argenx SE (ARGX) Earnings Call Transcript & Summary

Great. Good afternoon, everybody, and good evening. Thanks for joining us for the last session of today. Very pleased to have argenx with us for this session. Just quickly before I get started, I need to read a disclosure statement. Please note that all important disclosures, including personal holdings disclosures and Morgan Stanley disclosures appear on the Morgan Stanley public website at morganstanley.com/researchdisclosures. And with that, I'm going to turn it over to Tim, who's going to make some opening comments, and then we'll jump right into Q&A.

Thank you, Matthew. Thank you very much for having us today. Greatly appreciated and a fantastic relationship between our firms. What I would like to say, Matthew, is that argenx is in front of a very exciting period. We have been working really hard in the background, lining up a really exciting cadence of commercial launches for efgartigimod in myasthenia gravis and hopefully, first in the United States, then in Japan and then followed by Europe. We're also lining up a great string of clinical catalysts. You know that we are now in 6 global registration trials just for efgart alone. And we publicly said that first half next year, we will read out the Phase III trial for the subcu product in myasthenia gravis, but also the first of 2 global registration trials in ITP. And this is just the beginning because we have trials running in ITP in pemphigus, then also in myositis and bullous pemphigoid. We had an exciting R&D Day on July 20. We showed the ambition and the vision to go into 15 indications as fast as we can, but we also unveiled the first clinical data for ARGX-117, the next pipeline asset in autoimmunity with a pristine safety profile and a spectacular PK/PD profile putting the molecule in pole position to start before the end of the year in its first of hopefully many to come Phase II proof-of-concept trials. This one in MMN. We also started to talk about ARGX-119, and we unveiled further scientific data showcasing the differentiation of efgart from a molecular design and clinical data point of view. So all in all, this company is in great shape. We're firing from all cylinders. And we're, of course, backed by a very strong balance sheet with $2.7 billion cash in the bank, we can actually go credibly and solidly into what we call the launch of our life. Thank you.

Great. Thanks, Tim. Thanks for the introduction. So I thought maybe we could just start on the launch of efgartigimod given that you've got your PDUFA date coming up here at the end of the year. And maybe a good place to start, just walk people through what you've done to prepare. And then I think there's a series of things that I get asked a lot about that we can touch on.

Sure. Happy to do so, Matt. So as you mentioned, we have the PDUFA date on December 17. And of the things that we have under our control, we feel like we're in a very good position. This is probably the first time I'm speaking to you that I can tell you, we have fully onboarded our entire U.S. commercial team. Our 70 territory business managers joined us in Boston last month in August for orientation. And they are now in training, doing at-home -- in-house training, but they're also coming to the various training that we are offering because we are a company that was founded by scientists, and we plan on marketing from the science. And we have a great opportunity to with a first-in-class mechanism of action in FcRn. We've also fully staffed our thought leader liaisons, our neurology medical research liaisons. Our market access team is fully staffed, regionally and nationally. We have a fully staffed field-based nurse case management team and field reimbursement managers. So we're taking this from a multipronged approach so that we will be ready to address this rare disease. Right now, the only thing that we can do is not only educate ourselves, but profile these key customers, of which our team will be calling on, understanding how it is to access them in this COVID environment. Where they like to treat their patients? Do they use home infusion? If so, what company? So profiling the -- all of the accounts as well as educating on disease state education and specifically the role of the autoantibody at the neuromuscular junction. And by doing this, in January, when we go to launch, we can then speak of the mechanism of action of efgartigimod, which is essentially reducing that autoantibody at the neuromuscular junction and that's what's leading to those superior clinical results that we saw from the ADAPT Phase III clinical trial. So all in all, our belief in the launch is we remain optimistic and the opportunity in MG has not changed. But I do want to guide you to a gradual launch because we know that there are some uncertainties that are outside of our control, one being COVID. Two, being the fact that by the time we have our PDUFA date, we cannot apply for our J code until quarter 1 of next year, having it reviewed in quarter 2 of next year and then ultimately, having a specific J code for efgartigimod in quarter 3. We also know for these academic centers where these KOLs are that we will need to go through the P&T process, which can take 6 to 9 months at some of these large academic institutions. So we've done the groundwork, and we're looking forward to the PDUFA date.

