Ladies and gentlemen, thank you for standing by. And welcome to Apellis Second Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference may be recorded. I would now like to hand the conference over to your speaker-host, Meredith Kaya - Senior Vice President, Investor Relations. Please go ahead.

Good afternoon and thank you for joining us to discuss Apellis' second quarter 2021 financial results. With me on the call are Co-Founder and Chief Executive Officer, Dr. Cedric Francois; Chief Commercial Officer, Adam Townsend; Chief Medical Officer, Dr. Federico Grossi; and Chief Financial Officer, Tim Sullivan. Before we begin, I would like to 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.

Thank you, Meredith. And good afternoon to everyone joining us today for our conference call. Also, a great welcome to Meredith, who joined Apellis earlier this month, and will be leading our Investor Relations efforts. The second quarter was an exceptional period for Apellis, highlighted by the FDA approval of EMPAVELI or pegcetacoplan, which is the first targeted C3 therapy. EMPAVELI was approved with a broad label for the treatment of adults with paroxysmal nocturnal hemoglobinuria, or PNH. And it represents the first new class of complement medicine in nearly 15 years. The approval of EMPAVELI was a tremendous achievement for the PNH community and for Apellis, and I am very proud of our team for advancing this transformational medicine. Our commercial launch is off to a strong start, and our Chief Commercial Officer, Adam Townsend, will share additional details shortly. The EMPAVELI approval was quickly followed by more good news with positive results from the phase 3 PRINCE study of our targeted C3 therapy in treatment naive PNH patients. Together with the Pegasus data, the PRINCE results reinforce the potential for EMPAVELI to elevate the standard of care for all patients with PNH. And PNH is only the start of what is possible by targeting C3. In June, we hosted an R&D Day where we showcased our growing pipeline across rare disease, neurology, and ophthalmology. Our ambition is to be a global leader in complement over the long term, and we unveiled multiple new molecular entities across several modalities to deliver on that goal. In addition to advancing EMPAVELI and our registrational programs with our partner, Sobi; we plan to transform the treatment of rare complement-driven diseases by developing new product candidates for existing and new indications, and further enhancing the patient experience. In urology, where C3 plays a key role in a wide range of neurodegenerative conditions, our world-class research team is pioneering targeted C3 therapies to help patients with these devastating diseases. Then in ophthalmology, where we aim to be number one in the retina; we look forward to the phase 3 results from pegcetacoplan in geographic atrophy or GA. In addition, we are advancing novel molecular entities for GA with AMD and intermediate AMD. At our R&D Day, we also announced an exclusive research collaboration with Beam Therapeutics to apply Beam's proprietary-based editing technology to discover novel treatments for complement-driven diseases. Complement is a new frontier for base editing, and we look forward to working together with Beam. We will explore base editing, silencing, and other approaches that may have the potential to modulate complement in the eye, the liver, and the brain. Our shared vision is to develop one-time curative therapies for a wide range of debilitating diseases. We are thrilled with the breadth and depth of our extended pipeline, which we believe positions Apellis to be a global leader in complement today, tomorrow, and in the future. Looking ahead, we are optimistic heading into the top-line results from the phase 3 DERBY and OAKS studies of pegcetacoplan for the treatment of GA. This key readout in September is a potentially transformative event for the more than 5 million patients worldwide, currently living with GA, as well as for the millions of patients with wet AMD, the majority of whom will develop atrophy over time. Feedback from the retinal community shows great enthusiasm for pegcetacoplan, and the prospect of finally having the first potential treatment for people living with GA. I will now turn the call over to Adam Townsend to share more about our ongoing commercial launch of EMPAVELI for PNH.

