argenx SE (ARGX) Earnings Call Transcript

Good morning. My name is Leila, and I will be your conference operator today. I would like to welcome everyone to the call. [Operator Instructions] Thank you. I'd like to introduce Beth ElDaco, Vice President of Corporate Affairs. You may now begin your call.

Thank you. A press release was issued earlier today with our second quarter 2026 financial results and business update. This can be found on our website along with the presentation for today's webcast. Before we begin, on Slide 2, I'd like to remind you that forward-looking statements may be presented during this call. These may include statements about our future expectations, clinical development, regulatory time lines, the potential success of our product candidates, financial projections and upcoming milestones. Actual results may differ materially from those indicated by these statements. argenx is not under any obligation to update statements regarding the future or to conform those statements in relation to actual results unless required by law. I'm joined on the call today by Karen Massey, Chief Executive Officer; Karl Gubitz, Chief Financial Officer; and Sandrine Piret-Gerard, Chief Commercialization Officer. Luc Truyen, Chief Medical Officer, will be available during the Q&A. I'll now turn the call over to Karen.

Thank you, Beth, and welcome, everyone. I'll begin on Slide 3. The team delivered 1 of our strongest quarters yet, marking our 18th consecutive quarter of growth. This momentum reflects the value Zipcar continues to deliver for patients. The continued expansion of both MG and CIDP markets and our ability to unlock new opportunities for growth, most recently with the seronegative MG approval. The progress we're seeing across the business brings us closer to realizing Vision 2030, our roadmap for delivering new, medium and long-term growth. Looking ahead, we have 2 registrational readouts before year-end, which support our goal of achieving 10 labeled indications. Together with our differentiated immunology pipeline, these programs position us to extend our growth well beyond 2030. Our success today creates the opportunity to reinvest in the best science we can find wherever we can find it during the next phase of argenx growth. Slide 4. Visa continues to change what is possible for patients with MG and CIBC, and we see strong growth across both indications and all regions. We're reaching more patients than ever before, driven by our commitment to bring meaningful innovation to the treatment experience. Last year, we introduced our prefilled syringe, expanding our prescriber base and supporting our goal to reach patients earlier in their treatment journey. This year, we reached another important milestone with the approval of VYVGART for seronegative GMG. VYVGART is now the first and only treatment approved across all serotypes of GMG, including for triple seronegative patients who previously had no approved treatment options. This is transformational for patients and physicians, removing the need for testing. With ocular MG, we are moving forward in our ambition to make VYVGART for treatment of choice across all MG patients. Slide 5. We have 2 important readouts ahead that represent the next chapter of our growth strategy. broadening our leadership in urology within [indiscernible] and extending the impact of FcRn into new therapeutic areas, starting with rheumatology. VYVGART has the potential to have a similar impact in rheumatology as it has had in urology. Autoimmune myositis is our entry point. It represents both a near-term label expansion opportunity and the foundation for long-term leadership. What continues to motivate us is the urgent patient needs. In IMNM, patients can progress from their first symptom to meeting a wheels within a matter of months. We heard that at R&D day, and there are no approved treatments today. This sense of urgency to deliver the patient is what is driving our filing strategy based on the benefit risk of each subtype on it goes, which are a clear signal in both IMNM and DM in the Phase II and we're on track for a readout this quarter. Myositis is just the beginning. We believe a first-in-class launch in myositis can establish the foundation for broader leadership in rheumatology with Sjogren's data expected in the second half of 2027. Slide 6. [indiscernible] prove at remains on track to become our second pipeline of products with our first registrational readout in MMN expected later this year. MMN represents 1 of the clearest unmet needs in urology. [indiscernible] has the potential to operate a differentiated approach, supported by the efficacy, durability and safety profile it in the Phase II AD study. We continue to see growing enthusiasm from the neurology community, particularly around the safety profile and the sustained improvement in [indiscernible] observed in the open-label extension. These are outcomes that matter in patients' daily lives. Our ambition extends well beyond MMN, the unique biology of C2 inhibition has the potential to benefit a broader range of patients from our ongoing Phase III program in CIBC through our combination study in MG. We are focused on unlocking the full potential of this mechanism for patients. Slide 7. It's an incredibly exciting time to be building a company around scientific innovation. The pace of discovery is accelerating, and our job is to find the most promising science that can change outcomes to patients. Our goal is to advance 5 late-stage molecules by 2030 to fuel long-term growth, and we are pursuing this through 2 pathways. We're extending our leadership in CRM and we're broadening our immunology pipeline. We are already delivering [indiscernible] strategies. Our future CRA molecules ARGX-213 and ARGX-134 as well as our [indiscernible] ARGX-121, are progressing towards late-stage development. And ARGX-118, ARGX-125 and TSC 101 now in Phase I, each represent a new pipeline in the product opportunities. Together, these investments reflect a disciplined capital allocation strategy focusing on delivering durable growth over the long term. And with that, I'll turn the call over to Karl.

