Q3 2024 Apellis Pharmaceuticals Inc Earnings Call
The End of the World
Speaker Change: Good morning, ladies and gentlemen. Thank you for standing by and welcome to the Appellous Farmers' Sutacles 3rd Quarter 2024 earnings conference call. At this time, all participants are not listening only mode. After this speaker's presentation, there will be a question and answer session.
2. Ask a question during the session you will need to press star 1-1 on your telephone.
You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the call over to Meredith Kaya, Senior Vice President and Vester Relations and Strategic Finance. Please go ahead.
Meredith Kaya: Good morning and thank you for joining us to discuss what calluses third quarter 2020 for financial results.
Meredith Kaya: with me on the call or co-founder and Chief Executive Officer Dr. Cedric Francois. Chief Operating Officer Adam Townsend, Chief Medical Officer Dr. Caroline Baumal, and Chief Financial Officer to Sullivan.
Before we begin, let me point out that we'll be making four-looking statements that are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and actual results made to prematurely. I encourage you to consult the Respected Discussing Center at SEC Violence Reditional Detail. Now, I'll turn the call over to subject.
Speaker Change: Thank you Meredith and thank you all for joining us this morning.
Speaker Change: Over the past few months, we had made meaningful progress towards our long-term goals, reaching key milestones, such as generating continued growth and value demand for safe flow rates and presenting the ground breaking phase 3 of the World Health Organization, with Emma Vetti and Cedric G and ICMPG.
Speaker Change: This data underscored the power of C3 and reinforced our belief that targeting C3 is the optimal way to treat compliments mediated to Siyue.
Meredith Kaya: Holmes.
Meredith Kaya: During the third quarter, commercial vial demand for Sifo-Vri grew by 7% quarter over quarter and Sifo-Vri maintained its market leadership with 84,500 commercial vials shipped to physicians.
Meredith Kaya: Third quarter CIFORi net product revenue of $152 million were more than double the same period last year. However, we recognize that revenue fell short of expectations, declining by 1.7% relative to the last quarter.
Meredith Kaya: This was partially due to higher growth-to-net adjustments, which Adam and Tim will speak to shortly.
Meredith Kaya: Importantly, we expect growth to nets to be stable going forwards with more modest quarterly adjustments typical of a buy and a build model.
Meredith Kaya: Also affecting our performance this quarter was an overall slowing within the GA market.
Meredith Kaya: Total sale demands did grow quarter over quarter, but at a slower pace than in previous quarters.
Meredith Kaya: Market growth is now being driven by the next group of retina specialists, who often need more time to appreciate the benefit-risk profile of complement treatments, and therefore take longer to decide to treat their GA patients.
Meredith Kaya: To support meaningful growth going forward, we need to continue building awareness of Cy4V3's strong clinical profile.
Meredith Kaya: We have launched several key initiatives aimed at increasing our share of new patient starts, strengthening our market leadership, and accelerating growth in the overall GA market.
Meredith Kaya: Early science suggests that these efforts are delivering positive results, but their impact on the GA market and cipher demand will take time.
Meredith Kaya: Considering this, we remain conservative in our near-term expectations for growth, anticipating low single-digit percentage value growth for the remainder of 2024, with flat to modest net revenue growth in the fourth quarter.
Meredith Kaya: We plan to provide further insight into the GA market dynamics and our growth expectations for 2025 and the coming months, as we gain visibility into the impact of our new commercial initiatives.
Meredith Kaya: It is important to remember that we are still in the early stages of the launch. We estimate that only about half of all GA patients are diagnosed and seen by an eye care professional.
Meredith Kaya: And of those, an estimated 15% are currently being treated.
Meredith Kaya: GA patients are on an irreversible path to blindness.
Speaker Change: Encephalopathy has a significant impact on slowing disease progression and potentially preserving patients' vision for longer.
Meredith Kaya: We see tremendous opportunity over the long term, but expect the sales ramp to be more gradual going forward.
Meredith Kaya: Importantly, we continue to believe that FUVRI remains on track to become a blockbuster drug.
Speaker Change: Thank you. Thank you.
Meredith Kaya: Quickly touching on Europe, we were disappointed with the negative CHMP opinion despite multiple analyses showing that treatments with SIFO represerve visual function.
Meredith Kaya: We do not have plans to pursue EU approval further at this time.
Meredith Kaya: And then moving to Empaveli, we were extremely pleased to share the full results from the Phase III Valium study in C3G and primary ICMPGN at Kidney Week last month.
Meredith Kaya: I will let Caroline discuss these results further, but we believe MPAT-Ready has the potential to become a testing class treatment for these rare kidney diseases, redefining the current treatment paradigm for patients with C3G and ICMP-Gen.
Meredith Kaya: Thank you for watching. Bye bye.
Meredith Kaya: At Apenis, we have spent the last two decades investigating C3 as a therapeutic target because we believe in the significant benefit of targeting C3 as compared to other targets within complement.
Meredith Kaya: These positive, valiant results suggest, once again, that Apellis' C3-targeted therapies are particularly effective across multiple therapeutic areas, now including PNH, geographic atrophy, and C3G and ICMPGN.
Speaker Change: Thank you for joining us. Thank you.
Meredith Kaya: We received feedback from the FDA last week that our submission proposal has been accepted.
Meredith Kaya: which means that we remain on track to file our Supplemental NDA early next year in both C3G and ICMPGN based on our positive 6-month data.
Meredith Kaya: Importantly, the FDA did not require us to file with the full 52-week data. Our ex-U.S. partner, SOBE, expects to file a regulatory submission in the EU in early 2025, followed by a submission with the Japanese health authorities later in 2025.
Speaker Change: Thank you. Thank you.
Meredith Kaya: The Valiant data also unlock additional opportunities within nephrology that we are evaluating and plan to provide detail on soon.
Meredith Kaya: On the commercial front, Ambaredi generated $24.6 million in U.S. product revenue in P&H in the third quarter, up 3% as compared to the same period last year.
Meredith Kaya: The 97% compliance rate supports the substantial benefit that these patients are receiving.
Meredith Kaya: In closing, our strong fundamentals position us well for the future.
