argenx SE (ARGX) Earnings Call Transcript & Summary

Okay. I think we can go ahead and get started. My name is Ally Bratzel. I'm a biotech analyst here at Piper Sandler. It's my pleasure to introduce our next company, argenx. Joining us today, we have Karl Gubitz, Chief Financial Officer; and Keith Woods, Chief Operating Officer. So thanks for joining us. This is going to be a fireside chat format. But before we jump into Q&A, just to level set for investors, Karl, could you just give a quick overview of argenx? The story and the setup into 2023?

Thank you very much, Ally. Good afternoon, everybody. Yes, 2022 has been a very busy and successful year for us. We've proved that we can add value across the value chain, not only both first-in-class, best-in-class drugs, design innovative trials, [ getting ] through the discovery and development programs and then launch. We've launched in the U.S., Japan and in Europe and Germany in 2022. For a company of our size to launch in 3 territories, of course, is a remarkable achievement. What we -- what our takeaway from the launch is that the unmet need is clear, it's there, and our strategies are working. Physicians are responding to the data from the ADAPT study and also the initial clinical experience. Patients are empowered to ask for the drug and to manage their diseases. And on the payer front, access has been smooth. Our market access team has done a great job. On the clinical side, we had a subcu bridging study successful readout in the beginning of the year, followed by the first of our 2 ITP studies. Looking into '23, we have 3 Phase III studies reading out. The first is the CIDP, where we're on track for the [ 88 ] events in Q1 followed later on then by the top line data release, and later on in the second half with PV as well as the second ITP study. In terms of formulation growth, our PDUFA date for the subcu MG is on March 20, 2023. And in terms of geographical expansion, we filed in China. We hope to get approval in '23, that is with Zai Labs, our collaboration partner. We hope to get approval in Canada in '23, and our European expansion will continue. As I said, we're only currently launched in Germany, but other markets to follow. We also did a very successful financing round in March, raised over $800 million in a difficult market, which sets us up. We have a strong balance sheet. So really, we are set up, all the building blocks are there to continue value creation for our investors. Thank you.

Great. So just starting off first with the VYVGART launch in gMG. Yes, I know prior to launch, you had really set expectations for gradual uptake. I think your exact phrasing was slow and steady. For any number of reasons, you're launching a first-in-class asset hurdles, things like that. Obviously, the launch is off to a great start. I don't think many people will call it slow and steady. So now that you're coming up on a year since approval and launch, can you talk about specific factors that have most significantly diverged from your initial expectations and contributed to that for outperformance in the first 3 quarters on the market?

Yes. I mean, first, I just want to give credit to our drug development team because what they've ultimately done is they put a first-in-class FcRn in our hands that has not only set a very high bar on efficacy in MG with almost 8 out of every 10 patients that are exposed to it getting a clinically meaningful response, but a rapid response. And the safety profile that not only has carried through MG, but also into other studies that we've already published. So they really put a strong molecule in our hands. Ultimately, what we learned, as Karl said, there's much more unmet medical need in the MG space than what previous market research had identified. I remember a few years ago in doing market research and hearing physicians say, well, product X would probably be for about 10% of my patients. Well, now that product X has a name, has efficacy, has safety has the convenience of individualized dosing, we hear those same say, this could be for up to 30% of my patients. So look, between that and the execution of the team, we really put the patients at the center of what we've done. We put them in a position to ask for and demand better treatment. We did a first-in-class DTC in myasthenia gravis. And finally, lastly, we really broke down the hurdle with the payers by meeting with them in advance and really getting an understanding of what it would take to be well positioned in this. And I'm really pleased to see the amount of covered lives we got in such a short period of time.

Great. And then one thing that I hear about a lot from investors is questions about how the real-world dose frequency for VYVGART is playing out. And I know it's really too early to draw any definitive conclusions, but I guess our neurologist feedback has indicated that they view the redosing criteria using ADAPT as not really representative of their clinical practice. And they also indicate that docs are taking a proactive rather than reactive approach into starting a patient on their second or third treatment cycle. So I guess, does that match kind of the sentiment you're getting from the field? And then just related to that, can you tell any difference in how this is treated between academic and community docs?

