argenx SE (ARGX) Earnings Call Transcript & Summary

Okay. Ladies and gentlemen, welcome to our next session where I'm very pleased to be joined by the team from argenx. I'm Nick Hallett, I work in the European biopharma team in London. I'm joined today by Keith Woods, Chief Operating Officer; and Beth DelGiacco, the VP of IR. So first of all, welcome to both. It's great to have you here.

Thank you for having us. Pleasure to be here.

Perhaps, Keith, if we could start, if you could just sort of give a high-level overview of where argenx stands today, where your therapeutic area of focus is?

Sure. So as you know, at argenx, we were born out of engineering antibodies for other companies. Our ambition has expanded into clinical development, and we've kept some of those discoveries in-house first and foremost, is efgartigimod, VYVGART. We now have commercially launched VYVGART in the U.S. and Japan. So we've expanded our capability to be a worldwide biotech company. If you take a look just a quick walk down the path with VYVGART, we are 4 for 4 on proof-of-concept or 3 for 3 on Phase III registrational trials with VYVGART, and we're currently studying it in 10 indications, and we'll be taking it into 15 indications by 2025. We're also in a situation where we have our second asset in the pipeline, which is ARGX-117, that's a complement inhibitor targeting C2 and -- our first indication is MMN. This is the little sister of CIDP, it's squarely in our neurology franchise. And our second indication for 117, we announced earlier this year, it would be DGF. So pretty excited there. Another molecule, ARGX-119 will go into the clinic this year, and that's a must agonist, and we'll be looking at a couple of different indications to start there. Lastly, I would just say our global expansion. We started with commercialization in the U.S. We've now commercialized in Japan latter half of this year. We hope to have approval in Europe, and we'll begin commercialization there. Also plan to file in China with our partner Zai, and I'm really pleased we announced the opening of argenx Canada at the beginning of this year. So a lot of progress taking place.

Excellent. So perhaps we start with efgartigimod, that is obviously been the focus for investors quite for some time. You mentioned you're going to be in -- you are in 10 indications, 15 by 2025. Can you give us an idea of how big this is to go? how many indications are they out there that could potentially be addressed by efgartigimod?

Well, I mean you can look in the literature and see when it comes to IgG-mediated disease, the number grows far bigger than that of 15. There's a lot of areas that we look at that we evaluate based on the biological rationale, where there are proven endpoints in a regulatory path and then the commercial opportunity. And these are the ones that if they fit into our franchise, they fit into our commercial strategy, right now, we focus mostly on rare disease. These are the ones that we advance first. As far as the total potential for this product, we believe that VYVGART has the potential to be 1 of the largest biologics ever launched. So it will be exciting. I think some of the smaller areas that you could use VYVGART because it's -- for IgG-mediated disease. We're very open to investigated initiated trials and research. And so we'll continue to grow this over the years.

And then you mentioned biologic rationale is kind of your starting point for how you choose those indications. What's the risk appetite for going into potentially larger revenue opportunities, but where the biologic rationale isn't as strong?

I think that's something that we could evolve to over time, but right now, the rare disease model, it fits our argenx well. There's a lot of unmet medical need that lies with these rare disease. As I opened with, it feels good to go 4 for 4 on proof-of-concept. So we like the plan of how we approach the market at this time. It doesn't mean that there won't come a day that we won't go to maybe a broader, more risky disease. In fact, one could argue that we've kind of already introduced the potential of a couple of those because post-COVID POTS, for example, could be quite a broad market, also Sjogren's.

And actually, Sjogren's and POTS are 2 examples of where the physicians were actually coming to us with interest in those indications, bullous pemphigoid as well. So once we showed proof of concept in pemphigus, they were quick to come and say, you should look at bullous pemphigoid. And that similarly with Sjogren's and the post-COVID-mediated POTS. It was physicians coming to us to look at that biology.

And then in terms of -- you've got a growing body of evidence, [ 4 from 4 ] on proof-of-concept. Before we get into kind of indication specific competitive dynamics, can you give us an overview of what the profile of efgartigimod, what in the data that you've seen gives you confidence versus from a high-level [indiscernible]?

