ARGX - argenx: Innovation Over Losses In Autoimmune Arena

2024-05-07 04:02:20 ET

Summary

• argenx stock has decreased by 22% since the last evaluation, reflecting operational challenges and market conditions.
• The company is facing competition in the clinic, particularly from Immunovant's IMVT-1402 and Johnson & Johnson's nipocalimab.
• Despite high R&D and SG&A expenses leading to losses, argenx reported substantial revenue growth and maintains a strong cash position.
• Regulatory progress and potential market expansion for Vyvgart Hytrulo in new therapeutic areas could bolster argenx's market position.
• Recommend buying argenx shares, noting its potential in the autoimmune sector and a strong balance sheet, suitable for a barbell portfolio.

Argenx Performance and Prospects Amid Market Challenges

Argenx's ( ARGX ) stock is down 22% since my last evaluation in October. Back then, I noted growing revenue opportunities for the company's lead asset, Vyvgart. argenx, a biotechnology developer based in Amsterdam, is a leader in the anti-FcRn market , which is expected to grow to over $10 billion. Last quarter (Q4), argenx reported $374 million in global net product revenues (Vyvgart and Vyvgart Hytrulo) and $417 million in total operating income. argenx still reports hefty operating losses ($138.6 million) due to high R&D ($306 million) and SG&A ($208.8 million) expenses. Recall that the company is advancing both intravenous and subcutaneous Vyvgart across several autoimmune conditions. Furthermore, argenx's pipeline includes ARGX-119 (targeting MuSK), empasiprubart (targeting C2), ARGX-118, and a few others. As I alluded to in past contributions, argenx is facing some competition in the clinic. Immunovant's ( IMVT ) anti-FcRn antibody, IMVT-1402, is showing early promise as a differentiated at-home, subcutaneous delivery. This asset is expected to advance into Phase 2 in a few autoimmune conditions later this year. Some other competitors include Johnson & Johnson's ( JNJ ) nipocalimab, which just demonstrated Phase 2 efficacy in Sjögren’s disease. UCB's Rystiggo is already approved for generalized myasthenia gravis (gMG). MG is the "money" indication so far in the anti-FcRn market. argenx associated their $1.2 billion in 2023 revenue with gMG. Moreover, argenx noted that the switch to Vyvgart Hytrulo, a subcutaneous formulation, is ongoing....

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