UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the Month of August 2018

 

Commission File Number: 001-38097

 

 

ARGENX SE

(Translation of registrant’s name into English)

 

 

Willemstraat 5
4811 AH, Breda, the Netherlands

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F  ☒     Form 40-F  ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

 

 

 

 

 

First Half-Year 2018 Results

 

On August 2, 2018, argenx SE (the “Company”) announced its unaudited first half-year results for 2018, which are further described in an Unaudited Interim Report for the Six Months Ended June 30, 2018.

 

The information contained in this Current Report on Form 6-K, including the exhibits hereto, is incorporated by reference into the Company’s Registration Statements on Forms F-3 (File No. 333-225370) and S-8 (File No. 333-225375).

 

 

EXHIBITS

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

 

argenx reports second quarter business update and half-year 2018 financial results

Management to host conference call today at 3 p.m. CEST / 9 a.m. EDT

 

August 2, 2018

 

Breda, the Netherlands / Ghent, Belgium – argenx (Euronext & Nasdaq: ARGX), a clinical-stage biotechnology company developing a deep pipeline of differentiated antibody-based therapies for the treatment of severe autoimmune diseases and cancer, today announced its second quarter business update and half-year financial results for 2018.

 

These half-year results and this business update will be discussed during a conference call and webcast presentation today at 3 p.m. CEST/ 9 a.m. EDT. To participate in the conference call, please select your phone number below, and use the confirmation code 7669735. The webcast may be accessed on the homepage of the argenx website at www.argenx.com or by clicking here.

 

“We made significant progress recently in building a pipeline-in-a-product opportunity around our lead candidate efgartigimod (ARGX-113) as we study its potential to treat a range of severe autoimmune diseases, including validation of its mechanism of action across two indications based on the proof-of-concept data from the Phase 2 clinical trial in generalized myasthenia gravis (gMG) and the early evidence of disease control from the first cohort of patients in our Phase 2 pemphigus vulgaris (PV) clinical trial. These results strengthen our conviction that reducing pathogenic autoantibodies may offer an innovative approach to treating gMG and PV and could give rise to potential therapeutic benefits in other conditions that are similarly mediated. We look forward to a productive second half of 2018 around efgartigimod with topline data from the Phase 2 immune thrombocytopenia clinical trial expected before the end of the third quarter and the launch of a Phase 3 clinical trial in gMG before the end of the year,” commented Tim Van Hauwermeiren, CEO of argenx.

 

“We are also advancing a deep pipeline of differentiated antibodies beyond efgartigimod. We continue to enroll the Phase 2 clinical trial of ARGX-110 in acute myeloid leukemia (AML) and expect to report full data from the Phase 1 dose-escalation clinical trial in December around the American Society of Hematology (ASH) Annual Meeting. We achieved key milestones in our collaborations with AbbVie and Leo Pharma this quarter and have continued to showcase our ability to grow our pipeline through our productive Innovative Access Program.”

 

SECOND QUARTER 2018 AND RECENT BUSINESS HIGHLIGHTS

 

Efgartigimod Program

 

 

 

 

 

ARGX-110 Program

 

 

Corporate Updates

 

 

 

UPCOMING MILESTONES

 

 

 

KEY FIGURES (CONSOLIDATED AND UNAUDITED)

 

DETAILS OF THE FINANCIAL RESULTS

 

•Total operating income was €20.5 million for the six months ended June 30, 2018, compared to €23.9 million for the six months ended June 30, 2017. The decrease in operating income in 2018 was primarily due to a decrease of €4.5 million in revenue primarily from the completion of the preclinical activities under our ongoing collaboration with LEO Pharma. The decrease was offset by an increase in other operating income of €1.2 million, mainly driven by an increase in payroll tax rebates for employing certain research and development personnel.

 

•Research and development expenses were €34.4 million for the six months ended June 30, 2018, compared to €25.6 million for the six months ended June 30, 2017. The increase in research and development expenses in 2018 was principally due to (i) an increase of €4.4 million in share-based compensation expense linked to the grant of stock options to our research and development employees (including an increase of €1.3 million in social security costs on stock options granted to certain Belgian and non-Belgian resident employees), (ii) an increase of €4.0 million in costs related to the advancement of the clinical development and manufacturing activities of ARGX-113 and ARGX-110 and (iii) costs associated with a planned increase in research and development headcount.

