argenx SE

XBRU:ARGX

Earnings Call Transcript 2022-Q3

[Operator]

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the call. [Operator Instructions]. I would like to introduce Beth DelGiacco, Vice President of Corporate Communications and Investor Relations. You may begin your conference.

[Beth DelGiacco, executive]

Thank you, operator. A press release was issued earlier today with our Third Quarter 2022 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 development, 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 to conform those statements in relation to actual results unless required by law. I'm joined on the call today by Tim Van Hauwermeiren, Chief Executive Officer; Karl Gubitz, Chief Financial Officer; and Keith Woods, Chief Operating Officer. I'll now turn the call over to Tim.

[Tim Van Hauwermeiren, executive]

Thank you, Beth, and welcome, everyone. As we approach the end of the year, we are pleased to be here today with a message of consistent pipeline and commercial execution over the last 3 quarters. We continue to deliver strong results from our global VYVGART launch making progress towards our goal of bringing a paradigm shift in treatment to people living with generalized myasthenia gravis. We set out at the beginning of the year to prove that we could launch a drug that with our experienced team and core strategies, we could transition into a global integrated immunology company. About 3 full quarters into the launch, we have generated almost $230 million in net product revenue, demonstrating that our capabilities as an organization extends beyond antibody engineering, immunology research and clinical development and into bringing immunotherapy and new modality to patients.

Slide 4, we have identified 3 key drivers of our launch success, which we hope to replicate as we plan for the anticipated approval and launch of our subcu products in the first half of next year. First, the unmet need and severity of the disease was even more significant than we realized and the demand for a new treatment option has been high. During the third quarter, we crossed the 2,000 mark of patients on drug globally. We hear every day how debilitating the disease is and in fact, our market research shows that BeatMG is second only to ALS as the worst disease neurologists treat.

Many patients given their jobs due to the severity of the symptoms or side effects from current medication, they require working support or feeding tubes because they have difficulty swallowing. Many gMG caregivers are also out of work to provide full-time care to their loved ones. To quantify this burden, we have invested a lot of time in gathering real-world evidence, which has corroborated the anecdotes we heard on significant loss of productivity and impact on quality of life. Second, the VYVGART data [indiscernible] with health care providers, we are setting a new standard of treatment based on the efficacy and safety profile observing ADAPT and ADAPT+ and these data are translating in clinical practice.

We get positive feedback from physicians on the speed of onset and depth of response, including patients achieving minimum symptom expression. In fact, we observed 40% of all treated patients achieving MSC in ADAPT after just one treatment cycle. This is quickly becoming an essential outgo measure for patients and physicians.

And third, the core strategies we put in place appear to be the right ones, and we have strong engagement with our patients, physicians and payers. Keith will provide updates on these strategies, but I'm very proud of our cross-functional team, which has worked closely in collaboration to achieve these results.

Slide 5, as you know, we believe gMG is just the beginning for VYVGART, and next year will be a busy year with label expansion opportunities. Top line data are expected from our ongoing registration trials in CIDP, ITP and PV and each of these indications represent a sizable opportunity given the treatment gaps patients still face. We implemented innovative trial designs across the board that will provide us with important data for physicians in how they treat their patients. Next year, we've continue to anticipate top line results from CIDP in the first quarter of 2023.

Slide 6, we have been having our learnings from tests and trails to design here an innovative way. Patients need to have confirmed active CIDP in order to roll into stage A, where they must demonstrate a response to efgartigimod before advancing to stage B. In Stage B, patients are randomized to stay in efgartigimod or switch to placebo and the study stops once you have 8 events or relapses. Remember, this is an event-driven trial, which means we monitor the rate of dropouts to assess timing to data. We will, of course, continue to update you on this timing as necessary.

We're also expecting top line results in the second half of 2023 from our second ITP trial, ADVANCE SC. The 2 ADVANCE studies will support registration in here. Slide 7 highlights results from the first ADVANCE IV trial. [indiscernible] reported data from the advance IV study in May, we held an advisory board to gain feedback from the hematology community. The physicians were very excited by the fast onset of action and increased separation between the platelet counts of treated patients and placebo throughout the study.

They were also encouraged by the safety profile, which was consistently before we observe and adapt, from senses loss that these data support positioning of VYVGART as a third line treatment option [indiscernible]. They agreed that depending on additional data, there could be potentially early live patients as well.

Slide 8, many of the physicians on our advisory board were part of the ITP International Working Group that was formed to build assessment criteria of clinical trials modernized to clinical practice. The IWG Group that the goal of an ITP therapy should be to get patients to a safe platelet count to prevent clinically significant bleeding and to do so with little toxicity. In advance, 51% of treated patients were almost based on the IWG criteria, defined as achieving platelet counts over 30,000, a twofold increase from baseline and the absence of any bleeding. This IWG response rate resonated particularly well with our hematologists and further support our expected VYVGART positioning with [indiscernible], we expect data in the second half of 2023 as well.

