argenx SE (NASDAQ:ARGX) Q3 2023 Earnings Call Transcript

argenx SE (NASDAQ:ARGX) Q3 2023 Earnings Call Transcript October 31, 2023

Operator: Good morning. My name is Ralph, and I will be your conference operator today. I would like to welcome everyone to the call. [Operator Instructions] Thank you. I’d like to introduce Beth DelGiacco, Vice President, Global Head of Corporate Communications and Investor Relations. You may now begin your conference.

Beth DelGiacco: Thank you, operator. A press release was issued earlier today with our third quarter 2023 financial results and business update. This can be found on our website, along with the presentation for today’s webcast. Before we begin, I’d like to remind you on Slide 2 that forward-looking statements may be presented during this call. These may include statements about our future expectations, clinical development, regulatory time lines, the potential success of our product candidates, financial projections and upcoming milestones. Actual results may differ materially from those indicated by these statements. Argenx is not under any obligation to update statements regarding the future or to conform those statements in relation to actual results unless required by law. I’m joined on the call today by Tim Van Hauwermeiren, Chief Executive Officer; Karl Gubitz, Chief Financial Officer; and Karen Massey, Chief Operating Officer. I’ll now turn the call to Tim.

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Tim Van Hauwermeiren: Thank you, Beth, and welcome everyone. Slides 3. It is incredible to see what argenx team has accomplished this year meticulously delivering on the ambitious plan they laid out in January. We are reaching more and more gMG patients around the world and brought a subcutaneous product to the markets only 18 months after the IV launch. We reported stelas CIDP data and now have a path forward to approval next year. We advanced our pipeline with an important go decision in MMN with empasiprubart and are also keeping our promise to invest in the next generation of exciting preclinical assets, which we will talk about next year. Stepping back, we are working on 13 indications for VYVGART alone, with more slated to begin before 2025.

We have accumulated extensive clinical trial and we got experience with our first in class of seven inhibitors and continue to publish and present on this differentiated efficacy and safety profile. All of this is furthering our leadership in the space and broadening our understanding of the potential of VYVGART to change how we view autoimmunity. I would first like to share key highlights from the quarter and then move on to milestones ahead for the remainder of the year. The strength of our launch continues with double-digit growth quarter-over-quarter. Karen will share additional details later in the call. But at a high level, I’m really pleased with where we are today. We continue to hear countless patient stories and testimonials about VYVGART and this is motivating our teams to drive further growth.

We focus our VYVGART expansion goals across three key areas. Expanding within the gMG team and paradigm, expanding geographically and expanding into new indications. First on expanding within gMG, we are already seeing traction with new patients and new prescribers three months into the Hytrulo launch. We are the only gMG treatment that is available as an IV and as simple subcu injection, both offering a consistently strong clinical benefit. This choice in how and where patients want to be treated will help us move into earlier lines. Looking to our geographic expansion, we received VYVGART approval in Canada as our first patients in Italy and China and move another step closer to bringing Hytrulo to patients in Europe with a positive CHMP opinion, including self-administration on the label.

In addition to our commercial success, we achieved a key win for the CIDP community over the quarter and I’m planning ahead for indication expansion. We had a positive meeting with the FDA and can confirm we are on track to file our sBLA before the end of the year. As you will recall, the top line results from our vial trial, but nothing short of game changing. This was the largest global clinical trial for CIDP to date and we not only confirmed CIDP as an IgG-mediated disease, but also set a new standard for CIDP trials in the future. Efficacy was apparent across patient subtypes and we saw some normal 99% roll over into the open label extension study. Given the high unmet need for a safe and effective treatment alternatives, we feel a strong sense of urgency to bring our therapy to CIDP patients as quickly as possible.

Therefore, I’m also pleased to tell you that we have notified the FDA of our intention to use our PRV with the CIDP submission. Slide 4, today I’m speaking to you from [ANN] in Phoenix, Arizona, where the argenx team is presenting a significant amount of data on VYVGART. We have now those more than 1400 patients generating more than 1,000 patient years of data across all clinical trials. And in MG, we now have almost two years of real world experience in approximately 6,000 patients. This has provided us confidence in the consistency of the data and a deep understanding of the clinical profile of our Fc fragments, and why the way in which it binds to FcRn can lead to differentiated results. At the conference, we are presenting aggregated data from ADAPT, ADAPT subcu and the associated open label extension studies which extend out beyond three years and 90 treatment cycles.

