argenx SE (NASDAQ:ARGX) Q4 2022 Earnings Call Transcript

argenx SE (NASDAQ:ARGX) Q4 2022 Earnings Call Transcript March 2, 2023

Operator: Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Thank you. I’d like to introduce Beth DelGiacco, Vice President 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 full year 2022 financial results and the recent 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 developments, regulatory timelines, 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 Keith Woods, Chief Operating Officer. I will now turn the call over to Tim.

Tim Van Hauwermeiren: Thank you, Beth, and welcome, everyone. Next slide. Reflecting on 2022, it was a year of many achievements for argenx as we evolved from an R&D organization into a fully integrated R&D and commercial organization. We launched our first in class FcRn blocker VYVGART in the U.S., Japan and Germany and exceeded our own expectations, generating $401 million in global net product revenue. I’m very proud of the team for the strategy they built and executed, solidifying our reputation with our key stakeholders. With this significant momentum, we start 2023 in a position of strength. We also have our marching orders in hand for multi-dimensional expansion to reach more patients with VYVGART through anticipated regulatory approvals and launches in new regions and by driving usage earlier in the gMG treatment paradigm.

Next slide. This year, we also generated a significant amount of data on our first in class FcRn blockers through clinical trial readout, installation research and pre reviewed publications. We reported 50 data from our subcu bridging study in gMG, which demonstrated non inferiority to the IV, based on IgG lowering, as well as consistency across secondary efficacy endpoints and safety. We have now filed for approval with the FDA, EMA and PMDA and have a PDUFA target action date in the U.S. of June 20, 2023. We received a communication from the FDA in January notifying a three month clock extension. Since that time, the FDA’s review continues and we are engaging regularly with the agency being responsive to inquiries as we advance towards an anticipated approval.

We reported 50 ITP data from our first registration trial last May and presented these data during a planned recession at ASH in December, which triggered significant interest from the hematology community. We are preparing to submit an MAA in Japan in the middle of this year for approval, based on the first advanced trial and will await the data readout of advanced subcu in the second half of this year to support filing in the U.S. and Europe. Across all of our efgartigimod studies, we also generated significant data in 2022 to broaden the scope of our safety database, which now includes more than 3,000 commercial patients globally, more than 1,300 clinical subjects, up to 19 cycles of intermittent cyclic dosing, and more than two years of weekly chronic dosing, all with a cumulative exposure of more than 1,000 patient years.

Lastly, before we look ahead to 2023, I want to call out a strong sign that continues to serve as a cornerstone of argenx, solidifying our leadership in FcRn as both the first in class and likely best in class therapy. Our teams are committed to building a deep repertoire of preclinical and translational data, which can serve as an important basis for indication selection or to underscore the clinical or commercial data we are generating. We had several key publications in 2022 including on, one, the long term remission fee observed in and the underlying reduction of autoreactive B-cells. Two, the differentiation of our Fc fragment and its intracellular phase keeping FcRn in its recycling path without interfering with albumin homeostasis. Three, review of the humeral immune response to vaccines during treatment.

And four, multiple publications and presentations on the health economic outcomes front highlighting the value that this drug can bring to gMG patients from a quality of life perspective. Next slide. We are well on our way to achieving the argenx 2025 vision, which we laid out a couple of years ago. Specifically, we are now reaching patients with VYVGART globally, evaluating efgartigimod in 13 severe autoimmune indications, preparing for the first clinical efficacy data from ARGX-117, our next pipeline in the product candidate and we are investing in our ecosystem of innovation. We have an impressive track record for molecules that have emerged from our immunology innovation program, both within our own pipeline and those with our partners.

Beyond efgartigimod and ARGX-117, some of these include, ARGX-119, an agonist to muscle specific kinase, we dosed the first subject last month, our third pipeline candidate is now clinical stage. Cusatuzumab targeting CD70, we formed Oncoverity with the University of Colorado last year based on the translation work of Dr. Clayton Smith on the CD27/CD70 pathway, which when combined with our clinical studies is a pretty robust data set. ARGX-112, targeting IL-22 receptor in development by LEO Pharma and moving forward in development. And ARGX-115, targeting GARP development by AbbVie, which is also advancing. Next slide. We have a very busy year ahead as this progress even further on our path as an integrated immunology company. We continue to expect top line data from the ADHERE trial of efgartigimod in CIDP in the second quarter of 2023.

There remains a significant unmet need for CIDP patients for a safe, effective therapy with a manageable dosing schedule and delivery. With ADHERE, we hope to address these needs and demonstrate the potential for efgartigimod to provide patients with a differentiated therapeutic profile across efficacy, safety and convenience measures. In addition to the advanced subcu readout, in the second half of this year we also expect pivotal data from the ADDRESS trial for pemphigus. With ADDRESS, we hope to see efficacy data, which build on the exciting results from Phase II, a fast onset of action driving patients into disease control and ultimately complete remission with the ability to taper to a minimal dose of steroids. We will have our first group of concept data in post COVID POTS in the fourth quarter of 2023.

