Apellis Pharmaceuticals - Q2 2023
July 31, 2023
Executive Summary
- Q2 2023 total revenue was $95.0 million, driven by SYFOVRE U.S. net product revenue of $67.3 million and EMPAVELI U.S. net product revenue of $22.3 million; licensing and other revenue rounded out the quarter. SYFOVRE launch traction included more than 31,000 commercial vials and ~11,000 samples delivered in Q2 and over 68,000 vials delivered since launch through July 29, 2023.
- Reported net loss was $122.0 million with diluted EPS of $(1.02) for Q2 2023; cost of sales were $8.4 million, R&D expenses $95.7 million, and G&A expenses $111.4 million, reflecting commercial scale-up and investigation-related costs.
- Management highlighted “very rare and sporadic” real‑world retinal vasculitis events post-SYFOVRE injections, found no indication of drug product or manufacturing issues, and expects near-term sales “bumpiness” as physicians seek clarity.
- Cash and cash equivalents were $616.3 million at quarter-end; runway into Q1 2025 was reiterated, though sales trajectory may be impacted near-term by safety-event perception.
- Prior quarter (Q1 2023) total revenue was $44.8 million, including $18.4 million SYFOVRE and $20.4 million EMPAVELI; Q4 2022 total revenue was $22.7 million with EMPAVELI at $19.7 million.
What Went Well and What Went Wrong
What Went Well
- Strong initial commercial execution: SYFOVRE U.S. net product revenue of $67.3 million in Q2; EMPAVELI U.S. net product revenue of $22.3 million. CEO: “We reported approximately $90 million in total product sales, including $67 million for SYFOVRE, demonstrating the early strength of this launch”.
- Efficacy narrative strengthened: GALE long-term extension showed SYFOVRE reduced nonsubfoveal GA lesion growth by up to 45% between months 24–30 vs projected sham; broader GA lesion growth reductions up to 39% monthly arm.
- Broad physician engagement and inventory throughput: >68,000 vials distributed to practices through July; top prescribers typically keep ~1 week inventory, suggesting rapid patient utilization.
What Went Wrong
- Safety headlines created uncertainty: 7 confirmed retinal vasculitis events and 1 suspected, all after first injection, with outcomes ranging from recovery to severe impairment; management expects sales “bumpiness” as doctors pause new starts or await more info.
- Operating expense intensity: G&A rose to $111.4 million (+76% YoY) on commercialization and professional fees; net loss remained sizable at $122.0 million.
- Near-term commercial cadence risk: CFO flagged that safety events “may impact the sales trajectory” with uncertain magnitude, prompting spend discipline and monitoring demand.
Transcript
Operator (participant)
Good day, and thank you for standing by. Welcome to Apellis Pharmaceuticals' second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Meredith Kaya. Please go ahead.
Meredith Kaya (SVP, Investor Relations and Strategic Finance)
Good morning, and thank you for joining us today. Earlier this morning, we reported our second quarter 2023 financial results. We will be happy to take questions from you on these results in the Q&A session. However, we will be focusing our prepared remarks today on SYFOVRE, including feedback from the recent ASRS annual meeting and an update on our comprehensive review of the rare safety events. With me on the call are Co-Founder and Chief Executive Officer, Dr. Cedric Francois; Chief Commercial Officer, Adam Townsend; Chief Medical Officer, Dr. Caroline Baumal; and Chief Financial Officer, Tim Sullivan. Before we begin, let me 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'll turn the call over to Cedric.
Cedric Francois (Co-Founder and CEO)
Thank you, Meredith, and thank you all for joining us today. As Meredith said, we are going to take a different approach on today's call and focus the discussion on the rare events of vasculitis we have seen with SYFOVRE. We know you have questions, and we will do our best to answer as many of them as we can. Before we do, let me provide some overarching comments. First, I have never been prouder to be part of the Apellis team. The past few weeks have been challenging, and once again, the team has shown incredible dedication and resilience. Second, we had a strong second quarter. We reported approximately $90 million in total product sales, including $67 million for SYFOVRE, demonstrating the early strength of this launch.
With more than 68,000 vials of SYFOVRE now distributed to physicians, SYFOVRE is having a positive impact on the lives of tens of thousands of patients across the United States. Third, SYFOVRE continues to demonstrate increasing effects over time. Data from our GALE long-term extension study showed a reduction in non-subfoveal GA lesion growth of up to 45% between months 24 and 30 as compared to projected sham. These are incredible findings, further strengthening our understanding of SYFOVRE as an important treatment for patients with GA. With that, let's get into the discussion. Patient safety is our top priority, and we care deeply for the physicians who rely on us. We are conducting a comprehensive investigation into the potential causes of the events of vasculitis, working closely within the retina community. We do not know the cause yet, and realistically, we may never identify a singular cause.
What we do know, however, is that these events have been very rare and sporadic, and that zero events were reported in our clinical studies. SYFOVRE is a newly launched drug in a new disease with a new mechanism of action. It is not unexpected that events may emerge when bringing a drug into the real world, but it is expected that we take them very seriously. Now, let's get into some of your questions. First, what do we know so far about these events, and what are the visual outcomes for these patients? I will hand it over to Caroline to speak about this. Caroline?
Caroline Baumal (Chief Medical Officer)
Thank you, Cedric. As we get into the details, I want to recognize the patients and physicians who have been impacted by these rare but serious events. I will reiterate what Cedric said: Patient safety is and has always been our top priority, along with providing physicians with the information they need to make the best decisions for their patients. Let me share what we know today. Overall, these events have been rare. We have confirmed seven events since our launch in March, and one additional reported event is being evaluated by Apellis. More than 68,000 vials of SYFOVRE have been distributed to physician practices, and based on our research, we estimate over 60,000 of those have been administered to patients. These events occurred sporadically. There were two events following injections in April, two in May, and three in June.