Thank you, Cedric. As Cedric mentioned, our EMPAVELI commercial launch is off to a strong start, and I'm excited to share our initial results. EMPAVELI was approved on May 14, so we are only in the very beginning stages. With that said, we are encouraged by the great progress we've made thus far, and the positive feedback we've received from the PNH community. Our top launch priorities are outlined on this slide, all of which are designed to ensure that every eligible PNH patient who wants EMPAVELI will have access to this important new medicine. Beginning with the approval; we were thrilled with the EMPAVELI label, which included both patients currently being treated with C5 inhibitors and those who are naive to treatment. Recall that within the U.S., there are approximately 1500 patients who are currently being treated with C5 inhibitors, Soliris and Ultomiris, and another 150 people diagnosed with PNH every year. Our initial launch focuses on PNH patients who have suboptimal control of their disease, beginning with one-third of patients on C5 inhibitors with the highest unmet need, those who require transfusions to address their falling hemoglobin levels. We then plan to expand to the broader PNH community, many of whom are also suffering from signs and symptoms like anemia and severe fatigue. We have received positive feedback from various stakeholders, and the quotes on the right side of the slide highlight the excitement for EMPAVELI from the PNH community. At the end of July, over 75 physicians have signed up for our REMS Program since launch in the U.S., and we have received more than 60 start forms. Each of these are not only early indicators of demand, but also show that physicians have identified that EMPAVELI can help better address their patients' treatment needs. We are finding that C5 inhibitors are the majority of new EMPAVELI starts, with about 75% of switches coming from Ultomiris. We have also received newly diagnosed patient start forms, which is very encouraging and reflects our broad level. In terms of coverage breakdown, approximately 50% of EMPAVELI patients have commercial private insurance; 25% have Medicaid and 25% have Medicare with all three payer channels submitting and approving prescriptions. We expect payer coverage to remain split 50-50 between private insurance and government programs for the foreseeable future. Finally, on the payer front; our value and access team is engaging with high-priority payers, including the top 20 payers that cover approximately 85% of all U.S. PNH patients. So far four payers have accelerated EMPAVELI formulary reviews, and one has already placed EMPAVELI in a positive formulary position. Given our strong progress to date, we are on track to be on formulary with approximately 90% of plans by the end of the year. To close, we are excited about the strong initial launch of EMPAVELI and are super proud to bring this important new product to the PNH community. Some of the highlights I outlined from our launch activities are included on the left side of this slide. We have done a lot of work to prepare the marketplace and our integrated team, from the commercial field teams to medical affairs, is laser-focused on successfully executing the launch. On the right side of this slide, you can see end-of-year goals for engagement, market access, and patient experience. This includes engaging all priority accounts and 85% of priority physicians, as well as maintaining high patient satisfaction scores for self-infusion of EMPAVELI. While we are not trying to provide sales guidance in the near term, we do plan to provide certain launch metrics that help to illustrate our progress as we ramp up during this initial launch period. We look forward to keeping you updated as our teams continue to work to bring this transformative treatment to the PNH community. Our Apellis team is very proud to have the responsibility to help PNH patients with high unmet needs. At the same time, our commercial organization is looking forward to the upcoming phase 3 GA results next month. Our U.S., European, and international teams are busy preparing the commercial foundation globally for this potential blockbuster opportunity.

Thank you, Adam. I'll begin briefly with the phase 3 PIN study in PNH. In May, we and our partner Sobi were thrilled to report positive top-line result data from the phase 3 study of EMPAVELI early in treatment naive patients. EMPAVELI demonstrated statistical superiority on the co-primary endpoints compared to standard-of-care, which did not include complement inhibitors at week 26. EMPAVELI also achieved statistical superiority versus standard-of-care on several secondary endpoints that are meaningful to prescribers and patients. Those include improvement in hemoglobin levels, removing the need for transfusions. The safety profile of EMPAVELI was consistent with previous steps. These results add to the robust clinical profile of EMPAVELI and support the use of our targeted C3 therapy as a treatment for all adults with PNH. Beyond PNH, we have four registrational programs of EMPAVELI with Sobi that are either ongoing or planned to start this year. Our rare disease programs are focused on complement-driven diseases, where patients have few or no treatment options. And we believe that targeting C3 has the potential to offer a differentiated product profile by providing comprehensive control of complement. I encourage you to watch the recording of our R&D Day on our website to hear from several key opinion leaders on the unmet need, supported clinical data, and potential EMPAVELI to transform the treatment for patients suffering from these devastating diseases. The upcoming milestones for the remainder of the year are outlined on the slide, including three study initiations and enrollment completion of the Meridian study in ALS. Turning now to our pharmacology franchise. As previously mentioned, the top-line results from this phase 3 DERBY and OAKS studies of intermediate pegcetacoplan are expected in September. As shown on this slide, DERBY and OAKS are identical, multicenter, randomized, controlled studies that compare the efficacy and safety of monthly and every other month pegcetacoplan with the same treatment in 1,258 patients with GA. The primary endpoint of both studies is the reduction in growth of GA lesions at month 12. The full study design details can be seen on the slide. In September, we plan to present the results on the primary endpoint for the monthly and every other month arms as well as the safety profile of intermediate pegcetacoplan, including rates of activations and intraocular inflammation. Additional data from the studies are expected to be presented at medical meetings later this year, and the primary endpoint will be analyzed at month 12. The studies will continue with treatment groups masked until month 24. Secondary functional endpoints will only be formally tested at month 24. Finally, I'd like to briefly discuss our plans for pegcetacoplan in intermediate AMD, a disease that currently has no approved treatments. As an intermediate AMD represents a significant opportunity to delay or prevent progression to advanced forms of AMD and potentially prevent patient loss. The post-hoc analysis of the phase 2 study demonstrated that GA patients receiving pegcetacoplan have a lower rate of progression from intermediate AMD to GA in retina areas outside of the GA lesion compared to SHAM. These results support continued research and we're currently seeking feedback from regulators on studying the same regulatory pathway. Following the positive GA results, we expect to initiate a pivotal study in the first half of next year. I will now turn the call to Tim Sullivan for a review of the financial results.