Slide 9, this is an indication where the launch translation studies to [indiscernible] about efgartigimod based on the durable remissions we observed in Phase II. In these patients, autoantibody levels did not return to baseline in the same way as total ITG levels. Looking deeper, this correlated with a reduction in the autoreactive B cells, which are responsible for producing the autoantibodies. We are now looking more broadly across the indications to see if you observe a similar disease-modifying outcome. This type of translation work is part of who we are as a company. Through our commitment to both patients and the science, we want to advance our leadership in FcRn biology with new data and publications on the differentiation of our FC segment.

We also see our commitment to immunology innovation with our earlier stage pipeline and our partnered programs, both of which emerged from our immunology innovation program. Our partnered programs can take 2 forms, whether licensing relationship or a spin-off company based around anagenic assets. Slide 10, ARGX-117 is our first-in-class sweeping antibody targeting C2 in the complement cascade. Last year, we shared Phase I data indicating that the repeat dosing we can reduce C2 levels by over 95% for a sustained period of time. This would indicate the potential for an effective dosing profile.

We are currently evaluating ARGX-117 in a Phase II trial for the treatment of multifocal motor neuropathy and not very serious neuromuscular autoimmune disease and the second part of IVIG indication with a neuro. We believe there's a lot of opportunity with our C2 inhibitors across several of our therapeutic franchises, and we begin to show the first set of clinical data next year. Running out the assets in our neuromuscular franchise on Slide 11. We are on track to file a CTA by the end of the year for our MuSK Agonist ARGX-119. We will start a Phase I trial in the first quarter of 2023, in which we will assess the patient cohorts at the higher doses, including congenital myasthenic symptoms and to MuSK MG.

Slide 12, we are also seeing exciting recent progress with 2 of our partner molecules with anti-advancing ARGX-115 to the next stage of development and really exercising its option on ARGX-112. If you look back at our Argenx pipeline of antibody candidates, we have demonstrated human proof concept in 8 candidates out of our immunology innovation program, whether in our own hands or with a partner. This is exactly the reason we continue to invest in our innovation engine because it is efficient and productive with a strong track record to date.

Before I turn the call over to Karl for a financial update, I want to spend a few minutes talking about my co-founder from Hans de Haard, who will retire at the end of this year. Hans leave us with an incredible legacy of scientific innovation. He founded the company based on his breakthrough in antibody engineering, which has been the backbone to most of our pipeline candidates, that it was his humility and drive to always learn about the scientific breakthroughs of others turn that as to assets like Efgartigimod and ARGX-117. We are very grateful that he will continue as an adviser to our immunology innovation program, pushing us to find novel disease targets and promising the pathways and as a strategic adviser to the R&D committee of our Board.

We will still gain from Hans's sound scientific guidance, while he moves to the next stage of this carrier. We are also fortunate that we have such a strong successor to step into the important role of chief scientific officers. Peter Ulrichts has been with the company since 2010 was foundation to the creation of Efgartigimod and has been committed to the development of a Efgartigimod in this creation. We watched the first subject ever to be dosed with the drug and has been leading Efgartigimod's clinical science till that time. He served as a scientific leader of our neuromuscular franchise, strategizing Efgartigimod, ARGX-117 and ARGX-112 and most recently took over as head of all clinical science. This will be a very natural transition for the company and Hans and Peter will be working side by side for the next couple of months as they have been now for more than a decade. And with that, I will turn the call to Karl.

[Karl Gubitz, executive]

Thank you, Tim. Our third quarter 2022 results are detailed in our press release from this morning. So, I will only highlight the key points here. On Slide 13, you will find global net product revenues from the VYVGART launch for the first 3 quarters of the year. In the third quarter, we generated $131.3 million in global net product revenues, which was comprised of $124.1 million from the U.S., $6 million from Japan and $1.2 million from Europe and our distributor markets together with a $21 million from the first quarter and the $75 million from the second quarter. This puts our year-to-date global product revenues at $227.3 million.

As with previous quarters, inventory in the channel at quarter end was well managed and reflects less than 2 weeks' worth of viles. Slide 14, total revenues for the quarter were $146.5 million, which also includes $6.7 million in collaboration revenue driven by a EUR 5 million milestone from Leo Pharma following the option exercise for ARGX-112 and $8.5 million in our operating income. Cost of sales for the quarter were $10.3 million. Our total R&D and SG&A expenses for the third quarter were approximately $236.7 million and $108.2 million, respectively, and can mainly be attributed to efgartigimod and other pipeline research expenses as well as marketing and headcount expenses related to our global launch.

