argenx SE (NASDAQ:ARGX) Q2 2025 Earnings Call Transcript

argenx SE (NASDAQ:ARGX) Q2 2025 Earnings Call Transcript July 31, 2025

argenx SE beats earnings expectations. Reported EPS is $3.74, expectations were $2.84.

Operator: Good morning. My name is Rob, and I will be your conference operator today. I would like to welcome everyone to the call. [Operator Instructions] I’d now like to introduce Beth DelGiacco, Vice President, Corporate Communications and Investor Relations. You may begin your call.

Beth DelGiacco: Thank you. A press release was issued earlier today with our half-year 2025 financial results and second-quarter business update. This can be found on our website along with the presentation for today’s webcast. Before we begin, on Slide 2, I’d like to remind you that forward-looking statements may be presented during this call. These may include statements about our future expectations, clinical developments, regulatory timelines, 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. Luc Truyen, Chief Medical Officer, will be available during the Q&A. I’ll now turn the call over to Tim.

Timothy Van Hauwermeiren: Thank you, Beth, and welcome, everyone. I’ll begin on Slide #3. Vision 2030 is our road map for long-term value creation, and I’m proud to say that we are exactly where we set out to be. Over the past 12 months, VYVGART has achieved exceptional year-over-year growth of 97% across all of its approved indications. We’ve also initiated multiple registrational trials in large market opportunities like Sjögren’s, myositis and TED and advanced 4 new molecules into our pipeline. This sets us up to create significant growth with 10 labeled indications and a robust late-stage pipeline by 2030. While we are building for the long term, we are also delivering today. 15,000 patients globally are now being treated with VYVGART, including 2,500 CIDP patients just 1 year into the launch.

We are seeing growth across all indications, formulations and regions. And as expected, our prefilled syringe is already driving new patient starts and new prescriber demand. This momentum is a direct result of our team’s extraordinary execution, and I want to thank them for advancing innovation that truly matters to patients. Karen will share more later in the call on our commercial performance and the path to reach 50,000 patients by 2030. Where I want to focus today is on the opportunity we have to expand VYVGART’s broad potential and advance our pipeline of first-in-class assets. Slide 4. We have the opportunity to create significant value in the near term with our 3 Phase III pipeline assets. We are building momentum with efgartigimod in therapeutic areas beyond neurology.

We presented our Phase II proof-of-concept results in myositis and Sjögren’s for the first time at EULAR and the reception from the rheumatology community reminds me of the early enthusiasm we saw from neurologists when we first unveiled our MG data. Rheumatologists are beginning to see what a targeted approach like efgartigimod could mean for their patients, raising the treatment bar beyond symptom management to a sustained functional improvement. In the myositis study, efgartigimod delivered significant improvement in muscle strength as measured by the TIS, which clinically mirrors what we saw preclinically in our mouse-specific transfer models. In the Sjögren’s study, we observed meaningful improvement in systemic disease activity. Empasiprubart is also advancing in 2 registrational head-to-head studies versus IVIg in MMN and CIDP.

Our decision to run head-to-head studies illustrates our conviction that empasiprubart has the potential to disrupt these markets. The Phase II ADA results in MMN support this and recently gained significant attention from treating neurologists at PNS in May. The data point that resonated most comes from the Patient Global Impression of Change Scale, where over 94% of treated patients felt better on empa than their best on IVIg, indicating empa could provide a transformative benefit. For CIDP, we are seeing a significant demand from the community from VYVGART Hytrulo, indicating that there is still a need for more innovation. We’re committed to making the broadest impact by advancing 2 distinct mechanisms of action with VYVGART and empasiprubart.

ARGX-119 is our third and most recent molecule to enter a registrational study following positive proof of biology data in CMS. The discovery and development of ARGX-119 exemplifies our innovation model well. We collaborated with the world’s leading experts to design an antibody that activates MuSK in a way that stabilizes and potentially enhances the neuromuscular junction. In our 16-patient Phase I CMS study, we observed consistent functional improvements across multiple endpoints. And this is just the beginning for ARGX-119. We have identified several opportunities across neurology for this agonistic antibody. Slide 5. Our immunology innovation platform continues to be a powerful engine for long-term growth. We are rapidly advancing 4 new molecules, including our IL-6 inhibitor, a second FcRn blocker and an IgA targeting antibody, all of which are now in Phase I studies.

These programs are part of our broader portfolio of over 20 active IIP programs, each targeting areas of high unmet need. Our approach starts with identifying novel first-in-class immunology targets and building molecules that address them. As part of our investment in our IIP, we are also expanding our toolbox to optimize our molecules to be best-in-class. We recently announced a collaboration with Unnatural Products to gain access to their AI-driven microcycle discovery platform, enabling the development of potent, selective and orally available peptides against targets that we select. This collaboration both expands our capabilities beyond antibodies and reinforces our commitment to continue to innovate on the patient experience. I will now turn the call over to Karl to discuss our strong financial position, which remains a key lever for us in achieving our long- term growth vision to scale efficiently and prioritize our investment in innovation.