Good. Thanks, Keith. I guess a couple of things that would help there. So you touched on J code, but maybe can we just talk a little bit more broadly about payer dialogue that you're having as well as other items that we should think about in terms of reimbursement dynamics.

Yes. So first of all, we have been calling on the -- having meetings with the regional and national payers. And I can tell you that even in the situation of a pandemic, that's been an area where we have had great success with access. They are very interested in hearing about efgartigimod, not just because of the MG launch and the fact that we'll be only the second product approved for MG in the last 60 years, but also because they've read about efgartigimod and its potential in what we are now studying 5 other diseases. So they've been very open to meet with us to learn more about FcRn. They're interested in our individualized dosing strategy that we have for MG, and they actually appreciate it because our mentality behind this is if a patient is doing well, they don't need to receive an IV infusion if they're still feeling well. You treat the patient when their symptoms and when their treatment -- or to manage them at minimal symptom expression. And we know in MG, that's going to be different in different patients. So they like the fact about that. What they really want to know is how is the distribution curve going to be of the patients that I treat with this cycle of 4 weekly doses. Well, some of them might only require 4 weekly doses a couple of times a year. And other will -- might require efgartigimod a little bit more chronic. What we're really doing is pricing towards what the typical patient is and then managing the 2 -- the wings, the tips of that distribution curve. Overall, I can say that we have not disclosed a price. So that ultimately will be where the rubber meets the road with them, but we can talk somewhat in brackets as we have about pricing before.

Okay. Okay. Good. And then from an investor standpoint, people obviously focus on Soliris because it's out there. We've seen the launch. But I think there are some obvious differences between how they came to market versus how you're coming to market. So maybe you could just walk people through what's reasonable to look at Soliris as a corollary and what's not reasonable to look at as -- for Soliris as a corollary.

Yes. And so I think what's reasonable is the fact that Soliris has a label for gMG and acetylcholine receptor positive patients, right? That's a nice, broad label because that's not necessarily the population that they studied. In fact, they studied a very relapsed/refractory audience, and the payers are actually using their inclusion/exclusion criteria from the REGAIN study to determine which patients will be able to go on Soliris. I think that the learnings that we have from watching that is building a trial that allows a patient to be treated with efgartigimod anywhere across the treatment paradigm. This could be somebody that's only experienced mestinon and steroids and then could be on efgartigimod, or they could also be on a broad immunosuppressive therapy and we can add on efgartigimod. I'm really pleased to share that we have a population of the MG ADAPT trial with efgartigimod that fully meet the relapsed/refractory criteria of REGAIN. And our clinical efficacy in that relapsed/refractory population was just as high as we say all the way across the treatment paradigm. So really some nice learnings on how we will be EBITDA play. They had said that they were targeting roughly -- I believe the quote was 5,000 to 8,000 patients, where appropriate, for Soliris. We feel in the U.S. that efgartigimod has about 20,000 patients that would be appropriate for efgartigimod.

Okay. Okay. And then, Keith, maybe just some specific things that I think about. Soliris obviously had a J code when they launched, they had access already broadly established because they were in other indications. So when investors sort of look at first year Soliris patient numbers and first year Soliris revenues, how should they think about that versus if they're trying to match as we think about an efgartigimod launch?

So when we're saying, "first year Soliris patient numbers," we're talking specifically of MG, correct?

Correct.