Meredith Kaya: Apedis has two commercial products, each with blockbuster potential, which are already making a meaningful difference in patients' lives.
Meredith Kaya: are emerging pipelines of exciting products.
Meredith Kaya: and we look forward to sharing more on this soon. We are on a clear path to profitability and continue to believe we can independently fund our core business.
Meredith Kaya: Thank you. Thank you.
Speaker Change: And with that, I will now turn it over to Adam to discuss our commercial activities.
Adam Townsend: Thanks Cedric, and good morning everyone. I will begin with Cyphovir. In the third quarter, we delivered approximately 84,500 commercial doses, a 7% increase compared to Q2.
Adam Townsend: and approximately 4,000 samples of SIFO-3.
Meredith Kaya: The growth in demand seen during the quarter reaffirms Cyphovry's leadership in the market.
Meredith Kaya: Cyfovery closed the third quarter with approximately 65% market share as defined by injections and approaching half of new patient starts. As of September, more than 2,200 sites of care have ordered Cyfovery.
Speaker Change: As Cedric mentioned, the increase in demand was offset by adjustments to our growth to net, including contracting, that affected overall net revenue.
Speaker Change: As a reminder, contracting with physician practices is common within the Buy and Build space.
Speaker Change: At the end of 2023, we made strategic contracting decisions to remain competitive that impacted SIFOVRI's average sales price, or ASP reimbursement, in the third quarter of 2024.
Speaker Change: We also recorded higher rebates this quarter due to some incremental contracting decisions that took effect on July 1st.
Speaker Change: While this quarter was particularly impacted, to be clear, we have not chased large rebates or deep discounts, nor do we intend to in the future.
Speaker Change: Our strategy has always been to maximize access to cyfovery for patients while preserving long-term economics.
Speaker Change: We recognize the importance of staying competitive and have balanced these economics with the efficacy that SIFO reoffers.
Speaker Change: Turning back to demand, we are encouraged by the continued demand growth for cyfoveryth, but we know there's more work to do to sustain this growth moving forward.
Speaker Change: To that end, we've launched several initiatives as part of phase two of our commercial strategy to help shift the dialogue with ECPs towards SIFOVI's robust efficacy profile.
Speaker Change: including its increasing effects over time, up to 42% in non-subfovial patients. Multiple analyses demonstrating preservation of visual function and well-documented safety.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: Key initiatives include leveraging medical congresses and other key forums to reinforce PSYFOVRI's unique benefits.
Speaker Change: actively engaging with younger retina specialists who tend to treat a higher share of new patients.
Speaker Change: expanding our engagement with non-injecting ECPs such as optometrists and general ophthalmologists so that patients with GA seek treatment with a specialist.
Speaker Change: generating new clinical data and real-world evidence to further reinforce CyphoGRI's clinical profile.
Speaker Change: We introduced the new injection needle, making the user experience even easier by reducing injection force, and we continue to educate payers on the strong value proposition for syphovirine.
Speaker Change: We are pleased to already see some early indications of positive momentum. For example, after seeing a slight decline in new patient share at the start of Q3, syphovery rebounded in the last half of the quarter.
Speaker Change: Closing the quarter approaching 50%.
Speaker Change: Additionally, market research shows the efficacy messages are resonating.
Speaker Change: Surveyed ECPs recall syphobias efficacy as the leading discussion topic from their last appellate interaction, up from 46% in April to 73% in September.
Speaker Change: And lastly, a large Medicare Advantage plan recently made syphovery the only preferred product on their formulary, effective January 1, 2025.
Speaker Change: This adds to the two large national PBMs that place Syphovery as the only preferred product on their commercial plans in July.
Speaker Change: Looking ahead, we plan to launch Phase 2 of our branded TTC campaign soon.
Speaker Change: which brings back Henry Winkler.
Speaker Change: This campaign is intended to educate patients on cyfovery's profile, increasing patient awareness and driving cyfovery conversations with ECPs.
Speaker Change: SciFo REIT's market share has been stable at roughly 65% since September.
Speaker Change: This, combined with the uptick in new patient share in recent weeks, suggests that our initiatives are starting to have an impact.
Speaker Change: While we are encouraged by the positive momentum, it will still take time for these to gain traction, which is why we must be prudent in our guidance for the remainder of 2024.
Speaker Change: Thank you.
Speaker Change: Market research shows that questions about safety continue to delay more meaningful discussions about the benefits of cyfovery and those benefits that are offered to patients.
Speaker Change: It can take at least six conversations with an ECP before the efficacy messages truly resonate.
Speaker Change: That said, our long-term outlook for syphovery remains strong.
Speaker Change: We have only scratched the surface of Syfo-Re's market potential, and there is a significant opportunity for further growth.
Speaker Change: We anticipate growth moving forward will be gradual, but with only two available therapies in a large category and no new competition expected for at least the next four years, we are confident Syfovia will remain the leading GA product in the U.S. for many years to come.
Speaker Change: Beyond Syphovre, I'm excited about the opportunity for Empavelli to expand into C3G and ICMPGN. We believe the commercial opportunity for these indications is significant.
Speaker Change: We estimate approximately 5000 patients in the US, but also believe that these diseases are likely underdiagnosed because there are no treatments currently available.
Speaker Change: Feedback from physicians has been resoundingly positive that the severity of these diseases warrants use of the most efficacious treatment option available.
Speaker Change: Across the board, nephrologists' feedback is that Empire Valley data are significantly differentiated from other compounds in development, with the enthusiasm among physicians exceeding even our highest expectations.
Speaker Change: If approved, we believe we are in a strong position to capture a significant proportion of this market and generate meaningful growth for Empaveli.
Speaker Change: Now, let me shift to Amphi Valley and P&H. In the third quarter, Amphi Valley generated approximately $24.6 million in U.S. net product revenues.
Speaker Change: Compliance rates remain high at 97% and the safety profile remains consistent with our previous updates.
Caroline Baumal: With that, I will now turn the call over to Caroline. Caroline?
Caroline Baumal: Thanks Adam, and good morning everyone. As Adam mentioned, we are starting to see multiple instances of meaningful real-world presentations. Reaffirming CyFoVR's robust efficacy
Speaker Change: And we expect the first paper from a third party on syphovirate to be published soon.
