argenx SE

Argenx announced positive top-line results from its phase 3 trial of Vyvgart in autoimmune myositis, or IIM, with the study meeting its primary endpoint at week 52 in the combined patient population of immune-mediated necrotizing myopathy and dermatomyositis. Shares soared 16% on Aug. 17.

Why it matters: This is Argenx's first positive phase 3 study in rheumatology, and a strong commercial launch would expand Vyvgart's growth beyond its already approved neurology indications in generalized myasthenia gravis and chronic inflammatory demyelinating polyneuropathy. We assign a 90% probability of approval to Vyvgart in IIM, and its US Breakthrough Therapy Designation in the IMNM subtype could support a potential approval by late 2027. We forecast Vyvgart could generate annual IIM sales exceeding $1 billion in the later years of our 10-year forecast. Beyond Vyvgart's expansion, we see long-term value in FB102, Argenx's recently acquired phase 1b asset from Forte Biosciences, which targets a differentiated immune pathway across vitiligo, celiac disease, and alopecia areata. This could evolve into a second pipeline-in-a-product opportunity and diversify the firm's long-term growth beyond Vyvgart.

The bottom line: We raise our fair value estimate for no-moat Argenx to EUR 777 and $900 per ADS (from EUR 677/$770) based on the positive data for Vyvgart in IIM and the long-term contribution of FB102. We assign 25%-35% approval probabilities across FB102's indications, with phase 1b data readouts in celiac and alopecia areata later this year representing potential upside catalysts. We forecast FB102 could become a blockbuster drug in the later years of our forecast. We have a positive outlook and project 24% annualized revenue growth over the next five years. Still, shares are trading 10% above our valuation. Investors appear to be pricing in stronger commercial success for Vyvgart in ​IIM, along with higher probabilities of approval for FB102.

We maintain our fair value estimate for no-moat Argenx of $900 per ADS.

Argenx announced positive top-line results from its phase 3 trial of Vyvgart in autoimmune myositis, or IIM, with the study meeting its primary endpoint at week 52 in the combined patient population of immune-mediated necrotizing myopathy and dermatomyositis, which are two subtypes of IIM. This is Argenx's first positive phase 3 study in rheumatology, and a strong commercial launch would expand Vyvgart's growth beyond its already approved neurology indications in generalized myasthenia gravis and chronic inflammatory demyelinating polyneuropathy.

We assign a 90% probability of approval to Vyvgart in IIM, and its US Breakthrough Therapy Designation in the IMNM subtype could support a potential US approval by late 2027. We forecast Vyvgart in IIM could generate sales exceeding $1 billion annually in the later years of our 10-year forecast.

Vyvgart’s pre-filled syringe continues to fuel strong growth in myasthenia gravis and chronic inflammatory demyelinating polyneuropathy, supporting robust cash flow and pipeline investments. Argenx's recent US label expansion of Vyvgart into all serotypes of adult patients with generalized myasthenia gravis expand the addressable patient population by roughly 11,000 in the US.

Positive Vyvgart phase 3 results in ocular myasthenia gravis met the primary endpoint and support planned US filings to expand the label, potentially reaching an additional 7,000 US patients.

Argenx is advancing toward its goal of treating 50,000 patients by 2030, ending 2025 with 19,000 patients on therapy globally across three disease indications—generalized myasthenia gravis (approval globally), primary immune thrombocytopenia (approval in Japan), and CIDP (approval in the US, Japan, and China).

We appreciate Argenx's strong commercial execution of Vyvgart and advancement into phase 3 in Sjogren's Disease. An important catalyst is the upcoming multifocal motor neuropathy data readout in the fourth quarter of 2026. A successful data readout would help validate another platform for Argenx and break its single-drug reliance on Vyvgart. We assign this candidate a 55% probability of approval in our base case, and we see upside potential pending a positive data readout.

Beyond Vyvgart's expansion, we see long-term value in FB102, Argenx's acquired phase 1b asset from Forte Biosciences, which targets a differentiated immune pathway across vitiligo, celiac disease, and alopecia areata. This could evolve into a second pipeline-in-a-product opportunity and diversify the firm's long-term growth beyond Vyvgart. We assign 25%-35% approval probabilities across FB102's indications, with phase 1b data readouts in celiac and alopecia areata later this year representing potential upside catalysts. We forecast FB102 could become a blockbuster drug in the later years of our forecast.

Our valuation largely rests on our forecast for Vyvgart and FB102. We expect the firm to launch in several new indications, and that new launches and additional penetration into the myasthenia gravis market could lead to probability-adjusted Vyvgart sales reaching nearly $18 billion by 2035. We assume a 60% probability of approval in Sjogren's.

We expect R&D and SG&A expenses to remain elevated in the near term as Argenx advances its pipeline and focuses on prelaunch efforts to enable strong commercial launches. We think robust cash flows from Vyvgart will support Argenx's continued profitability throughout our forecast period, and the firm first reached positive net income in 2024, followed by positive operating profitability in 2025.

By the end of our 10-year forecast period, we anticipate that operating margins will rise to about 35%.

While we think Argenx’s key drug, Vyvgart, is on track to achieve annual sales of nearly $18 billion in 10 years, we do not yet award the company an economic moat, given the competitive landscape and concentration risk from a pipeline-in-a-product business model. Vyvgart is central to our valuation (accounting for 95% of our sales forecast in 2035), so superior data from competitors or safety issues that emerge with long-term use of Vyvgart would significantly impair the firm’s value. While we think the firm is in the process of building intangible assets, we see potential threats of value destruction, which underscores our no-moat rating for Argenx. A biotech moat would typically stem from patent-protected intangible assets or switching costs built on physician prescribing habits. Argenx is reliant on a single molecule across most of its approved and pipeline indications, and we view this as not durable or diversified enough to support a moat.

