argenx SE

XBRU:ARGX

Earnings Call Transcript 2020-Q3

[Operator]

Good morning. My name is Rocco, and I will be your conference operator today. At this time, I would like to welcome everyone to the conference call. [Operator Instructions] Please also note, today's event is being recorded.Thank you. I would now like to introduce Beth DelGiacco, Vice President of Investor Relations. You may begin your conference.

[Beth DelGiacco, Vice President of Investor Relations]

Thank you, Rocco. The press release was issued earlier today with our third quarter 2020 financial results and 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 developments, regulatory time lines, 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; Keith Woods, Chief Operating Officer; and Eric Castaldi, Chief Financial Officer. I will now turn the call over to Tim.

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you, Beth, and welcome, everyone. We appreciate you joining the call today. This has been an exceptional year for argenx. We have achieved several significant milestones, most notably the positive readout of our Phase III ADAPT trial, and done so in an unprecedented environment.While we are still managing the impact of COVID-19 on our lives and business, I'm continually impressed by the team we have built and their ability to deftly maneuver around the challenges which we've been presented with. We are in a very strong position as we close out 2020 and look forward to our first commercial launch next year.We know that FcRn antagonists, as a new class of medicines, have tremendous potential to transform the treatment of serious autoimmune diseases. And we are closer than ever to reaching people living with our first indication generalized myasthenia gravis.Today, we are excited to discuss the continued progress we have made in advancing our first and potentially best-in-class Fc fragments. As we focus on maximizing our leadership position with efgartigimod, we remain equally committed to investing in R&D and enriching our deep pipeline of differentiated early- and late-stage assets to generate long-term value.You'll find today's agenda on Slide #3. I will share details on the progress we've made with efgartigimod, specifically the new data we presented from ADAPT; updates on our ITP, PV and CIDP trials and our fifth indication. I will then move to the rest of our pipeline, including cusatuzumab and ARGX-117. Peter will provide more context on our commercial readiness activities, followed by a financial update from Eric before we take your questions.Let me begin with efgartigimod. In May, we reported that the global Phase III ADAPT trial met its primary endpoints, which was a responder analysis in acetylcholine receptor antibody-positive patients during the first treatment cycle. 67.7% of efgartigimod-treated patients compared to 29.7% of placebo patients achieved a greater-than-2-point improvement on the MG-ADL score for at least 4 consecutive weeks. Similar results were seen on the QMG score. 84.1% of responders had an onset of response in the first 2 weeks.Slide 5 shows that 40% of our patients, or about 2/3 of responders, achieved an MG-ADL of 0 or 1, classified as minimal symptom expression, and the substantial proportion of responders saw impressive durability, with almost 60% of patients experiencing a benefit of 8 weeks or longer and 1/3 of patients experiencing a benefit of 12 weeks or longer.Additional data from ADAPT were presented earlier this month at the MGFA scientific session by our principal investigator, Dr. James Howard. These data confirmed the rapid and clinically meaningful responses to efgartigimod that we saw from the top line but also showed additional analysis on the magnitude and repeatability of response.On Slide 6, to assess the magnitude of response, we looked at the MG-ADL and QMG score reductions at week 4, or 1 week after the last infusion. As you can look at increasing thresholds of improvement, the treatment arm continues to show benefit, while the placebo arm goes to 0. We were particularly pleased to see that 50% or more of patients achieved at least a 5-point improvement on the MG-ADL and at least a 6-point improvement on the QMG. 1/3 of patients achieved a QMG improvement of at least 9 points. These responses and the proportion of patients achieving minimum symptom expression are unprecedented and capture the most important component of this trial. These are not just scores. These are patients who are feeling better and a substantial number are virtually symptom-free.With regards to repeatability, if you look across cycles 1 and 2, almost 80% of efgartigimod patients were considered MG-ADL responders. This included 36.8% of patients who were not MG-ADL responders in cycle 1 but were in cycle 2. We saw that the MG-ADL score reduction was consistent in both cycles, with a mean change from baseline of 4.6 in cycle 1 and 5.1 in cycle 2.We also showed some additional analysis on the acetylcholine receptor antibody-negative patients. You'll recall we saw a high placebo response in these patients based on the MG-ADL score. By including the more objective measure QMG in the analysis, we started to see more separation from treated and placebo patients.Put simply, the data show that these patients responded to efgartigimod. They did so quickly and with a significant depth and duration of improvement. This is supported by a safety profile comparable to placebo, with no reduction in serum albumin. These data further demonstrate how efgartigimod is uniquely differentiated and has the potential to be the best-in-class FcRn antagonist.On Slide 9, you can see on our pipeline that the next steps for efgartigimod and gMG are on track. And we are pleased to confirm that we plan to file the BLA by the end of this year. In addition, our interaction with the FDA regarding the subcutaneous bridging strategy in MG is set to occur before year-end, and we will communicate on the path forward once we have regulatory feedback.We have heard from patients, physicians and payers that having both an IV and a subcutaneous formulation for efgartigimod will be a significant competitive advantage in MG and other indications. Our exclusive access to the Halozyme technology for the FcRn targets enables our subcutaneous administration to be a single, fast injection, which we also believe is optimal for patient comfort and convenience.As we talk through our open indications and the specifics of those trials, you can see that we are actively prioritizing subcu development to accommodate patient preferences and to adjust to this new normal, where patients may not always have easy access to all sites of care.So this brings me to the evolving strategy of our ITP program on Slide #10. We discussed the strategy on our last update call to address the enrollment delays we've been facing due to COVID-19. We consolidated the original 3 registration studies into 2. One is the ongoing IV-only ADVANCE trial, and the other is the subcutaneous-only ADVANCE-subcu trial, which is on track to