Apellis Pharmaceuticals, Inc. Q1 FY2022 Earnings Call

Hello, and welcome to Apellis Pharmaceuticals First Quarter 2022 Earnings Conference Call. It is now my pleasure to introduce Senior Vice President of Investor Relations and Strategic Finance, Meredith Kaya.

Good afternoon, and thank you for joining us to discuss Apellis's first quarter 2022 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 all for joining us today. 2022 is off to an extraordinary start at Apellis as we continue to execute across each of our key priorities. Starting with intravitreal pegcetacoplan for geographic atrophy, or GA, we've made important progress as we prepare for the NDA submission later this quarter. We completed the pre-NDA meeting in January, and then in March, we shared 18-month data from our Phase III DERBY and OAKS studies determining that longer-term treatment with pegcetacoplan resulted in an increasing benefit to patients with greater amounts of retinal tissue saved over time and a favorable safety profile. Additionally, these data showed improving effects in DERBY that were comparable with OAKS starting at month 6. Just this week at ARVO, we shared additional 18-month data analyses that showed that pegcetacoplan reduced lesion growth in patients with extrafoveal lesions and in patients with foveal lesions, further supporting pegcetacoplan's benefits for a diverse population of patients across the GA disease spectrum. Collectively, these data reinforce the potential for pegcetacoplan to become the first-ever treatment for the millions of patients living with GA, a relentless disease that is a leading cause of blindness worldwide. Turning to EMPAVELI in PNH. The launch is off to a strong start in 2022, with approximately $12 million in U.S. net sales despite the initial headwinds due to the Omicron variant. We remain focused on further establishing EMPAVELI as a first-line treatment for patients living with PNH. Our aim is to ensure that all patients with PNH, regardless of their baseline hemoglobin levels, have the potential to benefit from EMPAVELI. The leading indicators for the launch remain strong with positive physician and patient feedback, a favorable patient mix, high levels of compliance, and positive recognition by payers. Globally, we are thrilled to see our partner Sobi begin to bring EMPAVELI, also known as Aspaveli in certain countries outside the U.S., to patients worldwide. Beyond PNH, we are seeking to advance EMPAVELI as a transformative therapy for rare complement-driven diseases. In the first quarter, we completed enrollment in our potentially registrational Phase II study in amyotrophic lateral sclerosis, or ALS, with top line results expected in mid-2023. Additionally, Sobi dosed its first patient in a Phase II study in hematopoietic stem cell transplant-associated thrombotic microangiopathy or HSCT-TMA. Together with Sobi, we now have 2 late-stage clinical programs underway and remain on track to initiate 2 additional programs in the second quarter. Combined, these opportunities could address the needs of as many as 35,000 patients per year in the U.S. alone, significantly expanding the opportunity for EMPAVELI. We are also advancing complement inhibition as a novel approach to enabling adeno-associated viruses or AAVs. In collaboration with Spark Therapeutics, we look forward to sharing in vitro data with APL-9 at the upcoming Annual Meeting of the American Society of Gene and Cell Therapy later this month. While early, with additional clinical investigation warranted, these in vitro data further support our hypothesis that complement, and specifically C3, plays an important role in anti-AAV responses, and that targeting C3 has the potential to help mitigate the safety and tolerability concerns associated with AAV delivery. Finally, we are continuing to progress our early stage pipeline with 3 INDs expected over the next 18 months, including APL 2006, APL 1030 and our SiRNA program, and continue to make great progress in our partnership with Beam Therapeutics. On the finance side, we ended the first quarter with close to $1 billion in cash, providing runway into the first quarter of 2024. This strong financial position allows us to head into our NDA submission and potential launch from a position of strength in otherwise challenging market conditions. We look forward to building on our momentum as we further cement our position as a leader in complement across multiple therapeutic areas. And let me now turn the call over to Adam for a commercial update. Adam?

