Apellis Pharmaceuticals Reports Third Quarter 2022 Financial Results

Rhea-AI Summary

Apellis Pharmaceuticals (APLS) reported Q3 2022 net product revenues of $17.7 million from EMPAVELI, contributing to total revenues of $22.1 million. The company plans to submit 24-month Phase 3 efficacy data for intravitreal pegcetacoplan for geographic atrophy (GA) to the FDA, with a PDUFA target action date set for February 2023. Cash and investments reached $708.6 million, providing a strong cash runway into Q1 2024. R&D expenses increased to $95.2 million. Despite a net loss of $191.3 million, Apellis continues to advance its product pipeline.

Positive

• 24-month Phase 3 data for pegcetacoplan shows increasing efficacy over time.
• $17.7 million in Q3 2022 U.S. net product revenues from EMPAVELI.
• Cash and investments of $708.6 million provide a runway into Q1 2024.

Negative

• Net loss of $191.3 million in Q3 2022, albeit an improvement from the previous year.
• R&D expenses increased to $95.2 million, indicating rising operational costs.

• Plans to submit 24-month Phase 3 data to the FDA for intravitreal pegcetacoplan for geographic atrophy (GA); expected PDUFA target action date in February 2023
  
• EU marketing authorization application submission on track for December 2022
• Reported 24-month data with pegcetacoplan in GA showing increased effects over time and continued favorable safety profile
• Achieved $17.7 million in Q3 2022 EMPAVELI® (pegcetacoplan) U.S. net product revenues
• Cash and investments of $708.6 million as of Sept. 30, 2022; expected cash runway into Q1 2024
• Conference call scheduled today at 4:30 p.m. ET

WALTHAM, Mass., Nov. 07, 2022 (GLOBE NEWSWIRE) -- Apellis Pharmaceuticals, Inc. (Nasdaq: APLS), a global biopharmaceutical company and leader in complement, today announced its third quarter 2022 financial results and business highlights.

“We are making strong progress across the organization, including preparing for the potential approval and launch of intravitreal pegcetacoplan in GA. We believe that our recent decision to add the 24-month efficacy data to our NDA gives us the opportunity to have the best product profile at launch, with minimal impact to launch timing,” said Cedric Francois, M.D., Ph.D., co-founder and chief executive officer of Apellis. “At 24 months, both every-other-month and monthly pegcetacoplan demonstrated robust and increasing effects over time, with remarkable consistency across the two studies.”

Dr. Francois continued, “Additionally, the commercialization of our first product, EMPAVELI, continues to help more and more people living with PNH in its second year of launch. We also continue to progress EMPAVELI in a broad range of debilitating, rare diseases, with four later-stage clinical programs underway.”

Third Quarter 2022 Business Highlights and Upcoming Milestones:

Paroxysmal Nocturnal Hemoglobinuria (PNH) Commercial Progress

• Apellis recorded $17.7 million in EMPAVELI^® (pegcetacoplan) U.S. net product revenues.
• The Prescription Drug User Fee Act (PDUFA) target action date for the supplemental New Drug Application (sNDA) with the Phase 3 PRINCE results and the 48-week Phase 3 PEGASUS data is in February 2023.
• Apellis will be presenting long-term data reinforcing the robust efficacy and safety profile of EMPAVELI in patients with PNH at the 2022 American Society of Hematology (ASH) Annual Meeting being held December 10-13, 2022, in New Orleans, Louisiana.
  

Rare Disease R&D Highlights

• Immune complex membranoproliferative glomerulonephritis (IC-MPGN) and C3 glomerulopathy (C3G): Apellis continues to enroll patients in the Phase 3 VALIANT study of systemic pegcetacoplan for IC-MPGN and C3G.  
• Cold agglutinin disease (CAD): In October 2022, Sobi announced the dosing of the first patient in the Phase 3 CASCADE study of systemic pegcetacoplan for CAD.
• Amyotrophic lateral sclerosis (ALS): Apellis expects top-line results from its ongoing and potentially registrational Phase 2 MERIDIAN study with systemic pegcetacoplan for ALS in mid-2023.
• 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.
• EMPAVELI + small interfering RNA (siRNA): Apellis is studying the combination of EMPAVELI and an siRNA, which may offer the potential to reduce the treatment frequency of EMPAVELI. Apellis expects to submit an Investigational New Drug (IND) application for its siRNA in the first half of 2023.
  

