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Apellis Pharmaceuticals, Inc. (APLS)·Q4 2023 Earnings Summary

Executive Summary

  • Q4 2023 total revenue was $146.4M, up sharply from $22.7M in Q4 2022, driven by SYFOVRE U.S. net product revenue of $114.3M; net loss improved to $88.6M from $166.0M YoY .
  • SYFOVRE demand rebounded with ~62,000 doses delivered in Q4 (55,000 commercial vials; 6,400 samples) and Apellis cites ~90% GA market share; EMPAVELI maintained 97% compliance and ~$24.4M Q4 revenue .
  • Management expects 2024 total operating expenses to be lower than 2023 and entered capped call unwind agreements with expected cash proceeds of ~$100M (with total potential up to ~$125M), bolstering liquidity ($351.2M cash at year-end) .
  • EU CHMP re-examination for SYFOVRE underway with a final opinion expected in Q2 2024; Phase 3 VALIANT topline (C3G/IC‑MPGN) anticipated mid‑2024—key catalysts for sentiment and stock trajectory .

What Went Well and What Went Wrong

  • What Went Well

    • SYFOVRE launch momentum: “The launch exceeded even our own expectations… demand growth continuing into the first quarter of 2024” (Cedric Francois) .
    • Market leadership and dosing flexibility: “Today, SYFOVRE is the #1 chosen GA treatment with a current market share of approximately 90%… vast majority of physicians… every 6 to 8 weeks” (Adam Townsend) .
    • Strong operational positioning: “We expect our total operating expenses in 2024 to be less than… 2023… and entered agreements to unwind ~80% of capped calls” (Tim Sullivan) .

  • What Went Wrong

    • Elevated G&A from launch support: Q4 G&A was $141.7M vs. $84.4M in Q4 2022; 2023 G&A reached $500.8M (vs. $277.2M 2022) due to hiring, commercialization, and professional fees .
    • EU regulatory setback: Initiating re‑examination after January 2024 negative CHMP opinion; management stresses an “uphill battle” (Cedric Francois) .
    • Seasonality and competitive headwinds: Q1 seasonality (Medicare recertifications, weather) and PNH competition from new oral entrants expected to pressure EMPAVELI growth (Cedric/Adam) .

Financial Results

MetricQ4 2022Q3 2023Q4 2023
Revenue ($USD Millions)$22.7 $110.0 $146.4
Diluted EPS ($USD)$-1.50 N/A$-0.73
Net Loss ($USD Millions)$166.0 $140.0 $88.6
Net Income Margin %-731.1% (−166.0/22.7) -127.3% (−140.0/110.0) -60.5% (−88.6/146.4)
EBIT (Operating Income) ($USD Millions)$-164.1 ~$-137.4 (110.0−22.4−79.0−146.0) $-84.5
EBIT Margin %-723.1% (−164.1/22.7) -124.9% (−137.4/110.0) -57.7% (−84.5/146.4)
Cost of Sales ($USD Millions)$2.9 $22.4 $19.9
R&D ($USD Millions)$99.4 $79.0 $69.3
G&A ($USD Millions)$84.4 $146.0 $141.7

Segment revenue breakdown:

Segment Revenue ($USD Millions)Q4 2022Q4 2023
SYFOVRE U.S. net product revenue$0.0 $114.3
EMPAVELI U.S. net product revenue$19.7 $24.4
Licensing & other (Sobi)$3.0 $7.7
Total Revenue$22.7 $146.4

KPIs:

KPIQ3 2023Q4 2023
SYFOVRE doses delivered to practices37,000 commercial vials + 10,000 samples ~62,000 doses (55,000 commercial; 6,400 samples)
Total SYFOVRE doses since launch (cumulative)>100,000 by Oct 5 ~160,000 in 2023
EMPAVELI compliance rate97% 97%
EMPAVELI Injector adoptionApproved in Q3; rollout begun ~60% existing; >90% new patients
Accounts receivable (year-end)$169.3M (Sep’23) $206.4M (Dec’23)
Cash & cash equivalents (year-end)$452M (Sep’23) $351.2M (Dec’23)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Operating ExpensesFY 2024Not specified2024 total OpEx expected to be less than 2023 Lowered (cost discipline)
Capped Call Unwind ProceedsFeb–Mar 2024Not specified~$100M expected from unwind begun Feb 27; total potential up to ~$125M if remaining unwind executed New
Liquidity / RunwayOngoingCash funds ops into at least Q2 2025 (Q3 call) Cash + capped-call proceeds + sales sufficient “for the foreseeable future” Maintained/Enhanced
EU CHMP SYFOVRE ReviewQ2 2024Initial CHMP negative opinion (Jan 2024) Re-examination initiated; final opinion expected Q2 2024 Timeline update

