Good day and thank you for standing-by. Welcome to the Q1 2023 Apellis Pharmaceuticals Earnings 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 is being recorded. I’d now like to hand the conference over to your speaker today, Meredith Kaya. Please go ahead.

Good afternoon. And thank you for joining us to discuss Apellis’ first quarter 2023 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. Caroline Baumal; and Chief Financial Officer, Tim Sullivan. Before we begin, I’d 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 will turn the call over to Cedric.

Thank you, Meredith, and thank you all for joining us today. I know that the launch of SYFOVRE is top of mind for everyone, so let me jump right in. We received FDA approval of SYFOVRE for the treatment of geographic atrophy on February 17th. SYFOVRE is the first and only treatment available for GA, a disease that affects more than 1 million patients in the U.S. alone and that relentlessly and inevitably leads to vision loss. Prescribing label details SYFOVRE’s proven ability to slow GA progression with increasing effects over a 24-month period, flexible dosing and a well-demonstrated safety profile following nearly 12,000 injections. This approval is the culmination of more than 20 years of hard work and dedication by our team, and we are incredibly proud to bring SYFOVRE to patients who until now had no treatment options. SYFOVRE was launched in the U.S. on March 1st. In that first month, just over 6,000 commercial vials were shipped to physicians, and SYFOVRE generated U.S. net product sales of $18.4 million for the first quarter. We are continuing to see strong momentum in the second quarter so far and are really encouraged by this early market adoption. Initial demand by both eye care professionals and patients has exceeded our expectations, and we view this strong start as a leading indicator of longer-term demand. However, let me temper this by saying that GA is a new uncharted category. We have been in the market for two months and are just starting to learn about how various adoption trends may impact demand. So while we are pleased with our progress in March, we anticipate fluctuations and an uptick throughout the temporary J-code periods. Caroline and Adam will provide more color on what we are seeing in the market, some of the recent functional analysis presented at ARVO and our progress with the commercial launch. We are also making important steps in our efforts to bring intravitreal pegcetacoplan to patients globally, with applications now under review in the European Union, Australia, Switzerland, Canada, and the United Kingdom. Turning now to EMPAVELI, we are continuing to see strong momentum with EMPAVELI as we close out its second year on the market. U.S. net product sales were $20.4 million in the first quarter. We were pleased with the approval of our supplemental NDA, which includes the PEGASUS and PRINCE results, and look forward to the potential approval of the EMPAVELI injector. What really continues to stand out are the compliance rates for EMPAVELI, which remain around 98%. This is outstanding for a drug this far into its launch, and we view it as a clear testament to how much better patients feel when taking EMPAVELI. In ALS, we recently made the tough decision to discontinue treatment in the open-label portion of the Phase II study, following a recommendation by an independent data monitoring committee. The committee’s recommendation was not based on any unexpected safety signals. All patients in the study have completed the randomized treatment period, and we will analyze the data as planned. I would like to say thank you to the people living with ALS and their caregivers who participated in this study and for the partnerships we have built within the ALS community. We continue to advance nearly a dozen clinical and preclinical programs, and you will hear more about some of these today. Overall, we believe we have only just begun to unlock the potential of complement science and look forward to sharing our continued progress with you going forward. With that, I will turn it over to Adam.

Thank you, Cedric. I am thrilled with the initial enthusiasm that physicians and patients are showing for SYFOVRE. As I shared on the approval call in February, we have built best-in-class commercial and medical teams with extensive experience in retina. They went into the SYFOVRE launch well-prepared and highly energized, and have shown flawless execution on the launch to date. On day one, our commercial leaders joined 10 retina specialists as they treated their first patients, providing us an opportunity to gain operational insights and feedback. Many retina specialists posted about their experience on social media, recognizing the importance for patients and the historical nature of the first-ever approved treatment for GA. Let me share some of the initial metrics from March. The commercial and medical teams engaged with nearly 2,000 physicians at least once, and we have now seen SYFOVRE orders within every sales territory. 6,000 commercial SYFOVRE vials were shipped to physicians. In addition to commercial vials, we also distributed more than 3,400 samples to physicians upon request, which is an important indicator of future demand. We have also seen several academic institutions put SYFOVRE on formulary, which is faster than we expected. And as planned, we submitted our application for a permanent J code to CMS and expect to receive our code in early October. In summary, the launch is off to an excellent start, and we are encouraged by what we are seeing already in Q2. A significant amount of demand has come from private equity-backed groups. However, the majority of demand to date is coming from independent non-PE backed practices, which tells us that there is real patient demand across the country. But as Cedric said earlier, while it’s exciting to see these initial positive indicators, it is still early in a disease category that has had no approved treatments until SYFOVRE. Samples will continue to be an important component of the launch, representing a meaningful proportion of overall vials. And we have more to learn about market adoption and how certain factors such as reimbursement and dosing frequency may impact demand. As a result, we should expect some bumpiness in both demand and sales until we obtain the permanent J code. Looking forward, the teams are focused on continuing to educate both physicians and patients on SYFOVRE and geographic atrophy. We have been particularly encouraged by the patient requests for treatment. The media coverage, especially the segment on CBS Morning, was a strong push for patients to reach out to their physicians and ask about SYFOVRE. We will continue to educate patients with GA through our physician engagement, as well as through our GA direct-to-consumer campaign, which is aimed at encouraging patients to monitor and talk to their eye doctor about vision changes. Now turning to EMPAVELI, in the second half of 2022, we expanded our field team and strengthened our partnerships with key centers. Our efforts are taking hold as there were more than 200 patients on therapy at the end of the first quarter. We are gaining momentum in 2023 to date as we received FDA approval of the sNDA with the Phase III PRINCE results and the 48-week Phase-III PEGASUS data, which enables us to have even more robust discussions with physicians about the effects of EMPAVELI. We are also looking forward to the potential approval of the EMPAVELI Injector, which we believe will significantly improve the patient experience on therapy. Now let me turn the call over to Caroline.

