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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Welcome to argenx Fourth Quarter 2018 Business Update and Full Year Financial Results Conference Call. [Operator Instructions] I would now like to introduce Beth DelGiacco, Vice President Investor Relations at argenx.
Thank you. Our press release with our fourth quarter business update and full year 2018 financial results became available earlier today and can be found on the News and Events section of the company's website at argenx.com. Before we start, I'd like to go to Slide 2 to remind you 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 or to conform these statements in relation to actual results unless this is required by law. I'm joined on the call today by Tim Van Hauwermeiren, CEO of argenx; and Eric Castaldi, CFO. On Slide 3, you'll see a brief agenda for the call. We'll first walk through recent news before moving on to an update on our clinical programs and ongoing collaborations. Eric will then provide financial results for the full year before we start the question and answer portion of the call. With that, I would now like to turn the call over to Tim.
Thank you, Beth, and welcome, everyone. 2018 was a foundational year for argenx, and we're proud of all we accomplished fulfilling each of the commitments we had set out at the start of the year. We continue to plan for future success and expect 2019 to be just as eventful as we advance our late stage antibody pipeline and exhibit our commitment to translating immunology breakthroughs into novel medicines. Before jumping into the call, I want to highlight the exciting value proposition of argenx as we see it today, as highlighted on Slide #4. We have established a model for serial value creation with antibody experts and go after novel antibody targets by teaming up with top-notch academic labs under our Innovative Access Program. Together, we can create highly-differentiated antibody molecules that neither party could create independently. We favor molecules that we can develop according to the orphan business model, high unmet medical needs, small indications with high economic potential where we can credibly take our molecules through Phase II, and ideally Phase III and registration value inflection points. We have done this repeatedly and have established a company with a rich and deep antibody product pipeline, spanning from discovery into registration trials. And we're now investing in pre-commercial activities. Our lead autoimmune asset, efgartigimod, is being evaluated across 4 severe autoimmune indications and 2 formulations as shown on Slide 5. We have a first-in-class molecule and launched the first Phase III trial ever of any [ FcRn ] antagonist last September in generalized myasthenia gravis. We expect to launch a second Phase III trial this year in primary immune thrombocytopenia, pending feedback from the regulators.We showed several key data set this year around efgartigimod supporting our best-in-class claim as well. With encouraging efficacy data and a differentiated safety profile, which we attribute to the unique design of our Fc fragment, we can now also add optimal convenience to the differentiated attributes of our molecule. The size of the Fc fragment enables us to develop a high concentration low viscosity subcutaneous formulation. We believe our subcu capabilities were further enhanced earlier this month through our global collaboration and licensing agreement with Halozyme. The agreement allows us to access the industry-validated enhanced drug delivery technology for up to 3 product candidates, including exclusive access for our FcRn candidate. With our lead oncology asset, cusatuzumab, we announced a transformative collaboration with Janssen, worth up to $1.6 billion. This was on the heels of an impressive data set from the Phase I dose escalation trial in newly diagnosed elderly unfit AML patients, showing a 92% overall response rate. Notably, with this partnership we retained the important potential to co-promote in the U.S. on a 50-50 royalty base that will not cap the upside potential of this program for us. Last year, our partner programs also advanced, on Slide 6, including those with AbbVie and LEO Pharma, and we expect to realize more value from these assets in 2019. We ended 2018 very well-capitalized with a cash position of EUR 565 million that will enable us to execute on a very ambitious development plan, including the unveiling of 2 new assets this year at our R&D Day in May, both of which grew out of our Innovative Access Program. I will detail each of these key elements now on the call since all are important to the strategic vision of argenx and to driving value as we advance forward to be an integrated biotechnology company. First an update on efgartigimod, including an overview of each indication, and some of the data we've shown to-date as well as a broader discussion on why we believe our molecular design will continue to differentiate us from competition. With our neuromuscular beachhead indication in generalized myasthenia gravis, we launched the Phase III ADAPT trial in September 2018. We also launched ADAPT+, which is the 1 year open label extension trial as part of the Phase III program. Since dosing the first patient, we have been focused on opening sites globally. We expect to open around 65 sites across North America, Europe and Japan. We aim to enroll 150 patients in what would be the largest and broadest MG trial to-date since it includes acetylcholine receptor autoantibody positive and negative patients. While the acetylcholine receptor negative population will be outside the primary endpoint population, it could facilitate a broader label to all GMG patients should we see activity. We will also be broad in our enrollment criteria with regards to background therapy and will include any GMG patient that is not adequately controlled on standard of care, meaning MG-ADL scores of 5 or greater from patients failing on corticosteroids, immunosuppressants or acetylcholinesterase inhibitors. This will position the drug candidate to be an add-on therapy across the treatment paradigm should it be approved. We are on track with our estimates to have data in 2020. We have used the precedent example of the REGAIN study, which took 22 months from first patient dose to the top-line data. We have some elements in our favor, which could expedite enrollment such