argenx SE (ARGX) Earnings Call Transcript & Summary

Conference. I'm Yaron Werber from the biotech team. And it's a great pleasure to moderate the panel with argenx with my colleague Brendan Smith. So the management really needs no introduction. We have Tim Van Hauwermeiren, the CEO; and Keith Woods, COO. Gentlemen, thanks so much for joining us. We appreciate it.

Thanks for having us.

So there's a lot to talk about. There's a launch underway that's been going well. There's an upcoming PDUFA for subcu. Their CIDP data coming up, and there's obviously a lot of pipeline data. And Keith, there's obviously news with you that we want to cover. Let's talk maybe first. The launch has gone very well in the U.S., launch is obviously slower in Europe because of pricing and the subcu PDUFA is coming up. Once the subcu is approved, how do you see subcu versus IV being used? And what about reimbursement? Do you have to get the subcu on the formulation? Is that going to delay things a little bit or not?

Yes. Great. Thank you for the question. So first of all, with the subcu, we have a PDUFA date on June 20. I want to call out that our subcu is a completely separate brand, and it is a completely separate product from that of the IV. So we will have to go through all of the usual approvals that take place to get on formularies to -- for payers to cover us. So a lot of times, you will see with a new subcu that there will be a new-to-market block, and there will be a little bit of time. So some payers will have that in place. The bottom line is we think that with the ever-changing -- when we first came out with subcu, it was got optionality for the patients so that they could select what was in their best interest. But what's really happened is now you need optionality for not just the patients and their preference, but also with the payer dynamic switching. You've got Part B and Part D, and it can affect your out-of-pocket expense. So we just want to make sure by having both formulations that the choice can be made by the patient, by the health care provider, by the payer. We're agnostic as to which is used. Now the one thing I will say about adding subcu is we do believe there's an opportunity to grow the overall pie because the hurdle for a patient that might be currently on an oral therapy right now and having a response but not an ideal response. They're not symptom-free. The hurdle to have a potentially self-injectable subcu is a little less of an uphill climb than going to an infusion center for an IV infusion. So we do think it will grow the pie.

And when -- label wise, are you expecting a similar label overall? And can you roll into VBAs pretty quickly with the payers and getting formulary.

Yes. So first of all, for the label, this is a bridging study. So the dosing paradigm was exactly the same way that we did for the ADAPT study. You look at individualized dosing, which is what the patients asked us for. And quite frankly Yaron, it's going really well in the marketplace. We've just released some data that show basically about 1/3 of patients are going well beyond 9 weeks since their last dose of the first cycle before they have their first dose of the second cycle. You've got a third that are going really long. You've got a third that are between 6 and 9 weeks after their last dose before they're next. And you've got a third that are requiring a little bit more frequent dosing. But individualized dosing, they'll be able to take advantage of with subcu as well.

Okay. And then from a VBA perspective, I mean that's what's so critical and you're able to get on formulary so fast. Why wouldn't the payer be willing to roll it over pretty quickly?

Yes. So we are following our own playbook. We're already out meeting with payers about subcu and discussing the data that's available publicly with them. We'll continue those negotiations and it's our goal to be able to make this product available to everybody that can benefit from it. But it's going to be a step-by-step process because you're going to see that subcu will probably be acquired almost exclusively through specialty pharmacies versus a buy and bill that you see with IV.

Okay. Historically, you thought the U.S. will be the biggest market potentially followed by Japan, right? Europe was a third, launch in Europe these days is fairly slow. Do you still think Japan is going to be the second biggest market ex U.S.? Or is Europe really going to catch up over time?

Well, I mean, over time, and that's the key about Europe. I've said before that if we were just going to be a one product, one indication company, we probably wouldn't have built out our own infrastructure in Europe, and we would have considered a partnership. But because of VYVGART, we're currently studying in 13 indications, we'll be in 15 indications by 2025. There was too much value and too much benefit that people living with MG and other diseases could benefit from VYVGART. And so over time, Europe will definitely overtake Japan as a much bigger market. We're adding country after country. It's a 2- to 3-year process for a launch in Europe. But as all of these come on board, just the potential is much larger.