Thank you, Fed. Since we issued a press release earlier today with the full financial results, I will just focus on the highlights for the second quarter of 2021. Net product revenue was $623,000 in the second quarter of 2021. This reflects the first six weeks of recorded product revenue for EMPAVELI between FDA approval on May 14 through June 30, 2021. The third quarter of 2021 will include the first full quarter of EMPAVELI net product revenue. Research and Development expenses were $145.9 million in the second quarter of 2021, compared to $87.1 million for the same period in 2020. The increase in R&D expense was primarily attributable to the $50 million payment associated with the Beam collaboration, as well as medical and quality affairs expenses, personnel costs primarily due to the hiring of additional personnel, and the increase in costs associated with ongoing and planned clinical trials among others. R&D expenses were offset by contra R&D expense related to the Sobi transaction, a decrease in contract manufacturing expenses, and the capitalization of inventory following FDA approval of EMPAVELI. We expect R&D expenses to continue to increase as the number of patients in our trials increases and the number of trials we are conducting increases. General and administrative expenses were $49 million in the second quarter of 2021 compared to $28.4 million for the same period in 2020. The increase in general and administrative expenses was primarily attributable to general commercial preparation activities, employee-related costs, professional and consulting fees, among others. For the second quarter ended June 30, 2021, Apellis reported a net loss of $219.2 million compared to a net loss of $118.6 million for the same period in 2020. As of June 30, 2021, Apellis had $599 million in cash, cash equivalents, and short-term marketable securities. We remain well-capitalized to execute on the ongoing launch of EMPAVELI in PNH, and continue to advance our robust clinical development plan. Our cash runway is expected to fund operations into the second half of 2022, including the $50 million paid to Beam as part of our recent partnership. In July, we entered into certain agreements to exchange $201.1 million of the convertible notes for approximately 6 million shares of common stock, allowing us to lower our interest rate expense and further strengthen the balance sheet. We began 2021 with approximately $520 million in aggregate principal amount of notes. And with the two exchanges conducted in January and July of this year, we now have $192.7 million remaining at June 30, 2021. I will now turn the call back over to Cedric for closing remarks.

Thank you, Tim. We've made excellent progress so far this year, and have several important milestones upcoming as shown on this slide. We look forward to continuing to advance our growing pipeline across rare disease, ophthalmology, and neurology as part of our ambition to be a long-term global leader in complement. With the top-line results of the DERBY and OAKS studies expected next month, we would like to take this opportunity to recognize and thank the patients, investigators, caregivers, partners, employees, and investors who have helped advance us to this key milestone. We look forward to keeping you updated on our progress. And now operator, please open the call for questions.

Thank you. Please stand by while we compile the Q&A roster. Our first question coming from the line of Anupam Rama with JPMorgan. Your line is open.

Hey, guys. Thanks so much for taking the question. I'd just ask a quick one on EMPAVELI on the average days from prescription to first dose being, I think the slide said 12 days. Anecdotally, can you put that 12 days into context here in terms of when it's a little bit higher than 12 days and what's causing that and when you might be able to get a patient on more quickly than 12 days? Thanks so much.

Thank you, Anup, great to hear you. I'm going to hand it over to Adam to answer.

Thanks for the question, Anupam. Yes, we're actually very happy with the 12 days transition. It's very much in line with various other rare disease analogs. We obviously get transitions quicker than 12 days and some transitions slightly longer than 12 days. The main thing is we have to make sure that the patients have their vaccinations before they start, and that tends to drive that 12-day gap. That seems to be the consistent thing. We're obviously working hard with all of our PNH community and patients to make sure that they have everything that they need as they transition. But hopefully that answers your question, Anupam.

Thanks so much for taking our question.

Next question is coming from the line of Umer Raffat with Evercore ISI. Your line is open.

Hi, guys. Thanks so much for taking my question. Cedric, what percentage of the 38% wet AMD convertors in your phase 2 FILLY technically had non-leaky CMB at baseline? Also, I remember one of the themes that stood out when the phase 2 data came out was that folks that did convert had wide AMD conversions; their BCVA scores then worsened. But my understanding is in one of your phase 3s, you do have microperimetry as well. What would you expect in wet AMD converters on microperimetry? Thank you very much.

Thank you so much. Well, first of all, let's start with the free trial and the non-leaky CMV. So just a bit of background for the people on the line. In the FILLY trial, when we did a retrospective analysis and looked at the patients that had so-called CMV, what we were really looking at was exudations. Essentially leakage from neovascular membranes sitting in the retina, where they're not supposed to be. The question we asked ourselves is, were these neovascular membranes there at the beginning of the study but were not picked up at the time of screening? That can happen, because with the technologies available, sometimes this is missed. The retrospective analysis what we did is on LGOCT; we looked at something called a double layer sign, which is the separation of the Bruch's membrane from the RPE cell layer, indicative of that membrane sitting there but not being leaky. Now in the FILLY trial, when doing that, it became clear that a large percentage of the patient that ended up showing exudates later during the trial had that double layer sign at baseline. I will have to look back for exactly the number, but I believe that it was around 75% of the patients that developed that. That's as far as it relates to the FILLY trial, but a very interesting observation that we will, of course, further interrogate with the phase 3 results. Then as it relates to microperimetry in those patients with the coronal neovascularization. Microperimetry is an examination where you actually with a laser shine light outside of the fovea, so in peripheral areas of the macula. And here, again in FILLY, we did not do microperimetry; so we don't really know whether there is or will be an impact of exudates on microperimetry. But microperimetry, in the first place, is a way of creating a functional correlation; associating the ability to see light in areas where geographic atrophy is growing. So, on the surface of itself, it's not really related to CMV. But again, in the phase 3, we'll have the first time to really look into that.