Yes. Well, a lot to unfold there. I guess let's first start with the cycle frequency, right? And what we saw in ADAPT was that the average -- the typical patient was going to require about 5 cycles per year. I'm not sure the survey of which you're referencing. I can tell you in the early going, we're going to get some of the most severe relapsed/refractory patients in the launch. However, I do also know from our internal data because remember, a large proportion of the patients go through My VYVGART Path, and we're able to get a very good idea on the number of cycles. I feel comfortable in telling you that you're going to see consistency along with what we've seen in the ADAPT study. You're going to have some patients that are going to require a redose earlier than what we saw in ADAPT. You're going to have some that are able to stretch that interval out quite long and very impressive. So overall, I would say we wait and see on that.

Great. And kind of a related question. I think you guys have an ongoing Phase IIIb that's looking at continuous dosing versus the cyclical dosing that's on the current label. I mean I don't think we're going to get any data on that until late next year. But could you maybe walk through -- what kind of data gaps does this study fill for physicians and patients? And is it your sense that before that Q2 week data is available, that might be something docs try with their gMG patients?

Yes. So look, we did the ADAPT NEXT study simply because at argenx, we want to have the total offering for patients, for health care professionals, for payers to be able to treat these patients. So not only did we come up with the individualized dosing and run our Phase III off of that, we come up the IV formulation and individualized dosing, but now as Karl already alluded to, subcu dosing that we'll look forward to launching in quarter 2 of next year. The ADAPT NEXT study was designed because physicians asked us questions in advisory boards, they said, hey, if I have somebody that might require cycling more frequent, can I dose them on a regularly scheduled dose? At argenx, we always state that we're science-based, data-driven and patient-centric. So instead of extrapolating from other studies where we've already had success maintaining response with an every other week dose let's do the ADAPT NEXT study and prove this in MG. So that's the purpose behind it.

Right. You had mentioned the DTC efforts. And it is, I think, notable that, that DTC work started so early in launch. And just from where we sit, just looking at patient chatter and our doc checks, it seems to have been pretty effective, very effective in mobilizing patients, even those who might technically be responding sufficiently to IVIg, [ surely this for ] VYVGART. So I'm curious, do you intend to pursue the same strategy in CIDP or other therapeutic areas like heme with ITP or some of your derm indications like pemphigus?

Maybe I'll answer. So I mean, clearly, we haven't decided yet. But I assure you, when we do DTC for MG, we all know it's expensive, but we track the data, and we make sure that the IRR is there for our investors. And those decisions will be made later.

Excellent. So -- yes, turning to subcu. Yes, we have a PDUFA date coming up pretty soon, next March. In our checks, docs seem a little bit split on the importance of having a subcu dosing format, but it still seems like the majority of them say, this is going to increase their willingness to prescribe efgart. I'm curious how you view switching. Do you expect a lot of switchers from IV to subcu as being a major source of patients early in the subcu launch?

We're excited to bring out the subcu formulation. And as you know, we played a PRV for that. That again gives us first-mover advantage. Not only will we have the first FcRn in subcu available for myasthenia gravis, from what we can tell from other submissions, we'll have the first product that's subcu available for myasthenia gravis. So we played that for a competitive purpose. As far as which formulation is chosen, as an organization, we're agnostic to that. We really think this brings optionality for patients, those that prefer to potentially treat themselves at home and self-inject versus those that want to go to the office or go to an infusion center. And also for the physician, those that want to have their patient come in and be infused or if they would prefer to go to subcu. But the last thing that's become more important is actually with some of the changes that we expect to see with the Inflation Reduction Act going into place, you might see where payers drive which formulation gets utilized by each certain patient. So it's going to allow for positioning for a patient by the physician and potentially, ultimately, the payer deciding depending on if they want to fall in Part D, Part B. So we're really glad to have both options available.

Great. And maybe just one sort of follow-up. It seems based on our checks that physician awareness and familiarity with that a subcu option is coming soon is actually pretty high. So is it your sense that there is any warehousing of patients, particularly the earlier line patients because -- who are going to be important for growth, particularly in 2023 and thereafter? So if any of those types of patients might be waiting for a subcu to be available before starting a treatment with VYVGART?

Well, I guess, first of all, that makes me really happy to hear that there's good awareness because we've done very little, right? It's not approved, and it's not something that our field sales force talks about. So their awareness makes me happy to hear. Is there a warehousing of patients. I would tend to say -- you started by asking why was our demand higher than what we initially said. So I'm going to say to you that a lot of the patients that can benefit from VYVGART are currently getting prescribed VYVGART on a quarter-over-quarter basis. I do think what the subcu brings to you is an option for some patients that currently, whether it's a distance to travel to an infusion center or whether it's their lifestyle, says, you know what, I would -- I'll deal with my symptoms rather than this, this could be an option. So I think subcu has the potential to grow the overall size of the pie of the number of patients that are being treated. And I think we'll see some conversion to -- from IV to subcu. And I think it will be dependent upon the patient's choice, the physician's choice, and if it works out well for their insurance company.