 

•Selling, general and administrative expenses were €11.5 million for the six months ended June 30, 2018, compared to €5.0 million for the six months ended June 30, 2017. The increase of €6.5 million in selling, general and administrative expenses in 2018 is mainly explained by an increase of €6.1 million of personnel expenses resulting from (i) an increase of €4.9 million in share-based compensation expense linked to the grant of stock options to our selling, general and administrative employees (including an increase of €1.1 million in social security costs on stock options granted to certain Belgian and non-Belgian resident employees) and (ii) the recruitment of additional employees (notably in our US office) to further strengthen our selling, general and administrative activities.

 

•Financial income and exchange gains amounted to €5.3 million for the six months ended June 30, 2018 compared to financial income and exchange losses of €0.8 million for the six months ended June 30, 2017, which was primarily attributable to unrealized exchange rate gains on our cash, cash equivalents and current financial assets position in USD linked to the favorable fluctuation of the USD exchange rate in the six months ended June 30, 2018.

 

•The Group generated a loss for the period and total comprehensive loss of €20.1 million for the six months ended June 30, 2018, compared to a loss for the period and total comprehensive loss of €8.2 million for the six months ended June 30, 2017.

 

•As at June 30, 2018, the Group’s cash, cash equivalents and current financial assets amounted to €338.9 million, compared to €359.8 million as at December 31, 2017.

 

EXPECTED 2018 FINANCIAL CALENDAR:

•October 25, 2018: Third quarter 2018 business update and financial results.

 

About argenx

 

argenx is a clinical-stage biotechnology company developing a deep pipeline of differentiated antibody-based therapies for the treatment of severe auto-immune diseases and cancer. The company is focused on developing product candidates with the potential to be either first-in-class against novel targets or best-in-class against known, but complex, targets in order to treat diseases with a significant unmet medical need. argenx’s ability to execute on this focus is enabled by its suite of differentiated technologies. The SIMPLE AntibodyTM Platform, based on the powerful llama immune system, allows argenx to exploit novel and complex targets, and the three antibody engineering technologies are designed to enable the expansion of the therapeutic index of the company’s product candidates.

 

www.argenx.com

 

Dial-in numbers:

Confirmation Code: 7669735

 

United Kingdom: +44 330 336 9411

National free phone – United Kingdom: 0800 279 7204

USA: +1 929 477 0448

National free phone – USA: 888 599 8686

France: +33 1 76 77 22 57

National free phone - France: 0805 101 278

Belgium: +32 2 400 6926

National free phone - Belgium: 0800 38625

Netherlands: +31 20 703 8261

National free phone - Netherlands: 0800 265 9169

 

A question and answer session will follow the presentation of the results. Go to www.argenx.com to access the live audio webcast. The archived webcast will also be available (90 days) for replay shortly after the close of the call from the “Downloads” section of the argenx website.

 

For further information, please contact:

 

Joke Comijn, Director Corporate Communications & Investor Relations (EU)

+32 (0)477 77 29 44

+32 (0)9 310 34 19

info@argenx.com

 

Beth DelGiacco, VP Investor Relations (US)

+1 518 424 4980

bdelgiacco@argenx.com 

 

Forward-looking Statements

 

The contents of this announcement include statements that are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “intends,” “may,” “will,” or “should,” and include statements argenx makes concerning the intended results of its strategy and planned recruitment efforts; its financial condition, results of operation and business outlook; the sufficiency of its cash, cash equivalents and current financial assets; and the momentum of its product candidate pipeline as well as the advancement of, and anticipated clinical development and regulatory milestones and plans related to, and data readouts for, argenx’s product candidates and preclinical and clinical trials; the timing of the initiation of a global pivotal Phase 3 clinical trial of efgartigimod, expected data readouts for its clinical trials and the presentation thereof, and its third quarter 2018 business update and financial results; and interaction with regulators, including the potential approval of its current or future drug candidates. By their nature, forward-looking statements involve risks and uncertainties and readers are cautioned that any such forward-looking statements are not guarantees of future performance. argenx’s actual results may differ materially from those predicted by the forward-looking statements as a result of various important factors, including argenx’s expectations regarding its the inherent uncertainties associated with competitive developments, preclinical and clinical trial and product development activities and regulatory approval requirements; argenx’s reliance on collaborations with third parties; estimating the commercial potential of argenx’s product candidates; argenx’s ability to obtain and maintain protection of intellectual property for its technologies and drugs; argenx’s limited operating history; and argenx’s ability to obtain additional funding for operations and to complete the development and commercialization of its product candidates. A further list and description of these risks, uncertainties and other risks can be found in argenx’s U.S. Securities and Exchange Commission (SEC) filings and reports, including in argenx’s most recent annual report on Form 20-F filed with the SEC as well as subsequent filings and reports filed by argenx with the SEC. Given these uncertainties, the reader is advised not to place any undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date of publication of this document. argenx undertakes no obligation to publicly update or revise the information in this press release, including any forward-looking statements, except as may be required by law.

