at risk of blindness with no treatment options available and few opportunities in the horizon. Results from the largest retrospective study in GA secondary HH related macular degeneration or AMD were presented as a lay breaker at the American Academy of Stalmology meeting. The study, which was conducted in partnership with Verano Health, highlighted the disabling impact this disease has on quality of life. The results also reiterated that YMD is an expected occurrence in GA patients and show that it is observed more frequently if where AMD is present in the fellow eye with 22% of GAIs developing wet AMD over 24 months.
These results echo feedback received on our recent GA webcast, which feature a panel of leading veteran specialists and further underscore the need for new treatments. I encourage you to listen to the archived recording of this event on our website under Events and Presentations in the Investors section. Now to our pivotal Phase III GA studies. BRAVIANOQUES are 2 large, well controlled studies that compare the efficacy and safety of monthly and every other month in traditional pexetacopalan with sham treatment in more than 1200 patients. The primary endpoint of those studies is the reduction in growth of GA lesion at month 12.
The studies will continue for a total of 24 months, and safety and efficacy will be assessed again at that time. In Philly, we saw the treatment effect of pexetacopalan increase from man 6 to man 12, and we look forward to seeing the results of longer treatment with texetacopalan in our Phase III study. Full study design details can be seen in this slide. We're excited to see the top line results from Dervion OX in Q3 and would like to take this opportunity to reiterate why we believe these studies will be successful. 1st, Devionux have the same study population and core study design as Phoebe, which demonstrated robust and statistically significant results that confirm through multiple sensitivity analysis.
2nd, DERIONALKS include more frequent assessment that will provide an even more complete evaluation of the primary endpoint. 3rd, cases of oxidation required confirmation by the renaming sector, which reduces the potential for bias in the diagnosis. In addition, patients experiencing excavations can receive anti VGF treatments while continuing on pegcetacopla, which we expect to reduce the number of study treatment discontinuations. Finally, the studies have sufficient repower to meet the primary endpoint given the current rate of misinjections in this study. For all these reasons, we believe derbi and Knox will be successful, and we are excited to see the results later this year.
Success here will position us as the leader in the treatment of retinal diseases. The last component of our strategy is the addition to a partner of several new technologies designed to control complement. We plan to advance 3 new product candidates into clinical development by the end of next year. The first area of focus is on less frequent dosing while maintaining the strong clinical benefit seen in multiple studies with pexetecopulio. The second focus is to expand our MD offerings to treat all forms of MD and potentially avoid the onset of advanced MD altogether.
And finally, we believe that C3 play a critical role in many neurodegenerative conditions and are pursuing new technologies focused on neurology. We look forward to sharing more about these programs in the months to come. I will now turn the call over to our Chief Financial Officer, Tim Sullivan, who will review the financial results. Timmy?
Thank you, Fede. Since we issued
a press release earlier today with the full financial results, I will just focus on the highlights for the full year 2020. As of December 31, 2020, Appellate's had $877,600,000 in cash, cash equivalents and short term marketable securities compared to $352,000,000 in cash and cash equivalents as of December 31, 2019. This increase primarily reflects the addition of cash from our follow on offering for gross proceeds of $404,000,000 in January 2020, our convertible offering for gross proceeds of $329,000,000 in May of 2020 and also the receipt of $250,000,000 in the upfront proceeds for the Sobe transaction in October 2020, less our cash used in operations. Research and development expenses were 325,000,000 dollars for the full year ending 2020 compared to $221,000,000 for the same period in 2019. The increase in R and D expense for the full year 2020 was primarily attributable to an increase in manufacturing expenses for our Phase 3 clinical trials and potential commercial launch, costs associated with ongoing and planned clinical trials, compensation and related personnel costs primarily due to the hiring of additional personnel in 2020, among others.
General and administrative expenses were $139,400,000 for the full year ending 2020 compared to $67,000,000 for the same period in 2019. The increase in general and administrative expenses for the full year 2020 was primarily attributable to an increase in professional and consulting fees, employee related costs due to the hiring of additional personnel and directors stock compensation expense among others. For the full year ending December 31, 2020, APELUS reported a net loss of $344,800,000 compared to a net loss of $304,700,000 for the same period in 2019. We remain well capitalized to execute on the potential launch of pegzetacoplin in PNH and to continue to advance our robust clinical development plan. Our cash runway is expected to fund operations into the second half of twenty twenty two.
I will now turn the call back over to Cedric for closing remarks.
