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Operator
Ladies and gentlemen, thank you for standing by and welcome to Appellee's second quarter 2021 financial results conference call. At this time, all participants are on a listen-only mode. After this speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press the star then the one key on your touch-tone telephone. Please be advised that today's conference may be recorded. If you recall all of your assistants, please press star then zero. I would now like to hand the conference over to your speaker host, Meredith Kaya, Senior Vice President of Investor Relations. Please go ahead.
Appellee
Good afternoon, and thank you for joining us to discuss Appellus' second quarter 2021 financial results. With me on the call are co-founder and Chief Executive Officer, Dr. Cedric Francois, Chief Commercial Officer, Adam Townsend, Chief Medical Officer, Dr. Federico Grossi, and Chief Financial Officer, Tim Sullivan. Before we begin, I would like to point out that we will be making forward-looking statements that are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. Now, I'll turn the call over to Cedric.
Cedric Francois
Thank you, Meredith. And good afternoon to everyone joining us today for our conference call. Also, a quick welcome to Meredith, who joined Apedis earlier this month and will be leading our investor relation efforts. The second quarter was an exceptional period for Apedis, highlighted by the FDA approval of Empaveli or Pexetacoplan, which is the first targeted C3 therapy. Empaveli was approved with a broad label for the treatment of adults with paroxysmal nocturnal hemoglobinuria, or PNH, and it represents the first new class of complement medicine in nearly 15 years. The approval of Empaveli was a tremendous achievement for the PNH community and for Atelis, and I am very proud of our team for advancing this transformational medicine. Our commercial launch is off to a strong start, and our chief commercial officer, Adam Townsend, will share additional details shortly. The Empaveli approval was quickly followed by more good news, with positive results from the Phase III PRINCE study of our targeted C3 therapy in treatment-naive PNH patients. Together with the Pegasus data, the PRINCE results reinforce the potential for Empaveli to elevate the standard of care for all patients with PNH. And PNH is only the start of what is possible by targeting C3. In June, we hosted an R&D day where we showcased our growing pipeline across rare disease, neurology, and ophthalmology. Our ambition is to be a global leader in complement over the long term, and we unveiled multiple new molecular entities across several modalities to deliver on that goal. In addition to advancing Empatheti in four registrational programs with our partner SOBI, We plan to transform the treatment of rare, complement-driven diseases by developing new product candidates for existing and new indications and further enhancing the patient experience. In neurology, where C3 plays a key role in a wide range of neurodegenerative conditions, our world-class research team is pioneering targeted C3 therapies to help patients with these devastating diseases. And in ophthalmology, where we aim to be number one in the retina, we look forward to the phase three results from pexetacoplum in geographic atrophy, or GA. In addition, we are advancing novel molecular entities for GA, wet AMD, and intermediate AMD. At our R&D day, we also announced an exclusive research collaboration with Beam Therapeutics, to apply BEAM's proprietary base editing technology to discover novel treatments for complement-driven diseases. Complement is a new frontier for base editing, and we look forward to working together with BEAM. We will explore base editing silencing and other approaches that may have the potential to modulate complement in the eye, the liver, and the brain. Our shared vision is to develop one time, curative therapies for a wide range of debilitating diseases. We are thrilled with the breadth and the depth of our expanded pipeline, which we believe positions Apedis to be a global leader in complement today, tomorrow, and in the future. Looking ahead, we are optimistic heading into the top-line results from the Phase III Derby and Oaks studies of Pexita Copeland for the treatment of GA. This key readout in September is a potentially transformative event for the more than 5 million patients worldwide currently living with GA, as well as for the millions of patients with wet AMD, the majority of whom will develop atrophy over time. Feedback from the retinal community shows great enthusiasm for Pexita Copeland and the prospect of finally having the first potential treatment for people living with GA. I will now turn the call over to Adam Townsend to share more about our ongoing commercial launch of Empaveli for P&H.
Meredith
Adam? Thank you, Cedric. As Cedric mentioned, our Empaveli commercial launch is off to a strong start, and I'm excited to share our initial results. Empaveli was approved on May the 14th, so we are only in the very beginning stages. With that said, we are encouraged by the great progress we've made thus far and the positive feedback we received from the P&H community. Our top launch priorities are outlined on this slide, all of which are designed to ensure that every eligible P&H patient who wants Emperveli will have access to this important new medicine. Beginning with the approval, we were thrilled with the Emperveli label, which included both patients currently being treated with C5 inhibitors and those who are naive to treatment. Recall that within the U.S., there are approximately 1,500 patients who are currently being treated with C5 inhibitors, Saliris and Altamiris, and another 150 people diagnosed with PNH every year. Our initial launch focuses on PNH patients who have suboptimal control of their disease, beginning with a third of patients on C5 inhibitors with the highest unmet need. those who require transfusions to address their falling hemoglobin levels. We then plan to expand to the broader PNH community, many of whom are also suffering from signs and symptoms like anemia and severe fatigue. We have received positive feedback from various stakeholders, and the quotes on the right side of the slide highlight the excitement for Empaveli from the PNH community. At the end of July, over 75 physicians have signed up for our REMS program since launch in the U.S., and we have received more than 60 start forms. Each of these are not only early indicators of demand, but also that physicians have identified that Empaveli can help better address their patients' treatment needs. we are finding that C5 inhibitor switch patients are the majority of new Empaveli starts, with about 75% of switches coming from Altamiris. We have also received newly diagnosed patient start forms, which is very encouraging and reflects our broad label. In terms of coverage breakdown, approximately 50% of Empaveli patients have commercial private insurance. 25% have Medicaid and 25% have Medicare, with all three payer channels submitting and approving prescriptions. We expect payer coverage to remain split 50-50 between private insurance and government programs for the foreseeable future. And lastly, on the payer front, our Value and Access team is engaging with high-priority payers including the top 20 payers that cover approximately 85% of all US PNH patients. So far, four payers have accelerated Empaveli formulary reviews, and one has already placed Empaveli in a positive formulary position. Given our strong progress to date, we are on track to be on formulary with approximately 90% of plans by the end of the year. To close, we are excited about the strong initial launch of Emperor Valley and are super proud to bring this important new product to the PMH community. Some of the highlights I outlined from our launch activities are included on the left side of this slide. We have done a lot of work to prepare the marketplace and our integrated team from the commercial field teams to medical affairs is laser focused on successfully executing the launch. On the right side of this slide, you can see end-of-year goals for engagement, market access, and patient experience. This includes engaging all priority accounts and 85% of priority physicians, as well as maintaining high patient satisfaction scores for self-infusion of Empaveli. While we are not planning to provide sales guidance in the near term, We do plan to provide certain launch metrics that help to illustrate our progress as we ramp up during this initial launch period. We look forward to keeping you updated as our teams continue to work to bring this transformative treatment to the PNH community. Our Appellus team is very proud to have the responsibility to help PNH patients with high unmet needs. At the same time, our commercial organization is looking forward to the upcoming phase three GA results next month. Our U.S., European, and international teams are busy preparing the commercial foundation globally for this potential blockbuster opportunity. I will now turn the call over to Dr. Federico Grossi to review our clinical developments.
