argenx SE (ARGX) Q3 2023 Earnings Report, Transcript and Summary

Good morning. My name is Ralph, 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 DelGiacco, Vice President, Global Head of Corporate Communications and Investor Relations. You may now begin your conference.

Thank you, operator. A press release was issued earlier today with our third quarter 2023 financial results and business update. This can be found on our website, along with the presentation for today's webcast. Before we begin, I'd like to remind you on Slide 2 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 Tim Van Hauwermeiren, Chief Executive Officer; Karl Gubitz, Chief Financial Officer; and Karen Massey, Chief Operating Officer. I'll now turn the call to Tim.

Thank you, Beth, and welcome everyone. Slides 3. It is incredible to see what argenx team has accomplished this year meticulously delivering on the ambitious plan they laid out in January. We are reaching more and more gMG patients around the world and brought a subcutaneous product to the markets only 18 months after the IV launch. We reported stelas CIDP data and now have a path forward to approval next year. We advanced our pipeline with an important go decision in MMN with empasiprubart and are also keeping our promise to invest in the next generation of exciting preclinical assets, which we will talk about next year. Stepping back, we are working on 13 indications for VYVGART alone, with more slated to begin before 2025. We have accumulated extensive clinical trial and we got experience with our first in class of seven inhibitors and continue to publish and present on this differentiated efficacy and safety profile. All of this is furthering our leadership in the space and broadening our understanding of the potential of VYVGART to change how we view autoimmunity. I would first like to share key highlights from the quarter and then move on to milestones ahead for the remainder of the year. The strength of our launch continues with double-digit growth quarter-over-quarter. Karen will share additional details later in the call. But at a high level, I'm really pleased with where we are today. We continue to hear countless patient stories and testimonials about VYVGART and this is motivating our teams to drive further growth. We focus our VYVGART expansion goals across three key areas. Expanding within the gMG team and paradigm, expanding geographically and expanding into new indications. First on expanding within gMG, we are already seeing traction with new patients and new prescribers three months into the Hytrulo launch. We are the only gMG treatment that is available as an IV and as simple subcu injection, both offering a consistently strong clinical benefit. This choice in how and where patients want to be treated will help us move into earlier lines. Looking to our geographic expansion, we received VYVGART approval in Canada as our first patients in Italy and China and move another step closer to bringing Hytrulo to patients in Europe with a positive CHMP opinion, including self-administration on the label. In addition to our commercial success, we achieved a key win for the CIDP community over the quarter and I'm planning ahead for indication expansion. We had a positive meeting with the FDA and can confirm we are on track to file our sBLA before the end of the year. As you will recall, the top line results from our vial trial, but nothing short of game changing. This was the largest global clinical trial for CIDP to date and we not only confirmed CIDP as an IgG-mediated disease, but also set a new standard for CIDP trials in the future. Efficacy was apparent across patient subtypes and we saw some normal 99% roll over into the open label extension study. Given the high unmet need for a safe and effective treatment alternatives, we feel a strong sense of urgency to bring our therapy to CIDP patients as quickly as possible. Therefore, I'm also pleased to tell you that we have notified the FDA of our intention to use our PRV with the CIDP submission. Slide 4, today I'm speaking to you from [ANN] in Phoenix, Arizona, where the argenx team is presenting a significant amount of data on VYVGART. We have now those more than 1400 patients generating more than 1,000 patient years of data across all clinical trials. And in MG, we now have almost two years of real world experience in approximately 6,000 patients. This has provided us confidence in the consistency of the data and a deep understanding of the clinical profile of our Fc fragments, and why the way in which it binds to FcRn can lead to differentiated results. At the conference, we are presenting aggregated data from ADAPT, ADAPT subcu and the associated open label extension studies which extend out beyond three years and 90 treatment cycles. We see that responses are repeatable cycle-over-cycle, and that clinical benefit improvements are of a consistent magnitude. We also see consistent results on minimal symptom expression. In every dataset, we are able to achieve approximately 40% MSE, which is an important part of our value proposition to patients. We also show in our data that patients who are able to achieve MSE as quality of life measurements comparable to healthy populations, which is why we believe this metric should be the goal that physicians seek to attain with their MG patients. Safety continues to be a key differentiator and we show that across all indications and all those in schedules. Treatment emergent adverse events are mild to moderate and do not increase with longer exposure. And we do not see reduction in albumin or increase in cholesterol. The unique clinical profile that we confirm it this data can be linked to the unique design of the of rituximab, which of course was born out of Dr. Sally's Ward groundbreaking immunology research on FcRn biology. Since that time, we have generated a new understanding of the role of FcRn beyond a regulator of IgG levels in circulation. We've noted FcRn is important in the trafficking of antibodies into tissues and that by binding FcRn our fragment can reach the tissues inside of the disease very fast. It is also involved in the auto antigen presentation process, which may explain the data we saw in pemphigus in reducing autoreactive B cells Lastly, given the natural way in which we bind FcRn, we can uniquely modulate the targets, blocking argenx from binding, but not degrading FcRn itself into the lysosome for degradation. This has allowed us to select doses and dosing regimens that optimize the clinical benefit of rituximab without having to manage for dose related adverse events. Our leadership in FcRn presents itself through our business. From the efforts of our commercial and medical affairs teams to the ongoing translation work of our scientists who are rewriting the textbooks of immunology. Slide 5. Looking ahead, we are excited to advance our pipeline with two upcoming Phase 3 read--outs. The first read-out will be the top line results from our ITP ADVANCE subcu study followed by our pemphigus ADDRESS around year end. Let's begin with a high level overview of Hytrulo in ITP. Our goal for the subcu study is to replicate the Phase 3 IV results, which were recently published in The Lancet. The study had the same design and endpoints. Although we increased enrollment to give ourselves more room for success with a highly refractory patient population. The primary endpoint is challenging. So in terms of the threshold for success, we will be focused on the delta between treated and placebo. This endpoint is designed to meet the regulatory requirements but we also will be looking at the fast onset of action, the IWG score, and safety. The IWG score is what we view as the most clinically meaningful endpoint, as it is based on how clinicians make treatment decisions in the real world. ITP patients are often very fit, but suffer from fatigue and anxiety due to the risk associated with an unexpected bleed. They typically cycle through multiple treatments and a trial and error approach, including to multiple TPOs. What we have learned in our conversations with the ITP medical community is that there is a real need for a new modality to treat ITP particularly new modalities that come with a favorable safety profile, which is potentially where VYVGART could step in, Slide 6. Next, we can expect to see data from the ADDRESS study in pemphigus around year end, meaning the data read-out will fall right before or after the year-end, as we navigate the data analysis and communication around the holiday period. The safety trials for pemphigus was built on the adaptive Phase 2 results, where we saw a fast onset of action, with 90% of patients achieving disease control after just one to two infusions, and a quick time to see us on a low dose of steroids. In the Phase 3 study, we implemented an official stereotyping protocol and this is integrated in our primary endpoint. Similar to ITP, the primary endpoint is a challenging one, defined as the proportion of patients achieving complete remission on a minimum dose of steroids within 30 weeks. It combines reaching complete clinical remission, taping to and maintaining a low dose of steroids and sustaining this for 8-weeks. The current standard of care, including steroids and rituximab, this ample of room for a fast, new, durable treatment with few side effects. This will be especially important in a post-COVID setting. Now that we have a better understanding of the detriments of long term immune suppression. Slide 7. In 2024, we have multiple catalysts from our pipeline to look forward to. I'm particularly excited for the MMN top line results to be shared next year. This is the first indication for our second pipeline in a product ENX.PA and is a very serious disease, which fits perfectly within the infrastructure we are building for gMG and CIDP. We also have two upcoming GO/NO GO decisions first in both pemphigus end of this year, and also in myositis, which is expected in the second half of 2024. Phase 2 POTS results are expected in the first quarter of 2024. We have the potential to be a sizable opportunity. This is a study where we will learn a lot about the role of IgGs in this growing indication. And Sjogren's results are expected to be shared in the first half of 2024. This is an exciting opportunity within rheumatology where we believe strongly in the role of IgGs as a disease driver. Lastly, we are focused on long term sustainable innovation and in order to achieve this, we need to invest in the growth of our early stage pipeline. We have several exciting programs through our IIP, which we will communicate as we get closer to INDs but we are working from a strong track record of success. Every program in our pipeline, including those that we are developing ourselves, and those that are in the hands of others have all been co-created with a top notch academic collaborators and are grounded in a breakthrough immunology innovation. The new programs will also have this characteristic feature of assets from our IIP. I will now turn the call over to Karl.

