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Edited Transcript of ARGX.BR earnings conference call or presentation 1-Aug-19 1:00pm GMT

Q2 2019 argenx SE Earnings Call

BREDA Aug 6, 2019 (Thomson StreetEvents) -- Edited Transcript of argenx SE earnings conference call or presentation Thursday, August 1, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Beth DelGiacco

argenx SE - VP of IR - US

* Eric Castaldi

argenx SE - CFO

* Keith Woods

* Tim Van Hauwermeiren

argenx SE - CEO & Executive Director

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Conference Call Participants

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* Akash Tewari

Wolfe Research, LLC - Director of Equity Research & Senior Research Analyst

* Boris Peaker

Cowen and Company, LLC, Research Division - MD and Senior Research Analyst

* Christopher N. Marai

Nomura Securities Co. Ltd., Research Division - MD & Senior Analyst of Biotechnology

* Derek Christian Archila

Stifel, Nicolaus & Company, Incorporated, Research Division - Director & Senior Analyst

* Edward Andrew Tenthoff

Piper Jaffray Companies, Research Division - MD & Senior Research Analyst

* Emily Field

Barclays Bank PLC, Research Division - Research Analyst

* Graig Suvannavejh

Goldman Sachs Group Inc., Research Division - Executive Director & Senior Equity Research Analyst

* Jason Nicholas Butler

JMP Securities LLC, Research Division - MD and Senior Research Analyst

* Joon So Lee

SunTrust Robinson Humphrey, Inc., Research Division - VP

* Matthew Kelsey Harrison

Morgan Stanley, Research Division - Executive Director

* Sandra Cauwenberghs

KBC Securities NV, Research Division - Senior Financial Analyst

* Yatin Suneja

Guggenheim Securities, LLC, Research Division - MD & Senior Biotechnology Analyst

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Presentation

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Operator [1]

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Welcome to argenx First Half 2019 Financial Results and Second Quarter Business Update Conference Call. (Operator Instructions) I would now like to introduce Beth DelGiacco, Vice President, Investor Relations at argenx.

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Beth DelGiacco, argenx SE - VP of IR - US [2]

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Thank you. A press release with our first half 2019 financial results and second quarter business update became available earlier today and can be found on the News and Events section of our website.

Before we start, I'd like to go to Slide 2 to remind you that forward-looking statements may be presented during this call. This 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 those statements in relation to actual results, unless this is required by law.

I'm joined on the call today by Tim Van Hauwermeiren, Chief Executive Officer; Keith Woods, Chief Operating Officer; and Eric Castaldi, Chief Financial Officer.

On Slide 3, you'll see a brief agenda for the call. We'll start with recent news followed by a pipeline update. Keith will talk about commercial preparations for our lead asset, efgartigimod and its first indication, generalized myasthenia gravis. Eric will then provide financial results for the first 6 months of the year and Tim will end the prepared remarks with upcoming milestones before we start the question and answer portion of the call.

And with that, I'd like to turn the call over to Tim.

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [3]

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Thank you, Beth, and welcome, everyone. This past quarter was underscored by our May R&D Day, where we unveiled our argenx 2021 vision, shown on Slide #4.

We outlined our intention to expand the building blocks of our growing organization, including our unique innovation engine, our late-stage clinical development programs and our people and processes into an integrated immunology company, and more specifically into a commercial organization in 2021. We are building a deep pipeline of highly differentiated molecules that grow from our roots, the innovative access engine and will feed into our commercial franchises, one in neuromuscular and one in Hem/Onc.

Through these franchises, we plan to take our pillar of being patient focused and put it into action, launching efgartigimod into its first indication, generalized myasthenia gravis, to serve the persistent unmet needs we have identified in this community.

We are devoting resources across the organization to scale up to the demands of a commercial launch. argenx Japan is up and running, solidifying our presence in 3 high priority regions Boston, Ghent and Tokyo.

We hired our Chief Medical Officer, Wim Parys, who is very experienced in product development and help bring 7 now commercial molecules to approval. We have made all the key hires across the organization, many in the United States, and are now at 182 total head counts. And we are expanding our relationship with Lonza to ensure we are operating at commercial scale well ahead of launch.

We have Keith on the call today to talk more about the key infrastructure we're implementing to compete as an immunology powerhouse across our key markets. On the call today, we will also highlight each of the four indications from our ambitious efgartigimod program shown in our pipeline on Slide 5. Notably, in our press release this morning, we announced for the first time the trial design for our Phase III ITP program and the first patient dosing in the Phase I healthy volunteer trial for the subcutaneous formulation of efgartigimod in combination with Halozyme's ENHANZE technology. These are both important milestones within our subcutaneous development strategy.

The first Phase II and registration-directed trial is about start under our global collaboration with Janssen for cusatuzumab, which we will discuss today. And of course the roots of the tree are still abundant. And we will spend some time today on the newest candidates of our Innovative Access Program, ARGX-117 and ARGX-118 as well as our ongoing partnerships.