as the breadth of the patient population but also some elements that could slow enrollment, particularly other MG trials we expect others to start enrolling. In the fourth quarter of last year, we presented the full Phase II data during a workshop around ASH from our hematological beachhead indication immune thrombocytopenia, Slide 8. The data showed a clear correlation between reduction in IgGs, improvement in platelet counts and reduction in bleeds. These data showed clinical benefit from efgartigimod in ITP patients regardless of baseline medication, meaning in patients refracted to TPOs, corticosteroids, broad immunosuppressants or splenectomy. This will be an important feature in our plan to position our molecule as an add-on therapy across the primary ITP patient population. In thinking through next steps for ITP, we expect to communicate the plan for a Phase III trial of IV efgartigimod. And a Phase II trial with our subcu formulation once we have feedback from the regulatory agencies. We are on-track to start the Phase II subcu trial in the first half of 2019 and the Phase III IV trial in the second half of 2019. We announced 2 updates to the ITP program in our press release from this morning. First, we received FDA orphan drug designation for efgartigimod in ITP this month, so now we have the designation for both ITP and MG. We also announced we will be closing the open label extension arm of the Phase II trial in the middle of this year. We gained several important insights from the OLE including a 67% response rate in the first dosing period, which served as a true fourth cohort. Several patients received multiple cycles of treatment and each time responded. Patients who responded in the primary study were treated in the OLE and responded again. Additionally, patients on the 5mg/kg arm in the primary study who did not respond were treated with the 10mg per kg in the OLE and did respond, so we believe it is really about tipping the balance to ensure patients get enough drug exposure. We feel we have gathered the information we have hoped for the study and now want to focus on getting patients into a larger study with more chronic dosing. As presented in Slide 10, pemphigus vulgaris is our beachhead in skin blistering diseases. And we announced at JPMorgan, that we'll be starting the third cohort of the Phase II trial in the first half of 2019. We learned 2 key pieces of information from cohorts 1 and 2. From the data we gathered from cohort 1 back in June, we saw a rapid onset of action with 3 of 6 patients reaching disease control within 1 week and 1 patient within 4 weeks. We also saw a clear correlation between reduction of pathogenic IgGs and improvement in PDI score. For the third cohort, we intend to extend dosing to see if we can reach clinical remission. This will cause a 3-month delay on starting the next cohort, which we believe it's the best route to inform us regarding the design of a powerful Phase III trial in PV. In September of last year, we announced a fourth indication for efgartigimod, chronic inflammatory demyelinating polyneuropathy or CIDP. This will also be the first adjacent indication within the neuromuscular beachhead now that we have seen proof-of-concept in MG. CIDP is a compelling commercial indication since it's the single largest indications for IVIG in terms of consumption. IVIG is the standard of care for CIDP, and we believe about 80% of the patients respond. In addition, there is a strong rationale that pathogenic IgGs drive the disease and that CIDP would benefit from FcRn therapeutic. We expect to seek scientific advice and launch a study in CIDP in the second half of this year. The FcRn therapeutic field has become more crowded since we first started to work on our molecule. We contribute much of the compelling data and storability we have seen to the unique design of efgartigimod and believe it will continue to be differentiated from competition. Our collaborator, Sally Ward, identified in her seminal publication the role of FcRn in recycling IgGs shown on Slide 12. She showed that FcRn is responsible for homeostasis of antibody molecules of the IgG type. FcRn is salvaging IgGs from lysosomal degradation and is also important for [ trans site ] doses of IgGs into the tissues. So she took this finding and invented the ABDEG mutations, which are proprietary part of our molecule. She mutated touch points between the Fc tail and FcRn, giving our antibody fragment unique properties. Efgartigimod can outcompete IgGs in the acidified endosome due to increased affinity and can shuttle to the cell surface and rebind FcRn. The ABDEG mutation served to retain the pH-dependent binding of the natural IgG so our Fc fragment can follow that same natural recycling path. The thoughtful development of our molecule has led to unique features and what we believe are beneficial clinical attributes to-date as shown on Slide 13. Efgartigimod has an Fc fragment, which has reduced binding to Fc gamma and complement -- contributing to a clean tolerability profile. Efgartigimod can elegantly recycle FcRn through the sorting endosomes, it's not pushing FcRn to the lysosome so there is no drop in HSA. Efgartigimod can also rebind FcRn. This explains the superior half life and very fast tissue distribution. It's a fast-traveling molecule, so we see a correlating fast onset of action in the muscle and skin compartments where we interact with MG and PV biology. Our Fc fragment also allows for elegant subcu dosing, given the smaller size of the molecule, as I mentioned at the start of the call. We can squeeze three times more molarity into a milliliter of fluid compared to full-sized monoclonal antibodies. Physical chemical properties show that this is a very well-behaved molecule, which can be concentrated up to the 160 to 180 milligram per kilogram zone with low viscosity, which allows dosing through a 27-gauge needle. Finally, we have a favorable buffer solution with no injection site pain reported. As the FcRn field advances, we believe safety and convenience will be key differentiators in the space and that efgartigimod is positioned to be best-in-class across both of these features. Efgartigimod has been very well tolerated in all of our clinical trials to date in all indications. Headaches are not a class effect for us. We saw headaches that were balanced between treatment and placebo in our MG study and no sign of headaches in the ITP or PV studies. We