Yes. I mean, first of all, I think that efgartigimod, at least in our first approved indication, has allowed us to set a pretty high bar. Really the effect that between cycle 1 and cycle 2, you get almost 80% of patient -- people exposed to efgartigimod getting a clinically meaningful response. The fact that of those responders, 84% of them are going to respond within the first couple of weeks. Something that's really powerful is the percentage of responders, almost 60% or 60% get to minimal symptom expression. That's the highest MSE that's been produced and -- this is in a population that there is no cure. So if there's no cure, the second best that you can have is to be able to walk around symptom-free. We've done that while maintaining a very solid safety profile through the ADAPT study, but also now through our registrational ITP study. And then lastly, we introduced an innovative dosing schedule with individualized dosing. We came to this by working with the patients. But it really is based around the fact that MG is a disease that waxes and wanes and individualized dosing is an opportunity to take advantage of how long your benefit lasts for each person for efgartigimod.

Excellent. And then, let's go to MG. you've mentioned kind of the data you have there already. Now into the U.S. launch, what is your experience being so far of that launch? What strategies are you using to drive near-term uptake?

So I mean, I think we went with a few different strategies. First, our focus on the patients. We've been working with the patient community since the time that we had proof-of-concept data in Phase II. But additionally, since that time, we've rolled out programs online MG community called MG United, that there's over 40,000 members of MG United. We've rolled out the first ever docu series with a mystery to me. A 2,000-patient MIRO World MG study. And now many of you may or may not have seen, we embarked on a DTC campaign for MG immediately with the launch. The whole idea behind this is for patients to demand better treatment, patients demand to have the opportunity to be able to walk around symptom-free. And I think in the early stages, that's been positive. We've heard from patients where they've heard of VYVGART. We've heard from physicians where patients have come to them and said, "Is VYVGART is the right choice for me?" When we take a look at the perspective from the health care professionals, I think we focused a lot around the education, not just disease state education before launch, but also educational mechanism of action. I think a lot of the physicians, a lot more than we expected, they were very pleased with the clinical results of efgartigimod. And it's probably why we had a greater breadth of prescribers in the first quarter than I think we were even thinking from our own internal data. It just shows the unmet medical need that still exists in this disease. And if you're going to bring a product forward that has strong clinical benefit and a strong safety profile, physicians are going to take advantage of it, and they have. And lastly, I would say, our work with the payers. We worked with the payers prior to launch. We put many of them under CDA and went and met with them and discussed individualized dosing. We discussed pricing -- and ultimately, we reached several agreements in principle before we even went to the PDUFA date. What's the result of that? We shared at the end of quarter 1 that we had 62% of commercial covered lives, and we'll update that again at the quarter 2 earnings call. And in general, the policies that have been coming forward have been very positive, and it allows for efgartigimod, for VYVGART to truly be used the way we studied it, which is all the way across the treatment paradigm from second line right after mestinon to being used after a steroid or an IST, but all the way to the relapsed/refractory population.

And sticking on that point, what sort of patients have you been are being treated? And how does that kind of expand your view of the potential in MG?

Yes. I mean I'm really pleased to share with you that the patients we saw in quarter 1 fit the ADAPT clinical profile. We have patients that were what you would consider relapsed/refractory with almost 50% of them having previous experience with IVIg. But we also have patients that we were used second line after mestinon. And we have patients that came in all the way across the treatment paradigm, pretty evenly split between earlier stage and what one might consider relapsed/refractory. I think this is just the beginning because what we have truly said is that we believe at the beginning, VYVGART would be positioned as the first infusible therapy that you would reach for to treat MG. But over time, with positive experience by the health care professional with positive experience by the patients, I think you'll see them move it earlier into the treatment paradigm.

Okay. And then in terms of -- from a revenue perspective, your first quarter came in ahead of consensus expectations. You've been very consistent in having a conservative view on how quickly this is going to be taken up due to the impact of COVID and prelaunch activities. How is it progressing now relative to your initial internal expectations?