Thank you, Tim. Slide 8. Our third quarter 2023 financial results are detailed in the press release from this morning. I will highlight the key points here. The continued momentum of our launch is reflected in your third quarter revenues. We generated $340 million total revenues, including $329 million in global net product sales, and $11 million in collaboration and other revenues. Our revenues include $700,000 in royalty revenues from VYVGART sales in China. At quarter three global product net sales of $329 million represents growth of 22% versus quarter two. The breakdown is as follows; the U.S. sales is $280 million, Japan $15 million, EMEA $26 million and China $7 million. It is important to note two points on the VYVGART net product sales. First in EMEA, net sales includes as a one off positive impact of approximately $6 million as a result of a true-up of German price. Remember that beginning in March, we started to accrue revenue in Germany at the protected negotiated price. The price was finalized in September and that throughout reflected in the quarter three results. Second, the product net sales to China of $7 million is revenue generated on the supply of commercial vial design lab, our first party collaborator in China. The sales design lab or a cost, plus a nominal management fee. In design labs sales of vials, organics receives the royalty, which is reflected in the $700,000 mentioned earlier. Our total expenses are $420 million for the third quarter, resulting in an operating loss of $81 million over quarter. We ended the quarter with $3.2 billion in cash, cash equivalents and current financial assets. This includes the net proceeds of approximately $1.2 billion from the global offering completed in July. I will now turn the call over to Karen, who will provide detail on the commercial front.