see no reductions in albumin, as predicted, by the unique intracellular nature of our molecule, as you can see on the chart on Slide 14 from our JCI publication. We have not seen any GI toxicity or infusion-related or injection site reactions. We're also taking a derisk approach to developing a subcu molecule, because we believe that having the ability to offer several formulations to patients across indications will be crucially important for commercial success. We intend to launch a Phase II in ITP with our subcutaneous formulation as mentioned above. ITP is a good indication to study subcu because it's the one where we expect to dose more chronically and where we can assess IgG knockdown needed to keep patients in long-term response. Also platelets work as an effective and easy-to-measure biomarker to gain these insights. We also announced exclusive collaboration with Halozyme to develop our subcu formulation of efgartigimod. We see the ability to dose with enhanced technology as the finishing touch on an already exciting subcu program. It provides us further flexibility from a volume perspective and allows us to position the product candidate, detached from IV induction. We now have an opportunity to develop efgartigimod as a standalone subcu product, using an industry-validated delivery technology and can both infuse and maintain its subcu dosing. We expect this to allow us to capture all patients' preferences across indications. Importantly, we also have an exclusive license to ENHANZE with the [F 7] targets so other competitive products will not be able to use the same technology. One final note on efgartigimod, we are currently at commercial scale manufacturing in 2 plants across 2 continents. We have the capabilities to grow to an even larger scale as we progress towards potential approval of efgartigimod. Moving on now to our lead oncology candidate, cusatuzumab targeting CD70 on Slide 15. This candidate grew out of key translational biology breakthroughs from the lab of Adrian Ochsenbein at the University of Bern. He built the translational data sets that led to our developing cusatuzumab in AML in combination with Vidaza, awarding him with the Swiss Nobel Prize for this breakthrough work. During our ASH workshop, we showed very encouraging data from our Phase I/II trial, Slide 16. We saw a 92% overall response rate, which were mainly CRs, 8 out of 11. We saw 5 patients with MRD negativity so we believe these CRs to be deep in response. We also saw significant reduction in the leukemic stem cells in the bone marrow, including some that emerged after 2 weeks monotherapy of cusatuzumab. Strength of these data led to a major collaboration with Janssen to develop cusatuzumab across AML-subsets, in high risk MDS and other hematological malignancies. Under the agreement, as presented in Slide 17, Janssen paid us $500 million in upfront payments, including $300 million in cash and $200 million in an equity investment. We maintain the option to participate in the U.S. commercialization of the product where we have agreed with Janssen to share economics 50-50 on a royalty basis. Development costs ex U.S. will be a 60-40 split between Janssen and argenx, which will be more than covered by the upfront and expected milestone payments. We believe cusatuzumab is in the best hands with Janssen as our partner, allowing the development path to be accelerated and broadened in scope. We expect to share more on the development path of cusatuzumab during our R&D day on May 22. Our [deep] pipeline is also built from key partner programs that emerged from our Innovative Access Program. Slide 18. AbbVie announced last year that it exercised its option to in-license ARGX-115 and will be advancing it into the clinic. ARGX-115 was built by argenx, leveraging the insights from the de Duve Institute on the novel immune target GARP, which we accessed under our IAP program. LEO Pharma announced last year that it's filed its CTA to develop ARGX-112 in atopic dermatitis, an indication that is outside our area of specialty but which is well suited in the hands of this global dermatology player. This molecule came from our IP collaboration with the Ludwig institute. You can see [indiscernible] with our IAP in how we build out our pipeline with both wholly-owned assets and partnered assets. Through collaborations with top academic labs, we have been able to build a pipeline of first-in-class assets. Our strategy is to align with top tier academic labs that have spent years digging into novel targets, in some cases, uncovering the biology of one target for much of their career. This allows us to gain access to fundamental biology breakthroughs. We create true collaborations with these research institutions with fair economics on both sides, and we can build first-in-class candidates before the targets and disease biology breakthroughs become widely known. The collaboration allows both parties to build product candidates that neither party would be able to build independently. We also had recently news on 2 partnered assets that we discuss less frequently, since we have golden shares in each company but not milestones associated with development. Staten Biotechnology is developing what was ARGX-116, targeting ApoC3 for dyslipidemia. Staten announced an option agreement with Novo Nordisk under which Novo has the option to acquire Staten and gain rights to STT-5058, formerly ARGX-116. A company called Agomab has also founded through a collaboration between argenx and the University of Torino, Italy, based on the groundbreaking work of Paolo Michieli and his translational medicine team. Agomab is developing an argenx molecule and is what we know -- which we will now call ARGX-114. It is an EGF [HFG] mimetic SIMPLE antibody directed against the MET receptor that displays the same important biological activity of EGF but possesses the clinical transferability of antibodies. It has the potential to be applied in fibrotic, inflammatory autoimmune and degenerative diseases. Going forward we intend to use the IAP to bring product candidates into our wholly-owned pipeline for our own development and value creation. We will be announcing 2 new wholly-owned assets from the IAP in our R&D Day, including ARGX-117, our novel complement program and ARGX-118 on which we haven't shared any details yet. And with that, I would now like to turn the call over to our CFO, Eric Castaldi, for him to walk through the financials.
