By Manojna Maddipatla and Trisha Roy

(Reuters) – Apellis Pharmaceuticals Inc said on Tuesday its experimental drug for a blood disorder showed greater improvement in patients’ hemoglobin levels than market leader Alexion Pharmaceuticals Inc’s Soliris.

Apellis tested its drug, pegcetacoplan, in 80 paroxysmal nocturnal hemoglobinuria (PNH) patients who remained anemic despite taking Soliris. About half of them were even dependant on blood transfusions to maintain optimal hemoglobin levels.

The late-stage trial results would help Apellis challenge Alexion’s dominance in the PNH market. Alexion’s Soliris and Ultomiris, the only two currently approved drugs for PNH, recorded sales of $1.08 billion in the latest September quarter.

Shares of Apellis were up 22% at $36.8, paring gains after rising as much as 40.7%.

This “pop-and-fade phenomenon” was likely driven by concerns around the secondary goals, especially pegcetacoplan’s failure to match Soliris’ effectiveness in reducing lactic acid dehydrogenase (LDH) levels, Baird analyst Madhu Kumar said.

LDH levels are an indicator of hemolysis, breakage of red blood cells, in PNH patients.

While pegcetacoplan showed positive trends on the LDH level reduction, the drug failed to show non-inferiority to Soliris, according to Apellis.

Analysts also highlighted investors’ concern that if improvement in hemoglobin levels is a sufficient benefit for FDA’s approval of the product.

The company, however, believes the study data makes a strong case for the drugs’ approval and its superiority over Soliris, the current standard of care for PNH patients.

About 70% of PNH patients show low hemoglobin levels despite treatment with Soliris and 36% require one or more transfusions a year, Apellis said. With pegcetacoplan, also called APL-2, Apellis expects to address this unmet need.

Two-thirds of the Soliris-treated PNH patients cannot climb stairs without pausing to catch their breath, Chief Executive Officer Cedric Francois told Reuters.

“It all comes down to the quality of life… When these patients go on APL-2, they can essentially have a life that is pretty much normal.”

APL-2 is expected to be launched in the United States in 2021 with penetration ramping to 28% in the PNH patient market in 2025, driving $400 million in worldwide PNH sales, according to Cowen analyst Phil Nadeau.

The drug, which targets an immune pathway known as the complement system, is also being tested in other indications such as geographic atrophy and complement-associated kidney diseases.

Shares of Alexion reversed course to rise 0.5% to $107.11, after falling about 2% to $104.6.

(Reporting by Trisha Roy and Manojna Maddipatla in Bengaluru; Editing by Shinjini Ganguli)