Afternoon, everyone, and thank you for joining. My name is Rajan Sharma, European Pharma & Biotech Analyst here at Goldman Sachs. I'm very pleased to have argenx with us this afternoon for the last buy side of the day. We've actually got two speakers. We're lucky to have two speakers today. We've got Karl Gubitz, who's CFO, who you all probably know, and then we also have Arjen Lemmen, who is head of corporate development. Maybe just to kick off, Arjen, given that you're probably someone that hasn't had as much time with investors relative to Karl, maybe if you could just give a brief introduction of your role, yourself, and how that's evolved over the years at argenx.
Yeah. No, happy to do so, and happy to be here. My role at argenx is indeed that I head corporate development and strategy. I've been with the company since 2015. I joined argenx when it was just 30 people at the time. With a responsibility on our business development deal making, I ultimately evolved my role in a broader corporate development responsibility in the senior leadership team. My team focuses on really everything related to third parties and deal making. The business development, the partnerships, the alliances, our sourcing with suppliers, and corporate strategy as a whole. Supporting the organization, which countries do we enter, which indications do we prioritize? Does the overall portfolio make sense? Which molecule do we take into what indication, basically.
Okay, brilliant. We'll definitely dive into some details there. Maybe just to start, maybe if we could just start on VYVGART Commercial. You obviously had a very solid start to the year, 60% year-on-year growth in Q1. Competition in myasthenia, in particular, is stepping up. We've had a couple of recent approvals and potentially one coming. Just in that context, how should we think about the growth outlook for VYVGART, firstly in myasthenia gravis, in the near to midterm?
Thank you, Rajan. Yeah. MG still has a lot of growth ahead of it. We are now 17 quarters into the launch. The growth is not slowing down. The share of biologics, that VYVGART, all the other FcRns, C5 and so forth, is only about 20% of the total market. 80% of the market is still on the orals, Mestinon, steroids, immune suppressants. There's a lot of growth into the earlier lines. VYVGART is not only the biggest of the innovators in that 20% share of biologics, it's also driving the growth. If you ask a doc, four out of five docs will say you start with VYVGART. Now, of course, we also have the seronegative, which gives us the broadest possible label to help with that growth.
At 11,000 patients, to take the total addressable market, if you add seronegative moving into the earlier lines and also ocular, which we have a data but not yet the approval, to 60,000 patients. One of our key growth drivers continues to be the PFS for self-injection, because of the convenience of a 22nd injection, which none of the competitors can do, of course, is also driving the growth. A lot of growth looking forward in MG. From CIDP, if I can quickly add, we are in the early innings of a launch bay. We are still at the bottom of that patient funnel in that 12,000 patients which are not adequately addressed with standards of care. Slowly over time, we can move earlier line, but both CIDP and MG continues to grow in all markets.
I think we are set for growth for the rest of the year.
Okay. In terms of maybe just to double down on MG for a moment, you said 20% biologic penetration in the indication. Where do you think that can go, and are there any specific analogs that you would look to as you think about our biologic?
No, it is a great question. Of course, we also debate it internally, the short answer is, I do not know what the share of biologics will be in a few years, but it should be multiples of 20%. It is VYVGART who is driving that biologic growth, as I said earlier, because of our efficacy, safety and tolerability and the patient convenience. I think that we can look forward to expanding that biologic growth number significantly.
Okay. Just thinking about seronegative, it almost is clear that it adds a reasonably significant number of patients. How should we think about the ramp there? I think, at Q1, talked about being ready to launch there, whereas in previous new launches, you've talked to maybe 2 or 3 quarters to get reimbursement in place. Is it different for seronegative?
Seronegative is a little bit different in that typically when you add a new indication, you have to go back to the payers to do a negotiation. Of course, this is not necessarily here because gMG is on the label, but the payers need to change their formularies to say that the acetylcholine receptor antibody, the requirement to do a test and to send in the test, that can now be removed. That is actually removing a bureaucracy or a process at the physician's office.
I think that, of course, is very helpful for them. Remember that the seronegative is 3 subsets, and half of that patient population is the triple-negatives, which has no options available today. There are many patients waiting. In terms of a trajectory of a growth, 17 quarters in, we continue to show growth quarter after quarter. To maintain that growth, you need new innovation. This is the new innovation which is going to drive growth for this year in MG, the seronegative plus the PFS, which is continuing to drive growth.
