argenx SE (ARGX) Earnings Call Transcript

Great. Good morning. I'm James Gordon, JPMorgan European pharma and biotech analyst. And today, I've got the pleasure of introducing the argenx presentation. And you're going to hear from argenx CEO, Tim Van Hauwermeiren. And then we're going to have the Q&A in this room as well. So 20 minutes of presentation and then 20 minutes of Q&A. And if you've got any questions, you can also register those questions, and I can read them off the iPad or you'll be able to put your hand up, and we'll do live questions. So with that said, thanks a lot for joining us today, Tim.

Thank you, James. And a very warm welcome to all of you, ladies and gentlemen. It's exactly 1 year ago since we launched VYVGART here in the United States. And since that day, very powerful patient anecdotes are reaching us at argenx. And I thought I would start today by sharing 2 very recent stories of our VYVGART patients. The first patient is called Tom. He's the best patient. He's seropositive, and he suffered from a very severe weakness from his generalized myasthenia. He was on steroids, miston-IVIG, but had double vision, couldn't drive, had difficulty speaking, difficulty swallowing. And he lost up to 60 pounds of body weight up to the point where his family thought they were going to lose him. And at that point in time, his physician prescribed VYVGART, and Tom has been regaining his strength. He can speak normally. He can eat normally. He actually regained all of the weights he lost. And then recently and very excitingly, the first time in many years, he could travel to see his granddaughter at a volleyball event that was a 6-hour drive, and it was Tom who was driving his wife. To put it in the words of his daughter, she said, "VYVGART gave us our father back." That's a pretty transformational event. The second anecdote I wanted to share with you today is about the German patient. She is very weak despite being on all these oral medications, and then her physician can convince her to go on VYVGART. She's very afraid of an IV biological. For her first infusion, she was brought to the hospital by ambulance. For her second infusion, she came to the hospital by ambulance. And then for the third infusion she showed up herself on her bicycle. Guys, that's transformational. And these anecdotes remind us every day the bold mission we're on. We're on a bold mission to transform the way we think about autoimmunity, and we treat autoimmune patients like our MG patients. Transformation requires a deep look into biology. Think about cancer 25 years ago. We used to treat people with surgery and blunt chemotherapy. Today, we take a tumor biopsy. We look at the molecular pathways involved, and then we basically utilize precision tool to intervene with exactly the molecular pathway, which is the problem, with quite spectacular outcomes. That's where we want to take autoimmunity. Today, we treat autoimmunity with surgery, splenectomy, thymectomy. We treat patients with blunt chemotherapy, steroids. Immunosuppressants, we have been borrowing from the renal transplant space, but we're building these precision tools to completely transform the way we treat autoimmunity like has been happening with cancer. What does it mean for patients transforming the way we think about autoimmunity? Whenever we travel the field and we talk to physicians, the first thing they will tell you is, Tim, my patient is doing fine. And then when you start to drill deeper and you ask what it basically means doing fine, it basically means that my patient has not been hospitalized in the recent period. Now what if doing fine would mean that a patient can live a life with no autoimmunity symptoms? That's what we call minimum symptom expression. And remember that on VYVGART, already in your first cycle, you have a 40% chance to go into MSC, and that number only goes up with an increasing number of cycles. We also know that when you're stable on VYVGART, we can start to taper off this toxic, this nasty background ligation, tapering down steroid levels, tapering down the levels of cyclosporin is the fire prime or microphenolate or even completely eliminate them. We also want to reduce the burden of treatment. We know that MG patients basically say that none of them is experiencing the disease in the same way. Every MG patient is unique and is different. So why would we treat these patients with the same cookie-cutter approach? We offer them individualized dosing to actually reduce the burden of therapy and give them distinct periods of drug where they can forget about their disease. So if you sum up all these elements, this is about transforming patients' lives. This is about giving them the freedom back, giving them their lives back the way they used to live their lives before the diagnosis. And MG is just the beginning. As a company under our 2025 vision, we are going to pioneer from the science. We will basically lead with compassion for our patients. We want to be loyal to the innovation mission we signed up for, and we want to build a company we all want to work for. That's the vision for 2025. Now there are a few highlights of 2022 I would like to talk about. And obviously, the first thing I want to talk about is the launch. Here on the podium today, I would like to applaud our commercial teams. They did an unthinkable, launching VYVGART and in the States and in Japan and in Europe in one in the same calendar years of 2 to 4. Despite launching in full Omicron time, they reached 90% of their target prescribers. 