Earnings Call Themes & Trends

TopicQ2 2023 (prior)Q3 2023 (prior)Q4 2023 (current)Trend
Safety – Retinal vasculitisFocused call; rare, sporadic events; 0 in trials; investigation underway Stable very low rate; stopped discussing individual cases Rate remains ~0.01% per injection; risk believed related to PEG allergy; bilateral usage returning Stabilizing; transparency continues
Reimbursement – J‑codeNot yet effectivePermanent J‑code effective Oct 1; >95% Medicare coverage J‑code streamlines billing; supports continued demand Positive tailwind
SYFOVRE demand & dosingEarly launch strength; physicians segmenting use Weekly demand growth resumes; vast majority dosing q6–8 weeks Q4 delivered ~62k doses; q6–8 week dosing favored; Jan–Feb among biggest months despite seasonality Growth resuming; seasonality acknowledged
EU SYFOVRE outlookEMA review proceeding Confidence building with functional data; ex‑U.S. ~45% of potential revenues CHMP re‑examination, final opinion Q2 2024; uphill battle Regulatory uncertainty persists
EMPAVELI in PNH97% compliance; expanding use $24M Q3 revenue; injector approved; no meningococcal infections $24.4M Q4 revenue; 97% compliance; oral competitor expected to pressure share Competitive dynamics intensifying
Nephrology – VALIANTEnrollment completing by YE 2023 Topline expected Q3 2024; 50% proteinuria reduction clinically meaningful Topline mid‑2024 reaffirmed On track
Early pipeline – APL‑3007 (siRNA)Advancing preclinical —Phase 1 dose escalation; topline 2024 Progressing

Management Commentary

  • “The SYFOVRE launch exceeded even our own expectations… demand growth continuing into the first quarter of 2024” — Cedric Francois .
  • “Today, SYFOVRE is the #1 chosen GA treatment with a current market share of approximately 90%… physicians are treating… every 6 to 8 weeks” — Adam Townsend .
  • “We expect our total operating expenses in 2024 to be less than our total expenses in 2023… [and] entered into agreements to unwind approximately 80% of the capped call” — Tim Sullivan .
  • “We are initiating a reexamination… with the EMA… we expect a final opinion… in the second quarter of 2024… it will be an uphill battle” — Cedric Francois .

Q&A Highlights

  • EU re-examination: Management emphasized strong microperimetry/functional data and revised rapporteurs; outcome remains uncertain but support from physician/patient groups is strong .
  • Q1 trajectory: Despite seasonality from Medicare recertifications and weather, January/February were among the biggest months since launch; March expected to be solid (Adam) .
  • Market share methodology: Apellis cites ECP injection data indicating SYFOVRE leadership; time-adjusted analysis shows ~3x greater early demand vs competitor’s first 4 months (Adam) .
  • EMPAVELI competition: Oral entrants likely appeal to some patients; injector improves convenience; switching can create opportunities (Cedric/Adam) .
  • Bilateral injections: Returning with more cautious sequencing; dosing flexibility seen as advantage (Caroline/Adam) .

Estimates Context

  • Wall Street consensus (S&P Global) EPS and revenue estimates for Q4 2023 were unavailable due to a SPGI daily request limit error; as a result, we cannot quantify beats/misses vs consensus at this time. Values would be retrieved from S&P Global if accessible.

Key Takeaways for Investors

  • SYFOVRE is driving a step‑change in revenue with clear dosing adoption (q6–8 weeks) and cited ~90% GA market share; Q1 seasonality appears manageable with strong Jan/Feb momentum .
  • Operating discipline should improve 2024 P&L vs 2023 as launch-intensive G&A normalizes; cash fortified by capped-call unwind proceeds and year‑end cash of $351M .
  • Regulatory risk remains: CHMP re‑examination is a meaningful binary in Q2; prepare for volatility tied to European outcome and functional data reception .
  • PNH franchise steady but facing oral competition; injector adoption and high compliance underpin retention; watch for switching dynamics and payer behaviors .
  • Mid‑2024 VALIANT topline is a catalyst for nephrology expansion (C3G/IC‑MPGN); positive data could broaden pegcetacoplan’s profile beyond retina/PNH .
  • Near‑term narrative drivers: continued SYFOVRE demand growth vs seasonality, EU decision, safety rate stability (~0.01%), and clarity on 2024 expense trajectory .
  • Without consensus access, focus on sequential fundamentals (Q4 revenue +33% vs Q3) and operating improvements while monitoring estimate revisions post‑EU/VALIANT milestones .
All figures and statements are sourced from Apellis’ Q4 2023 8‑K/exhibit press release and Q4 2023 earnings call; prior quarter transcripts and preliminary press releases used for trend context. Where consensus comparisons are requested, S&P Global data was unavailable due to a system limit.