Great. Then just one last question on subcu before we get to the pipeline. I think you've indicated that a broad label encompassing seronegative patients could be on the table for the subcu format of efgart. Could you just clarify if that's based on interactions you've had with the agency, I guess I'm just -- our read of the FDA [indiscernible] docs for IV, efgart didn't make us that optimistic that, that was on the table. But maybe just help us understand what you're seeing with this. And how would -- having that broader label that encompasses seronegative patients kind of influence the launch?

I think we have an obligation to these patients. And the reason why I say that is in the ADAPT study, you saw that we had a response rate in the seronegatives that was very similar to the acetylcholine receptor positive. The difference was, as you know, the placebo rate went up dramatically. So there wasn't a great separation between the two. If you look at the subcu bridging study, again, in the two arms, one was VYVGART, IV, 10-milligram per kilogram; the other one was efgartigimod, subcu flat dose, 1,000 milligram. And in both of them, we enrolled seronegative patients. And again, we got a nice response rate in the seronegatives. Additionally, I'll add that seronegatives is already on label in Japan. We have numerous seronegative patients that are being treated in Japan successfully, but we just think we owe it to this patient population. I will agree with you, Ally, that we don't -- there is no discussion that has already occurred that with the regulatory bodies that set us up for a better chance. We just feel that it's the right thing to do for the patients. And regardless of the outcome of our negotiations that occur over the next few months, we'll still stay committed to this patient population.

Okay. That's great. So shifting now to CIDP. So obviously, that Phase III readout is the next major data catalyst for efgartigimod coming out in Q1 next year. Could you just give us a little bit of background on the update you had from this trial 2 years ago when it passed its go, no-go decision. Just remind us what was the go hurdle, and based on that, what gives you confidence that the [indiscernible] readout will be successful next quarter?

Yes. I mean I really have to commend our clinical team on the way that they design this trial. One of the most challenging things when you do a CIDP trial is to first make sure that for the best of your ability that you're enrolling through CIDP patients. And we do this by every single patient that is proposed to be enrolled by one of our investigators, their charts are then reviewed by an independent adjudication committee. So more than one expert in CIDP are looking at these charts, and they have to come to consensus that this is a CIDP patient, okay? Then the next thing that we need to determine to give us the best opportunity to be able to serve this population is that our study has to be looking at active CIDP patients. So how we do that is if they're currently on IV that we remove their -- excuse me, IVIg, we remove their IVIg, and as -- if they deteriorate, okay, we then move them forward into Stage A. If they're on steroids, if they deteriorate after removing the steroids, they move to Stage A. If they're a naive patient and there are symptoms and they're deteriorating, they move to Stage A. Stage A is where you have 100% of the patients on efgartigimod, right? And in that part of the study, they have to lose any -- they have to regain any response that they lost in the run-in period. And once they get to that point that they have regained what they lost, they then will be randomized into a placebo-controlled trial. So what we learned in the initial go, no-go decision was in that stage A, where they first -- everyone was treated with open-label efgartigimod, we set a bar that 14 of the first 30 patients had to be responding to efgartigimod. And what was shared at that time is we had cleared that hurdle and had a go decision and we were able to make that call before all 30 patients were enrolled. That's about as far as we've shared publicly. And remember, those patients are part of the primary endpoint, so the data has been blinded.

Excellent. So then going into this readout, just frame what you're looking for that you think would enable efgart to really unseat IVIg as standard of care in CIDP, taking into account the efficacy measures from Part A and Part B of the trial and also in the context of efgart's really pristine safety profile and its convenience benefit.