begin by the end of this year.This program realignment shows our ability to adapt and be nimble as an organization. And I'm pleased with the direction in which we are headed. Ultimately, we hope this change will expedite the path for efgartigimod in ITP.Moving on to CIDP on Slide 11. The Phase II ADHERE trial of subcutaneous efgartigimod is enrolling well. And the go/no-go decision to expand the trial up to 130 patients will occur after the first 30 patients are treated in Part A.As stated in today's press release, we now expect the decision to occur in the first half of 2021 with a specific timing dependent on the impact of COVID-19 delays. Based on initial interactions with the FDA, we believe the expanded trial could be sufficient for registration in CIDP.We will also be evaluating subcu efgartigimod in our Phase III ADDRESS trial in pemphigus, which is on track to start soon. I'd like to take a moment to describe this trial in more detail. As we did with developing our Phase III trial in MG, we are working closely with patients and physicians to design the ADDRESS trial as well. By partnering with key stakeholders, we can more fully understand the remaining unmet needs for pemphigus patients and identify how efgartigimod might best offer a solution to fit into the existing treatment paradigm.Pemphigus is a skin barrier disease. So speed of onset is a crucial aspect of a potential therapy. Patients want to see healing of lesions and achievement of disease control and clinical remission as quickly as possible. We also learned that patients prioritize the ability to taper off steroids to manage side effects. Slide 12. The Phase III ADDRESS trial will be a randomized, double-blinded, placebo-controlled study, where the objective is to assess efficacy, safety and tolerability in up to 150 newly diagnosed or relapsing patients with moderate to severe pemphigus. The trial will include both pemphigus vulgaris, or PV, and pemphigus foliaceus, or PF, so that the F population will be kept in a similar manner to the acetylcholine receptor-negative population in the MG study.Patients will be randomized to receive either subcu efgartigimod or placebo for 30 weeks. Patients will start on concomitant steroids based on what we determine to be the optimized dosing regimen from the Phase II study. The primary endpoint will assess the proportion of patients who achieve complete remission on a minimum steroid dose at 30 weeks.Before I move to the rest of our pipeline, I'd like to briefly mention the fifth indication for efgartigimod, which will be discussed in more detail during an investor event in the first half of 2021. So this program is not delayed. Everything is on track, and we're moving forward. We're just not sharing yet what this indication exactly is at this time.Given the evolving competitive landscape in the FcRn class, we have decided that it would be most prudent to provide full context around this new indication closer to the Phase II trial initiation mid next year. Our team is on track at all Phase II preparation work. And we're working hard to design a thoughtful trial as we've done with all indications to date.While we wait to share details until next year, we can say that we are very excited by the opportunity this indication presents to rare disease patients. We meet the criteria we use for our indication selection strategy. That means there is a clear valid rationale around the role of autoantibodies and the defined clinical and regulatory path forward.It also fits squarely into our emerging franchise structure, with an attractive commercial opportunity across more than one of our potential therapeutic franchises. In this way, it aligns with our broader strategy to leverage our growing commercial capabilities across multiple indications.We continue to have the broadest development program among FcRn antagonists and are committed to roll out new indications at the pace of at least one per year. Going forward, we will take an approach to talk about each indication just before the Phase II initiation so not to share information before it's necessary.Now on to cusatuzumab and ARGX-117. On Slide 13, we will be sharing top line data from the Phase II CULMINATE trial in early 2021, as promised. Based on an early look from CULMINATE, we have selected 20 milligram per kilogram as the go-forward dose. And we'll be prioritizing a combination approach of cusatuzumab with the emerging standard-of-care venetoclax. The Phase Ib ELEVATE trial, evaluating double and triple combinations of CUSA, AZA and VEN, continues to enroll following a pause due to COVID-19.Slide 14. We started the Phase I healthy volunteer study of ARGX-117 targeting Q2. Data from this study are expected mid-2021. The Phase I trial will assess PK/PD, pre-C2 levels and bioavailability of both IV and subcu formulations. We will also use the Phase I study to identify a Phase II dose.As with our approach to efgartigimod, we plan to launch multiple Phase II proof-of-concept trials on the heels of strong Phase I data. We're looking at severe autoimmune diseases and have already selected multifocal motor neuropathy, or MMN, as an initial indication. We also continue to look at potential kidney indications.Finally, as part of our argenx 2021 vision, we aim to be a global integrated immunology company, prioritizing both our commercial efforts as well as our R&D engine through our immunology innovation program. ARGX-118 is the lead optimization stage as we determine how best to address the groundbreaking biology on the role of Charcot-Leyden crystals in severe airway inflammation out of the lab of Bart Lambrecht. We're also, in fact, to finalize ARGX-119 this year. And we'll likely be communicating more on these pipeline candidates early next year.As we've said many times about our IIP, this is a program about co-creation, which is at the heart of everything we do at argenx. We recognize that partnering with leading disease biologists will allow us to unlock value in our key commercial franchises and bring forward the most innovative therapies to patients.Continued investment in our antibody engineering capabilities is a key component of our role in IIP relationships. We recently announced 2 new technology partnerships with Chugai and the Clayton Foundation, underscoring our commitment to the IIP by enhancing our capabilities to build the best antibodies possible and broaden the range of targets that we may address.We also announced that we will be expanding the scope of our collaboration with Halozyme for access to the enhanced drug delivery technology. Under the expansion, we gained 3 additional exclusive targets upon nomination, which brings the total to 6 potential targets. We have already exercised access for 2 targets, FcRn and C2. We believe that having access to the enhanced technology for current and future product candidates will allow us to reach more patients with our therapeutic antibodies.With that, I'd like to turn the call over to Keith to discuss our commercial preparations in more detail. Keith?

