Earnings Call Transcript - ARGX Q1 2021

Operator, Operator

Good morning, and welcome to the argenx First Quarter 2021 Earnings Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I'd now like to turn the conference over to Beth DelGiacco. Please go ahead.

Beth DelGiacco, Corporate Secretary

Thank you. A press release was issued earlier today with our first quarter 2021 financial results and the business update. This can be found on our website along with the presentation for today's webcast. Before we begin, I would 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 timeline, 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; Eric Castaldi, Chief Financial Officer; and Keith Woods, Chief Operating Officer. I will now turn the call over to Tim.

Tim Van Hauwermeiren, CEO

Thank you, Beth, and good morning, everyone. We appreciate you joining us today. Starting with Slide number 3. During our R&D Day in 2019, we shared our plan for how argenx could become a fully integrated immunology company that reaches patients globally, who are suffering from autoimmune diseases. We call it our 2021 Vision and it outlines the key drivers that will continue to build value year-over-year, even beyond 2021. Based on where we are today, we have executed well against our 2021 ambitions. First, reaching patients. This year, we are on track with our transformation into a commercial organization with the potential US approval of efgartigimod in generalized myasthenia gravis, followed shortly by a potential launch in Japan. We are also moving forward in Europe and in China with Cilag. At the same time, we want to be a company known for clinical execution and good business decisions when it comes to pipeline prioritization. We are focused on assets with breadth like efgartigimod and ARGX-117, and have demonstrated strong capabilities in advancing these programs. Notably, we have shown proof-of-concept in all four of our initial efgartigimod indications. We are hoping for a similar track record with ARGX-117. And finally, we want to be a company that continues to capitalize on early innovation so that we operate at all stages of the value chain. This is the core purpose of our Immunology Innovation Program. We will continue to grow our pipeline with differentiated candidates that emerge from an immunology breakthrough. Today, we will update you on our recent achievements related to each of these key drivers: our path to reaching patients, our clinical execution and our early-stage programs. These are all critical elements of our strategy to become a global sustainable immunology company. First, our path to reaching patients. We announced this morning that we have filed the Marketing Authorization Application to the PMDA in Japan. This positions us well for an early cadence of expected launches in MG, first in the US around our PDUFA date of December 17, second in Japan. We are on track to file our marketing application in Europe in the second half of 2021, and anticipate discussions with the regulators in China this year about a potential accelerated pathway. With close to 200,000 MG patients, the market opportunity in China is one of the largest in the world. We are incredibly excited that we've made important progress towards our global launch in just one year since we presented data from the Phase 3 ADAPT trial. That is what motivates all of our hardworking employees, and that is the patients. We've been able to spend considerable time with the MG community and have heard firsthand about the challenges they face. We see that people living with MG have had to manage either due to disease symptoms or side effects from current treatments. This is a truly debilitating disease characterized by fatigue, depression and an inability to perform simple daily activities. In some cases, it may result in a life-threatening crisis. Not only does this hinder patients' ability to live their own personal and professional lives to the fullest, but it takes a considerable toll on friends and families as well. It is clear that their fight with MG is far from over. Based on the positive Phase 3 data we showed from the ADAPT trial shown on Slide 4, we believe we can offer a new treatment option to patients with a promising value proposition. We showed an unparalleled response rate of 78% across the first two treatment cycles and a fast onset of action in 84% of responders. With the depth of response, where 60% of responders achieved an MG-ADL of 0 or 1, patients could consider the minimal manifestations of their disease. Furthermore, the trial demonstrated the potential for individualized dosing based on the durability of responses we observed which may provide enhanced options to patients. Importantly, the safety profile in ADAPT was comparable to placebo, which is crucial for our key stakeholders. As of today, a significant majority of patients who completed ADAPT and rolled over to ADAPT+ still remain in the study. In addition to advancing IV efgartigimod, we have also made progress in advancing our subcutaneous products with the goal of reaching MG patients. Slide 5 shows that the ADAPT subcutaneous trial is underway with a target enrollment of 50 patients. This is a non-inferiority trial where we will compare IgG reductions between the IV and subcutaneous products, with day 29 as the primary endpoint. Additionally, we have a safety database requirement for filing, and we will work to achieve this by switching eligible and interested patients from ADAPT+ to ADAPT subcutaneous. The formulation we are evaluating in this trial, which is used in all ongoing trials of subcutaneous efgartigimod, is equipped with Halozyme ENHANZE technology. With this product candidate, we hope to offer patients a self-administered single subcutaneous injection that only takes a few minutes to deliver. We believe that by advancing both an IV and a self-administered subcutaneous efgartigimod, we are capturing patient preferences and can reach a larger population of people suffering from autoimmune diseases. Before moving to the rest of our pipeline, I'd like to close on MG by sharing my pride and gratitude to our team who executed strongly despite the global pandemic. Between our experienced global launch team, our strong ADAPT data, and our dual development of both IV and subcutaneous formulations, we hope to support a new treatment option for individuals living with generalized myasthenia gravis. This positive readout from ADAPT was not only a significant milestone for the company, but it further validates the role efgartigimod may have in addressing a range of IgG-mediated autoimmune diseases. This brings me to the second key driver, clinical development within our differentiated antibody pipeline, Slide 6. As I mentioned earlier, we have demonstrated proof of concepts with efgartigimod in all four of our initial indications and currently have registrational trials ongoing across each. To date, we have dosed over 400 subjects with efgartigimod, some of whom have been treated with efgartigimod for well over two years. Through our ongoing translational work, we continue to learn more about our SC fragments and how the unique engineering of efgartigimod may contribute to the unique efficacy and safety profile we have