Apellis Pharmaceuticals, Inc. is a global biopharmaceutical company at the forefront of innovative therapies targeting the complement system, a critical component of the immune system. Over the past two decades, the company has dedicated itself to uncovering the immense potential of complement inhibition, establishing itself as a leader in this burgeoning field.
Company Background
Apellis' origins trace back to September 2009 when it was incorporated under the laws of the State of Delaware. Since its inception, the company has devoted substantially all of its resources to developing its proprietary technology, developing product candidates, undertaking preclinical studies and conducting clinical trials for pegcetacoplan, building its intellectual property portfolio, organizing and staffing the company, business planning, raising capital, and providing general and administrative support for these operations. Recognizing the far-reaching implications of targeting the complement cascade, the company has steadily built an impressive portfolio of approved and investigational products, each designed to address a wide range of complement-mediated diseases.
Key Products and Achievements
In May 2021, the company achieved a major milestone with the FDA approval of EMPAVELI (pegcetacoplan) for the treatment of paroxysmal nocturnal hemoglobinuria (PNH), a rare and life-threatening blood disorder. This pioneering therapy, the first targeted C3 inhibitor approved for PNH, has since gained traction, generating $74.7 million in U.S. net product revenue for the first nine months of 2024. The therapy's high compliance rate of 97% underscores the substantial benefits it provides to patients.
Building on this success, Apellis expanded its reach in February 2023 with the FDA approval of SYFOVRE (pegcetacoplan injection) for the treatment of geographic atrophy (GA) secondary to age-related macular degeneration. This landmark approval made SYFOVRE the first-ever approved therapy for this debilitating condition, which affects an estimated 1.5 million people in the United States and 5 million globally. In the third quarter of 2024, SYFOVRE generated $152 million in net product revenue, more than doubling the figure from the same period in the previous year.
Research and Development
Apellis' unwavering commitment to advancing the science of complement inhibition has yielded impressive results in other therapeutic areas as well. In August 2024, the company presented groundbreaking data from its Phase 3 VALIANT study, investigating the use of EMPAVELI in the treatment of C3 glomerulopathy (C3G) and primary immune complex membranoproliferative glomerulonephritis (primary IC-MPGN), two rare and severe kidney diseases. The study demonstrated a remarkable 68% reduction in proteinuria, a key marker of disease activity, along with favorable effects on other important endpoints such as stabilized kidney function and reduced C3c staining. These results have positioned EMPAVELI as a potential best-in-class treatment for these devastating conditions, with the company planning to submit a supplemental new drug application to the FDA in early 2025.
Apellis' pipeline extends beyond its approved products, with a focus on exploring the versatility of complement inhibition. The company is advancing APL-3007, a small interfering RNA (siRNA) targeting C3, through a Phase 1 clinical trial in healthy volunteers. Additionally, Apellis has forged a collaboration with Beam Therapeutics, Inc., leveraging the latter's proprietary base editing technology to discover new treatments for complement-driven diseases in the eye, liver, and brain.
Financials
Financially, Apellis has maintained a strong position, ending the third quarter of 2024 with $397 million in cash and cash equivalents. The company's cash operating expenses, which exclude stock-based compensation and depreciation, were approximately $180 million for the quarter, suggesting the potential for near-term profitability. To further bolster its liquidity, Apellis entered into a $475 million senior secured term loan facility in May 2024, using a portion of the proceeds to pay off its remaining obligations to SFJ Pharmaceuticals Group.
Despite the challenges faced by the broader biopharmaceutical industry, Apellis has navigated the landscape with agility. The company's Q3 2024 financial results reflected the continued momentum of its flagship products, EMPAVELI and SYFOVRE, which have demonstrated their potential to become blockbuster therapies.
In the third quarter of 2024, Apellis reported total revenue of $196.83 million, representing a 78% increase compared to the same quarter in the prior year. This growth was primarily driven by strong sales of SYFOVRE, which generated $151.96 million in net product revenue for the quarter. EMPAVELI contributed $24.61 million in U.S. net product revenue, showing a 3% increase compared to the same period last year. Additionally, the company recognized $20.26 million in licensing and other revenue, which included royalties from its collaboration agreement with Swedish Orphan Biovitrum AB (Sobi).
Despite the impressive revenue growth, Apellis reported a net loss of $57.45 million for the quarter. However, the company's operating cash flow turned positive, reaching $34.10 million, which was equal to its free cash flow for the period. This improvement in cash flow generation is a significant milestone for the company as it continues to scale its operations and commercialize its products.
Liquidity
It's worth noting that Apellis has financed its operations primarily through public and private offerings of its common stock and convertible securities, payments and royalties from its collaboration with Swedish Orphan Biovitrum AB, and various credit arrangements. The company has incurred significant annual net operating losses in every year since its inception, as it has devoted substantial resources to research and development activities as well as the commercialization of its approved products. Despite these challenges, Apellis has made significant progress in advancing its pipeline and achieving regulatory approvals for its first two commercial products. The successful launches of EMPAVELI and SYFOVRE have positioned the company to continue its growth and pursue its mission of developing novel therapies to treat diseases with high unmet needs.
As of September 30, 2024, Apellis reported a debt-to-equity ratio of 1.94, indicating a moderate level of leverage. The company's liquidity position remains strong, with $396.86 million in cash and cash equivalents. Apellis also maintains access to additional capital through its $475 million senior secured term loan facility, of which $375 million was drawn at closing. This facility matures in 2030 and bears interest at 3-month SOFR plus 5.75%. The company's current ratio of 4.36 and quick ratio of 3.73 further underscore its solid short-term liquidity position.
Future Outlook
Looking ahead, Apellis remains focused on maximizing the commercial success of its approved products, while simultaneously advancing its robust pipeline of complement-based therapeutics. The company's unwavering commitment to innovation, combined with its strong financial position, positions Apellis as a formidable player in the rapidly evolving world of complement-driven treatments.
For the fourth quarter of 2024, Apellis is guiding for flat to modest net revenue growth for SYFOVRE, with low single-digit percentage vial growth. The company expects the gross-to-net for SYFOVRE to be in the low to mid-20% range going forward through 2025, after a higher than normal gross-to-net in Q3 2024. Apellis remains conservative in their near-term expectations for SYFOVRE growth, anticipating low single-digit percentage vial growth for the remainder of 2024. Despite these near-term projections, the company believes SYFOVRE remains on track to becoming a blockbuster drug, although they expect the sales ramp to be more gradual going forward.
Apellis continues to see potential in EMPAVELI for PNH treatment and is optimistic about its prospects in other indications. The company plans to file a supplemental New Drug Application (NDA) with the FDA for EMPAVELI in C3G and IC-MPGN early next year, based on the positive 6-month data from the Phase 3 VALIANT study. This expansion into new indications could provide additional growth opportunities for the company in the coming years.
With its strong product portfolio, robust pipeline, and solid financial foundation, Apellis is well-positioned to continue its growth trajectory and make significant strides in addressing unmet medical needs through innovative complement-targeted therapies.