Thank you, Karl. Slide 9, I'm really happy where we are without VYVGART launch having rapidly and successfully bought a first in class medicine to patients across multiple markets. Today, I will share the details around the current launch dynamics and then highlight the ambitious plan ahead. Our goal is to continue to raise the bar for patients globally in what they can expect from a treatment for their autoimmune disease changing what well controlled means that they don't have to weigh the trade-offs between efficacy and safety and can experience a low treatment burden that allows them to get back to their lives. Before we discuss the performance over the quarter, I want to say that the multi-dimensional growth strategy we have in place. We have a bold vision for VYVGART bringing innovative therapy new patients, expanding our geographic reach, and maximizing the impact of new indications. We have already added Hytrulo to our product suite and continue to develop future product presentations to support our plan to move earlier in the treatment paradigm. We are rapidly bringing VYVGART and VYVGART Hytrulo to market in new countries and had key pivotal readouts on the horizon, which will further help us realize the broad potential of VYVGART and [indiscernible] into new indications. Slide 10. First, on broadening outpatient reach with VYVGART and VYVGART Hytrulo. With our third quarter results, we have now generated an impressive $816 million in net product revenues year-to-date. The large majority of these revenue is driven by VYVGART. And there are a number of metrics that we have observed that give us confidence in the trajectory of both VYVGART and VYVGART Hytrulo in the U.S. First, we're seeing these VYVGART naive patients comprised in majority of our Hytrulo prescriptions. So uptake is not being driven by a switch dynamic but rather by expansion. By providing flexibility in how and where patients receive treatment, we are reaching a broader population, which is what we had hoped for. The initial feedback from doctors on VYVGART Hytrulo has been broadly positive and they recognize the benefit of the simple 30 to 90-second single injection enabled by the unique and Halozyme ENHANZE technology. We also continue to make progress shifting into earlier treatment lines and VYVGART Hytrulo is contributing to this expansion. With physicians, we're focusing not only on expanding our prescriber base, but on also driving brand loyalty with our current prescribers. VYVGART Hytrulo is helping with both of these goals and we're still at the front end of the adoption curve with neurologists. The opportunity before us is extensive. In the U.S., injection site they're actively working to set up protocols to enable the injections. This takes time and we're seeing consistent progress. The first Hytrulo payer policies are also being published. So between this and the site's becoming available for treatment and the high level of excitement from physicians and patients, we expected to see this pull through into new patients dots as well. Overall, we are right where we expect it to be. We're on the path towards maintaining the trajectory of our launch, consistent quarter-over-quarter progress towards reaching more gMG patients globally. Slide 11. Second, in terms of expanding our suite of product presentations, I truly doubt first generation subcutaneous but our goal is to continue to innovate on the patient experience with future product presentations as well. Our second generation subcutaneous product is a prefilled syringe which is already in development. Our plan for the PFS is to enable self-administration in the U.S., given the simplified experience for patients. We will also aim to advance our PFS product forward for both MG and future indications including CIDP in parallel. The approval path includes bioequivalence and human factor studies, as well as stability data. And we expect to be able to share more information with you on timing early next year. Slide 12. Thirdly, we're delivering growth by moving into new markets with VYVGART. We're thinking about this both in terms of how we expand geographically and also as we look to repeat the success of MG in new indications. On our geographic expansion, starting with China through our partnership with Zai Lab. After June approval, the first patients began VYVGART treatment during the third quarter. Zai also filed for an approval of subcutaneous efgartigimod and we expect to hear back on an approval decision next year. We continue to make progress on pricing and reimbursements across the EMEA region and have had very good outcomes so far with our negotiations with reimbursement security in Germany, Italy, and now Spain also recognizing the important value that VYVGART provides to gMG patients and to healthcare systems. For subcutaneous efgartigimod, we received a positive CHMP opinion in September, which was a significant milestone for the region and notably, the label in EMEA will include self-administration. We also received an approval in Canada during the quarter and we're planning for a launch before end of year. Similar to Europe, the pricing and reimbursement discussions with the HCA in Canada have been going very well. And VYVGART has been recognized as better value than other entrenched biologics. This is an important win for patients in Canada. Slide 13. And finally, on our indication expansion, and here was the largest trial ever run in CIDP and the results were impressive. So we are busy preparing for launch in CIDP next year. As Tim already mentioned, we'll be filing our application with a priority review voucher because we recognize that patients are waiting for new innovation in CIDP. Our priority now is to take those key learnings from the MG launch and apply them to our CIDP strategy, while also thinking about where we can expand and improve. We're also investing for the long term, building out our launch capabilities in a very intentional and disciplined way to enable success across multiple indications down the road. It's certainly an exciting time to be at argenx. I'll now turn the call back to Tim.

Thank you, Karen. Slide 14. As we conclude, let's come back to where we are today and where we are going. We are leading from a position of strength, delivering on our commitment to bring transformative treatments to as many patients as possible. Through intentional launch strategies and relentless execution, we continue to reach new types of patients in new regions and make clear progress expanding into new indications. As innovators we're looking forward and are incredibly excited about the opportunity ahead of us to lead what we believe to be one of the biggest drug classes ever. Thank you for your continued support as partners on this mission. I will now turn the call back to the operator.

[Operator Instructions] Your first question comes from the line of Yatin Suneja from Guggenheim Partners. Your line is open.

Thank you for taking my question. Question on the PV study. Could you maybe talk about what would you think you would like to show with regard to the seeming efficacy endpoint. And also have you disclosed the powering assumption. How should we think about placebo performing? Thank you so much.

Good morning, Yatin. Thank you for joining us in the call today. The FcRn study which is on track readouts before the end of the year, we will actually give top line data in line with how we typically show data. So they will be sufficiently complete and transparent to understand the clinical utility of the medication in In this setting. It will center around the primary endpoint that we will assess the delta between active and placebo on the primary endpoint of FcRn where patients need to achieve CR on a minimum dose of corticosteroids and that for at least 8-weeks. We will also disclose the key secondary endpoints which have to do with steroid tapering and speed to disease control. And, of course, importantly, safety. So it will be comprehensive top line data sets in line with how we have been showing top line data in all the indications before. We have not disclosed powering assumptions. We never do that. But you know, by now that we are relatively conservative when it comes to powering the studies. Remember, this is the single biggest [FcRn] study ever with 222 patients involved. Thank you for the question.

Your next question comes from the line of Tazeen Ahmad from Bank of America. Your line is open.

