argenx SE (ARGX) Earnings Call Transcript

Good morning. I'm James Gordon, JPMorgan European pharma and biotech analyst. And today, it's my pleasure to introduce the argenx presentation. And you can hear from argenx, CEO, Tim Hauwermeiren. And we're going to have the breakout in here as well. So 20 minutes presentation and then time for your questions. So thanks a lot for joining us today, Tim.

Good morning, everyone. A warm welcome to the argenx presentation. And as we take a look at the forward-looking statements, James, I would like to thank you for hosting us today at this wonderful conference. We at argenx, we are on a bold journey, a journey to transform autoimmunity. Actually, we want to take autoimmunity away from surgery and blend chemotherapy into precision medication. Where we basically nail with precision tools, specific molecular pathways, which drive disease, offering a radically different benefit risk profile to patients, a transformative benefit to patients. And the way we work is as follows: we think this space, this autoimmunity space badly needs more novel targets. So instead of doing the technology push against the same old trusted targets, we like to pioneer novel disease biology. We would like to embark on novel targets and we do it in close collaboration with world experts in translational biology. We work with antibody drugs going after these targets. We have a world-class suite of antibody engineering technologies, and we like to build molecules, which when we promote them to the pipeline of the company, have the potential to play in multiple indications, so we create a ton of optionality within the molecules in the portfolio but also between the molecules in the portfolio. And in order to understand what transformation in autoimmunity means, I would like to invite you to take a look with me at Mike. Mike is an MG patient, he got diagnosed about 16 years ago with generalized MG when he was still at college. And the way he talked to us, the story is that he could not really participate to social activities, sports activities, he actually lost a full semester of classes at a given point in time. And basically, he was living his life with an MG-ADL score and activity of daily living score of about 8. That doesn't tell you a lot, but guys, this is a miserable situation to live in. One day, his physician prescribed VYVGART. Mike went into what we call minimum symptom expression. That means an ADL of 0 or 1 like you and I have it, and he could basically reengage with his life. He went back to the gym. He became the coach of his sons baseball team. He started a new relationship. Basically, MG killed his first marriage. And then last summer, his physician switched him over from VYVGART to VYVGART Hytrulo, allowing him to enjoy the fast subcu injection, fitting it into his very busy life. Guys, this is transformation. Mike has his life back. And this will be meant by bringing transformation to the autoimmune space. My agenda today is to walk you through three innovation horizons which run across the company. I'm going to start with the VYVGART horizon, then I will take a look at the Pipeline Horizon with Empasiprubart and ARGX-119. And then we look at the third innovation horizon consisting of four new IND candidates. But let's start with Horizon number one. the VYVGART horizon. We have two commercial products, VYVGART and VYVGART Hytrulo. And here from podium, I would really like to take the time to congratulate my commercial colleagues each and all of them for printing a $1.2 billion revenue number across the globe in 2023. Day-on-day, we have 2 years into the launch of VYVGART, and I think this is an impressive achievement. Thank you. I would also like to applaud the CIDP team for submitting a high-quality sBLA on time before the end of last year. I want to applaud the ITP team for submitting the marketing authorization application in Japan. And I want to thank the clinic teams for pushing forward with 15 indications by 2025 and our tech ops team working around the clock on the prefilled syringe. We're developing leadership position FcRn. I mean you remember the business model I just explained. We are pioneering FcRn biology, as you can see from the numerous peer-reviewed publications. We're going after this novel exciting targets with a unique antibody fragment and Fc fragment, equipment the proprietary ABDEG mutations, which preserve the pH-dependent nature of the binding, and that translates into a unique clinical profile, and remember, the optionality, which we like, 15 indications by 2025, yes, there will be attrition. But the way you protect against attrition is by creating this type of optionality. Now