Adam
Federico Grossi Thank you, Adam. I'll begin briefly with the Phase III print study in PNH. In May, we and our partner, SOBI, were thrilled to report positive top-line result data from the print study of Empavelli in treatment-naive patients. Empavelli demonstrated statistical superiority on the co-primary endpoints compared to standard care, which did not include complement inhibitors at week 26. Empavelli also achieved statistical superiority versus standard of care on several secondary endpoints that are meaningful to prescribers and patients. Those include improvement in hemoglobin levels and removing the need for transfusions. The safety profile of Empavelli was consistent with previous studies. These results add to the robust clinical profile of Empavelli and support the use of our targeted C3 therapy as a treatment for all adults with PNH. Beyond PNH, we have four registrational programs of Empavelli with SOVI that are either ongoing or plan to start this year. Our rare disease programs are focused on complement-driven diseases where patients have few or no treatment options and where we believe that targeting C3 has the potential to offer a differentiated product profile by providing comprehensive control of complement. I encourage you to watch the recording of our IMD Day on our website to hear from several key opinion leaders on the admin need, supportive clinical data, and potential for Paveli to be a transformative treatment for patients suffering from these devastating diseases. Key upcoming milestones for the remainder of the year are outlined on this slide, including three study initiations and involvement completion of the Meridian study in ALS. Turning now to our ophthalmology franchise. As previously mentioned, the top line results from the phase three DERBY and OX studies of intravitreal pextetocoplan are expected in September. As shown on this slide, DER-B and OAKS are identical, multicenter, randomized control studies that compare the efficacy and safety of monthly and every other month, like Cetacoplan, with sham treatment in 1,258 patients with GA. The primary endpoint of both studies is the reduction in growth of GA lesions at month 12. The full study design details can be seen on this slide. In September, we plan to present the results on the primary endpoint for the monthly and every other month ARMS, as well as the safety profile of intravitreal pexetacopland, including the rates of exudations and intraocular inflammation. Additional data from the studies are expected to be presented at medical meetings later this year. Although the primary endpoint will be analyzed at month 12, the studies will continue with treatment groups masked to month 24. Secondary functional endpoints will only be formally tested at month 24. Finally, I'd like to briefly discuss our plans for pexetocoplan in intermediate AMD, a disease that currently has no approved treatments. Targeting intermediate AMD represents a significant opportunity to delay or prevent progression to advanced forms of AMD and potentially prevent vision loss. A post hoc analysis of the Phase II FELI study demonstrated that GA patients receiving pexetocoplan had a lower rate of progression from intermediate MD to GA in retina areas outside of the GA lesion compared to SHUM. These results support continued research, and we are currently seeking feedback from regulators on study design and regulatory pathway. Following a positive GA readout, we expect to initiate a pivotal study in the first half of next year. I will now turn the call to Tim Sullivan for a review of the financial results.
Federico Grossi
Tim? Thank you, Sede. Since we issued a press release earlier today with the full financial results, I will just focus on the highlights for the second quarter of 2021. Net product revenue was $623,000 in the second quarter of 2021. This reflects the first six weeks of recorded product revenue for Empaveli between FDA approval on May 14th through June 30th, 2021. The third quarter of 2021 will include the first full quarter of EMPA Valley net product revenue. Research and development expenses were $145.9 million in the second quarter of 2021, compared to $87.1 million for the same period in 2020. The increase in R&D expense was primarily attributable to the $50 million payment associated with the BEAM collaboration, as well as medical and quality affairs expenses, personnel costs primarily due to the hiring of additional personnel, an increase in costs associated with ongoing and planned clinical trials, among others. R&D expenses were offset by contra-R&D expense related to the SOBI transaction, a decrease in contract manufacturing expenses, and the capitalization of inventory following FDA approval of Empaveli. We expect R&D expenses to continue to increase as the number of patients in our trials increases and the number of trials we are conducting increases. General and administrative expenses were $49 million in the second quarter of 2021, compared to $28.4 million for the same period in 2020. The increase in general and administrative expenses was primarily attributable to general commercial preparation activities, employee-related costs, professional and consulting fees, among others. For the second quarter ended June 30th, 2021, Appelis reported a net loss of $219.2 million, compared to a net loss of $118.6 million for the same period in 2020. As of June 30th, 2021, Appellus had $599 million in cash, cash equivalents, and short-term marketable securities. We remain well capitalized to execute on the ongoing launch of MPHA Valley and P&H and continue to advance our robust clinical development plan. Our cash runway is expected to fund operations into the second half of 2022. including the 50 million paid to BEAM as part of our recent partnership. In July, we entered into certain agreements to exchange 201.1 million of the convertible notes for approximately 6 million shares of common stock, allowing us to lower our interest rate expense and further deliver the balance sheet. We began 2021 with approximately 520 million in aggregate principal amount of notes. And with the two exchanges conducted in January and July of this year, we now have 192.7 million remaining at June 30, 2021. I will now turn the call back over to Cedric for closing remarks. Cedric.
