argenx SE (ARGX) Earnings Call Transcript & Summary

Good afternoon, everybody. Thanks for joining us for our latest session here at the Bank of America Healthcare Conference. I'm Tazeen Ahmad. I'm one of the senior SMID biotech analysts here. Our next presenting company needs no introduction really. From argenx, we have CEO, Tim Van Hauwermeiren; as well as Karen Massey. What is your exact title?

Chief Operating Officer.

Chief Operating Officer, meaning you handle all things commercial and maybe then some?

Exactly.

Okay. So why don't we first start with the macro. There's a lot of macro impacting SMID, which is the first time in my career that I've seen this. So maybe let's start in order of relatively speaking, recent events. So yesterday, the President announced an executive order that was focused on MFN, Most Favored Nation. So it's the first time we've heard about this but as it stands today to the best of your ability, Tim, can you talk to us about what the implications are and what that might mean specifically for argenx?

Thanks, Tazeen, and thank you for that first question. You have known the company for quite a while. And what we really tried to do at argenx is to build the company for the long haul. So I think we are very thoughtful when it comes to organizing the business with the long term in mind; the way we organize our supply chain, the way we are disciplined in the global rollout and pricing of the products. So I think, in general, this company is very well positioned to navigate the current environment because we have been organizing in a thoughtful way for the long haul. That means that from a pricing point of view, if you think like a product like VYVGART, we have been pricing internationally in a pretty tight price band. That's what you do in the type of product category where we play. If you look at it from a supply chain point of view, the tariffs, we have actually already since COVID been organizing the supply chain such that we produce in the market for that market, and that's also paying dividend today. So in general, I would say, in absence of all the details, the cards are stacked in favor of a company like argenx.

Okay. Then let's talk about tariffs in general. And what particular impact do you think there could be there? And some of these are going to overlap.

So from a tariff point of view, again, we're lacking the details. If people would be applying the rules for these tariffs the way they have been doing them in the past, I think argenx is very well positioned. We have very substantial manufacturing in the United States. So roughly speaking, we produce all the drug substance products we need in our U.S. market. We produce that here in the United States. We supply the Rest of the World and Europe, out of Europe and a little bit out of Singapore. So we're in a good shape. And then I think we have flexibility globally for drug product manufacturing. So again, I think the setup of the global supply chain is playing out in our favor in this environment.

Okay. When you say drug substance, where does fill finish happen? Which is harder to have to bring over if you had to?

Well, it's not too difficult to do it. You just have to do it. So the real transformation, of course, is the drug substance manufacturing. That's the liquids within which your antibody is dissolved is a solution of your antibody. As the supplier was commenting on, if then you put it in the vial and in the box, so the drug product manufacturing, the bulk of that actually today is happening in Europe and in Japan. But it's not difficult actually to reorganize and reshuffle that in line with your needs.

So -- and then maybe last question is on FDA interactions. Given the changes that have been happening over the last, I don't know, couple of months, have you noticed anything different. Fortunately, you don't have -- now that you got PFS approved, there's nothing imminent that's in need of FDA attention. But I guess, maybe talk about PFS, did you notice anything different at the end?

No, I think the PFS landed in time, and we are very grateful that the FDA finished that off in time. Of course, the bulk of the work happened last year in terms of inspections, review of the dossier, et cetera. For us, it's a very big win to have the PFS, and we will be talking about it later in the conversation. An innovator like argenx has very frequent interaction with the regulators. So for us, the FDA is an innovation partner. There's a lot of triangulation going on when it comes to trial design, discussion of endpoints, so much more under the surface than just submitting files and having files to be viewed and approved. I would say so far so good. I think we need to see what happens in the next, let's say, 4 to 6 quarters. I think the FDA will need to make certain priority calls in order to deal with the reduced capacity and we're trying to be as productive as possible in that partnership.

Okay. And then the last question is not really argenx question, but you do use Halozyme technology for Hytrulo. And I think there's been an update from CMS as it relates to, I guess, combining delivery systems or delivery pathways together, and I think Halozyme might be down on the back of that decision. And can you explain to me or to everyone listening, whether or not that in any way has an impact on argenx?