stellar clinical data is one thing, understanding how that translates to value in the real world is another thing. So that 45% minimum symptom expression we have seen in our clinical trials, remember, Mike, he was in MSC, right? ADL of 0 or 1, 45% of patients achieved that in the clinical studies. In the real world, when we follow a huge patient cohort out there, they have an ADL of 0 to 4. That means they no longer meet the threshold to enter clinical trial, which is an ADL of 5. We also see remarkably a very fast ability to taper steroids. The world is quickly becoming more intolerant for the cumulative toxicity of steroids and achieving a meaningful steroid tapering within the first 6 months on therapy, guys, its a big deal. We also made a commitment when we launched to make our innovation accessible to a broad range of patients. Well, we have shown now with My VYVGART Path, our patient support program that patients get meaningfully faster on drug. And then last but not least, outside of the U.S., VYVGART has been reviewed now by so many HTA bodies, health technology assessment bodies identifying the value of VYVGART. VYVGART is really shining through their models, and I was personally very pleased to see one of the leading HTA bodies declared that VYVGART has superior cost benefits over IVIg. The safety database of VYVGART is now becoming really big. We have more than 4,000 patient years of safety follow-up across the clinical trials and the real world patients. Let's double click on the commercial execution. We crossed the $1.2 billion revenue mark last year, and that represents a 21% CAGR in 2023. Already in Q3 last year, we passed a 6,000 patient mark. And what I want to call out is that 55% of our patients are coming straight from orals. That's exciting because that's where the real growth is in this market. We have been successfully broadening the prescriber base, crossing the 2,300 mark in Q3 last year, and that's a 25% year-on-year increase. And then last but not least, our promise, our commitment, most of the policies here in the States, 90% are favorable. That means patients can come on VYVGART after one or maximum two orals. And this is a growing market. When innovation enters an underserved rare disease space, it's growing the market. We're growing the VYVGART share. As of the first of January this year, we have a J-Code in place for VYVGART Hytrulo, which will help in access. We're expanding the field force, not only benefiting MG, but also preparing for the CIDP launch. We are aggressively investing in the prefilled syringe. And at the end of last year, our partner Zai Lab got VYVGART on the Chinese NRDL. That's a hell of an achievement. We are also expanding the VYVGART total addressable market. We're investing in label-enabling trials, Phase IIIb studies and externally sponsored research, and we continue the geographical expansion. And then last but not least, the magic spends when innovation enters the space, jointly as innovators we are growing the overall market. Disease awareness goes up, diagnosis improves, and patients and physicians stand up to ask for better they're no longer willing to accept the old status quo. Let's turn our attention to CIDP. We announced stellar data mid of last year, there is no other trial in the history of CIDP, which showed this strong set of data, very strong response rates, very strong reduction in risk of relapse. And for once and for all, we have shown, CIDP and IVIg mediated disease. We no longer have to guess how IVIg works, it's IVIg driving this disease. We have also set a whole new standard of how clinical trials will be done in the future from a quality and a global nature point of view in the CIDP rare disease. And then I would like to call out some of the magic of this study. 99% of the patients basically showed compliance in the study. That's not trivial. You ask these patients to give up their current medication to get on an unknown entity or placebo that's risky for a progressive disease, and still, we had such a high compliance. We also had a 99% rollover into the open-label extension. Guys, what this means is that patients are waiting. They badly need new treatment options in the toolbox. From our own market research, we know that only 20% of patients achieved remission on the current standard of care. More than 50% of patients are dissatisfied with the burden of their symptoms. And we think there are more than 42,000 CIDP patients on treatment today in the United States and our ex-U.S. argenx markets, excluding China. We're also working hard to transform the patient treatment experience. The key to understanding this slide is the exclusive