argenx SE (ARGX) Earnings Call Transcript & Summary

Thank you for joining us. I'm Tazeen Ahmad. I'm one of the senior biotech analyst here at Bank of America. It is my pleasure to have our next presenting company with us, argenx. Sitting next to me is Tim Van Hauwermeiren, who is Chief Executive Officer of the company. Tim, thank you for making the trip from Belgium.

Thank you for having us, Tazeen. It's always a pleasure.

And we're back live here in Vegas, obviously. So maybe for those who aren't as familiar with the company, can you just give us a quick 2-minute overview of the platform and some recent developments? And then we can go into some more detailed Q&A after that.

Very happy to do so. So argenx is a company which is on a mission to build global independent immunology company. We believe we're very strong in antibody engineering, and the way we build our pipeline assets is through what we call our immunology innovation program, where we team up with key translation labs around the world to co-create these pipeline assets. So pipeline assets, which we like to build are first-in-class going after novel targets. Black-belt antibody engineering, so it's a best-in-class molecule and then indications which really go after high unmet medical needs, rare diseases, which fit our growing franchises being the neuro franchise, the skin franchise, the heme and the kidney franchise. We have a number of molecules lined up in the pipeline in different stages of development. But of course, the lead molecule is called efgartigimod. We think this could be one of the biggest biologics in our industry because it's going after such a key mechanism in autoimmunity. It is selectively and precisely eliminating IgGs, and there's a ton of IgG-mediated ultimate antibody diseases. So we're just unpacking the potential of efgartigimod in a very systematic fashion. By the end of this year, we will already be in 10 indications. The ambition is to be in 15 indications by 2025. And that is, of course, an incredible opportunity in front of us with, again, some exciting catalysts already now in 2022, and we will talk about those. It's a global company with a footprint in Boston, Tokyo, and then Europe, both Geneva, the commercial office, and again, the R&D office. And for China, we have a strategic alliance with Zai Lab. So that's pretty much who we are.

Okay. So there's a lot to talk about here. Talking about catalysts, you were literally the only company that's had positive catalysts this year. So congratulations just on that. Let's talk about the launch for gMG with VYVGART. So you just reported your first full quarter of sales. You came in significantly above consensus expectations, at least outside expectations. You obviously are not in a position to provide sales guidance, but can you just talk to us about how this launch is going relative to your internal expectations? Just give us some qualitative tips on how we should be thinking about it for the rest of the year?

Very happy to do so. So there was a lot of uncertainty going into the launch because we had achieved or obtained approval on December 17. January was the launch month, and remember, that was full Omicron time. So very difficult to understand what the dynamics would be of the first weeks and the first months of the launch. I think, Tazeen, it's fair to say that our strategies work. So education of physicians is something we heavily betted on, and we see that neurologists like the education programs which we are offering, the P2P, especially is playing out to be very powerful. The DTC campaign to patients is mobilizing patients. It's resonating extremely well with the MG community, and is creating an extra pool for -- on top of all the efforts which we're doing. And then I think the third strategy with the payers has paid off because even before we had approval, we had met with them under confidentiality agreements, short under the data, discussed with them the price and the value-based agreement mechanisms. And we had installed in all the national and most of the regional payers, the value-based agreements, which are now being translated into policies, which actually nicely reflect the patient population, which we would like to treat, i.e. the ADAPT patient population. So the strategies with payers, physicians and patients are really working. I would really like to give credit to the field team. We have been betting on people. On average, our sales reps have 15 years of experience. We have been betting on people with long-standing relationships with these neurologists and that really paid off in Omicron time. I mean in times where hospitals are just closed, you cannot establish a relationship freshly. You need to be able to leverage existing relationships, and that's what these people managed to do so. I'm really applauding the field force for how they have leveraged these relationships in the first weeks of the launch.

Yes. So maybe going a little bit deeper. Where has your initial patient population been coming from?

Yes. Again, a very important question. So to our delight, we see the 2 of that population reflected in the prescriptions. So remembering the ADAPT patient in the ADAPT study, the patients we had were all the way from just being on mestinon 20%, all the way to the real relapsed/refractory patients, failing all lines of therapy. We see that same population back in the prescriptions with a bias towards general people which are IVIg experienced. So about half of them had experience with, for example, IVIg. Also some of the C5s. And basically, that's not -- surprisingly, physicians will try to give you some of these more difficult to treat patients. We always say the first patient is the most difficult patient. And then once you win in these patients, they will basically give you more patients and more upstream in the treatment paradigm. But what is boding well is that we're not just seeing the relapsed/refractory guys, we see patients across the spectrum. And has also nicely in sync with the policies, which we now see come out of the gate. The policies are basically supporting that positioning of efgartigimod in the MG treatment paradigm.