Cedric, maybe just a follow-up then. If 75% of wet AMD converters likely had the double layer at baseline, does that basically mean that based on the analysis that's being used in phase 3, your phase 2 wet AMD conversion rate was mid-single digits? I just want to confirm I'm hearing that right. Also, since this is the last call before your phase 3 comes out, can you remind us all what interims have or have not happened and what blinded and/or any interim data have you guys seen?

Sure. Just with respect to the last question, we don't have any insights in the middle. That is something that will come when we're closer to the deadline. Then as it relates to the end, it was breaking up a little bit, the first part of your question, could you repeat that, please?

The first part of the question basically is remember how the phase 2 FILLY had a wet AMD conversion rate of high teens, and if we apply the double layer definition that's been used in phase 3, considering you said 75% of those high teens already had double layer at baseline, would that mean that the new wet AMD conversions were only mid-single digits in phase 2; is that right?

No. That kind of comes down to the definition. Again, the difference between coronal neovascularization and exudation, where you see leakage in the retina. With the double-layer sign, you don't really know whether there is a neovascular membrane. All you know is that there's a separation that is suspected of being a coronal neovascular complex. The only way to measure a CMV technically is to use something called OCT angiography, which wasn't done in phase 2 and which even in phase 3 is only done on a subset of patients. By now, to really know the answer to that. Again, the important thing to point out is that with SDOCT, it's very easy to detect small exudates in the retina that may not be there at the beginning at screening. Because at screening, you use the gold standard for wet AMD, which is fluorescein angiography, and there may be a neovascular complex present that does not leak on that particular exam, but that later on may have some small exudates that you can detect on OCT. One reference point that I would like to give you that is very interesting is that, of the 26 cases that we had of exudates reported by the investigators in FILLY; 17 patients at the time of that discovered exudate received fluorescein angiogram and only 10 of those 17 patients, at that point in time, had confirmed wet AMD based on the recent angiography. So, think about this, of the 17 tests that had exudates on your OCT, only 10 could be confirmed using fluorescein angiography. All in line with what we've reported before. We believe that there was some investigator bias in the phase 2 that we have corrected for in the phase 3.

Thank you very much.

Next question coming from the line of Madhu Kumar with Goldman Sachs. Your line is open.

Hey, thanks for taking our question. I'll step back from the discussions about basic mechanistic questions about CNV if it's DERBY/OAKS. How much do you think complement blockade contributes to the emergence of CNV events as compared to things like you mentioned investigator bias, but differences in baseline patient distribution? How much of it ultimately is just when you sufficiently blockade complementing neovascularization at some biological gradient?

Thank you so much. That is a very interesting question. So, was this imbalance that we saw in the phase 2 real or not? Personally, I think it was. I just think it was vastly exaggerated based on two important parameters. One, which you refer to the investigator bias. The second that we enrolled a lot of patients who at baseline had wet AMD in the contralateral eye while having GA in the steady eye and to put some numbers on that in the FILLY trial, 38% of the subjects enrolled came from that background phenotype, whereas the normal distribution is closer to 20%. So, I think in our phase 3, we should all expect that number indeed to be closer to 20% rather than close to 40%, which was the case in FILLY. Then as it relates to why this is happening and should we again see an imbalance? You know, it's just it's a very interesting and fascinating observation and importantly, one that was not a safety concern. Again, these exudates were very small in nature, detectable in OCT, and as mentioned earlier, often not detectable on fluorescein angiography. Then the question is, if there are, for example, these pre-existing avascular complexes and they become more leaky, why is that the case? We have always postulated that it could be that you induce a wound healing response, which can be associated with an increased secretion, which would then lead to a more leaky state. So, it is not at all implausible that an increase in exudation, which in this case was not a safety concern for us, is actually associated with a repair response that is induced by complement control.

Okay, great. Then a question for Tim. How should we think about G&A and R&D expense through 2021 and 2022? How conditioned is that around what happens in DERBY/OAKS and kind of the Sobi collaborations on phase 3 trials from EMPAVELI?

Thanks a lot, Madhu. As you know, we don't give any specific guidance with respect to those line items. But one thing to keep in mind is that our cash of $599 million is sufficient to get us into the second half of 2022, and that does consider a positive readout in DERBY and OAKS, bearing in mind that we do plan to scale up for commercialization ourselves globally. But for G&A expenses for the year, you should also expect probably a bit of a ramp-up even towards the end of this year a little bit in our commercial spending in conjunction with the launch of EMPAVELI in PNH. And then, relating to R&D, you can see there's actually a pretty good breakout of the R&D expenses in our table. I think some of the ongoing ones are pretty easy to project with a mild increase as you look at the increase in the number of clinical trials, the pivotal trials that we have ongoing in addition to DERBY and OAKS, which again will roll into an extension study. So, you can get a decent sense of how things look over the next year or two.

Thanks for taking my questions.

Next question coming from the line of Yigal Nochomovitz from City. Your line is open.

Hi, this is Carlyon for Yigal. Thanks for taking our questions. Our first question is related to the announcement that the FDA had requested a change in the primary endpoint analysis further study. We were just wondering, is it your expectation that the FDA will ask for a similar slope analysis for DERBY and OAK in addition to the rate of change in absolute lesion area?

