Earnings Call Transcript - ARGX Q1 2020

Operator, Operator

Thank you. A press release with our First Quarter 2020 Business Update and Financial Results was issued earlier today and can be found on our website along with the presentation for today's webcast. I'm joined on the call today by Tim Van Hauwermeiren, Chief Executive Officer; Keith Woods, Chief Operating Officer; and Eric Castaldi, Chief Financial Officer. 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 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 will now turn the call over to Tim.

Tim Van Hauwermeiren, CEO

Thank you, Beth, and welcome everyone. I first want to wish you and your family well during a time when COVID-19 has affected all of our lives in a myriad of ways. On slide 3, here at argenx, we are committed to protecting and supporting our employees and the communities where we live and work. We have had a work-from-home mandate in place since March, except for certain essential roles like those in our labs. We continue to have all work-related global and domestic travel suspended. Even with this travel restriction, we have continued to stay close to all of our stakeholders through virtual conferences and meetings, including the investment community, physicians, patients, patient advocacy organizations, and payer groups. We have also continued to work closely together as one team, despite being in different locations. I'm very proud of the important progress we've been able to make across the company since the start of the year. This is largely due to the investment we have made in IT infrastructure to accommodate our global expansion over three continents, but also due to the hard work, dedication, and flexibility of our teams, allowing for a seamless transition to conducting business virtually. Even during a time when a lot is uncertain, we are confident in the strong fundamentals of our business, including a differentiated antibody pipeline and a solid financial position that allows us to advance our growth and development strategy and ultimately deliver meaningful immunology innovations to patients who need them. Moving on to the topics of our call in slide 4. We have a focused agenda today. The primary goal of the call is to provide you with an overview of the impact of COVID-19 across our business and detail what we're doing to mitigate the situation. We will also update you on the development of ARGX-117, our complement inhibitors targeting C2. We have delayed the start of our Phase 1 trial in healthy volunteers, but in the meantime, we have had the opportunity with one of our immunology innovation program collaborators to launch a first-in-human trial of ARGX-117 in COVID-19 patients. There's a growing understanding of the role of the complement system in driving severe respiratory symptoms associated with the virus. We feel we are upholding our social contract to help tackle this global health crisis, while also gaining critical information about ARGX-117 during a time when it is difficult to enroll trials in healthy volunteers. We also want to use this call to talk about the updated data presented this week on efgartigimod in our third beachhead indication, pemphigus. Professor Matthias Goebeler presented the detailed Phase 2 data at the Society for Investigative Dermatology Annual Meeting that is being held virtually. The data showed a promising tolerability profile and speed at which efgartigimod can push patients into disease control and complete remission when combined with suboptimal doses of prednisone. Later in the call, Keith is going to cover our ongoing preparations for our planned 2021 U.S. commercial launch of efgartigimod in generalized myasthenia gravis. The last few months have encouraged us to look at our launch preparations with a new lens and we have scenario planning around the unknown and potentially longer-term effects of coronavirus infection. Eric will then walk through our financial results for the quarter. With that, I'd like to update you on our ongoing programs. We have not paused any of our ongoing clinical trials and are diligently monitoring that our patients and physicians are taking appropriate measures to stay safe while participating in the studies. To enable patients in argenx's clinical trials to receive study drug with continuity, we have implemented telehealth and remote monitoring activities and more flexible dosing schedules into protocols where possible. On slide 5, ADAPT, our Phase 3 trial of efgartigimod in gMG, remains on track. I must pay tribute here to the hard work from our MG team. We enrolled this trial faster than anticipated which turned out to be an incredibly important milestone particularly in view of the current situation. By the time the shelter-in-place restrictions went into effect, all 167 patients in ADAPT had already passed the eight-week time point for the analysis of the primary endpoint and the majority of patients had already rolled over into the open-label extension. As an update today, all patients have now completed the 26-week primary trial. We will be reporting top-line data mid this year, which sets us up to file a BLA before the end of 2020, assuming success, and to launch in 2021 in the United States. Additionally, we are on track to file in Japan in 2021. We are very pleased with the high degree of rollover to the open-label extension study, which remains firmly on track. We are working closely with our CRO and trial sites to facilitate patients staying in the study. Fortunately, the MG-ADL assessment is one that can be accommodated remotely. The primary goal of the OLE is to gather the necessary safety data for our BLA filing, and we remain confident this will happen. Supply chain and manufacturing remain crucial components of our clinical development and commercial launch planning. We have partnered with Lonza and Zephyr, who have shown their strength through this crisis. Our global supply chain of drug substance and drug products remains unaffected and on track to support the launch in 2021. Our pipeline overview slide is on slide 6. Our trials of efgartigimod that have already initiated remain open, including the Phase 3 ADVANCE trial evaluating IV efgartigimod in primary ITP, the Phase 2 ADHERE trial evaluating subcutaneous efgartigimod in CIDP patients, and the 11 patients still on study in the Phase 2 trial evaluating IV efgartigimod in pemphigus. We do expect recruitment rates for the ITP and CIDP trials to be slowed due to COVID-19. We will provide an update on any potentially revised timelines as we have greater clarity, but it's currently too early to estimate the real effect. We are fortunate in that we run global trials in North America, Europe, and Japan, so we are not confined to one affected area for patient recruitment. We will use this to our advantage as best as we can in opening new sites. Importantly, we do not currently foresee a delay to the launch of new efgartigimod trials and our guidance remains intact. Two additional ITP Phase 3 trials are on track to start before the end of the year, which we expect, along with ADVANCE, will support registration for efgartigimod in primary ITP assuming positive data. These trials include the ADVANCE two confirmatory trial evaluating IV efgartigimod in approximately 50 primary ITP patients that is expected to start in the first half of 2020 and the ADVANCE subcutaneous trial evaluating both IV and subcutaneous maintenance efgartigimod that is expected to start in the second half of 2020. The PV registration trial is on track to start by the end of the year. Our decision to move to Phase 3 was based on the strength of the data we saw in Phase 2, which I will walk through shortly. And finally for efgartigimod, we do still plan to announce our fifth indication this year. Before moving on, I'd like to quickly touch on how our partners have handled ongoing clinical trials in slide 7. Janssen has paused many trials globally due to COVID-19. At this time both CULMINATE and the triple combination trial of cusatuzumab in venetoclax and azacitidine are both paused for enrollment. Additionally, Janssen has paused the launch of new studies of cusatuzumab. LEO Pharma has paused its trial of LP0145 for the treatment of atopic dermatitis. This is the compound that was previously known as ARGX-112. We cannot say today when or under what circumstances the cusatuzumab trials or those in the hands of LEO will be up and running again. We will be sure to update our stakeholders once we know more. Enrollment remains open in AbbVie's Phase 1 trial of ABBV-151, which was previously ARGX-115. Now on to ARGX-117. You will note that we did not start a Phase 1 trial in healthy volunteers in the first quarter. We felt it was not prudent to initiate this trial in the current environment given challenges with recruiting healthy volunteers. We did start the Phase 1 dose-escalation trial in COVID-19 patients as I mentioned at the start of our call, and I'd like to walk you through the brief rationale for this shown on slide 8. First, it has been a difficult few months to watch tragedy strike the health care and broader communities. When Professor Bart Lambrecht, our collaborator from VIB-Ghent University Hospital and the Belgian National Commissioner for the pandemic approached us about sponsoring a trial, we felt it was important and our duty to participate. Second, we always base our development decisions on strong biological rationale and there is one with ARGX-117 targeting C2. The role of the complement system is known in the activation of an inflammatory response that can lead to acute respiratory distress syndrome in coronavirus infections. C2 sits at a junction of the classical and lectin pathways which are both implicated in the downstream inflammatory response. We will first conduct a dose-escalation study in patients in recovery from the coronavirus and then shift to dosing patients at risk of developing ARDS. Through this first-in-human trial, we will also gain important data points about ARGX-117, including pharmacokinetics, pharmacodynamics, safety, and tolerability and possibly an optimal go-forward dose; all of which can be part of our broader development strategy. We still intend to launch a Phase I trial of ARGX-117 in healthy volunteers before the end of 2020. We can then move forward with our Phase II strategy in severe autoimmune disease, including our first planned indication, multifocal motor neuropathy. Moving on to other news. As you saw in the press release from this morning, detailed data were presented this week from the adaptive Phase II trial of efgartigimod in pemphigus at the SID Annual Meeting. The meeting changed to be virtual and our prerecorded oral presentation became available online yesterday. We are grateful to Professor Goebeler from University Hospital of Würzburg for his flexibility in presenting the data in this less-traditional format. Slide 9. Recall, in designing this trial, we took a unique and adaptive approach to evaluate the potential of efgartigimod in pemphigus while adjusting in a single variable way the dose between 10 and 25 mg per kg, the dosing schedule, and the dosing paradigm between monotherapy and combination therapy with corticosteroids. We also assessed the ability to taper steroids once patients reach end of consolidation. The updated data shown this week are from a data cutoff of March 25, 2020 and included the below highlights that are also shown on Slide 10. 90% or 28 of 31 patients evaluable for efficacy achieved rapid disease control. The median time to disease control for monotherapy and combination therapy was 15 and 20 days respectively. The majority of patients reached disease control after one or two infusions. Complete clinical remission was observed in 70% or seven of the 10 patients receiving an optimized dosing regimen determined to be efgartigimod, dosed at least every two weeks in combination with oral prednisone at a dose of 0.25 to 0.5 mg per kg. 73% or 11 of the 15 patients receiving 25 mg per kg efgartigimod achieved end of consolidation including patients who then successfully tapered their steroid dose and 11 patients are currently still on study. We had an independent data monitoring committee that assessed the safety and tolerability profile of efgartigimod and they felt it was favorable. This is very consistent with what we have seen across all our efgartigimod trials. Patients enrolled in the last cohort of the pemphigus trial will be receiving efgartigimod for up to 34 weeks, which is the longest treatment period to date, excluding open-label extension studies. Taking these data together, we are confident that we have shown important proof-of-concept in our third beachhead indication and have gathered the necessary information to design a robust registration trial in PV. With that overview, I'll now turn the call over to Keith for a discussion of our commercial readiness.

