Argenx SE 6-K, filed Jul 29, 2021
Argenx SE (ARGX)
About this 6-K
Argenx SE filed this 6-K on July 29, 2021.
MANAGEMENT REPORT
| 1. | MAIN EVENTS IN THE SIX MONTHS OF 2021 |
FIRST QUARTER OF 2021
We refer to our Q1 2021 press release.
SECOND QUARTER OF 2021AND RECENT BUSINESS UPDATE
“The first half of 2021 has been marked by clinical, financial and regulatory achievements for argenx. As we look toward 2022, we are well-positioned to build on the impressive progress we have made with our first-in-class FcRn antagonist, efgartigimod. We are expanding our commercial organization to reach patients living with generalized myasthenia gravis this year and know that these investments will benefit us in the future and support our growing, differentiated pipeline,” said Tim Van Hauwermeiren, Chief Executive Officer of argenx.
“Beyond myasthenia gravis, we are expanding the breadth of efgartigimod into our fifth and sixth indications, myositis and bullous pemphigoid and simultaneously investing in scientific breakthroughs through our Immunology Innovation Program (IIP). Our first-in-class C2 inhibitor, ARGX-117, emerged from the IIP and has the potential to be our next pipeline-in-a-product opportunity. Collectively, the demonstrated execution this year supports our ‘argenx 2025’ vision and brings us closer than ever to becoming a global, integrated, immunology company,” concluded Mr. Van Hauwermeiren.
During its July 20th R&D Day, argenx introduced its long-term vision to becoming a global, integrated immunology organization. The ‘argenx 2025’ vision includes:
| - | Efgartigimod being globally available to patients across its three expanding commercial franchises in neuromuscular diseases, hematology and dermatology |
| - | Efgartigimod commercially available or in clinical development in 15 active indications |
| - | Progress across broader immunology pipeline with ARGX-117 in multiple late-stage trials and ARGX-119 demonstrating proof-of-concept |
| - | Investment in continued expansion of differentiated pipeline through immunology innovation program, generating one new asset into pipeline each year |
On track with buildout of global commercial organization in anticipation of potential approval of efgartigimod for treatment of generalized myasthenia gravis (gMG)
| - | Biologics License Application (BLA) under review with U.S. Food and Drug Administration (FDA) with target action date of December 17, 2021 under Prescription Drug User Fee Act (PDUFA) |
| o | Marketing Authorization Application (J-MAA) under review with Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) with anticipated approval in half of 2022 |
| o | MAA on track to be filed with European Medicines Agency (EMA) in second half of 2021 |
| o | Zai Lab on track with regulatory discussions with National Medical Products Administration (NMPA) for approval in China |
| - | ADAPT Phase 3 trial results of efgartigimod for treatment of gMG published in Lancet Neurology |
| - | Hiring of salesforce to be completed in the U.S. in third quarter of 2021 and in Japan in fourth quarter of 2021 |
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| o | Ongoing engagement with gMG patient community through marketing and advocacy efforts, including award-winning docuseries “A Mystery to Me”, and continued enrollment into real-world evidence study, MyRealWorld®MG |
Efgartigimod is currently being evaluated in five ongoing registrational trials across four indications, including ADAPT-SC (gMG), ADHERE (chronic inflammatory demyelinating polyneuropathy or CIDP), ADVANCE (IV) and ADVANCE-SC (primary immune thrombocytopenia or ITP), and ADDRESS (pemphigus)
| - | Completion of enrollment expected by end of 2021 in ADAPT-SC and ADVANCE (IV); topline data in both trials expected in first half of 2022 |
| - | Broadened efgartigimod opportunity with announcement of new indications, idiopathic inflammatory myopathies (myositis) within neuromuscular franchise and bullous pemphigoid within dermatology franchise |
| o | Phase 2/3 trial of efgartigimod for treatment of myositis to start by end of 2021, pending interactions with FDA |
| o | Phase 3 registrational trial of efgartigimod for treatment of bullous pemphigoid to start by end of 2021 |
| - | Phase 2 proof-of-concept trials of efgartigimod in additional indications to be evaluated as part of collaboration with Zai Lab |
Phase 1 healthy volunteer data of C2-inhibitor, ARGX-117, support path forward into multifocal motor neuropathy (MMN)
| - | Favorable safety profile demonstrated across single and multiple ascending doses and both IV and SC formulations |
| - | Pharmacokinetic/pharmacodynamic profiles demonstrate potential for infrequent dosing schedules |
| - | Phase 2 trial of MMN patients on track to start by end of 2021 |
Immunology Innovation Program (IIP) continues to bring value to argenx as internal pipeline programs or through partnerships and licensing agreements
| - | ARGX-119, a SIMPLE AntibodyÔ aimed at boosting neuromuscular junction in disease, emerging from IIP to be next pipeline candidate within neuromuscular franchise |
| - | Regained worldwide rights to anti-CD70 antibody cusatuzumab from Janssen; argenx to evaluate alternatives to advance cusatuzumab through partnership |
| - | 15-20 discovery programs under evaluation at any point in time that have emerged from IIP |
| 2. | FINANCIAL HIGHLIGHTS |
As of January 1, 2021, the Company changed its functional and presentation currency from euro to U.S. dollars, which results in reporting financial highlights in U.S. dollar as compared to euro in prior periods. Historical financials have been converted at the average exchange rate of the related period.
