ARGENX SE
ARGX 20-F Report ended Dec. 31, 2024
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
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(Mark One)
EXCHANGE ACT OF 1934
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ACT OF 1934
For the fiscal year ended
OR
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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EXCHANGE ACT OF 1934
Date of event requiring this shell company report __________
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(Exact name of registrant as specified in its charter and translation of Registrant’s name into English)
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(Address of principal executive offices)
argenx BV
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(Name, telephone, e-mail and/or facsimile number and address of company contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
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Title of each class:
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Trading
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* Not for trading, but only in connection with the registration of the American Depositary Shares.
Securities registered or to be registered pursuant to Section 12(g) of the Act: None.
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None.
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
As of
December 31, 2024
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes
☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,”
“accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer
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Non-accelerated filer
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Emerging growth company
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If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers
during the relevant recovery period pursuant to §240.10D-1(b).
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Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
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U.S. GAAP
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by the International Accounting Standards Board
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Other
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If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS.)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution
of securities under a plan confirmed by a court.
Yes ☐ No ☐
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TABLE OF CO
NTE
NTS
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Page
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Introduction
Unless otherwise indicated, “
argenx
,” “
argenx SE
,” “the Company,” “our company,” “we,” “us”, “our” our “Group”
refer to
argenx SE
and its consolidated subsidiaries.
We own various trademark registrations and applications, and unregistered trademarks, including but not limited to
VYVGART
®
, VYVGART HYTRULO™, VYVDURA
®
, ARGENX™, ABDEG™, NHANCE™, SIMPLE
ANTIBODY™, ARGENXMEDHUB™, MG UNITED™, SHINING THROUGH CIDP™ and our corporate logo.
Trade names, trademarks and service marks of other companies appearing in this Annual Report are the property of their
respective holders. Solely for convenience, the trademarks and trade names in this Annual Report may be referred to
without the
®
and ™ symbols, but such references should not be construed as any indicator that their respective owners
will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend to use or display other
companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship, any other
companies.
VYVGART
®
(efgartigimod alfa) (VYVGART) has been approved in the U.S., Japan, the European Union (the EU), the
United Kingdom (UK), Switzerland, Israel, mainland China (Mainland China), Canada, South Korea and United Arab
Emirates for the intravenous treatment of generalized myasthenia gravis (gMG). We have now commercialized
VYVGART in the U.S., several countries in the EU, Japan, Mainland China (through our partner Zai Lab Ltd (Zai Lab)),
Israel (through our Medison Pharma Ltd. (Medison)) and Canada.
VYVGART is now also approved and launched in Japan for the treatment of ITP.
VYVGART subcutaneous (SC) (efgartigimod alfa + hyaluronidase qvfc) (VYVGART SC) has been approved in the
U.S. and China as VYVGART HYTRULO™ (VYVGART HYTRULO), in Japan as VYVDURA
®
(VYVDURA) and in
the EU and the UK as VYVGART for the treatment of gMG. VYVGART SC has also been approved in Israel for the
treatment of gMG. We have now commercialized VYVGART SC for gMG in the U.S. and China (as VYVGART
HYTRULO), in Japan (as VYVDURA) and in several countries in the EU (as VYVGART). Pricing and reimbursement
discussions for VYVGART SC remain ongoing in multiple other countries, including more countries in the EU.
VYVGART SC has now also been approved in the U.S., China and Japan for the treatment of chronic inflammatory
demyelinating polyneuropathy (CIDP). We have now commercialized VYVGART SC for CIDP in the U.S. and China
(as VYVGART HYTRULO) and in Japan (as VYVDURA).
For both VYVGART and VYVGART SC, we are aiming for further approvals and we are working to expand
commercialization in other jurisdictions.
Unless otherwise specified, references in this Annual Report to VYVGART should be read as references to VYVGART
and/or VYVGART SC, including VYVGART HYTRULO in relation to the U.S. and China, VYVGART in relation to
the EU and the UK and VYVDURA in relation to Japan, depending on the context.
Our consolidated financial statements are prepared in accordance with the IFRS
®
Accounting Standards (
IFRS
) as issued
by the International Accounting Standards Board (
IASB
).
