argenx SE (ARGX) Earnings Call Transcript & Summary

Good morning. Welcome to the very first presentation of the first day of the Bank of America Healthcare Conference. I'm Tazeen Ahmad. I'm one of the senior SMID biotech analysts here at the firm. First, I want to thank everybody for making the trip over to Las Vegas. We know you have a lot of choices of places to go these days. So we appreciate you taking the extra time. So it is my great pleasure to have with me as our first presenting company argenx. Sitting next to me is CEO, Tim Van Hauwermeiren. Tim, good morning, and thank you for coming to see us today.

Thank you for having us today, Tazeen. This is a fantastic conference and a great venue. I'm accompanied today by Karl Gubitz, our Chief Financial Officer; and Karen Massey, our Chief Operating Officer.

Okay. Perfect. So there's a lot going on at the company as there always is, it seems, around this time of year. So maybe let's just jump right into what's on everyone's mind. Let's start with the continued launch of VYVGART. You once again had a spectacular quarter, beating expectations handily. So I think the first question that we have in general is, realistically, how long can this continue? How long can you keep -- as your expectations rise, so do ours. So every quarter that you do better than we expect, we all expect you to do better going forward. So can you maybe level set expectations on how you got to the result that you did for this current quarter and what to expect trend-wise maybe for the rest of the year?

I'll give the floor in a second to Karen, who can talk about the strategies and how they pan out in reality, but I would like to start with the bigger picture, which is at argenx, we really on a bold mission to completely transform the way we think and treat autoimmunity. And MG, I think, is a perfect example for that. If we think how we can treat gMG patients going forward, that's pretty transformative. The stories, which we pick up from the field are pretty amazing. The language people use is like we're getting our lives back being on this drug. And you know that we are ambitious, right? So we are expanding quickly in the treatment paradigm of gMG. We're expanding globally. Last year, we launched in one in the same calendar year in the U.S., Japan and Germany. But this year, we're adding a lot of countries on top of it. And we're going to [ flank ] the IV product with a subcu product. Hopefully, the PDUFA date of June 20 gives us approval for subcu, and that basically means that we can now have both product offerings for our patients. But maybe, Karen, you want to go in a bit more detail on how these strategies seem to pan out.

Yes. That would be great. So I can share a little bit about...

So maybe, Karen, since this is one of your first official outings, give us a little bit of background on yourself before you go straight in. You're clearly qualified. You're filling big shoes like -- we all love Keith in this room. So we also want to give you the due that you deserve. So just tell us a little bit about yourself, and then you can go ahead and answer the question, if that's okay.

