Apellis Pharmaceuticals, Inc.

Hello everyone and welcome to the Q1 2025 Appellate Pharmaceuticals Inc. Earnings Conference Call. At this time all participants are in a listen-only mode. After the presentation there will be a question and answer session. To participate you will need to press star 1-1 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question simply press star 1-1 again. Please be advised that today's conference is being recorded. Now it's my pleasure to turn the call over to the Vice President of Communications Tracy Venise. The floor is yours.

Good morning and thank you for joining us to discuss Appellate's first quarter 2025 financial results. With me on the call are co-founder and chief executive officer Dr. Cedric Francois, chief financial officer Tim Sullivan, executive vice president of commercial David Acheson, and chief medical officer Dr. Caroline Baumel is on the line for Q&A. 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 Tracy and thank you all for joining us this morning. As many of you know Appellate is a commercial stage biopharmaceutical company with two approved C3 targeting therapies Seif-Overy and Empaveli and a growing pipeline of novel therapeutic compounds. Our focus is on addressing diseases with significant unmet need through targeted inhibition of the complement system. The first quarter of 2025 presented a combination of challenges and progress. Despite growth and injection demand we faced a unique set of market dynamics that impacted Seif-Overy revenue performance. Meanwhile we advanced Empaveli closer to its second approval with the FDA granting priority review designation for C3G and ICMPGN and a PDUFA date that is now less than three months away. Let's begin with Seif-Overy. While first quarter Seif-Overy injection demand grew 4% quarter over quarter revenue came in below expectations. We believe that this shortfall was primarily driven by two factors. As mentioned already in our Q4 earnings call there were funding shortages at third party co-pay assistance programs. There was also a larger than expected drawdown of total channel inventory during the first quarter including in physician offices. Tim and David will share more details on these dynamics shortly. Competitively we continue to strengthen our market leadership within Geographic Atrophy. Seif-Overy maintains more than 60% of the overall market and new patient starts continue to grow exceeding 50% during the first quarter and already reaching 55% by late April. GA represents a significant unmet need and GA therapies are only in the early stages of adoption. We expect continued but modest market growth in the near term and are confident that our efforts in the field will translate into meaningful growth for Seif-Overy over time. Shifting now to Empaveli where we are gearing up for a major launch of our second potential blockbuster opportunity. We have made significant strides towards our goal of bringing Empaveli to more patients in the first quarter. Supplemental NDA for C3G and ICMP-GEN was accepted by the FDA and granted priority review designation with a EDUFA date of July 28. The phase 3 valiant results demonstrated Empaveli's potential for disease modification across all patient subgroups achieving the trifecta of glomerular disease endpoints. First, an unprecedented 68% reduction in proteinuria. Second, stabilization of kidney function as measured by EGFR. And finally, substantial clearing of C3C staining. We look forward to presenting the valiant 52-week data at the European Renal Association Congress in early June. US approval and launch of Empaveli in C3G and ICMP-GEN will represent Aperis' third new product launch in just four years. We are carrying this momentum forward and looking to build on the success of Empaveli in rare nephrology indications. We remain on track to initiate pivotal studies in focal segmental glomerulosclerosis and the LACE graft function in the second half of this year. I will now turn the call over to Tim to provide a review of the financials from the first quarter.

Thank you Cedric. We are very encouraged by the growth in syphovore injection demand during the first quarter. Injections are the true measure of demand and this performance gives us confidence that the market for syphovore is growing. However, syphovore net product revenue was $130 million for the first quarter, which was down due to two primary factors. First, there was a unique inventory dynamic impacting the first quarter, as you can see on slide six. During Q4, physician demand drove a larger than expected build of inventory in physician offices, which led to a corresponding inventory increase at the distributor. We believe this increased physician demand was driven by stronger preference for syphovore and regulatory concerns for the competitor product. Then, in Q1, we saw a drawdown of inventory at both the distributor and physician offices, and total channel inventory returned to more typical levels by the end of the quarter. Most of the -over-quarter revenue decline was related to this Q1 channel inventory drawdown. The second impact to syphovore revenue was a funding shortage at third-party co-pay assistance organizations that resulted in increased physician and patient reliance on samples. As we discussed in our fourth quarter call, in connection with the funding shortage, non-revenue generating sample doses delivered were more than twice the average seen in previous quarters. We expect a similar amount of samples to be used going forward. We estimate that this shift to sample use impacted Q1 revenue by approximately $10 million. To put it simply, adjusting Q4 and Q1 for this inventory dynamic, revenue would have been consistent -over-quarter. Without the co-pay assistance funding shortage, we would have expected growth to have been more in line with injection growth. We've spoken about demand, and now let's turn to price dynamics. We continue to diligently manage our ASP, or average sales price, and expect the syphovore revenue growth to net percentage to be in the low to mid-20s through 2025. Turning now to operating expenses. We executed significant cost savings in late 2023 and have since maintained that financial discipline into 2025, completing the necessary reduction in our EU commercial infrastructure, while also efficiently scaling for a successful launch in C3G and ICMPGN. We continue to expect that our 2025 operating expenses will remain in line with our 2024 operating expenses. Also, we are closely monitoring the tariff situation and will take steps to mitigate any adverse impact it could have on our business. With $358 million in cash and cash equivalents at the end of the first quarter, we remain confident that our existing cash, combined with future product sales and ex-US royalties, will be sufficient to fund our business to profitability. I will now hand the call over to David for a commercial update. David?