Okay. Now recently, there was an update from a competitor, UCB, in gMG, Phase III data came out. Can you talk about their -- it was statistically significant. So can you talk about whether it's even possible to compare efficacy of efgartigimod to their programs? And where do you think the advantage of VYVGART will be should you be able to enter the market commercially?

Yes. I think that's a great question. So first, a few conceptual comments, if I may. So if you look at the gMG universe, we believe it's going to take multiple players to take that universe to its full potential. There are so many patients which we need to take away from this old chemotherapy into new treatment modalities. I'd like to draw the analogy with the multiple sclerosis market 20 years ago where basically that market developed, thanks to multiple innovations into what it is today. So I think it will take a number of strong players to develop the gMG space. Secondly, when I look at the data, I don't see any threats to our first-in-class and best-in-class positioning. For sure, we're first-in-class we're selling in the markets. As we already discussed, the sales is coming out of the gate really nicely. And the first-to-market advantage is real. I mean, for me, strategy is that you set the rules of the game. So we're trying to raise the standard to minimum symptom expression. It's not enough to see a reduction in ADL. We want patients to have no symptoms. 60% of VYVGART patients had no symptoms after just 2 cycles of VYVGART with the speed of onset, which is best-in-class and a very interesting durability. So the individualized dosing, I think, is another standard which we're going to set in this marketplace. You do not need to be permanently on chronic therapies as an MG patient, you can enjoy substantial periods of drug. So our first-in-class strength is playing out. I think we're best-in-class. The data we see are interesting. They validate the C5 pathway. They validate the F7 pathway, but I haven't seen any exciting data. But I would say as a patient, being on VYVGART, I would like to switch from VYVGART on these drugs. I mean, I haven't seen anything in addition to what we're offering, and I think our strategy is to be the most complete product offering in the marketplace when it comes to having both an IV product and a subcu product, which is on its way to the market. That's going to be a very competitive place for us.

Yes. So just to clarify, for UCB, their offering -- one option is IV -- subcu IV and the other is a daily subcu.

That's correct.

Is there any patients sub population that you think would feel that, that's a good option for them because you've done a lot of market data research on this?

Personally, I'm not in a position to comment on a daily self-injection, what that means for a patient and how many patients will find it appealing. I'm not very well placed to discuss that specific topic. What I feel I can talk about is the importance of having both IV and subcu on the market. What we see in our market research is different preferences amongst patients, also physicians. Some physicians make money on the IV infusion, but also payers. I think the IV product is going to be more easily to access compared to a subcu product. And then the subcu execution, I think weekly 1- to 2-minute self-injection with our subcu product will be competitive. I'm convinced.

Okay. So speaking of your subcu product, earlier, you did present positive bridging data, which showed that it was not inferior to your IV formulation. Can you just remind us about what your timelines are for filing? Is that going to be filed as its own separate application, not an sNDA or sBLA or any -- it's just going to be straight from scratch? And does that give you the ability to have more freedom with pricing ultimately?

That's a great question. And just a quick refresh on the subcu data because there is so much news coming from argenx that people very quickly forget what we announced earlier this year. I think the subcu product is very powerful. When I look at the onset of action, the depth of the response and the durability that can stand next to the IV product, if anything, it's maybe even a bit stronger. So that's a hell of a product proposition. The path to approval is that we need to collect the safety data in order to file by the end of the year. Then depending on whether we use the priority review voucher, we will have a regular review cycle or an accelerated review cycle. That's still a business decision we're going to make. It's going to be a database decision. But you're right. I mean, even in the United States, that product will be considered as a separate and distinctly different product from the IV product. So it will have its own brand. It will have its own price. And again, that's very powerful because now we have 2 players in the MG market where we can independently, from each other, play with key variables for commercialization.

Now you priced VYVGART at a slight premium to IVIg. Should we assume that for the subcu that there could be somewhat of a premium to VYVGART?

It's too early to talk about it. I mean, typically, you see subcu products coming with a slight premium over IV because the cost saving to the system can be a split between the innovator and the payer. I think we need to do our own independent work. Remember, we're going to play across so many indications where we have prioritized the subcu product for COVID reasons. So we need to be thoughtful about how we're going to price that product, and it will be a standalone business decision regardless of what we did on IV.