Well, so first, you might also want to say, we're obviously not going to comment on consensus. I think we're pleased with the first quarter, but there are several headwinds in there that we are factoring in, and we just want to make sure that we need to be able to see for a couple of quarters of how this trajectory is going to continue. One of them is Ultomiris launched just 2 weeks ago. And this is a competitor that we're not going to underestimate. So I think that is a fair challenge for us. Also, we don't really know how individualized dosing is going to play out cycle over cycle. At this point, the majority of patients are still on their first cycle -- so that's something that we need to consider. And then lastly, I do think when we're talking about that unexpected contribution from the more refractory C5 patients, we won't -- I think the dropout rate is still unknown to us. So we're really happy with the first quarter. I think -- so stay tuned.

Okay. You talked about individualized dosing as kind of being a differentiating factor here for patients. You've also got the -- opportunity they're exploring. And how encouraged where you by the Phase III data you got there, which was in MG as well? And how important is subcutaneous formulation to the revenue opportunity for efgartigimod?

I mean we were very pleased with the data from the MG bridging study. First and foremost, the primary endpoint being the PD effect and having a non-inferior effect with the 1,000 milligram flat dose compared to 10-milligram per kilogram IV, we clearly demonstrated a noninferior effect with the subcutaneous. We also tied that in with the secondary endpoints that showed clinical benefits to these people that are living with MG. So I couldn't have been happier with the results of that trial. I love the fact that in that trial, we also had the patients have the product administered in the presence of a health care professional during the main part of the study. However, when they go over to the open-label extension, if they choose to, they're taught how to self-inject at home and the majority now self-inject at home. What this opens up is optionality. And this optionality is so important, not just for patient preference. I think that's huge. I think a lot of people think that subcu, everybody thinks everybody is going to want to jump to subcu immediately. From a patient preference, that's not even going to be the case. We do have some patients that they elected not to roll into the subcu study because they were happy on the IV. So it gives that option. The other thing that I think is really big, and I'm glad that we have both formulations available in the future is reimbursement. And when you go to Part B and Part D, if we only had a subcu, we could be looking at potentially everything the majority being under Part D, and that can sometimes be associated with higher out-of-pocket expense. The donut hole comes into play. So now you've got 2 different tools -- 2 different levers that you can pull if you're a physician and a patient to decide which is going to be best for you.

Okay. What more needs to be done from the subcu perspective prior to filing that?

Yes. So we obviously showed top line results from the Phase III study. We are on track to file that BLA. It is its own BLA by the end of the year. The rate-limiting step there is the safety database. So we've -- yes, so that's kind of what we're waiting on, but on track for end of the year.

Great. Perhaps let's move on to ITP, another indication where you've had some positive Phase III data. How did that data compare versus your original hopes and expectations?

So I have to tell you, first of all, I'm thrilled with the data. And the reason being is that the patient population that we wound up enrolling into this trial is truly severe relapsed/refractory when it comes to ITP. I mean you had over 60% of the patients having previous experience with a TPO. You had over 1/3 of them with rituximab with splenectomy, 50% with IVIg. So these patients had really had everything thrown at them. The primary endpoint is a regulatory endpoint. And it was a very high threshold to clear, and we were able to clear it. It was designed to help minimize placebo effect. And for that, I think we did a very good job of and it allowed for the statistical significance in the primary endpoint. It's the IWG classification that we have gone out and spoken with KOLs even before we actually conducted this study. But with the results we've gone out and spoken with KOLs on both sides of the Atlantic and in Japan. And when you take a look at these severe relapsed/refractory and you're able to get over 50% of them to a platelet count that meets IWG criteria, greater than 30,000 in platelets, doubling from baseline platelets. And if you take a look at the graphs and the data that we released, this is quickly. This occurs rapid onset of action. It stays completely separated from placebo. So when you think about the opportunity for us to play after a first TPO failure. This is a substantial market, and it's also a market that there is still unmet medical need.

I think it's also really important to highlight the safety database there, the safety profile. This is the first Phase III study where we are actually dosing chronically, and we did not see any additional side effects there. So I think it's really important to see that in ITP, if we have an equally as promising safety profile.

And then correct me if I'm wrong, but you need 2 registrational studies for filing in ITP. So what could the potential time lines to be there?

