Apellis Pharmaceuticals Inc

Item 1A. Risk Factors.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10K for the year ended December 31, 2023, which could materially affect our business, financial condition or future results. The risk factors disclosure in our Annual and in our Quarterly Report on Form 10-KQ for the year ended December 31, 2023 is qualified by the information that is described in this Quarterly Report on Form 10-Q. The risks described below and in our Annual Report on Form 10K for the year ended December 31rter ended June 30, 2023 are not our only risks. Additional risks and uncertainties not currently known to us or that we currently deem to be imm4, which could material also may materially adversely aly affect our business, financial condition or future results.

 The terms of our Sixth Street Financing Agreement and our indebtedness could adversely affect our operations and limit our ability to plan for or respond to changes in our business. If we are unable to comply with restrictions in risk factors disclosure in our Sixth Street Financing Agreement, the repayment of our existing indebtedness could be accelerated. 

Under our financing agreement, or the Sixth Street Financing Agreement, by and among us, certain of our subsidiaries, Annual Report on Form 10-K for the lenders party thereto and Sixth Street Lyear ending Partners, as the administrative agent for the lenders, we have incurred a substantial amount of debt, which could adversely affect our business. In May ed December 31, 2024, we drew down the senior secured term loan facility, or the Credit Facility, of $375.0 million. The Credit Facility also includes a potential additional $100.0 million draw at o3 and in our option upon satisfaction of a $50.0 million minimum cash requirement and a requirement that our trailing three-month sales of SYFOVRE were at least $180.0 million prior to the $100.0 milliQuarterly Report on draw. Among other permissions, we are permitted, on terms and conditions set Form 10-Q forth on  the Sixth Street Financing Agreement, to enter into a separate asset-based financing arrangement with a third party in an amount of up to $100.0 million, which amount is increased to $200.0 million upon certain sales or market capitalization thresholds, and to have outstanding convertible unsecured notes in an amount equal to tquarter ended June 30, 2024 are qualified by the greater of $400.0 million and 10% of our market capitalization, but not to exceed $600.0 million.

The Sixth Street Financing Agreement requires us to make certain payments of interest over time and contains several other negative covenants that, subject to certain exceptions, restrict indebtedness, liens, investments (including acquisitions), fundamental changes, asset sales and licensing transactions, dividends, modifications to material agreements, payment of subordinated indebtedness, and other matters customarily restricted in such agreements. Among other requirements of the Sixth Street Financing Agreement, we and our subsidiaries party to the Sixth Street Financing Agreement must maintain liquidity of at least $50.0 million if our market capitalization is information that is described in this Quarterly Report on Form 10-Q. The risks described below $3.0 billion. We are also subject to restrictions on sales and licensing transactions with respect to oand in our core intellectAnnual property, defined to include SYFOVRE, EMPAVELI, and other pegcetacoplan product assets, subject to certain exceptions, including certain transactions related to areas outside tReport on Form 10K for the United States and Europe. These and other terms in the Sixth Street Financing Agreement could restrict our ability to grow our business or enter into transactions that we believe would be beneficial to oyear ended December 31, 2023 and in our business.

Our indebtedness could affect our business in the following ways, among other things: make it more difficult fQuarterly Report on Form 10-Q for us to satisfy our contractual and commercial commitments; require us to use a substantial portion of our cash flow from operations to pay interest and principal when due, which would reduce funds available for working capital, capital expenditures and other general corporate purposes; limit our ability to obtain athe quarter ended June 30, 2024are not our only risks. Additional financing for working capital, capital expenditures, acquisitionsrisks and other investments or general corporate purposes; heighten our vulnerability to downturns in our business, our industry or in the general economy; place us at a disadvantage compared to those of our competitors that may have proportionateuncertainties not currently less debt; limit managements discretion in operating our business; and limit our flexibility in planning for, or reacting to, changes in our business, the industry in which we operate or the general economy.

Our business may not generate cash flows from operations in the future that are sufficient to service our debt and support our growth strategies. If we are unable to generate such cash flows, we known to us or that we currently deem to be immaterial also may be required to adopt one or more almaternatives, such as obtaining additional equity capital on terms that may be onerous or highially adversely dilutive, selling assets, or restructuring debt. Our ability to refinance our indebtedness will depend on the capital markets and our affect our business, financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligationor future results.

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