Apellis Pharmaceuticals, Inc. (APLS) Earnings Call Transcript

Welcome, everyone, to the 41st Annual JPMorgan Healthcare Conference. My name is Anupam Rama. I'm one of the senior analysts here at JPMorgan. I'm joined by my team, Malcolm Kono, and Priyanka Grover. Our next presenting company is Apellis. And presenting on behalf of the company, we have CEO, Cedric Francois. Cedric?

Thank you very much. thank you for inviting us. So good to do this in person again. So in the next 20 minutes, I'm going to take you through the story around that pennies what we have been doing in the recent past and what we have to look forward to in the next year. These are our forward-looking statements. You can also find our SEC filings online. So we have a lot to look forward to. The next month, we have our PDUFA and geographic atrophy on February 26 and with the opportunity to deliver the first ever treatment for geographic atrophy, one of the leading causes of blindness in the world. We also have EMPAVELI that is currently in about 1.5 years of sales, has set a great launch trajectory and is turning out to be a truly game-changing solution for patients with PNH as it relates to their condition, their anemia and their quality of life. We also continue to focus on complement factor C3 and all that it can do across a wide range of therapeutic areas with 12 clinical and preclinical programs. So 2022 was a transformational year for us. Of course, in geographic atrophy, we had our filings in the U.S. as well as in Europe. We had the commercial preparations to complete. We are ready to launch this drug in geographic atrophy in the U.S. and have also worked in Europe. And importantly, we recently announced that Dr. Caroline Baumal is going to become our Chief Medical Officer. So Caroline Baumal is a world-famous retina specialist. And the way in which this happened is about a year ago, Dr. Federico Grossi and I, who cofounded this company with Pascal about 20 years ago. We decided that we wanted to have a retina doctor to help us launch this drug because it's such a specific field and to have the power of our presence was deemed to be very important. We decided to do it now so that we have some time until the real approval date to get all of the preparations in place. Fede is going to help us with this. And this is a great moment to thank him for the amazing job that he has done. This weekend, we're going to go to Hawaii altogether, Caroline, Fede and myself to talk about geographic atrophy and what we can do with this product in this disease. When talking about EMPAVELI last year, we continued our launch trajectory with $65 million in U.S. net product sales. We submitted 2 supplemental NDAs and completed more than 800 patient years of system dosing. In the meanwhile, in the pipeline, we continue to progress our late-stage clinical studies with Sobi, our early-stage pipeline and completed the enrollment in the Phase II ALS study. So now 2023. So this is going to be an amazing year for us. First of all, we are planning to deliver the first ever treatment for patients with GA in the U.S. to prepare for our ex U.S. approvals as well to continue to maximize the value of EMPAVELI and to advance our early pipeline and the beam collaboration. So what is geographic atrophy. So to understand this disease, I want you to think of the retina and of having a forest fire in the retina where in a relentless process, you lose more and more photoreceptor cells. This process has no treatment available. And once you have it, your path is towards inevitably blindness if you live long enough. This is a disease in which many, many drugs have been tried and where we finally have discovered a pathway where something is possible to control the progression of this disease. And we did this with intravitreal pegcetacoplan. So here is pegcetacoplan positioned to be that first ever treatment, and there are 3 seminal features of this drug product that I want you to bear in mind. The first one, and I'm opinion may be the most important one, is that we have increasing treatment effect over time. The longer these patients are on treatment with intravitreal pegcetacoplan, the more the slowdown of this degenerative process becomes. We've evaluated that over 24 months in DERBY and OAKS, and it looks like an immunotherapeutic process that we will continue to evaluate in the GALE extension study. Importantly, we saw these increasing effects across 2 dose regimens. We have a dose regimen where patients receive treatment every 2 months, but we also have the ability to treat patients monthly if the physicians choose to do so. It is hard to overemphasize the importance of every other month treatment because it provides a benefit to patients and physicians of much more convenience with a benefit in terms of treatment effects that is pretty close to what you get with monthly treatment. In the meantime also, especially towards the end of that 24-month period, the convergence between the effects on the foveal as well as the extra foveal lesions is fascinating to see from 18 to 24, the effect is more or less the same. And these are the famous DERBY and OAKS studies. So what's extraordinary about these 2 studies is that at 24 months, they look remarkably similar. And the consistency for both dosing regimens is truly remarkable. What also stands out here again is that increased effect that we see over time. And if you quantify that, in 6 months segments, so 0 to 6, 6 to 12, 12 to 18 at 18 to 24, you can see how in every 6-month segments, the effect on slowing down the lesion progression becomes more pronounced. Importantly as well is when you then look at how is the fire. What is the intensity of the fire in that segment from month 18 to 24 , while the slowdown there has become truly clinically meaningful. And we see that for both subfoveal as well as nonsubfoveal or extra foveal lesions. We see that for monthly as well as for every other monthly lesions. And these effect sizes in the range of approximately 30%. These 2 Phase III clinical trials are the only ones who have shown such a slowdown in the progression of GA for both extrafoveal as well as foveal lesions. And you should expect that, that treatment effect continues beyond year 2 in patients with GA who may be on treatment for 10 years, maybe 20 years or longer. We also had a favorable safety profile that we evaluated in a very large database of patients. 