This is important because as the number of injections increased each month, there was not a corresponding increase in the number of vasculitis events. Each event happened between seven and 13 days following drug administration, and all cases reported to Apellis occurred after the first injection. We recognize that the numbers we reported on Saturday are slightly different than the numbers presented by ASRS. This is because we make determinations based on the information that we receive directly from the treating physician and following review by external retina and uveitis specialists. Given physician confidentiality, we must be careful in what we share regarding detailed patient information.... Additionally, these are highly complex cases and are sometimes difficult to interpret. However, we are working closely with ASRS to make sure we are better aligned in how we evaluate each of these events going forward.
It is still too early to know the outcomes for each of these patients. Retinal vasculitis, by definition, is a severe inflammatory event that can potentially lead to significant vision loss. With standard of care treatments, we hope patients will recover, but this can take up to a few months. Of the seven confirmed patients reported to us to date, two have recovered vision nearly back to baseline. Two have severe vision impairment and are unlikely to be resolved, and three are still evolving. For the one suspected case, the patient's vision has already returned to baseline. Working with the physicians, we are monitoring each of these patients very closely.
Cedric Francois (Co-Founder and CEO)
Thank you, Caroline. The next question is why these events are happening. What are we doing to find the cause, and what do we know so far?
Caroline Baumal (Chief Medical Officer)
These are really important questions, and we have been collaborating with the retina community to better understand the potential factors contributing to these events. One of the first questions we asked ourselves was why we did not see this in the clinical trials. There is a robust process for evaluating safety in a clinical study. Patients are assessed by the trial investigator, and all imaging from the study is reviewed by a masked, independent reading center. Following more than 23,000 SYFOVRE injections administered in our studies to date, zero events of vasculitis have been reported. To confirm these findings, one of the first things we did upon receiving these case reports is go back to our phase III data to make sure that nothing was missed. We re-reviewed all cases of intraocular inflammation and retinal vascular occlusion and confirmed no vasculitis events.
Additionally, we asked the panel of retina and uveitis specialists to re-review all severe intraocular inflammation events, as well as two leading neuro-ophthalmologists to re-review our ischemic optic neuropathy events, both of whom further confirmed that there were no vasculitis events. We also know from our clinical trials that there was no indication of drug-related immunogenicity. Data showed no correlation between IOI events and any anti-drug antibodies, providing evidence that these events were unlikely to be caused by an immune response to either the peptide or to polyethylene glycol. These findings are important to our investigation, as there were no changes in the formulation of the product between clinical and commercial supply.
Cedric Francois (Co-Founder and CEO)
Thank you, Caroline. If we did not see anything in the clinical trials, then what else are we looking into as a potential cause?
Caroline Baumal (Chief Medical Officer)
The next important area we looked into was manufacturing processes and drug quality. There is no indication that these contributed to the vasculitis events. No single manufacturing lot was implicated. No manufacturing issues were identified related to intraocular inflammation, and no quality issues or contamination, such as endotoxins, were found. There has been some confusion around SYFOVRE being a biologic and that these events may have been due to endotoxin. To clarify, SYFOVRE is not a biologic. It is a synthetic peptide that binds specifically to C3 and C3b. Levels of drug product endotoxin in all clinical and commercial batches of SYFOVRE are significantly lower than the reporting threshold and the FDA's expectation for ophthalmic dosage forms for injection. As for what else, we are continuing to investigate potential contributing factors. This includes looking into patient characteristics, as well as evaluating any variations from the clinical trials to real-world.
We don't have any answers on these today.
Cedric Francois (Co-Founder and CEO)
Thanks again, Caroline. Okay, now that we've talked about the investigation, let's turn to how the conversations have been with physicians over the past few weeks, and of course, specifically here at ASRS. Caroline, why don't you start and then turn over to Adam to share what you're both hearing from the retina community and what this might mean for treatment going forward?
Caroline Baumal (Chief Medical Officer)
Sure. Thanks, Cedric. Over the past two weeks, we have been deeply engaged with the physician community, and as Adam will share, also conducted some early market research to better understand perception and impact. Upon hearing of these events, the first thing I did was reach out to multiple physician practices to better understand their experiences with SYFOVRE so far. These are physicians who in total, have administered thousands of SYFOVRE injections to date, and they have not seen any cases of vasculitis. Since then, we have continued to talk with dozens of leading experts in our field and just spent the past four days with hundreds of retina specialists at the ASRS meeting in Seattle. Overall, physicians are eager for more information, and this will take time and more data.
These are serious safety events, and physicians need to understand how to think about treatment. As a retina physician, I can attest that my colleagues are experts when it comes to treating their patients, especially with intravitreal injections. They are thoughtful in the decisions that they make, understand the risks associated with these therapies, and can effectively communicate the benefit-risk profile to their patients. I'll turn it over to Adam to share a bit of what he and his team are also hearing.
Adam Townsend (CCO)
Thanks, Caroline. Good morning, everyone. The commercial team has also spent an enormous amount of time engaging with retina doctors over the past few weeks, and then in person this weekend at ASRS. Our number one priority is to make sure that physicians know that we are sharing information with them as quickly as we can, and that we are available to answer any questions they have. Following the member communication from ASRS, we have sent two communications to physicians sharing additional color and context about these events, and held numerous calls with our physicians and our speakers. The feedback we are getting from the field is very consistent with what Caroline spoke to earlier. Additionally, prior to the ASRS meeting, we conducted some early market research with U.S. retina specialists, most of whom had previous experience treating patients with SYFOVRE.
The key takeaways of this survey were that one-third of the surveyed doctors said they plan to continue using SYFOVRE, as they had been prior to the vasculitis events in both new and existing patients. The next third said they plan to continue using SYFOVRE in their existing patients, but may pause use in new patients. The remaining third of doctors said they plan to pause treatment until they have more information or until their patients request treatment. Based on this, we do anticipate some sales bumpiness in the near term, as many seek to gain more information. Our job is to be a thoughtful, transparent partner over these next few months. We believe it is important to continue to bring this treatment to the millions of people suffering from GA in the U.S., and to be ready to bring this to patients worldwide very soon.
A quick update on the latter. Our marketing applications are under review in multiple territories worldwide, including the EU. We expect approval decisions starting in early 2024. With that, Cedric, I'll hand it back to you.
