Q1 2023 Apellis Pharmaceuticals Inc Earnings Call

Participants

Adam J. Townsend; Chief Commercial Officer; Apellis Pharmaceuticals, Inc.

Caroline R. Baumal; Chief Medical Officer; Apellis Pharmaceuticals, Inc.

Cedric Francois; Co-Founder, President, CEO & Director; Apellis Pharmaceuticals, Inc.

Meredith Kaya; SVP, IR & Strategic Finance; Apellis Pharmaceuticals, Inc.

Timothy E. Sullivan; CFO & Treasurer; Apellis Pharmaceuticals, Inc.

Annabel Eva Samimy; MD; Stifel, Nicolaus & Company, Incorporated, Research Division

Anupam Rama; VP and Analyst; JPMorgan Chase & Co, Research Division

Colleen Margaret Kusy; Senior Research Analyst; Robert W. Baird & Co. Incorporated, Research Division

Derek Christian Archila; Senior Equity Analyst; Wells Fargo Securities, LLC, Research Division

Douglas Dylan Tsao; MD & Senior Healthcare Analyst; H.C. Wainwright & Co, LLC, Research Division

Eliana Rachel Merle; Analyst; UBS Investment Bank, Research Division

Jonathan Miller; VP; Evercore ISI Institutional Equities, Research Division

Joseph Robert Stringer; Senior Analyst; Needham & Company, LLC, Research Division

Justin Alexander Kim; Associate; Oppenheimer & Co. Inc., Research Division

Madhu Sudhan Kumar; Research Analyst; Goldman Sachs Group, Inc., Research Division

Philip M. Nadeau; MD & Senior Research Analyst; TD Cowen, Research Division

Steven James Seedhouse; MD & Analyst; Raymond James & Associates, Inc., Research Division

Tazeen Ahmad; MD in Equity Research & Research Analyst; BofA Securities, Research Division

Yigal Dov Nochomovitz; Director; Citigroup Inc., Research Division

Presentation

Operator

Good day and thank you for standing-by. Welcome to the Q1 2023 Apellis Pharmaceuticals Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.
I'd now like to hand the conference over to your speaker today, Meredith Kaya. Please go ahead.

Meredith Kaya

Good afternoon, and thank you for joining us to discuss Apellis' first quarter 2023 financial results. With me on the call are Co-Founder and Chief Executive Officer, Dr. Cedric Francois; Chief Commercial Officer, Adam Townsend; Chief Medical Officer, Dr. Caroline Baumal; and Chief Financial Officer, Tim Sullivan.
Before we begin, I'd like to point out that we will be making forward-looking statements that are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail.
Now I'll turn the call over to Cedric.

Cedric Francois

Thank you, Meredith, and thank you all for joining us today. I know that the launch of SYFOVRE is top-of-mind for everyone, so let me jump right in. We received FDA approval of SYFOVRE for the treatment of geographic atrophy on February 17. SYFOVRE is the first and only treatment available for GA, a disease that affects more than 1 million patients in the U.S. alone, and that relentlessly and inevitably leads to vision loss.
Prescribing label details SYFOVRE's proven ability to slow GA progression with increasing effects over a 24 month period, flexible dosing, and a well demonstrated safety profile following nearly 12,000 injections. This approval is the culmination of more than 20 years of hard work and dedication by our team and we are incredibly proud to bring SYFOVRE to patients who until now had no treatment options.
SYFOVRE was launched in the U.S. on March 1. In that first month just over 6,000 commercial vials were shipped to physicians and SYFOVRE generated U.S. net product sales of $18.4 million for the first-quarter. We are continuing to see the strong momentum in the second quarter so far and really encouraged by this early market adoption. Initial demand by both eye care professionals as well as patients has exceeded our expectations and we view this strong start as a leading indicator of longer-term demand.
However, let me temper this by saying that GA is a new uncharted category. We have been in the market for 2 months and are just starting to learn about how various adoption trends may impact demand. So while we are pleased with our progress in March, we anticipate fluctuations and uptick throughout the temporary J-Code periods.
Caroline and Adam will provide more color on what we are seeing in the market, some of the recent functional analysis presented at ARVO, and our progress with the commercial launch. We are also making important steps in our efforts to bring intravitreal pegcetacoplan to patients globally, with applications now under review in the European Union, Australia, Switzerland, Canada, and the United Kingdom.
Turning now to EMPAVELI, we are continuing to see strong momentum with EMPAVELI as we close-out its second year-on the market. U.S. net product sales were $20.4 million in the first quarter. We were pleased with the approval of our supplemental NDA, which includes the PEGASUS and PRINCE results and look-forward to the potential approval of the EMPAVELI injector. What really continues to stand-out or the compliance rates for EMPAVELI which remain around 98%. This is outstanding for a drug this far into its launch and we view it as a clear testament to how much better patients feel when taking EMPAVELI.
In ALS, we recently made the tough decision to discontinue treatment in the open-label portion of the Phase II study, following a recommendation by an independent data monitoring committee. The committee's recommendation was not based on any unexpected safety signals. All patients in the study have completed the randomized treatment period, and we will analyze the data as planned.
I would like to say thank you to the people living with ALS and their caregivers who participated in this study and for the partnerships we have built within the ALS community. We continue to advance nearly a dozen clinical and preclinical programs, and you'll hear more about some of these today. Overall, we believe we have only just begun to unlock the potential of complement science and look forward to sharing our continued progress with you going forward.
With that, I will turn it over to Adam.