Okay. Obviously we have the ocular potential that we've hit on the trial. Is that a similar scenario where it could be a relatively quick uptake?
Yeah. On ocular, is important part of I already mentioned our strategy is to be the first-line biologic and to move earlier line. Ocular is earlier line, if you like. 85% of ocular patients generalize into generalized myasthenia gravis. We think we're going to add around 7,000 patients there, and the unmet need is clear. At the recent medical conference at AAN, when we presented the data, it was standing room only. This is because the unmet need calls out for a new tool in the toolbox to treat these patients. We don't have approval yet from the FDA, of course, but what we're hoping is to change gMG into MG. That will get you to the 60,000 total addressable market.
I think the unmet need is very often underestimated in ocular. I think the shorthand has sometimes wrongly been that ocular is less severe.
Yes.
Right? Because you don't have these generalized symptoms yet. Just imagine how debilitating ocular on its own can still be. These patients with the double vision they have, they cannot work on a computer. They cannot drive a car. It's hard to actually walk anywhere without falling, right? It's overall not a version that is less severe. It's just concentrated in the eye at that stage, and it is indeed typically earlier in the disease manifestation.
Maybe just quickly touching on CIDP. Do you have a sense of where penetration is for VYVGART right now? You talked about kind of moving to earlier lines, how do you actually enact that? Do you need more clinical data, or is it more of a case of physicians becoming more familiar with the product profile?
Yeah. Moving earlier line, of course, is, let's call it, a little bit more aspirational. We're going to get there over time because where we are now, we're still early in the launch. If you just look at the patient numbers, 42,000 patients diagnosed in the U.S., 24,000 of them are treated, half of them not adequately treated with standards of care. What we continue to do is to educate the physicians and to activate the patients. You'll see here in the U.S., all the DTC, the television campaigns because what really helps to get a patient on VYVGART is if a patient go to the doc and ask the doc, "Is VYVGART right for me?" We need to do a lot more work in terms of patient activation, physician education, and then over time, we can increase the usage of it.
We're still early in the launch, and the penetration is relatively low.
Okay. Maybe kind of moving to DD then potentially M&A. Could you maybe just outline what sorts of assets are potentially of interest to argenx? You've done a few smaller deals, whether that's for technology platforms or formulation. What was the rationale behind those?
Yeah. I think partnership has really been in the DNA of argenx right from the start. Actually, one of the cultural pillars of the company has been what we call co-creation, where we work together with our partners, either a technology partner or an academic partner, and that's how we've been able to create and design the molecules that we have in a differentiated way. We actually consistently do that. In our IIP, we do these business development licensing deals in close collaboration with the scientific team identifying the novel biology. There's actually not any program in argenx that gets started without some form of partnership at that from day one. We do, I think, a multitude of these deals per year.
You've seen, if you track carefully the early-stage pipeline, we've systematically added to that early-stage pipeline building up, let's say, the innovation engine for the future. What I think has changed with the company turning profitable is the means to build on that playbook but also apply it to later-stage opportunities. What are we looking for? We're looking for opportunities that still fit the argenx innovation playbook. We're looking for novel target biology, first-in-class opportunities. We're looking for opportunities where we can bring our pipeline in a product execution, and we're looking for that in a context of neuromuscular and I&I. None of that, I think, by any means, is surprising.
I think from a stage point of view, we're looking for opportunities that are IND minus 12 months or preclinical assets or IND plus 12 months, maybe a phase II asset. It could be later if it's the right fit. I don't think that these rules are dogmatic in any way, but just to give you some color. At the beginning of the year, you saw us sign this option to acquire Tensegrity, which is a Japanese biotech company. They have an antibody molecule against a novel target, FN14. We believe that that target biology has applications in multiple muscle wasting disorders, so we can apply our playbook there. It's an option deal, so we actually create a way for us to generate data together based on which argenx can decide to bring it in. It's an incredibly strong antibody, actually.
The Tensegrity, for those of you that don't know, it's a spin-out company out of Astellas. That molecule was actually discovered in the Astellas discovery. I'm just highlighting it because it's just a good example of what we've been doing. There's other shapes and forms that potentially could fit.
Okay. Where do you think that you add value as a partner? Is it on the development bit? Because obviously, they've been pretty successful. It's been tested across multiple indications. You've been successful in most of them. Or is it as a commercial engine where, again, you've been pretty successful at commercializing the drug?
