argenx SE (ARGX) Earnings Call Transcript & Summary

Good morning, everybody. Welcome to the third day of the Bank of America Healthcare Conference. Presenting as our next company this morning is argenx. It's always a pleasure to have argenx team members with us. Leading today is going to be Tim Van Hauwermeiren, who we speak to very, very frequently; as well as Keith Woods. Keith and Tim, good morning or good afternoon, depending on where you are.

Good morning, Tazeen.

Good morning. It's good to see you.

So maybe we can take a second or 2 to just review where everything that's happened with argenx over the last year, and it's been many things. And from there, we can go into a little bit more detail on questions, if that works.

Yes, happy to set the scene on argenx, Tazeen. So the way you have to think about argenx is it's a global, integrated and pretty innovative biotech company. Let me qualify this, being global as an organization now having a footprint in Europe, in North America, in Japan, and we have a strategic alliance with Zai Labs in China. We are an integrated company. We span the entire value chain from a powerful discovery engine all the way through a deep and rich product pipeline, into now an organization which is almost ready to launch our lead program, efgartigimod, first in the U.S., then in Japan and then in Europe. The antibody discovery engine we have is very productive. Each year of our existence, we've built a new pipeline asset, which is now 11 in total, 9 of which are in the clinic. And actually 8 out of 9 molecules continue to be successful, either in our own hands or in the hands of our partners. The most advanced molecule is called efgartigimod, we will be talking about it. Cusatuzumab is the second most advanced assets under a 50/50 partnership with Janssen. And then we will be talking about argenx 117, our next pipeline and a product opportunity. I think what is unique about the innovation culture of this company is that it's highly collaborative. We believe in the principle of co-creation, and our immunology innovation program is nothing else than a very dynamic network of collaborations to feed the growing pipeline of this company.

Keith, anything you want to add to that?

I would just say we are really excited for our first ever expected approval of efgartigimod at the end of this year. We have a PDUFA date of December 17. So the team has been very busy ramping up not only in the quality as we prepare, but also in quantity. As of this week, in the U.S. alone, we have now hired over 100 people since the pandemic began. So we've been active even though we've been separated.

Okay, excellent. So maybe, Tim and Keith, let's talk about the application for MG for a few minutes. So you have a very strong package that you put forth to FDA based on clinical data that's been presented over the course of the last year or so. We've gotten some questions as of are you unsure about getting the standard review versus what we would have probably naturally expected to be an accelerated review just because of the quality of the data and the under-met need in the MG space. And so did that in any way come as a surprise to your team based on the interactions that you have with the agency going in? And is there anything to interpret from that?

I don't think it really came as a surprise to us. We had applied for accelerated review. But we did know there is another product that's currently approved in the space for MG. And so that always is one thing that can prevent an accelerated review. The second thing is that the FDA has been under a great deal of pressure. There's a great deal of pressure that's taking place because of this pandemic. And so why put additional pressure upon themselves? We're going through the review process. I can tell you from my point of view today, I'm glad that we have a PDUFA date for December 17 because vaccination is rolling along very well over here in the states, and we are already seeing some states open up completely. And so now instead of a completely virtual launch, we think we really will have a launch that will be both in person and virtual. Also, as noted by many companies, supply chain goes under a great deal of stress because of the vaccines that are being created. And this gives us -- our supply chain is well intact, and we've ramped up our supply. So we'll be in good shape for our launch at the end of the year.

Okay. Now you are launching at the end of the year. How much of an impact -- it's hard to say for sure, but how much of an impact do you think in the U.S. COVID will still be having? How much of your efforts will need to be firmly virtual versus having face-to-face time with a physician, for example?

What we're seeing right now, which is still a bit early, is it's depending upon the geography. I've been listening to some of the other earnings calls that have been taking place on launches and hearing where areas such as Florida and Texas that are a little bit more open, where they're doing the bulk of their business. In areas where I'm at like Massachusetts, that's still pretty closed up, has been a bit challenging. So I think it's going to depend upon, one, the geography; and two, all of the market research that we've done and that other companies have done and shared has said that some physicians are going to prefer still virtual visits in the future, where others can't wait to get back to live interaction. So I'd hesitate to give a percent right now. Let us progress along in the vaccinations and returning to work schedule a little bit more.

Yes, you bring up a good point, actually, Keith. So it depends on specialty, it seems, as much as it does on geography. So for example, for the companies that we cover that have psychiatric drugs, psychiatrists were the first to go telemedicine and have chosen to stay telemedicine even as the reopening has started. What is your feedback, if any, on how neurologists have been with going to the office?

