argenx SE (ARGX) Earnings Call Transcript & Summary

I'm Matthew Harrison, one of the biotech analysts here at Morgan Stanley. Quickly before we get started, I just need to read a disclosure statement. Please note that this webcast is for Morgan Stanley's clients and appropriate Morgan Stanley employees only. This webcast is not for members of the press. If you are a member of the press, please disconnect and reach out separately. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley representative. With that, very pleased to have argenx with me and Tim Van. Tim, I can never say your last name. I'm sorry.

Just call it Tim.

Tim, who's CEO; and Keith Woods, who's the COO.

I thought we could start with efgartigimod. And look, I mean, I guess the question is, just to start off, do you remain on track with the filing time lines? Obviously, there's been a lot going on with COVID, et cetera, but I believe your time lines here are end of year for the U.S. and 2021 for Japan.

I think, Matthew, that's spot on. I think the silver lining to the whole COVID-19 global pandemic is that we were just in time with the collection of the critical data, and therefore, the remaining part of the train of events to BLA submission can actually take place outside of the impact of COVID-19. So yes, we are on track. And we will be submitting, hopefully, a high-quality submission by the end of the year to the FDA. And then you're spot on, we're going to turn around and submit our filing with the PMDA. That being said, of course, the other clinical trials in which efgartigimod is involved, do incur some delays, the ITP study, the CIDP study. And we try our best to inform our shareholders as accurately as possible and timely as possible on the impact of COVID-19. That's why we have given pretty detailed updates in the recent quarters.

Right. And we'll touch on that. I mean, I guess, now that you have the data, and you clearly know the profile versus some of the other drugs that are in the marketplace now, have you started any conversations with payers or other people in the marketplace to start to think about how the drug may be received?

You're right to say that the benefit/risk profile of efgartigimod in MG is unprecedented. I mean we have never seen such an efficacy and such a safety tolerability profile before in this space. So of course, everybody is watching this innovation with a very high level of attention. And I'm inviting Keith, my colleague here, to comment on how we're making progress, for example, on the market access front. Keith?

Sure. Thanks, Tim. So Matt, to your question, we have been working directly with key opinion leaders in MG, not just in the U.S., but also in Japan and in Europe, discussing the Phase III data with them and getting their input based on the Phase III data of how they see this fitting into their practice. So a great deal of market research is -- continues to go on with this because, as you know, FcRn inhibition, this is first-in-class. And so for many of them, this will be the first time even touching an agent like this unless they participated in our clinical trial. As far as the payers, in the U.S., we've already hired and fully staffed our market access team. They have -- since we've received the Phase III data, they have been actively meeting with not only national payers, but also the regional payers. The feedback that we've gotten has been extremely positive. They're pleased to have another alternative to bring to these patients that are suffering with MG. And they love the individualized dosing because from a payer's point of view, they don't want to pay for something that a patient doesn't need. And how we've set up this trial is as the patient receives medication when they need it and will benefit from it.

Okay. Perfect. And I guess, as you continue to engage across the landscape, you've got one drug out there, right, which is -- has a very high price range. And then you've got other generics, which have a very low price range. So you've got a really wide band, I think, to work with there. So what are the sort of data points that you guys are looking for as you try to hone in on where you're going to come out?

Yes. We're doing a lot of homework on pricing right now. And what we've talked about in the past has been -- you mentioned the high price of one of the treatments getting upwards to $700,000 a year. We just -- I got some further updates on data that chronic IVIg, the average price is $146,000 per year to treat an MG patient. And I'd just highlight, that's the average, some get more. But we're doing the homework on it. What we do know is that the data that came out of the ADAPT Phase III, putting the highest ever clinical efficacy response that's come out of a global Phase III, combined with the individualized dosing and the safety profile, we've got something that is providing great value to patients. And ultimately, the patient benefiting from it is more important than actually just establishing a cost. I think you'll see variability in the overall expense to treat the patient with efgartigimod because, as you know from our individualized dosing, some patients are going to require fewer cycles per year than others. But again, the feedback has been positive from the patients as well as the payers. So we'll get closer to setting price. We are getting closer to setting price, and we'll look forward to sharing that with you at launch.

