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Argenx: Why are Analysts Saying Higher and Investors Buying?

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TrialSite News received an investor request to summarize argenx.  Argenx SE (argenx)  is a clinical-stage biopharmaceutical company focusing on the development of antibody-based therapies for the treatment of autoimmune diseases and cancer. Its lead product includes ARGX-113 that has completed Phase 2 clinical trials for the treatment of autoimmune diseases, including myasthenia gravisimmune thrombocytopenia  and pemphigus vulgaris;  as well as ARGX-110 which is in Phase 1/2 clinical trials for the treatment of T-cell lymphomaacute myeloid leukemia  and myelodysplastic syndrome.

 Argenx Background

Founded in 2008, the company floated an IPO May 17, 2017 on NASDAQ as ARGX.  Based in the Netherlands, they have invested and developed a breakthrough discovery platform setting the new standard for antibody lead choice in the discovery of human antibody therapeutics.  Their Simple Antibody platform, they claim, leapfrogs existing platforms in critical aspects involving lead choice.

Argenx Financials 

  • Market capitalization $4.02 billion/current share  price $118.20
  • Revenue $62.35 million
  • EBITDA -$73.26 million/Net loss is -$42.24 million
  • Revenue per Share 1.80
  • Current share price $105.90
  • 52 week high/low $110.82 high and $54.30 low
  • Operating Expenses: They have steadily increased from $25.6 million in 2015 to $111.1 million in 2018.  Losses have accumulated from -$15.3 million in 2015 to -$66.6 million in 2018. Due to financings cash position has increased from $35.5 million in 2015 to $281 million in 2018 offering them some cushion based on current burn rates as 2018 cash flow deficit -$53.8 million.

Study their value proposition, progress and competition below.  Understand that argenx has impressive activity, science and deal making prowess.  Also understand they have limited capital compared to some of the global giants it competes against. On the other hand if it is able to differentiate in the market it may become an acquisition target at some premium.

Why they Could be So Valuable?

Argenx  touts its’ rapidly emerging leadership in the immunology field as a differentiator justifying its very high current valuation (based on limited finances and deadly competition TrialSite News opines). What differentiates argenx according to argenx?  We include their recent investor presentation to summarize the position.

Differentiation Argument

  • Novel Target Biology

o   Integrated via “advanced technology suite”

o   They believe it is “first and best in class potential”

  • Innovative Access Program

o   They declare it is based on “robust science”

o   Collaborative

o   Efficient pipeline expansion

  • Highly Productive Development Engine

o   Rapid development timeline (how does this compare to benchmarks—we are not sure)

o   New candidate each year

  • Maximum Value Per Asset

o   Pipeline in a product strategy

o   Strong biological rational

  • Multi-Asset Late Stage Program

o   Phase 3 in MG and ITP

o   Pre-commercial activities in MG

Recent Updates Point to Positive Momentum

ARGX-113

  • MG Phase 3: First patient treated—recruiting up to 150 patients (Sept 18)
  • ITP Phase 2: Favorable tolerability profile and robust efficacy signal—second Poc (ASH-Dec 18)
  • ITP Orphan Drug Designation (FDA-Jan 19)
  • Exclusive collaboration with Halozyme for ENHANCE® subcutaneous delivery technology (Feb 19)

ARGX-110

  • Favorable tolerability profile and 92% ORR mainly CR/Cri (ASH-Dec 18)
  • Strategic partnership with Janssen: accelerating and broadening clinical development plan (Dec 18)
  • AML: Orphan Drug Designation (FDA-Jan 19)

ARGX-115 (ABBV 151)

  • Initiation of first-in-human clinical trial; $30 million milestone payment

ARGX-114

  • SIMPLE AntibodyTM agonizing MET, spun out into AgomAB (€21mm series A round – April ‘19)

Competition

Argenx faces considerable competition for their drug discovery market leadership pursuit.  They must successfully expand market acceptance of 1) SIMPLE antibody platform B) NHance and C) ABDEG technologies or D) licensed POTELLIGENT technology to build a pipeline of product candidates and develop marketable products in the face of intensive competition.