Hi, good morning, and thanks for taking my question. Tim, just want to get a sense of how you're thinking about what the uptake of CIDP could look like relative to the very steep uptake you had with gMG and are still having with gMG. Just want to set expectations for that. Thanks.

Thank you for being with us today. And thank you for your question on CIDP. Of course, we are delighted with the stellar data which we generated in the year trial. And it is fair to say that the trial data put us in a position of strength. I believe that up to Karen here with me in the room today to comment on some initial thoughts when it comes to take off in CIDP markets. Karen?

Yes, thank you, Tim and thanks for the question. We're certainly excited and getting ready for the approval of CIDP. And we're doing exactly that workup right now, to really get a good sense based on the real data that we have, and the strong data that we have to break down the market into the segments of neurologists, as well as patients to really understand how quickly might the uptake be? And how can we drive that to be as fast as possible. From my perspective, based on what we're seeing early on, I wouldn't expect it to be as fast as MG that you - as we've talked about before, there is - IVIG is approved. I think we compete well versus IVIG. However, obviously, there's some loyalty from the neurologists and from the patients in this progressive disease where you know, shifting to a new medicine is something to be considered deeply so. So we're working it up. And we're going to do everything that we can, we'll leverage all of our learnings from MG. We will leverage all of the work that we've done on MG to maximize the uptake, but I don't think it will be as fast as we've seen in MG.

Thank you, Karen. Thank you Tazeen for the question.

Your next question comes from the line of Derek Archila from Wells Fargo. Your line is open.

Hi, good morning, and thanks for taking the question. And congrats on the progress. Maybe question for Karen, just you know, in terms of some of the checks that we've done more recently with the positions and really starting to position VYVGART earlier line, even as early as first line in MG. Is that something that's consistent with your comments earlier in terms of what you're seeing? And again, how do you kind of navigate the payers if that is the case? Thanks.

Yes, absolutely. Thanks for the question. And that is consistent with what we're seeing and what our strategy is, of where we think we can provide the most value, which is we're seeing consistently moving since launch - moving earlier and earlier in the treatment paradigm. As neurologists get more comfortable with VYVGART, more confident in the safety profile in particular, and they're really seeing the benefit to patients. Certainly from a payer perspective related to that part of your question, we're not seeing any challenges to date, we have broad access in the U.S. And obviously, we're securing pricing and reimbursement across Europe very successfully. So the value of this got in MG, including in earlier lines is really being recognized.

And most of the policies - state policies Derek actually stipulates that VYVGART can be used either straight after mestinon or mestinon with steroids, or mestinon with steroids with one IST. So there is actually a natural positioning to move upstream in the treatment paradigm. So is the dynamic we had all hoped for, and which is happening, but it's happening in its own cadence, which is going to take time. Thank you for the question.

Your next question comes from the line of Thomas Smith from Leerink Partners. Your line is open.

Hi guys, good morning. Thanks for taking our questions. And congrats on the progress in the quarter. Just on the timing for the bullous pemphigoid GO/NO GO decision. Can you comment on what's driving the accelerated timing there? Is that faster than expected enrollment? Or is there some triangulating of this readout with the availability of Phase 3 pemphigus data? Or there some other factors we should be considering there? Thanks.

Thanks for the question, Thomas. The bullous pemphigoid study is a seamless Phase 2, Phase 3 study where we derive sufficient confidence from the pemphigus data to venture into this trial design. The 40 patients GO/NO GO decision points so 20 patients on active, 20 patients on placebo is actually on time. And will be indicating event for a student continue to scale this trial into the Phase 3 part of the study, so very similar to CIDP. So I'm very happy with the performance of the team. Again, this is a significant recruitment efforts. And we're on track to show you the data as planned. Thank you for the question.

Your next question comes from the line of James Gordon from JPMorgan. Your line is open.

Hello. James Gordon, JPMorgan, thanks for taking the question. Two questions on PV and the ADDRESS trial, please. The first one is just the timing. So the transition of clinical trials having completed the primary on I think it was August 22. So just in terms of further steps needed before you can reveal the headline results and what has been the cause of the slight delay announced today because it sounds like now we might not get the data, at least the headline data too early 2024. So why there has been that slight delay? And then the follow up question was just also on the same trial. Just understand there's some significant differences with reduction in terms of how quickly the drug has efficacy come on, and then maybe also tend to steroid tapering. So do you think that the pemphigus results from rituximab where there was about a 30 percentage point placebo benefit is a relevant confer? Or is a smaller benefit than that still competitive? How should we think about that please?

James, thank you for being with us today. And thank you for your pemphigus questions. Certainly an exciting indication and a very ambitious trial design. There is no delay in the pemphigus study. Remember, when the study is fully enrolled, there is a substantial amount of time involved in follow-up of the patients. So we're assessing whether we can push patients into CRM within a 30-weeks times period, and then actually the roll over into the open label extension study where we continue to collect data, which will be important for a top line data readouts. In terms of comparing to the pemphigus trial, I would strongly advise against it. I mean, these are molecules with totally different modes of action. And therefore the trial designs are totally different. The pemphigus endpoint was taken at a totally different time point. It has its own particular steroid tapering protocol in the background, we work with ours, which is specific. So I would not really compare the two. It's a totally different situation. What we're looking for, for such a stringent endpoints, CRM in for at least 8-weeks within a 30-weeks’ timeframe. That's unattainable for addiction by the way, is a statistically meaningful separation between active and placebo. That is basically the definition of the endpoint, the primary endpoint. And then in the secondary endpoints, we will unpack the clinical utility of the drug in more detail by looking at the speed to disease control, the amount of stereo tapering we can achieve. We will also look at the pemphigus fallacious patients, which is a subset of the study. And we're also going to look whether we can actually push people into complete remission of therapy as portion of the open label extension study. So very exciting, very bold endpoints, which could be present a game changer in the pemphigus space. Thanks for the question.