Okay. So you did have a second indication for efgartigimod, have a positive read out recently, ITP. So this validates that this is, in fact, a pipeline within a product. Can you talk to us -- that's I would say, a little bit less well known relative to gMG as an indication. We've certainly been doing work on it, did a deep dive on it. But I'd love to hear your thoughts about why did you choose ITP? Because that was one of your very early indication.

Exactly. Yes.

And now that you've got this validation, what are the next steps?

I'm super excited about the data. So let's just unpack the ITP data point because it's such an important one. As you say, it's validating that VYVGART has much more in it than just being an MG drug. We think it can play across many IgG-mediated diseases. ITP is just one of these diseases where we know for a fact is IgG-mediated. And the scientific and clinical literature is very nicely dissecting what these pathogenic IgGs do. And therefore, why all the currently available therapies are not really interfering with the real disease biology. So if you would eliminate these IgGs, I think you can really do something very meaningful to ITP patients. What I think is exciting in the data set is, as we predicted, the patient population we got on trial is very heavily pretreated and refractory to anything under the sun. So most of them had more than 3 lines of therapy they failed. Many of them actually were on background medication, which no longer worked and responded very nicely to efgartigimod. When we look at the data, you need to look at them through 2 different lenses. The first one is the primary endpoint, which is a construct to satisfy regulators. The 50,000 platelet count in 4 out of 6 visits between week 19 and 24, that is a ridiculously difficult end point to meet. And it is designed to basically knock out placebo, which we did and satisfy an end point for a regulator. What clinicians care about and how clinicians make real-world treatment decisions is the IWG endpoint. So the international working group as to who should treat ITP, they came together and they formulated a real-world endpoint in ITP, which is you need to basically hit a 30,000 platelet count number to put the patient out of the danger zone. And once you do that, you need to double at least the baseline platelet count, and you need to stop the bleeding. If you look at our data set through this lens, we had a 52% response rate versus 20% in placebo. Well, in this patient population, 1 of 2 people getting an IWG response, that is very meaningful for the treating physician. The other thing which is very significant, I think, is the safety data we presented. This is the first Phase III trial with 24 weeks chronic dosing of efgartigimod, and there's nothing to talk about. I mean that safety profile is as clean as it can be. And so that, in addition with the clean safety database we presented for subcu and the MG safety data, that means we now have a pretty sizable solid safety database for efgartigimod. So that's a little bit the meaning of the ITP data readout. We think the commercial opportunity is significant. There are a lot of ITP patients in the states, we think around 80,000. Most of them actually are not well controlled by any of the current lines of therapy, and the treatment paradigm is just trial and error. So it's a matter of time and many of these patients will ultimately need and experience efgartigimod. Now with this type of response in that patient population, I think that's boding well for the commercial future of the product.

So in terms of how you want to pursue ITP, is it going to be subcu? Is it going to be similar to gMG where you'd have an option? Or you want to just go straight for subcu?

So we tested both IV and subcu in Phase III. So the data set will support both executions. We think this is a market where probably the subcu product will be a priority.

Yes. And so you have another data that would come out to talk a little bit more -- will analyze a little bit more about the subcu. When is that going to be?

So the 2 trials, so ITP is the only indication where the FDA asked us so far to run 2 independent registration trials. They're running in a staggered fashion. So the subcu study is fully enrolled and will read out in Q1 next year. And you need both data sets before you can go to the FDA with your submission.

Okay. And is there any reason to think that the efficacy that you see for the subcu will not mirror what you just saw for this data readout?

That's, again, I think the exciting thing about the MG subcu study. When we look at the PD curve of that study, that's an identical curve to the IV product. So that's boding well, I think also for these studies we're learning with a subcu product. The PD effect you will see will be at least as good as the IV product. So that's boding well, I think, for the subcu study. Mind you, of course, every clinical trial comes with its own clinical execution risks.

Now you said a couple of minutes ago that the U.S. addressable patient population for ITP is around 80,000. Are they all diagnosed? If you have to go find them tomorrow, could you?

So there are in total 80,000 primary ITP patients. We think that roughly speaking, 30% to 40% of them actually are looking for additional lines of therapy. So that would be our total addressable patient population. I think your question on diagnosis is an important one. Today, ITP is being diagnosed by extrusion. There is no active tests done yet to validate the diagnosis. They exclude all other potential diagnosis. So I think it is important to also establish this as an IgG-mediated disease that does exist. So one avenue for commercialization could be to further enhance the use of the autoantibody test.