Keith Woods, CFO

Thank you, Tim, and good morning everyone. As Tim noted, we are very excited to be nearing the top-line data readout from our Phase III ADAPT study in gMG patients. This is a transformational moment for the company and will mark a shift towards our goal of being an integrated immunology company. We built an innovative trial design for our Phase III ADAPT trial that we believe closely mirrors how physicians would use efgartigimod in practice. As we scale up our commercial team in Boston and throughout the U.S., these data will provide us with unique insights into patient management and how efgartigimod could integrate into the current MG treatment paradigm. As you look on slide 11, right now if you look at the current MG treatment landscape, we believe we can play across the spectrum of patients from earlier in the treatment cycle to the more severe refractory patients. gMG first presents with ocular symptoms and patients receive acetylcholinesterase inhibitors or ACIs at diagnosis. As symptoms become more generalized, physicians will move to steroids. But in order to taper steroids and reduce the significant side effect burden experienced by the patients, physicians will use broad-spectrum immunosuppressants, which can take time to kick in and come with their own set of side effects and risks. Agents like IVIg, rituximab, and Soliris are used later in the progression of the disease when earlier agents are no longer effective. Our goal for efgartigimod is to allow for earlier steroid tapering and to delay or even eliminate the need for broad immunosuppressants. Moving to slide 12. If we take this positioning and look at the addressable market, we believe we can target about 30% of gMG patients in the U.S. or about 20,000 patients based on a U.S. MG patient population of 65,000. This would be all generalized MG patients who require treatment beyond steroids and ACIs. To reach these patients and the 16,000 neurologists who treat them, we will start to build a sales force of approximately 70 representatives assuming a positive data scenario. We've already built a network of medical research liaisons who have been engaging with neurologists across the country for the past 18 months and have more recently built our thought leader liaison network. Moving to Japan, we believe there are about 20,000 patients that suffer from MG being treated by 200 to 300 neurologists in Japan. The concentrated nature of the MG market and the universal health care coverage make Japan a very appealing market for our second launch. The COVID-19 pandemic has not slowed our commercial readiness progress, but it has made us stop and consider the environment into which we could be launching our drug next year. Our team has committed to preparing for all scenarios including a world that generally returns to normal where we can activate our sales force to be present in doctors' offices and hospitals, or a world that is in full shutdown after another outbreak where we have to launch through virtual and digital interactions only, and somewhere in between where we believe we have to embrace a new normal and rely more heavily on digital and virtual capabilities while still having the option to see customers in person. We will be ready for any of these scenarios and have organized work streams across all key launch functions to consider the implications of this new normal. To wrap up and to reiterate Tim's earlier comments, our global supply chain remains on track for launch. We are grateful to be working with Lonza and Zephyr for our global manufacturing and have witnessed the capabilities of both organizations to activate risk mitigation strategies where necessary. We also continue to prioritize the development of our subcutaneous efgartigimod products in MG to provide optionality for patients, physicians, and payers. We are planning to meet with the FDA this year on a potential bridging strategy and will communicate once we have a clear path forward. With that, I'd like to turn the call over to Eric for a review of our financial results.