Yeah. I think it can be both. Clearly, if it's something that fits our commercial organizations, there's a way for us to add value. I think from a development execution pipeline and a product, there's a way to add value. For the earlier stage program on the antibody engineering, there's a way to add value. I think one of the prerequisite is that we have to add value to the deal, right? We cannot only be a financial tool. In that, we also need to bring capabilities, I think, to these assets that basically allow to either broaden or accelerate the opportunity that the biotech company otherwise would have been able to do.
Okay. How do you think about capital allocation there? Not just from a balance sheet perspective, I guess follow also from a P&L perspective, because if you're bringing things in, there's an R&D cost that comes with that. Are you sort of holding back some of the internal spend in the anticipation that there'll be something external coming?
I think the strength of argenx is it really is a type of asset which builds companies. If you look at the scale of our revenue, even now and with a lot of growth, as I said, ahead of us, you already see the revenue falling through to profitability. That said, we have a unique opportunity to build the company for the long run. We are going to invest in building durable growth now. argenx should give us that growth into the next decade, but after that, we're going to have a large base, and to build durable revenues on top of that, you need to invest in innovation now. That is what Arjen is doing now, and that is the strategy of a company. I think that, as I said, argenx growth can afford that we can do both.
the priority number one, of course, is revenue growth, and that is where the dollars go first.
maybe just on that point of sort of revenue growth dropping down through the P&L, how should we think about that on a forward basis? There's obviously some confusion within the market on the OpEx until 2026. How do you think that is going forward? Do you think the market's in the right place now?
we were clear at the beginning of the year that the OpEx growth year-over-year, which is combined R&D and SG&A, should be around 30%. That should get you to around $3.5 billion on a full year basis. We wanted to put that marker out there. At the end of Q1, we made a $400 million operating profit, which is an operating margin of 30%. We don't want to give targets out there in terms of operating margin because we don't want to box ourselves in. We want to chase the novel biology, as I said earlier on. Over time, of course, we think that we can provide operating and we will provide operating leverage. You can see that margin improving over time.
maybe just conscious of time, just moving on to pipeline readouts. It's obviously a relatively busy second half of the year. Lots of focus on myositis. I'm conscious that you have the event in a couple of weeks. Could you just kind of walk us through the trial there, what populations you're studying, and how to think about the sort of respective commercial opportunities in those subtypes?
The myositis study readout, registrational study will be in Q3. In a couple of weeks, we have an R&D day on myositis. It will also be webcast, so please join us. It is a basket study across three subsets, dermatomyositis, IMNM, immune-mediated necrotizing myopathy, and also polymyositis, PM. In terms of I won't get into all the details here. I think please join the R&D day. There's a path to get all the subsets or one or two of these subsets. It really depends on the data, and it depends on the FDA, of course. The unmet need surely will also play a role. In terms of a commercial opportunity-
Let's start with IMNM, because that's 20,000 patients and it's complete white space. This is probably the best example in the myositis of being a prototype argenx indication. Strong biology rationale and clear unmet need. If you take that 20,000 patients with no treatment options, I think we have an opportunity to very quickly transform the lives of those patients. Very excited about that commercial opportunity. The bigger brother, if you like, is dermatomyositis. 40,000 patients. Of course, there will be more competition there. JAK from Roivant, Priovant, will launch in September this year. It's an oral, but of course it's a JAK which comes with certain safety considerations. At the end of the day, dermatomyositis is a very heterogeneous disease. I think over time, each innovator will find its place in that indication, and we of course can also be very excited there.
I think there's more to come on the R&D day. Another phase III data in Q3. Lots to be excited about.
Okay. Maybe just thinking on the OpEx point is kind of related here, just assuming that you kind of get the label in all three indications, how should we think about that incremental launch cost that come with that? Because there'll obviously be a new physician group that you'll be targeting.
Yeah. It is. Of course, the argenx playbook is if we launch, we play to win. You've seen that from the MG launch, you've seen that from the CIDP launch. We will play to win. We will put in a field force for rheumatology. Part of myositis is described by neuros, where we already have strong relationships and established capabilities, but we will need a rheumatology field force. We will look at what patient activation strategies which we will put in place. Because the platforms is already in place, I think the launch will be very profitable in terms of a P&L. It will not be a drag in the operating margin. It will actually support the operating margin. Just to put a sense of scale out there, we launched MG in the U.S. very successfully with 70 reps. Seven, zero.
