argenx SE

XBRU:ARGX

Earnings Call Transcript 2021-Q1

[Operator]

Good morning, and welcome to the argenx First Quarter 2021 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I'd now like to turn the conference over to Beth DelGiacco. Please go ahead.

[Beth DelGiacco, Vice President of Investor Relations]

Thank you. A press release was issued earlier today with our first quarter 2021 financial results and a 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 time line, 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.

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you, Beth, and good morning, everyone. We appreciate you joining us today. Starting with Slide #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, with reaching patients. This year, we are on track with our transformation into a commercial organization with the potential U.S. 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 Zai Lab. At the same time, we want to be a company known for clinical execution and good business decisions when it comes to pipeline privatization.We are focused on assets with a lot of breadth like efgartigimod and ARGX-117 and have demonstrated strong capabilities in advancing these programs. Notably, we have shown proof-of-concept in all 4 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 U.S. around our PDUFA date of December 17 and secondly Japan. We are on track to file our marketing application in Europe in the second half of 2021, and Zai 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. There's a core motivator across 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 hear that people living with MG have had to accept a new reality, 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 life-threatening crisis. Not only does this hinder patients' ability to live their own person and professional lives to the fullest, but it takes a considerable toll on their friends and families as well. It is clear that the battle we're fighting 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 2 treatment cycles and a fast onset of action in 84% of responders. With a depth of response where 60% of responders achieved an MG ADL of 0 or 1, patients could think about 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 optionality to patients. And importantly, the safety profile in ADAPT was comparable to placebo, which is a crucial element to our key stakeholders.As of today, a significant majority of patients who completed ADAPT and rolled over to ADAPT-Plus still remain in study. In addition to advancing IV at caplacizumab, we have also made progress in advancing our subcu products forward with the goal of reaching MG patients.Slide 5. The ADAPT subcu trial is underway with a target enrollment of 50 patients. In this noninferiority trial, we will compare IgG reductions between the IV and subcu products at day 29 as the primary endpoint. In addition, we had a safety database requirements for filing and the work to achieve this by switching eligible and interested patients from ADAPT-Plus to ADAPT-subcu. The formulation we are evaluating in this trial, which is being used in all ongoing trials of subcu and efgartigimod is equipped with the Halozyme-enhanced 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 subcu efgartigimod, that 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 strongly executed despite the global pandemic. Between our experienced global launch team of strong ADAPT data and our dual development of both IV and subcu formulations, we hope to support a new treatment option for people living with generalized myasthenia gravis. This positive feed out from ADAPT was not only a significant milestone for the company, but it further validated the role of 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-concept with efgartigimod in all 4 of our initial indications and currently have registrational trials ongoing across each. To date, we have dosed all 400 subjects with efgartigimod, some of whom have been treated with efgart for well over 2 years.With each trial and through our ongoing translational work, we continue to learn more about our Fc fragment and how the unique engineering of efgart may contribute to the unique efficacy and safety profile we have seen to date. Our most recent achievement within the efgartigimod program occurred during the first quarter with the announcement that we surpassed