We see that responses are repeatable cycle-over-cycle, and that clinical benefit improvements are of a consistent magnitude. We also see consistent results on minimal symptom expression. In every dataset, we are able to achieve approximately 40% MSE, which is an important part of our value proposition to patients. We also show in our data that patients who are able to achieve MSE as quality of life measurements comparable to healthy populations, which is why we believe this metric should be the goal that physicians seek to attain with their MG patients. Safety continues to be a key differentiator and we show that across all indications and all those in schedules. Treatment emergent adverse events are mild to moderate and do not increase with longer exposure.

And we do not see reduction in albumin or increase in cholesterol. The unique clinical profile that we confirm it this data can be linked to the unique design of the of rituximab, which of course was born out of Dr. Sally’s Ward groundbreaking immunology research on FcRn biology. Since that time, we have generated a new understanding of the role of FcRn beyond a regulator of IgG levels in circulation. We’ve noted FcRn is important in the trafficking of antibodies into tissues and that by binding FcRn our fragment can reach the tissues inside of the disease very fast. It is also involved in the auto antigen presentation process, which may explain the data we saw in pemphigus in reducing autoreactive B cells Lastly, given the natural way in which we bind FcRn, we can uniquely modulate the targets, blocking argenx from binding, but not degrading FcRn itself into the lysosome for degradation.

This has allowed us to select doses and dosing regimens that optimize the clinical benefit of rituximab without having to manage for dose related adverse events. Our leadership in FcRn presents itself through our business. From the efforts of our commercial and medical affairs teams to the ongoing translation work of our scientists who are rewriting the textbooks of immunology. Slide 5. Looking ahead, we are excited to advance our pipeline with two upcoming Phase 3 read–outs. The first read-out will be the top line results from our ITP ADVANCE subcu study followed by our pemphigus ADDRESS around year end. Let’s begin with a high level overview of Hytrulo in ITP. Our goal for the subcu study is to replicate the Phase 3 IV results, which were recently published in The Lancet.

The study had the same design and endpoints. Although we increased enrollment to give ourselves more room for success with a highly refractory patient population. The primary endpoint is challenging. So in terms of the threshold for success, we will be focused on the delta between treated and placebo. This endpoint is designed to meet the regulatory requirements but we also will be looking at the fast onset of action, the IWG score, and safety. The IWG score is what we view as the most clinically meaningful endpoint, as it is based on how clinicians make treatment decisions in the real world. ITP patients are often very fit, but suffer from fatigue and anxiety due to the risk associated with an unexpected bleed. They typically cycle through multiple treatments and a trial and error approach, including to multiple TPOs. What we have learned in our conversations with the ITP medical community is that there is a real need for a new modality to treat ITP particularly new modalities that come with a favorable safety profile, which is potentially where VYVGART could step in, Slide 6.

Next, we can expect to see data from the ADDRESS study in pemphigus around year end, meaning the data read-out will fall right before or after the year-end, as we navigate the data analysis and communication around the holiday period. The safety trials for pemphigus was built on the adaptive Phase 2 results, where we saw a fast onset of action, with 90% of patients achieving disease control after just one to two infusions, and a quick time to see us on a low dose of steroids. In the Phase 3 study, we implemented an official stereotyping protocol and this is integrated in our primary endpoint. Similar to ITP, the primary endpoint is a challenging one, defined as the proportion of patients achieving complete remission on a minimum dose of steroids within 30 weeks.

It combines reaching complete clinical remission, taping to and maintaining a low dose of steroids and sustaining this for 8-weeks. The current standard of care, including steroids and rituximab, this ample of room for a fast, new, durable treatment with few side effects. This will be especially important in a post-COVID setting. Now that we have a better understanding of the detriments of long term immune suppression. Slide 7. In 2024, we have multiple catalysts from our pipeline to look forward to. I’m particularly excited for the MMN top line results to be shared next year. This is the first indication for our second pipeline in a product ENX.PA and is a very serious disease, which fits perfectly within the infrastructure we are building for gMG and CIDP.

We also have two upcoming GO/NO GO decisions first in both pemphigus end of this year, and also in myositis, which is expected in the second half of 2024. Phase 2 POTS results are expected in the first quarter of 2024. We have the potential to be a sizable opportunity. This is a study where we will learn a lot about the role of IgGs in this growing indication. And Sjogren’s results are expected to be shared in the first half of 2024. This is an exciting opportunity within rheumatology where we believe strongly in the role of IgGs as a disease driver. Lastly, we are focused on long term sustainable innovation and in order to achieve this, we need to invest in the growth of our early stage pipeline. We have several exciting programs through our IIP, which we will communicate as we get closer to INDs but we are working from a strong track record of success.