The increase and research and development expense was mainly driven by the recognition of a priority review voucher submitted with the BLA filing for subcu efgartigimod. On the cash balance, we ended the third quarter with almost $2.4 billion in cash, cash equivalents and current financial assets. We continue to expect to utilize up to $1 billion of available cash in 2022, which will support our ambitious growth plans, specifically the rollout of our global launch, clinical development of efgartigimod in 10 indications and ARGX-117 2 indications, investment in the global supply chain and the pipeline expansion through our immunology innovation program. You can find additional details behind these numbers in the press release we issued this morning. I'll now hand the call to Keith for a commercial update.

[R. Woods, executive]

Thank you, Karl. Slide 15, I'd like to start by saying that I'm really proud of our global team for their execution and accomplishments over the last year. We are now 10 months into our U.S. launch, 5 months into our Japan launch and almost 2 months into our Germany launch. Every day, I see dedication to deliver on our mission to serve gMG patients who are suffering from this devastating disease. We have now filed in Israel, Canada and China. So, 2023 will bring additional approvals that will expand our patient reach even further.

As Tim mentioned, our core strategies are working to engage our key stakeholders, patients, physicians and payers. Slide 16, on the patient side, we saw more than 50% growth of gMG patients globally on therapy, which indicates we had another quarter of significant demand for VYVGART. We believe we are setting a new standard in how gMG patients can manage their disease based on the efficacy and safety data we have shown in ADAPT. Most importantly, the data we saw in ADAPT are translating into the real-world setting. Approximately 50% of our patients are still coming from IVIg, meaning that IVIg is the most advanced therapy that they have experienced. We will be watching closely over the next several quarters to see if we continue to see the shift into earlier treatment segments.

We want to expand to reach those patients who have only experienced Mestinon, steroids or broad immunosuppressants. This will be an indicator of our long-term trajectory on our path to reach 17,000 addressable patients. Our sales team has done a great job engaging a broad group of neurologists focused primarily on their top target physicians in the first quarters of launch. We still face the effects of the pandemic, so the decision to hire an experienced sales force has been crucial to our early launch success. By the end of the third quarter, we see continued breadth of prescribers, though most have still only written 1 or 2 scripts.

The opportunity ahead of us is to drive more experience with current prescribers and reach new potential customers that our field teams have not yet engaged with. Moving on to payers. Engaging with the payers prior to approval was a key driver on early uptake of VYVGART. And as a result, patients have been able to successfully gain access. At the start of the third quarter, we received a dedicated J code, which helped to shorten the time between script and infusion and improve the rate of patients going on therapy. We will be taking a similar approach of the early engagement with payers ahead of the expected subcutaneous decision.

Following our European approval in August, we are also spending significant time with payers in this region. We launched in Germany and are able to sell through the unknown process while we negotiate price. The value dossiers have also been submitted in key countries like France, Italy and the U.K. We would like to point out that the reimbursement process can take several years. So, the growth trajectory in Europe is expected to be consistent but much more gradual than what we've seen in the U.S. and Japan.

Slide 17, patients and physicians have embraced the individualized treatment approach with VYVGART, feeling that aligns with the gMG experience. It's still too early to understand the distribution of treatment cycles on an annualized basis, but it seems to be aligning with what we saw in the ADAPT and ADAPT+ data based so far. We believe the value of individualized treatment approach goes beyond dosing schedule and extends to delivery as well. We are looking forward to the FDA decision on our subcutaneous BLA filing in the first half of next year because it gives the opportunity to bring the patient more ways in which they can individualize their treatment. It also gives us a second opportunity to show our commitment to the patient community by seeking approval in adult gMG patients regardless of antibody status.

Slide 18, before I turn the call back to Tim, I want to once again commend our global team. They have exemplified teamwork and dedication always putting the patients first as we advanced on our mission. We believe we have a truly transformative therapy with VYVGART, and we're motivated every day by the stories we hear from patients. We know that the connections we are building now within our neuromuscular franchise will serve us well as we look ahead to our future launches. There are still many unknowns on the long-term variables of our launch, but we are delivering where we can to generate demand and convert that demand into patients on therapy. Tim?

[Tim Van Hauwermeiren, executive]

Thanks, Keith. Slide 19. In closing, we are very happy to report a strong quarter of results. We are energized by the early response to VYVGART and the engagement from our stakeholders. We are ready to drive forward in 2023 with more global launch expansion and approval decision on our subcutaneous product in gMG and several key data readouts with efgartigimod and ARGX-117. Autoimmunity is ready for a revolution patients across all of our indications, need more options, especially options that may come with a fast onset of action, a robust set of response and a few side effects. Similar to what happened in the field of oncology, we are shifting to precision interventions in autoimmunity and Argenx is part of this shift. We believe that if we stick to our strategy of focusing on both the signs and the patients, bringing first-in-class immunology breakthroughs to the patients who need them that we had a significant future of value creation ahead. I would now like to open the call to your questions. Operator?