Speaker Change: These real-world data reinforce Cyphovir's unprecedented effects, adding to the largest body of evidence supporting Cyphovir treatment and allowing us to further strengthen our message around efficacy.
Speaker Change: Moving to Empavelli, the feedback on the full valiant data set that was presented at Kidney Week last month was remarkable.
Speaker Change: In these diseases, physicians are focused on three key markers of disease activity when evaluating a potential treatment.
Speaker Change: These are Proteuria, EGFR, and C3C staining.
Speaker Change: As detailed in our full data set, panxytococcaline showed positive effects on all three in just six months.
Speaker Change: This included a statistically significant 68% reduction in proteinuria with reductions observed as early as week four and effects that were consistent across all subgroups of patients.
Speaker Change: A stabilization of EGFR, a key measure of disease function.
Speaker Change: and a substantial reduction in C3C staining.
Speaker Change: There are no approved treatments for C3G or ICMPGN and the unmet need given the severity of these diseases is extremely high.
Speaker Change: The totality of the efficacy data from Valiant shows that pegcetacobalin rapidly, significantly, and consistently improved key outcomes for patients with C3G and ICMPGN.
Speaker Change: We are ecstatic about what the results mean for the patients, physicians, caregivers, and everyone else within the C3G and IC MPGN communities.
Speaker Change: Thank you for joining us. Thank you.
Speaker Change: Finally, we are continuing to advance our earlier stage pipeline, such as our C3-SIRNA that is currently in Phase I development, and our BEAM collaboration.
Speaker Change: We are excited to share more details about our pipeline programs with you in the future.
Speaker Change: I will now turn the call over to Tim for a review of the financials. Tim?
Tim: Thank you, Caroline. I will now provide an overview of our financials.
Speaker Change: Additional details are available in the press release that we issued earlier this morning.
Tim: Total revenue for the third quarter of 2024 was approximately $197 million, including $152 million in SIFO REIT, and $24.6 million in MVA US Net Product Revenue.
Speaker Change: This compares with $110 million in total revenue in the third quarter of 2023.
Speaker Change: Turning to the rest of the P&L for the third quarter. Cost of sales was $33.6 million. R&D expenses were $88.6 million.
Speaker Change: SG&A expenses were $122 million and we reported a net loss of $57.4 million.
Speaker Change: Cash operating expenses, which exclude stock-based compensation and depreciation and amortization, were approximately $180 million for the third quarter.
Speaker Change: We continue to expect total cash operating expenses in 2024, inclusive of R&D and SG&A expenses, to be less than our total cash expenses in 2023.
Speaker Change: As Adam mentioned, there was an increase in cyphovirus growth to net percentage this quarter as compared to previous quarters.
Speaker Change: This is a result of two factors.
Speaker Change: The first was due to contract decisions resulting in higher discounts to physicians.
Speaker Change: The second was related to a true-up of certain fees from prior quarters included in gross to net in Q3.
Speaker Change: Looking ahead, we expect growth to net to continue to be impacted by ASP erosion and required contracting.
Speaker Change: But we expect that erosion to be modest.
Speaker Change: and not at the rate we saw in the third quarter. We now expect growth to net through 2025 to be in the low to mid-20% range.
Speaker Change: With $397 million in cash and cash equivalents as of September 30, we remain confident in our strong financial position.
Speaker Change: We expect our existing cash combined with our future product sales to be sufficient to fund our core business to positive cash flow.
Speaker Change: I will now hand the call back over to Cedric for closing remarks.
Cedric: Cedric. Thank you Tim.
Cedric: We are focused on building out the GA market and realizing the opportunity in front of us in C3G and ICMPGN.
Cedric: With two potentially blockbuster commercial products, a pipeline of innovative programs in development, and a strong financial position to support the business, we are confident in our ability to continue to create significant value for our patients and our shareholders.
Cedric: Thank you.
Speaker Change: With that, we will now go over to the Q&A session.
Speaker Change: Thank you for joining us. Thank you.
Speaker Change: Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please limit yourself to one question and one moment for our first question.
Speaker Change: Our first question will be coming from John Miller of Evercore. Your line is open.
John Miller: Hi guys, thanks so much for taking the question. I would love to, I would love to spend my one question talking about the evolution of market share in 3Q and beyond. Obviously we all heard your competitor talking about increased market share in 3Q and their expectations for, well in their mind, continuing dominance from here. So what are the pushes and pulls, you versus them, on who's going to end up with the dominant market share and to what extent do you think that the actions you're taking to drive patients into the retina physician practice, you know, out of those ophthalmology offices, to what extent are those going to deliver patients to you as a
John Miller: opposed to the competitor.
Speaker Change: Thank you, John. Great hearing you. So, look, as we've always said,
John Miller: Thank you. Bye.
Speaker Change: the benefit of Cyfovir lies in its differentiated efficacy profile, right? It is also the only drug that has shown increasing effects over time, that has shown efficacy with every other month dosing both in foveal and subfoveal patients.
John Miller: That differentiated efficacy profile is really what stands out and what we will be building the market on now. So Adam, I'll hand it over to you today to add a couple of thoughts.
Adam Townsend: Yeah, thanks John. So obviously as we're heading into year three of the launch we're now calculating market share based on injections versus based on patients.
John Miller: We actually believe this is similar to the way our competitor calculates market share. We think it's a really important metric and we believe that we are a market share of 65%.
John Miller: Now, if we were still to use a market share based on patients, as we have previously reported, that market share would be approximately 70%.
John Miller: Injection share incorporates factors such as dosing frequency, bilateral usage, compliance, and active patients. That's why we think it's a really valuable metric. Now...
John Miller: As per new patient starts, after seeing a flight decline in new patient starts at the start of Q3.
John Miller: Sifo-Ru rebounded in the last half of the quarter, closing the quarter approaching 50%.
John Miller: The reason, we believe, is that this is an efficacy-driven market, and we have the strongest efficacy profile, and we're executing our plan to bring new prescribers and young prescribers into the market.
John Miller: So, does that answer your question?
Speaker Change: Yeah, that helps. Thanks very much. I'll hop back in the queue.