Our consolidated financial statements are presented in this Annual Report in U.S. dollars. All references in this Annual
Report to “$,” “US$,” “U.S.$,” “U.S. dollars,” “dollars” and “USD” mean U.S. dollars and all references to “€,” “EUR,”
and “euros” mean euros, unless otherwise noted. Throughout this Annual Report, references to ADSs mean American
depositary shares (
ADSs
) or ordinary shares represented by ADSs, as the case may be.
Cautionary Statement with Respect to Forward-Looking Statements
This Annual Report contains certain forward-looking statements. A forward-looking statement is any statement that does
not relate to historical facts or events or to facts or events as of the date of this Annual Report or that are derived from
our management’s beliefs and assumptions based on information currently available to our management. Forward-
looking statements are generally identified by the use of forward-looking words, such as “anticipate”, “aspire”,
“believe”, “can”, “continue”, “could”, “estimate”, “expect”, “entail”, “hope”, “intend”, “is designed to”, “look forward
to”, “may”, “might”, “objective”, “plan”, “potential”, “pursue”, “project”, “predict”, “seek”, “should”, “target”, “will” or
other or comparable variations or the negative of such terms, or by discussion of strategy, plans, objectives, goals, future
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events or intentions, although not all forward-looking statements contain these identifying words. These statements relate
to our future results of operations and financial positions, prospects, developments, growth, business strategies, plans and
our objectives for future operations, results of clinical trials and regulatory approvals, and are based on analyses or
forecasts of future developments and estimates of amounts not yet determinable. These forward-looking statements
represent the view of management only as of the date of this Annual Report, and we expressly disclaim any obligation or
undertaking to update, review or revise forward-looking statements (whether as a result of new information, future
developments or otherwise), except as may be otherwise required by applicable law. The forward-looking statements in
this Annual Report involve known and unknown risks, future events, assumptions, uncertainties and other factors that
could cause our actual future results of operations and financial positions, prospects, developments, growth, business
strategies, plans and our objectives for future operations, results of clinical trials and regulatory approvals to differ
materially from those forecasted or suggested herein.
Forward-looking statements include, but are not limited to, statements about:
•
the initiation, timing, progress, development and results of clinical trials of our product candidates, including new
indications, alternative dosing regimens, treatment modalities, and methods of administration, including statements
regarding when results or interim analysis of the clinical trials will be available or made public;
•
the expansion of our business, including the further development of our sales and marketing abilities and our IIP, and
the value of our pipeline;
•
the potential attributes, benefits, and side effects of our products and product candidates, including new indications,
alternative dosing regimens and treatment modalities, and their competitive position with respect to other alternative
treatments;
•
our ability to advance product candidates into, and successfully complete, clinical trials;
•
our estimates of the number of patients who suffer from the diseases we are targeting and the number of patients that
will enroll in our clinical trials;
•
the demand and commercialization of our products and product candidates, including new indications, alternative
dosing regimens, treatment modalities, and methods of administration, if approved;
•
the anticipated timing or likelihood of market or regulatory decisions relating to or of our products, including new
indications, alternative dosing regimens, treatment modalities, and methods of administration;
•
the anticipated pricing and reimbursement of our products and product candidates, if approved;
•
our plans to have various programs to help patients afford our products, including patient assistance and co-pay
coupon programs for eligible patients;
•
our ability to establish sales, marketing and distribution capabilities for any of our products and product candidates
that achieve regulatory approval;
•
our regulatory strategy and our ability to establish and maintain manufacturing arrangements for our products and
product candidates;
•
the scope and duration of protection, including any exclusivity period, we are able to establish and maintain for
intellectual property rights covering our products and product candidates, platform and technology, including our
intention to seek patent term extensions where available;
•
our estimates regarding expenses, future revenues, cash flow, capital requirements and our needs for additional
financing;
•
our expectation that we will benefit from the Belgian innovation income deduction;
•
our financial performance, including potential volatility in the price of our ordinary shares and ADSs;
•
the competition we face in our drug discovery, development, and commercialization efforts;
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the rate and degree of market acceptance of our products and product candidates, if approved;
•
the potential benefits of our current collaborations, including the possibility to access partner technology platforms or
capabilities;
•
our plans and ability to enter into or maintain current collaborations for additional programs or product candidates;
•
our plans and ability to enter into or maintain current new distribution partnerships;
•
our long-term growth strategy to develop and market additional products and product candidates, including
efgartigimod for new indications, empasibrubart and ARGX-119;
•
the impact of government laws and regulations on our business;
•
our expectations with respect to the timing and amount of any dividends (if any);
•
our plans regarding our supply chain, including our reliance on third parties, including contract manufacturing
organizations (
CMOs
); and
•
our business strategies, plans, projects, goals and targets and the timing, outcomes and benefits thereof.