Thank you, Cedric. As Cedric mentioned, since our launch last May, we continue to see strong commercial launch results for EMPAVELI in PNH, resulting in $12.1 million in U.S. net sales for the first quarter. Before I get into the details of the launch, I'd like to take a moment to welcome Dr. Peter Hillmen to the Apellis team. Pete will be joining us from the University of Leeds as Head of Hematology Engagement effective later this month. Pete is an internationally recognized hematologist, clinical researcher, and thought leader in the PNH field who has been involved in the development of several PNH treatments, including EMPAVELI. We are thrilled to have Pete coming on board and incredibly grateful for his continued contributions to the PNH community. Turning to the launch. Since approval in May 2021 through the end of the first quarter, we saw continued positive momentum across our key leading indicators. More than 150 start forms have been submitted, with 30 received in the first quarter. We continue to see the vast majority of EMPAVELI patient starts coming from C5 inhibitor patient switches, with over 75% of these switches coming from ULTOMIRIS. Another positive sign of demand is the continued growth of our REMS program, with approximately 170 physicians certified at the end of the first quarter. Additionally, 19 of the top 20 payers have added EMPAVELI to formulary. As we stated before, we initially focused on the top 20 payers, covering approximately 85% of all U.S. PNH prescriptions, and are thrilled with the progress we've made within the first year. One of the largest U.S. payers has also placed EMPAVELI as exclusive for all treatment-naive patients. And lastly, we are continuing to see high patient compliance rates in 2022, which we believe is a testament to the benefits of EMPAVELI and how much better patients feel when their disease is well controlled. As the quarter progressed, in-person access to physicians increased, and we saw a return of in-person conferences and events. This has allowed us to better connect with key healthcare professionals who had been more difficult to engage with during the Omicron wave earlier this year. We look forward to further executing on our launch efforts in the U.S., and we'll continue to educate physicians, secure additional payer coverage, and bring EMPAVELI to patients in need of treatment. Additionally, we've submitted our supplemental NDA, which includes the Phase III PRINT results in addition to the 48-week Phase III PEGASUS data. If approved by the FDA, this will allow us to strengthen our promotion of EMPAVELI for treatment-naive patients and raise more awareness of our long-term efficacy and safety data. Turning to our commercial efforts in GA. 2022 will be a pivotal year for all of us here at Apellis and for the millions of patients suffering from GA globally. GA causes irreversible damage and is the leading cause of vision loss impacting more than 5 million people worldwide, including 1 million people in the United States. We are compelled by the unmet need, loss of independence, and emotional burden of patients living with GA. We recently shared results from a geographic atrophy insight survey, referred to as GAINS, conducted by the Harris Poll on behalf of Apellis. GAINS surveyed over 200 adults with GA across 9 countries. Results revealed that nearly 7 in 10 people believe the impact on independence and quality of life due to their visual decline is worse than they expected. More than 2 out of 3 people reported that they rely on a caregiver for support, and the majority said that they feel the disease negatively affects aspects of everyday life such as the ability to read, drive, and travel. Approximately 1 in 3 said they have recently withdrawn from their social lives because of their disease and reported feelings of anxiety, powerlessness, and frustration. It is overwhelmingly clear: Treatments are needed and needed now. More than ever, we believe that pegcetacoplan is positioned to meet the significant unmet need, and we are committed to working to bring this therapy to as many patients as possible as quickly as possible. Our commercial team is preparing for a potential launch as early as the end of the year. We have onboarded several key leadership positions in medical affairs, sales, and marketing, and market access within the U.S. and additional leadership positions globally. We are initially focused on those retina specialists who manage the majority of GA patients. We also continue to make strides in our near-term launch initiatives, focused on disease state education, KOL, and payer engagement activities. In the EU, we remain on track to submit our MAA in the second half of 2022. We look forward to providing more detail on our commercial plans as we prepare for launch.