 

 

 

TABLE OF CONENTS

 

 

 

MANAGEMENT REPORT

1.      MAIN EVENTS IN THE FIRST HALF YEAR OF 2018

Efgartigimod (ARGX-113) Program

 

 

 

 

 

ARGX-110 Program

 

 

 

 

Corporate Updates

 

2.      FINANCIAL HIGHLIGHTS

3.      RISK FACTORS AND FORWARD-LOOKING STATEMENTS

The contents of this announcement include statements that are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “intends,” “may,” “will,” or “should,” and include statements argenx SE (the “Company” or “argenx”) makes concerning the intended results of its strategy; its financial condition, results of operation and business outlook; the costs of complying with laws, regulations and significant accounting policies; the sufficiency of its cash, cash equivalents and current financial assets; and the momentum of its product candidate pipeline as well as the advancement of, and anticipated clinical development and regulatory milestones and plans related to, and data readouts for, argenx’s product candidates and preclinical and clinical trials. By their nature, forward-looking statements involve risks and uncertainties and readers are cautioned that any such forward-looking statements are not guarantees of future performance.

 

The Company’s business and results of operations are subject to numerous risks, uncertainties and other factors that may interfere with its business objectives, and its actual results may differ materially from those predicted as a result of various important factors, including the Company’s expectations regarding the inherent uncertainties associated with competitive developments, preclinical and clinical trial and product development activities and regulatory approval requirements; the Company’s reliance on collaborations with third parties; estimating the commercial potential of the Company’s product candidates; the Company’s ability to obtain and maintain protection of intellectual property for its technologies and drugs; the Company’s limited operating history; and the Company’s ability to obtain additional funding for operations and to complete the development and commercialization of its product candidates. In addition to those described herein, a further list and description of these risks, uncertainties and other risks can be found in the Company’s U.S. Securities and Exchange Commission (SEC) filings and reports, including the Company’s most recent annual report on Form 20-F filed with the SEC as well as subsequent filings and reports filed by the Company with the SEC. Some of these risks relate to the Company’s operational processes, while others relate to its business environment. Any of these risks, uncertainties and other factors could have a material adverse effect on the Company’s business, financial condition or results of operations and could cause the trading price of the Company’s ordinary shares listed on Euronext and/or its American Depositary Shares listed on Nasdaq to decline substantially. For a detailed description of the risks defined, please refer to the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2017.

 

4.      OPERATIONAL AND FINANCIAL OUTLOOK

In the first half of 2018, argenx made significant progress in building a pipeline-in-a-product opportunity around the lead candidate efgartigimod (ARGX-113) as the Company studies its potential to treat a range of severe autoimmune diseases, including validation of its mechanism of action across two indications based on the proof-of-concept data from the Phase 2 clinical trial in generalized myasthenia gravis (gMG) and the early evidence of activity from the first cohort of patients in our Phase 2 pemphigus vulgaris (PV) clinical trial. These results strengthen the Company’s conviction that reducing pathogenic autoantibodies may offer an innovative approach to treating gMG and PV and could give rise to potential therapeutic benefits in other conditions that are similarly mediated. argenx looks forward to a productive second half of 2018 around efgartigimod with topline data from the Phase 2 immune thrombocytopenia clinical trial expected before the end of the third quarter and the launch of a Phase 3 clinical trial in gMG expected before the end of the year. argenx is also advancing a deep pipeline of differentiated antibodies beyond efgartigimod. The Company continues to enroll the Phase 2 clinical trial of ARGX-110 in acute myeloid leukemia (AML) and expects to report full data from the Phase 1 dose-escalation clinical trial in December 2018 around the American Society of Hematology (ASH) Annual Meeting. Key milestones were achieved in the collaborations with AbbVie and Leo Pharma this quarter, and the Company continued to showcase the ability to grow its pipeline through its productive Innovative Access Program.

 

Cash, cash equivalents and current financial assets amounted to €338.9 million on June 30, 2018. The Company continues to run its business with a strict financial discipline. The Company expects to significantly increase its utilization of the cash and cash equivalent amounts in the future as the Company advances the clinical development of its product candidate pipeline.