Yes. I mean they're still doing a great deal of telemedicine. I think telemedicine will continue into the future as long as the reimbursement for them continues in the future for their telemedicine visits. But I can tell you that there's a number of KOLs that I get to speak with on a fairly frequent basis. And they're missing the conventions. They're missing the personal interaction. And they look forward to getting together, especially at a time where you're rolling out a first-in-class mechanism of action, first in class and only the second treatment to be approved for MG in the last 50 years.

Yes, okay. Now can you talk to us about what the cadence of the ramp will likely be? We know it's an amazing drug. We know that doctors are going to want to try it. But are there going to be any rate-limiting factors initially? How important, for example, will it be to have a position on formulary before the drug can get used in large amount, for example?

Yes, I mean one thing that's going to be very important for us for the ramp is going to be site of care, right? And so we are going to be very prepared for optionality in site of care. Whether a patient is going to be infused at a physician's office, that can be an option for them. If they're going to be infused by home infusion, we're working with some of the largest home infusion companies. They can also go through specialty pharmacy to access the product and be infused in a freestanding infusion center. Or it could be, as you're referencing, with formulary, an outpatient infusion center of a community hospital. And in that case, in speaking with colleagues in the industry that have launched an IV product, what they've said is you will have to go through the formulary process, but there also is a form that can be filled out, which is exception to the formulary and where you can get access to the product as you're going through the P&T process.

Okay. It's a little bit early, but in general you've talked -- I guess given us a range. But how should we be thinking of pricing? First in the U.S., and then we can go spend a couple of minutes on Europe.

Yes, so we will look forward to bringing the price to you. But what we've done is analyze the data because as you know we have individualized dosing in this trial. So you're going to see some patients that are going to require very few cycles per year and others that might require more of a chronic dosing. So how we plan to price is based on the value that we are bringing to the patients, and we'll come to you with an average annualized price. Maybe to put it in context, you've got market research we did about a year ago showed IVIg, chronic IVIg at around $147,000 annually per year on average. And then you go all the way up to the high end of the spectrum, which is Soliris. I've already shared publicly, we don't have any intention of pricing near Soliris because we're really looking at the big picture, which is when efgartigimod is in 6, 7, 8, 9, 10 indications.

Okay, fair enough. So maybe we should talk for one minute about what you think an ideal label will look like. People may or may not pay a lot of attention to wording. How important is the actual wording in the label going to be, in your mind, to help with uptick, at least initially?

I think it's going to be extremely important, and we will go over it with a fine-toothed comb word by word. I mean I look at the label that Soliris got. And even though they studied in the relapsed refractory population, they were granted a very broad label of patients that are acetylcholine receptor positive that have gMG. And so we hope in a blue-sky scenario that we'll be broader than that, which would just be patients that have generalized myasthenia gravis regardless of whether they're acetylcholine receptor positive or a seronegative patient. Because as you know, we did study a subpopulation of seronegatives in our Phase III, so that would be a blue-sky scenario to go that broad. Additionally, what I think is key, is beyond the label, is the inclusion criteria to the study, all right? And I say that because although Soliris got the broad label, we see payers restricting them to relapse/refractory and using the inclusion criteria from their own trial. Whereas our trial would allow patients all the way across the treatment paradigm. All the way from second line, the severe relapsed/refractory were enrolled in the ADAPT trial.

Okay. Now where do you see efgartigimod ultimately landing in terms of its position in the treatment regimen for MG?

So why don't we start where it'll probably land first, at least what we hear from our clinicians? Where it will land first is it looks like this will be the first injectable therapy that I will choose to treat my patient, so before IVIg or PLEX, before off-label rituximab and upstream of Soliris. I think that's where they're going to land first, and that's going to be the comfort zone, okay? I think it's going to take experience from the physicians utilizing it and seeing the results. But also, I think there's going to be a great deal of peer-to-peer influence from patients because as patients go on efgartigimod and we know that those that are responders, which is almost 80% after the first couple cycles are responders, almost 2/3 of those patients achieve minimal symptom expression. And that's really impressive because there is no cure for MG. So to be able to walk around with zero symptoms and not having to deal with adverse events from your therapy, that's pretty much the holy grail. And I think as we achieve that in more and more patients, you'll see efgartigimod move up in the treatment paradigm, potentially replacing the use of some of these broad immunosuppressive therapies.

Okay. And how long do you think it will take to reach sort of that plateau of normalized penetration rate? So some launches can have a hockey stick like uptake, and some are much more gradual. Are you prepping your commercial team to be ready for a hockey stick launch should it happen? Or is the expectation more that it will be gradual? And then while we're on it, can you just remind us of how big the commercial organization in the U.S. will be, at least initially?