Thank you, Adam. Submitting the NDA later this quarter is one of our highest priorities. As Cedric mentioned, we are excited to share the 18-month data from DERBY and OAKS, which showed continuous and clinically meaningful benefits to a diverse and broad group of patients over time. As highlighted on this slide, both monthly and every other month's treatment with pegcetacoplan continue to reduce GA lesion growth compared to sham at 18 months with all nominal P values below 0.05 in both DERBY and OAKS. This means that there was a larger absolute difference between pegcetacoplan and sham in GA lesion area than observed at month 12. In an effort to understand how the treatment benefit evolves over time, we then looked at the effects with pegcetacoplan at 6-month intervals and found that the treatment effect in DERBY was comparable to OAKS during month 6 to 18. Pegcetacoplan in both studies continues to demonstrate a favorable safety profile as shown in the FILLY study and the 12-month top line DERBY and OAKS data readouts. Additionally, and most importantly, the combined 18-month data showed potential improvement treatment effects over time. Then, earlier this week at the ARVO Annual Meeting, we and our collaborators had 10 presentations, including 3 oral presentations, showcasing our leadership in the data. In one of our presentations, we shared 18-month data showing that pegcetacoplan continued to demonstrate a reduction in GA lesion growth in patients with extrafoveal lesions and an improved effect in patients with foveal lesions. In the combined DERBY and OAKS data, monthly and every other month treatment with pegcetacoplan reduced extrafoveal lesion growth by 26% and 21%, respectively, and reduced foveal lesion growth by 13% in both arms. Nominal P values were all below 0.05. This additional data reinforces the potential of pegcetacoplan to slow the progression of GA across the disease spectrum, which is critically important given the heterogeneity of this patient population. We are excited to potentially bring a therapy to all patients with GA with an additional opportunity to treat early in disease progression and save as many photoreceptor cells as possible throughout the course of the disease. We're also excited to present the 18-month fellow eye comparison at an upcoming medical meeting and expect the results to be generally consistent with what we saw at top line. We're also working to deliver on the broad platform potential of EMPAVELI to advance our disease franchise, which includes 4 late-stage studies in multiple complement-driven diseases. In addition to what Cedric mentioned earlier regarding our ALS and HSCT-TMA studies, we also expect to dose the first patient in a Phase III study in immune complex membranoproliferative glomerulonephritis (IC-MPGN) and C3 glomerulopathy (C3G) in the second quarter. Our partner, Sobi, remains on track to initiate a Phase III study in C3 glomerulopathy indices (CAD) in the second quarter. We're excited to share our continuous progress across these rare disease programs. Let me now turn the call over to Tim for a review of the financials. Tim?

Thank you, Fede. Since we issued a press release earlier today with the full financial results, I will just focus on the highlights for the first quarter of 2022. Total revenue was $14.4 million, which consisted of $12.1 million in EMPAVELI net product revenue and $2.3 million in collaboration revenue from Sobi. R&D expenses were $90.9 million, G&A expenses were $51.2 million, and we reported a net loss of $138.9 million. As of March 31, 2022, Apellis had $965.3 million in cash, cash equivalents, and short-term marketable securities, excluding the additional $50 million milestone received in April from Sobi. Our cash balance reflects $380.1 million in net proceeds from our offering in March. We expect our current cash balance to fund our operations into the first quarter of 2024, including the ongoing EMPAVELI launch, the global launch of pegcetacoplan in GA, and further development of our pipeline. We remain confident in Apellis's financial future as we continue to execute on our upcoming milestones. I will now turn the call back over to Cedric for closing remarks. Cedric?

Thank you, Tim. We have made excellent progress over the past few months and look forward to an exciting rest of the year. By year-end, we expect to have further cemented our position as a global leader in complement with 2 commercial products and a robust pipeline encompassing multiple late-stage rare disease programs and additional pre-clinical programs heading into the clinic. We look forward to building this momentum throughout the coming year and to updating you on our progress. And let us now open the call for questions. Operator?

And our first question comes from the line of Madhu Kumar with Goldman Sachs.

I guess our first one relates to the European filing strategy for pegcetacoplan. How should we think about that? And do they need to see the 24-month data, both in terms of GA lesion growth and in terms of functional assessment division before you kind of formally start the process of filing for approval in Europe?

Great to hear you. So we are meeting with the rapporteurs in Europe, and those interactions are going very well. Our plan continues to be to file in the second half of this year. And as you mentioned, the 24-month data is something that will be updated in that package. The functional endpoints, I want to again point out that the expectation there should not be to see something statistical, it never was. The European regulators want to understand what the functional relationship is with the full receptor cell death that we measure with the anatomical endpoints. So all of that will be included. And again, the second half of this year continues to be our guidance.

Okay. One more question maybe on GA market size. So a question you kind of have been getting more recently is, what fraction of GA patients are functionally legally blind in one eye? And how does that affect kind of the treating decision versus patients who have functional vision in both eyes? Like, can you answer looking at that question? And what are you hearing out there?