Cash, cash equivalents and current financial assets totaled $2,731.0 million as of June 30, 2021, compared to $1,996.5 million on December 31, 2020. The increase in cash and cash equivalents and current financial assets resulted primarily from (i) the closing of a global offering, which resulted in the receipt of $1,092.1 million in net proceeds in February 2021, (ii) the net receipt of a $73.1 million non-creditable, non-refundable development cost-sharing payment received from Zai Lab as part of the strategic collaboration for efgartigimod in Greater China, (iii) the payment of $98.0 million related to the purchase of the priority review voucher from Bayer HealthCare Pharmaceuticals, and other net cash flows used in operating activities.
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Total operating income increased by $453.2 million for the six months ended June 30, 2021 to $487.5 million, compared to $34.3 million for the six months ended June 30, 2020. The increase was primarily due to the recognition of the transaction price as a consequence of the termination of the collaboration agreement with Janssen, resulting in the recognition of $315.1 million and the closing of the strategic collaboration for efgartigimod with Zai Lab, resulting in the recognition of $151.9 million in collaboration revenue.
Research and development expenses increased by $84.7 million for the six months ended June 30, 2021 to $273.9 million, compared to $189.3 million for the six months ended June 30, 2020. The increase in the first six months of 2021 resulted primarily from higher external research and development expenses, mainly related to the efgartigimod program in various indications and other clinical and preclinical programs. Furthermore, the research and development personnel expenses increased due to a planned increase in headcount and the increased costs of the share-based payment compensation plans related to the grant of stock options.
Selling, general and administrative expenses totaled $129.6 million for the six months ended June 30, 2021, compared to $67.9 million for the six months ended June 30, 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 consulting fees linked to the preparation of a possible future commercialization of argenx’s lead product candidate efgartigimod.
The change in fair value on non-current financial assets amounted to $11.2 million for the six months ended June 30, 2021, which is the result of the closing of a Series B financing round of AgomAb Therapeutics, for which argenx maintains a profit share in exchange for granting the license for the use of HGF-mimetic antibodies from the SIMPLE AntibodyTM platform.
Exchange losses totaled $18.4 million for the six months ended June 30, 2021, compared to an exchange gain of $0.2 million for the six months ended June 30, 2020. As a result of the change in the Company’s functional and presentation currency, the exchange losses for the six months ended June 30, 2021 are reflecting the unfavorable change in euro/U.S. dollar exchange rate, mainly attributable to unrealized exchange rate losses on cash, cash equivalents and current financial asset position in euro.
| 3. | FINANCIAL GUIDANCE |
Based on current plans to fund anticipated operating expenses and capital expenditures, argenx continues to expect its 2021 cash burn to approximately double from 2020. The increased spend will support the Company’s transition to an integrated immunology company, including the build-out of global commercial infrastructure and drug product inventory ahead of the expected launch of efgartigimod in gMG in the U.S, the advancement of its clinical-stage pipeline, including expected global trials of efgartigimod in six indications, and the continued investment in its Immunology Innovation Program.
| 4. | RISK FACTORS |
We refer to the description of risk factors in the 2020 annual report, pp. 14-48 as supplemented by the description of risk factors in our annual report on Form 20-F filed with the U.S. Securities and Exchange Commission, pp. 2-45. In summary, the principal risks and uncertainties faced by us relate to: our financial position and need for additional capital, development and clinical testing of our product candidates, commercialization of our product candidates, our business and industry, our dependence on third parties, intellectual property, our organization and operations, and the ADSs.
We also refer to the description of our financial risk management given in the 2020 annual report, pp. 289-292, which remains valid.