Yes. First of all, it's draft language, which we came to see today. So I think we have to be careful jumping to final conclusions. If we look at argenx and argenx business, with our patient centricity, we decided already a while ago to launch both IV and the subcu product almost simultaneously in the marketplace because we wanted to have the most complete offering now for patients. So we're not playing the life cycle game some companies play. Or after the -- towards the end of the IV product life, they then try to create extra life by doing a kind of a subcu product combining with PH20 technology and then maybe hoping that would reset an IRA clock. That's not the game argenx plays. I think we offer both products almost simultaneously because we want to serve the patients. So I think this news has little to no influence on the business of argenx.

Karen, anything to say about that based on your experience?

No. I mean I think Tim covered it well. And I think it lines up all of -- taking a line through everything that we just talked about. argenx has always taken the approach of putting the patient at the center and making the best decision for the patient and bringing innovation to market continuously. And I think with that as the foundation it sets us up well through all of this day-to-day noise, and that's what we're focused on in the long term.

Okay. So let's just go back and do a quick refresh of your 1Q results, which you just presented. I think there were some questions about across the board, all of our companies made commentary about the redesign of Part D and having to renegotiate for the first time under those conditions and some of the challenges involved. So as it relates specifically to argenx, how did that impact, if at all, 1Q results?

Yes. I mean just taking a step back, I'm really pleased with our Q1 results. We delivered 7% revenue growth on top of a really strong Q4, where we had actually an incredible quarter. So really strong growth. We saw growth across all indications, we saw growth across all product presentations and across all regions. So I think that's something really to be really proud of that the team delivered. And as you say, in the U.S., we saw the standard sort of normal, whatever everyone sees across the industry, what we saw also last year, the seasonality effect across our indications. And I think what that looks like is the reverifications and that can really impact the volume. The other trend that we saw in Q1 that we highlighted was for us, it was not around a renegotiation of Medicare or anything like that. But what we saw was a signal that more patients were starting to get Hytrulo, which is our subcutaneous through home infusion, which meant the number of patients going through Part D increased a little bit. We see that as a really positive signal actually because what it means is that in preparation for prefilled syringe, which we got approval for on April 10, and we're seeing signals that patients are excited to be able to have home infusion, have the flexibility not to have to go into the health care provider to get their injection every week for CIDP or cyclic for MG. So we see that as a real tailwind and as a real opportunity. So we highlighted that the increase in Medicare Part D, and of course, that was what was highlighted in the earnings. But I think if you take a step back on every single underlying fundamental for both MG and CIDP, new patient adds, new prescriber ads, we're seeing really strong trends.

Okay. So based on what you said, this launch is not slowing down for either indication?

Not at all. I mean -- and just to reinforce, for MG, it's incredible. We're 13 quarters from launch, and we continue to see growth in new patient adds. I think that's a testament to the strength of VYVGART and to the team out there. And CIDP, we're 3 quarters into launch, still consistent new patient adds and across both indications, we're seeing prescribers grow as well. So we're in a great position for the rest of the year.

You've said in the past that the majority of new patients are now starting on Hytrulo, right?

Yes.

So now that you have PFS in, how is that dynamic expected to change and over what period?

Yes. So you're exactly right. The majority of our growth is coming from Hytrulo, which shows that the patients and prescribers value the innovation that we're bringing. We have the prefilled syringe for self-injection approved on April 10, and we got, I would say, the optimal label. And what do we mean by that? It was approved for self-injection, 20 to 30 second injection. Limited training and monitoring requirements in fact, so the patient has self-monitoring. So we've really got the best case label. And what we've seen since that approval with prefilled syringe for self-injection is already the signals that it will deliver on the strategy that we thought, which is a market expansion strategy. So we're not pursuing a switch strategy. We believe that both in MG and CIDP, we can reach new patients by meeting patients with this new innovation. And we're already seeing it. So the number from the Q1 earnings that highlights this is that already, very early in launch, 50% of the prefilled syringe for self-injection, patients were new to the VYVGART franchise so expanding that patient population already. And we're already seeing prescribers who have never written VYVGART before, never prescribed VYVGART before, write their first prescription as prefilled syringe. So it's an exciting expansion opportunity.