Thank you, Tim, and good morning, everyone. In the first quarter, there were approximately 92,000 syphovore doses delivered to physician offices, including 82,000 commercial doses and 10,000 samples. As Tim and Cedric noted, there is a funding shortage at the copay assistant programs that has impacted demand for commercial doses, resulting in increased sample usage. Despite this headwind, we successfully drove growth in total injection demand in the first quarter. Syphovore remained the clear market leader with overall market share exceeding 60% and share of new patient starts above 50%. Injection demand continued to grow, with the share of new patient starts already reaching 55% by late April. There remains tremendous opportunity in the GA market. We've put several initiatives in place to continue to drive demand and new patient starts, including leveraging our DTC campaign, where we have seen a meaningful increase in traffic to syphovore.com relative to the monthly average in 2024. Once patients reach our website, they can use our Find a Doctor tool to identify retina specialists that are experienced in treating GA. We are highlighting syphovore's unique 48-month Gale Extension study results that demonstrated syphovore's ability to preserve meaningfully more retina tissue when physicians treat patients early and keep them on treatment over time. We've built a robot field team that is focused on growing the market through educating optometrists and ophthalmologists on the importance of treating GA and syphovore's differentiated product profile. We also provide resources so that the GA patients can seek treatment with a retina specialist. To mitigate issues with the co-pay assistance programs, we are launching education programs on best practices for managing patient reimbursement. We're working to educate practices about patient benefit designs, potential impacts to -of-pocket expenses, and how our Appellus Assist program can offer education to retina offices. Syphovore's gains in new patient starts reflect that its differentiated profile is resonating, driven by its robust efficacy, flexible dosing, and preferred position with many payers. Turning now to the anticipated launch of Emphaville in C3G and ICMPGN. The commercial and medical teams are ramping up their efforts in anticipation of Emphaville's potential label expansion later this year. We are executing several pre-launch activities and working to drive disease state awareness. Our approach to maximizing the potential for Emphaville in these diseases is three-pronged. First, highlight the urgency for a treatment that addresses underlying disease pathology. Second, ensure seamless access to treatment for patients upon approval. And third, establish Emphaville as the market leader in C3G and ICMPGN. Our field teams are already in place and building relationships with key physician accounts. We're working with payers to ensure coverage and access to Emphaville upon approval. We're also engaging with physicians and KOLs at medical conferences. The U.S. commercial opportunity is significant with an estimated 5,000 C3G and ICMPGN patients. Given the strength of the Valiant data, we believe Emphaville will be used across all patient groups and disease severities. As many C3G and ICMPGN patients will progress to end-stage renal disease, physician feedback has been consistent that treatment choice will be primarily based on efficacy, not route of administration. As Cedric mentioned, full 52-week data from the Valiant study will be presented at the ERA conference in June. We expect this to drive further excitement for Emphaville within the treatment community. Switching now to P&H, net product revenue for Emphaville in the first quarter was $20 million. Compliant rates remain high at 97 percent and the safety profile remains consistent with our previous updates. With that, I will now turn the call over to Cedric for closing remarks.

Thank you, David. As we discussed, there is a lot to look forward to. The remainder of 2025 will be a pivotal year for execution. I am confident in our team's ability to capitalize on the strong position demand for sephulury and I am excited about the potential for Emphaville to transform the treatment in C3G and ICMPGN. We continue to make progress towards becoming a profitable, well-established biopharmaceutical technology company with a promising pipeline and approved products across retinal, niprology, and hematological diseases. Our objective is clear. Successfully execute our strategy, drive revenue growth, maintain financial discipline, and most importantly, continue to deliver meaningful treatments to patients in need. Before I open it up for Q&A, I would like to take a moment to welcome the newest member to our board of directors, Craig Wheeler. Craig is the former CEO of Momenta and founder and CEO of Headwaters Biotech Advisors. He has more than 30 years of leadership experience across the biopharmaceutical industry and has successfully grown companies into strong commercial organizations with robust pipelines. His expertise will be a tremendous asset and we are thrilled to have him join the board. With that, I'll turn the call over to the operator for Q&A.

Thank you so much. As a reminder, to ask a question, press star 1-1 on your telephone and wait for your name to be announced. To remove yourself, press star 1-1 again. As a courtesy to other analysts, we ask that you please keep your questions to one. Thank you. Please stand by for our first question. It comes from the line of John Miller with Evercore. Please proceed.

Hi, guys. Thanks so much for taking my question and congrats on all the progress. I would love to just be really, really clear about 1Q volume dynamics, I guess, in my question. Obviously, there's a couple of moving parts to this, but I just want to sort of square the circle between your disclosures last quarter and your disclosures this quarter. Last quarter, aggregate volume was 94,000 vials. This quarter, it's 92, but your graph shows demand continuing to grow. Last quarter, you called inventory build not significant, I think, in your Q&A. Obviously, this quarter, you're saying it really was a more substantial change. The lack of funding to the copay assistance program was a known headwind we talked about last quarter, but it seems like maybe that's larger than it was expected. Do we know when that's going to roll off or how all of these dynamics are going to change as we move forward to the rest of the year? Can you sort of square those circles on volume changes for Q to 1Q for me?