Yes. There's a lot of people, so I apologize, the room is small. Feel free if you want to quickly move in. We have room over here. So if you want to, you can come on and stand over here, and that way you can hear as well. Keith, let me ask you -- we got a lot of questions last week with the announcement, right? You decide -- you've decided to move on, you'll be a strategic adviser to the Board. Tell us maybe a little bit, and Tim, obviously, for you as well. Why now it was obviously orchestrated since you've announced that you will retire and your successor is coming in and you'll still stay an adviser to the Board. What does that adviser look like? Is that a permanent sort of setup? Or is that of a finite period?

Well, maybe I'll start and then hand it off to you, Tim. Well, I mean, first and foremost, this is something that Tim and I have talked about for a little while. And it's something that when I joined the organization, the goal was to build out commercial capabilities, not just in U.S. but across the globe and then have a successful launch. And I think that I'm honored that Tim selected me to take on that responsibility. And I think that the results have been something that I'm really proud of, that I will take with me. I do believe that for shareholders now is the time, it's -- I think it's in the best interest of shareholders that we make this change. And I'm thrilled to have Karen on board. I mean, we hand selected her amongst quite a large candidate pool. And just like she did with OCREVUS, where she stepped in after the first 18 months of launch and change that trajectory to go even higher. I know she's the person to do that here. So the bottom line is this works out well for me personally, and it works out well for the organization and shareholders.

Few words, I would like to add to that, Yaron. When I call Keith back in 2017, I mean, he was in preretirement. So I called them out of the retirement and convince him to join the company. I think I was lucky for you to join us. But to tell the truth, that was a 5-year pit of duty. And Keith assignment was build out a commercial capability and launch in the States. He gave us much more than he promised. I mean he launched not just in the States. He also launched in Japan and Europe and soon in Canada and other places in the world. Secondly, we have been discussing what the good timing would be. There is never a good timing because there's always the next catalyst. Now it's CIDP, then it's, again, ITP then it's [indiscernible], then it's MMN. There's never a good time in this company because there's always that next catalyst. The thinking behind the change is Karen should come on board now because now you can still look at the subcu launch, help crystallize the final strategies and plans and have her fingerprints on the subcu launch. And I think there's the whole thinking behind the time, right?

Yes. And maybe for both of you, your agreement with the Board, is that a permanent appointment? Or how does that work?

So the way it works is it going in steps, right? So there's a very significant transition plan in place. First day for Karen will be 13th of March. Then there's a very extensive handover from Keith to Karen, which will frankly speaking, take as long as she wants it, right, Keith? That's your commitment to her. And then Keith becomes member of the Commercialization Committee of the Board. Our Board is a very committed Board, a very engaged board. They're very active guys, the subcommittees of the Board that include the Commercialization Committee is chaired by Jim Daly, but we also have Camilla Sylvest, Tony Rosenberg and Ana Cespedes. So Keith will join them and continue to be that sparring partner and signing board for the commercial team when it comes to crafting strategy.

And it's -- Tim, Jim Daly from Amgen historically?

That's correct.

He was the Head of Commercial Ops at Amgen. If anybody have any questions, feel free to raise your hands. I'm going to move on to CIDP. That's obviously going to be the next important catalyst in the second quarter of this year. The -- what's a little unique in this study, in some ways, it's a combination of ICE and PATH. And at least early, it sounds like for a while in the study, about 40% of patients were naive. When you look at the historical ICE data, the naive population has done better than the control arm in PATH, and there's a lot of nuances that we can spend an hour talking about and the nuances had to do with the selection and whether you selected some placebo patients who naturally will do well, and they enrolled into that arm. My question, because of that, theoretically, both arms in the study could do very well because you have 40% of patients at least early were naive. Can you talk about that a little bit to the extent that you can? And what are you expecting from the control arm?

