Earnings Call Transcript - ARGX Q2 2023

Operator, Operator

Good morning. My name is Sarah, and I will be your conference operator today. I would like to welcome everyone to the call. Thank you. I'd like to introduce Beth DelGiacco, Vice President, Global Head of Corporate Communications and Investor Relations. You may now begin your conference.

Beth DelGiacco, VP, Global Head of Corporate Communications and Investor Relations

Thank you, operator. A press release was issued earlier today, with our half-year 2023 financial results and the second quarter business update. This can be found on our website, along with the presentation for today's webcast. Before we begin, I'd like to remind you on Slide 2 that forward-looking statements may be presented during this call. These may include statements about our future expectations, clinical development, regulatory timelines, the potential success of our product candidates, financial projections, and upcoming milestones. Actual results may differ materially from those indicated by these statements. Argenx is not under any obligation to update statements regarding the future or to conform those statements in relation to actual results unless required by law. I'm joined on the call today by Tim Van Hauwermeiren, Chief Executive Officer; Karl Gubitz, Chief Financial Officer; and Karen Massey, Chief Operating Officer. I'll now turn the call to Tim.

Tim Van Hauwermeiren, CEO

Thank you, Beth, and welcome, everyone. I'll begin on Slide 3. This has been an incredibly exciting time at Argenx, and we are so happy to be delivering good news to the gMG and CIDP communities and to patients living with autoimmune diseases more broadly. We have successfully achieved several key milestones that we laid out at the beginning of the year, bringing us one step closer to our mission to transform treatment for people living with severe autoimmune diseases. Transformation to us means patients living their lives with minimal interruption due to their disease, so they can have more time to do things that they enjoy. We see this as a sign of hope for patients who have been waiting for meaningful innovation. Slide 4. At the beginning of the year, we outlined an ambitious plan to create value for our key stakeholders by driving sustained growth across the business. Commercially, our commitment was to expand into earlier gMG patient segments and broaden into new geographies. We have made progress across both of these goals, which Karen will talk about later in the call. From the clinical side, we said we would advance several programs to demonstrate the power of our FT fragments and the timeline and product opportunity. Our conviction in this opportunity has only grown following the positive CLP data last week, and we expect more momentum later this year with two Phase III leaders in ITP and our ongoing trials. We are also committed to continued investment in innovation. This includes both our early-stage programs and developing ARGX-119 and other pipeline expansion through our immunology innovation program. I'm proud to say that we are right on track with our goals for 2023, having achieved the milestones we laid out. Slide 5. Very quickly, I would like to recap the recent clinical news in CIDP and MMN. Last week, we announced positive end-year results. We studied a broad patient population and saw a 67% response rate in Stage A supporting our long-standing hypothesis that CIDP is an IgG mediated disease. In Stage B, the study showed a significant endpoint with an impressive p-value demonstrating that VYVGART Hytrulo reduces the risk of relapse by 61% based on time to first adjusted INCAT deterioration. We had several conversations with neurologists following our announcements, which were highly encouraging around the potential for these data to create a paradigm shift. The team is now preparing for upcoming interactions with the FDA on the data while simultaneously working on the SBLA. Slide 6. In June, we also shared Phase II data of empa for MMN. The key highlights are: we are advancing forward with ARDA studies. This decision follows a planned safety review by an independent data monitoring committee of 22 patients in Cohort 1, including 9 who completed the full 15 big treatment period. The IBMC confirms a favorable safety and tolerability profile, consistent with results from the Phase I study which allows us to move forward. Based on this recommendation and an internal efficacy assessment, we believe we have established proof of concept in MMN and will be advancing to a second dose cohort. We plan to report top-line results from the full study next year. MMN management is just the first indication for empa, and we believe this could be our second pipeline product opportunity. We are on track to start a Phase II study in DGF later this year and in terms of my guidance earlier next year. Slide 7. The addition of our leadership in the neuromuscular space is quickly emerging. And you can see the puzzle pieces coming together with each quarter of revenue growth from VYVGART and VYVGART Hytrulo and the key data from our clinical programs. We have generated almost $500 million in net forecast sales this year-to-date, driven by consistent quarter-over-quarter growth. VYVGART Hytrulo was approved in June. So we now have two approved commercial products for gMG patients honoring our long-term commitment to this community. With ADHERE, it's important to consider what a positive outcome means to the neuromuscular community. This was the largest CIDP trial ever run and the first that included several unique design features. We hope that we will set the bar for what CIDP trials look like going forward to ensure the right patients are getting into the study. Beyond the impressive efficacy and safety, we also uncovered important biological insights showing CIDP is IgG-mediated. This is what we envision leadership to look like for all of our indications, doing what is best for patients and physicians while furthering our fundamental understanding of disease biology. The next set of readouts within our neuromuscular franchise will be myositis, where we are also innovating with our trials by including three unique subsets: macro timing, antisynthetase, and dermatomyositis. These subsets are unified by muscle deterioration associated with the progression of the disease that can present very differently with other physical manifestations in the joints, lung, skin, or other compartments. Each subset is also characterized by its own unique IgG autoantibodies. And we believe the field is ready to use the IgG autoantibody signature to reclassify myositis. We expect a GO/NO GO decision next year, which will inform us whether to advance all these subsets into the Phase III, providing clear underlying biology insights into the broad treatment of myositis. We are also building up our pipeline opportunities with empa and ARGX-119. We are thrilled to have proof of concept in MMN, and we have also published significant ventilation data on the underlying biology. From a franchise perspective, MMN squarely fits into the core capabilities we are building. We are currently in the Phase I healthy volunteer study with ARGX-119, for which we will be evaluating its potential in other disorders as part of a Phase Ib patient cohort. Our commitment within neuromuscular extends across our business. First, the relation is per building commercially within the neuromuscular community, including patients, physicians, and other entities. We are also building a reputation clinically in how we design clinical trials to be patient-friendly and unlock key translational biology insights. And all of this is included in the scientific foundation we are building in the space, partnering with leading neuro disease biologists, seeking out opportunities to innovate and expand our pipeline going forward within neuromuscular. And with that, I'm going to turn the call over to Karl to talk about our 2Q and half-year financials and our recent equity rates.

