Apellis (APLS) shares have nearly rebounded from the sharp nosedive suffered over the summer after safety questions surfaced about the company’s Syfovre® (pegcetacoplan injection)—but a short seller’s report this week rattled investors enough to send the stock back tumbling for a day.

Favus Institutional Research on Wednesday raised concerns about the safety of Syfovre, which in February received the first-ever FDA approval for a geographic atrophy (GA) therapy. Favus reported that 14 cases of retinal vasculitis occurred during clinical trials of the drug, six more than the company confirmed in August.

An Apellis spokesperson told GEN Edge the company had not seen the report and thus could not comment on its contents or how Favus interpreted the data: “To date, the rate of retinal vasculitis continues to be rare at 0.01% per injection. Additionally, the majority of cases have resulted in partial or full recovery of vision.”

Apellis plans to share its next safety update before its third-quarter earnings call, the spokesperson added.

At deadline, Favus had not responded to a GEN Edge request for a copy of the report, summarized by The Motley Fool.

Colleen M. Kusy, CFA, a senior research analyst with Baird, wrote in a September 22 research note that her firm was able to confirm 12 vasculitis cases as of August 21, based on a Freedom of Information Act (FOIA) request to the FDA for data from the agency’s FDA Adverse Event Reporting System (FAERS).

The 12 cases suggest a rate of 1.5 cases per 10,000 injections, Kusy added, based on the 78,000 shipped commercial vials reported by Apellis as of August 22. The rate would be lower, 1.2 per 10,000 injections, if the 24,000-plus clinical trial injections of Syfovre were included.

“While there are plenty of caveats with these data, the count is in a similar range as Apellis’ most recent update, and we think the rate is still in an acceptable range,” Kusy observed. “We look forward to future updates to better assess the forward rate.”

Those updates are expected in coming weeks, Kusy added—possibly at The Retina Society’s 56th Annual Scientific Meeting, set for October 11–14 in New York City.

Investors responded to Favus’ report with a selloff that sent Apellis shares falling 10% on Wednesday, from $43.18 to $38.83. The stock headed back up i Thursday, rising 2% to $39.67.

Analysts sanguine

Analysts appear more sanguine than investors since the Favus report came out, with only H.C. Wainwright weighing in on Apellis shares at deadline. Doug Tsao, managing director, senior healthcare analyst with Wainwright, reiterated his firm’s “Buy” rating on the stock and 12-month price target of $82 a share.

Apellis began scrambling to address questions about the safety of Syfovre on July 15, when the Research and Safety in Therapeutics (ReST) Committee of the American Society of Retinal Specialists flagged six cases of occlusive retinal vasculitis, a rare but severe type of inflammation of the retinal vessels, in patients treated with Apellis’ drug.

Apellis shares suffered a 38% drop-off from $84.50 to $52.46 on the day the retinal specialists’ society went public with its concerns. Shares further fell 45%, before inching back to $23.86 as of August 3.

“We think we could see an update from ASRS’s ReST Committee at AAO,” Kusy added, referring to the American Academy of Ophthalmology’s upcoming 127th annual meeting in San Francisco (AAO 2023), set for November 3–6.

Apellis confirmed eight events of retinal vasculitis on August 22—five of them occlusive, the other three non-occlusive—and suggested the incidents were linked to cited “internal structural variations” in the 19-gauge x 1½ inch filter needle included in some of its injection kits, while stopping short of saying those irregularities caused the retinal vasculitis events.

As of the date of Apellis’ safety update, one patient remained stable at baseline vision. Two patients had recovered vision nearly back to baseline, two patients had severe vision impairment that the company acknowledged is unlikely to be resolved, and three patients’ outcomes were still pending.

The safety update appeared to reassure investors, as shares of Apellis rebounded—starting with a 30% surge August 23, from $30.76 to $40.04, then climbing another 21%, closing at $48.53 on September 20 before sinking.

Despite the stock recovering, Apellis disclosed plans August 29 to eliminate 25% of its workforce—about 225 jobs—in a restructuring intended to refocus the company’s resources on Syfovre as it gears up to launch the drug outside the U.S., with the expectation of a regulatory approval decision from the European Medicines Agency (EMA) in early 2024.

$300M savings

Apellis has projected it expects to save up to $300 million through 2024 through the restructuring, which is also intended to drive growth in Apellis’ other FDA-approved drug, Empaveli® (pegcetacoplan), a complement inhibitor which became Apellis’ first marketed product in 2021.

During the first half of this year marketed solely in the United States, Syfovre generated $85.7 million in U.S. net product revenues—thanks in part to a marketing campaign highlighted by ads featuring Henry Winkler, Fonzie from the 1970s sitcom “Happy Days.”

Apellis said July 31 that it had delivered more than 50,000 vials to physician practices, including commercial vials shipped and sample vials distributed. More than 26,000 vials have been distributed in the third quarter.