Cedric Francois (Co-Founder and CEO)
Thank you, Adam. Okay, another question on everyone's mind is how we think these rare events will impact SYFOVRE sales, and ultimately, of course, our cash runway, and how are we thinking about financing at this point. Tim, can you comment on this?
Tim Sullivan (CFO)
Of course. Thanks, Cedric. As of the second quarter, we had $1,660 million in cash. Based on our current assumptions, this provides us with a runway into the first quarter of 2025. These safety events may impact the sales trajectory in the near term, but because it is all very new, we don't know the magnitude. We are monitoring demand very closely and in parallel, looking at our overall spend to ensure we are being disciplined and thoughtful going forward. We will be transparent with you, but we don't have it, all of the details for you today. As for financing, we are not under any immediate pressure to raise money. As we always do, we will evaluate multiple ways in which to finance the company at the right time and with our shareholders in mind.
Cedric Francois (Co-Founder and CEO)
Thank you, Tim. To the last question then, because the ASRS was not just about safety for us this weekend. We also presented some exciting new data from our GALE long-term extension study. Caroline, can you please give us an overview about some of the new data that was shared?
Caroline Baumal (Chief Medical Officer)
Yes, absolutely. Thanks, Cedric. We had a strong presence at ASRS this weekend with seven podium presentations. Notably, we shared for the first time, data from our GALE Extension Study, reinforcing the long-term efficacy and safety of SYFOVRE. These data demonstrated that SYFOVRE reduced GA lesion growth by up to 39% in the monthly arm between months 24 and 30, as compared to the projected sham arm. What we were most excited about were the effects seen in nonsubfoveal GA patients, as Cedric mentioned earlier. Between months 24 and 30, SYFOVRE reduced nonsubfoveal GA lesion growth by 45% in the monthly arm. This means that within three years, patients with nonsubfoveal lesions are seeing the rate of GA progression slow by nearly half. This is the first time we have seen slowing of GA lesion growth at this level in a large, well-controlled study.
The safety profile in GALE was consistent with previously reported phase III data. In addition to the GALE data, we also shared data using AI technology, demonstrating the effect of SYFOVRE in protecting photoreceptor cell degeneration. Photoreceptor cells are responsible for visual acuity, and the degradation of these photoreceptor cells are significantly reduced upon initiation of SYFOVRE treatment. Both the GALE and the photoreceptor data, along with additional analysis presented over these past few days, contribute to the most robust data set against GA and reinforce the importance of treatment with SYFOVRE to help to protect against this irreversible disease.
I'll turn it back over to Cedric for closing remarks.
Cedric Francois (Co-Founder and CEO)
Thank you, Caroline. We are very excited about the data presented at ASRS. Although it has been a turbulent few weeks, we believe that we have a strong future ahead of us. We are closely monitoring the safety of SYFOVRE in the real world and will formally update on the rate of events on our quarterly calls. We will not be commenting on future individual cases. We intend to handle this situation with the utmost integrity and transparency and do what is right for our patients, physicians, and investors. Blazing a new trail in geographic atrophy is not easy, but I am confident in the Apellis team, and we look forward to bringing SYFOVRE to patients in need worldwide. We are also proud of the impact that EMPAVELI is having on patients with PNH.
Additionally, we continue to advance a robust clinical and preclinical pipeline to achieve our goal of improving the lives of people living with debilitating diseases by bringing new and innovative complement therapies to market. Let us now open the call for questions. Operator?
Operator (participant)
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Umer Raffat with Evercore. Your line is now open.
Jonathan Miller (Managing Director and Senior Equity Research Analyst specializing in Biotechnology and Pharmaceuticals)
Hi, guys. It's actually Jon on for Umer. I would love a little bit more clarity on the inventory in that 68,000, vial shipped, as of this past weekend. Can you confirm how much inventory an average doc keeps on stock, and how much inventory would be in the channel at any given time? Furthermore, one bit of feedback that we were hearing out of ASRS is that there may have been a change from trial to commercial in the device. Was there a supplier for the trials that had automatic draw up, of the SYFOVRE solution? Commercial docs have been complaining that draw up from the vial obviously is challenging, and that's a little bit different for this product.
Is that something that could be driving this or something you've looked into?
Cedric Francois (Co-Founder and CEO)
Thank you, Jon. I will hand the first question over to Adam and then take the second one.
Adam Townsend (CCO)
Hi, Jon, it's Adam. Yes, of the 68,000 vials, those have been distributed to physician practices. We contacted our top prescribers, and on average, after those discussions, our top prescribers tell us they hold approximately one week's worth of inventory within their fridges. The vast majority of those 68,000 vials are likely not sitting in fridges. They're probably being used with patients. On average, about one week held in a refrigerator. Hopefully, that answers the first part, and then I'll hand back to Cedric.
Cedric Francois (Co-Founder and CEO)
Thank you, Adam. I think, John, we had an important objective this weekend coming to ASRS, and that was, first of all, to work closely with the ASRS and get a very good sense of what is happening nationwide, i.e., how large is this problem? Is there something that we have missed? Secondly, is this rate changing over time, right? What's very important here, and the key objective of this weekend and the research that we did in the past couple of weeks, is that we can conclude that these events are very rare, and as Caroline mentioned earlier, that they don't increase over time, right? They're sporadic in nature. I think that is really, really important. Of course, comes the question, what is the potential etiology behind this?
As you can imagine, of course, and as you mentioned, the best starting point is what was different in the clinical trials versus the real world. We are going to be very methodical, and we are not going to engage in hypothesizing until we have data, and I think that is really important. That is something that we owe to physicians and to patients. In that investigation, the first step was to find out, is the drug product that we are delivering to physicians today the same as the drug product that we used in the clinical trials? The answer is yes. We are now going to take next steps to evaluate other factors that could have played a role, but we will only communicate on those when we have more clarity.
Jonathan Miller (Managing Director and Senior Equity Research Analyst specializing in Biotechnology and Pharmaceuticals)
When you say the drug product is the same, you're, you're specifically not talking necessarily about any of the additional materials that may have come along with the vial of drug, like syringes, drop, assisting devices, things like that?
