Earnings Call Transcript - APLS Q4 2025

Operator, Operator

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the Apellis Pharmaceuticals Fourth Quarter and Full Year 2025 Earnings Conference Call. Please be advised that today's call is being recorded. I will now turn the call over to Eva Stroynowski, Head of Investor Relations. Please go ahead.

Eva Stroynowski, Head of Investor Relations

Good morning, and thank you for joining us to discuss Apellis' Fourth Quarter and Full Year 2025 financial results. With me on the call are Co-Founder and Chief Executive Officer, Dr. Cedric Francois; Executive Vice President of Commercial, David Acheson; Chief Medical Officer, Dr. Caroline Baumal; and Chief Financial Officer, Tim Sullivan. Before we begin, let me 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 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.

Cedric Francois, CEO

Thank you, Eva, and thank you all for joining us this morning. Before turning to our fourth quarter results, I'd like to briefly reflect on the progress Apellis made over the course of 2025. It was a year of disciplined execution and foundation building for our company. We strengthened our commercial franchises, advanced key programs across our pipeline and continued to demonstrate the value of our differentiated C3 approach, all while maintaining a strong balance sheet and a clear focus on long-term value creation. These foundations position us well as we move ahead with clear priorities centered on execution, growth and unlocking the next set of value-creating inflection points for Apellis. At our core, Apellis is a company focused on complement biology, specifically targeting C3, the central hub of the complement cascade. By intervening at this central point where all complement pathways converge, we take a fundamentally different approach that enables comprehensive disease control at the root cause while preserving essential immune function. This strategy continues to differentiate us scientifically and commercially and positions us to address a broad range of serious complement-driven diseases. Our 2026 focus remains anchored in our 3 strategic pillars. First, strengthening SYFOVRE's leadership in geographic atrophy. Second, driving growth with EMPAVELI across rare kidney diseases. And third, advancing an innovative pipeline that underpins our next wave of growth. Starting with SYFOVRE. SYFOVRE continues to be a resilient and durable business. In 2025, we delivered steady growth in total injections, and we expect SYFOVRE to remain a stable and meaningful revenue stream through 2026. Last month, co-pay assistance programs at third-party organizations began reopening to new patients. While we do not have visibility into how activity may ramp over time, we are encouraged that patients may be able to gain access to treatment. Looking ahead, we are advancing key initiatives to lay the foundation for accelerated growth in 2027, including a best-in-class prefilled syringe, and OCT-F, our AI-enabled approach to visualize the functional benefits SYFOVRE can provide for patients. Together, these initiatives are designed to make treatment more tangible, improve workflow and support broader adoption over time. Turning now to our second pillar, EMPAVELI. EMPAVELI is our near-term growth engine, and its launch trajectory reinforces our confidence in its long-term value. Following FDA approval in July for patients with C3G and primary IC-MPGN, the launch has progressed fully in line with our internal expectations, reflecting strong execution and early market receptivity. After its first full quarter on the market, EMPAVELI achieved more than 5% market penetration, significantly outpacing other rare nephrology launches. We continue to receive outstanding feedback from the community, with growing appreciation of EMPAVELI's value proposition following the publication of our data in the New England Journal of Medicine. We believe EMPAVELI's strong efficacy and safety profile will continue to drive adoption, and that over time, it has the potential to be used by up to 50% of the estimated 5,000 U.S. patient population. Lastly, our third pillar, which is our innovative pipeline. In nephrology, we are building on the momentum of EMPAVELI and expanding the franchise into new indications with pivotal trials now underway in focal segmental glomerulosclerosis and delayed graft function. In geographic atrophy, we are further bolstering SYFOVRE's leadership through our next-generation strategy, combining SYFOVRE with APL-3007, designed to enhance efficacy, patient experience and further differentiate our offerings. We are also excited to advance APL-9099, our category-defining FcRn program. This first-in-class base editing approach has the potential to disrupt a multibillion-dollar market and enable a one-and-done treatment paradigm across multiple indications. These programs reflect the breadth, strategic depth and long-term ambition of our pipeline. With a strong balance sheet and a growing commercial revenue base, we are well positioned to self-fund our pipeline and drive long-term value through disciplined financial execution. And with that, I will now turn the call over to David for an update on our commercial performance.