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| 5. | FORWARD-LOOKING STATEMENTS |
The contents of this announcement include statements that are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “intends,” “may,” “will,” or “should” and include statements argenx makes concerning its statement that the submissions in China and the EU are on track and that it is well-positioned for a global launch of its first-in-class FcRn antagonist, including that BLA for IV efgartigimod for treatment of gMG accepted for review by the U.S. Food and Drug Administration (FDA) in March 2021 with target action date of December 17, 2021 under Prescription Drug User Fee Act (PDUFA), J-MAA submitted to Japan’s PMDA and accepted for review with anticipated Japan commercial launch in 2022, MAA expected to be filed with European Medicines Agency (EMA) in second half of 2021 and Zai Lab Limited to discuss potential accelerated regulatory pathway for approval in China with National Medical Products Administration (NMPA); statements regarding its commercial readiness; its statement that enrollment in trials for fifth and sixth indications to begin in 2021; its statement that data expected mid-year from Phase 1 trial of C2 inhibitor, ARGX-117; Phase 2 dosing plan to be identified for indications including multifocal motor neuropathy (MMN), and Phase 2 trial of MMN on track to start by end of 2021; its expectation that its 2021 cash burn will approximately double from 2020; its hope to reach patients this year; its statements regarding the therapeutic potential of Efgartigimod in patients with gMG as well as several other severe autoimmune diseases mediated by IgG autoantibodies; its plans to start enrollment in two additional efgartigimod indications this year, its expectation to have Phase 1 data mid-year for its C2 inhibitor, ARGX-117, 2021 business and financial outlook and related plans; the therapeutic potential of its product candidates; the intended results of its strategy and argenx’s, and its collaboration partners’, advancement of, and anticipated clinical development, data readouts and regulatory milestones and plans, including the timing of planned clinical trials and expected data readouts; the design of future clinical trials and the timing and outcome of regulatory filings and regulatory approvals. By their nature, forward-looking statements involve risks and uncertainties and readers are cautioned that any such forward-looking statements are not guarantees of future performance. argenx’s actual results may differ materially from those predicted by the forward-looking statements as a result of various important factors, including the effects of the COVID-19 pandemic, argenx’s expectations regarding its the inherent uncertainties associated with competitive developments, preclinical and clinical trial and product development activities and regulatory approval requirements; argenx’s reliance on collaborations with third parties; estimating the commercial potential of argenx’s product candidates; argenx’s ability to obtain and maintain protection of intellectual property for its technologies and drugs; argenx’s limited operating history; and argenx’s ability to obtain additional funding for operations and to complete the development and commercialization of its product candidates. A further list and description of these risks, uncertainties and other risks can be found in argenx’s U.S. Securities and Exchange Commission (SEC) filings and reports, including in argenx’s most recent annual report on Form 20-F filed with the SEC as well as subsequent filings and reports filed by argenx with the SEC. Given these uncertainties, the reader is advised not to place any undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date of publication of this document. argenx undertakes no obligation to publicly update or revise the information in this press release, including any forward-looking statements, except as may be required by law.
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UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
ARGENX SE
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
| | | | | | | | |
| | | | As of | ||||
| | | | June 30, | | December 31, | ||
(in thousands of $) |
| Note |
| 2021 |
| 2020 (*) | ||
ASSETS |
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Current assets |
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Cash and cash equivalents |
| 5, 15 |
| $ | |
| $ | |
Research and development incentive receivables — current |
| |
| | — |
| | |
Financial assets — current |
| 6, 15 |
| | |
| | |
Prepaid expenses |
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Inventories | | 7 | | | | | | |
Trade and other receivables |
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Total current assets |
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| $ | |
| $ | |
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Non‑current assets |
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Restricted Cash - non-current |
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Financial assets - non-current | | 8, 15 | | | | | | |
Research and development incentive receivables — non-current |
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Deferred tax asset | | | | | | | | |
Property, plant and equipment |
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Intangible assets |
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Total non‑current assets |
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| $ | |
| $ | |
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TOTAL ASSETS |
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| $ | |
| $ | |
(*) The Company has adopted a change in its presentation currency from EUR to USD at January 1, 2021, as described in note 4. Accordingly, the December 31, 2020 comparative statements of financial position and related notes have been re-presented retrospectively based on the procedures as outlined in note 4.
The notes are an integral part of these unaudited condensed consolidated interim financial statements
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| | | | | | | | |
| | | | As of | ||||
| | | | June 30, | | December 31, | ||
(in thousands of $) |
| Note |
| 2021 |
| 2020 (*) | ||
EQUITY AND LIABILITIES |
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Equity |
| 9 |
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Equity attributable to owners of the parent |
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Share capital |
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| $ | |
| $ | |
Share premium |
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Translation Differences | | | | | | | | |
Accumulated losses |
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| | ( |
| | ( |
Other reserves |
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Total equity |
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| $ | |
| $ | |
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Non-current liabilities |
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Provisions for employee benefits |
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Deferred tax liabilities | | | | | | | | |
Lease liabilities — non-current | | | | | | | | |
Deferred revenue — non-current | | | | | — | | | |
Total non-current liabilities | | | | | | | | |
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Current liabilities |
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Lease liabilities — current | | | | | | | | |
Trade and other payables |
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Tax liabilities | | | | | | | | |
Deferred revenue — current |
| |
| | — |
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Total current liabilities | | | | | | | | |
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Total liabilities |
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| $ | |
| $ | |
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TOTAL EQUITY AND LIABILITIES |
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| $ | |
| $ | |
(*) The Company has adopted a change in its presentation currency from EUR to USD at January 1, 2021, as described in note 4. Accordingly, the December 31, 2020 comparative statements of financial position and related notes have been re-presented retrospectively based on the procedures as outlined in note 4.