Eric Castaldi, CFO

Thanks, Keith. Slide 13 covers our first quarter 2020 operating results, which are detailed in today's press release and regulatory filings. As you can see on this slide, total operating income reached €23.4 million for the first three months of 2020, a decrease from the same period in 2019 due to a milestone payment we received last year under the AbbVie collaboration agreement. R&D expenses for the three months ended March 31, 2020, were €94.9 million compared to €34.8 million for the same period in 2019. SG&A expenses were €25 million for the first three months of 2020 compared to €11.3 million for the same period in 2019. The increases in R&D and SG&A expenditures over the prior year have been driven by the progress made with our late-stage pipeline, including higher consulting and personnel expenses, higher clinical trial costs, and manufacturing expenses, and the recruitment of additional employees to support ongoing activities. We expect operating expenses to continue to increase this year as we further advance our pipeline and prepare for future commercialization. For the first three months of 2020, financial income amounted to €1.7 million compared to €3.5 million for the same period in 2019. Exchange gains totaled €20.8 million for the three months ended March 31, 2020, compared to €9.5 million for the same period in 2019. The total net loss for the three months ended March 31, 2020, was €80 million compared to a total comprehensive profit of €6.7 million for the same period last year. You will recall this profit was an outlier due again to the milestone payment we received last year from AbbVie that was mentioned previously. We ended the first quarter of 2020 with €1.3 billion in cash, cash equivalents and current financial assets compared to €961.6 million for the same period in 2019. I will now turn back the call to Tim.

Tim Van Hauwermeiren, CEO

Thank you, Eric. Slide 14. 2020 is off to a strong start and we expect to have an especially exciting year as we meet the top-line data readouts from our ADAPT trial and advance efgartigimod toward commercialization. We continue to have strong fundamentals across our business, including our pipeline of late-stage product candidates with efgartigimod being evaluated in four indications and cusatuzumab in AML and high-risk MDS, as well as our growing pipeline of early-stage candidates with ARGX-117, ARGX-118, and ARGX-119 this year. We continue to expect up to five Phase III trials and seven earlier-stage clinical trials to be ongoing this year in indications that are synergistic to our growing commercial infrastructure. We are very enthusiastic about the prospects for efgartigimod in MG and are preparing for success by growing our commercial team. As Eric mentioned, we are grateful to have a strong cash position during this time of uncertainty thanks to the ongoing support of our shareholders. Before turning the call over to your questions, I would like to take the time to acknowledge and applaud those on the frontline fighting this global pandemic, in particular those nurses and physicians providing direct care for COVID-19 patients including some of our own employees who have devoted their own time to this cause. With that, I will now turn the call over to the operator for your questions.

Operator, Operator

Thank you. We will now be taking our first question from Ted Tenthoff at Piper Sandler. Please go ahead. Your line is open.

Ted Tenthoff, Analyst

Excellent. Thank you so much and great update. Glad to hear everyone is doing well. Just with respect to the upcoming myasthenia gravis study, Keith, I appreciate all the commentary on potential for buildout. How quickly would you guys be able to file the BLA? And what would be your plans for Europe? Thank you so much.

Tim Van Hauwermeiren, CEO

Thank you, Ted, and good to hear your voice. So with the Phase III data readouts planned for mid-2020, we say that we are on track to file the BLA by the end of the year. That basically puts us in position for a launch in 2021. How long exactly the review procedure with the FDA will take, we do not know. But I would like to call out our earlier announcement that actually we did receive a fast track designation from the FDA.

Ted Tenthoff, Analyst

Yes, congratulations on that. And then what would be plans for Europe? Is that something you would consider taking on yourself? I appreciate the commentary on Japan. But would Europe be a potential partnering opportunity, or would you expect to launch there yourselves as well? Thanks so much.

Tim Van Hauwermeiren, CEO

Yes. What we said in public is that priority number one is going to be the U.S. Priority number two will be Japan. And then we have declared our intention to be active in Europe as a third priority where we called out the big five as the countries where we may become active. But that is our third priority.

Ted Tenthoff, Analyst

Excellent. Thanks so much and beloved.

Tim Van Hauwermeiren, CEO

Thank you, Ted.

Operator, Operator

We will now be taking our next question from the line of Christopher Marai from Nomura. Please go ahead. Your line is open.

Christopher Marai, Analyst

Good morning. Thank you for taking the question. I was wondering first maybe for Keith, if you could describe your plans for the launch with respect to potentially launching this drug in a virtual mode? And then secondarily how ready you are for initiation of home infusions. How much experience do the KOLs have with that right now? And how much do you expect docs to be able to adopt home infusions at the early part of the launch? And I have a follow-up. Thank you.