Cedric Francois
Thank you, Tim. We've made excellent progress so far this year and have several important milestones upcoming, as shown on this slide. We look forward to continuing to advance our growing pipeline across rare disease, ophthalmology, and neurology as part of our ambition to be a long-term global leader in complement. With the top-line results of the Derby and Oaks studies expected next month, we would like to take this opportunity to recognize and thank the patients, investigators, caregivers, partners, employees, and investors who have helped advance us to this key milestone. We look forward to keeping you updated on our progress. And now, operator, please open the call for questions.
Operator
Thank you. Ladies and gentlemen, as a reminder, to ask a question on the phone line, you will need to press the Start and the 1 key on your touch-tone telephone. To withdraw a question, press the pound key. Please stand by while we compile the Q&A roster. And our first question, coming from the line of Anupam Rama with JP Morgan, your line is open.
Anupam Rama
Hey, guys. Thanks so much for taking the question. I'll just ask a quick one on Empaveli on the average days from prescription to first dose being, I think the slide said 12 days. Anecdotally, can you put that 12 days into context here in terms of when it's a little bit higher than 12 days and what's causing that and when you might be able to get a patient on more quickly than, say, 12 days? Thanks so much.
Cedric Francois
Thank you, Anupam. Great to hear you. I'm going to hand that over to Adam to answer.
Meredith
Thanks for the question, Anupam. So, yes, we're actually very happy with the 12 days transition. It's very much in line with various other rare disease analogs. We obviously get transition quicker than 12 days and some transitions slightly longer than 12 days. The main thing is we have to make sure that the patients have their vaccinations before they start, and that tends to drive that 12-day gap. That seems to be the consistent thing. We're obviously working hard with all of our PNH community and patients to make sure that they have everything that they need as they transition. But hopefully that answers your question, Nanopam.
Anupam Rama
Yep. Thanks so much for taking our question.
Operator
Our next question coming from the lineup, Omar Rafat with Evercore IFI. Your line is open.
Omar Rafat
Hi, guys. Thanks so much for taking my question. Cedric, what percentage of the 38% wet AMD converters in your Phase II filly technically had non-leaky CNV at baseline? And also, I remember one of the themes that stood out when the Phase II data came out was that folks that did convert have wet AMD conversion, their BCVA scores didn't worsen. But my understanding is in one of your Phase IIIs, you do have microparametry as well, What would you expect in wet AMD converters on microparametry? Thank you very much.
Cedric Francois
Thank you so much, Umar. Well, first of all, let's start with the Philly trial and the non-leaky CNV. So just a bit of background for the people on the line. In the Philly trial, when we did a retrospective analysis and looked at the patients that had so-called CNV, what we were really looking at was exudations, so essentially leakage from neovascular membranes sitting in the retina where they're not supposed to be. The question we asked ourselves is, were these neovascular membranes there at the beginning of the study but were not picked up at the time of screening? And that can happen because with the technologies available, sometimes this is missed. So in a retrospective analysis, what we did is on SDOCT, we looked at something called a double layer sign, which is a separation of the Brooks membrane from the RPE cell layer, indicative of that membrane sitting there but not being leaky. Now, in the Philly trial, when doing that, it became clear that a large percentage of the patients that ended up showing exudates later during the trial had that double layer sign at baseline. And, Umar, I will have to kind of look back for exactly the number, but I believe that it was around 75% of the patients that developed that. So that's as far as it relates to the Philly trial, but a very interesting observation that we will, of course, further interrogate with the Phase III results. And then as it relates to microperimetry in those patients with the choroidal neovascularization, so microperimetry is an examination where you actually, with a laser, shine light outside of the fovea, so in peripheral areas of the macula, And here, again, in Philly, we did not do micro-parametry, so we don't really know whether there is or will be an impact of exudations on micro-parametry. But micro-parametry, in the first place, is a way of creating a functional correlation, so kind of associating the ability to see light in areas where geographic atrophy is growing. on the surface of itself, not really related to CNV, but again, in the phase three, we'll have the first time to really look into that.
Omar Rafat
And Cedric, maybe just to follow up then, if 75% of wet AMD converters likely had the double layer at baseline, does that basically mean that based on the analysis that's being used in phase three, your phase two wet AMD conversion rate was mid-single digits? I just want to confirm I'm hearing that right. And also, Can you just remind us all, since this is the last call before your phase three comes out, can you remind us all what interim have or have not happened and what blinded and or any interim data have you guys seen?
Cedric Francois
Sure. So just with respect to the last question, we don't have any insights in the middle. That is something that will come when we're closer to the deadline. Then, as it relates to the – I was breaking up a little bit. The first part of your question, Umar, could you repeat that, please?
Omar Rafat
Oh, the first part of the question, basically, is remember how the Phase 2 Philly had wet AMD conversion rate of high teens, and if we apply the double layer definition that's being used in Phase 3, considering you said 75% of those high teens already had double layer at baseline, would that mean that the new wet AMD conversions on – was only met single digits in phase two. Is that right?
