Company Reports

We’re maintaining our $466/EUR 425 fair value estimates for Argenx following first-quarter results that were in line with our expectations, with sales of the firm’s immunology drug Vyvgart amounting to $398 million. We think this puts Argenx on track to surpass $1.8 billion in Vyvgart revenue for the full year, largely from the first approved indication (myasthenia gravis) but also with limited sales expected in CIDP, which could receive US Food and Drug Administration approval in June. While we think CIDP data has been impressive, we expect a slower launch in this indication, given many patients are already established on immunoglobulin treatment. We think Vyvgart sales in both indications combined will surpass $5 billion annually by the end of our 10-year forecast, with another roughly $3 billion in sales coming from potential new indications, including thyroid eye disease (in phase 3) and Sjogren’s disease (entering phase 3) as well as indications that should have data later this year, including post-covid postural orthostatic tachycardia syndrome (data expected by the end of June) and myositis (data in the second half of the year). We think shares look slightly undervalued at recent prices, with investors not fully appreciating the opportunity surrounding new Vyvgart indications and the firm’s expanding pipeline. However, we do not yet assign Argenx an economic moat, given the uncertainty around the breadth of the drug’s potential as well as its profile relative to emerging competition. Competition in the FcRn space is likely to intensify, with UCB’s Rystiggo already launched and promising recent data from J&J’s nipocalimab (positive phase 3 data in myasthenia gravis and phase 2 data in Sjogren’s disease in February 2024) and Immunovant’s IMVT-1402 (entering registrational studies over the next year with a high efficacy and convenient at-home injection).

Argenx reported 2023 revenue for its autoimmune disease drug Vyvgart of nearly $1.2 billion, in line with our expectations, and we’re maintaining our $466/EUR 425 fair value estimates. While we expect Argenx to continue to generate a net loss in 2024, we think the Vyvgart’s strong growth trajectory and $3.2 billion in cash and investments as of the end of 2023 put the firm in a solid position. While sales to date have been focused on the drug’s first approved indication in myasthenia gravis, Vyvgart is on track to launch in a second indication (chronic inflammatory demyelinating polyradiculoneuropathy) in the US in the second half of 2024 if approved on schedule in June. The drug could also launch in immune thrombocytopenic purpura, or ITP, in Japan this year, if approved in the first quarter. Vyvgart’s failure in another ITP trial in November and two dermatology trials in December likely reduces the potential breadth of future indications for the drug, but we still see $8 billion in annual Vyvgart sales by 2032, with more than $5 billion of this stemming from the two indications that have been well validated in trial results (MG and CIDP). We think shares look slightly undervalued at recent prices, with investors not fully appreciating the opportunity surrounding new Vyvgart indications and the firm’s expanding pipeline.

Argenx’s autoimmune drug Vyvgart Hytrulo has failed to improve responses over low-dose steroids in two related dermatology indications—pemphigus vulgaris and pemphigus foliaceus—and we’ve lowered our fair value estimates to $466/EUR 425 from $539/EUR 490. This disappointing news comes on the heels of the drug’s November 2023 failure in a key trial in a hematology indication (idiopathic thrombocytopenic purpura). The failure also adds to our confusion over the potential breadth of indications for Vyvgart, which had positive data this year in the poorly understood neurology indication of CIDP, where we had assigned a lower probability of approval, but was seen as much more likely to offer improvement over existing treatments in ITP and pemphigus, due to the role of IgG autoantibodies (and Vyvgart’s ability to lower IgG) in these diseases. We think this failure could also hint at potential failure for another dermatological indication currently in a pivotal trial: bullous pemphigoid. Following the pemphigus failure on Dec. 20, Argenx management has decided not to take an interim look at the potentially registrational trial in this indication, opting to complete the full trial and also likely implementing some trial design changes.