Thank you, Karen. Slide 8. I am pleased to present the second quarter 2026 financial results in this morning's press release. We continue to increase the number of patients that we treat, resulting in growing revenues. Product net sales for the second quarter were $1.5 billion, representing 60% year-over-year growth and 17% quarter-over-quarter growth. By region, product net sales were $1.3 billion in the U.S., $102 million in Japan, $136 million across the rest of the world and $5 million related to products supplied to Zai Lab in China. Our U.S. market grew by 15% quarter-over-quarter with a gross to net and net pricing similar to prior quarters. In Japan, quarter-over-quarter net product sales growth is 55% or $35 million reported sales include a one-off benefit of approximately $25 million due to a change in our distribution model. Next slide, Slide 9. Total operating expenses in the second quarter were $1 billion, representing an increase of $129 million compared to the first quarter. We have stepped up our combined R&D and SG&A investment to $903 million in the quarter. This increase is delivered and reflects disciplined investment in multiple mid- and late-stage clinical development programs and commercialization capabilities to support our growing multiproduct portfolio. Operating profit in the second quarter is $494 million, an increase of 146% year-over-year. Tax for the quarter is 11% of profit before tax. We ended the quarter with a cash balance of $5.2 billion, including cash, cash equivalents and current financial assets an increase of more than $744 million from the beginning of the year. Our capital allocation priority continues to be building durable long-term revenue growth. At the same time, we are well on track to deliver a financial profile that includes increasing operating margins, sustained earnings growth and a significant cash generation I now turn the call over to Sandrine who will provide details on the commercial front.