Every program in our pipeline, including those that we are developing ourselves, and those that are in the hands of others have all been co-created with a top notch academic collaborators and are grounded in a breakthrough immunology innovation. The new programs will also have this characteristic feature of assets from our IIP. I will now turn the call over to Karl.

Karl Gubitz: Thank you, Tim. Slide 8. Our third quarter 2023 financial results are detailed in the press release from this morning. I will highlight the key points here. The continued momentum of our launch is reflected in your third quarter revenues. We generated $340 million total revenues, including $329 million in global net product sales, and $11 million in collaboration and other revenues. Our revenues include $700,000 in royalty revenues from VYVGART sales in China. At quarter three global product net sales of $329 million represents growth of 22% versus quarter two. The breakdown is as follows; the U.S. sales is $280 million, Japan $15 million, EMEA $26 million and China $7 million. It is important to note two points on the VYVGART net product sales.

First in EMEA, net sales includes as a one off positive impact of approximately $6 million as a result of a true-up of German price. Remember that beginning in March, we started to accrue revenue in Germany at the protected negotiated price. The price was finalized in September and that throughout reflected in the quarter three results. Second, the product net sales to China of $7 million is revenue generated on the supply of commercial vial design lab, our first party collaborator in China. The sales design lab or a cost, plus a nominal management fee. In design labs sales of vials, organics receives the royalty, which is reflected in the $700,000 mentioned earlier. Our total expenses are $420 million for the third quarter, resulting in an operating loss of $81 million over quarter.

We ended the quarter with $3.2 billion in cash, cash equivalents and current financial assets. This includes the net proceeds of approximately $1.2 billion from the global offering completed in July. I will now turn the call over to Karen, who will provide detail on the commercial front.

Karen Massey: Thank you, Karl. Slide 9, I’m really happy where we are without VYVGART launch having rapidly and successfully bought a first in class medicine to patients across multiple markets. Today, I will share the details around the current launch dynamics and then highlight the ambitious plan ahead. Our goal is to continue to raise the bar for patients globally in what they can expect from a treatment for their autoimmune disease changing what well controlled means that they don’t have to weigh the trade-offs between efficacy and safety and can experience a low treatment burden that allows them to get back to their lives. Before we discuss the performance over the quarter, I want to say that the multi-dimensional growth strategy we have in place.

We have a bold vision for VYVGART bringing innovative therapy new patients, expanding our geographic reach, and maximizing the impact of new indications. We have already added Hytrulo to our product suite and continue to develop future product presentations to support our plan to move earlier in the treatment paradigm. We are rapidly bringing VYVGART and VYVGART Hytrulo to market in new countries and had key pivotal readouts on the horizon, which will further help us realize the broad potential of VYVGART and [indiscernible] into new indications. Slide 10. First, on broadening outpatient reach with VYVGART and VYVGART Hytrulo. With our third quarter results, we have now generated an impressive $816 million in net product revenues year-to-date.

The large majority of these revenue is driven by VYVGART. And there are a number of metrics that we have observed that give us confidence in the trajectory of both VYVGART and VYVGART Hytrulo in the U.S. First, we’re seeing these VYVGART naive patients comprised in majority of our Hytrulo prescriptions. So uptake is not being driven by a switch dynamic but rather by expansion. By providing flexibility in how and where patients receive treatment, we are reaching a broader population, which is what we had hoped for. The initial feedback from doctors on VYVGART Hytrulo has been broadly positive and they recognize the benefit of the simple 30 to 90-second single injection enabled by the unique and Halozyme ENHANZE technology. We also continue to make progress shifting into earlier treatment lines and VYVGART Hytrulo is contributing to this expansion.

With physicians, we’re focusing not only on expanding our prescriber base, but on also driving brand loyalty with our current prescribers. VYVGART Hytrulo is helping with both of these goals and we’re still at the front end of the adoption curve with neurologists. The opportunity before us is extensive. In the U.S., injection site they’re actively working to set up protocols to enable the injections. This takes time and we’re seeing consistent progress. The first Hytrulo payer policies are also being published. So between this and the site’s becoming available for treatment and the high level of excitement from physicians and patients, we expected to see this pull through into new patients dots as well. Overall, we are right where we expect it to be.