seen. Our most recent achievement within the efgartigimod program occurred during the first quarter with the announcement that we surpassed a pre-defined GO threshold in the ADHERE trial in chronic inflammatory demyelinating polyneuropathy. We had built a planned efficacy assessment into the trial because the role of the autoantibody in CIDP disease progression is less defined than it is for MG. Following this GO decision, we can confidently expand enrollment up to approximately 130 CIDP patients into the randomized portion of the trial, which is depicted on Slide 7. This decision validated our indication selection strategy as we move into additional adjacent indications within our therapeutic franchises. We are actively enrolling patients into the ADVANCE and ADVANCE subcutaneous trials for ITP and into the ADDRESS trial for pemphigus, which are shown on Slides 8 and 9. Given the still unpredictable situation with COVID-19, it is too early to provide guidance on these trials. We will look to provide updates where possible on our upcoming quarterly earnings calls. We are also well underway with our fifth and sixth indications and will be initiating trials this year. We look forward to sharing more about these during our R&D Day in July, but have already confirmed that these fit within our muscular franchise. Slide 10; as a first-in-class and potentially best-in-class FcRn antagonist, we recognize the vast potential that efgartigimod could have in autoimmunity. We want to roll out new indications as quickly as we can. This is why we are particularly excited to select Zai as our partner in China because their strong development capabilities will enhance the long-term value of efgartigimod. Slide 11; by contributing patients to ongoing global trials, we hope Zai will help accelerate the path to approval from each respective indication. With Zai running Phase 2 proof-of-concept trials in future efgartigimod indications, we hope to expand the scope of our overall pipeline. We aspire to take efgartigimod into 10 indications over time. Slide 12; we also recognize that we may have another pipeline product opportunity with ARGX-117. We look forward to showing the first clinical data sets mid-year from both our IV formulation and the subcutaneous formulation equipped with Halozyme's ENHANZE technology. With our Phase 1 data, we will show safety and tolerability, PK-PD properties, and we will identify dosing regimens based on complement biomarkers to advance into future Phase 2 trials. Similar to the engineering enhancements we made to efgartigimod, we also optimize ARGX-117 to have broad capabilities. We expect these qualifications will lead to differentiation in terms of the dosing levels and schedule we can achieve for our C2 antibody. Slide 13; we have identified our first indication for ARGX-117 to be multifocal motor neuropathy, or MMN, which will sit within our neuromuscular franchise. We used our proven indication selection strategy for MMN, and we will do the same for additional Phase 2 trials that we will start. First, we rely on biology. MMN is an Ig immune-mediated disease, where IgM autoantibodies activate complement via the classical pathway. C2 sits at the intersection of the classical and lectin pathways, making it an ideal target for an indication like MMN. We continue to invest in translational work in the disease pathways of MMN and will share more of this data in the future. Beyond these biological rationales, there are also known clinical and regulatory endpoints in MMN from precedent trials and a strong commercial case. This is a patient population where a significant unmet need still exists. As you can see, we are very excited to advance ARGX-117, as we hope to reach even more patients suffering from autoimmune diseases. Before we move to the last key driver, our early innovation, I'd like to reiterate that our development program of cusatuzumab in collaboration with Janssen remains ongoing, as seen on Slide 14. We announced earlier this year that we are prioritizing the triple combination of cusatuzumab, azacitidine and venetoclax in the ELEVATE trial. We will make decisions on the next steps for the collaboration once we review data from ELEVATE, specifically around response rate, durability, safety and tolerability, and whether there may be trends to identify from AML subsets in the trial. Slide 15; now onto our Immunology Innovation Program or IIP, which is a centerpiece of our long-term value creation strategy. Through our IIP, we have been able to add value year-over-year by turning an immunology breakthrough of our academic collaborators into an argenx pipeline candidate. We have done this with each candidate to date, whether it's our wholly-owned assets like efgart or ARGX-117, or our partnered programs with AbbVie, LEO, or Janssen, and asset-centric companies like AgomAb or Staten who are working with argenx created molecules. With our wholly-owned candidates, we prioritize those that make sense within our therapeutic franchises to leverage core capabilities across the value chain. Slide 16; it's important to boost our IRP toolkit. We are continually looking to enhance our technology capabilities. We have our proprietary V-region and Fc engineering technologies such as SIMPLE, NHANCE, POTELLIGENT and ABDEG. We also have our license agreements with Chugai and Clayton to amplify our Fc engineering capabilities. With long-term lifecycle management of efgartigimod in mind, we are planning for a broad product delivery platform. We have our collaboration with Halozyme, for which we still have four target nominations available. Today, we also announced our recent collaboration with Elektrofi, a Boston-based company with capabilities to deliver highly concentrated biologics in smaller volumes. While still very early in development, we believe this technology could provide us the opportunity to dose efgartigimod and other future products with next-generation delivery systems. Similar to our collaboration with Halozyme, we have targeted exclusivity for FcRn and one additional target. These types of technology agreements will continue to be part of our early discovery strategy. We don't intend to communicate on each one, but we want to share our commitment to evolving our overall capabilities as we grow and as the next-generation technologies emerge. We hope that this continued investment will help us build the most differentiated pipeline possible. Slide 17; with the acceptance of both our applications for IV efgartigimod in the US and Japan, we are solidly positioned for a steady cadence of launches. We are hopeful that the stellar results from the ADAPT trial will position us for success in MG. This is a space where there has been little innovation and patients are still in need of more options. We are laser-focused on execution as we grow our team, expand into new indications for efgart, develop our second pipeline in a product opportunity, ARGX-117, and identify new high-potential assets through our IIP. Finally, as we mentioned in the press release this morning, we look forward to providing updates on our deep and differentiated pipeline of assets at our upcoming R&D Day in July. With that, I will turn the call over to Eric for a financial update.