Thank you, Tim. So let's move to Slide 19 first. Our 2018 financial statements are detailed in this morning's press release and filed with the requisite exchange agencies. Total operating income was EUR 29.2 million for the year ended on December 31, 2018 compared to EUR 41.3 million for the same period in 2017. Research and development expenses amounted to EUR 83.6 million for 2018 compared to EUR 51.7 million for the same period in 2017. The increase in research and development expenses in 2018 was principally due to an increase in external R&D expenses and personnel expenses, reflecting higher clinical trial cost and manufacturing expenses, related to the development of our products, candidate portfolio and the recruitment of additional employees to support our R&D activities. Selling, general and administrative expenses totaled EUR 27.5 million in 2018 compared to EUR 12.4 million in 2017. The increase seen in 2018 is mainly due to higher personnel expenses and consulting fees in relation with the preparation of a possible future commercialization of our lead product, efgartigimod. The company, as a result, generated a total comprehensive loss of EUR 66.6 million for the year ended December 31, 2018, compared to EUR 28.1 million in 2017. Our cash position including our cash, cash equivalents and current financial assets as of December 31, 2018, was EUR 564.6 million compared to EUR 359.8 million on December 31, 2017. The significant increase in our cash position resulted from our public offering completed in September 2018. This cash position does not include the $500 million we received in the form of upfront payments and equity investment as part of the Janssen deal, which closed in January 2019. If we move to Slide 20 now. This slide shows that, so far, we have been highly efficient in managing our capital. Since inception, we have raised a total of EUR 717 million of capital, including the proceeds of our public offering completed in September 2018. At the end of December 2018, we were offering 132 people of which 97 were in R&D and 35 in SG&A. With our cash position, we believe we are well capitalized to execute on our strategic plan. Our burn rate is expected to increase significantly as we advance our clinical development pipeline. In parallel, we will also advance and extend our preclinical pipeline looking to access novel targets and technologies. To conclude, on this financial slide, you can see the current shareholding structure of argenx. With our 3 public offerings completed in 2017 and 2018, we have now reached a free float of 90% with U.S. institutional investors representing over 70% of our shareholder base. And now, I would like to turn the call back to Tim.
Thank you, Eric. As you can see on Slide 21, we have a very ambitious development plan ahead of us, and we will execute on this in a focused way in 2019. We expect several milestones ahead this year including continue to open trial sites for our Phase III ADAPT trial of efgartigimod in myasthenia gravis; communicate feedback from the FDA on the path forward for our Phase III of IV efgartigimod in ITP, expected to start in the second half of 2019 and the Phase II of subcu efgartigimod in ITP expected to start in the first half of 2019; initiate a third cohort of our Phase II trial of efgartigimod in PV in the first half of 2019; also initiate a Phase II trial of efgartigimod in CIDP in the second half of 2019; launch a Phase I clinical trial with the subcutaneous enhanced formulation of efgartigimod in healthy volunteers. We will also be hosting an R&D day on May 22, and will cover several topics, including an update on the cusatuzumab global development plan, ARGX-117, the translational data supporting the target choice and the first indication for the pipeline in a product asset, ARGX-118 and the early data around this IAP asset as well as some of the precommercial planning that is going on at argenx.With that, we'd like to now open the call for questions and answers. Operator?
[Operator Instructions] And our first question comes from a line of Matthew Harrison.
This is this Ishmael on for Matthew. Thank you for taking our questions. For the PV study, what data did you hope to generate from the third cohort? And how long do you expect it to take to enroll and readout?
So remember what we learned from the PV studies so far. We saw a clear signal, right? With disease control happening so fast in 4 out of 6 patients and a very nice correlation between the knockdown in pathogenic antibodies on the one hand and PDI improvement on the other hand. What we now really want to see is whether extended exposure to the study drug can put people into clinical remission. You may remember that 2 years ago when we submitted a protocol, we did not have a long-term tox data for the molecule, which we have collected in the meantime. So this means that now we have all the data to extend the exposure in these [indiscernible] patients and really understand whether we can drive to PDI scores to 0.
The next question comes from a line of David Nierengarten from Wedbush.
I noticed you mentioned competition from other MG studies as potentially slowing down enrollment a little bit in the trial. But you didn't mention patients being treated with Soliris. Is there any draw off of the clinical trial pool from patients being treated with Soliris is the first question? And the second one, if you could maybe share with us the target profile for the combination of efgartigimod with the enhanced technology, if you're looking for a certain reduction in volume and injection or just if you could elaborate on that and when we could see the first readout from the healthy volunteer study.
So to your first question, I would like to remind you that myasthenia gravis is an orphan indication but it's certainly not so orphan that it's difficult to recruit parallel clinical trials. We estimate that the real number of myasthenia gravis patients in the States is getting closer to 80,000 to 100,000. So to your question on whether Soliris is actually draining patients out of the available pool, I would say no because the real world use of Soliris seems to be patients which are close to the Phase III clinical trial population in the REGAIN trial, that means the highly refractory patient population. And mind you that the inclusion/exclusion criteria for our trial would allow us to recruit patients across the treatment paradigm, i.e., also substantially ahead of the relapsed refractory patient population. So to cut a long story short, we do not believe that, specifically, the Soliris launch is eating into our recruitment potential here. To your second question, the power of the enhanced technology really sits in the fact that now we can completely decouple our subcu product from an IV induction. Remember that we reported data last year where we showed that after an induction with the IV product, we can basically keep IgGs at a steady knockdown of about 50%, with a small volume weekly dose. Actually, the modeling suggests that we could go up to 75% if we wanted to. But now actually we can get rid of the IV induction in case we would really like to do that. So now we will be working towards the future with the IV product and the subcu product could live completely separated in the market space.