The most recent dropoff included a nearly 2% dip on Monday, from $43.77 to $3.08, despite Apellis announcing a significant advance in obtaining reimbursement for Syfovre through Medicare and Medicaid: The U.S. Centers for Medicare & Medicaid Services (CMS) assigned a permanent and product-specific J-code (J2781) for the drug, effective October 1.

“The permanent J-code is a significant milestone that will help ensure accurate and efficient reimbursement of SYFOVRE in all treatment settings, building on our goal of bringing this important treatment to GA patients in need,” Adam Townsend, Apellis’ chief commercial officer, said in a statement.

In the four weeks since Apellis’ last safety update, Derek Archila, managing director, biotechnology equity research with Wells Fargo, upgraded his firm’s rating on the stock from “Equal Weight” to “Overweight” on September 15. Archila also nearly doubled his firm’s 12-month price target on Apellis shares, from $34 to $64.

Analysts at three other firms raised their Apellis price targets:

  • Yigal Nochomovitz, PhD, of Citigroup, up 20% from $45 to $54 and maintaining a “Buy” rating.
  • Annabel Samimy of Stifel, up 8% from $60 to $65 and maintaining a “Buy” rating.
  • Brian Cheng of Bank of America’s BofA Securities, up 7.5% from $40 to $43 and maintaining a “Neutral” rating.

Leaders & laggards

  • Biohaven (BHVN) shares surged 33% on Wednesday, from $17.65 to $23.53, after the company disclosed in a regulatory filing positive Phase I data about its bispecific IgG degrader BHV-1300, saying it showed potential for superiority in immune-mediated diseases over standard of care, argenx’s marketed generalized myasthenia gravis drug Vyvgart® (efgartigimod alfa-fcab). Biohaven showed BHV-1300 achieved greater than 90% reductions in immunoglobulin G (IgG) after repeat dosing, and declared that the drug “can specifically remove target IgG from circulation faster than [neonatal fragment crystallizable receptor] FcRn inhibitory antibodies, antibody fragments, or immunosuppressants.” Biohaven was acquired by Pfizer for $11.6 billion in a deal completed in October 2022.
  • Bionomics (BNOX) shares more than tripled, zooming 244% from 98 cents to $3.37 on Thursday, after the company announced positive topline results from its Phase IIb ATTUNE trial (NCT04951076), a 212-patient study assessing BNC210 as a treatment for PTSD. ATTUNE met its primary endpoint by showing that treatment with BNC210 led to a statistically significant reduction in total PTSD symptom severity at 12 weeks—as measured by a change in Clinician-Administered PTSD Scale for DSM-5 (CAPS-5) total symptom severity score. Statistically significant changes in CAPS-5 score were also seen at Week four and at Week eight. Bionomics added that it recently held what it deemed a successful Phase III-enabling end-of-Phase II meeting with the FDA about advancing BNC210 into registrational studies as an acute treatment for social anxiety disorder.
  • BrainStorm Cell Therapeutics (BCLI) shares plunged 51% on Thursday, from 39 cents to 19 cents, after the FDA’s Cellular, Tissue, and Gene Therapies Advisory Committee voted 17-1 with one abstention that the company’s NurOwn®—a mesenchymal stem cell therapy designed to treat amyotrophic lateral sclerosis (ALS)—did not demonstrate substantial evidence of effectiveness in treating mild to moderate ALS. The vote sided with FDA staff reviewers, who cited “major concerns” about the failure of BrainStorm’s Phase III BCT-002-US trial (NCT03280056) to meet its primary and key secondary endpoints, and about product manufacturing. “Had more time and opportunity been allowed, many remaining questions posed by Advisory Committee members could have been sufficiently addressed,” co-CEO Stacy Lindborg, PhD, stated. Added president and CEO Chaim Lebovits: “In the coming weeks we will explore all options available to us.”
  • Immunovant (IMVT) shares nearly doubled, leaping 97% on Tuesday, from $20.28 to $39.96, after the company reported positive initial data from a Phase I trial showing that subcutaneously administered doses of IMVT-1402 produced dose-dependent reductions in IgG in healthy adults, with no dose-related changes in serum albumin or LDL-C. The doses achieved peak IgG reductions that are similar to those previously observed with the company’s batoclimab, according to the company. The results bolstered IMVT-1402 as a potential best-in-class FcRn inhibitor for treating autoimmune diseases, Immunovant added.
  • Intercept Pharmaceuticals (ICPT) shares rocketed 79% on Tuesday, from $10.44 to $18.71, after the company agreed to be acquired by Italian pharma Alfasigma for about $794 million or $19 a share, an 82% premium from its Monday closing price. The deal came after Intercept tried twice but failed to gain FDA approval in pre-cirrhotic fibrosis due to non-alcoholic steatohepatitis (NASH) for the marketed drug Ocaliva® (obeticholic acid), now approved for adults with primary biliary cholangitis (PBC). After the second rejection in June, Intercept decided to end all NASH-related investment and restructure its operations with the aim of strengthening its focus on rare and serious liver diseases.

Alex Philippidis is Senior Business Editor of GEN.

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