Apellis Pharmaceuticals, Inc. [APLS] Filings

10-Q 1 apls-20240630.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38276

APELLIS PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	27-1537290
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

100 Fifth Avenue, Waltham, MA	02451
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 977-5700

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	APLS	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Small reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 25, 2024, the registrant had 121,766,328 shares of common stock, $0.0001 par value per share, outstanding.

APELLIS PHARMACEUTICALS, INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2024

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2024 and 2023	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2024 and 2023	5
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
PART II.	OTHER INFORMATION	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 5.	Other Information	37
Item 6.	Exhibits	38
Signatures		39

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Special Note Regarding Forward-Looking Statements and Industry Data

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking statements include, among other things, statements about:

•

the ongoing commercialization of EMPAVELI and SYFOVRE;

•

our plans with respect to our ongoing and planned clinical trials for our product candidates, whether conducted by us or Swedish Orphan Biovitrum AB (Publ), or Sobi, or by any future collaborators, including the timing of initiation, dosing of patients, enrollment and completion of these trials and of the anticipated results from these trials;

•

our sales, marketing and distribution capabilities and strategies, including for the commercialization and manufacturing of EMPAVELI, SYFOVRE and any future products;

•

the rate and degree of market acceptance and clinical utility of EMPAVELI, SYFOVRE and any future products;

•

our plans to develop our current and future product candidates for any additional indications;

•

the timing of and our ability to obtain and maintain regulatory approvals for our product candidates;

•

the potential clinical benefits and attributes of our current and future product candidates we may develop and the inhibition of C3;

•

our current and any future collaborations for the development and commercialization of our current and future product candidates;

•

the potential benefits of any current or future collaboration, including our collaborations with Sobi and Beam Therapeutics, Inc.;

•

the rate and degree of market acceptance and clinical utility of EMPAVELI, SYFOVRE and any other products for which we receive marketing approval;

•

our commercialization, marketing and manufacturing capabilities and strategy;

•

our intellectual property position and strategy;

•

our ability to identify additional products or product candidates with significant commercial potential;

•

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•

developments relating to our competitors and our industry; and

•

the impact of new government laws and regulations (including tax).

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments that we may make or enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed or incorporated by reference as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

This Quarterly Report on Form 10-Q includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. All of the market data used in this Quarterly Report on Form

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10-Q involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such data. We believe that the information from these industry publications, surveys and studies is reliable. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of important factors, including those described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and in this Quarterly Report on Form 10-Q. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us. The Apellis, EMPAVELI, SYFOVRE and Apellis Assist names and logos are our trademarks, trade names and service marks. The other trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

Note regarding certain references in this Quarterly Report on Form 10-Q

Unless otherwise stated or the context indicates otherwise, all references herein to “Apellis,” “Apellis Pharmaceuticals, Inc.,” “we,” “us,” “our,” “our company,” “the Company” and similar references refer to Apellis Pharmaceuticals, Inc. and its wholly owned subsidiaries.

In addition, unless otherwise stated or the context indicates otherwise, all references in this Quarterly Report on Form 10-Q to “EMPAVELI (pegcetacoplan)” and “EMPAVELI” refer to systemic pegcetacoplan in the context of the commercially available product in the United States for the treatment of adults with paroxysmal nocturnal hemoglobinuria, or PNH, and references to Aspaveli refer to pegcetacoplan in the context of the commercially available product in the European Union for the treatment of adults with PNH who are anemic after treatment with a C5 inhibitor for at least three months, in each case, as more fully described herein. Unless otherwise stated or the context indicates otherwise, all references in this Quarterly Report on Form 10-Q to “SYFOVRE (pegcetacoplan injection)” and “SYFOVRE” refer to intravitreal pegcetacoplan in the context of the commercially available product for which we received approval from the United States Food and Drug Administration in February 2023 for the treatment of geographic atrophy secondary to age-related macular degeneration. Unless otherwise stated or the context indicates otherwise, all references herein to “pegcetacoplan” refer to pegcetacoplan in the context of the product candidate for which we are exploring further applications and indications, as more fully described herein. The other trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

APELLIS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in thousands, except per share amounts)