90% of the West policies are favorable. That means direct access to the patient population we studied in that trial is not just the patients who likes the individualized dosing. Also, the payers love it because why would you pay for a drug if you do not need it? And then pretty invisible to you guys is this phenomenal supply chain we have been building in the background. This is a global supply chain with scale and flexibility to supply all of our clinical trials and this very ambitious commercial launch. We have been studying launches in preparation of our own launch, and there is something very special about them. The revenue curve of the first 4 to 6 quarters sets the tone for the rest of the commercial life of a drug. Ladies and gentlemen, this is a hell of a momentum behind the launch, and I think it's boding very well for the commercial future of VYVGART. I would also like to applaud R&D teams. They have been giving us a very powerful subcu product. The margin for failure was very thin in that non-inferiority trial. And look what potent subcu product they delivered. It's as potent as the IV product, and this is a fast, single subcu injection. Unlike some of the pharma companies, we're not going to wait and use this product for life cycle management. No. We made a commitment to the MG patient community, and we're working day and night to bring the subcu product option to our patients with a PDUFA date set for March 20. Personally, I was very gratified to see on the right-hand side the first Phase III data outside of MG. Guys, the more than 50% RWG response rate in such a hard-to-treat patient population is impressive. And here, we see the signature of VYVGART. It's fast. You have a response within a week. And when you respond, it's durable. And the safety profile of this study where we chronically dosed VYVGART was as clean as it was in the cyclical dosing for MG. And we continue to pioneer the science behind FcRn. FcRn is much more than just a receptor taking care of IgG levels. We have published pretty strong data showing how FcRn is enabling the pathogenic action of the autoantibodies in pemphigus. We have also generated 2 data sets we shared where we have shown the potential of efgartigimod to be disease-modifying, both in pemphigus where we impact the alterative B-cell compartment, and in [indiscernible] where we saw a rebuilding of muscle mass and a regain of muscle strength. Ladies and gentlemen, that's putting efgartigimod in a very a class of drugs, drugs which have disease-modifying potential. We also expanded dramatically the safety database behind this molecule. We now have more than 1,300 study subjects in our database, a cumulative exposure of more than 1,000 patient years. And the treatment immersion adverse events are basically consistent across the healthy volunteers, all indications we study and are typically mild to moderate. I also want to call out the unique molecular design of efgartigimod. This is an FC fragment. It mimics the natural interaction between FcRn and the wild-type IgG. And in doing so, it avoids the pitfall of potentially cross-linking FcRn, driving it into degradation and making it unavailable to that other serum protein, which is so important that needs to recycle through FcRn called albumin. And I encourage each and all of you to study the albumin review paper we published in Frontiers and Immunology, the long-term consequences of lowering albumin are not small. It's way beyond increased levels of LDL and cholesterol. And last but not least, the real-world safety profile of the molecule confirms what we have seen in our trials. Now that we look at some of the highlights of '22, I want to take you into our look into 2023. Basically, we have 4 drivers on our path to profitability. First, we're going to expand the commercial use of VYVGART. Secondly, we will continue to add indications in the clinical studies. Today, we will be in 13 indications, and we are well underway for 15 indications by 2025. We also want to expand the pipeline above and beyond efgartigimod and continue to leverage our IIP program in discovery. So expanding commercial use of VYVGART. How are we going to do that? Within the universe of myasthenia, we're going to geographically expand its use. We're going to launch that subcu product to flank the IV product, and we will continue to move up in the treatment paradigm of MG in earlier lines of therapy. Outside of myasthenia gravis, and here, I'm applauding the entrepreneurial team in Japan, we will file for marketing authorization in Japan based on the first ITP study. And of course, we have all these new indications, which we continue to add. This is an expanding universe with targeted with efgartigimod. There's an abundance of opportunity, and there isn't a week going by without another paper popping up in my inbox highlighting a new disease where we identified pathogenic IgG antibodies to drive disease biology. In this expanding universe, we want to basically trigger a chain reaction by all the 15 indications we handle, all the externally sponsored research trials in order for people to go to VYVGART as their first choice when they're confronted with an IgG mediated disease. This is how we started. Remember, we started with our beachhead indications, MG, ITP, pemphigus, adding quickly CIDP. Then we added bullous pemphigoid and myositis. Then we added lupus nephritis and membranous nephropathy when