license, which we hold to the Halozyme ENHANZE technology is a unique commercially and clinically validated technology. It's a volume-enhancing technology, allowing us to get 5 ml of product quickly under the skin. And the second key to understanding this slide is the unique physical chemical properties of efgartigimod. This Fc fragment can be concentrated to 200 milligrams per milliliter without paying any penalty on viscosity. That means you can squeeze this formulation through a fine-gauge needle without any back pressure. We have used these advantages to launch the first ever MG product in MG, mid last year called VYVGART Hytrulo, we are working very hard on the prefilled syringe that's currently in advanced clinical trials. And we just promoted the auto-injector from prototyping stage into industrialization stage. And this is just the beginning. So far, I have only been speaking about myasthenia. I have only been speaking about CIDP and ITP, but this year, we get 6 Phase II data points on deck. Whilst in the background, we have the Phase III trials ongoing for TED. And next year, we have another 6 data cards coming on deck. So we will be at least in 15 indications by 2025. Let's zoom in on the 5 Phase II proof-of-concept studies for VYVGART on deck this year. It's Sjogren’s syndrome. It's post-COVID POTS, and then 3 subtypes of myositis, which we're proceeding with in a basket trial. With these 5 indications change is a very strong biology rationale. It's very plausible that these diseases are driven by pathogenic IgGs, as you can see from the literature, convincing evidence from different models, suggesting that pathogenic IgGs drive the disease. Each of these indications is going through the discipline of a randomized controlled Phase II trial of 24 weeks, the myositis basket study is actually a seamless Phase II, Phase III trial and there are accepted clinical endpoints for each of these indications. And then invariably, all these indications have the same in common. There's a significant number of patients out there waiting for new transformative tools in the toolbox. The current treatment options are either nonexisting like in PC-POTS or very dissatisfactory, as in Sjogren’s syndrome or myositis. Let's move our attention now to innovation horizon #2. We start with empasiprubart, let's call it empa today. But here is the argenx playbook. We are pioneering a novel target complement factor C2, be first-in-class. We're approaching this target with black belt antibody engineering. This is a sweeping antibody. That means that one antibody can take out multiple times C2 before it cleared itself. It has a half-life of about 80 days, supporting very favorable dosing, And again, we create optionality within this molecule. We're already in three indications in clinical development. And today, we will be talking about MMN multifocal motor neuropathy, where we're redefining the textbooks of immunology and say that MMN is a pathogenic IgM driven disease. These are data from the first of 2 dosing cohorts in the Phase II proof-of-concept trial of MMN. You need to know that MMN patients have only one treatment option. It's IVIg. Every MMN patient you find on the globe is on IVIg. So in the run-in phase, what we do is we establish the IVIg dosing cadence for each patient. It's a very high dose of IVIg typically every 2 to 3 weeks. And once we established their cadence of IVIg, at the peak of their last IVIg administration, we randomized these patients over placebo or empa, and we monitor the risk for needing an IVIg rescue. What you can see is that empa is reducing the risk for an IVIg rescue by 91% which is pretty spectacular. But what we're most excited about is that 94% of patients declared their health condition to be better as compared to their baseline when they were on IVIg. Guys, that's transformational. 55% of these patients say they were much or very much improved compared to not on placebo. The safety profile of empa continues to be favorable and in line with the very extensive Phase I safety and tolerability study, which we performed. MMN patients are waiting. The diagnosis of an MMN patient is lengthy, it's frustrating, and it's an emotional roller coaster. Many of these patients first get diagnosed as an ALS patients, then they're being rediagnosed as an MMM patient to find out there is a treatment option out there called IVIg, but it's imperfect because the chance of progressing on IVIg is real. So we think that MMN space, MMN patients are ready for a transformation and we think there are more than 10,000 patients waiting in our argenx markets. Taking a look at ARGX-119, enhancing the neuromuscular junction. Hit the