Keith Woods, CFO

Yes. Chris, thank you for the question. So as I mentioned in the prepared statements, we're preparing for all scenarios across our launch work streams. Obviously, it's much more difficult to launch when you can't schedule in-person interactions with the physicians and the patients and the payer groups. However, we are managing to work with all three of those groups even in this current situation. We're not alone in this scenario. As you know, many other companies are in this situation. What I can say is maybe we're a little bit lucky that we're not launching this year when COVID-19 hit us for the first time and we were into full launch because we still have time to learn, plan, and adapt. And that's basically what we're doing, looking directly to more virtual and digital approaches while at the same time still trying to be innovative in our approach.

Christopher Marai, Analyst

Okay. And then just with respect to the home infusion, how prepared are you? And how much experience do physicians have with your drug and home infusion dosage?

Keith Woods, CFO

One of the steps that we have taken in clinical trials has been to make the availability of home infusion possible for some of our sites. So we have started to convert over to that in our clinical trials. We already know that many gMG patients that receive IVIg will get that from a route of home infusion. So it is something that we were already exploring and speaking with the home infusion companies in preparation for launch. So I believe being able to adapt to this as a location for treatment should not be a challenge for us.

Christopher Marai, Analyst

Okay. And then just one last one, with respect to potential for less frequent dosing compliance-type issues that could arise whether it's in a trial or otherwise. Obviously in MG the antibody is causal to the disease. But I was wondering if you could frame, and maybe Keith can frame this from a market access perspective or a market perspective compliance perspective how often you expect patients to be receiving doses and the potential for them to delay doses from what's happened sort of in the trial setting. How are you thinking about that? How are maybe some KOLs thinking about that in practice? Thank you.

Keith Woods, CFO

Yes. Well, I guess first of all, in regard to the dosing, I don't want to speculate. I'm looking forward to seeing the Phase III data. I do remind you, Chris, as you know that in the Phase II data, 75% of the patients had a response of at least six weeks. In reality, the majority of those patients were still in response at week 11. So we'll still need to see the data. When it comes to patients being compliant with their medication, when they have a customized dosing schedule, many patients are currently being treated. So I would call the example to chronic IVIg where, if you look at patients with MG that are treated with IVIg, they are not all on an identical dosing schedule. Basically, these MG patients can feel the beginning of the return of symptoms and then they will want to get their medication. So I believe that how we've set this up will allow patients to be customized. But at the same time, they will want to be treated because they want to live a symptom-free life.

Christopher Marai, Analyst

Thank you.

Operator, Operator

We will now be taking our next question from Tiago Fauth from Crédit Suisse. Please go ahead. Your line is now open.

Tiago Fauth, Analyst

Hey guys, thanks for taking the question. I had a follow-up on enhanced formulation. I'm curious if you generated additional in-patient data to support every-other-week subcutaneous injection. How does that stack up against the model data? And just a quick follow-up on pemphigus, if you could just recap the target population positioning for efgartigimod relative to rituximab and the commercial opportunity that we have in that indication? Thanks a lot.

Tim Van Hauwermeiren, CEO

Thank you, Tiago for the question. You know that we did initiate the CIDP study using the efgartigimod subcutaneous product. Initially, that is going to be based on a weekly dosing, Tiago. So we haven't made it yet to an every-other-week dosing schedule. That remains to be explored in the future of that trial or other trials. When it comes to pemphigus' competitive positioning, you need to know that pemphigus is a very bad autoimmune disease with too few tools in the toolbox. Today people actually have not much more than high-dose corticosteroids, maybe some of the IFTs, and then rituximab. Antibody cusatuzumab, of course, is a major innovation in this space. It's not a solution for all. We basically see a relatively slow onset of action. Patients need to be managed with high doses of corticosteroids until the effect of rituximab kicks in. We also see a pretty high relapse rate. So from a competitive positioning point of view, we look at the world in terms of more tools in the toolbox, not less. I think efgartigimod is hopefully going to build its own unique proposition based on its rapidity of onset of action and then secondly the ability to taper steroids very fast. So I think that's very complementary to, for example, rituximab positioning.

Tiago Fauth, Analyst

Got it, thank you very much for the color.

Operator, Operator

We will now be taking our next question from the line of Graig Suvannavejh from Goldman Sachs. Please go ahead. Your line is now open.

Graig Suvannavejh, Analyst

Great, thank you. Good morning. Good afternoon. I've got two questions. And thank you for taking them. One, I'm curious about ARGX-117. And I saw you're doing COVID-19. When might data be initially available? I know it's early days. But what are you thinking about that? And then a quick follow-up there is what would be the plan if you actually had positive data? And would that be in a combination-study setting? Just how are you thinking about the potential further development plan there? And then just one on the model, I know that the guidance is on OpEx to continue growing. I'm just wondering if there's any lumpiness over the balance of the year in terms of SG&A or R&D as we look out throughout the year. Thanks.

Tim Van Hauwermeiren, CEO

Thank you, Graig. I will give the second question to Eric in a minute. So, concerning ARGX-117 in COVID-19, this team has been pulling the trial together at record speed in very close partnership and collaboration with the regulators, the Belgian FDA and our academic partners. So the deal, I think, is that when we have positive data, we will embark on a Phase II trial to build on these positive data. When exactly we're going to release data remains to be seen. Here in Belgium for the moment, the COVID-19 epidemic really cooled off. We are coming gradually out of the lockdown. Experts believe that it's going to be a balancing act between relaxing the measures and seeing again an increase of COVID-19 patients. So it will depend a little bit on how this pandemic is going to evolve and how fast we can get patients into the study. Eric, I would like to refer to you for the second part of the question regarding R&D and SG&A expenses.

Eric Castaldi, CFO

Thank you, Tim. Graig, you will see our ambition levels increasing as we progress the pipeline. We have additional registrational trials with efgartigimod and are starting clinical development with earlier assets. Also, keep in mind the funding for 40% of the cusatuzumab development. All of this will come with increased spending, so the burn rate will definitely rise significantly.