 

UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

ARGENX SE

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

 

 

The notes are an integral part of these unaudited condensed consolidated interim financial statements.

ARGENX SE

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

 

The notes are an integral part of these unaudited condensed consolidated interim financial statements.

ARGENX SE

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

 

The notes are an integral part of these unaudited condensed consolidated interim financial statements.

ARGENX SE

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

 

Please refer to note 4.7 for more information on the share capital and movement in number of shares. See also note 4.8 for more information on the share-based payments.

The notes are an integral part of these unaudited condensed consolidated interim financial statements.

ARGENX SE

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. General information about the company

argenx SE (the Company) is a Dutch European public company with limited liability incorporated under the laws of the Netherlands. The Company (COC 24435214) has its official seat in Rotterdam, the Netherlands, and its registered office is at Willemstraat 5, 4811 AH, Breda, the Netherlands. An overview of the Company and its subsidiaries (the Group) are described in note 7.4.

argenx SE is a publicly traded company with ordinary shares listed on Euronext Brussels under the symbol “ARGX” since July 2014 and with American Depositary Shares listed on Nasdaq under the symbol “ARGX” since May 2017.

2. Significant accounting policies

The unaudited condensed consolidated interim financial statements for the six months ended June 30, 2018 have been prepared in accordance with International Accounting Standard 34 ‘Interim financial reporting’ (IAS 34) as issued by the IASB and IAS 34 as adopted by the European Union (EU). The unaudited condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended December 31, 2017, which have been prepared in accordance with the International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB) and as adopted by the EU.

The accounting policies applied in the preparation of the unaudited condensed consolidated interim financial statements are consistent with those applied in the financial statements for the year ended December 31, 2017. New standards or interpretations applicable from January 1, 2018 do not have any significant impact on the unaudited condensed consolidated interim financial statements, except for the adoption of IFRS 15. We refer to note 5.1 of these unaudited condensed consolidated financial statements for additional information on the impact of the adoption of IFRS 15. The assessment of the impact of IFRS 16 Leases (applicable for annual periods beginning on or after January 1, 2019) is still ongoing. The Company plans to adopt IFRS 16 on its effective date.

All amounts herein are presented in thousands of €, unless otherwise indicated, rounded to the nearest € ‘000.

The unaudited condensed consolidated financial statements have been approved for issue by the Company’s Board of Directors (the Board) on July 31, 2018.

3. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Company’s accounting policies, the Company is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The following areas are areas where key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Going concern

The Group has incurred net losses since its inception and for the six months ended June 30, 2018, its unaudited condensed consolidated interim statement of profit and loss and other comprehensive income reflects a net

loss, and its unaudited condensed consolidated interim statement of financial position includes a loss carried forward. On July 31, 2018, the Board reviewed and approved the unaudited condensed consolidated interim financial statements and accounting standards. Taking into account the cash and cash equivalents and current financial asset position of €338.9 million on June 30, 2018, the Board is of the opinion that the Group is a going concern.

Whilst the current cash position is sufficient for the Group’s immediate and mid‑term needs, the Company may seek additional funding to support the continuing development of its portfolio of products or to be able to execute other business opportunities, to the extent that such continual investment is expected to derive future benefits.

Revenue recognition

Revenue from certain arrangements is recognized as the Group satisfies a combined performance obligation.

The Company recognizes upfront payments and milestone payments, allocated to a combined performance obligation over the estimated service period based on a pattern that reflects the transfer of the services. The revenue recognized would reflect the level of service during each period. In this case, the Group would use an input model that considers estimates of the percentage of total research and development service costs that are completed each period compared to the total estimated services costs (% of completion method).

Research and development service fees are recognized as revenue when costs are incurred and agreed by the parties as the Group is acting as a principal in the scope of its stake in the research and development activities of its ongoing license and collaboration agreements.

Measurement of share‑based payments

In accordance with IFRS 2—Share‑based Payment, the fair value of the options at grant date is recognized as an expense in the statement of profit and loss and other comprehensive income over the vesting period. Subsequently, the fair value recognized in equity is not re‑measured.

The fair value of each stock option granted during the year is calculated using the Black‑Scholes pricing model. This pricing model requires the input of subjective assumptions, which are detailed in note 4.8.

Recognition of deferred tax assets

Deferred tax assets are recognized only if management assesses that these tax assets can be offset against positive taxable income within a foreseeable future.