novel target we are pioneering is musk. Again, we're working with the world experts on the neuromuscular junction. We made a pretty cool agonistic antibody. It's a very special antibody. And again, we create optionality by pursuing multiple indications where enhancement of the neuromuscular junction can create a transformative event for a patient. We're just concluding a very extensive Phase I safety and tolerability study. Warranting advancement of this molecule into proof-of-concept studies. On the left-hand side, you see a preclinical animal model for congenital myasthenic syndrome. This is the first indication we're going in with ARGX-119. This is an ultra-orphan indication. It's a genetic mutation, which is leading to genetic myasthenia. And this animal model shows that normally, when these pups are born that is the short gray line at the bottom, they die. The muscle function is very weak, that diaphragm doesn't really work, so they don't live long. And what you see that the single administration of 119 upon birth is rescuing that phenotype from lethality. They have a normal body weight development, a normal restoration of the phenotype. Of course, at a give point in time, the antibody has left the system, and a single readministration is rescuing the relapse in these animals. So this is a very robust preclinical animal model based on which we are marching forward into CMS patients this year. We do not have such models in ALS. There are no robust predictive animal models. So we revert to kind of second-generation advanced testing. Here, you see a neuromuscular junction on a chip. It's interesting to see how these motor neurons innovate the muscle cells, they can stimulate the cells to contract. And now you can see in black how neuromuscular junctions of healthy volunteers are performing on such a chip, how the neuromuscular junctions of an ALS patient perform, you see a marked reduction, which you can rescue with an ARGX-119 dose with a nice dose response. Turning our attention to the third innovation horizon running across the company. We're going to talk about four new pipeline assets. Last year, here on this podium, I promised you one, at least one. Well, we announced four molecules, ARGX-213, which is an immune molecule targeting FcRn. We are bundling all our know-how on FcRn in this molecule. We believe the universe of opportunity is so big that we cannot just stop it with VYVGART, we need a second molecule to do that. We have ARGX-109, which is known to some of you. It's an ultra potent long half-life IL-6 blocker. And then ARGX-121 and ARGX-220 comes straight from the argenx innovation playbook. This is a first-in-class novel target antibodies, and they're all racing towards IND, they should all have achieved that IND before the end of 2025. So this company is firing from all cylinders. In 2024, there's going to be a ton of news. We will have approval news from Switzerland, Australia, Saudi Arabia and South Korea for VYVGART and gMG. We're initiating [ seronegative ] trial and for ITP, we're expecting a Japan decision on approval. For VYVGART subcu, in gMG, we're expecting a Japan decision on approval, a China decision on approval. CIDP, we're expecting a launch around the middle of the year and then steaming forward into regulatory submissions in Japan, Europe, China and Canada. We're also investing heavily in the prefilled syringe development, and we will be giving you database updates in the course of the first half of this year. As I told you, we're expecting 5 Phase II data cards in Sjogren’s, PC-POTS and myositis subtypes. We are expecting the full Phase II data for MMN and you will see ARGX-119 get into the first two proof-of-concept studies in CMS and ALS. A few words on the financials of this company. We're in a very healthy state with such a continued strong execution on the commercialization front with such a strong cash position of USD 3.2 billion at the end of last year and a disciplined investment in R&D and SG&A at or below $2 billion. We can guide for a cash burn of around $0.5 billion. And that basically means that this company is on a firm trajectory to become financially self dependent. To conclude, this year, we are rallying the troops behind important strategic priorities. On the commercial front, we want to broaden the MG leadership. We want to launch CIDP, and we want to advance the prefilled syringe as fast as we can. We're preparing for 6 Phase II data readouts leading to multiple Phase III indications, and we are working around the clock to get our 4 INDs filed by 2025. And with this, I would like to really thank you for your attention and I would like to open the floor for questions.