So I don't think the big issue in the trial is going to be whether you were treatment naive or whether you were on steroids or on IVIg. I don't think that's going to be the issue and by the way we stratified for that which I think is a clever thing to do. The big -- real big unknown Yaron, I think, is a placebo effect. Do we think about CIDP patients is that they suffer from a very significant placebo effect? For example, in the PATH trial, where everyone was on IV -- IVIg response rate. And if you then start to randomize them, they start to imagine all sorts of things. They think you took away IVIg when actually you didn't. Or they think they have the side effects of IVIg when actually that's placebo and that type of stuff. So placebo effect is unknown for an efgart treated patient. That is a big unknown, I think, in the trial. But I think that's why the Stage B is actually 4 to 8 weeks. You give people the time to relapse. So we got a question in one of the earlier meetings this morning. If you would redesign the trial today, would you change anything? No, we wouldn't change a single thing to the trial.

Right. So the question has to do with the placebo effect even on the efficacy side.

Correct. Yes.

But these are patients who are coming in, and that's what's unique about the study, right? They have active disease. They must flare and they must improve. When you looked historically at PATH, and again, there was -- it's a slightly different trial design, obviously, the placebo did around 12 weeks in that arm, right, the median time to relapse. When you looked at ICE, and again, you could have enrolled and out study patients who are placebo responders for sure, it wasn't hit at 27 weeks. It was trending close to it. In this study though, patients are active. So I would be surprised that the placebo is going to do that well.

But then active -- but on any of 3 scales, right, not just on the INCAT scale, which is the scale you use in Part B for your end points. So there's still the theoretical possibility that you show active disease on grip strength or I-RODS, that you didn't move on INCAT and therefore, you're also not going to move on INCAT Stage B. I mean this is all hypothesis. We don't know. So there are still some risks associated with the trial design, which actually we could not completely eliminate in this type of self-study. I think the trial, the design of the experiment is very thoughtful. I think it's very solid. If this trial would fail, I think it's not because of a poor trial design. It's probably because the biology is wrong, and we should stop investing in such an opportunity and move on and do other stuff. That being said, you know how we selected CIDP's indication, right? We do believe in the biology rationale. We took all the pitfalls into account of the eyes in the PATH study in what I think is a pretty solid trial design. And in Stage B, people have sufficient time to relapse.

And to get into Part B in the study, you were not able to get into Part B if you did not recover on your INCAT score based to baseline. Is that correct because that's the primary question?

Small correction, you're absolutely correct Yaron. You had to completely regain what you lost on any of the 3 scales where you lost it. So it could have been INCAT, but it could have been also grip strength or it could have been I-RODS. So what you lost on one of the 3 scales had to be regained on exactly the right -- the same scale.

Right. So theoretically, someone could have come in who flared had an I-RODS reduction, improve back to baseline and got enrolled even though their INCAT never changed.

Correct. Yes. Now what we did say when we announced the GO/NO GO decision point is that the clinical scales typically, not always, but typically move hand-in-hand.

And they're correlated. What do we know about IVIg and how it works other than autoantibodies? Is there anything else that you know about complement?

Yes. When you talk to the people who understand the biology pretty well, it probably has 2 modes of action, which are in play in CIDP. The first thing is, of course, competition for FcRn. So you just infuse a massive amount of donor IgGs, which only to recycle to a limited number of FcRn receptors. So the probability of success for an autoantibody to recycle just goes down dramatically. So you're washing out your autoantibody. That is definitely one of the effects. The other effect, which is possibly in play, it's mopping up C1q. So it's a low affinity interaction. That's why you need so much donor IgGs, but you're probably also silencing your complement system. Whatever it is, it is an indirect effect or effects because boy, you need a very high dose, 2 gram per kilogram and you need it very frequently, i.e., every 10 to 14 days.

And what do we know about direct complement inhibition in CIDP?