Speaker Change: And one moment for our next question.
Speaker Change: Our next question will be coming from Tazeen Ahmad of Bank of America. Your line is open.
Tazeen Ahmad: Hi guys, good morning and thanks for taking my question. I maybe wanted to stay on topic with Cyphovry. Your competitor has been wanting, it seems, to provide a lot of detail about the cadence of their launch.
John Miller: providing a first stab at guidance and then revising it at their last call upward. I know a question that investors had is when appellants would feel comfortable providing guidance on sales, and I think that's also tied to how people think you think the rate of growth of the market is going to be. I think there's some questions.
Speaker Change: What are you feeling that you need comfort on in order to provide, let's say, a full-year sales guide on a go-forward basis? And how are you thinking that's going to be reflected about how you're thinking about the size of the overall opportunity? Thanks.
Speaker Change: Thank you for joining us. We hope you enjoyed the program. If you have any questions, please feel free to contact us.
Speaker Change: Thank you, Tazine. We're considering providing guidance for next year. We haven't made a decision on that yet. You know, a couple of things. We have these initiatives we've discussed, and there are certain market dynamics that we think will settle out over time. We'd like to see how those evolve.
Speaker Change: And for the moment right now, we're focused on fortifying our position as a market leader and growing the GA market overall, but once said, you know, I think we feel we have
Speaker Change: And one moment for our next question.
Speaker Change: Our next question will be coming from Anupam Rama of J.P. Morgan. Your line is open.
Anupam Rama: Thank you. Thank you.
Anupam Rama: Hey guys, thanks so much for taking the question.
Anupam Rama: Do you think your sales team is sort of right sized to get to that next tier of docs that you're talking about in terms of prescribing cyfovery and a complement inhibitor and any trends we should think about in terms of sampling for that next tier of physicians relative to what you kind of disclosed in 3Q. Thanks so much.
Anupam Rama: Hey Anupam, it's Adam. Thanks for your question. So we analyze our sales team and our infrastructure on a regular basis based on our target audience and at the moment we believe that we have the right feel for structure to execute.
Anupam Rama: and grow a depth and a breadth strategy across the market.
Anupam Rama: We have made a couple of new initiatives to drive more patients and patient referrals, so we are in the process of putting an ophthalmology field team in place to
Anupam Rama: educate on geographic atrophy for non-injecting ophthalmologists to help refer patients to cyfova users and we also have a digital virtual optometry team to also fuel more and more
Anupam Rama: Referrals to Injecting Retina Physicians
Anupam Rama: As it comes to sampling, obviously with our commercial vial demand growing at 7%, and given that this is a buy and build commercial model, we now have a J code, we have well-established payer coverage.
Anupam Rama: significant role at the moment but we still believe that samples will make up approximately 5% of CyFovery's total file demand moving forward. You would expect that new prescribers will use samples as part of this market as they get more and more experience of CyFovery.
Speaker Change: And one moment for our next question.
Speaker Change: Thank you. Thank you.
Speaker Change: Our next question will be coming from Salveen Richter of Goldman Sachs. Your line is open.
Speaker Change: Thank you.
Salveen Richter: Thank you, good morning. You noted that market growth is now being driven by the next group of retinal specialists. Could you just
Salveen Richter: Elaborate on who these specialists are and how large that that group is and If I could just also just go back to this, you know flat to modest revenue growth in 4Q Can you just help us understand what this accounts for in terms of growth to net?
Salveen Richter: Thank you.
Speaker Change: Thank you so much, David. I will answer the first part of the question and then hand it over to Tim.
Speaker Change: So I think the the retina community, you know, and I think this is not...
Salveen Richter: Just because the retina community but any type of launch you have the initial wave where you have you know patients that have been you know Have been waiting
Speaker Change: on the sidelines for something to be approved with retina doctors that are enthusiastic to be first movers. And then you have, you know, a whole swath of, you know, the next wave of physicians as well as patients.
Salveen Richter: in a disease that is slowly progressing. You know, that kind of wait for the dust to settle of that first wave to then engage and slow down this devastating disease.
Speaker Change: trainees and younger retina doctors also have only been in practice for a limited time so have maybe not seen the full effects of geographic atrophy on their patients but they're very very motivated to learn about geographic atrophy and how to treat these patients.
Speaker Change: So, we really would like to make sure that we don't forget any of these new young trainees and with more and more physicians training in retina that they have available to CyFoVery.
Speaker Change: In terms of the guidance that incorporates our gross net that I mentioned in the prepared remarks
Speaker Change: which was, you know, going forward through 2025, we believe that Gross Net will be in the low to mid-20s.
Speaker Change: You know, obviously, this quarter, we had a relatively large growth-to-net jump. That's a function of certain launch dynamics that all came together in this third quarter. So we don't expect anything remotely like this going forward and growth-to-net to evolve in a more modest sense as ASP sort of steadily erodes, as we discussed.
Speaker Change: And one moment for our next question.
Speaker Change: Subs by www.zeoranger.co.uk
Speaker Change: Our next question will come from Yigal Notremovitz of Citigroup. Your line is open.
Yigal Notremovitz: Sounds like there was something related to maybe a discount trigger in the contract related to order volume
Yigal Notremovitz: that may have just all, you know, lined up in the third quarter, if you could clarify that. And then regarding the duration and persistence of therapy, I'm curious if you've collected any data, Adam, in terms of the percent of patients that are staying on the therapy.
Yigal Notremovitz: and then the percent that may be taking a break or don't return on schedule. Thank you.
Speaker Change: So, sure. Thanks, Yigal. I will start with the gross to net part of the question.
Speaker Change: So, the impact in the third quarter was really a result of three things. I know we mentioned two in the prepared remarks, but I'll dig in and divide this first one into two parts.
Yigal Notremovitz: This ultimately sort of created the perfect storm for just this quarter. The first one, which is again these two parts, is the strategic contracting decisions that we actually made in late 2023. That resulted in a lower ASP starting in Q3.
Speaker Change: Beyond that, we had certain rebates provided as a result of incremental contracts within the third quarter.