Thank you, Karl. I'll begin on Slide 7. What continues to set argenx support is our ability to translate the patient-first approach into execution across the entire treatment journey. From educating health care providers to supporting patients who ongoing care we are focused on removing friction at every step. And it is an approach that continues to deliver results. More HCPs are choosing to prescribe VYVGART and the preferred biologists for MD and CIDP. More patients are requesting VYVGART, and other results getting on treatment earlier. Patients are remaining on treatment because VYVGART continues to make a meaningful difference in all-day feel and function in their daily life. Today, we have patients who started in our very first quarter of launch and remain on therapy 18 quarters later. These strong fundamentals are reflected in our performance this quarter and we continue to position us well for future growth. Slide 11. This quarter, we continued to see growth driven by both MG and CIDP across all regions. -- renew patient demand remaining at a consistently higher level. The prefilled syringe continues to be an important driver of this demand across both MG and CIP. Its convenience and flexibility are supporting broader adoption of these parts in the second quarter, approximately 80% of prefilled syringe patients in the U.S. have been new to VYVGART. We also see increasing breadth and depth of prescriptions for VYVGART. Physician confidence in VYVGART is reflected in a repeat prescriber base of more than 5,000 neurologists and increasing yield earlier in the treatment journey. While early into launch, we also saw a contribution to growth from our seronegative expansion in GMG. VYVGART is now the first and only biologic approval across all serotypes of generalized MG significantly expanding our addressable market in MG by 11,000 patients. Slide 12. Our recent approval across all serotypes in GMG mass positive, triple-negative and LRP4 positives, strengthened VYVGART leadership in MG and advances our goal of reaching the broadest patient population. We are pleased with the early response to the legal expansion with extremely positive situation and ACP feedback. We have established relationships with more than 80% of seronegative MG treaters and see the recent VYVGART label expansion having a halo effect on all GMG prescriptions, also driving increased uptake by prescribers in the seropositive population. On the payer side, we leverage the credibility and relationships we have built to secure policies covering approximately 55% of of U.S. commercial lives, all within 10 weeks since launch. Most plants are removing the serology testing requirements, making it simpler for physicians to prescribe VYVGART as the good option in MG. There is also tremendous excitement and hope among patients, particularly triple-seronegative patients who previously had no approved therapies available. One of these patients as Zack shared I sat on my computer cried, hope. This is finally real hope of the seronegative community. As we look ahead in energy, we see significant opportunity to reach patients earlier in the treatment journey and pending approvals expand into ocular MG. These patients continue to face a meaningful garden of disease, underscoring the need for additional treatment options and reinforcing our commitment to serving the full MG community. Slide 13. Let's move to the opportunity in CDP. Within our initial 12,000 patient addressable population in the U.S., we are driving further adoption through physician education and continued evidence generation. At the same time, we are laying out the groundwork to expand beyond this. Today, approximately 24,000 patients are being treated for CIDP in the U.S. and roughly half are considered to well-managed only current therapy. Yes, what we consistently hear is that many have learned to live around their disease, often without realizing how much function they have lost. And this is exactly why generating data that shows many consumptional improvement matters. Our [indiscernible] results demonstrate the impact VYVGART can have on outcomes that are important in patient life and meaningful to the physicians treating them. Similarly, we have generated evidence that help physicians navigate practical treatment decisions, including transitioning appropriate patients from IVIg to VYVGART. We presented recently at PNS, the results of a Phase IV switch study, showing that 87% of patients on IVIg, which successfully to VYVGART helping address the questions, how do I [indiscernible] to VYVGART? Finally, we continue to explore the opportunity to reach patients earlier in debit. We see significant potential among the large population of untreated patients where OLED suggests that treatment-naive patients midrise meaningful benefits from earlier treatment. Slide 14. Looking ahead, we are preparing the organization for the next repos. We view autoimmune myositis as a strategic entry point into rheumatology with the potential for regard to establish early leadership as the first FcRn. We are augmenting our best-in-class launch playbook in MG and CIDP to be launched ready for myositis. We are already engaged with 650 treating auto and myositis advancing disease state education, engaging patient communities and getting ready to expand our field force footprint. With that, let me turn the call back to Karen for closing remarks.

Thank you, Sandrine. As you saw today, we continue to see strong momentum across the business with significant opportunities to hit for VYVGART and a pipeline position to sustain refers well into the future. And while there is much to be proud of in the first half of the year, there is even more ahead. We entered the second half of 2026 with multiple opportunities to advance innovation and further our mission of transforming the lives of people living with autoimmune disease. I want to thank our teams, patients and strategic partners for their continued commitment as we continue to commission together with us. And with that, operator, we'll open the call for questions.

[Operator Instructions] Our first question will come from Myles Minter.

Congrats on the quarter. Looking forward to the myositis data in the third quarter here as well. I'll keep it to 1 on the commercial business. You've delivered quarter-over-quarter sort of mid-teens percentage growth if you take out the first quarter seasonality. I just had a question on whether that sort of future growth trajectory might change with the launch in the seronegative population here and whether there's any sort of tailwinds that we should think about from the broader population now that most plants are not requiring the serology testing for that population.

Yes. Thanks for the question, Myles. And I would agree with you. It is incredible 18 quarters in that we're still delivering consistent growth quarter-over-quarter. And what I would say related to the quarterly trends. Of course, every quarter has its own dynamics. And after Q1 seasonality, we generally see some rebound in but we expect the shape of the curve for the remainder of the year to look pretty consistent to what you've seen in prior years. We're off to a strong start. Of course, with seronegative but you -- we've had the same dynamic in prior years with the launch of the PFS and that type of thing. So I would expect to look -- continue to look to grow and to look similar to prior years. Thanks for the question Myles..

Our next question will come from Derek Archila with Wells Fargo.

