Okay, great. We'll get started here. Thanks so much, everyone, for joining. It's. I'm Steven Seedhouse, biotech analyst at Raymond James. Really a privilege for me to open this next session with Apellis Pharmaceuticals. Welcome to the Institutional Investors Conference 45th year. Over 300 companies here, of course, but I would argue the best one sitting up here. No, no bias for biotech, of course on my part. But maybe we'll kick it off, Cedric. For folks new to the story or obviously following the story close, I think it would just be helpful: outlook for 2024, where you're at with Apellis Pharmaceuticals, how you drive value in the coming years, just to level set the conversation. Yeah, thank you, Steve, and thank you for inviting us. It's a pleasure to be here. First time, I believe, right? So hopefully of many. So bit of background for those of you not familiar with the company. So we are a biotech company based in Waltham, Massachusetts. We have two approved products on the market. First product that got approved a couple of years ago called EMPAVELI. This is a drug for a rare disease called paroxysmal nocturnal hemoglobinuria, or PNH, which is a disease of the bone marrow. In this indication, EMPAVELI is a drug that, on one hand is a lifesaving intervention for these patients, on the other hand was an improvement over the standard of care called Soliris, where patients on that treatment continue to suffer from severe anemia, something that we showed in our clinical trials, we can solve for the vast majority of patients. So that drug has done very well there and is now on a path to a, hopefully, a second approval. We have a phase 3 clinical readout. There's a lot of beeping going on here. Maybe because my mic is close. Yeah. So, we have a phase 3 readout this summer for EMPAVELI in C3 glomerulopathy and IC-MPGN. These are two kidney indications, something we're very excited about, and that we think will amplify the revenue potential for this drug as well. Our second approved product is a product called SYFOVRE. This drug was, is pretty much at the one year anniversary of its approval. This is the first therapy for the leading cause of blindness in the elderly, called geographic atrophy, which is the advanced dry form of age-related macular degeneration, which is a disease probably many of you have heard from. This launch in the first 10 months led to approximately $275 million in sales, making it one of the best launches in the last decade. It's been very exciting for us to go through all of that. As always, when you're a pioneer, you encounter a lot of unexpected things. We did that too, but navigated those well and look forward to what's ahead for us. We then also this year are going to be talking a lot about what we have in the pipeline. We have an early program, thank you so much, with siRNA. So what is that? Small interfering RNA is a way to lower the levels of our target in the bloodstream. That is currently in a healthy subject clinical trial, so meaning it's still away from getting approval of concept, let alone from being approved. But we have very exciting data there that we look forward to sharing later this year as well. And then we also have very interesting and exciting programs that are preclinical still that are about to go into man, including in exciting fields like gene editing, where we have a collaboration with one of the preeminent players there called Beam Therapeutics. As a company, we have approximately 750 employees, and again, across all of these areas, as well as a presence in Europe, and some other geographies as well. Thank you so much. Great. Okay, so we'll, we'll get to SYFOVRE, of course. There's a lot of topical things to discuss there, and we have a breakout after. We can, we can do that as well with everyone in the room. Maybe I think I'm going to flip the conversation that you've probably traditionally had on its head. I want to start with the C3G renal disease program. Love that. Just because that's—it's a catalyst that's coming up for the company. I think it's probably under the radar. Can you just frame that data update? I mean, the way the trial's designed, I guess can you clarify, like, in the primary analysis, what we're going to see? What's a win? You have some prior phase 2 data that has shown proteinuria reduction. Maybe just to, in general terms, frame that catalyst and frame what, you know, you're hoping to see from that data, and then we'll get into the weeds. Yeah, thank you. Thank you, Steve. So, kind of, for our company, everything in the past year has been a little bit in the shadows, of course, of the launch of SYFOVRE, being such an important product. But the EMPAVELI and this readout that we have in these two new kidney indications is something that we're, really looking forward to. So brief words on C3G and IC-MPGN. These are indications or diseases that are driven by mutations in the complement pathway, which is where our drugs are active. What you should imagine there is typically adolescents that get diagnosed with these diseases, where their kidney function starts to deteriorate. Over the course of approximately 10 years, 50% of these patients will end up being on hemodialysis. So it's a very bad disease, affecting young individuals. The prevalence of this disease is approximately three times larger than the initial indication, PNH, without an incumbent to fight against. What does that mean? There are approximately 5,000 patients in the U.S. across these two indications, 8,000 patients in Europe. Of these 5,000, we believe that as many as 1,500 patients from where we have visibility on it are patients that are transplanted. And that is important because once you are transplanted, these mutations