Eric Castaldi, CFO

Thanks, Tim. Slide 18 covers our first quarter of 2021 operating results which are detailed in today's press release and regulatory filings. As stated in this morning's press release, as of January 1, 2021, we changed our functional and presentation currency from euro to US dollars. You will see our financial highlights recorded in US dollars going forward. Total operating income increased by $141.6 million for the first quarter of 2021 to $167.4 million compared to $25.8 million for the same period in 2020. The increase was primarily due to the closing of a strategic collaboration for efgartigimod with Zai Lab, resulting in the recognition of $151.9 million in collaboration revenue. R&D expenses increased by $17.7 million for the quarter to $122.3 million compared to $104.7 million for the same period last year. This increase resulted primarily from higher external R&D expenses, mainly related to our evaluation of efgartigimod in multiple indications and also clinical and preclinical programs. The higher expenses were also due to a planned increase in headcount and the increased cost of the share-based payment compensation plans related to the grant of stock options. SG&A expenses totaled $56.3 million for the first quarter compared to $27.6 million for the same period in 2020. The increase resulted primarily from higher personnel expenses, including the costs of the share-based payment compensation plans related to the grant of stock options and also, consulting fees linked to the preparation for a possible future commercialization of efgartigimod. We saw an increase in the fair value on non-current financial assets of $11.2 million for the first quarter. This was the result of AgomAb Therapeutics closing its Series B financing round. As you are aware, we maintain a profit share in AgomAb for granting the license of ARGX-114. Exchange losses totaled $28.8 million for the three months ended March 31, 2021, compared to an exchange gain of $23 million for the same period in the prior year. Because of the change in our currency, the exchange losses for the first quarter reflect the unfavorable change in the euro-US dollar exchange rates. Finally, we ended the quarter with cash, cash equivalents and current financial assets totaling $2.9 billion compared to $2 billion on December 31, 2020. This increase resulted primarily from the closing of a global offering in February 2021, resulting in $1.1 billion in net proceeds and the net receipts of our development cost-sharing payment received from Zai Lab. These were partially offset by our payments to Bayer for a priority review voucher and other net cash flows used in operating activities. I will now turn the call over to Keith for an update on our commercial activities.