This was an indication that was brought to us, particularly with the growing incident in the wake of COVID. Physicians report that IVIg and patients, and we know that anti adrenergic and antinuclear antibodies are involved in disease pathophysiology. All of this is a strong rationale for evaluating efgartigimod in what could be a very sizable indication. Finally, we’re also planning for the first clinical efficacy data from ARGX-117 in patients with multifocal motor neuropathy. IVIG is the only treatment option for MMN, and it comprises a significant proportion of that market. With our interim analysis in the middle of this year, we will have data from the first cohort of nine patients. Our data snapshot is to determine whether to advance to its second larger cohort and at which dose.

We continue to produce translational data supporting the pathological role of IgG autoantibodies in MMN and the rationale for a C2 inhibitor as a new treatment modality. Before I turn the call to Karl, I want to spend a few minutes on the leadership transition we announced today with its planned retirement. We are very excited to welcome Karen Massey to the team as our Chief Operating Officer as of March 13, 2023. She is a very talented and inspirational leader with significant operational and commercial experience. She’s joining us from Genentech Roche, where for the last three years she had a global clinical operations team of over 2,000 people. She has a broad commercial experience, including specific experience within the neuroinflammation space, having launched first in class medicines which disrupted the treatment paradigm.

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I was very impressed to hear about her role with Ocrevus launch, taking an already successful launch and accelerating it in a crowded market. Beyond this remarkable achievement, the quality that most caught my attention is to focus on building teams, creating a company culture and community and designing nimble, global, innovative organization, all of which will benefit argenx. I would also like to share with you my gratitude to Keith for his partnership and his friendship. He is a visionary leader with signs and to the patients at the center of everything we do. We are so fortunate for the role he has played in our growth over the last five plus years of his distinguished career in biopharma. He joined argenx after the release of data, when he convinced me that argenx could launch efgartigimod.

He saw a vision for argenx commercially not only in the U.S. but also Japan, Europe and Canada. I could never imagine at that time the impact it could have on patients, even in the first year of launch. He was committed throughout our search process to find the right person to fill his role. I knew I could count on him to stay until we all agreed we had the right successor and we are both very confident we have that in Karen. We are also fortunate he will be staying with the company not only during the transition period, through the SC Efgartigimod launch, but also after he retires. He will transition to serve as a Board adviser on our commercial committee, but he will continue to make a significant impact on our commercial strategy and for our patients.

And with that, I will turn the call to Karl.

Karl Gubitz: Thank you, Tim. Our full year 2022 results are detailed in our press release from this morning. So I will keep this section of the call short. On the next slide, you will find global net VYVGART revenues for the fourth quarter and the full year 2022. We generated $401 million in global net product revenues in 2022 and $173 million in the fourth quarter. Specifically which was comprised of $159.1 million from the US, $8.3 million from Japan, and $6 million from Europe and the other distributor markets. Next slide, total revenues for the full year 2022 were $445.3 million, which also includes $10 million in collaboration revenues and $34.5 million in other operating income. Cost of sales for the year were $29.4 million.

Our total R&D and SG&A expenses for the full year 2022 were approximately $663 million and $472 million, respectively, and can mainly be attributed to efgartigimod and other pipeline research expenses, as well as marketing and headcount expenses related to our global launch. The research and development expenses includes the recognition of a priority review voucher submitted with the BLA filing for SC efgartigimod. We ended the year with $2.2 billion in cash, cash equivalents and current financial assets. Based on your current operating plans and a projected 2023 cash burn of approximately $500 million, we expect our existing cash, cash equivalents and current financial assets, together with anticipated future product revenues to fund the company to profitability.

You can find additional details and these numbers in the press release we issued this morning. Before I turn the call over to Keith, I would also like to share my gratitude. Under his leadership, we were ready to launch VYVGART and it has been a very successful first years, both with our performance, but also seeing the team of leaders that Keith has built across the commercial organization. I am confident that Karen is the right person to build on this momentum and lead us to the next stage of our growth as a global company. Keith?

Keith Woods: Thank you, Karl, and thank you both for the kind words. While I’m very much looking forward to this next phase, spending more time with my family and transitioning to an advisory role for argenx, it was still a difficult decision to make. The last five plus years have been the most rewarding of my career. Being able to build a commercial team and launch a truly transformative first-in-class medicine for patients. I am proud of the success we had in the first year and know that this is just the beginning for argenx and for patients, especially with Karen at the helm and the team of impressive leaders behind her. We closed out the first year of our VYVGART launch in a very strong position. We were able to reach more than 3,000 patients in 2022 with our transformative therapy, well beyond the expectations we set for ourselves at the beginning of the year.

Our commercial and medical teams have done an outstanding job working hard every day on our path to redefine how autoimmune diseases are treated and the work has just begun. First, on patients. We continue to see a steady demand from new VYVGART patients, both in new scripts and patients on therapy. We also see positive trends and moving earlier into the treatment paradigm. We still see approximately half the patients coming from IVIg as their most advanced therapy, but the dynamic is shifting in the other half, with more coming from earlier lines than refractory. We still continue to learn about our launch and the trends, but we are going in the direction that we want. We are seeing a similar positive trend with physicians. Increasing numbers of repeat prescribers and the growth in the number of physicians have written greater than five or even greater than 10 prescriptions.