These include changes in general economic and business conditions. You should refer to
”Item 3.D —
Risk Factors
” of
this Annual Report for a discussion of important factors that may cause our actual results to differ materially from those
expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the
forward-looking statements in this Annual Report will prove to be accurate. Furthermore, if our forward-looking
statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these
forward-looking statements, you should not regard these statements as a representation or warranty by us or any other
person that we will achieve our objectives and plans in any specified time frame or at all. We undertake no obligation to
publicly update any forward-looking statements, whether as a result of new information, future events or otherwise,
except as required by law.
You should read this Annual Report and the documents that we reference in this Annual Report and have filed as
exhibits to the Annual Report completely and with the understanding that our actual future results may be materially
different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
Information regarding market and industry statistics contained in this Annual Report is included based on information
available to us that we believe is accurate. Forecasts and other forward-looking information obtained from this available
information is subject to the same qualifications and the additional uncertainties accompanying any estimates of future
market size, revenue and market acceptance of products and services.
In addition, statements that include “we believe” and similar statements reflect our beliefs and opinions on the relevant
subject. These statements are based upon information available to us as of the date of this Annual Report, and while we
believe such information forms a reasonable basis for such statements, such information may be limited or incomplete,
and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all
potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly
rely upon these statements.
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Summary Risk Factors
Our ability to implement our business strategy is subject to numerous risks that you should be aware of before making an
investment decision. These risks are described more fully below. These risks include, among others:
•
The commercial success of our products and product candidates, including in new indications or methods of
administration, will depend on the degree of market acceptance.
•
We face significant competition for our drug discovery and development efforts.
•
We will face significant challenges in successfully commercializing our products and additional product candidates
after they are launched.
•
Our products and product candidates for which we have obtained or intend to seek approval as biological products,
including for new indications, may face biosimilar competition.
•
Enacted and future legislation could impact demand for our products which could impact our business and future
results of operations.
•
We are subject to government pricing laws, regulation and enforcement. These laws affect the prices we may charge
the government for our products and the reimbursement our customers may obtain from the government. Our failure
to comply with these laws could harm our results, operations and/or financial conditions.
•
We may not obtain or maintain adequate pricing and coverage or reimbursement status for our products and product
candidates.
•
If we fail to obtain orphan drug designation or we do not have valid and enforceable patents covering our products
and their uses and product candidates and fail to obtain and/or maintain orphan drug exclusivity for our products or
product candidates, our competitors may be able to sell products to treat the same conditions and our revenue may be
reduced.
•
Failure to successfully identify, select and develop our products in other indications, or additional products or product
candidates could impair our ability to grow.
•
Failure to successfully develop or obtain marketing approval for our products and product candidates could
negatively impact our business.
•
Certain of our clinical trials have not succeeded, and may in the future also not succeed, and even if they succeed, we
may not obtain regulatory approval for our products or product candidates or regulatory approval may be delayed.
•
If we decide to pursue accelerated approval for any of our product candidates, it may not lead to faster development
or regulatory review or approval and we may still need to conduct additional clinical trials, which could increase the
expense of obtaining, if at all, necessary marketing approvals.
•
Our products and product candidates may have serious adverse, undesirable or unacceptable side effects, and we or
others may identify undesirable or unacceptable side effects caused by any of our products or product candidates
before and after they have received marketing approval.
•
If our target patient population is smaller than expected, we are unable to successfully enroll and retain patients in our
clinical trials, or experience significant delays in doing so, we may not realize the full commercial potential of any
products or product candidates.
