Apellis Pharmaceuticals, Inc.

Good morning, ladies and gentlemen. Thank you for standing by and welcome to the Appellus Pharmaceuticals third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 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, Investor Relations and Strategic Finance. Please go ahead.

Good morning, and thank you for joining us to discuss Pellis' third quarter 2024 financial results. With me on the call are co-founder and Chief Executive Officer, Dr. Cedric Francois, Chief Operating Officer, Adam Townsend, Chief Medical Officer, Dr. Caroline Bommel, and Chief Financial Officer, Tim Sullivan. Before we begin, let me point out that we will be making forward-looking statements that are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. Now, I'll turn the call over to Cedric.

Thank you, Meredith, and thank you all for joining us this morning. Over the past few months, we have made meaningful progress towards our long-term goals. reaching key milestones such as generating continued growth in vial demand for Sifovir and presenting the groundbreaking Phase III valiant results with mPavetti and C3G and ICMPGN. These data underscore the power of C3 and reinforce our belief that targeting C3 is the optimal way to treat complement-mediated diseases. During the third quarter, commercial vial demand for Sifovir grew by 7% quarter over quarter, and Saifovri maintained its market leadership with 84,500 commercial vials shipped to physicians. Third quarter Saifovri net product revenue of $152 million were more than double the same period last year. However, we recognized that revenue fell short of expectations, declining by 1.7% relative to the last quarter. This was partially due to higher gross to net adjustments which Adam and Tim will speak to shortly. Importantly, we expect growth to net to be stable going forward with more modest quarterly adjustments typical of a buy and build model. Also affecting our performance this quarter was an overall slowing within the GA market. Total file demand did grow quarter over quarter, but at a slower pace than in previous quarters. 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. To support meaningful growth going forward, we need to continue building awareness of CyphorBree's strong clinical profile. 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 markets. Early science suggests that these efforts are delivering positive results, but their impact on the GA market and safe-over-demand will take time. 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. We plan to provide further insight into the GAA market dynamics and our growth expectations for 2025 and the coming months as we gain visibility into the impact of our new commercial initiatives. It is important to remember that we are still in the early stages of the launch. We estimate that only about half of all GAA patients are diagnosed and seen by an eye care professional, and of those, An estimated 15% are currently being treated. GA patients are on an irreversible path to blindness, and Cyphovry has a significant impact on slowing disease progression and potentially preserving patient's vision for longer. We see tremendous opportunity over the long term, but expect the sales ramp to be more gradual going forward. Importantly, we continue to believe Cyphovry remains on track to become a blockbuster drug. Quickly touching on Europe, we were disappointed with the negative CHMP opinion, despite multiple analyses showing that FEMA would say for preserved visual function. We do not have plans to pursue EU approval further at this time. And then moving to Mpavelli, we were extremely pleased to share the full results from the phase 3 valiant study in C3G and primary ICMPGN at kidney week last month. I will let Caroline discuss these results further, but we believe Mpavedi has the potential to become a best-in-class treatment for these rare kidney diseases, redefining the current treatment paradigm for patients with C3G and ICMPGN. 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. These positive valiant results suggest once again that abelicis C3 targeted therapies are particularly effective across multiple therapeutic areas, now including PNH, geographic atrophy, and C3G and ICMPGN. We received feedback from the FDA last week that our submission proposal has been accepted, which means that we remain on track to file our supplemental NDA early next year in both C3G and ICMPGN based on our positive six-month data. Importantly, the FDA did not require us to file with the full 52-week data. Our ex-US partner, SOBI, expects to file a regulatory submission in the EU in early 2025, followed by a submission with the Japanese health authorities later in 2025. The VALIANT data also unlock additional opportunities within nephrology that we are evaluating and plans to provide detail on soon. On the commercial front, Embavedi 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. The 97% compliance rate supports the substantial benefit that these patients are receiving. In closing, our strong fundamentals position us well for the future. Apedis has two commercial products, each with blockbuster potential, which are already making a meaningful difference in patients' lives. Our emerging pipeline holds exciting products, 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. And with that, I will now turn it over to Adam to discuss our commercial activities.