With that, let's go to the program starting with Slide #6, efgartigimod, our FcRn antagonist. Efgartigimod is a human IgG1 antibody Fc fragment engineered to optimally block FcRn. Our molecule uniquely binds to FcRn in the same way as its natural ligands IgG, but has been engineered for increased yet pH dependence affinity to targets. By blocking FcRn from its central role in IgG regulation, efgartigimod leads to a targeted reduction of all IgG subtypes and we have demonstrated across our clinical trials that this leads to meaningful clinical benefits in diseases where IgGs are directly pathogenic.

MG, as our lead indication, is the anchor of our neuromuscular franchise. We are actively enrolling patients to our global multicenter Phase III ADAPT clinical trial, including to ADAPT Plus, the one-year open-label extension study. This is shown on Slide 7. As I mentioned earlier, we are on track with enrollment and expect to have top line results in the second half of 2020. With the Phase III trial, we look to build on the results of the completed Phase II trial of efgartigimod in patients with generalized MG that were recently published in the peer-reviewed journal Neurology.

In ITP, on Slide 8, we have designed a Phase III program in consultation with the 3 major regulators; FDA, PMDA and EMA. In line with precedent ITP approvals, our Phase III program will includes 2 registrational trials that may be run concurrently. Across the 2 trials, we will incorporate both a subcutaneous and intravenous component. Our first Phase III trial, ADVANCE, will begin in the second half of 2019 and will evaluate the 10 mg/kg IV formulation of efgartigimod in up to 158 patients.

ADVANCE will assess platelet response in patients with persistence or chronic primary ITP, where response is defined as sustained platelet levels of 50,000 platelets per microliter of blood occurring across 4 out of 6 scheduled measures during weeks 19 to 24.

The second Phase II trial in ITP will begin after the start of ADVANCE. This second trial will start with an induction dose schedule of 10 mg/kg IV, after which patients can transition to dose with our 2 ml subcutaneous maintenance injection of efgartigimod to evaluate our ability to keep patients in response with the subcutaneous formulation. We are very excited to not only move into Phase III development in ITP, our second high value indication, but also to dose for the first time our subcutaneous injection in patients as a maintenance product.

Moving to Slide 9. We also recently began dosing our standalone subcutaneous product in healthy volunteers in a Phase I trial of the efgartigimod enhanced subcutaneous combination. This is a combination we are developing with Halozyme's proprietary delivery technology as part of our global collaboration that provides us exclusivity to the FcRn targets.

That study will evaluate PK-PD and bioavailability of the combination product and will enable us to move the product into patients and to initiate conversations with regulatory authorities on a potential bridging strategy with the IV formulation. We will have 2 subcutaneous formulations that will soon be in patients in a trial setting; in maintenance products and a standalone subcutaneous option. This dual approach will better accommodate patient preferences across indications, but may also come with other commercial advantages.

On Slide 10, you'll see our third indication PV, where we are enrolling the third cohort to assess the ability of efgartigimod to push patients with this very severe disease in clinical remission. We believe that an added assessment of time to clinical remission will build on the other observed characteristics of efgartigimod in PV, including rapid onset of disease control and clear correlation of reduced IgGs and improved disease course. Together, this could make for a very compelling commercial opportunity. We expect to provide our next data update in the first half of 2020.

Finally our fourth indication and second in other neuromuscular franchise, CIDP shown on Slide 11. We are on track to initiate our Phase II trial in the second half of 2019. The team here has dedicated significant time into designing a robust and what we think will be a highly informative study. And we look forward to sharing the trial design and market opportunity for efgartigimod in CIDP at a KOL event in the second half of the year.

There is a significant commercial opportunity for efgartigimod in our current indications and we see broad therapeutic potential across many other untapped disease states where IgG autoantibodies are directly pathogenic, including within our current franchises, but also in those we hope to establish in the future. We have committed in 2020 to renouncing our fifth indication in the program as well.

Moving on now to cusatuzumab on Slide 12. Our first in class anti-CD70 assets for AML, MDS, and other human indications for which we have a global collaboration and license agreement with Janssen. Recall, that interest around the CD70 target in AML is based on foundational research out of the University of Bern showing the pervasiveness of the target on both leukemic stem cells and AML blasts, but not on healthy cells.

Janssen trialed the operational development of cusatuzumab, and will be launching the first trial under the collaboration, a Phase II and registration directed trial in AML expected to start imminently. The trial will enroll patients with newly diagnosed AML who are not eligible for intensive chemo, the same population we studied in the Phase I trial from which we present the data at ASH last year. Patients will first be randomized to a dose finding of cusatuzumab in combination with azacitidine and once the dose is selected, the trial will be expanded to evaluate 150 patients total at that dose. As we progress through 2020, we expect more of the development plan of cusatuzumab to unfold, demonstrating why we believe Janssen to be the optimal partner to take this asset forward. Deep in our pipeline, we also want to discuss our newer assets today, ARGX-117 and ARGX-118 as well as provide a quick update on our other collaborations.