we entered into the collaboration with Zai lab. And we added post-COVID parts and sugrants under our strategic alliance with IQVIA. Today, we're announcing the addition of TD ANCA vasculitis and antibody-mediated rejection to sum up to 13 indications. And people always ask me the same question. They said, Tim, what do you think is going to be the most successful indication of all these indications you're targeting? Well, frankly speaking, I don't have the answer to that question. But what I do know is that when we sum up all these indications, this is going to lead to what I think is going to be the most promising pipeline in the product of the next decade. If we reshuffle all these indications over a time line, you basically see that 2023 will give us 3 Phase III data points: one in CIDP, one in pemphigus, one in ITP, and a Phase II proof-of-concept data point I'm very much looking forward to in long COVID pots. But beyond 2023, moving into '24, '25 and beyond, you see that string of clinical catalysts, which is coming, which is very exciting. We want to build a pipeline above and beyond efgartigimod. And here is a molecule, which is close to my heart. It's ARGX-117. It targets C2, a very exciting target in the complement cascade. And it can nail both the classical and the lectin pathway, but it's a really tricky target for an antibody. It's abundantly present, and it has a very high turnover rate. So we built a very special antibody molecule to actually take care of that. And again, it's a molecule, which can target a number of indications within the franchises we are building. And today, I brought you a new data point underpinning the biology rationale in our lead indication, MMN, multifocal motor neuropathy. This is an animal model where we basically expose the animal to the disease-closing antibody, which is attacking the paranodal structure, and therefore, damaging the functioning of the node of ranvier. This is the healthy animal. We see a perfectly normal node of ranvier. This is after the introduction of the autoantibody, you see massive complement recruitment and the destruction of the node of ranvier and then when we introduce a therapeutic setting, the C2 antibody, we restore the architecture of the node of ranvier. And the beauty of this model is that it links this structural damage information to function. This animal suffers from weakened diaphram. The healthy animal is breathing normally, normal titer volume, normal respiratory rate. After the attack of the node of ranvier, you see basically a reduction in the title volume, and as a result, an increased rate of respiration completely stored by the C2 blocking antibody. This is as good as it gets in the preclinical translational model, and we strongly believe in MMN as a lead indication. And then last but not least, I want to applaud our 119 team working so hard over the Christmas period to get a CT out, get us in pole position to the single ascending and multiple ascending dose study for this agonist and lining up 2 patient cohorts, one in myasthenic syndrome and one in MuSK-MG, to look for a biologically active dose. In the background, we do a lot of translation work on ALS, which is a target indication for Phase II. Ladies and gentlemen, I have been talking about a lot of indications and multiple molecules. How does that all come together? Well, we're building a company for the long haul. We're positioning this company for long-term growth in all of its 4 franchises: neuro, human room, dermato and nephrology. In the meantime, we continue to innovate. We have built an entire ecosystem of people with whom we cocreate. And there's one party I want to call out today, which I think is very exciting. And that's this University of Colorado. We have cocreated oncoverity. It's a spire of company around cusatuzumab, our CD70 AML antibody, and the know-how, the data that you see basically give us an algorithm to select AML patients who will not respond to venetoclax or who will very quickly relapse on venetoclax. And guess what, they figured out how the CD70 pathway is driving that. We bring in our molecule, our program, our data. And together, we can set the course for the successful development of cusatuzumab in AML. Let's look at 2023 and the catalysts in front of us. This is going to be a very exciting year. From a commercial point of view, in myasthenia gravis, we go for VYVGART approval in China, in Canada. We will launch in France, U.K. and Italy. We will go for approval of the subcu product in MG in the United States, file in Europe, submit in Japan and then also submit our marketing authorization request in Japan for ITP. On the clinical front, plenty of catalysts, 3 Phase III data cards. The CIDP 88 defense is now projected to happen in Q2, Pantheris and ITP, the Phase II proof of concept in long COVID pots, initiation of the 3 new indications, the interim efficacy data in MMN for 117 and then the initiation of the DGF trial and ARGX-119 Phase I trial. To conclude, I hope I convince you today within a bold mission, and we're building a pretty unique company. I think there's a ton of value we can create for our stakeholders with the plan I just presented to you. And I feel we will be very successful as a team of Argonaut firmly grounded in our culture of innovation, cocreation, empowerment, excellence and humility. And with this being said, I would like to invite my colleagues, Keith and Karl, to join me on the podium for the Q&A session. Thank you.