Graig Suvannavejh, Analyst

Thank you.

Operator, Operator

We will now be taking our next question from the line of Akash Tewari from Wolfe Research. Please go ahead. Your line is now open.

Akash Tewari, Analyst

Hey guys. So looking at your Phase II MG data, it seems like the MG-ADL drop didn't plateau after your four doses. In fact, if you kept dosing it felt like you may have been able to drop it a few more points. Can you go over biologically? What's going on in these symptomatic patients? And what does that mean for your ability to maybe space out the dosing of a long-term extension or get patients into a long-term remission? Additionally, given you're enrolling a more moderate to severe population in the Phase III study, is there any reason to believe an FcRn wouldn't show similar efficacy to a C5 inhibitor in this type of severe refractory population? Looking back at the C5 studies, it didn't necessarily seem like a higher MG-ADL score at baseline led to a greater drop in corresponding scores at the week four endpoint. So I would be curious to get any color on that. Thanks.

Tim Van Hauwermeiren, CEO

Thank you, Akash for these questions. The way we configured the dosing schedule for MG in Phase II is basically on the pharmacodynamics curves or the total IgG curves. What you get to see in the Phase II publication, of course, is the total curve showing the means for the population we tested, not the individual patient curves. We have these individual patient curves. We feel comfortable to basically see that after the last weekly infusion you max out on your pharmacodynamics effects, which is in sync, by the way, with the Phase I data, where we played around with dose and dosing frequencies. We think we have maximized the IgG reduction through the current block of four weekly infusions. Your question on C5 is an interesting one. Actually, there is no scientific or biologic rationale why an FcRn blocker would not be able to play in a severe and refractory patient population. We all know that complement recruitment is just one of the three pathogenic modes of action of these pathogenic autoantibodies. We expect that by removing these autoantibodies, we should at least have the same effect as a complement blocker, potentially a battery effect because we also take care of receptor blockade, and receptor cross-linking and internalization-reducing signaling. We agree with you that there is no real correlation from the data we have or the data we have seen between a disease score and the delta you can get in terms of ADL or QMG. So I think the jury is out there.

Akash Tewari, Analyst

Thanks so much.

Operator, Operator

We will now be taking our next question from the line of Derek Archila from Stifel. Please go ahead. Your line is now open.

Derek Archila, Analyst

Hi guys and thanks for taking the question. Congrats on all the progress. Just a couple of quick questions on MG and one just an update on pemphigus' history. So on MG, can you just provide us what the run-in sort of potential of the Phase 2 study for the patients when they were on standard of care? That's a question that you frequently get. And then secondly in the Phase 3 results how much information will we actually get on re-treatment of the active arm?

Tim Van Hauwermeiren, CEO

Thank you for the questions, Derek. I don't know by heart the run-in period for the patients in the Phase 2. I think that's disclosed in the publication. I think we are expecting the standard washout periods. I do remember that for IgG-based medication that was six months. What we also said in public is that on average a lot of the patients, or all of the patients which came into the study had been for substantially longer periods on stable doses of background medication than the periods we were requiring according to protocol. So we do know they were on stable doses, and therefore we do not believe that background medication or changes in the background medication may have influenced the Phase 2 data. In terms of retreatment information, I think we are still thinking internally on the specifics of the top line Phase 3 data communication. Expect us to share primary endpoint analysis, assessment of safety and tolerability, and possibly some trends on some of the secondary endpoints.

Derek Archila, Analyst

Got it. And then a quick one on pemphigus. I just wanted to know, as you think about the Phase 3 trial, is this something that you're going to bring the IV forward, or is this an opportunity to also bring in the enhanced subcutaneous version into that trial? Thank you.

Tim Van Hauwermeiren, CEO

Thank you for that question, Derek. So we will be giving more specifics on the Phase 3 trial design later in the year when we disclose the Phase 3 trial design in its totality. We typically like to do that in the context of a KOL event, and we're currently thinking about how we could organize that in today's virtual world. So stay tuned. The details of the Phase 3 will be disclosed in the second half of the year.

Derek Archila, Analyst

Excellent. Congrats on the progress and stay safe.

Tim Van Hauwermeiren, CEO

Thank you, Derek.

Operator, Operator

We will now be taking our next question from the line of Matthew Harrison from Morgan Stanley. Please go ahead. Your line is now open.

Max Skor, Analyst

Thank you. This is Max Skor on for Matthew Harrison. Could you comment on the evolving competitive anti-FcRn landscape, specifically Alexion's decision to advance only the subcutaneous formulation? And also do you have an update on the subcutaneous bridging study and timeline for meeting with the FDA? Thank you very much.

Tim Van Hauwermeiren, CEO

Concerning the subcutaneous bridging study, what we said in public is that we have an FDA meeting on our to-do list for this year, where we will discuss our proposal and hopefully come to an agreement. When we have that meeting, we will have received the written minutes. We will communicate to the stakeholders on the outcome of that meeting. In terms of the evolving competitive landscape, it is true that we see some shifts in that competitive landscape with the dropout of the Affibody molecule and some delays in some of the other competing trials. The big picture Matthew is still very much intact. I think there are a few players that have shown Phase 2 efficacy data, and therefore we only have to navigate based on Phase 1 PD data and safety data. I think we continue to be in an outstanding position in terms of differentiation. From an efficacy point of view, in our MG, ITP and PV trials, we've put the efficacy bar very high. On the safety side of things, it's clear that not all accidents are made equal. We have a distinctly different and clean profile. On the convenience dimension, it is important to mention that we have a winning IV execution, and probably also winning subcutaneous execution thanks to the Halozyme ENHANZE exclusive license. Mind you that we are also differentiating when it comes to trial design, and the way we work with patients. I think the ADAPT trial design is unique, it's innovative, and if it is successful, we will be shaping the market by what we are doing in the ADAPT study. We also try to stay very close to the MG patient community through initiatives like MyRealWorld MG. In our efforts to differentiate, we've gone way beyond a winning molecular design into clinical trial and patient-centricity thinking.