With its approval in December 2021 in myasthenia gravis, Vyvgart became the first FcRn inhibitor to reach the market, giving it a significant opportunity to gain market share ahead of competitors. These drugs work by blocking FcRn and impairing the recycling of auto-antibodies linked to several autoimmune conditions. Vyvgart is protected by both orphan drug exclusivity (biosimilars could launch in 2029 at the earliest) and patents on Argenx’s in-licensed ABDEG technology used to improve Vyvgart’s potency (expiring in 2036). While we think efficacy for Vyvgart and other FcRn inhibitors in development looks likely to be similar, Argenx could see differentiation through its exclusive license for Halozyme’s delivery technology, which allows subcutaneous administration of the drug. The US Food and Drug Administration approved this subcutaneous form, marketed as Vyvgart Hytrulo, in myasthenia gravis and Chronic Inflammatory Demyelinating Polyneuropathy (CIDP), and Argenx is pursuing subcutaneous versions of Vyvgart for other indications in testing. Vyvgart also has a clean safety profile, while other drugs in the class have been linked to headaches and raised cholesterol levels.

We assume peak Vyvgart sales of more than $9 billion in myasthenia gravis, competing against UCB’s Rystiggo and Zilbrysq and J&J’s Imaavy. Myasthenia gravis is a rare, chronic neuromuscular disease driven by autoantibodies that interfere with communication between nerves and muscles, leading to severe muscle weakness and, in severe cases, respiratory failure. Vyvgart encourages destruction of these autoantibodies without affecting levels of other important proteins in the blood. Most myasthenia gravis patients take oral steroids and other immunosuppressive therapies initially, but tougher-to-treat patients require IV medication like immunoglobulins (sold by plasma firms including CSL, Grifols, and Takeda) or AstraZeneca’s complement antibodies Soliris and Ultomiris. Roughly a quarter of patients have an inadequate response to other therapies, leaving a significant opportunity for Vyvgart to improve outcomes for patients.

One of the most important drivers of Argenx’s long-term competitive position is whether Vyvgart proves effective in other autoimmune conditions. Argenx received FDA approval in June 2024 for Vyvgart Hytrulo in CIDP, validating the idea that autoantibodies drive this disease as well. Vyvgart also received approval in Japan for primary immune thrombocytopenia (ITP), though phase 3 studies in ITP failed to meet primary endpoints in the US and it did not receive US approval there.

Registrational studies are ongoing for efgartigimod in ITP and Sjogren’s disease, and Argenx recently announced positive top-line phase 3 results in autoimmune myositis (IIM). Success across this pipeline could create new patent-protected therapies extending Argenx’s exclusivity beyond Vyvgart’s 2036 patent expiration, but until then, the firm’s economic value remains concentrated in a single molecule: superior competitor data or long-term safety issues with Vyvgart would significantly impair Argenx’s valuation, reinforcing why a no-moat rating is most appropriate today. Other FcRn inhibitors are also in testing across a wide range of indications at firms including UCB, J&J, and Immunovant, which could pressure Vyvgart’s share further.

We’re also unsure of Argenx’s ability to innovate beyond Vyvgart, as the firm has built its pipeline largely with collaborative partners rather than in-house discovery. Pipeline candidate empasiprubart, a complement inhibitor developed with Broteio Pharma using in-licensed NHANCE technology, had positive phase 2 data in multifocal motor neuropathy and CIDP, with phase 3 readouts expected in late 2026 and the first half of 2027. If empasiprubart advances to clinical and commercial success, it would diversify Argenx’s portfolio and could help support a narrow moat over time.

Similarly, FB102, an acquired phase 1b asset from Forte Biosciences targeting a differentiated immune pathway across vitiligo, celiac disease, and alopecia areata, could become a second pipeline-in-a-product opportunity if data due later in 2026 read out positively.

Until Argenx demonstrates durable, patent-protected returns from a diversified set of therapies beyond Vyvgart, we see insufficient evidence of a maintainable competitive advantage. We would revisit this no-moat rating if empasiprubart reaches commercialization with strong efficacy and pricing power, or if FB102 or Vyvgart’s expanding indications meaningfully diversify revenue away from a single molecule.

Novel FcRn inhibitor Vyvgart is a pipeline in a product, currently approved in myasthenia gravis and CIDP in the US, but it's being evaluated in multiple additional indications.

Vyvgart’s approval in myasthenia gravis made it the first-to-market FcRn-targeting drug, putting Argenx in a strong position to entrench itself in the market before competitors arrive.

With exclusive access to Halozyme's subcutaneous drug delivery technology, Argenx can improve the convenience of Vyvgart and potentially differentiate its drug from future competition.

Vyvgart’s initial average price in myasthenia gravis of $225,000 per year per patient in the US could fall over time, as international launches progress and as competitors reach the market.

While Vyvgart showed impressive efficacy in two indications, other potential indications are less clearly caused by autoantibodies, and pivotal data has been mixed in ITP and dermatology indications.

Firms like Johnson & Johnson, UCB, and Immunovant are also aggressively pursuing FcRn inhibitors that could prove just as effective as, or more effective than, Vyvgart.