David Acheson, Executive Vice President of Commercial

Thank you, Cedric, and good morning, everyone. I'll begin with SYFOVRE. As Cedric highlighted, 2025 reinforced that SYFOVRE is a resilient and durable business. While full year revenue was modestly down compared to 2024, largely due to elevated use of free goods, the underlying demand remains strong with total injections growing approximately 17% year-over-year. SYFOVRE continues to lead the GA market. Physicians and patients value its differentiated profile, including robust efficacy and the flexibility of dosing as few as 6 times per year. Payer coverage remains strong with preferred status across a broad range of plans. As the GA market continues to evolve, we see meaningful opportunity for SYFOVRE and are focused on 3 priorities to support continued expansion and long-term growth. First, sharpening our field engagement through physician segmentation, refined messaging and a greater emphasis on early career retina specialists. Second, reinforcing our data leadership in GA. SYFOVRE is supported by the most extensive clinical and real-world evidence base in the category, anchored by 5-year GALE data; and third, advancing innovation with a best-in-class prefilled syringe and OCT-F. Together, these initiatives are foundational to supporting broader growth in 2027 and beyond. Turning to EMPAVELI. We are very pleased with the progress in C3G and primary IC-MPGN launch with early uptake fully consistent with our expectations. Following its first full quarter post launch, EMPAVELI achieved more than 5% market penetration. This level of early adoption is particularly notable in nephrology, a specialty known for conservative prescribing behavior and high evidentiary thresholds. As of year-end 2025, we received 267 cumulative patient start forms, reflecting strong early demand and a growing patient pipeline. Demand is being driven by broad engagement across the nephrology community and supported by favorable payer access with 95% of published policies reimbursing to label or with minimal restrictions. Physicians consistently highlight EMPAVELI's compelling efficacy profile, along with the convenience and ease of use of its on-body auto-injector and twice weekly dosing. With its broad label, EMPAVELI is the only approved therapy for approximately 2/3 of patients with C3G and primary IC-MPGN in the U.S. As the launch has progressed, we have expanded meaningfully across prescriber community, increasing both the breadth and depth of engagement. Over time, physicians are gaining experience in treating additional patients, reflecting growing confidence as the launch matures. Importantly, this execution has translated into strong patient pipeline. Early identification and engagement efforts over the first 6 months have positioned us well for continued growth, and we remain focused on broadening and deepening that pipeline as the market develops. As we look ahead, our 2026 launch priorities are focused on 3 clear areas: first, strengthening the patient identification through targeted medical education to both improve diagnosis and drive urgency around earlier treatment. Second, expanding engagement with prescribing physicians. We began the launch with a disciplined focus on our top 20 accounts, which represent more than 30% of the overall market and have accounted for approximately 1/3 of patient start forms. We are now systematically broadening engagement across additional tiers through targeted field activity and peer-to-peer education. And third, deepening adoption across patient segments. We continue to see strong interest from pediatric and post-transplant patients with growing opportunity in the adult population as the treatment paradigm shifts and clinical practice continues to evolve. Overall, the launch is progressing very well. We entered 2026 with strong momentum, and we believe that strength will continue through the year with some quarter-to-quarter variability. We believe EMPAVELI is on a clear trajectory to blockbuster status and that it could ultimately be used by up to half of U.S. C3G and primary IC-MPGN patient population. With that, I'll turn the call over to Caroline.

Caroline Baumal, Chief Medical Officer

Thanks, David. I'll begin with SYFOVRE. As the only approved therapy that targets C3, SYFOVRE addresses the central biology driving geographic atrophy, which continues to differentiate its clinical profile. In the fourth quarter, we announced new 5-year data from a post-hoc analysis of the GALE extension study, which showed that SYFOVRE delayed progression of geographic atrophy by approximately 1.5 years in patients with nonsubfoveal GA when compared to sham or projected sham. We look forward to presenting the full 5-year data set at the Macula Society later this week as one of our 8 oral presentations at the conference. Looking ahead, we are advancing 2 initiatives designed to support clinical decision-making and real-world use. First, our prefilled syringe intended to improve efficiency in retina practices. The clinical study is complete, and we are working toward a regulatory submission in the first half of this year. Second, we continue to make important progress with functional OCT, our AI-enabled approach to visualizing functional benefit in GA. We recently shared data at the Angiogenesis meeting earlier this month and plan to make the tool available for research use in retina practices in the second half of this year. In parallel, we continue to advance the Phase II study of SYFOVRE in combination with APL-3007 as a next-generation approach designed to more comprehensively block complement activity in the retina and choroid. We expect to share top line data in 2027. Now turning to EMPAVELI in C3G and primary IC-MPGN. Physician feedback and the recent New England Journal of Medicine publication continue to reinforce EMPAVELI's differentiated profile. As the only C3 targeting therapy, EMPAVELI has demonstrated the trifecta of efficacy outcomes with direct clearance of C3 deposits translating into reduced proteinuria and stabilization of kidney function. These data reinforce our confidence in EMPAVELI's mechanism and its potential to redefine treatments in complement-mediated kidney disease. We also recently initiated pivotal trials with EMPAVELI in FSGS and DGF, 2 additional high unmet need kidney indications. Both conditions are strongly linked to complement activation and currently have no FDA-approved therapies. Finally, I'll briefly touch on APL-9099, our FcRn program. This first-in-class base editing approach is designed to reduce IgG levels while preserving albumin, which we believe addresses important limitations of existing FcRn therapies. We expect to submit an IND in the second half of this year and look forward to sharing more details as the program progresses. With that, I'll turn the call over to Tim.