Our field teams have reached more than 90% of their key targets and almost 8,000 healthcare professionals overall across targets and non-targets. Our medical affairs teams have had a significant presence at all major neurology conferences, broadly reaching the prescribing community. They also worked on more targeted engagement through scientific road shows to reach the typically difficult to access institutions. The field teams were nimble throughout the year leaning in on tactics that work well, which led to an overall successful year of physician engagement. Payer interactions also continue to be an area of strength for this launch. We ended the year with approximately 90% of commercial lives covered and almost 80% of these policies are favorable.

The team is still successfully working to switch unfavorable policies to favorable, removing IVIg as a step through, just as an example. The recertification dynamic does appear to exist as we are switching to a new year. But this is something we are watching closely. And for the most part, re-approvals have been smooth and occurring every six to 12 months, which allows the physicians to redose as they see fit. We presented data last month on the time distribution between cycles one and two from over 4,00 VYVGART patients. As we saw in ADAPT and ADAPT+, it is a true distribution with 32% of patients receiving a second cycle less than six weeks after the conclusion of the first. But on the other side, we also had 32% of patients receiving a second cycle greater than nine weeks after their last dose of their first cycle, the rest fall in the middle.

Based on the data we see and the feedback we hear, individualized dosing is doing what it’s supposed to do. Patients asked for this when we were designing our trial and we’re pleased to see that a substantial number of patients are benefiting from that decision. Next slide. We are now looking ahead to the expected FDA approval of subcutaneous efgartigimod in June. The team is using the extra three months to refine our strategies and expand our opportunity to reach patients both with IV infusion and subcutaneous administration. We’re taking a similar early engagement approach with payers as we did with the IV launch, but we still expect several months where we won’t have a published policy in place post approval. Beyond subcutaneous approval, we also expect to drive VYVGART expansion geographically this year, with anticipated regulatory approvals in China, Canada and additional launches in Europe as we work through price negotiations.

Before I turn the call to Tim, I went to end with one VYVGART patient story from my trip to Japan earlier this year. I heard from a young mother who was really struggling when she learned that she had a chronic disease because she was feeling very socially isolated. She was not being able to participate in family activities, play with her children or pick them up and give them a hug. She had lost her job because she could not use the equipment to perform small manual tasks. VYVGART worked quickly for her and within a week or two, she had restored more movement than she had in several years. Her gratitude was so rewarding. We shared her story more broadly with our teams to remind them of the impact that we can have. This is the motivation we are taking forward as we build on our momentum from 2022 and apply it to our successful strategies for the year ahead.

Back to you, Tim.

Tim Van Hauwermeiren: Thanks, Keith. Next slide. 2022 was a historic year for us. I will first see it as a commercial company and we are very happy with the outcomes. We build momentum across our key stakeholders with physician and patient demand and a smooth payer process. We know from precedence that the initial six months of the launch often defines the trajectory and now we have our trajectory. We are looking forward to the rest of 2023, focusing on multidimensional expansion into new geographies, the anticipated launch of SC efgartigimod and moving into earlier line gMG patients. We also see the opportunity to transform the treatment paradigm in many other autoimmune indications. As we look ahead to our upcoming data readouts in CIDP, ITP and PV and the first efficacy look at ARGX-117 and MMN. Thank you for your time today. I would now like to open the call to your questions.

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Q&A Session

Operator: And your first question today comes from the line of Tazeen Ahmad from Bank of America. Your line is open.

Tazeen Ahmad: Hi, guys. Good morning. Thanks for taking my questions. Keith, I want to wish you really well. It’s been a great to get to know you and you’ve been an amazing head of commercial and all companies deserve to have someone as good as you. Maybe my question will be on MMN for the interim read in mid-2023. What level of data should we be expecting to see at the top line? And what would you consider to be clinically meaningful? Thank you.

Tim Van Hauwermeiren: Thank you, Tazeen, and thank you for joining us in today’s call. That’s what do you think and will be the level of disclosure detail for the first nine patients.

Beth DelGiacco: Yes. So what we really want to see from those first nine patients is to understand early clinical activity but also what level of dose we want to take forward into that second cohort. We haven’t said what exactly we’ll share, but that’s really the goal of that first cohort and disclosure will be around that.

Tazeen Ahmad: Okay. How many patients will that be again? Sorry, Beth.

Beth DelGiacco: Nine patients.

Tazeen Ahmad: Nine patients. Thanks.

Tim Van Hauwermeiren: The way to think about it, Tazeen is, all MMN patients today are on IVIg. So the way that the proof of concept is designed is that, we first establish the dependency of these patients. So we basically document their IVIg cycle and then we switch either to placebo or ARGX-117 and see whether we can keep the patient stabilized compared to placebo. So we think this first dose cohort should give us a very clear idea of whether the drug works and more importantly what level of C2 inhibition we need going forward.

Tazeen Ahmad: Okay. Thank you, Tim.