Thanks, Cedric, and good morning, everyone. I will begin with Sifovri. In the third quarter, we delivered approximately 84,500 commercial doses, a 7% increase compared to Q2, and approximately 4,000 samples of Sifovri. The growth in demand seen during the quarter reaffirmed Sifovri's leadership in the market. Cyphovry 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 Cyphovry. As Cedric mentioned, the increase in demand was offset by adjustments to our growth to net, including contracting, that affected overall net revenue. As a reminder, contracting with physician practices is common within the buy and build space. At the end of 2023, we made strategic contracting decisions to remain competitive that impacted Cyphovry's average sales price or ASP reimbursement in the third quarter of 2024. We also recorded higher rebates this quarter due to some incremental contracting decisions that took effect on July the 1st. 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. Our strategy has always been to maximize access to Cyphovry for patients while preserving long-term economics. We recognize the importance of staying competitive and have balanced these economics with the efficacy that Cyphovry offers. Turning back to demand, we are encouraged by the continued demand growth for Sifovir, but we know there's more work to do to sustain this growth moving forward. 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 Sifovir's robust efficacy profile, including its increasing effects over time up to 42% in non-subfovial patients. multiple analyses demonstrating preservation of visual function, and well-documented safety. Key initiatives include leveraging medical congresses and other key forums to reinforce Cyphovry's unique benefits, actively engaging with younger retina specialists who tend to treat a higher share of new patients, Expanding our engagement with non-injecting ECPs, such as optometrists and general ophthalmologists, so that patients with GA seek treatment with a specialist. Generating new clinical data and real-world evidence to further reinforce SIFO-BRE's clinical profile. 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 Sifovri. 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, Sifovri rebounded in the last half of the quarter, closing the quarter approaching 50%. Additionally, market research shows the efficacy messages are resonating. surveyed ECPs recall Cyfovri's efficacy as the leading discussion topic from their last appellate interaction, up from 46% in April to 73% in September. And lastly, a large Medicare Advantage plan recently made Cyfovri the only preferred product on their formulary, effective January 1, 2025. This adds to the two large national PBMs that place Sifovri as the only preferred product on their commercial plans in July. Looking ahead, we plan to launch phase two of our branded DTC campaign soon, which brings back Henry Winkler. This campaign is intended to educate patients on Sifovri's profile, increasing patient awareness, and driving Sifovri conversations with ECP. Cyphery's market share has been stable at roughly 65% since September. This, combined with the uptick in new patient share in recent weeks, suggests that our initiatives are starting to have an impact. 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. Market research shows that questions about safety continue to delay more meaningful discussions about the benefits of Sifovir and those benefits that are offered to patients. It can take at least six conversations with an ECP before the efficacy messages truly resonate. That said, our long-term outlook for Sifovir remains strong. We have only scratched the surface of Sifovir's market potential. and there is a significant opportunity for further growth. 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 Cyphovia will remain the leading GA product in the U.S. for many years to come. Beyond syphovary, I'm excited about the opportunity for Empaveli to expand into C3G and ICMPGN. We believe the commercial opportunity for these indications is significant. We estimate approximately 5,000 patients in the U.S., but also believe that these diseases are likely underdiagnosed because there are no treatments currently available. Feedback from physicians has been resoundingly positive. that the severity of these diseases warrants use of the most efficacious treatment option available. Across the board, nephrologists' feedback is that Emper Valley data are significantly differentiated from other compounds in development, with the enthusiasm among physicians exceeding even our highest expectations. If approved, we believe we are in a strong position to capture a significant proportion of this market. and generate meaningful growth for Emper Valley. Now, let me shift to Emper Valley and P&H. In the third quarter, Emper Valley generated approximately $24.6 million in U.S. net product revenues. Compliance rates remain high at 97%, and the safety profile remains consistent with our previous updates. With that, I will now turn the call over to Caroline. Caroline?

Thanks, Adam, and good morning, everyone. As Adam mentioned, we are starting to see multiple instances of meaningful real-world presentations, reaffirming SIFOVERY's robust efficacy, and we expect the first paper from a third party on SIFOVERY to be published soon. These real-world data reinforce SIFOVERY's unprecedented effects, adding to the largest body of evidence supporting SIFOVERY treatments and allowing us to further strengthen our message around efficacy. Moving to Empaveli, the feedback on the full Valiant data set that was presented at Kidney Week last month was remarkable. In these diseases, physicians are focused on three key markers of disease activity when evaluating a potential treatment. These are proteinuria, EGFR, and C3C staining. As detailed in our full data set, Pexet and Copeland showed positive effects on all three in just six months. 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, regardless of disease type, age, and transplant status, a stabilization of EGFR, a key measure of disease function, and a substantial reduction in C3C staining, with over 70% of pegcetacopelin-treated patients having achieved zero C3C staining intensity, indicating complete clearance of C3C deposits. There are no approved treatments for C3G or ICMPGN, and the unmet need, given the severity of these diseases, is extremely high. The totality of the efficacy data from VALIANT shows that Pegcet and Copeland rapidly, significantly, and consistently improved key outcomes for patients with C3G and ICMPGN. We are ecstatic. about what the results mean for the patients, physicians, caregivers, and everyone else within the C3G and ICMPGN communities. Finally, we are continuing to advance our earlier stage pipeline, such as our C3 siRNA that is currently in phase one development and our BEAM collaboration. We are excited to share more details about our pipeline programs with you in the future. I will now turn the call over to Tim for a review of the financials. Tim?

