Apellis Pharmaceuticals, Inc. (APLS)·Q2 2023 Earnings Summary

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 .

Financial Results

Quarterly Revenue and P&L (oldest → newest)

Notes: Where “—” appears, the specific metric was not available in the cited press release extract. For Q2 2023, gross margin can be derived at ~91.2% = (Revenue $95.0m − Cost of Sales $8.4m) / $95.0m .

Product Revenue Breakdown

KPIs

Guidance Changes

No numeric revenue/EPS guidance was provided in Q2 2023 materials.

Earnings Call Themes & Trends

Management Commentary

• CEO framing launch strength and safety posture: “We reported approximately $90 million in total product sales, including $67 million for SYFOVRE… What we do know… is that these events have been very rare and sporadic” .
• CMO on investigation scope: “No single manufacturing lot was implicated… SYFOVRE is not a biologic… endotoxin levels… significantly lower than… FDA’s expectation… We’re continuing to investigate potential contributing factors” .
• CFO on liquidity and trajectory: “We had $616 million in cash… provides… runway into the first quarter of 2025… these safety events may impact the sales trajectory in the near term… we don’t know the magnitude” .
• CMO on efficacy: “SYFOVRE reduced nonsubfoveal GA lesion growth by 45%… Photoreceptor cell degradation… significantly reduced upon initiation of SYFOVRE treatment” .

Q&A Highlights

• Physician intent survey: 1/3 continue SYFOVRE as before; 1/3 continue in existing but pause new starts; 1/3 pause until more info. Implication: near-term demand variability; orders continued through July despite ASRS timing .
• Inventory and utilization: Top prescribers hold ~1 week inventory; majority of 68k vials likely administered vs sitting in fridges .
• Etiology and ancillaries: Manufacturing/drug product unchanged vs trials; ancillaries (syringes, devices) part of ongoing investigation; prefilled syringe desired but would take years .
• Incidence and first-dose pattern: All confirmed cases after first injection; extremely rare and sporadic; quarterly incidence updates planned .
• Dosing preference: Expect majority every‑other‑month dosing going forward; monthly may rise as comfort returns and GALE data reinforce efficacy .

Estimates Context

• Wall Street consensus comparisons could not be retrieved due to S&P Global request limits at this time; as a result, EPS/Revenue/EBITDA estimate comparisons for Q2 2023 are unavailable via S&P Global for this report [GetEstimates error].

Key Takeaways for Investors

• SYFOVRE demand scaled rapidly in Q2 with $67.3 million revenue and >31k commercial vials delivered, signaling strong early adoption despite July safety headlines .
• The vasculitis investigation has ruled out drug product/manufacturing issues; events remain very rare and sporadic, but a near-term demand pause among a subset of physicians is likely until clarity improves .
• Efficacy narrative is strengthening (GALE: up to 45% nonsubfoveal lesion growth reduction months 24–30), supporting medium-term uptake once safety risk-benefit is better understood and communicated .
• Expense intensity tied to launch pushed G&A to $111.4 million; monitor OpEx discipline and any restructuring updates (note: Apellis announced cost reduction initiatives later in Aug 2023) .
• Liquidity runway into Q1 2025 provides a buffer to navigate investigation and commercialization; management does not foresee immediate financing needs .
• Trading: Expect headline sensitivity and potential volatility around safety updates and physician sentiment; watch quarterly vasculitis rate disclosures and any EMA/foreign regulatory outcomes .
• Thesis: If safety characterization remains rare and confidence rebuilds, the combination of launch traction and efficacy data supports medium-term revenue growth; near-term positioning should account for demand “bumpiness” and OpEx control .

Sources

• Q2 2023 Form 8‑K and Exhibit 99.1 press release; condensed financials
• Q2 2023 earnings call transcripts – and –
• Prior quarter and year press releases for context: Q1 2023 ; Q4 2022
• Corporate restructuring (Aug 29, 2023)