[R. Keith Woods, Chief Operating Officer]

Thank you, Tim. If we could go to Slide 16, please. It has indeed been a very exciting year for argenx. I'm pleased to report that our commercial readiness activities remain on track as we prepare to file our first BLA by the end of the year and reach patients in 2021. An important part of our ongoing rolling BLA submission is our safety database, which we accrue from our ongoing ADAPT open-label extension. The retention rate in the open-label extension has been impressive. And we expect to be able to share data from this study at future medical meetings.We also are on track to file the J-MAA in Japan in the first half of 2021 and prepare for a launch there in 2022. We continue to progress our launch strategies in Europe and will file with the EMA shortly after filing in Japan. We expect to be able to share with you more details about our European strategy early next year.We have committed to our first 3 priority regions for the commercial launch of efgartigimod, but we also recognized the importance of making efgartigimod available globally. And we are working through our strategy in the rest of the world, likely relying on a partner for some regions. Of course, the use of additional Phase IV clinical trials in many regions of the world as well as an expanded access program is a key factor in our patient-centric values.In terms of commercial preparation, we are building an outstanding team in our 3 key regions: hiring leaders with significant launch experience in rare disease and even MG specifically. There is no doubt the right team to launch efgartigimod has been given their deep knowledge in the neurology space, their excitement around the potential of efgartigimod and their commitment to patients.We continue to grow our field team, including medical research liaisons, thought leader liaisons and key account directors on the payer side. And we expect to start hiring our planned 70-person U.S. sales force by the end of this year.We recently launched our disease awareness campaign, which we know will be a crucial component to our commercial success, particularly around engaging physician customers and building awareness of this new mechanism of action. We want to ensure that our key audiences understand FcRn as a target and the role that the autoantibodies play in MG.We continue to gain important insights from patients, from advocacy groups and physicians. We have been pleased and even surprised by our ability to have very productive conversations virtually, whether through advisory boards or events such as the MGFA or AANEM. This will be a good practice for the team as we do expect to launch in at least a partially virtual environment next year.Furthermore, while we're still in the early phase of engaging with U.S. payers, feedback from both regional and national payers has been positive, the potential for individualized dosing offered by efgartigimod is attractive, and it offers the opportunity for patients to only receive treatment when they really need it.We continue to build out and scale our global supply chain to ensure continuity of drug supply when we launch in the U.S., Japan and Europe. As you know, we have a long-established alliance with Lonza for our manufacturing, with facilities in both the U.K. and Singapore and the potential to expand even further as we launch into additional geographies or indications. We partnered with Vetter for our fill and finish of our drug product and now with Cardinal for our third-party logistics here in the U.S. We trust that our partnership with these 3 well-established players is the right decision for such a key component of our launch.Now before I hand the call over to Eric, if we take a look at Slide 17, I want to quickly mention an important project that we've been working on to engage with MG patients and build awareness of this devastating disease. Next month, we're excited to premier A Mystery to Me, a documentary film about myasthenia gravis. We partnered with film producers Sarofsky to capture the hidden toll that MG can take on those who live with it every day. We hope that by watching this docuseries, we can give a voice to MG patients and encourage broader empathy for people who not only suffer from MG but from any rare disease that can lead people feeling isolated and misunderstood.And with that, I'll turn the call over to Eric.

[Eric Castaldi, Chief Financial Officer]