So you've also said not to expect a bolus effect from PFS. Why? Because it does seem from some of what you said that perhaps some people don't want to go to a facility or want the convenience of the PFS or PFS-like product. So why wouldn't there be a bolus?

I mean I think you have to look at the dynamics of both of the different markets to say that what this will do is enable us to continue the trajectory of growth. So starting with MG with 13 quarters in, it is incredible to say we're still in launch mode for 13 quarters in, and the reason for that is because we keep bringing innovation to the market. So the way that I look at this is for MG, it allows us to continue that growth of the biologics market, which we're leading the expansion of the use of biologics in MG. We're expanding our market share and pre-filled syringe self-injection will really help us to continue on that trajectory. In CIDP, we've always said the launch dynamics are different or the dynamics are different in CIDP versus MG. And what do we mean by that? CIDP hasn't had any innovation in 30 years, majority of patients are treated with IVIg. So it's very much a switch dynamic. So whereas already, it's a step forward being able to go from the IVIg, where they might be hours in the infusion chair to once a week with the injection as a convenience benefit. I think pre-filled syringe will just allow us to continue to penetrate that market of IVIg.

And maybe thinking ahead, what would an auto-injector do as part of that continuum?

Yes. I think the auto injector can -- again, let's go all the way back to what Tim said at the beginning. We're a company that's focused on innovation and patient centricity. And so I think the auto-injector is another step forward in bringing innovation to market that's easier for patients to use. I think the big step change is from the Gen 1 Hytrulo, which was HCP administered to self-injection. That frees the patients. It gives them independence. So the prefilled syringe is the big step forward. Prefilled syringe that has a 20 to 30-second push, which is pretty quick, relatively short, and we've seen that MG and CIDP patients can do that. The auto-injector, the step forward there is the needle is not visible, and it's a single press for 20 to 30 seconds. So it just makes that a little bit better for patients. And I think that's important to continue to bring innovation to the market.

For whatever it's worth, we have heard from physicians that the explosion and popularity of GLPs has made people in general less needle phobic. I don't know if that's what you've heard as well.

Indeed. We hear the same, yes. Look, I still think there will be a healthy IV business, so VYVGART business. And whether it's because of how the particular neurologist wants to prescribe or maybe there are some patients that are still needle-phobic or for social reasons, we even hear that they like to go in and see the nurses. And you can see that in other analog markets. And you know the MS market very well and launched Ocrevus. And you can see it there. Ocrevus has a lot of patients on therapy. It's a robust multibillion-dollar brand. Novartis brought Kesimpta to market. And what you can see is next to the infusion business in that case, there's a strong subcutaneous business that another set of patients. So you can see that there are 2 separate patient groups, 2 separate prescriber groups. In our case, what we'll see is that they're both VYVGART, one IV, one subcutaneous.

So you brought up a topic that I've always wanted to ask you about. So initially way, way back when Keith Woods announced he was retiring on that call, the stock was down what, 10% that day, something like that. So the value add of the argenx management team is clearly quantifiable.

I took a screenshot of that and sent it to my parents and said, I'm off to a great start.

So -- but I mean you've done an amazing job of picking up where Keith left off. What, from your previous experience, do you think is helping you manage -- continue to manage the launch with the high level of success that it's had? Like what did you bring from Ocrevus that you think is applicable here?

Well, I would say the first thing is the team that Keith built is incredible, and the success of the VYVGART launch and the continued success is because of the team that we have in market. So I mean they are out with customers every single day and that's the strength. So I'm very fortunate and appreciative of Keith building such a strong team. I would say what I -- what I learned from whether it's the Ocrevus experience or other experiences the importance of focusing on how you're building the market over the long term. And the key to that is how do you make the story as simple as possible and focus on the expansion into the community and transforming the outcomes for patients in the community. And I think that's what we learned with Ocrevus. And certainly, when you look at the success we've had with expanding the prescriber base, with VYVGART, I think that's been a big driver of the success.