[Operator]

[Operator Instructions] Your first question comes from the line of Yaron Werber from Cowen.

[Yaron Werber, analyst]

Great. Congrats on a terrific quarter Tim. Maybe just a quick sort of integrated question. Karl, can you give us a little bit of a sense on what the gross to net impact is? I know you typically give it every 6 months in your financials. But is there any change from what we saw sort of in the first half? And then secondly, are you expecting typical seasonality sort of in Q1? I know it's obviously -- it's an IV product, it's a buy and bill, but still, is there going to be an impact?

[Tim Van Hauwermeiren, executive]

Thank you, Yaron and thank you for joining us today. I'm going to hand the first question indeed to Karl. And then Keith, I will ask you the question on possible seasonality, right? So, Karl?

[Karl Gubitz, executive]

Thank you for your question. Indeed, we don't provide detailed financials in Q3. If you go back to the Q2 financials which is on our website, you'll see the gross to net is varied to 12 it's 88%. And we don't have an update on that. And also no reason for that to move materially, thank you.

[R. Woods, executive]

Excuse me on the second question about seasonality. I'll tell you one thing that we're learning during this launch is that gMG is very promotionally sensitive, which means when there's times when our team is not in the sales out in the field or physicians and customers are not in their office, we could potentially see a lag. We also know that here in quarter 4, around Thanksgiving and towards the end of the year, there are fewer days that infusion centers are open, and you may have fewer patients making trips to their doctors. So, we're expecting some seasonality.

[Operator]

Your next question comes from the line of Tazeen Ahmad from Bank of America Securities.

[Tazeen Ahmad, analyst]

A real quick one here for your subcu for VYVGART. Can you just remind us if there's any differences in how it's dosed relative to the IV formulation specifically the regimen, the cycle interval and to the extent that you can, how are you thinking about pricing for that formulation versus the current formulation of IV?

[Tim Van Hauwermeiren, executive]

Thank you, Tazeen. Thank you for joining us today. I will quickly handle these 2 questions. So, think of the subcu product presentation as being dosed in exactly the same way as we do for IV. Remember, it's the explicit wish of patients to go to individualized dosing and therefore, the subcu product has been tested and will be marketed following the same individualized dosing as we did for IV. But from a pricing point of view, the homework is still in full process. So, stay tuned, we will communicate about the price in a similar way as we did for IV when we get closer to the market. Thanks for the question.

[Operator]

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

[Yatin Suneja, analyst]

A couple of questions for me, mostly on the CIDP front. Could you just comment on how you are handling the steroid use in the study? That's first part. Can you also talk about the historical relapse rate that we should be thinking about? I think when we look at the literature, it's somewhere around 45%, 50% and you're looking at 88 events. So, what does that translate to? And what would you like to show once the data around that what sort of efficacy profile that you all should report.

[Tim Van Hauwermeiren, executive]

Thank you, Yatin. So, the way the CIDP trial has been designed is such that after we confirm or validate your CIDP diagnosis, we will basically take away your current medication and see you worsen to a certain degree on any of these scales. And then we will try to restore what you lost in terms of function with a efgartigimod therapy. So that's how you have to think about how we deal with steroids they will basically be taken away from the patients. Remember that we enroll naive patients, so newly diagnosed patients on steroids 4 patients on IVIg. So we do it with both steroid and IVIg patients. Newly diagnosed patients, of course, would not have to go through that first step. And then on expectations around response rate the IVIg study, which we typically compare and referenced to would be the ICE trial, where you roughly saw a 50% response rate on IVIg. Nothing to say on relapse rate, Yatin, it's too early to comment from that point of view. Thanks for the question.

[Operator]

Your next question comes from the line of Manos Mastorakis from Deutsche Bank.

[Manos Mastorakis, analyst]

So I just wanted to ask if you could give us an update on the duration of treatment and the average number of cycles that you are seeing so far since launch in the real world as well as how should we think about Germany and Japan ramp versus the U.S. ramp uptake as well as finally, if you could comment on the impact of the J code launch in July? And how should we think about its impact, basically?

[Tim Van Hauwermeiren, executive]

Thanks for the question. And maybe, Keith, you want to talk about how do you see the distribution of the cycle using merge in the real world compared to the ADAPT study? And then maybe also briefly comment on how the Germany and Japan brand is going, on J code, we can be very brief. This is mainly facilitating the turnaround time between enrollment and drug administration. But Keith, go ahead on the first 2 questions, please.