Max Skor, Analyst

Thank you.

Operator, Operator

We will now be taking our next question from the line of Yaron Werber from Cowen. Please go ahead. Your line is now open.

Unidentified Analyst, Analyst

Hi guys. This is Brendan speaking on behalf of Yaron. Thank you for taking my question and congratulations on the great progress today. I wanted to quickly ask about the ITP trial. Can you remind us of the timing for a filing? Will you aim to file after the first and second confirmatory trials readout, or will you wait for the full results of the subcutaneous trial as well? Are you considering launching immediately in ITP with the subcutaneous maintenance regimen? I have a follow-up question after that. Thanks.

Tim Van Hauwermeiren, CEO

Thanks, Yaron. Maybe Keith you want to take the first question on the ITP trial strategy?

Keith Woods, CFO

Sure. Happy to do so, Tim. So first of all, Brendan, as far as the timing on the ITP trials, Tim did share in the prepared statements that enrollment has slowed a bit due to COVID-19. So we are not in a position to provide firm guidance on what that timing would be. We don't know if we'll see a relapse of COVID-19 that could again slow trial enrollment. So we're not ready to make a firm statement on that. Regarding the IV to subcutaneous transition, we will use a subcutaneous maintenance dose, which is a much smaller dose of efgartigimod. For the third ITP trial, we will put patients in, we will induce them with 10 milligrams per kilogram IV and get them into response, and then the idea is to maintain them. We believe that although that trial is starting later than our first two ITP trials, it will be run concurrently. Therefore, there's a possibility that they could all finish up around a similar time. To answer the question directly, if we find that the subcutaneous trial is not ready and we're ready to file with the IV, we will move forward with the first two and continue to subcutaneous.

Unidentified Analyst, Analyst

Got it. Great. That's super helpful. And then actually just one really quickly on the PV trial readout yesterday. It's obviously pretty exciting the possibility of this steroid-sparing effect. I was wondering, I know you guys had some really detailed information on a few of the patients in the deck. Are we going to maybe get a little bit more granularity on the extent to which individual patients are able to taper off steroids? And I guess, how you're kind of thinking about showing that in a concrete way maybe moving forward? Thanks very much.

Tim Van Hauwermeiren, CEO

Thank you. We provided a significant amount of detail in the Phase II presentation regarding individual patients, particularly their PDI scores and the three patient anecdotes that are quite representative of what we're observing in the trial. Notably, several patients were able to taper off steroids successfully. Specifically, we had 13 patients from cohorts three and four who underwent an aggressive and successful tapering of steroids. More comprehensive details will be available in an upcoming publication, which will contain the complete findings from the Phase II study. The three patient anecdotes we presented are reflective of our observations in cohorts three and four.

Unidentified Analyst, Analyst

Okay. Great. Thanks very much, guys.

Tim Van Hauwermeiren, CEO

Thank you.

Operator, Operator

We will now be taking our next question from the line of James Gordon from JPMorgan. Please go ahead. Your line is now open.

James Gordon, Analyst

Hello. James Gordon from JPMorgan. Thanks for taking the question. First one was just to echo MG ahead of the ADAPT results. Just generally when we go from Phase II to Phase III, you often get some efficacy deterioration, maybe because of less rigorous patient selection. And then we've got some helpful data about what the Phase II would look like when you did a six-week responder. But you're doing a four-week responder which may be filtering less noise. So just when planning the trial how much weakening were you allowing for? How much buffer have you got? And what's sort of the minimum you need to get over the line would be the first question, please.

Tim Van Hauwermeiren, CEO

Yes. When we were moving from Phase II to Phase III, James, of course, we had an opportunity to test-drive the primary endpoint definition we would use in the ADAPT study on the Phase II patient population. We feel comfortable with the responder definition of seeing at least a two-point improvement on the ADL score in at least four subsequent visits in the first eight weeks. I think the separation from placebo is still strong. I think we have been saying in public that if you would apply that endpoint on the Phase II study, you would still have a 75% response in the efgartigimod arm and a 33% response in the placebo arm. Our statisticians had the benefit of looking in detail at this data, but also the placebo response in the REGAIN study and some of the other small Phase II proof-of-concept studies. While we haven't been public on the exact powering of the study, I can assure you that we took a pretty conservative approach to the powering of the study.

James Gordon, Analyst

Thank you. And then second question please, is just about recruitment in the ADHERE studies in CIDP. Can you talk about how many patients you are planning to recruit into the study so far?

Tim Van Hauwermeiren, CEO

We're not public on the number, but the study is open as we said in the release. We did not pause the study. The study is openly screening patients. The first patient entered the study already some time ago and we will continue to screen patients and work towards the 30-patient go/no-go decision point. We always said that this study would run relatively slowly because of the three filters, which we installed at the start of the study for patients to go through into Part D. So far, I think that study is coming nicely out of the gate.

James Gordon, Analyst

Thank you.

Operator, Operator

We will now be taking our next question from Jason Butler from JMP Securities. Please go ahead. Your line is now open.

Jason Butler, Analyst

Hi. Thanks for taking the questions. First one for Keith. Obviously, when you look forward to the launch and you think about potential virtual strategies, are there things that you're doing now with your MSLs that you can build into your education strategies awareness strategies to gain some experience with virtual tools ahead of a potential launch? And then second question, Tim, in addition to the work you're doing with ARGX-117 in COVID-19, are you doing any additional work to leverage the platform for antiviral antibodies? There was some work published recently on camelid antibodies in coronaviruses, so just wondering if there's any application for your simple platform here? Thanks.