Thank you so much, Sean. Great to hear you. Well, I will hand it over to Tim for details. What I want to stress is that we've had quarter over quarter growth in demands as measured by the number of injections that are given to patients with geographic atrophy with Q1, as you correctly indicated, being the largest quarterly injection volume since the launch. That injection volume is a combination between commercial injections and sample injections. That is the true measure of demand. As you correctly alluded to as well, of course, samples are the ones that are mostly impacted by what is going on with the copay assistance funding situation. I'll hand it over to Tim to talk more about the inventory.

So there were a lot of questions within that question. I'll try to touch on what I think was your main question there, which is, as Cedric said, there's 4% growth in injections. That injection growth constituted both commercial doses and sample doses. Those are sample injections and commercial injections. When you look at what we deliver, that's what's sent from, if it's commercial doses, that's what's sent from the distributor to the physician. That's different from what the physician puts in the eyes. That's an injection. Let's make that distinction very clear. We saw what we had was an inventory build at the end of Q4, both at the ECP level, that's at the doctor's offices in their fridges, and at the specialty distributor. What we saw in Q1 was a wind down of that inventory at the ECP level, which went to injections into the eye. We also saw an increase in the number of samples as a result of the switch that came from the underfunding of the copay assistance organizations. That also impacted how much these doctors were ordering from the specialty distributor. We had a drawdown. That's where you see this reduction in vials delivered. That lower demand for vials delivered was because of the increase in inventory at the ECP level. They had to wind that down. That's why you're seeing a difference between vials delivered and the injection growth that we saw. I don't know if that clarifies your question or if there's some other piece to it, but that's where the discrepancy lies.

Sure, thank you. That makes sense. How do we think about that going forward into the future with sampling volumes presumably continuing to remain high?

What we saw was we saw a drawdown in the total channel. This ended up impacting not only the increase in inventory at the ECP level, but also at the distributor. We don't know exactly where the world will end up from an inventory perspective, but what we can tell you is that inventory at the end of the first quarter looked a lot like inventory in prior quarters, excluding obviously the fourth quarter. Going forward, the impact really from a demand perspective really is there's this ongoing use of samples we expect that's roughly about the same as what we saw in the first quarter. From a commercial perspective,

we hope to be basically at a baseline right now. You're not expecting this copay

assistance underfunding issue to be resolved anytime soon?

We're not expecting that to be resolved anytime soon, but I think when you get to this inventory impact and vials, so doses delivered, those were the two concepts you were talking about, those should be on a more normal and steady state going forward, excluding obviously what's shifted to samples over time would be great. David can comment on the potential to switch those samples to commercial over time. Hey,

John. It's David. Thanks for the questions. I appreciate the discussion this morning. We are working diligently to understand and we know where the samples are being used in place of commercial injections. One of the things that we have done is we've done a lot of work with the offices to make sure that we're educating the practices around the patient benefit designs. We've actually got some new programs and other work that's being put in place by the teams inside those offices so that we can transition those patients that are on samples over to commercial paid-for doses that are being used. The work is in progress and over time I think we'll see that shift, but right now we do anticipate the samples to be about the same.

Thank you so much.

Thank you. Our next question is from Tassin Admad with Bank of America Securities. Please proceed.

Hi, guys. Good morning. Thanks for taking my questions. I did want to ask about your calculation of new patient share. It does seem a little bit different than the calculation. Your competitor stated on their first release a few weeks ago or a couple weeks ago, can you tell us how you derive share with new patients? And then how are you thinking about the potential for providing sales guidance? Again, the competing product company has issued sales guidance which seems to assume pretty steep uptake going forward. You're not responsible for their guide, but what would you need to feel comfortable with on your end to provide sales guidance for CIFO? Thanks.

Thank you, Tassin. I will hand the first part of your question over to David and then Tim will talk about guidance.

Hey, Tassin. Thanks for the question this morning. So one of the things that we do is we purchase a site of care data set that covers about 50% of the market that's very accurate. And we feel our data sets are as accurate as you can get in space. We know our competitor talked about claims database type of data, which we know is not as accurate and only covers a small portion of the market. At a high level, what we're focused on is growing the CIFOBRE leadership position, which we're clear in doing. And you can see that in the new patient starch growth. And we're trying to go to the market as quickly as we possibly can around that. So we've launched several near term initiatives and long term initiatives to manage through that, which we can certainly talk about. I'll hand it over to Tim on the guidance part.

Sure. Thanks, Tassin. So from a sales guidance perspective, we've obviously had a couple of pretty big dynamics happen over the last two quarters. We have the CRL for the competitor. We also have this underfunding of the patient co-pay assistance organizations. So I think we really need to enter more of a steady state before we think about guiding around CIFOBRE. Married with that, we also have a new launch in C3G and ICMPGN, which we're really excited about, which comes with a little bit of how big is this. And when we feel comfortable guiding, we probably want to guide on both products. So that's probably the best thing

to do right now. Thank you, Tim. Just maybe one brief touch, Tassin, what you mentioned as well. I mean, for us, what is most encouraging is how quarter after quarter, since the early fall, we keep gaining on that new patient share. So the relative evolution over time creates a very clear trend for us.