•
We rely, and expect to continue to rely, on third parties to conduct some of our research activities and clinical trials
and for parts of the development and commercialization of our existing and future research programs, products and
product candidates. If our relationships with such third parties are not successful, our business may be adversely
affected.
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•
Disruptions caused by our reliance on third parties for our manufacturing process may delay or disrupt our business,
product development and commercialization efforts.
•
Accuracy and timing of our financial reporting is partially dependent on information received from third-party
partners, which we do not control.
•
We and our third-party manufacturers and suppliers may become exposed to liability, fines, penalties or other
sanctions and substantial expenses in connection with environmental compliance or remediation activities.
•
We are subject to healthcare laws, regulation and potential enforcement. The failure to comply with these laws could
harm our results, operations and/or financial conditions.
•
Our performance tracked by our Environmental, Social and Governance metrics is subject to risks and the outcomes
may not achieve the anticipated benefits or align with new regulations and stakeholders’ expectations.
•
We expect to increase our expenses for the foreseeable future, and we may not be able to raise additional capital, be
profitable or sustain net profitability in the future in order to fund our operations.
•
We may become exposed to costly and damaging liability claims and other litigation.
•
Our business and operations could suffer in the event of system failures or unauthorized or inappropriate use of or
access to our systems.
•
We are highly dependent on public perception of our products.
•
We may be unable to adequately maintain, enforce or protect our intellectual property rights in products, product
candidates and platform technologies which could adversely affect our ability to maximize the value for patients in
our marketed products and product candidates.
•
Intellectual property litigation could lead to substantial resource diversion or issued patents could be found invalid,
not infringed, or unenforceable if challenged in the applicable patent office or court.
•
Our future growth and ability to compete depends on maintaining our culture, retaining our key personnel and
recruiting additional qualified personnel.
•
Global geo- and socio-political threats and macro-economic uncertainty and other unforeseen political crises could
materially and adversely affect our business and financial performance.
•
Holders of our ADSs have fewer rights than our ordinary shareholders.
•
The price of our ADSs may be volatile and may fluctuate due to factors beyond our control. An active public trading
market may not be sustained.
•
Claims of U.S. civil liabilities may not be enforceable against us or the members of our Senior Management Team
and our Board of Directors.
•
As a foreign private issuer, we are exempt from various rules and regulations that a U.S. domestic public company
would be required to follow, including those requirements under U.S. securities laws and Nasdaq listing standards.
•
We may lose our foreign private issuer status which would then require us to comply with the Exchange Act’s
domestic reporting regime and cause us to incur significant legal, accounting and other expenses.
•
If we were to be classified as a passive foreign investment company for U.S. federal income tax purposes, this could
result in adverse U.S. tax consequences to certain U.S. holders.
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PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A. [RESERVED]
B. CAPITALIZATION AND INDEBTEDNESS
Not applicable.
C. REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
D. RISK FACTORS
Our business faces significant risks, including those described below. You should carefully consider all of the
information set forth in this Annual Report and in our other filings with the SEC, including the following risk factors
which we face and are faced by our industry. Our business, financial condition or results of operations could be
materially and adversely affected if any of these risks occurs. These are not the only risks argenx faces. Additional risks
and uncertainties not presently known to argenx or that it currently considers immaterial or not specific may also impair
its business, results of operation and financial condition. This report also contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially and adversely from those anticipated in these
forward-looking statements as a result of certain factors including the risks described below and elsewhere in this Annual
Report and our other SEC filings. See “
Cautionary Statement with Respect to
Forward-Looking Statements
”.
Risk Factors Related to Commercialization of argenx’s Products and Product Candidates, Including for New
Indications
The commercial success of our products and product candidates, including in new indications or methods of
administration, will depend on the degree of market acceptance.