Ophthalmology R&D Highlights

• Geographic atrophy (GA) secondary to age-related macular degeneration (AMD):
  • In November, Apellis plans to submit the 24-month Phase 3 efficacy data to the U.S. Food and Drug Administration (FDA) for the intravitreal pegcetacoplan New Drug Application (NDA).
    • This submission will be a Major Amendment to the NDA, extending the review period by three months with an expected PDUFA target action date in February 2023.
    • The 24-month Phase 3 safety data were previously submitted as part of the 120-day update.
  • In July, the FDA accepted and granted Priority Review designation for the NDA for intravitreal pegcetacoplan.
  • In August 2022, Apellis reported top-line 24-month results from its Phase 3 DERBY and OAKS studies showing a clinically meaningful reduction in GA lesion growth as compared to sham and a favorable safety profile.
    • Between months 18-24, the pegcetacoplan treatment effect accelerated compared to previous six-month periods in the combined studies, with robust reductions of GA lesion growth versus sham.
    • Additionally, the reduction of GA lesion growth in patients with nonsubfoveal lesions was comparable to the reduction in patients with subfoveal lesions in the combined studies between months 18-24.
    • Pegcetacoplan demonstrated a favorable safety profile, consistent with safety data to date and longer-term exposure to intravitreal injections.   
    • Consistent with expectations, no clinically meaningful difference was observed between pegcetacoplan and sham in the key secondary endpoints measuring visual function at 24 months.
  • At the American Academy of Ophthalmology (AAO) Annual Meeting, multiple post hoc analyses were presented, providing further evidence that treatment of GA with intravitreal pegcetacoplan reduces photoreceptor loss and has the potential to preserve visual function.
    • A post hoc analysis of microperimetry data was presented demonstrating that both every-other-month and monthly pegcetacoplan treatment preserved visual function of retinal cells near the GA lesion border compared to sham.
    • Additionally, a post hoc AI-guided analysis of OCT images from DERBY and OAKS at 12 months showed a substantial and rapid reduction in photoreceptor loss for both every-other-month and monthly pegcetacoplan in GA patients, reinforcing the robust efficacy of pegcetacoplan in preserving photoreceptors, which are responsible for vision.¹
  • Apellis remains on track to submit a Marketing Authorization Application (MAA) to the European Medicines Agency in December 2022.
• APL-2006: Apellis expects to submit an IND for APL-2006, a bispecific C3 and VEGF inhibitor, and next generation wet AMD therapy, in the first half of 2023.
  

Neurology R&D Highlights

____________________________ 

¹ U. Schmidt-Erfurth et al., Medical University of Vienna and RetinSight Inc., AAO, 2022

• APL-1030: Apellis continues to advance pre-clinical studies with APL-1030, a first-in-class, brain-active C3 inhibitor for neurodegenerative diseases.
  

Third Quarter 2022 Financial Results:

Cash. As of September 30, 2022, Apellis had $708.6 million in cash, cash equivalents, and short-term marketable securities, compared to $430.3 million in cash, cash equivalents, and short-term marketable securities as of September 30, 2021.

Total Revenue. Total revenue was $22.1 million for the third quarter of 2022, which consisted of $17.7 million in net product revenue from sales of EMPAVELI and $4.4 million in revenue associated with the Sobi collaboration.

Research and Development (R&D) Expenses.

• R&D expenses were $95.2 million for the third quarter of 2022, compared to $87.7 million for the same period in 2021.
• The increase in R&D expenses for the third quarter ended September 30, 2022 was primarily attributable to an increase in personnel-related costs due to having more employees in the three months ended September 30, 2022 and increases in research and innovation costs and device development expenses. In addition, no contra research and development expenses were recorded related to the Sobi transaction for the three months ended September 30, 2022 as compared to $6.4 million for the three months ended September 30, 2021. The increases were partially offset by a decrease in clinical trial costs due to the completion of the Phase 3 DERBY and OAKS trials, a decrease in contract manufacturing expenses due primarily to the timing of drug supply and analytical activity, and decreases in other development costs and preclinical study expenses.