	June 30,			December 31,
	2024			2023
Assets
Current assets:
Cash and cash equivalents	$	360,087		$	351,185
Accounts receivable, net		304,433			206,442
Inventory		152,772			146,362
Prepaid assets		28,971			38,820
Restricted cash		1,339			1,114
Other current assets		12,372			22,408
Total current assets		859,974			766,331
Non-current assets:
Right-of-use assets		16,321			16,745
Property and equipment, net		3,836			4,345
Long-term inventory		23,021			—
Other assets		1,330			1,309
Total assets	$	904,482		$	788,730
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	38,270		$	37,516
Accrued expenses		122,781			127,806
Current portion of development liability		—			75,830
Current portion of lease liabilities		6,214			6,441
Deferred revenue		1,903			—
Total current liabilities		169,168			247,593
Long-term liabilities:
Long-term development liability		—			239,817
Long-term credit facility		364,025			—
Convertible senior notes		93,186			93,033
Lease liabilities		11,085			11,454
Other liabilities		2,691			2,312
Total liabilities		640,155			594,209
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000 shares authorized, and zero shares issued and outstanding at June 30, 2024 and December 31, 2023		—			—
Common stock, $0.0001 par value; 200,000 shares authorized at June 30, 2024 and December 31, 2023; 121,687 shares issued and outstanding at June 30, 2024, and 119,556 shares issued and outstanding at December 31, 2023		12			12
Additional paid-in capital		3,209,245			3,035,539
Accumulated other comprehensive loss		(3,362	)		(3,542	)
Accumulated deficit		(2,941,568	)		(2,837,488	)
Total stockholders’ equity		264,327			194,521
Total liabilities and stockholders’ equity	$	904,482		$	788,730

See accompanying notes to unaudited condensed consolidated financial statements

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APELLIS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(Amounts in thousands, except per share amounts)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2024			2023			2024			2023
Revenue:
Product revenue, net	$	179,136		$	89,645		$	342,211		$	128,444
Licensing and other revenue		20,549			5,324			29,798			11,370
Total revenue:		199,685			94,969			372,009			139,814
Operating expenses:
Cost of sales		23,100			8,379			43,309			16,188
Research and development		77,947			95,658			162,647			205,684
Selling, general and administrative		128,081			111,373			257,587			213,466
Total operating expenses:		229,128			215,410			463,543			435,338
Net operating loss		(29,443	)		(120,441	)		(91,534	)		(295,524	)
Loss on extinguishment of development liability		(1,949	)		—			(1,949	)		—
Interest income		3,184			6,002			6,488			11,395
Interest expense		(9,359	)		(7,341	)		(16,326	)		(14,869	)
Other income/(expense), net		24			(63	)		(475	)		(341	)
Net loss before taxes		(37,543	)		(121,843	)		(103,796	)		(299,339	)
Income tax expense		114			194			284			476
Net loss	$	(37,657	)	$	(122,037	)	$	(104,080	)	$	(299,815	)
Other comprehensive gain/(loss):
Foreign currency translation		163			(21	)		180			79
Total other comprehensive income		163			(21	)		180			79
Comprehensive loss, net of tax	$	(37,494	)	$	(122,058	)	$	(103,900	)	$	(299,736	)
Net loss per common share, basic and diluted	$	(0.30	)	$	(1.02	)	$	(0.84	)	$	(2.57	)
Weighted-average number of common shares used in net loss per common share, basic and diluted		123,904			119,316			123,430			116,594

See accompanying notes to unaudited condensed consolidated financial statements

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Apellis Pharmaceuticals, Inc.

CONDENSED Consolidated Statements of CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(Amounts in thousands)


									Accumulated
	Common Stock					Additional			Other						Total
	Outstanding					Paid-In			Comprehensive			Accumulated			Stockholders’
	Shares		Amount			Capital			Income/(Loss)			Deficit			Equity
Balance at January 1, 2024		119,556		$	12	$	3,035,539		$	(3,542	)	$	(2,837,488	)	$	194,521
Proceeds from settlement of capped call		—			—		98,763			—			—			98,763
Issuance of common stock upon exercise of stock options		714			—		9,477			—			—			9,477
Vesting of restricted stock units, net of shares withheld for taxes		997			—		(28	)		—			—			(28	)
Share-based compensation expense		—			—		30,349			—			—			30,349
Net loss		—			—		—			—			(66,423	)		(66,423	)
Foreign currency translation		—			—		—			17			—			17
Balance at March 31, 2024		121,267			12		3,174,100			(3,525	)		(2,903,911	)		266,676
Issuance of common stock upon exercise of stock options		233			—		1,962			—			—			1,962
Vesting of restricted stock units, net of shares withheld for taxes		102			—		—			—			—			—
Share-based compensation expense		—			—		29,990			—			—			29,990
Issuance of common stock to employee stock purchase plan		85			—		3,193			—			—			3,193
Net loss		—			—		—			—			(37,657	)		(37,657	)
Foreign currency translation		—			—		—			163						163
Balance at June 30, 2024		121,687		$	12	$	3,209,245		$	(3,362	)	$	(2,941,568	)	$	264,327

