SYFOVRE And EMPAVELI Will Broaden Treatment Options Globally

Key Takeaways

• SYFOVRE's strategic expansion and dominant GA market role could significantly drive revenue growth and international market penetration.
  
• Pipeline progress and regulatory momentum, including EMPAVELI's launch and next-gen treatments, forecast enhanced long-term earnings and market expansion.
  
• Temporary factors and competitive pressures may impact revenue growth, with early-stage market penetration and high expenses challenging future profitability.

Catalysts

A commercial-stage biopharmaceutical company, focuses on the discovery, development, and commercialization of novel therapeutic compounds to treat diseases with high unmet needs.

• The company's primary growth driver, SYFOVRE, is projected to outperform in the geographic atrophy (GA) market with its unmatched prescribing profile. With a strategy to expand treatment coverage and penetration among diagnosed but untreated patients, SYFOVRE could drive significant revenue growth.
  
• The expected regulatory approval and subsequent launch of EMPAVELI for C3G and IC-MPGN in late 2025 is anticipated to capture a considerable patient population, meeting a significant unmet need in rare kidney diseases, and contributing positively to future earnings.
  
• Continued international expansion of SYFOVRE, including planned entries into markets like Australia and Switzerland, could fuel revenue growth through increased penetration and market share in global markets.
  
• The development of next-generation GA treatments combining SYFOVRE with APL-3007 siRNA aims to deliver a comprehensive complement blockade, leading to enhanced therapeutic efficacy and potential market expansion, positively impacting future revenue.
  
• The continuous progression and expansion of Apellis' innovative pipeline, including new trials and partnerships like Beam Therapeutics, are projected to unlock future growth opportunities, enhance long-term revenue potential, and move the company towards profitability.

Apellis Pharmaceuticals Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Apellis Pharmaceuticals's revenue will grow by 18.4% annually over the next 3 years.
• Analysts assume that profit margins will increase from -25.3% today to 18.7% in 3 years time.
• Analysts expect earnings to reach $242.9 million (and earnings per share of $1.7) by about May 2028, up from $-197.9 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $1.2 billion in earnings, and the most bearish expecting $5.8 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 28.9x on those 2028 earnings, up from -12.8x today. This future PE is greater than the current PE for the US Biotechs industry at 20.6x.
• Analysts expect the number of shares outstanding to grow by 3.42% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.76%, as per the Simply Wall St company report.

Apellis Pharmaceuticals Future Earnings Per Share Growth

Risks

• Temporary factors, such as Medicare reverifications and winter storms, could affect orders of commercial vials and net revenue in the first quarter of 2025. These factors might result in lower revenues.
  
• A reported funding gap at non-profit co-pay assistant organizations has led to an increase in sample usage, potentially impacting net revenue if the situation persists.
  
• In geographic atrophy (GA), only about half of diagnosed patients are seen by an eye care professional, and fewer than 10% are receiving treatment, indicating that market penetration is still in early stages. This could impact future revenue growth if the rate of adoption does not increase.
  
• Competitive pressure, particularly from competitors' regulatory updates and label changes, could influence market share and new patient acquisition, possibly affecting revenue growth momentum.
  
• Operating expenses are expected to remain stable compared to 2024; however, this implies continued high R&D and SG&A spending which, without corresponding revenue increases, could negatively affect net margins and profitability.

Valuation

• The analysts have a consensus price target of $41.5 for Apellis Pharmaceuticals based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $75.0, and the most bearish reporting a price target of just $21.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.3 billion, earnings will come to $242.9 million, and it would be trading on a PE ratio of 28.9x, assuming you use a discount rate of 6.8%.
  
• Given the current share price of $20.08, the analyst price target of $41.5 is 51.6% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.