Henry Winkler—Fonzie from the 1970s sitcom “Happy Days”—promotes Apellis Pharmaceuticals’ Syfovre in ads that have saturated radio airwaves since April. [Apellis]
Since April, Apellis Pharmaceuticals (APLS) has saturated radio airwaves with commercials in which Henry Winkler—Fonzie from the 1970s sitcom “Happy Days”—promotes the company’s Syfovre® (pegcetacoplan injection), which in February received the first-ever FDA approval for a geographic atrophy (GA) therapy.

Apellis has indeed gained plenty of attention for Syfovre, which is indicated for GA secondary to age-related macular degeneration (AMD)—but not the kind that it sought through all those radio spots. Instead, the company has scrambled to address questions about the safety of Syfovre since 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.

In the nearly three weeks since then, Apellis shares have nosedived 73%. That decline began with a 38% drop-off from $84.50 to $52.46 on the day the retinal specialists’ society went public with its concerns. That decline continued for about a week before plateauing with shares trading in the $30-a-share range.

Apellis had hope to reverse that decline last weekend when it issued a pair of public statements attempting to reassure patients and physicians about the safety of Syfovre. Instead, Apellis shares tumbled an additional 24% earlier this week, falling from $32.02 on July 28 to $24.22 on Tuesday, then sank another 1% Wednesday to $23.96, and skidded nearly 4% in early Thursday trading, to $23.07 as of 11:16 a.m.

Apellis confirmed seven events of non-occlusive/occlusive retinal vasculitis—four occlusive, three non-occlusive—since Syfovre was launched on March 1, and disclosed it was evaluating one reported event of retinal vasculitis which had yet to be confirmed. Apellis hastened to add that it has distributed to date more than 68,000 vials of the drug and 23,000 injections of the drug into clinical trial patients.

The safety of patients has always been—and continues to be—our top priority at Apellis,” Cedric Francois, MD, PhD, Apellis’ co-founder and CEO, insisted in a statement. “These events continue to be very rare. Additionally, as part of our ongoing review, we have seen no indication that drug product or manufacturing issues contributed to these events.”

“We will continue to collaborate with the retina community to deliver a safe, effective treatment for GA,” Francois continued, “and look forward to sharing long-term clinical data on Syfovre [on July 30] at the ASRS Annual Scientific Meeting.”

At that meeting, held July 28–August 1 in Seattle, ASRS echoed Apellis in reporting seven confirmed instances of occlusive retinal vasculitis, plus the potential eighth case, which it said was under review. Causes of those cases are not yet known, though the society said they occurred in patients aged 60–96, within 15 days of being injected with the drug.

Lowering price targets

The safety news on Syfovre appeared to jolt analysts as well as investors. Since Apellis’ public statements, four analysts have lowered their 12-month price targets on Apellis shares.

Apellis Pharmaceuticals in February scored the first-ever FDA approval for a therapy designed to treat geographic atrophy (GA) whenit received authorization to market Syfovre.. [Apellis]
The most dramatic decrease came at BofA Securities, where Tazeen Ahman, a managing director in U.S. Equity Research covering small and mid-cap Biotechnology stocks, on Tuesday slashed the firm’s target share price 65%, from $114 to $40, and downgraded the stock from “Buy” to “Neutral.”

Also lowering their price targets on Apellis:

  • Joseph Stringer, PhD, a principal focused on biotech equity research at Needham & Co., down 45% from $110 to $60, but maintaining a “Buy” rating.
  • Steven Seedhouse, PhD, a managing director covering the biotechnology sector at Raymond James, down 43% from $156 to $89, but maintaining a “Strong Buy” rating.
  • Colleen M. Kusy, CFA, a senior research analyst at Baird, down 39% from $115 to $70, but maintaining an “Outperform” rating.

“A blowout Syfovre quarter is rightfully overshadowed by ongoing safety concerns,” Kusy wrote Monday in a research note. “On the one hand, multiple patients lost vision due to retinal vasculitis, and we don’t know what is causing these serious events (bad). On the other hand, some patients regained vision and the rates are low (maybe not so bad).”

“While we expect uncertainty to weigh on the stock in the near term, if the rate stays low in the coming quarter(s) (0 cases in July/~16.6K vials), we think the stock could reverse course,” Kusy added.

Cedric Francois
Cedric Francois, MD, PhD, Apellis’ co-founder and CEO

One other analyst left unchanged their firm’s price targets and ratings of Apellis stock—Doug Tsao, a Managing Director and Senior Healthcare Analyst at HC Wainwright, maintained an $82 target and “Buy” rating both on Monday and Tuesday.