The notes are an integral part of these unaudited condensed consolidated interim financial statements.
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ARGENX SE
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF PROFIT AND LOSS
| | | | | | | | |
| | | | Six Months Ended | ||||
| | | | June 30, | ||||
(in thousands of $ except for shares and EPS) |
| Note |
| 2021 |
| 2020 (*) | ||
Revenue |
| 11 |
| $ | |
| $ | |
Other operating income |
| |
| | |
| | |
Total operating income |
| |
| | |
| | |
| | | | | | | | |
Research and development expenses |
| 13 |
| | ( |
| | ( |
Selling, general and administrative expenses |
| 14 |
| | ( |
| | ( |
Total operating expenses | | | | | ( | | | ( |
| | | | | | | | |
Change in fair value on non-current financial assets | | 15 | | | | | | |
| | | | | | | | |
Operating income / (loss) |
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| $ | |
| $ | ( |
| | | | | | | | |
Financial income/(expense) |
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| | ( |
Exchange gains/(losses) |
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Profit / (Loss) for the period before taxes |
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| $ | |
| $ | ( |
Income tax (expense)/benefit |
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| $ | ( |
| $ | ( |
Profit / (Loss) for the period |
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| $ | |
| $ | ( |
Profit / (Loss) for the period attributable to: | | | | | | | | |
Owners of the parent | | | | | | | | ( |
Weighted average number of shares outstanding |
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Basic profit / (loss) per share (in $) |
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| | |
| | ( |
Diluted profit / (loss) per share (in $) | | | | | | | | ( |
(*) The Company has adopted a change in its presentation currency from EUR to USD at January 1, 2021, as described in note 4. Accordingly, the June 30, 2020 comparative statements of profit and loss and related notes have been re-presented retrospectively based on the procedures as outlined in note 4.
The notes are an integral part of these unaudited condensed consolidated interim financial statements.
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ARGENX SE
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE PROFIT OR LOSS
| | | | Six Months Ended | ||||
| | | | June 30, | ||||
(in thousands of $ except for shares) |
| Note |
| 2021 |
| 2020 (*) | ||
Profit / (Loss) for the period |
| |
| $ | |
| $ | ( |
| | | | | | | | |
Items that may be reclassified subsequently to profit or loss, net of tax | | | | | | | | |
Currency translation differences, arisen from translating foreign activities | | | | | ( | | | — |
Translation effect | | | | | — | | | |
Items that will not be reclassified to profit or loss, net of tax | | | | | | | | |
Fair value gain/(loss) on investments in equity instruments designated as at FVTOCI | | 15 | | | | | | — |
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Other comprehensive income / (loss), net of income tax |
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Total comprehensive profit / (loss) attributable to: |
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| | ( |
Owners of the parent |
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| | |
| | ( |
(*) The Company has adopted a change in its presentation currency from EUR to USD at January 1, 2021, as described in note 4. Accordingly, the June 30, 2020 comparative statements of comprehensive profit or loss have been re-presented retrospectively based on the procedures as outlined in note 4.
The notes are an integral part of these unaudited condensed consolidated interim financial statements.