Keith Woods, CFO

In regard to the launch and having to launch potentially in a combination of virtual and in-person, as I said, we are learning a great deal right now. We're fortunate that we're not launching at this time. However, we are very active with the medical community. You mentioned our MRLs and the learning that is taking place right now. Our MRLs are still, as well as our thought leader liaisons, are active with the KOLs in MG. Not only are we able to continue to discuss with them about treatment disease those that are participating in our trial in regard to our trial, but we're also getting an understanding from them of what they believe the new normal is going to look like on an institution-by-institution basis. We're doing a lot of listening right now so that we can develop something that meets the needs of the health care professional; otherwise, it's going to fall on deaf ears. So that's how we're utilizing the MRLs and TLLS right now is to understand how people want to be communicated to if we are launching in a virtual setting.

Tim Van Hauwermeiren, CEO

To the second question, Jason, the answer is simple: it’s no. The news which was seen a couple of days ago relates to an academic initiative by one of the knowledge institutes here in the cluster called VIB. They're working with single-domain antibodies of camelids to go after this virus. We have focused specifically on our ability to contribute through our C2 complement inhibitors. There are no further antiviral or anti-infective initiatives going on in our company today.

Jason Butler, Analyst

Great. Thanks for taking the questions.

Operator, Operator

We will now be taking our next question from Yatin Suneja from Guggenheim Partners. Please go ahead. Your line is now open.

Yatin Suneja, Analyst

Hi, guys. Appreciate the opportunity. Just on the MG pivotal study, a little bit of a positive surprise that all of the patients have completed the 26-week threshold probably two weeks earlier than we were anticipating. So could you maybe talk about the next steps as you start to lock the database? Do you need any more follow-up beyond the 26-week on all patients before you announce the data? Any other gating factor before you sort of lock the data and clean it up and sort of announce it and what the timeline might be?

Tim Van Hauwermeiren, CEO

Yatin, good to hear you and thanks for joining today. I'm not a clinical operations expert. So there are indeed a number of steps which have to do with cleaning the data, verifying the data, cross-checking the data before actually you go and lock it and you start to extract the data. You want to be absolutely sure about the quality of the database before you freeze it. In terms of next steps, these are the routine clinical operation steps, which need to happen to have comfort in the quality of the database. But none of these individually would be a specific gating item. It is true that for the top line data, we do need the full ADAPT 26-week dataset, whilst then the open-label extension study continues. We will be able to extract safety information from that open-label extension study to further supplement the BLA filing with the required safety information.

Yatin Suneja, Analyst

Got it. That's helpful. And then just a follow-up on a previous question that somebody asked on the placebo side. So in terms of other trials that have looked at a similar endpoint, which is responder rate and a little bit different than the one you have versus what Soliris did, are there other trials that we can look at beside your Phase II to get a better understanding of how the placebo might perform in these patients based on that endpoint?

Tim Van Hauwermeiren, CEO

In terms of the longitudinal ADL and QMG curves, I would encourage you to really look at the REGAIN study. This is the only decent study published out there where you can probably extract some learnings. I think the placebo effect that they saw with their inclusion/exclusion criteria resembles the placebo effect which we saw with pretty much overlapping inclusion/exclusion criteria. That’s probably the best study to guide you.

Yatin Suneja, Analyst

All right. Thank you very much.

Tim Van Hauwermeiren, CEO

Thank you.

Operator, Operator

We will now be taking one more question from the line of Yanan Zhu from Fargo Securities. Please go ahead. Your line is now open.

Yanan Zhu, Analyst

Hi, thanks for taking the question. So first question is on the ADAPT trial secondary endpoints. How would the results on the secondary endpoints affect approvability? And I'm particularly interested in the 26-week endpoints, which is obviously going to incorporate the effect of flexible dosing. So just wondering do you have to hit statistical significance on the 26-week endpoints for approval? Thanks.

Tim Van Hauwermeiren, CEO

Thank you for the question. Keith, would you mind taking this one?

Keith Woods, CFO

Yeah, happy to do so, Tim. First of all, I think probably the most important secondary endpoints that we have there is that this is the first trial to include these seronegative patients, so these MuSK LRP4 and agrin patients. The seronegative population is not a part of the primary endpoint. The primary endpoint is only going to be on acetylcholine receptor positive. We did not want to put our Phase 3 study at risk in a patient population that we believe can benefit from efgartigimod, but we had not tested it in seronegatives yet. If that secondary endpoint gives a similar result to the primary endpoint, it can be label-enabling, and we would be the first and only therapy approved for this population of MG patients, which is about 15% of the total MG population. In regards to the additional secondary endpoints, we will disclose those and you will see that they will align to further build out and round out the successful primary endpoint by utilizing other scales like QMG and such. To your question about the 26-week endpoint, the primary endpoint is measured in the first eight weeks. The other endpoints are measured throughout. But as far as statistical significance, it will occur. The statistical significance of the primary endpoint is observed only in the first eight weeks.

Yanan Zhu, Analyst

Got it. Thanks for the clarification. And also another question is on the pemphigus data that was just released. So I just want to clarify a little bit about the 70% CR rate. I think that is based on 10 patients who were on optimal dosing defined as efgartigimod at least every other week plus a low-dose corticosteroid. But I'm just wondering because the cohort three and cohort four had a total of 23 patients, and it seems like the majority of them should be on at least every other week efgartigimod and as well as on low-dose corticosteroid. So just wondering about how you arrived at the 10 patients and what are the reasons for the other patients not included in the calculation? Thanks.

Tim Van Hauwermeiren, CEO

Yes, this is an interesting question, Sandra. In cohort four, we actually specified the use of corticosteroids per protocol. Before that, it was actually at the liberty of the investigators. We were still triangulating our way through these data to come to the change in the protocol for Cohort four. What you need to know in Cohort four is that actually, when patients reach end of consolidation, which is again an important clinical milestone, the patients were given the option to continue into CR or to actually already start to taper off corticosteroids. That's where we learned the importance of steroid tapering for patients. We showed the third patient anecdotes in the presentation because this is really representative patients for those who actually elected not to go into CR, but to aggressively taper off these hated corticosteroids. For them, it was more important to go to an acceptable level of steroids than it was to go to a PDI score of zero. For those patients, who opted to continue to go into CR, these are the 10 patients. Indeed for these seven out of ten on the optimal dosing regimen, we achieved complete remission fast. So it's based on that information that we can now craft the Phase 3 trial design.