Speaker Change: And then the final piece, which is not insignificant, was a true-up of certain fees and expenses from prior quarters. So, as I said, we now expect growth to net through 2025 to be in the low to mid-20% range.
Speaker Change: Hey Gal, it's Adam. You also asked a question on discons. So obviously at the moment we're happy with the feedback from physicians on patient adherence.
Speaker Change: We're seeing persistence and discontinuation rates similar to what is seen with the anti-VEGFs in wet AMD.
Speaker Change: A key driver of compliance is patient motivation. These patients are really committed to staying on drug to preserve their vision.
Speaker Change: Every other month dosing provides meaningful flexibility to those patients and we believe that also drives strong compliance with the efficacy you also see with every other month dosing.
Speaker Change: Thank you.
Speaker Change: And one moment for our next question.
Speaker Change: Our next question will be coming from Steve Seedhouse. Raymond James, your line is open.
Speaker Change: Hi, thank you. This is Nick on for Steve. Just a quick one for us. Are you able to comment on which renal indications you like for testing up the belly next? Or do you have a timeline set for when you'd articulate further clinical development in kidney? Thank you.
Speaker Change: Thank you so much for that question. So, not yet. It's a short answer.
Speaker Change: But, you know, we're working hard and in the next couple of months we will provide more clarity.
Speaker Change: Thank you. Thank you.
Speaker Change: Great, thank you.
Speaker Change: And one moment for our next question.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: Our next question will be coming from Phil Nidde of TD Cohen. Your line is open.
Phil Nidde: Thank you.
Phil Nidde: Morning. Thanks for taking our question. One follow-up and then one extra question from us. Tim, you've been very clear where GrossNet's going. I'm still not entirely clear where GrossNet actually was in Q3. Could you quantify what the GrossNet was in Q3?
Speaker Change: And then, in terms of going forward, there's been some reports of vasculitis for IZRV in the adverse event database at the FDA. Has that had any impact on prescribing to the market from what you've seen? Curious to get your feedback from your feet on the street on those reports. Thanks.
Speaker Change: Yeah, thank you, Phil. So, you know, we previously had guided from the beginning of the launch
Speaker Change: of gross to net in the 10 to 20 percent range and we had sort of earlier on been kind of in the you know middle ish of that range and in this quarter because of what we you know described as the perfect storm we were at the high end of that and that's about all I'm probably going to give in terms of accuracy there.
Speaker Change: Got it, thank you. Thank you, sorry.
Speaker Change: Thank you so much.
Speaker Change: Bill, do you have a follow-up to that? No, no, I was just saying thank you. That's very helpful.
Speaker Change: As it relates to vascular, so we're not going to comment on our competitor's safety, but again, as we mentioned earlier, we believe that the only and real difference between the two products is on the efficacy profile, where Sanfovri stands out head and shoulders. We're the only product with increasing effects over time.
Speaker Change: with every other month dosing and with both foveal and sub-foveal patients included in our data set.
Speaker Change: Great, that's helpful. Thank you.
Speaker Change: Thank you.
Speaker Change: And our next question will be coming from Akash Tiwari of Jeffries. Your line is open.
Speaker Change: Hi, this is Cathy on Furakash.
Speaker Change: It seems like your competitor is spending on promotional efforts for iZervey with an increase in SG&A spend associated with iZervey of $127 million for six months of sales of $185 million.
Speaker Change: So, during a similar time period for SISO re-launch, around one year of approval, what was your return on investment? And then in the long term, what are the ROI levels you're targeting, and more specifically for your DTC spend in 2025? Do you think it'll be much different from the spend this year, since you're investing in DTC this year already?
Speaker Change: Thank you.
Speaker Change: Yes, so thank you. I'll quickly start out and I'll turn it over to Adam.
Speaker Change: We don't actually break out exactly what we're spending specifically on commercial VersaFovery. Obviously, we work hand-in-hand with Adam on, you know, those amounts, and we really haven't, you know, as a finance group, haven't really constrained those efforts. We've just tried to be as efficient as possible based on things like MetrixLink ROI.
Speaker Change: And for that answer, I'll turn it over to Adam.
Adam Townsend: Yeah, thanks Kathy. So we look at every initiative from an ROI perspective So we we analyze it internally on a regular monthly cadence and take a big initiative like disease state education pivoting to DTC with Henry Winkler
Adam Townsend: We do a robust ROI analysis on that. We, you know, we actually believe that that's a really, really sound
Adam Townsend: sophisticated business approach for us and it drives many many more patients in so it's a very positive ROI for DTC so that's the type of analysis we do.
Speaker Change: This is a really, really big market, and we've only just started to scratch the surface. So the more effective we are in executing our plan and balancing what that looks like from an ROI perspective, the better the results will be.
Speaker Change: Thank you.
Speaker Change: Okay, great. Thank you so much.
Speaker Change: And one moment for our next question.
Speaker Change: Our next question will be coming from Ellie Murrell of UBS. Your line is open.
Ellie Murrell: Hey guys, thanks for taking the question. I want to talk a little bit more about the volume trends that you're seeing.
Speaker Change: Specifically, you said that you expect the sales ramp to be more gradual going forward. Just in terms of vial shift, does that mean we should expect similar vial growth in 4Q as in 3Q? And just any more details you can give us on the volume trends you're seeing so far in October? Thanks.
Speaker Change: Thank you.
Speaker Change: So I think that
Speaker Change: I think that we did get some guidance in the prepared remarks on the vial growth and we sort of said, you know, mid-percentages roughly is what to expect, low to mid-percentage vial growth. Right? So beyond that, I don't think we're planning on guidance for the quarter.
Speaker Change: Okay, thanks.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: And our next question will come from Annabelle Samimi of Stiefel. Your line is open.
Annabelle Samimi: Thank you. Thank you. Thank you.
Annabelle Samimi: Hi, thanks for taking my question.
Speaker Change: push to get more. What are you seeing in terms of dynamic referrals? Like when a patient comes into the retinal specialist from the ophthalmologist or the optometrist, are they coming in for monitoring now or treatment? Are they typically severe enough to treat or are they still in a watchful waiting mode?
Speaker Change: And then you mentioned six conversations to convert a retinal specialist who wasn't an early adopter. Does this get worse as these patients from the optometrists and the ophthalmologists come in because there may be less...