Thank you, Keith. Slide 18 covers our third quarter 2020 operating results, which are also detailed in today's press release and regulatory filings. Total operating income for the 9 months ended September 30, 2020, was EUR 42.6 million, a decrease of EUR 18.6 million from the same period in 2019, due to a milestone payment we received last year under the AbbVie collaboration agreement and partially offset by the revenue recognition of the transaction price related to the Janssen collaboration and also an increase in other income, driven by higher payroll tax rebates.R&D expenses for the 9 months ended September 30, 2020, were EUR 246.3 million compared to EUR 122.8 million for the same period in 2019. Selling, general and administrative expenses were EUR 100.4 million for the 9 months of the year compared to EUR 41.7 million for the same period in 2019. The increases in R&D and SG&A expenditures over the prior year have been driven by the progress made within our late-stage pipeline, including higher clinical trial costs and manufacturing expenses, the recruitment of additional employees to support ongoing activities and higher consulting and personnel expenses. We expect operating expenses to continue to increase this year as we further advance our pipeline and prepare for future commercialization.For the 9 months ended September 30, 2020, financial expenses, which mainly relate to interest received under -- I'm sorry, received unchanged in fair value of current financial assets, amounted to EUR 1.7 million compared to a financial income of EUR 10.8 million for the same period in 2019. Exchange losses totaled EUR 55.9 million for the 9 months ended September 30, 2020, compared to an exchange gain of EUR 26.9 million for the same period in 2019.The total net loss for the 9 months ended September 30, 2020, was EUR 205.6 million compared to a net loss of EUR 45.1 million and an operating loss of EUR 54.5 million for the same period in 2019.We ended the first 9 months of 2020 with EUR 1.8 billion in cash, cash equivalents and current financial assets compared to EUR 1.3 billion on December 31, 2019. The increase was principally due to the closing of a global offering last June, including a U.S. offering and a European private placement, resulting in the receipt of EUR 730.7 million of net proceeds.I will now hand back the call to Tim.

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thanks, Eric. Please turn to Slide 19. Before we take your questions, I want to take this opportunity to offer my gratitude to our exceptional team, whose hard work and unwavering devotion to patients continue to fuel us towards our first commercial launch. We see the broad potential for FcRn antagonists to be a transformative option for patients suffering from serious autoimmune diseases. With our positive Phase III ADAPT data in hand, our growing team and commercial infrastructure, a deep pipeline of differentiated early- and late-stage programs and our strong balance sheet to drive our company forward, I believe we are well positioned to realize our argenx 2021 vision and to generate long-term value for our shareholders.Operator, you may now open the call for questions.

[Operator]

[Operator Instructions] Today's first question comes from Yatin Suneja with Guggenheim.

[Yatin Suneja, MD & Senior Biotechnology Analyst]

Congrats on all the progress. Can you maybe just talk conceptually about the pricing? I mean it seems like there are certain indications where you might need a little bit more chronic treatment or dosing and certain indication where you can get away with intermittent chronic dosing. So if you can conceptually talk about that? So that's the first question.The second question is could you maybe remind us what the infusion time is for the Halozyme subcu and what volume are you targeting.

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you, Yatin. So on your second question, it's very simple. It's subcu injection over infusion, which is a very important difference. This is a 30-second subcu injection with a volume of just above 5 mL. Keith, maybe you would like to take the first question -- the conceptual question on pricing across different indications?

[R. Keith Woods, Chief Operating Officer]

Yes, happy to, Tim. So Yatin, last call, we actually discussed the pricing and how we were thinking around MG. And we actually set kind of some goalposts and said, looking at chronic IVIg as the floor, given our strong efficacy, safety and convenience and -- remember, we said chronic IVIg on average is about $146,000 per year to treat an MG patient, and that's just the average. So your more frequently treated patients, it goes up.We've also talked about the other bookend being Soliris, but we've also said that we plan on pricing, grounding our pricing and value and do not expect to be up there towards Soliris. So we have the opportunity to price based on the data that Tim shared with you in the call today, which right now is the most impressive data that's been released in a Phase III study. So we do have this opportunity to bring value to patients.As far as the individualized dosing schedule compared with some additional indications that might be more chronic, I just want to remind you that in ITP, for example, although we will be -- we are using a more chronic dosing schedule, you also know that physicians that treat ITP, after they get their patient managed, the main thing that they want to do is slowly trend them off of medication. We also know that pemphigus, for example, we're able to treat patients and get them into complete remission. And once we do, you'll see where that will not be treated chronically but yet the next player.So we've done a lot of homework on this, and we've had the opportunity to study a great deal of our data from the ADAPT study. And we now feel very comfortable in moving forward with our pricing strategy that we'll tie into MG but also think about second, third, fourth, fifth and even more indications.

[Operator]

Our next question today comes from Yaron Werber with Cowen.

[Yaron Benjamin Werber, MD & Senior Biotechnology Analyst]

So I have just a couple about the trial design, maybe Tim. Number one, for MG and -- I'm not sure what you can comment. The subcutaneous bridging study historically was [ enhanced ]. FDA has wanted to see efficacy data. If you look at Rituxan, you look at Herceptin and DARZALEX, but those indications don't have a biomarker like IgG. So how does that factor in? And can you use an IgG as sort of a primary surrogate and then maybe like an 8-week clinical endpoint?And then secondly, for PV, I see that the trial design makes a lot of sense. Another trial design that some KOLs were talking about is maybe doing something concomitantly with Rituxan and some sort of an acute and then chronic. Any thoughts? Is that something you might want to do down the line?