Your next question comes from a line of Akash Tewari from Jefferies. Your line is open.

Hi, this is Amy on Akash. Thanks so much for taking our question. So one on PV. How do you expect the more severe patients in Phase 3 to impact FcRn? Additionally, do you need the cell drop to have sustained remission? Or do you consider this as more of a bridge to rituximab? Thanks so much.

Thank you for these two excellent questions. So first of all, we do not see any difference between moderate and more severe patients in the ability to respond to the VYVGART. Remember, we had both on trial in Phase 2, it's true that in Phase 3, we're recording a somewhat more severe patient population, but we had them in Phase 2. And they have an equal right, to respond equally fast and equally deep and equally durable to VYVGART as the milder patients. So that there's no, real differentiation there. In terms of positioning of the product, and you're correct in calling out that maybe we can go faster to steroid tapering, which is something which patients badly want and need. You cannot continue these patients on a high dose of steroids for too long period of time. And then of course, we had this beautiful publication, where we started to unravel the biology behind the durable clinical responses, which we have seen in Phase 2, as we tried to set in the prepared notes. FcRn is much more than just you know receptor involved in IVIG homeostasis, it is also involved in all the antigen presentation. And actually, we see not only and sustained reduction in auto antibodies, but also a sustained reduction in auto attractive B cells in our perfect suspicions, which basically means that - is disease modifying and has the ability to either postpone or replace completely and rituximab. Thank you for the question.

Your next question comes from a line of Danielle Brill from Raymond James. Your line is open.

Hi, guys. Good morning. Thanks for the question. I also have a question on PV. Sort of a follow-up on to a prior question. I'm curious what endpoints you think will dictate [escolares] rank and the treatment algorithm? Specifically, and what do you think it needs to show to leapfrog with rituximab? And then how should we think about potential recruits to BP? Thank you.

Thank you, Danielle, for the questions. Of course, we have to be careful, hit and wait for the Phase 3 data, because they will ultimately dictate whether we have a drug induced indication, and how to position VYVGART within the pemphigus treatment paradigm. We did extensive work with the community, both physicians and patients, actually the entire global physician community is surrounding this trial. And of course, we have been doing extensive work with the patient advocacy group, what patients badly need is a fast response. They want to see stopping the formation of lesions, closing of lesions as fast as possible. They also want to taper steroids as fast as they can they hate steroids, steroids with a passion. So imagine we can repeat the Phase 2 data in terms of quick onset of action. Remember, 90% of patients in Phase 2 went into disease control within the first, two weeks’ time. And then we can keep them you know, in a very low disease activity, state of complete remission, whilst taping the steroids. I think that will position and VYVGART very well for positioning in the pemphigus treatment paradigm. But let's not get ahead of ourselves and wait for these data. Thank you

Your next question comes from the line of Yaron Werber from TD Cowen. Your line is open.

Great. Thanks for including me and congrats on another great quarter. So a quick - also questions from me for the ADDRESS study. So the studies including both naive and experienced patients, and if you look again at the rituximab studies, the placebo vary between a 10% and a 28% response rate. I think a lot of the Kay wells are kind of talking about a 30% to 40% delta. That was easily achieved. So if you look at your CRA from the Phase 2 sort of the seven out of 10 at the optimal dosing. Can you give us a sense sort of in this study, the placebo? Is that 10% to 28% relevant at all or do you think it's going to be even lower? Just given the tightness of the endpoint? And are you expecting sort of 50/50 in terms of naive and experience in the study? Thank you.

Thank you, Yaron. From a patient population point of view we expect the real world population. That means that the majority of the patients of course, will have been on therapy, with maybe some naive patients in there as well. I would caution against extrapolating from rituximab trials in terms of endpoints, which are different duration of treatment, which are different background stereotyping protocols, which are different. And therefore placebo behavior in that trial cannot just be extrapolated into our trial, the way we designed the primary endpoint is such similar to IDP, by the way that we try to really minimize any placebo response in the 30-week trial. So, let's not extrapolates, let's not assume similar placebo responses of deltas, between active and placebo. This is its own unique trial design. And we would be very happy to see statistically significant delta emerge, between the placebo arm and the active, it's a very aggressive endpoint. Thank you for the question.

Your next question comes from the line of Myles Minter from William Blair. Your line is open.

Hi, thanks for taking the question. I think I was on - previously actually announced some data showing that they can get a 10 ml auto injector in about a 30 second injection time. I know, you're advancing up prefilled syringe version of VYVGART Hytrulo, and that's in development, you can update us next year. But would that also potentially mean you'd introduce an auto injector solution based on that? I had to up data? Thanks.

No, thank you for the question Myles, if anything is just shows you the power of the enhanced technology from Halozyme. And it underscores again how important this technology is to win in the subcu setting. And we're very happy to have the exclusive license to the technology, which positions us in a position of strength. We're the only product out there, which can deliver a single subcu injection with this volume of products. And auto injector of course, is in the works. As you know, argenx is always planning for multiple steps ahead. So, we were really feeling a sense of urgency, to launch this first generation subcu product ASAP, because patients are waiting, that we are already working on the prefilled syringe. And we have also been public on the fact that we are working on an auto injector as a third generation. So the data from Halozyme are boarding very well. And they underscore the power of the Halozyme technology in order to delight patients in the subcu setting. So stay tuned and more news will come next year. Thank you.