Okay. One of the other indications that receives a lot of attention is, of course, CIDP. It was a clearing event when the GO/NO GO decision came through, and now you are comfortably into the pivotal portion of development. So can you talk to us about how CIDP might be, in some ways, more challenging to diagnose relative to gMG or some of the other autoimmune disorders? And how you're ensuring that the right patients are being enrolled into your study?

I think that is a key question for CIDP product development. So the diagnosis today of a CIDP patient happens based on clinical symptoms, and they can be very heterogeneous. So there is a real need in clinical development to install what we call an independent adjudication committee, which can validate the proper diagnosis of CIDP. This is an expert task. In the real-world setting, when there is a suspicion of CIDP, they will try IVIg, and if it works, it's actually validating the diagnosis of CIDP. That's how it works in reality. In a clinical trial, you cannot run that risk because God knows what you're basically enrolling to the trial. So I think one of the clever moves in the trial design is the first filter of having an independent expert panel, validating that this is a true CIDP patient. And we have been presenting posters on the real success rate of diagnosis is about 50%, mirroring the real world. So about 50% of those patients, which are being proposed to us, are actually not CIDP patients or unlikely to be CIDP patients. So we have a clean shot on goal because we'll be getting our true CIDP patients. The second filter we put in is we want patients with active disease. There's some of the lessons learned of the IVIg studies. When you deprive these patients of that kind of medication, some of them are actually fine and they're stable. Now there's great news for the patient, but not ideal for a clinical trial where you need to separate active from placebo in a reasonable time in the trial. So we established the fact that these patients have active disease because they need to worsen within a certain time period. And then the third filter we install is that whatever function they lose in that worsening period needs to be regained on efgartigimod before then they are being randomized into portion builder trial. So I think we've spent a lot of thought into the trial design, maximizing the quality of the study. We are very excited about CIDP because it's a very rare disease. It's a high unmet need and the only real drug out there is IVIg, which is, I think, a pretty mediocre drug when you look at its efficacy, safety and tolerability.

And how does size wise is CIDP relative to gMG?

So what we know from public sources is that IVIg is selling around USD 3 billion here in the States just in CIDP. So I think this is probably the biggest indication outside of primary immunodeficiency, and it's rapidly growing. It's growing double digits per year. So this is a really valuable market, and I think it's a market ready for disruption. I hope the data readout will be positive, and then I think we will have a very exciting alternative for patients.

Just remind us when that data is due.

So thank you for asking the question. We're on track to read the study out in Q1 next year. Remember, it's an event-driven trial. And it's a little bit more difficult to triangulate when that study will actually have the 88 events. It's not that you need to enroll a study in next 6 months. So we are on track to have the 88 events by Q1 next year, and we will keep you updated on that dynamic in the future quarterly earnings calls.

Now has COVID impacted the enrollment rate of the study? And what about all of the other macro issues, geography-wise, Ukraine, Russia, that has impacted PD, of course. But let's just talk about CIDP and anything related to China.

So CIDP has not really been affected. So these are global trials. They are in many, many countries, in many, many clinical sites. I think we're close to 80 clinical sites for the CIDP trial. So this is big. So whatever movement you see geopolitically or COVID wise, I mean given the fact that it's such a big trial is always cautioning these effects. So we're not really impacted in the CIDP study by what has happened. You correctly alluded to the pemphigus study, where we need to reopen the study and replace a handful of Ukrainian and Russian patients.

Okay. So when CIDP does read out, what would be good to there?

Well, I think we already have a competitive product if we can put forward an efficacy, which is roughly speaking, comparable to IVIg. Remembering the ICE trial, which is the closest proxy, IVIg had about a 50% response rate. I think with a similar efficacy and with this safety and tolerability profile and given the IVIg shortages which are hitting the CIDP market, I think we're in a very strong competitive position.

Okay. And it gets a lot of attention in CIDP, but do you think that if you had to pick -- you're in the clinic now with multiple indications, 6 indications total. That's includes your approved indication of gMG. But if you were to look at all of these, which one do you think potentially gets the least level of credit relative to what you think it deserves? We talked about a few already, but...

Tazeen, we like all these indications. And I do not know, honestly, which indications will ultimately be the biggest one. I think CIDP is correctly called out as a very important one. But if you look at an ITP patient population, the autoimmune blistering diseases, which is very sizable and high unmet need, that's again another 40,000 patients, the myositis patients. If you just add it up, it's going to be big. So I'm very excited about the autoimmune skin blistering disorders, where I think people underestimate the number of patients in pemphigus, and there's very little attention to bullous pemphigoid, which I think is going to be very sizable.