So maybe IVIg is blocking the classical pathway, but it's the autoantibody, which is the actor, right? We know the autoantibody binds to the myelin sheath. And when it binds, it's also recruiting components of your innate or your adaptive immune system. So the autoantibody is the actor.

Okay. Brendan?

All right. So I guess, moving a little later than Q2 of this year. Obviously, you have a couple of other critical data readouts coming, right? You have ITP in the second half, you have some biggest in the second half. We have some information from the first Phase III study in ITP. We have some Phase II data in pemphigus. So using those as more or less of a bar, your subcu in ITP looks comparable to the IV. And if your Phase III in pemphigus looks more or less what we saw in Phase II, give us kind of a sense of how these opportunities could play out for efgart. I mean it's very different spaces, it's very different treatment paradigms, especially relative to MG. So how are you thinking both of those opportunities can actually play out for FcRn?

Why don't start with the ITP first, and then we could talk about PB, but with ITP right now, the treatment that you see, it's not like pure guidelines, where you just see everybody, it's more cyclical. They rotate through different therapies with ITP. And you see where TPOs have moved up earlier into this rotation, sometimes even second line, where we really think the opportunity exists for VYVGART is after you have either not responded to your first TPO or you've relapsed from your first TPO. So roughly, if you think about that response rate at all the patients that will get exposed to a TPO, almost 2/3 are either going to relapse or have not responded. That's a sizable market. And currently, what's happening is after failing or relapsing from a TPO, you'll see a second TPO used. So why stay with the same mechanism of action, if you can go to something like VYVGART can -- that can potentially change the outcome for this patient. I'm excited about ITP. I think that this marketplace provided the data is good in the subcu, I think that this is a very good marketplace for VYVGART to be able to play in.

Right. Yes. And actually, maybe before we even go to pemphigus, I want to follow up and ask you about your plans to file in Japan. You had noticed -- you had made a point of saying you're going to file with IV in Japan, middle of this year, I believe, which is obviously a different regulatory path than it is in the U.S. So give us a little bit of understanding as to what the expectations are from a regulatory perspective?

Yes. So as you know, the subcu VYVGART is going to be different than the IV, different brand. That's the case in the U.S. That's also the case in Japan. Because of that and it being 2 separate products, it was the FDA and EMA that asked us to do 2 Phase III studies, the confirmatory study, which, by the way, for ITP and for that division, we are being treated no different than every other product that's been studied in ITP that had to do 2 different Phase IIIs. In Japan, our team went to PMDA and basically with the IV study and PMDA didn't need to see the confirmatory study. They were amenable to us filing with the first study. And basically, what our team said is, why should we have patients that are suffering with ITP in Japan wait for a second study because that's what we're doing for the U.S. and Europe. There's no reason why we have to do that for Japan. That's how that started, and we will launch first in Japan.

Then on pemphigus, which I think is, again, a very exciting indication for a molecule like VYVGART. If you look at pemphigus, it ticks all the boxes, right? It's a very high unmet medical need. It's not just skin lesions, which make the disease so bad. It's also the mucosal lesions. Your eyes, your mouth, your throat, genitals, all you mucosal get affected with these lesions. And frankly speaking, these patients don't have a lot of options. So they have high dose corticosteroids, which they hate with a passion, it's brutal. And when you talk to them, they say, "Look, I want the fast closure of my lesions. Lesions should stop performing, and I want to taper my steroids as fast as I can." That's the need of patients. On the other hand of the spectrum, we have rituximab, the other approved drug. Now what we see, and there was a recent publication on that, the real-world use or the real-world efficacy of rituximab is by no means close to what was reported in the clinical trials. It takes 12 to 18 months for rituximab to achieve its peak efficacy. And it's only in about 1/3 of the patients where you have a real CR where you go off therapy. That's pretty poor. So I think efgartigimod really fits nicely between these 2. You can take your steroids much faster, and you can push out the use of rituximab, at least delay it or eliminated because the infection of the rituximab very significant.