Cedric Francois (Co-Founder and CEO)
All of these will be part of our investigation.
Jonathan Miller (Managing Director and Senior Equity Research Analyst specializing in Biotechnology and Pharmaceuticals)
All right. Thank you very much.
Cedric Francois (Co-Founder and CEO)
Thank you, Jon.
Operator (participant)
Thank you. Our next question comes from the line of Tazeen Ahmad with Bank of America. Your line is now open.
Tazeen Ahmad (Managing Director in U.S. Equity Research)
Hi, good morning, guys. Thanks for taking my questions. Also, I wanted to clarify upon some of your prepared remarks. Cedric, how are you thinking about, you know, on a go-forward basis, a risk mitigation plan? Maybe this is appropriate for Adam, 'cause Adam, you've talked about what you've done so far, but I think docs probably would benefit from, from guidance from the company going forward, where are you in trying to plan that out? Secondly, I wanted to clarify, were all of the cases of vasculitis that were reported to ASRS, were they injected by retina specialists, or were any of them done by general ophthalmologists? Then I have a follow-up.
Cedric Francois (Co-Founder and CEO)
Thank you so much, Tazeen. First of all, briefly on the risk mitigation and, and docs' guidance, I think it is really important here that we have a label, that we have a way of, that we have thoroughly evaluated in clinical trials, of distributing this product and using this product. That is something that we, of course, want to stick to as closely as possible. We have communicated with physicians through letters, to update them, and we will continue to do so to make sure that the, the routes of communication are thorough. We will continue to work with the ASRS. As far as it relates to, you know, practice mitigation steps, et cetera, you know, we are going to be working with the retina community, but the retina community is better positioned than anyone, right?
To talk about how this should be handled. I think, again, the most important fact that we wanted to get our hands on this weekend was to understand the rate and the sporadic nature, and to communicate that, you know, with ASRS to the community. I think that is really important. The vasculitis cases that were all reported, I will look to Caroline, but I believe were all done by retina doctors. That is correct, yeah.
Tazeen Ahmad (Managing Director in U.S. Equity Research)
Okay, thanks. Then lastly, I think ASRS said that there's been a suspected case that maybe hasn't been confirmed that occurred after the second SYFOVRE injection. I think this was not reported to you, but over the past weekend, have you had the opportunity to learn a little bit more about that particular patient's characteristics?
Cedric Francois (Co-Founder and CEO)
Yeah. I think it's important to point out here that suspected cases are suspected for a reason, right? In the sense that there are many confounding factors that come into this. This is not an exact science, right? The key thing is that after kind of a really thorough search nationwide, right, that we ended up realizing that we are very close to where we were a few weeks ago, right? This, there was not, like, a hidden tsunami, that all of a sudden came our way. You know, there will, in all likelihood, be new cases. We will take those and evaluate those. We will continue to work with ASRS, but, with the knowledge that the rate and the sporadic nature of these events, you know, create a risk-benefit profile that physicians can then openly communicate about with their patients.
Tazeen Ahmad (Managing Director in U.S. Equity Research)
Okay. Thanks, Cedric.
Cedric Francois (Co-Founder and CEO)
Thank you, Tazeen.
Operator (participant)
Thank you. Our next question comes from the line of Anupam Rama with JPMorgan. Your line is now open.
Anupam Rama (Managing Director and Senior Equity Analyst)
Hey, guys. Thanks so much for taking the question. maybe a question on how you segmented the physicians. maybe the one-third of physicians who you've talked to that are remaining, going to continue to prescribe, can you give us a sense of where these physicians fall into sort of what you've seen amongst your top prescribers to date?
Cedric Francois (Co-Founder and CEO)
Adam?
Adam Townsend (CCO)
Yeah, absolutely. Yes, the one-third of our market research. They tend to be actually a mix. They're a mix of our top prescribers, large accounts, but they're also slightly smaller accounts. The SYFOVRE users within our market research had between one and 250 patients. You can tell there that there's a broad bolus of SYFOVRE use within that snapshot market research we did prior to ASRS. We tend to get usage across the large PE-backed accounts and smaller accounts as well. In our market research, that was consistent within that third.
Anupam Rama (Managing Director and Senior Equity Analyst)
Thanks so much for taking our question.
Cedric Francois (Co-Founder and CEO)
Thank you, Anupam.
Operator (participant)
Thank you. Our next question comes from the line of Colleen Kusy with Baird. Your line is now open.
Colleen Kusy (Senior Research Analyst)
Thanks. Good morning, and thanks for taking our questions. We've heard similar feedback on the needle and the commercial kit. Is there any progress made on potentially developing a prefilled syringe for SYFOVRE? How long would that take to bring to market?
Cedric Francois (Co-Founder and CEO)
Yeah. Thank you, Colleen. Again, as mentioned earlier, our investigation around the ancillaries is part of the overall investigation. Of course, a prefilled syringe is an important objective for us. It was before these events occurred as well. That is unfortunately, something that takes several years of development, as was the case for, you know, LUCENTIS and EYLEA as well. We are working very hard towards that, but that is not something that you should expect in the near future.
Colleen Kusy (Senior Research Analyst)
That's helpful. Thank you. A follow-up: At least one of the patient's vision did recover, encouragingly. Anything notable about that case that you think can be applied if future cases come up? You know, any, any guidance on how you think the best treatment for these cases would be in the future?
Cedric Francois (Co-Founder and CEO)
Caroline?
Caroline Baumal (Chief Medical Officer)
Thank you. As I presented earlier in this talk, two of the patients have recovered vision nearly back to baseline, and three cases are still in evolution. What I would say is that these cases are so rare and complex, it's difficult to make any interpretation about treatment guidelines at the present. We will continue to communicate with the retina community and update them when we have some guidance.
Colleen Kusy (Senior Research Analyst)
Thank you. Last one from us. Just in Europe, have you submitted these vasculitis cases to European regulators, and do you expect that to be part of the review?
Cedric Francois (Co-Founder and CEO)
Of course, we communicate all safety events to all the regulatory authorities.
Colleen Kusy (Senior Research Analyst)
Great. Thanks for taking our questions.