Keith Woods, COO

Thank you, Eric. To echo Tim's sentiments, it's amazing to consider that the pivotal ADAPT readout of efgartigimod in MG was just one year ago. This was a significant gating event, which led us to meaningfully expand and accelerate the development of our commercial organization. The driving force continuing to push us forward as we approach a potential launch is the magnitude of what this treatment could mean for patients. There is a significant unmet need for innovative fast-acting safe treatments for people living with MG. We hear this every day from key stakeholders, including the patients themselves, their caregivers, advocacy partners and the physicians who treat them. As part of our ongoing commitment to the MG community, we recently launched our Pre-approval Access program. We are preparing for an end-of-year approval in the US, but in the meantime, we want to ensure that we can offer efgartigimod to MG patients who meet the pre-approval access criteria. Our PAA is currently open in the US, Canada and seven countries in Europe. We also continue to provide IV efgartigimod to patients who remain on the ADAPT+ study, and subcutaneous efgartigimod to patients enrolling in our ADAPT subcutaneous trial, whether from rollovers from IV or as new participants. As Tim already mentioned, we are still the only company actively evaluating both IV and subcutaneous formulations of an FcRn antagonist. This is important for us to reach as many patients as possible. We believe this option will provide a significant competitive advantage from both a reimbursement standpoint and from a patient and physician preference perspective. On Slide 19; we remain sharply focused on our engagement efforts with all key stakeholders, including patients, healthcare providers and payers. For patients, we have awareness and advocacy initiatives well underway, as depicted on Slide 20. Our MG United platform has ongoing engagement from over 25,000 unique visitors. Our real-world evidence study continues to enroll and now has close to 2,000 participants. Data from this study, in addition to our health economics outcomes work, will be instrumental in helping us to better understand the disease burden associated with MG. All these initiatives guide our engagement efforts with the broader MG community as we prepare for our potential launch. We have also engaged most of the leading gMG treating neurologists through our disease state awareness campaign. Our medical affairs team has been actively engaging with neurologists, most recently at the AAN meeting a few weeks ago. Our MRLs and TRLLs are hard at work in their education efforts, as we know how crucial this will be at launch given the new mechanism of action. From a payer perspective, we continue to engage with national and regional payers on the potential value that efgartigimod could provide to MG patients. Our team is also engaging with specialty pharmacies, specialty distributors and infusion networks to ensure broad access for patients at launch. Another key part of this will be our patient support program, which will be managed closely by our team of nurse case managers who will work towards building critical infrastructure to help support access for gMG patients prescribed efgartigimod following its approval. Slide 21; from a regulatory perspective, as you saw in the press release this morning, we are thrilled to have the J-MAA accepted for review by PMDA in Japan, with a targeted launch in 2022. We continue to make strategic hires and expand our global organization to support a series of launches in the coming years. We now have over 500 employees globally, including growing commercial organizations within the US, Europe and Japan. While our key functional heads have been in place for more than a year, we are now in the process of hiring our field sales forces. We recently brought on our regional business directors and are starting the interview process for our territory business managers. I've been very impressed with the high caliber of candidates we are engaging with as we expand. The breadth of experience and core cultural alignment they bring to our organization will help us get differentiated medicines to patients in need. Additionally, we know that the strategic investments we are making now in top-tier candidates will benefit us as we expand our neuromuscular franchise into CIDP and future indications with efgartigimod and ARGX-117. We plan to execute a similar smart growth strategy for our other evolving franchises as we base our future hires around key data events. Finally, we have strong manufacturing and logistic partnerships in place with world-class companies like Lonza for drug substance, Vetter for fill and finish, and Cardinal Health for third-party logistics. We are actively collaborating with global regulators to ensure in-person or virtual inspections can occur as needed. To conclude, we see signs and hope that the effects of the global pandemic will be somewhat alleviated by our December 17 PDUFA date. Even so, we are preparing for the likelihood that we will launch in a partially virtual environment, and growth will be gradual and steady as we are engaging with customers regarding this new mechanism of action. I will now turn the call back to Tim for some concluding remarks.