On Slide 13, you see ARGX-117, our first in class sweeping antibody targeting complement component C2. ARGX-117 is a prototype of our discovery engine marrying the cutting edge antibody discovery and engineering capabilities of argenx with the deep knowledge of the complement cascade from Professor Erik Hack from UMC Utrecht.

C2 sits at the nexus of the classical and Lectin pathways and C2 deficiency shows a relatively mild pathology compared to other components in the cascade that come at higher risk of lupus or infection. There are a large number of diseases that sits within the classical and Lectin pathways and we will share our development plan after we complete a Phase I trial in healthy volunteers, expected to start in the first quarter of 2020. We announced our intention to start with multifocal motor neuropathy or MMN, which sits squarely within our neuromuscular franchise, but also discussed the potential in kidney or hematology diseases that are driven by more upstream complement processes.

We also accessed our second license for ENHANZE under our Halo collaboration with exclusivity around C2 allowing us to start development with a subcutaneous formulation. ARGX-118 targets Galectin-10, uncovered by the research of Bart Lambrecht at VIB as a novel airway inflammation target, this is shown on Slide 14. Galectin-10 is the component protein of Charcot-Leyden crystals which lay a role in the presence and persistence of mucus flux. ARGX-118 is a simple antibody with crystal dissolving properties which has never been cited in literature to our knowledge. With this capability, ARGX-118 could be beneficial in diseases like severe asthma or ABPA where mucus flux remain a serious mediator of disease.

The ex vivo work on ARGX-118 from Professor Lambrecht's book was published in the peer reviewed journal Science and was also covered in Nature and the New England Journal of Medicine. The molecule is still in lead optimization work, but showcases the novel signs of our collaborators and the strength of ARGX molecules to bring innovative target biology to the forefront.

Our target pipeline is moving along well through key collaborations that continue to bring value to our company through our Innovative Access Program shown on Slide 15. LEO Pharma entered Phase I last year with ARGX-112 and AbbVie initiated a first-in-human trial earlier this year with ARGX-115, both leading to sizeable milestone payments to argenx. AgomAb and Staten are companies built around argenx assets, ARGX-114 and ARGX-116 respectively. In both of these companies, we have a nondilutive golden share.

And with that, I'd now like to turn the call over Keith who will discuss some of the commercial works happening to us on our argenx 2021 vision.

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Keith Woods, [4]

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Thank you, Tim. Today, I'd like to talk about the work we are doing on the commercial front, building on the launch preparation we shared during our R&D Day in May.

On Slide 16, you can see an overview of our therapeutic franchises. Following the Phase II proof of concept data in MG, we realized we had a high-value multiindication product that would, assuming success, require a significant commercial infrastructure across several therapeutic areas. We recognized the importance of starting to build this infrastructure early and getting a repeatable formula in place because efgartigimod and MG is just the beginning.

Let's discuss our launch preparation work along 2 key themes. First, where we will play and second, how we will win? Starting with the where, we're building out a plan to be a fully integrated biopharmaceutical company in 2021. We have 3 geographic priorities; in the U.S., Japan, and Europe. As Tim mentioned earlier, we're making key hires in the U.S. around our first commercial launch in 2021 of efgartigimod and MG. Japan is our second priority, and we do not expect it to be far behind the U.S. in terms of a launch time line. MG is a very attractive market in Japan due to the high unmet medical need and the concentrated prescriber base with around 200 prescribing physicians. So this is a group we can reach with an efficient argenx team.

Rare disease status is similar in Japan as it is to the U.S. and so medications targeting small underrepresented populations are given certain efficiencies. And perhaps most importantly, health insurance coverage is universal in Japan.

Critical to the question of where we will play is our commercial franchise model where we can build infrastructure and winning core capabilities within each. We have announced 2 commercial franchises into which we currently have 3 molecules and 5 indications. Within neuromuscular, we have MG and CIDP with efgartigimod and MMN with ARGX-117. Within hematology, we have ITP with efgartigimod and AML with cusatuzumab for which we have retained co-promotional rights in the U.S. and a 50:50 economic split on a royalty basis within the U.S.

Each franchise will have people with therapeutic expertise, but also dedicated processes across regulatory and commercial readiness. By developing core competencies within a franchise, we can maximize our learnings, taking what we build and learn from our MG launch and apply it to CIDP and MMN or taking what we learn from the commercial partnership with J&J and apply it to our ITP launch.

We will start with the launch of MG in 2021 in neuromuscular. But efgartigimod has the broad potential to play across multiple therapeutic spaces and cusatuzumab has multiindication potential as well within the Heme franchise. This model also makes room for expansion on the heels of positive data, where we may want to launch a third -- into a third therapeutic space with earlier programs, whether in dermatology, with efgartigimod from pemphigus vulgaris or should we expand ARGX-117 into kidney indications.

Now moving on to how we're going to win. MG is an indication where there is a community open to innovation across key stakeholders. This includes patients, advocacy organizations and physicians. We're working hard to broaden awareness of this chronic disease and identify the unmet needs that remain within a population that has had to define their lives to a new normal.

