Apellis Pharmaceuticals Inc. (APLS)
Summary
Recently transitioned commercial stage biopharmaceutical company focused on the development of novel therapeutic compounds to treat disease through the inhibition of the complement system.
Data from two phase 3 trials (DERBY and OAKS) in geographic atrophy (GA) are expected to be provided in September 2021 and if positive will be impactful to patients with GA and will likely have a large impact on the company’s valuation.
Data in Focus — Intravitreal (injection into eye) Pegcetacoplan in GA (Phase 1b and 2)
Phase 1b Study
At 24-months there was a 46% decrease (p=0.007) in mean lesion growth in 8/12 patients with bilateral GA comparing treatment eye vs the untreated eye.
Small study that showing the drug is capable of having an effect.
Patient population similar to those enrolled in phase 3 DERBY and OAKS trials but allowed for more advanced disease with a wider range of baseline lesion size and lower baseline visual acuity.
Phase 2 FILLY Trial
Compared to placebo (n=80), the monthly and every other month injections of pegcetacoplan reduced GA lesion growth by 29% (p=0.008, n=84) and 20% (p=0.067, n=78), respectively.
Preventing growth of lesions in eyeballs = good in GA and study shows there is an actual effect of the drug (given the better performance compared to placebo).
“Anything over 20% [reduction in lesion growth rate] would be significant in my mind” — Retina Specialist. (4)
P-values are okay since stats used an alpha of 0.1, and since p-values are below this, then it’s likely that there is a 90% chance that the data seen in the phase 2 trial was not because of chance alone.
Safety was in line with other studies of intravitreally administered medicines.
Post hoc analysis showed that pegcetacoplan slowed progression from age-related macular degeneration (AMD) to GA (i.e. slowed the progression from not seeing well to not seeing at all).
Negatives
Despite promising data in the phase 2 FILLY trial, there still remains the risk of seeing clinical trial failures in the phase 3 trials in GA.
Patients enrolled in phase 3 are not exactly similar to those enrolled in the phase 2 and 1b studies.
There is a chance that the positive findings from the phase 2 trial may not translate positively in the larger phase 3 trials (medium risk).
Phase 3 trials show that adverse events seen in phase 2 trial are more prevalent than expected.
The company is transitioning into a commercial stage company, so APLS future valuation will eventually be based more on sales of its approved product rather than data readouts from the phase 3 trials.
Positives
The phase 2 FILLY trial can be viewed as successful and is supported by the data from the phase 1b study.
Given the data to date, the phase 3 trials in GA are set up for success and I think that the phase 3 trials will likely have a positive data readout.
Lesion growth reduction seen in phase 2 FILLY trial were clinically meaningful.
Positive phase 3 data readouts (and the potential total addressable market) in GA do not appear to be accounted for in the company’s current valuation.
Pegcetacoplan is clearly an active drug (see data from systemic pegcetacoplan in paroxysmal nocturnal hemoglobinuria (PNH) and corresponding US approval).
Assessment
Positive findings from these two phase 3 trials would unlock a new treatment option for patients with GA.
Phase 3 studies are designed for success based on information from the phase 2 FILLY trial and supportive phase 1b data.
Endpoints and design are similar to the phase 2 FILLY trial, but with a larger enrollment and a broader population of enrolled patients.
Based on the positive data seen in the phase 2 FILLY trial and supportive data from the phase 1b study, then I am inclined to believe that the phase 3 studies in GA will read out positive.
Whether you agree with my assessment or not, you could take advantage of this opportunity in a number of ways:
Short-term call options for September 2021 (spicy) of October 2021 (conservative) could be used to maximize value from a large upward move of the company’s stock price if the phase 3 data is consistent with what was seen in the phase 2 FILLY trial.
If assuming positive phase 3 data, then going long makes sense since APLS will be cutting into Soliris and Ultomiris market share in the PNH space AND the lack of treatments for GA (hello monopoly).
If you believe the phase 3 data fails, then expect any short-term put options to print.
Interesting Tidbits
Ownership by Baker Bros and Perceptive Advisors.
References
Nathan C. Steinle, Ian Pearce, Jordi Monés, Ravi Metlapally, Namrata Saroj, Mohamed Hamdani, Ramiro Ribeiro, Philip J. Rosenfeld, Eleonora M. Lad, Impact of Baseline Characteristics on Geographic Atrophy Progression in the FILLY Trial Evaluating the Complement C3 Inhibitor Pegcetacoplan, American Journal of Ophthalmology, Volume 227, 2021, Pages 116-124, ISSN 0002-9394, https://doi.org/10.1016/j.ajo.2021.02.031. (https://www.sciencedirect.com/science/article/pii/S0002939421000969)
Charles C. Wykoff, Philip J. Rosenfeld, Nadia K. Waheed, Rishi P. Singh, Nick Ronca, Jason S. Slakter, Giovanni Staurenghi, Jordi Monés, Caroline R. Baumal, Namrata Saroj, Ravi Metlapally, Ramiro Ribeiro, Characterizing New-Onset Exudation in the Randomized Phase 2 FILLY Trial of Complement Inhibitor Pegcetacoplan for Geographic Atrophy, Ophthalmology, Volume 128, Issue 9, 2021, Pages 1325-1336, ISSN 0161-6420, https://doi.org/10.1016/j.ophtha.2021.02.025. (https://www.sciencedirect.com/science/article/pii/S0161642021001639)
Author’s Note
I hope this short write-up acts as a starting point for your research if you are interested in supporting APLS. If you want me to highlight a biotech/pharma company you are interested in, then let me know!
Edit: Of the two readouts, DERBY had mixed results, which resulted in APLS share price to plummet. Tis the nature of the game!
Disclosures
As of the date of this post, I hold call options on APLS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it from any related parties mentioned in the article, directly or indirectly. I have no business relationship with any company whose stock is mentioned in this article.