Tim Van Hauwermeiren, CEO

Thanks, Keith. Before we begin the Q&A, I would like to conclude with Slide 23. We are working hard every day to build the next great integrated global immunology organization that is strongly positioned for long-term sustainable growth. We are well-capitalized and our strong balance sheet will provide the foundation to expand our team and reach new indications and geographies. We have made meaningful progress with our lead asset efgartigimod and our focus on execution as we advance forward six indications. We look forward to expanding the breadth of this pipeline with the help of our strategic partner Zai Lab. We are also approaching the first clinical data readout from ARGX-117, which we hope will launch our next broad pipeline opportunity into meaningful autoimmune indications. Finally, we remain firmly rooted in groundbreaking immunology research as we grow through our IIP and collaborative efforts in order to help improve the lives of patients around the world. With that, I will turn the call back to the operator to open the call for your questions.

Operator, Operator

We will now begin the question-and-answer session. Our first question comes from Derek Archila from Stifel. Please go ahead.

Derek Archila, Analyst

Hey, good morning, and congrats on the progress, guys. One question – so maybe this is for Keith. You talked about the pre-approval access program for efgartigimod in MG patients. I just want to kind of get a sense of what the patient criteria are for getting access. And I guess, how are you communicating that program, if you can at all? And is there a cap on the number of patients you can actually enroll into that program? Thanks.

Keith Woods, COO

Hi. Good morning, Derek, and thanks for the question. We were really pleased to offer the pre-approval access program because this program demonstrates our commitment to the patients who are living with MG. At this time, the commitment is only for patients with MG who cannot participate in a clinical trial because remember, if a patient can participate in a clinical trial, we are actively enrolling our subcutaneous efgartigimod MG trial. If they cannot participate in the clinical trial, they can go into the pre-approval access program, but basically, it has the same strict inclusion-exclusion criteria that we used in our Phase 3 clinical trial. Again, this is just another way to honor our commitment to patients. All of our patients that participated in ADAPT were eligible to roll over into our OLE, and more than 75% of the patients that rolled over are still on. After they complete a year in that OLE, they will have the option to remain on therapy. We're committed to them, or as stated in the prepared remarks, they can roll over into our subcutaneous bridging study.

Derek Archila, Analyst

Got it, okay. And then, is there no cap on the number of patients you can get into that access program?

Keith Woods, COO

So we have an internal cap right now just because of the amount of supply that we've shipped to our partner Clinigen, but we can always change that as needed.

Derek Archila, Analyst

All right. Thanks, guys, and congrats again on the progress.

Keith Woods, COO

Thank you.

Operator, Operator

The next question comes from Akash Tewari from Wolfe Research. Please go ahead.

Amy Li, Analyst

Hi. This is Amy on behalf of Akash. Thanks so much for taking our question. On your Elektrofi partnership, is it more of a backup option? Or are you seeing any sort of benefit with their microparticle suspension technology versus Halozyme's in areas including AE, mediated or PK? And then, if we could just sneak in one more on MG. And given you and Alexion both ran 26-week MG trials and you have an earlier eight-week primary endpoint. Has the FDA specifically said anything on what they expect for efficacy between the weeks eight and 26? And that's it. Thank you so much.

Tim Van Hauwermeiren, CEO

Thank you for the question. Let me take the Elektrofi question first and then I will hand over to Keith for the FDA-related question. The way you have to think about our collaboration with Elektrofi is that we're always thinking five steps ahead. This is relatively early-stage technology, and it's promising if you want to break through the typical physical limits of the concentration you can achieve for a biological like an antibody or antibody fragments. You may remember that for efgartigimod, we already reached a 200 milligram per milliliter concentration which is phenomenal. But if you want to break through that, you need a different type of technology. That's what we're seeking to access through the Elektrofi collaboration. The backbone of our subcutaneous product presentation approach continues to be the Halozyme technology. That subcutaneous execution is now in play across all our indications. Maybe, Keith, you want to address the FDA question?

Keith Woods, COO

Happy to do so, Tim. So, Amy, thanks. Yes, our primary endpoint was indeed at week eight, but we continued to treat these patients throughout the entire study. In fact, we shared that at that primary endpoint at week eight, we had a 67.7% response rate. But after a second cycle, almost 80% of patients exposed to efgartigimod had a response. We are sharing the continued positive clinical efficacy data with the FDA as we go through the review.

Operator, Operator

The next question comes from Tazeen Ahmad from Bank of America. Please go ahead.

Tazeen Ahmad, Analyst

Hi. Good morning. Thanks so much for taking my question. Just wanted to get a little bit of color regarding the specifics of your collaboration with Zai Lab. Can you just remind us what the total milestones expected are, and when could the next milestone be in the collaboration? Thanks.