Our products and product candidates, including for new indications or methods of administration, if and when approved
and available on the market, may never achieve an adequate level of acceptance by physicians, patients, the medical
community, or healthcare payors for us to be profitable or sustain net profitability in the future. This will depend on a
number of factors, many of which are beyond our control, including, but not limited to:
•
consumer perceptions or publicity regarding our business or the efficacy, safety and quality of the products and
product candidates in our profile, our clinical trials for new indications, or any similar products distributed by other
companies, and the prevalence and severity of any adverse effects discovered before or after marketing approval has
been received;
•
approval may be for indications, dosage and methods of administration or patient populations that are not as broad as
intended or desired;
•
changes in the standard of care for the targeted indications for any product and product candidate;
•
relative availability, cost, and convenience of alternative approved therapies;
•
labeling may require significant use or distribution restrictions or safety warnings;
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•
acceptance by physicians, public health bodies, patients and healthcare payors of each product as safe, effective and
cost-effective; and
•
patients continued commitment required to receive periodic in-center infusions.
In addition, because we are developing our products and product candidates for the treatment of different indications,
negative results in a clinical trial evaluating the efficacy and safety of a product or product candidate for one indication,
including by one of our competitors, could negatively impact the perception of the efficacy and safety of such product or
product candidate in a different indication, which could have an adverse effect on our reputation, commercialization
efforts and financial condition.
Moreover, efforts to educate the medical community and third-party payors on the benefits of our products and product
candidates may require significant resources and may never be successful. If our product candidates or methods of use of
existing products or new indications fail to gain market acceptance, this will have a material adverse impact on our
ability to generate revenues. Even if some products achieve market acceptance, they may not be able to retain market
acceptance and/or the market may prove not to be large enough to allow us to generate significant revenues.
We face significant competition for our drug discovery and development efforts.
The market for pharmaceutical products is highly competitive and characterized by rapidly growing understanding of
disease biology, quickly changing technologies, strong intellectual property barriers to entry, and a multitude of
companies involved in the creation, development, and commercialization of novel therapeutics. Many of these
companies are highly sophisticated and often strategically collaborate with each other.
Competition in the autoimmune field is intense and involves multiple mAbs, other biologics and small molecules either
already marketed or in development by many different companies including, but not limited to, large pharmaceutical
companies such as AbbVie, Inc. (
AbbVie
), Amgen, Inc. , Biogen Inc. , GlaxoSmithKline plc , F. Hoffman-La Roche AG
(
Roche
) and Janssen Pharmaceuticals, Inc. now part of Johnson Johnson Innovation, Inc. (
Johnson Johnson
).
In
addition, these and other pharmaceutical companies have mAbs or other biologics in clinical development for the
treatment of autoimmune diseases.
Currently, our commercial revenue is generated by VYVGART and VYVGART SC in gMG, CIDP and ITP (Japan
only). We face and expect to continue to face intense competition from other biopharmaceutical companies, who have
launched or are developing products for the treatment of gMG and/or CIDP and other autoimmune diseases, including
products that are in the same class as VYVGART, as well as products that are similar to some of our product candidates.
Competition for other (potential) future indications is also fierce, with significant development in almost all of the
indications we are currently developing or planning to develop for our product or product candidates. For example, we
are aware of several neonatal Fc receptor (FcRn) inhibitors that are in clinical development and one FcRn inhibitor,
Rystiggo (rozanolixizumab-noli), which was approved in June 2023. We are also aware that AstraZeneca plc is selling
Soliris and Ultomiris for the treatment of adult patients with gMG who are AChR-AB+ and that UCB is selling Rystiggo
for the treatment of adult patients with gMG who are AchR-AB+ or MuSK-AB+ and Zilbrysq for the treatment of adult
patients with gMG who are AchR-AB+. Roche, Novartis AG, CSL Behring, Grifols, S.A., Curavac, Inc., Takeda
Pharmaceutical Co Ltd, RemeGen Co, Immunovant, Inc., Cartesian Therapeutics, Inc., Horizon Therapeutics plc,
Regeneron Pharmaceuticals, Inc., Alnylam Pharmaceuticals, Inc., Sanofi S.A. and Johnson Johnson, among others, are
developing drugs that may have utility for the treatment of myasthenia gravis (MG) and/or CIDP. Any negative side
effects or safety concerns from one of our competitors’ products may adversely affect our business.