[R. Woods, executive]

Sure. Happy to do so, Tim. So first of all, on the duration of treatment in the real world, what we're seeing is very consistent with what we've seen in the ADAPT study. I can tell you that we're getting to a point where more patients and physicians are getting very comfortable with the individualized dosing because I think one of the key things about the individualized dosing is that once each individual patient has established that interval between cycle 1 and cycle 2 and then between cycle 2 and cycle 3, it stabilizes. And that becomes their own individual cadence. It makes it very easy to project when they'll need their next cycle and very easy to schedule their time in the infusion share.

Right now, it's still too early to give annual projections. But I would say that we're on target for what we've seen in the ADAPT study and the ADAPT+ study on the typical patient requiring roughly 5 cycles per year. As far as the Japan launch and the Germany launch, in Japan, you know we have the broadest label on the globe where we include seronegatives. I'm really pleased to share that we're adding not only seronegative patients, but also astecholane receptor positive patients. We have consistent growth in that marketplace through our first 2 quarters. And so, we believe that the Japan pace of adding patients will continue to remain consistent. Germany, we're barely 2 months into the launch. We're off to a nice start. But as you know, we're negotiating reimbursement. What I can say, having spent a few weeks in Germany last month is that the unmet medical need for gMG patients in Germany is no different than we see other places on the globe. They haven't had new therapies available to them in decades, and they're really looking for a new option in their treatment.

[Operator]

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

[Derek Archila, analyst]

Congrats on the progress during the quarter. So just 2 quick ones from us. I guess one of your future competitors have kind of commented on FcRn's potential indications like RA that might not solely be autoantibody driven. So just kind of curious if you've done any preclinical work there and just your thoughts on pursuing those types of indications? And then also, is it fair to think that a good benchmark for the pace of enrollment for both the [ Barre ] trial and the [ Alchemia ] trail would it be similar to CIDP?

[Tim Van Hauwermeiren, executive]

Thanks, Derek. Thanks for being with us today. On enrollment piece, it's very difficult to triangulate from current or past trials. I would say that each trial has its own dynamics and enrolling a global trial in a rare disease is always hard work, as we know. So, stay tuned that if we are going to update you on a regular basis on how enrollment will be going. On the topic of rheumatoid arthritis RA, we are not excluding that subsets of patients actually would see an active role of autoantibodies. It's just that the biology is less clear, it's less linear than what we like to see for the indications we prioritize. So, we always start from a solid biology rationale, and then we take it from there. So, this is not a priority indication so far for us.

[Operator]

Your next question comes from the line of Alex Thompson from Stifel.

[Alexander Thompson, analyst]

On subcu efgartigimod, I was wondering if you could comment on your confidence in obtaining a broad label given that your new evidence here is from the IV formulation and sort of how the FDA might view that? And then assuming you do get approved in a broad label, how much larger do you view the addressable population?

[Tim Van Hauwermeiren, executive]

Thanks, Alex. Thank you for this question. So, you do know that we have a long-standing commitment to the gMG patient population. So, we do have evidence that efgartigimod may work in the seronegative patients. We saw that not only in the open-label extension study at depth plus but we also saw that in the subcu studies. So, these data have been submitted and we are indeed going through a broad label. The outcome of that interaction with the regulator, of course, will have to be seen. So, let's leave it as a review issue, but it doesn't diminish our long-term commitment to the gMG patient population. Thank you.

[Operator]

Your next question comes from the line of Matthew Harrison from Morgan Stanley.

[Matthew Harrison, analyst]

Great afternoon. I guess 2 things I wanted to ask about. So, the first is just a follow-up to the prior question around some of these larger indications where the biology is less clear. Tim, just how do you think strategically about that? Obviously, the strength of the business is improving and sort of your position in terms of ability to see sort of the runway of where revenue could be is improving. How do you think about potentially taking some more risk in terms of some of these potentially larger indications? And then secondly, just a question on phasing. I know people have asked about Japan and Germany. Just maybe more broadly, as you think about some of the other countries that could come online next year. Anything we should be thinking about specifically about those countries in terms of phasing?

[Tim Van Hauwermeiren, executive]

Thank you, Matthew. And I will hand over the question on global expansion to Keith in a minute. On the larger indications, Matthew of course, we've been looking at some of them. I think we're pretty explicit about what our next priorities will be in terms of the ten indications we're targeting. Remember that we stated the aspiration to be in 15 indications by 2025. I think we're well on track to do that. But for the moment, we're not going to compromise on the biology rationale for these indications. So, we will always start from biology, then overlay that with clinical feasibility and then finally, look also at commercial opportunity. We like commercial spaces where the unmet medical need is very high and where you actually have an ability to influence the treatment paradigm similar to what we have seen for some of the indications where we already play and maybe, Keith, you want to address the second question on global expansion, what we expect next year?