Speaker Change: severe. So I just want to understand the dynamic there of what types of patients you're starting to see from those specialists, from those, from that group.
Speaker Change: Thank you, Abel. So that's a really important and good question, right? So I think what was actually really great in the last few months is that kind of the
Speaker Change: people not knowing how to think about efficacy, how to think about safety, etc. That is slowly dissipating. We're going to end up next year in a situation where, with a lot of data available to us, both from our trials, but now also as Caroline alluded to, from the real world and that data looks incredible.
Speaker Change: The states where physicians and patients can make an educated decision on treatment. And that's something that we really look forward to.
Speaker Change: Caroline, I don't know if you want to add something to that.
Caroline Baumal: Sure, I can add from what my colleagues are telling me and from what I'm seeing myself.
Caroline Baumal: You know, this is a novel mechanism of action and we have a new treatment paradigm.
Caroline Baumal: And there's still many patients who are coming into the office who are always having patients referred with macular degeneration.
Caroline Baumal: of all types, whether it's early or they're patients who have later stages of the disease. And so we're still seeing a whole host of different types of patients.
Caroline Baumal: I think that physicians are having conversations with their patients and they really center around efficacy. Now, of course, whenever we have a treatment
Caroline Baumal: Safety also plays a role, but patients are really driven by efficacy and the flexibility of dosing with six injections a year.
Caroline Baumal: And then I think the other thing that moves the needle for physicians
Caroline Baumal: is we have a lot of long-term, robust data. In addition to Gale, where patients have already had five years of full treatment,
Caroline Baumal: We have a real-world garland study.
Caroline Baumal: And then there are four real-world studies done unrelated to a pellet. And that really, in many ways,
Caroline Baumal: speaks more to physicians. One of those studies has over 12,000 patients and those studies have shown robust reductions in GA lesion growth, photoreceptor preservation, and all of the things that we have found. So just confirming our data.
Speaker Change: Go ahead Adam. Hey Annabelle and Salim, just on the final part of your question, so we are educating optometrists and ophthalmologists so that the patient also is aware as they progress to a retina physician about their disease and what treatment could possibly look like.
Caroline Baumal: We are actually hearing a lot from the field that, you know, patients go in saying, I want the Henry Winkler drug and that type of activity. So these patients are educated and are learning about the disease.
Caroline Baumal: We find it takes between six to nine conversations to get a new physician on board with the efficacy and the benefit-risk for syphovary. So we have the capability of getting time with these physicians. Access is not a problem and we'll continue to execute as flawlessly as we can.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question will be coming from Francois Brissevoix of Oppenheimer. Your line is open.
Francois Brissevoix: Thank you. Thank you. Thank you.
Speaker Change: Hi, this is Dan on for Frank. Thanks for taking our questions. Just a quick one from us. I'm sorry if you touched on this, but the uptick in new patients in the recent weeks.
Speaker Change: Did you give us any color in terms of what factors may have contributed to that, anything around that recent uptick? Thanks.
Speaker Change: Thank you.
Speaker Change: We did dip below and we're below 50% and we're back and stable at approximately 50% and that uptick has been stable. I think it's down to us executing our plan on the benefits that the efficacy that syphophy can bring, increasing effects over time.
Speaker Change: flexible dosing, well-documented safety and the significant real-world experience and I think that's starting to resonate with our current prescriber base but also all of these new physicians that we're targeting so we will continue to execute as flawlessly as we can.
Speaker Change: Thank you. Bye.
Speaker Change: And one moment for our next question.
Speaker Change: Our next question will be coming from Douglas Hale of H.A. Wainwright. Your line is open, Douglas.
Douglas Hale: Hi, good morning. Thanks for taking the questions.
Douglas Hale: Maybe, Adam, this is a follow-up on that. I'm just curious.
Douglas Hale: in terms of if you could provide some color in terms of the messaging and what resonated with physicians to drive.
Douglas Hale: the rebound and share. Was it really that physicians had simply weren't aware of some of these efficacy differentiation points? Had they lost focus on it? Perhaps were they, you know, sort of under a mistaken impression on the rate of vasculitis events?
Douglas Hale: Thank you. Bye.
Speaker Change: Yeah, great question, Doug. We did see a lot of what you've described. So, we have simplified our efficacy messages so that we can get them across field-based interactions and digital interactions around the strong efficacy up to 42% in non-sarcofobial patients, flexible dosing, and well-documented safety.
Speaker Change: We have been very transparent on our safety.
Douglas Hale: and we have communicated that to physicians to make sure that people understand the fact base behind our efficacy as well as our safety.
Speaker Change: And that's what we will continue to hit. And that's, you know, I think part of the plan of what's leading to the stability that we're seeing in the market. Caroline, I don't know if you want to add anything from a physician perspective.
Caroline Baumal: Thank you, Adam. I think another important thing is that we're very aligned with the REST Committee and the ASRS and that is an organization that retina physicians run by retina physicians. It's their organization.
Caroline Baumal: Physicians really take confidence in that, you know, we're working with them, the rate hasn't changed, and they've seen no unsuspected events. So that, based on the real-world data that's come into play, has really increased confidence amongst retina doctors.
Speaker Change: And I guess this is a follow-up, I mean between all those factors that you mentioned and Caroline, I mean was there one in particular that you thought was perhaps or you've gotten feedback was misunderstood in the marketplace and as your reps have gone out you know sort of has been corrected?
Speaker Change: Thank you. Bye.
Speaker Change: Yes, we've been consistent that we believe that this is a market that's going to be driven on efficacy.
Speaker Change: And we get some incredibly positive recall data and knowledge from physicians on the efficacy messages once we've hit them. And it does take a little bit of time for them to resonate. So we think efficacy is changing the curve.
Speaker Change: Okay, great. Thank you so much.
Speaker Change: And one moment for our next question.
Speaker Change: Our next question will be coming from Lachlan Hanbury-Brown of William Blair. Your line is open.
Lachlan Hanbury-Brown: Thank you.