Our next question comes from a line of Sandra Cauwenberghs.
I have a follow-up question, basically, on the Halozyme and ENHANZE technology. Basically, when you think of implementing this into the commercial strategy for efgartigimod timewise, then do you see any future extensions possible within your premium franchise in terms of drug modalities beyond the FcRn and the complement space? And this is a question in light of the competitive positioning and the leadership position. Quickly, in terms of the financial, if you could give us a quick break breakdown of the upcoming milestones payments. And also in light of the, J&J deal, maybe some guidance on operational R&D and G&A costs going forward into 2019. And some insight on the translation effect would be handy for modeling into 2019.
So with regards to Halozyme, I can tell you that this is not your life cycle strategy, right. So we've aligned biological to incorporate the technology into its product. Unlike some of the predecessor, this is not a life cycle strategy. So we aim to push the subcu product including the Halozyme technology to its market as fast as we can, but we do need to go, of course, to some of the basic homework, including a short Phase I study. So I would say stay tuned on our announcements, going forward. We will communicate about outcome of Phase I and start of further clinical development work, incorporating the technology. Before I hand over, for the financials question, to Eric, I would like to ask you to maybe repeat the second question because I did not completely get it, Sandra.
So in terms of targeting a broad range of autoimmune diseases, the rare space of autoimmune diseases, there are other modalities out there in terms of targets beyond FcRn and the complement space. I was wondering if you see any future progress into that or if you think that you'll be able to keep your leadership position into the future also into the commercial strategy on these 2 angles, let's say, FcRn and complement.
So autoimmunity is clearly a therapeutic focus of this company and in our Innovative Access Program, we have at, any point in time, between 5 to 10 live programs. So yes, we are actively working on novel pathways, novel modalities in the autoimmune space all with the ambition, of course, to establish a strong franchise into these high unmet autoimmune diseases. Eric, would you mind taking the financial question please.
Sure. So regarding the breakdown of the milestone payments, we are not public on this actually for both the AbbVie collaboration and Janssen collaboration. We are just indicating the total figures. The only thing you should know is that if and when, as we would move into Phase I, we will certainly get milestone payments on this one. And for Janssen, we're not public. And then regarding the burn rate for 2019. So in 2019, thanks to the payment received from Janssen, we're going to be actually in the cash flow positive situation. Having said that, as you can anticipate both our R&D and SG&A expenses will increase significantly. What we can say is that based on the current business plan, we anticipate that our cash balance will -- allows us to fund all our operating expenses and capital expenditure requirements into 2021. And this includes notably expanding our manufacturing investments to provide clinical drug supply as well as building our pre-commercial investment for efgartigimod, but also our participation to the development plan of cusatuzumab with Janssen as indicated previously by Tim.
And with regard to the translation effect, which is, yes, on a couple of companies we see a difference between 2018 and moving that into 2019. Can you address how you will report on that?
You mean on the currency?
Yes. So between the dollar, and the euro and with regard to the collection, let's say, on the U.S. side last year.
Well, actually what we did is that, from the proceeds we received from our recent financings, we have kept a lot of dollars to finance our activities in U.S. So we have -- I mean, we were applying some sort of a natural hedging, so it means what we see is a lot of unrealized capital gain or losses. I mean, this is year it was gain, almost EUR 11 million on our placement in dollars because of the fluctuation of dollars versus euros. But otherwise, I mean they should be, apart from that, I mean there should be no real impact in the sense that we have sufficient dollars and sufficient euros, on the other hand, to finance our activities both for European activities and U.S. activities.
The next question comes from the line of Akash Tewari from Wolfe Research.
Given Momenta's comments on the recent earning call, if you were to run a pivotal CIDP trial, would you be required to go head-to-head versus IVIG? And if so, would that data from that trial potentially allow label expansion outside to other IVIG-approved indications? And then on your Halozyme technology, since you're able to start a Phase I with ENHANZE this year, is it safe to assume that the 113 formulation is similar to HYQVIA's where the drug and the Halozyme enzyme are administered as 2 separate injections instead of, I think, like RITUXAN's HYCELA where the drug and the enzyme are kind of co-formulated?
So to your question on the CIDP trial, that of course, is subject to our conversation with the regulators. I think there's a case to be made that you will be able to do a placebo-controlled trial. But I would like to hold off making further comments until we have certainty from that and scientific advice meeting with the FDA. And with regards to the Halozyme technology, it's clear that, from a clinical trial point of view, you can indeed just co-administer the 2 products together as part of a clinical trial. From a commercial point of view, you would like to blend the ENHANZE technology into your final product. And of course, that's one of the pieces of due diligence we did before in-licensing the technology, we have basically convinced ourselves of the compatibility of the technology with the efgartigimod molecule and formulation.
The next question comes from the line of Graig Suvannavejh from Goldman Sachs.
I've got 3 questions, if I could. My first has to with a competitor product, which is the UCB product. I believe that they are accelerating their time lines with respect to their Phase III or at least pivotal study in MG. And so my first question has to do with can you remind us, with respect to that product, how you feel your FcRn is differentiated particularly from a PK/PD perspective? So that's my first question. My second question has to do with your beachhead strategy, especially in the heme space. And there, since you already have proof-of-concept in ITP when might we think about when you might announce the next indication? You've already gone into a second indication in neurology with CIDP. Was curious as to what the next step might be in the heme space and whether autoimmune hemolytic anemia might be of interest or not, especially given that Alexion is already in clinical trials in that indication. And then my last question really has to do with how you were thinking about the co-promote option with respect to cusatuzumab in the U.S. I know there's an option, I'm assuming, you would want to trigger that option, but just can you give us a sense of how you're thinking about weighing the pluses and minuses?