Your next question comes from the line of Joel Beatty from Baird. Your line is open.

Hi, thanks for taking the question. For the post COVID pops data in Q1, what would be good data? And could good data that will be supportive of further development of - other settings?

Yes, this is an excellent question. So, this is one of the few indications where actually we need to go for signal finding first. I think there's a strong hypothesis, which was delivered, to us by the key opinion leaders in post-COVID pops that this is IgG-mediated. We need to establish a firm signal in what is, a true Phase 2 trial hidden at post COVID pops. Before then we can think about venturing into the Phase 3 trials. So, we will be looking at the totality of data. And we will see conviction that is truly IgG mediated. So, we have some fundamental answers, to be given before we can go into Phase 3. We believe that post COVID pops based on the data we have seen, is not different from regular pops. But the experiment is ongoing and we need to show the data now. Thank you for the question.

Your next question comes from the line of Alex Thompson from Stiefel. Your line is open.

Hi, thanks for taking my question. I guess a question for Karl. How should we think about the net price per patient for VYVGART now in Europe, now that we have the final German price? How should we think about modeling that moving forward? Thanks.

Thank you, Alex. Yes, as a reminder, we launched in September '22. And we got the final price in August '23. We're very pleased with the outcome as it recognized the clinical benefit. And that of course resulted in the $6 million true-up, which I reflected early on. At the moment, our price - our European business of course, is largely Germany. And I do have to mention, I think, but in Germany, orphan drugs are subjected to a full AMNOG process. And renegotiate if your annual revenue exceeds $30 million. And we have now exceeded that threshold. Basically, what I'm saying is that we will go back and renegotiate again. So, we expect that price to drop - during 2024. That said, we are pleased to have a strong commercial performance, which resulted invoice and we are pleased with our partnership with a German for addition, look forward to continue discussions with then for planning purposes, of course, I think Alex, you have to assume that the European price will be lower than the U.S. price. Thank you.

Your next question comes from the line of Allison Bratzel from Piper Sandler. Your line is open.

Hi, good morning. Thanks for taking my question. And congrats on all the progress. Just one for you on the early experience with VYVGART Hytrulo. I know its early days in the launch. But just curious if we have any insight just on the profile of early adopters of the subcu format, you know, is initial uptake concentrated among neurologists who are already heavy prescribers of IV VYVGART. Or just what are you seeing there? And then I know you indicated that such a low uptake is primarily in the VYVGART naive patients so far. But just as Hytrulo coverage policies are put into place, kind of hoping you could walk us through what you would expect would be the major barriers preventing a patient from switching just from IV to subcu. And then just second separately. Just a point of clarification. I think you talked about a 7 million in product sales to Zai Lab. Was that - that was commercial supply related, I think, could you just confirm that, and how we should think about just modeling that this quarter and going forward? Thanks.

Thanks, Allison. I will give question to Karl in a minute to comment about, the transfer of goods to Zai Lab in China. But maybe and Karen, you want to go on first on Hytrulo launch dynamics, and patient phenotypes we get on drug?

Yes, absolutely. Thanks for the question. We're really excited about where we are with the Hytrulo launch, I would say we are getting positive feedback from - neurologists, from patients. And as you mentioned in your question, payer policies are now going into place, and they broadly reflect IV policies. So it's clear that the market is responding well, to this innovation. That is that has been brought forward. You mentioned and I'll just reinforce the majority of patients that we're seeing of they've got naive patients. So, this is expanding the pool of patients that are considering they've got and we are adding new prescribers, with they've got Hytrulo as well. So, if you go back to what we've talked, about is this very intentional and very consistent approach to VYVGART, and we've got Hytrulo, where we were focused on expanding quarter-over-quarter, the prescribers that have experience and confidence with VYVGART and VYVGART Hytrulo expanding the patience to go in earlier line. And that's certainly what we're seeing, we're getting very positive feedback on Hytrulo. Of course, it's taken a little while, for some of the logistics, let's call them that, to be set up. Some of the infusion sites, getting infusions in place, is standard procedure, they needed to get new protocols in place for doing an injection instead. But we've certainly seen that that's coming online now. And those injection sites are seeing the value of VYVGART well. And then the last thing that I'll say is that not to forget that we do get self-administration in the EU, for and Japan with regards Hytrulo, or in that case, subcutaneous VYVGART. And so, we're pleased with that as well.

Karl, question two.

And yes Allison, thank you for the question. So the 7 million we've sold to China is to Zai Lab. This is essentially stocking the country. This is inventory now sitting in the Zai Lab warehouses. That same amount, the $7 million is both in revenues, and in cost of sales. We only of course get our share of that in royalties about $700,000. I mentioned earlier, which is in other revenues. I think from planning purposes, you have to exclude it, the revenue and the cost per sale is at zero profit - periodically, we will of course have to supply the China market, but we will always be transparent on that. But I would exclude it for planning purposes, please. Thank you.

Your next question comes from the line of Vikram Purohit from Morgan Stanley. Your line is open.

Hi, good morning. Thanks for taking our questions. We had two regarding the potential impact of competition in MG. So first, what sort of impact have you seen at this point, if any on physician views towards VYVGART and treatment options on MG more broadly, in the past few months, given approval of the competing therapy from UCB. And how is the messaging regarding VYVGART, potentially changing in response to competition. And the second given there are additional treatments in development for MG? We'd be curious to understand your perspective on how you think the market settles out, over the coming years, and which factors you think are going to drive patient preferences, prescriber preferences, towards one treatment choice or presentation versus another, as the number of moving parts in the marketplace potentially increases in the next few years. Thanks.