Karl Gubitz, CFO

Thank you, Tim. Slide 8. Our second quarter 2023 financial results are detailed in our press release from this morning, so I will only highlight the key points here. The continued momentum of our launch is well reflected in our second quarter revenues; we generated $281 million in total revenues, including $269 million in global net product sales and $12 million in collaboration and other revenues. In looking at the regional breakdown of our global product sales, you can see that $244 million was from the U.S., $13 million from Japan, and $12 million from Europe and our distributor markets. The launch in Europe is largely in Germany. Remember that beginning in March, we started to accrue revenue in Germany at a projected negotiated price, which we will learn in September. This accounts for the lower quarter-over-quarter growth in Europe. Other markets will start to contribute from Q3 onwards, following our launch in Italy. Our total expenses were $383 million for the second quarter, indicating an operating loss of $102 million for the quarter. We ended the quarter with $2 billion in cash, cash equivalents, and current financial assets. This excludes gross proceeds of approximately $1.3 billion from the global offering we completed last week, which will allow us to execute on the many opportunities ahead, specifically on the heels of positive at-year data and our growing conviction in VYVGART and the rest of our pipeline. We are still in the process of reviewing how our increased ambition level will change our operational spend. So, as of today, we are not able to confirm our prior cash burn guidance of $500 million. I will provide an update at a later date. I'll now hand the call to Karen for a commercial update.

