Argenx Earnings: Raising Our Fair Value to EUR 491 From EUR 425 on Sales and Pipeline Advancement

We’re raising our fair value estimate to EUR 491/$533 per ADR from EUR 425/$466 per ADR following strong second-quarter results for Argenx and data presented at last week’s research and development Day. Our new valuation incorporates higher potential sales for the firm’s sole approved drug, Vyvgart, in myasthenia gravis (both higher market share and a larger pool of patients becoming eligible for therapy over time), recent approval in CIDP, and clinical trial advancement in Sjogren’s disease (probability of approval raised from 30% to 60%), only slightly countered by failure in post-covid-19-mediated postural orthostatic tachycardia syndrome. We’ve also increased our assumptions for sales of pipeline drug empasiprubart after incorporating its advancement to phase 3 trials later this year. We think shares look slightly undervalued at our new fair value estimate. However, uncertainty around the competitive landscape and reliance on a single molecule for most of our forecast sales prevent the firm from establishing an economic moat just yet. We expect Argenx to report solid and expanding profitability beginning in 2025.