However, Tsao had lowered Wainwright’s price target 18% from $100 on July 21, becoming one of five analysts to do so soon as the ASRS raised its initial concerns in mid-July. The other four analysts joining Tsao between July 20 and 21:

  • Laura Chico, PhD, a senior vice president, Equity research focused on biotech at Wedbush, down 53% from $86 to $40, but maintaining a “Neutral” rating.
  • Derek Archila, managing director, biotechnology Equity Research at Wells Fargo, down 30% from $76 to $53, but maintaining an “Equal-Weight” rating.
  • Anupam Rama, a vice president at JP Morgan, down 28% from $100 to $72, but maintaining an “Overweight” rating.
  • Yigal Nochomovitz, PhD, a director and small- to mid-cap biotech analyst at Citigroup, down 24.5% from $106 to $80, but maintaining a “Buy” rating.

Exceeding Forecasts

It’s too soon to tell how the controversy over the safety Syfovre will affect sales of the drug. Apellis outperformed sales expectations during the first half of this year, reporting total U.S. net product revenues of $85.7 million for the drug. Of that total, $67.3 million came in the second quarter, the remaining $18.4 million in the first.

During Q2, Syfovre accounted for 71% of Apellis’ $94.969 million in total revenue, while another $22.3 million came from net product sales of Empaveli® (pegcetacoplan), a complement inhibitor which became Apellis’ first marketed product in 2021. Empaveli is approved in the U.S., European Union, and other countries as a treatment for paroxysmal nocturnal hemoglobinuria (PNH).

Peter Kaiser
Peter Kaiser, MD, the Founding Director of the Digital Optical Coherence Tomography (OCT) Reading Center at the Cleveland Clinic’s Cole Eye Institute

Apellis did find support of a sort from STAT News, which reported that the physician who heads the ASRS’ ReST committee—at the Cleveland Clinic’s Cole Eye Institute—failed to report receiving consulting fees from and owning stock in Iveric Bio.

Iveric is an eye drug developer that has positioned itself to compete with Apellis by developing a treatment for GA secondary to AMD. That treatment, avacincaptad pegol (ACP), is Iveric’s lead pipeline candidate—and is under FDA review, with a Prescription Drug User Fee Act (PDUFA) target decision date of August 19. Iveric is being acquired by Astellas Pharma for approximately $5.9 billion, in a deal expected to close in the second quarter of Astellas’ current fiscal year (third quarter 2023).

“The conflict raises questions about his supervision of an emerging safety issue for patients and its impact on the financial health of Apellis,” STAT’s Adam Feuerstein observed.

A 2021 Q-and-A interview with Kaiser in Retinal Physician described him as an advisor to Iveric. Even more interestingly, Kaiser heaped praise on Apellis and the FDA approval of Syfovre in a commentary published April 1 in the same publication.

“This is an amazing milestone in the retinal drug timeline,” Kaiser wrote. “We owe a huge debt of gratitude to Apellis cofounder and CEO/president Cedric Francois, MD, PhD, and his team for their unfailing belief that complement inhibition would work when many in the community did not believe it would.”

But Kaiser acknowledged that answers will be needed in coming months to many of the questions doctors would most likely have about how to incorporate Syfovre into their practices:  Who should receive treatment? How should patients be kept on the drug to maintain its benefits? Should Syfovre be used on patient with small subfoveal GA lesions? And how often should it be delivered?

“There are still many questions, and the answers will become clearer as our experience with the drug increases. It is a very exciting time in retina as we finally have a treatment for this huge unmet need, and I look forward to offering it to my patients.”

Leaders & laggards

  • Adamis Pharmaceuticals (ADMP) shares nearly tripled, rocketing 179% from $1.43 to $3.99 on Tuesday, after the company disclosed in a regulatory filing that it sold a building and property in Conway, AR, that was previously used by the company’s discontinued compounding pharmacy business to FarmaKeio Pharmacy Network for $2 million, including an estimated $232,700 for commissions, fees and closing costs. Shares at first more than quadrupled, surging 312% to $5.90 as of 10:15 a.m. before investors took profits later in the day. However, shares plunged 67% to $1.33 on Wednesday after the company announced an $8 million public offering of 5.93 million units at $1.35 per unit.
  • TG Therapeutics (TGTX) shares plummeted 49% on Tuesday, from $20.69 to $10.49, after reporting second-quarter net sales for its adult relapsing multiple sclerosis (RMS) treatment Briumvi® (ublituximab) of $16 million, 16% below the $19 million expected by a consensus of analysts. The share price plunged despite TG signing an up-to-$650 million agreement with Neuraxpharm Group to commercialize Briumvi outside the U.S. According to TG, Briumvi is the first and only anti-CD20 monoclonal antibody approved in the U.S. and European Union (EU) for adults with RMS that can be administered in a one-hour infusion twice a year following the starting dose.
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