Tim Van Hauwermeiren: Thanks for the question.

Operator: Your next question comes from the line of Rajan Sharma from Goldman Sachs. Your line is open.

Rajan Sharma: Hi. Thanks for the question. So I was just wondering if I could get your thoughts on kind of VYVGART’s trajectory this year. And whether kind of the slight delay to the PDUFA for the subcutaneous formulation has changed your expectations? Thanks.

Tim Van Hauwermeiren: Thank you for this question. Keith, do you want to run this one?

Keith Woods: Very happy to do so, Tim. So first of all, the delay by three months in the PDUFA date for subcu, I mean, it does change the fact that we were going to have two different opportunities to serve patients with two different formulations for nine months of the year. That only turns into six months of the year. As you know, we haven’t given guidance at this time. And so, all I can say is that, we believe that the trend that we’re currently on will continue to allow for growth and we believe that subcu will expand the total potential market for patients that would receive VYVGART.

Operator: Your next question comes from the line of Thomas Smith from SVP Securities. Your line is open.

Thomas Smith: Hey, guys. Good morning. Thanks for taking the questions and let me add my will wishes to Keith on his transition and retirement. Just, I guess, one quick one on the subcu PDUFA. It sounds like the dialogue here is pretty dynamic regarding the application. Can you comment on whether there’s been, I guess, any area of particular focus for the FDA in the review? Whether there’s been any unanticipated asks for further data?

Tim Van Hauwermeiren: I would say that the review continues at a good cadence. The way we would describe the ongoing Q&A is rather routine, rather standard. We get your typical questions in review of the file. So no specific area to call out. So we believe in the strength of the date of our file and we see continued good progress in the review of the file. So we’re all hopeful for the June 20 PDUFA date.

Thomas Smith: Okay, great. Thanks. And if I could just squeeze in one follow-up just on the commercial — just on the commercial trajectory. If you could just comment on expectations, I guess, for Q1 relative to Q4? And how to think about combination of seasonality and kind of payer reset there would be very helpful. Thanks.

Tim Van Hauwermeiren: Keith, would you like to take this question please?

Karl Gubitz: So it’s Karl here. So I think for Q1, I mean, the launch — adding new patients, consistent growth. Two things to call out in Q1. We do see the impact of seasonality. If we lose the selling day because of an holiday or a winter storm, that sales do not move to the next day. We basically lose those sales. And also we do see re verification of benefits, which typically happens in Q1.

Thomas Smith: Understood. Thank you guys.

Tim Van Hauwermeiren: Thank you.

Operator: Your next question comes from the line of Yaron Werber from Cowen. Your line is open.

Brendan Smith: Hi, guys. This is Brendan on for Yaron. Thanks for taking the questions. First, quickly on CIDP. Can you maybe just tell us how many patients you have randomized into Stage B as of today? Is that something you’re able to share with us? And then just looking back at the (ph) studies, it looks like there may be some slight difference in the rate of relapse in treatment naive versus IVIg experience patients. So are you able to give us a little bit of a sense of what the breakdown of patients enrolled in here thus far is looking like, just in terms of background therapy? Thanks.

Tim Van Hauwermeiren: Yes, Brendan, thanks for the question. So we’re not public on the number of patients randomized in Stage B. I think what we said earlier is that, we have exceeded the number you would normally need to successfully come to the (ph) events. So, that all continues to progress well. In terms of representation of patients with the different backgrounds being newly diagnosed on naive, being on steroids or being on IVIg, I believe the last disclosure we did is a disclosure to go forward. I think that was about 40 patients in the process. We think there maybe a relative increase in IVIg patients. It was the second half of the trial, because we had more U.S. sites getting online and involved, but that’s my speculation.

From a biology point of view, looking at the mode of action of Cusatuzumab, I cannot think of the reason why an IVIg patient or a steroid patient would react differently to VYVGART’s mode of action. So let’s wait for the data and see whether we can create or see any correlations between, for example, baseline characteristic of prior therapy and your ability to respond on VYVGART? Thanks for the question.

Brendan Smith: All right. Great. Thanks, guys.

Operator: Your next question comes from the line of Yatin Suneja from Guggenheim Partners. Your line is open.

Yatin Suneja: Good morning, everyone. Keith, that’s been great working with you. Good luck with the future endeavor. So just following up on a question on the CIDP. Could you provide some detail on the baseline and cap score that you showed or you might be expecting in Stage B? And the reason I ask is because, for the first 40 patient in ADHERE the baseline was around five, which seems to be a little bit higher than previous study. And there seemed to be this inverse correlation between a high score and probability of relapsing. So just trying to get a sense of how the placebo might perform? Is there a particular score that you are looking for? And then the second part is like, what about the maximum number of patients that can be enrolled in Stage B? Thanks.