a predefined gold 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 open antibody 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. The decision also validated our indication selection strategy as we move into additional adjacent indications within our therapeutic franchises.We're also actively enrolling patients into the advanced and advanced subcu trials for ITP and 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're also well underway with our fifth and sixth indications and we'll 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 the fifth is within our neuromuscular franchise.Slide 10. As a first-in-class and potentially best-in-class FcRn antagonist, we recognize advance potential that efgartigimod could have in all community. We want to roll out new indications as quickly as we can. This is why we were particularly excited to select Zai as our partner in China because their strong development capabilities will be an asset to 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. And with Zai earning Phase II 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 in a product opportunity with ARGX-117. We look forward to showing the first clinical data set midyear from both an IV formulation and the subcu formulation equipped with Halozyme's ENHANZE technology. With our Phase 1 data, we will be showing safety and tolerability, PK/PD properties and we look to identify dosing regimens based on component biomarkers to take forward into future Phase 2 trials.Similar to the engineering enhancements we made to efgartigimod, we also optimized ARGX-117 to have sweeping capabilities. We expect these modifications will lead to differentiation in terms of the dosing level and schedule we can achieve with 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 will do the same for additional Phase 2 trials that we will start.First, we rely on biology. MMN is an [ IT ] immune-mediated disease with IgM autoantibodies activate complement via the classical pathway. C2 sits at the intersection of the classical and lectin pathway, making it an ideal target for an indication like MMN. We continue to invest in translational work in the disease pathways of MMN, and we'll share more of these data in the future.Beyond this solid biology rationale, there are also non-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 forward as we hope to reach even more patients suffering from autoimmune disease.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 Cusa, azacitidine and venetoclax in the ELEVATE trial. We will make decisions on next steps for the collaboration once we review data from ELEVATE, specifically around response rates, curability, safety and tolerability and whether there may be trends to identify from AML subsets in the trial.Slide 15. Now on to our Immunology Innovation Program or IIP, a centerpiece to 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 partner programs with AbbVie, Leo or Janssen or asset-centric companies like AgoMab or Staten, who are working with argenx creative molecules. With our wholly-owned candidates, we prioritize those that make sense within our therapeutic franchises in order to leverage core capabilities across the value chain.Slide 16. In order to boost our IIP toolkit, we are continually looking to enhance our technology capabilities. We have our proprietary V-region and Fc engineering technologies, SIMPLE, NHANCE, POTELLIGENT and ABDEG. We also have our license agreements with Chugai and Clayton to amplify our Fc engineering capabilities. With the long-term life cycle 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 4 target nominations available. And today, we also announced our recent collaboration with Elektrofi, a Boston-based company with capabilities to highly concentrate biologics into smaller volumes. While still very early in development, we believe the 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 enhanced target 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 U.S. 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 in which there has been little innovation and patients are still in need of more options. We are laser-focused on execution as we, one, grow our team; 2, expand into new indications for efgart; 3, develop our second pipeline in a product opportunity, ARGX-117; and 4, 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, Chief Financial Officer]