Thank you. Great. So we'll now kick off the Q&A part of the session. Does anyone have any questions they'd like to start with? In that case, maybe I'll start with a high-level question, which was so lots going on in the presentation. We've got already a blockbuster. But where are you now seeing VYVGART's peak potential? And how long can VYVGART can go for?

I think VYVGART has a really long time horizon in front of itself. I think we have a very long patent life. What we said is that the patent life is now known to be further extended by another 2 to 3 years due to PT and PTA. So there is an enormous volume of opportunity in front of us. It's just a sheer volume of indications, which we need to tackle with the molecule, which makes us believe that there is space for a second molecule in the pipeline.

And clearly, you had very strong data for MG and CIDP. You have had some setbacks towards the end of last year for ITP and PV. But does that change your view on all these other indications much? Should we read through from a MG and CIDP, or does PV change how you think about all these other indications?

I'm glad with the question because I don't think these indications feel from a biology point of view. That is the whole point. So I think VYVGART worked. These are clearly IgG-driven diseases. Actually, as a reference, the whole class of FcRn antagonist has already shown in 8 out of 8 indications convincing proof of concept. The lesson we learned for one of the two ITP studies and the pemphigus study is how do you run a clinical experiment in autoimmunity without being tricked by background medication. That's a very important question we run into. We're drawing the lessons. We need to draw from this experiment, and we're reapplying them across the pipeline in all the other indications.

And a question from the gentleman there.

Kind of what gives you the real confidence there? Obviously, the disease treatment [indiscernible] of the kind of kind of how should we be thinking about [indiscernible].

Yes, I think that's an excellent question...

Maybe, in case some people didn't hear the question. So I think, in summary, the question was [ surgeons ] and confidence, is it.

Yes. I think that's an excellent question. So when you do the homework on biology and you start to look at the pattern of evidence, there's actually quite a lot of evidence that it's immune complexes driving this disease. I think there has been a hyperfocus on B-cell biology, but I think the trigger of immune complexes which are formed by autoantigens in complex with the autoantibody. You basically see pretty convincing passive transfer data. For example, moms with Sjogren’s delivering babies, which have lupus-like effects, the autoantibodies correlates, the titer correlates with disease severity. And basically, what we do in this Sjogren’s study is try to prove the concept that this is indeed IgG-mediated. So we're not only looking at specific clinical endpoints, which are typical in Sjogren’s, but we also take a real deep dive in our patient court from a biomarker point of view. So we can zoom in on subsets of patients where you have the highest chance of success. Thank you for the question.

Gentleman in the back there, please stand up?

Any guidance on 213 and maternal fetal medicine indications?

I think -- was the question on 213?

Yes, ARGX-213, any direction in terms of going into maternal fetal indication.

No. We're not public on any indication for the molecule. I think we're in a bit of a more competitive space than a couple of years ago when we were alone. So give us the time to further develop the molecule and announce indications when the time is there, okay? Thank you.

The person second over here with his hand up. If we could just just wait for the microphone.

Just two questions. One, remind us of the sort of advantage and disadvantage of the CRM therapy versus immunogoblin. And also how much of the CIDP patients market -- patients share you're going to -- you're likely to sort of capture in the CIDP market?

And could you repeat part 1 of the question, please? Sorry, there's a lot of...

Immunoglobin -- compared to immunoglobulin, what's the sort of advantage of the VYVGART?

Yes. So today, I think the mainstay of therapy in CIDP is steroids and IVIg, you're correct. IVIg can also be part of the diagnosis. So it's a difficult diagnosis. And when there is a suspicion of CIDP and patients respond to IVIg, it's further evidence that this is a CIDP patient. I think there's plenty of room for improvements. I think you will see a typical adoption later when we launch the product, there are patients, of course, which do not respond to IVIg or who cannot tolerate IVIg or who do not want to carry that burden of therapy. Then of course, you have patients which weaken in between IVIg cycles. Who could also be open for an alternative tool in the toolbox. So I think in general, this is a space which is, I think, ready for multiple tools in the toolbox, not just one. And then I think the 42,000 patients we referenced in our markets. These are patients which are on therapy. I'm excluding a similar dynamic as a dynamic which we're seeing in myasthenia, where for the first time in precision tools entered the space, you uncover that the space is bigger than you thought. So awareness going up, diagnosed is improving and basically more patients and physicians coming out of the woodworks asking for better.

Thank you. A question, is there?

In terms of indications for FcRn inhibitors. How do you think about ITT proteases and their competition.

I think was the question on -- so the [indiscernible]. Was the question on competition for FcRn or other mechanisms?