Thank you, Adam, and good afternoon, everyone. It has been a tremendous start to my journey at Apellis. Following the approval of SYFOVRE, I am proud to see my fellow physicians and peers embracing the transformative potential of SYFOVRE on patients' lives. I have attended several retina meetings since the launch, and the feedback from my retina colleagues has been positive. Just last week, we were at the Association for Research in Vision and Ophthalmology or ARVO. Apellis had a strong presence with eight presentations showcasing our leadership in GA and retina. At this meeting, we shared new Phase III post-hoc functional analysis. In the presentation given by Dr. Alan Cheng, patients with extra-foveal lesions who were treated with SYFOVRE showed visual function and quality of life benefits. Results demonstrated a preservation of 5.6 letters compared to Sham, which is equivalent to more than one line of vision as measured by best-corrected visual acuity or BCVA over 24 months. Patients also reported a clinically meaningful benefit on VFQ-25, a validated visual function questionnaire that measures quality of life outcomes such as social function, driving and dependency on others. In a separate presentation given by Dr. Ursula Schmidt-Erfurth, patients treated with SYFOVRE demonstrated a substantial reduction in photoreceptor cell loss as compared to Sham. Data were also consistent when comparing SYFOVRE-treated study eyes to the untreated fellow eye. Remember that both retinal pigment epithelial or RPE, and photoreceptor cells are required for visual function. RPE cells maintain the integrity of photoreceptor cells, which are the light-sensitive cells responsible for vision. We are also continuing to progress our three-year GALE extension study and look forward to sharing data from this study in upcoming medical meetings. Now that SYFOVRE is approved in GA, we are exploring other indications where intravitreal pegcetacoplan may offer value for patients, such as Stargardt disease. We also plan to evaluate the impact of SYFOVRE in those patients who are on the verge of developing GA, and specifically, the impact SYFOVRE has on preventing photoreceptor loss in these early stages of the disease. In the rare disease space, we and our partner Sobi are continuing to advance EMPAVELI in additional indications. We are enrolling patients in the Phase III trial for immune complex membranoproliferative glomerulonephritis and C3 glomerulopathy, both rare kidney diseases. And Sobi is enrolling patients in a Phase III trial for cold agglutinin disease, a rare type of autoimmune hemolytic anemia, and in a Phase II trial for hematopoietic stem-cell transplantation associated thrombotic microangiopathy, a severe and common complication following hematopoietic stem-cell transplant. I will now turn the call over to Tim for a review of the financials, Tim?

Thank you, Caroline. 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 2023. Total revenue was $44.8 million, which consisted of $20.4 million in EMPAVELI net product revenue, $18.4 million in SYFOVRE net product revenue, and the remainder in collaboration revenue from Sobi. A few comments on SYFOVRE, like EMPAVELI, revenue for SYFOVRE is recorded when it is shipped to the distributor, not when it is shipped to the physician. Therefore, revenue includes both products shipped to the physician and product in the channel. We estimate approximately two to three weeks of inventory on-hand at the distributor and expect these to be the inventory levels going forward based on anticipated future demand. We are not guiding on gross-to-net. Other than to say we anticipate it will be within the standard pharmaceutical ranges. And as you have heard already, we are in the early days of SYFOVRE launch and do not expect that one month’s results represent the full year’s runway. We intend to share more about our learnings in the coming quarters. Turning to the rest of the P&L, R&D expenses were $110 million and G&A expenses were $102 million, and we reported a net loss of $178 million. As of March 31, 2023, Apellis had $765 million in cash and cash equivalents, which includes the recent follow-on offering completed in February. We expect our current cash balance to fund our operations into the first quarter of 2025, including the ongoing EMPAVELI and SYFOVRE launches and further development of our pipeline. We remain confident in Apellis’ 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. This is an incredibly important and exciting time for our company. With SYFOVRE now available for patients, we are blazing a new trail in GA and our position in the PNH market is expanding. Additionally, we continue to advance a robust clinical pipeline encompassing multiple late-stage rare disease programs, as well as several programs heading into the clinic. This broad portfolio gives us a position of strength as we strive to achieve our vision of being the global leader in complement. Let’s now open the call for questions. Operator?

