argenx SE (ARGX) Earnings Call Transcript & Summary

Good afternoon. Thanks, everybody, for joining us at the now virtual Bank of America Health Care Conference. I'm Tazeen Ahmad. I am one of the senior SMid biotech analysts here at the firm. It's my pleasure to have our next presenting company with me, argenx. Presenting from argenx this afternoon will be Chief Executive Officer, Tim Van Hauwermeiren; as well as Chief Operating Officer, Keith Woods. Tim and Keith, good afternoon. Thanks very much for joining us today.

Hi, Tazeen. Thanks for hosting us.

Thanks for having us here today.

So I think this will be a good use of the next 30 minutes. Maybe, Tim, can you, for anyone on the line who may not know your story as well, give us just a couple of minute overview of argenx, about just the company, what your goals are? And then we can go into some of the upcoming catalysts that you have, if that's okay.

Thank you, Tazeen. And it's so nice not having to start with COVID-19 but with the company vision. So let me refer to argenx 2021. That's the vision of argenx, to become a sustainable integrated biotech play. We plan to go to market through our therapeutic franchises. We are building out a neuromuscular franchise and a hem/onc franchise. In our neuromuscular franchise, we have indications like myasthenia gravis, the lead indication for efgartigimod, but also CIDP and MMN, the lead indication for our next pipeline, asset 117. And in the hem/onc franchise, we are active in indications like ITP with efgartigimod and AML and high-risk MDS with our lead cancer assets called cusatuzumab. We have a late-stage mature clinical pipeline. Just to give you a flavor, Tazeen, we are running this year, 5 Phase III trials and 7 Phase I and Phase II clinical trials. And we continue to build the product pipeline out of our innovative immunology program, where we basically see the birth of a new pipeline asset at a cadence of 1 per year. So this company has a very productive engine. And we now have created 10 molecules, 8 of which are successful in our own hands or in the hands of our partners. And last but not least, the company is very well financed. We have a robust balance sheet. We announced a cash position of $1.5 billion at the end of last year. So that's who we are in a nutshell. And we are, of course, facing a very important period in our life. And with the readout of the global Phase III MG study mid-2020 and actually in the next couple of days -- actually tomorrow, a detailed rundown of the Phase II proof-of-concept data in pemphigus vulgaris, which is one of the 3 beachhead indications for efgartigimod, our lead pipeline assets.

Okay. Great. There's a lot for us to go through based on that intro. So maybe let's start with your lead indication on MG. Can you give us an update on where you are with the pivotal ADAPT study? COVID was not the first question. It'll be the second question. I'm going to ask if you've seen any impacts from the pandemic on patient follow-ups or dosing up until this point.

Yes. That's a very relevant question, of course. And unlike the other clinical trials we are involved in, where invariably we see a delay, I'm super pleased today to tell you that the MG registration trial is basically untouched by the COVID-19 pandemic. Already at the beginning of the year, at the JPMorgan conference, we could announce that the study was fully enrolled. You, of course, note, Tazeen, that the primary end point is collected at week 8, and that the patients then, of course, all passed the primary end points before the outbreak of the COVID-19 pandemic. Actually, all patients are in the open-label extension study. The primary study is secured, is on track to read out by mid-2020. And in the open-label extension study with both placebo and [ as regards ] patients can roll over and enjoy efgartigimod therapy. We actually see a very nice adaptation to the new normal with basically telemedicine, with basically at-home administration for some patients and remote monitoring, really helping us to keep that open-label extension study nicely on track. So also, that study continues to collect valuable data and information as planned. And therefore, we think that if this study reads out positively, and we are on track for BLA preparation and submission before the end of 2020.

Okay. So the top line is due by midyear. What kind of information should we expect to see from that? And can you just remind us what the primary efficacy end point is? And what would be a good bar for us to think about as being successful?