Thanks Vikram. I will hand over these two questions to Karen. Karen?

Yes, thanks for the question. Look, the way that I would think about this, and the way that we talk about it in the, the MG market is still, let's call it quite immature. And as you said, there's a lot of competition, a lot of - innovation coming, to the market over the coming months and years. I actually see that and we see that, as a good thing. Innovation is a great thing for patients. And certainly, the real competition that we all face is inertia, that there's an assumption that patients are well controlled, with these therapies from decades ago. And that's just not the case. So from my perspective, more innovation, addresses that inertia, and really expands the market over time. We've talked before, about it look maybe something similar to the MS market. But what you really see, is an expansion in the treatment, the treatment rates, the diagnosis rates, and an improved outcomes for patients. Along with that. So that's - where we would see the direction of travel for the market. And within that, I think - VYVGART is really well positioned. We have a first in class, I think we have the best molecule with the fragment technology. It comes through in the efficacy and clinical trials, but also in the real world efficacy that we're seeing. The safety profile continues, to hold up and continues to be strong. And then obviously on the treatment burden. We started with the infusion, but with Hytrulo, we've been able to decouple patients from the infusion chair, and Tim spoke earlier about the continued innovation that we're bringing, as we think about PFS, and auto injector. So as these markets expand, I think they've got is incredibly well positioned, and will be continued to be intentional and disciplined and will be investing for growth.

Thank you, Karen.

Your next question comes from the line of Manos Mastorakis from Deutsche Bank. Your line is open.

Hi. Thank you for taking my question. So just a quick follow-up on the CIDP and potential ITP launch in terms of sales force planning and expansion. If you can help us understand whether the new sales force will be sorry, whether new sales force will be required with different types of expertise. And what numbers are you looking to have deployed? At least in the U.S., of course. In other words, what will be the respective contribution of MG, ITP, CIDP to the overall sales force. And then secondly, for indications such as bullous pemphigoid, where potential competition could be much cheaper. For example, in dupixent, on an annual basis could be a lot cheaper than what is [indiscernible], how do you think about positioning and pricing of [indiscernible] there? Yes, that's it? Thank you.

Thank you for these two questions. So Karen I suggest you take question one, and then that will address BP question, please.

Yes, certainly happy to. So, I'll start where I left off on the last question, which is that we are investing for growth, as we think about the opportunity in MG, being larger than maybe what we have thought. Obviously, the opportunity with CIDP on the incredible strength of that data, and then we'll see where ITP, which you included, as well as PV, come out. Without getting into details, what I would say - is that we're working up, we are working up the details at the moment. But the way to think about it is, that we're investing that will leverage the field force, and all of the capabilities and the infrastructure that we built for MG, and that we're thinking about investing for growth as we move forward. And we'll be able to share more of the details of what exactly that looks like, over the coming months. But the goal for us is to maximize the opportunity and the value creation from VYVGART in the coming years.

Thank you, Karen. And then on the BP question, look, we're not in a different situation than we are in the other indications. But it is true. There is other medications out there, you know, which can be done at a cheaper price. The question is, of course, what value do they offer. So, we believe that bullous pemphigoid is a very difficult disease to treat. There's actually very little competition or competitive activity in development going on for the moment. And just like pemphigus, this is an IgG driven disease. This is IgG-mediated. And therefore we think that by hitting the disease in its heart, we can have a dramatic impact in these patients. And let's start with the clinical benefits which we can demonstrate in these patients to then derive the value, because it will all send around the value we offer for these patients. So I think let's wait for the data. But if the data pan out in a similar direction is what we have seen earlier in pemphigus, I think put in a very strong position to really transform the lives of these patients, and be able to extract the coding value from that. Thank you for the question.

Your next question comes from line of Douglas Tsao from H.C. Wainwright. Your line is open.

Good morning. Sorry about that. Thanks for taking the questions. I'm just curious, in terms of the early launch of Hytrulo for, you've obviously mentioned that it's largely patients who had not switching new patients to therapy. I'm just curious what was necessarily holding them back? Or was it just a matter of prescribers getting to these patients, or for some of these patients is not willing to go on to therapy with the ID?

Yes, thanks for the question. It's a good one. Look, I don't think there was anything holding them back, necessarily. I think this is we're early in the adoption curves still have, they've got even seven quarters in. And I think VYVGART Hytrulo gave the opportunity for new prescribers. That might not have considered VYVGART before. Suddenly we have the DTC campaign, highlighting Hytrulo patients for perhaps say - they felt that an IV was for a more severe disease and they wanted to be on. So it opened up maybe some different patients. But overall, I would say the trajectory of the launch is just based on as prescribers and patients get more experience with VYVGART, they see the impact in terms of their quality of life. As I've mentioned a few times the fact that the safety profile continues to hold up. And now we have these two routes of administration. I think what we'll see is just that continued momentum and consistency in expanding with prescribers and patients. Thanks for the question.

Your next question comes from the line Joon Lee with Truist Securities. Your line is open.

Hi. Congrats on the strong quarter and thanks for taking our questions. I have missed this but are you still on track to start trial by year end? Just didn't seem to - I might have missed out on the press release. Thank you.

Hi Joon, thank you for the question. Yes, was simple. We are on track. So actually, we don't track with all of the clinical milestones which we had promised at the beginning of the year. So very proud of the execution power of the team. We have a ton of work in front of us. But these are all very exciting indications. So yes, we are on track and thank you for the question.