Sure. So look, I think that as we go to launch, there will be some headwinds. And so if I was going to project, I would project it will have gradual, consistent growth in MG. We'll be launching out there with a generic J code. That slows the process a little bit at the beginning. We are meeting with regional and national payers already to make sure that we can have the product available. But remember, there's a great deal of education that needs to take place as this is a first-in-class mechanism of action, of which the majority of physicians have not touched the product. So I would project gradual. But at argenx, we're always preparing for various cases. So when you say, are we prepared for the hockey stick? I can tell you from a manufacturing point of view, we've prepared for the hockey stick. From a supply -- excuse me, from a personnel point of view. Because we'll be case managing our patients, so we've kind of overstaffed in case management and our field reimbursement team, so that if the demand is there, we will be able to take care of it. So you asked about the size of our team, Tazeen. It was yesterday, the postings went up on the Internet for the 71 sales representative positions in the U.S. So we'll have -- there's going to be about 120 commercial members, because it goes beyond just field sales. It also goes to inside sales, thought leader liaisons. We have market access that are out in the field across the U.S. We'll also have our field reimbursement managers and our case managers. So it's a pretty extensive commercial team.

And you've been prepping for a long time for this launch, Keith. So there is no doubt that we think that you're prepared for sure. Okay, so let's move on really quickly to CIDP for a minute or 2. So that's got the potential of being a really large indication for argenx. I think the go/no-go decision was something that people were looking for intently earlier this year. Now that that's happened, can you just walk us through where you are in terms of planning next steps, and when we could start to see data here? So in that, I'd like to also spend a minute trying to discuss the differences I guess in how CIDP might manifest versus MG as it relates to designing the right trial. Because I think designing the right trials is what people are really, really focused on.

Yes.

Happy to take that question, Tazeen. So you're right, I think the go/no-go decision point, which we comfortably met for the CIDP indication was outstanding use. Remember that this is now 4 in 4 indications we actually have got efgartigimod scores in Phase II. And we already have a first registration trial under the belt. And what we're doing is actually ramping up this study into its global registration portion as fast as we can. It's a single registration trial. It was a seamless Phase II/Phase III trial design allowing us without any interruption to now scale to that global study. Just to give you a flavor, there will be about 80 clinics involved worldwide, and we are aiming to enroll between 120 and 130 CIDP patients in total. I think it's a very unique trial design, taking as many lessons learned from the past into account as possible. Because clinical trials in CIDP have not proven to be easy and we could learn from historical trials. So I think the way we vet the diagnosis, the way we make sure these are patients with active disease, and the way we assess the ability of the patients to respond to an IgG-reducing therapy, these are 3 important gating events before a patient can make it into the blinded randomized control portion of the study. So I think it's all boding very well. And the CIDP patient, of course, is a patient suffering from a pretty bad disease. In contrast to myasthenia gravis which is really waxing and waning, with every patient experiencing the disease in his or her own unique fashion, a CIDP patient actually is slowly progressing. And it goes hand in hand with increasing mobility issues and weakness in the limbs. Steroids and IVIg are the standard of therapy, many patients are actually on IVIg chronically, about 70% to 80% of patients in the States. And what you would see that they would need a cycle of IVIg, let's say, every 2 to 4 weeks with significant weakening in between the treatment cycles. So we think there is a significant unmet need for an agent which can come in with hopefully better efficacy, definitely better tolerability and convenience than chronic IVIg.

Okay. We did have a call with you guys to discuss this topic in detail. So I thought I would use the remainder of this discussion to talk about 117, which we didn't get to spend a lot of time on in our last discussion. So any update on the 117 program and when we should expect to see data there?

Yes. So Tim, you're on mute. I'll just start, if you don't mind, with the Phase I trial that we are currently enrolling. It's a very robust Phase I clinical trial. We're studying both IV and subcu formulations of 117 with single ascending dose and going into multiple ascending dose, taking a look at really in-depth dosing regimens here in this Phase I. We've got a beautiful biomarker with free C2. So what you can expect to see is going to be safety data, tolerability data, PK/PD and how the free C2 levels change. And we expect to be able to share this data with you mid this year. So you'll have a good readout on 117 this year. And at that time, we'll also share some more information. Because we expect after the Phase I data, we will go immediately into our -- we've announced that our first proof of concept is going to be in MMN, which is the cousin to CIDP. So it fits perfect into our neurology franchise. We're really excited about 117 coming out this year because we always talk about efgartigimod being a pipeline and a product, and I referenced how many potential indications we may be going to. But now here comes 117, and we certainly believe that this complement inhibitor can be a pipeline and a product as well.

Right, okay. So given the complement space seems to be getting more crowded with many companies trying different approaches and different indications, can you talk to us about what potential you see specifically for C2?