Thank you, Tim. As you heard today, we have a transformational year ahead and the key commercial, clinical and regulatory milestones are shown on this slide. As you can see, we have a busy 2021 as we work to deliver on the full potential of targeting C3 across a broad range of complement driven diseases. Before we move to Q and A, I would like to thank the patients, investigators and caregivers who have participated in our clinical trials and our employees and investors who have helped advance Aperis to this difficult year. We look forward to keeping you updated on our upcoming milestones.
And now, operator, please open the call for questions.
Thank you. Our first question comes from Anupam Rama of JPMorgan. Your line is open.
Hi, guys. Thanks so much for taking the question. One of the most common questions we've gotten recently is in Derby and Oaks, how do you think about the potential impact of sort of missed injections and how that impacts the study, the stats plan, how we should be thinking about this? Is the Philly every other month arm maybe a reasonable proxy for how we should be thinking about the potential effect of APL2 with missed doses? Thanks so much.
Thank you so much, Anupam. Great hearing you and thank you to everyone for joining this call. The brief answer to this question is that the studies, Derby and Oaks continue to be well powered to show what we intend to show in these studies in spite of the missed injections that we have seen so far. Obviously, we did have missed injections and the study was impacted by COVID, but we have a way of looking back, as you alluded to, to the PHILI trial and compare the frequency of missed injections, how these missed injections occurred and based on that make an assessment of the quality of the Phase III clinical trials. And it is those assessments that make us highly confident that we are in a good place to measure the primary endpoints with good quality.
Great. Thanks so much for taking our question.
Thank you, Anupam.
Thank you. Our next question comes from Umer Raffat of Evercore. Your line is open.
Hi. Thanks so much for taking my question. Cedric, what percentage of the patients had wet AMD at baseline in the fellow eye? I'd be very curious. And also, sort of separately, for the primary endpoint, can you remind us how the autofluorescence was done in Phase 2 and how it's being done in Phase 3?
But I guess what I'm really asking is, are you using CSLO, the scanning laser or using the standard fundus camera? Thank you.
Thank you so much, Umer, for that question. So I'm going to start with the second part of your question, which is that we measure autofluorescence in exactly the same way in the Phase III as we did in the Phase II clinical trial. And then I have to ask you to repeat the first part because the line was breaking up a little bit.
No problem. What percentage of these 600 patients in each trial had wet AMD in the fellow eye? Because I recall one of the discussions with FDA was whether they should or should not be included and FDA encouraged you guys to put them in. But presumably that will impact the conversion rate. So I'm curious what percentage have it at baseline?
Yes. No, thank you so much. So in the PHILI trial, as you may recall, at baseline, we had 38% of patients who had geographic atrophy in the study eye and wet AMD in the contralateral eye. That compares to a normal natural frequency of that demographic of approximately 25%. So we had many more patients that came into our Phase II clinical trial having that phenotype present.
The reason for that is that back then, there were 2 large Phase III clinical trials that were enrolling with Lampalizumab, which excluded those patients from their studies. In the Phase III clinical trials, we are not commenting, of course, yet on the baseline characteristics. That will come in due time. But everyone should expect, I think, a lower present and naturally lower occurrence of patients coming into the study with that particular phenotype. The reason simply being that we do not compete anymore with these other studies and that I think we will be closer to that 25% normal demographic spread.
Thank you very much.
Thank you.
Thank you. Our next question comes from Steve Seedhouse of Raymond James. Your line is open.
Yes, thank you. Maybe I'll ask about the COVID data that's coming up. I'm just curious if you have a hurdle that you set that's going to determine next steps That asset in that indication, I think Alexian has talked about a 20% mortality delta or having statistical confidence at a 20% reduction in mortality at their interim analysis, which ultimately they didn't meet. I'm wondering if you have something similar established that will determine if you advance that to Phase 3 or not? Thanks.
Yes. Thank you so much, Steve, for that question as well. So as we have previously commonly or publicly reported, I should say, in December at the end of December towards Christmas, we completed the enrollment in this study. So we are now getting close to the point in time where the Data Safety Monitoring Board will make an assessment. We will that should be expected in the near future.
And then the top line results will be after the full data analysis has been completed.
Thank you. Our next question comes from Derek Archila of Stifel. Your line is open.
Great. Hi, guys, and thanks for taking the questions. Maybe one on PNH. I mean, Cedric, can you just provide some color how you think about the competitive landscape shaping up in that indication, particularly with the orals that are in development? And then maybe I'll just throw in one more in terms of some of the new programs you might be launching from now to 2022.