I mean, to this point, I mean, we speak with KOLs who treat pemphigus, right? There's a conversation to be had to get exactly what you were just referring to. So this long time frame to push people into remission with rituximab, but they have a lot of experience with the drug and the prolonged remission that can come afterwards. So is there any talk at this point of potentially treating with FcRn upfront or co-treating alongside rituximab to kind of push very quickly into remission and then kind of maintain a long-term?

Frankly speaking, I think it's game over for rituximab because the publication, which we have is that we silence the alterative B cells. So we have still patients from the Phase II in full clinical remission and that autoreactive B cells are gone. So the question is, why on earth would you still use a B-cell depleting agent like rituximab if you have got taken up in your hands. So I think we're going to take a significant share of that market.

They are off therapy. Those patients are off therapy.

They are off therapy. Yes.

Yes. All right. And I mean, even beyond the FcRns, you also have 117 data coming up in the middle of the year, right?

Before we go to 117, allow me to explain my excitement about bullous pemphigoid because there's a little [indiscernible], the big sister indication of pemphigus, right? Very similar biology, safety, even more important than pemphigus and it's the society, it's the community which invited us to come in and do the BP trial now when they have seen the safety profile of efgartigimod or pemphigus. So here is an equally high unmet need, much more prevalent even than pemphigus, and there is nothing approved in bullous pemphigoid. So I think the autoimmune blistering disease space for VYVGART is going to be a very attractive marketplace.

So you see the same kind of use of rituximab with -- in BP patients as well?

They are not using rituximab. They can only use low-dose steroids because they're too toxic. I mean the older you become; the more pronounced toxicity becomes of corticosteroids. So these people have literally no options.

And I mean, as you look at all the expansion opportunities for VYVGART and actually the whole FcRn franchise were large, right? I mean the question naturally comes how many of these -- the autoantibody contribution, how well understood is it like when you look at BP or when you look at even MMN with some of these other ones as well. So to what degree is that kind of guiding which direction you move to franchising?

I think the understanding of the role of the pathogenic autoantibody in pemphigus and bullous pemphigoid is as well articulated as it is in MG. So this is a textbook indication being autoantibody mediated, the titers, especially of your DSG1 antibody correlate very well with clinical efficacy and clinical outcome. So testing the presence of the autoantibody, testing the tide of the autoantibody is part of the routine clinical practice.

All right. So then 117. Right. So new drug, same idea that you're looking at here, kind of this pipeline within a product approach. So obviously, the Phase II data in MMN is going to be important in midyear. So really, what are we looking for? Same kind of question in terms of maybe autoantibody versus complement contribution to MMN since that is a different disorder. And really, what is kind of your guideposts here for the mid-year readout?

So MMN is clearly established as a pathogenic IgM mediated disease. We are working with the world experts. We have gone through enormous biobanks, validating that this is IgM-mediated, and that the titer of the IgM autoantibody correlates with disease severity. We have also shown ex vivo and in passive transfer models at 117 can completely stop the complement attack, which is being orchestrated by these pathogenic IgM autoantibodies. So I think the effects are very convincing. What is the task for the Phase II trial? It is to create basically a data set which can populate the PK/PD model to predict the Phase III dose because no one knows in MMN what a level of C2 blockade needs to be? Is it 70%? Is it 90%? Is it 99%? We do not know. So we have different dose cohorts, which we're going to test. And the midyear data point we're going to talk about will be efficacy from the first dose cohort, okay? How do we imagine that cohort and the data release? All MMN patients are on IVIg, right? There is no other medication, which works. IVIg is also approved in MMN. So whatever MMN patient you identify, he or she will be on IVIg. So in the running period, we established a cadence of IVIg dosing and then when that up to for the third dose, we randomized them into a placebo arm or a 117 arm. And the hope is that the placebo patients will need soon to be rescued by IVIg whilst the 117 patients will not need to be rescued by IVIg. So that's the primary endpoint. It's the rescue by IVIg. We have a whole battery of secondary endpoints, patient reported but also functional assays, testing muscle strength, dexterity, quality of life, fatigue and all the others. So it's going to be a very comprehensive data set.