Thanks, Tim. Slide 18 covers our first quarter 2021 operating results, which are detailed in today's press release and regulatory filings. As we stated in this morning's press release, as of January 1, 2021, we changed our functional and presentation currency from euro to U.S. dollars. You will see our financial highlights reported in U.S. dollars going forward.Total operating income increased by $141.6 million for the first quarter 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 our 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 other clinical and preclinical programs. The higher expenses were also due to a planned increase in head count 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 cost of the share-based payment compensation plans related to the grant of stock options and also consulting fees linked to the preparation of a possible future commercialization of efgartigimod.We saw an increase in fair value on noncurrent financial assets of $11.2 million for the first quarter. This is the result of AgoMab Therapeutics closing of Series B financing round. As you are aware, we maintained a profit share in AgoMab for granting the license of ARGX-114.Exchange losses totaled $28.8 million for the 3 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-U.S. dollar exchange rate.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 our global offering in February 2021, resulting in $1.1 billion in net proceeds and the net receipt of our development cost-sharing payments received from Zai Lab. These were partially offset by our payments to buyers for a priority review voucher and the 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?

[R. Keith Woods, Chief Operating Officer]

Thank you, Eric. To echo Tim's sentiments, it's amazing to consider that the pivotal ADAPT readout of efgartigimod in MG was just 1 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 which continues 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 U.S., 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 U.S., Canada and 7 countries in Europe. We also continue to provide IV efgartigimod to patients who remain on the ADAPT-Plus study and subcu efgartigimod to patients enrolling in our ADAPT subcu trial, whether it's from rollover from IV or as new participants. As Tim already mentioned, we are still the only company actively evaluating both IV and subcu formulations of an FcRn antagonist. This is important for us to reach as many patients as possible. We believe this optionality will be 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, health care 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 better understand the disease burden associated with MG. All of these initiatives are guiding 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 the neurologists as well, 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 a critical infrastructure to help support access 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 and support a series of launches in the coming years. We now have over 500 employees globally, including growing commercial organizations within the U.S., 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 to get the differentiated medicines to patients in need.Slide 22. 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 that in-person or virtual inspection can occur as needed.To conclude, we see signs of hope that the effects of the global pandemic will be somewhat attenuated by our December 17 PDUFA date. Even so we are preparing for the likelihood that we will launch in a partially virtual environment and that 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?

[Timothy Van Hauwermeiren, CEO & Executive Director]

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 a foundation to expand our team and reach new indications and geographies.We have made meaningful progress with our lead asset efgartigimod and are focused on execution as we advance forward 6 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 readouts from ARGX-117, which we hope will launch our next broad pipeline opportunity into meaningful autoimmune indications.And 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 to your questions.

[Operator]

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Derek Archila from Stifel.

[Derek Christian Archila, Director & Senior Analyst]

Congrats on the progress, guys. One question, all right. So maybe this is for Keith. You talked about the pre-approval access program for efgartigimod in MG patients. So just wanted 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?

[R. Keith Woods, Chief Operating Officer]

Derek, and thanks for the question. So 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 the time -- at this time right now the commitment is to only for patients that are with MG that cannot participate in a clinical trial. Because remember, if a patient can participate in a clinical trial, we are actively enrolling our subcu 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. You know that 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 Tim stated in the prepared remarks, they can roll over into our subcu bridging study.

[Derek Christian Archila, Director & Senior Analyst]

Got it. Okay. And there's no cap on the number of patients you can get into that access program?

[R. Keith Woods, Chief Operating Officer]

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 Christian Archila, Director & Senior Analyst]

Cool. All right. Congrats again on the progress.

[R. Keith Woods, Chief Operating Officer]

Thank you.

[Operator]

The next question comes from Akash Tewari from Wolfe Research.

[Amy Li]

This is Amy on for Akash. On your Elektrofi partnership, is this more of a backup option? Or are you seeing any sort of benefit with their micro particulate suspension technology versus [ Halo ] in areas including AE, ADA or PK? And then if we could just sneak in one more on MG. Given you know [ SEM ] [indiscernible] ran 26-week MG trial, they have an earlier 8-week primary endpoint, has the FDA specifically said anything on what they expect for efficacy between the weeks 8 and 26? And that's it.

[Timothy Van Hauwermeiren, CEO & Executive Director]

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. So the way you have to think about our collaboration with Elektrofi is that we're always thinking 5 steps ahead. This is a relatively early stage technology. And it's a promising technology if you want to break through the barrier of the typical physical limits of the concentration you can achieve with a biological like an antibody or an antibody fragment.You may remember that for efgartigimod, we already reached a 200-milligram per millimeter concentration, which is phenomenal. But if you want to break through that, you need different type of technology, and that's what we're seeking to access through the Elektrofi collaboration. The backbone of our subcutaneous product presentation approach continues, of course, to be the Halozyme technology. That subcu execution is now in play across all our indications. Maybe, Keith, you want to address the FDA question?

[R. Keith Woods, Chief Operating Officer]

Happy to do so Tim. So Amy, thanks. Yes, our primary endpoint was, in fact, at week 8, but we continue to retrieve these patients throughout the entire study. In fact, we've shared that at that primary endpoint at week 8, we had a 67.7% response rate. But after a second cycle, almost 80% of patients that were exposed to efgartigimod had a response. So we're sharing the continued positive clinical efficacy data with the FDA as we go through review.

[Operator]

The next question comes from Tazeen Ahmad from Bank of America.

[Tazeen Ahmad, Vice President]

Just wanted to get a little bit of color regarding the specifics of your collaboration with Zai Lab. Can you just remind us what are the total milestones potentially expected? And when could the next milestone be in the collaboration?