Is there an oral complement inhibitor in the mix there? Thanks.
Yes. Thank you so much, Eric, for that question. So as we have commented many times, we are excited about the development of new complement inhibitors by others and ourselves. I think we're really just at the beginning of what complement control can do in a wide range of indications. Of course, the launch in PNH being the first one now, where very importantly for patients, I believe and we all believe that the control of extravascular hemolysis will elevate the standard of care in these patients.
In a couple of years, particularly in PNH, we may be looking forward to the introduction of oral products that can control the alternative pathway of complement in these patients and thereby address extravascular hemolysis. And while on the surface it may seem much more appealing to have an oral product compared to a twice a week subcutaneous product, important to bear in mind that in a disease like PNH, there is no room for error. What I mean by that is that when you are reliant on a pill that you need to take twice per day, for example, forgetting to take a pill could have important consequences. That is a liability that many patients are not very comfortable with, neither are physicians. In line with that also is the fact that we still need to find out if majority of patients respond well to these products and whether the control of PMH is durable in the long run.
So we look forward to the Phase III readouts. But beyond that, I want to end this on a positive note. I am personally very excited about the development of oral products. In PNH not so much, but I think in other indications where kind of the exquisite control of complement is less important, will provide a lot of opportunities. As it relates to our own internal programs, we are not yet ready to comment on that, but we look forward and are excited about sharing more in the months to come.
Great, thanks.
Thank you.
Thank you.
Our next question comes from Justin Kim with Oppenheimer and Company. Your line is open.
Hi, thanks for taking the question. Just maybe on PRINT, as we prepare for that readout, could you walk us through maybe perhaps what unique insights we may see from this naive to complement treatment population? And particularly maybe where the geographies where APL2 is being used here may differ from like a standard of care perspective?
Yes. Thank you so much for that question, Justin. I'm going to hand that one over to our Chief Medical Officer, Doctor. Gross. Jaden?
Thank you, Cedric, and thank you, Justin, for that. We're really looking forward to the outcome of that study and sharing with you the results. So the study, as you point out, is looking at a PNH population that is naive to complement inhibitors. And the primary endpoint is hemoglobin sterilization, which is a typical endpoint for PNH studies. And in addition to that, we're looking at quality of life and transfusion dependency.
So that the population this population does not differ from the treatment naive population that you see on regions where eculizumab is available. We had to do the studies in regions where eculizumab is not available in order to do it, but the population does not differ.
Okay. Got it.
And maybe just a follow-up to the previous question and maybe asked maybe slightly differently. When you think about pan AMD sort of therapies, do you is it a fair assumption that we may see sort of modalities outside of intravitreal injection if we're looking at populations who maybe have less severe disease?
So can you repeat the question on AMD? Or
Just wondering, as we think about sort of new agents in a pan AMD sort of therapeutic, does that suggest a non injection based therapy potentially?
Well, when you look at this is outside of AMD, for diseases into the eye, the level of systemic exposure that you will get from treatments that are not injected into the eye may be too high. So they'll have to be a therapy that an interim systemically you can achieve good levels from the eye at exposing the patients to mark up the drug and having safety concerns from a systemic perspective.
Got it. Thank you.
Thank you. Our next question comes from Althea Young of Cantor Fitzgerald. Your line is open.
Hey guys, thanks for taking my questions and very exciting year ahead of you guys. One just for me is on, I mean obviously Electeon is going to be acquired and sometimes there's disruption which can occur. And I just wanted to get your perspectives on whether from a human resources standpoint or even a commercial standpoint, but you're sensing any sort of opportunity that you might be able to take advantage of even though your data is already quite robust? And then the second question I had is just on the 4 programs that are kind of moving toward registrational, ALS is always interesting and a little bit challenging. I mean, do you perceive that as being higher risk, higher reward program?
Or should we think about them all kind of a little bit more in equivalence? Thanks.
No, thank you so much. Well, starting with the first question, our primary goal is to elevate the standard of care in PNH. The competitive landscape has changed, but at the end of the day, we believe that the important unmet need that exists in PNH is going to be the main driver of sales, and we look forward to addressing that. Then as it relates to the new or the other indications, which are currently in registrational development, of which there are 4, so C3 glomerulopathy with ICMPGN, ALS, colic glutenin disease and HSCT associated thrombotic macrogiopathy. The ALS trial has a special place.