9
ARGENX SE
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
| | | | | | | | |
| | | | Six Months Ended | ||||
| | | | June 30, | ||||
(in thousands of $) |
| Note |
| 2021 |
| 2020 (*) | ||
Operating result |
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| $ | |
| $ | ( |
Adjustments for non-cash items |
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Amortization of intangible assets |
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Depreciation of property, plant and equipment |
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Provisions for employee benefits | | | | | | | | |
Expense recognized in respect of share-based payments |
| 10 |
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| | |
Fair value gains on financial assets at fair value through profit or loss | | 15 | | | ( | | | ( |
| | | | | | | | |
|
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| $ | |
| $ | ( |
Movements in current assets/liabilities |
| |
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(Increase)/decrease in trade and other receivables |
| |
| | ( |
| | |
(Increase)/decrease in inventories | | 7 | | | ( | | | ( |
(Increase)/decrease in other current assets |
| |
| | ( |
| | ( |
Increase/(decrease) in trade and other payables |
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Increase/(decrease) in deferred revenue — current |
| |
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| | ( |
Movements in non-current assets/liabilities | | | | | | | | |
(Increase)/decrease in other non‑current assets |
| |
| | ( |
| | ( |
Increase/(decrease) in deferred revenue — non-current | | | | | ( | | | ( |
| | | | | | | | |
Cash flows (used in) / from operating activities | | | | | ( | | | ( |
| | | | | | | | |
Interest paid | | | | | ( | | | ( |
Income taxes paid | | | | | ( | | | ( |
| | | | | | | | |
Net cash flows (used in) / from operating activities |
| |
| $ | ( |
| $ | ( |
|
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Purchase of intangible assets |
| |
| | ( |
| | ( |
Purchase of property, plant and equipment |
| |
| | ( |
| | ( |
(Increase)/decrease in financial assets — current |
| 6 |
| | ( |
| | |
Interest received |
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Net cash flows (used in) / from investing activities |
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| $ | ( |
| $ | |
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Principal elements of lease payments | | | | | ( | | | ( |
Proceeds from issue of new shares, gross amount |
| 9 |
| | |
| | |
Issue costs paid | | 9 | | | ( | | | ( |
Exchange gain from currency conversion on proceeds from issue of new shares | | | | | | | | |
Proceeds from exercise of stock options | | 9 | | | | | | |
| | | | | | | | |
Net cash flows from/used in (-) financing activities |
| |
| $ | |
| $ | |
| | | | | | | | |
Increase/decrease (-) in cash and cash equivalents |
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| $ | |
| $ | |
| | | | | | | | |
Cash and cash equivalents at the beginning of the period |
|
|
| $ | |
| $ | |
Exchange gains/(losses) on cash & cash equivalents |
| |
| $ | ( |
| $ | |
Cash and cash equivalents at the end of the period |
|
|
| $ | |
| $ | |
(*) The Company has adopted a change in its presentation currency from EUR to USD at January 1, 2021, as described in note 4. Accordingly, the June 30, 2020 comparative statements of cash flows have been re-presented retrospectively based on the procedures as outlined in note 4.
The notes are an integral part of these unaudited condensed consolidated interim financial statements.
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ARGENX SE
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
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| | Attributable to Owners of the Parent (*) | ||||||||||||||||||||
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| Total |
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| | | | | | | Attributable | | |
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| | | | | | | | | | | | | | | to Owners | | | | | |||
| | Share | | Share | | Accumulated | | Translation | | Other | | of the | | | Total | |||||||
(in thousands of $) | | Capital | | Premium | | Losses |
| Difference |
| Reserves |
| Parent | | | Equity | |||||||
Balance year ended December 31, 2019 |
| $ | |
| $ | |
| $ | ( |
| $ | ( |
| $ | |
| $ | |
|
| $ | |
| | | | | | | | | | | | | | | | | | | | | | |
Total loss of the period |
| $ |
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| $ |
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| $ | ( | | $ |
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| $ |
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| $ | ( | | | $ | ( |
Share-based payment |
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Issue of share capital | | | |
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Transaction costs for equity issue | | | | | | ( | | | | | | | | | | | | ( | | | | ( |
Exercise of stock options |
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Translation effect (*) | | | | | | | | | | | | | | | | | | | | | | |
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Balance period ended June 30, 2020 |
| $ | |
| $ | |
| $ | ( |
| $ | ( |
| $ | |
| $ | |
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| $ | |
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Balance year ended December 31, 2020 | | $ | |
| $ | |
| $ | ( |
| $ | |
| $ | |
| $ | |
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| $ | |
| | | | | | | | | | | | | | | | | | | | | | |
Total profit of the period |
| $ |
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| $ |
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| $ | | | $ |
|
| $ |
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| $ | | | | $ | |
Other comprehensive income / (loss) | | | | | | | | | | | | | | | | | | | | | | |
Income tax benefit from excess tax deductions related to share-based payments | | | | | | | | | | | | | | | | | | | | | | |
Share-based payment |
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Issue of new shares |
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Share issue costs | | | | | | ( | | | | | | | | | | | | ( | | | | ( |
Exercise of stock options |
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Currency translation effect | | | | | | | | | | | | ( | | | | | | ( | | | | ( |
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Balance period ended June 30, 2021 |
| $ | |
| $ | |
| $ | ( |
| $ | |
| $ | |
| $ | |
|
| $ | |
(*) The Company has adopted a change in its presentation currency from EUR to USD at January 1, 2021, as described in note 4. Accordingly, the June 30, 2020 comparative statements of changes in equity have been re-presented retrospectively based on the procedures as outlined in note 4.
Please refer to note 9 for more information on the share capital and movement in number of shares and note 10 for more information on the share-based payments.
The notes are an integral part of these unaudited condensed consolidated interim financial statements.
11
ARGENX SE
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. | General information about the company |
argenx SE (the “Company”) is a Dutch European public company with limited liability incorporated under the laws of the Netherlands. The company (COC 24435214) has its official seat in Rotterdam, the Netherlands, and its registered office is at Willemstraat 5, 4811 AH, Breda, the Netherlands.
argenx SE is a publicly traded company with ordinary shares listed on Euronext Brussels under the symbol “ARGX” since July 2014 and with American Depositary Shares listed on Nasdaq under the symbol “ARGX” since May 2017.