Yes, thank you so much for that question. The short answer to that question is no. So, again, not but a special protocol assessment is often or typically requested from the FDA when it is unclear what type of analysis the FDA would agree to. That is often inspired by a request from the sponsor that may be viewed as unusual in the context of that analysis. So, my suspicion is that that is the process that happened in this case. From our perspective, I can tell you that after the FILLY trial, we submitted our protocol with the proposed statistical analysis plan in the phase 2 meeting, and we had full agreement with the FDA on that. So, there was no need for a special protocol assessment as what we proposed was the standard that the FDA among others also use, for example, in the chroma and spectory trials with Roche-Genentech.

Okay, great, thank you. Then we were just wondering if there's anything more you could say at this point on how the rate of missed injections and rate of dropouts in DERBY and OAKS compared to what was observed in FILLY? I think in the past you've mentioned plans to conduct some additional analyses that could potentially account for the impact of missed visits due to COVID, and we were just wondering if those would be included in the topline disclosure in September as well. Thank you.

Sure, no problem. As we have iterated before and as we've talked about at length during our R&D Day in June, we've been tracking very, very closely over the past two years or a year and a half, I should say, what the impact was of COVID on the missed injections in the trial. As we indicated at the R&D Day, for the primary endpoint analysis of the monthly injections, we feel very good about minimum impact of COVID on that analysis, and that is the analysis that will give us our approval. For every other month injections, where one missed injection could be an interval of as long as four months in a trial that is one year long, there, of course, the risk is higher. But as we pointed out at our R&D Day, every other month is something that we used to interpret and understand what the PK/PD relationship of the drug is, but for approval, we need to mark and there, we feel very confident that the impact of COVID is under control.

Thank you so much.

Next question coming from the line of Philip Nadeau with Cowen. Your line is open.

Hi, this is Ernie Rodriguez for Phil. Thank you for taking our call. You mentioned some of the positive feedback you have received on the launch and your goals for the year. We were curious if you have identified any barriers that could preclude you from achieving those goals and expectations for the launch? Then in GA, assuming positive results and FDA approval, what's the group within the GA patient population do you expect should approach and treat with EMPAVELI? Do you think this will change depending on the level of reduction that you achieve on the September results?

Thank you so much. I'll let Adam answer the first part of your question and then I will take the second.

Yes, thanks for the question. Yes, we're very happy with our progress to date with the launch. Everything is going well, and as you can tell by the REMS, the number of physicians going through REMS and the number of start forms, we're on a very strong launch trajectory. We're very happy and believe that our Q4 2021 goals are very achievable. We're working incredibly well with the payers to make sure that we can get every patient who needs access, and those are ongoing discussions. As you remember, sometimes they take between three to six months to allow us to get access to their formularies. We're continuing to have some success there. That's something that we'll continue to work on. But everything's pointing in the right direction for the EMPAVELI launch. So, we're very happy to help the PNH community.

Then in the second part of your question. So, I'm happy to have that because it's something that we have done a lot of research on as well. What is the patient population that physicians will be interested in? How do we see this product being implemented? There are two important takeaways to communicate. The first one is that, should we have a good safety profile for our drug? I mean, should the exudation be very well under control? If this is a product with a clinically meaningful effect on the growth of atrophy, then this is, in our opinion, going to be a drug product that a retina specialist will prescribe to the majority, if not all, of their patients with GA. Because that is how medicine works. I think that is something that is probably not fully appreciated yet how we think this will fit into the flow of the retina specialist like anti-VEGFs found their way into the flow with the treatment of wet AMD. Then as it relates to basically all patients and then the question, at which point in time would you intervene in the disease? That's very interesting. Because intuitively, you may say, well, even when you speak with a retinal specialist, I'm going to start with my worst patients, blind in one eye, advance geographic atrophy in the contralateral eye. While intuitively that makes sense, logically, it does not. Because again, assuming that this drug is as safe as we think and hope it will be, you want to treat geographic atrophy as early as possible. At the first sign of GA, when you start losing photoreceptor cells, I fully expect physicians and patients to make commitments to saving as many photoreceptor cells as they can to as much as possible prolong the path to blindness. I think something that should this drug find its way into the market, that I believe will happen is that patients will be treated early and that all patients, barring exceptions, should be interested in being treated with this product.

Thank you, very helpful.

Next question coming from the line of . Your line is open.

Hi, good afternoon. Thanks for taking our questions. One on GA, I guess following up on that, that really all GA patients could be amenable to this treatment. I guess what sort of bottlenecks would you expect, assuming obviously, positive data and approval what sort of bottlenecks would you expect? Would there be any sort of capacity restrictions or limiting for the intravitreal injection?

I'll give the medical angle, and then I will hand it to Adam to talk a little bit more about practical implementations because we've done work on that as well, of course. Medically, I think if the safety profile of this drug is good at that point in time, I think it will be important to educate physicians. It would be the first treatment for a disease that is currently untreatable. It will be important to find patients in the generalist of the ophthalmology practice that may not be referred to a retinal doctor right now because there's no treatment available and even earlier and the optometrist office, but I think at that point in time, really the main focus should be on building awareness and the fact that there is now or will then at that point, hopefully be a treatment available. Adam, I don't know if you want to add something to that?