Okay. And any updated thoughts on patients that are mediated by the autoantibody or not in terms of your strategy for engaging with regulators or how that data has been received by the KOLs as you've been talking to them after the initial data in terms of your thinking about that population of patients?

Sure. Well, the strategy with the regulators was actually set at our end of Phase II meeting, which was allowing us to include these MuSK LRP4 agrin, the seronegative patients into the study without putting our primary endpoint at risk. And that agreement was -- first of all, they were pleased to see that we were willing to do this even though they weren't a part of our Phase II population because there's nothing else that is approved and available for this subset of MG patients. And so the agreement was that if we had a clinical efficacy outcome and safety that was similar to the rest of the patient population in the ADAPT trial, we would have something to discuss on this being label enabling. And that's exactly what we plan to do. As you know, from the ADAPT trial, our actual efficacy rate was very similar in the seronegative as it was in the acetylcholine receptor positive, but we did see quite a blip in the placebo response on the seronegative patients. So we'll be discussing this with the regulatory bodies and trying to advance this forward for patients that don't have other options. You asked about the KOLs. The feedback that we've received from the KOLs in the seronegative population is, look -- it looks from efficacy that it works. I combine that with that safety profile that was very similar to placebo, why wouldn't I use it? And they said, "You just got to make sure we can get paid for it." And so that's what we're going to work towards.

Okay. Okay. That's helpful. And then I guess one of the last things I just want to touch on is, you're obviously looking on -- working on multiple formulations and presentations of the drug. And I believe you said you're going to meet with the regulators towards the end of this year or the fourth quarter, I think, to discuss what you need to do from a bridging standpoint. I just want to make sure we're all on the same page as to what you think you need and what your goal is in terms of that meeting. And then how you're going to communicate and what that strategy may be afterwards?

Yes. So I mean, obviously, what we think we need is, first of all, the ADAPT Phase III clinical trial data that shows the PK/PD. It shows -- in these 167 patients, it shows the clinical efficacy; it shows the safety. So really coming forward with that robust data was going to be important for us to put in front of them to bridge from because this being our first indication. Secondly, PK/PD data for efgartigimod subcu is something that we will take forward. And then lastly, we believe that they will want to see some MG patients treated with efgartigimod subcu. Ultimately, from a commercial point of view, what I would like to send forward from my team regardless of the regulatory requirements, is I want us to be able to answer questions for physicians and patients about patients that are efgartigimod -- MG patients that are efgartigimod naïve, so they'll be starting on efgartigimod subcu. But also, what about an efgartigimod IV patient that's still -- that has completed our open-label extension and seeing about maybe converting some over to subcu, so that we'll have both those questions answered when we go to launch.

Okay. Tim, maybe just a broader strategic question, and before we touch on some -- ITP and some of the other indications and what you're progressing. But you're obviously at a point now where you've started to derisk the profile of the drug. You have very broad data now. And you also have a wide range of other indications that you can pursue. And so sometimes at this point, companies may make the commercial decision where they can get more breadth from a partner to aggressively push across geographies as well as maybe aggressively expand the pipeline beyond some of the leading indications. So how have you guys thought about that internally? Obviously, you've set forth your plan to go it alone. But I'm just wondering how you think about that. And maybe you don't think there is a trade-off that you have to take and that's why?