Thanks for the reminder. I get too excited of what we've got and the launch. So Karen Massey, I joined argenx about 6 weeks ago as the new Chief Operating Officer. I have been working with Keith since -- during that time. He's around through June and have had the opportunity to work closely with him through the transition. A little bit about me and my background, I've been in the industry over 20 years, started my career with Pfizer and launched a number of first-in-class medicines through marketing and the sales organization and spent the last 9 years with Roche and Genentech and again experienced commercializing our medicines, including in the MS space, most recently with OCREVUS, and joining argenx and really excited to be here. And I would say over the last 6 weeks, what I've seen at argenx and what I've experienced is an incredibly talented group of people, incredibly passionate and energized between -- behind the opportunity that we have, not just with VYVGART, but more broadly with the pipeline and the incredible science. So it's been a whirlwind over the first 6 weeks, but it's been fantastic. And certainly, I appreciate how the team delivered for this first quarter, which I can't take any credit for, but certainly has made a positive experience talking about the earnings for the first time this quarter. And to the question that you asked around as I come in even with a new set of eyes, what's really driving both the short-term results and how we delivered this quarter and with the launch in general, but then the bigger opportunity that you're asking around -- and I'd say what you clearly see with this launch is, I would say, consistent momentum. The team has been really -- has had a strong plan. They're executing on that plan. And you can see this consistent momentum, and maybe I would say it in 3 ways. One is with the prescribers with neurologists in MG. What you can see is that the plan first focused on sort of academic centers and then expanding and expanding to community and neurologists as the -- so that the community and neurologists could get more experience. So growing the market in terms of new prescribers, but also as we're doing -- as we're growing the market with new prescribers, as prescribers or neurologists get experience with VYVGART, the feedback that you hear, and I heard this a lot when I was at AAN, is, wow, this medicine really works. My patients come back, and they say that they feel different. They feel better. They're at a new normal. And as neurologists get that experience, whether they're in academics or whether they're in the community, they are encouraged to start moving earlier in the treatment paradigm. So that's a big part of strategy, is get breadth of prescribing and move VYVGART earlier in the treatment paradigm, and we're seeing consistent progress on both of those fronts. And I think that's the core piece of the launch strategy and of the success. And along with that, as we get further into launch, that becomes more difficult. The inertia sets in of seeing patients that might be -- that prescribers think are well controlled. But what the team has been executing on a plan is around engaging patients to really empower patients so that they're more empowered to talk to their neurologists to go in and say, hey, I've heard about this new medicine. I think -- reset expectations. I think I can do more, and I think I can do better. And our team has been working not just with the direct-to-consumer, which is a really successful campaign, but really engaging with the MG community in a different way, showing up as a partner with patient's suffering from MG to really -- to drive that demand. And I think that's been working really well. And then the third leg of the stool, if you will, is the payer and the payer access that the team has secured for the IV version, which is what we're on market with at the moment. Over 90% reflects the ADAPT study. It's a really strong payer access, and that means patients can get on to therapy quickly. We have subcutaneous coming, fingers crossed, in June. And our goal and our strategy is that we'll secure a similar strong access, good access for subcutaneous so that patients and neurologists will have that choice. And we can talk a little bit more about what that subcutaneous launch looks like later. But I think you had asked the question about how do we think about the short-term results, but what's the bigger picture? And maybe if I could just take a few moments since this is my first opportunity to be with you guys. What I am amazed by is the larger opportunity that we have with VYVGART in IgG-mediated autoimmune diseases. When you look at these diseases, MG, CIDP, ITP, PV, whichever one it is, what you see is that they're generally treated in academic centers by real specialists. And part of that is because they are rare disease, but a huge part of it is because the medicines that are available or have been available in these diseases are really complicated, safety challenges, tolerability challenges, a lot of ongoing monitoring, a lot of off-label use. And so for a neurologist -- a community and neurologist to deal with that is -- can be challenging. So these patients get referred into the academic centers. The opportunity that we have with VYVGART is completely revolutionized that, and I would say we think about it as democratizing the treatment of these diseases. So in the community, we can be treating these diseases with VYVGART because VYVGART has the -- has been designed and has the safety profile, the efficacy profile, it's reliable, it's consistent and can be used much more easily in the community. So I think about it in the way that I think about the iPhone, revolutionizing the way we communicate. The technology of the iPhone is incredible, but what made it the broad adoption and what made it so revolutionary is that it's simple, and all of us can use it, [ grammar and text ] with an iPhone and et cetera. Think about VYVGART like that for autoimmune diseases, that's the real opportunity over the long term, that for all of these diseases, all of these indications, we move out of the academic centers into the community, patients are treated more -- treated earlier, more aggressively, and the markets grow in line with that. And it is really revolutionary. And that's the bigger opportunity that I see with VYVGART.

Okay. Perfect. I did want to spend maybe a couple of minutes on Europe just because I think that's still an evolving launch. And either Tim or Karen, can you share with us how you're thinking about the trajectory there if we were to compare it to -- it's probably an unfair comparison to what you've seen in the U.S.

Maybe it's an opportunity for Karl to chip in and also give some more color on the Germany launch. Karl, what to we expect there?

Yes. I'll let Karen talk about the unmet need and the opportunity there. I just want to mention that we are now around just over 6 months into the AMNOG process in Germany. As you know, you select a list price. Our list price is public, EUR [ 7 7 2 2 ]; threshold, 20% higher than the U.S. And we are negotiating the new list price with the German authorities. That price will, of course, be lower at the end of the day. And for the last -- that price will be public in September. And for the last 6 months of AMNOG process, you have to rebate the difference between the old and the new list price. So we're starting accruing for that new list price, which we don't know yet. But of course, we look at analogs, and we're not going to be public on that. But it's very important that when you see the Q2 revenue numbers for Europe, which is largely Germany, you might be disappointed, but that's all just because of that pricing dynamic. And I just want to make sure everybody understands that. Karen, maybe you can talk about the opportunity.

Yes, I'll touch on it briefly. I'd say the opportunity in Europe and what we're seeing in the Germany launch is similar to what I just talked about. So moving out of academic centers much more in the community. And so we're seeing a strong launch in Germany as a result of that. Through the year, we have 10 -- we're in pricing and reinvestment negotiations with 10 countries. So we'll see more countries from Europe come on board, but there's limited revenue this year. But next year, we can expect to see -- it's always a slower growth and a slower ramp-up in Europe, but I would say you can expect to see the same dynamics as we get pricing and reimbursement in Europe.

So would you say that the European launch is maybe like 1 year to 1.5 years behind the trajectory that you've seen in the U.S.?

Yes, I would say just based on the fact that we have to get the pricing and reimbursement.

Okay. So let's spend a minute or 2 talking about the subcu. So this is something that we've all been anticipating for a bit. There's a little bit of a delay coming from FDA on the PDUFA. Is there anything you can share on that? Are you feeling good about that date being met this time around? And then how should we think about the initial impact of a subcu being introduced into the market?