Yanan Zhu, Analyst

Thanks for the color.

Tim Van Hauwermeiren, CEO

Thank you for the question.

Operator, Operator

We will now be taking our next question from Sandra Cauwenberghs from KBC Securities. Please go ahead, your line is now open.

Sandra Cauwenberghs, Analyst

Thank you for including me and for the update today. I have a question regarding the competitive landscape for efgartigimod in MG concerning competitors and late-stage trials in the FcRn complement space for both subcutaneous and IV administration. I also wanted to discuss the IVIg market, which seems to be significantly affected by the COVID pandemic, with impacts likely extending into 2021. Could this situation present an opportunity for efgartigimod's positioning in 2021, particularly regarding launch potential and market share? Additionally, I would like to follow up on the adaptive trial for PV.

Keith Woods, CFO

So, thanks for the question Sandra. We have heard rumors of a potential IVIg shortage. As you can imagine, we monitor this situation because it does affect our patient population. In MG, it affects our patient population directly. In CIDP, it could have an enormous impact. I don't think we can offer anything other than speculation at this time. The IVIg companies would be able to provide you with a much more in-depth knowledge. So I'd rather not comment on what the situation is with their supply. But we've always said that we believe efgartigimod can be positioned broadly across multiple indications that IVIg is utilized in today. It does present a potential increase in opportunity to disrupt the IVIg market.

Sandra Cauwenberghs, Analyst

Okay. Thanks. A follow-up question on PV on the adaptive trial specifically on the fourth cohort where I was intrigued by the combination of the tapering for steroids for the dosing there and the increase in efgartigimod dosing going up to 25 milligrams per kilogram if I'm correct. And there was some efficacy seen on the skin tissue which was enhanced. So, do you have any learnings that you can extract from that particular part of the study with regard to the mode of action for these patients?

Tim Van Hauwermeiren, CEO

Yes, this is an interesting question, Sandra. The ingoing hypothesis was that while everybody is measuring total IgGs in circulation nobody actually knows what happens in the different compartments outside of the circulation. The skin compartment specifically raises the question of how much of the drug makes it and how fast into the skin. We know that efgartigimod has a very high volume of distribution and is therefore traveling fast. But we wanted to see whether we maxed out the effect in the skin by maybe seeing differences in onset of action for example. The truth is that it's difficult to compare between cohorts one, two, three and cohort four because in cohort four we happen to have the most severe patients of all, and therefore, it's very difficult to compare. But I think we expected some lessons learned. We're going to communicate in the Phase III trial design when we will present to you the dose and the dosing schedule for efgartigimod. So stay tuned on this one.

Sandra Cauwenberghs, Analyst

Okay, thank you.

Operator, Operator

We will now be taking our next question from the line of Damien Choplain from Kepler. Please go ahead, your line is now open.

Damien Choplain, Analyst

Yes, good afternoon. Thank you for taking my question. I was just wondering why the recruitment in the cusatuzumab trials have been paused compared to efgartigimod trial that are still recruiting. I mean is it a question of indication or geography or maybe something else? If you could elaborate a bit on this would be nice. Thank you.

Tim Van Hauwermeiren, CEO

Thank you for that question. There are two reasons for that. First of all, efgartigimod is a development plan which is completely under control of argenx only. We did the benefit-risk analysis for our studies, and we concluded that for efgartigimod it was safe to continue to enroll patients. In the cusatuzumab development, we are 50/50 partners with Janssen so we are not making the decision alone. Secondly, we need to study of course specifically AML patients, which have a very much weakened defense system against infection. Infection is a very high risk of mortality, and therefore, the decision was taken to pause enrollment. It remains to be seen exactly when we can resume enrollment in the trial.

Damien Choplain, Analyst

Okay. Thank you.

Operator, Operator

We will now be taking our final question from Emily Field from Barclays. Please go ahead. Your line is now open.

Emily Field, Analyst

Hi, thank you for taking my question. I missed the start of the call, so I apologize in advance if my questions have already been answered. I'm curious about your thoughts on possibly planning a hybrid launch, whether that would be virtual or fully in person. Additionally, have you had any discussions with the FDA, or do you think that inspections of manufacturing facilities might be affected by COVID if the pandemic continues? Also, could you share your thoughts on pricing and whether your perspective has changed in light of the potential for a longer recession? Thank you.

Tim Van Hauwermeiren, CEO

Thank you for these two questions, Emily. So Keith, I will hand over the question to you in a minute. Regarding question one, so far what we have seen and heard from colleagues in the space is that FDA continues inspection visits, but they simply do that in a virtual fashion. So we cannot look into the future, but today we know that FDA continues its activities, inspection activities in a virtual mode. That's what we're preparing for. Keith, could you mind taking on question number two?

Keith Woods, CFO

So first of all, when it comes to the pricing of efgartigimod, we've said for quite some time that there's a lot of pricing research we are taking into consideration that we are ongoing right now, particularly when we see the data and the overall value to the patient on the annual treatment for MG. There's a great deal of information that we're learning that will help us in pricing from our real-world evidence study, as well as some of the health economics outcomes research studies that we're doing. We have a large window to price in potentially for MG. If you take a look at the high end of the spectrum where Soliris is, which we will not be pricing up near Soliris, and you go down to what it costs for a patient to be on IVIg to treat MG, so there's a large window that we can play in. Now to your point about how COVID potentially impacts this? In various work streams that we have in our launch readiness, we are doing all types of scenario play. One of those work streams is obviously pricing and reimbursement, and we are taking into consideration things like the larger population of unemployment, how this affects overall out-of-pocket expenses. So it is considerations like that that we are currently taking into account, learning right now and building our various scenarios of where we'll play. And then finally, the last comment is as we set a price for MG, we'll have a good idea on the progress and success of where we are with our other four indications with efgartigimod. So that will certainly weigh in.

Emily Field, Analyst

That's very helpful. Thanks very much.