Karen Massey, COO

Thank you, Karl. Let's go to Slide 9. We started the year with a clear and straightforward vision commercially to reach more patients with VYVGART globally. We plan to do this by driving multidimensional expansion in gMG, including geographic expansion, the launch of our subcutaneous product, and driving usage into earlier gMG treatment lines. We also look ahead to the multiple data readouts expected this year and how this would drive expansion into new patient segments over time. I'm going to talk today about the continued strong performance from our gMG launch, but also about the pivotal point we are facing as we look ahead to the evolving opportunity before us. The outstanding results for mid-year have strengthened our conviction that we will be a leader beyond MG in neuromuscular, and that we can start to leverage the launch capabilities we have built to prepare for multidimensional expansion across product presentations, new geographies, and towards a portfolio of indications. Slide 10. Starting with our recent commercial performance, we had a great first half of the year, generating $489 million in net VYVGART sales over the first two quarters. This impressive revenue number translates to more patients getting access to VYVGART and more opportunity for us to change patients' lives. We are incredibly happy with the results. We can point to several key drivers of the momentum we saw in the second quarter. First, we are seeing consistent growth looking at month-over-month new patient starts. We are reaching patients in earlier lines of therapy, though we're still at the front end of reaching the 17,000 patients we believe we can address with VYVGART. The task before us is to shift into earlier lines of treatment and overcome neurologists' inertia. This will take time as neurologists gain deeper experience with VYVGART and will also require persistence from our field teams. We have seen consistent prescriber growth, both in terms of breadth and depth. We now have more than 2,100 prescribers in the U.S., and a greater percentage of them each quarter are moving beyond that first prescription and putting additional patients on treatment. We also think that VYVGART Hytrulo will help with this shift. Slide 11. We're now a couple of weeks into the Hytrulo launch and have received our first prescriptions and shipped our first vials. We will share specifics through our third-quarter call, but I was very impressed by the team's readiness at the time of approval to get the drug into the channel and to patients as quickly as possible. Our goal with VYVGART Hytrulo is to honor our long-term commitment to the gMG community with a second product option, now subcutaneous. We also aim to drive growth into early-line patients by simplifying or democratizing the treatment of gMG. We believe our positioning should be first-line after oral therapy and that will require further expansion into community practices. The diagnosis and treatment of MG patients can be complex, and can be associated with a trial and error approach or a battery of tests. Current treatment options often come with safety and tolerability challenges, which require patients to decide between symptom control, emerging side effects, or long-term safety concerns. This all requires close management from a gMG specialist, which is why patients are often referred to specialist centers. Our conviction is that with the efficacy of VYVGART, established safety and tolerability, and now 30 to 90 second injection with Hytrulo, we can expand usage deeper into the community of patients and prescribers. The more experienced community prescribers gain, the more expert they will become at diagnosing MG and treating with VYVGART. Now that we have the results of the VIB trial, we can take many of the same themes that we've seen with gMG and apply them to CIDP as well. The CIDP community has been waiting for innovation for over 30 years. With these data, we believe we can bring transformational change to patients. For me, one of the most compelling data points from ADHERE was that 91% of eligible patients who rolled over into the open-label extension study, including patients who relapsed in Part B and were given the option to go back to their prior therapy or to stay on VYVGART. We see this as a good indication that the patient experience with VYVGART is different. We know that there will also be unique challenges associated with the CIDP market based on the comfort level and loyalty associated with current treatment. However, we also see the opportunity to raise the bar on what a treatment can offer, taking into account the full patient experience, efficacy, safety, and the burden associated with administration. Slide 12. Before I wrap up and turn the call back to Tim, I want to shift to the progress we're making with our global geographic expansion. We've had three key updates since our last call and still more ahead this year, demonstrating the speed at which we are executing on our global launch strategy. First, we received approval for VYVGART in China through our partner Zai Lab at the end of June. This means we will be eligible to apply to the NRDL in 2024, which is important from a timing perspective because it will open the opportunity to patients who are not privately insured. Zai Lab also submitted the BLA to the relevant regulatory authority, and it was accepted. Earlier in July, we also successfully completed reimbursement negotiations in Italy, marking the second country within Europe to have officially launched VYVGART. I'm incredibly proud of the team expanding access for Italian patients just 11 months after European approval. Lastly, we finalized the commercial and distribution agreement in South Korea with Handok, a team with a great track record as a commercial partner. Similar to our other distribution agreements, Handok will take the lead on all regulatory and commercial activities associated with VYVGART in South Korea. Slide 13. I want to close with the vision behind all of our expansion strategies, which are the patients living with severe autoimmune diseases. On the heels of another strong quarter and a positive outcome in CIDP, we are more motivated than ever to drive a paradigm shift in how autoimmune diseases are treated. Current autoimmune treatments come with many trade-offs, and now is the opportunity for transformative change. We want to take the full patient experience into account: efficacy, safety, and treatment burden, and give patients more days without being reminded of their disease. It is the right time for meaningful change, and we believe we have a unique medicine, patient-centric strategies, and a talented team to deliver. I'll hand it back to Tim.