Autoimmune market competition

Intensive to say the least.  There are multiple monoclonal antibodies, other biologics and small molecules already marketed or in development by a wide array of dangerous competitors.  They include:

  • AbbVie (HUMIRA/rheumatoid arthritis)
  • Amgen (Enbrel/ rheumatoid arthritis)
  • Biogen (Tysabri/multiple sclerosis)
  • GSK (Benlysta/lupus)
  • Roche (Rituxan/often used off label)
  • Janssen (J&J) (Remicade/ rheumatoid arthritis & Stelara/Psoriasis)

In some cases argenx may collaborate with some of its competitors. Other competitive forces:

  • Alexion Pharmaceuticals (FDA approval for Soliris—for the treatment of adult patients with generalized Myasthenia gravis (MG) who are anti-acetylcholine receptor antibody positive)
  • Other sponsors focused on Myasthenia gravis (MG) development: BioMarin, Roche, GSK, Novartis, CSL Behring, Grifols, S.A., Curavac and Millennium Pharmaceuticals (Takeda).
  • Immune Thrombocytopenic Purpura (ITP) competition includes Rigel Pharmaceuticals, Eisai, BMS, Shire Immunomedics; Protalex Inc. and others.
  • Pemphigus Vulgaris (PV) competition can include Roche, Syntimmune Inc. and others.
  • FcRn  competition includes UCB S.A., Momenta, Inc., Syntimmune Inc and Hannal Biotech.

Leukemia & Lymphoma Competition

Monoclonal antibodies approved for treatment of Hodgkin’s lymphoma, non-Hodgkin’s lymphoma, multiple myeloma or other blood cancers

Argenx faces intensive competition by far more capitalized, global operations includes:

  • Roche (Rituxan)
  • Seattle Genetics & Takeda (Adcetris)
  • Janssen (Darzalex)
  • Kyowa Hakko Kirin Co., Ltd. (Poteligeo)

AML (acute myeloid leukemia) Competition

  • Pfizer (Mylotarg)
  • Amgen (Rydapt)
  • Jazz Pharmaceuticals (Vyxos)
  • Celgene with Agios Inc. (IDHIFA)

Moreover there are a number of other competitors in the development stage targeting AML that may compete with ARGX-110.

Monoclonal Antibody Drug Discovery Platforms

There are other ambitious biotech enterprises attempting to out maneuver and out innovate each other in the market. They include the following sample:

  • Adimab LLC
  • Merus NV
  • Regeneron Pharmaceuticals Inc.
  • Xencor Inc.
  • MorphoSys AG

Moreover Scholar Rock, Inc. may compete directly against ARGX-115 and a product candidate from Ionis Pharmaceuticals, Inc. may compete against ARGX-116 if this IP is approved.

Investors Position of Late

Overall the stock currently has an average rating of “Buy” and average price of $144.27.

  • Wedbush (lifted price target on shares from $131 to $144)
  • Guggenheim (initiated coverage and say “buy” at $157 objective)
  • ValuEngine (upgraded shares from hold to buy)
  • Stifel Nicolaus (restated buy)
  • Sun Trust Banks (restated buy)
  • 14 investment analysts have rated argenx a buy

Activities

Institutional Investors own 63.58% of the company. Hedge funds and other institutional investors have modified holding:

  • FMR LLC purchased an additional 12,003 shares now owning 3,487,052
  • Federated Investors Inc. PA increases its stake by 16.8% (now own 961,276 shares) after buying an additional 138,531 shares.
  • BB Biotech AG increased its position by 20.4% (now owns 884,739 shares after purchasing another 150,000 shares).
  • venBio Select Advisor increased its position by 13.8% in Q4 now owning 860,000 shares—additional 104,585 added).
  • Oberweis Asset Management Inc. bought a new position in Q4 valued at $27,659,000 total position.

TrialSite News received a request from accredited investor to summarize argenx.  At least 10% of our viewer network is represented by investors monitoring clinical trials that have an interest in clear, concise and frank summaries. TrialSite News focuses on delivering ongoing transparency to clinical trials with a research site perspective.  Investors frequent our news site and we welcome requests.  Investors are the catalyst for new therapies to market. Without investment capital nothing will develop.

 

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