that drove the disease initially are not gone and will put your transplanted organ at risk as well. Why do I mention that? Because we have done a lot of work already, of course, I mean, as you do before you go into a phase 3 program. Some of the most exciting data were on the histopathology images, so looking under the microscope at what you see in these kidneys. What we saw there was very convincing and, you know, very exciting in terms of the prospects for this drug, in the sense that we saw dramatic changes in the architectures of these kidneys, giving us a lot of hope that we will be able to really stabilize these diseases for these patients. The transplanted segment of these patients is even more interesting because if you think about it, once you have a transplanted organ, protecting that organ, you know, it's like having a nugget of gold in your body, right? I mean, the value proposition is very strong, and the uptake for something that can protect a transplanted organ is typically very rapid as well. This is something that we really look forward to. Then, to your point, Steve, on the endpoints, the way in which we run these clinical trials is we try to show a 50% reduction in the proteinuria levels of these patients. So when these kidneys are sick and affected by the disease, protein is leaked into the urine, and that is an important marker for how well or poor these kidneys are doing. So the study is powered to show a reduction or the primary endpoint, I should say, is showing a reduction in proteinuria and powered to show a 50% reduction, which, you know, most nephrologists would agree is a clinically meaningful improvement. There are also important secondary endpoints such as stabilization of what we call the glomerular filtration rate and other elements that give us confidence that this drug will do what we hope. Do you have an understanding from regulators of how critical those secondaries are to an approval pathway here, including the biopsy as one of the secondaries, I guess, from those that have it? So the biopsies were done in a separate study, the one that we published early November, called the NOBLE trial. The reason why that was a separate study is that taking a biopsy in a patient with a native kidney is very painful and complicated. In a transplanted kidney, where the nerves are no longer present in the kidney, you can take several biopsies. So the biopsy and histopathology data was shown in 2004 and will, of course, be part of the package. As it relates to kind of an agreement with regulators in the kidney, it is, sorry, generally complicated because proteinuria is, you know, not a direct reflection of what eGFR means. This has been kind of the eternal debate around this. But we have, of course, discussed this in advance, with regulators both here as well as in the other countries where we are running this trial. And we believe that if we meet the primary endpoints, probably with supportive evidence from secondary endpoints, but not, I think, bound necessarily to statistics, that that will be sufficient for approval. Yeah, I want to come back to some aspects of the trial design, but maybe, Tim, to bring you in here. So assuming success here and assuming, you know, an amended label for EMPAVELI that includes this, I mean, from a standpoint of a sales force or investment or, you know, just, just future planning, is there anything is there any big lift here to get this? Yeah, it's not. I mean, these are orphan diseases, and this is a pretty concentrated, base of physicians, so it wouldn't be a major increase. We do have an existing sales force, at least in the U.S., for PNH, and there might be some overlap there. So it's not a massive investment for us, no. Okay. Correct me if I'm wrong. I think the target enrollment, at least on ClinicalTrials.gov, maybe for the phase 3 was 90 patients or something, but you've enrolled more than that. You've enrolled maybe 120 or 124. What, what was the reason for that? Was that just driven by demand, or was there a statistical reason for that? No, so very good pickup, Steve. So, it was 124 subjects. And the reason why we over-enrolled is we wanted to have more patients with IC-MPGN. So again, there are two diseases here, C3G and IC-MPGN. IC-MPGN is less prevalent, but we wanted to make sure that we had the best chance possible of getting that separately in our label. And we ended up enrolling 27 out of the 124, and in the end, really went looking for these patients to make sure that we reached it. Okay, so what, I guess, the primary analysis would be on the overall population, but then there'll be obviously important subgroup analyses on those distinct subtypes. Correct. Subtypes, okay. And then, in the primary update, are you going to have any of the open-label data that is coming later on in this study, or will this just be on the blinded period? I think 26 weeks. This will be on the blinded period. Okay, okay. The other thing I wanted to ask about this study, so there's a weight-based dosing paradigm, I believe, in this kidney study. And that's, if I'm not mistaken, not the case for EMPAVELI and PNH commercially. It's just one dose. What's the reason for that, I guess, in the kidney disorders? Pediatric population. Okay. Right? So we want to be able to dose adolescents as well. You know, this is, I feel, that we're going to be able to make such a big difference in these indications. We receive more requests for treatments now for C3G and IC-MPGN than we do for PNH. And the drug is not even past phase three, let alone approved yet, right? So that gives you a sense of the unmet needs and how important it is and how convincing, you know, the histopathology data, for example, were. Again, this