Thank you, Caroline. I will now provide an overview of our financials. Additional details are available in the press release that we issued earlier this morning. Total revenue for the third quarter of 2024 was approximately $197 million, including $152 million in SIFO REIT and $24.6 million in Ember Valley U.S. net product revenues. This compares with $110 million in total revenue in the third quarter of 2023. 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, SG&A expenses were $122 million, and we reported a net loss of $57.4 million. Cash operating expenses, which exclude stock-based compensation and depreciation and amortization, were approximately $180 million for the third quarter. 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. As Adam mentioned, there was an increase in SIFOBRI's gross-to-net percentage this quarter as compared to previous quarters. This is a result of two factors. The first was due to contract decisions resulting in higher discounts to physicians. The second was related to a true-up of certain fees from prior quarters included in gross to net in Q3. Looking ahead, we expect gross to net to continue to be impacted by ASP erosion and required contracting, but we expect that erosion to be modest and not at the rate we saw in the third quarter. We now expect gross to net through 2025 to be in the low to mid 20% range. With $397 million in cash and cash equivalents as of September 30, we remain confident in our strong financial position. We expect our existing cash combined with our future product sales to be sufficient to fund our core business to positive cash flow. I will now hand the call back over to Cedric for closing remarks. Cedric?

Thank you, Tim. We are focused on building out the GA market and realizing the opportunity in front of us in C3G and ICMPGN. 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.

With that, We will now go over to the Q&A session.

Certainly. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please limit yourself to one question and one moment for our first question. Our first question will be coming from John Miller of Evercore. Your line is open.

Hi, guys. Thanks so much for taking the question. 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 here? 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, out of those ophthalmology offices, to what extent are those going to deliver patients to you as opposed to the competitor?

Thank you, John. Great hearing you. As we've always said, the The benefit of Cyphovry 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 sub-foveal patients. That differentiated efficacy profile is really what stands out and what we will be building the market on now. So, Adam, I'll end it over to you to maybe add a couple of things.

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. 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%. 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%. 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. As per new patient starts, after seeing a slight decline in new patient starts at the start of Q3, SIFO re-rebounded in the last half of the quarter, closing the quarter approaching 50%. 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.

to answer your question?

Yeah, that helps. Thank you very much. I'll hop back in the queue.

And one moment for our next question. Our next question will be coming from Tezeen Ahmad of Bank of America. Your line is open.

Hi, guys. Good morning, and thanks for taking my question. And if you wanted to stay on topic with SIFO-3, your competitor has been wanting, it seems, to provide a lot of detail about the cadence of their launch, providing a first stab at guidance and then revising it at their last call upward. I know a question that investors had is when Appellus 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 about the size of GA with the two products currently approved. So 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.

Thank you, Tazeem. We're considering providing guidance for next year. We haven't made a decision on that yet. 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. And for the moment right now, we're focused on fortifying our position as the market leader and growing the GA market overall. But once I think we feel we have a little better understanding of that, I think we would feel comfortable doing some sort of guidance.

But at this point, it's under consideration.

And one moment for our next question. Our next question will be coming from Anupam Rama of JP Morgan. Your line is open.

Hey, guys. Thanks so much for taking the question. 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 syphovary 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.

Hey, Adam. 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 field force structure to execute and grow a depth and a breadth strategy across the market. 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 educate on geographic atrophy for non-injecting ophthalmologists to help refer patients to SIFOBRA users. And we also have a digital virtual optometry team to also fuel more and more referrals to injecting retina physicians. 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, and over 2,200 sites of care We believe that sampling has less significant role at the moment, but we still believe that samples will make up approximately 5% of SIFOvary's total vial 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 SIFOvary.