Adam J. Townsend

Thank you, Cedric. I am thrilled with the initial enthusiasm that physicians and patients are showing for SYFOVRE. As I shared on the approval call in February, we have built best-in-class commercial and medical teams with extensive experience in retina. They went into the SYFOVRE launch well-prepared and highly energized, and have shown flawless execution on the launch to-date.
On day 1, our commercial leaders joined 10 retina specialists as they treated their first patients, providing us an opportunity to gain operational insights and feedback. Many retina specialists posted about their experience on social media, recognizing the importance for patients and the historical nature of the first-ever approved treatment for GA.
Let me share some of the initial metrics from March. The commercial and medical teams engaged with nearly 2,000 physicians at least once, and we have now seen SYFOVRE orders within every sales territory. 6,000 commercial SYFOVRE vials were shipped to physicians. In addition to commercial vials, we also distributed more than 3,400 samples to physicians upon request, which is an important indicator of future demand.
We have also seen several academic institutions put SYFOVRE on formulary, which is faster than we expected. And as planned, we submitted our application for a permanent J-Code to CMS and expect to receive our code in early October.
In summary, the launch is off to an excellent start and we're encouraged by what we're seeing already in Q2. A significant amount of demand has come from private-equity backed groups. However, the majority of demand to-date is coming from independent non-PE backed practices, which tells us that there is real patient demand across the country.
But as Cedric said earlier, while it's exciting to see these initial positive indicators. It is still early in a disease category that has had no approved treatments until SYFOVRE. Samples will continue to be an important component of the launch, representing a meaningful proportion of overall vials. And we have more to learn about market adoption and how certain factors such as reimbursement and dosing frequency may impact demand. As a result, we should expect some bumpiness in both demand and sales until we obtain the permanent J-Code.
Looking forward, the teams are focused on continuing to educate both physicians and patients on SYFOVRE and geographic atrophy. We have been particularly encouraged by the patient requests for treatment. The media coverage, especially the segment on CBS Morning, was a strong push for patients to reach out to their physicians and ask about SYFOVRE. We will continue to educate patients with GA through our physician engagement, as well as through our GA direct-to-consumer campaign, which is aimed at encouraging patients to monitor and talk to their eye doctor about vision changes.
Now turning to EMPAVELI, in the second half of 2022, we expanded our field team and strengthened our partnerships with key centers. Our efforts are taking hold as there were more than 200 patients on therapy at the end of the first quarter. We are gaining momentum in 2023 to-date as we received FDA approval of the sNDA with the Phase III PRINCE results and the 48 week Phase-III PEGASUS data, which enables us to have even more robust discussions with physicians about the effects of EMPAVELI. We are also looking forward to the potential approval of the EMPAVELI Injector, which we believe will significantly improve the patient experience on therapy.
Now let me turn the call over to Caroline.

Caroline R. Baumal

Thank you, Adam, and good afternoon, everyone. It has been a tremendous start to my journey at Apellis. Following the approval of SYFOVRE, I am proud to see my fellow physicians in peers embracing the transformative potential of SYFOVRE on patients' lives. I have attended several retina meetings since the launch and the feedback from my retina colleagues has been positive.
Just last week, we were at the Association for Research in Vision and Ophthalmology, or ARVO. Apellis had a strong presence with 8 presentations showcasing our leadership in GA and retina. At this meeting, we shared new Phase III post-hoc functional analysis. In the presentation given by Dr Alan Cheng, patients with extra-foveal lesion who were treated with SYFOVRE showed a visual function and quality of life benefits. Results demonstrated a preservation of 5.6 letters compared to sham which is equivalent to more than one line of vision as measured by best corrected visual acuity, or BCVA, over 24 months.
Patients also reported a clinically meaningful benefit on VFQ-25, a validated visual function questionnaire which measures quality-of-life outcomes such as social function, driving, and dependency on others. And in a separate presentation given by Dr. Ursula Schmidt-Erfurth, patients treated with SYFOVRE demonstrated a substantial reduction in photoreceptor cell loss as compared to sham. Data were also consistent when comparing SYFOVRE-treated study eyes to the untreated fellow eye. Remember that both retinal pigment epithelial, or RPE, and photoreceptor cells are required for visual function. RPE cells maintain the integrity of photoreceptor cells, which are the light sensitive cells responsible for vision.
We are also continuing to progress our 3-year Gale extension study and look forward to sharing data from this study in upcoming medical meetings. Now that SYFOVRE is approved in GA, we are exploring other indications where intravitreal pegcetacoplan may offer value for patients, such Stargardt disease. We also plan to evaluate the impact of SYFOVRE in those patients who are on the verge of developing GA and specifically, the impact SYFOVRE has on preventing photoreceptor loss in these early stages of disease.
In the rare disease space, we and our partner, Sobi, are continuing to advance EMPAVELI in additional indications. We are enrolling patients in the Phase III trial for immune complex membranoproliferative glomerulonephritis and C3 glomerulopathy, both rare kidney diseases. And Sobi is enrolling patients in a Phase 3 trial for cold agglutinin disease, a rare type of autoimmune hemolytic anemia, and in a Phase 2 trial for hematopoietic stem-cell transplantation associated thrombotic microangiopathy, a severe and common complication following hematopoietic stem-cell transplant.
I will now turn the call over to Tim for a review of the financials, Tim.