Karl Gubitz: Thank you, Tim. Slide 6. The second quarter 2025 financial results are detailed in this morning’s press release. Total operating income in the second quarter was $967 million. This reflects $949 million in product net sales and $19 million in other operating income. We are very proud of a 97% growth we have been able to deliver since this time last year, representing the significant unmet need that exists in MG and CIDP and the transformative outcomes VYVGART can offer to patients. On a quarter-over-quarter basis, we delivered 19% or $158 million in product net sales growth in the second quarter compared to first quarter of this year. If you look at the breakdown by region, product net sales were $802 million in the U.S., $52 million in Japan, $83 million across our rest of world markets, including Europe, Canada and our partner markets and $12 million for product supply to Zai Lab in China.

We are happy to share that all global markets grew in the second quarter with the exception of our supply to China, which you’ll remember is not reflective of demand and depends on when we ship within the quarter. We continue to expand our patient reach in our non-U.S. markets and the overall contribution of these regions now represents more than 15% of our global product net sales. In the U.S. specifically, we delivered 18% quarter-over-quarter growth, which reflects strong growth in both gMG and CIDP across all 3 presentations, VYVGART IV, subcu vial and the subcu prefilled syringe. We made the investment to move quickly with PFS because we know it will be a long-term growth enabler for all current and future indications. We are already seeing this play out in the near term and PFS has increased patient demand for VYVGART 1 quarter into its launch.

With the introduction of PFS and the changing dynamics associated with Medicare Part D redesign, there was an increase in gross to net, which we anticipated. Gross to net went from 12% at the end of 2024 to approximately 20% at the end of the second quarter. Importantly, the net revenue contribution for a gMG patient and a CIDP patient continues to be consistent with our previous guidance. This means that going forward, even with the increased gross to net adjustments, growth will be driven by our ability to broaden our patient reach within the MG and CIDP markets and into new patient populations, PFS will help us to achieve this growth. Next slide. Total operating expenses in the second quarter are $766 million, an increase of $98 million compared with Q1.

This includes a $49 million increase in SG&A and a $19 million increase in R&D, all of which reflects our commitment to deliver on our innovation mission in a disciplined way. Cost of sales for the quarter is $111 million, which brings our year-to-date gross margin to 11%. We continue to make important investments into our global supply chain. Our expansion strategy includes our commitment to manufacture in a region for that region and specifically to grow our capacity in the U.S. R&D and SG&A expenses for Q2 were $328 million and $325 million, respectively, leading to an operating profit of $201 million for the period. The quarterly financial income is $38 million, and we recorded $49 million of exchange gains, mainly resulting from our non-U.S. dollar-denominated cash balances.

The year-to-date effective tax rate is 15%. After tax, the profit for the quarter is $245 million and for the year-to-date is $415 million. Our cash balance at the end of the quarter, represented by cash, cash equivalents and current financial assets, is $3.9 billion. This is up from $3.4 billion as of the beginning of the year, mainly driven by net cash flow from operating activities of $0.4 billion for the first half of the year. I will now turn the call over to Karen, who will provide details on the commercial front.

Karen Massey: Thank you, Karl. Slide 8. At argenx, everything we do begins with a deep commitment to understanding and meeting patient needs. VYVGART continues to be a transformative medicine, raising the bar for patients of what they can achieve from their treatment. In MG, we have the highest rate of minimum symptom expression across any treatment. And in CIDP, we’re seeing real-world results that mirror the ADHERE data, including around functional improvement. This value proposition for patients supports our position as the leading branded biologic in MG in an increasingly competitive environment and that’s exactly where we hope to go in CIDP as well. Before diving into the success of the quarter, I want to discuss the real-life impact of our treatment.

Lynn, a biomedical engineer and marathon runner, was first diagnosed with CIDP when she was training for an Ironman and noticed a strange tingling in her fingers. Her CIDP unfortunately progressed, notwithstanding treatment with IVIg and other therapies. She maintained an active lifestyle and has been vocal about the challenges that come with managing her CIDP. Recently, she switched to VYVGART Hytrulo prefilled syringe, which she cited as an absolute game-changer for her treatment experience. She also shared that she’s seen an overall improvement in her quality of life. Recently, for the first time in 8 years, she didn’t plan around a hospital schedule while traveling outside the U.S. for 3 weeks. And while every patient’s experience is different, this is just one of the many inspiring stories we’ve heard throughout this launch.

Next slide. The team delivered another phenomenal quarter, and we saw VYVGART growing across all indications, formulations and regions. In the U.S., the introduction of the prefilled syringe led to increased demand for VYVGART with more patients initiating treatment across all VYVGART product presentations than we’ve seen in prior quarters. 50% of PFS patients were brand new to VYVGART with the other switching from Hytrulo vial or VYVGART IV. We also see the PFS expanding our prescriber base, which ultimately opens up our ability to reach new patients. Over 1,000 physicians have written a PFS prescription in the first quarter of launch with around 15% being first-time prescribers of any VYVGART product presentation. As with our prior launches, early momentum has been enabled by our ability to secure access quickly with favorable policies.

As of this week, we have secured policies representing 70% of commercial lives. Let’s now look at the growth dynamics for MG and CIDP, both of which meaningfully contributed to the quarter’s performance and have near-term expansion opportunities. Slide 10. VYVGART continues to gain momentum in MG. It has now been 14 quarters since we launched VYVGART in MG and 14 quarters of consistent growth. Even so, we believe we are still at the early stages of unlocking the full opportunity, which we estimate to be 60,000 patients in the U.S. First priority is to shift the treatment paradigm, moving the goalpost for patients and resetting expectations of what a treatment can do. It’s no longer that being controlled is being out of the hospital or being reliant on high doses of broad immunosuppressants.