The number there is around 40% of patients, so it's a very high number of patients who are legally blind in one eye and affected by GA in the fellow eye. That is particularly a target population that is of interest for many retina docs because, of course, those are the patients that are most at risk of catastrophic bilateral vision loss.

And our next question comes from the line of Jon Miller with Evercore.

Let's start with cash runway. Moving into 2024 seems to support the launch, but what is the likelihood that it will lead to profitability? Additionally, with the new runway, how have business development priorities and discussions changed since the recent funding?

I'm going to hand the call over to Tim.

Sure. Jon. With this recent capital raise, as you said, our runway does get us into the first quarter of 2024. And in terms of that, there are a lot of assumptions out there that could fluctuate that kind of target of profitability one way or the other, so we're not guiding to profitability based on that time frame. However, I don't think that capital really gets us a comfortable cash balance if we get to profitability, so we're going to continue to be thoughtful about what that potential financing that would get us there looks like. We're looking at approaches that may include royalty partnerships or other financing vehicles. But the good news is that we have a very strong cash balance right now. And we can take our time to figure out what makes sense for the company.

Great. That makes sense. And then maybe one more follow-on on the 24-month data we just were discussing. When we think about FDA, if they get that 24-month data later this year, what's so likely that constitutes a major amendment that pushes back the PDUFA?

Yes. Jon. So like that is very, very small and would be based on surprises, right? So we have, of course, amply discussed this in anticipation. And the reason why the 24-month data is not something we need to wait for is because we don't expect to learn anything new between month 18 and 24. So of course, when we have the data, we will communicate it, but it's not scheduled to be a major amendment.

And our next question comes from the line of Philip Nadeau with Cowen and Company.

A couple more on regulatory. In terms of an FDA panel issues, do you think the FDA would want to hold on? And if so, what would they hope to learn? And then second, on the timing, we noticed on Slide 13, you suggested an approval is possible this year. Our understanding of the regs at the FDA is they have 2 months to accept any filing, and then even with prior review, it's 6 months after the acceptance for the PDUFA. So it seems like even if you were to file today, the 2023 PDUFA day would likely occur. What have you heard from the FDA that gives you some confidence that the approval could actually come before the end of this year?

The six-month timeline from acceptance is specific to a new chemical entity. However, since pegcetacoplan is already approved for other products, it is not classified as a new chemical entity, meaning we can expect a timeline of six months from the filing date instead of the acceptance date. This timing could still position us for a decision by the end of this year, possibly by the end of the second quarter. Regarding the FDA panel, we are anticipating one and are preparing accordingly. This could represent the first approval for a significant new indication. When discussing what might be examined in such a panel, it’s important to note that the New Drug Application centers on four key pillars. The first pillar is safety. The second is the drug's biological activity—essentially, does it work? This is based on achieving the primary endpoint in the FILLY and OAKS studies and analyzing outcomes in patients with bilateral geographic atrophy (GA). The third pillar focuses on the real effect size, which ranges from 12% to 29% across the three studies, with a clear effect size around 20% at one year based on the covaried analysis. The fourth pillar considers the outcomes moving into year two, which was crucial in including the 18-month data to understand the long-term effects of the treatment for a disease that patients may face for years or even decades. If an outcome does occur, one intriguing discussion point will be the implications of a 20% effect at one year, and what that sustained benefit means over time for patient safety regarding receptor cells. Beyond that, we do not believe there are many contentious aspects in our submission.

So it seems you believe a panel would address the significant aspects of the data or the results you've presented. Am I understanding you correctly?

Yes. And the question was if you have a panel that would be discussed, and I think that would be probably what we predict. Now we have done a ton of research on that, of course, in the preparation for the launch. A general consensus among physicians is that 20% is clinically meaningful, so it's also not a subject that we believe will be problematic for us.

Our next question comes from Steve Seedhouse with Raymond James.

This is Timur Ivannikov on for Steve Seedhouse. So just a question on G&A. I think you've talked about the importance of educating retina docs. And assuming the drug is approved, what do you think will be the best way to communicate the benefit of pegcetacoplan if a patient doesn't really see a change in symptoms over a year or maybe the symptoms are worse, but it's not really clear whether the drug is helping?