Yes. So another reason I'm asking is competition has always been a topic of discussion. I mean, you guys, Tim, you've always brought it up as the space will get crowded. So maybe let's talk about -- we can talk about both CIDP as well as gMG. As the space continues to have new players that might claim to have certain differential factors, what is the strategy of argenx really to not only keep share but to keep growing share as more and more players enter?

Yes. I mean it goes back to keep patients at the center of every decision and make decisions based on what does the patient need and meeting the patient where they are. And that's how you get -- that's how you focus on bringing new innovations. That's how you focus on setting a bar around what is the outcome that patients are driving for. That's where we -- in MG, we focus on minimum symptom expression. Patients want to live as if they don't have the disease. So that's where we focus, and that's what we talk about. Patients want to have options for how they receive them. So whether it's IV or subcutaneous, same thing with CIDP. So I think the key is not to get distracted by what the competitors are focused on, focus on what our value proposition is, and that is, I think, the strength of VYVGART and what we're bringing to patients. And look, I think it's positioned us very well. And what we talk about is -- and you've heard me say this before, more innovation is good for patients. More innovation in the MG market grows the number of patients that are being treated with advanced and innovative medicines, and we're leading that growth and advancing our market share. Same thing with CIDP. There's been limited innovation in 30 years in CIDP. We're the first innovation, and we're focusing on what patients need, and I think that's showing in the numbers.

Yes. And building on what Karen said, my real competition, our real competition in MG is not the other innovative molecule. It is actually the high dose of steroids, which people continue to use, these broaden the suppressants, which people borrowed from the transplant setting, just imagine, and the inertia in the communities mindset. So that's the real competitor to fight. And same in CIDP is the inertia we are filing.

On the CIDP launch, what metrics should we expect you guys to provide on a go-forward basis? It's still early?

It's still early. So we'll sort of take the learnings from the MG playbook and apply it to CIDP, I think that worked pretty well. So we'll continue to provide new patient add as we pass milestones. So for the first couple of quarters, we wanted to provide sort of more on a quarterly basis. Now that we're getting further out from launch, as we pass milestones, we'll share those new patient start numbers. We'll continue to share the numbers around the prescriber base growing. That's an important metric for us because it demonstrates the long-term trajectory and the long-term growth. And so I think those key sort of underlying metrics that tell us a little bit more about the health of the business and the underlying dynamics of the key metrics we'll share. Of course, on CIDP, sorry, just to say we'll also be sharing what is the source of patients. So 85% to 90% of our patients coming from IVIg, which is exactly where, at this point in launch, we thought we would be, that we are and we'll continue to share those types of metrics.

Okay. Later this year, you do have data updates, I believe, for seronegatives and ocular?

So second half of this year, seronegative and first half, ocular. First half next year.

First half of next year.

Yes. It's 2 Phase IIIs, which are label expanding. Indeed, seronegative is on track to read out second half of this year. The ocular MG study is also enrolling really well ahead of plan, so that's on track to read out first half of next year. And both are important. In line with what Karen said, in order to continue to innovate in the space, we need to bring these indications online.

How big are each of these, remind us?

They're both about 15% of the total MG population. So these are meaningful, sizable additions, a bit high unmet medical need.

What's your confidence on the seronegatives?

So in the seronegative patients, we know the drug works. We actually demonstrated that in the ADAPT trial. It is on label in Japan. So we have real-world experience where we see that VYVGART is actually working very well in seronegative patients. We have been presenting data multiple times in the clinical conferences. Out of Europe, we have seen interesting case series of patients being treated off label with VYVGART, with equally positive effect. So the question is not does the drug work? The question is, can you demonstrate it in a well-controlled clinical trial. We spent a lot of time with the FDA perfecting the trial, agreeing on the endpoint. So now it's a matter of reading out the experiment. So I think the confidence level is high, but it's still a clinical trial that has intrinsic risks.

Okay. As we look to next year, so this year is an execution year, continued execution for the 2 launches. But I guess for people who were looking for excitement, you have some data reads that are upcoming. And some of them, you could be first again. And in some, you would be in an unusual position of not necessarily being first to market. So can you -- first, I'll ask you to just name like what you think will be the biggest data reads of 2026 for argenx program-wise? And then we can talk a little bit about each.