We feel that we had the right conversations ahead of launching our Phase III MG trial to operate more strategically within this growing landscape. We have designed the ADAPT trial to be one global registration study with buy in from the FDA and PMDA. And we're currently enrolling Japanese patients into this global Phase III trial to enable submission in Japan concurrently with the FDA submission.

ADAPT is also designed in close consultation with all key stakeholders. We will be disclosing more on the benefits of our Phase III design at a later date. But we feel that with positive data, we will be in a strong position with patients, physicians and payers as we launch.

We're building out core competencies in the U.S. and have filled the major commercial leadership positions as shown on Slide 17. We are now doing the same in Japan, having started with the hiring of our GM of Japan earlier this year. We've also hired field-based medical research liaisons in both the U.S. and Europe that are already actively involved in the ADAPT and the ADAPT Plus, thus building relationships with KOLs ahead of launch.

We're launching a real world evidence project in the second half of 2019 aimed at gaining in depth knowledge on the burden of disease and patient journey. And all manufacturing validation activities to meet required global regulatory standards are on track. We are advanced with putting our global supply chain in place for a 2021 launch.

With that, I'd like to turn the call over to Eric for our financial results.

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Eric Castaldi, argenx SE - CFO [5]

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Thank you, Keith. So Slide 18 covers our second quarter operating results, which are detailed in today's press release and regulatory filings.

Total operating income reached EUR 51.3 million for the first 6 months of 2019, an increase of EUR 30.8 million for the same period in 2018. The increase is related to the EUR 16 million increase in the recognition of milestone payments from AbbVie, the EUR 7.8 million from the recognition of R&D service fees under the Janssen collaboration and an increase of EUR 5.2 million driven by higher payroll, tax rebates for certain R&D personnels. R&D expenses for the first half were EUR 78.3 million compared to EUR 34.4 million for the same period in 2018.

Selling, general and administrative expenses were EUR 27.5 million for the first half of this year compared to EUR 11.5 million for the same period in 2018. The increases in R&D and SG&A expenditures over the prior year has been driven by the progress made within our late stage pipeline, including higher consulting and personnel expenses, higher clinical trial costs and manufacturing expenses, and also the recruitment of additional employees to support ongoing activities. We expect operating expenses to increase year-on-year as we further advance our pipeline and prepare for future commercialization.

For the first half of 2019, financial income amounted to EUR 7.2 million compared to EUR 1.3 million for the same period in 2018. Exchange gains totaled EUR 2.5 million for the first half of 2019 compared to EUR 4 million for the same period in 2018.

The total net loss for the first half of 2019 was EUR 45.1 million compared to EUR 20.1 million for the same period in 2018. As of June 30, 2019, we ended the first 6 months of the year with EUR 944.3 million in cash, cash equivalence and current financial assets, compared to EUR 564.6 million on December 31, 2018.

And with this, I would like to turn back the call to Tim.

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [6]

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Thanks, Eric. We're expanding quickly in an integrated and deliberate way across our organization. We have several milestones to look forward to in the next 18 months shown on Slide 19. First with efgartigimod. We will report top line data from the Phase III ADAPT trial in MG in the second half of 2020. We will initiate the Phase III ADVANCE trial in ITP in the second half of 2019 and the second Phase III trial with a subcutaneous component will follow.

We will report data from the Phase II trial in PV in the first half of 2020. We will launch the Phase II trial in CIDP in the second half of 2019. We will also report data from the Phase I healthy volunteer trial of the efgartigimod ENHANZE combination in the second half of 2019.

We anticipate that given efgartigimod's best in class safety and efficacy profile are validated across multiple clinical trials targeting a well known and clinically relevant biological mechanism, we are in an advantageous position to deliver substantial value in the near and long term from this candidate.

With our other assets, we expect the following. Janssen will dose the first patients in a Phase II and registration-directed trial of cusatuzumab in newly diagnosed AML patients who are unfit for intensive chemo.

We will file the CTA for ARGX-117 before the end of the year and dose subjects in a Phase I healthy volunteer trial in early 2020. We will continue to lead optimization work on ARGX-118 and will line up ARGX-119. You can see by the depths in our pipeline and the infrastructure we're putting in place ahead of our first commercial launch in 2021 that we are dedicated to building an integrated immunology company.

We thank you for your time today. And will now turn the call over for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) And your first question comes from the line of Matthew Harrison.

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Matthew Kelsey Harrison, Morgan Stanley, Research Division - Executive Director [2]

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I guess probably maybe 2 from me if I can. So the first one, just -- I know you're not ready to talk about the CIDP trial design. Maybe you could just talk to us a little bit about how you're thinking about the indication and what you think you need to demonstrate in a trial to be able to move this ahead given the results from IVIg as well as steroids? And then a second question from me just on bridging for IV to subcu, could you just maybe briefly talk about what sort of steps you need to take with regulators to have clarity on whether or not a bridging study is appropriate?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [3]

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So the detailed CIDP trial design is going to be disclosed in a CIDP KOL event later this year. We're going to do, again, an educational session on the disease, today's management of the disease and then of course the trial design and the rationale for the trial design. But let it be clear that we have the ambition to establish, again, a clear signal in this patient population when it comes to establishing the correlation between knocking down IgGs and seeing clear clinical improvement.