Tim Van Hauwermeiren, CEO

Thank you, Karen. Slide 14. Coming back to where we started, which is to look back at the plan we set forth at the start of the year. We have delivered on our promise to execute and drive sustained growth across our business. I'm incredibly proud of the team for these achievements. They do not come without a lot of hard work. We continue to show in all that we do our commitment to drive innovation and to execute with the needs of patients in mind. Our work is not done, and we still have a lot to look forward to by the end of 2023 on our path to transforming the treatment of autoimmune diseases.

Operator, Operator

Your first question comes from Tazeen Ahmad with Bank of America.

Tazeen Ahmad, Analyst

Maybe, I just wanted to focus on one of the two data catalysts that you have in the fourth quarter, specifically for the pemphigus readout. Maybe, Tim, can you frame for us what to expect in terms of the top-line results that you're going to be presenting? And in terms of feedback that you've gotten from physicians, what would be considered good data?

Tim Van Hauwermeiren, CEO

Thank you for your question. Some of the key catalysts, I think, for the remaining part of the year. In pemphigus, the primary endpoint is primarily around showing a statistically significant delta versus placebo. So we're testing a treatment versus placebo in the context of steroid tapering. The idea is to show a statistically significant win on the primary endpoint, which is complete remission on minimal therapy, that means a minimum dose of steroids. In the key secondary endpoints, we're unpacking elements that are really critical to patients, including the extent to which we can reduce steroids, which is very important for patients, as well as the speed to disease control, meaning stopping the formation of new lesions followed by the closure of the lesion. This is a summary of the key endpoints blending what the regulators care about with what patients care about. Thanks for the question.

Operator, Operator

Your next question comes from the line of Derek Archila with Wells Fargo.

Derek Archila, Analyst

I actually have two brief questions, if I may. So first, I was just hoping you could talk a little bit about the sales momentum for VYVGART. You talked about some of the ex-U.S. geographies coming online. You've launched Hytrulo now, and this push into earlier lines. So I guess, as you think about the second half, which of these do you think will be the biggest incremental contributor to sales growth? And then the second question, you stated in the PR that you're going to start the TED trial for VYVGART. Given what we're seeing with Tepezza's recent performance in the thyroid eye disease market, has your optimism around that commercial opportunity changed at all? And when will you communicate the full details of that trial design?

Tim Van Hauwermeiren, CEO

Thank you, Derek, and thanks for joining us today. I'll give your question 1A to Karen, and then I will take your question 1B, okay?

Karen Massey, COO

Thanks Tim. Thanks for the question. As you say, I think we continue to see strong momentum and I'd say consistent momentum in the launch of VYVGART. In the second half of the year, we'll continue to see that consistency across all of the factors that you mentioned. We are penetrating earlier lines of treatment and expanding that prescriber base. I see no reason why that won't continue throughout the year. We have pricing reimbursement discussions ongoing in Europe, and so we believe those will continue throughout the year. The Hytrulo launch is showing positive feedback, and that will also contribute to our growth. So I think one of the strengths we have is that we are driving growth across all of those dimensions, which should help us maintain consistent momentum.

Tim Van Hauwermeiren, CEO

Thank you, Karen. On the TED question, Derek, I can just invite you to be a bit patient. We are on track to start the trial once we finalize the trial design. I also think we can start to discuss how we think about positioning. We believe that TED is an IgG-driven disease, and we expect that the correlation between the type of autoantibody and clinical symptoms will be significant. I think VYVGART is well placed to excel in all dimensions of efficacy, safety, and convenience. So stay tuned on the TED story. Thank you.

