argenx SE (ARGX) Earnings Call Transcript & Summary

Hello. This is Will olds from the Evercore ISI Biotech Equity Research team, and I am delighted to be joined today by Karl Gubitz, the CFO; and Keith Woods, the COO of Argenx to really talk about VYVGART and all the excitement going on there. So I'd love if you guys would just start out with just a snapshot overview of where argenx is this year.

Thank you, Will. Good morning to everybody. Yes, 2022 has been a really exciting year for us. First, the launch, our global launch. We launched in 3 territories: the U.S. in January, Japan in May and then in Europe, in Germany in September. So a global launch in 3 territories and of course, the launch is going really well. What we've seen is that the MG, we have unmet need is fair. Our strategies are working. Firstly, with physicians that data is resonating, and the first experiences by half is really good. In terms of patients, we've empowered the patients to ask about the disease to -- and for them to be -- for them to be treated. And for Empire, our access has been really smooth. -- on data. We had the sub cue read out earlier in the year. And of course, we now have our PDUFA date September 20 -- sorry, March 20 of next year is our PDUFA date. We filed on September 20 and the first of our ITP readouts. It was also done earlier this year. Looking forward into 2023 on data, we have a CIDP study reading out in Q1 and then followed later in the second half, the PV and the second of our ITP studies. Also in 2022, we did the financing round in March. It was a really successful financing round that raised more than EUR 800 million. So that allow us to have a very strong balance sheet. So I think we are continuing to focus on value creation for our shareholders, and there's a lot to look forward to. Thank you all.

Perfect, Great very concise, considering all you guys have accomplished this year. So VYVGART has really had an exceptional U.S. launch so far and benefits of great white label. A lot of success in converting patients on IVIG so far, but what's the strategy for engaging stakeholders to move it up the line? And what are the signs that you're making progress on that front?

Yes. So I think the key, Will is going to believe be the physician experience and that they have. We've said all along that we think the toughest patient to get for a physician to start is their first one. And then after they get to have the VYVGART experience live in their own hands, where they get to see the efficacy, they get to see the rapid onset of response and they get to achieve deep responses, that will provoke more utilization of the product and into earlier lines of treatment. I can tell you that we are trending in that direction. When I look at a quarter-over-quarter basis, we are moving more into the earlier lines of treatment than where we started in quarter 1. I think typically, a physician gives us their most troubled their most relapsed/refractory patient at the beginning. So look, the ADAPT study, it covers all the way across the treatment paradigm. Our payer policies, as Karl mentioned, gives us coverage across the treatment paradigm. And I think you'll see that use spread across the treatment paradigm.

And obviously, some more FcRn ahead of the market soon. How do you plan to defend your lead and maintain that first-mover advantage?

Well, I mean, look, there's a lot of other competition that's coming to this space. And I think that this is in the best interest for people that are living with myasthenia gravis. So I think it will be an opportunity to grow the market. Our first mover advantage does help without a doubt. Our team has been out there speaking about FcRn and how it plays upstream in the treatment paradigm. But really, the data is our best defense. We've set a pretty high bar here. When you think about it, patients that have the opportunity to get VYVGART, almost 8 out of 10 of them get a clinically meaningful response and 84% of them see this in the first or the first or second infusion. But what I really think is key is that out of the patients that respond to VYVGART, almost 60% of them achieved minimal symptom expression. So walking around feeling symptom-free as if they don't have the disease. And until there is a cure for myasthenia gravis, that's about the best that we can get -- you add that along with our safety profile that we've now demonstrated across multiple studies and the individualized dosing, which makes sure that your dosing is set for what your needs are, not just what was studied.

Excellent. And so kind of moving on to kind of the European side here. So the art market is much more cost focused than the U.S. And I know you guys said in your last earnings call, discussions are ongoing. It may take a while, but should we expect usage in more refractory patients in later in the treatment paradigm than the U.S., for instance?

Look, I mean, I've got the opportunity to spend time over in Germany for a few weeks with the launch, and I can tell you that the unmet medical need that exists in Germany is not any different than what we've seen in the U.S. and Japan. There are still patients that could very much benefit from VYVGART. Ultimately, we're going through the pricing negotiation and reimbursement negotiation right now. We're in the AMNOG process. So that does cause some hesitation for physicians to utilize the product upfront. The other thing is, in Europe, probably the biggest difference in Europe from U.S. and Japan. We don't see as much IVIg use in MG or biologic use. So I imagine that we will see an opportunity to have VYVGART-beplaced as the first infused product that would be available there. So -- but overall, I've said, number one, this isn't a European launch yet. It's a German launch. And secondly, I do see the uptake to be more gradual than what you've seen in the U.S. and Japan.