So I did want to follow up on that, Cedric. I think the reason why people would like to see you provide sales guidance is because there's a question about how big the number of patients is large in GA, but how much of it is actually addressable in this market. I think people are trying to figure that out. And one of the two companies has provided what their view of what they think they'll do this year is. But when do you think, forget about C3G, let's talk about Cyphery, which is a much more mature launch. When do you think, I mean, is it possible at all this year that you would feel comfortable?

So I don't think it's likely we'll provide guidance this year. We don't do interim guidance. We'll consider it probably towards the end of the year, next year, but we're not committing to it.

And I think that's just kind of to the broader point of adoption. You know, we see, as you see quarter over quarter, that growth is there. It's steady. It is, you know, it's a new space, a new disease indication, new therapeutic modality. These things take time to find a place of adoption. But as you correctly outlined, only a very small portion of patients with geographic atrophy have been treated so far. And the shift that we see gradually in the community of physicians is meaningful. And maybe Caroline is here with us. She can maybe briefly comment on this as well.

Thank you, Cedric. Hi, Tuzine. I think that similar to the wet AMD market, which started in a similar way that took physicians a little bit of time to adopt the treatments, the anti-vederov treatments, but there's continually more patients to treat. It doesn't stop. That we'll find the same thing with GA patients. I mean, it's the same population. Patients develop both diseases in both eyes and there's a lot of overlap. So I think this market will continue to grow. And that's based on my experience

as well.

Thank you. One moment for our next question, please.

It comes from Anupam Rama with JPM. Please go ahead.

Hey, guys. Thanks so much for taking the question. Can you help us understand a little bit the payer landscape post the label update for Isove? And what are the strategies to get some formulary wins here on the payer side? Thanks so much.

Thank you, Anupam. Great hearing you. Let me hand that over to David

to answer.

Hey, Anupam. It's David. Thank you for the question. So we have been very open and very clear that we've had preferred positioning with SIFOVERY on a number of plans, in particular some of the large Medicare Advantage plans. And that continues to exist. We haven't seen significant changes with the label update that's happened with our competitor. And in particular, I think what really drives a big part of that is that we have efficacy data with every other month dosing or up to six, as few as six doses a year. So a major differentiator for us with our data and with our label. But we continue to see preferred positioning

and nothing has changed moving into this year. Thanks so much for taking the question.

Thank

you.

One moment for our

next question, please.

It comes from the line of Salvin and Richter with Goldman Sachs. Please proceed.

Hi, this is Srinath Rao on for Salvin. Thank you for taking our question. So could you speak to this is with regard to APL 3007, where you're initiating a phase to study with SIFOVERY in Tokyo. Could you speak to the magnitude of expected benefit from this combination versus SIFOVERY alone?

Thank you so much for that question. So I quickly repeat it because your line was a little bit muted. So the question was whether our 3007 program where we combine a subcutaneous injection with an SIRNA product that brings the systemic C3 levels down by approximately 90%. If when we combine that with the intravitro injection for SIFOVERY, which we are currently doing as you know every two months, but we plan to also test with an every three month injection. So a combination of intravitro administration with this new product subcutaneously. The question is, what is the magnitude of benefit that we can expect from that? So this is a very exciting program for us. I think that this will be, we obviously believe that this will be the next big innovation in the space in geographic atrophy. We believe that the protection that SIFOVERY has on photoreceptor cells by the analysis that we have done on the photoreceptor cells specifically is pretty much as good as it can be. The protection on the layer below that, which are the retinal pigmented epithelial cells, we have increasing effects over time, slowdowns of 30 to 40, even though we're up to 42%. There we think we can further improve and have an impact beyond that 40% threshold that we're bumping into right now. So if we could get north of 50, that would be an important improvement. We are also going to use these next clinical trials to apply everything that we learned in terms of how you can measure the functional impact on vision with these therapies and be

able to assess that much better than we have been able to do in the past.

Thank you. Thank you.

Thank you. Our next question comes from Steve Seedhouse with Cantor. Please proceed.

Good morning. Thanks so much. I wanted to ask specifically about, I appreciate the comments that you're not expecting a near-term resolution to the charity, the copay assistance situation, but the question is, are you in dialogue with other industry members seeking a solution? It sounded like Regeneron was open to contributing again either to Good Days or to a new entity, something similar, but basically wanted others in the industry to pony up as well. So are you in dialogue with folks, Regeneron or others, and is Appellus willing to pay some prorated amount along with other industry members into Good Days or some similar charity to bring that back online? Thank you.

Thank you so much, Steve, for that question. So the answer to that question is no. We respect the full independence of these co-funding or these copay assistance organizations. We do contribute to them typically at the beginning of the year, but sometimes that can also happen throughout the year, but we keep that as an entirely dissociated contribution from what we do, obviously,

with Teffulvia as a commercial product.

One moment for our next question, please.

Comes from the line of Colleen Cossie with Baird. Please proceed.

Hi, good morning. Thanks for taking our questions. We have a follow-up on that. What do you see as the risk of the third party copay assistance program coming back at all? Do you think that that's definitely going to happen, or is that a risk that that part of the business might go away completely?

Thank you, Colleen. I will hand that over to David.

Yeah, Colleen, look, thank you for the question, first of all. We don't know. It's unpredictable, right? I don't know what will happen with the funding of the foundation overall. We have taken the approach that we anticipate, and we're working under the assumption that it won't, and that's why we do anticipate our sampling and our injections to continue to grow, but the balance between samples and commercial doses that are out there will be balanced a little bit differently. So that's where we sit on our observations of

it. Understood. Thank you.