Timothy Sullivan, CFO

Thank you, Caroline. I'll now walk through our financial results. Additional details are included in this morning's press release. Total revenue for the fourth quarter and full year 2025 was $200 million and $1 billion, respectively. As a reminder, full year 2025 revenue includes the one-time $275 million upfront payment from the Sobi royalty repurchase agreement. We reported SYFOVRE net product revenue of $155 million for the fourth quarter and $587 million for the full year 2025. During the fourth quarter, we delivered approximately 102,000 SYFOVRE doses to physician offices, including approximately 89,000 commercial doses and 13,000 free goods doses. As previously discussed, reported revenue was meaningfully impacted due to elevated free goods utilization through 2025. Looking ahead, we remain committed to supporting patient access while recognizing that free goods utilization may evolve over time as third-party programs resume activity. Turning to gross to net. SYFOVRE adjustments in the fourth quarter trended just above the mid-20% range. In 2026, we expect gross to net to be in the high 20% range, reflecting the normal step-wise evolution of the buy-and-bill market. Importantly, based on our current pricing strategy, we expect net price to remain relatively stable through 2026, and we remain confident in our access position. As we exited 2025, we took a disciplined approach to inventory management, and we are comfortable with the current channel levels. We therefore expect a modest inventory reduction in the first quarter alongside typical seasonal dynamics, including Medicare reverifications. Overall, SYFOVRE remains a meaningful and durable foundation for Apellis. In 2026, we are focused on disciplined execution while advancing initiatives that position the business for renewed growth in 2027 and beyond. Moving to EMPAVELI. We reported U.S. net product revenue of $35 million for the fourth quarter and $102 million for the full year 2025. As David noted earlier, the launch continues to progress very well. And based on current trends, we believe EMPAVELI is on a clear path to blockbuster status. For operating expenses, we continue to maintain a highly disciplined approach to cost management. Operating expenses were $251 million in the fourth quarter compared with $239 million in the same period last year. For the full year 2025, operating expenses were in line with our expectations and consistent with 2024 levels. In 2026, we expect operating expenses to be modestly higher with incremental investment in the newly initiated pivotal trials for FSGS and DGF as well as certain milestone payments, largely offset by a decrease in SG&A, reflecting ongoing operating efficiency and resource optimization. We ended the year with $466 million in cash and cash equivalents, which we believe provides us with substantial flexibility and the resources to fund the business to profitability. As a reminder, Sobi recently received European Commission approval for Aspaveli in C3G and primary IC-MPGN, which triggered a $25 million milestone payment to Apellis during the first quarter of this year. We also remain focused on prudent capital structure management. We have approximately $94 million of convertible debt outstanding, which matures in September of this year, and we are actively evaluating a range of alternatives to address this obligation in a thoughtful and disciplined way. And with that, I will now turn the call back over to Cedric.

Cedric Francois, CEO

Thank you, Tim. As we move through 2026, our priorities are clear. We are focused on disciplined execution across our commercial portfolio, advancing initiatives that support long-term growth and continuing to deliver meaningful impact for patients. EMPAVELI is gaining traction in C3G and primary IC-MPGN, while SYFOVRE provides a durable foundation as we position the franchise for its next phase of growth. Supported by a strong balance sheet and financial rigor, we are operating from a position of strength and remain confident in our ability to create durable value for patients and shareholders. And with that, I will now turn the call over to the operator for Q&A.

Operator, Operator

Our first question comes from Jon Miller of Evercore ISI.

Jonathan Miller, Analyst

On the progress throughout '25. I'd like to use my one question to ask about EMPAVELI launch as we get into '26. You mentioned opening to broaden the accounts there and improve patient identification, diagnosis and all of that. But I noticed that one of the things that you didn't mention when you were listing the indications where there was strong growth potential was IC-MPGN, where obviously you have a differentiated label, but historically, it's been a little bit more challenging to find those patients. Can you talk a little bit about the breakdown of different indications throughout 2026, where you think the low-hanging fruit is, where we can see real growth in the near term and what it will take to break open some of those indication subsets that are a little bit tougher to diagnose and get on treatment?