So they had, they were able to take a number of their patients from their Phase III clinical trial and roll them immediately over to commercial drug. I'll -- I share that with you because we will not be doing that with 100% of our patients. The reason being, as you know, we're bringing out a subcutaneous efgartigimod. And to get that approval with the FDA, we're currently running a Phase III MG clinical trial with subcu, but we are also running an MG efgartigimod subcutaneous safety study. And this was an agreement with the FDA, where they wanted to see a certain number of patients with MG exposed to efgartigimod subcu over a certain number of months. To help bolster that safety population, we have offered every single one of our ADAPT IV patients that after you complete the ADAPT trial and 1 year in the open-label extension, we will then offer you the opportunity to go into the subcu safety trial. And so we have a number of patients that are taking us up on that. I want to call out, very clear, we don't have 100% of the patients that are switching over to subcu because some of the patients, they are extremely satisfied in the clinical efficacy they're getting with IV and they do not want to change. So you're not going to have that bolus that's going to come in right in at launch. You already mentioned, they did have a J code, we don't. Now we will work with the generic J code just like many other launches do, and it's why we have all the ancillary staff to help out the physician offices that will need to use this generic J code. But it does deter some because it slows the process, it increases the likelihood of denial and appeal up-front and then you go through appeal. And ultimately, it takes them longer to receive their money back from the insurance company than if you had a J code. The other thing that I mentioned, Matt, that's going to be different is Soliris was already potentially on some of these academic center formularies because of the other 2 indications, we're going to have to through that process. So again, some of the things that would take us gradual, but overall, the excitement for efgartigimod in MG remains.

Okay. Great. Good. And then maybe the last thing before we switch to other indications and the rest of the pipeline is just, we always seem to talk about U.S. and U.S. focus. And obviously, that's the first launch, but you're filing globally, you've got a lot of other markets here and some of those markets are pretty sizable. So maybe just remind people about the global package and remind people about how you're thinking about opportunities outside the U.S.

Yes. So when you think about efgartigimod and you think about argenx, one thing that we're setting up for is going to be a series of launches, and that series is going to be in different geographies, in different formulations and then in different indications over the next few years. So what's on tap? The PDUFA date, December 17 for the U.S. means we'll launch at the beginning of January will be our commercial launch here in the U.S. Approval during the -- approval in Japan will occur during the first half of the year. Pricing will be established, and we will start promoting and selling efgartigimod in Japan during first half of 2022. We expect approval in Europe in second half of 2022. That will lead to immediate commercialization efforts in Germany, which will come first and ongoing work with a number of the countries that we are already establishing a presence in so that we can negotiate reimbursement on a country-by-country basis.

Perfect. Thank you. So you obviously have a bunch of other indications, as you pointed out, that are in trials. I feel like CIDP gets a lot of focus because of the competitive implications to IVIg, but also because of the size of that opportunity. But I also feel like ITP and PV have sort of faded away. So maybe could we just take a minute to remind people about those studies because they're obviously coming up and what you guys think about the market opportunity for those.

Tim, I don't know if you wanted to talk about the studies?

Yes. Let me take them first, Keith, and then maybe you fill me in on positioning. But you're right. I think ITP and pemphigus are largely overlooked, but they are sizable opportunities. For ITP, we think there are about 16,000, 17,000 addressable patients in the United States only. This is a significant market with still substantial unmet medical needs, and today, patients basically cycle between steroids, rituximab, TPOs. None of these drugs actually give long-term satisfactory response rates. And I think there is a real opportunity here to come in with a drug which for the first time in history, is going to address this disease in the heart of its biology. We do know for a fact, ITP is IgG-mediated. We know what these autoantibodies do. They clear the platelets, they lyse the platelets, they attack the megakaryocytes, which produce the platelets in the bone marrow. And actually, we have been testing efgartigimod in a Phase II study in a very refractory patient population, very short exposure, only 3 weeks to the drug, and we saw a 46% to 67% response rate, which is pretty impressive. So I think if we can replicate a similar number in Phase III, there is a real opportunity here to come in and disrupt an ITP market. Pemphigus, it's wide open. This is a brutal disease and you have nothing beyond steroids, which patients hate with a passion and rituximab, which is coming with significant shortcomings. This fast onset of action, the depth of responses and the durability of the responses we have seen with such a clean safety profile is really going to be a revolution in pemphigus. And you know that we have been using the pemphigus data one-on-one to branch out into bullous pemphigoid, which is a very similar blistering disease of the skin with 4x more patients than there are pemphigus patients. So we're pretty excited about these opportunities. And maybe, Keith, you want to be a bit more specific how we think about positioning in the ITP marketplace, right?