1,200 patients and nearly 12,000 injections were evaluated in these 2 clinical trials. And what we found is that we have a safety profile that is best and most easily understood as that associated with an intravitreal injection, something we know very well from the anti-VEGF world. We also have a slowly increased rate of or slightly increased rate of exudations in these patients. That is something that can be controlled with anti-VEGF injections and that we continue to follow closely. So we are now ready to launch in this very important disease, which because of its prevalence also represents, of course, a meaningful commercial opportunity for us. When we run a global survey with physicians with retina doctors, we found that more than 90% of retina doctors worldwide plan to use pegcetacoplan in their patients with GA. And we have built in the past year a best-in-class team, a highly experienced in retina across all of these elements that are important in a successful launch. We currently have approximately 100 field-based employees out there doing the work. More than 90% of those come from companies that have profound retina and ophthalmology experience, and these employees joined us because of what they have seen in the data package and the faith that they have in making a real difference in this disease. In the meantime, the prelaunch activities are well underway. In med affairs, we have been working for a long time throughout 2022 on our presentations, on raising awareness on teaching physicians, retina docs as well as patients, what it means to be on treatment with a product like pegcetacoplan. And on the commercial side, in September 2022, we really started amplifying our efforts. The one thing I want you to remember from the commercial efforts is that we have extraordinary access to the retinal practice. Retina docs want to see us and want to learn about this product. That is not very hard to understand when you imagine a patient that is on a path to blindness that they have to see multiple times per day and for which currently nothing is available. So where do we stand? So we are positioned to be the first ever treatment for geographic atrophy as early as next month with the compelling product profile to address an unmet need globally, with more than 90% of surveyed retina specialists worldwide planning to use this product in their patients and the best-in-class field-based team deployed and ready for launch. So moving on now to EMPAVEDI, our first approved product and now on the market for approximately 1.5 years. We've had a successful EMPAVEDI launch where it has been incredibly gratifying to see how this product elevates the standard of care in PNH. Many years ago, when we were doing our development, there was always the question as to what is the role of extravascular hemolysis in this disease, is it safe to control this disease with C3? What is the difference that this is going to make? Well, the difference is absolutely extraordinary. And if there's 1 number that I would like you to pay attention to on this chart, it is the fifth bullet point -- we have 98% real-world patient compliance. Now it's hard to reach these patients. Many of these patients, unfortunately, get a little bit forgotten. They are on C5 inhibitors. They are hard to find, they need to be made aware that this is available to them. But once these patients are on treatment and discover what it does for them, the retention rate is absolutely extraordinary. And again, a testament to how much of a difference this product can make. We then also have those 2 supplemental NDAs, what will they do? The first one has a PDUFA on February 8 next month. And this gives us the ability to promote on the basis of treatment-naive data as well, data that we have established in the so-called PRINCE study and the 48-week PEGASUS results. We then also have the EMPAVEDI injector that is going to come on the market at the end of March, our PDUFA is March 15. This was through collaboration with enabled injections, and it allows these patients who self-administer this product twice per week at home to do this in what we call a needle less experience. So these patients have no longer to manipulate any needles in order to self-administer this which will significantly improve the patient experience and the administration. Here, too, we have a strong safety profile. We have over 800 patient years of systemic pegcetacoplan exposure. And on this slide, the second bullet is the most surprising one. We have 0 reported cases of meningococcal infection. With C5 inhibitors at this point in time, you should have expected to see a couple of these meningococcal infections to show up already because it's considered to be a class effect, but the way in which pegcetacoplan works, at least for now, seems to have an advantage in that regard as well. We are then expanding on potential new indications. In the middle of this year, we are going to have the readout on our ALS trial -- we are enrolling very quickly in our Valeant Phase III clinical trial in IC-MPGN-NC3G. And our partner, Sobi, is enrolling in the cholelutini disease trial as well as in the Phase II trial in hematopoietic stem cell associated thrombotic microangiopathy. to have the readout on our ALS trial. We are enrolling very quickly in our Valeant Phase III clinical trial in ICMPGNandC3G. And our partner, Sobi, is enrolling in the cholelutini disease trial as well as in the Phase II trial in hematopoietic stem cell associated thrombotic microangiopathy, where in the second half of this year, we will have the first data. Then last but not least, our early pipeline, which in this year is going to move in meaningful ways into the clinic and, of course, our beam collaboration. First of all, our molecule APL-2006, which we also call the ranifitin molecules. This is a molecule that we developed by considering what happens with patients who are on treatment with anti-VEGF -- if you have wet macular degeneration and you are being treated with an anti-VEGF product, Your chances of developing geographic atrophy within a 7 month -- a 7-year time frame are 98%. So it's virtually inevitable. So what we decided to do was create a molecule that would both control VEGF, could be injected what we believe is going to be an every 3-month procedure and, at the same time, control C3 so that we can hopefully avoid the development of geographic atrophy and have a next-generation anti-VEGF molecule available to us. Then we have our next-generation C3 SiRNA program. This is a program to lower the levels of C3 in the body, so that the twice a week subcutaneous administration that is currently needed with EMPAVELI can be reduced to something more convenient for patients. In preclinical settings, we silence C3 expression by more than 90%. And this drug product is planned to go into the clinic in the first half of this year. And last but not least, APL-1030. So this is a molecule that allows us via an intrathecal injection to for the first time, control C3 in the brain. This is a very exciting because we think of the of the , I should say, as a window into the brain. When you look at the mechanisms behind complement and the reasons why we believe pegcetacoplan in the eye can slow down the progression of geographic atrophy, it shares so many commonalities with many neurodegenerative conditions and some neurological diseases as well. In the meantime, we also, as you know, in Derby and Oaks have seen this increasing effects over time, which gives us hope that there is something of an immunotherapy effect that we may be able to explore in these central nervous system conditions as well. This is another product that's moving forward very nicely and where we intend to be the first ones to explore this in the CNS space. And then we also have our beam collaboration as far as we know, the only gene editing program in C3 or in complement, I should say, 6 research programs in total on which you will hear much more in the future. as well. And this is what our pipeline looks like. So really exciting to explore this unique target complement factor C3 across such a wide range of therapeutic areas and indications in the space of rare diseases, ophthalmology, neurology and certain others outside of that as well. So this is an extraordinary year for us -- We look forward to sharing our data with you in the months to come. Of course, next month, the PDUFA date and the launch in geographic atrophy shortly thereafter, but then also to continue to see what we do with EMPAVELI and the advancement of our early pipeline. Thank you.