Perfect. And then as Karl mentioned earlier, the subcu form has looked great. You got the PDUFA date coming up early next year. How are you thinking about pricing this versus the IV form? And what are kind of your weighing in this analysis? And how would like the CIDP results fit into this pricing analysis you guys are doing?

Yes. Thanks, Rod. So you have a PDUFA date is March 20 2023. So that's next year, acceptance came through last week. Just a reminder, this is a separate BLA. So because of Helena Enzyme in the subcu. So this allow us to price differently. So we're currently doing the work to see how we're going to price it. We're not going to comment further on that at the moment. But we're going to price for MG, but we also do not believe that this will price us out of any of the other indications.

Excellent. And then let's move on to CIDP. Obviously, a big focus for investors. We're getting a lot of pings on it with that readout coming out next year. Can you just kind of first frame the size of the opportunity and the unmet need and where this could be really -- where VYVGART really slot in?

Yes. I mean, first of all, the CIDP opportunity in the U.S. is we think that there are about 16,000 people that are living with CIDP here in the U.S. So it's about 1/4 of the size of the market of MG. The thing that I think is called out a lot from the investor community is almost 80% of these patients are being treated with IVIg. So it is IVIg's single biggest indication. And so it's quite an opportunity. We look forward to the data. We look forward to seeing the data sometime in the first half of next year. And based on where that data is, it will allow us to understand where we can best position VYVGART. I mean, certainly, we need to see what the clinical readout is. I think that where we will land on a safety point of view is where we have been all along because I remind you that safety data is not blinded. We get to see that through the clinical trials and make sure that there aren't any safety issues. And right now, we see consistency. And certainly, the convenience of a self-injected 1-minute subcutaneous injection could give us a great advantage over IVIg.

Excellent. And so it's a complicated disease. What's the clinical evidence to give you confidence that this is specifically IGG mediated?

Well, I mean, we studied the literature. And what the team looked at, first of all, was what was the response rates with various products with -- for CIDP. We first took a look at IVIg to see with overall response rate and where they were able to get to. And then we looked at plasma exchange. Ultimately, it was the immunoabsorption data, which is almost doing exactly what pcartigimod does, which is eliminate just those IgGs, and we saw the response rate there. And so that gave us great confidence that this is an IgG-mediated disease. We also did a passive transfer model where we took the -- we took the IgG from immunoabsorption. We put this into mice, and they actually developed CIDP. So it gives us the best guess that this is, in fact, an IgG mediated disease.

Perfect. And one things that you guys have is a really unique trial design. So would you please walk us through the design and kind of the thoughts behind it?

Yes. I think what we said all along is the first thing that you need to do when you conduct a CIDP trial is to make sure you actually have active CIDP patients in there. So there's a couple of steps that you have to get through a couple of hurdles before you actually enter the trial. So first, misdiagnosis is in up to 50% of CIDP patients. So when a physician wants to enroll a patient in our clinical trial, their chart work is submitted, it's submitted to an adjudication committee and at least 2 KOLs and CIDP independently look at those charts, and they have to both come to the same conclusion independently that this is a confirmed CIDP diagnosis. The second hurdle that has to occur is this active disease. So there's 3 buckets of where patients can come from. They can be on IVIg -- they can be on steroids or they could be a newly diagnosed CIDP patient. What we do is we remove their IVIg or their steroid and they have to worsen. That shows that they actually have active disease. As soon as they have worsened, right, as soon as they have worsened, they move forward and go directly on to efgartigimod, a newly diagnosed patient, they have to clear the adjudication committee and then show that they're symptomatic, and they'll go directly on to efgartigimod. Patients then must respond to efgartigimod and that response means that whatever they lost during the time of their IVIG being removed or their steroid being removed, they must regain that, okay? And this was measured on 3 different scales, IROs, INCAT and grip strength. So whatever scale they lost it on, they must regain it on. After they've regained that, they then get randomized to the placebo-controlled portion of the trial -- and the trial, the endpoint is when we see time to 88 events. So 88 relapses that occur in that placebo-controlled trial.

Excellent. And so kind of the one that you guys have looked a lot at is really the ICE trial for where IVIg is used. So how is that trial differ from your guys' design? And is there any potential upside for efgartigimod's response rates due to the careful measures you just explained?