Cedric Francois (Co-Founder and CEO)
Thank you, Colleen.
Operator (participant)
Thank you. Our next question comes from the line of Yigal Nochomovitz with Citigroup. Your line is open.
Yigal Nochomovitz (Director and Biotech Equity Research Analyst)
Hi, Cedric and team. Thanks for taking the question. On the survey you conducted, you mentioned that the market research was conducted before ASRS. Just when you presented the survey to the physicians, was that just based on the contents of the ASRS letter from mid-July, or were there any further details that they were given with respect to either the retinal images or detailed aspects of the case studies presented on Saturday? Thanks.
Cedric Francois (Co-Founder and CEO)
Thank you, Yigal. Good hearing you. Adam?
Adam Townsend (CCO)
Yeah. Hi, Yigal. What we did was, with the survey, we only used the letter, from ASRS as the basis for that.
Yigal Nochomovitz (Director and Biotech Equity Research Analyst)
Okay, thanks. Then just, you know, being very specific with respect to the statement around drug product or manufacturing, I mean, are you, are you saying that, that excludes the potential of the underlying mechanism of action of SYFOVRE on C3 inhibition, or does drug product and manufacturing just apply to the way the excipients were produced or any other aspects of the manufacturing process, but not necessarily the mode of action itself?
Cedric Francois (Co-Founder and CEO)
Yeah. The mode of action is going to be part of the broader investigation, but again, the mode of action was the same in the clinical trials, of course, as it was in the real world. Again, no answers there yet. All we can say is that the product that was manufactured and used in the clinical trials is the same product as the product that we are distributing to physicians to date, all within the same specs and the same manufacturing process.
Yigal Nochomovitz (Director and Biotech Equity Research Analyst)
Okay. I know Caroline mentioned a few times, these are highly complex cases. And I don't think I saw in the ASRS slide any demographics on the, other than GA. Is there anything you can say, any potential commonality in terms of, comorbidities or other, conditions or disease conditions that may be at least a hypothesis that you, you're going to pursue? Or are these all just highly divergent, highly complex and, no clear way to pursue a hypothesis other than obviously, the commonality of all having GA?
Cedric Francois (Co-Founder and CEO)
Thank you, Yigal. These cases are so rare that, you know, as you can imagine, kind of trying to find commonalities between patients requires something that, you know, would require a much larger denominator or not, numerator. We're gonna continue to track it and continue to investigate, but right now, all we have done is be able to exclude manufacturing. The rest will be subject to further research.
Yigal Nochomovitz (Director and Biotech Equity Research Analyst)
Okay. Thanks, Cedric.
Cedric Francois (Co-Founder and CEO)
Thank you.
Operator (participant)
Thank you. Our next question comes from the line of Steven Seedhouse with Raymond James. Your line is now open.
Steven Seedhouse (Managing Director and Head of Biotech Research)
Yeah, yeah. Hi, good morning. Thanks for taking the questions. I have a commercial one and then a follow-up for Caroline, if I could. The... Some of the numbers that, we now have in hand, so 42,000 vials distributed to offices in the second quarter, 60,000 per the ASRS letter, as of July 15th. That implies, if we back out 1Q as well, implies like 8,000 or 9,000, let's say, in the first two weeks of July that were distributed. Then we have the 65,000 number on July 21st, and 68,000 on July 29th that you're updating, today as well, which would imply like 8,000 vials distributed in the second half of July. Can you just corroborate that math?
I mean, I, I appreciate you said, you know, that you expect some sales impact, and certainly the survey work suggests that, but it really does look like the first half and the second half of July had about the same number of vials distributed.
Cedric Francois (Co-Founder and CEO)
Thank you, Steve. Adam?
Adam Townsend (CCO)
Hi, Steve. Yes, I think your math is right, but one thing to think about, is this week and the week just gone, and this current week is obviously the ASRS weekend, so a lot of physicians are actually here or were here in Seattle. We always calendarize some bumpiness for this week as physicians tend to attend these conferences. The orders for vials are continuing and have continued throughout the last couple of weeks, as your math explained.
Steven Seedhouse (Managing Director and Head of Biotech Research)
Okay, thanks. For Caroline, just there seemed to be some discussion during the ASRS panel presentation on Saturday, that tap and inject, for instance, especially vancomycin, is not necessarily an optimal approach for management of retinal vasculitis, if, if that is suspected. Which it wasn't, because it hadn't been observed in a clinical study, and, and based on the Beovu experience, I think something like intraocular steroids, especially early on, might be a, a better approach and could maybe mitigate, you know, some of the worst outcomes, now that this is a known possibility. Is that characterization accurate, and do you think visual outcomes could be improved just on that basis alone going forward, if this happens in the future? Thanks.
Caroline Baumal (Chief Medical Officer)
As I said before, and, thank you for that question, these cases are complex, and they're, they're not all bound by commonality. I think we have more to learn with our, our retina colleagues on management of these cases.
Steven Seedhouse (Managing Director and Head of Biotech Research)
Great. Thanks.
Operator (participant)
Thank you.
Cedric Francois (Co-Founder and CEO)
Thank you, Steven.
Operator (participant)
Our next question comes from the line of Philip Nadeau with TD Cowen. Your line is now open.
Philip Nadeau (Managing Director and Senior Research Analyst)
Good morning. Thanks for taking our questions, a couple from us. First, on the conclusion that manufacturing wasn't involved, can you discuss a bit more of the basis for that conclusion? What assays were performed, and generally, what analysis did you do to conclude manufacturing is not an issue?
Cedric Francois (Co-Founder and CEO)
Yeah. Thank you, Phil. As you know, you know, the, the way these investigations starts by looking into manufacturing are quite well standardized, right? Our CMC group has a process to go through where, you know, lots specifically, lots specifically get investigated to find out that, you know, all of these cases were not related to one specific lot. We then look whether all the drug product that was shipped was within the specs that are predefined in our registrational batches and through the NDA. Then much more work around, you know, testing and evaluating whether the possibility of the introduction of a manufacturing problem was involved in these cases, and the answer to that was no.