Yes. Timur. I think it's a very important one, right? I mean, I would say that what most resonates with retina doctors is when you talk to them about the area of saved retina, right? I mean, that's a very tangible thing to look at, right? I mean, it's not a percentage slowdown or whatever. So how much retina is actually being preserved. And we disclosed the number with the 18-month data of OAKS, for example, where at one year, a 0.41 square millimeter of retina was preserved compared to the sham whereas at 18 months, that was already 0.66 square millimeters. And you could say, well, what is a square millimeter in the retina? Well, think about it this way, approximately or even less than 2 square millimeters is responsible for all central vision. So what we need to read charting, which determines visual acuity. So there's a lot of retina over the course of, we could say, 1.5 years. A lot, but in the picture of a treatment with GA, a very short period of time.

Okay. Got it. And then maybe just a quick follow-up. In terms of fast progressor that you've talked about in DERBY. On the other hand, do you have people who are best responders who are deep responders? Do you have patients who did not really progress at all on GA? And if you do, what is the distribution of those patients across the studies?

Yes, those are details we will discuss more over time. It’s quite uncommon for a patient not to experience any progression at all. While that can happen, it is rare. Progression varies from very fast to no progression. We will publish more information about how this unfolds in the future. What’s crucial is that there are numerous factors influencing how quickly these patients progress. A study can easily become unbalanced if the patient stratification is not done properly in GA. Sometimes, luck can play a role. For instance, in the FILLY study, we might have been fortunate with the patient distribution between the sham and active groups. Conversely, in the DERBY study, we were unfortunate since, as you pointed out, the rapidly progressing patients were disproportionately assigned to the active monthly group.

And our next question comes from the line of Chris Howerton with Jefferies.

Team, this is Combis on for Chris. A couple of questions for us. What were your takeaways from the DERBY extrafoveal subgroup analysis? Were you surprised to see every other month performing better than monthly in that group? And I guess, just any general broader takeaways in GA from that finding? And then as a second question, thinking about kind of function and how pegcetacoplan will impact patients' visual function. What's the most high fidelity functional measure in GA? And kind of like, what's the most practical way to measure function? Would something like a digital Amsler grid be practical and easy to implement to measure visual function?

Thank you, Combis. Let me start with the question about extrafoveal data. We disclosed the 12-month data on extrafoveal at the Retina Society earlier in October. We continue to see an inverse dose relationship in this area, and it will be interesting to observe its progression over time. In DERBY, in the monthly treatment group—unlike those receiving treatment every other month—we identified patients experiencing rapid progression. These patients are at a disadvantage compared to the sham group and those treated every other month. However, it’s encouraging to note that over time, their condition compensates, as we shared in the 18-month update back in March. Regarding function in geographic atrophy and retinal conditions, measuring function is particularly challenging and often incomplete. Visual acuity, the most recognized measure, mainly assesses central vision. While it may suffice for reading charts, it isn't effective for assessing mobility, as trying to run while only seeing through a small straw reveals its limitations. We also utilize visual questionnaires, which help in understanding functional evolution but still aren't comprehensive. Reading speed, which can vary significantly for the same patient throughout the day, is another measure, although it also has its inconsistencies. Microperimetry is another interesting method; it involves an extensive examination with a laser at multiple frequencies on various spots, but the number of testable spots is limited. All these methods have their drawbacks but can provide useful context. However, the reason why the FDA and other regulatory bodies accept the anatomical endpoints from autofluorescence over time is that it directly measures the rate at which retinal cells die. While it is indeed an anatomical endpoint, it allows us to assess with nearly single-cell resolution how quickly patients are losing photoreceptor cells, which directly correlates to their vision.

And our next question comes from the line of Colleen Kusy with Baird.

Can you share your thoughts on the slope analysis we discussed in the 18-month update? Do you have an opinion on whether the focus should be on the entire period from 0 to 12 months, or just at 18 months? Alternatively, should there be a greater emphasis on the later slope, specifically the months from 12 to 18?