Cedric Francois
No. So that kind of comes down to the definition, right? So again, the difference between choroidal neovascularization and exudations, where you see leakage in the retina. With a double layer sign, you don't really know whether there is a neovascular membrane. All you know is that there is a separation that is suspected of being a choroidal neovascular complex. The only way, you know, technically to measure a CNV is is to use something called OCT angiography, which wasn't done in phase two and which even in phase three is only done on a subset of patients. So again, hard by now to really know the answer to that, Umar, but again, important I think to point out is that with SD-OCT, it is very easy to detect small exudates in the retina that may not be there at the beginning at screening Because at screening, you use kind of the gold standard for wet AMD, which is fluorescent angiography. And on fluorescent angiography, there may be a neovascular complex present that does not leak on that particular exam, but that later on may have some small exudates that you can detect on SDOCT. And one reference point that I would like to give you that is very interesting is that on the 26 cases that we had of exudates reported by the investigators in Philly, 17 patients at the time of that discovered exudate received fluorescent angiogram, and 10 only of those 17 patients at that point in time had confirmed wet AMD based on fluorescent angiography. So think about this. Of the 17 tested that had exudates on SDOCT, only 10 could be confirmed using fluorescent angiography, all in line with what we've reported before. our belief that there was some investigator bias in the Phase 2 that we have corrected for in the Phase 3.
Omar Rafat
Thank you very much.
Cedric Francois
Thank you.
Operator
Our next question coming from the lineup, Madhu Kumar with Goldman Sachs. You want to open?
Madhu Kumar
Hey, thanks for taking our questions. I'll step back from the risk questions and ask a more basic mechanistic question about CNV and Darby Oaks. how much do you think complement blockade contributes to the emergence of CMV events as compared to things like you mentioned, investigator bias, differences in baseline patient distribution? How much of it ultimately is just when you sufficiently blockade complement in the retina, you get choroidal vascularization at some biological frequency?
Cedric Francois
Yeah, thank you so much, Maru. So that is a very interesting question, right? So Was this imbalance that we saw in the phase two real or not? You know, personally, I think it was. I just think it was kind of vastly exaggerated based on two important parameters, one which you referred to, the investigator bias, the second that we enrolled a lot of patients who at baseline had wet AMD in the contralateral eye while having GA in the study eye. and put some numbers on that in the Philly trial, 38% of the subjects enrolled came from that background phenotype, whereas the normal distribution is closer to 20%. So I think in our phase three, we should all expect that number indeed to be closer to 20% rather than close to 40, which was the case in Philly. Then as it relates to why is this happening and should we again see an imbalance, it's a very interesting and fascinating observation, and importantly, one that was not a safety concern. Again, you know, these exudates were very small in nature, detectable in SDOCT, and as mentioned earlier, often not detectable on fluorescent angiography. And then the question is, if there are, for example, these preexisting neovascular complexes and they become more leaky, why is that the case? And we have always postulated that it could be that you induce a wound healing response, which can be associated with an increase in VEGF secretion, which would then lead to a more leaky state. So it is not at all implausible that an increase in exudation, which in this case, again, was not a safety concern for us, may be actually associated with a repair response that is induced by complement control.
Madhu Kumar
Okay, great. And then a question for Tim. How should we think about SG&A and R&D expense in the kind of through 2021 and through 2022, and kind of how conditioned is that around what happens in Derby Oaks and kind of the SOBE collaborations on phase three trials for Ember Valley?
Federico Grossi
Yeah, thanks a lot, Madhu. So, as you know, we don't give any specific guidance to, you know, with respect to those line items. But one thing to keep in mind is that our cash of $599 million is sufficient to get us into the second half of 2022, and that does consider a positive readout in Derby and Oaks, bearing in mind that we do plan to scale up for commercialization ourselves globally. But for G&A expenses for the year, you should also expect probably a bit of a ramp-up even towards the end of this year, a little bit in in our commercial spending in conjunction with the launch of Empa Valley and P&H. And then related to R&D, you can see there's actually a pretty good breakout of the R&D expenses in our 10Q. We go into quite a bit of detail in the table. And I think some of the ongoing ones are pretty easy to project with sort of a mild increase as you look at the increase in sort of the number of clinical trials, the pivotal trials that we have ongoing. in addition to our Derby and Oaks, which, again, will roll into an extension study. So that will continue on for three years after Derby and Oaks. So you can kind of get a pretty decent sense of how things will grow over the next year or two.
Joey
Okay, good. Thanks for taking my question. Thanks, Madhu.
spk09
Now, next question coming from the line-off.
Operator
with Citi. Your line is open.
Philly
Hi, this is Carly on for . Thanks for taking our questions. Our first question is related to Iverick's announcement that the FDA had requested a change in the primary endpoint analysis for their study. We were just wondering if your expectation that the FDA will ask for a similar slope analysis for Derby and Oaks in addition to the rate of change in absolute GA lesion area.
Cedric Francois
Thank you so much for that question. The short answer to that question is no. Again, not to speak for iveric, of course, but a special protocol assessment is often or typically requested from the FDA when it is unclear what type of analysis the FDA would agree to. That is often inspired by a request from the sponsor that may be viewed as unusual in the context of that analysis. Suspicion is that that is the process that Iveric went through. From our perspective, I can tell you that after the Philly trial, we submitted our protocol with the proposed statistical analysis plan in an end-of-phase 2 meeting, and we had full agreement with the FDA on that. So there was no need for a SPA, since what we proposed was the standard that the FDA had, among others, also used, for example, in the Cro-Mans Spectry trials with Roche Genentech.
Philly
Okay, great, thank you. And then we were just wondering if there's anything more you could say at this point on how the rate of missed injections and rate of dropouts in Derby and Oaks compared to what was observed in Philly. And I think in the past you've mentioned plans to conduct some additional analyses that could potentially account for the impact of missed visits due to COVID. And we were just wondering if those would be included in the top line disclosure in September as well. Thank you.