General and Administrative (G&A) Expenses.

• G&A expenses were $78.4 million for the third quarter of 2022, compared to $45.8 million for the same period in 2021.
• The increase in G&A expenses for the third quarter ended September 30, 2022 was primarily attributable to higher employee-related costs, an increase in professional and consulting fees and general commercial preparation activities, as well as higher office costs and travel related expenses. The increase was partially offset by lower director stock option compensation.

Net Loss. Apellis reported a net loss of $191.3 million in the third quarter 2022, compared to a net loss of $195.6 million for the same period in 2021.

Convertible Notes. As of September 30, 2022, the aggregate principal balance of the 3.500% Convertible Senior Notes (Notes) due 2026, net of unamortized debt issuance costs, was $92.7 million. On July 27, 2022, Apellis entered into an agreement with certain holders of its Notes to exchange approximately $75.6 million of the Notes for common stock. On July 28, 2022, Apellis entered into additional agreements to exchange approximately $22.5 million of the Notes for common stock. These exchange transactions closed on August 1 and August 5, 2022, respectively.

Conference Call and Webcast
Apellis will host a conference call and webcast to discuss its third quarter 2022 financial results and business highlights today, November 7, 2022, at 4:30 p.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 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. EMPAVELI is approved for the treatment of paroxysmal nocturnal hemoglobinuria (PNH) in the United States, Australia, and Saudi Arabia, and Aspaveli, which is the European trade name for pegcetacoplan, is approved in the European Union and Great Britain. The therapy is also under investigation for several other rare diseases across hematology, nephrology, and neurology.

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
The most common adverse reactions (incidence ≥10% of patients) with EMPAVELI vs. eculizumab were injection-site reactions (39% v. 5%), infections (29% v. 26%), diarrhea (22% v. 3%), abdominal pain (20% v. 10%), respiratory tract infection (15% v. 13%), viral infection (12% v. 8%), and fatigue (12% v. 23%).

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 is committed to leveraging courageous science, creativity, and compassion to deliver life-changing therapies. Leaders in complement, we ushered in the first new class of complement medicine in 15 years with the approval of the first and only targeted C3 therapy. We are advancing this science to continually develop transformative medicines for people living with rare, retinal, 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. 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 results obtained in preclinical studies and clinical trials will be indicative of results that will be generated in future clinical trials; whether the results of the FILLY, DERBY, and OAKS trials are sufficient to support regulatory submissions; whether a submission for approval of intravitreal pegcetacoplan for GA on the basis of the FILLY, DERBY and OAKS trials will be accepted by foreign regulatory agencies; whether intravitreal pegcetacoplan will receive approval from the FDA or equivalent foreign regulatory agencies for GA when expected or at all; whether the company’s clinical trials will be fully enrolled and completed when anticipated; whether preliminary or interim results from a clinical trial will be predictive of the final results of the trial; whether results obtained in preclinical studies and 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 pegcetacoplan will receive approval from the FDA or equivalent foreign regulatory agencies for CAD, C3G, IC-MPGN, HSCT-TMA, ALS or any other indication when expected or at all; whether, if Apellis’ products receive approval, they will be successfully distributed and marketed; and other factors discussed in the “Risk Factors” section of Apellis’ Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2022 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

[TABLES TO FOLLOW]