It’s about being symptom-free and getting back to the activities you love. This shift is already underway and 60% of new patients to VYVGART come from oral, reflecting the value VYVGART delivers through its consistent safety and efficacy. Second, we know that branded biologics still represent only 10% of the MG market today. We see this expanding as more innovation enters the market, all of which serves to raise treatment expectations for patients. We’re focused on maintaining our position as the fastest-growing biologic in this evolving landscape. The launch of the prefilled syringe will be critical to achieving both of these goals. The PFS is expanding access to new MG patient segments, particularly those we couldn’t reach with HCP administration as the only option.

It’s also emerging as a key differentiator to help us reach that additional 25,000 patients as the total biologic adoption grows. Lastly, we’re also advancing registrational trials in seronegative and ocular MG, which together represent 18,000 patients of our total addressable market, and it supports our goal of VYVGART having the broadest MG label. Slide 11. Turning to CIDP. We continue to see consistent growth across all key patient and prescriber metrics, the sign of a very successful launch. As of the end of June, over 2,500 patients have been treated globally with VYVGART Hytrulo, most of which are coming from the U.S. The launch in Japan and Germany are also off to a fast start. This momentum is driven by the clear and unmet need, and meaningful outcomes driven by the safety and efficacy we’ve seen with VYVGART Hytrulo in the real world and now the added convenience of our prefilled syringe.

Importantly, we see significant room to continue to grow within our initial 12,000 patient population, and we believe the strong value proposition of VYVGART Hytrulo will support continued expansion even beyond that over time. We see tremendous opportunity ahead in MG and CIDP. We’re just getting started. These indications alone give us a strong foundation for continued growth, and we’re applying the same playbook as we expand into new diseases. We’re focusing on what matters most, generating meaningful data for patients, moving rapidly and staying ahead of the competition through innovation. And with that, I’ll now turn the call back to Tim.

Timothy Van Hauwermeiren: Thank you, Karen. We are executing across the business to transform the treatment landscape for patients with autoimmune diseases. What we have achieved in MG and CIDP alone reflects the significant value we have already unlocked and the substantial growth still ahead. We are excited to build on our proven ability to translate innovation into commercial success as we enter new markets and the opportunity in front of us is expansive. Over the next 18 months, we expect data from 6 Phase III and 6 Phase II trials across our pipeline, each with the potential to expand our reach into new patient populations and unlock addressable markets well beyond where we are today. As we scale for the long term, we remain deeply committed to creating lasting value for our shareholders, our partners and most importantly, the patients we serve. With that, operator, we’ll open the call up to questions.

Operator: [Operator Instructions] Your first question today comes from the line of Alex Thompson from Stifel.

Q&A Session

Alexander Thompson: I guess, really, how have your cycles per year in MG evolved as you generated additional chronic dosing data from AdDAP-NXT and with neurologists getting more comfortable with this idea of chronic FcRn administration? I guess really what I’m asking is one of the drivers of a higher gross to net here outside of the Part D exposure, a higher gross price per patient in MG followed by greater discounting towards a consistent net price?

Timothy Van Hauwermeiren: Thank you, Alex, for joining us on the call today. I would like to kick it off with Karl’s answer to the second part of your question. And then I really like where you’re going, and I would like to give that question — part one of the question to Karen. Karl?

Karl Gubitz: Thank you, Alex. The net revenue per patient for MG and CIDP remains consistent even with a higher gross to net. There are many variables that go into the net revenue per patient. It includes product mix, list price, gross to net utilization and adherence. It is fair to assume that the combination of these variables offsets the impact of gross to net. And then also for the sake of clarity, we want to confirm that we have not taken any price increase during 2025 in the U.S. Over to you, Karen.

Karen Massey: Thanks, Karl. Yes, and thanks for pointing out. I mean, we had a really strong quarter in MG, and that was actually driven by patient adds is what I would suggest. But we continue to guide to 5 cycles per year on average for an MG patient. But what you’re right to call out is that there is a potential for higher utilization and adherence with Hytrulo and particularly with PFS because of the convenience, you can imagine, for patients, the convenience of a PFS for self-injection. The other big driver here and what you can imagine is that once a patient experiences MSE with VYVGART, they want to stay in that minimum symptom expression. That’s the advantage of individualized dosing, right? They can pick their dosing that keeps them in MSE. And that’s that positive experience that is keeping patients on VYVGART. So those factors combined are really what led us to delivering what is remarkable. I think it’s 14 quarters straight of growth with MG.

Operator: Your next question comes from the line of Tazeen Ahmad — bear with me moment. Your next question comes from the line of Derek Archila from Wells Fargo.

Derek Christian Archila: Congrats on the update here. So just one on the breakdown of the PFS switches between Hytrulo and IV. I know you said that 60% of PFS patients were new, leaving 40% from switches, but what’s that breakdown look like?

Timothy Van Hauwermeiren: Derek, thanks for joining us on the call today, and thank you for this question, which is really focusing how are we growing the market with PFS instead of just switching an existing market, right, Karen?