Cedric Francois, CEO

Thank you so much, Jon, and great hearing you, and thank you, everyone, for joining. So EMPAVELI is on a clear path to blockbuster status. And as you correctly outlined, Jon, there's not just IC-MPGN, there's also the fact that in the VALO study, we studied EMPAVELI in the pediatric population as well as in a post-transplant setting as well. Now specifically as it relates to IC-MPGN, we believe that the epidemiology in total between the 2 indications is approximately 5,000 patients in the U.S., split more or less 50-50 between those 2 indications. While we're not providing exact breakdowns as to where in the population things sit at the moment, it is worth noting that in the pediatric population, the IC-MPGN in the post-transplant segment, we see important pickup and differentiation. And that, of course, contributed to achieving more than 5% penetration after the first full quarter in Q4 and contributes to our confidence of reaching up to 50% of those 5,000 patients at peak.

Jonathan Miller, Analyst

But I guess if you're going to see 50% penetration at peak and IC-MPGN is 50% of the U.S. population, I guess I'm asking, are you going to see equivalent penetration across those different subpopulations, those different sub-indications by the end of the day? Or are there places that are going to remain more difficult to penetrate?

Cedric Francois, CEO

It's still a bit too early to provide a definitive answer on that. It's also worth noting that there is significant overlap between these two indications. There isn't a strict distinction between them, as a patient can have a biopsy one day indicating more towards C3G and a different biopsy indicating more towards IC-MPGN. That's why it's crucial to have included all phenotypes of these diseases in the clinical trials we've conducted. Therefore, it's premature to offer more specifics at this time.

Operator, Operator

Our next question comes from the line of Anupam Rama of JPMorgan.

Anupam Rama, Analyst

For SYFOVRE, you've got the 5-year GALE data this Friday that you guys highlighted. What would you have us focus in on within these data?

Cedric Francois, CEO

Thank you so much, Anupam. Well, the important benefits and the continued safety profile that SYFOVRE provides to patients with geographic atrophy, right? So it is by far the largest data set ever generated in geographic atrophy. And what we found through the course of following these patients for a full 5-year period is that patients who are on treatment for 5 years can save as much as 1.5 years of tissue. So as I think you can appreciate, that's an enormous benefit to a 70- or 75-year-old individual who obviously, in the twilight of their lives, depends so much on their vision. So we're incredibly proud and incredibly happy with the data that we have generated and look forward to presenting it on Friday. I don't know, Caroline, if you would like to add something.

Caroline Baumal, Chief Medical Officer

Thank you, Cedric. I think what will be meaningful for retina physicians is that we have this extended trial with 5 years of data that we continue to show increasing effects over time and that retina tissue can be meaningfully saved. And these findings might lead to earlier treatment for patients with geographic atrophy. So we really look forward to presenting this data. Thank you.

Operator, Operator

Our next question comes from the line of Tazeen Ahmad of Bank of America.

Tazeen Ahmad, Analyst

I maybe wanted to follow up on that 50% penetration for EMPAVELI. How long do you think it's going to take to reach that? I know that a big point of discussion among investors is like the ramp of your launch. Is it going to be more steady? Or could it accelerate and become more steep? So any thoughts you can provide on patient finding efforts and what you think realistically the time to onboard patients will take? That would be helpful. And then can you just talk about what the competitive dynamics are so far relative to how doctors are viewing EMPAVELI versus FABHALTA? What are the types of patients that they might still be waiting to see if EMPAVELI might be better than relative to FABHALTA?

Cedric Francois, CEO

Thank you, Tazeen. Regarding the ramp, I agree that we should expect consistent growth, which is typical in rare diseases. We've observed this trend over the past few months and anticipate it will continue. As previously mentioned, we have a clear differentiation and unique positioning without competition right now in the pediatric segment and in IC-MPGN, which is a significant advantage. In the pediatric population, the disease generally progresses more rapidly. Based on our observations since the launch, there is a notable appreciation for the drug's efficacy and safety profile. Additionally, the post-transplant segment is crucial, as the majority of patients with these conditions will experience a relapse due to the genetic nature of the disease.

Operator, Operator

Our next question comes from the line of Timur Ivannikov of Cantor.

Timur Ivannikov, Analyst

For EMPAVELI launch, I think you mentioned strong momentum in C3G in 2026 with quarter-to-quarter variability. Could you talk about some of the variability factors? And do you expect to provide start forms again at some point or any other form of guidance?

