The financial markets had just closed last Friday when Apellis Pharmaceuticals (APLS) announced that it had scored the first-ever FDA approval for a therapy designed to treat geographic atrophy (GA), Syfovre™ (pegcetacoplan injection).
Apellis investors reaped the benefits of that approval this week, namely a stock surge that saw the company’s share price jump 19% this week, from $55.49 at the close of trading February 17 to $65.82 on Wednesday. Shares rose another 7% in early trading Thursday, to $70.14 as of 10:41 a.m. ET, before settling for a 2% gain, to $66.96.
Even better for Apellis, the company also garnered accolades from analysts. Nine of them raised their 12-month price targets on Apellis stock this week, based on the Syfovre approval as well as two Tuesday announcements. One was favorable fourth-quarter earnings results, and positive Phase III results showing that pegcetacoplan—approved in 2021 to treat PNH under the name Empaveli™—was not inferior to the current standard of care for paroxysmal nocturnal hemoglobinuria (PNH), namely AstraZeneca (AZN)-owned Alexion’s blockbuster drug Soliris® (eculizumab).
“Apellis’s successful approval of Syfovre is a landmark achievement in ophthalmology,” declared Chris Howerton, PhD, an equity analyst with Jefferies, in a Tuesday research note headlined, “Syfovre Approval Commences a New Era in GA Treatment.”
The FDA based its approval on positive data from two Phase III trials, the 621-patient DERBY (NCT03525600) and 637-patient OAKS (NCT03525613) studies. In those studies, Syfovre reduced the rate of GA lesion growth compared to sham control and showed increasing treatment effects over time, with the greatest benefit—up to 36% reduction in lesion growth with monthly treatment in DERBY—taking place between months 18 and 24.
Apellis wasted little time cashing in on the Syfovre approval. The company on Wednesday priced a $350 million public offering in which investors could purchase company stock at $63 a share or pre-funded warrants to buy shares at $62.9999 per warrant. The offering is expected to close on February 27. J.P. Morgan Securities, Goldman Sachs, and Evercore Group are joint book-running managers for the offering, with Robert W. Baird and Raymond James acting as co-managers.
“A lot to like”
“There is a lot to like about the Syfovre label: 1) a broad indication for the treatment of geographic atrophy, 2) there is a flexible dosing option with administration once every 25-60 days, 3) Syfovre can be dosed every other month (EoM), and 4) the label spotlights (24-month) efficacy and safety data,” Howerton elaborated.During a conference call with analysts, Apellis executives said they anticipated EoM dosing to account for 70-80% of all usage of Syfovre.
Smaller percentages of EoM patients showed reduced rates of GA lesion growth through 24 months—17% vs. 18% in DERBY, and 18% vs. 22% in OAKS. Apellis has estimated that GA affects one million patients in the U.S. and five million globally, citing studies published in 2012 and in 2014.
Howerton added that his price target increase also reflected the pricing of Syfovre, which carries a list price of $2,190 per vial—a price that makes the drug anything but a slam dunk in terms of generating quick sales.
“We expect Syfovre will be utilized by ophthalmologists, but adoption to be conservative in the early innings. APLS stock has priced in generous GA patient growth from current levels, and it will be challenging to meet estimates given market fundamentals and incoming competition,” said Howerton, who maintained Jefferies’ “Hold” rating on Apellis shares. That rating was downgraded from “Buy” in November, based on a survey of 25 of ophthalmologists and retinal surgeons in which a majority said they would not prescribe complement therapies to the majority of their GA patients.
Syfovre targets complement factor C3, the central protein in the complement cascade.
Competitive landscape
Syfovre could be joined by a second approved GA treatment later this year. On February 16, Iveric Bio (ISEE) said the FDA accepted its New Drug Application (NDA) for avacincaptad pegol, a complement C5 inhibitor candidate also indicated for GA secondary to AMD, and granted the NDA a Priority Review with a Prescription Drug User Fee Act (PDUFA) target decision date of August 19.
A third potential competitor, NGM Biopharmaceuticals (NGM), faded in October when its NGM621 failed the Phase II CATALINA trial (NCT04465955), sparking a 72% plunge in its shares. NGM621 showed statistically non-significant reductions in the rate of change in GA lesion area vs. sham injection control.
Howerton raised Jefferies’ 12-month price target on Apellis shares 20%, from $50 to $60. Eight other analysts increased their price targets, with the biggest leap coming from Tazeen Ahmad, a managing director with BofA Securities covering small and mid-cap biotechnology companies. She hiked BofA’s price target 46% from $79 to $115, and maintained her firm’s “Buy” rating on Apellis.
Joining Ahmad and Howerton in raising their price targets on the stock:
- Laura Chico, PhD, senior vice president, equity research with Wedbush, up 8.5% from $47 to $51, and maintaining a “Neutral” rating.
- Yigal Nochomovitz, PhD, director, biotech equity research with Citigroup, up 6% from $86 to $91, and maintaining a “Buy” rating.