Timothy E. Sullivan

Thank you, Caroline. Since we issued a press release earlier today with the full financial results, I will just focus on the highlights for the first quarter of 2023. Total revenue was $44.8 million, which consisted of $20.4 million in EMPAVELI net product revenue, $18.4 million in SYFOVRE net product revenue, and the remainder in collaboration revenue from Sobi.
A few comments on SYFOVRE like EMPAVELI, revenue for SYFOVRE is recorded when it is shipped to the distributor, not when it is shipped to the physician. Therefore, revenue includes both products shipped to the physician and product in the channel. We estimate approximately 2 to 3 weeks of inventory on-hand at the distributor and expect these to be the inventory levels going forward based on anticipated future demand.
We are not guiding on gross-to-net. Other than to say we anticipate it will be within the standard pharmaceutical ranges. And as you've heard already, we are in the early days of SYFOVRE launch and do not expect that one month's results represent the full year's runway. We intend to share more about our learnings in the coming quarters.
Turning to the rest of the P&L, R&D expenses were $110 million and G&A expenses were $102 million, and we reported a net loss of $178 million. As of March 31, 2023, Apellis had $765 million in cash and cash equivalents, which includes the recent follow-on offering completed in February. We expect our current cash balance to fund our operations into the first quarter of 2025, including the ongoing EMPAVELI and SYFOVRE launches and further development of our pipeline. We remain confident in Apellis' financial future as we continue to execute on our upcoming milestones.
I will now turn the call back over to Cedric for closing remarks. Cedric?

Cedric Francois

Thank you, Tim. This is an incredibly important and exciting time for our company. With SYFOVRE now available for patients, we are blazing a new trail in GA and our position in the PNH market is expanding. Additionally, we continue to advance a robust clinical pipeline encompassing multiple late-stage rare disease programs as well as several programs heading into the clinic. This broad portfolio gives us a position of strength as we strive to achieve our vision of being the global leader in complement.
Let's now open the call for questions, operator.

Question and Answer Session

Operator

(Operator Instructions) Our first question will come from the line of Madhu Kumar of Goldman Sachs.

Madhu Sudhan Kumar

So maybe to follow-up about some of the comments Adam made around future quarters. Like, what do you think is the way to think about this lumpiness in a very practical way? Do you think this is a way to think about it kind of like growth and decline or kind of a flattening or how should we look at kind of where the launch will be in terms of lumpiness? Is the lumpiness across the quarter, or kind of into the April kind of numbers you have so-far suggests some variance on lumpiness. And then, I'll follow-up afterwards for Tim?

Cedric Francois

Madhu, great to hear you, I will let Adam comment on this.

Adam J. Townsend

Madhu, thanks for your question. Obviously, we're thrilled with the first quarter sales and the $18.4 million, and more importantly for me the 6,000 commercial demand vials. That's a real strong indicator with the 3,400 samples that also went out about demand. And we're continuing to see that momentum into 2Q so far. So everything is progressing really well.
I will say, obviously, keep in mind that GA is relatively new, it's unchartered category, we've only been on the market for 2 months and we're starting to learn about the various adoption trends and some of those may impact demand. We have a little bit more to learn around reimbursement, dosing frequency, et cetera. So that leads to a little bit the bumpiness, until we get our permanent J-Code in October. Now, Tim, you might want to comment a little bit on one way of running that forward from a forecast perspective

Timothy E. Sullivan

Sure, so the way we think about -- the first quarter numbers really are kind of a 5-week month if you will. So if you take that 6,000 or so vials and divide that over 5 weeks, it's roughly 1200 vials per week and we don't get at this as sort of an average weekly growth rate potential in terms of forecasting. So you can do what you want with that, obviously there is a portion of the vials that we recognize as revenue, instead of distributor, because those are included in our revenue number.
And we'd like to -- basically, the distributors like to keep roughly 2 to 3 weeks on-hand. So as you grow that -- sort of those vials that, go out to the retinal specialists on a weekly basis. You also have to grow that inventory a little bit. But that's how we like to think about it. But again each week is different and we've seen some lumpiness as Adam said, but we have seen continued strong demand in April.

Madhu Sudhan Kumar

Okay, great. Maybe to follow from that with you Tim, so as you think about this is 1Q number would is basically 1 month of sales, how does this shift or kind of refine your perspective about a path to breakeven for Apellis as a company overall?

Timothy E. Sullivan

Yes, sure, so we obviously forecast a number of different scenarios, this is the best case scenario and we guide to our cash runway, we take a conservative view. Again, it's early so we're going to continue to evaluate this, but again, it's like I said, that's a conservative number that first quarter of 2025, so we'll see.

Madhu Sudhan Kumar

Okay. I guess maybe one more to follow-up on that, is there any kind of external leverage you think you guys have that could kind of move things further or could actually get you to have a little more clarity on kind of the path to breakeven?

Timothy E. Sullivan

Yes, I think we've been really creative in terms of how we finance the company and how we've managed our -- I think we've managed our expenses, especially in terms of the -- when we finance and how we kind of built-out that commercial infrastructure relative to when our approval came. So look I think we're pretty careful about this, but I don't think we can guide specifically on how we're going to bridge that gap to profitability, but we're pretty confident it will be the right thing for shareholders when we do that.

Operator

Our next question comes from the line of Jon Miller of Evercore.

Jonathan Miller

And congrats on that great first quarter number. I think you actually gave a lot of great color on the dynamics there. But I'd love to dive into that ARVO presentation actually. I would love to get a sense for how you view the impact of functional post-hoc analysis on the commercial market from here, and maybe if you could provide a little bit more color on where those functional analysis cut-offs came from? Where the 250-micron cut-off for [post] foveal come from et cetera. And did you run the time-to-event analysis like your competitor did?