Operator, Operator

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

Yaron Werber, Analyst

Congrats on a great quarter. Maybe, as we look into the GO/NO GO decision early next year, can you give us any parameters at all as to what you're looking for from a powering perspective in those first 30 or 40 patients? And what is the actual GO/NO GO metric?

Tim Van Hauwermeiren, CEO

Yes. Thank you, Yaron. The best analogy to draw is to draw parallels with prior trials. We think that we need to see a minimum level of response in these first 40 patients to give us confidence that this is not merely a placebo effect. This will confirm that this is a true IgG-mediated disease. We envision a seamless Phase II/III trial design where we need to meet a minimum efficacy criterion to proceed. Of course, we will look at the totality of the data, including safety, as we make our decision in this pivotal trial.

Yaron Werber, Analyst

And is it just based on placebo? Or are you thinking a little bit about the corollary of some of the competition out there? There isn't necessarily a time, but some of it is showing robust responses? Or do you have that in your sights as well into the GO/NO GO decision?

Tim Van Hauwermeiren, CEO

The GO/NO GO will primarily look at the initial emerging data profile. We are not positioned to judge based on long-term effects of the drug at this time. However, we will also take into account the long-term clinical benefits we've seen in some of the existing therapies in the Phase II trials. These data will also be collected but will not influence the GO/NO GO decision point.

Operator, Operator

Your next question comes from the line of Danielle Brill with Raymond James.

Danielle Brill, Analyst

I have a follow-up on the growth outlook for VYVGART in the second half. I'm just curious from a modeling perspective how we should think about the growth momentum. You've been seeing consistent mid-20% quarter-over-quarter growth in the U.S. Is it fair to model that moving forward? And what kind of impact, if any, should we expect from the recent launch of UCB's CRM?

Karl Gubitz, CFO

Danielle, it's Karl. Thank you for your question. As the dollar numbers increase, we cannot expect a continued 20% growth quarter-over-quarter, of course. Also, as we navigate the launch dynamics, it is important that we are patient while we secure payer contracts. It took us some time with VYVGART 18 months ago to get better positioning in the market. In terms of competition, yes, we do have new competition coming into the market. Overall, while we still expect growth, it will likely be tempered as we look into the second half of the year.

Operator, Operator

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

Thomas Smith, Analyst

Let me add my congrats on a great quarter. Just wanted to ask a high-level question. You have a really strong balance sheet, pretty incredible launch momentum in gMG. Can you just comment on how you're thinking about strategic priorities here, given your significant cash balance, how you're thinking about investment between commercial infrastructure or VYVGART indication expansion or early pipeline development? Are you considering any other BD opportunities?

Tim Van Hauwermeiren, CEO

Thomas, thank you for the question and joining us today. We are positioned to invest in every area. Our strong cash balance enables us to fully invest in the commercial dimension. We are not holding back on the immense opportunity in front of us. We have an incredible pipeline with over 60 clinical trials running now, giving a sense of urgency to pursue innovative trial designs and unpack our products' clinical potential. You can see that ARGX-117 has shown promising efficacy in MMN, and ARGX-119 is swiftly advancing through the Phase I study. We have an exciting wave of innovation progressing through clinical trials. We are also always externally focused, carefully searching for partnership opportunities. Our entrepreneurial spirit drives us to be ready to explore any opportunities that come our way.

Operator, Operator

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

Myles Minter, Analyst

Just a question on the potential self-administration of VYVGART Hytrulo. Did you have those conversations during labeling when the product got approved for myasthenia gravis and what it would take data-wise to get self-administration in the label? Would the ability to potentially self-administer in the open-label extension efforts here be sufficient to get a self-administration option on that label for both CIDP and myasthenia gravis?