Philip Nadeau (Managing Director and Senior Research Analyst)
You may recall the Eprex situation about 20 years ago, where Eprex was associated with red cell aplasia, and I think it turned out to be they changed, like, the supplier of the rubber stoppers, something that seemed totally innocuous. If that same situation had been the, the case here, would the analysis you did to look at manufacturing and supply have, have picked up that as a potential cause? Are they, are they that detailed?
Cedric Francois (Co-Founder and CEO)
If, if there was a change between what we did in the clinical trials in terms of how we manufacture the product and what we do now in the real world, we would have told you. You know, this is all within the same specs and the same use and the same manufacturing process that we used in our clinical trials as well.
Philip Nadeau (Managing Director and Senior Research Analyst)
Perfect. Then, second question: at ASRS, there were some questions from physicians on the per patient incidence. Since, it seems to happen after the first dose, physicians were wondering what would be the risk of a naive patient of going on therapy. Do you have any estimates as to how many patients are on therapy, and so what is the per patient incidence of a naive patient getting the vasculitis?
Cedric Francois (Co-Founder and CEO)
Yeah, thank you so much for that question, Phil. It's very early, of course, to look into something like that. Of course, the majority of these estimated 60,000 injections in the real world are probably going to or will probably have been first-time injections in first-time patients. That, of course, provides a huge denominator from which to work. Now we're going to find out, right? I mean, whether this is a first injection phenomenon, subsequent injections, we just don't know a lot yet, other than the fact that it's an extremely rare event and that it is an event that is sporadic in nature, right?
I think that's really important to bear in mind, is that the retina community, you know, ran through kind of a very traumatizing event a couple of years ago, where an increased incidence over time was taking place, where this product was sensitizing patients, and more and more patients came out of the woodworks and physicians. That is absolutely not what is happening here. I think it's important to state that categorically.
Philip Nadeau (Managing Director and Senior Research Analyst)
Last question from us. In terms of the path going forward, do you have any information on when ASRS could provide an update on its analysis of cases, or does Apellis have any timelines to providing a next disclosure on either your root cause analysis or the incidence of vasculitis?
Cedric Francois (Co-Founder and CEO)
Yeah. As we mentioned, we, we will provide a quarterly update as it relates to the rates. We are going to provide updates on the investigation when we have things to tell, right? We're not going to make an update unless we have real clarity around understanding this, and we are going to continue to work with the ASRS. We're very grateful for the partnership that we have with them.
Philip Nadeau (Managing Director and Senior Research Analyst)
Great. Thanks for taking our questions.
Cedric Francois (Co-Founder and CEO)
Thank you, Phil.
Operator (participant)
Thank you. Our next question comes from the line of Justin Kim with Oppenheimer & Co. Your line is now open.
Justin Kim (Executive Director and Senior Analys)
Hi, good morning. Thanks for taking the questions. Maybe shifting gears a little bit towards GALE. You know, just in the context of the safety events and given that GALE is really delivering on showing those increasing effects over time, just wondering how you've heard the feedback in terms of patient participation in the U.S. for the clinical study and whether sort of the, those subgroups are continuing on, especially given that these events aren't being observed in clinical study.
Cedric Francois (Co-Founder and CEO)
Yeah. Thank you so much for that question, Justin. First of all, you know, as, as you may recall, the number of patients that went from DERBY and OAKS into GALE was very high, right? Approximately 80% of the patients in the trial decided to go into this three-year extension study. We are actually, I think, months away from having the first patient who has been on treatment for five years with SYFOVRE already in the GALE study. An incredibly rich and important data base for us to understand not just the safety, but also, as you mentioned, the efficacy. As Caroline mentioned earlier, if you have a patient with extrafoveal lesions, and as a reminder for those that are not familiar with this, these are patients who have GA in the periphery of their vision.
Still with typically a good ability to read and recognize objects with their central vision. In other words, patients that can really benefit. Being able to slow down the progression of the disease by something that looks like it's close to 50% is, of course, incredibly important. With all of these things, you know, of course, we have these safety events, which we take very seriously, which we will investigate. On the flip side, the efficacy profile is also evolving and something very exciting, I think, for patients to look forward to.
Operator (participant)
Thank you. Our next question comes from the line of Derek Archila with Wells Fargo. Your line is open.
Derek Archila (Managing Director and Biotechnology Equity Research Analyst)
Hey, good morning, and thanks for taking the questions. Just two from us. I guess, first off, can you just remind us how many patients present with bilateral disease? I just, you know, do you think the ASRS notification may deter docs from doing injections in both eyes?
...Then also, I know you haven't said, you know, you're still working on the investigation, but no similarities or commonalities between these patients experiencing retinal vasculitis has been determined. If there is, would you expect, you know, future label language that could direct patients or, sorry, direct docs, you know, to the patients who are best suited for therapy? Is that something that would ultimately end up happening? Thanks.
Cedric Francois (Co-Founder and CEO)
Thank you, Derek. Let me start with the second question. You know, it is way too early to talk about that. We are obviously in very close communication with the FDA on all of these things. That is something that we will evaluate and potentially do when more information is available. As it relates to bilateral patients, Caroline, maybe you could speak to that.
Caroline Baumal (Chief Medical Officer)
Thank you, Cedric. As the ASRS did present, they did present that one bilateral case, and I think that, you know, that is- we have retina physicians who are very thoughtful in what they do, and we typically do include bilateral injections in our treatment paradigm. However, that case, you know, does highlight that, you know, when we have a new product, it may be prudent to consider unilateral injection first time with use.
Derek Archila (Managing Director and Biotechnology Equity Research Analyst)
Gotcha. Thank you so much.
Cedric Francois (Co-Founder and CEO)
Thank you, Derek.
Operator (participant)
Thank you. Our next question comes from the line of Ellie Merle with UBS. Your line is now open.
Ellie Merle (Director and Equity Research Analyst)
Thank you so much for taking the question. What's your understanding in the cases, if all of them were given using the provided administration materials, or did any of the physicians choose to use, say, a different syringe for the injection or maybe deviate in any way, from the proper administration procedures? Just also you alluded to, you submitted the safety findings to the EMA. Just any color, on that, so far from those interactions? Thanks.