[R. Woods, executive]

Sure, happy to do so, Tim. So, Matthew, as you know, we have the European regulatory approval, but we actually only promote in one country in Europe right now, and that's Germany. In the other countries, we have submitted dossier so that we can get reimbursement and then begin to promote. So, I call out particular to you, France, Italy, the U.K., where we'll continue to make progress. But that's just the beginning. So, when you think about phasing, thinking about our desire to be able to serve patients across the European Union. Secondly, we mentioned Israel, Canada and China, where we've already filed. So, I think you can expect to see us to begin to commercialize in those countries in 2023. And I think next year, we'll give further clarity on some of our expansion plans to other parts of the globe, so we can maximize our ability to serve patients.

[Operator]

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

[Danielle Brill, analyst]

Congrats on the quarter. I'm curious how we should be thinking about the cadence of new patient adds moving forward? And then looking ahead to the subcu availability, what impact that might have on broadening use? Are there any early indications that docs are waiting for the subcu to prescribe more broadly?

[Tim Van Hauwermeiren, executive]

Thank you, Danielle and thank you for joining us on the call today. Keith would you mind taking these 2 questions please?

[R. Woods, executive]

Yes, happy to do so. So, Danielle, as far as new patient adds, I think we gave some clarity here that we passed the 2,000-patient mark during quarter 3, and we've seen over 50% growth in quarter 2 for over quarter 2 in our patient adds. But I think the real question is what's the trajectory going to continue with the launch. All of our demand indicators continue to show consistent growth. But you have to remember that right now, the so many of our patients, almost 50% are coming from their most recent therapy being IVIg. If we don't change that that's our main pond that we fish in that pond will begin to dry up. So, our long-term trajectory is going to depend on our ability to shift into earlier lines of treatment patients that have only experienced oral therapies and be the first infusable therapy that is utilized.

As far as subcutaneous and pent-up demand in the market research that we've done with physicians and with patients, this is providing optionality. So, it's providing options to patients, it's providing it to the health care professionals, but also to payers. I think that we will see our subcu uptake, a major part of it will be reimbursement and the fact that subcu will go into Part D versus our IV that goes in Part B and what's associated with out-of-pocket expense. The bottom line, as a company, we are agnostic as to which formulation a patient or a health care provider or a payer selects, we want to make sure that we can serve as many patients as possible, and that's why it's going to be beneficial to add this to our bag of tools.

[Operator]

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

[Akash Tewari, analyst]

So a couple. How comfortable are you with the perception that VYVGART could have IVIg like efficacy in CIDP? We've seen UCB fail in this indication with a different trial design, and then even your team kind of baked in on a go or no-go interim. So, are you comfortable with that base case expectation? And is it possible that VYVGART could actually differentiate from IVIg from a response rate perspective. Additionally, on the gMG launch, it looks like new patients did start to slow down to kind of 600. Is that kind of a fair assumption on a go-forward new patient adds in the U.S. for next year or could that start to pick up once the subcu opportunity comes in line? And what have you seen in terms of your persistence rate so far? So basically, patients who started on drug in Q1, what percent of those patients are still on drug today?

[Tim Van Hauwermeiren, executive]

Thank you, Akash. I will give your question 2 and 3 to Keith talking about how we look at patient adds going forward and discontinuation. On CIDP, Akash, we have always been very transparent about why we think this is an IgG mediated disease. We derived confidence and conviction from the immuno absorption data, the plasma exchange data and to a certain extent, the IVIg data. I think we also went at great length to explain what typical risks or pitfalls are associated with the running of clinical trials in CIDP, it's very tricky. And I think we have a rational approach to delisting the study. This being said, it's still a clinical experiment. I mean, if we would be 100% sure we would not need to do the experiment. So I think it's reasonably de-risked from a trial design point of view, this conviction on biology. But let's do the experiment first now and then talk about outcomes. And Keith, do you want to take the 2 remaining questions, please.

[R. Woods, executive]

Sure. Happy to do so. So, when it comes to new patient adds, all I can say is that our indicators for demand continue to show consistent growth. So, we continue to get new patients that are interested in being on VYVGART and new scripts coming in. We're not going to give projections on the trajectory as we're just 3 quarters into this. But overall, as I mentioned before, we are going to need to expand into the earlier treatment lines. I can say directionally, we have been headed that way with more patients, VYVGART being the first infusable therapy that they work, but still the majority of our patients are coming from IVIG.

Second in regard to discontinuations. We have seen some discontinuations. That's really not a surprise, as you know, between cycle 1 and cycle 2 VYVGART works in roughly 80% of patients that are exposed to the product. So, we would expect to see a discontinuation rate. We're not at that level at this point. That's not really that big of a surprise either considering that the majority of patients that are on VYVGART started on therapy in quarter 2 and quarter 3. So overall, no exact projections on discontinuation rate, but we expect that we will continue to see some over time.