Tim Van Hauwermeiren, CEO

Thanks for being with us today, and thank you for the question. Just a quick recap on the MG situation. For the first-generation subcutaneous treatment, we've seen a combination of relative complex interface with several steps that need to be followed for patients with specifics like double vision, limited dexterity, and muscle weakness. This combination creates high barriers to self-administration in the United States. Remember that we are still having discussions ongoing in Japan and Europe regarding the label, and we need to see what those will deliver. It's too soon to predict for CIDP regarding self-administration without a pre-BLA meeting with the FDA to align our expectations. We are diligently working on a second generation of the subcutaneous product represented as a prefilled syringe. That design aims to simplify user interaction and potentially facilitate self-administration. So stay tuned as we continue to progress.

Myles Minter, Analyst

Congrats on the quarter.

Operator, Operator

Your next question comes from the line of Yatin Suneja with Guggenheim Partners.

Yatin Suneja, Analyst

I have two quick questions. First, can you provide insight into the current patient mix on the drug, specifically regarding refractory patients? What percentage of those patients are receiving retreatment and how often? Secondly, can you share your thoughts on offering revenue guidance now that you have more than a year of experience since the launch?

Tim Van Hauwermeiren, CEO

Thank you, Yatin, and thanks for joining us. I'll give the question on the percentage of refractory patients and numbers of treatment frequency to Karen, and then Karl can briefly comment on your revenue question.

Karen Massey, COO

Yes. Thanks for the question. We saw higher usage in refractory patients during our early stages of launch as physicians just started gaining experience with the medicine. Over time, we've continued to see consistent movement into earlier lines of treatment. That momentum has been positive. In terms of retreatment frequency, it varies among patients and is individualized. Some require treatment frequently, while others need it less often. Overall, the data aligns with our previous assumptions, which indicated approximately five cycles for patients who show significant improvement.

Karl Gubitz, CFO

Yatin, it's Karl here. Thank you for your question. Regarding financial guidance, we’re not quite ready yet. There are too many variables, including the German price, the China launch, and the ongoing development of our subcutaneous treatment. We need to observe a few quarters of activity before being able to provide accurate financial guidance. Thank you.

Operator, Operator

Your next question comes from the line of Vikram Purohit with Morgan Stanley.

Vikram Purohit, Analyst

So we just had one on the recent launch of subcu VYVGART into myasthenia gravis. Understanding it's early, but is there any color you could provide on the demand trends you're seeing from prescribers and patients towards subcu versus IV? And have you been able to glean any trends at this phase of the launch on the types of patients that are leaning more towards subcu? And on that same topic, are you able to provide any commentary at this point on how you're finding early receptivity towards the subcu option from payers?

Tim Van Hauwermeiren, CEO

Yes. Thank you, Vikram. I'm going to limit my answer to one question. Karen, could you comment on subcutaneous launch dynamics and any trends we’re observing?

Karen Massey, COO

Yes, absolutely. It's still too early to provide definitive details on the trends you've asked about. However, we believe we have a strong value proposition, and early indications are positive. We are receiving encouraging feedback from neurologists and are pleased with the engagement from our field force. It will take time to finalize payer policies, which does impact the uptake rate right now. However, we are optimistic about the 30 to 90 seconds injection time being a considerable advantage for patients and for community neurologists.

Operator, Operator

Your next question comes from the line of Allison Bratzel with Piper Sandler.

Allison Bratzel, Analyst

Maybe just a follow-up on an earlier question regarding the prefilled syringe. Could you remind us of the expected cadence of updates on the subcutaneous prefilled syringe? It does look like you've been enrolling a Phase I bioequivalence trial in healthy volunteers for the PFS for a few months based on clintrials.gov. Just curious, though, what other clinical work would need to be carried out for that to be fileable? And if you could just outline the expected data flow and development path there, that would be helpful.

Tim Van Hauwermeiren, CEO

Allison, thank you for being with us today. I will comment on your question. Several key data components need to be generated in parallel to expedite the PFS. Currently, we have the ongoing bioequivalence study, human factor studies, and several essential CMC works happening with our CDMOs. Once these three elements come together and generate the required data, including stability data, we will be ready to submit. We will provide more granular timelines over the course of next year, but developing the prefilled syringe is a priority for us as we view it as a significant enabling factor for the long-term rollout of VYVGART and essential for self-administration.

Operator, Operator

Your next question comes from the line of Alex Thomson with Stifel.