So first of all the UCB molecule, this is a competitor's, which has disclosed relatively more data compared to some of the other competitors. We have seen a Phase I scientific publication. We have seen a press release announcing top-line data for the Phase II study in myasthenia gravis. And we have seen workshop presentations on ITP. The last interim data were presented, actually, during a breakfast event at the ASH conference. So I believe it's fair to say that from a safety, efficacy and convenience point of view, there are clear differentiating features emerging from these initial data. I think from a safety point of view, it's clear that their molecule comes with a different safety profile as compared to our molecule. I refer to the Phase I publication, but they're, basically, were steering from an IV dosing to a subcu dosing to avoid some of the emerging toxicities, which they saw mainly associated with headaches and GI toxicity. It is interesting to see that even with reduced subcu doses in that Phase II MG trial, they continue to have to take headache into account as well as GI toxicity in the increased doses in their ITP trial. So I think safety seems to be fundamentally different between both molecules. I think that's directly then related to efficacy. I think they have to be careful with the dose they choose for the molecule, from a safety point of view, and therefore, may be not hitting full PD effects of that molecule. Clearly from a bioavailability, biodistribution point of view, our data suggests that our fragment has a totally different volume of distribution and tissue penetration compared to this full-sized monoclonal. Finally, I believe that, from a volume dosing point of view, as a subcu product, they are talking about a subcu infusion using a pump system. That is clearly a different proposition compared to the subcu proposition, which we are trying to develop with our own subcu formulation, including now the ENHANZE technology. With regards to your second question, it is indeed our beachhead strategy to open up adjacent indications, which it looks like the Phase II proof-of-concept indications on the back of clinical success. So we have mapped the heme space. We do know where we would like to go, but I would like to refrain from disclosing next indications purely from a competitive dynamic point of view. The co-promote option in the States for cusatuzumab, I think, is a golden move for us, because under the 50-50 agreement, it basically means that we will be able to establish our commercial infrastructure in the heme space. And 50% paid for by Janssen, and that's the commercial infrastructure for AML, which we would be able to direct reapply for our ITP products. So we think that, from a strategic point of view, it is highly likely we will exercise the option, and we will be investing in the co-commercialization activities, going forward.
The next question comes from Christopher Marai from Nomura.
First, maybe, could we touch upon albumin reductions. I know you indicated what you had published previously with respect to albumin levels not being affected in earlier studies. However, I was wondering how much follow-up you have for your ongoing multiple trials across indications. And then open label extension studies, have you seen any reduction subsequent or with subsequent longer-term dosing? Then I have a couple follow-ups.
So the answer is a simple no. We have not seen any reduction in albumin levels, either in the open label extension study for ITP nor, of course, in the prolonged exposure in our [indiscernible] study where, for the first time, we are working with the maintenance portion in the product also. It looks like the effect on albumin, which is absent in the JCI publication is something which we consistently find back also in repeat or prolonged exposure in subjects.
Got it. And then thinking about the ADAPT MG trial and the progress with enrollment there, number one, will you be updating us on when it is fully enrolled or on further enrollment, I suppose, progress? And secondarily, could you comment on the proportion of AChR positive versus AChR negative patients enrolled in the trial so far, does that match sort of the population? How should we look at the balancing of those patients in the trial?
For the ADAPT enrollment, we have not decided, as a company yet, if and when we would be communicating on an update on the study. So I reserve the answer to the question for probably later this year. In terms of the proportion of acetylcholine receptor positive antibody patients versus negative, we expect significant traffic to our study from the negative patients because, typically, they have always been left out of all of the studies in the past. We do know that these patients are significantly affected by the disease and therefore, what we did, is we have placed a cap on the maximum number of patients we would allow into the study just to make sure that the study is properly powered on the acetylcholine receptor positive antibody patients.
Great. And then with respect to ITP, you're running a IV trial and then a subsequent subcutaneous trial, that's a Phase II subcutaneous trial. I was wondering will you expect that data to be sufficient to support a label with subcutaneous dosing in ITP? Or would the expectation be you'll run a Phase III trial? And then just, with respect your subcu products, you collaborated with Halozyme for ENHANZE, is that an indication that you're having problems developing your own internal subcu? How should we think about that?
So the question on bridging from IV into subcu for ITP, I think, is an outstanding question. It is a question we would like to discuss with the FDA. So we have a number of regulatory interactions ahead of us this year as we discussed. I think this will be an important question, assuming that we could be mimicking the PK/PD profile of the IV product with the subcu product, to what extent would we need to go into patients and what would be the minimum data set required to actually be able to go into commercialization with the subcu product? So I think we'll entertain that question with the FDA for sure, and we will report back on the outcome of the conversation as soon as it that took place. The Halozyme technology, Chris, is perfecting what I thought was already an outstanding subcu product. I think the molecule efgartigimod has been concentrated to, I would say, the very high end of what is possible with biologics, showing an outstanding product stability, low viscosity and therefore, already enabling, I think, a very elegant weekly subcu dosing in conjunction with an IV induction. And mind you, we have seen commercially successful biologics following such an induction and maintenance schedule in the past. Just think about Stelara. What Halozyme, basically, does is it just gives us more flexibility on the volume front. I think that Halozyme you can easily go up to 5 to 10 milliliters volume of dosing without running into the typical problems people would experience with such subcu volume. So a simple, fast, painless push of increased volumes would now allow us to decouple a subcu product from an IV induction. And that basically gives us now the full breadth of opportunity in positioning these products independently in the commercial market space.