We’re on the path towards maintaining the trajectory of our launch, consistent quarter-over-quarter progress towards reaching more gMG patients globally. Slide 11. Second, in terms of expanding our suite of product presentations, I truly doubt first generation subcutaneous but our goal is to continue to innovate on the patient experience with future product presentations as well. Our second generation subcutaneous product is a prefilled syringe which is already in development. Our plan for the PFS is to enable self-administration in the U.S., given the simplified experience for patients. We will also aim to advance our PFS product forward for both MG and future indications including CIDP in parallel. The approval path includes bioequivalence and human factor studies, as well as stability data.

And we expect to be able to share more information with you on timing early next year. Slide 12. Thirdly, we’re delivering growth by moving into new markets with VYVGART. We’re thinking about this both in terms of how we expand geographically and also as we look to repeat the success of MG in new indications. On our geographic expansion, starting with China through our partnership with Zai Lab. After June approval, the first patients began VYVGART treatment during the third quarter. Zai also filed for an approval of subcutaneous efgartigimod and we expect to hear back on an approval decision next year. We continue to make progress on pricing and reimbursements across the EMEA region and have had very good outcomes so far with our negotiations with reimbursement security in Germany, Italy, and now Spain also recognizing the important value that VYVGART provides to gMG patients and to healthcare systems.

For subcutaneous efgartigimod, we received a positive CHMP opinion in September, which was a significant milestone for the region and notably, the label in EMEA will include self-administration. We also received an approval in Canada during the quarter and we’re planning for a launch before end of year. Similar to Europe, the pricing and reimbursement discussions with the HCA in Canada have been going very well. And VYVGART has been recognized as better value than other entrenched biologics. This is an important win for patients in Canada. Slide 13. And finally, on our indication expansion, and here was the largest trial ever run in CIDP and the results were impressive. So we are busy preparing for launch in CIDP next year. As Tim already mentioned, we’ll be filing our application with a priority review voucher because we recognize that patients are waiting for new innovation in CIDP.

Our priority now is to take those key learnings from the MG launch and apply them to our CIDP strategy, while also thinking about where we can expand and improve. We’re also investing for the long term, building out our launch capabilities in a very intentional and disciplined way to enable success across multiple indications down the road. It’s certainly an exciting time to be at argenx. I’ll now turn the call back to Tim.

Tim Van Hauwermeiren: Thank you, Karen. Slide 14. As we conclude, let’s come back to where we are today and where we are going. We are leading from a position of strength, delivering on our commitment to bring transformative treatments to as many patients as possible. Through intentional launch strategies and relentless execution, we continue to reach new types of patients in new regions and make clear progress expanding into new indications. As innovators we’re looking forward and are incredibly excited about the opportunity ahead of us to lead what we believe to be one of the biggest drug classes ever. Thank you for your continued support as partners on this mission. I will now turn the call back to the operator.

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Q&A Session

Operator: [Operator Instructions] Your first question comes from the line of Yatin Suneja from Guggenheim Partners. Your line is open.

Yatin Suneja: Thank you for taking my question. Question on the PV study. Could you maybe talk about what would you think you would like to show with regard to the seeming efficacy endpoint. And also have you disclosed the powering assumption. How should we think about placebo performing? Thank you so much.

Tim Van Hauwermeiren: Good morning, Yatin. Thank you for joining us in the call today. The FcRn study which is on track readouts before the end of the year, we will actually give top line data in line with how we typically show data. So they will be sufficiently complete and transparent to understand the clinical utility of the medication in In this setting. It will center around the primary endpoint that we will assess the delta between active and placebo on the primary endpoint of FcRn where patients need to achieve CR on a minimum dose of corticosteroids and that for at least 8-weeks. We will also disclose the key secondary endpoints which have to do with steroid tapering and speed to disease control. And, of course, importantly, safety.

So it will be comprehensive top line data sets in line with how we have been showing top line data in all the indications before. We have not disclosed powering assumptions. We never do that. But you know, by now that we are relatively conservative when it comes to powering the studies. Remember, this is the single biggest [FcRn] study ever with 222 patients involved. Thank you for the question.

Operator: Your next question comes from the line of Tazeen Ahmad from Bank of America. Your line is open.

Tazeen Ahmad: Hi, good morning, and thanks for taking my question. Tim, just want to get a sense of how you’re thinking about what the uptake of CIDP could look like relative to the very steep uptake you had with gMG and are still having with gMG. Just want to set expectations for that. Thanks.