Alexander Thompson, Analyst

I guess I had a quick follow-up on pemphigus. As we think about steroid tapering in the drug arm, what does good look like there in your view? Is it no steroid? What would a good dose of steroids in these patients look like to be clinically meaningful?

Tim Van Hauwermeiren, CEO

Alex, thanks for that question. It's important to clarify that steroid tapering is not exclusive to the drug arm; we also apply it to the placebo group. In both arms, patients start on the same steroid dosage and then decrease as per a predetermined protocol. The ultimate endpoint is achieving complete remission while on the minimum steroid dose. Meeting that minimum threshold is crucial in managing pemphigus, especially within an 8-week timeline for meaningful results. It sets the bar high, of course, and we aim to push placebo responses as close to zero as possible to demonstrate an impactful delta between active treatment and placebo. Alongside the primary endpoint, we will also collect secondary data on cumulative steroid usage and disease control speed.

Operator, Operator

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

Amy Li, Analyst

This is Amy on for Akash. Just two from us. First, on non-COVID pops. Do you envision this as something that is not to be given chronically as long-term maintenance? Or would it be more of a one-time treatment? And finally, could you revisit your expectations for when you'll reach profitability?

Tim Van Hauwermeiren, CEO

Thank you. Once again, this is two questions for the price of one. Regarding non-COVID pops, my colleague and Chief Medical Officer would highlight that we need to learn whether the treatment is sufficient to cleanse the body in a one-off instance or if chronic dosing will be necessary to effectively manage patients. This is a key question for us to address in the Phase II proof-of-concept trial — so stay tuned for updates on this. As for profitability timing, I’ll hand it over to Karl for a brief comment.

Karl Gubitz, CFO

Thank you, Amy. We will not comment further on timing toward profitability at this time, but I do want to emphasize that we are a sustainable company operating on solid ground.

Operator, Operator

Your next question comes from the line of Joon Lee with Truist Securities.

Joon Lee, Analyst

My apologies. Your next question comes from the line of Rehan Sharma with Goldman Sachs.

Rajan Sharma, Analyst

It's Rajan. Just on CIDP and posed data, is it safe to assume that you're going to be positioning VYVGART as a first-line option there to compete directly with IgG? What additional work do you think is necessary to convince the treating community that there is more pathogenic IgG activity in the disease than they may have previously assumed?

Tim Van Hauwermeiren, CEO

Yes. Thanks for that question. I think there will be significant education necessary, similar to what we did for MG, to inform our audience about the IgG-mediated nature of CIDP based on our data. We believe the trial design and results indicate that there is no need to restrict this product to the refractory setting or to IVIg therapy lines. The drug has shown comparable efficacy in patients on steroid background therapy or IVIg therapy, whether they are newly diagnosed or diagnosed recently. We do not see any grounds to categorize or niche VYVGART given the sizable opportunity it presents.

Operator, Operator

Your next question comes from the line of Joon Lee with Truist Securities.

Joon Lee, Analyst

Congrats on the progress. With CIDP data presented, how are you thinking about commercial competitiveness of VYVGART versus IVIG and at steady state? How do you see the breakdown of IVIG versus FcRn-targeted products in CIDP?

Karen Massey, COO

Thanks for the question. It's a bit too early for us to assess IVIG versus FcRn market share. We still need to continue developing our commercialization plan. However, I can share that we see a strong value proposition for VYVGART in CIDP, considering efficacy, safety, tolerability, and convenient 30–90 second dosing. We have confidence in the product and will share more information on our competitive environment as we learn more in the coming months.

Operator, Operator

Your next question comes from the line of Samantha Semenkow with Citigroup.

Samantha Semenkow, Analyst

Just a follow-up on pemphigus. Assuming the data is positive on the primary and some of the secondary endpoints during the fourth quarter, how do you envision VYVGART fitting into the treatment paradigm? I'm curious regarding your conversations with physicians and how you design the trial as well as barriers you may need to overcome regarding current treatment patterns.