Yes. So as we said before, Tazeen, complement is of course a very powerful system. And the more we learn about it, the more we learn about all its different aspects in autoimmunity. So that isn't one size fits all from a [ target ] choice point of view. There are actually many different ways to interfere with the complement cascades and hopefully impact different diseases. So it all depends what diseases you aim to treat, in order then to choose the best point of intervention. C2, I think, is a first-in-class opportunity. It's an intriguing target because it sits at the nexus of 2 of the 3 complement pathways. It sits at the nexus of the classical pathway where antibodies induce complement activity. And the lectin pathway with sugars -- or sugar structures are triggered by complement activation. But we do not touch the alternative pathway, which seems to be a very important pathway for protection against pathogens. It's also a target which is upstream of C5. But we all have seen, of course, that some of the pioneers in complement went after C5 with success. But a lot of diseases are triggered by complement activity upstream of C5. So the C5 blocker would simply be coming too late to prevent the damage being done by a complement. So there are a number of interesting indications we think we can target with the C2 blocker. We believe we've also built a unique molecule to do that because C2 is a pretty abundant serum protein. And if you would apply the classical antibody approach to such a serum factor, you would need high doses and very frequent dosing because the half-life of the target is short. So the target-mediated clearance would be very significant. And that's why we're so excited of argenx 117, which is a sweeping antibody which is able to actively sweep C2 out of circulation without being destroyed itself. So the aim really is to go for an infrequent dosing of this C2 blocker.

Okay. And what's available right now for MMN patients, if anything?

IVIg is predominantly what they're on. And very much like CIDP, it's a progressive disease. So they're on quite frequent IVIg, every 2 to 3 weeks. The other thing that I have heard is that over time, they start to build tolerability to it and they keep having to increase the dose. So again, this is a space that is over $400 million in IVIg. And that data is probably a couple of years old now, but $400 million in the States for treatment of MMM of just IVIg.

Okay. And so I guess what size program do you think would be ideal? Can you just remind us how many patients are diagnosed in the U.S. and Europe?

Yes. So in the U.S., the patient population for CIDP is about 16,000. And for MMN, it's about 10,000.

Okay, so comfortably in the orphan range.

Yes.

Is it well diagnosed?

Eventually, it is. Now the one thing about both of these diseases is they're both treated by the exact same specialists. Those who specialize in CIDP do in MMN, and they ultimately wind up -- the MMN patients wind up making it to these tertiary centers and these specialists. So it's very concentrated.

Okay. So is it the case then that it also can be confused with something else before it's directly identified?

Yes, it is.

Okay. So what is the average age of which people get diagnosed?

It's a typical disease of men in the middle years. So let's say, in their 40s, many more men than women. And I think the hallmark diagnosis is very difficult, but the hallmark of the disease is conduction block. So if you look at other neuropathies, MMN stands out because of its unique conduction block signature.

I see. Okay. So in terms of how you want to develop C2, do you also want that to be a pipeline within a product?

Absolutely. And we will look to take it very similar to the approach that we've taken with efgartigimod, which is we're going to look at indications that not only fit into our existing franchises, but the additional indications that we'll look at that might be outside of an existing franchise, would put us in a situation that we would create a new franchise. I know that when we did the R&D Day and unveiled 117, we actually had a nephrologist there with us and talked about potentially some of the renal -- some of the kidney indications that could exist.

Okay. And so before we close this off, I just want to remind everybody that for efgartigimod, you will be announcing 2 additional indications later this year, correct?

Yes, we will. We'll share the fifth and the sixth indication this year. Those studies will be up and going this year. And also, with efgartigimod, it's pretty incredible that we are currently enrolling in 5 global Phase III simultaneous right now as we speak. So this program is getting ready to go much more broad than just the MG launch.

Okay. So as you mentioned, you're in several indications now for efgartigimod. What should we expect to be the cadence of adding indications for C2 by comparison?

It's a bit early to comment on that, Tazeen. But clearly, we have a handful of indications in mind, which we will take again in a staggered fashion and in a rational fashion, whilst we will try to also prioritize indications, of course, which will fit into the emerging commercial franchises, which Keith and colleagues are developing.

Okay, excellent. We're coming down to the end of our time together. But I always try to close conversations with, is there anything about your company that you feel investors don't yet fully appreciate?

I'm super happy that we had some time to touch on argenx 117 because I think it's an exciting asset. I think what people still underestimate is the potential of the Zai Lab collaboration to not just help us to accelerate the global-hosted trials, adding a committed number of Chinese subjects to the study, but also that ability to trigger additional indications above and beyond the 6 indications we will be playing in. So we're well on the way to 10 indications.

Excellent. Okay, with that, I'd like to say thank you to both of you, Keith and Tim, for joining us this morning. It's always great to catch up on the latest updates on the company. We always appreciate participation in the conference. So thank you in advance, I hope you guys have a great rest of the day.

Thank you, Tazeen.

Thanks for having us.

And thanks, everyone, for joining.