So as we discussed before, there is precedent on how to do Phase II clinical trials in CIDP. There are known clinical and regulatory end points. So I think we will be well equipped to set a big competitive trial, which we will disclose later this year.

With regards to bridging IV to subcu, I think we are clearly going to try and leverage the unique mode of action of the compound, where we can correlate the IgG reduction to PD effect with clinical outcome. And I think the real discussion with the regulator can start once we have collected solid PK-PD and bioavailability data from the currently ongoing Phase I study in healthy volunteer.

So I think this is going to be unprecedented. But we will have to enter into the discussion of course to see to what extent we can agree with the regulator on the path forward. So when we have the outcome of that conversation, we will certainly turn back to our stakeholders and communicate about it.

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Operator [4]

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Next question comes from the line of Christopher Marai.

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Christopher N. Marai, Nomura Securities Co. Ltd., Research Division - MD & Senior Analyst of Biotechnology [5]

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So just with respect to the ITP subcu formulation that you're using, will it be the Halozyme formulation or the homegrown subcu? And then just to maybe piggyback on that last question, so given the start of the subcutaneous trial with the Halozyme formulation, do you expect data will be available such that it could be used in your first BLA for efgartigimod in MG such that your label would have both IV and subcu formulations?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [6]

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So clearly we have 2 different subcu product presentations. It is clear from today's call that we're pushing forward with both product presentations. And homegrown maintenance product is a product we're going to push forward into the Phase III registration program for ITP. So that clearly is a product which would come on the back of an IV induction. So the start of the Phase I Halozyme combination product will indeed deliver data in time by the end of the year and the company is going to disclose on the back of these data also how it's intending to take the product forward into patients. But allow me to hold off on answering that question until we have the time to look at the data and then also disclose and discuss the data with you.

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Operator [7]

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Next question comes from the line of Derek Archila.

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Derek Christian Archila, Stifel, Nicolaus & Company, Incorporated, Research Division - Director & Senior Analyst [8]

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So Tim maybe first off, can you just talk about maybe or provide a little color on the end points you might use in the ITP Phase III to measure durability of response? We've seen some of the data from the Tavalisse Phase III. So would it be kind of similar or how do you think about that?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [9]

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So I think the field has clearly demonstrated that a platelet count of 50,000 platelets per microliter is clinically meaningful. And we also saw that the regulators started to ask for some measure of durability because it's of little clinical meaning when a platelet count is crossing the 50,000 number just once. What you want to see is a persistent increase in platelet. So I think what we disclosed today is a trial design where we will want to see in 4 out of 6 subsequent visits that platelet count of 50,000 and we also pre-specified the window, the time window in which that should happen. So we allow patients to go through that induction. And towards the end of that induction, we really want to see a sustained increase in platelet counts in order to call that a response.

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Derek Christian Archila, Stifel, Nicolaus & Company, Incorporated, Research Division - Director & Senior Analyst [10]

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Got it. And then just a follow-up onto the CIDP. So I know you're not going to talk about your trial design, but I just want to see if you had any thoughts or comments on the UCB CIDP trial design? It looks like they're dosing [rozano] on top of standard of care IVIg or subcu IG. So I just wanted to kind of get your thoughts on that and whether you think there is a potential benefit of dosing both therapies in those -- in CIDP patients.

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [11]

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As you could guess, it's premature for me to comment on the exact trial design. Remember that I think we always start new indications from the start, which means establish the activity of the compounds, establish a clear correlation between the PD effect and the clinical benefit. So I think that's also what you'll see in our CIDP study, that is where we're going to start.

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Operator [12]

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The next question comes from the line of Ted Tenthoff.

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Edward Andrew Tenthoff, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [13]

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I really appreciate the thought for Phase III ITP trial design, a lot of progress on a lot of different fronts. I want to come back to pemphigus if I may because it's a disease I know a little bit less about and obviously kind of heterogeneous in terms of manifestation. So what should we be expecting from that data next year? What would be a win for you guys that would really show that this is an indication to pursue with efgartigimod? And do you think this is an IV indication or is this one that may be better utilized via subcu?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [14]

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So what to expect from the pemphigus trial, recall the key objectives of that study, right. So we're seeking to establish the correlation between the reduction of total IgGs and then specifically of course the anti-desmoglein autoantibodies on the one hand and then disease improvements, which we assess along the PDI score on the other hand. And we also want to link that to clinical improvement. Now in pemphigus, let me walk you again through the 3 meaningful clinical improvements you want to see. First of all, you want to see disease control in a pemphigus patient. Disease control is defined as no new lesions are being formed and you start to see the closing of the existing lesions. That is very important for a PD patient. These lesions are extremely painful and difficult to manage. So you want to stop that.

Then secondly, you want to go to consolidation. End of consolidation basically means that 80% of the lesions closed and there are no new lesions being formed. That is a very substantial step on the way to a clinical remission. And the definition of clinical remission basically means that all lesions are gone.