Sure. Happy to. So as Tim said, the options that you have for an ITP patient, they're getting steroids. They're get -- a lot of them are getting TPO second line rescue therapy, IVIg really only for rescue therapy. But what we're seeing is if a patient goes on a TPO, which they have about 2/3 -- about a 66% chance of responding and about 50% of them will relapse. Typically, right now, the next step by a physician is switch to a different TPO and try out another TPO. Where we'd like to position efgartigimod if the data allows us to is we don't expect we're going to replace TPOs upfront. We need to be realistic here. They have a long-standing place right in this treatment paradigm. We want to be the first product used after your TPO. And that's the position that we would go after for launch. If we have the clinical efficacy that shows it, I think that the possibility could exist depending on the data that over time, with a subcutaneous injection of efgartigimod, you could have some physicians that would say, "I may want to place this in front of TPOs if the data shows that." But at the beginning, we're going to go probably mostly in the U.S. in TPO refractory. The good news is the way that we designed the Phase III clinical trial, we have patients that are currently on TPOs that are not having adequate response. So you're going to get data on combination therapy right from our Phase III clinical trial. You're going to get data from patients that are relapsing from a TPO.

And Matthew, there is another big opportunity here. I mean today, ITP is very narrowly being defined as just a platelet count issue. Now ITP is a severe autoimmune disease. It comes with debilitating fatigue, depression, anxiety, and it's much more than just a platelet count issue. I think with efgartigimod, the trial is designed such that we will be picking up on these very important parameters on quality of life, but we're also going to study platelet functionality because TPOs, the only thing they do is they bump up platelet production, but these autoantibodies are still hanging around and still disabling the platelets. We believe that if you clear the autoantibodies, you will also basically see again a more mature platelet fraction with better functionality. And so I think there's a lot of opportunity here in ITP to reset the rules of the game.

Okay. Okay. Good. I know we could spend all -- the whole time on efgart, but I want to make sure we touch on some of the other stuff that's going on. So maybe just a last quick one here on efgart is just we've got the 5 indications, you've outlined another 5 or 10 that are out there. I mean just as we think about your vision here, should we expect to see every year 1 or 2 more indications being put into the clinic?

Yes, I think that is a nice cadence. We discussed in our R&D Day the argenx 2025 vision to play in 15 indications. So on our own force, we can be adding with a certain cadence new indications. But don't forget, Matthew, that we also have Zai Lab in China as our strategic partners and the significance of that partnership is that not only will they commercialize in China and help us enroll Phase III trials by supplying Chinese subjects to these studies, they're also going to take on a number of new proof-of-concept studies in indications where we're not playing yet. So I think you will basically see an acceleration towards that 15 number.

Okay. Good. Good. Maybe let's do it this way. So J&J obviously returned your AML program to you. I think people are just sort of wondering like what's the outlook for that program now and when are we going to get some clarity on it because I think you expressed a view that you still think there's a place for it. So maybe we could touch on that.

Yes. And that's a database statement. [ We're all this database, right? ] So now that we retained or regained full ownership of the molecule, we're also gaining control of communication, and that means that we will be able to show you data at one of the upcoming clinical conferences on what it is we have seen in these Phase II studies and why we think there is a substantial potential in the molecule. Now there's a reason we partnered this molecule back in 2018. This company is completely doubling down on its autoimmune pipeline with 113, efgartigimod 117, 119. And we do not want to distract the R&D machine to now take on also EML trials of top of all the work we have to do on the autoimmune pipeline. So this is a business development opportunity where we're going to take the time to identify the best possible house to take cusatuzumab forward. I think we owe it to the patients, but we also learned our lesson that we need to go with a partner, which has deep EML expertise in order to develop the molecule to its fullest potential.