Cedric Francois

Jon, well, I'll start off by giving the word to Caroline to talk about what we really saw and the why that is important, and then briefly hand it over to Adam to talk about kind of the commercial impact of that.

Caroline R. Baumal

Thank you, Cedric. We've always believed that there is a link between the functional data and slowing the growth of geographic atrophy. And sometimes post-talk analysis are necessary to confirm that, especially within the noise of the measurements that we get in patients with GA. In our post-talk analysis, we showed that there was a functional benefit with regards to visual acuity and quality-of-life measurements demonstrated in SYFOVRE treated eyes with extra-foveal lesion. And this is really consistent with what I would expect as a clinician, that we would be able to show this benefit in patients before lesions affected the foveal.
250 microns, well, that is the size of the foveal avascular zone and why didn't we do the same analysis as Iveric, I think that we're pleased that they were able to do that type of analysis that they did to show their benefits, and we have our recent functional analysis and we also have microperimetry data that was presented at ARVO last year, that confirms our functional benefit.

Adam J. Townsend

Jon, it's Adam, just following-up. Obviously, the commercial team is laser-focused on executing against our label. So all of our focus is there and targeting our 2,600 retina doctors around the U.S. So, whilst this is great data, I think there's a great usage from educating the medical community, but our sales team is focused on executing our plan and talking about our 24 months of data and everything that's within our label.

Jonathan Miller

Just as a quick follow-up guys. Will you be including that functional analysis in your ex-US filings? I know there's been a lot of attention on the -- from the EU, especially on functional benefit?

Cedric Francois

Absolutely, we will. So despite of the bigger functional story, more functional data will come out as well as we continue to track of course and again extension study books, is but this is of course an important piece as we had expected to follow the lesion size reduction and we're very excited to see it materialize.

Operator

Our next question comes from the line of Tazeen Ahmad of BofA.

Tazeen Ahmad

Congrats from me as well on a really good start to the launch. I'm just wondering how much detail do you get about the granularity? So you shipped 6,000-plus vials, do you get in real-time updates on how many of those vials are actually being used? And is it your expectation that the initial grouping of patients that are going to be put on the drug will be every month dose versus every other month? And then I have a follow-up?

Cedric Francois

Adam?

Adam J. Townsend

Yes hey, Tazeen, it's Adam. So obviously, what we do see in this initial phases of the launch is vials ordered by our retina practice, and then the link that is the revenue number that you've seen. So initially, all of our feedback is based on interaction from either someone from the medical affairs team or the commercial team having a discussion with the physician, but we don't see that level of granular detail of how these vials are used or what type of patients they're used in. What I can tell you is that we expect physicians to carry only 1 to 2 weeks of stock in their fridge, so my belief is the vast majority of those demand vials is, what I call them, the 6,000 commercial and the 3,400 samples in the first month are likely going into eyes relatively quickly.
But the second part of your question was, what type of patients and is that monthly or every other month likely to be dominant. So what we are hearing anecdotally is the type of patients that the physicians are using SYFOVRE for is as we expected to within the initial phases prior to launch. So you tend to hear physicians say that they are treating a patient who is blind in one eye and GA is progressing vision loss in the second eye, why AMD in one eye and GA in the second eye, and bilateral GA, that was consistent with our market research. And we are also hearing that every other month, it's a bit of a game-changer in this disease, and every other month is the dominant player at the moment. So hopefully that answers your question.

Tazeen Ahmad

Okay. Yes that's helpful, Adam. And then just with the recent news that Astellas would be managing the next complement launch, if it does get approved, what's your view of them being your competitor in this market?

Cedric Francois

Tazeen, first of all we're happy for both Astellas and for Iveric and we wish them the very good and productive and partnership together. Look, from our angle it doesn't change anything, we are very focused on the job at hand, at making SYFOVRE available to every patient that needs in the U.S. for now, and other countries in the future. So, importantly we have the every-other-month dosing, of course, which gives us we believe is an important competitive advantage that we here materializing in the months-to come as well.

Operator

Thank you. This question comes from the line of Anupam Rama with JPMorgan.

Anupam Rama

Congrats on the initial launch here. I have a quick question for-- on SYFOVRE sampling. When a physician for a sample, like how many samples do you give per patient and I guess, what is assumed in terms of that patient transitioning to commercial drug, the timeframe to switching to commercial drug?

Cedric Francois

Anupam, great hearing you. Adam?

Adam J. Townsend

Yes, hey Anupam it's Adam. So thanks for your question. So obviously samples are really important component of our launch, and they are going to represent a meaningful proportion of overall vials. Now, physicians tend to request samples, and the reason why they do so that they want to understand the patient's clinical experience with the drug, gain experience with the drug, and also how to administer it as it's a new drug in this class.
A few things, obviously, only a physician who has medical certification can file to receive samples and they have to form their request to do so. So they tend to know the level of samples they need based on how they want to use it, and we expect it is an important piece of our business moving forward as we progress towards the permanent J-code. Now, I do think the majority of samples lead to commercial vials in the end. Caroline, from your perspective, is there anything you want to add?

Caroline R. Baumal

Well, I think samples are important for physicians they fill a gap, and also gives us the experience with how to use the medication. And my colleagues have been really pleased to have this option available, they're excited to finally have this treatment for GA, they're-- I think the flexible label meets all of their needs and they're really having great interaction with Apellis that's my input so far.