So obviously, I mean, this is a complement halfway now, right? Obviously, we're outside of the FcRn room. But when we're thinking about expansion opportunities for 117, I mean, people are familiar a little bit more with C5. So when you look longer term for this, obviously, getting a little bit ahead of ourselves with the data, but when you're trying to plan ahead, building out the franchise for a C2 inhibitor, could you potentially follow a comparable path to what we've seen with C5 or there are important considerations when you're thinking 2 or 3 steps ahead.

So we're thinking disease biology with a C5 blocker would just come too late. For example, in MMN, C5s have been tested and they don't work. And we know why they don't work because it's all about C3 deposition and activation. So we're looking at indications where you need to be upstream of the terminal complement pathway and ideally indications for your classical and/or the lectin pathways in place. So the second indication we are looking at delayed graft function, that's a typical disease driven by both lectin and the classical pathway. Again, a very strong translational biology. You can biopsy the kidneys, you see the deposition of complement C4 in the kidney. The only guy who can create C4 is C2. So if you block C2, there will be no -- there will no C4 deposition be observed in the kidney, and you should be able to rescue these kidneys, which now go into failure. The third indication, dermatomyositis, again, there is a subset of patients where you have from the skin biopsy, clear evidence that the classical pathway is starting the disease. You see direct complement deposition and activation with no involvement of the autoantibody.

Interesting. All right. So I mean, that kind of gets in a quick pitch for our novel therapies and autoimmune disorders panel on Wednesday, we're going to be talking about dermatomyositis as well as MG and CIDP too. So stay to forth. Do we have anything else?

So let me -- we have a few minutes left. So let's maybe talk a little bit about dermatomyositis. The GO/NO GO decision will be first half next year. And that study is a little bit -- dermatomyositis is a little bit more heterogeneous, right? There was a heavy skin involvement with a CDASI score versus a more muscular endpoint with a total TIS score. Your study, I believe, is a function of both, but it's a little bit more I am denominated, more myositis with a TIS score. But I believe you might have had a cohort in that study, it's more skin involvement. So maybe can you correct me if I'm wrong and talk about the dermatomyositis because depending who you talk to, there's different end points that clinicians care about?

So it is a basket trial. And the condition for the basket trial is that you can use the same inclusion, exclusion criteria and the same endpoints. So this total improvement score is the endpoint for all the 3 subsets we study. Immune-mediated necrotizing myositis [indiscernible] and dermatomyositis. The other unifying factor between the 3 subsets is the muscle involvement. So we're not going to include dermatomyositis patients with only skin involvement. We do need muscle involvement. That is also the difference, I think, with the 117 study in dermatomyositis, where you do not have that requirement.

So the thought to develop in both, is there potentially complementary in terms of which patients they're going to treat?

Exactly.

They have [indiscernible] commercial. What -- and the go -- remind us, what have you said about the GO/NO GO decision and what's the power? What are the [indiscernible]?

So the myositis trial is a seamless Phase II, Phase III trial. And after 30 patients in each subset will be -- that's basically whether we have a signal, which is stronger than a placebo signal. We can roll into the Phase III portion of the trial similar to what we did for CIDP.

And the trial design for that in terms of background therapy. Just remind us do you need to wash them out? Or they could be naive and said that you've essentially taken all comers?

Yes. Again, we're not going to niche the product. We basically take all comers, and we can go on top of background medication as long as that's stable.

For IVIg, that's [indiscernible]

IVIg is -- I have to watch my words. I think in dermatomyositis, it got approved. I don't think it is approved in immune-mediated or in [ ACS ]. No.

[indiscernible]

So the question from pool in the room here is whether we expect similar placebo behavior as we saw in the PATH trial for our own CIDP trial. The honest answer is we do not know. No one has ever studied a VYVGART responder and what happens when you take away VYVGART. So the honest answer is, we just don't know.

Thanks so much for coming. We really appreciate it.

Thanks for having us.