See accompanying notes to unaudited condensed consolidated financial statements

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Apellis Pharmaceuticals, Inc.

CONDENSED Consolidated Statements of CHANGES IN STOCKHOLDERS’ EQUITY

(Continued from previous page)

(Unaudited)

(Amounts in thousands)


									Accumulated
	Common Stock					Additional			Other						Total
	Outstanding					Paid-In			Comprehensive			Accumulated			Stockholders’
	Shares		Amount			Capital			Loss			Deficit			Equity (Deficit)
Balance at January 1, 2023		110,772		$	11	$	2,479,596		$	(875	)	$	(2,308,860	)	$	169,872
Issuance of common stock and pre-funded warrants in common stock offering		4,008			1		384,386			—			—			384,387
Issuance of common stock upon exercise of stock options		951			—		17,718			—			—			17,718
Vesting of restricted stock units, net of shares withheld for taxes		448			—		(10,999	)		—			—			(10,999	)
Share-based compensation expense		—			—		28,823			—			—			28,823
Net loss		—			—		—			—			(177,778	)		(177,778	)
Foreign currency translation		—			—		—			100			—			100
Balance at March 31, 2023		116,179			12		2,899,524			(775	)		(2,486,638	)		412,123
Issuance of common stock upon exercise of stock options		1,208			—		22,334			—			—			22,334
Vesting of restricted stock units, net of shares withheld for taxes		119			—		(27	)		—			—			(27	)
Share-based compensation expense		—			—		29,277			—			—			29,277
Issuance of common stock to employee stock purchase plan		73			—		3,754			—			—			3,754
Net loss		—			—		—			—			(122,037	)		(122,037	)
Foreign currency translation		—			—		—			(21	)		—			(21	)
Balance at June 30, 2023		117,579		$	12	$	2,954,862		$	(796	)	$	(2,608,675	)	$	345,403

See accompanying notes to unaudited condensed consolidated financial statements

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Apellis Pharmaceuticals, Inc.

CONDENSED Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands)


	For the Six Months Ended June 30,
	2024			2023
Operating Activities
Net loss	$	(104,080	)	$	(299,815	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense		60,339			58,101
Loss on extinguishment of development liability		1,949			—
Loss on disposal of fixed assets		—			19
Depreciation expense		893			846
Amortization of discounts for credit facility		161			—
Amortization of discounts for convertible notes		153			147
Accretion of discount to development liability		8,936			13,078
Changes in operating assets and liabilities:
Accounts receivable		(97,990	)		(103,186	)
Inventory		(29,431	)		(17,502	)
Prepaid assets		9,832			2,535
Other current assets		10,039			9,846
Other assets		(306	)		14,977
Right-of-use assets and lease liabilities		(171	)		(37	)
Accounts payable		759			(9,849	)
Accrued expenses		(4,308	)		3,065
Deferred revenue		1,903			—
Net cash used in operating activities		(141,322	)		(327,775	)
Investing Activities
Purchase of property and equipment		(383	)		(631	)
Net cash used in investing activities		(383	)		(631	)
Financing Activities
Proceeds from credit facility		365,454			—
Payment of issuance cost for credit facility		(1,589	)		—
Repayment of development liability		(326,533	)		—
Proceeds from settlement of capped call		98,763			—
Proceeds from issuance of common stock and pre-funded warrant offering, net of issuance costs		—			384,387
Payments for development liability		—			(24,500	)
Proceeds from exercise of stock options		11,439			40,052
Proceeds from issuance of common stock under employee share purchase plan		3,193			3,754
Payments of employee tax withholding related to equity-based compensation		(28	)		(11,027	)
Net cash provided by financing activities		150,699			392,666
Effect of exchange rate changes on cash, cash equivalents and restricted cash		133			9
Net increase in cash, cash equivalents and restricted cash		9,127			64,269
Cash, cash equivalents and restricted cash at beginning of period		352,299			553,075
Cash, cash equivalents and restricted cash at end of period	$	361,426		$	617,344
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets:
Cash and cash equivalents	$	360,087		$	616,259
Restricted cash		1,339			1,085
Total cash, cash equivalents, and restricted cash	$	361,426		$	617,344
Supplemental Disclosures
Cash paid for interest	$	6,949		$	1,643
Cash paid for income taxes		—		$	384
Proceeds from income tax refunds net of income taxes paid		119			—