Okay. Okay. That's clear and that makes sense. So maybe we should touch on 117 then. Next key program here. You've got some nice preclinical data and early [ healthy volunteers ]. So maybe just talk to us about target and first indications.

Would love to do so. So if you have the ambition to build a sustainable, successful autoimmune company, there are important compartments of the immune system where you actually would like to play. So with efgartigimod, we can now take care of some of the antibody-mediated diseases, IgG-mediated diseases. And you know the list is very long. Complements, the innates and immune system is also a very important compartment responsible for severe autoimmunity. I mean the more we learn about complements, the more we start to understand how actually it is involved in a lot of serious autoimmune diseases. A complement by itself is a pretty complex system. And actually, we're learning about it every day, and you see more and more specific possibilities of intervention. And with each molecule, you actually learn more about complements. So the days are over that we're only looking at C5 intervention, we really want to play upstream of C5, actually upstream of C3 so we can selectively take care of a classical and a lectin pathway without impairing the alternative pathway, which is very important from a safety point of view. Now if you do the homework, Matthew, on indications, which are driven by the classical and/or the lectin pathway, you'll see again a very nice collection of diseases, severe unmet medical needs, basically fitting the franchises, which Keith and colleagues are developing. So the first indication which we public on is multifocal motor neuropathy, and it looks and feels a bit like CIDP but it's really classical pathway mediated, pathogenic IgMs recruiting complement. And we showcased during the R&D Day pretty impressive data from ex vivo work using patient materials and showing how potently ARGX-117 can block a complement attack on the Schwann cells and the motor neurons in contrast to IVIg, which is basically only able to partially block it and also showing why a C5 block will just -- will be too late in the cascades. And this is just the beginning. This is the first of, hopefully, many Phase II proof-of-concept trials we will be triggering.

Okay. And cadence there, I mean just to remind people when we might get some first data to demonstrate the sort of profile of the molecule.

So this is a Phase II proof-of-concept study starting before the end of the year. The duration of the trial is, if I'm not mistaken, just below 20 weeks. What we do not know, Matthew, is the rate of enrollment given the COVID pandemic. So you know that we're always very careful managing expectations when it comes to enrolling in the midst of a global pandemic, but we will keep you updated in the quarterly earnings calls when we're approaching a full enrollment.

Okay. Okay. And in terms of -- just because people are probably not as familiar with multifocal motor neuropathy, what's the key clinical sort of benefit that you want to see? And what's considered clinically meaningful in these patients?

So what these patients experience is, again, a significant weakness in their limbs, typically the distal part, so very -- big problems in using hands, arms, significant portion, having difficulty ultimately to walk and ending up in a wheelchair. So from that point of view, we think the disease is as significant or as debilitating as CIDP. Patient numbers are also comparable, around 13,000 patients in the United States compared to 16,000 for CIDP. Today, the only therapy which works is IVIg, steroid [ stone ] work. These patients are at the highest possible dose of IVIg, on the highest possible cadence every 2 to 3 weeks and still they gradually become refractory to IVIg. So they still progress whilst being on IVIg. So I think there's tremendous opportunity in front of us.

Okay. Okay. Good. Good. I think maybe just to finish this off, there was one question that came in from the audience, which was just asking for an enrollment update on subcu or just maybe how to think about the time line for subcu. I know that's a question that you probably get a lot. So maybe we could just address that before we wrap up.

Yes. Very quickly, what we publicly said is that you can expect top line data of the Phase III non-inferiority trial, first half next year. What Keith already alluded to is that the size of the safety database is going to be rate limiting. So we have not been public on the requirements of the FDA, but we were pretty pleased with the outcome of the meeting and the ambition is still intact to be the first subcu to the MG markets.

Okay. Great. Good. Well, Tim, thanks for staying up for us. Keith, nice to have you here as well. Thanks for the comments, and I appreciate the time.

Thank you for having us.

Thanks for having us.