I like the question a lot, Matthew. You know the reputation of the company, right? So I think we like to march forward based on thorough homework, typically science-based database. So I think the path forward has been plotted already in quite some detail when it comes to the additional indications which we can credibly take on. And you know that our geographical focus is going to be U.S., Japan and then EU5, that means that there are territories out there where actually we think efgartigimod could play and where we would need to partner in order to drive efgartigimod to peak sales potential. So we are actually strategizing how we can actually tap these rest of the world's pockets of value, whilst we, of course, continue to build out our commercial infrastructure in the 3 territories of interest, U.S., Japan, Europe. From an indication point of view, you will basically see that we will continue to be disciplined. We will continue to add high-value indications where the biology rationale is solid, when I think the feasibility of running clinical trials in terms of nonclinical and approvable regulatory endpoints is proven and when actually there is a sizable commercial opportunity. So we think there's an abundance of opportunity in front of us where we can add indication after indication. Geographically speaking, I think we will be looking out for bounce.

Okay, that's helpful. And sorry, I guess, Keith, maybe just to go back to one thing. Japan, it's -- I don't feel like it's a geography that's discussed a lot among investors, but obviously, tends to -- probably the third largest market in the world. So maybe just outline for us, what kind of market do you think that could be for MG patients? What we know about the size of that market now? And how important that is as you guys think about global uptake?

Sure. I mean we're really excited to be going to Japan as our second market, and we've already begun to build out the team. Argenx Japan was opened in Tokyo in January of 2019, and we've began to hire -- actually, we have hired many members of our commercial and medical team over there. Reason being is in Japan, you have over 20,000 patients that suffer with MG. So it's a sizable population. And in this population, they're treated by a finite number of physicians. So somewhere between 200 to 300 physicians manage all of the MG patients in Japan. So it's very scalable for us to do as our second market. We believe that we can cover Japan with roughly somewhere in the 50 to 55 people at launch. What else is really key about Japan is that 100% of the patients have insurance. MG being a rare disease has a minimal patient pro-pay and also the government does not pay for off-label use. So having that indication, as you know so many other medications that are used in the U.S. to treat MG actually do not have the indication. So this will be very key in Japan, and we look forward to successfully commercializing that.

Okay. That's very helpful. And just out of curiosity, I don't know if you know, do we have any idea about how many patients are on Soliris or something else like that in Japan right now for MG?

I don't have the numbers on that because I don't believe that they have broken out because I know they've been combining their 2 indications of NMO and MG. So I don't know the answer.

Okay. Maybe we should turn to ITP, discuss what's going on there. Maybe just -- I guess, just an update there, remind everybody where you are given that trial is still enrolling. And then we can talk about formulation, and your approach there obviously with subcu is different.

Yes. So first, a couple of pieces of background information. First of all, the IND division of the FDA typically requires 2 Phase III registration trials in ITP. So we're not different there. In contrast to MG or CIDP, the FDA requests for ITP 2 independent registration trials. The second thing I wanted to say is that unlike MG, where speed to market is key and IV has been prioritized, we decided in the ITP Phase III campaign to include both IV and subcu. So in the original plans, we had 3 trials, an IV trial, a small second IV confirmatory trial and then a trial where we would basically induce IV and maintain subcu. What we announced in our latest earnings call is that due to the enrollment challenges posed upon us by COVID, the team actually has been rethinking that Phase III campaign. And we are in active dialogue with the regulator to see whether we can further streamline these trials and actually bring subcu forward in the whole Phase III campaign. So you will see us make the first steps there on clinicaltrials.gov. And soon, when we hear back from the regulators, we will be in a position to confirm how the strategy actually panned out. So it's important for us to have a registration campaign entailing both IV and subcu, and we have been actively investigating how we can streamline the campaign to facilitate enrollment.

Okay. And so I guess the outcome -- or I guess maybe I should ask it this way, what's the best case outcome for you when you meet with the regulators? What would you view as the most expeditious path forward here?

We would be looking to trim back the number of studies from 3 to 2 and in a way that we achieve both IV and the subcu objectives.

And is the main -- as you think about what the regulators might push back on is the main concern about number of patient exposures? Or just that you'd have different -- traditionally, they want 2 well-controlled studies with the same formulation as opposed to different formulations in those studies?

Too early to comment on. I mean let's see. Based on our regulatory experts, it should be possible to present data from 2 different formulations as long as you have been achieving similar PD effects, but that is the topic of the conversation.