Thank you, Cedric. Lots of practice there. You got done 5 minutes early. [Operator Instructions] Cedric, on the PDUFA date forthcoming, just wondering how soon after approval, could you launch, you said shortly thereafter? Is there a time frame which you're targeting?

Yes, we're not going to be more specific than that, but we are -- we will be ready to ship. We will -- Adam has done a crazy good job of getting everybody ready. So it will not be very long after the approval we would be able to launch this product.

One of the controversies that we talked about in the back half of the year was the 24-month data being included in the product label and having that major amendment. Can you walk us through what the 24-month data do if they are fully included in the label versus the 18-month data?

Yes. So I hope, of course, the reason why we did it we hope that it will be available in the label, and that's the label that we submitted to the FDA. The 1 feature of the 24-month data that is not very obvious at 18 months is the consistency between these 2 clinical trials. So even at 18 months, Derby does not look as good as Oaks and for our sales force to go out and talk about that with retina docs, we felt that it would take too much time explaining as to why these 2 trials are not exactly the same. And as you've all seen at 24 months, that is clearly there. The second aspect that is really important to us, again, are these increasing effects over time. And from month 18 to 24, that is where it really starts showing up, right? I mean these effect sizes that are close to 30% when we did our research with retina doctors. That is a number that virtually every retina doc becomes really excited about. So these are elements that -- those are the 2 most important elements that factored into our decision.

Question from the audience? question is around an ADCOM in the CMO leaving.

