Apellis Pharmaceuticals, Inc. (APLS) Q3 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call reflects a mixed sentiment. While there are positive developments like the expected transition of patients to commercial growth and new trials, concerns exist regarding revenue segmentation and the timeline for new product launches. The Q&A session reveals uncertainties about market growth and product availability, which tempers enthusiasm. Given the lack of strong catalysts or significant new partnerships, the overall sentiment is neutral, with no clear indication of a strong positive or negative stock price movement.

Key Financial Performance

Total Revenue $459 million for the third quarter, including a $275 million upfront payment from Sobi in connection with the Aspaveli royalty purchase agreement.

SYFOVRE Net Product Revenue $151 million for the quarter, with approximately 101,000 doses delivered (86,000 commercial doses and 15,000 free goods doses). There was a 4% sequential growth in total injection demand, but a $15 million headwind to revenue due to elevated use of free goods.

EMPAVELI Net Product Revenue $27 million during the third quarter across indications, including PNH, C3G, and primary IC-MPGN. The nephrology opportunity is expected to normalize into a gradual ramp.

Operating Expenses $235 million in the third quarter, down from $244 million for the same quarter last year, reflecting disciplined cost management.

Cash and Cash Equivalents $475 million at the end of the quarter, supported by the $275 million upfront from the Sobi royalty transaction. The company discontinued factoring, resulting in expected cost savings of approximately $5 million annually.

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Operating Highlights

SYFOVRE: SYFOVRE is the first-ever treatment for geographic atrophy, showing robust efficacy in slowing disease progression. It maintains market leadership with 52% of new patient starts and 60% of the overall market. The company plans to introduce new tools and targeted market education initiatives over the next 12-18 months to reaccelerate adoption.

EMPAVELI: EMPAVELI is a first-in-class C3 inhibitor approved for C3 glomerulopathy and primary IC-MPGN, expanding its addressable market by approximately 5,000 patients. It is the only approved therapy for 2/3 of this population and offers highly differentiated efficacy for the remaining 1/3. Early feedback highlights its ease of use and convenience.

Geographic Atrophy Market: Only 10% of patients diagnosed with GA are treated with complement inhibitors. The company aims to grow this market through education and new tools.

Nephrology Market: EMPAVELI's approval for C3G and primary IC-MPGN positions it as the only treatment for 2/3 of the 5,000-patient market, with strong early adoption among nephrologists.

Revenue Growth: Total revenue for Q3 2025 was $459 million, including $151 million from SYFOVRE and $27 million from EMPAVELI. SYFOVRE saw a 4% sequential growth in injections.

Cost Management: Operating expenses were $235 million, down from $244 million in the same quarter last year. The company expects full-year operating expenses to align with 2024 levels.

Pipeline Expansion: The company plans to initiate pivotal trials for EMPAVELI in primary FSGS and delayed graft function by the end of the year.

Market Education: Apellis is focusing on disease awareness and education to drive adoption of SYFOVRE and EMPAVELI, including engaging early-career specialists and developing AI tools.

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Risk or Challenges

Market Adoption Challenges for SYFOVRE: Despite SYFOVRE's established clinical profile, only about 10% of patients diagnosed with geographic atrophy (GA) are treated with complement inhibitors. Many retina specialists adopt a 'wait-and-see' approach, limiting market penetration. This poses a challenge to achieving broader adoption and revenue growth.

Regulatory and Payer Hurdles for EMPAVELI: The launch of EMPAVELI faces challenges related to prior authorization requirements and payer policies, which can delay patient access to treatment. These regulatory and administrative hurdles could impact the speed and scale of adoption.

Economic Impact of Free Goods on Revenue: The elevated use of free goods for SYFOVRE has created a $40 million headwind to revenue through the first three quarters of 2025. This dynamic affects short-term financial performance and could influence future pricing strategies.

Competitive Pressures in Complement Therapeutics: While Apellis has a differentiated C3 platform, competition from other complement-targeted therapeutics, such as C5 inhibitors and oral alternatives, remains a challenge. This could impact market share and long-term growth.

Operational Risks in Scaling EMPAVELI: The company has scaled its field-based teams to approximately 100 people to support EMPAVELI's launch. However, ensuring effective execution and maintaining momentum in a rare disease market with a limited patient population presents operational risks.

Economic Uncertainty and Pricing Dynamics: Gross-to-net adjustments for SYFOVRE are expected to trend slightly higher, reflecting normal market dynamics. However, this could lead to modest degradation in pricing and impact revenue stability.

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Guidance & Outlook

SYFOVRE Growth Initiatives: Apellis plans to introduce new tools and targeted market education initiatives over the next 12 to 18 months to reaccelerate the adoption of complement treatments and grow the overall geographic atrophy (GA) market.

EMPAVELI Launch and Expansion: The company is focused on maximizing market opportunities for EMPAVELI, which has been approved for C3 glomerulopathy (C3G) and primary immune complex membranoproliferative glomerulonephritis (IC-MPGN). Apellis expects long-term growth potential as awareness deepens and patient access expands. Pivotal trials for EMPAVELI in primary focal segmental glomerulosclerosis (FSGS) and delayed graft function (DGF) are expected to begin by the end of the year.

SYFOVRE Market Leadership: Apellis anticipates steady measured injection growth in the near term and sees significant long-term market opportunities with blockbuster potential. The company is focusing on disease awareness and education to expand the prescriber base and increase adoption within existing practices.