[Timothy Van Hauwermeiren, CEO & Executive Director]

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 milestone -- regulatory milestone, which will happen downstream. And then all remaining parts of the economics actually situate themselves in a royalty Zai Lab would pay to us on net sales in their territory. Thank you.

[Operator]

The next question comes from Joon Lee from Truist Securities.

[Joon So Lee, Vice President]

Can you talk a little bit about your ongoing dialogue with payers ahead of the approval? And how you're thinking about pricing per vial, given your individualized dosing regimen, how much of an inter-patient or even intra-patient variation are there in frequency? And how quickly can you also get a J code established post-approval?

[R. Keith Woods, Chief Operating Officer]

Yes. So Joon, a few things. First of all, we have a fully staffed U.S. market access team. So we not only have our teams to cover the national payers, but we also, throughout the U.S., have a team placed that's covering all of the regional payers. So we continue to have regular dialogue with the payers. I want to remind you that they're pleased with an approach such as individualized dosing because they don't want to have to pay for a therapy or medication when it's not needed. With that leaves the question for them, okay, what can I expect?And so what we are sharing over time is what occurred in the ADAPT trial and in the ADAPT-Plus trial so that we can have an idea of what is the average number of cycles that are going to be required in a year. And you're going to have some -- we have some patients that get a really long benefit from one cycle of efgartigimod. And those patients are going to be the less expensive patients. We have others that are going to require more chronic treatment. But what we will do is look at the average and see how that how that distribution curve shapes out.And then we are pricing for the annual value to manage a patient, to put a patient in a minimal symptom expression and then be able to maintain them there. And we will price for the average on that, and that backs us right into our vial price.

[Operator]

The next question comes from Danielle Brill from Raymond James.

[Danielle Catherine Brill, Research Analyst]

I was just wondering if you could maybe comment a little bit more on the PAA program enrollment. I'm curious how it's tracking compared to your internal expectations? And I mean, if you could share how many patients you've enrolled, that would be great.

[R. Keith Woods, Chief Operating Officer]

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

[Operator]

The next question comes from Yaron Werber from Cowen.

[Yaron Benjamin Werber, MD & Senior Biotechnology Analyst]

Actually I have a question about 117 for MMN. Maybe can you -- I don't know if you can share with us how are you thinking about the time to evaluating 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.

[Timothy Van Hauwermeiren, CEO & Executive Director]

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

[Operator]

The next question comes from Jason Butler from JMP.

[Jason Nicholas Butler]

I had another one on 117 actually. Just if you're thinking about the potential for a longer duration or durability effect 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?

[Timothy Van Hauwermeiren, CEO & Executive Director]

Jason, thank you for being us today. Thank you for this question. We haven't disclosed a trial design yet, and we will do so. You know that we do that. I would suggest that you take a look at, for example, the CIDP trial, which we unveiled the trial design to give you a feeling of how you could work in this type of diseases. We consider MMN to be very similar to CIDP when it comes to thinking through the pitfalls of clinical trial and execution, design and execution. Thank you.

[Operator]

The next question comes from James Gordon from JPMorgan.

[James Daniel Gordon, Senior Analyst]

James Gordon, JPMorgan. I had a question on a new mechanism. So I saw that Alexion are taking the all Factor D inhibitor into Phase 2 for MG. So the question is, how promising do you see that sort of approach for treatment of a disease like MG? And could an oral Factor D work even more broadly than MG? Any of the other indications that you're planning on targeting with an FcRn inhibitor or the reason not to be too optimistic there? And was it -- a clarification just on the Elektrofi formulation. What is the earliest that that might potentially be able to come to market, please?