Cedric Francois
Sure, no problem. As we have iterated before, and as we talked about at length during our R&D day in June, we've been tracking very, very closely over the past two years or year and a half, I should say, what the impact was of COVID on the missed injections in the trial. And as we indicated at the R&D day, for the primary endpoint analysis of the monthly injections, we feel very good about a minimum impact of COVID on that analysis. And that is the analysis that will give us our approval. For every other month injections, where one missed injection could be an interval of as long as four months in a trial that is one year long, there, of course, the risk is higher. But as we pointed out at our R&D day, every other month is something that we use to interpret and understand what the PK-PD relationship of the drug is. But for approval, we need monthly. And there we feel very confident that the impact of COVID is under control.
Operator
Thank you so much.
Cedric Francois
You're welcome.
Operator
Now next question coming from the line of Phil Medjoo with Cowen. Your line is open.
Phil Medjoo
Hi. Hi, Tim. This is Ernie Rodriguez for Phil. Thank you for taking our call. You mentioned some of the positive feedback you have received on the launch and your goals for the year, and we were curious if you have identified any barriers that could preclude you from achieving those goals and expectations for the launch. And then in GA, assuming positive results and an FDA approval, what subgroup within the GA patient population do you expect physicians will first approach and treat with Empavelia, and do you think This will change depending on the level of reduction that you achieve on the September results. Thank you.
Cedric Francois
Thank you so much. I'll let Adam answer the first part of your question, and then I will take the second.
Meredith
Yeah, thanks for the question. Yeah, we're very happy with our progress to date with the launch. Everything is going well, and as you can tell by the REMS, the number of physicians going through REMS and the number of start forms, we're on a very strong launch trajectory. we're very happy and believe that our Q421 goals are very achievable. We're working incredibly well with the payers to make sure that we can get every patient who needs access. And those are ongoing discussions. And as you remember, sometimes they take between three to six months to allow us to get access to their formularies. And we're continuing to have some success there. So that's something that we'll continue to work on. But everything's pointing in the right direction for the Empire Valley launch. So we're very happy to help the P&H community.
Cedric Francois
And then, Ernesto, for your second part of your question, so I'm happy you asked that because it's something that we, of course, have done a lot of research on as well, which, you know, what is the patient population that physicians will be interested in? How do we see this product being implemented? And there are two, I think, important takeaways to communicate. The first one is that should we have a good safety profile for our drug, right? I mean, should the exudations be very well under control? And, you know, if this is a product with a clinically meaningful effect on the growth of atrophy, then, you know, this is, in our opinion, going to be a drug product that a retinal specialist will prescribe to the majority, if not all of their patients with GA atrophy. because that is how medicine works, right? So I think that is something that is probably not fully appreciated yet, how we think this will fit into the flow of the retinal specialist, like anti-VEGFs found their way into the flow with the treatment of wet AMD. And then as it relates to, so basically all patients, and then the question, okay, at which point in time would you intervene in the disease? And that's very interesting, right? Because intuitively you may say, well, even when you speak with a retinal specialist, you know, I'm going to start with my worst patients, you know, blind in one eye, advanced geographic atrophy in the contralateral eye. And while intuitively that makes sense, logically it does not. Because again, assuming that this drug is as safe as we think and hope it will be, you want to treat geographic atrophy as early as possible, right? At the first sign of GA, when you start losing photoreceptor cells, you know, I fully expect physicians and patients to make commitments to saving as many photoreceptor cells as they can to as much as possible prolong the path to blindness. So I think something that should this drug find its way into the market that I believe will happen is that patients will be treated early and that all patients, barring exceptions, should be interested in being treated with this product.
Phil Medjoo
Thank you. Very helpful.
Cedric Francois
Thank you.
Operator
Our next question coming from the line of Colleen Cousy with Baird. Your line is open. Hi, good afternoon.
Colleen Cousy
Thanks for taking your questions. So one on GA, I guess following up on that, that really, you know, all GA patients could be amenable to this treatment. I guess what sort of bottlenecks would you expect, assuming obviously positive data and approval, what sort of bottlenecks would you expect? and would there be any sort of capacity restrictions or limitations for the intravitreal injection?
Cedric Francois
Yeah, so, I mean, I'll give the medical angle, and then I will handle it to Adam to talk a little bit more kind of about practical implementations, because we've done work on that as well, of course. But medically, I think, again, you know, if the safety profile of this drug is good at that point in time, I think... You know, it will be important to educate physicians. It would be a first treatment for a disease that is currently untreatable. It will be important to find patients in the generalist ophthalmology practice that may not be referred to retinal doctor right now because there's no treatment available, and even earlier in the optometrist's office. But I think at that point in time, really, the main focus should be on building awareness and the fact that there is now or will then at that point hopefully be a treatment available. And Adam, I don't know if you want to add something to that.
Meredith
Yeah, just to add on the capacity piece of the question, we did some research with injecting ophthalmologists and retina specialists. And, you know, they've had many years of getting experience of doing intravitreal injections and increasing patient numbers. So we believe with a new addition and a new approved product in GA that they'll have the capability of expanding capacity based on our discussions and our market research with them. You know, they know that they currently have a bolus of GA patients within their clinics and at their sites, of which there are no current treatments. So we don't expect capacity to be a rate-limiting step as we launch this drug.
Colleen Cousy
Great. That's helpful. Thank you. And then one follow-up on intermediate AMD. Could you talk about any initial thoughts you have on the potentially pivotal study design in terms of size or endpoints?