Just to give you an indication of a size you need for an orphan type of indication in the U.S.
Okay. That's super helpful. Maybe just on the data itself. We saw the phase II data. It looked pretty encouraging. We don't know what the subtype split was in that. Is it fair to assume that there was a similar level of efficacy across all of those subtypes?
We didn't provide all the detail, of course. The only thing I will say is that at the end of phase II, we had the option to not to continue in one or two or all three subsets, and we made the decision to continue with all three. We will, of course, now get the data in a few months of phase III data.
Okay, perfect. Maybe just switching to empasiprubart plus VYVGART as well, which I guess kind of fits with the external innovation piece as well. How should we think about the commercial opportunity there in the initial indication of MMN?
Yeah, MMN, I think it's the kind of indication where, first of all, like in CIDP with VYVGART, there hasn't been innovation in that indication for decades. The only available option for those patients is IVIG. What we've said is that there is about 12,500 patients in the core markets. We think about 6,000 of those in the U.S. That's, I think, the direction to think about. What is also important to note about MMN and its unmet need is that we know that the MMN patients are actually the single highest consumers of IVIG. They tend to use a lot of IVIG, which I think is a testament to the level of unmet need that exists in that patient population.
In terms of a broader context, if I can just add, the bear case on argenx is that it's a single asset concentration risk and this is why empasiprubart and the MMN data, which will read out in Q4, is so important for us to show you what we're doing with VYVGART is repeatable and scalable because in empasiprubart is currently in 2 phase III and more indications to come.
Okay. On that point, how much of important sort of readout is empasiprubart in the sense that it de-risks empasiprubart for you internally? Is this a scenario similar to VYVGART once you have confidence in the protocol that you then explore multiple indications?
Well, I think we're already executing that strategy, right? I think we designed a very strong molecule, with empasiprubart. It's highly differentiated in its molecular design. We think C2 is a great target to intervene in the complement system at the intersection of the classical and the lectin pathway. It has this pipeline and a product potential. MG and CIDP are leading the way. We've been there with DGF, but I think we're not done evaluating new indications for this biology.
Okay. Makes sense. Eventually, is that something that you can foresee again, kind of extending that VYVGART sort of playbook where you have multiple formulations?
Yeah. I think the presentation playbook that we had for VYVGART would also apply to Empa, but probably in an accelerated way, relative to VYVGART.
Yeah. Okay. Makes sense. You're also exploring the asset in CIDP.
Yeah.
How should we think about that coexisting with VYVGART? Is this a combination approach, or is it there's a subset of patients that don't respond on VYVGART and they need an alternative?
We made a couple of important choices there. First of all, we didn't subordinate our Empa development to VYVGART. It's not VYVGART failures-
Yeah
in the Empa trial. Our strategy is to develop Empa for the broadest possible label, and we will let the data speak on how to think about that. We do know that it's likely that these molecules target different biology to a certain extent. In CIDP, it is characterized that IGMs also play a role. IgM activates complement. VYVGART, biologically, it would not impact an IgM. Could you see that biology as part of a rationale of patients that don't respond on VYVGART? It could be. Would these patients potentially have a right to respond to Empa? I think biologically the answer would be yes. We're putting that to the test. Basically what we're doing on the co-positioning is we're generating the data, and then we will make a data-driven decision on what approach is based on the label, based on the data sets.
We would be the only player in this market that has multiple modes of action. We're, I think, in a strong position to continue to build out and generate return on our investments in CIDP.
Makes sense. Thinking a little bit deeper into the pipeline, you've obviously got a couple of next-generation FcRn assets.
Yeah.
Maybe if you think with your sort of about portfolio strategy and how do those coexist, and is it a case of wait for the data to mature and then you make a decision on which you take forward?
Yeah. I think portfolio is a very important word in that context. What we are trying to achieve on the next generation is to move our FcRn leadership with VYVGART into potentially a decade-long strategy. We have from that, we created multiple next-generation molecules, and these have differentiated profiles. We've been public on the profile of ARGX-213. It's a longer-acting FcRn. It completed early-stage studies. It's ready for late-stage studies. Then we have ARGX-124, where we have not been public on its design and its mode of action. What we can say is that it's not just another 213, right? It's a different molecule, it's a different profile that is currently going through phase I. What does that optionality allow us to do, right?
