argenx SE (ARGX) on Q2 2021 Results - Earnings Call Transcript
Operator: Good morning, everyone. My name is Jamie, and I will be your conference operator today. At this time, I would like to welcome everyone to the conference. Thank you. At this time, I'd like to introduce Beth DelGiacco, Vice President of Corporate Communications and Investor Relations. Ma'am, you may begin.
Beth DelGiacco: Thank you, operator. A press release was issued earlier today with our first half 2021 financial results and second quarter business update. This can be found on our website along with the presentation for today's webcast. I also encourage you all to visit our R&D Day microsite, also on the Investor page of our website to watch a replay of the presentation and engage with the additional resources we've provided as part of the event.
Tim Van Hauwermeiren: Thank you, Beth and good morning, everyone. We appreciate you joining us today to discuss our half year results and second quarter business update. We're going to keep the prepared remarks brief, because we provided a substantial update during our R&D Day last week. The first half of 2021 has been marked by several achievements across our immunology pipeline. Notably, the progress we had made in advancing our first-in-class FcRn antagonist efgartigimod in six indications. We are on track to reach generalized myasthenia gravis patients later this year, and have been busy with hiring activities and key stakeholder engagements in anticipation of our December 17 PDUFA date. Slide three. We have registrational trials ongoing in four severe autoimmune indications; MG, ITP, CIDP and pemphigus. And we announced two new efgartigimod indications last week, myositis and bullous pemphigoid. We are preparing to launch trials this year in both of the new indications, pending FDA interactions. With regard to our ongoing registrational trials, we have said that this year would develop execution, and we would provide clarity on enrollment as able. We are delivering on that commitment today. We expect to complete enrollment this year in the ongoing ADAPT subcu trial in gMG and the ADVANCE IV trial in ITP. This sets us up to have top line data for both trials in the first half of 2022. Recall that with ADAPT subcu, the primary endpoint is based on PD effects and is taken at day 29. The trial continues out to 12 weeks before patients roll over into an open-label extension study. The ADVANCE IV trial follows patients out to 24 weeks before they can roll over into an open-label extension. The other registrational trials of efgartigimod ADVANCE subcu, ADHERE and ADDRESS are all making progress. We additionally expect our partner Zai Lab Limited to start enrolling patients into these global trials by the end of this year. We continue to believe that that efgartigimod is well-positioned to be not only first-in-class, but also be a leader in the FcRn space, with its unique structure as an Fc fragment with optionality with both intravenous and subcutaneous formulations and development with clear clinical proof-of-concept established in four out of four indications, and perhaps most importantly a growing safety database which supports a favorable benefit to risk ratio.
Karl Gubitz: Thanks Tim. Slide 11 covers our first half 2021 operating results, which are detailed in today's press release and regulatory filings. Total operating income increased to $487.5 million over six months ended June 30, 2021, compared to $34.3 million during the same period in 2020. The significant increase was primarily due to the recognition of a transaction price as a consequence of the termination of a collaboration agreement with Janssen, resulting in the recognition of $315.1 million, and the closing of a strategic collaboration with Zai Lab, resulting in the recognition of $151.9 million in collaboration revenue. R&D expenses increased by $84.7 million for the six months ended June 30, 2021 to $273.9 million compared to $189.3 million for the six months ended June 30, 2020. The increase in the first six months of 2021 resulted primarily from higher external research and development expenses, mainly related to the efgartigimod program in various indications, and have clinical and preclinical programs.