Yes, just to add on the capacity piece of the question. We did some research with injecting ophthalmologists and retinal specialists. They've had many years of experience doing intravitreal injections and increasing patient numbers. So, we believe with a new addition and the new approved product in GA, they'll have the capability of expanding capacity based on our discussions and our market research with them. They know that they currently have a bolus of GA patients within their clinics and at their sites of which there are no current treatments. So, we don't expect capacity to be a rate limiting step as we launch this drug.

Great, that's helpful. Thank you. Then one follow-up on intermediate AMD. Can you talk about any initial thoughts you have on the potentially pivotal study design in terms of size or endpoints?

Yes, we're not commenting yet on what the design will be. But I think, again, the notion of doing a trial in intermediate AMD goes hand in hand with what I mentioned earlier about wanting to treat patients as early as possible. The fact that in a post-hoc analysis of FILLY, we actually discovered that AMD region outside of the atrophic area of the retina. In other words, retina that you can still see on your autofluorescence image, but that is, of course, affected, and if you want to call it that, surrogate for intermediate AMD and where we saw post-hoc a significant slowdown on the conversion to full geographic atrophy. So, no design details yet, but a patient population that we are particularly interested in is acceptable.

Great, thanks so much. Thank you so much.

Next question coming from the line of Kaseem Hoffman with Bank of America. Your line is open.

Hi, good afternoon. Thanks for taking my questions. Quickly on the GA studies, assuming that they're both positive, should we expect that you would be able to apply for approval this calendar year? What would be the rate-limiting steps in your application assuming positive data? Then as we talk about the commercial landscape, can you maybe give us your view about the potential for C5 as well as the C1Q complement inhibitor entering the market? And how your products would be differentiated from those?

Thank you so much. I'm going to hand the approval question to Federico, and then Adam will take the commercial question.

Thank you, Cedric. Thank you for the question. We're looking forward to the results we have from the studies coming in September, and our teams are ready to jump into the submissions and be able to submit as soon as possible. We're not guiding on timing of the submissions, but we're fully prepared to tackle the analysis, not only of the primary endpoints, and there will be reporting to medical analysis required for the submission as soon as possible.

Thank you for that. For the commercial question, it's a question on data. I think, at the end of the day, we will see what happens with the competition. It is our conviction that the mechanism by which the retina suffers from geographic atrophy is driven by the accumulation of C3 products on the retina, which is not properly being removed, and it's not being properly removed because the same cellular mechanisms compete for removal of C3 as those that work on the visual cycle. We know from our DNA studies that C5 has no effect on the accumulation of C3. So, it would be a surprise to us should the C5 inhibitor be successful, especially in light of the fact that anti-C5 has failed twice already, both when administered systemically as well as intravitreally. C1, on the other hand, is an interesting target, and there too, you can kind of target the broad control of complement that we believe you need, as you do with pegcetacoplan, also covering the lectin pathway and the alternative pathway. So, I think the proof is in the pudding but it's also important to note that the only competitor closest, of course, is the IVERIX program and we look forward to evaluating that when it becomes available. I hope that answers your question.

Yes, that's really helpful, Cedric. If you were to talk about one thing that could be differentiated in your program versus theirs, would you pivot more to efficacy?

Well, I think, what we have done and what I like about our program is that it has been a program where we deliberately chose to be highly consistent over time. In other words, we definitely tried in 2015 really to mimic what Genentech-Roche at the time was doing with their Lampalizumab program. We knew that they had interactions with the FDA, what the expectations were in terms of endpoints, and the phase 2 clinical trial was really designed to anticipate a phase 3 trial with minimal changes. So, for all of you that have studied FILLY and DERBY and OAKS, they are pretty much a carbon copy of each other with very, very tiny changes and if anything, just more quality and robustness in the DERBY and OAKS trial. So, the IVERIX program without any criticism is a kind of much more variable. I mean, there was a part one and part two and the phase 2. Then they went through the span of the phase 3. It's a different approach. We wish them success. But I think for us, it's planning the course and really building on the initial hypothesis has been the key.

Okay, thank you.

Next question coming from the line of Steve Seedhouse with Raymond James. Your line is open.

Hi, this is Timor on for Steve Seedhouse. We have a quick question on commercial. Given that $0.6 million in revenue, is it fair to assume you have around 15 to 20 patients on therapy, or is that revenue mostly for inventory build? Then in terms of geographic distributions, have you seen any trends? Orders coming from a certain geographic area in the US or is that too early to tell? Thank you.

Thank you so much. I will hand it over to Adam for the answer.

Thank you very much for the question. So, we're not going to guide on product revenue for the foreseeable future. But the initial $0.6 million is a great sign of how EMPAVELI can elevate the standard of care. So, we've had over 75 physicians sign up for REMS, and over 60 start forms, which should give you a very strong sign of the demand. So more to come there. On your second part of the question, we've seen success all across the US. So, we've seen start forms and REMS submissions as well as actual patients come from each of the large main centers that you would expect within the PNH community and also from smaller centers geographically dispersed across the US. So, we're having an impact across the whole country. Hopefully that answers your question.

Yes, thank you. Then maybe a question on GA commercialization preparedness. In terms of where you potentially need to be versus where you are now, are you just starting out versus what percent of salesforce do you still need to hire as you're probably in early stages, but just to give us an idea?

