Apellis Pharmaceuticals Inc at Cowen Health Care Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : So, Cedric, maybe I'll hand it to you. Can you give us a brief state of the company overview, biggest strengths, biggest challenges, what needs to happen to drive outperformance over the next year or two?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : That's a great overview. I think will start with pegcetacoplan in GA, where the vast majority of our questions from investors are focused today. So starting with the FDA filing, you guided for the NDA to go into the FDA in Q2 of 2022. Can you give us some sense of -- based on your interactions with the FDA, how confident are you that the filing is going to be accepted for review and then granted a priority review, and maybe ultimately approved?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : You recently announced that you're going to include 18-month data from DERBY and OAKS in the filing. Can you briefly touch on that decision to include the data, what 18-month measures will be available to include in the filing? Why do you want to include the data?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : So in terms of the alpha being spent, can you expand on that a bit more? So is the 18-month analysis -- was that predefined? Is it possible to achieve statistical significance in that analysis? Or are we going to talk about nominal p values because of the alpha being spent at month 12? How do the statistics work in the formal plan?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Got it, okay. And in terms of framing expectations, it's clear in the 12-month data from DERBY and OAKS that the curves continue to separate over time. So the absolute difference in lesion size was bigger at six months than prior time points, nine months then six, 12 to 9. Is there any reason that that simply wouldn't continue through month 18? It seems really difficult to imagine a scenario where that would happen to us, but we're curious if we're missing something.

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Right, right. I didn't mean to imply compounding. I guess we are assuming the slope of the line stays the same, so the percent difference between the lines is maintained. But because more time passes, the absolute difference in lesion size, it should continue to grow.

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : And then in terms of safety, how descriptive will you be in the topline data? Obviously as more time passes, you're going to have more adverse events, even though the rate per event year might not change. So how much information do you expect to give on that?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Okay, perfect. And then last question -- one we get all the time -- do you know the data today? Has this analysis already happened or is it something that will be performed shortly?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : That's what we (multiple speakers). And then moving on to the 20-month data that's expected in Q3, similar broad questions there. What data will be released at 24 months? And how will those analyses be included in the FDA filing?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Has Apellis decided upon the indication it's going to seek with the filing? Are you likely to ask for an indication of patients with all GA lesions? Or would you consider concentrating on extrafoveal, where the data were particularly striking?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Can you talk about the commercial preparations that are underway today? What are the near-term initiatives? Have you identified physicians or groups you plan to target?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : There are several other complement-directed therapies in development for GA. Investors are particularly focused on Iveric since its data is coming out this year, but there are others. How does Apellis believe pegcetacoplan can be differentiated in the commercial market? What attributes are likely to determine share? And is it possible that this market is so huge that really everyone wins?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Cowen projects that by 2026, 10% of diagnosed GA patients will be on pegcetacoplan, generating $1.2 billion in revenue to Apellis. How do you feel about those projections? If we're wrong, what mistake do you think we are making?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Perfect. With that, I think those are all our GA questions. So we'll move to EMPAVELI in PNH. Following its May 2021 approval, can you give a sense for how the launch is progressing?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Perfect. In terms of the launch, is there any update to the number of [start forms] that you've received thus far in Q1? I think you noted more than 125 were received at the end of 2021. Any update to that figure? And if not, can you give us some sense of how that pace of start forms will maybe ebb and flow over the course of the year?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : And on the Q4 call, you did note some headwinds that were observed in December-January due to COVID. Could you maybe elaborate on those trends? And have they subsided now that the Omicron wave has gone away?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : What is the message that you bring to the physicians to drive uptake and take share? Can you give us some sense of the strategy, the commercial strategy?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Couple financial questions. First, is there any sense of when you could begin providing EMPAVELI revenue guidance?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Great. And then back to the -- a Cowen question. We project that by 2026, 32% of diagnosed PNH patients in the US will be on EMPAVELI, generating $260 million in revenue. How do you feel about those projections and (multiple speakers) what mistake are we making?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Okay. I apologize, we're going to backtrack to GA just for one second so that people can stop emailing me. I guess one question I forgot to ask that apparently a lot of people want to know the answer to is in your FDA interactions, did they specifically ask for the 18-month data? Or is that something that Apellis decided to supply simply because you think it's going to strengthen the filing?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Okay, great. And then a question I asked, but I guess a lot of people missed: can you tell us whether you know the data today or whether the data is yet to be processed?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Perfect. And I apologize, I know you answered that before. But I think -- based on what's happening in my inbox, it seems like a lot of people missed it. So let's move to pegcetacoplan in other indications. Pegcetacoplan's either just moved into pivotal studies or is about to move into pivotal studies in a number of these other indications. You mentioned some in your prepared remarks, Cedric. Can you maybe frame for us which ones are you most excited about?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Why do you think that is? Is there a mechanistic rationale why pegcetacoplan or C3 inhibition could have a lower rate? Or do you think you expect a relatively similar class rate, and thus far with 500 patients, you've been a little lucky? Any way to differentiate between those two?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Perfect. On the kidney disease indications, what would be a clinically meaningful benefit in proteinuria and IC-MPGN and in C3G? Any sense of what physicians would want to see or what needs to be produced in these pivotal studies to drive uptake?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Great. We'll move on to the early stage pipeline. You did mention the programs like 2006, 1030, siRNA, as they get closer to the clinic. Again there, which would you care to highlight? Which have the best potential to contribute to Apellis's revenue and earnings in the future?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : In the last couple minutes, I did want to ask couple of corporate questions. First is on possible operating margins from your business. Cowen projects, in 2026, $680 million in operating income on revenue of $1.575 billion, so an operating margin in the 40% range. Is that reasonable? Do you think that you could get -- you could approach a 50% operating margin, assuming success in both GA and PNH?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : And one question we get from investors is on your cash runway guidance and your possible strategies of augmenting that. Any thoughts there? I know you recently did an offering, so I don't think people anticipate anything too soon, but how do you think about extending the cash runway beyond Q2 of 2023?

Question: Phil Nadeau - Cowen and Company, LLC - Analyst : Well, that's great. It looks like, with that, we are out of time. So I'd like to thank Adam, Tim, and Cedric for a very interesting discussion, and thank everyone out there who has been listening and (inaudible). Thank you.