Thank you. Our first question will come from the line of Madhu Kumar of Goldman Sachs. Madhu, your line is now open.

Hey. Thanks for taking our question. So maybe to follow up about some of the comments Adam made around future quarters, like, what do you think is the way to think about this lumpiness in a very practical way? Do you think this is a way to think about it kind of like growth and decline or kind of a flattening or how should we look at kind of where the launch will be in terms of lumpiness? Is the lumpiness across the quarter or kind of into the April kind of numbers you have so far suggests some variance on lumpiness? And then, I will follow-up afterwards for Tim?

Thank you, Madhu. Great to hear you. I will let Adam comment on this.

Hi, Madhu. Thanks for your question. Obviously, we are thrilled with the first quarter sales and the $18.4 million, and more importantly for me the 6,000 commercial demand vials. That’s a real strong indicator with the 3,400 samples that also went out about demand and we are continuing to see that momentum into Q2 so far. So everything is progressing really well. I will say, obviously, keep in mind that GA is relatively new; it’s an uncharted category. We have only been on the market for two months, and we are starting to learn about the various adoption trends and some of those may impact demand. We have a little bit more to learn around reimbursement, dosing frequency, et cetera. So that leads to a little bit the bumpiness until we get our permanent J code in October. Now, Tim, you might want to comment a little bit on one way of running that forward from a forecast perspective.

Sure. We view the first quarter's numbers as reflective of a five-week month. When you consider the 6,000 vials and divide that by five weeks, it amounts to approximately 1,200 vials each week. We don't analyze this as a standard average weekly growth rate for forecasting purposes. Naturally, a part of the vials is recognized as revenue and not just through distributors since they factor into our revenue figures. Distributors tend to keep around two to three weeks of inventory on hand. As the number of vials sent to retinal specialists increases weekly, we also need to slightly boost that inventory. This is our approach, though each week can vary, and as Adam mentioned, we have encountered some fluctuations. However, we have noticed robust demand continues in April.

Okay. Great. Maybe to follow from that with you Tim, so as you think about this is the 1Q number, which is basically one month of sales, how does this shift or kind of refine your perspective about a path to breakeven for Apellis as a company overall?

Sure. We forecast several different scenarios, and this represents the best case. We provide guidance on our cash runway and take a conservative approach. It's still early, so we will keep assessing the situation. As mentioned, that figure for the first quarter of 2025 is cautious, and we will have to see how it develops.

Okay. I guess maybe one more to follow up on that. Is there any kind of external leverage you think you guys have that could move things further or could actually get you to have a little more clarity on kind of the path to breakeven?

Yeah. I think we have been really creative in terms of how we finance the company and how we have managed our expenses, especially in terms of when we finance and how we kind of built out that commercial infrastructure relative to when our approval came. So look, I think we are pretty careful about this, but I don’t think we can guide specifically on how we are going to bridge that gap to profitability. But we are pretty confident it will be the right thing for shareholders when we do that.

Hey. Great. Thanks very much, everybody.

Thanks, Madhu.

Thank you. One moment for our next question. Our next question comes from the line of Jon Miller of Evercore. Your line is open, Jon.

Hi, guys. Thanks for taking the question and congrats on that great first quarter number. I think you actually gave a lot of great color on the dynamics there. But I’d love to dive into that ARVO presentation actually. I would love to get a sense for how you view the impact of functional post-hoc analysis on the commercial market from here and maybe if you could provide a little bit more color on where those functional analysis cut-offs came from? Where the 250-micron cut-off subfoveal post-talk came from, et cetera, and did you run the time-to-event analysis like your competitor did?

Thank you, Jon. Well, I will start off by giving the word to Caroline to talk about what we really saw and the why that is important and then briefly hand it over to Adam to talk about the commercial impact of that.

Thank you, Cedric. We have always believed that there is a link between the functional data and slowing the growth of geographic atrophy. And sometimes post-hoc analysis are necessary to confirm that, especially within the noise of the measurements that we get in patients with GA. In our post-hoc analysis, we showed that there was a functional benefit with regards to visual acuity and quality of life measurements demonstrated in SYFOVRE treated eyes with extrafoveal lesions. This is really consistent with what I would expect as a clinician, that we would be able to show this benefit in patients before lesions affected the fovea. 250 microns, well, that is the size of the foveal avascular zone and why didn’t we do the same analysis as Iveric, I think, that we are pleased that they were able to do that type of analysis that they did to show their benefits and we have our recent functional analysis and we also have microperimetry data that was presented at ARVO last year, confirming our functional benefit.

Hey, Jon. It’s Adam. Just following up, obviously, the commercial team is laser-focused on executing against our label. So all of our focus is there and targeting our 2,600 retina doctors around the U.S. So, whilst this is great data, I think there’s a great usage from educating the medical community, but our sales team is focused on executing our plan and talking about our 24 months of data and everything that’s within our label.

Just as a quick follow-up, will you be including that functional analysis in your ex-US filings? I know there’s been a lot of attention from the EU, especially on functional benefit.