See accompanying notes to unaudited condensed consolidated financial statements

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APELLIS PHARMACEUTICALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Nature of Organization and Operations

Apellis Pharmaceuticals, Inc. (the “Company”) is a commercial-stage biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutic compounds to treat diseases with high unmet needs through the inhibition of the complement system, which is an integral component of the immune system, at the level of C3, the central protein in the complement cascade.

The Company was incorporated in September 2009 under the laws of the State of Delaware. The Company’s principal executive offices are located in Waltham, Massachusetts.

The Company’s operations since inception have been limited to organizing and staffing the Company, acquiring rights to product candidates, business planning, raising capital, developing its product candidates, commercializing EMPAVELI (pegcetacoplan) for the treatment of paroxysmal nocturnal hemoglobinuria (“PNH”) and SYFOVRE (pegcetacoplan injection) for the treatment of geographic atrophy secondary to age-related macular degeneration (“GA”).

The Company is subject to risks common in the biotechnology industry including, but not limited to, raising additional capital, development by its competitors of new technological innovations, its ability to successfully complete preclinical and clinical development of product candidates and receive timely regulatory approval of products, market acceptance of the Company’s products, protection of proprietary technology, healthcare cost containment initiatives, and compliance with governmental regulations, including those of the U.S. Food and Drug Administration (“FDA”).

Liquidity and Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared on the basis of the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. From inception to June 30, 2024, the Company has incurred cash outflows from operations, losses from operations and had an accumulated deficit of $2.9 billion primarily as a result of expenses incurred through a combination of research and development activities related to the Company’s various product candidates and expenses supporting those activities.

As of August 1, 2024, the date of issuance of these unaudited condensed consolidated financial statements, the Company believes that its cash and cash equivalents of $360.1 million as of June 30, 2024 combined with cash anticipated to be generated from sales will be sufficient to fund its operations and capital expenditures for at least the next twelve months.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and following the requirements of the Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted and, accordingly, the consolidated balance sheet as of December 31, 2023 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements. These financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of the Company’s financial information. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other interim period or for any other future year.

The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2024, as amended by Amendment No. 1 thereto filed with the SEC on February 29, 2024 (the “2023 Form 10-K”).

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Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. Estimates are used in the following areas, among others: development liability, accrued expenses, prepaid expenses, convertible debt, reserves for variable consideration, reserves for excess or obsolete inventories, and income taxes.

Summary of Significant Accounting Policies

Reference is made to Note 2 Summary of Significant Accounting Policies in our 2023 Form 10-K for a detailed description of significant accounting policies. There have been no significant changes to our accounting policies as disclosed in our 2023 Form 10-K.

Recently Issued Accounting Standards

In December 2023, the Financial Accounting Standards Board (“FASB”) issued an amendment to the accounting guidance on income taxes which requires entities to provide additional information in the rate reconciliation and additional disaggregated disclosures about income taxes paid. This guidance requires public entities to disclose in their rate reconciliation table additional categories of information about federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. The guidance is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements and disclosures.

In November 2023, the FASB issued an amendment to the accounting guidance on segment reporting. The amendments require disclosure of significant segment expenses and other segment items and requires entities to provide in interim periods all disclosures about a reportable segment's profit or loss and assets that are currently required annually. The amendment also requires disclosure of the title and position of the chief operating decision maker (“CODM”) and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15,

2024. Retrospective application is required, and early adoption is permitted. The Company is currently evaluating the impact the guidance will have on its consolidated financial statements and disclosures.