Thank you. Our next question comes from the line of Phil Nodal with TD Cowan. Please proceed.

Hi, this is Alex on for Phil. Thanks for taking my question. Could you comment maybe on the potential tariff exposure for Cytfobri and Empovelli, and to what extent is manufacturing located at XUS? Also, where is the Pellis's key IP domiciled? Thank you.

Thanks. Yeah, this is Tim. I'll take the question. Appreciate it. Unfortunately, there's not much we can say to any of the really three parts to your question. So first, we're analyzing any potential exposure to tariffs, and obviously, mitigation tactics under these multiple tariff scenarios are being evaluated, and we'll provide updates when we can on that, but we really don't have much more information. We do talk about, and we have disclosed where our drug substance for Cytfobri is manufactured, which is at Bakken, and that are not for drug intermediate where that is produced. So those are Switzerland and Japan, respectively. We haven't disclosed who we work with on drug product, nor have we disclosed where our IP is domiciled. So I'm afraid there's not a lot to tell you on those answers.

Understood. Thank you.

Thank you. Our next question comes from Eliana Merle with UBS. Please proceed.

Hey, guys. Thanks for taking the question. Looking at the revenues reported versus the amount of commercial vials that you shipped, it does look like the net price per vial has gone down a bit. Can you just help us understand the dynamics here and what you saw with net price in 1Q? I know you commented you expect gross to net in the low to mid-20s over 2025, but can you just clarify how that could potentially vary quarter to quarter and what you saw specifically in 1Q? And then I have a follow-up question after.

Thanks. There's going to be a lot of those. Okay. So first, let me start out with the difference between revenue recognizing and then vials shipped or doses shipped as we disclosed it. So the first thing is we recognize revenue when a dose is shipped to the distributor. That's not what we're disclosing to you in terms of vials shipped or doses shipped. That's from the distributor to the doctor. So those are disconnected and you can't back into the price, the net price that way. Okay? So that's the first thing. And we talked about some of the inventory dynamics that changed how those ordering patterns were happening for the physician from the distributor. Again, that's what we disclosed, but that's not what the revenue recognition comes from. So I hope that answers your question. But from a gross to net perspective, we were on the low end of the 25% range this quarter. And it does fluctuate. We obviously gave the guidance that through the end of the year, it would be between 20% and 25% or low to mid-20s.

Great. Thanks. That's helpful. And then just in terms of the demand growth, can you just elaborate a little bit more on what you're seeing in two cues so far? So this 4% injection growth that you saw in one cue, I guess, is this fair for us to assume going forward in terms of injection growth and how you're thinking about that? Thanks.

Thank you so much for that question. And also, again, without providing guidance, I think what is really important here, what you picked up on, is that this quarter over quarter demand, as measured by the number of injections that are given to the number of patients that are out there, continues to grow. And last quarter, consequently, was the largest quarterly injection volume that we saw. That is not something that we expect to change. We are very early in the launch still, in many ways. Only small percentage of patients have been treated. And as Caroline alluded to earlier, this is something where when you speak with physicians that have properly adopted the product, you will find numbers ranging all the way from, I will treat between 30 and 50% of my patients with geographic atrophy. So we're only in the very beginning stages. And I think as physicians become comfortable with understanding the mechanism, the disease, the drug, that will continue to grow.

One thing that we're doing is we're introducing tools to help physicians and patients realize benefits of our product. And being able to pull these into practice, we presented on a GA prediction tool. We're working across multiple imaging and AI studies to give the physicians the tools that they need for their patients.

Great. Thanks.

Thank

you.

Our next question is from Annabel Samimi with Stiefel. Please proceed.

Hi, everyone. Thanks for taking my question. Just going back to the issue of the inventory, I realize that you get some build in the fourth quarter on the holidays, but you didn't know last quarter that it wasn't outside of the two to three week norm. So maybe you can help us understand the extent to which the build was from the eyes of a CRL and not being comfortable with that product during that CRL period. And now seeing drawdown based on more comfort with eyes survey, with the label expansion. Have the conversations changed at all since their label update? And maybe I missed this, but maybe you can quantify what that inventory impact was?

Sure. I'll start and then I'll give, hand it over to David for what the latest conversations are with the physicians on this topic. But in terms of what we saw in December, right after the CRL, we saw a sharp increase in demand for Stiefel ovary. Okay. That is in terms of doses ordered to the physician's offices, but it also correlated to three very important metrics. The first one was an increase in Stiefel ovary total injections in December. The second one was an increase in new patient share of injections. And you've seen that continue, obviously in the chart that is in the deck. And then finally, we saw a sharp increase in switches from the competitor product. So all of these things together, you know, contribute to the increase in inventory that we saw. Now in Q1, we saw this drawdown to more typical levels, and that was probably impacted further by the underfunding of this co-pay assistance organization dynamic that we talked about. But there's no question that the, you know, that the CRL for the competitor, as well as the more limited label that they achieved, has really changed that conversation. So with that, I'll turn it over to David to talk a little more about that conversation.