Tim Van Hauwermeiren, CEO

Thank you, Tazeen. Thank you for being with us today, and thank you for your question on Zai Lab. It's a partnership we're very excited about. Remember, we spoke about a total of $175 million upfront, partially in cash upon signing, partially in equity, and a smaller fraction associated with the regulatory milestone, which will happen downstream. All remaining parts of the economics will situate themselves in the royalty Zai Lab will pay to us on net sales in their territory. Thank you.

Operator, Operator

The next question comes from Joon Lee from Truist Securities. Please go ahead.

Joon Lee, Analyst

Hi. Thanks for taking our questions and for the updates. Can you tell us a bit about your ongoing dialogue with payers ahead of the approval? And how you're thinking about the pricing profile given your individualized dosing regimen? How much of an inter-patient or even intra-patient variation is there in frequency? And how quickly can you also get a J-code established post-approval? Thank you.

Keith Woods, COO

Yes. So Joon, a few things. First of all, we have a fully staffed US market access team so we not only cover national payers, but we also have a team placed covering all of the regional payers throughout the US. We continue to have regular dialogue with the payers. I want to remind you that they are pleased with an approach like individualized dosing because they don't want to pay for a therapy or medication when it's not needed. What does lead to the question for them, okay, what can I expect? We are sharing over time what occurred in the ADAPT trial, and in the ADAPT+ trial, so we can have an idea of the average number of cycles that will be required in a year. You will have some patients that get a long benefit from one cycle of efgartigimod, and those patients will be the less expensive patients. Others will require more chronic treatment. But we will look at the average and see how that distribution curves out, and then we are pricing for the annual value to manage a patient to minimize symptom expression and maintain them there. This pricing backs us right into our bio price.

Joon Lee, Analyst

Great, thank you.

Operator, Operator

The next question comes from Danielle Brill from Raymond James. Please go ahead.

Danielle Brill, Analyst

Hi, guys, good morning. Thanks so much for the question. I was just wondering if you can maybe comment a little bit more on the PAA program enrollment. I'm curious how it's tracking compared to your internal expectations? And if you could share how many patients you've enrolled, that would be great. Thank you.

Keith Woods, COO

Yes. Danielle, we have not made that information public yet. I can tell you that the PAA, there has been demand coming from the US, Canada and Europe already. It's a process that we go through to actually enroll the patients and get them started. The demand meets our expectations, and at this point, we just haven't disclosed the total number of patients that are in the PAA. Thanks.

Operator, Operator

The next question comes from Yaron Werber from Cowen. Please go ahead.

Yaron Werber, Analyst

Great. Thanks for taking my question. Actually, I had a question about ARGX-117 for MMN. Could you maybe share how you are thinking about the time to evaluate the primary endpoint? And are all patients going to have to be anti-GM1 IgM antibody positive to be enrolled? And I assume they need to be second line onwards. Thank you.

Tim Van Hauwermeiren, CEO

Hi Yaron, thank you for being with us today. What concerns MMN, so far, we have been talking mainly about our conviction around the biology of this disease, which is clearly driven by pathogenic IgM antibodies that recruit the classical pathway. We haven't disclosed details yet on the clinical trial design, but we will do so as we progress through the R&D Day. The trial design is something you can get inspiration for when you look at the IV trials, which we can all study in the MMN space. These trials established the clinical and regulatory endpoints. To answer your second question, no, we probably will not use anti-GM1 antibodies presence as an inclusion criterion. We will disclose, of course, in more detail about inclusion-exclusion criteria. We believe recent evidence from our key collaborators at Utrecht University suggests that all MMN patients actually do have these autoantibodies, and the titer of these autoantibodies directly correlates with disease severity. Thanks for the question.

Operator, Operator

The next question comes from Jason Butler from JMP. Please go ahead.

Jason Butler, Analyst

Hi, thanks. I had another one on ARGX-117. Actually, thanks for taking the question. Just if you're thinking about the potential for a longer duration or durability of PLEX versus IVIg, and the fact that this is a slower progressing disease, just how are you thinking about the control arm, and how to optimize around that? Thanks.

Tim Van Hauwermeiren, CEO

Hey Jason, thank you for being with us today. Thank you for this question. We haven't disclosed a trial design yet, but we will do so. I would suggest that you take a look at, for example, the CIDP trial which we unveiled the trial design for to provide you with a feel of how we could work in this type of diseases. We consider MMN to be very similar to CIDP regarding trial design and execution. Thank you.

Operator, Operator

The next question comes from James Gordon from J.P. Morgan. Please go ahead.