Tim Van Hauwermeiren, CEO

I'm excited about our opportunity in the autoimmune disease space. Pemphigus is an area which is quite open, as patients currently have limited options primarily relying on steroids that are associated with numerous side effects or rituximab, which shows a slow onset of action. Based on the favorable Phase II clinical data reflecting a fast onset of action, superior response rate, and rich treatment durability, I believe we can differentiate ourselves from current treatments. I think there is a unique opportunity to reshape treatment paradigms, but we’ll need to wait for Phase III data to clarify the best positioning of our product in the market. Thank you for the question.

Operator, Operator

Your next question comes from the line of Joel Beatty of Baird.

Joel Beatty, Analyst

What's the mix of patients starting on Hytrulo? Are you seeing a transition of patients switching from IV VYVGART versus those for whom Hytrulo is their first experience?

Karen Massey, COO

It's too early to determine the mix of switches versus first-time users of Hytrulo. But we are receiving strong feedback on the overall value proposition of Hytrulo.

Tim Van Hauwermeiren, CEO

It would be disappointing if this was solely a switch dynamic. Right, Karen?

Karen Massey, COO

Absolutely. Our strategy is not to just switch patients but rather to extend access to those requiring community treatment with a quicker 30 to 90-second—much more accessible option.

Operator, Operator

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

Douglas Tsao, Analyst

Just following up on Hytrulo. You’ve spoken about the opportunity to penetrate the community more extensively. I'm curious, what percentage of the market does this now open up? How many patients were community-based and had limited access to VYVGART for whatever reason?

Karen Massey, COO

We still project the addressable market of VYVGART and VYVGART Hytrulo as approximately 17,000. We believe Hytrulo allows us to penetrate more effectively into the community and become better utilized after oral treatment. We are at the forefront of addressing this market.

Operator, Operator

Your next question comes from the line of Leland Gershell with Oppenheimer.

Leland Gershell, Analyst

With respect to empasiprubart, as you look forward to the Phase II second cohort MMN next year, is there a particular bar you're looking to meet, or is that data merely to inform next steps? Additionally, are you expecting to start either both of the POC studies in DM or kidney this year?

Tim Van Hauwermeiren, CEO

Yes. Thank you. I would like to clarify that empasiprubart is an exciting molecule. The Phase II trial is revised to generate pharmacokinetic/pharmacodynamic and efficacy data to inform our next steps. Ideally, the two dose cohorts will provide us sufficient information to identify optimal dosing. What we have stated publicly is that on dose cohort one, we received favorable feedback from the independent data review committee from a safety and tolerability standpoint, and we also observed promising efficacy allowing us to advance to dose cohort two. The aim is to identify a distinct separation between the two dose cohorts to refine our pharmacokinetic/pharmacodynamic models. For the other two indications, we are on track to initiate both trials as outlined in our press release. Thus, soon this molecule will be active across three indications, and we expect to identify additional opportunities ahead. Please stay tuned. Thank you for the question.

Operator, Operator

Your next question comes from the line of Xian Deng of UBS.

Xian Deng, Analyst

You have several catalysts coming up, including BP, pemphigus, TED, and more indications in the pipeline. Just wondering, are there any specific indications you'd like to highlight that may carry higher risk or if any of them stand out as potentially bigger commercial opportunities?

Tim Van Hauwermeiren, CEO

That's a challenging question because I’m equally excited about all the indications. It's difficult to specify which will be the biggest. However, I can share that collectively these opportunities should result in a substantial commercial product pipeline. I want to specifically point out that we'll soon receive marketing authorization in Japan for ITP. Also, I’m particularly eager about the myositis trial, which is innovative and involves a basket trial targeting distinct subpopulations in high unmet medical needs where there currently aren't effective treatment options. We're also enthusiastic about both pemphigus and bullous pemphigoid running smoothly along the pipeline. We remain focused on indications for which we feel confident in our biological premise and actionable clinical feasibility while maintaining an eye on commercial opportunities to transform patient care. Thank you for the question.

Operator, Operator

As there are no further questions at this time, this will conclude today's conference call. Thank you for joining us. You may now disconnect your lines.