Yes. And I don't want to skip 2025 because I think our audience is a little bit spoiled having 4 data readouts, one Phase III and three Phase IIs. I don't think that's a quiet year. I think that's a busy year in any other company.

But we have high standards for them.

We have high standards. The exciting thing about this year is that we have data details across the pipeline. So not only for VYVGART, but also for empasiprubart. And we will have a data readout for ARGX-119 in the genetic form of MG, which I'm really looking forward to.

So maybe let's talk about that for one minute before we get to next year. So 119?

So 119 is coming out of the argenx innovation playbook. It's a completely novel targets. We co-created a molecule with the leading experts on the target. The target is called MuSK. It's a key organizer of the neuromuscular junction. It's a unique antibody. It's an agonistic antibody. And by strengthening the communication at the neuromuscular junction, we think we can play with that molecule across a number of indications. The first one is the genetic form of myasthenia. These patients closely resembled the autoimmune form, so they have fatigable and muscle weakness. And it's going to be very interesting to see what happens in these patients with this type of molecule. We also announced ALS and SMA as the next indications and there's much more work to do for 119. So stay tuned on that molecule.

Those are actually quite challenging indications. Yes, so for next year, I mean I can name a few, let's say, Sjogren's, TED...

Arthritis.

Arthritis. Keep going.

550 is coming next year, and they're all quite equally exciting. The way to think about it at least from a biology point of view, that all marching on equally convincing biology rationale, they're all adequately derisked true proof-of-concept data. And now the matter or the question will be what is the magnitude of the effect in Phase III. In terms of size of the opportunity, roughly speaking, they're all same ballpark as the MG opportunity. So these are all meaningful Phase III readouts.

So maybe let's zero in on one that we didn't talk about, which is probably early, but still worth mentioning, which is IgAN or nephrology related diseases, right, IgA-specific nephrology diseases. So there are several companies that are looking at that indication. How are you thinking about argenx in terms of potential differentiation there?

It's an interesting molecule because it's the first time there's a precision tool, which is developed to precisely take out the pathogenic RGAs. We also have a switch built-in in the molecule, which if you dose it properly, can also remove IgGs because, frankly speaking, the jury is out on the IgAN biology are just IgAs, which are in play or also the IgG. So here, you have a tool, which can precisely take out these bad actors and answer that question once and for all. I think it's precision instrument, which will be arriving in a market which is currently being built. I look at this market as a novel market. It will basically have space for a number of molecules. And you see different generations of products. We see some repackage steroids. We see some blunt aspecific B-cell tools and then the precision tools. And I think that's ultimately where this market will go to. I'm very excited about that molecule.

So we'll be looking forward to all the data readouts and talking to you guys about read-throughs for sure. And then I did want to lastly talk about TED and its relation to Graves. Do you think that TED and Graves are 2 separate diseases?

From a biology point of view, if you talk to the specialists, it's one spectrum of the same disease. And there's a fancy new name. The old name and the correct name is GO, Graves. And it's the same spectrum of underlying disease. So I think the eye presentation is a very specific one of high unmet medical need, but probably that would be a read into Graves' as such.

So would you pursue Graves' as it's defined today?

Yes. I mean from a -- the way we select indications is we start with the biology, and Tim just talked through that is their development path, which we think varies. But the last lens that we look at is, is the market real? Is there an unmet need for patients? And that's what we're doing, the double click or the homework on at the moment is, is the unmet need there for patients with Graves' disease for an innovative medicine like argenx. And with -- in particular, when you speak to the doctors, they'll say, "No, these patients are quite well controlled." What we want to do is make sure -- go and speak to the patients and see what do they think and what are their unmet needs. And so we're doing that work at the moment, and we'll see where that lands.

Okay. With that, we're out of time for today. So we can continue this conversation again. There's much to discuss. But thanks so much, both of you for coming to Las Vegas. I know you both flew a long way to get here. And thanks, everybody, for sitting in on the fire side. We'll talk soon.

Thank you.

Thank you.