Colleen. That is a really great question. So again, kind of going back to the way which our primary endpoint is measured, we look at lesion size reduction over time. That is what we agreed on with the FDA, and that is the way we do the primary endpoint analysis. However, in secondary analysis, among many other things, we do a slope analysis. And the slope analysis gives you exactly the same outcome as you get for the measurement of loss over time, but close to exactly the same. You make it a very important and that will be a really critical point, which is also the slope can be measured in various ways. You can go from, for example, over 1 year from 0 to 12 months. You can go from 0 to 6 months, 6 to 12, or you could even go from 12 to 18, the way we did it at the 18-month time point. That is important because the slope gives you an idea of what to expect over time and how consistent the measurements are among each other. So it is a contextual tool to understand what the long-term impact of treatment is on patients. And what we showed with the 18-month data in March is that if you take it through this piece-wise linear slope analysis from 0 to 6, 6 to 12, and 12 to 18, that these effects seem to be compounding, right? And if I have geographic atrophy today, it's not that important how bad my disease was 2 years ago or 18 months ago. I care about what it is like now because that is what I will know likely carry forward as long as I stay on treatment, right? And in that sense, the 12- to 18-month data looked very good with data. Much more consistent between DERBY and OAKS now, for example, at the beginning of the study.

Great. That's really interesting. And on a potential GA launch, I guess, how much focus will be on retina specialists that are already seeing probably more advanced GA patients? And how much focus will be on educating optometrists or general ophthalmologists on referring earlier stage GA patients to specialists?

Yes. Colleen. I'm going to hand that one over to Adam.

Colleen. So as a quick little reminder, right? So we'll target around 3,000 retina specialists and some optometrists as well to drive patients who are unaware that there's a treatment to a retina specialist. So our focus is on the target list of about 3,000. But an interesting piece of information, about 900 retina specialists do about 85% of all of the intravitreal injections for GA. So it's a very easy target for us to go and introduce ourselves to and start to build commercial relationships with. As we said on the call, we started to onboard several of our leadership positions across commercial, medical affairs, sales, and marketing. And interestingly enough, we've started our high-level leadership sales position recruiting, and we had over 400 resumes come in for those positions. So you can see the interest within the industry on the potential excitement around our GA launch. So hopefully, that answers your question, Colleen.

Our next question comes from the line of Derek Archila with Wells Fargo.

Maybe just shifting gears to PNH and EMPAVELI for a sec, just 2 questions. I mean, first, I guess how has the EMPAVELI patient mix trended in terms of naive versus C5 switches since launch? So that's question number one. And then second question, I guess, can you talk to what the competitors are doing in this market right now? Are you starting to see some more counter detailing since you've been in the market for now more than several months? That would be helpful.

Derek. This one, too, I will hand over to Adam.

Yes. Derek. So not a surprise we're finding that C5 inhibitor switch patients continue to be the majority of our EMPAVELI starts. And as a reminder, there are about 1,500 C5 treated patients within the U.S. and 150 treatment-naive patients, give or take. And again, consistently, 75% of the switches are coming from ULTOMIRIS patients. And that just tells you the benefit that people see of a C3 treatment over a C5 treatment. We are also seeing patients with hemoglobin levels near normal that have experienced the benefits of EMPAVELI. Patients from this group will still potentially suffer from symptoms such as jaundice and fatigue. And so we're seeing that the high levels of hemoglobin are now entering the market and asking to switch and switching to EMPAVELI. We continue to see treatment naive patients come in as well to EMPAVELI, and they're also benefiting from the significant increase in hemoglobin. So as we get later into the launch of this year, I expect us to continue to build on that C5 switch population. I expect treatment-naive patients to also increase. So I think we're getting a whole mix of patients within the market that are benefiting from switching to EMPAVELI. Now the second part of your question, competitors and what we're seeing. So one thing I'll say, Derek, is we are laser-focused on executing our plan. And for me, that's best practice as we launch into these older rare diseases to make sure that we offer the best solutions for EMPAVELI patients and also hematologists and oncologists that are willing to put patients on EMPAVELI. So we try and make sure that when we hear about competitors and everything that's happening in the market that we just stay true to our plan, which is we want to elevate the standard of care for PNH patients. So we have not surprisingly seen more action and noise from various companies, but again, we are determined that we have the best products and we believe that we can have the best impact on patients, so we're going to continue to execute our plans.

And our next question comes from the line of Yigal Nochomovitz with Citigroup.