Karen Massey: Yes, absolutely. So we don’t provide the split by product presentation, but we’ve shared in previous quarters a few facts that are important. Hytrulo is driving the majority of the growth for VYVGART. And as you rightly called out, 50% of prefilled syringe patients are new to VYVGART. So our strategy with bringing these innovations to market in both MG and CIDP is that we’re looking to expand the market and improve our differentiation in increasingly competitive markets. And that’s exactly what we’re seeing, the prefilled syringe is delivering is that market growth — market expansion and product growth. So you can expect that to continue, I would say, through the end of the year. Thanks for the question.

Operator: Your next question comes from the line of Akash Tewari from Jefferies.

Akash Tewari: So our high-level math suggests your gMG patient adds are really meaningfully growing. I think it went from 800 to something over 1,500 in Q2. How much of this was the prefilled syringe allowing you to unlock new patients in an earlier line setting, and it doesn’t seem like you’re necessarily cannibalizing from the IV. And really, what’s the correct run rate assumption going forward? And maybe just secondly, on your seronegative trial, can you talk about your confidence on that study reading out well? And why your primary endpoint for that trial is absolute MG-ADL drop versus the MG responder endpoint you’ve used in the past?

Timothy Van Hauwermeiren: Thank you, Akash. And we have the benefit of having our Chief Medical Officer, here today who is on the call, Luc. So Luc, we will give question 2 to you about the seronegative trial, but let’s kick it off with you, Karen.

Karen Massey: Yes. I think you rightly call out, we had a very strong quarter in MG, and that was fueled by prefilled syringe as we expected, expanding the market. Now prefilled syringe allowed us to grow the prescriber base. We had 1,000 prescribers for prefilled syringe in the quarter, 150 of those are new to VYVGART. And that’s exactly what we thought would happen. So we’re really pleased with the launch of prefilled syringe. It’s delivering on what we thought it would deliver. In parallel to that, we are continuing to see growth in our IV business in MG. And that’s because there is a place in the market where certain prescribers and patients prefer the IV option, and that’s in line with our strategy that we want to meet the doctors and the patients where they are.

We want to provide the best efficacy and safety, and we know we have that with VYVGART, and we have multiple options for product presentations so that we can continue to really expand the market in MG, start to move into those earlier lines of treatment. And as the #1 biologic and the fastest-growing biologic in the market, we’re seeing exactly that play out in the market. Luc, I’ll hand it over to you.

Luc Truyen: Thanks, Karen, and thanks for the question. We’re very excited for the upcoming results. So directly related to the change of primary endpoints. So we changed to a change from baseline in MG-ADL because compared to a responder kind of definition and therefore, dichotomy, you retain more information and therefore, intrinsically, it would increase the power. And then secondly, we were also able to negotiate with the agency that based on all the data we already had on seronegatives that we could put the required p-value to be reached at 0.1. So those are 2 things that will help. And then what we also added was a better diagnostic accuracy ascertainment at the beginning to make sure we had the right patients in.

Timothy Van Hauwermeiren: Yes. Thank you, Luc. So to wrap it up, our confidence level is high, but guys, it’s still a clinical trial, which has intrinsic risks. Thanks for the question.

Operator: Your next question comes from the line of Tazeen Ahmad from Bank of America.

Tazeen Ahmad: Maybe my phone is just as excited about your beat as I am. I wanted to maybe ask 2 questions. Can you talk about expectations for increasing competition as the year progresses? Specifically, we’ve been getting a lot of questions about UPLIZNA. How are you thinking about the dynamic for that? And then secondly, can you just talk about the drop-off rate from treatment for patients? Maybe let’s start with gMG because it’s been launched longer.

Timothy Van Hauwermeiren: Yes. Thank you, Tazeen, for joining us. And Karen, I think these are 2 excellent questions for you. Why don’t we maybe kick it off with our views on the competitive dynamics of our space?

Karen Massey: Yes, absolutely. As you say, Tazeen, the competitive dynamics or the competition is certainly heating up — and I would say as the leading biologic and the fastest-growing biologic, our task is to continue to raise the bar on what patients and prescribers can expect in MG. And we’re doing exactly that. So whether you look at our MSE rate, our rapid and sustained efficacy, over 10,000 patient years of safety, and we’ve just talked about all of our product presentations, I think we set the bar very high in MG. Having said that, and we’ve said this before, we welcome innovation to MG market, to the CIDP market. Innovation is great for patients. And we believe that we are very well positioned to continue to lead and to continue to be the fastest-growing biologic within that expanding biologic market in MG.

In terms of your second question on the discontinuation rate, I wasn’t sure if it was for MG or CIDP or both, but I can say for both MG and CIDP, the discontinuation rate is in line with expectations, what you would expect for a chronic medicine. And in particular, as we talked about earlier, I think in MG, what we’re seeing is once patients get into that MSE, they want to optimize their dose and they want to stay on VYVGART. With CIDP, we’re seeing the majority of patients on a weekly. They’re staying with weekly, but we do expect that some patients will start to switch to biweekly and our discontinuation rate is in line with what you’d expect for chronic medicine. Thanks for the question.

Operator: Your next question comes from the line of Rajan Sharma from Goldman Sachs.

Unidentified Analyst: This is Max for Roger. So our question is, so based on the patient numbers you disclosed in the release, it looks like the number of patients on VYVGART for CIDP almost doubled from the end of January to the end of June. Is that a good proxy for the growth rate during the remainder of the year?