And one moment for our next question. Our next question will be coming from Salveen Richter of Goldman Sachs. Your line is open.

Thank you. Good morning. You noted that market growth is now being driven by the next group of retinal specialists. Could you just elaborate on who these specialists are and how large that group is? And if I could just also just go back to this flat to modest revenue growth in 4Q, can you just help us understand what this accounts for in terms of gross to net?

Thank you so much. I will answer the first part of the question and then hand it over to Tim. So I think the retina community, you know, and I think this is not 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 on the sidelines for something to be approved with retina doctors that are enthusiastic to be first movers. Then you have, you know, a whole swath of, you know, the next wave of physicians as well as patients 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. So that's really where we currently are and what we are seeing in the marketplace. Caroline, I don't know if you want to add something to this.

Sure. Thank you. Hi, Sabine. I think that, you know, many physicians 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. 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 SIFOvary.

In terms of the guidance, that incorporates our gross-to-net that I mentioned in the prepared remarks, which was, you know, going forward through 2025, we believe that gross-to-net will be in the low to mid-20s. You know, obviously this quarter we got a relatively large gross-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 gross-to-net to evolve in a more modest sense as ASP sort of steadily

roads as we discussed.

And one moment for our next question. Our next question will come from Yagal Nochumovit of Citigroup. Your line is open.

Yeah. Hi, guys. Thank you. So for my one question, I guess I'll ask a two-part question. Could you just provide a little more clarity on this impact to the ASP? Sounds like there was something related to a maybe a discount trigger in the contract related to order volume that may have just all 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 and then the percent that may be taking a break or don't return on schedule. Thank you.

So, sure. Thanks, Yagal. I will start with the gross to net part of the question. 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. And 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, and that resulted in a lower ASP starting in Q3, okay? Beyond that, we have certain rebates provided as a result of incremental contracts within the third quarter. 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 gross to net through 2025 to be in the low to mid-20% range.

Hey, Gal, it's Adam. You also asked a question on discounts. So, obviously, at the moment, we're happy with the feedback from physicians on patient adherence. We're seeing persistence and discontinuation rates similar to what is seen with the anti-VEGFs in wet AMD. A key driver of compliance is patient motivation. These patients are really committed to staying on drug to preserve their vision. 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.

Thank you.

And one moment for our next question. Our next question will be coming from Steve Seedhouse of Raymond James. Your line is open.

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 Epivelynex, or do you have a timeline set for when you'd articulate further clinical development in kidney? Thank you.

Thank you so much for that question. So, not yet. Just a short answer.

But, you know, we're working hard, and in the next couple of months, we will provide more clarity. Thank you.

And one moment for our next question. Our next question will be coming from Phil Nadeh of TD Cohen. Your line is open.

Good morning. Thanks for taking our question. One follow-up and then one extra question from us. Tim, you've been very clear where gross net's going. I'm still not entirely clear where gross net actually was in Q3. Could you quantify what the gross net was in Q3? And then in terms of going forward, there's been some reports of vasculitis for iZervay in the adverse event database at the FDA. Has that had any impact on prescribing in the market from what you've seen? Curious to get your feedback from your feet on the street on those reports. Thanks.

Yeah, thank you, Phil. You know, we previously had guided from the beginning of the launch of growth to net in the 10% to 20% 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.

Got it. Thank you.

Thank you.

Sorry. Bill, you had a follow-up to that?

No, no. I was just saying thank you. That's very helpful.

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 St. Fovri stands out head and shoulders. We are the only product with increasing effects over time with every other month dosing and with both foveal and sub-foveal patients included in our data set.

Great. That's helpful. Thank you. Thank you.

And our next question will be coming from Akash Tiwari of Jefferies. Your line is open.

Hi, this is Kathy on for Akash. It seems like your competitor is spending on promotional efforts for iSurvey with an increase in SG&A spend associated with iSurvey of $127 million for six months of sales of $185 million. So during a similar time period for SISO rebounds, so like 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 spent in 2025, do you think it'll be much different from the spend this year since you're investing in DTC this year already? Thank you.

Yeah, so thank you. I'll quickly start out and I'll turn it over to Adam. we don't actually break out exactly what we're spending specifically on commercial first-life ovary. 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 metrics like ROI. And for that answer, I'll turn it over to Adam. Yeah, thanks, Kathy.