This judgment is made by management on an ongoing basis and is based on budgets and business plans for the coming years, including planned commercial initiatives. These budgets and business plans are reviewed and approved by the Board.

Since inception, the Group has reported losses, and consequently, the Group has unused tax losses. The deferred tax assets are currently not deemed to meet the criteria for recognition as management is not able to provide any convincing positive evidence that deferred tax assets should be recognized. Therefore, management has concluded that deferred tax assets should not be recognized as of June 30, 2018.

 

 

4. Notes relating to the unaudited condensed consolidated interim statement of financial position

4.1         Research and development incentive receivables

 

On June 30, 2018, the Group recorded a tax receivable of €3.5 million compared to €3.2 million on December 31, 2017, in relation to a research and development incentive tax scheme in Belgium under which the research and development incentives can be refunded after five years if not offset against future income tax expense. The research and development incentives are recorded in other operating income (see note 5.2) in the unaudited condensed consolidated interim statement of profit and loss and other comprehensive income. These amounts are gradually being reimbursed in cash from 2018 onwards.

4.2         Restricted cash

 

On June 30, 2018, the Group had a total amount of €2.0 million of restricted cash. This amount is split as follows:

4.3         Trade and other receivables

The trade and other receivables are composed of receivables which are detailed below:

 

The nominal amounts of all trade and other receivables approximate their respective fair values. The VAT receivable relates to VAT amounts to be recovered in the second half of 2018.

Trade receivables correspond to amounts invoiced to the collaborators or strategic allies of the Group. No bad debt allowance was recorded nor were any trade receivables impaired on June 30, 2018 and December 31, 2017. The amount of €0.5 million in “Other receivables” relates to the short-term part of the receivable with FairJourney Biologics LDA. The Flanders Innovation and Entrepreneurship Agency (VLAIO) grant receivable consists of earned income from government grants for which no payments have been received but for which the relating expenditures have been incurred.

For more information on the Flanders Innovation and Entrepreneurship Agency grants, see note 5.2.

4.4         Prepaid expenses

The prepaid expenses on June 30, 2018 amounted to €4.7 million compared to €2.3 million on December 31, 2017. On June 30, 2018, the prepaid expenses related to (i) a €2.5 million upfront fee paid to a third-party clinical research organization in connection with our upcoming expected Phase III clinical trials in MG, (ii) a €0.7 million upfront reservation fee paid in 2017 to a third-party drug product manufacturer, and (iii) €1.5 million to other prepayments already invoiced for which the services will be rendered in future periods.

4.5        Current financial assets

On June 30, 2018, the current financial assets amounted to €198.0 million compared to €168.9 million on December 31, 2017. These current financial assets relate to:

Please also refer to note 6.1 for more information on the financial instruments.

4.6         Cash and cash equivalents

 

On June 30, 2018, cash and cash equivalents amounted to €140.9 million compared to €190.9 million on December 31, 2017 and included cash equivalents and cash and bank balances held in different financial institutions. Cash positions are invested with selected financial institutions, which are considered to be high-quality financial institutions with sound credit ratings, or in highly-rated money market funds. Policies are in place that limit the amount of credit exposure to any specific financial institution.

4.7        Shareholders’ capital

Roll forward of number of shares outstanding:

 

New shares issued during 2018

270,134 new shares were issued in the six months ended June 30, 2018 as a result of the exercise of stock options during this period under the argenx Employee Stock Option Plan.

This resulted in a total of 32,450,775 ordinary shares with a nominal value of €0.10 per share on June 30, 2018. On May 8, 2018, the annual general meeting of shareholders of the Company renewed the authorization to the Board to issue up to a maximum of 20% of the then-outstanding share capital for a period of 18 months, or up to a capital increase of €648,789.60 represented by 6,487,896 shares.

4.8        Share‑based payments

The Company has a stock options scheme for the employees of the Company and its subsidiaries. In accordance with the terms of the plan, as approved by shareholders, employees may be granted options to purchase ordinary shares at an exercise price as mentioned below per ordinary share, as set forth below.

The stock options can be granted to employees, consultants or directors of the Company and its subsidiaries. The stock options have been granted free of charge. Each employee’s stock option converts into one ordinary share of the Company upon exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

The stock options granted vest, in principle, as follows:

No other conditions are attached to the stock options.

The following share‑based payment arrangements were in existence during the current and prior years:

 

The fair market value of the stock options has been determined based on the Black and Scholes model. The expected volatility in the model is based on the historical volatility of peer companies and historical volatility of the Group since its initial public offering.