Cedric Francois
Yeah, we're not commenting yet on what the design will be. But I think, again, the notion of doing a trial in intermediate AMD goes hand in hand with what I mentioned earlier about wanting to treat patients as early as possible. And the fact that in a post hoc analysis of Philly, we actually discovered that in the region outside of the atrophic area of the retina, in other words, retina that you can still see on your autofluorescent image, but retina that is, of course, affected, and is, if you want to call it that, kind of a surrogate for intermediate AMD, and where we saw post-hoc a significant slowdown on the conversion to full geographic atrophy. So no design details yet, but a patient population that we are particularly interested and excited about.
Colleen Cousy
Great. Thanks so much.
Cedric Francois
Thank you so much, Colin.
Operator
Our next question, coming from the line up, is in office with Bank of America. Your line is open.
Adam
Hi. Good afternoon. Thanks for taking my question. Quickly on the GA studies, assuming that they're both positive, should we expect that you would be able to apply for approval this calendar year? And what would be the rate-limiting steps left in your application, assuming positive data? And then as we talk about the commercial landscape, can you maybe give us your view about the potential for a C5 as well as a C1Q complement inhibitor entering the market and how your product would be differentiated from those? Thanks.
Cedric Francois
Thank you so much, Dazin. I'm going to hand the approval question to Federico, and then Adam will take the commercial question.
Dazin
Thank you, Cedric. And thank you for the question. We are looking forward for the results, the readout of the studies come in September. And our teams are ready to jump into the submissions and be able to submit as soon as possible. We're not guiding on timing of the submissions, but we're fully prepared to tackle the analysis, not only of the primary endpoints that will be reported soon, but the full analysis required for the submissions. and do that as soon as possible.
Cedric Francois
Thank you, Felipe. And then, well, I was just, Adam is texting me here. It's not a commercial question. It's a question on data. Look, I think at the end of the day, you know, we will see what happens with the competition. It is our conviction that the mechanism by which the retina suffers in geographic atrophy is driven by the accumulation of C3 products on the retina, which is not properly being removed, and it's not being properly removed because the same cellular mechanisms compete for removal of C3 as those that work on the visual cycle. We know from our PNH studies that C5 has no effect on the accumulation of C3, so it would be a surprise to us should a C5 inhibitor be successful, especially in line of the fact that anti-C5 has failed twice already, both when administered systemically as well as intravitrally. C1 is, on the other hand, an interesting target, but there, too, you don't have kind of the broad control of complement that we believe you need, and as you do with pexitaclopam, by also covering the lectin pathway and the alternative pathway. So I think, you know, the proof is in the pudding, but it's also important to note that, you know, the only competitor closest, of course, is iverix program, and we look forward to evaluating that when it becomes available. Yeah, I hope that answers your question, Tazine.
Adam
Yeah, that's really helpful, Cedric. I mean, if you were to talk about one thing that could be differentiated in your program versus theirs, would you pivot more to efficacy?
Cedric Francois
Well, I think, you know, again, What we have done and what I like about our program is that it has been a program where we deliberately chose to be highly consistent over time. In other words, we did the Philly trial in 2015 really to mimic what Genentech Roche at the time was doing with their Lampalizumab program. We knew that they had interactions with the FDA, what the expectations were in terms of endpoints, and the phase two clinical trial was really designed to anticipate a phase three trial with minimum change, right? So for all of you that have studied Philly and Derby and Oaks, they're pretty much a carbon copy of each other with very, very tiny changes, and if anything, just more quality and robustness in the Derby and Oaks trial. So, you know, a VARICS program without any criticism is kind of much more variable, right? I mean, there was a part one, part two in the phase two, Then they went through the span, the phase three. It's a different approach. We wish them success. But I think for us, standing the course and really building on the initial hypothesis has been the key.
Operator
Okay. Thank you.
Cedric Francois
Thank you.
Operator
Our next question coming from the line of Steve Seedhouse with Raymond James. Your line is open.
Steve
Yes. Hi. This is Tim Urvanik of On for Steve Seedhouse. So we have a quick question on teenage commercial. Given you have $0.6 million in revenue, is it fair to assume you have around 15 to 20 patients on therapy, or is that revenue mostly for inventory build? And then in terms of geographic distributions, have you seen any trends, you know, bolus of orders coming from a certain geographic area in the U.S., or is that too early to tell? Thank you.
Cedric Francois
Thank you so much. Well, I will hand that over to Adam to answer.
Meredith
Yep, thank you very much for the question. So we're not going to guide on product revenue for the foreseeable future, but, you know, the initial 0.6 million is a great sign of how Empaveli can elevate the standard of care. So we've had over 75 physicians sign up for REMS and over 60 start forms, which should give you a very strong sign of the demand. So more to come there. And on your second part of the question, we've seen success all across the U.S. So we've seen start forms and REM submissions as well as actual patients come from each of the large main centers that you would expect within the PNH community and also from smaller centers geographically dispersed across the U.S. So we're having an impact across the whole country. Hopefully that answers your question.
Steve
Yes, thank you. And then maybe a question on GA commercialization preparedness. So in terms of, you know, in terms of where you potentially need to be versus where you are now, I mean, you're just, are you just starting out versus, you know, what percent of Salesforce do you still need to hire? You're probably in early stages, but just to give us an idea. Thank you.
Meredith
Yeah, I'll take that one too. It's Adam. So, um, We have obviously built an infrastructure which we can carry across for certain pieces of commercialization for geographic attributes. We've also created the leadership teams commercially in medical affairs in the U.S., in our international head office in Zug in Switzerland, and in Germany and in Australia. So we have the core infrastructure. As soon as we see data, we'll rapidly start to expand on that infrastructure through Salesforce and medical affairs and everything else that you would expect. So we're in a good place. We're looking forward to see the data. And we've identified candidates out in the market who are willing to join Appellus and excited to join Appellus post-positive GA data.
Steve
Thank you very much.