Cedric Francois (Co-Founder and CEO)
Thank you so much, Ellie. Again, I think it's important to note here that we are very fortunate that the retina community is so professional and experienced with intravitreal injections, right? I mean, this is the heart and the bread and butter of these practices for the last, you know, 15 years or so. So you know, that is something that needs to be remembered here. Syringes, ancillaries, as mentioned before, will be part of our broader investigation, and we will comment on that when we have more information. As it relates to the EMA, we communicate, as I mentioned, everything, of course, to these agencies. It becomes part of the evaluation. That evaluation with EMA so far has been going well. For now, we don't see any changes.
Ellie Merle (Director and Equity Research Analyst)
Great. Thanks. Just a quick follow-up. In the patients that had IOI who didn't have retinal vasculitis, I guess, did they have any vision impacts and any color on if those cases fully recovered? Thanks.
Cedric Francois (Co-Founder and CEO)
Yeah, I think that's, that is a very important question, Ellie, because there is a bit of a misconception with the way the slide was presented, that IOI cases and vasculitis, you know, are confusable with each other. Intraocular inflammation is very normal with intravitreal injections, and the rates of intraocular inflammation that we have seen in our trials and in the real world are in line with what we saw in the clinical trials and with what we saw, or what you would see with anti-VEGF injections in general. On that end, we have no concerns. It's of course, these cases of vasculitis which, you know, do look like they are kind of a severe complication of severe inflammation, that draw our special attention. I think that's, that's an important difference there.
IOI cases without vasculitis typically have a much better recovery. I don't know, Caroline, if you would like to add something?
Caroline Baumal (Chief Medical Officer)
We're looking into every single case that is reported to us, and the rates of IOI that we've seen in the real world are consistent with the clinical study.
Ellie Merle (Director and Equity Research Analyst)
Great. Thanks so much, guys.
Cedric Francois (Co-Founder and CEO)
Thank you.
Operator (participant)
Thank you. Our next question comes from the line of Annabel Samimy with Stifel. Your line is now open.
Annabel Samimy (Managing Director and Senior Analyst)
Hi, thanks for taking my question. I just wanted to go back to, you know, the methods that were used in clinical trials versus the methods that are being used in real world. Is there anything that you can sense from the way physicians are assessing a patient right now in the real world for treatment versus what was done in clinical trials, where they, you obviously didn't see any of these, these cases of retinal vasculitis? Anything that you can gather from that to, I guess, develop some kind of risk mitigation plan or some kind of protocols that they can better assess the patients going forward?
Cedric Francois (Co-Founder and CEO)
Yeah. Thank you, Annabel. Look, as, as mentioned before, we know we have a, a, as strong a desire as anyone, more probably than anyone, to try to understand this, but it is very important to be methodical in that process, which is something that we are very much dedicated to. You know, we don't want to comment about what could be. We are going to look into everything, and when we have more information, we will share it. As a general comment, and that is how it works, right? Clinical trials are different from the real world, where there is much more variability on every front, and being able to understand these signals, which again, you know, it, it's unfortunate, but it is not at all unique, right?
Many drugs, when they go into the real world, will run into unexpected findings. At that point in time, it is on the company, on us as a sponsor, to be diligent, to take these cases seriously and to evaluate them and communicate them properly.
Annabel Samimy (Managing Director and Senior Analyst)
Okay, great. Then as far as the differences between what was reported to Apellis versus what ASRS reported on, are you going to be getting these cases and reviewing them, or? You know, to what extent is your independent panel overlapping at all with the ASRS panel? Is there any overlap there, or are they completely different sets of physicians?
Cedric Francois (Co-Founder and CEO)
Yeah. Thank you so much for that question. The, the, the, the wonderful news here, from my vantage point is that this partnership that we had with the ReST Committee and with ASRS, was a very thorough process and a collaborative process, where, you know, many of these cases, were shared, overlapped, as you could see from that slide. Importantly, we set in stone that the rate is extremely rare and that it is sporadic in nature, right? Being up or down one case, we ended up remarkably close to each other, right? Now, about the exact nature of these cases, occlusive, non-occlusive, depending on which experts you show this to, you're gonna get different answers, right?
The most important thing here is you cannot count these cases as to one up or one down or even to their nature, but we are very much in the same ballpark, right? This is a very rare event, fortunately, and one, again, that is sporadic in its distribution over time.
Annabel Samimy (Managing Director and Senior Analyst)
Okay, great. If I could just follow up with one more. I know that a lot of people have been making a Beovu comparison. Maybe just to repeat in context for us one more time, why this is not going the way of Beovu, maybe in terms of the onset and the rarity. Can you maybe just speak to that again, so we can sort of put that in context?
Cedric Francois (Co-Founder and CEO)
Yeah. Thank you, Annabel. We're very fortunate because Caroline was actually the lead author on the lead paper on the Beovu investigation and the work that was done there. She's uniquely positioned to comment on this.
Caroline Baumal (Chief Medical Officer)
Thank you, Cedric. I think that what we have seen with SYFOVRE is very rare. In contrast, the rate of vasculitis with brolucizumab was 3.3% in patients who were in the HAWK and HARRIER studies, and we did not see this at all in our clinical studies. Also, as you alluded to, the onset and the clinical features differ from what was seen with brolucizumab.
Annabel Samimy (Managing Director and Senior Analyst)
Differ in terms of when was the onset?
Caroline Baumal (Chief Medical Officer)
With brolucizumab, the onset was typically after three to four weeks. Of note, having the events were more common with multiple injections, with a shorter time interval between injections, and this played a role in the discontinuation of some of the brolucizumab clinical studies. As well, brolucizumab caused a, an arteritis and different sorts of features on clinical exams.
Annabel Samimy (Managing Director and Senior Analyst)
Okay, great. Thanks so much for the color.
Cedric Francois (Co-Founder and CEO)
Thank you, Annabel.
Operator (participant)
Thank you. Our next question comes from the line of Joseph Stringer with Needham & Co. Your line is now open.