Keith Woods: Thank you, Carl. The first half of this year has been marked by several achievements, which have brought us closer than ever before to reaching patients with myasthenia gravis. As Tim mentioned, we expect to complete enrollment by the end of this year in our ADAPT-subcutaneous trial in MG. To satisfy the safety database requirements for a subcutaneous trial, we are encouraging patients from our ADAPT-plus open-label extension study to switch over to the ADAPT-subcutaneous trial. While this may mean that we won't have a bolus of patients to switch from the ADAPT-plus trial to commercial drug launch, we continue to believe that having both IV and subcutaneous formulations will provide optionality to patients and offer a potential competitive advantage when it comes to position and payer preference. Similarly, as part of our continued commitment to the MG community, we launched our pre-approval access program in the U.S., Canada and several countries in Europe. This program ensures that we can offer efgartigimod to MG patients who don't have available options. In addition, we know that continued engagement with the broader MG community will be critical. Slide 12, please. Ongoing initiatives like our patient marketing programs and our real-world evidence study, MyRealWorld MG help us to learn about the significant toll this debilitating disease takes on both patients and their caretakers. We have and we will continue to listen to and learn from the MG community. With our approaching December 17 PDUFA date, we continue to build out our team such that we can be fully staffed and trained well in advance.
Tim Van Hauwermeiren: Thank you, Keith. I would like to conclude with the following on slide 15. Earlier this year, we laid out our strategic priorities for 2021. Notably, we stated that MG is just the beginning. Today with our fifth and sixth indications for efgartigimod in hand, our growing commercial organization to support not only efgartigimod in MG, but also our earlier stage pipeline assets across our therapeutic franchises, this is more true than ever. We are united in our commitment to improve the lives of patients, and we believe we're well on track to reaching those living with MG and other serious autoimmune diseases. I will now hand the call to the operator to start the Q&A. Operator?
Operator: Ladies and gentlemen, at this time we will begin the question-and-answer session. Our first question today comes from Joon Lee from SunTrust. Please go ahead with your question.
Joon Lee: Yes. Thank you very much for taking our question and for all the updates. Just curious if you can comment on the breadth and magnitude of the pre-approval access program in the U.S. and Canada and the EU as well. And related to that, I appreciate that you are sacrificing the initial bolus of your IV patients by switching them over into the subcu. By doing that, how much are you speeding up the potential submission of the subcu formulation? Thank you.
Keith Woods: Hi, Joon. It's Keith. Thank you for the question. Let's address that in two different parts. First, let's talk about the subcu program which you asked. So, if you think about the subcu program, we've offered that as an opportunity for not only the subcu bridging study, which you may have noticed, we increased the total number enrolled for that and that's because we've had such rapid participation in the trial. We wanted to take an opportunity to continue to fill that trial for our safety database. We have also offered our ADAPT open-label extension patients from the IV trial, the opportunity to switch over to subcu. We have some very satisfied patients on IV and so not all of them have elected to switch over to the subcu. And finally, you asked about the pre-approval access program that's available here in the U.S., also in Canada and in parts of Europe. There has been a nice demand for that. I want to call out to you that we do this in the interest of the commitment to the patients of which we serve and that's our number one priority. We also prioritized by offering them to participate in the subcu trial prior to the PAA. So, with that, I would give you -- I wouldn't have great expectations that the PAA is going to put a bolus of patients for commercial transition at launch in the U.S.
Joon Lee: Thank you.
Operator: Our next question comes from Tazeen Ahmad from Bank of America. Please go ahead with your question.
Tazeen Ahmad: Hi. Can you hear me?
Tim Van Hauwermeiren: Yes. We can hear you Tazeen. Good morning.
Tazeen Ahmad: Good morning Tim. Thanks for taking my question. Just wanted to follow-up on cusatuzumab and what the update there might be. How are you thinking about future developments, and what level of priority is it to partner that? Thanks.
Tim Van Hauwermeiren: Thanks for the question, Tazeen. So, with concerns of cusatuzumab, we're going through the data. So, we have now full access to the interim data readouts. The scientists and the clinicians are working hard on that as a team. We did inform our audience in the past that this is becoming a business development priority and activity. So, we think we have a commitment to fulfill toward AML patients based on the data we have seen so far. Clear those response, clear signal in that study, interesting signal in certain subsets of patients and importantly has a clean safety profile in line with the historical safety profile of the molecule. So, we believe there is value in the data. It's a business development priority, but we're not going to distract the internal clinical development machine to take user back on in-house. So, we stay fully focused and committed to expanding efgartigimod as fast as we can, ramping up ARGX-117 and bringing ARGX-119 on line.