2. Impacts of COVID-19 on our business
The current unprecedented challenges as a result of the COVID-19 outbreak have impacted how we operate. We have been taking, and continue to take, the necessary steps in terms of safety, risk mitigation, and financial measures to best manage through these challenging times. We have currently experienced limited impact on our financial performance and financial position, although we continue to face additional risks and challenges associated with the impact of the outbreak.
3. | Basis of preparation |
The unaudited condensed consolidated interim financial statements for the six months ended June 30, 2021 have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as issued by the IASB and as adopted by the European Union. The unaudited condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended December 31, 2020.
All amounts herein are presented in thousands of $, unless otherwise indicated, rounded to the nearest $ ‘000.
The unaudited condensed consolidated financial statements have been approved for issue by the Company’s Board of Directors (the “Board”) on July 27, 2021.
4. | Significant accounting policies |
There were no significant changes in accounting policies, critical accounting judgements and key sources of estimation uncertainty applied by us in these unaudited condensed interim financial statements compared to those used in the annual consolidated financial statements as of December 31, 2020, except for the changes below:
Financial Instruments – non-current Financial Assets
The Company holds investments in non-current financial assets, which based on IFRS 9, are either designated as financial assets at fair value through profit or loss or financial assets at fair value through OCI. The fair value of listed investments is based upon the closing price of such securities at each reporting date. If there is no active market for an equity instrument, the Company establishes the fair value by using valuation techniques.
Based on IFRS 9, the Company irrevocably elected to designate specific investments as a financial asset at fair value through OCI as the participation is not held for trading purposes nor contingent consideration recognised by an acquirer in a business combination.
Foreign Currency Transactions
Functional and Presentation Currency
12
Items included in the consolidated financial statements of each of our entities are valued using the currency of their economic environment in which the entity operates. As of January 1, 2021, the consolidated financial statements are presented in USD, which is the Company’s presentation currency.
Financial Statements of Foreign Entities
As of January 1, 2021, for foreign entities using a different functional currency than USD:
| ● | assets and liabilities for each consolidated statements of financial position presented are translated at the closing rate at the date of that statement of financial position. |
| ● | income and expenses for each statement presenting profit or loss and other comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions). |
| ● | all resulting exchange differences are recognised in other comprehensive income. |
Change in functional and presentation currency as of January 1, 2021
As of January 1, 2021, the Company changed its functional and presentation currency from EUR to USD. The change in functional currency was made to reflect that USD has become the predominant currency in the Company, representing a significant part of the Company’s cash flows and financing. The change has been implemented with prospective effect.
The change in presentation currency, effective January 1, 2021, from EUR to USD is retroactively applied on comparative figures according to IAS 8 and IAS 21, as if USD had always been the presentation currency of the consolidated financial statements. The change was made to reflect that USD is the predominant currency for the Company, and better reflects the economic footprint of the Company’s business going forward. The Company believes that the presentation currency change will give investors and other stakeholders a clearer understanding of the Company’s performance over time.
Comparison figures in the consolidated interim statement of financial position, the consolidated statements of profit and loss and other comprehensive income, the consolidated statement of changes in equity, and consolidated statements of cash flows, all condensed and unaudited, and disclosures have been re-presented, unless otherwise stated, using the procedures outlined below:
| ● | Assets and liabilities are translated into USD at the closing rates applicable at the end of each reporting period. |
| ● | Income and expenses are translated at exchange rates at the dates of the respective transaction or average rates where these are a suitable proxy. |
| ● | Differences resulting from the re-presentation have been presented as translation difference, a component within shareholders’ equity. |
| ● | Share capital, share premium, and other reserves are translated at historic rates prevailing at the date of transaction. |
13
5. | Cash and cash equivalents |
| | As of | ||||
| | June 30, | | December 31, | ||
(in thousands of $) |
| 2021 |
| 2020 | ||
Money market funds |
| $ | |
| $ | |
Term accounts | | | | | | |
Cash and bank balances |
| | |
| | |
Total cash and cash equivalents |
| $ | |
| $ | |
On June 30, 2021, cash and cash equivalents amounted to $
Please also refer to note 15 for more information on the financial instruments.
6. | Current financial assets |
On June 30, 2021, the current financial assets amounted to $
Please also refer to note 15 for more information on the financial instruments.