- Annabel Samimy, a managing director with Stifel focused on biopharma and biotechnology, up 15% from $65 to $75 and maintaining a “Buy” rating.
- Steven Seedhouse, PhD, a managing director with Raymond James focused on biotechnology, up 13% from $123 to $139 and maintaining a “Strong Buy” rating.
- Joseph Stringer, PhD, a senior analyst with Needham covering biotechnology companies, up 14% from $70 to $80 and maintaining a “Buy” rating.
- Doug Tsao, a managing director and senior healthcare analyst with H.C. Wainwright focused on biopharmaceuticals and specialty pharmaceuticals, up 16% from $75 to $87, and maintaining a “Buy” rating.
- Colleen Kusy, CFA, a senior research analyst with Baird covering biotechnology, up 17% from $90 to $105, and maintaining an “Outperform” rating.
FDA precedent
A colleague of Kusy’s at Baird, senior research analyst Jack K. Allen, CFA, noted that in approving Skyfovre, the FDA set a precedent of authorizing a drug based on its impact on GA lesions.
As a result, Allen wrote Tuesday in a research note, he expects the agency to approve another treatment that has shown it can effectively reverse GA lesion growth—OpRegen® (RG6501), a retinal pigment epithelial cell therapy being co-developed by Lineage Cell Therapeutics (LCTX) and Roche (ROG; RHHBY) and its Genentech subsidiary for GA secondary to age-related macular degeneration.
Last May, Lineage and Roche reported positive Phase I/IIa results showing what it called preliminary evidence of improvement in visual function in patients with GA and impaired vision. One example: 12 patients in one cohort showed an average 7.6 letter gain in visual acuity at 12 months in the study eye, with three showing gains of 15 letters or greater. Genentech launched a Phase IIa trial (NCT05626114) evaluating OpRegen in 30 to 60 patients in November. The open-label, single arm study has an estimated primary completion date of September 15, 2029.
“We believe the Syfovre regulatory precedent reads-through positively to the OpRegen program and could lead to a rapid approval of this asset,” Allen wrote.
That would be especially good news for Lineage, which gave to Roche worldwide rights to develop and commercialize OpRegen in December 2021. In return, Roche agreed to pay Lineage $50 million upfront, up to $620 million in milestone payments, and tiered double-digit royalties on sales.
“We’re too small today to be an effective commercial competitor. So, partnering with Roche obviously brought not just the capital, but also their capabilities and then the credibility of a pharma partnership,” Lineage CEO Brian Culley explained to GEN Edge.
Leaders and laggards
- Aileron Therapeutics (ALRN) shares tumbled 38% on Tuesday, from $2.34 to $1.46, after the company said it was exploring strategic alternatives and would slash its workforce from nine to three full-time employees “in the coming weeks.” The moves followed Aileron halting further development of its lead candidate ALRN-6924, and ending the Phase Ib Chemoprotection trial (NCT04022876) assessing the MDM2/MDMX inhibitor in patients with p53-mutated breast cancer. Aileron said a review of initial data from the open-label study showed that patients experienced severe neutropenia (Grade 4) and alopecia. Ladenburg Thalmann is Aileron’s strategic advisor.
- Akebia Therapeutics (AKBA) shares skidded 25.5% on Wednesday after saying the FDA sent the company a second interim response to its Formal Dispute Resolution Request concerning the agency’s Complete Response Letter for vadadustat issued in March 2022, touching off a 66% stock plunge. Akebia said the FDA cited resource constraints and staffing needs in switching its deciding authority for the appeal from a senior advisor to the Director of the agency’s Office of New Drugs, Peter Stein, MD. The change will delay a decision on the appeal, Akebia acknowledged. Vadadustat is a treatment for anemia due to chronic kidney disease.
- Graphite Bio (GRPH) shares rose 16%, from $2.20 to $2.55, on Thursday, the first trading day after the company announced it would begin exploring a range of strategic alternatives and would end further development of nulabeglogene autogedtemcel (nula-cel) for sickle cell disease (SCD). The announcement came nearly seven weeks after the company voluntarily paused the Phase I/II CEDAR trial (NCT04819841) assessing nula-cel in SCD after the first patient dosed with the therapy developed pancytopenia, a serious adverse event that the company concluded was likely related to the treatment. Graphite said it will pivot to research activities associated with its early-stage non-genotoxic conditioning program.
- Ocean Biomedical (OCEA) shares zoomed nearly six-fold on Thursday, from $4.81 to $26.59 at 10:46 a.m. ET, before settling for a 124.5% gain, to $10.80, after the company announced its discovery of bispecific antibodies that target Chitinase 3-like-1 (CHI3L1) and immune checkpoint inhibitors PD-1 or CTLA4. The antibodies were shown to kill glioblastoma cells and melanoma cells, as well as block the metastasis of malignant melanoma cells to the lung by over 90%. “This therapy has the potential to save thousands of lives of people affected from NSCLC [non-small cell lung cancer] and GBM [Glioblastoma multiforme],” said Chirinjeev Kathuria, MD, Ocean’s co-founder and executive chairman.