Competitive product launches may erode future sales of our products, including our existing products and those currently
under development, or result in unanticipated product obsolescence. Such launches continue to occur, and potentially
competitive products are in various stages of development. We could also face competition for use of limited
international infusion sites, particularly in new markets as competitors launch new products. We cannot predict with
accuracy the timing or impact of the introduction of competitive products that treat diseases and conditions like those
treated by our products or product candidates. In addition, our competitors and potential competitors compete with us in
recruiting and retaining qualified scientific, clinical research and development and management personnel, establishing
clinical trial sites, registering patients for clinical trials, as well as in acquiring technologies complementary to, or
necessary for, the development of our products.
There can be no assurance that our competitors are not currently developing, or will not in the future develop,
technologies and products that are equally or more effective, are more economically attractive, and can be administered
more easily than any of our current or future technologies or products.
Competing products or technology platforms may gain faster or greater market acceptance than our products or
technology platforms and medical advances or rapid technological development by competitors may result in our
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products and product candidates or technology platforms becoming non-competitive or obsolete before we are able to
recover our research and development and commercialization expenses. If we, our products and product candidates or
our technology platforms do not compete effectively, it is likely to have a material adverse effect on our business,
financial condition and results of operation.
We will face significant challenges in successfully commercializing our products and additional product candidates
after they are launched.
The commercialization of VYVGART in new indications or other product candidates once approved, or entrance of any
of our products or product candidates into new markets will require us to further expand our sales and marketing
organization, enter into collaboration arrangements with third parties, outsource certain functions to third parties, or use
some combination of each. We have built, and continue to expand, our sales forces in certain of the countries where
VYVGART is approved and plan to further develop our sales and marketing capabilities to promote our products, and
product candidates, including new indications, if and when marketing approval has been obtained in other relevant
jurisdictions.
Even if we successfully expand our sales and marketing capabilities, either on our own or in collaboration with third
parties, we may fail to launch or market our products effectively. Recruiting and training a specialized sales force is
expensive and the costs of expanding an independent sales, marketing and/or promotion organization could be greater
than we anticipate.
We could further encounter difficulties in our sales or marketing, due to regulatory actions, shut-
downs, work stoppages or strikes, approval delays, withdrawals, recalls, penalties, supply disruptions, shortages or
stock-outs at our facilities or third-party facilities that we rely on, reputational harm, the impact to our facilities due to
pandemics or natural or man-made disasters, including as a result of climate change, product liability, and/or
unanticipated costs. In addition, recruiting and training a sales force is time-consuming and could delay any product
launch. In the event that any such launch is delayed or does not occur for any reason, we would have prematurely or
unnecessarily incurred these commercialization expenses, and our investment would be lost if we cannot retain or
reposition our sales and marketing personnel.
We have entered into distribution agreements with Medison, Zai Lab, Genpharm and Handok to perform sales and
marketing services in Israel, Central and Eastern Europe, Mainland China, the Gulf Cooperation Council and South
Korea, respectively. Under these agreements, our product revenues or the profitability of these product revenues could be
lower than if we were to market and sell the products that we develop ourselves. Such distribution agreements may place
the commercialization of our products outside of our control, including over the amount or timing of resources that our
distribution partners devote to our products. Furthermore, our distributors’ willingness or ability to comply with and
complete their obligations under our arrangements may be adversely affected by business combinations or significant
changes in our distributors’ business strategies. In addition, we may not succeed in entering into arrangements with third
parties to sell and market our products or may be unable to do so on terms that are favorable to us.
Our products and product candidates for which we have obtained or intend to seek approval as biological products,
including for new indications, may face biosimilar competition.
In the U.S., the Biologics Price Competition and Innovation Act (
BPCIA
) created an abbreviated approval pathway for
biological products that are demonstrated to be “biosimilar” to or interchangeable with a U.S. FDA-licensed reference
biological product. However, during the 12-year regulatory exclusivity period applicable to reference biological
products, another company may still market a competing version of the reference product if the FDA approves a full
BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-
controlled clinical trials of their product.