Operator: Our next question comes from Matthew Harrison from Morgan Stanley. Please go ahead with your question.
Max Skor: Hi. This is Max Skor on for Matthew Harrison. Thank you for taking our questions. So, as you continue to engage in switch stakeholders, can you speak to the potential payer dynamic? Will patients need the fail standard of care before starting efgartigimod? Thank you very much.
Keith Woods: Hi, Max. It's Keith. Thanks for the question. And yes, we are engaging with the regional and national payers throughout the U.S. You can see where you've had some restrictions that have been placed by payers on eculizumab and that is due to the inclusion trial of the -- inclusion/exclusion criteria of the REGAIN trial. I call out to you that we have a different inclusion criteria for our trial and so that we are treating patients across the entire treatment paradigm. I think where the hits the road on what will take place will be when we're actually talking with them with our price in place. But we aim to be able to serve out of the 65,000 MG patients, our target audience is about 20,000. So, we'll be able to give you more information as those discussions take place and as we get closer to launch.
Max Skor: Great. Thank you.
Operator: Our next question comes from Yaron Werber from Cowen. Please go ahead with your question.
Brendan Smith: Hi. Good morning. This is Brendan on for Yaron. Congrats on the progress. Thanks for taking the questions. Just a quick question from us. So, I know you mentioned the ADAPT-subcu and ADVANCE IV study will be enrolled by the end of this year. I just wanted to check in on the subcu and ITP and kind of just see how you're now thinking about that fitting into the dosing scheme when you finally launch there. Like maybe what are the two different -- or what from the two different trials maybe you're kind of looking at this point to really inform how we should think about the two would be used? Thanks.
Keith Woods: Hey, Brendan, it's Keith. So, yeah, we did share that the IV enrollment is going on at a good pace and we expect to have that fully enrolled by the end of the year. We are also concurrently enrolling a subcu clinical trial for ITP. It did start a little bit later, but overall what the FDA had asked us for was two Phase 3 clinical trials. So what we're doing is running two very similar Phase 3 clinical trials, just one with IV and one with subcu. This should position us for the optionality that we talk about for all of our patients, our payers and our healthcare professionals when it comes to treating ITP patient. So, the subcu trial is not going to be concluding by the end of the year, like the IV one is, because it started a little later and they will both be included in our file.
Operator: Our next question comes from Andrew Galler from Wolfe Research. Please go ahead with your question.
Andrew Galler: Hi. Thanks for taking my question. So, just on gMG, The Lancet Neurology article on ADAPT noted positive signals on a post stock basis in the AChR AB negative patients. Do you think this is sufficient for approval in this population given the unmet need?
Keith Woods: Yeah. So, I want you to know that we honored our commitment to the MG patient community by including the seronegative patients in our trial. We've seen in the data that there was a treatment benefit, but you also see in the data that there's nearly an equivalent placebo effect. Although, it was never agreed with the FDA that these results had to be statistically significant and in fact what we see is that they are not statistically significant, we will be speaking with the FDA and it will completely be a decision of the regulatory body. And we'll get back to you after we have more information on that at the time of approval.
Andrew Galler: Great. Thank you.
Operator: Our next question comes from Danielle Brill from Raymond James. Please go ahead with your question.
Unidentified Analyst: Hi. This is Alex on for Danielle. I may have missed the update early, but do you have any hardening estimate for subcu efforts taking on sNDA submission. And a follow-up, would you consider using your priorities with new voucher for such a submission? Thanks.
Tim Van Hauwermeiren: Thanks for the question, Alex. So, the press release this morning was talking about fully enrolling the subcu study before the end of the year. Then, of course, we will be reporting out top line data first half next year. And then, I think the trial will take its regular course of action life, I mean in terms of locking the data, reporting the data and then filing them. We have been saying publicly that it is a possibility that we will use the PRV voucher for this one. You know that efgartigimod has splendid opportunity to use such a voucher and think of a CIDP study as well. But indeed, the subcu MG trial could be a possibility for using the voucher. Thank you.