Yes. So the ADCOM, so when we -- the way in which this major amendment came about is we gave a call to the FDA, we said we would like to do this, Will you accept it, right? That was the first question. And in those conversations, we also talked about the ADCOM, and we were told again that no AdCom was planned this program. And then with the Chief Medical Officer change. This is something that got planned well in advance, right? I mean, Federico was -- it was always the plan that he would leave the company and that we would turn it over to a Chief Medical Officer with Retina Experience. But when we thought about the logistics and making sure that the team is kind of fully ready to operationalize this, right? We said we're going to do it before the PDUFA. That gives us time to really hit the ground running when we're there, -- that's why we did it. So from an investor perspective, this is, of course, not what you want to do because it creates uncertainty. But operationally, it's 100% the right thing to do for us. And again, Federico, feel free to -- welcome to talk to him. You'll see him this weekend if you go to away has been an amazing, amazing project and Dr. Caroline Baumal, I think is hit the ground running member there, and that's why we did it. So from an investor perspective, this is, of course, not what you want to do because it creates uncertainty. But operationally, it's 100% the right thing to do for us. And again, Federico, sure you're welcome to talk to him, you'll see him this week and if you go to Hawa has been an amazing, amazing project. And Dr. Caroline Baumal, I think, is going to be the perfect person to launch this book for us.

And I guess while I have the mic, the other thing investors are really focused on is when you start labeling discussions? Is that being a positive indication that things are moving forward as you expected? So when do you expect to start labeling discussions?

Well, so it's typically about a month before the PDUFA date, right? That's the timing. We're not going to announce it when we are in labeling discussions. For in by value, it was 3.5 weeks before our approval. So I think it varies a little bit.

We do have a question in the question portal, which is, Cedric, does the new CMO have a different view on the value of having both monthly and every month dosing in the label?

No. I think you should all know that Dr. Baumal did not join us on -- in the spur of the moment, right? So she went through all of the documentation. She went through the data, and it is her belief in the product and the difference that it can make in this disease that led her to join us, right. So this is something where every other amount is incredibly important to the vast majority of these retina docs. We do want to have the monthly dosing regimen in the label so that physicians have the flexibility. So that's the best way to think about it is every other month is very attractive, but for certain patients, you may want to resource to multi-injections as well.

Other questions from the audience? You talked about every other month dosing. The other thing that could be differentiated in the label is having a broad label such as with fovea patients. How do you think about that inclusion of that in the label as well as one other controversy around fovea patients, is what the uptick would look like in that segment?

Yes. So I think, look, first of all, on a prevalent basis, approximately 60% of patients have foveal lesions. That's because there was no treatment available so far. At the time of diagnosis, as many as 85% of patients have extrafoveal lesions that then ultimately involve the fovea -- when we enrolled our patients in our Phase III clinical trials, and if you want to use that as a surrogate for the interest that patients have of enrolling in this trial, we had approximately the prevalent distribution. So meaning that at least from a physician patient interaction perspective, there was no preference for extrafoveal patients to come into this study. Now we expect both to be present in the label, again, especially with the 24-month data, really, the difference between the foveal and the extra foveal lesions becomes quite minimal.

Question from the audience... Can you remind -- go ahead... Brian...

Intermediate AMD and whether or not this would be an opportunity you would pursue? And what would be the pathway to get a label in that indication?

Yes. So intermediate MD is not an indication, and intermediate AMD is not an endpoint. That is very bad in feedback that we received from the regulators. So I think, quite frankly, that the FDA doesn't think about intermediate AMD as a different disease. And therefore, I think we should not expect to have that language in the label either.

A couple of quick ones. One, I don't know if you've talked about the peak sales and also, what kind of a sales force in a sort of steady state would you require to support that?

Yes. So we have, in August, we hired the full sales force, as I presented to you, right? So we have approximately 100 field-based representatives across these various functions that are out there doing the work. We are not guiding on peak sales. So all of our analysts, including Anupam, have their views on that. And again, for us, the main focus is to get access to as many patients as possible as quickly as possible.

Questions from the audience...

I was going to ask on the exudation part. One thing that comes up when I talk to the doctors is they don't think it will be very -- an issue to give anti-VEGF, but they are not really sure what the protocol will look like in terms of can we inject the anti-VEGF on the same day on the GA treatment? Or should we stop the GA treatment for 6 months, and wait how the execution recover. So anything -- I guess, internally, you have looked at the data and can you comment anything on that? And would that be in the label? And would be helpful for physician practices, essentially.

Thank you for that question. So that's a very important question, [indiscernible]. In the clinical trials, it was done on the same day in the real world, we for now, we plan on providing the flexibility to do it any way they want. So they could do it on the same day. Typically, with about an hour apart between the 2 injections or they could do it on subsequent days or even 2 weeks between them. So -- but we do not plan on providing kind of very clear instructions on how to do that.