Congrats on the quarter here. Excellent results. I just wanted to understand, where do things stand with the ocular MG filing? And I guess maybe going to more tailwinds, but assuming approval, I guess, how do you think ocular could be a growth driver? And does that really materially change VYVGART's revenue trajectory?

Yes. Thanks for the question. We're moving forward with urgency on ocular MG filing, I mean there's a big patient unmet need, in ocular MG. Of course, there's no advanced therapies approved in this patient population. So we will be the first and only approved treatment in this population. So we're on track with the filing. We'll update you when we have a PDUFA date but maybe, Sandrine, you could comment a little bit on how you see the outlook if we do have an ocular approval.

So thank you, Chairman, and Derek, for the question. So I see the ocular MG potential approval as another way to continue and to support our growth momentum. Over the last 5 years, we basically have had 5 launches when you think about that. So this would give us another launch to continue that growth momentum. And we are well positioned because many of these patients are being treated by neurologists, and this is already a population of providers that we visit and that have experience with the drug. So I'm very confident that this will be another -- I think another leg to our growth for the long term.

Our next question will come from Tazeen Ahmed with BofA.

So Karen or maybe Sandrine, I wanted to get your thoughts about the competitive landscape. So you're right, your '18 quarter is in and you've had commanding share, but there continue to be new launches and upcoming launches. And some of the competitors that are talking about what advantages their products might have include comments such as efficacy may not necessarily be where it needs to be with FcRn in general and that patients might be dropping off therapy due to safety observation. So can you maybe share with us your feedback from the field about what doctor's satisfaction is vis-a-vis the patient commentary on both efficacy? And can you talk to us about dropouts as a result of any safety concerns?

Yes. Thank you, Tazeen, for the question. Let me just comment broadly on competition and then I'll hand it over to Sandrine. But we've had this question a lot. I would say we launched in MG. And I'd like to say that argenx put MG on the map, and there has been a lot of competition that has followed us into the space. And throughout that, we've maintained our leadership in the market. And you can see, for example, 4 out of 5 physicians continue to say that they choose they've got before any other biologics. But Sandrine, maybe you want to comment on specifically the efficacy advantage and any other dynamics you see in the market?

Yes. So VYVGART, I mean, like a Karen has been seen and it's being used today earlier than the others. The others I use more in refractory populations and it's been used in earlier lines. And the reason is that the label supports it and the data supported. And when you look at the data, I wonder if anybody else can demonstrate an MSC that we have. We have 60% of patients that have reached minimal symptom expression. And then that MSC is sustained over time, -- so I haven't seen until now other competitors being able to demonstrate MSC or even speak about NFC. And so that's really what stands out when you speak about the efficacy of this card. And then if you combine that with its safety, over more than 25,000 patient years. I mean this is a very strong combination of a safety and efficacy profile that puts us in a position to be used earlier lines. And that's why until now, we haven't really seen a meaningful impact on our growth trajectory.

Our next question will come from Alex Thompson with Stifel

Maybe for Karen, could you walk us through sort of what we should expect to see now at the top line for myositis in terms of both primary endpoint clinical data as well as the potential path to filing, particularly in DM.

Yes. Thanks, Alex. We're really looking forward to the readout in Q3, and we're on track. Just to set the stage, what we see as success from myositis is positive readout on the primary endpoint in 1 or more subset, and that's the data that we'll share. So you'll remember from our Myositis Day, that we shared that we see both of these indications on their own as potential blockbuster indications. They both have significant unmet need. And they're both actually strategically important to us. If we proceed with an approval, this will be important because it will be the first-in-class FcRn approval in rheumatology. So we'll be looking for positive data on the primary endpoint in 1 or more subset. But maybe, Beth, do you want to share a little bit more about what they can expect to see a top line results.

Yes. I mean we're still working out the specific details of what the communication will look like. But what we know is that this is an important event with positive data for argenx. It's our entry into rheumatology, and we'll want to capture that in our communication, and we'll also want to capture the primary endpoint analysis on -- in IMM and in DM. So the details are still to come, but you can assume that those are the key topics of the communication.

Our next question will come from Akash Tewari with Jefferies.