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you, Yaron, and thank you for being with us on the call today. So concerning the bridging strategy, I think you're spot-on. Strategy means that you play in the strengths. And we believe that efgartigimod is a unique drug when it comes to the literally linear correlation between its PV effects, i.e., the reduction in IgGs and clinical benefits. I think the ADAPT study has again clearly demonstrated that. And it's with these data in hand that, actually, we have prepared the meeting request with the FDA. So there is a science-based case to be made. But let's wait until we have the meeting behind us. I don't want to preempt that meeting. And we will certainly communicate about the outcome of the meeting as soon as we have the written minutes.And on your pemphigus study design, you're right. I think there are several entry points into the space of pemphigus. And actually, we decided to -- after careful work with patients and physicians to, really leverage that fast onset of action and the ability to reduce steroids as fast as possible in our first study. So I think this placebo-controlled trial in a background of suboptimal prednisone or corticosteroid dosing is actually going to replicate hopefully the success of the Phase II study. And that's a very compelling proposition to get into that space ultimately. How efgartigimod is going to coexist with rituximab is, of course, topic of further studies, even when we prove success with the first study.

[Operator]

Our next question today comes from Tazeen Ahmad with Bank of America.

[Tazeen Ahmad, Vice President]

Hopefully, you can hear me clearly. Tim, I just wanted to ask you, as we await the company's top line data in early 2021, can you give us an idea of what type of information we should expect at this first look at the study and what data we should consider to be encouraging for the program?

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you, Tazeen. So obviously, in newly diagnosed AML patients unfit for chemotherapy, what you would look to see in this data would, of course, be the number of responses and the quality of the responses on the one hand, and of course, then the duration of these responses. We think also the safety information is going to be very important because we see the future for newly diagnosed [ unfit ] AML patients to be combination therapy.So the combinability of your drug [ risk ] and venetoclax with or without data is going to be very important also from a tox point of view. And then also expect data which will clearly explain why the dose is what we chose it to be, so the 20 milligram versus the 10 milligram per kilogram data.

[Operator]

Our next question today comes from Derek Archila with Stifel.

[Derek Christian Archila, Director & Senior Analyst]

So Tim, just 2 on CIDP. Maybe first, just wondering if you can provide any color on some of the challenges you are or were facing with the CIDP study enrollment and what gives you confidence that you'll be able to put out the results in the first half of 2021?And then second, I'd love to get your insights on the type of responses that would make you -- make this a go decision, and if there are any good reference points in terms of maybe IVIg responses that could kind of inform us here on the investor side.

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you, Derek, for this excellent question. So CIDP, it was a very thoughtful trial design in close partnership with physicians and patients. So we see a study which is being very well received by the community and a very high level of motivation of both physicians and patients to participate.I think the slowing down factor here is, of course, the COVID-19 pandemic, more specifically, the work on-site to initiate sites, open sites and get patients to sites. So I think the study has really picked up momentum after the first wave of the pandemic cooled off. And now I think the art will be to navigate through what clearly is the second wave going through Europe and soon probably the U.S.So it's COVID-related. To our delight, I think the study has lots of traction with the community. And we see plenty of patient excitement around innovation entering the space, which is actually stuff for innovation. At the third design IVIg, people really want to see something else and something better.On your second question, response, we have not been public on the definition of the go/no-go decision points. But clearly, I can call out, for example, the response rate which was seen in the only blinded, randomized placebo-controlled IVIg study, that's the ICE trial, where we saw a 53% response for IVIg versus a 21% response for placebo. So I think that's an interesting point of reference.

[Operator]

And our next question today comes from David Nierengarten with Wedbush Securities.

[David Matthew Nierengarten, MD & Head of Healthcare of Equity Research]

Maybe looking a little bit further in the future, we're likely to see [ old-timers ] from -- get used in myasthenia gravis have a bit lower price point than Soliris and, of course, are much less frequent infusion. How are you thinking about the competitive dynamics between your both IV product and your subcutaneous product relative to a less frequent C5 inhibitor? And in particular, both the competitive dynamics and the potential for out-of-pocket costs affecting the decision between a subcutaneous format and the IV format from a competitor?

[Timothy Van Hauwermeiren, CEO & Executive Director]

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

[R. Keith Woods, Chief Operating Officer]

Yes, happy to. David. Thank you for the questions and both very good questions. Ultimately, we are bringing forth both formulations, IV and subcu into hopefully all indications but certainly into MG upfront. Remember, we went forward with IV because of a speed-to-market strategy, and that strategy is paying off. As we said, we'll be able to launch in 2021. But as we bring the bridge forward, we know that weekly dosing, when you can have a response rate that -- as Tim shared in the prepared remarks, that was up to almost 80% of patients that responded between cycle 1 and cycle 2, and you have a safety profile of which we've had, when we talk to patients and we ask them to rank what is important to them, the #1 thing is efficacy and relieving of symptoms and #2 is safety. Actually, they recommend -- ranked their route of administration towards the bottom of the 5 measures that we took a look at with them. So when we're producing this type of efficacy and safety for a patient, you're going to have patients that are going to want to be on therapy.I think our subcu, as Tim mentioned, with a simple, single, easy injection that they will be able to administer to themselves at home, you combine that with an individualized dosing schedule, can provide quite some convenience for our patients as well. So I guess the answer to you is individualized dosing schedule with IV and a combination of the self-injection at home is how we think about -- with the overall efficacy rate is how we think about how we compete.I guess the last thing that I'll say in regard to the C5, David, is that we believe that an FcRn placed upstream of a C5 and by utilizing an FcRn and removing the autoantibody from the neuromuscular junction, you therefore have fewer autoantibodies to recruit complement. So we can affect the neuromuscular junction in 3 different mechanism ways with our mechanism of action versus just one being complement.Lastly, you mentioned out-of-pocket expense. And that's where we have great optionality because of the out-of-pocket expense that could be experienced with a subcu. We have the IV formulation that will be available. Additionally, the work that we are doing right now in our pre-commercialization is to be able to address to make efgartigimod accessible to patients that require it, whether that would be with some type of patient assistance programs or even, in some situations, compassionate use. So we're looking into all of these things so that we can bring forth the product competitively.