affects adolescents. We enroll patients as young as 12 years of age. And of course, the dose needs to be adjusted for that. Okay. This program's also under the Sobi collaboration, from several years ago. Okay, so are there any milestones or anything to note, associated with the data or approval, and then just maybe remind us of the structure of that collaboration, how it would influence the, the revenue opportunity here? Sure. So we did this collaboration with our systemic franchise, and they have Sobi has the rights to our systemic drug. It's called ASPAVELI ex-US, EMPAVELI in the US. They have the rights to that, entirely ex-US. And so just as an example, when they got approval in Europe for PNH, which was in April of 2022, we received a $50 million milestone. When they got approved in Japan, we got a $5 million milestone. The structure of the deal was a $250 million upfront. It included $80 million and this was, you know, when we were a growing company and, you know, financing challenges of the day and so forth. So they gave us $250 million upfront, with $80 million in development milestones. We also disclosed that for Cold Agglutinin disease, which is an indication that we just discontinued in conjunction with them, we had announced that there's a total of $915 million in milestones. We also just announced in our 10-K that, when we discontinued CAD, $120 million of those went away. So that gives you a sense of the scope and scale of a new indication. So C3G is a good example of that. For all revenue ex-US, we receive double-digit royalties, high teens-high twenties. So a very good deal for us. Okay, and I mean, just on EMPAVELI and the outlook here, so ALS, right, you just mentioned CAD. So there's been a couple of shots on goal here in the past, and then obviously C3G coming up. I mean, do you have a sense of where you go next, or is it really about the pipeline, like the siRNA and sort of the next-gen assets, in terms of priorities after this? Yeah, no, the story is, you know, for EMPAVELI continues to evolve. You know, we have to be a little bit cognizant of patent life, of course, but we're still very much within the window where we could do something to maximize the revenue opportunity for that drug. It's something that we're excited about. Okay. So we'll pivot back to SYFOVRE, obviously, the bellwether program. You said you had 90% market share. I think it's a little less than that in new patients, but still dominant, you know, despite, obviously, all of the challenges that you face since going commercial. I mean, can you just level set started this conversation on SYFOVRE, and what do you attribute, really, your ability to take dominant market share to, if you had to name a few variables? It's very simple, I think, is it? Yeah, so this is SYFOVRE is a drug that when you administer it to patients with geographic atrophy, can slow down the progression of that disease by as much as 42% after three years of dosing, right? So geographic atrophy, you should imagine, is like having a wildfire in your retina, where, you know, you start with a small patch, and then literally it burns out and, you know, ultimately will destroy, you know, large, large swaths of your visual field. The way in which this drug, our drug, was tested, or any drug that gets approved in this disease, is to be able to slow down the rate at which that fire rages. So needless to say, you know, 42% is, you know, almost in health, so highly meaningful to these patients. But it takes time, right? I mean, in the first year, it is closer to 27%-28%. And then over time, the effect amplifies, probably a little bit because, you know, the further you go out, the more the cells are protected. When we launched this product, what really stood out was the unmet need that exists in this disease. I don't think anyone can imagine what it's like to lose vision until you're actually in those unfortunate shoes. And the launch was, you know, I hate to say it, but out of control almost, right? I mean, in the first quarter, where everybody was getting treated left and right by, by everybody. And then in the summer, in July, rare events were discovered of a safety concern called vasculitis. So now, what is vasculitis? It's a form of intraocular inflammation that, in rare cases, can have, you know, a very negative impact on the eye. I'll tell you in a minute how rare that is. The reason why that was sensitive is because a couple of years ago, there was a drug on the market that had something similar that started with a few cases and then exploded with, you know, just a massive amount of problems that all ended up affecting between one in 50 and one in 100 subjects. When we saw this happen in July of last year, we thought that the rate was approximately 1 per 10,000 injections. That was never an issue to start with. The question was, will it stay there? The answer is, we now know definitively, yes, it does. There's a very rare event that occurs in approximately 0.01% of injections. Because of that, the physicians are very comfortable using this product in patients. It's just a matter of having that discussion with the patient and moving on from there. That has resulted in September, but then especially in the fourth quarter, with really impressive growth. So in the fourth quarter, we had $114 million in sales, which one analyst exactly got on the dot. It's pretty impressive. I mean, not off by a million, just on the. The dartboard hit the. On the dot in the middle. And, you know, represented I don't know what percentage it was, but probably about 50% growth, compared to the third quarter. So it was, you know, a reflection, again, of that unmet need, the fact that physicians were becoming comfortable with this. And