Operator

Thank you. This question comes from the line of Colleen Kusy with Baird.

Colleen Margaret Kusy

Great, and thanks for taking our questions and congrats on the quarter. So of the 6,000 demand vials as Adam called them and the 3,400 samples, how many different prescribers does that cover kind of what's the breadth of prescribers you're seeing in this early stage?

Cedric Francois

Colleen, handing it over to Adam.

Adam J. Townsend

Yes, Colleen, it's Adam. So obviously we are targeting in 2,600 retina physicians and we continue to do that. The commercial and medical teams, they have engaged already 2,000 physicians at least once, and the thrill for me is that actually every sales territory has actually ordered a commercial vial of SYFOVRE. So we're getting usage across the whole of the country. We are also seeing usage from private-equity-backed practices, but the majority is coming from independent practices.
So again a good mix of the type of center that's using, now the challenge we have initially in the early stages with this launches that we only see vials going to centers, so we don't have a physician -- live physician knowledge of who is using apart from anecdotal. But conditions are wanting to speak to us and we're already getting throughout 2,600 target there, so I think there is a wide spread of physicians who are using across the country.

Colleen Margaret Kusy

That's helpful. And then just as a follow-up, can you remind us your strategy for distribution? How many distribution -- how many distributors you're working with and could we expect more to come online in the future?

Adam J. Townsend

Yes Colleen, it's Adam. So we not public on our distribution strategy, but we have all of the distributors that meet the needs of all of our 2,600 physicians and all of the coverage plans that they may have. So we're very happy with our distribution process at the moment, but we're not public on it.

Operator

This question comes from the line of Yigal Nochomovitz from Citigroup.

Yigal Dov Nochomovitz

Congrats on the very strong launch. Just a really basic question, just so I'm clear, the WACC is $2,190 per vial and you've done 6,000, or maybe a little more vials so that's getting me to $13 million so I must be missing something. Can you just clarify how you're getting $18.4 million from the over -- just over 6,000 commercial, please?

Timothy E. Sullivan

Sure. Yigal, it's Tim. I'll take that. So we recognize revenue when it when the vials are shipped they go to the distributor, and then the distributor will -- when the doctor requests them to -- the distributor will ship them to the doctor. And so the 6,000 is that second step, but we recognize revenue with the first step. So there are some (inaudible) vials that stay at the distributor level that we've already recognized as revenue. We don't tell you --

Adam J. Townsend

And, Yigal, it's Adam. Just as a reminder, right? We expect our distributors to keep between 2 to 3 weeks of inventory on-hand and physicians about 1 to 2 weeks.

Yigal Dov Nochomovitz

Okay, so there is another 2 to 3 weeks of distributor revenue, but it's not in the system, okay. And then regarding the sampling, can you give us a sense as to what percent of the 2,000 physicians that you've engaged with so far have actually requested samples.

Adam J. Townsend

Yes, so we've seen samples being used across the vast number of those 2,000 physicians that we've seen in there across all of our regions in all of our geographies.

Yigal Dov Nochomovitz

Okay. And then we've talked in the past about the dynamic with so-called re-calendaring, some of the wet AMD patients to make room for SYFOVRE capacity. Have you seen any evidence of that practice yet?

Adam J. Townsend

Yes we've seen and anecdotally heard that physicians looking at managing both their Wet AMD patients as well as their GA patients, and managing the calendars there. Caroline, anything you want to add from your experience?

Caroline R. Baumal

Well, I think that this is fit really nicely within the treatment paradigm that we already have with anti-VEGF, and so this fits well into that. Doctors are -- physicians are really enjoying our educational materials for patients, the brochures that they have, and able to explain this to patients. And patients are really enthusiastic about this treatment, they recognize that their vision was going down before, and they want to save and reduce the burden of GA. So -- but as retina physicians and retinal surgeons, we know how to adapt to treat our patients, and I have no doubt that my colleagues will be able to adapt to these injection burden finding new ways to do that.

Operator

This question comes from the line of Steven Seedhouse with Raymond James.

Steven James Seedhouse

I wanted to ask, there have been various news reports, of course, discussing strategic takeover interest in Apellis, so Cedric, any comments you wanted to make on that subject and Apellis' strategic priorities?

Cedric Francois

Yes, Steve well, there's always those speculation of course, we are in the stage of commercialization that of interest. But we are squarely focused on making SYFOVRE available to every patient that needs in the U.S.

Steven James Seedhouse

Roger that. Can I follow-up and just asked the -- when is the first update from GALE coming in, and what would that initial data sort of entail, if you can just get us current on that?

Cedric Francois

So we are going to be presenting a full update on GALE at the ASRS Conference at the end of July. Very excited about sharing what happens to increasing effects over-time that we mentioned already is 24-month data. So this is going to be the 30-month update on these subject as they continue to be dosed.

Operator

Our next question comes from the line of Phil Nadeau with TD Cowen.

Philip M. Nadeau

Let us add our congratulations on the initial launch of SYFOVRE. Couple of questions from us. First, Adam, I think you mentioned that you expect physicians to keep 1 to 2 weeks of inventory on-hand, so 1,200 vials approximately per week. You should have seen some reorders during March. Would you be willing to share that proportion of the 6,000 that were re-orders versus first time orders?

Adam J. Townsend

Phil thanks for the question. Yes, we've seen reorders, but we're not going to go into the details of those reorders.