Dutch biotech Argenx is hoping to build a portfolio of autoimmune treatments around Vyvgart, which received FDA approval in 2021 as a treatment for myasthenia gravis. We think the drug will see peak sales of more than $8 billion if approvals can extend into new autoimmune indications in neurology, hematology, dermatology, and nephrology over the next several years, although competitors in testing and uncertainty around future clinical trial results for Vyvgart prevent us from assigning the firm an economic moat.

We’re slightly lowering our fair value estimate for Argenx to $539/EUR 490 from $574/EUR 543 following a disappointing phase 3 trial failure for subcutaneous product Vyvgart Hytrulo in primary immune thrombocytopenia, or ITP. While the drug appeared to be effective in lowering levels of IgG antibodies, the trial did have a slightly higher percentage of patients who had failed numerous prior therapies than in the successful phase 3 study of infused Vyvgart, and patients in the placebo arm had surprising responses. Based on this uncertainty, we have reduced our assumed probability of Vyvgart’s global approval in ITP to 30% (from 70%). This lowers our assumed ITP sales of Vyvgart to roughly $300 million in 2032 from $700 million previously.

Dutch biotech Argenx is hoping to build a portfolio of autoimmune treatments around Vyvgart, which received FDA approval in 2021 as a treatment for myasthenia gravis. We think the drug will see peak sales of more than $10 billion if approvals can extend into new autoimmune indications in neurology, hematology, dermatology, and nephrology over the next several years, although competitors in testing and uncertainty around future clinical trial results for Vyvgart prevent us from assigning the firm an economic moat.

Argenx reported third-quarter results that were relatively in line with our expectations, and we’re not making any changes to our $574 per ADS/EUR 543 fair value estimates. Argenx reported sales of myasthenia gravis drug Vyvgart and its subcutaneous version, Vyvgart Hytrulo, amounting to $329 million in the third quarter, with roughly two thirds of these sales stemming from the U.S. market. This represents 22% quarter-over-quarter growth, and we think strong continued patient uptake will allow sales of the drug to surpass $1.1 billion in 2023. We think shares look undervalued given the potential for Vyvgart to gain approval in multiple additional autoimmune indications, but we do not yet assign the firm an economic moat, given the uncertainty around the breadth of the drug’s potential as well as its profile relative to emerging competition.

Dutch biotech Argenx is hoping to build a portfolio of autoimmune treatments around Vyvgart, which received FDA approval in 2021 as a treatment for myasthenia gravis. We think the drug will see peak sales of more than $10 billion if approvals can extend into new autoimmune indications in neurology, hematology, dermatology, and nephrology over the next several years, although competitors in testing and uncertainty around future clinical trial results for Vyvgart prevent us from assigning the firm an economic moat.

Argenx reported solid second-quarter results, with sales of the firm’s foundational autoimmune disease drug Vyvgart growing 24% quarter over quarter to reach $269 million. We’re maintaining our $574 fair value estimate and continue to expect Vyvgart sales to surpass $1 billion in 2023, with sales of more than $10 billion annually by 2032. The vast majority of sales are still in the U.S., although international approvals continue to roll in, and the firm is the process of securing reimbursement in multiple markets. In addition, the new subcutaneous version of the drug, Vyvgart Hytrulo, has been approved in the U.S. and is likely to gain approval in Europe, Japan, and China by the end of 2024. While sales are exclusively in myasthenia gravis, we expect the firm to file for approval in several new indications in the coming years, led by positive recent pivotal data in a neurology indication (CIDP) and upcoming pivotal data in hematology and dermatology indications later this year. Argenx has a long runway of trial readouts through 2024 and continues to start new trials, and we think the firm is in the process of building an economic moat. The firm also has plenty of cash to support further development, with $2 billion in cash and equivalents at the end of the quarter and an additional $1.3 billion equity raise following the CIDP data this month. However, we’re keeping a close eye on competition in this nascent market, as other FcRn inhibitors are launching (like UCB’s Rystiggo) and J&J and Immunovant are advancing in trials.