Yes, exactly. So with the division -- the Heme division at the FDA, they do require 2 registrational studies. So we will not be filing until after the data from the subcu. What we're doing right now is we're taking key learnings from that phase -- or from the ADVANCE-IV trial, and we're applying them to the ADVANCE-Subcu trial. That's 1 of the benefits that we had in running trials in a staggered fashion. So I mean 1 option would be to kind of assess the powering assumptions of the IV, and to take a look at enrollment numbers in the subcu. Another could be that we want to take a look at the actual ordering of the secondary endpoints and to make sure that they line up with what's most interesting to a physician.

And then, what's the patient population for ITP, let's say, in the U.S.? What do you see as the addressable market with efgartigimod?

I would say that your patient population based on the data is somewhere 65,000, 70,000 patients in the U.S. When you talk about our positioning of being after a TPO, you're probably looking at a market potential for us 6,000 to 8,000 patients. So -- it's a substantial market.

And then going to another indication. Obviously, there are many -- we could go through, but let's not do all of them. What does the competitive landscape in CIDP look like? And what do you see as the overall opportunity there? Perhaps if you could size it relative to MG and ITP.

Yes. So with CIDP, you're looking at a smaller number of patients than you see with MG and ITP, but you're also looking at an indication that is the single largest indication for IVIg. And this is the indication where how we've set our study up. We've set it up to where we could be used as for naive patients that have not been exposed to treatment at all. They could have been on a steroid before or they could have been on IVIg. We also set up for the potential switch if the data comes in. I think I mentioned it's the largest indication for IVIg. And so our potential there, it's greater than $2 billion on an annual basis in the U.S. alone. So we believe that, as Beth mentioned, the ITP safety data, the first safety database that's come out from chronic dosing and that we have in CIDP. So if that's a readthrough, we are feeling optimistic. That study, we're using the subcu. So again, when they go to the open-label extension, they can inject themselves at home. So you've got a convenience aspect. Now we just need to wait to see the clinical results.

Okay. And sticking with those clinical results, what is the data like we can see in CIDP?

I mean it is a placebo-controlled trial, if you compare it to IVIg, placebo-controlled trial, the ICE trial, you saw roughly 53% response rate with IVIg. I think if we tick that box, that's similar to that. I don't think we will be disappointed. We'll see if we -- I think we have a marketplace and an advantage if we do better, but I also think there can be a place for VYVGART even if it doesn't quite hit 53%.

And then can you remind us of time lines for trial data there? And what's your filing strategy with regard to IV and subcu formulations?

So timing is first quarter '23 is when we expect top line data. And we've always said that we want subcu and IV to be available in all indications. So I think that you can expect that with CIDP as well.

Then you've got 10 indications, we discussed 3. What are the other indications do you think are most exciting, perhaps most underappreciated by the market?

Maybe I'll talk quickly about pemphigus to give a plug to our recent data at the SID conference. So pemphigus like ITP and MG, it's very clearly IgG-mediated. This is 1 of our first indications that we selected because of that strong biology rationale. And in pemphigus, it's autoantibodies against the skin protein -- or skin cohesion proteins called desmoglein, so it's DSG1 and DSG3. This is a really serious indication. I mean these patients have blisters not only in their skin, but also their mucosa, they're at high risk for infection. And what we hear from physicians is that they really need a therapeutic option that works quickly, gets patients to complete remission and then a situation where you can also start to taper patients off steroids. Because right now, patients have the option of being on steroids, rituximab, broad ISTs. But with each of those, sometimes the side effects of the drug are kind of more significant than the symptoms themselves and also they can take a while to take effect, and there's high relapse rates. So what we showed recently in our Phase II data showed exactly what I mentioned and what physicians are looking for, a fast onset of action. We were able to drive patients to complete remission and we were able to show tapering of steroids. We also did have patients who had long-term remissions. And so we went back into the lab to try to figure out translationally why this is happening, and that's what we showed at SID. We showed that in addition to desmoglein there's actually other IgG autoantibodies that are driving pemphigus. So maybe a little bit more heterogeneous than we expected. Still of the IgG type. So there's a target for efgartigimod, but that was an interesting finding. We also found that efgartigimod had a direct effect on keratin -- direct protective effect on keratinocytes. So that would be a benefit beyond just IgG reduction. And thirdly, we found that actually there was a reduction in autoantigen-specific B cells, while normal B cells stayed at regular levels. So this is a different profile for efgartigimod because it's showing immunomodulatory potential. So I think that this is something we're exploring currently in autoimmune blistering diseases, but that could be really exciting.