So

Tim mentioned that one of the dynamics that we benefited from and took an opportunity to grow Stiefel ovary was the CRL and the label situation, the regulatory situation that our competitor was under. And obviously that drove some business for us and actually we continued to benefit from that. In the offices, I can tell you they, there's definitely more of a cover level that the product, the competitive product will be reimbursed. But here's our differentiator, right? This is both with the physicians and with the payers. We are the only product that's got every other month dosing opportunity with high efficacy. And that's a separator, both with the physicians and patients, as well as at the payer level. So even though there was a little change that opened up the 12 month restriction for our competitive product, we clearly have benefits that they

do not have. And that's where we're growing the business today.

Thanks. Thank you.

Our next question is from Byron Amin with Piper Sandler. Please proceed.

Yeah, hi guys. Thanks for taking my questions. You mentioned that samples increase about 5,000 vials quarter over quarter. I assume that increase was largely due to the foundation use. So can you maybe confirm that that increase quarter over quarter was due to the fact that there wasn't a co-pay assist through the foundation? And I guess going forward, should we expect that your samples will continue to grow as you know, new patient growth continues and you'll have more patients go on the samples without having a co-pay assist?

Thank you, Byron. I will hand it over to David to speak about kind of the trends moving forward and what we expect and how we're working on that. But I think it's important for you to remember that when a physician administers a sample to a patient, they make significantly less revenue than if they actually administer a commercial injection to a patient. And what that indicates to you, and I think this is important, is that physicians care deeply about patients. They care about following up the treatment. They care about bringing new patients on it, even if that patient is not able to pay that co-pay, the physicians are trying to find ways to still treat these patients. And remember again, this probably affects up to as much as 20% of the patient's population. Now, the goal moving forward is how are we going to switch as much as possible from samples to commercial and they will

speak briefly to that.

That's

great. Thank you, Cedric. And look, I also look at samples as true demand, right? It could have been easy for physicians to not use a sample based on what Cedric just talked about, but what we're doing to mitigate the issues is a couple things. We are working specifically with the practices inside the reimbursement discussions, but we're also doing educational programs that have been updated for practice managers to talk to other practice managers about making sure that the benefit programs that, or the benefit programs that these patients are on, we can find ways to transition them from the samples to the commercial doses. And that is efforts that are currently underway

and have been since the middle of Q1. Thank you.

Thank you. Our next question comes from the line

of Igal Nokomowicz with City Group.

Please

proceed. Igal, your line is open. Please check your mute button.

Hello? Can you hear me?

We can hear you now. Please proceed. I was just

curious about the copay situation. What is your level of visibility on that resolving and the funding gap going away in the ophthalmology sector? Thank you.

Thank you. David? Yes, Igal, good to hear from you. It's like we talked about a few minutes ago. We aren't real sure. It's not predictable at all in what will happen with the funding issue that's out there with the copay assistance program. What we are doing is assuming that it will not be resolved, and that's how we're operating moving forward. And for us, it's about making sure we transition patients from the samples to a commercial dose as quickly as possible where we can educate offices to do that based off of benefit design and the plans that these patients are on. So those are the efforts currently underway.

Okay. And could you talk a little bit about your launch plans in C3G and ICMPGN? What are you working on now to have a strong launch out of the gates and have a differentiated message versus the oral competitor?

Yeah, great question. Thank you. So look, a couple things. We are in a situation now where we have all field teams and all of our teams are currently actively in the field working to profile accounts and to also understand the links between KOLs and where the patients are located. We've got a very specific set of accounts that we're spending time with now to profile and understand where to launch and then how to launch quickly. The other thing that we're working through is making sure that everyone through our medical affairs team that would like to know and understand the data can do that. Our biggest differentiators, of course, in this market is the fact that our efficacy is twice that of the competitive product. We also believe that efficacy in this space is going to drive decision making, not the route of administration. So we're focused on that as well. And at the end of the day, the teams have been out there since April and we've got until late July during the RUFA-DUFA and it's all about making sure that we're ready to go for launch as

soon as we get approved.

Okay. Thank you very much.

Thanks.

Your next question comes from the line of Douglas Cao with HC Wainwright. Please go ahead.

Hi. Good morning and thanks for taking the questions. I guess, David, just given your sort of comments that you don't assume the foundation will come back online, I guess I'm trying to sort of understand some of the steps that you can take in terms of benefits because presumably most of these patients have some coverage. It's just the out of pocket that they're not able to address. And so I'm not sure, it just might be helpful to sort of understand some of the steps that you might be able to take to mitigate that impact. And do you see yourself being more or less affected than your competitor and just the fact that you have sort of every other month dosing potentially become even more of an advantage in this environment for segments of the patient population? Thank you.

Absolutely. Thank you for the question. I think you answered part of the question at the end. So part of the advantage that we have is that we do have every other month dosing in high efficacy with that modality. I think one of the things in those offices for patients that would struggle to pay a co-pay 12 times a year can do that. That's half as many times as that, which is great. What we're doing to mitigate this is a couple of things to go a little bit deeper. We have a reimbursement team, as you're aware of, in the field. They know benefit plans and design by each one of these plans very, very well. One of the things that we do know about the reimbursement through the foundation is that in many times patients were going on reimbursement through the foundation that didn't need to. And it was a situation where it was just benefit design that was missed and we're making sure we're educating opposites so they understand that down to the patient level. The other thing is we're using Appellus Assist, which is our patient hotline and also works with our offices to help identify when these patients that have a benefit that will run, when the -of-pocket max is hit for a specific patient, we can help identify that for a specific patient and then work with the offices to get that patient in for treatment. So there's a fairly detailed plan behind the scenes that goes down to the patient level to help the offices manage with that.