Tim Van Hauwermeiren: Thank you, Yatin. So on question 1, I need to wait for the answer also until we unblind the study and we look at the data. I have no further information above and beyond what was historically disclosed. And it’s also very difficult to compare apples with apples in between the IV trials and the ADHERE trial. There is probably a difference in placebo response. But it’s premature for us to comment on that. So let’s wait until we unblind the data. Is there a limit to how many patients we can enroll in Phase B? No, there is no real limits above and beyond the numbers, which we highlighted for enrollment on clinicaltrials.gov. And then you can see that we basically stopped screening for the study, we feel that we have handful of patients which now made it into the funnel. So let’s see. Let’s wait. This is a Q2 event as far as we can see today. And let’s look at unblended data together soon. Thank you.

Yatin Suneja: Very good. Thank you.

Operator: Your next question comes from the line of Myles Minter from William Blair. Your line is open.

Myles Minter: Hi. Thanks for taking the question. Just on — you mentioned you stopped screening the study for ADHERE. Is your screen out rate when you do the independent investigator sort of confirmation of the VYVGART scores? Has that remained consistent with what you presented at I think it was about a 50% screen out rate. Has that remained consistent with the patients that you’ve been enrolling beyond the 120 to 130 range? Thanks.

Tim Van Hauwermeiren: Hi, Myles. Thanks for the question. My information is that, that screening failure rate continues to be consistent. So it is around 50%. It is also perfectly in line with earlier published studies looking at the accuracy of the CIDP diagnosis. So we feel it’s in sync with real world. And we think that it is constant throughout the study. Thank you for the question.

Myles Minter: Thanks.

Operator: Your next question comes from the line of Manos Mastorakis from Deutsche Bank. Your line is open.

Manos Mastorakis: Yes, hi. Thanks for taking my question. So I wanted to ask first of all in terms of the priority review voucher and the unwanted scenario of an FDA rejection? What happens to the priority voucher? Do you get it back? And maybe a quick follow-up on whether you have any data on duration of the second cycle that is patients going from second to third dose? Thank you.

Tim Van Hauwermeiren: Keith, would you mind starting with the second to third dose, the relative distribution we see in the real world. And then I will take on that question on the PRV. Thank you.

Keith Woods: Yes. So the data that I quoted in the prepared remarks are the first to second dose and it really shows a nice distribution about a third, a third, a third. I want to call out that that interval is after the last dose of the first cycle. So when we have about a third of patients that are going nine weeks and some substantially longer than that just like we saw in the ADAPT trial. We haven’t been public with any data on real world on between second and third. But as you might recall from the past, we’ve referenced that From the ADAPT, OLE study, you can typically see that when a patient gets in their individualized cadence, so if they become a nine week interval between the last dose of one cycle and the first dose of the next one, that cadence typically holds standard and once they get dialed in, it just becomes their regularly scheduled dosing.

So although we haven’t been public with something between second and third. Right now, I’m not expecting a major change except for maybe some of those patients that went with shorter interval to see if there isn’t an opportunity to stretch a little further.

Tim Van Hauwermeiren: Thank you, Keith. And then on the PRV, we continue to understand our options, but technically speaking, guys, we’re still in a priority review and we decided to take a forward looking approach with the FDA and try to collaborate as swiftly and expedited as possibly towards the PDUFA date? Thank you for the question.

Operator: Your next question comes from the line of Danielle Brill from Raymond James. Your line is open.

Alex Nackenoff: Hey, guys. This is Alex on for Danielle. Just another one on CIDP. We had a few questions come our way. Just when did you decide to increase the enrollment? And what information, if any, did you have in hand that aided your decision to upsize or was this just an organic strategic decision? Thanks.

Tim Van Hauwermeiren: Well, thank you for this question Alex. There was not a distinct point in time where we decided to increase enrollment. We decided to just not stop enrollment and continue to enroll. And the reason is that, it would be pity for those patients who all have an opportunity to come on drug not to do that, because not all of them, of course, are going to make it to the end of Stage B, but all of these patients would then have the opportunity to roll over to the open label extension and also contribute to the safety database. Remember, in the background, not only do we need to build efficacy data, but also strong files, strong evidence of safety. So it was a decision not to stop rather than to a large history . Thank you.

Alex Nackenoff: Great. Thanks.

Operator: Your next question comes from the line of Allison Bratzel from Piper Sandler. Your line is open.

Allison Bratzel: Hi, good morning. Thanks for taking my question. Just another one ADHERE. It seems like a lot of focus has been placed on the relapse rate in Stage B. I guess, it’s our understanding the endpoint is actually time to relapse rather than a percent of patients relapsing at a given time point. So my question is, what is the actual metric we should expect to see from Stage B? Is that going to be communicated as a hazard ratio median time to relapse something else? And just in that case, would you look to the hazard ratio from past as the best comp? And then just related, will you have actual relapse rate data and time for the top line readout, just given that a bunch of patients may not have made it to the end of Stage B by the time the event has occurred. Thanks.

Tim Van Hauwermeiren: Thank you, Allison. Maybe Beth you take on what we expect in terms of top level data disclosures. And then I can take the question on the comparison with the past trial. Thank you.