It allows us to think about life cycle for VYVGART in a way that still elevates. It potentially also gives us the indication pipeline even beyond, let's say, the current set of indications. We do know that there is more evidence being generated for anti-FcRn. There's a multitude of IgG-driven diseases in which we haven't explored yet. We're creating this portfolio, and that's the second wave in this portfolio. I think at JPMorgan, Tim also highlighted for the first time, I think the third wave on how we think about that, with a potential oral formulation in FcRn as well.
Okay. In terms of timelines, you talked about ARGX-213. We know a little bit more about that. Is that potentially ready to go to phase III? Can you be a bit more aggressive in terms of timelines given you have the capital and you have the understanding of the mechanism?
I think that's exactly right. It's potentially ready to go to phase III. It's really about what is the right plan, how to move that forward in the fastest possible way. In addition to that, the ARGX-124 data is not far out. We will see that in the second half of this year. That will really, I think, give us the information to say which molecule is best positioned where, at what pace. We're doing, let's say, all that scenario strategic analysis as we speak.
Okay. Maybe just on the point of sort of there are more IgG-mediated diseases that you could target, not just with VYVGART, but also with the next-generation assets. How should we think about pricing? Because you've got empasiprubart coming next year, which is a potentially larger indication. You're also exploring Graves' disease, which is a much larger indication. Can you maintain sort of orphan-like pricing as you expand into those indications?
Yeah, Sjögren's, a very big indication, more than 300,000 patients. If you think about where the drug might work, probably more of a moderate to severe subset of that, which gets you more to an MG-like opportunity in terms of patient numbers. I think, yes, you are right. As we add on more indications, pricing pressure will come, surely. Maybe we need to adapt our price, but think of that as a very slow decline, more of an offset with incremental patients over time.
Okay. Yes, I'm just thinking about the strategy that Alexion or AstraZeneca had as they shifted from SOLIRIS to ULTOMIRIS, and there was obviously a price incentive to do that. Is that something that may be rational?
That may be something, yeah. I think, as Arjen said, we want to have multiple next-gen FcRns. One will be lifecycle management, and we can look at playbooks. There are many successful playbooks out there. SOLIRIS to ULTOMIRIS surely is one of them. To have a second FcRn at a different price point, possibly lower price point, maybe broader indications, we'll see. I think that will be all important aspects to consider.
Okay. Just on 124 timelines, should we expect an update there this year?
We'll have the data this year allowing us to make that portfolio-level strategy decision-making. To what extent we will communicate that this year, I'm looking at our IR.
We're going to be light in communication.
I think that's exactly right. I think in this very competitive environment, we will really want to maximize our position. We will want to go as fast as we can. Then do the communication in a very deliberate and strategic way.
Okay. Well, let's move on before you get in trouble. Maybe on systemic sclerosis, there's obviously a phase II data read coming second half of the year. What are you looking to learn from that and how quickly could you then move to a registrational study? Would this be one of those sort of seamless phase II to phase III that you've employed in the past?
I think scleroderma is an indication of a similar size as myasthenia gravis, where there's tremendous unmet need. There is really not that much that works. The approved drugs are typically confined to the lung setting and more systemic settings or manifestations of the disease are really lacking treatment options. I think the autoantibodies are well-characterized in this biology as a potential driver of the disease. That's really what we're putting to the test in phase II. Can you intervene? Can you see the kind of effect that justifies moving that forward? Can you intervene early enough to have a real benefit?
Okay. Maybe in the last minute, I think there's building interest on the IgA sweeper. Can you maybe, again, just talk to the differentiation of that asset relative to everything else that's going on in that space? Maybe if I could ask about timelines there as well.
Yeah. That molecule, it's a precision tool and it specifically targets IgA. What it does, it reduces IgA deep and fast. Ultimately, we will roll out an indication development plan across multiple IgA-driven diseases. We've communicated IgA nephropathy as the first indication. It's a pretty obvious one. It's also a competitive one. We have to show, I think, those benefits in our clinical trial approach, where we have to show the benefit of the fast onset of action. We have to show the benefit of the depth of the reduction, because that's really, I think, what justifies the positioning of that molecule in this competitive treatment paradigm.
Okay, got it. I think we're just perfectly at time. Arjen, Karl, thank you so much.
Well done. Thank you, and thank you all for listening.
Thank you.