James Gordon, Analyst

Hello. James Gordon, J.P. Morgan. Thanks for taking the question. I had a question on the new mechanism. I saw that Alexion has taken their oral Factor D inhibitor into Phase 2 for MG. So my question is, how promising do you see that approach for treatment of a disease like MG? And could an oral Factor D work even more broadly than MG and other indications that you're planning on targeting with an FcRn inhibitor? Or are you feeling optimistic there? And also, could you clarify just on the Elektrofi formulation? When is the earliest that might potentially come to market, please?

Tim Van Hauwermeiren, CEO

Thank you, James. Regarding your question on the involvement of complement in MG, whether you have a C5 blocker or affected D blocker... What we know about the disease biology is that the autoantibody is at the heart of the disease biology, exerting multiple pathogenic modes of action at the neuromuscular junction. Complement recruitment is just one of them, alongside acetylcholine receptor blockade and internalization, which are at play, so we think an upstream agent like efgartigimod should work ahead of any complement inhibitors regardless of whether that is a C5 blocker or affected D blocker. Regarding Elektrofi, it's too early to give you a timeline for when a product could hit the market. This is novel technology that we're pioneering in close collaboration with our partner Elektrofi.

Operator, Operator

The next question comes from Douglas Tsao from H. C. Wainwright. Please go ahead.

Douglas Tsao, Analyst

Hi. Good morning, and thanks for taking the questions. Just wanted to revisit the question on pricing. You indicated pricing to be based on average duration. I'm curious, have you engaged with payers in more of a value-based model, meaning setting an annual price regardless of how many treatments they need, but controlling the management of someone’s disease? The same goes for MG or any other diseases in development? Thanks.

Keith Woods, COO

Yes. Doug, we have indeed engaged with payers, done exactly that. We've also conducted a substantial amount of market research after showing them the data and asking what they believe the annual value is. You have a product in MG is currently being used that is approved with a retail price of up to $700,000 per year, and it's been well covered by payers for relapsed refractory MG. I think we will be offering a great value to patients and payers because of the clinical impact we can have on these patients. We are looking at efgartigimod from the bigger picture. It's larger than just the MG launch. We are already in four indications and will be in six before the end of the year, with aspirations to reach up to 10 indications.

Douglas Tsao, Analyst

Okay.

Operator, Operator

The next question comes from Graig Suvannavejh from Goldman Sachs. Please go ahead.

Graig Suvannavejh, Analyst

Okay. Good morning, good afternoon, and thank you for taking my question. I had a question, just on your expected announcement of the fifth and sixth indications for efgartigimod. Could you remind us if those indications will evaluate both IV and subcu, or if you're leading with the subcu formulation? And in terms of the indications themselves, if one or both of them will overlap with your existing disease areas of interest or if they will establish a new beachhead? Could you also share a bit about how much of the upcoming R&D Day will focus on perhaps your non-efgaritgomod, non-ARGX-117, and non-cusatuzumab pipeline, whether proprietary or partnered? Thank you.

Tim Van Hauwermeiren, CEO

Thank you, Greg. Thank you for being with us today. Regarding your first question, it is our vision to have both IV and subcu products available for all our indications. You will see from the pipeline updates that we have emphasized subcu product execution for recent indications simply because it provides more flexibility during the ongoing COVID pandemic. We already disclosed publicly that the fifth indication will fit squarely into the neuromuscular franchise, and we will discuss the sixth indication soon. The R&D team will primarily focus on efgartigimod and cusatuzumab, but we will make the agenda public soon and then we can interact for further questions on it. Thank you.

Operator, Operator

The next question comes from Rosie Turner from Barclays. Please go ahead.

Rosie Turner, Analyst

Good morning or good afternoon. Thank you very much for taking my question. Just one on manufacturing, if I may. I know Lonza is your key partner there and they've been having some issues manufacturing the Moderna vaccine in terms of delays. Just wondering how your discussions with them are progressing? And if there is any indication it could lead to delays in the beginning of 2022 when you're ready to start launching? Thank you.

Tim Van Hauwermeiren, CEO

Thank you, Rosie. Maybe Keith would like to take this question.

Keith Woods, COO

Sure, happy to. So Rosie, first of all, I want you to rest assured that we already have commercial supply that is manufactured and ready to go for launch. Additionally, we know that the global pandemic has put added pressure on the supply chain. Fortunately, we had ramped up production prior to the pandemic due to the anticipated demand, considering this is a major pipeline and our plans in China. We wanted to ensure that we had ramped up our supply well in advance and we did that. Regarding communication with Lonza, we have a very good relationship with them, and I can tell you we speak to them weekly about logistics. I feel quite confident in our current position, and we've taken all precautions. So unless something unforeseen happens, we should be in good shape.