Cedric Francois, CEO

Thank you so much, Timur. I will hand that question over to David Acheson.

David Acheson, Executive Vice President of Commercial

Hope you're doing well. Thank you for the question. Regarding the variability, it's an ultra-rare disease. It's essential to recognize that we might see fluctuations in potential patients submitting start forms, which can change week over week and month over month. This is something we need to monitor closely. However, I'm optimistic about the momentum we have entering 2026, especially following last year's launch, the quality of the product, and the increasing number of patients engaging with the brand, which is very encouraging. Can you please repeat the second part of your question for me?

Timur Ivannikov, Analyst

Yes. I was just wondering about the start forms or any other type of guidance for the product?

David Acheson, Executive Vice President of Commercial

Yes. So moving forward, we continue to report on revenues for sure and start forms, but we're not going to give any additional guidance on start forms that we had in the third to fourth quarter.

Operator, Operator

Our next question comes from the line of Yigal Nochomovitz of Citigroup.

Yigal Nochomovitz, Analyst

Could you talk a bit about the prefilled syringe? I just want to get a sense of how much it matters for the retina docs in terms of the practice flow and efficiency. And when you say renewed growth in 2027 for SYFOVRE is the driver behind the statement, the launch of the PFS. And then more specifically on the practice dynamics, since the space is very limited for the physicians, for the fridges to store the drug, is there an advantage to the PFS in terms of practice dynamics in storing the drug with that presentation?

Cedric Francois, CEO

Thank you, Yigal. Those are excellent questions, and the PFS will make a huge difference for us. And we have, of course, our Chief Medical Officer with us here, Caroline, to speak a little bit more toward that.

Caroline Baumal, Chief Medical Officer

Thank you. So the prefilled syringe is really a practice-enabling innovation, and this is going to offer convenience and efficiency to retina physicians. And from my experience as a clinician and also from being heavily involved in the development of our prefilled syringe, this is going to support the ease of clinical use in patients with geographic atrophy. So we really think that this is going to be transformative for physicians and their patients. When it comes to specifics about the design, I think that retina physicians put their input heavily into how we design this, including the box, the complete package, and we'll be very, very pleased with how it fits into the refrigerators. We also have some other things that will be helping be transformative for SYFOVRE with renewed growth, and that's functional OCT, which was mentioned in the call.

Operator, Operator

Our next question comes from the line of Salveen Richter of Goldman Sachs.

Salveen Richter, Analyst

I was wondering if you could provide any further color on the recent improvement in co-pay dynamics for SYFOVRE and how you think about the quarter-over-quarter cadence of sample use and kind of the sales trajectory as you input this into your trajectory?

Cedric Francois, CEO

Thank you so much, Salveen. Tim, can you elaborate?

Timothy Sullivan, CFO

Sure. So as you probably saw, Salveen, the Patient Assistance Organization is open for reimbursement for co-pay assistance with geographic atrophy patients. At this time, we don't really have any sense of what that means in terms of dynamics from a free goods perspective. As you'll recall, last year, we had 12% to 14% fluctuating on a quarterly basis. But really, what this represents is an important advance for the patients who have been unable to pay for their treatment in geographic atrophy.

Operator, Operator

Our next question comes from the line of Colleen Kusy of Baird.

Colleen Kusy, Analyst

Congrats on all the progress. I realize for the nephrology Phase III studies are just recently coming up and running now, but any color you can provide on the expectations for enrollment there? Do any of these centers have preexisting experience with EMPAVELI? Just how that enrollment might pan out.

Cedric Francois, CEO

Thank you so much, Colleen, for that question. So we're very excited about these 2 Phase III clinical trials in FSGS and DGF, where we think EMPAVELI's potential can make a huge difference as it did in C3G and IC-MPGN. It's a little bit early to give projections on what the enrollment will look like, but the excitement around kind of continuing the trajectory in the kidney is very strong. What really stood out from the VALIANT study is the exquisite target engagements and the control of the complement pathways that we see in the glomerulus, which we believe will translate in a similar efficacy profiles in these conditions.

Operator, Operator

Our next question comes from the line of Phil Nadeau of TD Cowen.

Philip Nadeau, Analyst

We wanted to focus on SYFOVRE revenue trends for Q1 and 2026. Tim, putting your comments together, it sounds like you expect typical seasonal factors. For Q1 last year, sales were down $37 million quarter-over-quarter in Q1 '25 versus Q4 '24, although there was a big impact of free product in that downtick. So how will the seasonal factors in Q1 of '26 compare to Q1 of '25? And then more generally for 2026, it sounds like you guys are suggesting relatively stable revenue for SYFOVRE. So I want to make sure I understand that we should be modeling something, full year 2026 similar to full year 2025?