now the opportunity for us ahead is to continue to build on that success and let the competitive dynamic play out. So this is what you were referring to. There is only one competitor on the market, and between the two of us, we will own this market for the next four to five years. For those of you familiar with biotech, it doesn't happen very often. Usually, you have five or 10 products competing for a small swath. This is only two products. Now, our competitor has approval so far only for one year of treatments. So in the summer, we will find out if they get approval for treatments beyond that. Their efficacy is stuck somewhere between 14%-17% slowdown compared to 42%, which we have, again, when you get into the third year. So there is a clear efficacy differential there that most physicians are acutely aware of. The main question that still needed to be resolved is, will they also have the problem of these vasculitis rare events? And right now, it looks like they do. So I think that is something that, in the next couple of months, will, you know, play out favorably for us. In the second half of this year, things are going to be, I think, very clear, both in terms of how the competitive dynamics pan out, in terms of what future growth and peak sales will look like. And then one last little element that's important to bear in mind here is that, with the European Union, you know, we are going through the motions, but we received what is called a negative CHMP opinion. So the initial indication from Europe has been that they do not want to approve this product. And you could say, wait, why? I mean, you have such a beautiful efficacy profile. Well, the missing piece for us was that we could not show a functional benefit, not because there wasn't one, but because it is very difficult in this disease to show it. So if you want to test this, if you look at this screen and you look through a little hole in your fist, you can read all these letters like you would at a physician's practice, right? But if I ask you to run through these corridors and have a life looking through little peephole, right, that is what life would look like. So best-corrected visual acuity is your ability to look through your fist and read these letters. But in Geographic Atrophy, in our disease, that little tiny pinhole is protected. So it's not a good endpoint. And that nuance is complex to understand for most people, of course, and it's kind of what held us back. We have many other things where we have shown a functional benefit, but it was not the primary endpoint in our trial. So that is something that we need to work through. We got two new reviewers assigned, and in the spring, we will find out if we can get behind this without the need to run an additional trial. So, you know, whether we get approved or not, both have a very viable path forward, of course, with the unmet need that exists, combined, of course, with the approval and the successful launch in the States. So, I mean, you've mentioned before that efficacy really is the hang-up for Europe. And just sticking on this point of the European process. I just find it hard to believe that the retinal vasculitis stuff that you also mentioned and your ability to get clarity on that and have additional data out in the public domain. I mean, the rapporteurs, everyone's human. Do you not think that that would play a role in influencing this next decision? I mean, the landscape in that on the safety front has evolved and changed, and I would argue improved, for SYFOVRE between now and the initial review cycle. Do you see it differently? Is it all about efficacy? Yeah, so that is very true. But at the end of the day, our discussions were all centered around, you know, where is the you know, yes, you show a lesion size reduction. Does that mean that the function on the vision of these patients is impacted, yes or no? And if you and we have all the trends that we need to really definitively, you know, in our opinion, make conclusions around this. I'll give you an example. You know, we have analyses where you show function in the treated eye compared to the sham control eyes, but also in the same treated eyes compared to the untreated fellow eyes in the same patients, right? It's hard to imagine that being a random effect. But if you're kind of, if you look at it from a purist's statistical perspective, unless it is pre-specified in a statistical analysis plan in a new trial, right, you don't have to accept that as true. So that is kind of the back-and-forth, but that has very much been the center point of the discussion, not the safety piece. Back on the competitive dynamics, just on market share, do you have a sense of what your market share is like by segments here? So I know, like, foveal versus nonfoveal so the region where the lesion's affecting the eye, maybe good vision versus bad vision at baseline, bilateral disease versus one eye affected. Do you know if you have different market share in certain segments based on the ways the trials were run? It's a little too early to speak to that. You know, again, our competitor did not run a trial on patients where the central pinhole is involved, right, which is about 60% of patients are so far advanced that they couldn't even read these letters anymore. We included those patients in our trial. Our competitor did not. So you would assume that retina doctors would use our drug for those patients. But it's unclear that that distinction is made properly in the real world. Okay. Tim, so your competitor in this space is not only providing near-term guidance, but they're providing long-term revenue guidance. Okay, so there's a number out there that people can triangulate to. But just in