[Operator]

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

[Joel Beatty, analyst]

I understand that 50% of the patients are coming from off of IVIg, but looking at it from a different way, what percent of patients on IVIg are starting on efgartigimod. And how does that compare with what percent of earlier line patients are starting on VYVGART.

[Tim Van Hauwermeiren, executive]

Thank you, Joel, for this question. Keith do you want to address this question on what we think the percentage of patients on IVIg is that is effectively starting on VYVGART?

[R. Woods, executive]

Yes. I mean, Joel, the breakdown that we've given is what we've already shared, which is almost 50%, the last or the most extensive therapy that they were on is IVIg. That doesn't mean that they switched directly from it. It means that was as far as they've gone in their overall treatment paradigm before they switched over to VYVGART. I don't have the exact data on who was actually being infused IVIg and switched directly to VYVGART versus had they used IVIg 3 months ago and switched over to VYVGART.

[Operator]

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

[Douglas Tsao, analyst]

Just maybe when we think about the launch in subcu next year, just curious, have you already started to engage with payers? And obviously, with the IV, the pace of getting coverage was really impressive. Do you expect to see a similar percentage of patients covered at the time of launch? And what dynamics should we think about? I think you touched on it, this is going to be Part D versus Part B that we should consider in terms of the pace of the launch?

[Tim Van Hauwermeiren, executive]

Thank you, Douglas. I think we can be brief on this question. It's too early for us to comment, you have seen our modus operandi run IV. We like to reach out proactively to payer and be transparent about the value we bring to the table and how we think about pricing and calibrate that the pricing points. So, expect this company to continue to execute along these lines. But we will comment on it when we get closer to launch, okay? Thanks for the question.

[Operator]

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

[Allison Bratzel, analyst]

Just another on the VYVGART launch. I know you said the U.S. patient mix by severity has stayed relatively constant since launch, about half of patients from IVIg. But just thinking about the other 50% of patients, I guess, wondering if you could talk to whether you've seen any impact or slowdown in patient switching from Soliris to VYVGART now that we're a few months into the ULTOMIRIS launch or is there any discernible impact to demand that you would call out?

[Tim Van Hauwermeiren, executive]

Allison, thanks for being with us today. Thanks for joining, and thank you for your question. Keith, do you want to comment on the other 50%, which are non-IVIg experienced and the dynamics there, please?

[R. Woods, executive]

Yes. Happy to do so. So, Allison, the other 50% is going to come from anywhere across the treatment paradigm. So they can come from patients that have only experienced Mestinon, some that have had Mestinon and steroids, others that have had broad immunosuppressants. Also in that other 50%, we do see patients whose most advanced therapy happened to have been rituximab off-label rituximab and we do have some patients from that have been on -- previously been on C5. Quite frankly, we don't really focus on D5 refractory patients or rituximab refractory patients because we think our real competition in this space is steroids and broad immunosuppressant therapies. That's how we get to that 17,000 total addressable market, and that's really where our field team focuses on. But we do get some of those biologic refractory patients in our starts each quarter.

[Operator]

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

[Joon Lee, analyst]

I think one of your C5 competitor in gMG has a bit of a more modest expectation for the addressable gMG patient market, maybe less than half of what you think you can address with VYVGART. Can you elaborate on the differences of this and how you hope to get there?

[Tim Van Hauwermeiren, executive]

Thanks for the question, and thanks for being with us. It's not up to us, I think, to comment on the homework of one of the competitors or colleagues who is going to help us to build out this space into what it could be. I think we have been very transparent into how we derive the total addressable market population. I think our analysis is reasonable. It starts from a total patient population as it was published in the first publication in 2001 which we think is one of the most credible sources. And then we look down into how many of those are gMG, how many of those do we think are not well managed and with currently used therapeutics and then we apply a reasonable penetration of that patient group. So, I think we can talk about how we do our analysis to come to the 17,000, and we feel comfortable with the assumptions we have been making so far. Thank you.

[Operator]

Your next question comes from the line of Nick Hallatt from Goldman Sachs.

[Nicholas Hallatt, analyst]

It's Nick here on for Keyur. Just a couple of questions coming back to the subcu. As your experience of the IV launch in gMG changed your expectations around the long-term IV subcut mix there? And then is there anything we should be thinking about indication specific that you see driving a meaningful variation across the different indications you're going into?

[Tim Van Hauwermeiren, executive]

Thank you, Nick. Thanks for joining us. In general, we always said, Nick, that for each indication, we have the ambition to be both on the market serving patients with the IV and the subcu product presentation. Maybe, Keith, do you want to share any high-level comments we have concerning the long-term mix between IV and subcu?