[Operator]

Our next question today comes from Akash Tewari with Wolfe Research.

[Akash Tewari]

For CIDP, how many naive patients are you targeting to be included within your first 30 go or no-go decision? I think we've seen from the ICE trial that 66% of those patients were IVIg naive. What internally gives you confidence that an FcRn will have efficacy in that patient population? And will your go or no-go decision look at refractory and naive patients separately? And then I have a follow-up.

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you, Akash. We are stratifying within the CIDP population for subsets of CIDP. And as you correctly point out, we are allowing in both naive and refractory patients. Basically, what we've seen in the study so far is a good split between the 2. I mean there hasn't been a predefined number. So I think we will be in a position at the go/no-go decision point for the first 30 patients to look and try to correlate signal DC, not just with subtype of CIDP but also with disease status. So I would say stay tuned. We have a good representation of both classes in the study.

[Akash Tewari]

Okay. Great. And just Alexion, at the recent Investor Day, talked about, for the gMG market, looking at the 80,000 patients who are potentially even -- not poorly controlled on steroids. You've talked about an FcRn being upstream of a C5. How -- I think -- how much do you think you could penetrate that market? And is there a possibility that you can expand into that larger patient pool?

[Timothy Van Hauwermeiren, CEO & Executive Director]

Keith?

[R. Keith Woods, Chief Operating Officer]

Yes. Thanks for the question. So I'm going to tell you what our KOLs are telling us right now, which is -- I've heard Dr. Howard just recently talked about where he would use efgartigimod. And first place he started is he would replace IVIg. He would replace plasma exchange with this product. The second thing that he talked about was being able to use it in a bridging manner because of its rapid onset of action, using it in patients where it would take a little while for another therapy to kick in like a broad immunosuppressive therapy. So he mentioned using that upfront and maybe either replacing ISTs or certainly bridging the patients to ISTs.The next area that he shared was patients hate steroids. And what the ADAPT trial showed was safety, and he repeated that over and over. And so patients hating steroids, he could see replacing the steroid use with that. So you get this broad utilization of efgartigimod.The last 2 areas, remember in this trial, it's a broad enrollment criteria. So we play all the way from second line down to the defined relapsed/refractory patients, and we also go into the broader set of patients because we included the seronegative patients in our trial.So to answer your question with one answer, yes, I think we will land into the MG space. And then I think we will expand as physicians get comfortable. But remember here, this is a brand-new mechanism of action, of which most physicians in the U.S. have never utilized. And so it is going to be about education and getting them comfortable with it as we expand into that broader set of patients.

[Operator]

Our next question today comes from Joon Lee with Truist Securities.

[Joon So Lee, Vice President]

Congrats on the progress. Just looking at the safety section of your presentation at a recent medical conference, the infection rates are largely similar between the drug and the placebo, but the drug arm does have a bit of a numerically higher value by about 10 percentage points and for both placebo and the drug there between 30% and 40% ranges appears to be a little bit high, but I'm just not sure. Is that typical infection rate for gMG patient population?And along that line, assuming there's a COVID-19 -- a mass COVID-19 vaccination program on a global scale possibly in 2021, would that impact your commercialization strategy in any way? Just wondering if the FDA would be curious to know what the impact of efgartigimod would be on the immune system possibly eliminating some of the therapeutic antibodies that the body generates.

[Timothy Van Hauwermeiren, CEO & Executive Director]

Joon, thanks for joining us today. I will pass on the second question to Keith in a minute. But in terms of safety profile, when you look at it, basically speaking, we see a safety profile. So there is no signal. Maybe you see, under medical difference, but it is small numbers. And basically, on one of the parameters we study, you see actually a signal for increased risk of infection. Remember that these patients were on broad immunosuppressants already, some of which actually do suppress the immune system to the extent you may see some increased risk of infection anyhow.Mind you, before I hand over to Keith, that the mode of action of efgartigimod is to interfere with the recycling of IgGs but not with their production. We do not target B cells. We do not target the ability of B and partner cells to produce IgGs. We only interfere with their persistence. And there's plenty of scientific literature out there showing that within FcRn antagonists, we're basically not impacting the ability of the immune response to see and react effectively to an infectious agent.How we think about commercialization in the COVID-19 environment? Maybe, Keith, you're best placed to give a few comments on that?

[R. Keith Woods, Chief Operating Officer]

Yes. So Joon, we are actually fully expecting that we would be launching this product in a COVID environment. And so I'm hopeful that we could even be in a cross-functional type of launch, where it could be some live and some virtual, but we have been studying the launches.Horizon has had a very successful launch here during COVID environment with an IV product. And so we have been studying the launches and particularly how they're engaging with the health care professionals so that we can replicate that type of launch.So all I can tell you is what I've said before. I'm glad that we did not wind up launching in 2020 because there's been a great deal of learning and a great deal of adapting that the team has had to go through.