Yes. I mean look, I think you hit on the 3 key parts of the trial. What's going to give us the opportunity to potentially disrupt this market, let's go in reverse order, right? From a convenience point of view, if you're able to give yourself a self-injection for 1 minute at home on a weekly basis, right, not even leaving the house to be able to take your treatment, as compared to if you're getting IVIg, you could be sitting in an infusion center for 5.5 hours getting near infusion, right? So I think the convenience area here, we definitely tick the box. I would say from a safety profile point of view, again, efgartigimod, whether it's in the ADAPT study, whether it's in the continuous dosing ITP Phase III study that we already shared or you know that in all of our clinical trials that are currently ongoing, we are collecting safety data all along. And so we can tell you that the safety profile of efgartigimod has remained consistent with everything that's publicly available to you. I think we are able to potentially have an advantage in the safety and tolerability of efgartigimod versus that of IVIg. That finally leaves us to just the clinical outcome. And I mean, that's what we're all looking forward to, the [ 88th ] event occurring potentially in the first quarter of 2023 and then a readout shortly thereafter.

Great. So shifting now. We've got a couple of minutes left. I want to touch on ITP, where we're looking forward to full data from the IV trial that's coming up at ASH. There's a lot of nuances in the data that are probably beyond the scope of our discussion here. But I am hoping you can contextualize what aspect of the data docs are going to care about most, particularly some of the quality-of-life measures. And just what aspects of the data give you confidence in efgart's ability to really disrupt the TPO cycling paradigm that exists now in ITP?

So we spoke to KOLs across on both sides of the Atlantic. And what they really use in treating patients is the IWG, International Working Group. If you look at the data set there and combined with a fast speed of onset, which you do see for efgartigimod, we really think that the current treatment paradigm where we get a TPO and when you relapse and remember, if you look at it holistically, there are 3 TPOs. Typically, 1/3 of your patients relapse -- or sorry, don't respond and then half of them relapse. So there are 2/3 of our TPO market available where they cycle from one TPO to a second and sometimes a third. We will never replace the TPOs. But if we can position ourselves after the first TPO, we think that could create a significant market for us.

Great. And then maybe one of the more overlooked efgart opportunities, I'm just hoping you can kind of frame the opportunity in the autoimmune blistering space. We're getting some Phase III PV, PF data next year. Can you just frame that readout and then the overall derm opportunity?

So maybe if I start, then Keith can add. So in PV, currently, the standard of care is steroids. And a couple of years ago, rituximab was approved. Rituximab of course, has a good response, but a higher relapse rate and the speed to onset is very slow. So originally, you hear people saying, maybe efgart with its quick onset can be used as a bridging to rituximab, but that's until they saw a proof of concept, I think it was Cohort 4, the data where in combination with steroids where you had a rapid response, but then a clinical remission. And if you took efgartigimod away, but remission was maintained, the response was maintained. The IgGs returned but not the auto antibodies. We think if you look at that, we could actually be first line in PV. And -- but if you look at the claims database, you'll see that there's 19,000 patients out there. So it's quite a big total addressable market.

Great. And it looks like we've got time for maybe one more question. So maybe kind of a bigger strategic question. Just about how you think about balancing and prioritizing the development strategy you've outlined for efgartigimod, ARGX-117 and 119, what gives you confidence in achieving the argenx 2025 vision that you've put out there as a stand-alone company?

Okay. I mean, maybe I'll start and, Keith, please...

Sure.

So I think when we look at argenx into '23, we look at our growth across 3 aspects. In terms of geographical expansion, we've talked about that we were going to launch in new markets, the indication expansion and then, of course, also the formulation expansion. I mean I don't know -- how much time do we have?

We're fine.

So maybe just quickly on 117. 117 is our C2 and 119 -- in 119, our mask -- we're going to have the first clinical -- we're going to have a first -- we're going to put it in humans next year. So both 117 and 119 is progressing and more data will come with that. With 117, we also believe that, that could be a product and a pipeline.

Great. And actually, I'm going to sneak in one more. We have a tiny bit of time. We saw the news today about the PRV. So the first thing I thought when I saw that press release, was, oh, great, the CIDP could be [ adding the ] label sooner rather than later. But maybe just help us understand how you're thinking about where to use that?

So I think the fact that we bought a PRV, shouldn't -- don't read into that in a specific indication. We are using our PRV for the subcu MG, and that's how we got 4 months off. And so our PDUFA date is March 20. So we've employed that strategy before. And we think having the PRV for a future indication could be very valuable. PRVs are not always on the market. It was in the market now. We think it was for a good price. So we bought it and it gives us optionality going forward. That is far as it goes.

Excellent. Looks like we are out of time, but I want to thank you both for spending the time with us today.

Thank you for having us.

Thank you.

Thanks.

Thank you. Goodbye.