3. Product Revenues, Accounts Receivable, and Reserves for Product Sales

The Company received FDA approval for the sale of EMPAVELI in the United States in May 2021 and approval for the sale of SYFOVRE in the United States in February 2023. The Company’s product revenues consist of sales of EMPAVELI and SYFOVRE to specialty pharmacies and specialty distributors.

The table reflects product revenue by major source for the following periods (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Products:
EMPAVELI	$	24,512	$	22,303	$	50,122	$	42,742
SYFOVRE		154,624		67,342		292,089		85,702
Total Product revenue, net	$	179,136	$	89,645	$	342,211	$	128,444

The Company’s accounts receivable balance of $304.4 million as of June 30, 2024 and $206.4 million as of December 31, 2023, consisted of EMPAVELI and SYFOVRE product sales receivable and licensing and other revenue receivables from our collaboration with Swedish Orphan Biovitrum AB (“Sobi”). The Company does not have a reserve related to expected credit losses against its receivable balance and expects to collect its accounts receivable in the ordinary course of business.

Table of Contents

The Company’s product sales reserves totaled $22.7 million and $16.6 million as of June 30, 2024 and December 31, 2023, respectively. These amounts are included in accrued expenses on the Company’s unaudited condensed consolidated balance sheets.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the three and six months ended June 30, 2024 (in thousands):


	Chargebacks, Discounts, and Fees			Government and other rebates			Returns			Total
Ending balance at December 31, 2023	$	5,674		$	8,898		$	2,053			16,625
Provision related to sales in the current year		9,575			13,125			1,355			24,055
Adjustments related to prior period sales		146			(19	)		(96	)		31
Credits and payments made		(9,724	)		(9,906	)		(1,859	)		(21,489	)
Ending balance at March 31, 2024	$	5,671		$	12,098		$	1,453		$	19,222
Provision related to sales in the current year		10,025			17,777			1,039			28,841
Adjustments related to prior period sales		(131	)		354			(983	)		(760	)
Credits and payments made		(9,635	)		(14,640	)		(326	)		(24,601	)
Ending balance at June 30, 2024	$	5,930		$	15,589		$	1,183		$	22,702

The following table summarizes activity in each of the product revenue allowance and reserve categories for the three and six months ended June 30, 2023 (in thousands):


	Chargebacks, Discounts, and Fees			Government and other rebates			Returns			Total
Ending balance at December 31, 2022	$	164		$	1,936		$	251			2,351
Provision related to sales in the current year		1,466			2,566		651				4,683
Adjustments related to prior period sales		—			(2	)		(249	)		(251	)
Credits and payments made		(184	)		(1,639	)		—			(1,823	)
Ending balance at March 31, 2023	$	1,446		$	2,861		$	653		$	4,960
Provision related to sales in the current year		3,944			5,114			1,588			10,646
Adjustments related to prior period sales		(84	)		30			(416	)		(470	)
Credits and payments made		(1,668	)		(2,946	)		(141	)		(4,755	)
Ending balance at June 30, 2023	$	3,638		$	5,059		$	1,684		$	10,381

Significant customers - EMPAVELI and SYFOVRE are sold principally through arrangements with specialty pharmacies and specialty distributors, who are the Company’s customers. Gross product revenues and product sales receivable from the Company's customers who individually accounted for 10% or more of total gross product revenues and/or

Apellis Pharmaceuticals, Inc. [APLS] Filings
10-Q	[2024-08-01]
10-Q	[2024-05-07]
10-K	[2024-02-27]
10-Q	[2023-11-01]
10-Q	[2023-07-31]
10-Q	[2023-05-04]
10-K	[2023-02-21]
10-Q	[2022-11-07]
10-Q	[2022-08-08]
10-Q	[2022-05-04]
10-K	[2022-02-28]
10-Q	[2021-11-08]
10-Q	[2021-08-09]
10-Q	[2021-04-28]
10-K	[2021-02-25]
10-Q	[2020-11-02]
10-Q	[2020-07-30]
10-Q	[2020-04-29]
10-K	[2020-02-27]
10-Q	[2019-11-05]
10-Q	[2019-07-31]
10-Q	[2019-05-07]
10-K	[2019-02-26]
10-Q	[2018-11-13]
10-Q	[2018-07-31]
10-Q	[2018-04-30]
S-1	[2018-04-16]
10-K	[2018-03-19]
10-Q	[2017-12-20]
S-1	[2017-10-13]
S-1	[2015-10-13]