Okay. You mentioned -- we know what the first 10 indications are. When might we hear more on the next indications you're going to be looking at?

They always wanting more...

Yes, exactly.

You know what, for this year, we're going to continue to execute on the 10 indications that we've already shared, and we'll keep you updated on those. We've really committed to the 15 indications by 2025. So more to follow.

Let's move away from efgartigimod. You've got an asset, 117 in the pipeline. This looks really exciting to me. It's got pipeline and a product potential. Can you talk to how indications here have been selected and perhaps relative to the FcRn opportunity, what is the C2 opportunity? How is that sized?

So maybe I'll start and we really like C2 as a target. I think it sits at a unique intersection of the complement cascade, sitting at the intersection of both the classical and the lectin pathway. It also leaves the alternative pathway intact, which could be important for infection protection. Also, it sits upstream of C5. So MMN, for example, is an indication where C5 inhibitor did not work. And we realized now is because it came in too late in that terminal blockade. And really that having a target upstream is important for having a different set of opportunity. We also like C2 because it has a very mild phenotype. We don't see the high rates of lupus, for example. And with our molecule 117, which is a sweeping antibody, we can really go after something like C2, which does tend to have higher serum concentrations. And so you really do need really well-engineered antibody like 117.

Yes. I think something that was exciting about the selection of MMN was our work again with academia outside of our company. And really, we work with Erik Hack on this molecule in particular. And we selected MMN. It's not too different of a process that we did when we selected MG as one of our first indications because of efgartigimod's mechanism of action, which is specific IgG. MMN is an IgM-mediated disease, and that's exactly where the C2 lines up. So we felt that really gave us the best shot on goal for proof-of-concept. That's how we wound up there with our first indication.

And to what extent are you going to be able to -- let's assuming that you have some success with this molecule. To what extent are you going to be able to leverage the infrastructure you're building for efgartigimod? And what sort of synergies are you expecting to see there?

Yes. I mean I think we can already begin to see some of them from a clinical research point of view because the exact same physicians that are treating CIDP patients and enrolling in our CIDP trial, it's the first stop we made for the MMN trial because they see the same patients. Provided we continue down the path that everything goes as well as it has gone, when MMN comes to commercialization, it's going to fit squarely in the franchise along with MG, along with CIDP, MMN and other neurology potential indications that we can have.

And similarly, with DGF, right? You can see that, that would fall into what would be a kidney franchise along with 2 of our new efgartigimod indications, lupus nephritis and membranous nephropathy.

Okay. And then on the other pipeline, if you like, you've got cusatuzumab. Could you update us on progress there? And then perhaps talk a little about 119 and then when we might hear a bit more from that?

Sure. So cusatuzumab, as you know, we did a deal with J&J. We -- the clinical trial was run basically during the pandemic. Unfortunately, we wound up having a great deal of COVID in that trial. But if you take a look at the results, there was still some very promising data there and really something that patients that are suffering from AML, we have a right to continue to bring this forward. So what we have said since it was handed back to us from J&J is that it's clearly in the department of our business development team. Our company, we have enough on our plate right now with efgartigimod with 117, with 119. So we are going to look to partner cusatuzumab, but we'll continue that development path forward.

Yes. 119. So we -- this is our MuSK agonist. Again, it's right out of our IIP, so our Immunology Innovation Program. And we're working with an academic who is an expert at the neuromuscular junction, Steve Burton of NYU. And we are on track to file the CTA on that by the end of the year. And we're excited about this because, again, it does fit squarely into our neuromuscular franchise. So the first indication is that we would look at in a Phase I, a potential pilot study would be congenital myasthenia. The biology is crystal clear there, but it's obviously a very rare indication. We would also look at MuSK-MG. But the big -- kind of the long-term plan, if we do see early signs of efficacy there that we would look at our indications like SMA and ALS.