Can you give a little more color on your stat plan for my side. Based on your public comments, it seems like there is no alpha split. Basically, DM and IMM are now being run independently at 2 separate trials. Is that the correct read here? And then if the effect size in DM for your Phase II trials was replicated in Phase III, would the trial hit static or not? And if not, what are some reasons that efficacy could improve from Phase II to Phase III.

Yes. Thanks for the questions, Akash. We have Luc here. So asking to comment.

Yes. And thanks, Akash. So you are correct,. So the way we now approach the analysis of the Phase II is that we will independently analyze the subsets. So each has their own chance to win. As you also know from the research day, of course, the enrollment differed between subsets, so that will affect the intrinsic power Nevertheless, the analysis plans are completely in parallel. With respect to your question on FX effect size in Phase II in the end that will be observed in Phase II, you could make the assumption that because it's twice as long and twice as big, that, that would increase the chance for statistics sites, which is certainly true, but not a guarantee. We just will have to turn the data cards see what we have and then determine our path forward. But with a stat/sig or stat negative, we are working on a plan for DM.

Our next question will come from Rajan Sharma with Goldman Sachs.

I've actually got 1 on [indiscernible] approval . Could you just provide a little more color on the DGF update, please? So it seems like you're progressing development but not in DGF itself. So can you maybe help us understand what the forward path is here in terms of indications and when you may be in a position to move through a pivotal trial and what it was that you saw in the 52-week data that gives you confidence to move forward. And I'm just wondering if there's any additional reassurance into MMN based on what you've seen in the DGF trial.

Yes. Happy to have Loc comment on this. Just a reminder, this was a Phase II proof-of-concept study. And what we wanted to do was use it to explore and learn about this of [indiscernible] the transplant setting broadly with a focus on DGF in the particular study but Luc maybe you can talk about what we saw on the path forward.

Yes. Thanks, Karen. Thanks for the question. So as I already said, is a relatively small trial. Basically, evaluating hypothesis whether we could influence reperfusion injury with this mechanism. And the transplant situation lends itself to this. And we have chosen as a target which is a relatively short-term goal. So when we saw the data at 24 weeks, we found an entreatment signal, which made us decide let's continue the exploration of the study after 52 weeks, which more or less confirmed that there is something in the renal parameters here that is affected, which gives us an interesting perspective on exploring the transplant. However, it does not support DGS, which as I said, is a short-term readout to be continued as an indication.

And maybe just to comment on the second part of your question around MMN read-through. I don't think I would take any read-throughs for MMN other than we did see some effect of the drug. But in particular for MMN with the readout in Q4, I think the most important data point to look at there was our positive Phase II study where on the endpoint of group strength in the -- both in the initial Phase Part A as well as the open-label extension, we saw positive results. Thanks for the question.

Our next question will come from Yatin Suneja with Guggenheim.

An excellent results. So congrats again. So quick 1 on the pipeline, specifically on ARGX-121, the IEN program. Could you maybe talk about a little bit about the profile that you have seen in Phase I that is enabling you to move into Phase 2, what level of IgA reduction you saw? How should we think about frequency, all of that?

Yes. Thanks for the question about ARGX-121. We're really excited about 121 and broadening our pipeline with the IGA sweep. And we had shared data specifically from Phase I from -- and with the profile that showed that ARGX-121 reduces IgA by about 90% within the matter of days and that reduction is maintained all the way out until day 28 with 1 single dose. So very impressive data. And we're moving very quickly with urgency into IgAN. And perhaps you could share your thoughts on the IgN program, clinical development program.

Well, with such a signal in Phase I, we are pretty excited to keep this really moving fast. When we show those later key opinion leaders, they were also very enthusiastic that this speed and depth really puts it aside from, as we all know, again, has quite some efforts going on. But our signature of the drug here really set us apart and it's really offering us great hopes for the Phase II and the Phase III that we can bring a meaningful drug to patients.

Our next question will come from Yaron Werber with Cowen.

Congrats on a really nice quarter. Just a question for you on MMN, and thanks for putting that slide into the deck that shows the group strength change from baseline. What we hear from clinicians is that 8 points is clinically meaningful? And I believe the primary is not inferiority and then you have superiority. Can you maybe just talk about that Phase III trial design, maybe a little bit of the powering or whatever you can share as to -- how do you -- what do you expect from baseline?