Cedric and team. Cedric, I had a question on effects for extrafoveal. So obviously, in extrafoveal, the data are very, very strong for both OAKS and DERBY. Though portfolio, the situation, as you know, is a bit more complicated since the data looked really good in OAKS but not quite good in DERBY. Though, of course, on a pool basis, figures show a very solid nominees in fact at 18 months. So with that being said, what is your level of confidence you can get claims to full yield in the label? And more to the point, how much do critical extrafoveal claims giving that these patients already have irreversible central vision loss and more retina docs will have more opportunities to save vision that they can start treating patients with the extrafoveal lesions?

That's a very important question, and I think it's valuable to discuss extrafoveal involvement briefly. Foveal lesions are located centrally and significantly affect the fovea, leading to a strong impact on vision. In contrast, extrafoveal lesions preserve central vision but come with a lower risk over time. Newly diagnosed patients with geographic atrophy (GA) are often identified with extrafoveal lesions because, for reasons we don't fully understand, the fovea tends to remain protected until late in the progression of the disease. Therefore, it's reasonable to consider patients with foveal involvement as being in a more advanced stage compared to those with extrafoveal lesions, especially when they are in the earlier stages. Even when foveal involvement occurs, advanced patients can still rely heavily on the remaining retina outside the fovea. When they reach that stage, it's crucial not to cease treatment; in fact, a more aggressive approach may be warranted since these patients are using the most vision. Regarding the DERBY study, extrafoveal patients did not exhibit significant defects, and they appear to be particularly interesting over time. We'll continue to monitor that aspect. The primary endpoint of the study focused on both foveal and extrafoveal lesions, and it’s important to be cautious while treating due to the smaller patient populations, as retinal health can greatly influence outcomes. Nevertheless, our filing will address all patients with geographic atrophy, regardless of whether their lesions are foveal or extrafoveal.

Okay. Great. And then just on the dosing regimen for pegcetacoplan in GA. So as you know, there doesn't appear to be a clear dose response between monthly and every other month. As for example, the extrafoveal every other month and monthly dose responses are inverted between OAKS and DERBY. So I'm just wondering, is there any credence to the argument that the agency should only approve every other month, given comparable efficacy to monthly and an incrementally cleaner safety profile on new onset CMD? Or do you disagree with that assertion and believe both schedules merit approval?

Look, we're very excited about every other month dosing schedule. I think especially for patients with extrafoveal lesions at the beginning of the disease, we want to preserve as much retina as possible. If you end up getting 80% to 90% of the benefit of monthly injections by doing every other month, that is desirable if you start early and you want to get as much as possible over the long run. So we think that is a very important piece of our filing. There's also the 18-month data that we have. So not just at 12, but we have the full data package on the 18 months, both on safety as well as on efficacy. And then, of course, as we discussed earlier, the improving effect profile that we see on these foveal patients as well over time. So I think that in terms of the dosing regimen, both doses we believe have the data necessary to get approved. We do not believe that the safety profile warrants limiting the label, and we would like to provide as much flexibility as possible to physicians. And importantly, again, you don't get the full benefit. Touching as I did in the previous question on that every other month versus monthly inversion in DERBY. That is related to the fact that we had rapidly progressing patients in the monthly arm.

And our next question comes from the line of Eliana Merle with UBS.

Just in terms of the GA sort of commercial landscape and any sort of pre-commercialization kind of analysis that you guys are doing. I guess, what data do you have or sort of what kind of your latest understanding of sort of the number of patients that might be undiagnosed today? Just given sort of no available treatment, so maybe not an incentive to actively diagnose? And how you're thinking about that just as we all kind of run sort of the standard kind of model in terms of the number of patients that might be out there with GA?

Ellie, I will hand that one over to Adam as well.

Ellie. So a quick refresher. So obviously, we have 5 million GA patients worldwide, 1 million alone in the U.S. Now in our discussions with retinal physicians, we've got to a level where a lot of retina physicians believe that number is actually greater than 1 million patients because of patients that might not make it to their retina center or to injecting ophthalmologists or something like that. So I think if you speak to the experts within the field, they'll tell you that number could be higher than that. So for our intents and purposes, we are focusing on that 1 million and working at various ways, including targeting certain optometrists and ophthalmologists, to allow that drive of the patient now that there's a potential treatment on the horizon to enact retina specialists. We're also exploring various ways through digital footprint, disease education, and awareness to really make it known to patients through various channels that they could and should potentially go and see their retina specialists or injecting physician. So we've looked at a lot of those types of activities. We have plans around that. We indeed think it's going to be important to make sure that we can drive patients to injecting physicians. So hopefully, Ellie, that answers your question.