Absolutely. We will. So despite the bigger functional story, more functional data will come out, as well as we continue to track, of course, and again, the extension study, but this is, of course, an important piece as we had expected to follow the lesion size reduction, and we are very excited to see it materialize.

Thank you so much guys. Congrats again.

Thank you.

One moment for our next question. Our next question comes from the line of Tazeen Ahmad of BofA. Your line is open.

Hi, guys. Good afternoon and congrats from me as well on a really good start to the launch. I am just wondering how much detail do you get about the granularity? So you shipped 6,000-plus vials, do you get in real-time updates on how many of those vials are actually being used, and is it your expectation that the initial grouping of patients that are going to be put on the drug will be every month dose versus every other month? And then I have a follow-up. Thanks.

Thank you, Tazeen. Adam?

Yeah. Hey, Tazeen. It’s Adam. So, obviously, what we do see in these initial phases of the launch is vials ordered by our retina practice and the link that is the revenue number that you have seen. So initially, all of our feedback is based on interaction from either someone from the medical affairs team or the commercial team having a discussion with the physician, but we don’t see that level of granular detail of how these vials are used or what type of patients they are used in. What I can tell you is that we expect physicians to carry only one week to two weeks of stock in their fridge, so my belief is the vast majority of those demand vials is what I call them, the 6,000 commercial and the 3,400 samples in the first month are likely going into eyes relatively quickly. But the second part of your question was, what type of patients and is that monthly or every other month likely to be dominant. So what we are hearing anecdotally is the type of patients that the physicians are using SYFOVRE for is as we expected to within the initial phases prior to launch. So you tend to hear physicians say that they are treating a patient who is blind in one eye and GA is progressing vision loss in the second eye, or AMD in one eye and GA in the second eye, and bilateral GA, that was consistent with our market research. And we are also hearing that every other month is a bit of a game changer in this disease and every other month is the dominant player at the moment. So hopefully that answers your question.

Okay. Yeah. That’s helpful, Adam. And then just with the recent news that Astellas would be managing the next complement launch, if it does get approved. What’s your view of them being your competitor in this market? Thanks.

Thank you, Tazeen. First of all, we are happy for both Astellas and for Iveric, and we wish them the best and a productive partnership together. Look from our angle it doesn’t change anything, we are very focused on the job at hand at making SYFOVRE available to every patient that needs it in the U.S. for now and other countries in the future. So, importantly, we have the every other month dosing, of course, which gives us, we believe, is an important competitive advantage that we here materializing in the months to come as well.

Okay. Thank you.

Thank you. One moment for our next question. This question comes from the line of Anupam Rama with JPMorgan. Your line is open.

Hey, guys. Thanks so much for taking the question and congrats on the initial launch here. I have a quick question for on SYFOVRE sampling. When a physician requests a sample, like, how many samples do you give per patient, and I guess, what is assumed in terms of that patient transitioning to commercial drug, the timeframe to switching to commercial drug? Thanks so much.

Thanks, Anupam. Great hearing you. Adam?

Yeah. Hey, Anupam. It’s Adam. So, obviously, samples are a really important component of our launch, and they are going to represent a meaningful proportion of overall vials. Now, physicians tend to request samples, and the reason why they do so is that they want to understand the patient’s clinical experience with the drug, gain experience with the drug and also how to administer it as it’s a new drug in this class. A few things, obviously, only a physician who has medical certification can file to receive samples, and they have to form their request to do so. So they tend to know the level of samples they need based on how they want to use it, and we expect it is an important piece of our business moving forward as we progress towards the permanent J code. Now, I do think the majority of samples lead to commercial vials in the end. Caroline, from your perspective, is there anything you want to add?

I believe samples are crucial for physicians; they address a need and provide us with insights on the medication's usage. My colleagues appreciate having this option, as the flexible label meets their requirements and they are having positive interactions with Apellis. That's my input so far. Thank you.

Thanks so much.

Thank you. One moment for our next question. This question comes from the line of Colleen Kusy with Baird. Your line is now open.

Great. Good afternoon. Thanks for taking our questions and congrats on the quarter. So of the 6,000 demand vials, as Adam called them, and the 3,400 samples, how many different prescribers does that cover, kind of what’s the breadth of prescribers you are seeing in this early stage?

Thank you, Colleen. Handing it over to Adam.

Hi, Colleen. It’s Adam. We are focusing on 2,600 retina physicians and have made progress towards that goal. Our commercial and medical teams have engaged with at least 2,000 physicians so far, and what excites me is that every sales territory has ordered a commercial vial of SYFOVRE, indicating usage throughout the country. We are also seeing usage from private equity-backed practices, but the majority comes from independent practices, which reflects a good mix of centers. Initially, our challenge has been that we only see vials being sent to centers, so we don’t have detailed knowledge of the physicians using them outside of anecdotal evidence. However, practices are eager to communicate with us, and we are making headway within the 2,600-target group. Overall, it seems there is a broad range of physicians using the product across the country.