So, we look at every initiative from an ROI perspective. So, We analyze it internally on a regular monthly cadence and take a big initiative like disease state education pivoting to DTC with Henry Winkler. We do a robust ROI analysis on that. We actually believe that that's a really, really sound, 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. This is a really, really big market, and we've only just started to scratch the surface. So the more effective we are at executing our plan and balancing what that looks like from an ROI perspective, the better the results will be.

Okay, great. Thank you so much. And one moment for our next question. Our next question will be coming from Ellie Merle of UBS. Your line is open.

Okay. Hey, guys. Thanks for taking the question. I want to talk a little bit more about the volume trends that you're seeing. So specifically, you said that you expect the sales ramp to be more gradual going forward. Just in terms of vials shipped, 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.

So I think that I think that we did give 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.

Okay, thanks.

And our next question will come from Annabelle Samimi of Stiefel. Your line is open.

Hi, thanks for taking my question. So, you know, I guess from the initial launch, it looks like you got a lot of low-hanging fruit. Now it's a bigger 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? 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 optometrist and the ophthalmologist come in because there may be less severe? So I just wanted to understand the dynamic there of what types of patients you're starting to see from those specialists, from that group.

Thank you, Annabelle. 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 uncertainties, people not knowing how to think about efficacy, how to think about safety, etc., That is slowly dissipating, right? So we're going to end up next year in a situation where, you know, kind of from a, 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, you know, very good, a state where physicians and patients can make an educated decision on treatment. And that's something that we really look forward to. Caroline, I don't know if you want to add something to that.

Sure. I can add from what my colleagues are telling me and from what I'm seeing myself. You know, this is a novel mechanism of action, and we have a new treatment paradigm. And there's still many patients who are coming into the office who are always having patients referred with macular degeneration 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. I think that physicians are having conversations with their patients, and they really center around efficacy. Now, of course, whenever we have a treatment, safety also plays a role, but patients are really driven by efficacy and the flexibility of dosing with six injections a year. And then I think the other thing that moves the needle for physicians is is we have a lot of long-term robust data. In addition to Gale, where patients have already had five years of full treatment, we have a real-world Garland study, and then there are four real-world studies done unrelated to a pellet. And that really, in many ways, 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. 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. um 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 their disease um we find it takes between six to nine conversations to get a new physician on board with the efficacy and the um and the benefit risk for cyphovaries 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.

Thank you. And one moment for our next question. Our next question will be coming from Francois Brisebois of Oppenheimer. Your line is open.

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, did you give us any color in terms of what factors may have contributed to that, anything around that recent uptick? Thanks. Thank you, Russell.

Yeah, thanks, Sam. Yeah, so we continue... 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 Sifo-V can bring, increasing effects over time, flexible dosing, well-documented safety, and the significant real-world experiences. 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.

And one moment for our next question. Our next question will be coming from Douglas Hale of H.A. Wainwright. Your line is open, Douglas.

Hi, good morning. Thanks for taking the questions. Maybe, Adam, just as a follow-up on that, I'm just curious. in terms of if you could provide some color in terms of the messaging and what resonated with physicians to drive 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?

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-subphobial patients, flexible dosing, and well-documented safety. We have been very transparent on our safety. And we have communicated that to physicians to make sure that people understand the fact base behind our efficacy as well as our safety. 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.

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's retina physicians run by retina physicians. It's their organization, and 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.

And I guess just as 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?

Yeah, Doug, we've been consistent that we believe that this is a market that's going to be driven on efficacy. 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.

Okay, great. Thank you so much.

And one moment for our next question. Our next question will be coming from Lachlan Hanbury-Brown of William Blair. Your line is open.

Hey, thanks for taking the question. We've already had a few questions this morning around the October trends for syphovory. It sounds like you've recovered new fetish air and you're seeing decent growth, but you're also guiding to sort of low to mid single digits. 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?

I'll just start out and then I'll turn it over to Adam. What Adam said is 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. So I think our confidence is over the long term, is quite strong that the efficacy profile of lysofobry will dominate over time. But, you know, in the short term, these dynamics take some time to take effect, right? We have certain initiatives we're putting in place like DTC and others that we've described, as Adam talked about, 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 through it to take that approach and to say, look, you know, low to mid single digit growth in a vial 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.

And one moment for our next question. Our next question will be coming from Derek Archila of Wells Fargo. Your line is open.

Hey guys, thanks for taking the questions. So just, I wanted some help reconciling your comments on reaching profitability with current cash 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? 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.