Okay, great. That's very helpful.

Thank you. One moment for our next question. It comes from Lackland-Hambury Brown with William Blair. Please go ahead.

Hey, guys. Thanks for taking the question. I guess, you know, your competitor mentioned that they've sort of seen some signs of market growth. I know that's something that you've been investing in. So I was wondering if you can comment on, is there anything you've seen that suggests those efforts to kind of grow the market increase, you know,

diagnosis and referrals are starting to bear fruit? Yeah, thank you for the question. This

is David. So, you know, we are both working very diligently to grow the market. We have DTC plans in place with, as you know, for us, both on TV as well as digitally with Henry Winkler. We also have multiple different programs that are in place to help folks to identify patients that have GA, both in the treating offices and non-treating offices. We also have a very rosebush team that's built to focus on optometry and ophthalmology offices that are non-injecting. And their sole purpose is to educate on geographic atrophy, identifying the patients that have geographic atrophy, and then having the opportunity for those patients to have information and some sort of referral into an office that is an injecting office. And that is ongoing and has been ongoing since the first part of the year. So that's what we're working to do to grow the market and our competitors doing a number of like opportunities. What I can tell you is that, you know, the market's been relatively flat coming into our Q1, but, you know, we've been able to grow our new to brand starts real robustly since, you know, late last year, which gives us comfort that we're going to see continued growth

in our brand as well as in the market moving forward. Thanks.

Thank you.

Our next question is from Ryan Deschner with Raymond James. Please go ahead.

Hi there. Good morning. How likely do you think it is that the impact of inventory drawdown and copay funding shortages continue to have a significant impact on net sales of going forward in subsequent first quarters? And then I have a follow up.

Thanks. Sure. I'll take this question. So, you know, there are always little inventory fluctuations you really can't control. But these two events, the first one, obviously the CRL and the, you know, accelerated build that we saw in the fourth quarter, you know, obviously that's a settled issue at this point. And then in terms of the, you know, the copay assistance organizations being underfunded, we look at that as sort of a one time issue that has continued effect. So in that sense, there's no kind of event that's going to change any inventory dynamic. We would expect

neither

of these two

things would impact inventory specifically going forward.

And

then

can you tell us about your latest thinking on the impact of a new DTC campaign on sales across 2025? Thanks.

Yeah, so far it's been very positive. And what we can see early, because it started in January, as a brand and direct to consumer campaign, we can see a very high spike in the additional hits to our website, which is kind of an early indicator metric that we look at before we can get robust data switches or information on patients that actually go to product. And as early as we are, all of our metrics are up quite a bit. We're actually 30% higher this year, just alone in Q1, than we were all year last year on average per quarter on the number of actually website visits, as well as actions that people, either physicians or patients

take beyond that. So it's been positive so far. Thank you very much.

Thank you so much. Our next question is from Judah Frommer with Morgan Stanley. Please go ahead.

Hi, good morning. Thanks for taking the question. Just a couple more on sampling dynamics. We're extensively competition within sampling. Are you seeing the competitor provide more samples? And is there, I guess, some inclination to compete with their level of sampling? And then separately, is there anything you can share on sampling into newer practices that you're penetrating versus existing customers?

Thanks. Yeah, no problem. Thank you. So let me first comment on our sampling efforts. So our sampling efforts are there for physicians to take advantage of in their offices when they have patients they want to treat. And obviously, if the co-pay situation has gotten in the way from the foundation funding issue, they can certainly manage through that with an opportunity to treat patients. That is readily available for all offices. We can see it across both new and former treaters. And we do continue to add new treaters as we progress throughout the launch. So and samples are used in almost all offices across patients. I'm not going to comment on what we see from a competitive landscape. And we don't see that data specific to their sampling efforts. But for us, we know that it's something that's a good tool for us to use under our current circumstances.

Thanks. Thank you. One moment for our next question, please. And he's from the line of Greg Harrison with Scotiabank. Please go ahead.

Hey, good morning. Thanks for taking the question. Maybe one on Ampavelli. What are you seeing that led to the revenue decline this quarter? Any inventory issues here or something else involving demand? Just trying to understand that dynamic and what we could expect going forward.

Yeah, thank you. I was in the door for additional details. But we are actually very happy with the stable situation that we found in P&H, where as you know, there was an oral competitor that came in a little over a year ago. It's been very good for us. I mean, we have a stable business in P&H, where we've actually had several patients that went to the oral product and then decided to come back to Ampavelli, kind of bearing witness to the remarkable efficacy and safety profile of that drug in P&H. With the new launch coming up in C3GN ICMPGN, that of course, you know, will, we believe, turn Ampavelli into our second blockbuster opportunity. We're really excited about what we're seeing there. We estimate approximately 5,000 patients just in the US, 8,000 patients ex-US. And I want to point out again that because of the breadth of patients that we studied in C3G and ICMPGN, being adolescents and adults, C3G and ICMPGN, pre-transplant and post-transplant, we may end up competing only for maybe 1,500 to 2,000 out of these 5,000 patients with again, a very powerful and differentiated efficacy profile for Ampavelli. So a launch that we're incredibly excited about for all the right reasons. And that just around the corner. And maybe a little bit of a speech.