Yes. Great question. So the definition of the primary end points is basically the following. We want the patients to show a clinically meaningful improvement on the activity of daily living score of at least 2 points. That is clinically meaningful. And we want to see that in at least 4 subsequent visits during that 8-week time window I was referring to. This is basically a primary end point, which is making use of an accepted scoring system by the FDA, the ADL score that's patient reported. And by having the requirement of having 4 subsequent visits with a clinically meaningful improvement of at least 2 points, we think we can also manage placebo. Top line results will, of course, include the primary end point readouts, did we have statistical significance in reaching that end point. We will look to confirm the favorable safety and tolerability profile we have seen so far for the compounds. And maybe we can also allude to some level of durability the way it has been described in some of the secondary end points. So that's basically what we can expect. From a success point of view, look, we're looking to replicate what we have seen in Phase II. I think what was so nice about efgartigimod's performance in MG patients in Phase II was the fast onset of action, a pretty deep clinical effect in terms of magnitude of clinical benefits and magnitude which is reminding us of plasma exchange, and then we had a surprisingly long durability of the clinical benefits, which we would seek to replicate in a controlled manner in that Phase III global registration trial.

Okay. With this study, you're also uniquely trying to look at redosing of efgartigimod. As it relates to that, why is that important for you to have an understanding of that? And how much granularity are we going to get on that particular aspect of the study at the top line?

Great question. And I think, Keith, I think you're well positioned to address it, right?

Yes. I'd be happy to do so, Tim. So first of all, we're positioning efgartigimod to be a chronic therapy. We plan to take advantage of that sustained therapeutic benefit between treatment cycles that Tim referenced because of that duration that we saw in Phase II. So how this study is adapted to is patient-tailored dosing. This is going to be very important for us to be able to understand and for physicians to be able to understand, as they apply this in real-life treatment of their patient population. They're familiar with doing this type of thing. They've told us that this is actually how they prefer to treat patients. They get patients into response and then they begin to titrate, a lot of times based on interval, so that they get the patient to where they're dialed in, to what is managing their MG, while not having to come in to get their infusions. When we have the 26-week data that we will be sharing at the top line information, we will have only information on a number of cycles. So remember, in that 26-week trial, it's 1 cycle, 2 cycles. Theoretically, there would be time for a third cycle. So we'll have that information. But remember, we also are going to be able to continue to collect duration of response information as these patients roll over into the OLE. So by the time that they're completed the OLE, we're going to have 1.5 years’ worth of information on some patients, at least a year on others. And it will be very interesting to see, does their duration of response change in any way, does it grow greater based on greater exposure to efgartigimod.

And thanks for that, Keith. And Keith and Tim, can you give us an idea of how often you think patients will need to be redosed, just based on your knowledge of other drugs that are out there and your knowledge of the MG space in general?

Well, the closest analogy which comes to mind is the use of chronic IVIg. And Keith, maybe you want to comment on what we heard from physicians on how they use that, right?

Happy to. What we heard from the physicians is that when they're going to put a patient on chronic IVIg to treat MG, they'll typically start them on the standard 2-gram dose on a monthly basis. And if they can get the patient into response for 3 months in a row, that's when they'll begin to titrate and say, "Okay, you made it 4 weeks. Can we go 5 weeks? And if you do fine on 5 weeks, can you go 6 weeks?" And that's how they've been dialing in the dose with IVIg. And again, that's what they said was their intention on how they would use efgartigimod. I think we'll be able to provide a distribution curve based on the data that we have. So that they can see at least what's the range of responses that are there and what's the most common. But then they're really going to need to apply this for each individualized patient.

Okay. You're also looking at acetylcholine receptor negative patients in this study. It's obviously not something that is necessarily part of your primary end point evaluation. But what do you need to show to agencies in order to get the broadest label possible by including these patients here?

Yes. Well, first, I'm glad that you called out for everybody that it's not a part of our primary end point. And the reason why it's not is because we have not studied efgartigimod in these seronegative patients. So these MuSK, these LRP4, these agrin patients, we haven't studied it in there. However, based on our mechanism of action and when our scientists went back to look at it, the biology rationale is there, and we believe that it should work. So when we went to the FDA, we shared this information with them. We said, "Look, these patients have been left out of all other global studies. There is no approved medication for these seronegative patients, and we believe that efgartigimod could work for them, but we can't put our study at risk." That's why they're not in the primary end point. However, the agreement was that we would allow these -- enroll these patients in the trial. We would cap it. We would cap the number of enrollment for the seronegative patients. I can tell you, I'm super happy that we capped it because that section of the trial filled up very rapid. And the agreement is not that we show statistical significance because it's a smaller portion of the population, it's that we show a clinical effect and safety that is similar to what you see in the primary end point.