Timothy Sullivan, CFO

Sure. So yes, I think the one thing to remember, there are a couple of seasonal dynamics in the first quarter, one of which we tried to manage a little bit. So as you'll recall, last year, we had a fourth quarter spike in revenue that was as a result of some inventory build across the channel. So that included at the physician offices as well as the distributor. We really did our best to manage that this year. So we think there may be a bit of a modest swing in the first quarter, but much more muted than last year. We also typically have some seasonal dynamics like weather and reverifications in the first quarter. So bearing that in mind, we think across the year, that's the main seasonal quarter for us. There is a little bit at the end in the fourth quarter. But as you rightly point out, we expect sort of a modest cadence to growth over the course of the year.

Operator, Operator

Our next question comes from the line of Annabel Samimy of Stifel.

Jayed Momin, Analyst

This is Jayed for Annabel. I would like to revisit the doses of SYFOVRE delivered. It remained unchanged quarter-over-quarter, which you mentioned was due to some seasonality. However, there was a better distribution favoring commercial doses. Considering the co-pay assistance funds returning, do you anticipate that distribution will continue to be more favorable towards commercial doses in 2026?

Timothy Sullivan, CFO

Sure. So thanks for the question. So what we really felt happened in the fourth quarter was a touch of seasonality. When you look at the amount of doses we had, it was 89,000, and sort of there are roughly 90 days in a quarter. We had a couple of a longer holiday stretch that may have impacted things. So it was really not a significant change from a commercial doses perspective in the context of that seasonality in our view. But from the free goods perspective, we saw a range of 12% to 14% over the course of 2025. That bounced around. And so this was, I think, pretty much in line with what we expected in the fourth quarter. As you may recall, sometime in the third quarter, the patient co-pay assistance organization was open for existing patients, and that may have led to a small downtick in the total free goods in the fourth quarter, but it's really hard to say.

Operator, Operator

Our next question comes from the line of Ellie Merle of Barclays.

Eliana Merle, Analyst

Two for me. I guess, what are you looking to see in the Phase II data, SYFOVRE in combo with APL-3007 next year? And how you're thinking about what would be meaningful there? And then just a clarification on the C3G IC-MPGN comments. The 50% penetration that you mentioned, I'm sorry if I missed this. But I guess, is this the base case that you'll treat 50%? Or are you saying that half the population will become challenging to treat? Just trying to understand that 50% comment.

Cedric Francois, CEO

Thank you, Ellie. It's great to hear from you. We are really excited about the GALLOP study. In this study, we are using a subcutaneous injection of an siRNA product that targets C3, which reduces systemic C3 levels by about 90%. This also leads to lower C3 levels in the eye, providing a stoichiometric advantage to SYFOVRE. If the study is successful, we believe it will allow us to extend the treatment interval from every two months to every three months and potentially enhance the already significant efficacy of SYFOVRE. The exact definition of "well above that" will be established later. This is a very exciting study for us, as we believe it can change the landscape of treatment for geographic atrophy, similar to what we've achieved before. Regarding the C3G and IC-MPGN population, we estimate that up to 50% of the epidemiology could be treated with EMPAVELI. It’s important to note that we have a conservative estimate for the epidemiology of C3G and IC-MPGN. Our only competitor in this area has a significantly higher estimate. We achieved more than 5% penetration in the fourth quarter, indicating a very strong launch, among the best in rare diseases. We believe our conservative estimate, or a combination of both, reflects our ongoing confidence in EMPAVELI's trajectory based on our Q4 performance and the positive trend we continue to observe as this launch develops.

Operator, Operator

Our next question comes from the line of Lachlan Hanbury-Brown of William Blair.

Lachlan Hanbury-Brown, Analyst

I guess for EMPAVELI, you've previously talked about there being an initial bolus of patients and then it sort of settles down into more of a steady state, monthly or quarterly growth in new patients. I'm wondering, sort of where are you at that? Are you through that bolus and into the steady state now? Or are you still working through some of that initial bolus of patients that you're expecting? And maybe you reach steady state later this year?

Cedric Francois, CEO

Yes. Thank you, Lachlan. I will hand that over to David Acheson to answer.

David Acheson, Executive Vice President of Commercial

Thank you for the question. Yes, as we discussed last year from the Q3 launch through Q4, we typically see a surge of patients early in the launch who start using the product shortly after it becomes available. We observed this in the fourth quarter, which was encouraging. Now, we are in the steady state we mentioned earlier, and as Cedric noted in the initial part of the questions, I am confident in the ongoing stability we will experience moving forward.