Beth DelGiacco: Yes, of course. So the primary endpoint, as you said, in Stage B is time to relapse. And I think during our communication, we’re committed to showing the primary endpoint of Part A, the response rate, the primary endpoint of Part B, of course, with a view of safety. But beyond that, we’re not ready to provide too much information on what that top line will look like. I think what you can expect is exactly what you’ve seen with ADAPT and ADVANCE is that, we are transparent in our communication and we will make sure that we give a complete picture of what we’re seeing with those data to make sure that you understand them well.

Tim Van Hauwermeiren: Thank you, Beth. And you’re absolutely correct, Alison. The time — the primary endpoints for Stage B is time to relapse, it’s a typical end point in cancer trial. So indeed, hazard ratio would be a proper way for example to look at this data. We’re still thinking about how are you going to present the top line data, but you should be able to draw a fair comparison with the (ph) trial in the way we present the data, for example, if you don’t were to take a specific time points. So we’re still rolling it over. But in terms of separation between active and placebo path continues to be, I think, the proper benchmark to match or to beat. Thank you.

Operator: Your next question comes from the line of Matthew Harrison from Morgan Stanley. Your line is open.

Matthew Harrison: Great. Thanks for taking the question. I’ve asked the flavor of this question before, but I wanted to ask it again in a different way, which is, we’re expecting to get some Phase 2 studies from J&J this year, especially some of the larger indications. How should we just think about that impacting your view on what you may or may not be willing to invest in the pipeline and sort of how ready you are to potentially pivot quickly to think about investing in maybe a large Phase 3 study for some of these broad indications? Thanks very much.

Tim Van Hauwermeiren: Thanks, Matthew. Thanks for joining us today. I think overall it’s exciting to see some other players in the (ph) class venture into other indications than the argenx indications because so far we saw mainly imitation and not too much creativity. So good to see new indications coming on that where we feel there’s a different proposition from a biology rationale point of view and we’ll actually be very happy to see other people deal with these indications. So we have our own list of preferred indications, Matthew, how we select them based on biology rationale, technical feasibility and then the lead — medical lead and commercial opportunity, we’re not going to deviate from our own list, which starts from the science and the biology.

And then, of course, keenly looking at other indications which are turning data cards. Overall, I believe they will just show that the opportunity is a real big opportunity warranting multiple players active in the space. Thank you for your question.

Operator: Your next question comes from the line of Alex Thompson from Stifel. Your line is open.

Alex Thompson: Hey, great. Thanks for taking my question. I guess, Keith, maybe on your commentary as it relates to real world observations cycles on VYVGART. How should we think about net price per patient in 2023? Do you expect that to stay pretty constant as to what you have been guiding in 2022? Or how is that going to look moving forward, at least for the IV version? Thanks.

Karl Gubitz: It’s Karl here. So maybe I’ll take that question. So we got it in the beginning of last year at typical net price of $225,000. And if we look at all the data points, the average wait per patient, the number of cycles, the gross to net, the value based agreements, we are taking all of those things in account, we think that the $225,000 per patient, those stems for 2023.

Alex Thompson: Great. Thanks.

Karl Gubitz: Thank you for your question.

Operator: Your next question comes from the line of Will Olds from Evercore. Your line is open.

Will Olds: Hey, guys. Congrats on the great quarter. I’m very curious about the

Tim Van Hauwermeiren: I could not understand the question. Did anyone else understand it?

Beth DelGiacco: Yes, it’s about thyroid eye disease and the positioning and the potential trial design.

Tim Van Hauwermeiren: Okay. So the only thing we have disclosed at the JPMorgan Conference is the choice for this indication. This is for once an indication where we’re not leading. I mean, we will not be first to market in those indications. So I think we have been speaking mainly about the biology rationale but we reserve the right to answer your question until we will disclose the trial design and then we can expand on competitive positioning, but it’s a bit premature for us to comment on it right now. So bear with us, that will come later in the year. Thank you.

Operator: Your next question comes from the line of Joel Beatty from Baird. Your line is open.

Joel Beatty: Great. Thanks for taking the question. For the current FDA review of subcu for Cusatuzumab, is there a potential to add zero negative patients to both subcu and IV labels?

Tim Van Hauwermeiren: Thank you for this question. In the bridging study, remember, this was a head to head comparison of almost inferiority trial between the IV version of VYVGART and the subcu product presentation of VYVGART. We basically included again both zero positive patients and zero negative patients. And again, VYVGART has shown that it works equally well across the board in a non-inferior manner between subcu and IV. So together with some other data, which we collected from the real world and the rollover from the ADAPT trial in the OLE. We have been bringing all these data together and we resubmitted them to the FDA, making a case for the negatives. But again, this is a review issue. This is not in our hands only. We submitted the data and we look forward to the interaction with the FDA on this topic. Thanks for the question.

Operator: Your next question comes from the line of Douglas Tsao from H. C. Wainwright. Your line is open.

Douglas Tsao: Hi, good morning. Thanks for taking the questions. And first, I send my regards to Keith and congratulations. It’s been great to know him. Maybe first question t Keith. You mentioned sort of insurance resets and just curious how that might be — how that’s playing out in the real world just given timing of cycles and re dosing and just assuring sort of continuity of treatment?