Unidentified Analyst: Thanks.
Operator: And our next question comes from Laura Sutcliffe from UBS. Please go ahead with your question.
Unidentified Analyst: Hi. This is Andrew on for Laura. Just one on the BP from me please. As an R&D Day last week, I think you flagged about 41,000 BP patients in U.S. I'm trying to see, as previously highlighted, a biological eligible population about 30,000 in the U.S. And I'm just wondering, do you agree with sort of the position that a significant proportion of the BP population could be biological ineligible? Thank you.
Tim Van Hauwermeiren: Thank you for the question, Andrew. So, we're quoting prevalence data from literature sources, which we could identify through our own research. What that is the right number, I think we're both pointing at the same possibility or opportunity, right? This is a sizable opportunity, a significant unmedical needs of patients which today have very limited treatment options. And as we hopefully explained in the R&D Day, we do believe this disease is really driven by pathogenic IgGs and therefore, I think that the mode of action for efgartigimod is very well-positioned toward a significant portion of these patients. But thanks for the question.
Unidentified Analyst: Great. Thank you.
Operator: Our next question comes from Yanan Zhu from Wells Fargo. Please go ahead with your question.
Yanan Zhu: Hi. Thanks for taking my question. Could you comment on the dosing frequency in the open-label extension of the Phase 3 ADAPT study now that you're evaluating the kind of real-world dosing? How does the dosing frequency compare with the first randomized 26-week portion? And also you mentioned that some patients elected to be switched to the subcu study -- Phase 3 subcu study, which obviously is a weekly dosing schedule, but a little more convenient with subcu. Could you talk about the kind of level of interest you saw in the switching? And what does that tell you with regard to whether IV and subcu is more preferred and the relative preference by patients. Thank you.
Tim Van Hauwermeiren: Two great questions. Thank you for this. I will take the first question and then I will hand over to my colleague Keith here to comment on the switching over situation. You're absolutely right in the ADAPT study, initially patients rolled over in the first open-label extension study where they followed the same cadence of dosing as they were doing in the registrational portion of the trial. And then you're right, after concluding the first open-label extension, but already there was a possibility to take the background medication. Now with second open-label extension, which enjoyed a very high over rate, it was hands-off. So, patients were truly treated in a real world setting from a dosing regimen point of view. We've not public on the data yet. So what we said is that we will, with a certain frequency report on our open-label extension study data, but we're very fortunate, of course, to be in a position to now see the real-world dosing cadence and therefore really be able to triangulate a proper price and value for the products we will offer to these patients. So, I would say stay tuned. We will be communicating about it later. And, of course, we continue to collect further safety data as we now have a very sizable safety data base of more than 100 patients being on 18 months drug or longer. And maybe, Keith, you want to comment on the switching over situation, right?
Keith Woods: Yeah. Happy to do so, Tim. So, as you know, from the open-label extension where patients are on IV, if you total up the response rate on clinical efficacy of patients that had a clinically and meaningful response when exposed to efgartigimod, it's at almost 80% of patients respond between their first and second round. You also know that out of those responders, those that went to minimal symptom expression, an ADL of zero or one, is almost two-thirds of the responders. I share that with you, because we have patients in our trial all way across the treatment paradigm and some that have failed many other therapies. When they are finally getting that relief that they need after failing several other therapies, they don't want to be switched from something that's working. So, although, we may think, hey, IV will be much more convenient, they're happy because of the clinical response that they're receiving. Secondly, not all patients want to have a subcu. When we have talked with the physicians, they have said somewhere on a breakdown of up to 30% of patients would prefer to have an IV over a subcu. They don't want to inject themselves and they don't want their partner to be injecting them. So, look, as far as the projection of will we be 70% subcu and 30% IV, I think we'll let the market test its way out. I also think there will be another component, and that will be the payer situation and reimbursement on whether a patient wants to go in through potentially Part B, Part D, specialty pharmacy, home infusion or actually visiting an infusion center. The good news is we're providing that optionality.