The next question comes from a line of Yatin Suneja from Guggenheim.
Maybe just a few questions for us, Eric. Could you maybe tell us what was the share outstanding as of Q4 and then the weighted average for the year? And also tell us how are you -- how should we model the -- or how are you accounting the upfront that you're going to receive from Janssen on the P&L?
Sure. So the weighted average sales for Q4, that was 35,948,839 million shares. Sorry. So that's the first one. I'm just looking for the final figures on the total number of shares we had at the end of December. And we had a total of -- sorry. We had 37,907,551.
Got it. Then how about the accounting for the upfront?
So we will follow IFRS 15, so basically, this is going to be spread over the collaboration because we have an involvement in this collaboration. So basically, we're going to follow development plan. It's going to be directly linked in the percentage of progression of our development plan that we have with Janssen.
Okay, great. Then a couple of questions on the pipeline front. So for the PV trial, are we going to get any clinical data update this year? Or when should we expect to see the next data readout from the PV? And then I do have a couple other follow-ups.
There is a very clear agreement here that we will not provide any further interim data. For pemphigus we will present to you the full Phase II data sets next time, given the fact that we have amended the protocol, given the fact that we're now able to dose patients substantially longer. In case the product really works, that means that the data set is pushed into 2020.
Got it. And then on the dosing frequency, I think Alexion has mentioned that weekly dosing might not be ideal. What is your view on that? I think they are initially going with every other week IV dosing. I'm just trying to understand into what you did, trying to understand what is the best value proposition. Is it weekly? Every other week? Every month?
Yes, we will discuss dosing frequency and attractiveness of dosing schedules when we make progress with the clinical trial, Yatin. But we take stake of what is being said here, and we will answer that question later this year.
Okay. Maybe another follow-up on the ITP side. I think that in that Phase II trial, there was -- you guys observed some non-neutralizing ADAs. Do we have any additional -- were there any additional learning from the open label extension part? How are you of sort of following that, maybe in pivotal trials?
The analysis of the data of the OLE is still ongoing, actually the trial is still ongoing, so I cannot comment on a incomplete data sets. But so far, Yatin, the situation continues to be such that there is no reason to believe that there's any meaningful ADA developing when we dose or repeatedly dose our patients. That is certainly consistent, by the way, across the healthy volunteers trial, the MG, ITP and PV trial.
Got it. And then just final questions. On the CIDP, I think in the past, maybe in January, you commented that you want to make sure you enrolled the patient population that actually have the disease, and you seem confident that the drug would work if they have the disease. So can you help us understand how you can implement or how the inclusion criteria can be implemented to ensure you have the proper patient selection in that particular trial?
So that has been a topic of extensive consultation with the world-leading CIDP experts. We do have a very concrete suggestion that, again, I would like to hold off answering this question until we have spoken to the FDA. So the idea would be to reach out to the regulator with our proposal, discuss that proposal in depth and before we lock down the design. And then we will be ready to communicate, Yatin.
And our next question comes from the line of Ted Tenthoff from Piper Jaffray.
Eric, just one quick follow-up. What is the life of the J&J collaboration then?
You mean the life over which we're going to recognize revenue?
The term, correct, yes.
Well, it goes, I mean, until at least commercialization of the product. And we own -- so what you should take in consideration is actually the total collaboration is going to last until we launch the product, Yatin. And then, the commercialization products. So I would say until...
I think, Eric, the real answer to this question is more an IP question. Yes, we can expect revenue, Ted, until the last valid claim expires. And we have not been public yet on the ultimate patent life of the argenx content patents, but what we have been saying in public is that these patents were filed in 2010. So you just add your 20 years of normal patent life on top of that and then there could be an extra patent term adjustment and patent term extension time to be added to these 20 years. So I would say, for your model for ARGX-110, you should model somewhere between 2030 and 2035.
The next question comes from a line of Boris Peaker from Cowen.
Great. Thanks for squeezing men in. Most of the questions have been answered already, but I'm just thinking, commercially, in ITP, if you do show that the IV and the subcu have very similar PK/PD property and therefore, should probably work very similar, explain the case why some doctors would still choose to use the IV formulation.
Yes, I think, Boris -- thank you for your question, by the way. You have to look at that question from different angles. One angle would be the patient, one angle would be the physician but another angle would be the payor. And I think if you start with the payor, you will see the different geographies deal with subcu products differently from a reimbursement point of view, even within the U.S., different systems or different plans reimburse IV and subcu differently. So there is quite some complexity to be dealt with here from the payor's point of view. Then secondly, if you look at the heme space, there is an existing infrastructure, an existing investment in IV infusion infrastructure, which certain people may want to leverage in administering the product. And then finally, I would say, for the patient, there is of course diversion preference. ITP is a pretty bad disease. It's very much underestimated. There is a constant fear of bleeding. Due to low platelet count, these patients typically live more active lives as compared to MG patients and therefore, certain regular visits or visiting scheme to the hospital seems to be typical for ITP patients. So they would show up with a certain frequency in the hospital anyhow to have platelet counts. So to cut a long story short, we believe that we will reach more patients in different settings, under the different reimbursement systems if we can offer both IV and subcu.