Okay. Thanks for that color. Maybe just overall, what do you see as the addressable market for your drug just based on the profile that it has now? Can you talk about -- I guess in conjunction with that, can you talk about all the things that you're doing in terms of how to deliver the drug formulation changes, for example? And just how you're thinking about the current market versus what the competitive landscape could look like?

Yes. And quite a bit there, so let me try to dissect that a little bit. So first of all, let's talk about what we believe is the addressable market. I'll start with our -- the primary area that we'll launch, which is the U.S., where there is data that shows about 65 -- at least in the literature, 65,000 MG patients in total. Within generalized MG, we believe about just over 1/3 of them need therapy beyond steroids or get into high-dose steroids. And so that brings our population number to somewhere probably just around to north of 20,000, would be the appropriate audience for efgartigimod. When you think about it, how we've designed our study, we have an opportunity to play across the entire treatment paradigm of MG. So all the way from a patient starts on mestinon and ACIs, and then as they will graduate to go on to taking steroids, when they get to high-dose steroids, that's where efgartigimod could first come into play, to help patients taper off steroids because they certainly don't like being on high-dose steroids. By introducing efgartigimod there, you could delay or even eliminate ISTs, but we also will have patients enrolled in the trial that are on ISTs. So we can be concomitant with them. We also believe that we can play in that severe or less refractory audience where you see Soliris currently being utilized also before chronic IVIg. And finally, last, if our seronegative data is positive, although rituximab is not approved for MG, it is used in MuSK MG, and that could be an area where we will play as well.

Okay. A question...

You also mentioned about the other -- go ahead, please.

Yes. No. No. No. That's okay. I did want to ask you about IVIg, about -- from time to time, there seem to be shortages of this product. And maybe you could just spend a minute talking about how doctors feel about the uncertainty of access to IVIg? And I guess, why do they have these shortages from time to time?

Tim, would you like me to take that? Or would you like to?

Yes. Please. Please continue.

Yes. Yes. Okay. So as far as the shortages of IVIg, yes, we have heard about this. We don't know that -- to what extent the full data is in regard to that and what can we really expect from the pandemic. That's not going to be something that we are able to address. I will tell you that we have heard concerns in shortages of IVIg a lot outside of the U.S. as well because a great deal of the IVIg is actually consumed in the U.S. Do I think it could be a potential opportunity for us? It quite possibly could be an enrollment of some of our clinical trials. But at this time, I don't want to speculate what it means in regard to our commercial launch until we really have a good handle on what could the effect of COVID-19 be on IVIg or just their overall supply.

Okay. Maybe moving on to IV formulation versus subcu, just remind us where you are on the subcu.

So remember, we in-licensed the Halozyme technology so that we could bring you an efgartigimod subcu that is noninferior to our 10-milligram per kilogram IV dose. We have the exclusive rights to that. So we own the FcRn target for that technology. So we'll be the only FcRn agent that will be able to use that. With that, we successfully created a dose that is noninferior to our IV dose, and it's at a flat dose of 1,000 milligrams. It is a single, self-injected, easy to administer, takes less than a minute that you can administer at home. We have already introduced that into our CIDP study, which is up and running. And we have also stated that we will be going to bring this to MG after we get a clear understanding of the bridging strategy that will be required to be implemented by the FDA. But our desire is to be able to have subcu and IV available in each of our indications.

Okay. And so with that diversified offering in mind, how do you think that being potentially the first FcRn mechanistic product on the market could help you commercially?

I think, first of all, the mechanism of action itself is quite exciting. When you think about MG and the role that these auto antibodies play and the fact that our mechanism of action is to remove these auto antibodies from the neuromuscular junction, it makes sense. We'd like to repeat the clinical efficacy that we've seen in Phase II. That's setting the bar pretty high. Then we continue to have the safety and tolerability that we saw. But then finally, going into the convenience of not just our future subcu dose but I think just the thoughtful design of our Phase III trial in taking advantage of that extended duration of therapeutic benefit is providing convenience. Lastly, what I'll say is because we've designed a trial that is tailored, and it's tailored so that our commercial team will be able to speak to physicians exactly about how they're actually treating their patients. If we had just done a standard trial, we would have to -- our messaging would have to be on that standardized dosing of every other week or whatever you choose. So I think we're setting the barrier of entry at a successful place to where it's our job as the first in class to move into FcRns. It's our job to set that bar high for the other FcRns.