We believe that any of our product candidates approved as a biological product under a BLA in the U.S. should qualify
for the Biologics Price Competition and Innovation Act 12-year period of exclusivity, as is the case with VYVGART
and VYVGART HYTRULO. The base regulatory exclusivity period for VYVGART and VYVGART HYTRULO is
expected to extend until December 2033 in the U.S. whereas regulatory protection in the EU is expected to expire in
August 2032 in the EEA and March 2033 in the UK. However, in the U.S., there is a risk that this exclusivity could be
shortened due to congressional action or otherwise, or that the FDA will not consider our product candidates to be
reference products for competing products, potentially creating the opportunity for competition by biosimilar products
sooner than anticipated. The same applies to the EU, as there is also a risk that this exclusivity could be shortened due to
legislative actions.
We are aware that some of our competitors may be actively developing competing or biosimilar products for
VYVGART and VYVGART HYTRULO, including for CIDP, for which VYVGART HYTRULO received FDA
approval in 2024. It is possible our competitors will be successful in developing biosimilar or interchangeable products
for our products and product candidates, and the approval of such competing products may lead to substantial
competition in the market, a decrease in sales, or force us to make VYVGART or VYVGART HYTRULO available at
lower prices due to competitive pressures. Moreover, an interchangeable biosimilar product, once approved, may be
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substituted under existing state laws for any one of our reference products. In addition, the Further Consolidated
Appropriations Act, 2020, which incorporated the framework from the Creating and Restoring Equal Access To
Equivalent Samples (CREATES) legislation, allows biosimilar developers to obtain access to reference biological
products, which may facilitate the development of biosimilars to our products. If competing or biosimilar products are
approved, the market position of our products for existing and recently approved indications may be adversely affected.
In the EU, biosimilars are evaluated for marketing authorization pursuant to a set of general and product class-specific
guidelines and in coming years, the European Commission may further revise relevant legislation and lessen the amount
of data and market exclusivity available for medicinal products. In addition, some EU Member States have adopted, or
are considering the adoption of, biosimilar uptake measures or may impose automatic price reductions upon market entry
of one or more biosimilar competitors. While the degree of competitive effects of biosimilar competition among EU
Member States may vary, continuation of policies promoting biosimilar products in the EU and in EU Member States
could erode market share or introduce competitive pricing pressures for our products and product candidates.
Enacted and future legislation could impact demand for our products which could impact our business and future
results of operations.
In the U.S., the UK, the EU and other jurisdictions, there have been a number of legislative and regulatory changes to the
healthcare systems that could affect our future results of operations. Governmental regulations that mandate price
controls or limitations on patient access to our products or establish prices paid by government entities or programs for
our products could impact our business, and our future results of operations could be adversely affected by changes in
such regulations or policies. For example, if the European Commission’s recent proposal to revise the EU’s
pharmaceutical legislation is adopted in the form proposed, we may be affected by a decrease in data and market
exclusivity for our products and product candidates in the EEA.
In particular, there have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to
reduce healthcare costs in general and the cost of pharmaceuticals in particular. The IRA, enacted in August 2022,
allows, among other things, the HHS to directly negotiate the price of a statutorily specified number of high-expenditure
drugs and biologics each year that the CMS reimburses under Medicare Part B and Part D. In August 2023, CMS
announced the first 10 Part D selected drugs for negotiation, with maximum fair prices taking effect in 2026. In January
2025, CMS announced an additional 15 Part D drugs selected for negotiation, with maximum fair prices taking effect in
2027. Negotiations for Medicare Part B products will begin in 2026 with the negotiated price taking effect in 2028. The
Medicare drug price negotiation program is currently subject to legal challenges and we cannot predict the outcome of
those cases. At this time, the Trump administration is continuing to implement the IRA and to defend the law in
litigation.
The IRA also penalizes drug manufacturers that increase prices of Medicare Part D and Part B drugs at a rate greater
than the rate of inflation relative to a benchmark period. The IRA also capped out-of-pocket spending for Medicare Part
D enrollees and made other Part D benefit design changes beginning in 2024. Beginning in 2025, the IRA eliminated the
coverage gap (and the Coverage Gap Discount Program), lowered the enrollee maximum out-of-pocket cost to $2,000,
and established a new manufacturer discount program, which requires manufacturers to provide discounts on their
applicable drugs equal to 10% in the initial phase, and 20% in the catastrophic phase of the Part D benefit. Although
these discount percentages are lower than coverage gap discounts, the new catastrophic phase discounts could be
considerable for certain high-cost drugs and may exceed those coverage gap discounts previously provided. These Part D
design changes also increase costs to Part D plans and may incentivize Part D plans to exclude certain drugs from their
formularies, which could affect the supply, demand, and pricing of our product and product candidates.