Operator, Operator

Our next question comes from the line of Judah Frommer of Morgan Stanley.

Judah Frommer, Analyst

Maybe just one on the commentary around the ability to fund yourselves through to profitability. Just curious how pipeline could impact the timing and trajectory of that, specifically maybe 9099 and 3007, what are the pushes and pulls there that could move that profitability closer or further out?

Timothy Sullivan, CFO

Thank you, Judah, for the great question. Currently, we have taken all of this into consideration when discussing a potential slight increase in total operating expenses this year. Looking ahead to 2024 and 2025, our expenses have remained relatively flat overall. We may see a notable increase this year as our FSGS and DGF studies ramp up, along with new programs like the Beam program starting towards the end of the year, which could impact our cost structure. However, we have been effective in managing our operating expenses, which ultimately depends on revenue growth. Today, we view our situation from the perspective of operating expenses and net revenue. If we adjust for stock-based compensation, we've been close to maintaining a neutral operating adjusted EBITDA level over the past year, and we anticipate this will become clearer as the year progresses.

Operator, Operator

Our next question comes from the line of Douglas Tsao of H.C. Wainwright.

Douglas Tsao, Analyst

Just on SYFOVRE, David, just a couple of questions. I think you indicated there was sort of an initiative to help patients sort of end up on the right plan which sort of improves their coverage of SYFOVRE. I'm just curious sort of as you come into the new year, if you've sort of seen meaningful progress on that. And then also, I'm just curious in terms of the free goods, are you seeing those patients sort of typically sort of get dosed with free goods and then they see that they can't get covered or can't get patient assistance and drop off? Or are you seeing sort of a persistence of it? I'm just sort of trying to understand that in terms of understanding sort of how patients are coming in and sort of identification for the market.

Cedric Francois, CEO

Thank you, Doug. David will address the question regarding SYFOVRE, and I will answer the first question, followed by a discussion about the free goods.

David Acheson, Executive Vice President of Commercial

Thank you for the question, Doug. Regarding the reverification process and patients switching insurance plans, we made significant efforts last year with our field reimbursement team to educate offices on which plans are relevant for patients who might have coverage gaps for geographic atrophy treatment, specifically SYFOVRE. Our Apellis Assist hub also played a crucial role in educating both patients and offices during the insurance reverification period that occurred in the fourth quarter and into this year. This support aimed to help them identify treatment and payment opportunities. The reverification process is coming to a close and has gone relatively smoothly. I can't provide details on how many patients changed plans, but we focused on ensuring people had access to additional information. Now, I'll hand it back to Cedric.

Cedric Francois, CEO

Thank you, David. I want to emphasize that in 2025, we made a strong commitment to support retina practices to ensure that patients who cannot afford the co-pay for their products still receive treatment. This reflects our medical commitment to patients, which we upheld throughout last year and will continue to prioritize when necessary. It's crucial for us. Regarding the upcoming year, it's important to note how significantly the workflow disruption impacted retina practices. This situation required adjustments, leading to a decrease in new patients seeking treatment for geographic atrophy, as this condition is often deprioritized in these practices. However, we anticipate this dynamic will change over time. Currently, it's encouraging to see that in the retina field, we are beginning to establish a new rhythm and stability after a challenging year for both physicians and patients.

Operator, Operator

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

Derek Archila, Analyst

You made some comments on kind of the patient pipeline for EMPAVELI in C3G and IC-MPGN. And I guess, what level of visibility do you have there? Is it as granular as understanding where the patients are at certain sites, outreach of those patients? And then just a second question on PFS. Just kind of curious, is it more of expand the market? Or is it also share gains against the other competitor?

Cedric Francois, CEO

Thank you, Derek. Regarding the pipeline, it's been one of the most rewarding aspects of our launch. Initially, we faced challenges in estimating the epidemiology, but it appears we accurately gauged it, perhaps even conservatively. We've experienced one of the best launches for a rare disease in the kidney space, particularly with our penetration during the first full quarter. As for the pipeline, the number of patients we've identified has increased, leading to more patients transitioning to start forms and beginning treatment. Even with many patients moving to these start forms, our upstream pipeline today is larger than pre-launch, confirming our understanding of the epidemiological rates and our ongoing patient identification. This gives us confidence in steady growth from this launch. Regarding the prefilled syringe, I believe it will significantly drive our market share. We've seen from the wet AMD market with anti-VEGF products that having a prefilled syringe offers a considerable competitive advantage. We are working towards that, although we anticipate competitors will also release their own prefilled syringes in the future. Currently, we have a head start which we are pleased with and it positions us well. It will also enhance share as it integrates better into the workflow of retina practices, making it easier for physicians to treat and try our products. Instead of the cumbersome process of drawing from a vial, they can simply take it from the fridge and use it. These are important distinctions, and I'm happy with our current status.