Karen Massey: Yes. So thanks for the question. We’re really pleased with that 2,500 patient number. And I think what you can expect is that the growth will continue through the end of the year. I do want to remind you that 2,500 patients is global. And in particular, we had a launch in Japan in the beginning of the year. We recently had the EMA approval. So we’ve also launched in Germany. And I can tell you that both of those markets are off to a very fast start similar to what we saw in the U.S. And I think what those fast starts across all markets demonstrate is that patients and providers have been waiting for innovation to come to the CIDP market, and they’re excited for VYVGART. Thanks for the question.

Operator: Your next question comes from the line of James Gordon from JPMorgan.

James Daniel Gordon: James Gordon, JPMorgan. First question is on the CIDP launch. So I think President, you pointed us to just being reimbursed 12,000 U.S. CIDP patients who failed Ig. But what are you seeing there? And how might it change? We did a survey that said or respondents said that actually quite a lot of the use was already in Ig-naive CIDP patients and the growth is going to increase — or uptake was going to be growing almost as quickly in the naive patients as the experienced patients. So are you seeing any of that? How might that change? How are you shape? Are you going to get some more data in CIDP to try and get use earlier or just it takes time? And then just a follow-up, which was gross margin assumptions.

So I had heard some concerns that gross margin was going to contract as a result of IRA and effectively the discount you have to give and paying to Halozyme. But then I also saw some comments in Zai Lab, which seem to suggest a very significant reduction in production costs for VYVGART, and that presumably will help your COGS ratio a lot. So what’s the gross margin outlook going forward?

Timothy Van Hauwermeiren: Maybe, Karl, you start with the question 2 on cost of goods and the impact on gross margin. And then Karen, we can bring it back to you to where we are on the adoption curve in CIDP and how we see that evolve, right? Karl?

Karl Gubitz: Yes. Thank you, James. Thank you for the question. The gross margin on a year-to-date basis is currently at around 11%. Going forward, we expect that number to remain around 11%. Two offsetting factors going into that. We continue to drive down the cost of sales with our CDMOs as we move to larger sites, bespoke sites with higher yields and economies of scale. And that is the reference I think Zai is probably referring to. Also in cost of sales is the royalty we’re paying to Halozyme. And with Hytrulo becoming a bigger share of the business, and remember, we’re paying royalties only on Hytrulo, not on IV, you would expect the royalty number to increase over time. So the decreasing standard cost of sales plus the increasing royalties should largely offset. And therefore, we expect the cost-of-sales percentage to be around 11%. Thank you for the question.

Karen Massey: Yes. Thank you. And in terms of the CIDP patient dynamics, so we’re 1 year into launch. We’re seeing strong growth and patient adds. We are still seeing in our data that 85% to 90% of the patients are coming from IVIg switches. And you’ll recall, that’s what we expected, and that’s how we define that 12,000 TAM or addressable market as patients that are uncontrolled on their current medicines, the majority of which is IVIg. So we are still seeing that that’s where the majority of our source of business is. That could expand over time, but I would caution that we are very early on the launch curve. We’re just 1 year into the launch. So we have a lot of growth ahead of us and a long way to go even in those 12,000 uncontrolled patients.

To your question about when would we expect to start to get into earlier line patients or some naive patients, we do see some already. Our label enables it. So we don’t need to do an additional study or change our label. Rather, the key here is making sure that we get the payer access in place. And obviously, HCP and patient experience is going to be critical as well. But I think you’re pointing out the most important fact, which is we are very early on the growth curve in CIDP despite the strong uptake.

Operator: [Operator Instructions] Thanks for the question. Your next question comes from the line of Yatin Suneja from Guggenheim.

Yatin Suneja: Just a quick one on gross to net as a clarification. So for this quarter, it was 20%. Could you comment on how do you think it is going to evolve for the second half of this year and then as we go into next year? Yes.

Karl Gubitz: Yatin, thank you for the question. Yes, the gross to net increased to 20%, and that is a year-to-date number. It’s not referring to the second quarter. So that’s an 8% increase from the end of last year to the middle of the year. We talked about the key drivers of gross to net, so I won’t repeat that. But I think what’s really important is that the bulk of the increase is now behind us. Going forward, we will see increases in gross to net, but it will be smaller increases driven by the product mix, i.e., if PFS becomes a bigger share of a business, which it will, you’re going to see gross to net creeping up. But the important thing and what we want to emphasize is that the net revenue per patient has not changed.

And as I mentioned, at least for the foreseeable future, we’re not expecting that to change. PFS comes with unique dynamics, but ultimately, it’s expanding the market, resulting in incremental patients, which will drive revenues. Thank you for the question.

Operator: Your next question comes from the line of Yaron Werber from TD Cowen.

Yaron Benjamin Werber: Great. Congrats on a great quarter. Two quick interrelated questions. Maybe just the first one, give us an update on the IV to subcu switch for VYVGART that you’re seeing so far? And then secondly, we noticed that new ENERGIZE Phase III for empa head-to-head against placebo. So this is not an IVIg switch. There’s almost like a Part A and then a Part B in the Phase III in adults with CIDP. Can you talk about the trial design and the strategy?

Timothy Van Hauwermeiren: Yes. Thank you, Yaron, and thanks for joining us today in the call. Maybe, Karen, you want to talk a little bit about the IV to subcu switch. It’s not really a switch dynamic we’re driving. And then Luc, I would like to call on you to explain a little bit about empa strategy and the high-level features of this placebo-controlled second trial, okay? Karen?

