ACHN 2017 Annual Report

The PNH Market PNH is a life-threatening, ultra-rare genetic blood disorder defined by chronic uncontrolled complement activation leading to the destruction of red blood cells, or hemolysis, which can take place both inside, or intravascularly, and outside, or extravascularly, of the circulatory system. Based on internal research, we estimate that PNH affects approximately 10,000 people in the United States and the major European markets. The chronic hemolysis in patients with PNH may be associated with life-threatening thrombotic events, recurrent pain, kidney disease, disabling fatigue, severe anemia, pulmonary hypertension, shortness of breath and intermittent episodes of dark-colored urine or hemoglobinuria. The only currently approved therapy for PNH patients is eculizumab, or Soliris ® , an antibody that inhibits the activity of the complement protein C5, which originally was approved in 2007 and is currently approved in the United States, Europe, Japan and in several other territories. Sales of Soliris ® were reported to be $3.1 billion in 2017. We estimate that approximately 25% of patients currently treated with eculizumab, the current standard of care for patients with PNH, have suboptimal response in the form of symptomatic extravascular hemolysis due to the accumulation of C3 protein fragments on red blood cells, or due to genetic mutations that prevent binding of eculizumab to C5, the protein target of eculizumab. Patients who respond sub-optimally to eculizumab through extravascular hemolysis often require dosing at higher than recommended levels or greater dosing frequency. Benefits of Our Approach We believe that drug candidates advanced from our complement inhibitor platform have distinct potential advantages over currently available therapies. Focus on the Alternative Pathway We and experts believe a number of complement-mediated diseases are the direct result of dysregulation of the alternative pathway. While other complement treatments marketed or in development focus on inhibiting the classical, lectin or terminal pathways (the terminal pathway being the final stage of all three complement pathways), these treatments do not affect the complement system at the root of dysregulation. For example, experts believe that C3G results from overproduction of C3 fragments that ultimately deposit in the kidney, impairing renal function. This overproduction of C3 fragments, experts believe, stems from dysregulation of the fluid phase of the alternative pathway. Factor D inhibitors can potentially block or suppress over activation of the alternative pathway, thereby limiting or eliminating excessive C3 fragment formation and subsequent deposition in the kidney. Conversely, other complement inhibitors, such as inhibitors of complement proteins C3 or C5, do not specifically inhibit the alternative pathway. Targeting Factor D Factor D is a catalytic enzyme that has one of the lowest concentrations in blood serum of all the complement proteins, several times lower than the targets of other complement therapies including C5 and C3. Factor D, therefore, has the potential to provide a highly specific target for drug intervention while, we believe, limiting off-target effects. Our expertise in synthetic chemistry has allowed our scientists to utilize crystal structures with high resolution in order to synthesize compounds that bind specifically to factor D. Further, because factor D is rate-limiting in activation of the alternative pathway, targeting factor D effectively shuts down the amplification loop that can lead to indiscriminate activation of the complement system. Small Molecule Inhibitors All our complement factor D inhibitor compounds for the potential treatment of rare diseases are orally- available small molecule compounds. This is in contrast to biologic compounds that require intravenous or subcutaneous dosing. The current FDA-approved therapy for PNH is dosed intravenously, requiring routine 7