Lachlan Hanbury-Brown: Hey, thanks for taking the question. We've already had a few questions this morning around the October trends for syphovirae. It sounds like you've recovered and you've etched your chair and you're seeing decent growth but you're also guiding to sort of low to mid single digit.
Speaker Change: volume growth in the fourth quarter. So can you just sort of reconcile some of those October trends that you've talked about with the full quarter commentary?
Speaker Change: I'll just start out and then I'll turn it over to Adam. What Adam said is obviously what we've seen. We've seen new patient share approaching 50%. We've also seen, as you can see, the market is still growing, but it was growing at a little bit of a slower rate in the last quarter or so.
Speaker Change: But I think our confidence
Speaker Change: Over the long term, it's quite strong that the efficacy profile of syphovery will dominate over time. But in the short term, these dynamics take some time to take effect. We have certain initiatives we're putting in place like DTC and others that we've described that Adam talked about.
Speaker Change: But those don't have an immediate impact, so from the perspective of, you know, what we can see this quarter, I think it was for it to take that approach and to say, look, you know.
Speaker Change: Low to mid-single-digit growth in a bio basis and flat to moderate growth on a revenue basis. I don't know if you want to comment more on this. No, I think you said it really well. Thanks.
Speaker Change: Thank you.
Speaker Change: Our next question will be coming from Derek Archila of Wells Fargo. Your line is open.
Derek Archila: Hey guys, thanks for taking the questions. So just, I wanted some help reconciling your comments on reaching profitability with current cash.
Derek Archila: while anticipating flat to modest sales growth. I guess, you know, what type of growth does that imply for SIFO-RE in 2025 and beyond? And I guess maybe on the flip side, what levels of OPEX?
Derek Archila: And then another just to squeeze in, I guess, should we assume the sale of receivables is part of that funding strategy to profitability? Thanks.
Speaker Change: Sure, thank you. That's a great question.
Speaker Change: So look, we ended the quarter with about $400 million in cash. That included a sale of roughly $57 million in receivables. So that was, you know, obviously you've read the queue, so congratulations. Thank you, Derek. When you look at our operating expenses on a cash basis, if you exclude one-time items of about $15 million on the COGS line,
Speaker Change: And then our cash outbacks of roughly 180 on the SG&A and R&D lines. You get to the fact that we're basically neutral on the net revenue to cash operating expenses basis and beyond that we had net interest of around 10 million. So you're looking at kind of 10 million in
Speaker Change: operating burn and the rest of this sort of cash usage relates to working capital. And for that we put in place this ability to monetize our receivables a little bit earlier because we extend these receivables quite significantly as much as five months, four to five months.
Speaker Change: So from our perspective, that's really just bringing in cash that's ours a little bit early. But you can see from an operating level...
Speaker Change: We are pretty much nearing, if not around, breakeven. So, you know, our perspective is it doesn't take much growth to make us cash flow positive. And obviously we have a lot of faith in the long term of this product, as we've talked about. We also have C3G coming on.
Speaker Change: We don't see any immediate need or risk from a capital perspective.
Speaker Change: Got it. Thank you.
Speaker Change: In one moment for our next question.
Speaker Change: Thank you.
Speaker Change: Our next question will be coming from Beren Amin of Piper Sandler. Your line is open.
Beren Amin: Yeah, hi guys. Thanks for taking my questions. Can you maybe talk about how many switches you're seeing from iSurvey as part of the new patient share growth that you're experiencing in the last half of Q3?
Speaker Change: And for 2025, what's the SG&A increase that we should expect for C3-MPGN? I think Novartis mentioned that they have about a 100-plus person sales force.
Speaker Change: dedicated to nephrology. Thank you.
Adam Townsend: Hey Barron, yes it's Adam. So switching first on on Syphovir, so obviously our data analysis suggests that switching does occur but we actually think it doesn't happen that frequently so
Speaker Change: Hence, we're executing our plan to grow depth and breadth in accounts and bring on new young prescribers to our business. We think that's what's really going to move the needle forward.
Speaker Change: When it comes to infrastructure for the nephrology indications,
Speaker Change: So we're doing that homework now. We obviously have a really small but mighty PNH infrastructure, which we will leverage to move into the kidney. So we're doing our homework there to look at the target population and what field force structure that we would need to implement.
Speaker Change: to compete to get those patients with the great profile that everybody is showing.
Speaker Change: Thank you. And maybe adding one thing to that, or two things to that, on the switches, you know, there are switches occurring in both directions, right? I mean, as again, this field will settle and there's a couple of things still that, you know, we need to see materialize the next couple of months.
Speaker Change: and go in both directions. The other aspect is, as it relates to C3G and ICMPGN,
Speaker Change: Again, reiterating the fact that we were not asked to submit the 12-month data.
Speaker Change: But the six-month data was sufficient.
Speaker Change: We had a pre-NDA meeting that was scheduled with our team in Washington, meeting got cancelled because all questions were answered. So again, very exciting program for us that we think will add meaningfully to what we are doing.
Speaker Change: Great, thank you.
Speaker Change: And one moment for our next question.
Speaker Change: Our next question will be coming from Lisa Walter of RBC. Your line is open.
Lisa Walter: Thank you. Thank you.
Lisa Walter: Oh, great. Thanks so much for taking my questions. Maybe just one on cyphovir and given the recent negative CHMP opinion and also your competitor withdrawing from filing in the EU, how are you thinking about the possibility of potential approval in other ex-U.S. geographies, particularly the U.K., Australia, Canada, Switzerland?
Speaker Change: And also, beyond those four countries, are there any other large foreign markets that are also on your radar? Thanks for taking the question.
Adam Townsend: Hey Lisa, it's Adam. Yeah, thanks for your question. So, obviously we still progress with the UK, Switzerland, Canada and Australia. Those are countries that are outside of EMA's guidance. They used to be
Speaker Change: within something called the Access Consortium, so we continue to have positive and robust conversations with those geographies.
Speaker Change: We also will move forward in areas where the U.S. file is required, so we've started to build a lean infrastructure in Brazil to get ready for those regulatory interactions.
Speaker Change: And we have distributors who will help partner with us to get to other smaller markets where the U.S. filing is accepted. So, we still see a really large unmet need outside of the U.S. when it comes to geographic entropy, and we're executing country by country.