Rosie Turner, Analyst

So just one follow-up, is that both subcu and IV supply?

Keith Woods, COO

Yes, I mean, right now we're focused on the IV supply from a commercial point of view, and the subcu supply is focused on clinical trials.

Operator, Operator

The next question comes from Yatin Suneja from Guggenheim. Please go ahead.

Unidentified Analyst, Analyst

Hey guys, this is Eddie on for Yatin. Thanks for taking the question. I just wanted to ask how you're thinking about the filing for ITP? Are the two advanced trials each sufficient on their own or will you need two separate BLAs, or do you need to see success in both and file together? And are there any safety requirements or gating factors that differ between those two formulations? Thanks.

Tim Van Hauwermeiren, CEO

Thank you, Eddie. Both the IV and the subcu trial in ITP will jointly satisfy FDA requirements for the BLA filings. The data packages from both trials will be integrated into one single BLA. This will meet their requirements for two independent studies and also for the necessary size of the safety database.

Operator, Operator

The next question comes from Lenny Van Steenhuyse from KBC. Please go ahead.

Lenny Van Steenhuyse, Analyst

Good afternoon. Lenny here. Thanks for taking the question. Quick one on ARGX-117, we see that the plan is to involve Zai Lab's Elektrofi and efgartigimod clinical development to expand the breadth of the program. I was wondering if this is a strategy you would consider as well early on in ARGX-117 development as we enter that Phase 2 development at the end of the year? Or would you prefer to take a more stepwise approach, seeing first initial proof of concept before then expanding into additional geographies for development? Thank you.

Tim Van Hauwermeiren, CEO

Thank you, Lenny. Yes, the Zai Lab partnership's scope is limited to efgartigimod only. It does not extend into any other of our pipeline assets. There’s a lot of work required with Zai Lab as they aim to support us with up to 10 indications, and we will see how the partnership evolves. This is somewhat new territory for us and an important strategic component. Let's see how that goes before making additional pipeline decisions. Thank you.

Operator, Operator

The next question comes from Yanan Zhu from Wells Fargo. Please go ahead.

Yanan Zhu, Analyst

Hi, thanks for taking my question. Just wondering about the upcoming data readout for the healthy volunteer study of ARGX-117. Could you comment on what level of PD biomarkers could translate into clinical meaningfulness in patients in terms of C2 level reduction, free C2, total C2 as well as the CH50 titers? Just what kind of expectations you have for data from this healthy volunteer study? Thanks.

Tim Van Hauwermeiren, CEO

Thank you for the question about the healthy volunteer study. This is a robust study. We do single ascending dose and multiple ascending dose work for both the IV and the subcu products. The subcu product is equipped with Halozyme's ENHANZE technology. Beyond the classical Phase I readouts, which include safety, tolerability and the safe dose for Phase 2, there will be meaningful information deduced from biomarkers. Complement is a compelling system to study biomarker-wise. We are studying total C2 levels, free C2 levels and complement activity, and we will present some of these data when we release Phase I data around mid-year. These data will inform us on how to dose in Phase 2 for the indication being MMN. So stay tuned. Expect data similar to what we unveiled during the R&D Day in New York in 2019.

Yanan Zhu, Analyst

Got it. Thank you.

Operator, Operator

The next question comes from Colleen Kusy from Baird. Please go ahead.

Colleen Kusy, Analyst

Hi, good morning. Thanks for taking my questions. So for MG, in your market research, do you have a sense of how many patients may prefer subcu versus IV formulation?

Tim Van Hauwermeiren, CEO

Sure. Colleen, I can only provide you with qualitative insights from roughly a cohort of about 50 physicians throughout the US. The larger demand leans towards the subcu option, but I'm hearing that up to 30% of patients may prefer to avoid self-injections and would want to stay on IV. I've also seen similar numbers in reports from analysts on calls with physicians. So we haven't conducted broad-based official market research yet, but that's roughly the trend we expect.

Operator, Operator

There are no more questions in the queue. This concludes our question-and-answer session. I would like to turn the conference back over to Tim Van Hauwermeiren for any closing remarks.

Tim Van Hauwermeiren, CEO

Thank you, operator. This company is executing strongly on the business plan. I think we're moving forward on all fronts as you could see in the Q1 earnings updates. We would like to conclude here. Thank you for your participation in the call and for your questions today. Thank you.

Operator, Operator

The conference has now concluded.

Beth DelGiacco, Corporate Secretary

Goodbye.

Operator, Operator

Thank you for attending today's presentation. You may now disconnect.