So let's just spend a couple of minutes on PV. So what is the current treatment regimen? There have been a lot of companies that have tried and failed to develop therapies for PV. Why do you think it's been so challenging?

This is a deep poster child skin disease being driven by pathogenic autoantibodies. I think the Phase II data, which we have put forward are clearly demonstrating that and are pretty spectacular. So if you're a pemphigus patient and basically, you have multiple lesions, skin lesions, but also mucosal lesions, top of mind is these lesions need to close ASAP. That's called disease control. Then I think you want to taper your steroid use as fast as you can because today, the only options are high-dose steroids, which patients hate with a passion. And rituximab, which needs 4 months to kick in and still has a high relapse rate and all the issues associated with it, and nothing between steroids and rituximab. I think efgartigimod has shown super fast onset of action, an impressive response rate and a nice durability of response. And that's exactly what we're going to replicate in the Phase III trial, and on top of that, also document how fast you can taper your steroids when you don't have efgartigimod. So if and when that trial would read out positively, I think there's going to be a big news for pemphigus patients.

So as you quickly move through each indication for efgartigimod and advance into late-stage studies, how are you thinking about managing costs associated not only with, I guess, completing the studies, but also prepping for commercial infrastructure? And so what portion of the gMG infrastructure that you've created already is leverageable to all of your other indications?

I think it's a key question, and we want to be responsible in how we deploy the capital of the shareholders. So that's where the concept comes to focus on our franchises. I mean we cannot just do all diseases under the sun, we need to be able to create economies of scale in our commercial activity. So within the neuro franchise, for example, we see that the MG launch has been the most expensive launch in the history of the company. Because all the infrastructure we built out in terms of field force, back-office systems can be directly leveraged when you would launch, for example, a CIDP indication or myositis or for example, MMN, the first indication of ARGX-117. So the incremental investment for these new indications is going to be smaller and smaller. And we think along similar lines for the other franchises where we say, look, in order to go to market ourselves and invest in commercial infrastructure, we want to be able to play in multiple indications ideally even with multiple molecules. So that's how we're building out a franchise.

Okay. And so the other question that we get is spend. So you just completed a very successful financing. I think you tried to raise EUR 500 million, raised EUR 800 million.

Correct.

How far does that take you now in your cash runway?

So that puts the company in a very strong position. So the cash balance today is about EUR 2.9 billion. I think that is sufficient to finance the current business plan. So that puts us in a very strong position to just continue to execute where we are trying to quickly develop efgartigimod to its full potential to aggressively invest in the supply chain. There is quite a big supply chain under the surface, but also continue to invest in other aspects of the pipeline. That being said, if the ambition level of the company will again go up, we may need more capital, but so far, the business plan is properly covered.

And when you talk about the ambition of the company would increase, you're quite ambitious as it is. So what would be, in your mind, meaningful enough to require additional capitalization?

It will basically mean that we see, again, opportunity above and beyond what we are currently developing. The juries are on ARGX-117 and soon ARGX-119. Remember, these are real pipeline and the product opportunities. We do not take an asset into the clinical pipeline if it cannot play across multiple indications. So the more we learn about the biology of these drugs and the more we line up indications, which we really like, the higher the ambition level can become. We're also looking opportunistically at the world around us. The big benefit is that now we have franchises with dedicated commercial infrastructure. You can start to leverage that not just to sell your own drugs, but maybe also drugs -- good drugs which have been developed elsewhere. So these are potential dimensions to think about when you talk about raising the ambition level.

Okay. And then last question for me. What are the plans for cusatuzumab going forward?

Cusatuzumab put forward strong data at ASH last year. Ironically, we met the internal success hurdle from J&J with an 80% overall response rate. And what we see is that those patients which responded to cusa are still in response. That is a pretty impressive thing which is happening there. We made the principal decision not to bring cusa back into the internal development portfolio. I mean we're busy. We have a lot on our plate with ARGX-117 and 119. But we think that drug deserves a second shot on goal. It's going to be a precision shot based on everything we have learned in these studies, but it will be a drug developed by someone else. So it's a BD priority, a business development priority, and we are well on track to give that molecule the future it deserves.

Okay. Perfect. All right. With that, we are out of time for today. But Tim, thank you so much for coming. As always, there's always a lot to talk about. Thanks, everybody, for attending the sessions.

Thanks for hosting us. Thank you.

Of course.