That’s helpful. Thank you. As a follow-up, can you remind us of your distribution strategy, how many distributors you are currently working with, and can we expect more to come online in the future?

Yeah. Thanks, Colleen. It’s Adam. So, we are not public on our distribution strategy, but we have all of the distributors that meet the needs of all of our 2,600 physicians and all of the coverage plans that they may have. So we are very happy with our distribution process at the moment, but we are not public on it.

Got it. Thanks much for taking the questions and congrats again.

Thank you, Colleen.

Thank you. One moment for our next question. This question comes from the line of Yigal Nochomovitz from Citigroup. Your line is now open.

Hi, Cedric and team. Congratulations on the strong launch. I have a basic question for clarification. The WACC is $2,190 per vial, and you've produced around 6,000 vials, which brings me to $13 million, so I must be missing something. Can you clarify how you arrived at $18.4 million from just over 6,000 commercial vials? Thanks.

Sure. It’s Tim. I will take that. We recognize revenue when the vials are shipped to the distributor, and then the distributor ships them to the doctor when requested. The 6,000 refers to that second step, but we recognize revenue at the first step. There are some vials that remain at the distributor level for which we have already recognized revenue. We don’t take…

Okay.

...vials are covered.

And Yigal, it’s Adam. Just as a reminder, right? We expect our distributors to keep between two weeks to three weeks of inventory on hand and physicians about one week to two weeks.

Okay. So there is another two weeks to three weeks of distributor revenue, but it’s not in the system, okay. And then regarding the sampling, can you give us a sense as to what percent of the 2,000 physicians that you have engaged with so far have actually requested samples?

Yeah. So we have seen samples being used across the vast number of those 2,000 physicians that we have seen across all of our regions in all of our geographies.

Okay. And then we have talked in the past about the dynamic with so-called re-calendaring, some of the wet AMD patients to make room for SYFOVRE capacity. Have you seen any evidence of that practice yet?

Yeah. We have seen and anecdotally heard that physicians looking at managing both their wet AMD patients, as well as their GA patients and managing the calendars there. Caroline, anything you want to add from your experience?

I believe this integrates well into the existing treatment framework we have with anti-VEGF. Physicians appreciate our educational materials for patients, including brochures that help them explain the treatment. Patients are very enthusiastic; they notice their vision declined previously and want to preserve it and lessen the impact of geographic atrophy. As retinal physicians and surgeons, we are skilled at adjusting our approaches to meet patient needs, and I am confident that my colleagues will find new methods to manage the demands of these injections.

Great. Thank you.

Thanks, Yigal.

Thank you. One moment for our next question. This question comes from the line of Steven Seedhouse with Raymond James. Your line is now open.

Thank you. Good afternoon and congratulations. I wanted to ask, there have been various news reports, of course, discussing strategic takeover interest in Apellis. So, Cedric, any comments you wanted to make on that subject and Apellis’ strategic priorities? Thanks.

Yeah. Thank you, Steve. Well, there’s always those speculations, of course, we are in the stage of commercialization that is of interest. But we are squarely focused on making SYFOVRE available to every patient that needs it in the U.S.

Congrats on that. Can I follow up and just ask when is the first update from GALE coming in and what would that initial data sort of entail, if you can just get us current on that? Thanks.

Yeah. So we are going to be presenting a full update on GALE at the ASRS Conference at the end of July. Very excited about sharing what happens to increasing effects over time that we mentioned already is 24-month data. So this is going to be the 30-month update on these subjects as they continue to be dosed.

Thanks so much.

Thank you.

Thank you. One moment please. Our next question comes from the line of Phil Nadeau with TD Cowen. Your line is now open.

Good afternoon. Congratulations on the initial launch of SYFOVRE. I have a couple of questions. First, Adam, you mentioned expecting physicians to keep one to two weeks of inventory on hand, which is approximately 1,200 vials per week. Did you notice some reorders in March? Would you be able to share what portion of the 6,000 vials were reorders compared to first-time orders?

Hey, Phil. Thanks for the question. Yes. We have seen reorders, but we are not going to go into the details of those reorders.

Got it. And then, second question, there were recent reports about endophthalmitis, it seems like something that’s going to happen at a background rate. How should investors put into context any future database settings of endophthalmitis around the side effects?

Thank you, Phil. I will let Caroline answer that question.

Thank you. There was a single case of culture-positive endophthalmitis, and that was deemed related to the intravitreal injection procedure. This is well within the reported rate based on the number of intravitreal injections performed thus far. And as you had mentioned, it that was misquoted line as blindness in fears and this is being corrected. I’d say that, overall, we are encouraged by the safety profile thus far with SYFOVRE, and this has been consistent with the clinical trial.

Perfect. Thanks for taking my questions and congrats again.

Thank you, Phil.

Thank you. One moment please. Our next question comes from the line of Justin Kim of Oppenheimer. Your line is now open.

Hi. Thank you for taking the question and congratulations on the quarter. I wanted to follow up on the initial adopters of SYFOVRE and the observed delay in reaching patients with geographic atrophy in one eye while there’s no involvement in the other eye. Could this be due to the fact that these patients may not be referred to a retinal specialist, but rather be seeing an optometrist or an ophthalmologist?