Right. And just also to clarify, for the actual studies that you plan to conduct for the IV and subcu, do you aim to enroll patients with the same enrollment criteria? Or would there be some kind of a different patient subgroups that you can focus on?
Yes. For the Phase II, we're dealing with basically the same inclusion/exclusion criteria. For the Phase III subcu product, we have not made up our mind yet. So for the moment, the only thing I can say is that the Phase III IV study will, again, most likely stay close to the patient population of the Phase II where we picked up the signal.
The next question comes from the line of Jason Butler from JMP.
Just one the Halozyme collaboration. When you think about the increase in volume you can now achieve as well as the half life of efgartigimod, and the time dynamics of the impact on autoantibodies. Could you just speak to how this could potentially impact dosing frequency? And does this give you a potential to go to a significantly longer duration between doses?
The answer to your question is we need to find out in the Phase I how do PK/PD compare, how does bioavailability turn out to be with the technology. If you look at precedents, typically, you saw outstanding behavior in subcu dosing thanks to the technology. In some cases, even increased bioavailability thanks to the technology. So I think I have to stay silent on the answers until we have the data. And you know that we will do Phase I and healthy volunteer trial as fast as we can, so I'm confident we could have data before the end of the year.
The next question comes from the line of Joon Lee from SunTrust.
As you look at different autoantibody mediated diseases, what are your top considerations for choosing a particular indication? My understanding is that efgartigimod's mechanism of action is analogous to IVIG in that both saturate FcRn so other autoantibodies are diverted towards the degradation pathway. Are there some autoantibody diseases that are less admittable to IVIG? And I guess the more blunt question would be do MG, PV, ITP and CIDP respond equally well to IVIG or do some respond better to IVIG than others? I think, you said about 85% of the patients, CIDP patients respond to IVIG, so what about for the other diseases?
Joon, this is an interesting question. We haven't been public, of course, on our next indication for efgartigimod, but the way we select them would typically be we need to be convinced about the underlying disease biology of the disease in question, where we want to be convinced that these pathogenic antibodies actually drive the disease. And we do find comfort in the IVIG literature, but we find even comfort, typically, in the plasma exchange and immunoabsorption literature. So when you go from IVIG to immunoabsorption, you're increasingly confident that, actually, you're only interfering with pathogenic IgGs and with no other components of the immune system. So we would typically be convinced about a number of data points, not just IVIG. Now, with regards to the efficacy of IVIG, there's of course, a lot of unknowns about how it really works, and in the past, there has been a lot of speculation. I think it depends on the indication. For example, in myasthenia gravis, we believe that it's mainly competition for FcRn and complement, which is the mode of action of IVIG. Whilst in ITP, for example, we believe that IVIG mainly works through competition for FcRn but also competition for Fc gamma receptors. And that's why we believe IVIG has such a fast but short style of action in ITP. In CIDP, it's true that IVIG is the approved first line therapy, with an 80% response, roughly speaking, in CIDP patients. It is to still a pretty mediocre drug. And these patients have to take the molecules every 2 to 4 weeks in order to have a reasonable quality of life. So I believe in all these indications, there is ample room for improvement. And whilst we will unlikely compete with IVIG and ITP, we will more directly compete with IVIG in MG, and for sure we'll compete head on IVIG in CIDP.
And I have a follow-up. In your ITP Phase II, you observed 3 different types of ITP patients. You classified them as either chronic, persistent or newly-diagnosed ITP patient, and depending on the type of the patient you see different durability of effect. What about the chronicity of the disease is impacting the response to efgartigimod? And what's the implication in terms of your inclusion/exclusion criteria for the upcoming Phase III and the data stratification and commercial implications of that?
So it is clear from the literature, we're not the only ones to report that, actually, the earlier you interfere in the disease, the higher your chances for achieving long-term remission. I think that has been clearly demonstrated in the PLEX literature. And we also saw a 2019 publication on [indiscernible] where it is clear that patients with a more recent diagnosis had a much higher chance for long-term remission compared to patients, which had the disease already for years. Now the good news is that, in our study, we have all 3 profiles and we saw responses across the board for efgartigimod. We did see long-term remission, not only in newly-diagnosed patients, but also in some of the chronic patients. So the way we think about the positioning the drug, going forward, is not necessarily restricted to either newly-diagnosed, persistent or chronic, but really allow people to utilize the drug on top of their standard of care as long as they're inadequately controlled by the standard of care. So we would try to play across the treatment paradigm across the board in all 3 patient categories. To your last question, of course, the persistent and chronic patients are much higher in number compared to the newly-diagnosed patients.
I would now like to hand the call back for closing comments.
Thank you, everyone, for joining the call today. This concludes our prepared remarks. We look forward to updating you throughout the year on our programs and collaborations. Have a great day.
Thank you all.
That does conclude our conference for today. Thank you for participating. You may disconnect.