7. | Inventories |
| | As of | ||||
| | June 30, | | December 31, | ||
(in thousands of $) |
| 2021 |
| 2020 | ||
Raw materials and consumables |
| $ | |
| $ | |
Inventories in process |
| | |
| | |
Finished goods | | | — | | | — |
Total inventories |
| $ | |
| $ | |
On June 30, 2021, inventories amounted to $
8. | Financial Assets – non-current |
| | As of | ||||
| | June 30, | | December 31, | ||
(in thousands of $) |
| 2021 |
| 2020 | ||
Non-current financial assets held at fair value through profit or loss |
| $ | |
| $ | |
Non-current financial assets held at fair value through OCI |
| | |
| | — |
Total financial assets - non-current |
| $ | |
| $ | |
Please also refer to note 15 for more information on the financial instruments.
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9. | Shareholders’ capital |
On June 30, 2021, argenx SE’s share capital was represented by
Number of shares outstanding on December 31, 2020 |
| |
Exercise of options | | |
Global public offering on Euronext and Nasdaq on February 2, 2021 | | |
Over-allotment option exercised by underwriters on February 4, 2021 | | |
Number of shares outstanding on June 30, 2021 |
| |
On February 2, 2021, argenx SE offered
On May 11, 2021, at the annual general meeting, the shareholders of the Company approved the authorization to the Board to issue up to a maximum of
10. | Share-based payments |
On April 1, 2021, the Company granted a total of
| | | |
Stock options granted in | April 2021 | | |
Number of options granted | | | |
Fair value of options (in USD) (*) | $ | | |
Share price (in USD) (*) | $ | | |
Exercise price (in USD) (*) | $ | | |
Expected volatility | % | | |
Expected option life (in years) | | | |
Risk‑free interest rate | % | ( | |
Expected dividends | | — | |
| | | |
(*) amounts have been converted to US dollar at the closing rate of grant date | | | |
On May 11, 2021, at the annual general meeting, the shareholders of the Company approved the 2021 remuneration policy, including the Company’s 2021 Equity Incentive Plan providing in both stock option as well as restricted stock units.
Stock options
The stock options are granted to employees, consultants or directors of the Company and its subsidiaries. The stock options have been granted free of charge. Each employee’s stock option converts into
15
The stock options vest, in principle, as follows:
| ● | of the total grant on the first anniversary of the date of grant; and |
| ● | of the total grant on the first day of each month following the first full year. |
Upon leave of the employee, consultant or director, stock options must be exercised before the later of (i) 90 days after the last working day at argenx, or (ii) March 31 of the 4th year following the date of grant of those stock options, and in any case no later than the expiration date of the option.
The total share-based payment expense recognized in the unaudited condensed consolidated statement of profit and loss totaled $
11.Revenue
For the six months ended June 30, 2021, the majority of the revenue was generated under the collaboration agreements signed with Zai Lab and Janssen. These agreements comprise elements of upfront payments, milestone payments based on development criteria and research and development service fees.
| | Six Months Ended | ||||
| | June 30, | ||||
(in thousands of $) |
| 2021 |
| 2020 | ||
Upfront payments |
| $ | |
| $ | |
Zai Lab | | | | | | - |
Janssen | | | | | | |
AbbVie | | | | | | |
Other | | | — | | | |
Milestone payments |
| | |
| | |
Janssen | | | | | | |
AbbVie | | | | | | |
Other | | | | | | |
Research and development service fees | | | |
| | |
Janssen | | | | | | |
Other | | | | | | |
Total revenue |
| $ | |
| $ | |
Below is a summary of the key changes to our collaborations:
Zai Lab
On January 6, 2021, argenx and Zai Lab announced the License agreement for the development and commercialization of efgartigimod in Greater China, granting Zai Lab the exclusive rights to develop and commercialize efgartigimod in Greater China.
Under the terms of the agreement, the Company may receive up to $
16
With regard to this collaboration with Zai Lab:
| ● | The Company concluded there are |
| ● | The Company concluded that the Subscription Shares granted by Zai Lab, as included in the Share Issuance Agreement, entered into on January 6, 2021, was obtained because of the existing obligations under the terms of the Collaboration and License Agreement, and is therefore to be considered to be part of the overall consideration received. |
| ● | The transaction price of these |
| ● | The fixed part of the transaction price, as well as the $ |
| ● | The Company concludes that the license as of the effective date of the contract has standalone value. As such, the Company concluded that the promise in granting the license to Zai is to provide a right to use the entity’s intellectual property as it exists at the point in time at which the license is granted and therefore, revenue accrued has been recognised at a point in time. This conclusion was reached, taking into account following aspects: |
| o | there are no material restrictions included in the contract which would prevent Zai Lab to direct the use of, and obtain substantially all of the remaining benefits, within the Territory and considering the sales-based royalties which become due to the Company upon successful commercialisation |
| o | the current phase of efgartigimod, successfully completed the Phase III trials. |
Janssen
On June 4, 2021, the Company received a termination notification from Cilag GmbH International, an affiliate of Janssen, which results in the termination of the Collaboration Agreement to jointly develop and commercialize cusatuzumab. As a result the Company regains the worldwide rights to its anti-CD70 antibody cusatuzumab.