Keith Woods: First of all, thanks for the comments Douglas and also the question. But the bottom line is, as we go through the insurance reverification, almost all of our policies, we said 90% covered lives with 80% of those being favorable. Most of those policies — almost all are approved for anywhere from six to 12 months. So we just go through the reverification process. I can tell you that as Karl said about our net that we projected even prior to launch still stands true and goes into 2023. I think it puts us in a very credible position with payers because what we talked about before launch is actually coming to fruition. And so as we go through the recertification, we’re not seeing challenges. We’re just seeing a little bit more time consuming.

Douglas Tsao: Okay, great. That’s helpful. And then just as a follow-up, just curious, we’re going to start to get data from 117 this year. I’m just curious, should we think about that development program once we get to sort of initial proof of mechanism data sort of expanding as quickly as what we saw happen with efgartigimod? Or will that development program sort of take place in a sort of more measured pace and organically? Thank you.

Tim Van Hauwermeiren: Thanks for the 117 question. Look, 117 has its own program and its own plan behind it. And we do believe it’s a pipeline and a product. If you look at the biology, which is so universal across multiple indications. And we’re already public on MMN, also in delayed draft function. And also on dermatomyositis and there are more indications to come. Whether 117 ever will become as big as efgartigimod is a different question. But we believe that there is a significant pipeline of indications where the biology of 117 is really in play. And what is similar to efgartigimod is that we invest a lot in the translation of biology and showing the right to succeed with the C2 blocker in these indications. For example, the work we presented on multiple occasions for MMN, but now also at the JPMorgan Conference that that’s your transfer model.

Think of that type of quality, translation, biology work which is taking place in all indications we’re addressing. So that is definitely a similarity between 117 and efgartigimod. Thank you for the question.

Douglas Tsao: Just as a quick €“

Tim Van Hauwermeiren: Yes, please.

Douglas Tsao: When should we get more indications beyond this first review? Do you have a sense of that?

Tim Van Hauwermeiren: Well, leave it to the future. So there are definitely more indications. If we continue at this pace, we will already be in 20 indications. It also needs to be executionable. So let’s continue to roll out indications in a thoughtful fashion and in a fashion that we can execute, okay?

Douglas Tsao: Okay, great. Thank you so much.

Tim Van Hauwermeiren: Thank you.

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

James Gordon: Hello, James Gordon from JPMorgan. Thanks for taking my question. Question about CIDP. I guess the question was, is the data I believe it’s showing what the ICE trials Stage A and part shows in Stage b. And if you do that, is that enough, do you think to be a blockbuster indication that we’ve got in CIDP? And the other part just also in CIDP, in terms of what a CIDP launch could look like. If you do show similar data to what IG is shown in CIDP. Do you think the VYVGART launch is a good proxy for CIDP for the launch like in 2024? How are you thinking, what are the considerations, please?

Tim Van Hauwermeiren: Thank you, James. And it’s a bit premature to talk about how our launch would look like in absence of data, but I’ll leave it to Keith in a minute to share some conceptual thinking on how a launch could be different between CIDP and MG. I just repeat what I said before, also during our analyst breakfast at the JPMorgan Conference, we believe that we are well equipped to compete if we come out with a, roughly speaking, similar response in stage (ph) and similar effect size to path in Stage B. We feel we will be equipped to effectively compete in such a position. The launch, of course, in such a well-entrenched market could look quite different. Keith?

Keith Woods: Yes, I mean, certainly James, I think the first thing we need to do is to see the data to see how we stack up in not only efficacy, but as we believe from the profile of the product we do think we’ll probably have an edge on safety and convenience. With all that being said, comparing it to MG is probably not a likely scenario. And that is because the IVIG companies, they can’t promote IVIG and MG, it’s off label. However, CIDP is their single largest indication and this is a satisfied market. I think that there is room for improvement and the possibility to disrupt if the data allows, but we’re going into a market where physicians and patients are satisfied with IVIG. So I would not use the MG as a proxy to the CIDP launch, but let’s wait and see those data.

Operator: Your next question comes from the line of Joon Lee from Truist. Your line is open.

Joon Lee: Hey, thanks for taking our questions. Keith has done a phenomenal job of VYVGART launch and conventionalism is that if it didn’t broke, you don’t fix it, but I totally understand Keith has personal reasons. Could you elaborate a bit more on what Ms. Karen Massey brings the cable and what aspects of her expertise you think is particularly well suited to further drive VYVGART uptake. I’m sure you had many qualified candidates to choose from. Thank you.

Tim Van Hauwermeiren: Thank you for joining us on the call. And as you correctly called out, this was a planned transition, right? So Keith is retiring and his aspiration is to spend more time with Family and serving on board, including continuing to be an adviser to our board as a participant in our commercial committee. I think with Karen, we have the right person at the right time for argenx. She brings global operational experience, she has successfully led launches in the nuro-inflammation space. Specifically, I referred to the OCREVUS launch where she accelerated an already successful launch. And then I think she has a proven track record of building innovative global nimble teams, exactly the type of teams which we need if we want to continue to be successful on the commercial side.