Yanan Zhu: Got it. Very helpful. Thank you.
Operator: Our next question comes from Thomas Vranken from KBC Securities. Please go ahead with your question.
Thomas Vranken: Yes. And thanks for taking my question. I was wondering about the progress in the ITP trials. We saw that enrollment seems to be a bit more difficult than we had anticipated, perhaps related to an impact of COVID. I was wondering how this affects the timelines for the Fc trial. Thank you.
Tim Van Hauwermeiren: Thomas, thank you for joining us in the call today. It is true and we have been talking about it frequently in the previous quarterly calls that COVID has been impacting all our ongoing clinical trials. I think with the ADAPT study, we were lucky to or fortunate to actually conclude that study before the COVID pandemic really hits society, but all the trials have been impacted to some extent. So, also the ITP, PV -- the ITP subcu study, businesses that the studies on global studies that basically are able to adapt and adjust to the global pandemic in all the different waves of the COVID pandemic and enrolling quite well. So, IV is going to be enrolled first. But I think the subcu ITP study, the CIDP study, the pemphigoid study, that also enrolling quite well. So, COVID is a situation getting increasingly under control.
Thomas Vranken: Okay. Thank you.
Operator: And our next question comes from Graig Suvannavejh from Goldman Sachs. Please go ahead with your question.
Graig Suvannavejh: Yeah. Thanks. Good morning. Good afternoon. Thanks for taking my question. Just a very quick one and apologies if this may have been asked before. But just on timelines with PV and CIDP, I appreciate that enrollment seems to be getting better and you're still in COVID or coming out of the COVID type landscape. If you're not able to provide at least today exact or approximate timeline, when would you anticipate being in that position? Do you think it could happen at the next quarterly update? Thanks.
Tim Van Hauwermeiren: Thanks for being with us today, Graig. So, what we said is that in these quarterly calls, we will give you from time-to-time updates on the clinical pipeline, just like we're doing today, right? So, we're honoring our commitments. We can now speak with certainty about concluding enrollment in the ITP, PV study and the MG subcu study, and I think in the coming quarters going forward, expect us to be getting similar information if and when the situation allows. So, when we are there or when we're very close to a completion of enrollment, we're committed to inform you in our quarterly calls. So, I would say stay tuned. We should not be naive. I think now with the Delta variant, we need to watch out and not to shout victory too fast, but our global studies are actually recruiting quite well. Thank you.
Graig Suvannavejh: Thank you.
Operator: Our next question comes from Yatin Suneja from Guggenheim. Please go ahead with your question.
Eddie Hickman: This is Eddie on for Yatin. Thanks for taking my question. Just as a follow-up to that last one. I was wondering if you could just sort of give us a sense of the cadence of data from some of these ongoing trials and if any of the early data releases will derisk any of the later ones? I'm thinking specifically about the pemphigus program? So, just give us a sense of sort of what we're going to learn in them over the next sort of 12 to 18 months? Thanks.
Tim Van Hauwermeiren: Yeah. I think, as we said before -- thank you for the question. What we said before, it's too difficult for us to really predict with certainty, given the COVID pandemic situation when studies will have been completely enrolled and therefore, when data readouts will come. We will keep you informed when we feel sufficiently confident about enrollment of trials. To your second portion of the question, yes, we do believe that a successful readout in pemphigus will have a read-through to bullous pemphigoid, because that's the whole rationale why we actually initiated from the pemphigoid Phase 2 registrational study in bullous pemphigoid, building from the Phase 2 proof-of-concept in pemphigus. So, there is some connection between this indication -- our indications. That being said, let's be careful, right. All these diseases remain distinctly different diseases with their own biology. So, it will further derisk, but probably not completely. Thanks for the question.
Operator: And ladies and gentlemen, with that we conclude today's question-and-answer session, as well as today's conference call. We do thank everyone for attending. Please have a great day. You may now disconnect your lines.