Your next question comes from the line of Suzanne van Voorthuizen from VLK. Your line is open.

Hi, Tim, thank you for taking my question. It's more of a long term using but I wanted to ask your thoughts on the more recent development where CAR T players are moving in autoimmunity, they seek to potentially cure lupus, but some players are also moving into indications not too distant from argenx like myositis. So could you please elaborate a bit on how you look at this development? What are your thoughts on the position of this potential future modality versus VYVGART? Or if you have any other considerations that you think are relevant? Thank you.

Hi Suzanne, and thank you for being with us today and on the call. Yes, of course, we're watching all sorts of innovation coming into the autoimmune space. I think it's an exciting time to be in autoimmunity these days, with multiple, you know, different modalities coming in. We're looking at the CAR T technology, of course. To be fair and honest, we need a bit more data. So I think we have all seen that small set of data in asleep patients. Let's see, you know, how these CAR T data play out in the different indications. And I think everyone will be focusing, of course on you know, what will be the durability of the clinical response, which we can expect with this type of technologies, which very early days, let's wait for the data. And of course, we're closely monitoring that. Now, our ambition and autoimmunity as Karen explained earlier in the call, is not to wait with expensive innovation until your last line patients, but to actually move with affordable innovation early in the treatment paradigms. So we can hit a disease heart early and hopefully avoid these very bad relapsed refractory patients, which are outreach nothing works anymore. So, that is our mission in autoimmunity, bring the innovation as early as we can in the treatment paradigm to hold further progression of disease and prevent patients from getting in that final station. Thank you for the question.

Your next question comes from the line of Samantha Semenkow from Citi. Your line is open.

Hi, good morning. Thanks for taking the questions. Just a couple of follow up questions for me. Just from a timing perspective should be expect both the pemphigus and bullous pemphigoid data to be read out at the same time or is the guidance just they will be read out near each other around year end. And then also for pemphigus. When we look at the Phase 2 data, about 20% of the patients, they seem to have achieved CRM main endpoint within about the 30-week timeframe, just recognizing that [indiscernible] dose and the dose schedule as well as they're adjusting was different in the Phase 2 than it is in Phase 3. How should we think about that translating into the readout for the ADDRESS study? Is that 20% around where you expect the bar or would you expect it to be different than that? Thank you.

Thank you for both questions, Samantha. So from a timing point of view, we're not going to go into get any more granular than what we have been disclosing publicly. Let the teams navigate the Christmas period. Let them do a thorough data analysis. And then we can come out of the gate with the data. But there will be close together on extrapolating from pemphigoid Phase 2 to Phase 3, remember that the objective of Phase 2 was something totally different rights. This is the only indication where we studied monotherapy of VYVGART's, then combination therapy at different doses and dosing regimens with low dose of steroids. And therefore you cannot just look at numbers. I think what we did in Phase 2 is fine tune the dose, the dosing regimen and the ideal combination with steroids to then take that ideal combination into Phase 3. So we did test drive the ideal combination with quite spectacular results. But it was relatively small, patient numbers. And that's why now we do the proper Phase 3 experiment. Thank you for the questions.

Your next question comes from the line of Rajan Sharma from Goldman Sachs. Your line is open.

Hi, thanks for taking my question. So maybe just to follow on from the question on competition. Could you just share your perspectives on early data from immune advanced second generation FcRn antibody, I realize it's still very early, but be helpful to get your thoughts on that. And specifically, I guess how important you think an incremental IgG reduction is in driving clinical outcomes. And then, given the immune events have been quite clear on which indications they're targeting initially, does that change your thinking on the additional indications you may target with VYVGART or indeed how quickly you may perceive those?

Yes. Thank you for the question. So it's very difficult to comment on someone else's data, especially when the early Phase 1 data, I would invite you to study the Phase 1 data of VYVGART's and the Phase 2 dose finding data of VYVGART to compare and contrast. Our task as the leader in the space actually is to bind it to take in what we think is a phenomenal excellent antagonists into areas of high unmet medical needs, and actually continue to pioneer the understanding of the biology behind VYVGART and FcRn biology. So the only thing I would caution against in this call is to just extrapolate VYVGART data to other molecules., VYVGART has a distinctly different molecular design with distinctly different properties. And I think we need to wait for Phase 2 data before we can start to compare and contrast. So we will continue to focus on the pioneering role we have and we sharply focused on the patient needs. Thank you.

And we have time for one more question. Your final question comes from the line of Charles Pitman from Barclays. Your line is open.

Hi, guys. Thanks very much for taking my question. Just quickly on bullous, can you just clarify and kind of highlight what it is that you're specifically looking for on the GO/NO GO decision. And to what degree as the expected readout of pemphigus VYVGART is expect is going to help you in terms of trying to set up the kind of ongoing trial design post the GO/NO GO decision. Now to what degree is that design still adaptive to your impending learnings? Thank you.

Thank you for the question. You're right in your assumption that the GO/NO GO decision point would still allow us to tweak certain aspects of the trial. For example, sample size to just powering. This is a very demanding endpoint. It's a different endpoint than in pemphigus. In pemphigus, the endpoint is CR on a minimum dose of steroids for at least eight weeks. In bullous pemphigoid endpoint is even tougher. It is a complete response of steroids. So the GO/NO GO decision point allows us to triangulate very ingoing assumptions for the trial design correct or do we need some tweaking, they will also give us an early visibility on the achievability of course of this primary endpoint. So that's the gist of the GO/NO GO decision point. And thank you for your question.

And ladies and gentlemen, this does conclude today's conference call. We thank you for your participation. And you may now disconnect.