Yes. I mean, look, we like the ICE trial because it's the only placebo-controlled trial that we could find with IVIg and ultimately utilizing the INCAT. So we did study that, and we determined that this would probably be the best place for us to look to go for an approval with the regulatory bodies. You know in that trial, you had about 54% response rate from those treated with IVIg compared to about 21 with placebo. So we took a look at that and our statisticians built our overall trial based on a lot of the data that's from there.

And then would you please remind me if they -- what sort of measures that trial had in place to confirm diagnosis?

Yes. Actually, the patients in that trial, they were viewed by the KOLs. There wasn't an adjudication committee. But ultimately, there wasn't the active arm that we had.

Excellent. Okay. And so what -- how should we think about the benchmark for success well meeting the bar set by the ICE trial be enough for stakeholders?

I would think so. I mean, ultimately, if we meet that criteria and we have efficacy that's overall equivalent, as I mentioned earlier in the call, we do think we have a pretty substantial safety advantage as well as a convenience advantage. And so I think if we meet the efficacy hurdle, we certainly have an opportunity to disrupt the marketplace. But look, there's a big difference here, and that is that IVIg is approved in these indications, and it's the largest indication for these IVIg companies. So I expect this to be quite the challenge.

Yes, And so what are the next regulatory steps and time line should this be a positive result for you guys?

Yes. So look, we look to have the 88th event. Right now, we're tracking that, that would occur in quarter 1. After that occurs, we'll then get to a level of top line data. So that would be a bit after the 88th event. And when we have that top line data, it would give us the opportunity to file an sBLA that SBLA is going to be assuming that everything goes well with the March 20 PDUFA date that Karl mentioned because this is done with the subcu formulation as well.

Do you need any further time for fulfilling the safety database and other requirements?

We haven't been made aware of any additional time that would take us past this. I mean this is a pretty large and substantial...

So I'm -- I know we talked about this a little bit, but just to be really just like drilling on it, IVIg is probably going to be very competitively priced to the SC expectation. What do you think is going to be the value prop for switching? Have any neurologists that you've talked to that are already using VYVGART for myasthenia kind of saying, "Hey, I really want to use this for my CIDP patients?

So well, I think we really need to focus on differentiation across those 3 levers, which Keith already mentioned. One is efficacy. -- safety and convenience. Clearly, on convenience, we would like to think that our one to 2-minute push will be a lot more convenient than going forward in IV infusion or even the subcu. On the safety, I mean we have a lot of safety data also refer to you to the ITP safety data, which was cocoa chronic indication. On the efficacy, I mean we need to wait for the study. What we do hear from neurologists is that IVIg is pretty much establishing the market. So similar to MG, we -- our task will be to educate physicians and patients on the value proposition of [indiscernible].

Excellent. And then I think closing just to talk a little bit more kind of strategy here. So -- you guys have a very ambitious goal for just about of indications that you want to pursue for efgartigimod. So investors see MG and CIDP is the largest, but what do you think is an underrated opportunity by investors? What do you think could really help move the needle?

I'll be quick in hand over to Keith. Just a reminder, but we also have 2 further Phase III readouts next year. One is the second of our ITP study. I think about the commercial opportunity where I mean the TPOs are well established. We will not displace the TPOs. But the TPO not all patients respond to TPOs, around 1/3 are not responding and then around of those who do respond, we have for up 50% to drop off. So I mean, that market opportunity to be here after the first is where we will focus. Maybe quickly on BV. Currently, patients are harder treated on steroids or rituximab. And if we look at our claims database, with 19,000 patients there, so sizable opportunities there for us.

Yes. Well don't forget also our ambition in already working in 10 indications with efgartigimod going to 15 indications by 2025. So we really look at this as one of the broadest pipelines in our product. The other thing that I don't want folks to lose attention on is the 2 other molecules that are in our pipeline. Right now, we have the first-in-class complement inhibitor that targets C2. That's ARGX-117 that we're currently enrolling MMN patients. And that's a huge opportunity that fits squarely in our neurology franchise. We're also studying ARGX-117 in DGF. And finally, in 2023, our first-in-class musk agonist will go into healthy volunteers at the beginning of 2023. So that's ARGX-119. So exciting year coming up in 2023.

That's a wonderful way to cap off the discussion. So I want to say thank you guys so much for the great discussion.

Thank you, Will. Thanks for having us.

Thank you.