Apellis Loses A Third Of Its Value; Are Its Mixed Results Enough To Win FDA OK?

Apellis Pharmaceuticals (APLS) reported mixed results for an eye-disease treatment, leading APLS stock to crash on Friday.


The company is working on a treatment for geographic atrophy, a blindness-causing disease that impacts more than 5 million people globally and 1 million people in the U.S. Its experimental drug, known as pegcetacoplan, succeeded in one Phase 3 test. But it failed in another.

Analysts were split on whether the results were good enough for Apellis to ultimately snag Food and Drug Administration approval. The company says it plans to ask for approval in the first half of 2022. Wedbush analyst Laura Chico says her team “can’t believe (their) eyes.”

“We presume the regulatory overhang will remain in place with additional data still about one year out,” Chico said in a note. She downgraded APLS stock to a neutral rating and cut her price target to 39 from 71.

On today’s stock market, APLS stock plummeted 37.2% to 34.93.

APLS Stock: One Test Hits

Apellis tested pegcetacoplan in two studies, Oaks and Derby. Researchers aimed to reduce the growth of lesions in the eye with monthly or every-other-month injections in the eyes.

The Oaks study med its goal, cutting lesion growth by 22% for the monthly group and 16% for the every-other-month group. But the Derby results weren’t statistically significant with 12% and 11% reductions, respectively. The results were taken after a year of treatment.

Safety results were promising, however. Across both studies, new incidents of fluid in the eyes occurred in 6% of patients receiving monthly injections and 4.1% of patients who received shots every other month. That compared to 2.4% of patients who didn’t receive pegcetacoplan.

Evercore ISI analyst Umer Raffat notes there is nothing approved for geographic atrophy. The analysis across both studies — a 17% lesion reduction in the monthly group and 14% in the every-other-month group — plus a favorable safety profile is promising, he said in a note.

“We think this is very much an approvable data set,” he said. He maintained his outperform rating on APLS stock, saying the stock is oversold.

Is The Drug Approvable?

Bullishly for APLS stock, patients with extrafoveal lesions benefited more than others. Legions in this group occur outside the area of the eye where vision acuity is highest. They have earlier-stage disease, but more rapid lesion growth, Needham analyst Joseph Stringer said in a note.

In this group, pegcetacoplan decreased lesions by 26% in the monthly treatment group and 23% in the every-other-month group.

Previously, the company said a 20% reduction in lesion growth for all patients would be clinically meaningful, Wedbush’s Chico said. Needham’s Stringer kept his buy rating on APLS stock. But he cut his price target to 70 from 85. He still sees “a light of sight to FDA approval.”

“We think the totality of the results, including favorable (effectiveness)/safety profile for high unmet need geographic atrophy is likely sufficient for FDA approval,” he said.

Still, in early action, APLS stock hit its lowest point since August 2020. That put shares well below a buy point at 73.10 out of a consolidation, according to

Follow Allison Gatlin on Twitter at @IBD_AGatlin.


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