Apellis eye drug likely to be rejected in Europe, company says

European drug reviewers appear likely to recommend against clearing a new medicine from Apellis Pharmaceuticals in another stumble for a first-of-its-kind treatment the Food and Drug Administration approved earlier this year.

In a statement Thursday, Apellis said it’s been informed of a “negative trend” vote on its application for the drug, sold in the U.S. as Syfovre, by a committee that advises the European Medicines Agency. Apellis expects that committee in January to advise against clearing the medicine for geographic atrophy in Europe, where more than 2.5 million people are living with the disease, the company said.

Should the committee officially issue a negative opinion of Syfovre next month, Apellis will appeal and seek a re-examination, the company said.

“It goes without saying that we are extremely disappointed with this outcome and deeply saddened for patients,” said CEO Cedric Francois, on a conference call with analysts. “We are seeing firsthand in the U.S. how important Syfovre has been for this community.”

The setback is the latest in what’s been a rocky year for Apellis. The company made history when the FDA approved Syfovre in February. The drug is the first marketed medicine for geographic atrophy, a common condition in which patchy lesions form in the eye. The lesions can get larger with time and obstruct vision. Analysts have expected the drug to bring in peak annual sales of $3 billion, potentially enabling Apellis to become profitable.

But Syfovre came to market with questions about its safety and effectiveness. Since its approval, rare but serious side effects have marred an otherwise steady launch in the U.S., depressing Apellis’ stock price and, in October, triggering a major restructuring. Though Apellis has blamed faulty needles, not the treatment, for the safety problems, two weeks ago the FDA added a warning to Syfovre’s prescribing information.

Apellis’ apparent issues in Europe center around the level of benefit its treatment provides. Syfovre was cleared in the U.S. based on an ability in testing to slow the growth of eye lesions. The drug didn’t definitively prove that doing so can help preserve vision, however. Apellis has pointed to after-the-fact analyses’ that suggest the drug provides that benefit. But on Thursday’s conference call, executives noted that reviewers in Europe appeared unconvinced by the data at a meeting this week.

They “have not accepted what we believe, and what our expert advisors agree, is clear evidence of the functional benefits” of treatment, Francois told analysts.

Francois argues that evaluating a drug’s impact on vision in geographic atrophy is exceedingly difficult given the limitations of available tools and measures. In fact, he claimed running a late-stage study with that as a main measure is “impossible, period.”

The reviewers in Europe “have set a bar that nobody can reach,” he said.

Apellis is hoping that, assuming a negative opinion is issued, an appeal will bring a new slate of evaluators to the table, kickstarting another multimonth review process and another chance at an approval. Still, expectations for a clearance in Europe “have to go down” or “at least be meaningfully delayed,” according to Evercore ISI analysts Umer Raffat and Jonathan Miller.

“Given our view that the EU is typically more conservative in its view of risk/benefit (especially with regards to patient safety), we believe it is more likely than not that Syfovre does not get approved in Europe, unless newer information regarding risk/benefit are provided or come to light,” wrote Mizuho Securities analyst Graig Suvannavejh in a Thursday note.

Apellis shares fell 21% in morning trading on Thursday.