[R. Woods, executive]

Yes. Nick, I think, honestly, the mix between IV and subcu, you'll probably see more dramatic from a geographical point of view, then you will see from an indication point of view. I think when it comes to potentially Europe and Japan, you can see subcu step in and begin to take over the marketplace as far as efgartigimod but still offering both formulations across the globe. In the U.S., I think there's going to be a lot of considerations that will not only be patient-driven and health care professional driven, but I also think there will be a payer-driven aspect, in particular, when it comes to the Medicare population. So that could very much affect the mix regardless of indication within the U.S. geography.

[Operator]

Your next question comes from the line of Thomas Smith from SVB Securities.

[Thomas Smith, analyst]

Let me have my congrats on the strong launch. Just on the VYVGART prescribing patterns. Can you talk a little bit about the split between VYVGART use and uptake in the community versus the academic centers? Are you seeing any noticeable differences in prescribing patterns between these 2 settings? And how has that evolved over the last few months?

[Tim Van Hauwermeiren, executive]

Thank you, Thomas. Thank you for this question. Keith, do you want to comment on the split between community versus academic?

[R. Woods, executive]

Yes, happy to. So, Thomas, we actually haven't given the breakdown of community versus academic. We have made it clear that we have patients coming from both of these settings. I think what's really key to remember here is that of the 70% of prescribers that have utilized VYVGART, still have only written 1 or 2 scripts. So regardless if they're in the community or academic that's the overall population, that is our opportunity for growth. The other aspect is the additional reach of physicians that we need to get to. So, the pandemic still plays into this. Sometimes academic centers are much more difficult to get into. So we still need to increase our reach to potential prescribers.

[Operator]

Your next question comes from the line of Emily Field from Barclays.

[Emily Field, analyst]

Just a couple of quick ones. I was just wondering, in CIDP is the subcutaneous dose of efgartigimod the same as it is in myasthenia gravis. I was just kind of asking that thinking about how the number of injections on an annual basis could impact annual pricing per patient in the U.S. and then secondly, just I wanted to ask what your confidence in sort of comparing IVIg response rates with CIDP. As part of what's underlying thinking that the study is a good comparator that as part of their trial design for ICE, they also did require patients to have deterioration going into the study, whereas the other FcRn competitor in their trials didn't show efficacy, noted that perhaps that result was driven by skewing a stable CIDP patients in the study?

[Tim Van Hauwermeiren, executive]

Thank you, Emily. I will leave the question on dosing frequency and potential impact on pricing with Keith for CIDP, but it's going to be a high-level answer only. I mean we need to wait for the data. Concerning the IVIg response versus an efgartigimod response in CIDP, well, you'll get as good as mine. I think it's a fair calibration point, the 50% or the ICE trial response rate, it also helps us to calibrate what we think we need in order to effectively compete. We have not seen the detailed data from UCB in CIDP, but my mind was initially going first to the fact they did not do an independent verification of the diagnosis. And we know and we actually made posters on that. And we know that about 50% of CIDP patients turned out not to be true CIDP patients. So, without such an independent adjudication committee, you just wonder what patients have been tested in this small Phase II trial. Let's leave it there for today. And maybe, Keith, is there any high-level comment you would like to give concerning pricing an indication like CIDP?

[R. Woods, executive]

Yes. Emily, I mean, first of all, the subcu is a flat dose. It's a 1,000-milligram flat dose. We did that as noninferior to 10 milligram per kilogram IV. So, it is going to be the same 1,000 milligram flat dose for MG as it is in CIDP. As you know, from the CIDP study design, which was shown in the slides, we do dose that continuous and much more frequent in the primary part of that study. Let us get the final results from that as well as look at the data from the open-label extension and then I think we'll be able to provide more clarity around dosing and where that can lead for pricing implications.

[Operator]

And your next question comes from the line of Trevor Allred from Oppenheimer.

[Trevor Allred, analyst]

Can you give us an idea of how concentrated the U.S. regional contributions have been? Is it mostly on the coast or are we seeing a totally dispersed uptake?

[Tim Van Hauwermeiren, executive]

Thank you, Trevor. Thanks for joining us. Keith this a question you would like to take, please?

[R. Woods, executive]

Yes, I'm happy to because I'm really proud of the team. The delivery and serving patients is coming across the U.S. Our 8 regions and our 71 territory business managers are all on the board with the majority of them, as you can imagine, from the successful launch in the first 3 quarters ahead of plan. So really pleased. We went out and hired neurology experienced people, and it's definitely paid off for us. Thanks.

[Operator]

This concludes today's conference call. Thank you for your participation. You may now disconnect.