Argenx: Positive Data in Second Neurology Indication Boosts Vyvgart’s Potential; Raising Fair Value

We’ve raised our Argenx ARGX 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.

We assign the firm a Very High Uncertainty Rating and do not yet believe it has 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 Rystiggo was approved in June in myasthenia gravis and Johnson & Johnson and Immunovant both have FcRn inhibitors advancing in trials. While Vyvgart is first in class, competitors could launch with stronger efficacy, although we’re impressed by Vyvgart’s safety profile, and an exclusive license from Halozyme gives Argenx access to differentiated subcutaneous dosing technology.