Okay. And with so much going on, could you just remind us of your cash position and how you're thinking about prioritizing where that's directed? And just give us an idea that.

So at the end of Q1, we had $2.9 billion in cash, and that included the $800 million that we raised at the end of March. And what we said is that this year, we do expect to spend about $1 billion of that. And where that goes is primarily R&D. I think it's no surprise. I mean we have a lot of Phase III studies ongoing. We have proof-of-concept studies that we're starting with efgartigimod and 117. And so I would say, just on that alone, no surprise that R&D is the biggest component of that spend. Second is supply chain build. We're planning for a global launch, and we want to just make sure that we're very well prepared for the demand there. Thirdly is SG&A. But it's fair to say we have a really strong balance sheet, and we're currently able to fund our -- the ambitions of our business plan right now.

Assuming that more of these indications bring up positive data, you have a strong cash position, do you see any need for funding in the sort of near- to medium-term to meet these long-term targets?

I mean like I said, right now, our cash position does support our current business plan. I mean, I think that would change if our ambitions were to change.

We've got a few minutes left at this point. I might open up to the floor for any questions. Okay. Not seeing any of that. So perhaps if we could finish with -- can you sort of summarize what the big news events are going to be over the next 12 months? What investors should be getting most excited about?

You go ahead. It's right in your wheelhouse.

Well, I think most importantly, we have a launch that's ongoing with our MG-IV. And so we have that -- it's launched in the U.S. We launched in Japan, May 9. And so that's ongoing. We're expecting the EU approval or decision on approval in the second half of the year, and we'll launch first in Germany. And while we secure reimbursement more broadly in Europe. We also are planning to file in China with our partner Zai Lab midyear. And we do have distributor agreements going on in Israel, the Middle East and Central Europe. So that's, of course, an important dynamic at the company. From a data perspective, what we did say is, we had expected pemphigus data by the end of this year. That has since moved to the second half of next year because we did increase enrollment due to exposure in the Ukraine and Russia. But then we are looking at CIDP and ITP subcu in the first quarter of 2023. And then, of course, we have ongoing Phase III trials in myositis, bullous pemphigoid. We're going to be starting proof-of-concept studies in lupus nephritis, membranous nephropathy, Sjogren's syndrome and that post COVID mediated POTS. We have MMN ongoing for 117, and we'll be starting DGF by the end of the year. And then as we mentioned, 119 is still coming up. We continue to invest in our IIP. So that is still an important part of the company to make sure that we start -- continue to feed our pipeline. What did I miss?

I think you nailed it. Did a very good job of accounting, a lot that's going on. One more question, if I may. Could you just talk about the IIP just for time, just let's know how that feeds the pipeline in...

I'll start. So the innovative immunology program, this is really how all of our products and indications have come to be at argenx. This is truly a collaboration with academia, whether we look at VYVGART or efgartigimod, which came to us through our collaboration with Professor Sally Ward, who's spent her career in studying FcRn. And then we work together with our antibodies. I mean, to be candid, we built for FcRn, not only our Fc fragment, it is VYVGART, but we put it up against full-size monoclonal antibodies that we had built and VYVGART outcompeted them. And that's really the process that we use is our antibody expertise combined with academia's biology expertise. So same thing that we had experienced with C2. And as you already mentioned, we're now experiencing this with 119. So we continued down that path. And we always have somewhere between roughly around 10 programs that are actively going because as we've said in the past, to begin to have an IIP program and work with that for argenx, we don't have to set the bar super high to take that program to where it's something that we're going to then in-license and get to a product with it, that bar set very high.

And this is really who argenx is at our roots when we started as an antibody engineering company. And I think that, that's how we think about it. We think there's a lot of opportunity in academia and relying on the disease biology expertise of these research labs that we can really showcase where we are at our best, which is antibody engineering and clinical development. So if you look across our pipeline, every single one of the assets has a story just like Keith mentioned. And we started to focus our efforts now and really bringing in into the wholly-owned pipeline, those that fit into our autoimmune franchise and our immunology ambitions.

I'm afraid we've pretty much run out of time there. It's been great having you both here. And thank you very much for your time, exciting time.

Thank you.

Thank you.