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you, James. Concerning your question on the involvement of complements in MG, whether you have an C5 block or effective D blocker, what we know about the disease biology is that actually the autoantibody is at the heart of the disease biology. It's exerting multiple pathogenic modes of action at the neuromuscular junction. Complement recruitment is just one of them.It's also a statistical neuroreceptor blockades, cross-linking and internalization which are in play. And therefore, we think that IgG removing agent like efgartigimod should be upstream of any complement inhibitor regardless whether that would be a C5 blocker or effective D blocker. Concerning your question on Elektrofi, it's too early to give you a time line for if and when a product could hit the market. This is a novel technology, which we, to a certain extent, going to pioneer in close collaboration with our partner Elektrofi. Thank you.

[Operator]

The next question comes from Douglas Tsao from H.C. Wainwright.

[Douglas Dylan Tsao, MD & Senior Healthcare Analyst]

Just wanted to revisit the question on pricing. You sort of indicated you're going to sort of price to the average duration. I'm just curious, have you engaged with payers in sort of more of a value-based model, meaning just sort of setting an annual price regardless of how many treatments they need, but just sort of controlling some of these disease, the MG or any other diseases in development?

[R. Keith Woods, Chief Operating Officer]

Yes. So Doug, we have engaged with payers on exactly that. We've also done a great deal of market research after showing them the data and acting them what they believe the annual value is. And I've stated this before, you have a product that's being used in MG right now that's approved with Soliris that has a retail up to 700,000 per year. And it's being pretty well covered by payers for relapsed/refractory MG. I think that we are going to be able to offer a great value to the payers and to the patients because of the clinical impact that we can have on these patients.And again, we're looking at efgartigimod in the big picture. It's bigger than just the launch of MG. We're already in 4 indications. We'll be in 6 before the end of the year with aspirations to go up to 10 indications. So we need to think about that as we go to price as well. Thanks.

[Operator]

The next question comes from Graig Suvannavejh from Goldman Sachs.

[Graig Suvannavejh]

I had a question just on your expected announcement of fifth indication and a sixth indication for efgartigimod. Could you just remind us if those indications will evaluate both an IV and a subcu or if you're leading with a subcu formulation? And then in terms of the indications in themselves if one or both of them will be overlapping with your existing disease areas of interest or if they will establish a new beachhead?And then secondly, maybe just a quick one on your upcoming R&D Day. How much of that R&D Day will you spend talking about perhaps your non-efgartigimod, non-117 and non-cusatuzumab pipeline, whether they be proprietary or partnered?

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you, Graig. Thank you for being with us today. Concerning your first question. It is our vision to have both the IV and subcu products available in each and all of our indications. You will see from the pipeline updates that we have been prioritizing for the more recent indications the subcu product execution, simply because it gives a small degrees of freedom during this COVID pandemic. We already disclosed publicly that the fifth indication will fit squarely in Keith's neuromuscular franchise, and we will be talking more about the sixth indication, of course, soon.The R&D Day will mainly focus I think on efgartigimod and cusatuzumab, but the agenda will be made public soon, and then maybe we can interact for further questions on the agenda then. Thank you.

[Operator]

The next question comes from Rosie Turner from Barclays.

[Rosie Turner, Research Analyst]

Just one on manufacturing, if I may. So I know Lonza is your key partner there, and they've been having some issues manufacturing the Moderna vaccine in terms of delays. And I was just wondering how your discussions with them are progressing? And if there's any indication it could be some delays in the beginning of 2022 when you're ready to start launching?

[Timothy Van Hauwermeiren, CEO & Executive Director]

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

[R. Keith Woods, Chief Operating Officer]

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 additional pressure on the supply chain. Fortunately, we had already ramped up production prior to the pandemic because of the -- you can see how much we're putting into our pipeline and then going into China where there's a huge population. So we wanted to make sure that we had ramped up our supply well in advance, and we did that.And finally, regarding communication with Lonza, we have a very good relationship with Lonza. And I can tell you that we speak to them pretty much on a weekly basis going through all of the logistics. So I feel quite confident in where we are now. And we've taken all the precautions that we can. So unless something unforeseen, we should be in good shape.