Karen Massey: Yes. Happy to take the question. So as Tim already flagged, our strategy with a prefilled syringe or subcutaneous is not a switch strategy. It’s a market expansion strategy, and we’re seeing that play out in the market. In fact, we’re also seeing — and recall that IV is only indicated for MG. What we’re seeing is continued growth in the IV business. So — and we expect that, that will continue and that we will continue to see a substantial IV business in MG. And the reason for that is, again, the prescriber preference as well as patient preference, there is a portion of patients and prescribers who prefer that product presentation, and we expect that to continue to grow over the coming years. And Luc, if I can hand it over to you for the ENERGIZE question.

Luc Truyen: Yes, it’s energizing. So the approach we’re taking here is that we learned a lot, and we’ve been innovators now in the CIDP field, first bringing efgartigimod forward, which shows you can have up to a 70% response, which would indicate an IGC dependency, but 1/3 didn’t respond. And that then brings us to the question, okay, we are not satisfied. And then we saw the results of MMN with empa, which were quite spectacular, and we started thinking, could we not continue our journey and develop solutions for CIDP patients by also introducing empasiprubart. Once we’ve made that decision, the first thing is the recognition IVIg is, of course, widely used and could we be an improvement over IVIg. But that is not the only approach.

And that’s why we also felt to kind of broaden that ability to get a signaling patient that we should look at patients that are either refractory or naive and look at the power of empasiprubart in that study. Study is pretty simple. It’s a 24-week study against a placebo.

Timothy Van Hauwermeiren: Thank you, Luc. And we believe CIDP will become an increasingly competitive space. And therefore, the clinical development strategy, which you see emerge on clinicaltrials.gov, is basically there to give empa the best possible positioning in that exciting marketplace. Thanks for the questions.

Operator: Your next question comes from the line of Sean Laaman from Morgan Stanley.

Sean M. Laaman: Thinking strategically, I mean, you guys are now in a new era of profitability. I think cash flow will increase to cash was almost $0.5 billion for the 6-month period. And on the other hand, you’ve got a number of clinical trials sort of coming up. I’m just wondering, how do you see the business evolving from here? What do you think of margin? And what’s the balance sheet strategy going forward?

Timothy Van Hauwermeiren: Yes. We’re not going to comment on margins, and it’s not a goal for us to strive for certain ratios and margins as an innovator in our spaces. But let us try to answer the question from a capital allocation point of view, right, Karl, because we are accumulating cash. Maybe you want to comment on this?

Karl Gubitz: Yes. We have a really strong balance sheet, $3.9 billion. We added $500 million, $0.5 billion in the year, but also from an operating cash flow of $400 million in the year, which is really good. I think also as a CFO, I’m really proud to say that the revenue growth is outpacing the OpEx growth. But that resulting in incremental profit quarter-over-quarter. But that in itself is not the goal here. We are focusing on clinical catalysts and revenue growth. Our capital allocation priorities has always been clear. Priority #1 is to deliver on the promise of VYVGART. There’s still a lot of work to do, many indications and studies. Following that is empa and the rest of the pipeline. We’ve talked about it earlier, lots of exciting assets in science, and we want to invest there.

Third, what I want to highlight is the investment in our supply chain. The decisions we’ve made years ago bring us to a position today that we can say we have enough inventory and supply for all scenarios. And we need to make those same decisions for tomorrow, and that requires a lot of capital. Fourth is where we’re starting to think about business development. The company has always looked outside for innovative biology. Typically, we found it in academic centers, but we’re now moving to a stage where we can use the strength of our balance sheet to also look at other biotechs. And fifth, of course, we will get to a stage where we’re going to return cash to shareholders, but that is not really part of the discussion today. So thank you very much for the question.

Operator: Your next question comes from the line of Thomas Smith from Leerink Partners.

Thomas Jonathan Smith: Congrats on the really strong quarter. Just on CIDP, I was wondering if you could comment and maybe provide some updated thoughts on the FDA’s FAERS update from June. Is there any visibility on where FDA is with their analyses or expectations on the timeline of resolution? And then just curious if there’s any feedback you’re hearing from prescribers in the field on this, any kind of evolution in thinking about how they’re approaching switching from IVIg.

Timothy Van Hauwermeiren: Yes. And I’m going to give the floor to Luc to briefly comment on this fares question. And then maybe, Karen, time for you to echo the voice of the field, right, the marketplace. Luc, why don’t you kick it off?

Luc Truyen: Yes. And thanks for the question and allowing to give some context to this. We first talk about FAERS itself. So that’s an important tool in the safety monitoring established in 2004, but it comes with many limitations. So it is actually a building repository or database with inputs from sponsors, providers and patients. But one thing that is missing in there is denominators. And it is, therefore, not really useful to really assign causality or definitely not make a benefit-risk statement. And the reason I’m saying that is that a fast increase in exposure could lead to an increasing reporting. And that is maybe one of the reasons here given, as you saw, the success we’re having in CIDP. Now having said that, we, of course, are monitoring this ourselves and are in conversations with the agency as per normal procedures.