Under the terms of the agreement, Janssen committed to an upfront payment of $
With regard to this collaboration with Janssen, the Company concluded as follows:
| ● | There was |
17
| ● | The Company concluded that the share premium that Janssen paid above the closing price on the day of entering into the investment agreement (being December 2, 2018) was paid because of the existing obligations to deliver development services under the terms of the collaboration agreement, and was therefore considered to be part of the overall consideration received. |
| ● | The transaction price of these |
| ● | The transaction price was allocated to the single performance obligation and revenue was previously recognized over the estimated service period based on a pattern that reflects the transfer of the license and progress to complete satisfaction of the research and development activities. |
Following the receipt of the termination notification and as of June 30, 2021, the Company concluded that it has substantially satisfied the performance obligation, and as a consequence, recorded $
12. | Segment reporting |
The Company operates from the Netherlands, Belgium, the United States and Japan. Revenues are generated by external customers with their main registered office geographically located as shown in the table below.
| | | | | | |
| | | ||||
| | | ||||
| | | ||||
| | Six Months Ended | ||||
| | June 30, | ||||
(in thousands of $) |
| 2021 |
| 2020 | ||
United States |
| $ | |
| $ | |
China | | | | | | — |
Other | | | | | | |
Total revenue |
| $ | |
| $ | |
13. | Research and development expenses |
| | | | | | |
| | Six Months Ended | ||||
| | June 30, | ||||
(in thousands of $) |
| 2021 |
| 2020 | ||
Personnel expense |
| $ | ( |
| $ | ( |
External research and development expenses |
| | ( |
| | ( |
Materials and consumables |
| | ( |
| | ( |
Depreciation and amortization |
| | ( |
| | ( |
Other expenses |
| | ( |
| | ( |
Total research and development expenses |
| $ | ( |
| $ | ( |
18
14. Selling, general and administrative expenses
| | | | | | |
| | Six Months Ended | ||||
| | June 30, | ||||
(in thousands of $) |
| 2021 |
| 2020 | ||
Personnel expense |
| $ | ( |
| $ | ( |
Consulting fees |
| | ( |
| | ( |
Supervisory board |
| | ( |
| | ( |
Other Expenses |
| | ( |
| | ( |
Total selling, general and administrative expenses |
| $ | ( |
| $ | ( |
| 6. |
15. | Financial instruments and financial risk management |
The Company carried the following assets at fair value on June 30, 2021 and December 31, 2020, respectively:
| | | | | | | | | |
| | At June 30, 2021 | |||||||
(in thousands of $) |
| Level 1 |
| Level 2 |
| Level 3 | |||
Non-current financial assets |
| $ |
|
| $ |
|
| $ | |
Non-current financial assets | | | | | | | | | |
Current financial assets | | | | | | | | | |
Cash equivalents |
| | |
| |
|
| |
|
Assets carried at fair value |
| $ | |
| $ | — |
| $ | |
| | | | | | | | | |
| | At December 31, 2020 | |||||||
(in thousands of $) |
| Level 1 |
| Level 2 |
| Level 3 | |||
Non-current financial assets |
| $ |
|
| $ |
|
| $ | |
Current financial assets |
| | |
| |
|
| |
|
Cash equivalents | | | | | | | | | |
Assets carried at fair value |
| $ | |
| $ | — |
| $ | |
Non-current financial assets – Level 3
In March 2019, the Company entered into a license agreement with AgomAb Therapeutics NV for the use of HGF-mimetic SIMPLE Antibodies™, developed under the Company’s Innovative Access Program. In exchange for granting this license, the Company received a profit share in AgomAb Therapeutics NV. The Company assessed the accounting treatment and concluded that the license agreement is in scope of IFRS 15 and that any revenue should be recognized at once at the effective date of the agreement. The profit share has been designated as a non-current financial asset held at fair value through profit or loss. Since AgomAb Therapeutics NV is a private company, the valuation of the profit share is based on level 3 assumptions.
In March 2021, AgomAb Therapeutics NV secured $
Non-current financial assets – Level 1
As part of the license agreement for the development and commercialization for efgartigimod in Greater China (see note 11 for further information), the Company obtained, amongst others,
19
Current financial assets and Cash equivalents – Level 1 (see note 11 for further information)
16. | Contractual obligations and commitments |
The Company’s manufacturing commitments with Lonza, its drug substance manufacturing contractor, relate to the ongoing execution of the biologic license application (BLA) services for efgartigimod and its manufacturing activities related to the potential future commercialisation. In December 2018, the Company signed its first commercial supply agreement with Lonza related to the reservation of commercial drug substance supply capacity for efgartigimod. In the aggregate, the Company has outstanding commitments for efgartigimod under the first commercial supply agreement of $
20