Despite 'robust' Syfovre growth, concerned Apellis investors sent shares down 10%

Apellis’ geographic atrophy (GA) drug Syfovre delivered what CEO Cedric Francois called “robust” growth in the first quarter, as its sales topped analysts’ expectations. But investors still dragged the company’s shares down by 10% on Tuesday.

The stock sell-off after Apellis’ earnings call was driven by “lack of investor confidence around management’s comments and its attempts to address near-term headwinds that are likely to hit the company” in the second quarter from Astellas’ competitor drug Izervay, Mizuho analyst Graig Suvannavejh, Ph.D., observed in a note to clients Wednesday.

The additional threat from Izervay comes in the form of a permanent J-code, which went into effect in April. A J-code in drug billing can streamline the reimbursement process and improve uptake of an injectable drug.

Both Izervay and Syfovre are new complement inhibitors. Despite the increasing competitive pressure, Apellis executives on Tuesday repeatedly argued that Syfovre’s clinical profile can withstand the challenge and that the GA market is large enough for several products.

For now, Syfovre holds 85% of the market share, Apellis’ chief operating officer, Adam Townsend, said on the conference call. But it was only a few days ago that Astellas said on its own earnings call that Izervay had reached about 25% market share.

The two firms are calculating market share differently, Townsend explained. While Apellis focuses on the number of patients treated, Astellas measures product vials shipped, which may also include doses that remain at wholesalers and in doctors’ fridges.

Amid the competing launches, one disadvantage for Syfovre is an eye inflammation concern flagged by experts in July of 2023. So far, the vasculitis rate remains rare and stable at about 1 in 10,000 injections, and it’s more of a problem following a first injection, Townsend said. According to the Apellis exec, retina specialists are getting comfortable with the rare problem as they gain more knowledge about the therapy; many who had previously paused or decreased their use of Syfovre are back, he said.

“The efficacy is something that really stands out for Syfovre versus our competitor, which, at the end of the day, we think will be the most important,” Townsend said.

As for the GA market overall, only about 12% of an estimated 1.5 million patients are diagnosed and being treated by a specialist, according to Townsend.

In a bid to reach more patients with its therapy, Apellis recently launched a branded direct-to-consumer campaign. The good news is, capacity isn’t “remotely a problem,” Townsend said, as retinal physicians have said they can accept many more patients.

“Competition is healthy, and competition does grow an incredibly large market,” he said.

Francois wasn’t exaggerating when he said Syfovre just had a “robust” quarter. Revenue from the GA drug reached $137.5 million, compared with Bloomberg's consensus estimate of $127.4 million, according to Mizuho.

Apellis distributed 72,000 commercial doses of Syfovre in the first quarter, up from 55,000 in the last three months of 2023. The company also continues to see a double-digit increase in new treatment sites each week, with the roster climbing to 2,000, Townsend said.

As for Astellas, the Japanese drugmaker distributed about 50,000 Izervay vials during its launch from September to March, analysts at Evercore ISI pointed out in their Tuesday note to clients. By comparison, Apellis shipped more than 400,000 vials in the same timeframe.

Nevertheless, Astellas CEO Naoki Okamura during an earnings call on April 26 said Izervay is tracking above the company’s expectations. For Astellas’ fiscal year that ends in March 2025, the company expects Izervay sales of 46.4 billion Japanese yen ($300 million).

Apellis did not provide a sales projection for Syfovre this week. Wall Street consensus currently has the drug reaching $640 million this year, according to Mizuho.