Joseph Stringer (Principal and Senior Equity Research Analyst)
Hi, thanks for taking our questions. Just curious, can you comment on the returns of vials and what visibility you have into this? More specifically, how many vials have been returned and/or how many practices have returned SYFOVRE vials?
Cedric Francois (Co-Founder and CEO)
Thank you, Joey. Adam?
Adam Townsend (CCO)
Yeah. Hey, Joey. Yes, we have seen some vial returns, but the number is actually very small.
Joseph Stringer (Principal and Senior Equity Research Analyst)
Okay. Thank you for taking our questions.
Cedric Francois (Co-Founder and CEO)
Thank you, Joey.
Operator (participant)
Thank you. Our next question comes from the line of Douglas Tsao with H.C. Wainwright. Your line is now open.
Douglas Tsao (Managing Director and Senior Healthcare Analyst)
Hi, good morning. Thanks for taking the questions. First, I'm just curious, Adam, in terms of the market research for the physicians who said that they are either pausing altogether or the third who are stopping with new patient start. I'm just curious if you got a sense from, and maybe this is more anecdotal, but just what would they, sort of, need to see to restart?
Adam Townsend (CCO)
Yeah, thanks for the question. Within the research and with our conversations at ASRS this weekend, I think a lot of physicians are, are the ones that have said they would pause. They want to just see what happens over the next couple of weeks, right? This has all happened relatively quickly over the last few weeks, and they want to see that stability. They want to see if any more information comes out. They have found having conversations with their patients about a rate would be important, and they want to hear updates from Apellis in a, a very transparent way. That tends to be the theme for those physicians that are either pausing new starts or, you know, have, have decided to pause for an enough time to get more information. That was a, a consistent theme at ASRS, as also within our research.
Caroline, I don't know if you want to add anything to that based on your physicians? Nope, Caroline says the same thing. That's, that's where we are.
Douglas Tsao (Managing Director and Senior Healthcare Analyst)
Okay. Just, just to be clear, Adam, it's not as if they're waiting for some definitive, you know, sort of conclusion on this issue. There just seems like they're waiting more to see-... some stability, for lack of a better word, to sort of get a sense of, you know, now that this has come to light, that more cases aren't coming out of the woodwork, et cetera?
Adam Townsend (CCO)
Correct. Correct.
Douglas Tsao (Managing Director and Senior Healthcare Analyst)
Okay, great. Just as a follow-up, I think somebody asked, and I'm not sure, maybe I missed the answer, but just do you know of the 68,000, how many were first injections right now?
Adam Townsend (CCO)
We don't know, but our assumption is that, you know, the vast majority are first, first injections.
Douglas Tsao (Managing Director and Senior Healthcare Analyst)
Then just one final quick one. Are you continuing with DTC work, or, I know you had just started the Henry Winkler campaign, or is that on pause right now?
Adam Townsend (CCO)
Yeah, it's a great question. DTC has had a really good impact and has driven patients to have conversations about losing vision. I think we'll be very thoughtful moving forward, how we how we use that. Now is the time for us to have really transparent, open conversations with physicians. The DTC impact and getting patients to go and check their vision, I think is a good thing for all, all patients who- of a certain age. I'm very proud of that work, but we'll be thoughtful in how we use that moving forward.
Douglas Tsao (Managing Director and Senior Healthcare Analyst)
Okay, great. Thank you so much.
Operator (participant)
Thank you. Our next question comes from the line of Laura Chico with Wedbush. Your line is now open.
Laura Chico (SVP, Equity Research)
Hey, good morning, guys. Thanks very much for taking the question. I had just 1 clarification question. I apologize if I missed this, but I think ReST Committee noted there was 1 incident that occurred after a second injection. I just wanted to clarify if I have that correct, but also, how Apellis Pharmaceuticals came to kind of a different conclusion there? Then I have a follow-up.
Cedric Francois (Co-Founder and CEO)
Yeah. Thank you, Laura. That was a suspected case. We need to look into that. you know, based on our findings, all so far were first injections.
Laura Chico (SVP, Equity Research)
Okay. Thank you. Just kind of going back, you know, Adam, thank you for the market research color. I, I guess, I realize it's premature, but what is your expectation around how the dosing interval frequency might evolve over time here, now that we've kind of encountered these safety events? How do you think physicians are going to lean one way or another in terms of the dosing interval with SYFOVRE? Thank you.
Adam Townsend (CCO)
Yeah, you're welcome, Laura. Yeah, absolutely. Our, our assumption and my assumption was, prior to these vasculitis, rare vasculitis events, the vast majority of physicians were using every other month type dosing. I think this just confirms that, again, every other month dosing will be used by the, you know, the vast, vast majority moving forward. I expect that to be consistent for, for, for the future. I think, as we progress through this and people look at the, the GALE data and the increasing effects over time, once the physician segment that needs to get comfortable with these safety events gets comfortable, I think you'll start to see a, a little bit of, fluctuation as monthly dosing moves, but every other month will be the vast majority.
Caroline, from your perspective, anything you want to add?
Caroline Baumal (Chief Medical Officer)
I think that physicians are very, very thoughtful and very experienced with this type of medication. The vast majority of physicians appreciate having a label that's so flexible. I've heard all different sorts of things, but I think between every six to eight weeks, with every other month dosing is the preferred paradigm.
Laura Chico (SVP, Equity Research)
Thanks very much, guys.
Cedric Francois (Co-Founder and CEO)
Thank you, Laura.
Operator (participant)
Thank you. Oh, I'd like to hand the conference back over to Cedric Francois for closing remarks.
Cedric Francois (Co-Founder and CEO)
Thank you very much. Well, in closing, thank you all for joining us today. It's been, of course, you know, a, an intense couple of weeks for us, but we are very happy with how we come out of the ASRS, because we believe that we have gained significant clarity. We are ready to take on the next couple of weeks. We will continue the investigation and promise to continue to be as transparent as we have been. We are around later today and tomorrow. If you have any additional questions, feel free to reach out to Meredith. Thank you.
Operator (participant)
This concludes today's conference call. Thank you for your participation. You may now disconnect.