Thank you so much. Justin, great to hear you. Adam, I don’t think we can share too much on this.

Yeah. Thanks, Justin. Good to talk to you. And so, yeah, based on our initial research we did prior to launch and the feedback we are hearing from physicians. The prioritized patients that I described earlier in the call tended to be the first wave of treatment period because they sat on the books of retina physicians. So your assumption can be quite accurate, a lot of these physicians that have GA in one eye that might be extrafoveal and not impacting vision might tend to have been set back to their ophthalmologist or their optometrist. Now, moving forward we believe that you might have seen the where we are doing some direct-to-consumer work with Henry Winkler and we are launching the GA Won't Wait campaign that’s really important part of the marketing strategy. We think that a lot of people basically believe, particularly the elderly, that vision loss is just a natural part of their aging and what we wanted to do is we want to drive those patients to go and see their eye doctor. So our GA Won't Wait campaign is going to be a really important tool for us to educate patients and move patients to go see their physicians, and we are really thrilled that Henry Winkler has decided to partner with us because of his really emotional story of looking after his father-in-law as his father-in-law went through vision loss. So that will help us and that addresses the piece of your question about patients naturally sitting with the retina doctor.

Okay. Great. And maybe just a follow-up maybe thinking about safety for EMPAVELI. Any updates on meningococcal infection profile, and just any update on there, given sort of the profile to date?

Yeah. No. Thank you so much. So EMPAVELI, I mean, unfortunately, we have crossed into north of 1,000 patient years of dosing. And we have, yes, we do not see a single case of pneumococcal infections and Adam, I don’t know if he wants to add something to that, so we are extremely happy with what we have seen so far.

Yeah. It’s great. Thank you, Justin, for asking them EMPAVELI question. I think it’s a massive, massive fan of all things EMPAVELI and PNH, and I think we are making great progress there. So as Cedric said, we still know cases over 1,000 patient years, and we still see a really, really high compliance of 98%. It shows me that the efficacy and safety of EMPAVELI continues to be a strong driver within the PNH market. So I am thrilled with what that team is doing and continue to make great growth quarter-on-quarter.

Okay. Great. Thanks so much everyone.

Thank you.

Thank you. One moment for our next question. This question comes from the line of Derek Archila with Wells Fargo. Your line is now open.

Hey, everyone, and congrats on the quarter well done. Just a couple of questions from us. Maybe just first off, I was kind of wondering if you got any feedback from physicians, kind of on how the patient journey and the logistics are working in the practices. So how has SYFOVRE impacted their practices and are you finding areas to optimize for future in the launch? And then the second question and maybe I missed this earlier, how long do you plan to actually run the sampling program? Thanks.

Thank you so much. I will hand the physician feedback on to Caroline and then Adam will talk about that sampling.

Well, the physician feedback has been really positive. It’s amazing that Apellis and my colleagues as a company, relatively new to the retina space has contacted and impressed so many of my colleagues. I don’t know anyone who doesn’t know the members of the Apellis team who contacted them for medical and sales information. So I think that’s all help to bring the patient story into light, and patients are really pleased with their initial interaction with SYFOVRE.

Yeah. I think you said it nicely there, Caroline. Hey, Derek. It’s Adam. So, yes, sampling we still believe it’s going to be pretty important for us during this launch phase, particularly before we get a permanent J code in October. And as I said previously, just in case you didn’t miss it, some of physicians want to gain about experience they want to try the drug. Make sure that when they go patient in the chair that they understand how everything goes, et cetera. So it’s going to be an important tool for us. I do see samples as a sign of demand.

Yeah. And maybe just one follow-up to my first question. So, I guess, is there any kind of pushback or issues with like the time in the chair for these patients as you know, again, the communication, the education around SYFOVRE? I just kind of compared to wet AMD. We have heard some feedback on that, so just kind of curious what you are hearing as well? Thanks.

Well, this is really an opportunity to change the treatment paradigm. I mean, I think back to when we initially had treatment for wet AMD was the same sort of thing. We had to explain to patients they were having an injection, and we had to educate patients, and we were able to completely change wet AMD from a blinding disease to something where we see patients earlier, we have all eye care providers involved so we can save vision. So now that we have SYFOVRE the first treatment for GA, we are able to start the treatment paradigm for GA and kind of roll it back, so we can start to treat these patients earlier, get all eye care providers involved, not just retina docs, but tera docs, optometrists, obstetricians and treat these patients. And I haven’t really heard anything, but of course, anything new takes a little bit of education for patients and the community.

Hey, Derek. It’s Adam. I will just jump in on that too, right? So, obviously, we were doing disease day education from the end of last year. So we have done a really solid job with our field teams to educate physicians, centers, and also patients compliant around geographic atrophy. Anecdotal feedback from all the physicians that we have been speaking to who have been using it is that patient, physician conversation goes incredibly well. These patients are educated; they are very comfortable within the chair, and physicians are doing a really solid job of describing SYFOVRE and the disease. So far those conversations have been going very, very well.