Yes, I'll take that one too. It's Adam. So, we have obviously built an infrastructure which we can carry across for certain pieces of commercialization for geographic atrophy. We've also created the leadership teams commercially in medical affairs in the US, in our international head office in Zurich and Switzerland, in Germany and in Australia. So, we have the core infrastructure. As soon as we see data, we'll rapidly start to expand on that infrastructure through the salesforce and medical affairs and everything else that you would expect. So we're in a good place. We're looking forward to seeing the data, and we do identify candidates out in the market who are willing to join Apellis and excited to join Apellis post positive GA data.

Thank you very much.

Our next question coming from the line of Alethia Young with Cantor Fitzgerald. Your line is open.

Hey, guys. Thanks for taking my questions. Can you talk a little bit about how COVID has impacted things and how you think going forward it may with this Delta Variant, Lambda Variant, take every variant you have going? Then maybe the second question is from a scenario, how do you think about having levels of safety front, whether it be the infections or the endophthalmitis or whether it be the exudative events? How do you think about if they were the same in this cavalry? Then what do you think that means commercially versus potentially were slightly lower? Just maybe lay out some of your scenarios on that?

Thank you so much, Alethia. I assume that your first question regarding COVID also applies to the study, correct GA studies.

Yes, the joys of launching a product during a global pandemic. So, we've actually seen in-person live interactions increase. So, prior to our approval, they were lower than 10% of our interactions were live. Now, roughly 40% of all of our interactions are live in person. We also continue to use virtual technologies to engage with physicians. Now, my bias tells me that the Delta variant could slow this down a little bit, the in-person engagements, but we're going to closely monitor all of the regional COVID-19 restrictions and we'll make sure that we're following those with HCPs and their offices. But we think we have the right skill set, and obviously, we prepared to do a virtual launch. We're having some great success with that as well. So, between the balance of in-person and virtual, we think we're in a really good spot to continue the great progress on the PNH launch.

Thank you, Adam. Alethia, related to your second question regarding safety. So, I want to start off by saying that in the FILLY trial, the safety profile was such that we did not have to make any changes in phase 3. So, first of all, as it relates to the exudations and as alluded to earlier, the types of exudations we had were never a safety concern. By correcting for that investigator bias and the fact that the demographics will be adjusted, we expect in the phase 3 clinical trial, the exudation rates to be lower than they were in phase 2. Again, the investigators in the phase 3 trial, who know those data very well, found the phase 2 exudation rate to be acceptable for the enrollment in the phase 3 trial, which if it hadn't been for COVID, would have probably been faster than any phase 3 trial done before. Then as it relates to the cases of infections to endophthalmitis, we had two cases in the FILLY trial, that were on a total of approximately 1,400 intravitreal injections. That rate of infectious endophthalmitis is in line with what you find in phase 2 clinical trials with anti-VEGF or with steroids, for example. So, this is an entry pathogen and this is a complication that is inherent to the procedure itself. There is right now absolutely no indication that that rate would be higher because of some circumstance than it is under normal circumstances. Typically, what you see is that in the phase 2 clinical trial, you have a certain rate, in phase 3, it gets better, and then commercially, it further improves, as physicians get used to the procedure. So, it is our expectation that the safety profile of pegcetacoplan will be safe and that we will be able to focus on efficacy against the background of FILLY.

Great, thank you.

Our next question coming from the line of Elin Murph with UBS. Your line is open.

Hey, guys. Thanks so much for taking the question. First, in terms of exudations in VA, maybe what we might know from the natural history around how exudations might impact VA growth or any associations we've seen historically either with your data or in the natural history. Then second question, just in terms of the commercial outlook for GA. I was just curious, how you're thinking about potential commercial preparations as you ask for GA. And just any differences in terms of diagnosis rate or any particular emphasis on endpoints versus the U.S. or anything different there in terms of the commercial strategy?

Thank you so much. Relates to exudations, we don't talk a lot about this because we're really not talking about anecdotal numbers. But if you look back at the FILLY trial and you look at those patients that develop exudations for whom we have the follow-up data for geographic atrophy, there’s quite a remarkable slowdown in GA, beyond what we measured in the primary endpoint. But these are such small numbers that we'll have to find out in the phase 3 clinical trial if they materialize or not. Again, that's something to look forward to. But it's definitely an intriguing observation and goes hand in hand with kind of that hypothesis that maybe these exudates go hand in hand with a wound healing repair process. Then as it relates to the ex-US deployments, which is a wonderful undertaking that Adam is taking on. I'll hand it over to him.

Yes, thank you. Thanks for the question. Quickly, obviously in GA, there's a million patients in the US and about $2.6 million in Europe and $5 million globally. So, you can see that there is a total global opportunity for geographic atrophy for Apellis, and we're preparing to execute against that global opportunity. So, we have built out an infrastructure in Zurich, in Switzerland, very experienced commercial and medical affairs leaders. We have already started to build out our region in Germany, based in Munich, and also our Australian affiliate. We are ready to make sure that we can meet the needs of GA physicians and GA patients very quickly ex-U.S.; it's an exciting opportunity and we're doing all that we can to be ready for that. Now, I will hand the regulatory side to Cedric and on what's likely to be expected in Europe. That was the third part of your question.