And remember that in the interim update, we could already show in the first cohort a speedy disease control, which very nicely correlated with the PDI score improvement and the knockdown in pathogenic IgG4s. The reason we amended the study is we want to now show or hopefully show that with prolonged exposure, we can also go to the second stage and which is end of consolidation and then the final stage, which is clinical remission.

To your other question, IV or subcu, I think the jury is out and allow us to do the homework into Phase I Halozyme study, and then I think the scientists and clinicians will have all the data in hand to make a deliberate choice.

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Operator [15]

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Next question comes from the line of Jason Butler.

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Jason Nicholas Butler, JMP Securities LLC, Research Division - MD and Senior Research Analyst [16]

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First one, just another on the ITP ADVANCE trial design. Specifically, is the trial powered or does the trial has statistical power to show a difference versus control on the secondary end point of bleeding event rates? And then my second question is for the real-world study that you're doing in MG burden of disease. Are you looking at economic burden as well as health burden in that study?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [17]

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I'm going to defer the second question to Keith. We have the benefits of having Keith with us today. He is best placed to talk about the real-world evidence too. With regards to the ITP trial design, expect pretty standard end points in the secondary end point. So yes, indeed we will look at reduction in bleeding events and we will also look at quality of life at some of these secondary end points, absolutely.

Keith, do you want to tackle the real-world evidence question?

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Keith Woods, [18]

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Sure, thank you. In the real-world evidence study that we're beginning in the second half of the year, what we're looking at is the true disease burden for these patients with MG. And the data that we're going to be generating is going to not only be on the impact of the disease, but the patients living with the disease and living on treatment and the responses to various treatment. It will look at really the broader picture that will include their hospitalizations, it will include number of crisis and so we will be able to take into consideration paralleling that with the economics of the therapies that they would be on.

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Operator [19]

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Next question comes from the line of Akash Tewari.

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Akash Tewari, Wolfe Research, LLC - Director of Equity Research & Senior Research Analyst [20]

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And I apologize if I didn't hear the window correctly, but why did you choose the particular definition for sustained platelet count for ITP of greater than 50 to the 9th for at least 4 out of 6 visits from weeks, did I hear this correctly, 19 through 24? And then you compare that versus like Riegel's definition which was similar but it was from weeks 24 -- 14 to 24 and the TPO is where it's kind of a cumulative percentage over a 6-month period. And would that definition of sustained response include without rescue therapy? And then on the Halozyme formulation, just to understand the range of possibilities, is it possible that you could bridge patients from the Halozyme formulation to the Phase III myasthenia gravis study, so like the IV to the subcu? And if not, when could we potentially get a subcu myasthenia gravis Halozyme formulation on the market?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [21]

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So I think to answer your first question on the time window in which we're going to measure the sustained platelet count improvement, I think that's mainly being driven by the learnings from our own Phase II study in the PK-PD model. So I think we had to choose carefully the window where we maximize the chance to see a durable response. And I think that could be different or slightly different for different molecules, but we just wanted to maximize chances to see success. The definition itself in terms of 50,000 in 4 out of 6 visits is indeed something which was pioneered by Riegel.

With regards to your second question, I think you have to expect that the ADAPT study is going to sail as fast as possible to conclusion. I do not believe that we're going to try and [ride] that protocol by bringing in a subcu product. Remember that speed to market is the key strategy here. The key question is what is the minimum dataset which the regulator will want to see to allow us to comfortably bridge from IV into subcu and there we're going to heavily leverage to PK-PD bioavailability data from the ongoing Phase I study. To what extend the regulator will want to see additional comfort on top of that I think is the very topic of the conversation.

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Operator [22]

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Next question come from the line of Yatin Suneja.

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Yatin Suneja, Guggenheim Securities, LLC, Research Division - MD & Senior Biotechnology Analyst [23]

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The first question I have is on the ITP side. Can you maybe help us understand the scope and size of the second ITP study relative to ADVANCE? I mean how it might differ from the first study, I mean or is the main difference only is IV subcu or is it purely a bridging study? And then I have a follow-up.

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [24]

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So we haven't said much about the second study. So I think today's call was mainly focusing on the first study. Remember that we did decide to accelerate the subcu product in ITP from what was originally a Phase II into a Phase III and the only thing I would like to say today is that the concept of the second Phase III study will be to give further comfort on study 1 for the IV product, whilst also making use of this opportunity to demonstrate hopefully the power of the subcu product. But more details to follow and we will certainly be happy to enter into the detailed conversation then.

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Yatin Suneja, Guggenheim Securities, LLC, Research Division - MD & Senior Biotechnology Analyst [25]

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Got it. And then on the MG side, maybe could you talk about what you are seeing in terms of enrollment in the ADAPT trial that sort of enabled you to guide now to second half of 2020, have a more precise guidance now versus the product 2020 guidance that you had in the past?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [26]

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Remember, Yatin, the conversations we had when we kicked off the ADAPT study in terms of guidance for the duration of that study, the best proxy which we could give was actually the precedent of the REGAIN trial. And it turns out that actually that guidance or that proxy is also applicable to our study. So what we are announcing today is that we're on track with enrolling the trial, we continue to stick to the guidance which we gave earlier. And then when you simply do the math, you will see that the study should read out in the second half next year.