Tim Van Hauwermeiren: Thank you for being with us today. And thank you for your question on CIDP. Of course, we are delighted with the stellar data which we generated in the year trial. And it is fair to say that the trial data put us in a position of strength. I believe that up to Karen here with me in the room today to comment on some initial thoughts when it comes to take off in CIDP markets. Karen?

Karen Massey: Yes, thank you, Tim and thanks for the question. We’re certainly excited and getting ready for the approval of CIDP. And we’re doing exactly that workup right now, to really get a good sense based on the real data that we have, and the strong data that we have to break down the market into the segments of neurologists, as well as patients to really understand how quickly might the uptake be? And how can we drive that to be as fast as possible. From my perspective, based on what we’re seeing early on, I wouldn’t expect it to be as fast as MG that you – as we’ve talked about before, there is – IVIG is approved. I think we compete well versus IVIG. However, obviously, there’s some loyalty from the neurologists and from the patients in this progressive disease where you know, shifting to a new medicine is something to be considered deeply so.

So we’re working it up. And we’re going to do everything that we can, we’ll leverage all of our learnings from MG. We will leverage all of the work that we’ve done on MG to maximize the uptake, but I don’t think it will be as fast as we’ve seen in MG.

Tim Van Hauwermeiren: Thank you, Karen. Thank you Tazeen for the question.

Operator: Your next question comes from the line of Derek Archila from Wells Fargo. Your line is open.

Derek Archila: Hi, good morning, and thanks for taking the question. And congrats on the progress. Maybe question for Karen, just you know, in terms of some of the checks that we’ve done more recently with the positions and really starting to position VYVGART earlier line, even as early as first line in MG. Is that something that’s consistent with your comments earlier in terms of what you’re seeing? And again, how do you kind of navigate the payers if that is the case? Thanks.

Karen Massey: Yes, absolutely. Thanks for the question. And that is consistent with what we’re seeing and what our strategy is, of where we think we can provide the most value, which is we’re seeing consistently moving since launch – moving earlier and earlier in the treatment paradigm. As neurologists get more comfortable with VYVGART, more confident in the safety profile in particular, and they’re really seeing the benefit to patients. Certainly from a payer perspective related to that part of your question, we’re not seeing any challenges to date, we have broad access in the U.S. And obviously, we’re securing pricing and reimbursement across Europe very successfully. So the value of this got in MG, including in earlier lines is really being recognized.

Tim Van Hauwermeiren: And most of the policies – state policies Derek actually stipulates that VYVGART can be used either straight after mestinon or mestinon with steroids, or mestinon with steroids with one IST. So there is actually a natural positioning to move upstream in the treatment paradigm. So is the dynamic we had all hoped for, and which is happening, but it’s happening in its own cadence, which is going to take time. Thank you for the question.

Operator: Your next question comes from the line of Thomas Smith from Leerink Partners. Your line is open.

Thomas Smith: Hi guys, good morning. Thanks for taking our questions. And congrats on the progress in the quarter. Just on the timing for the bullous pemphigoid GO/NO GO decision. Can you comment on what’s driving the accelerated timing there? Is that faster than expected enrollment? Or is there some triangulating of this readout with the availability of Phase 3 pemphigus data? Or there some other factors we should be considering there? Thanks.

Tim Van Hauwermeiren: Thanks for the question, Thomas. The bullous pemphigoid study is a seamless Phase 2, Phase 3 study where we derive sufficient confidence from the pemphigus data to venture into this trial design. The 40 patients GO/NO GO decision points so 20 patients on active, 20 patients on placebo is actually on time. And will be indicating event for a student continue to scale this trial into the Phase 3 part of the study, so very similar to CIDP. So I’m very happy with the performance of the team. Again, this is a significant recruitment efforts. And we’re on track to show you the data as planned. Thank you for the question.

Operator: Your next question comes from the line of James Gordon from JPMorgan. Your line is open.

James Gordon: Hello. James Gordon, JPMorgan, thanks for taking the question. Two questions on PV and the ADDRESS trial, please. The first one is just the timing. So the transition of clinical trials having completed the primary on I think it was August 22. So just in terms of further steps needed before you can reveal the headline results and what has been the cause of the slight delay announced today because it sounds like now we might not get the data, at least the headline data too early 2024. So why there has been that slight delay? And then the follow up question was just also on the same trial. Just understand there’s some significant differences with reduction in terms of how quickly the drug has efficacy come on, and then maybe also tend to steroid tapering.