Super helpful. Thanks, guys, and congrats again.

Thank you. One moment for our next question. This question comes from the line of Eliana Merle with UBS. Your line is now open.

Yes. Thanks so much for taking my question and congrats on all the progress. Maybe just a couple on Europe just first on the regulatory review. Can you any color that you can provide on how the European review is going and any feedback that you have gotten and the latest there in terms of your confidence on European approval? And then second, just in terms of the commercialization strategy in Europe. I guess how should we think about the commercial opportunity and strategy ex-U.S. versus U.S. and any key differences there? And then just on the ex-U.S. commercial preparations and build-out, can you comment just where you are on that front in terms of like the sales force build-out your commercial preparations, but that also from a spend perspective where you are in terms of ex-U.S. build out? Thanks.

Thank you so much, Ellie. Great hearing you. Well, look, I mean Europe is the next frontier, the rest of the world as well. I mean we have as our filing was accepted by the consortium between Australia, Switzerland, Canada and the U.K. as well. European regulatory process is going as we had expected and going very well. We expect an approval there early next year. And I think it’s important to point out that we established our commercialization force in Europe many, many years ago. So Adam has been with us, I believe, longer than four years now. And as soon as he came in, we established our force in Zug, Switzerland. This is important because in Europe, as many of you know. The work involves many, many layers, so there was a whole level of awareness that needs to be established, not just with the retina, doctors but also with regulators, which of course, EMEA had jurisdiction of regulators, the payers, and quite frankly, also the kind of the political landscape for people to understand what those diseases are and how we are going to bring this to market. And Adam will talk a little bit more about how we have gone about that.

Hey, Ellie. It’s Adam. So, yeah, obviously 5 million GA patients worldwide and if your assumption is $1 million to $1.2 million of those are in the U.S., you can see there is a massive opportunity for us ex-US. So Cedric beautifully said right, we have been building out the commercial and medical test, infrastructure, our corporate, the European office is based in Zug in Switzerland, that’s where our strategy is driven from. And we started to put feet on the ground from a medical affairs in-country leadership perspective in the U.K., France, Italy, Nordics, and more importantly, our first potential launch outside of the U.S., Germany. And we also have footprints in Canada and Australia. So we are getting ready for this launch. We are also going to do it in a very Apellis way, right. We are going to be super thoughtful and when we onboard people and we will wait for milestones as we go through the European regulatory process. We have been really lucky in attracting very talented people to join our teams. So we are ready to go as we work towards a potential approval towards the end of the year.

Great. Thanks.

Thanks, Ellie.

Thank you. One moment for our next question. This question comes from the line of Annabel Samimy with Stifel. Your line is now open.

Hi. Thanks for taking my question and great quarter. Congratulations. So I want to go back to the functional data that was presented at ARVO. Clearly, it’s the first evidence of function that you have demonstrated in addition to the anatomical data. So I guess the first question is, what was the reception that you got from the physician population at ARVO? And I guess given that the benefit was seen in patients who are earlier or have lesions that are further away from the center, so technically extrafoveal. I mean, how does that square with your current strategy of targeting patients? Do you think that there’s going to be a shift, maybe go earlier, since you are seeing the functional benefit there? And then the follow-up is, I noticed that you mentioned that you are going to be exploring the drug in patients that are at risk of developing GA, is this different from intermediate disease, which I thought that you had moved away from a little bit? So, yeah, just if you could help us understand any change in strategy based on the interesting information you presented at ARVO? Thanks.

Thank you, Annabel. Regarding the reception, it's crucial to highlight that visual acuity only measures central vision. Visual function encompasses much more than the ability to read a Snellen chart. For example, if you imagine walking through New York while looking through a straw, you could have 20/20 vision on the Snellen chart, but your functional ability would be greatly restricted. With that in mind, visual acuity is influenced by the presence of photoreceptors in the fovea. When assessing visual acuity in extrafoveal patients, this means they may theoretically maintain some central vision at baseline, raising the question of whether that vision deteriorates over time and if we can slow that process. This makes it a significant study, but again, we must acknowledge the limitations of our measurements that focus solely on visual acuity. Last year in September, we shared data on microperimetry, which examines peripheral vision. Concerning intermediate AMD and the risk of geographic atrophy, you made a great point about SYFOVRE's initial features showing increasing effects over time. The ability to slow the disease's progression appears to rise from around 20% in the first year to over 30% by year three, indicating that longer treatment leads to better outcomes in slowing GA progression, thus emphasizing the importance of early treatment. The term intermediate AMD is often used inconsistently, applying to patients with minor eye occlusion as well as those showing early signs of geographic atrophy. Our work in intermediate AMD, based on regulatory feedback from the FDA, is neither an official indication nor an endpoint, which I cannot stress enough. Therefore, our goal is to initiate treatment before geographic atrophy manifests. We can now do this using OCT imaging, which is our next step for studying SYFOVRE's effectiveness. Caroline, could you briefly share the feedback you received on the functional endpoint?