Philip M. Nadeau

Got it. And then second question, there were recent reports about endophthalmitis, it seems like something that's going to happen at a background rate. How should investors put into context any future database settings of endophthalmitis around the side effects?

Cedric Francois

Phil, I'll let Caroline answer that question.

Caroline R. Baumal

There was a single case of culture positive endophthalmitis and that was deemed related to the intravitreal injection procedure. This is well within the reported rate based on the number of intravitreal injections performed thus far. And as you had mentioned, it that was misquoted line as blindness in (inaudible), and this is being corrected. I'd say that overall, we are encouraged by the safety profile thus far with SYFOVRE, and this has been consistent with the clinical trial.

Operator

Our next question comes from the line of Justin Kim of Oppenheimer.

Justin Alexander Kim

And congrats on the quarter. Maybe just following-up on the observed initial adopters this therapy for SYFOVRE, a kind of lag in reaching patients with GA in a single eye and nothing -- in the lateral eye -- is that driven by the fact that these patients might not be seen by a retinal specialist and maybe even just being seen by an optometrist or an ophthalmologist?

Cedric Francois

Thank you so much. Justin great to hear you Adam, I don't think I can share too much on this.

Adam J. Townsend

Yes, thanks, Justin. Good to talk to you. So, yes, based on our initial research we did prior to launch, and the feedback we're hearing from physicians. The prioritized patients that I described earlier in the call tended to be, the first wave of treatment period, because they sat on the books of retina physicians. So your assumption can be quite accurate. A lot of these physicians that have GA in one eye that might be extra-foveal and not impacting vision might tend to have been set back to their ophthalmologist or their optometrist.
Now, moving forward, we believe that you might have seen the where we're doing some direct-to-consumer work with Henry Winkler, and with we are launching the GA Won't Wait campaign that's really important part of marketing strategy. We think that a lot of people basically believe, particularly the elderly, that vision loss is just a natural part of their aging, and what we wanted to do is we want to drive those patients to go and see their eye doctor.
So our GA Won't Wait campaign is going to be a really important tool for us to educate patients and move patients to go see their physicians. And we're really thrilled that Henry Winkler has decided to partner with us, because of his really emotional story of looking after his father-in-law as his father-in-law went through vision loss. So that will help us and that addresses the piece of your question about patients -- naturally sitting with the retina doctor.

Justin Alexander Kim

Okay, great. And maybe just a follow-up maybe thinking about safety for EMPAVELI, any updates on meningococcal infection profile? And just any update on there, given sort of the profile to-date?

Cedric Francois

No, thank you, so much so EMPAVELI I mean, unfortunately we have crossed into north of 1,000 patient years of dosing. And we have yes. We do not see a single case of pneumococcal infections and Adam I don't know if he wants to add something to that, so we're extremely happy with what we've seen.

Adam J. Townsend

Now it's great. Thank you, Justin, for asking them EMPAVELI question. I think it’s a massive, massive fan of all things EMPAVELI and PNH and I think we're making great progress there. So as Cedric said we still know cases over 1,000 patient years. And are we still see a really-really high compliance 98% it shows me that the efficacy and safety of EMPAVELI continues to be a strong driver within the PNH market. So I'm thrilled with what that team is doing and continue to make great growth quarter-on-quarter.

Operator

This question comes from the line of Derek Archila with Wells Fargo.

Derek Christian Archila

Hey, everyone and congrats on the quarter well done. Just a couple of questions from us so, let me just first-off. I was kind of wondering, if you got any feedback from physicians, kind of on how the patient journey and the logistics are working in the practices. So how has SYFOVRE impacted their practices? And are you finding areas to optimize for future in the launch. And then the second question and maybe I missed this earlier, how long do you plan to actually run the sampling program?

Cedric Francois

Thank you so much but I will hand the physician feedback on to Caroline. And then Adam will talk about that sampling.

Caroline R. Baumal

Well the physician feedback has been really positive. It's amazing that Apellis and my colleagues as a company, relatively new to the retina space has contacted and impressed so many of my colleagues. I don't know anyone who doesn't know the members of the Apellis team who contacted them for medical and sales information. So I think that's all help to bring the patient story into light and patients are really pleased with their initial interaction with SYFOVRE.

Adam J. Townsend

Yes, I think you said it nicely there, Caroline. Hey Derek, it's Adam. So, yes, sampling we still believe it's going to be pretty important for us during this launch phase, particularly before we get a permanent J-Code in October. And as I said previously, just in case you didn't miss it, some of physicians want to gain about experience they want to try the drug. Make sure that when they go patient in the chair that they understand how everything goes et cetera. So it's going to be an important tool for us. I do see samples as a sign of demand.

Derek Christian Archila

Yes and maybe just one follow-up to my first question, so I guess is there any kind of pushback or issues with like the time in the chair for these patients as you know, again, the communication, the education around SYFOVRE. I just kind of compared to wet-AMD we've heard some feedback on that. So just kind of curious what you're hearing as well?

Caroline R. Baumal

Well, this is really an opportunity to change the treatment paradigm. I mean I think back to when we initially had treatment for wet-AMD was the same sort of thing. We had to explain to patients they were having an injection, we have to educate patients and we were able to completely changed wet-AMD from a blinding disease to something where we see patients earlier we have all eye care providers involved so we can save vision.
So now that we have SYFOVRE the first treatment for GA, we're able to start the treatment paradigm for GA and kind of roll it back, so we can start to treat these patients earlier, get all eye care providers involved, not just retina docs, but [Thera] docs, optometrist, obstetrician and treat these patients and I haven't really heard anything, but of course, anything new takes a little bit of education for patients and the community.

