Argenx Earnings: Shares Remain Undervalued as Vyvgart’s CIDP Launch Looks on Track for 2024

Argenx ARGX reported third-quarter results that were relatively in line with our expectations, and we’re not making any changes to our $574 per ADS/EUR 543 fair value estimates. Argenx reported sales of myasthenia gravis drug Vyvgart and its subcutaneous version, Vyvgart Hytrulo, amounting to $329 million in the third quarter, with roughly two thirds of these sales stemming from the U.S. market. This represents 22% quarter-over-quarter growth, and we think strong continued patient uptake will allow sales of the drug to surpass $1.1 billion in 2023. We think shares look undervalued given the potential for Vyvgart to gain approval in multiple additional autoimmune indications, but we do not yet assign the firm an economic moat, given the uncertainty around the breadth of the drug’s potential as well as its profile relative to emerging competition.

New indications will be key to Vyvgart reaching our 2032 sales forecast of more than $10 billion. Argenx plans to file for approval of Vyvgart in CIDP by the end of 2023 and use a priority review voucher to accelerate the timeline to market, which pushes our assumed launch in this indication to 2024 (from 2025). Argenx still expects data from a study in ITP later this year and studies in pemphigus and bullous pemphigoid around the end of the year, with several additional trials reading out in 2024. By 2024, Argenx should also have approval of Vyvgart Hytrulo in key markets outside of the U.S., including Europe, Japan, and China. We’re eager to see data for Argenx’s second drug, empasiprubart, next year in multifocal motor neuropathy, which could build on the firm’s initial neurology autoimmune indications and help diversify the portfolio. The firm’s $3.2 billion in cash (including $1.2 billion from a recent equity offering) could also be used to further supplement the portfolio with tuck-in acquisitions.