Alethea Young
Thank you.
Operator
Our next question, coming from the line of Alethea Young with Cantor, Yolanda Salfin.
Alethea Young
Hey, guys. Thanks for taking my questions. to just one, can you talk a little bit about, you know, how COVID has kind of impacted things and how you think going forward it may with kind of, I guess, some of this Delta variant, Lambda variant, take every variant you have going. And then maybe the second question is just from a scenario basis, like, you know, how do you think about kind of, you know, having levels of kind of, you know, on the safety front, whether it be the infections or the endopto or, you know, whether it be the – exudative events? Like, how do you think about, like, if they were the same in this trial readout, what do you think that means commercially versus if, you know, potentially were slightly lower? You know, kind of just maybe lay out some of your scenarios on that. Thanks.
Cedric Francois
Thank you so much, Alicia. And I assume that your first question regarding to COVID also applies to the study, correct, to the GIA studies?
Alethea Young
I was actually asking about PN8, shockingly. Excellent.
Cedric Francois
Well, I will hand that over to Adam then to give us some brief insights on, because that's gone very well, actually. Adam?
Meredith
Yeah, thanks, Alethea. Yes, the joys of launching a product during a global pandemic. So we've actually seen in-person live interactions increase. So prior to our approval, they were lower than 10% of our interactions were live, and now roughly 40% of all of our interactions are live in-person. We also continue to use virtual technologies to engage with physicians. Now, my bias tells me that the Delta variant could slow this down a little bit, the in-person engagements, but we, you know, we're going to closely monitor all of the regional COVID-19 restrictions, and we'll make sure that we're following those with HCPs and their offices. But we think we have the right skill set, and obviously we prepared to do a virtual launch, and we're having some great success with that as well. So between the balance of in-person and virtual, we think we're in a really good spot to continue the great progress on the PMH launch.
Cedric Francois
Thank you, Adam. And then, Alethea, as it relates to your second question related to safety, so I want to start off by saying that in the Philly trial, the safety profile was was such that we did not have to make any changes in Phase 3. So, first of all, as it relates to the exudations, and as alluded to earlier, the types of exudations we had were never a safety concern. And by correcting for that investigator bias and the fact that the demographic will be adjusted, we expect in the Phase 3 clinical trial the exudation rates to be lower than they were in Phase 2. But, again, the investigators in the Phase 3 trial, who know, of course, those data very well, found the Phase II exudation rate to be acceptable for the enrollment in the Phase III trial, which, if it hadn't been for COVID, would have probably been faster than any Phase III trial done before. Then as it relates to the cases of infectious endophthalmitis, so we had two cases in the Philly trial that was on a total of approximately 1,400 intravitreal injections. That rate of infectious endophthalmitis is in line with what you find in Phase II clinical trials with anti-VEGF or with steroids, for example. So this is an entry pathogen, and this is a complication that is inherent to the procedure itself. There is right now absolutely no indication that that rate would be higher because of some circumstance than it is under normal circumstances. And typically what you see is that in a Phase II clinical trial you have a certain rate, in Phase III it gets better, and then commercially it further improves as physicians get used to the procedure. So, look, it is our expectation that the safety profile of Pexita Co-Plan will be safe, and that we will be able to focus on efficacy against the background of Philly. Great, thank you. Thank you so much.
Operator
Our next question, coming from the line of Ellie Murr with UBS. Your line is open.
Ellie Murr
Hey guys, thanks so much for taking the question. Just first in terms of exudations in GA, and I guess maybe what we might know from the natural history around like how exudations might impact GA growth or just, you know, any associations we've seen historically either in your data or in the natural history. And then second question, just in terms of the commercial outlook for GA ex-US, I guess just curious, you know, how you're thinking about you know, potential commercial preparations ex-US for GA and just any differences in terms of, you know, diagnosis rate or, you know, any particular maybe emphasis on endpoints versus, you know, the US or anything different there in terms of the commercial strategy versus the US. Thanks.
Cedric Francois
Thank you so much, Ellie. Well, so as it relates to exudations, and we don't talk a lot about this because we're really now talking about anecdotal numbers, but if you look back at the Philly trial, and you look at those patients that develop exudations for whom we have the follow-up data for geographic atrophy, there's quite a remarkable slowdown in GA, beyond what we measured, for example, in the primary endpoint. But these are such small numbers that we'll have to find out in the Phase III clinical trial if they materialize or not. So again, that's something to look forward to, but it's definitely an intriguing observation and goes hand-in-hand with kind of that hypothesis that maybe these exudates go hand in hand with a wound healing repair process. And then as it relates to the ex-US deployment, which is a wonderful undertaking that Adam is taking on, I'll hand it over to him.
Meredith
Yeah, thank you. Thanks for the question. So quickly, obviously, in GA there's a million patients in the U.S., And about 2.6 million in Europe and 5 million globally. So you can see that there is a totally global opportunity for geographic actually for a palace. And we're preparing to execute against that global opportunity. So we have built out an infrastructure in Zurich in Switzerland, very experienced commercial and medical affairs leaders. And we have already started to build out our region in Germany, based in Munich, and also our Australian affiliates. So we're ready to make sure that we can meet the needs of GA physicians and GA patients very quickly ex-US. It's an exciting opportunity, and we're doing all that we can to be ready for that. Now, I will hand the regulatory side to Cedric and Fede on what's likely to be expected in Europe. That was the third part of your question.
Cedric Francois
Thank you so much. So, in Europe, as it relates to the regulatory process, like in the U.S., the growth of geographic atrophy is the primary endpoint that we look for. The general feedback from the European regulators has been that we would like to see a directional change in the functional endpoints in alignment with essentially the loss of photoreceptor cells as measured through the anatomical endpoints, but not with the expectation of showing that statistically. And that is data that we will gather at the 24-month time point and add to our findings in Europe. Did that answer your question, Ellie?