Okay. You do have other indications that are being pursued as well, and maybe we can talk about those. Maybe going back to Tim for PV and ITP. How much read-through do you think there is from ADAPT to the other indications?

Yes. That's an excellent question, Tazeen. And look, it would certainly validate the underlying biology rationale, which we have been using to select our beachhead indications. Remember, we carefully picked MG, ITP and PV as indications for which there is lots of evidence in the literature that pathogenic IgGs drive the disease, and that there's a correlation between the types of these antibodies and the disease stage. So from that point of view, I think it would be a massive validation. However, we have to realize, that these are, of course, distinctly different indications, diseases. They play in different compartments of the body. ITP is, I think, a bone marrow disease. PV clearly plays in the skin compartment. So they have their own dynamics. And lastly, the trial designs for the Phase IIIs are fundamentally different. The ADAPT study is not comparable to the ITP study or to what we will announce later this year to be the Phase III trial for PV. So clearly, read-through, but I would still be careful or cautioning because these are different diseases and different Phase III clinical trial designs.

Okay. Fair enough. So this week also, we are expecting, as you said at the beginning, actually tomorrow, an update on your PV data. So I guess give us a little bit of a preview if you could, Tim, on what we should expect to see and what you'd like investors to take away from that.

Yes. Look, Tazeen, we're super excited about this PV data. We will stay within the realm of the Phase II top line data disclosures earlier this year, but we're going to give you much more color and much more depth. So you will see more patients, longer durability on study. And basically, you will see color to the fast onset of action, our ability to drive patients into CRs, complete remission and also some powerful steroid tapering data. We will also show you anecdotes, which I personally find most exciting, of patients where we showcase the different attributes of the molecule. So big picture, speed of onset, steroid sparing potential and a spick-and-span safety and tolerability profile but with much more detail than we could show in the Phase II top line data.

Okay. And then how should we think about your next steps for this indication?

Clearly, the Phase II data warrants to go into Phase III. I think the response of the community, the treating physicians and patients, is overwhelmingly positive. I think we can have a unique position of the drug in a totally underserved space. So clearly, green light to go into Phase III, but the design of that Phase III will be reserved for the disclosure later this year.

Okay. And are you thinking about the entire range of PV patients as being eligible for your treatment? Or is there a particular subset that you think at least initially would be better served?

No. Based on the data, I think we had a very representative patient sample in the Phase II. I think we had a nice balance between pemphigus vulgaris and pemphigus foliaceus; newly diagnosed versus relapsing; mild versus moderate, up to the border of severe; no background medication, background medication. So I think this data suggests that we should go for the full pemphigus population.

Okay. So we look forward to your data tomorrow on that. Let's talk about your third indication for a minute, CIDP. Can you just give us an update on where you were with that study? How is enrollment going? Could we get an update on that program by year-end on whether that's going to advance or not?

Look, we're excited about CIDP because as we presented during our KOL events at the end of last year in New York, I think the clinical evidence that this disease must be driven by IgGs, I think, is pretty convincing. I think we have a very thoughtful trial design, really maximizing the chances of success. So this is a precision shot on goal. And look, we know that the first 30 patients leading to the go/no-go is not going to be the fastest study ever, but we felt we were in a good position to actually achieve that point this year. But that was before the COVID-19 situation. And to date, Tazeen, I don't feel comfortable to give you any credible projection on when we will hit that 30 patients. Know that this study is open, know that we are enrolling. This is a global study with a very hard-working team, but I think we should wait until we're deep in the year to give you further guidance on the timing for the 30 patients on a go/no-go decision point.

Okay. That's fair. Maybe a couple of minutes on Janssen. Can you give us a recap on what kind of milestones we should expect to see with that partnership? And when should we expect to see any type of update, for example, from the AML study? Could that be this year? Or is there any kind of delay potentially on that?