[Rosie Turner, Research Analyst]

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

[R. Keith Woods, Chief Operating Officer]

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

[Operator]

The next question comes from Yatin Suneja from Guggenheim.

[Eddie Hickman, Research Analyst]

This is Eddie on for Yatin. So I just wanted to ask how you're thinking about the filings for ITP? Are the 2 advanced trials each sufficient on their own? Or will you need 2 separate sBLAs? Or do you need to see to test in both and file together? And then are there any safety requirements or gating factors that differ between those 2 formulations?

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you, Eddie. So the -- I believe that both the IV and the subcu trial in ITP would jointly satisfy the requirements of the FDA for the BLA filing. So the data packages of both trials would feed into one and the same BLA and that then indeed would meet their requirements in terms of 2 independent studies, but also the requirement in terms of size of the safety database.

[Operator]

The next question comes from Lenny Van Steenhuyse from KBC.

[Lenny Van Steenhuyse, Financial Analyst]

Quick one on 117. We see that the plan is to involve Zai Lab actively and after taking more clinical development to expand the breadth of the program. Was wondering if this is a strategy that you would consider as well earlier on in 117 development as we entered that Phase 2 development at the end of the year? Or would you prefer to take a more stepwise approach from seeing first initial proof-of-concept before then expanding to additional geographies for development?

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you, Lenny. Thanks for being with us. So you're right that the Zai Lab partnership, the scope of the partnership is limited to efgartigimod. It does not reach into any other pipeline asset of the company. And look, there's a lot of work on the plate of Zai Lab if they want to help us on up to 10 indications. And we will see how the partnership evolves. This is, to a certain extent, new territory for us. It's an important strategic component to design. And let's see how that goes before we make any further pipeline decisions. Thank you.

[Operator]

The next question comes from Yanan Zhu from Wells Fargo.

[Yanan Zhu, Senior Equity Analyst]

Just wondering about the upcoming data readout for the healthy volunteer study of ARGX-117. Could you comment on the -- what level of PD biomarkers could translate into clinical meaningfulness in patients in terms of the C2 level reduction, free C2, total C2 as well as the CH50 titer? Just what kind of expectation do you have for the data from the healthy volunteer study?

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you for the question about the healthy volunteer study. So this is a pretty 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 NHANCE technology. And you're spot on above and beyond your classical Phase 1 readouts, which would be safety tolerability and a safe dose for Phase 2, there would be meaningful information deducted from biomarkers. Complement is a very interesting system to study from a biomarker point of view. And you're right, we are studying total C2 levels, free C2 levels and complement activity, and we will be showing you some of these data when we release Phase 1 data around the middle of the year.And how then these data will have informed us about how to dose in Phase 2 first indication being MMN. So stay tuned, but you can expect data similar to the Santa Monica [indiscernible] data, which we unveiled during the R&D Day in New York in 2019. Thank you.

[Operator]

The next question comes from Colleen Kusy from Baird.

[Colleen Margaret Kusy, Research Associate]

So for MG, in your market research, do you have a sense for how many patients might prefer subcu versus IV formulation?

[R. Keith Woods, Chief Operating Officer]

So Carlene, I can only give you -- this is not going to be true market research. It's only going to be in speaking with roughly a cohort of about 50 physicians throughout the U.S. I think that you will see that there will be a larger demand to be on subcu, but I'm hearing -- and there's up to 30% of patients that do not want to stick themselves with a subcu injection and would want to stay on IV. I've actually also seen a very similar figure to that when some of the analysts have done calls with physicians. So haven't done any broad-based official market research, but that's roughly the numbers that we're thinking.

[Operator]

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

[Timothy Van Hauwermeiren, CEO & Executive Director]

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 update. We would like to conclude here, and thank you for your participation to the call and the question today. Thank you.

[Operator]

The conference is now concluded.

[Beth DelGiacco, Vice President of Investor Relations]

Goodbye.

[Operator]

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