It has a special place as the first neurological indication that we are targeting. It has a special place as, of course, an indication with an incredible unmet need that we hope to address and also as a place where we believe that C3 offers advantages over other places in the continent cascade where this disease can be controlled. So for us, again, the primary motivation for us was to bring the science together with the molecular entity that we have and our belief that we can address the unmet need. Is this a high risk program? Of course, it is.
Any trial in ALS is with a high reward associated, but one that we do truly believe fits very well into kind of the plethora of indications that we are pursuing with systemic pexitagoplan.
Thank you. Thank
you.
Our next question comes from Laura Christiansen of Cowen. Your line is open.
Good afternoon. Hi, guys. So my question is actually about the allergic reaction to PEGs that have been sporadically seen in people who have received the Pfizer and Moderna vaccines. I believe the CDC recommends that anyone who experiences an immediate allergic reaction to PEG should not receive the booster. So I was just wondering what gives you confidence that sensitized to PEG and I assume that is your belief, but if it's not, why that's also the case?
Yes. Thank you, Laura, for that question. So as you correctly mentioned, there are a couple of isolated cases of anaphylaxis that have been associated with tech sensitization. This is something that is well known that can sometimes occur. It's important, therefore, that when you introduce products like ours, especially in the beginning, to make sure that there is a good follow-up.
What is important to note here, however, as well is that with the introduction of the vaccines with the PEGylated element in them, there does not seem to be an extra sensitization because the booster vaccines do not seem to be associated with any type of additional immune reactions. So we feel very comfortable with where we stand right now. Will we in the future in these rare diseases, right? I mean once in a while see an anaphylactoid reaction, that is possible. Thus far, that has not been the case.
Our next question comes from Matthew Lutini of BMO Capital. Your line is open.
Hi. Good afternoon. Thanks for taking the questions. So first, on PNH commercially, I guess, I'd love to get a little sense as to what your internal market research is telling you about the initial launch. And what I'm really looking for is a little bit of more of the color around things like, are patients are your doctors telling you that the patients are asking for the drug?
Are they planning to call patients in versus waiting for the next visit? Any kind of color there that could help sort of set our expectations around what the initial launch is going to look like? And then secondly, just a kind of a housekeeping question. It looks like R and D saw pretty decent sequential step down in 4Q. And I'm just wondering if that's something that we should think about as sort of the new baseline going forward?
How we should think about that as we think forward into this year and beyond?
Thank you.
Thank you, Matthew. I will hand the first question over to our Chief Commercial Officer, Adam Townsend, and then Tim will take your second question.
Thank you, Cedric, and thank you, Matthew, for the question. So we've spent a lot of time with the PNH community, patients, caregivers and everything that surrounds the patient. And we do believe that we expect some patients to have a conversation with their physician about the potential to elevate the standard of care with pegcetagoplan. We've got various patient focused marketing activities out there and we're getting a great response from them as they interact with our content. They truly understand the unmet need that exists within the market.
So whilst this is a very much an efficacy driven story for us, we think that at launch, the physicians will have identified the patients with the highest unmet needs. And you've seen from our presentation and our previous discussions, we look at the market of C5 treated in 3rd. So we expect to transition with it from the patients that have the highest unmet need to the broader patient and unmet need population as we work through. A core piece of that will be when patients go in to have a conversation with their physicians and we also expect some physicians to have already identified the patients and actually potentially call them in. Still a rare disease, it will be a very thoughtful approach to launch.
And obviously, this is an important conversation for patients and physicians to have around the potential of pegzetagoplan.
Sure. And I'll thanks, Matthew, for the question. I'll take the R and D question. So what you're seeing in terms of the 4Q step down in R and D is actually more of an accounting and Sobeya related concept. So Sobeya, as you know, from the structure of the deal, will reimburse Apellis for $80,000,000 worth of R and D expenses over the course of the next 4 years.
The way those are accounted for and when those began started in the Q4 primarily of 2020. And so that is actually counted as a contra account. And so from a GAAP perspective, those amounts were deducted from R and D and that just brings the number down. Ultimately, the reimbursement for that $80,000,000 will come over time over the next 4 years. So I would look at the true R and D expenses much closer to the Q3, flat to a little bit up and probably will it will steadily, although not dramatically rise over the next year.
Great. Thank you. Very helpful.
Thank you. Our next question comes from Yigal Ptchavovitch, Citigroup. Your line is open.