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Operator [27]

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Next question comes from the line of Sandra Cauwenberghs.

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Sandra Cauwenberghs, KBC Securities NV, Research Division - Senior Financial Analyst [28]

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I have 2 small questions left. I understand that it's difficult to give more insight on the second ITP trial. But given the fact that competition is advancing with the subcu alone application, where could the findings of the second ITP trial give you a differentiating factor in terms of patient adoption or commercialization of the drug for that indication? The second question is with regard to 117, so I understand that the first indication would stay in the neuromuscular corner and maybe I missed it during the R&D Day, but is there a biological rationale to also a C2 blocker in a disease like ITP given the fact that there are some historical reportings on C2 deficiency in ITP?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [29]

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Two good questions, let me start with the second one first. So when we talk about ITP and our understanding of the pathogenic role of the antibodies, there are at least 4 pathogenic modes of action of these autoantibodies, right. And 1 of the 4 is indeed complement recruitment. So we cannot quantify exactly how many patients suffer from a complement recruitment as the key mode of action, but it certainly plays a role. In addition, of course, to complement recruitment, we also see the accelerated clearance of platelets, the impaired production of platelets, and the impaired platelet functionality. So we believe that clearing the pathogenic IgGs is a more profound impact on the disease biology is also extreme by the way of the complement recruitment because complement in ITP is recruited by these autoantibodies. So yes, complement is involved, but we think that the heart of the biology actually sits with the pathogenic autoantibodies.

With regards to differentiation in the ITP space, I think it's still early to talk about it. We have only seen our own Phase II data and we have seen Phase II data in public from one of our FcRn colleagues. I think already there you see a distinct different patent in terms of safety and efficacy, but truly to compete or talk about competition in the global market, we would need to see Phase III data for both products. So allow me to hold off on that question and build an answer on that on the back of Phase III data.

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Operator [30]

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Next question comes from the line of Graig Suvannavejh.

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Graig Suvannavejh, Goldman Sachs Group Inc., Research Division - Executive Director & Senior Equity Research Analyst [31]

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I've got 2 questions and they're both related to your interest in dermatology. So with dermatology and your decision maybe to move forward as a third therapeutic area or not, is it completely dependent upon whether you have positive data in PV or do you still see an opportunity in dermatology just in case the proof of concept does not read out in the way that you want? And then my second question with regards to, on a similar note, whether you'd move into nephrology, is this an either/or of going into dermatology or nephrology or could it possibly be both?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [32]

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I think that's a great strategy question. The way we're thinking internally is that only it makes sense to invest in commercial infrastructure if that infrastructure can also be leveraged across multiple indications. So PV of course would be a great entry point, but we would want to see rationale and/or data in at least second and maybe third indication before we would establish a franchise. And that is the potential of course across our portfolio to play in multiple skin indications. But let the data drive the decision. And no dermatology and nephrology are not mutually exclusive. I think they're both very interesting spaces. And what we said in our R&D Day is that actually we are starting with a neuromuscular and Hem/Onc franchise, but there is expansion possibility in both skin and kidney.

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Operator [33]

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Next question comes from the line of Joon Lee.

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Joon So Lee, SunTrust Robinson Humphrey, Inc., Research Division - VP [34]

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Regarding pemphigus vulgaris program for which we expect data in the first half of 2020, there are competing mechanism of action like B cell depletion methods. Rituximab for example is now approved for PB and has demonstrated complete remission at month 24 with infrequent dosing of 6 to 12 months. How do you think about competitive landscape versus such modality? And what are some of your tall design strategies to help setup efgartigimod for commercial success in PV? Would safety or convenience be potentially differentiating aspects of efgartigimod?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [35]

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It's also a question which we tried to address in our KOL during last year's pemphigus event. So what you need to remember is that pemphigus is a complete empty space when it comes to therapeutic tools in the toolbox. So in general, people will be looking for different modalities, different modes of action and they will be looking to use them in concert rather than see one compete with the other one. So they need more medication, not less. Now when we look at the Phase III trial results for the Rituximab trial, a couple of things spring out. So the first one is, it takes some time for Rituximab to start acting in these patients. And of course mechanistically we understand why that is the case. It's not because you wipe out B cells, that your plasma cells are affected. And also you have titers of circulating old antibodies, which we all know have a long half life, thanks to FcRn. So when it takes 4 months for Rituximab to take an action, question is, how do you control that patient in between period of time?

The second thing which is interesting about Rituximab in pemphigus is the high relapse rates. It's difficult to understand where it is coming from, but there is a substantial relapse rates for patients, which are on Rituximab. And third, I think you're spot on, we need to keep an eye on safety. We know that in pemphigus there is the 3x higher mortality due to infection compared to the normal healthy population. So these patients do have an impaired barrier function. And I think (inaudible) risk of infection and the safety profile of the different modality is making their way into that markets.