Your next question comes from the line of Joey Stringer with Needham & Company.

I have a question regarding PNH. I noticed that you've added based on the start forms over the last two quarters. I'm curious if you think it will stabilize at some point. Also, were there any COVID-related impacts on the start forms in the first quarter? Regarding the compliance rate, it remains quite high. Do you still anticipate it will stay at this level, or where do you see it leveling out?

Joey. Adam?

Yes. Joey. So I think we believe that we're going to see consistent growth quarter-over-quarter in an ultra-rare disease like PNH. It's incredibly encouraging that we continue to see that demand, especially to your point, Joey, in light of the COVID-19 restrictions, which thankfully, we're seeing now as we exit the first quarter, lifting a little bit and access is improving, for sure. So that allows us to get back into physicians' offices and train patients more frequently face-to-face. I do expect some fluctuations when it comes to start forms, right? This is our first January, February, and March for an approved product in EMPAVELI, right? So we're learning the seasonality, we're learning the impact. But I'm pleased with the consistent demand that we're seeing when it comes to start forms. Another good metric for everyone to think about is we continue to see REMS certifications programs increase. So we had over 170 physicians sign up for our REMS program. That continues to grow. And that's another good sign for everything that's coming there. So more to come. I expect the demand to continue; everything we're hearing from physicians and patients points in that direction.

And our next question comes from the line of Laura Chico with Wedbush Securities.

I kind of wanted to follow up on one on the commercial side for GA. And I think you discussed this a little bit, but what is the capacity of the system in the U.S. to treat IVT or to handle IVT injections by ophthalmologists and retinal specialists? I'm just trying to understand how many patients could feasibly be treated more at a peak period, but as we're ramping up. And then kind of related to that, what would be the timeline to obtaining a J code? And just curious how that might impact uptake during the period prior to the issuance of the J code.

There are two excellent questions. I'm going to hand it over to Adam, but very briefly on the capacity level. I think one of the things that is really great is that the infrastructure, the reimbursement model, the habit that retina doctors have of administering anti-VEGF products is, of course, kind of a perfect point of entry for us. The fact that we're talking about capacity rather than capability is a great point for us to start from because all of these physicians, these retinal docs are used to managing inventory, the buy and bill model that is typical for these products. And we are slowly entering into a phase where with anti-VEGF injections, everything goes towards fewer anti-VEGF injections for less frequent dosing. This will hopefully become possible. So in many ways, there is a scenario here where the introduction of our product should, if and when it occurs, help us fill what would otherwise be a void that gets created by less frequent dose antibiotics. But Adam, I'm going to hand it to you to talk more about that as well as the comment on the J codes, please.

Yes, Cedric, you expressed that very well. Last year, we conducted capacity research on our products, and one consistent finding was that retinal physicians know how to ensure their patients can be treated for wet AMD. They also mentioned that they are aware of what is needed to enhance that capacity, whether it’s a new bed, a new set, or additional technicians to onboard patients. They've begun developing plans in anticipation of any capacity challenges. I don’t expect capacity to be an issue, but during the initial launch phase, when products are being approved and patients are being identified, we might see some challenges. We have strategies in place to address this, supported by solid research. Regarding your question on J codes, just to refresh everyone’s memory, new physician-administered drugs like this are typically billed through miscellaneous J codes. We anticipate having one of those codes and will work with CMS, as permanent J codes are allocated quarterly—January, April, July, and October. We understand the significance of this, as providers will be mindful of reimbursement certainty for these drugs. They will likely consider this in the early stages of our launch until a permanent J code is available. We are exploring ways to boost provider confidence in prescribing our product promptly, and we plan to apply for a permanent J code to facilitate claims processing and payment, which we expect to achieve within 6 to 9 months of approval. That summarizes our position regarding J codes.

Thank you. I'll now turn the call back over to CEO Cedric Francois for any closing remarks.

Thank you very much. And in closing, thank you all for joining us today. We look forward to keeping you updated on our progress in the months ahead. We are around later today and tomorrow. If you have any additional questions, feel free, of course, to reach out to Meredith, and have a wonderful rest of the week.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.