Yes. So let's first take a step back. So what we had were pretty spectacular data from a small patient sample in the dose escalation, and then we had ventured into an expansion cohort. At that point in time, we did the collaboration of the science, the collaboration with Janssen, really with the objective to accelerate and expand the development plan for cusatuzumab. I think that's also what we saw happen in the meantime with Janssen starting a number of studies. They started the CULMINATE trial, which is actually in combination with the current standard of care in newly diagnosed unfit AML patients. They also started a combination study with what could be the future standard of care in these patients, i.e., venetoclax, and they also ventured into high-risk MDS. What we see is that due to COVID-19, Janssen basically has paused all clinical trials, including the clinical trials which are subject of our collaboration. So it remains to be seen exactly when and how these studies will be reopened. We're, of course, in active dialogue with Janssen about it, but it's too early to talk about it. And look, it takes some time for Janssen to produce its own data under the collaboration because not only are we interested in the response rate in AML, you also want to assess durability of response. And that takes time. You don't buy anything with a high response rate if that does not translate into a meaningful prolongation of life or survival. So I think we need some time, Tazeen, after these studies will ultimately resume.

Okay. So we've kind of weaved in and out of instances in various programs where COVID might play a factor. But just as an overarching question that we're asking all of our companies, I guess, Tim, what do you think the long-term implications of COVID could be specifically to argenx? Is there anything that you're changing in the way you're doing business or in the way that people are accessing your company that you think will persist, even after things return to some sense of normal?

Look, I'm not going to deny that COVID-19 is painful for a company which is scaling, from a local Belgium-based biotech company to a global player with sites in Ghent, Boston and Tokyo. So human interaction is important. But I am, first of all, very positively surprised by the resilience of the organization and the teams and the way they've managed to continue the business in what is today almost a completely virtual world. So that is remarkable. Secondly, I think there is a positive view on the whole situation because I think some things which were overdue in our industry are actually now happening. I mean there are some elements which were basically overdue already for some time, which now suddenly got traction in an accelerated way. Think about the way we run clinical trials. Think about the way we monitor studies. Think about the way we interact with physicians and patients, I think that's changing forever to the better. So I think hopefully tomorrow, in the new reality, when COVID is under control, I think you will see that this industry will have institutionalized some of these positive aspects. And I think argenx is very well positioned to build on that because we're still crystallizing how we build the business, how we do the business. And Keith, I think you will agree with me, boy, are we happy that this COVID-19 pandemic didn't hit us in full launch. I think now we can think, we can study, we can learn about how we're going to learn in the new normal -- launch the product in the new normal, and I think that's all positive on the long term.

Okay. And maybe, Tim, you've led to my next question, which is as you prepare for launch, have you thought about the ability if you had to launch through a potential recession? Kind of what is your contingency? Are there any areas for cost offsets that you would look to do in that scenario?

Maybe Keith is better [indiscernible] to answer this question, right, Keith?

Sure. Happy to, Tim. And the simple answer is yes. As Tim just mentioned, we are very happy that we are not launching at this time. And actually, we're getting this experience to transition into a company that can both execute the old way of doing business but also virtually. So we have a number of different work streams that are going into -- that go into our launch. We've been working on this for months since this COVID-19 situation has occurred. We've gone to each and every single one of those, and we built in scenario play. And those scenarios can run all the way from you go back to a life that was normal before COVID-19, all the way to what if we have a reoccurrence of this next year and we're having to launch from home. And so we're planning for that worst-case scenario. But we're also planning for that area in the middle to -- which Tim -- which -- like what Tim just said, could help us to evolve. Because if you think about commercialization of pharmaceuticals, it hasn't evolved much in the past few decades, and I think it's going to be on the cusp of because of this.

Okay. With that, we are out of time. Tim and Keith, thanks so much for participating with us. This was a good use of our time. We wish you the best of luck with your upcoming data readouts tomorrow and beyond, and we look forward to speaking with you both again soon.

Thank you, Tazeen. Thank you for hosting us.

Thank you very much. Have a good day. Bye-bye.

Of course. You too. Bye-bye.

Bye-bye.