[Operator]

Our next question today comes from Lenny Van Steenhuyse with KBC Securities.

[Lenny Van Steenhuyse, Financial Analyst]

I was also looking to circle back a bit on the subcu formulation of efgartigimod and the FDA meeting. You already touched a bit on the discussion and then let's say the impact of the biomarker-related data or note. Perhaps, could you provide some additional info on the content of the meeting, what we can expect and what the potential outcomes and impact on the development trajectory for the subcu formulation would be?And perhaps relating to that follow-up question, subcu formulation is, of course, tied to the partnership with Halozyme. What should we expect in terms of royalty out-payments to Halozyme? Companies themselves mentioned mid-single digits on average for their deals. Is this also the case for efgartigimod? Are there any specificities on this deal? Can you comment on that, please?

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you, Lenny. So on royalty, it is indeed one-size-fits-all in the deal making. So we're in the same ballpark in terms of royalties, actually identical, and that means mid-single digits.The strategy for bridging IV to subcu for the FDA meeting, we're not going to go into the details. I think we just elaborated on the fact that this is going to be based on signs. It's going to be based on a very substantial data set from our ADAPT Phase III trial and, of course, a growing safety database. I think we have the biggest safety database in this space at seventh base for efgartigimod. So expect a science-based conversation. Expect that the company, which is ready to argue a benefit/risk based on data. And as we said before, we do anticipate some level of exposure needed in gMG patients in order to effectively bridge from IV to subcu. But rest assured, Lenny, we will communicate as soon as we have the written minutes from the meeting.

[Operator]

Our next question today comes from Danielle Brill with Raymond James.

[Danielle Catherine Brill, Research Analyst]

I know we have to wait to hear the -- your fifth indication of data next year. But curious, given what we've seen with the success of Horizon's drug in thyroid eye disease, what your thoughts are on that opportunity and the potential role for anti-FcRns in the indication?

[Timothy Van Hauwermeiren, CEO & Executive Director]

Yes. Look, the list is long. There are many, many indications that there is compelling evidence that pathogenic eye disease actually drive the disease. I think TED is one of them. Actually, there's a whole series of recent publications further documenting the pathogenic role of IgGs in this devastating disease.So it's one of the many indications, but I think, from a biology point of view, it makes sense. I think it's also demonstrated now that there's a clear clinical and regulatory path to approval in this indication. And therefore, we do have this indication on our radar screen. How actually we look at prioritization of this indication is too early to discuss. But you're right, from a biology point of view, this could be an efgartigimod indication.

[Operator]

Our next question today comes from Jason Butler at JMP Securities.

[Jason Nicholas Butler]

Just the first one on ITP. Obviously, with the program you have ongoing, you'd expect to get both subcu and IV formulations approved. But just wondering, when you speak to physicians in the context of the IV and the potential to switch patients at some point to subcu, are there additional data or information that physicians would want to inform who the appropriate patients would be and how to do that?And then just second question on PV. Just if you can remind us the rationale and the epidemiology of including the pemphigus foliaceus population as well in that program?

[R. Keith Woods, Chief Operating Officer]

Yes. So Jason, I'll start with the question on subcu IV in ITP. I just want to call out that these are 2 separate studies. One is going to be exclusively IV and the other one is going to be exclusively subcu. So it will allow us to have a stand-alone advantage for patients with subcu. So they'll have both induction and maintenance with subcu. So there's not going to be a switching.When it comes to switching patients from IV to subcu, what I can tell you is, in the discussions that we've had with our KOLs, this has been more around MG. Mind you that it has been ITP. They've shared with us that when given the preference, still 30% to 40% of patients have elected to stay on IV therapy as opposed to subcu. They just simply do not want to inject themselves.And finally, lastly, the point of switching from IV to subcu, we will have data on that in the future because although we're waiting on the news from the FDA meetings, what we are not doing is standing still. So we are already working on some of our patients that come out of our open-label extension from ADAPT and look at potentially switching them to subcu so that we would have that type of information.

[Operator]

And our next question today comes from Matthew Henderson at Morgan Stanley.

[Matthew Kelsey Harrison, Executive Director]

I guess 2 for me. One, can you just comment -- when you think about CIDP, and you obviously felt confident enough to give guidance around timing now, what do you view as still the risk that, that time line could slip? Or can you just contextualize for us what potential issues you could run into that would push that out further?And then secondly, can you comment on the regulatory process in Japan? I'm just wondering how much clarity we have there once you file versus, say, a regulatory process in the U.S.

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you, Matthew. So CIDP, I think the enrollment is going swiftly, as we said. I think now the real COVID-19 exposure is that -- for those patients who are on study, that actually their ability to perform the visits would be impacted. We have tried to mitigate against it as much as we could through home administration of products and tailored medicine. But still, there is some ability required of patients to go to sites from time to time. So it's really during the stay on the study that we -- of course, we have to be careful about the impact of COVID-19 on patient logistics.With regards to the registration process in Japan, it's a pretty well understood process. I think we can really leverage the BLA filing. I think especially in the Q&A following the filing, there will be much more intensive Q&A, real-time Q&A, where I think it's more technical complications which have to do with, for example, translation from Japanese to English, and everything is to be checked, of course, double. And there's also a particular attention of the PMDA to all the aspects of the filing as compared to, for example, European or U.S. risk. But I think it's a process which is very well understood by us and by the team, and we feel very comfortable going into the process.