Speaker Change: Thank you.
Speaker Change: Got it. Thanks so much.
Speaker Change: And one moment for our next question.
Speaker Change: Thank you. Bye.
Speaker Change: Our next question will be coming from Greg Harrison of Scotiabank. Your line is open.
Greg Harrison: Hey, good morning. Thanks for taking the question.
Greg Harrison: Looking at the feedback from ASN, you know, everything was was very positive there. Are you able to provide any additional color on physician feedback now that they've had some time to digest the data from the conference? And how are you thinking about your competitive positioning in those indications in the shorter and longer term? Thanks.
Speaker Change: Thank you so much, Greg. Thank you for asking a question about the kidney, something we're really excited about. And to your point, it was a very pleasant conference for us to attend.
Speaker Change: You know, the reality here is that if you are a teenager with C3G or ICMPGN and with the data that we have, you know, we believe that you have an opportunity to never have to worry about being on hemodialysis or requiring a transplant.
Speaker Change: think about that, right? I mean that is what these data really represent.
Speaker Change: So really excited about this competitively, as I mentioned before, you know, we are
Speaker Change: We have a very different profile on three important endpoints, on protein embryo reduction, of course, but also on EGFR stabilization, and importantly, on C3C staining, where we saw this dramatic effect.
Speaker Change: and Caroline, if you want to add something to that.
Caroline Baumal: Sure, thank you. Well, it was my first nephrology meeting and I can say across the board the clinicians were so excited about these findings.
Caroline Baumal: I mean to see this sort of effect is is really remarkable and I think one thing that was really important for them was that the effects started as early as four weeks.
Caroline Baumal: in these patients.
Caroline Baumal: And, you know, as a physician, why, you know, wait for kidney disease to get worse?
Speaker Change: To get worse, it might get worse to the point that it's irreversible, right? And these patients are often young in our studies, the mean age for patients in their 20s. So they were really excited to give them something that worked and worked quickly and could prevent them from having a negative outcome.
Speaker Change: So, across the board, everyone was very excited for this.
Speaker Change: and one more.
Speaker Change: Thank you. Bye.
Speaker Change: One moment for our next question.
Speaker Change: Thank you. Bye.
Speaker Change: And our next question will be coming from John Miller of Evercore. Your line is open.
Speaker Change: Again, John Miller of Evercore, your line is open.
Speaker Change: Moving forward to our next question.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: Our next question will be coming from Greg Stabenow of Mizzou Health Securities. Your line is open.
Greg Stabenow: Good morning. Thanks for taking my question. My question is on your longer term and perhaps aspirational view
Greg Stabenow: around potential peak penetration of the complement inhibitor class. You've been great about providing granularity on current penetration, which I believe you said is...
Greg Stabenow: Earlier, it might be at about 15%, but longer term, where do you think 15% can go and how long do you think it might take to get there? Thanks.
Speaker Change: Thank you, Greg.
Speaker Change: Well, I think that no one should be surprised of this treatment and our
Speaker Change: Patients are only getting older, and these patients come in, whether it's for AMD, for cataract, we have so much education that we can do, not just with optometrists, but across the eye care provider market, which is more than just optometrists and retinopathy.
Speaker Change: Thank you. Thank you.
Speaker Change: Our next question will be coming from Laura Chico of Wedbush Securities. Your line is open.
Laura Chico: Good morning. Thanks very much. Two clarifications for me. Just following up on the cash runway guidance, just wanted to clarify, does that incorporate a C3G launch and revenue contribution? And then second, I think I might have missed it, but the average number of injections per patient, how has that changed over the course of the launch here? Thanks very much.
Speaker Change: Thank you very much Laura. I'll take obviously the first question. It absolutely does. You know the incremental cost for a C3G launch would not be massive in terms of expenditure relative to where we are and you know so that absolutely does.
Laura Chico: Hey Laura, it's Adam. To your second part of the question, so every other month dosing or that flexibility to push to every other month dosing has been really stable at 80 to 90 percent of all of CyfoBreeze prescriptions.
Laura Chico: Physicians and patients believe in the efficacy and the flexibility of every other month's dosing. So we expect that to, you know, stay the same as we move forward.
Speaker Change: One moment for our next question.
Speaker Change: Thank you for joining us.
Speaker Change: Our next question will be coming from John Miller. Your line is open.
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John Miller: Hi, guys. Thanks for taking my follow-up here. I'd love to ask more on the kidney indications.
Speaker Change: How do you expect, obviously it's a little early to discuss eventual label, but
Speaker Change: Given you've got data in C3G, ICMPGN, both pre- and post-transplant, how do you expect your potential label to look relative to Novartis' considering the differences in trial design? And do you expect that, you know, proteinuria efficacy differences aside, is the patient population going to be materially broader for you guys?
Speaker Change: Thank you, John. We're not going to comment on what we expect in the label, but to your point, we studied pediatric adults.
Speaker Change: pre-transplants, post-transplants, C3G and ICMPGN and all levels of C3 concentration in the blood, right? I mean, our competitor studied only patients with C3G, only in adults, only pre-transplants, and only in patients that had C3 depletion.
Speaker Change: So it's really a very...
Speaker Change: narrow population compared to what we studied in Valiant where across the board we saw the same efficacy profile and again
Speaker Change: The benefit of being able to file with the six-month data is a reflection of the robustness.
Speaker Change: and the quality of what we were able to establish. So again, we believe that this is a treatment that may offer the possibility to an adolescent to never have to worry about hemodialysis or a transplant.
Speaker Change: And there are at least 5,000 patients, we believe, in the U.S. with this condition, of which already 1,000 to 1,500 are transplanted and at risk of relapsing.
Speaker Change: So, really important indication, and we believe a tremendous first line and all-encompassing solution for these patients.
Speaker Change: And I would now like to turn the call back to Cedric for closing remarks.
Cedric: Thank you so much and thank you everyone for joining us this morning. If you have any follow-up questions feel free to contact Meredith and we look forward to speaking with many of you today. Thank you so much.
Speaker Change: And this concludes today's conference. Thank you for your participation. You may now disconnect.
Speaker Change: Thank you. Bye.
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