We’ve raised our Argenx fair value estimate to $574 per ADS from $486 following positive data from a pivotal trial of Vyvgart Hytrulo (subcutaneous dosing of Vyvgart) in chronic inflammatory demyelinating polyneuropathy, a rare nerve-related autoimmune disease. We had assumed only a 30% probability of approval in this disease, given the prior failure of UCB’s Rystiggo (which has a similar mechanism of action) and uncertainty around the biological drivers of CIDP. However, a 67% patient response rate on Vyvgart as well as a 61% reduction in the risk of relapse versus placebo both show strong efficacy. We think Argenx’s strong trial design (verifying diagnosis and filtering out patients in remission) was a likely driver of the positive results. We now assume a 100% probability of approval in CIDP, with significant sales starting in early 2025 and annual sales approaching $1.5 billion by 2032. We still assume this is a smaller indication for Vyvgart than the approved myasthenia gravis indication (we model $3 billion in peak annual sales in myasthenia gravis), mostly due to the number of patients who are well served on immunoglobulin therapy and could be reluctant to switch. We assume pricing will be similar to myasthenia gravis in the long run, although if CIDP patients require chronic weekly dosing, there could be upside to our sales forecast.

Dutch biotech Argenx aims to build a portfolio of autoimmune treatments around Vyvgart, which received Food and Drug Administration approval in 2021 as a treatment for myasthenia gravis. We think the drug will see peak sales of more than $15 billion if approvals can extend into new autoimmune indications in neurology, hematology, dermatology, and nephrology over the next several years, although competitors in testing and uncertainty around future clinical trial results for Vyvgart prevent us from assigning the firm an economic moat.

We’re initiating coverage of autoimmune disease-focused biotech firm Argenx with a $486 per ADS fair value estimate, and we think shares look undervalued ahead of several expected data readouts later this year for the company’s central drug, Vyvgart, in new indications. Vyvgart received Food and Drug Administration approval in December 2021 as a treatment for myasthenia gravis and has generated strong sales for the past several quarters, and the launch in international markets is just beginning. Imminent pivotal data for the drug as a potential treatment for another neurology-related indication, chronic inflammatory demyelinating polyneuropathy, as well as data expected in the fourth quarter in hematology (idiopathic thrombocytopenic purpura) and dermatology (pemphigus vulgaris and pemphigus foliaceus) should begin to give us a clearer view of Argenx’s potential to expand Vyvgart’s label into multiple additional autoimmune conditions. We include probability-weighted Vyvgart sales in nine indications beyond MG in our forecast, with probabilities ranging from 30% for smaller phase 1 and phase 2 programs to 70% for the pivotal ITP program, which already has positive data from one phase 3 trial. We think Vyvgart could generate nearly $3 billion in annual sales by 2032 in MG alone, with nearly $9 billion in total annual sales that year across multiple indications. However, we assign the firm a Very High Uncertainty Rating and do not yet award the firm an economic moat, as the view of Vyvgart’s potential across autoimmune diseases is still fuzzy. In addition, several similar drug candidates could be vying for share, as UCB’s Rystiggo was approved in June in MG, and J&J and Immunovant both have FcRn inhibitors advancing in trials. While Argenx is first in class, competitors could launch with stronger efficacy, although we’re impressed with Vyvgart’s safety profile, and an exclusive license from Halozyme gives Argenx access to differentiated subcutaneous dosing technology.

Dutch biotech Argenx is hoping to build a portfolio of autoimmune treatments around Vyvgart, which received FDA approval in 2021 as a treatment for myasthenia gravis. We think the drug will see peak sales of more than $10 billion if approvals can extend into new autoimmune indications in neurology, hematology, dermatology, and nephrology over the next several years, although competitors in testing and uncertainty around future clinical trial results for Vyvgart prevent us from assigning the firm an economic moat.