Ellie Murr
Yep, really helpful, thank you.
Cedric Francois
Thank you so much.
Operator
Our next question coming from the line of Justin Kim with Appenheimer, Yolanda Salpin.
Justin Kim
Hi, good afternoon. Thanks for taking our questions. Just a couple at this point. I know you had covered this a little bit before, but with the intermediate AMD study dependent on Derby and Oaks' success, Can you just discuss how important regulatory buy-in on I-RORA to C-RORA progression is to designing and powering a potentially pivotal study in intermediate AMD, and sort of what aspects of the Derby Oaks study will help inform that design empowering as well?
Cedric Francois
Thank you so much, Justin. Great to hear you. I'm going to hand that over to Federico.
Dazin
Thank you, Cedric, and thank you, Justin, for the question. Well, you know, it's really important, and we are, as you know, discussing with the regulators on the importance of the change from Aurora to Aurora. So they're buying an agreement on the definition on the disease and the endpoint to look for the studies is extremely important, and we are having ongoing discussions with them. So we'll know more, you know, in the next few months.
Justin Kim
Okay, great. And maybe just one on Ember Valley, appreciating that the label is already quite broad, just wondering if there are any plans at this point to informally incorporate the print study data into the label and any sort of timeframe for that, as well as a potential scientific publication?
Cedric Francois
Thank you so much, Justin. So that has not been decided yet. To your point, the label is very broad and will be something we'll follow up on.
Justin Kim
Great. Thanks so much for taking the questions. I look forward to the results next month.
Joey
Thank you so much.
Operator
Our next question coming from the line of Matthew Lucchini with BMO Capital Markets. Your line is open. Your line is open.
Matthew Lucchini
All right, thanks, everyone. This is Nick Linard on for Matthew. Just one quick follow-up for us. It seems like the PNH launch is going pretty well, as you said, and I believe you said the majority of patients are C5 switches, with 75% of that being from ultramarines. Is that something we can expect going forward, or is that going to kind of change over time, and any incremental color on that would be really great? Thanks.
Cedric Francois
Thank you so much. I'm going to hand that one over to Adam as well.
Meredith
So, yeah, thanks for the question. You're correct. We're seeing a switch being the majority of our Empire Valley starts, and 75% of those switches are coming from Altamiris. As a quick reminder, the one-third of the 1,500 C5-treated patients, we believe, is our target population at the beginning of launch, and that third has the highest unmet need. They have a low and falling hemoglobin on their current C5 treatments, and they're continually being transfused. So that is the patient population that we're seeing, and so C5 switches will be the bolus of our starts moving forward. I expect there to be a balance between Altamiris and Solaris, with Altamiris likely being the majority as we move forward. And then we'll continue to progress through the unmet need in the 1,500 C5-treated patients. Great. Thank you.
Cedric Francois
Thank you so much.
Operator
Our next question coming from the line of Joseph Stringer with Needham. Your line is open.
Joseph Stringer
Hi, everyone. Thanks for taking our questions. Quick one on Impaveli in terms of grows the net. Recognize that it's early on in the launch, but just giving your commentary around commercial versus government payer mix and how that's going to continue in the future, just Well, if you give us an early sense of the gross to net early on and, you know, what you sort of see that in a steady state on an annual basis. Thank you.
Cedric Francois
Thank you so much. Adam, you want to take this one?
Meredith
Yeah, absolutely. Thanks, Joey. You're right. It's a bit too premature for us to comment on gross to net at this point in the launch. We are in line with other gross to net rare disease models. And to your point, I expect our gross net to tick down as we progress into the later stages of the launch, as we transition patients to Empaveli. So early days in the launch window, but I'm still thrilled with how we're progressing with the Empaveli launch.
Joey
Great, thanks for doing that question. Thank you so much. Next question.
Operator
Our next question coming from the line of Eleanor Prius with Lot Capital. Your line is open.
Elmer
Yes, hi. Maybe just a housekeeping question from Tim. The cost of the research collaboration from Beam Therapeutics, would that be an ongoing line item separately, Tim?
Federico Grossi
Thank you, Elmer. Ultimately, no, that is unlikely to be. It'll be baked into research and development expense. We broke that out showing the upfront because it had a large impact on the R&D expense this quarter. As you know, we're obligated to pay another $25 million a year from now. And ultimately, after that, the ongoing expense will be fairly de minimis as this is a research collaboration initially, so it'll be baked into R&D.
Elmer
Thank you. Thank you, Tim. And maybe a clarification from Adam. Adam, you mentioned that, and this is related to the lead time of 12 days to get patients on drug, that vaccination is a component there. You meant COVID vaccination? Because I thought that most of these patients are switch patients, so they've been previously vaccinated.
Meredith
Yeah, it's no, it's actually vaccinations that are required by label two weeks before the start of Mpavelli to get on to Mpavelli. So it's following the label guidance. It is not COVID vaccine related.
Elmer
So even though these people were previously vaccinated because they received Delta virus, they would have to receive another vaccine?
Meredith
Yeah, they're following the label guidelines on vaccination two weeks prior to the first dose of Empaveli. Okay, okay.
Elmer
Thank you so much for that.
Cedric Francois
Thank you so much, Elmer. And I think that was the last question. In closing, thank you all for joining us on our second quarter conference call. We look forward to presenting top-line results from our Derby and Oaks studies in September. and keeping you updated on our commercial and pipeline progress in the months ahead. We are around later today and tomorrow if you have any additional questions, and feel free to reach out to Meredith. Thank you again for joining us today, and have a wonderful rest of the week.
Operator
Ladies and gentlemen, that was my conference for today. Thank you for your participation. You may now disconnect.
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