[R. Keith Woods, Chief Operating Officer]

Yes, Tim. Matthew, the only thing that I would add to this is going through the process, which is well understood, the only difference that you'll see from that here in the -- with the FDA is once we have approval by the FDA, we have a price set, and then we are -- the product is available in the market.In Japan, the difference is you have approval from PMDA and your product is approved and you're allowed to discuss it, but there's a 3-month period after that approval of which you set price with Japan. So there's about a 3-month stretch between the actual approval and when you can actually make product available to patients. And that's because of pricing and that standard in the practice there in Japan.

[Operator]

And our next question today comes from Douglas Tsao with H.C. Wainwright.

[Douglas Dylan Tsao, MD & Senior Healthcare Analyst]

Just curious in terms of feedback you're getting from KOLs in terms of the individualized dosing and how they intend to implement it. Do you get a sense that they're going to base this on symptoms? Or are they going to be checking IgG levels?And I'm also just curious, obviously, you have 4 week cycles. Have you heard from KOLs that might be thinking about going with a 4-week induction of sort of weekly treatment but then sort of maybe going with shorter cycles in subsequent periods with sort of different sort of intervals?

[R. Keith Woods, Chief Operating Officer]

Yes. So Douglas, first of all, the treatment with the individualized treatment, they're not going to be measuring IgGs to make their determination of when they re-dose the patient. What they have told us is your individualized treatment cycle is how I start a patient that I'm going to treat with chronic IVIg. I start them on a regularly scheduled dose, right, which would be our cycle with an interval, and then they bring them back in and they evaluate them. As the patient is maintaining the response and doing well, they will continue to stretch that cycle out longer as time goes on.As far as your second question about will they begin to customize the dose from the cycle, I think that they do this with every product available on the market. They create dosing schedules and don't stay completely rigid. I'm talking about MG treatment. They don't stay completely rigid to what the package insert says in their intervals on dosing. So we do get questions like that from KOLs.And in fact, if you take a look at the data that Tim shared, the individualized dosing, what it really is going to allow is for some patients to have very few cycles per year. And other patients, you may see physicians decide to take them with more of a chronic dose that could be administered. So they ask the questions because there's no 2 patients that are the same in MG.

[Operator]

And our next question today comes from Graig Suvannavejh with Goldman Sachs.

[Graig Suvannavejh]

A bigger-picture question maybe for Tim, and Keith, maybe you can comment, too. But over the quarter, we've seen competitive landscape developments, Phase II data for Immunovant's MG program, also the ITP Phase II data from UCB. Just wondering, bigger picture, how you think about how the competitive landscape is shaping. And obviously, given J&J's acquisition of Momenta, just broad strokes on how you think the FcRn competitive landscape is shaping up?

[Timothy Van Hauwermeiren, CEO & Executive Director]

Thank you, Graig. Maybe I will start, and I will hand over to Keith to fill in on probably some of the more commercial aspects. But I think there's one thing becoming very clear, Graig, that is, that not all FcRns are made equal. So I think we see clear baskets of clinical profiles. I think IgG4 antibodies clearly have a different efficacy and safety profile from the aglycosylated IgG1 antibodies, which typically commit less side effects. And then I think we're uniquely positioned with the fragment.I think it's fair to say that, of course, we have the largest and most advanced data set of all, but we've put the bar very high. Typically, we like to think about differentiation along the factors of efficacy, safety and convenience. I think on the efficacy side, we've put forward data from large studies now, which basically put down an unprecedented efficacy. We haven't seen anything which is coming close to that from the smaller Phase II data points we saw from competition.I think on the safety side, again, a unique position. I think it's very early, of course, to talk for some of the other molecules. But I think the ADAPT study, and especially the open-label extension, where we now have patients on drug for up to 2 years and I think an impressive pemphigus suggestion of a pretty clean safety and tolerability profile going forward with, again, a key differentiator being the fact that we do not induce any drops in serum albumin.And then I think on the convenience side, as Keith already called out, we think it's important to have both an IV and the subcu product available in the U.S. market. There is a need for both. And I think the Halozyme technology is, again, putting us in a very nice starting position for a single, fast subcu injection, not to be confused with these more lengthy and more cumbersome, for example, subcu infusions.And Keith, maybe feel free to step in if you feel I overlooked an important point.

[R. Keith Woods, Chief Operating Officer]

No. I think, Tim, you covered it from those 3 points. The only thing that I would add, Graig, is that we believe that the total space for FcRn is so much bigger than just the 4 indications that we currently have made public to you. And because of that, actually, other competitors will help grow the FcRn space, we believe, more rapid than just what we could do by ourselves.So we love the position that we're in. We love the product that we're going into this space with, but ultimately, competition can benefit all of us.

[Operator]

Thank you. And ladies and gentlemen, this concludes today's question-and-answer session and today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.