Adam J. Townsend

Hey Derek, it's Adam. I'll just jump-in on that too, right. So obviously, we were doing disease day education from the end of last year. So we've done a really solid job with our field teams to educate physicians centers and also patients compliant around geographic atrophy, anecdotal feedback from all the physicians that we've been speaking to, have been using is that patient, physician conversation goes incredibly well. These patients are educated, they very comfortable within the chair and physicians are doing a really solid job of describing SYFOVRE and the disease. So far, those conversations have been going very, very well.

Operator

This question comes from the line of Eliana Merle with UBS.

Eliana Rachel Merle

And congrats on all the progress. Maybe just a couple on Europe just first on the regulatory review can you any color that you can provide on how the European review is going and any feedback that you've gotten and the latest there in terms of your confidence on European approval. And then second, just in terms of the commercialization strategy in Europe. I guess how should, we think about the commercial opportunity and strategy ex-U.S. versus U.S. and any key differences there?
And then just on the ex-U.S. commercial preparations and built-out. Can you comment just where you are on that front in terms of like the sales force build-out your commercial preparations, but that also from a spend perspective where you are in terms of ex-U.S. build out?

Cedric Francois

Thank you so much Eli great hearing you. Well, look, I mean. Europe is the next frontier the rest of the world as well. I mean we have as our filing was accepted by the consortium between Australia Switzerland, Canada and U.K. as well. European regulatory process is going as we had expected and going very well. We expect an approval there early next year. And I think it's important to point out that we established our commercialization force in Europe many, many years ago.
So Adam has been with us, I believe, longer than 4 years now. And as soon as he came in, we established our force in Zug, Switzerland. This is important because in Europe, as many of you know. The work involves many-many layers, so there was a whole level of awareness that needs to be established, not just with the retina, doctors, but also with regulators, which of course, EMEA had supporters, but with regulators, the payers and quite frankly, also the kind of the political landscape for people to understand what those diseases and how we are going to bring this to market, and Adam will talk a little bit more about how we have gone about that.

Adam J. Townsend

Hey Eli it's Adam. So, yes, obviously 5 million GA patients worldwide and if your assumption is $1 million to $1.2 million of those are in the U.S. you can see there is a massive opportunity for us, ex-US. So its Cedric beautifully said right. We've been building out the commercial and medical test, infrastructure, our corporate, the European office is based in Zug in Switzerland, that's where our strategy is driven from.
And we started to put feet on the ground from a medical affairs in-country leadership perspective in the U.K., France, Italy, Nordics and more importantly, our first potential launch outside of the U.S., Germany, and we also have footprints in Canada annual Australia. So we're getting ready for this launch.
We are also going to do it in a very Apellis way, right. We're going to be super thoughtful and when we onboard people and we'll wait for milestones as we go through the European regulatory process. We've been really lucky and attracting very talented people to join our teams. So, we're ready to go as we as we work towards and a potential approval towards the end of the year.

Operator

This question comes from the line of Annabel Samimy with Stifel.

Annabel Eva Samimy

And great quarter, congratulations. So I want to go back to the functional data that was presented at ARVO. Clearly, it's the first evidence of function that you've demonstrated in addition to the anatomical data, so I guess the first question is, what was the reception that you got from the physician population at ARVO?
And I guess given that the benefit was seen in patients who are earlier or have lesions that are further away from the center, so technically extra-foveal, I mean, how does that square with your current strategy of targeting patients? Do you think that there's going to be a shift, maybe go earlier, since you're seeing the functional benefit there?
And then the follow-up is, I noticed that you mentioned that you're going to be exploring the drug in patients that are at risk of developing GA, is this different from intermediate disease, which I thought that you had moved away from a little bit? So just if you could help us understand the -- any change in strategy based on the interesting information you presented at ARVO?

Cedric Francois

Thank you, Annabel. Caroline comment on the reception, but I think it's important for people to remember that visual acuity is only the measurement of central vision, right. Visual function is much, much more than just your ability to read a Snellen chart. And I always get the example, imagine walking through New York, looking through a straw, you would have 20/20 vision on Snellen chart, but obviously your function and your ability to operate will be severely impaired.
So with that context in mind, visual acuity is determined by the presence of photoreceptors within the fovea. So when we look at visual acuity and you look at extra-foveal patients, that means that these patients at baseline in the study still theoretically have the ability to have central vision and then the question, does that central get impaired over time can we slow that down.
So in that sense, it was a very important study. But again within the limitations of how we measure function just focused on that element of visual acuity. You may recall that last year in September, we presented data on microperimetry that is something that looks more as a periphery. So then the question as it relates to intermediate and the -- versus risk of GA, you bring up an excellent point, which is that one of the most of beginning features of SYFOVRE are the increasing effects over time.
So the ability to slowdown the progression of the disease increases from approximately 20% or so in the first year to well north of 30% when you go into year 3. So the longer you treat, the better it appears that this drug is able to slowdown the progression of GA and hence the ability to treat as early as possible is important.
Intermediate AMD is in term that gets used randomly and not very precisely all the way for patients who have just have just occlusion in the eye, to patients that may have kind of the early onset of geographic atrophy. What we did in intermediate AMD, and this is direct feedback from the regulators at the FDA is neither, an indication or an endpoint. I cannot overemphasize that.
So in that context, what we want to do is go treat as early as possible before you actually have the presence of geographic atrophy. So we can do that now with OCT imaging and that's where we want to go next to study what SYFOVRE can do. So, Caroline if you want to -- maybe briefly comment on the feedback that you got on the functional endpoint?