Caroline Baumal, Chief Medical Officer

Yes. This is a real innovation, and this will be highly meaningful to physicians to have this way to treat their patients efficiently. So I speak from my personal experience and what I've heard from colleagues that I think that this will help to expand the market for geographic atrophy.

Operator, Operator

Our next question comes from the line of Ryan Deschner of Raymond James.

Unknown Analyst, Analyst

This is Anthony on for Ryan. So we wanted to ask, can you walk us through how retina specialists can potentially use OCT-F in their practices, how this could increase the size of the GA market? And then if you have like an approximate time line for when you anticipate having appreciable amounts of real-world OCT-F data for analysis? And if possible, I have a follow-up.

Cedric Francois, CEO

Thank you, Anthony. We're discussing Caroline's favorite topic. For those unfamiliar with OCT-F, it is functional OCT, a technology developed in collaboration with the University of Bonn in Germany. We utilized what is the largest dataset of microperimetry data ever generated in the retina to effectively transform an OCT image into a real functional mapping of the retinas, showing the retinal sensitivity in patients. Analyzing patients with geographic atrophy over time reveals a significant loss of retinal sensitivity. This year, starting two weeks ago at Angiogenesis, we aim to redefine for retina specialists and patients' families what it means to have this disease. Currently, many believe geographic atrophy occurs only at the border of a lesion, but it is actually a pan-retinal neurodegenerative condition, which we can now image. We can also quantifiably visualize the benefits of treatment with SYFOVRE. Initially, we will focus on raising awareness of the impact geographic atrophy has on patients. Our mission is to make this technology available in retina practices, so physicians can analyze and assess patients one-on-one, tracking the benefits of SYFOVRE treatment. Caroline is passionate about this technology and discusses it at every retina conference. Would you like to add anything?

Caroline Baumal, Chief Medical Officer

Physicians are very enthusiastic about this technology as it provides a way to connect structure to function. This was evident during our recent presentation at Angiogenesis, and I received multiple inquiries afterward. This advancement will facilitate earlier diagnosis of geographic atrophy, support the patient journey, and enhance physicians' understanding of the disease. We anticipate that it will encourage the adoption of SYFOVRE, which is the currently approved treatment with dosing every other month, helping to maintain patients on their treatment schedules by demonstrating their progress to both patients and their families. We also hope it sheds light on other conditions, including wet age-related macular degeneration and other areas we are exploring as a research tool.

Operator, Operator

Our next question comes from the line of Douglas MacPherson of Mizuho.

Douglas MacPherson, Analyst

I'm interested in the sort of competitive dynamics of the market. Firstly, are you seeing the complement inhibitor class to treat GA, seeing that hold steady or perhaps growing modestly? And then I think you're holding pretty solid at 60% market share. As far as new patient starts, what proportion are you seeing versus competitor? And have you seen any impact of the 5-year GALE update in November? You see any impact on that on new patient starts or on compliance?

Cedric Francois, CEO

Thank you, Doug. It's nice to hear from you. We believe that it's surprising that we are still in the early stages of what can be accomplished for patients with geographic atrophy. With the unique characteristics of our product and the extensive data we've gathered over the full 5-year period, we are in a strong position to remain competitive. I will now pass it over to David Acheson to discuss market share further.

David Acheson, Executive Vice President of Commercial

Yes. Thanks for the question. So you're correct. We're holding steady at 60% market share, which we're confident in. And we feel really good about where we're coming into 2026. I can tell you that we're really confident in the competitive strength that we have, including the GALE data that we just talked about and came out this week. I think it's important for us to note that nobody else has that data, and it's a big strength for us to have that kind of data with the patients that are in the long-term study. And our focus, quite frankly, is really being disciplined on execution and to continue to innovate with what we're doing with the brand and continue that leadership reinforcement moving forward within the space. So the market share is part of that, but certainly, driving innovation is a part that we'll continue to drive uptake, market growth and our share growth as well.

Operator, Operator

Thank you. I would now like to turn the conference back to Cedric Francois for closing remarks. Sir?

Cedric Francois, CEO

Thank you very much, and thank you all for your thoughtful questions. We look forward to updating you on our progress, and I believe that we're speaking with many of you later today as well. Thank you so much, and I hope you have a great rest of the day.

Operator, Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.