We've got a 20-minute Q&A that's going to take place in here. You can register for questions via the website. But if you're in the room, it might be a lot easier if you put your hands up, and we can send a microphone to you. And could we take the microphone to the gentlemen in the green jacket, please.

Was interested in the pots indication. [indiscernible]

If we can pause a second. I'm not sure the microphone is coming through.

Yes. I was interested in the POTS indication. And I know it's a little earlier, but can you talk about the scientific rationale for how VYVGART would work on treating that?

The autoantibody against the receptor is very well known. We think that long COVID POTS is nothing different than normal POTS. And that receptor is important for half rate and blood pressure. So there is a growing body of evidence that this autoantibody is actually generated as a response to the COVID infection. We are working with the leading academic institutions here in the United States who are actually publishing on that translational work to go to a proof-of-concept study as fast as we can. So the hypothesis is that when we lower that specific autoantibody, we should have a fast and dramatic impact on POTS.

And would that just be from COVID? Or would it be the broader POTS market?

We need to start, of course, with a subset of long COVID POTS. The POTS subset is probably the best understood in terms of the causality of that autoantibody. But I'm not excluding that if we win in long COVID POTS, there is a stepping stone going into some of the neurology issues, which we see with long COVID. Thank you for the question.

Do we have any other questions in the room?

I just had a quick question on the CIDP pushout. So I'm just kind of curious in terms of what was sort of the rationale for the events, I guess, not accuring as you expected. And then also on the enrollment of the 130 patients, I think you said you've exceeded that at that point. So just kind of curious why you think that might be the case.

So remember, this is an event-driven trial, and we have always been very clear about the fact this is a waiting game for the ADA events to happen. So what we're trying to do is triangulate with a certain probability when that ADA event is going to happen. And I think we now know with sufficient certainty that the event is likely going to happen in Q2 instead of Q1. What we said in the press release is that enrollment in this trial has been going really well. We already exceeded the minimum number of patients we needed in Stage B to hit the ADA events. And we decided as a company to just continue to enroll. In the protocol, we have wiggle room to recruit up to 180 patients, and that's exactly what we're doing. So this is a waiting game. This is waiting for the ADA events to happen. And based on the latest triangulation from the statisticians, it's now more likely to happen in Q2 than in Q1. Thank you for the question.

Maybe if I could just ask a follow-up question because there was some confusion around this. So the study is now going to enroll more than what was originally planned. But has the powering of the study changed as well? Again, a negative view on this morning's update would be it reflects the lack of confidence in success, and the company has tried to increase the powering of the study because they don't think the drug will work as well is the reasonably thought. Is that accurate?

That's a great question. James, it's not accurate, of course, because the hazard ratio will only be determined by the ADA events. So we're aiming for ADA events. That's not going to change anything to the power of the study. The fact that we continue to enroll basically means that the more patients we have in Stage B, the more events can happen. And those who will be in Stage B when we finished the study on the ADA events will actually be rolled over into the open-label extension study. So we will not lose them, and the patients will continue to benefit from all getting VYVGART in the open-label extension study. Thank you for the question.

There's another question to the gentleman there in the check show.

Just a follow-up on CIDP. So you mentioned that you're pleasantly surprised that you exceeded the 1 30. Is that an implication that you think that the drug is doing better in Stage A than you expected?

It's very difficult for us to make any comment on how the drug would be doing in this blinded study. What you basically see is a typical ramp in an orphan indication clinical trial. You need to think of about 1 to 2 patients per clinical center. So in the beginning, you find yourselves opening many clinical trials -- many clinical trial sites for a few patients. But once that wheel is turning, you go crescendo in your enrollment curve. I also believe that after the positive go/no-go decision point, more patients and physicians were willing to come on study based on that positive interim data point. But that's basically all we can say in all fairness. Thank you for the question.

There is some hand up over there.

What assumptions are you guys using that made you believe that you could get to the ADA events at the 1 30 patients? Is that based off the ICE trial?

So you always need to use some assumptions when you design your trial and you think about the powering, you're spot on. We have been looking at the ICE trial and the delta between active and placebo as a reasonable assumption going into the study. I would love to continue to talk about CIDP, but I feel a bit embarrassed that Keith and Karl on the forum even are not getting any questions.

Do you have any other questions in the room?

Maybe just one more CIDP one that I've been asked to us, which was what are you actually going to tell us when we do hear the -- or see the anti headline release? Is it just going to be Stage B or also Stage A? And when we do get that data, what is it we need to compare it to? What is a good result look like?