Yes, that's a great question. Thank you, Tazeen. And impact-wise, I will hand over to Karen. But where are we in the process? So we got a product extension of 3 months, moving the PDUFA date from March 20 to June 20. We feel as a management team that we're on track. Ultimately, of course, it's the sole decision of the FDA to give us the approval on June 20. But based on all the ongoing activities and the past activities, we think we -- where we should be in the process for the June 20 approval. So, so far, so good, I would say, from a process point of view. Impact of subcu on our MG launch, maybe, Karen, you can spend a few words on that.

Yes. Yes. So I can touch on that briefly. I would say from a strategic perspective, again, it aligns with our strategy of moving earlier line and -- to community and neurologists because it creates a different option. Some neurologists -- some patients might not be comfortable with IV. And so the subcutaneous opens up another option. We won't be pushing or trying to switch from IV to subcutaneous. This is another option for neurologists and prescribers. What I expect is a continued consistent growth. We're not hearing and what we're not -- is that there is any patients that are being warehoused or any bolus of patients that we think want subcutaneous, launches that are all of a sudden will have those patients. Rather, what we see is this is another option in line with our strategy of making it easy to start patients earlier in their treatment, and this will be another leg to that stool that we can expect. In the second half of the year, assuming we get approval, some payers will have those new-to-market blocks that they have in all cases. So until they review subcutaneous, they won't provide -- we wouldn't be able to have access. So we expect over time -- over the 6 months or the latter half of the year that we'll start to get access and start to see some adoption of subcu.

So I guess if I'm understanding you correctly, don't expect too much contribution this calendar year from subcu even with an on-time approval.

That's right.

But as you negotiate with payers, next year should be more impactful. How, if in any way, does that impact those particular areas that you mentioned at the beginning of your talk about moving higher up in the treatment regimen or potentially branching out into the audience that's beyond what you've been able to capture so far?

Yes. I think it aligns really well with that strategy. Some -- as we start to move earlier in the treatment paradigm, and we've seen this in other diseases as well, there are some patients for which once they come off an oral, going to an infusion medicine seems like a step too far. So they want the subcutaneous. Maybe they're younger, they're more active, they can do self-administration or home administration or they can go into the office. So it gives that option and gives that choice. Similarly, there are some physicians -- some practices like the IV, because of their practice economics, but also because they want to see the patients come in, make sure they get the medicine, some of the practices, the IV is complicated. They don't have the infusion chair capacity, whatever it might be. And so subcutaneous is a different option. So I think it just continues to build on our strategy of providing MG patients and prescribers with options that meet their needs and meet them where they are.

Okay. Perfect. And I think it's important to point out that subcu would just not be limited to one indication over time. It would be to the multiple indications that you have in development. Okay. So speaking of additional indications, there's a small study that no one is paying attention to that I'm going to force you to mention really quickly. So obviously, we're waiting for CIDP with bated breath, it seems. So on your earnings call, you announced that you've achieved the much anticipated 88 events for Part B of the study, but you also said not to necessarily expect the top line results before July. So we've gotten a lot of embedded questions on that, Tim, as I'm sure you have. Can you just talk us through some of the details of why it may take from today, which is still the earlier part of May until maybe a couple of months from now, to see that top line?

Yes. So the triangulation is over. We were trying to find out when these 88 events would happen to then inform you when the data readout could happen. The big news is that 88 events are in now actually within control. If you look at the trial design, it's not because you have 88 events that the trial is over. So we still need to learn the study. That basically means that you need to do your final patient visits, depending on whether the patient will opt to do it all over into the open-label extension or actually leave the study. There's a different sequence of steps to be taken. We need to collect this data. They need to go into the database. You clean the database. You lock the database. And from there on, actually, it's a quick sprint to top line data readout. So this is actually quite fast. I know that for inpatient investors, it seems to take forever. For the team, this is a very fast time line, typical for an event trial. So important news is the thing, which we did not control, the 88 events, we now know we have done. And from now on, it's just unwinding the mechanics of this study. Okay?

Perfect. So let's maybe try to level set some expectations a bit more as we approach that top line. So maybe first question is, what level of data will you reveal at that top line from Part A and Part B?

We have not exactly decided yet on what will be the data we will disclose as top line results, but I would encourage you to look at how we disclosed the myasthenia gravis and the ITP data. That's pretty substantial for top line data. So the spirit of the top line data release will be that there will be sufficient transparency. They'll be sufficiently complete for our shareholder base to understand what the value is of these data. So expect in our press release, followed by a management call, but actually we'll disclose a substantial amount of data. The data, which will be important to understand if and how we would be able -- we would be equipped to compete in the IVIg market for CIDP.