And in that sense, we have to note that this NIS, as it’s called, was issued as a potential safety signal that requires monitoring. Now NIS have 2 levels: one, important potential, which has a much shorter window of evaluation or potential, which typically has a 12- month evaluation period. And at the end of that, in many cases, nothing happens or the monitoring period is extended. But of course, we can never exclude that we have to have a dialogue with the agency about a label change. But at this point, we don’t have sight on that. Given the rate we observe ourselves as being a sponsor of less than 2% of these sort of events with over 2,500 patients exposed, we feel that the current benefit-risk ratio on CIDP is maintained.

Karen Massey: Thank you, Karl (sic) [ Luc ]. And just to add to that, in terms of the feedback from prescribers, I would say the early experience that we hear about from prescribers is very positive. And we continually hear that, that real-world experience mirrors what we saw in ADHERE in the clinical trial. The other positive signal that we see is that we are investing in patient activations and many patients are going in to ask their neurologists about VYVGART for CIDP. And what we’re seeing is a very high grant rate when the patients ask. And what that means and what that demonstrates is that neurologists have confidence and belief in VYVGART in both the efficacy and the safety profile of the medicine. And that’s obviously translating into the strong patient growth numbers that we’re seeing in the quarter as well. So I think really positive early experience.

Operator: Your next question comes from the line of Myles Minter from William Blair.

Myles Robert Minter: Congrats on the quarter. It’s following up on this actually. I think at AAN, you disclosed the 1,316 patients as of January 31 on Hytrulo CIDP, the worsening rate was 3.3%. It’s pretty low now that you’ve got greater than 2,500 patients on therapy. Can you update us on that rate there? Or do you plan to update us? And then the second question is just on the Phase IV IPIg to efgartigimod switch study in CIDP. Are we still expecting data for that this year?

Timothy Van Hauwermeiren: Yes, Myles, I’m going to give you a very brief answer. So we are monitoring all AEs, of course, in the real world. This specific AE of severe CIDP worsening is actually not going up. It’s rather stable or going down. It is a very small number. And I want to remind the audience that in the CIDP setting specifically, any therapeutic switch you would consider as a physician carries the risk of CIDP worsening. This is simply a known fact in the space. What I do want to call out is the transformative benefit which we see for VYVGART in so many patients. The amount of patient anecdotes which are reaching us every week in terms of improvement in functionality, I think, is just impressive. And to conclude, from where we sit, we don’t see a real benefit-risk change.

The switch study, I think, is well on track. It’s enrolling, and we will keep you updated when the study progresses, finalizes. And as you can expect, data will be reported at the clinical conference. Thanks for the question.

Operator: Your next question comes from the line of Samantha Semenkow from Citi.

Samantha Lynn Semenkow: Just one on the pipeline for me. I’m wondering if you could just share some context on your decision to advance the clinical development of ARGX-119. Just the data you’ve seen so far in CMS, does it increase your enthusiasm as well for ALS and SMA? And just more broadly, I’m wondering what the overall market opportunity across indications for 119 is that you’re envisioning?

Timothy Van Hauwermeiren: Sam, thank you for the question on 119, our latest kid on the block. And we have the benefit of having Luc here. So Luc, could you contextualize the go decision for CMS, please? And what is your view on potential read-through on other indications? And then I will briefly summarize how we look at the totality of the opportunity, okay?

Luc Truyen: Yes. Yes, certainly. So we chose indication CMS, which is an ultra-rare indication because that for us will be the best in human proof of the biology at work of an agonistic antibody for a mask. And therefore, we designed a small also driven by the availability of patients, but highly densely monitored with readouts and also building intra-patient dose escalation to come to the answer is the proof of biology. And so the basis for our decision is that we did find this. We found that on a clinically relevant endpoint correlated with a digital endpoint and also with a clinician-observed strength in the leg. And so the endpoints are 6 minutes walk test, a digital measure of cadence and strength on the MG that we have that signature with an increasing ability to walk longer distances in these patients.

And that really made us say we have proof of biology, and we’re going to continue the path in CMS as far as we can. With respect to read-through to the other indications, there should be some correlation, but there are 2 different things here. One is that the diseases that we’re testing, ALS and SMA are, of course, complex with different biology. So we should not simply assume that there’s a 100% read-through. And that’s why we designed ALS development with a POC testing multiple doses. SMA is currently being designed.

Timothy Van Hauwermeiren: Thank you, Luc. So if we zoom out on 119, it’s a typical argenx molecule or program. It comes straight from the innovation playbook, right? So a novel target where we collaborate with the world experts, a hell of an antibody, which we made and then the potential pipeline in a product because we’re now already in 3 indications, CMS, ALS, SMA. But just think about a molecule which has the potential to rejuvenate the neuromuscular junction that has exciting potential across a number of nerve regeneration indications, but also muscle diseases. So stay tuned. We’re still assessing further potential in more indications to come. And thanks for the question on 119.

Operator: Your next question comes from the line of Gavin Clark-Gartner from Evercore.

Gavin Clark-Gartner: On the great progress. So this week, AstraZeneca noted that they expect 40% of MG patients to be on self-administered therapies by 2030. I’m curious if this aligns with your market research and very early PFS experience seen to date.

Timothy Van Hauwermeiren: Yes. Thank you, Gavin. And it’s not to comment on market research results from colleagues in the field. I think what we tend to agree is that self-administration is important for patients, as we are actually already evidencing today. And remember the R&D Day of last July, where we basically increased our expectations for the total 10 in MG. PFS and self-administration actually is going right after that box, which we showed of 23,000 extra patients, which we added in addition to the initial 17,000, which we had at the start of the MG launch. So very, very important. But we cannot comment on these numbers specifically.