Hi, great. Thanks for taking the question. I had one on Zervi and Oaks. So as you know, Cedric, in Philly, the difference in the absolute lesion growth area between the sham and the monthly pexidacoparib was 0.66 meters squared, and that was obviously deeply stacked sig. Now presumably the bar is lower in Derby and Oaks given the higher power.
So could you comment at all on the hurdle that you need to hit for the difference in the GA region growth area for Derby and Oaks to be successful? Thank you.
Thank you so much, Yigal. So the Phase III clinical trials are more than 95% powered to show the same effect that we saw in the Phase II clinical trial for the multi dosed individuals and somewhere between 80% 90% for every other multi dosed individuals. This is, of course, on a presumption of similar variability and accounts for a P value of 0.05. So again, for us to kind of protect the p value that we got in the Phase II clinical trial, we made sure to have as few changes as possible. We are studying the same exact patient population.
We analyze and read the findings in the same way. All of that was maintained between Phase II and Phase
III. Okay.
Thank you. Thank you.
Thank you. Our next question comes from Laura Chico of Wedbush. Your line is open.
Hey, thanks very much for taking the question. I just wanted to circle back on one with respect to wet AMD. Cedric, I think you indicated the normal frequency is around 25%. I'm wondering if you could just comment then around maybe what is an acceptable rate of new onset oxidation that we should be thinking about in Derby and Oaks, A, from a regulatory perspective and B, from a commercial perspective? Just kind of curious if patients do have a lower baseline frequency there, how might that change the expectation?
And then a quick follow-up, just with respect to PNH, could you just remind us or talk a little bit about your expectation on whether APL2 labeling would also extend to include ULTOMIRIS treated patients. I think you had a slide there comparing that with ULTOMIRIS. So what type of data or guidance might you be able to provide for patients thinking about a transition? Thank you.
Yes. Thank you so much. So starting with the first part of your question, the wet AMD occurrences that had in the Phase II clinical trial are important to contextualize, right. These were small exudates, which did not lead to significant vision loss. And that is why in the Phase III clinical trial, we are studying the exact same patient population as we did in the Phase II.
So if your question is what is acceptable from a physician perspective or from a regulatory perspective in terms of exudation, it is the exudation rate that we saw in the Phase II clinical trial. And that oxidation rate was arguably artificially higher than what you should expect in the Phase III because we had so many patients in the study had already wet AMD in the contralateral eye when they came into the study. And also because in the Phase II, with the benefit of hindsight, we had some investigator bias that may have contributed to an increased frequency of treatment with anti VEGF as well. All of that will be corrected in the Phase III clinical trial. But I think the most important take home message here is that our Phase III clinical trial, if it hadn't been for COVID, if it hadn't been for the kind of the IMPDs that we had to wait for in Europe, would have been rolled probably in 9 months.
I mean, and that gives you a sense of the unmet need that exists and the willingness and desire of physicians to treat these patients. So we are we start with what I believe is a very strong baseline and we will see what we see in the Phase III clinical trial. But importantly, exudations in patients with geographic metropathy are a normal phenomenon. And I would encourage listeners that haven't done that to look at our presentation at the American Academy of Ophthalmology. It was a late breaking abstract, where we looked retrospectively at 69,000 patients with geographic atrophy.
It's the largest study of its kind ever done. And the purpose was to find out how frequent it is for patients with geographic atrophy to develop wet AMD. And on a base case, the number to bear in mind is that patients with pure geographic atrophy, meaning no expeditions yet anywhere, develop wet AMD based on claims based data in 8% of cases over 2 years. If you start off with wet AMD in 1 eye and GA in the contralateral eye, then that GAI has a 22% odds of developing wet AMD over the course of 2 years. So not at all unusual.
And again, it comes down to what is the nature of these expeditions that are observed. Then to get back to your second question as it relates to the label. So we are not yet commenting on labeling. We believe that we will have a broad label when we get our approval, a broad label. Label would mean including treatment naive patients.
And in that particular case, would, of course, be applicable and usable in patients that are on baseline in ulcerinaries as well.
Thanks very much.
Thank you.
Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Cedric Francois for any closing remarks.
Thank you so much, and thank you, everyone, for joining us on our inaugural financial results conference call. We are excited about the transformational year ahead for us. I would like to close by reiterating our corporate strategy for leadership in complement. We aim to establish systemic pexithacopan as a disruptive therapy across rare complement driven diseases. We plan to become number 1 in the retina with the first treatment for geographic atrophy, and we continue to advance innovative technologies to control complement with a focus on complement factor C3.
Thank you again for joining us today.
Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may all disconnect. Have a great day.