Yeah, sure. So if you look at the decrease in revenue, there was, you know, probably about a third of that would be inventory and pricing dynamics. And the other two thirds would really just be sort of a small decrease in demand over time, you know, versus last year. We've seen towards the, you know, a leveling off of that age. So we've seen actually incredibly good compliance, -a-vis switches to our competitor product in the first quarter. I don't know, David, do you want to talk a little bit about that? I think

that Cedric touched on it, but we've seen, you know, what we do see is we see patients who go to the World Vector B product, but a number of times we've seen them come back as a result of efficacy and the safety profile that we've presented with Ampavelli.

Great. That's helpful. Thanks so much.

Thank you so much. Our next question is from Derek Akela with Wells Fargo. Please proceed.

Hey, good morning. This is Evelyn for Derek. Thanks for taking our question. A quick one from us. Can you share some updated thoughts on your cash runway given first quarter sales came in a bit lower than expected? And just discuss the, put some pulls as you move towards profitability. Thanks.

Thank you very much. So we're not changing our guidance on cash runway and profitability. As we stated before, we continue to expect that our 2025 operating expenses will remain in line. And obviously, the only impact we've seen here from a revenue perspective is some transient inventory dynamics and a little bit of an impact related to the switching to samples. But as we look forward, we expect the launch of C3G, which is a target for Q3, to conveniently contribute to our top line.

So we're maintaining our guidance as discussed.

All right. Thanks. Thank you so much. Our next question is from the line of Greg Suwanabe with Mizuho Securities. Please proceed.

Good morning. Thank you for taking my question. I just wanted to return to CIFOVERY and the growth dynamics there. Could you just for us paint a picture of where we are today in terms of prescribing of CIFOVERY and perhaps just the complement inhibitor class? Should we expect that the growth outlook is more of a slow and steady grind? Or do you think that there is still a possibility for some sort of inflection, some meaningful inflection as we think about the total commercial potential of not only CIFOVERY but the class overall? Thanks.

So thank you for that question, Greg. So this is a steady growth that again takes time to adopt this. Caroline mentioned earlier, in addition to the work that David is doing that he spoke to in terms of bringing physicians along with the journey, there are a couple of things that will believe further acceleration points. One notable one is the AI tools that we are working on and that are in development. What is important there is that we believe that we have the tools available to allow a physician and a patient to see the drug work for them, both on protecting retinal tissue as well as the impact that it can have on the visual function of the patient. That is something that is very exciting, will create further acceleration within this space. Caroline can maybe briefly expand on this because there is a precedent for this.

Yes, thank you Cedric. So Cedric highlighted we have actually the largest data set of an approved product for the longest time period with favorable dosing. And we have so much experience from the anti-vegetative era when we are able to pull out data-driven tools for physicians, they are able to use that to really understand the disease and access their patients. So I think that is something that has been missing at GA and we are really at the forefront of being able to pull meaningful tools and algorithms for physicians and for patients. So people can understand we have data coming up on who responds best to Cypho-Ovary and what is the patient experience and functional improvements for patients and all of that will increase the market for our patients.

Thank you. Thank you so much. And our last question comes from Lisa Walter with RBC. Please go ahead.

Oh great, thank you so much for taking your question. Maybe just one on the broader kidney space. We recently saw some IGAN data from Arrowhead with their C3-SIRNA and their early results looked on par with what SAP HULTA has shown in IGAN. I'm just curious, would you consider also exploring your C3-SIRNA and other kidney indications?

Thank you so much Lisa. So we, you know, in the past couple of quarters we've spoken about this. The efficacy that Mbafeti showed in C3-GNase and BGN is absolutely remarkable as we call the trifecta as you heard in our remarks earlier. What is really exciting here is that we did a thorough analysis. We have perfect or near perfect we believe engagement of C3 in the kidney. We had to find where these, which next indications in the kidney we could be exploring. After that thorough analysis we decided to do two phase three clinical trials, one in delayed graft function, one in focus segment of glomerulosclerosis. IGAN is not one of those indications, but those are the two next ones where we believe we can make a meaningful difference in the kidney.

Great, thank you Céline. And maybe just one last one on Cephovery. I can't help it. I'm just wondering if you can give us any more color on the X-US plans. For instance, you know, how is the progress in Australia and how is conversations with regulators and progressing in Canada, UK, and Switzerland? Any color here would be helpful. Thank you so much.

Thank you so much for that question. So in Australia it's a little bit early, but you know the enthusiasm there about the retina community is meaningful and palpable. As it relates to other regions around the world, we continue to do the work. We believe that the data as it continues to grow, remember we have the Gale Extension Study for the eight month data available to us now. It is undeniable what the benefit is that Cephovery can provide to these patients. And that is something that we will continue to work on with regulators and

the patients and have the best access globally for this product.

Thank you. And this concludes our

Q&A session for today. I will turn it back to Cedric Francois for closing remarks.

Thank you so much and thank you again everybody for joining us this morning. It's been a special quarter for us. Of course, you know, in spite of what we saw in terms of revenue, based on the dynamics, we see that continued growth in a market that has just started to grow and we can make a huge difference for patients with Cephovery. Also with MPAVEDI just three months away from the launch and we look forward to speaking about that and the other elements of the company with you today and in the days to come. Thank you so much.

And thank you all for participating in today's conference. You may now disconnect.