We also believe that Karen is going to be a great cultural fit. And I think the culture of the company is strong. And not only did we hire a great leader from a technical master point of view, we also think we have an excellent cultural fit. So you’re right. I mean, there was choice. And I’m extremely excited about Karen joining us on March 13. Thanks for the question.

Operator: Your next question comes from the line of Simon Baker from Redburn. Your line is open.

Unidentified Participant: Hi. This is asking questions on behalf of Simon Baker. Thanks for taking my questions. Two questions if I may. So the question one is, can you discuss the IP position for VYVGART beyond the March 2036 composition patent expiry, particularly on the subcutaneous formulation? And the question two is, can you give us an update on the European rollout of VYVGART? In which countries do you expect to begin selling in 2023? Thank you.

Tim Van Hauwermeiren: Could you repeat question one on patent life, please? I couldn’t hear it.

Joon Lee: Yes. So the question one is, can you discuss the IP position for VYVGART beyond March 2036, a compensation patent expiry, particularly on the subcutaneous formulation?

Tim Van Hauwermeiren: Oh, okay, I got it. Keith, I will hand over the question to you on what we expect in the context of European rollout for the drug this year. From an production point of view, what I would like to leave you with conceptually is that, of course, there are multiple layers of IP protection protecting VYVGART. Of course, we have the specific limitations which we used and in license, actually from then indeed we have the composition of mega claims, which are on roughly speaking, to 2035. But then we have additional composition of matter and formulation patents which we continue to file on the back of clinical data. So we have not been public. I would explicit on the final IP horizon for the molecule, but there is significant IP life in the making above and beyond decomposition of claims you just referred to. Keith, you want to comment on the European rollout, please?

Keith Woods: Yes, happy to do so, Tim. So as you know, we are currently in the AMNOG process in Germany and VYVGART is available in Germany and we’re off to a successful launch there. But we will continue to go through that reimbursement process to have final and official approval in quarter three, late quarter three of this year. Also in France, we’re in an AP2 program, which makes VYVGART available to patients. It’s not quite as broad as the label at this point, but it does give access to patients that need it, while we continue to go through the reimbursement process in France. We’ve submitted dossies in numerous countries across Europe, including that of Italy. We’ve been working with the U.K. and Spain. I want to call out that we have a broad preapproval access program so that we can begin to serve patients. But basically, this is all going to be based on the timeline of gaining approved reimbursement on a country by country basis.

Operator: And your next question comes from the line of Charles Pitman from Barclays. Your line is open.

Charles Pitman: Hi. Thank you very much for taking my questions. I apologies if these are any repeats. But just — first on OpEx. Could you give us an idea of how this is going to progress over 2023? R&D obviously came in a bit light at 4Q. I’m just thinking in terms of you’ve got a number of pivotal trials set to readout ahead of the earlier stage trials starting in 4Q 2023 and kind of how you’re controlling costs? And then secondly, we have top line data around the corner for pemphigus . I was wondering if you could just update us on how these trials are proceeding and maybe particularly what you’re trying to — what you’re hoping to demonstrate from the trial readouts? Thanks.

Tim Van Hauwermeiren: Karl if you would take the OpEx question, then I will take the pemphigus question. Okay? Thank you.

Karl Gubitz: Thank you. And thank you, Charles, for the question. I think if we — I mean, we don’t give guidance, of course, but just at the high level, conceptually, we can talk about the OpEx 2023. If you look at Q4, you will see that the R&D spend is roughly $115 million. It is lighter than Q3, but Q3 of course, included $100 million for the PRV. Going forward, I would expect that the Q4 number to increase — to be flat or to increase by inflation for the rest of the year by quarter. For SG&A, if you look at the Q4 number of around $140 million a little bit below. But if you think about what’s going to happen in 2023, we’re going to have a second launch in the U.S. for subcu, but there will not be material increases with that, but there will be marketing spend for the second campaign.

And of course, Keith mentioned about the European launches and those investments in those countries are stage gate. We don’t put commercial colleagues in the market until such time, but we do have pricing and reimbursement in place. So the point is that, the SG&A number will increase quarter by quarter throughout 2023.

Tim Van Hauwermeiren: Thank you, Karl. And I’m very happy with the pemphigus question. Pemphigus is a significant unmet medical needs, there is hardly any option — treatment option out there for these patients. And the trial actually has been going very well. This is a global a Phase 3 registration trial on the back of very strong Phase 2 data. And I would say that the in autoimmune listing disease is participating in this trial. The trial enrolled extremely well. And from an endpoint’s point of view, the primary endpoint is complete remission on minimum dose of corticosteroids. So these patients really need stop information of new lesions, the closing of the existing lesions and then the tapering of steroids as fast as possible.

So minimum corticosteroid dose is the primary endpoint. In the second — in the second release, we will be looking at CR off therapy. We will be looking at quality of life and safety and the cumulative use of corticosteroids. These are the key secondary endpoints. So this is a data point to be expected for the second half of this year. Thank you for the question.

Operator: And there are no further questions at this time. This does conclude today’s conference call. Thank you for your participation. You may now disconnect.