Sure. Thank you. That's a great question. 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. 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, and then our cash objects of roughly $180 on the SG&A and R&D lines, you get to the fact that we're basically neutral on a 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 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. 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, we are pretty much nearing, if not around, break even. So 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, so we don't see any immediate need or risk from a capital perspective.

Got it. Thank you.

And one moment for our next question. Our next question will be coming from Barin Amin of Piper Sandler. Your line is open.

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? And for 2025, what's the SG&A increase that we should expect for C3-MPGN? I think Navar has mentioned that they have about 100-plus-person sales force dedicated to nephrology. Thank you.

Hey, Barron. Yes, it's Adam. So switching first on SIFO read. So obviously, our data analysis suggests that switching does occur, but we actually think it doesn't happen that frequently. 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. When it comes to infrastructure for the nephrology indications, 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 compete to get those patients with the great profile that InfoValue is showing.

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. and go in both directions. The other aspect is, as it relates to C3G and ICMPGN, again, reiterating the fact that we were not asked to submit the 12-month data, but the six-month data was sufficient. We had a pre-NDA meeting that was scheduled with our team in Washington. Meeting got canceled because all questions were answered. So, again, very exciting program for us that we think will add meaningfully to what we are doing.

Great. Thank you.

And one moment for our next question. Our next question will be coming from Lisa Walter of RBC. Your line is open.

Oh, great. Thanks so much for taking our questions. Maybe just one on syphovory and given the recent negative DHMP opinion and also your competitor withdrawing from filing in the EU, how are you thinking about the possibility of potential approval and other extradition ex-US geographies, particularly the UK, Australia, Canada, Switzerland. And also, beyond those four countries, are there any other large foreign markets that are also on your radar? Thanks for taking the question.

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 EMIS guidance. They used to be within something called the Access Consortium. So we continue to have positive and robust conversations with those geographies. We also will move forward in areas where the US file is required. So we started to build a lean infrastructure in Brazil to get ready for those regulatory interactions. And we have distributors who will help partner with us to get to other smaller markets where the US filing is accepted. 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.

Got it. Thanks so much. And one moment for our next question. Our next question will be coming from Greg Harrison of Scotiabank. Your line is open.

Hey, good morning. Thanks for taking the question. Looking at the feedback from ASN, everything 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.

something we're really excited about. And to your point, ISN was a very pleasant conference for us to attend. 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. Think about that, right? I mean, that is what these data really represent. So really excited about that. Competitively, as I mentioned before, you know, 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 these dramatic effects. And Caroline, maybe you want to add something to that.

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. I mean, to see this sort of effect is really remarkable. And I think one thing that was really important for them was that the effects started as early as four weeks in these patients. And as a physician, why wait for kidney disease 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 were 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. So across the board, everyone was very excited for this.

And one more.

One moment for our next question. And our next question will be coming from John Miller of Evercore, your line is open. Again, John Miller of Evercore, your line is open.

Moving forward to our next question.

Our next question will be coming from Greg Savino of Mizuho Securities. Your line is open.

Good morning. Thanks for taking my question. My question is on your longer term and perhaps aspirational view around potential peak penetration of the complement inhibitor class, you've been great about providing granularity on current penetration, which I believe you said earlier 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.

Thank you, Ray. Carolyn?

Well, I think that no one should be deprived of this treatment. And our patients are only getting older. You know, 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 retina. So I think that, you know, hopefully we will continue. So chronic disease will continue to have the penetration go up.

We're just really at the start. And one moment for our next question.

Our next question will be coming from Laura Chico of Wedbush Securities. Your line is open.

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.

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.

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% of all of CyphoBreeze prescriptions. Physicians and patients believe in the efficacy and the flexibility of every other month dosing.

So we expect that to stay the same as we move forward.

One moment for our next question. Our next question will be coming from John Miller. Your line is open.

Hi, guys. Thanks for taking my follow-up here. I'd love to ask more on the kidney indications. How do you expect Obviously, it's a little early to discuss eventual label, but 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?

Thank you, John. So that is, we're not going to comment on what we expect in the label, but to your point, we studied pediatric adults, 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. So it's really a very narrow population compared to what we studied in Valiant, where across the board we saw the same efficacy profile. And again, the benefit of being able to file with the six-month data is a reflection of the robustness 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. 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. So really important indication, and we believe a tremendous first-line and all-encompassing solution for these patients.

And I would now like to turn the call back to Cedric for closing remarks.

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.

And this concludes today's conference. Thank you for your participation. You may now disconnect.