The shares of Apellis Pharmaceuticals (APLS 2.48%) are up more than 50% over the past year and over 32% so far in 2023. The company's lead treatment is Empaveli (pegcetacoplan), used to treat adults with paroxysmal nocturnal hemoglobinuria (PNH), a rare disease that kills red blood cells. What's driving the stock's rise is that another version of the drug could be a blockbuster.

On Feb. 17, the Food and Drug Administration (FDA) approved that version, Syfovre, to treat geographic atrophy (GA) secondary to age-related macular degeneration (AMD). 

Several analysts upgraded their price targets for Apellis based on the news. Wedbush bumped up the stock's price target to $51 from $47, Stifel maintained a buy rating and bumped up the target from $65 to $75, Baird maintained an outperform rating and raised the target from $90 to $105, and Citigroup maintained its buy rating and raised its target from $86 to $91.

In addition, Credit Suisse raised its target on Apellis from $43 to $72, H.C. Wainwright kept its buy rating and raised its target from $75 to $87, and Needham reiterated its buy rating and adjusted its target from $70 to $80.

The reason for the excitement

The analysts moved in lockstep because Syfovre is the first FDA-approved therapy to treat GA, which is a leading cause of blindness and affects over 5 million people globally, including 1 million in the U.S. The disease affects 22% of those over 90, and according to one study, GA typically causes patients to quit driving within two years of diagnosis.

The drug isn't a cure for GA but a regular treatment (every 25 to 60 days) that works to prevent the lesions on the eye that lead to GA, and it is more effective over time. The company said it expects to launch the therapy by March, and it will cost $2,190 per single-dose vial, not counting discounts, with 90% of patients covered by Medicare.

The therapy is also under review with the European Medicines Agency, with a decision expected early next year. Apellis has also turned in a new drug submission for Syfovre in Canada and expects to do so in the first quarter in Australia, Switzerland, and the United Kingdom.

A dose just in time

Since the FDA's announcement, the biotech reported full-year and fourth-quarter numbers on Feb. 21. For the quarter, Apellis clocked $22.7 million in revenue, including $19.7 million from Empaveli. That's well down from the $60.3 million in revenue the company reported in the fourth quarter of 2021 because the earlier figure included $51.1 million in milestone payments and licensing payments from its Sobi collaboration.

Looking at the full year, revenue was $75.4 million, including $65.1 million from Empaveli, compared with $66.6 million in 2021 revenue. The improved sales are also improving Apellis' bottom line, though the company is still losing money. It lost $652.2 million in 2022, or $6.15 per share (EPS), an improvement from $746.4 million in losses and $8.84 per share.

On Wednesday, Apellis announced it was selling $300 million in common stock. While the move is dilutive to current investors, the stock rose 12.5% because it is a sign the company is ready to ramp up marketing efforts for Syfovre and needs more money to do so. Apellis has multiple programs at the pre-clinical or clinical stage to target the C3 protein, which is vital to the body's immune system.

The combination of the large potential patient field for GA and the uniqueness of its lead therapy makes Apellis a buy, even with the recent surge in the stock's price. The company has a growing pipeline, and it already has a therapy with two indications (and perhaps more) on the way. Pegcetacoplan has already shown a strong safety profile, and it is also being looked at for treating amyotrophic lateral sclerosis (ALS) and cold agglutinin disease (CAD), among other conditions.