So I think early, a point of differentiation visible, but bear in mind this is a very bad disease. These patients are in high unmet needs and therefore people will be looking for multiple modalities in the toolbox, which ideally could be used synergistically or together.

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Joon So Lee, SunTrust Robinson Humphrey, Inc., Research Division - VP [36]

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And if I may ask one more question. It's well known that FcRn is also involved in maintaining albumin homeostasis and your competitors using monoclonal antibodies against FcRn seems to also end up reducing albumin in addition to IgG. At what magnitude of albumin reductions do you start to see clinical sequel of hypoalbuminemia and is there any reason to believe that ITP, gMG and PV or CIDP patients may be particularly vulnerable to low albumin levels?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [37]

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Thank you for the albumin question. I would like to refer to our Phase I publication where we published microscopy data highlighting the difference in behavior between efgartigimod and some of the full-size monoclonal antibodies when it comes to interfering with serum albumin trafficking. So we haven't seen any drop in albumin, whilst indeed some of the high-affinity monoclonal antibodies have consistently reported drops between 20% and 30%, I think mainly in healthy volunteers.

I'm not the best person to talk about potential risks associated with low levels of albumin, but I am aware of publications highlighting the drops, for example, of 50% start to become really problematic in patients. And therefore I think the jury is out, how big the drop in serum albumin will really be when we go into chronic dosing regimens for some of these molecules. But I think it's too early to really comment on that. It's a watch out. It's something to work around for those programs. But I think it's too early to really comment on that.

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Operator [38]

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Next question comes from the line of Emily Field.

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Emily Field, Barclays Bank PLC, Research Division - Research Analyst [39]

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I was just wondering if you could comment on the advanced trial design and the thought process behind trialing efgartigimod on top of standard of care and not as a monotherapy. And then also just on each of the subcutaneous formulations, is the intention that these would both be home administered by the patient or would they have to be administered in a physician's office?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [40]

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Thanks for these questions. And again I'm going to defer the second question to Keith. We have the benefit of having Keith on the call today. Look, the reason why we're testing in MG and ITP efgartigimod on top of standard of care is because we're aiming for a broad label. And actually the label I'm aiming for is that efgartigimod could be dosed on top of standard of care as soon as patients are no longer adequately controlled by standard of care. And by doing that, you're actually going for a very broad label instead of niching into a highly relapsed refractory patient population. So the goal really is a broad competitive label for both indications. I would like to ask Keith maybe to address your subcu home administration question.

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Keith Woods, [41]

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Yes, thank you, Tim. So in regard to the 2 different formulations that we have for the ITP study where we'll be using, what I heard referred to as the homegrown, but the maintenance subcutaneous dose, during the trial, of course, it will not be administered at home immediately because we'll be monitoring platelets on a regular basis. But the desire with providing subcu is optionality and convenience for patients. So the desire, and it will be determined as we meet with the regulatory bodies with successful data, would be that it would be that you could inject yourself at home.

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Operator [42]

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Next question is from the line of Boris Peaker.

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Boris Peaker, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [43]

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So I just want to follow up on the prior, I guess, questions. For the ADAPT trial, how they enroll patients to date compared to your expectations? And how do they compare to the Phase II study, and more specifically, I just want to get an understanding of how the background therapy compares to the Phase II study?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [44]

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These are 2 great questions. So believe it or not, but the enrollment curve is perfectly matching our forecast. So I think the strategies which we deployed for recruiting such an ambitious trial, remember this is the biggest and the broadest MG trial ever worked, and I'm very proud of the teamwork behind such an ambitious trial. And the comparison between the Phase III patients and the Phase II patients is a great question. We believe that the ADAPT study design is substantially derisked by a couple of factors. One of those factors is indeed that we try to stay as close as possible to the type of patients, which we saw in the Phase II study including the severity of the disease, so the MG-ADL cutoff, but also the type of background medication, which we allow. The difference between the ADAPT study and the small Phase II trial is that, of course, we will aim to have a better balance in background medication between control arm and study arm. Remember, there was a slight imbalance in the past in the Phase II study, which we have of course explained and contextualized, but it's clearly not something which we wanted to see in the Phase III registration trial.

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Boris Peaker, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [45]

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And then my second question, for the Phase II study in MG, are there any additional plan updates that you -- any data cuts or in the future, whether it's presentation at a medical meeting or publication of any sort or anything like that?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [46]

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The manuscript is being submitted. So I think the next data release to be expected will be a peer-reviewed publication.

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Boris Peaker, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [47]

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And do you have a tentative time line for that?

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Tim Van Hauwermeiren, argenx SE - CEO & Executive Director [48]

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No, that's in the hands of course of the review process. So very difficult to pin us down on the timing. But you know that this company takes pride to be science-based and is typically also announcing publication of key data to its stakeholders. So we will alert you.

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Operator [49]

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I would now like to hand back the call to Beth DelGiacco. Please go ahead.

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Beth DelGiacco, argenx SE - VP of IR - US [50]

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This concludes the call for today. Thank you for joining and we look forward to updating you on our progress.

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Operator [51]

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You may all disconnect.