Operator: Your next question comes from the line of Andy Chen from Wolfe Research.

Unidentified Analyst: This is Emma on for Andy. Congrats on the strong quarter. In the press release, it’s mentioned that you’re still in the early stages of MG and CIDP launches. We’re just curious how you guys know the launch is still in early stages. Is it because prescriber coverage is still a small percent? Or are new prescriptions still rising? Or are new numbers still just far away from theoretical TAM?

Karen Massey: Yes. Thanks for the question. And I think it’s all of those factors. So let’s take it step by step. So first, in MG, I mean, we’re 14 quarters in. But what we continue to see is that strong quarter-over-quarter patient growth, as you said. And I think we’re fueling that growth with new innovations, for example, bringing a prefilled syringe to the market. And as Tim just talked through, we see that the biologics market — share of market will grow in MG. We estimate that it will grow by about 25,000 patients. We also continue to invest in VYVGART and getting the broadest label for VYVGART. So we have our seronegative and our ocular MG studies. And that means that the total addressable market in MG ends up being around 60,000 patients.

So that’s where we get to. We’re still — despite being 14 quarters in with continuous growth, we’re still early in the market opportunity for MG. Likewise, with CIDP, we’re only 1 year into launch with CIDP, and we’re seeing continued strong uptake in the market. We’ve said that the TAM there is 12,000 patients, so we still have a way to grow. And I think over time and certainly over the long term, you can start to imagine that with more innovation coming to market, we just talked about empasiprubart potentially for CIDP, you can start to see that, that market will start to grow beyond the 12,000 as well over the long term. So I think if you take a step back, when you look at our continued growth that we’ve delivered since the VYVGART launch and the fact that we have 6 Phase III studies reading out in the next 18 months, you can see that as a company, we’re very much on the early side of the growth trajectory.

Thanks for the question.

Operator: Your next question comes from the line of Douglas Tsao from H.C. Wainwright.

Douglas Dylan Tsao: On all the progress. I’m just curious, in terms of the PFS, we’ve talked to some physicians who have said that they’ve had some challenge in terms of getting patients access to the product. I’m just curious, is that sort of one-offs? Or is there still a situation where perhaps demand is sort of exceeding the available supply?

Karen Massey: Yes. Thanks for the question. Look, I think it’s — we’re only 1 quarter into launch. And normally, with these — into the launch of PFS, we always say that with any new launch, it takes about 2 quarters to get access in place. And I think we sometimes forget about that because our access team does such a great job and always beats expectations on that. So of course, in early stages, there are going to be some questions like that or some feedback while we get access into place. What we see though is very — is that we have 70% of commercial lives covered with prefilled syringe. And in general — and we’re adding to that all the time. In general, the feedback that we get from the field is that prescribers are very pleased with how quickly we’re getting access for patients to prefilled syringe. I think that’s reflected in the strong uptake.

Karl Gubitz: And Douglas, if I can add, we definitely have enough inventory available. It’s not driven by inventory.

Operator: Your next question comes from the line of Victor Floch from BNP Paribas.

Victor Floch: I have basically just one question on ITP, actually. I was wondering if you could update us on the feedback since launch. Because if I remember correctly, your ambition at the time was to position VYVGART as the first TPO-RA option basically as a fourth-line treatment. So I was basically wondering if the physician feedback so far in Japan basically supports this? And if by any chance, you could also share your market share in this market in Japan.

Timothy Van Hauwermeiren: Yes. Thank you, Victor, for the question on ITP. So the launch in Japan for ITP is actually going well. And what we find exciting is to see that in the real world, the clinical data are actually perfectly merit. So we see about a 50% response rate. The drug is landing first in the last line of ITP patients after they fail steroids, IVIg and TPOs. So very refractory patient population and still a very nice 50% response rate. And if patients respond, just like similar in the clinical trial, they respond very quickly and the safety profile of the product is also differentiating. I mean physicians badly need a fast-acting safe drug. So I think the drug is landing very well. Uptake is nice, and I think we will be gradually moving our way up in that treatment paradigm. So all in all, according to plan. Thanks for the question.

Operator: Your final question comes from the line of Charles Pitman-King from Barclays.

Charles Pitman: Just a final one, please, just on the kind of pricing dynamics. Just thinking about the Medicare process for argenx. I’m just wondering what potential quarterly fluctuation is there between assuming a Medicare discount and then kind of rightsizing it? What kind of visibility do you have to have confidence in your comments that the net price per patient is going to remain flat going forward as we think about trying to forecast your sales on a quarterly basis going forward and any potential fluctuations that might come as a result of that?

Timothy Van Hauwermeiren: Yes, Charles, let me kick it off and then hand over to Karl. But we will not get into the complexities of the U.S. health care system in today’s call. But I think what I want you all to remember from the call is the confirmation right, Karl, that the net contribution for an MG and CIDP patient is actually not changing. And if and when we think it’s about to change, we will definitely flag it to this audience. Anything you would like to add?

Karl Gubitz: No. I think that’s all. Thanks, Charles. Thanks for the question…

Operator: And this concludes today’s conference call. We thank you for your participation, and you may now disconnect.