Thank you, Cedric. I would say, the feedback was very positive and because it really is consistent with what we would expect as a clinician. For example, when we see patients and they have GA through the fovea or any patient who has severe disease, the visual acuity measurements can have a lot of noise and be really variable. And so we would expect to have more stable and reproducible visual results as the lesion gets further from the fovea, and that’s why we are able to demonstrate this. The other thing that’s notable is we had a really big trial looking at GA patients, the second-largest study in GA and we enrolled a really heterogeneous group of patients in this. So that’s why we are able to demonstrate this more easily with our extrafoveal patients. The reception was really positive, and clinicians are really excited about this data.

Okay. I guess just follow-up on that point, would that mean that you might want to target a different population in the 4 categories that you had mentioned, so maybe, those that do have lesions that are further away from the center and just really be able to get the maximum benefit for those patients?

Well, again, Annabel, if the benefit to the patients focuses only on visual acuity, then in extrafoveal patients you are going to see better than you would in foveal patients. But we know for a fact that many patients who have foveal involvement at the start of the study, so-called subfoveal patients also will benefit from slowing down photoreceptor cell loss. So that is something that we clearly established and studied in our 1,200 patients that we studied in early adults.

Okay. Great. Thank you.

Thank you.

Thank you. One moment for your next question. This next question comes from the line of Joseph Stringer of Needham & Company. Your line is now open.

Hi. Thank you for taking my questions. I have a few quick ones. Can you explain the immediate impact on sales when the permanent J code becomes available at the beginning of the fourth quarter this year? Additionally, regarding gross-to-net, while you might not be providing specific guidance, you seem to suggest a normal range. Do you expect this to stay relatively consistent as you move through the launch?

Hey, Joey. I had a hard time hearing your first question, but I think it was about permanent J code. So, a few things about that is, obviously, a permanent J code gives physicians and guarantees that confidence of getting reimbursed in a timely manner. So I do think that that will have a nice impact for us as we get to that stage of the launch in October. At the moment, obviously, we are working claim-by-claim and working for reimbursement claims. And one thing that I think it’s probably good for us to know and you guys to know, since launch, as of today as well, our understanding is that there have been more than 50 payer claims. So, obviously, the permanent J code has a real solid impact for us as we get there in October, but we are doing pretty well to make sure that we are working through claim-by-claim. Now the spin side to that is the majority of the challenges we have seen tend to be basically process-related, and we also anticipate that will smooth as we can over time, this is the first time some of these payers are seeing these GA patients come through the system, and it manually done during this temporary J code period, so that will improve post the permanent J codes. So considering I didn’t hear your question, I am hoping I answered it.

Yeah. I can answer the gross-to-net question. Did he answer your first part?

Oh! Yeah. Very helpful. Thank you.

So on gross-to-net, we won’t be guiding on gross-to-net, and it will change a little bit over time. We are willing to say is that it’s within the pharmaceutical margins, which you can typical pharmaceutical gross-to-net, which is in the 10% to 20% range and I realize that’s very wide. In our 10-Q, we do add additional disclosure that we haven’t in the past, but it does blend EMPAVELI and SYFOVRE, and we give detail on charge-backs, discounts, and fees, government, and other rebates and also returns on a year-to-date basis. So you can get a sense on a blended basis what that looks like, but we are not going to break it up by individual product.

Great. Thanks for taking my questions.

Thank you, Joey.

Thank you. One moment for our next question. This question comes from the line of Douglas Tsao with H.C. Wainwright. Your line is now open.

Hi. Good afternoon and thanks for taking the questions. Adam, you mentioned that there is demand from smaller individual practices compared to those backed by private equity. Could you provide more insight into what that means and how you think it will impact both types of practices? Thank you and congratulations on all the progress.

Thank you, Douglas. I see a strong leading indicator in the usage of SYFOVRE across various retina practices. While some practices are private-equity backed and may have different ordering processes, most of the usage is coming from independent retina practices throughout the U.S. I'm excited that every sales territory has achieved commercial sales, indicating a solid demand beyond just the initial private-equity-backed usage. We are effectively collaborating with both retina centers and independent practices to ensure patients are accessing the drug. I believe this demand will continue to grow as we reach a broader target audience and encourage repeat prescriptions. Overall, this is a promising sign for us.

Okay. Great. And if I can, just a quick follow-up, in terms of samples to doctors need to request samples for an individual patient or are doctors able to keep samples just around in their offices?

Yeah. Great question. So, yes, doctors need to request samples, but they don’t need to request them for individual patients. So they can request samples and then use that as they appropriately see fit.

Okay. Great. Thank you so much.

Thank you.

I would now like to turn the call back to Cedric Francois for closing remarks.

Thank you so much. And in closing, thank you all for joining us today. We are around later today and tomorrow, if you have any additional questions, feel free to reach out to Meredith. This was a great start to the year for us and we look forward to sharing more in the months to come. Thank you.

Thank you for your participation in today’s conference. This does conclude the program, and you may now disconnect.