Yes. Maybe Luc, I can pass it over to you to talk about Phase I.

Yes. Thanks for the question because it allows us to talk to what have we been trying to achieve in argenx. So with the Phase II data, as you will remember, we had like an 81% reduction in the need for rescue with IVIg based for those that received an [indiscernible] is to the point where we said, if every rescue, we need to take forward as on IVIg, you might as well do IVIg head-to-head, which would also provide the most meaningful data for prescribers. So we designed this trial where after stabilization on IVIg and optimizing that we initiate either a continuation of the IVIg regimen or switch to Embassy Rebar. The endpoints here is indeed grip strength, which we picked in conversation with actually the agencies because there were quite meaningful data available. which allows us to define a non-inferiority margin. And the non-inferiority margin is set, I think, pretty relevantly but we also have the opportunity to go to superior it. And I think based on the Phase II data and what we learned on IVIg that there is in my opinion, a great chance that we could show that, but the noninferiority at least gives us the ability to at least provide that information.

Yes. Thanks, Luke. And just to wrap it up, what I would say is what we see is success is a positive readout on the primary endpoint, noninferiority and obviously, upside would be superiority. But when we speak to KOLs and prescribers, we certainly hear excitement about the fact that we have a head-to-head versus IVIg. And certainly, with our experience in CIDP, we have some experience competing in that space as well. So I think we're set up for success, assuming a positive readout towards the end of the year with MMN.

Our next question will come from Danielle Brill with Truist.

This is Alex on for Daniel. Congrats on the quarter. Just a question on CIDP as it pertains to the current commercial dynamics as well as the ongoing AMPA trials. As far as it relates to the commercial read-through of the CIDP launch in the regions where VYVGART is available, who are the types of patients who are enrolling in the EMPA CIDP trials instead of trial in VYVGART?

Yes. So maybe to start, just to lay out our strategy with CIDP. So we see that CIDP is a heterogeneous disease, and there is significant unmet need until VYVGART launched, there hadn't been innovation in the space for 30 years, and we've seen the strong uptick of VYVGART in CIDP. What we know is with the disease heterogeneity that there is also IGMs driving the disease. And so that's why we have the study within passive treat where we think we have strong biology rationale. So our hypothesis is that there are some patients that -- we have a 70% response rate with VYVGART. So those patients that don't respond to Viv gut might have more IgM driven disease. And so we think that there's an opportunity for impact in those patients. There also might be patients where they have certain drivers of the disease, and so an overlap that might be between eligible for both VYVGART and [indiscernible] So our strategy here is to study in past approved, and we're enrolling in [indiscernible] in a broad patient population so we can understand what impact -- the impact of [indiscernible] on the disease. And then once we have the data readout, we can analyze that data as well as the VYVGART data and really understand what is driving the best outcome for patients and move forward with the commercial strategy.

Our next question will come from Thomas Smith with Leerink Partners.

Let me add my congrats on a really strong quarter here. On the pipeline, could you just provide some update us on how you're thinking about advancement between your next-gen FcRn in Canada and 2 -- any additional color on the target profile you're aiming for 124 with respect to IgG leveling or dosing interval or other potential differentiation? And how do you think about indication selection between life cycle management and potential expansion opportunities across those candidates.

Yes. Thanks for the question. Our goal with FcRn is to maintain our leadership and even advance our leadership for decades to come. And we have a few pieces or parts to that strategy. Our next-generation molecules, 213 and 124 that you referred to. 213 is we call Phase III ready and 14, we're in Phase I at the moment and by the end of the year, we'll be in a position to move it into late-stage clinical development. So at the moment, we're working with our teams based on that data to assess the 2 molecules. Of course, ARGX-213, we know has a Q4 weekly dosing schedule. ARGX-124, we're further categorizing the advantages that it will bring over VYVGART at the moment. And then we'll be in a position where we can lay out what the strategy is for the full portfolio between VYVGART, 213 and 124. The other component of our strategy that's really exciting is that we are in development of an oral FcRn, and that program also moves forward with quickly at the moment. Thanks for the question.

Our next question will come from Sean Laaman with Morgan Stanley.