argenx: Priority Review Voucher Goes To Waste And Why SC Efgartigimod Is Important (ARGX)

argenx (NASDAQ:ARGX) preannounced Q4 2022 net sales of Vyvgart ahead of the JP Morgan Healthcare Conference in early January and provided a pipeline update with new indications for Vyvgart. Vyvgart’s momentum continued in the fourth quarter and argenx expects to report $175 million in quarterly net sales and $402 million in full-year 2022 net sales. It seems likely that global net sales will exceed $1 billion this year and Vyvgart is well on its way to meeting and potentially exceeding my global peak sales estimate range of $1.5 billion to $2 billion in generalized myasthenia gravis (‘gMG’).

The company also suffered a regulatory setback with subcutaneous efgartigimod as the FDA extended the review of the application by three months to June 20, 2023.

This means the Priority Review voucher argenx purchased for $98 million in 2020 and used for this application was a near waste of money because the review period went from six to nine months, just one month short of the regular review timeline. But this should prove just a minor setback because the extension was made due to the company submitting additional data and more time is needed to review the new data.

There are two reasons argenx was in a hurry to get SC efgartigimod to market.

The first is that the convenience of subcutaneous dosing will more than likely expand the market for the drug. Alnylam’s (ALNY) Amvuttra is a good example of that. Amvuttra is Alnylam’s subcutaneously administered drug for the treatment of ATTR amyloidosis patients with polyneuropathy. It was approved last summer and has rapidly cannibalized the company’s IV-administered Onpattro, but it has also led to growth acceleration for new patient starts. The number of new patient starts has roughly doubled in the fourth quarter of 2022 – 395 in Q4 versus 150 to 200 in the previous three quarters.

Now, I do not expect the demand for Vyvgart to explode once the subcutaneous version becomes available, but I do expect to see incremental improvement in growth rates in late 2023 and in 2024.

The second reason for the company to rush SC efgartigimod to market is the first anti-FcRn competitor coming to market. Vyvgart was alone for the last 12 months, but UCB (OTCPK:UCBJY) has a PDUFA date in the second quarter for rozanolixizumab for the treatment of generalized myasthenia gravis. And the FDA granted the rozanolixizumab BLA Priority Review which shortened the review period from ten to six months. That has to hurt because argenx spent $98 million to purchase a voucher to get the same six-month review timeline for SC efgartigimod.

However, I do not see a reason for concern on argenx’s side. Yes, rozanolixizumab is administered subcutaneously, but it is not delivered through an injection, but using an infusion pump over 30 minutes while SC efgartigimod will be administered as a subcutaneous injection using Halozyme’s (HALO) Enhanze technology and it takes a few minutes.

And the difference in the timing of the approvals of the two drugs should be minimal as both are likely to be approved in the second quarter with rozanolixizumab probably getting the FDA nod a month or so before SC efgartigimod.

So, yes, it is important to get SC efgartigimod to market as fast as possible, but a three-month delay will not make a significant difference and the convenience of rozanolixizumab over IV-administered Vyvgart will be short-lived and it should be soon outdone by an even more convenient SC efgartigimod.

In the meantime, the more important catalyst will be the top line results from the ADHERE phase 3 trial of efgartigimod in CIDP patients. The readout was pushed out by one quarter to the second quarter. This is an event-driven trial and the timing of the readout is uncertain and is the company’s best guess about when the required number of events are generated. I wrote about this trial in my previous article and believe the trial should report positive results based on the relationship between IgG reductions and efficacy and efgartigimod comfortably passing the go-no go test in 2021 that required that more than 50% of patients respond to efgartigimod before progressing to the next phase of the trial.

argenx also continues to expand its pipeline with additional indications for efgartigimod:

• The registrational trial of efgartigimod in thyroid eye disease (‘TED’) is expected to start in 2023. Unlike generalized myasthenia gravis, ITP, and pemphigus vulgaris, argenx is not leading here but is, in fact, a fast follower. Immunovant (IMVT) has already initiated a phase 3 trial of batoclimab in TED patients and argenx has decided not to waste time with a proof-of-concept trial.
• Two additional proof-of-concept trials will be initiated this year – ANCA-associated vasculitis and antibody-mediated rejection.

The company expects to have active trials in 15 IgG- and complement-mediated autoimmune diseases (the latter with the C2 antibody ARGX-117) and we should see more proof-of-concept trial launches in the following years.

Conclusion

argenx has spent most of the last two years consolidating its big prior gains. With the launch of Vyvgart, it needed to grow into this valuation while validating the potential of the lead asset through de-risking in additional indications.

I expect Vyvgart to reach blockbuster status this year in generalized myasthenia gravis (‘gMG’) and a new commercial growth phase to start in 2024 through continued geographic expansion in gMG, the potential launch of SC efgartigimod in the same indication, and the potential launches in CIDP (pending positive phase 3 results in the second quarter), immune thrombocytopenia (pending positive results from the second phase 3 trial in 2H 2023), pemphigus vulgaris (pending positive phase 3 results in 2H 2023).

And from there, we should see a steady stream of clinical trial readouts and potential regulatory approvals of Vyvgart and potentially of ARGX-117 in complement-mediated diseases.

argenx is well-capitalized to execute its commercial and development plans. The company ended 2022 with $2.2 billion in cash and equivalents and it expects to burn approximately $500 million in 2023. If Vyvgart continues to grow as expected, argenx could reach cash flow breakeven by the end of 2024.

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