Caroline R. Baumal

Thank you, Cedric. I would say, the feedback was very positive and, because it really is consistent with what we would expect as a clinician. For example like, when we see patients and they have GA through the fovea. Or any patient to have the severe disease, the visual acuity measurements can have a lot of noise and be really variable. And so, we would expect to have more stable and reproducible visual results as the lesion gets further from the fovea and that's why we're able to demonstrate this.
The other thing that's notable, we had a really big trial looking at GA patients, the second-largest study in GA, and we enrolled a really heterogeneous group of patients in this. So that's why we're able to demonstrate this more easily with our extra-foveal patients. The reception was really positive, and clinicians are really excited about this data.

Annabel Eva Samimy

Okay. I guess, just follow-up on that point, would that mean that you might want to target different population in the 4 categories that you had mentioned? So maybe, those that do have lesions that are further away from the center and just really be able to get the maximum benefit for those patients?

Cedric Francois

Again, Annabel, if the benefit to the patients focuses only on visual acuity, then in extra-foveal patients you're going to see better than you would in foveal patients, but we know for a fact that many patients who have foveal involvement at the start of the study, so-called so subfoveal patients also will benefit from slowing down photoreceptor cell loss. So that is something that we clearly established and studied in our 1,200 patients that we studied in early adults.

Operator

One moment for your next question, this next question comes from the line of Joseph Stringer of Needham and Company.

Joseph Robert Stringer

A few quick ones from us just curious if you can walk us through the immediate impact on both tremendous sales in the permanent J-code becomes available at the start of 4Q this year. And then on gross-to-net, maybe you're not guiding for it. But you -- I guess you sort of guide for a normal range, but do you expect this to remain relatively constant as you progress through the launch?

Adam J. Townsend

Hey, Joey, I had a hard time hearing your first question, but I think it was about permanent J-code. So, a few things about that is obviously a permanent J-code gives physicians and guarantees that confidence of getting reimbursed in a timely manner. So I do think that that will have a nice impact for us as we get to that stage of the launch in October. At the moment, obviously we're working claim-by-claim, and working for reimbursement claims, and one thing that I think it's probably good for us to know, and you guys to know, since launch, as of today as well, our understanding is that there have been more than 50 payer claims.
So obviously the permanent J-code has a real solid impact for us as we get there in October, but we're doing pretty well to make sure that we're working through claim-by-claim. Now the spin side to that is the majority of the challenges we've seen tend to be basically process related and we also anticipate that will smooth as we can overtime, this is the first time some of these payers is seeing these GA patients come through the system. And it manually done during this temporary J-code period, so that will improve post the permanent J-codes. So considering, I didn't hear your question. I'm hoping I answered it.

Timothy E. Sullivan

Yes, I can answer the gross-to-net question. Did he answer your first part?

Joseph Robert Stringer

Yes, very helpful.

Timothy E. Sullivan

Okay. So on gross-to-net, we won't be guiding on gross-to-net, and it will change a little bit over-time. We're willing to say is that it's within the pharmaceutical margins, which you can typical pharmaceutical gross-to-net, which is in the 10% to 20% range and I realize that's very wide. In our 10-Q, we do add additional disclosure that we haven't in the past, but it does blend EMPAVELI and SYFOVRE, and we give detail on charge-backs, discounts and fees, government and other rebates, and also returns on a year-to-date basis. So you can get a sense on a blended basis what that looks like, but we're not going to break it up by individual product.

Operator

This question comes from the line of Douglas Tsao with HC Wainwright.

Douglas Dylan Tsao

Adam, you've spoken a bit about seeing demand from sort of smaller individual practices versus the PE backed ones. Could you maybe provide a little more color in terms of what do you think that means and ultimately how it will play off -- play out across both of those different practice sets? And congrats on all the progress.

Adam J. Townsend

Douglas so yes, so actually I see as a really strong leading indicator for us that we're seeing usage across the board of retina practices. So those who are private-equity backed and have a different process, potentially on how they order and use SYFOVRE, but the majority is coming from independent retina practices all across the U.S. And as I've said before, our metric for me as a commercial guy, I'm thrilled that each one of our sales territories has had commercial sales.
So for me, this is a sign of demand that we are not just getting the initial PE backed usage. We're also working appropriately with those retina centers and independent retina centers to work through-- to get patients on the drug. So I can only see that progressing as we get broader within target list, and we continue to drive repeat prescription et-cetera. So I think it's a really strong sign across the board. So it's a great metric for us.

Douglas Dylan Tsao

Okay, great. And if I can, just a quick follow-up, in terms of samples to doctors need to request samples for an individual patient, or are doctors able to keep samples just around in their offices?

Adam J. Townsend

Yes, great question. So yes, doctors need to request samples, but they don't need to request them for individual patients. So they can request samples and then use that as they appropriately to see fit.

Operator

I would now like to turn the call back to Cedric Francois for closing remarks.

Cedric Francois

Thank you so much. And in closing, thank you all for joining us today. We are around later today and tomorrow, if you have any additional questions, feel free to reach out to Meredith. This was a great start to the year for us and we look forward to sharing more in the months to come. Thank you.

Operator

Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.