Pipeline Development: Apellis is expanding EMPAVELI's development into other rare kidney diseases, including FSGS and DGF, with pivotal trials planned by year-end. The company is also developing artificial intelligence tools and a prefilled syringe for SYFOVRE to broaden its prescriber universe and drive higher utilization.

Financial Guidance: Apellis expects SYFOVRE revenue in the fourth quarter to be broadly in line with the third quarter. Gross-to-net adjustments for SYFOVRE are expected to trend slightly above the prior range in Q4, reflecting normal dynamics rather than structural shifts. The company remains confident in its pricing and access position heading into 2026.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Do you still expect past this first bolus of patients that kidney is going to be a distributed or slow indication to penetrate?

A:David Acheson stated that the bolus of patients would be through by the end of the year, and steady, consistent growth is expected going into next year.

Q:Should we expect SYFOVRE sampling to now be more stabilized, or is there a chance that this continues to creep up as you expand the market?

A:David Acheson mentioned that the company reviews the PAP program and free goods consistently to ensure proper utilization and emphasized the company's commitment to patient access as the market grows.

Q:Can you break out just of the 150-odd patients, how many are C3G, how many are IC-MPGN pre- versus post-transplant, adult versus adolescent? And do you know if anyone has switched from Fabhalta to EMPAVELI?

A:David Acheson stated there are 152 start forms, with roughly 50 coming through the EAP program. He confirmed switches from Fabhalta to EMPAVELI due to efficacy, tolerability, and dosing convenience.

Q:Are the 50 patients rolling over from clinical trials actually on drug at this point, or are they still in process? And what fraction of the other 102 have started EMPAVELI?

A:David Acheson clarified that the 50 patients on EAP are expected to transition to commercial product by year-end. For the other 102, many are still in the process, which typically takes 4 to 6 weeks.

Q:When do you think the 4- to 6-week time frame for getting EMPAVELI to treatment could accelerate, and what could it normalize as?

A:Cedric Francois explained that the 4- to 6-week time frame is typical for rare disease launches and is influenced by REMS, vaccinations, and payer policies. Efforts are ongoing to reduce this time frame.

Q:Do you see the current SYFOVRE revenue as a floor before other components like long-term efficacy data or PFS come into play? When can we assume a return to growth for SYFOVRE?

A:Timothy Sullivan noted that underlying demand grew by 4%, but free goods created a headwind. Long-term growth opportunities include the prefilled syringe, with more visibility expected at the beginning of the year.

Q:Can you elaborate on prescribers' habits in C3G and IC-MPGN at this early stage of launch and the implications for the launch?

A:David Acheson and Eva Stroynowski highlighted the open label's positive reception, ongoing education efforts, and excitement about data robustness, including reductions in proteinuria.

Q:Has there been any progress with the Good Days co-pay assistance charity for SYFOVRE?

A:Timothy Sullivan stated that the largest group is open for existing patients but not for new ones, and no changes are expected this quarter.

Q:For the 1/3 shared market with Fabhalta, how do you expect prescribers to bifurcate between Fabhalta and EMPAVELI?

A:Cedric Francois emphasized EMPAVELI's differentiated efficacy, particularly for post-transplant patients, those at risk of end-stage renal disease, and pediatric patients.

Q:What are you seeing as far as persistence on SYFOVRE treatment?

A:Eva Stroynowski noted that every-other-month dosing aligns with anti-VEGF treatments, and physicians report patient compliance. Long-term data will be available next year.

Q:Why did SYFOVRE's new patient share tick down this quarter?

A:David Acheson attributed the fluctuation to normal variability and expressed confidence in the consistent numbers reported.

Q:When could the prefilled syringe for SYFOVRE be made available, and how might it change the growth trajectory?

A:Cedric Francois stated that the prefilled syringe is being tested in the clinic, with no specific timeline provided for competitive reasons. It is expected to improve practice flow and attract new users.

Q:How do you view the GA market growth given Apellis' revised IZERVAY sales guidance and low injection growth?

A:Timothy Sullivan and Caroline Baumal acknowledged significant headwinds due to co-pay issues and emphasized ongoing efforts to educate physicians and improve access.

Q:Have clinicians started biopsying more aggressively for C3G and IC-MPGN since EMPAVELI became available?

A:Caroline Baumal noted that new treatments often motivate clinicians to diagnose more actively, which may lead to increased biopsies.

Q:Can you provide a sense of breakout in terms of EMPAVELI revenue from PNH versus new rare kidney indications?

A:Timothy Sullivan indicated that PNH revenue has been relatively static, and the contribution from new indications is not broken out. He suggested using the 4- to 6-week timeline for start forms to estimate revenue.

Q:Can you provide any color on the pivotal trial design for FSGS and DGF?

A:Cedric Francois stated that the trials have just started, with details available on clinicaltrials.gov. He highlighted the potential patient populations and the significance of these indications.

Q:Will the prefilled syringe for SYFOVRE be offered as samples or only as commercial drug?

A:David Acheson confirmed that the prefilled syringe will launch as a commercial product, with samples available later.

Q:Review of Unclear Management Responses

A:Management avoided providing specific timelines for the availability of the prefilled syringe for SYFOVRE and the completion of the Phase II study for SYFOVRE and APL-3007. Additionally, they did not break out EMPAVELI revenue by indication, citing challenges in doing so.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

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APLS Slides

Apellis Q1 2025 slides: SYFOVRE maintains market lead despite revenue decline

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