APELLIS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share amounts)
	September 30,				December 31,
	2022				2021
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	584,189			$	640,192
Marketable securities		124,364				60,358
Accounts receivable		8,091				10,103
Inventory		59,753				16,286
Prepaid assets		30,356				24,868
Restricted cash		1,259				1,563
Other current assets		23,925				70,677
Total current assets		831,937				824,047
Non-current assets:
Right-of-use assets		19,522				19,901
Property and equipment, net		5,681				6,177
Other assets		15,752				31,640
Total assets	$	872,892			$	881,765
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	14,099			$	16,909
Accrued expenses		79,778				103,239
Current portion of development liability		16,146				7,584
Current portion of right of use liabilities		5,423				4,115
Total current liabilities		115,446				131,847
Long-term liabilities:
Long-term development liability		340,142				345,151
Convertible senior notes		92,663				189,024
Right-of-use liabilities		15,287				17,081
Other liabilities		1,938				—
Total liabilities		565,476				683,103
Commitments and contingencies (Note 14)
Stockholders' equity:
Preferred stock, $0.0001 par value; 10,000 shares authorized and zero shares issued and outstanding at September 30, 2022 and December 31, 2021		—				—
Common stock, $0.0001 par value; 200,000 shares authorized at September 30, 2022 and December 31, 2021; 110,476 shares issued and outstanding at September 30, 2022, and 97,524 shares issued and outstanding at December 31, 2021		11				10
Additional paid-in capital		2,453,301				1,857,430
Accumulated other comprehensive loss		(3,027	)			(2,090	)
Accumulated deficit		(2,142,869	)			(1,656,688	)
Total stockholders' equity		307,416				198,662
Total liabilities and stockholders' equity	$	872,892			$	881,765

APELLIS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Amounts in thousands, except per share amounts)
(Unaudited)
	For the three months ended September 30,								For the nine months ended September 30,
	2022				2021				2022				2021
Revenue:
Product revenue, net	$	17,676			$	5,314			$	45,439			$	5,937
Licensing and other revenue		4,380				336				7,320				336
Total revenue:		22,056				5,650				52,759				6,273
Operating expenses:
Cost of sales		1,381				149				2,711				149
Research and development		95,207				87,733				287,813				267,688
Cost of research collaboration		—				—				—				50,000
General and administrative		78,406				45,763				192,795				135,309
Total Operating expenses:		174,994				133,645				483,319				453,146
Net operating loss		(152,938	)			(127,995	)			(430,560	)			(446,873	)
Loss on conversion of debt		(32,890	)			(61,102	)			(32,890	)			(100,589	)
Loss from remeasurement of development derivative liability		—				(4,219	)			—				(42,483	)
Interest income		2,809				144				4,339				381
Interest expense		(7,903	)			(2,282	)			(24,888	)			(10,223	)
Other income/(expense), net		99				(117	)			(42	)			1,366
Net loss before taxes		(190,823	)			(195,571	)			(484,041	)			(598,421	)
Income tax expense		446				—				2,140				—
Net loss	$	(191,269	)		$	(195,571	)		$	(486,181	)		$	(598,421	)
Other comprehensive gain/(loss):
Unrealized (loss)/gain on marketable securities		435				(25	)			(383	)			19
Foreign currency loss		(268	)			(156	)			(554	)			(1,912	)
Total other comprehensive income/(loss)		167				(181	)			(937	)			(1,893	)
Comprehensive loss, net of tax	$	(191,102	)		$	(195,752	)		$	(487,118	)		$	(600,314	)
Net loss per common share, basic and diluted	$	(1.75	)		$	(2.28	)		$	(4.65	)		$	(7.31	)
Weighted-average number of common shares used in net loss per common share, basic and diluted		109,126				85,661				104,608				81,846

FAQ

What were Apellis Pharmaceuticals' Q3 2022 earnings results for APLS?

Apellis Pharmaceuticals reported total revenues of $22.1 million, including $17.7 million in net product revenues from EMPAVELI.

When is the PDUFA action date for Apellis' pegcetacoplan NDA submission?

The PDUFA target action date for the pegcetacoplan NDA submission is set for February 2023.

What is the expected cash runway for APLS?

As of September 30, 2022, Apellis has a cash and investments balance of $708.6 million, providing a runway into Q1 2024.

How did Apellis' R&D expenses change in Q3 2022?

R&D expenses for Q3 2022 increased to $95.2 million compared to $87.7 million in the same period of 2021.

What was the net loss reported by Apellis in Q3 2022?

Apellis reported a net loss of $191.3 million in Q3 2022.