Thank you so much. So in Europe, as it relates to the regulatory process, like in the US, the growth of geographic atrophy is the primary endpoint that we look for. The general feedback from the European regulators has been that we would like to see a directional change in the functional endpoints in alignment with the loss of photoreceptor cells as measured through the anatomical endpoint, but not with the expectation of showing that statistically. That is data that we will gather at the 24-month time points and add to our findings in Europe. I hope that answered your question?

Yes, really helpful. Thank you.

Next question coming from the line of Justin Kim with Oppenheimer. Your line is open.

Hi, good afternoon. Thanks for taking our questions. Just a couple at this point. I know you had covered that a little bit before, but with the intermediate AMD study depending on DERBY and OAK to success, can you just discuss how important regulatory buy-in on IRR to CRR progression is to designing and powering a potentially pivotal study in intermediate AMD and what aspects of the DERBY and OAKS study will help inform that design empowering as well.

Thank you so much, Justin, great to hear you. I'm going to hand that over to Federico.

Thank you, Justin, for the question. It's really important, and we are discussing with the regulators on the importance of the change from IRR to CRR. So, their buy-in and agreement on the definition of the disease and the endpoint to look for the studies is of utmost importance. We are having ongoing discussions with them, so we'll know more in the next few months.

Okay, great. And maybe just one on EMPAVELI; appreciating that the label is already quite broad, just wondering if there are any plans at this point to informally incorporate the PRINCE study data and into the label and any timeframe for that as well as potential scientific publication?

Thank you so much, Justin. That has not been decided yet. To your point, the label is very broad and it will be something we'll follow up on.

Great, thanks so much for taking the questions. I'm looking forward to the results next month.

Thank you so much.

And our next question coming from the line of Matthew Lachine with BMO Capital Markets. Your line is now open.

Hi. Thanks, everyone. This is Nick on for Matthew. Just one quick follow-up for us. It seems like the PNH launch is going pretty well as you said, and I believe you said the majority of patients are C5 switches with 75% of that being from Ultomiris. Is that something we can expect going forward, or is that going to kind of change over time? And any incremental color on that would be really great. Thanks.

Thank you so much. I'm going to hand that one over to Adam as well.

So, yes. Thanks for the question. You're correct. We're seeing switches being the majority of our EMPAVELI starts, and 75% of those switches are coming from Ultomiris. As a quick reminder, the one-third of the 1500 C5-treated patients, we believe is our target population at the beginning of launch, and that said, has the highest unmet need. They have low and falling hemoglobin on their current C5 treatments and are continually being transfused. So, that is the patient population that we're seeing. And so C5 switches will be the bolus of our starts moving forward. I expect there to be a balance between Ultomiris and Solaris, with Ultomiris likely being the majority as we move forward. And then we'll continue to progress through the unmet need in the 1500 C5-treated patients.

Great. Thank you so much.

Next question coming from the line of Joseph Stringer with Needham. Your line is open.

Hi everyone, thanks for taking our questions. Scoping on EMPAVELI in terms of gross to net, recognize that it's early on in the launch. But just giving you a commentary around commercial versus government, the payer mix and how that's going to continue in the future. You gave us an early sense of the gross to net early on. And, you know, what you sort of see that in a steady state on an annual basis. Thank you.

Thank you so much. Adam, you want to take this one?

Yes, absolutely. Thanks. You're right. It's a bit too premature for us to comment on gross to net at this point in the launch. We are in line with other gross and net rare disease models. And to your point, I expect our gross to net to tick down as we progress into the latest stages of the launch as we transition patients to EMPAVELI, so early days in the launch window, but I'm still thrilled with how we're progressing with the EMPAVELI launch.

Great. Thanks for taking our questions.

Next question coming from the line of Alan with ROTH Capital. Your line is open.

Hi, maybe just the housekeeping question from Tim. The cost of the research collaboration from Beam Therapeutics, would that be an ongoing line item separately, Tim?

Thank you, Oliver. Ultimately, no; that is unlikely to be it'll be baked into research and development expense. We broke that out, showing the upfront because it has a large impact on the R&D expense this quarter. As you know, we're obligated to pay another $25 million a year from now. And ultimately, after that, the ongoing expense will be fairly minimal. This is a research collaboration initially, so it will be baked into R&D.

Thank you, Tim. And maybe a clarification from Adam. Adam, you mentioned that and this is related to the lead time of 12 days to get patients on drug. That vaccination is a component there. You meant COVID vaccination because I thought that most of these patients are switch patients so they have been previously vaccinated.

Yes, no, it's actually vaccinations that are required by label two weeks before the start of EMPAVELI to get on to EMPAVELI. So it's following the label guidance. It is not COVID vaccine-related.

So even though these people were previously vaccinated, because they received Ultomiris, they would have to receive another vaccine?

Yep, they're following the label guidelines on vaccination two weeks prior to the first dose of EMPAVELI.

Okay. Thank you so much right now.

Thank you so much. And I think that was the last question. In closing, thank you all for joining us on our second quarter conference call. We look forward to presenting top-line results from our DERBY and OAKS studies in September, and keeping you updated on our commercial and pipeline progress in the months ahead. We are around later today and tomorrow if you have any additional questions, and feel free to reach out to Meredith. Thank you again for joining us today and have a wonderful rest of the week.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.