general, I mean, for Apellis, the company, and how you think about revenue expectations, but also cost expectations, and you're at this pivot point of turning profitable here, potentially, in the coming year. Those are my words. I don't want to put words in your mouth. But this is your opportunity. I mean, you can speak on earnings calls, but also, if you want to just elaborate on, like, how are you seeing the cash runway and financial stability of the company here as you transition to point of profitability? Would you provide guidance, you know, sometime soon? Yeah, we've been pretty circumspect about that. You know, we always took the view that, in a launch period, not knowing dynamics like seasonality and so forth, that we—you know—it's typical for us to—we've always said, you know, probably at least 18 months from launch. So that puts us, you know, potentially next year, but we really haven't committed. We'll think about that. We'll also think about guiding on the cost side, but we still haven't done that. What we have said, however, is that from a cash perspective, we just did this small kind of funky little financing unwind of a hedge that gave us some capital, which puts us in a position where we could confidently say, at least under our current business plan, we think we can fund our operations. So, that from a do we ever truly need new capital perspective, the idea is we can operate the business we currently have. So that's the most guidance we've given, and we're certainly going to we're certainly going to consider more granularity as time goes on, and we get through our first full year of, you know, of revenue with SYFOVRE. Does that contemplate European approval too, or would that obviously change? Either way. Okay. Okay. Can I ask about the so speaking of long-term revenue expectations here and what I mean, at this point, it seems clear that SYFOVRY is headed towards blockbuster status. And the question is just, is how many billion is it $1 billion? Is it $2 billion? Is it $3 billion? Is it more long-term? And when you think about that, right, and how the what that implies about how you value, you know, the asset at this point, I just I wanted to ask about long-term competition in this space. There's been changes at the FDA level, in terms and maybe an evolution in how this is going to play out for future people. There's different endpoints now being used in phase three programs that are starting. In this case, bio you know, making you know, genericizing the market, I think, is complicated, right, because doing PK in the eye is a challenge. So can you even have a biosimilar generic competitor, that they'd have to run an efficacy study, I imagine? I mean, these are all things people are talking about. Maybe you can speak to, how the competitive dynamics long-term here are complex and how you see it all playing out. And by the way, you have two minutes to cover all that. Well, it's incredibly complex, right? I mean, so, you know, I think it's important for patients, right, that we stimulate innovation and that we so I would hope that flexibility is shown by all the regulatory organizations to get to therapies that are better. But the reality is that the way things look right now, it's exceedingly hard for anyone to develop a drug in this disease. It was hard against no competition or no established standard of care. It's especially hard now, right? I mean, if you based on lesion size again, I mean, I gave the numbers earlier, running a non-inferiority trial against something like that, like SYFOVRE, is going to be very it would take a lot of patients and a lot of time. The last indication from the previous leadership at the FDA was that you would have to run a superiority trial, which I don't even know where you would start with that. So I think it's going to come down to, to your point, more innovative endpoints that could be involved, but that takes years to develop and validate. So, you know, I think we are you know, fortunately for us, in a very kind of exclusive and unique position. But I hope for patient benefit that the field gets opened up more. How do you yeah, go ahead. I was going to say the other problem is that most late-stage drugs are complement-based, and we control the central component of complement, which means they're going to do a partial blockage of something we control all of. When you overlay that to a superiority study requirement, which is the current guidance, it looks it's a very hard to intellectually picture what you do there. From the Apellis standpoint and the pipeline, and maybe you have assets, maybe siRNA, something that would play a role here. I mean, do you think about extending the GA franchise, or is near- and mid-term, is it really just about maximizing SYFOVRE's impact? Well, near-term is definitely about SYFOVRE, right? But, I mean, we don't stop. We think about all the things that we could do to make life better. There may be a way to parse out, you know, these very rare cases of vasculitis and predict which patients are exposed to that. I don't think it would make a big difference, but it would be helpful, and it's important for those rare subjects that are at risk. We are thinking about innovative ways to establish that functional relationship that is better than what currently is around. So we view that as a contribution to the field, in addition to what we do. We are thinking about combinations with SYFOVRE that could make SYFOVRE an even better drug, something else where we have a lot of ideas that will come to fruition in the not-too-distant future. Great. We'll continue the discussion in the breakout room. I just want to thank everyone for joining. Thanks, Cedric and Tim, from Apellis, for being here.