The HHS has and will continue to issue and update guidance and rulemaking as these IRA programs are implemented.
We cannot predict how the HHS will interpret the IRA in the future, or whether the U.S. Congress will enact legislation
that amends the law. However, at this time, the Trump administration is continuing to implement the IRA. Manufacturers
that fail to comply with the IRA may be subject to significant penalties, including civil monetary penalties and excise
taxes. The IRA also extends enhanced subsidies for individuals purchasing health insurance coverage in ACA (as
defined below) marketplaces through plan year 2025. Thus, while the full economic impact of IRA is unknown at this
time, the law’s passage is likely to affect the pricing of our products and product candidates. The adoption of restrictive
price controls in new jurisdictions, more restrictive controls in existing jurisdictions, the adoption of these lower prices
by commercial payors, or the failure to obtain or maintain timely or adequate pricing could also adversely impact
revenue. We expect pricing pressures will continue globally.
Further, at the U.S. state level, legislatures are increasingly enacting laws and implementing regulations designed to
control pharmaceutical and biological product pricing, including price or reimbursement constraints, discount
requirements, price transparency reporting, and programs designed to encourage importation from other countries and
bulk purchasing. States are also enacting laws modeled on federal policies, such as the IRA and the 340B drug discount
program. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of
which could limit the amounts that federal and state governments will pay for healthcare products and services, including
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pharmaceuticals, which could result in reduced demand for our products and product candidates or additional pricing
pressures. It is too early to predict whether and how the policies and priorities of the new U.S. presidential administration
could materially impact the regulation governing our products and product candidates.
The EU, on the other hand, has reopened the entire legislative framework for medicinal products. On April 26, 2023, the
European Commission has published its proposal for a new directive (COM/2023/192 final) and a new regulation
(COM/2023/193 final), which would revise and replace the existing general pharmaceutical legislation, including e.g.,
Directive 2001/83/EC, as well as Regulations (EC) No. 726/2004, No. 141/2000, or No. 1901/2006 (EU Pharmaceutical
Legislation). This proposal is currently undergoing the ordinary legislative procedure in the European Parliament and
Council of the European Union and is therefore still subject to changes. If at all, the EU Pharmaceutical Legislation is
expected to be implemented at the earliest in the next few years. Prevention and mitigation of medicine shortages,
simplification of the market entry of generics and biosimilars, the reduction of the regulatory burden (e.g., by increased
digitalization) and the implementation of a new regime for data and / or market exclusivity (e.g., by reducing the
minimum period while introducing factors that, if met, prolong protections for MA holders) are among the major
objectives pursued by the European Commission. Pending the outcome of the legislative procedure, the impact could be
positive with respect to certain regulatory processes. There could, however, also be a negative impact on innovative
pharma and biotech companies such as argenx due to shorter baseline regulatory and orphan exclusivities if the proposal
is not amended.
Following its exit from the EU, the UK is not required to reflect future changes to EU Pharmaceutical Legislation in its
own domestic regulatory regime (subject to ongoing alignment in respect of pharmaceuticals marketed in Northern
Ireland). However, other legislative and regulatory changes to the healthcare systems that could affect our future results
of operations are possible.
We are subject to government pricing laws, regulation and enforcement. These laws affect the prices we may charge
the government for our products and the reimbursement our customers may obtain from the government. Our failure
to comply with these laws could harm our results, operations and/or financial conditions.
In the U.S., we are required to participate in various government programs for our products to be reimbursed or
purchased by the federal government. We participate in programs such as the Medicaid Drug Rebate Program, the 340B
drug discount program, Medicare Part B, Medicare Part D and the U.S. Department of Veterans Affairs Federal Supply
Schedule pricing program. The requirements vary by program, but we are, among other things, required to enter into
agreements with and calculate and report prices and other information to certain government agencies, charge no more
than statutorily mandated ceiling prices and calculate and pay rebates and refunds for certain products.
The calculations are complex and are often subject to interpretation by us, governmental agencies and the courts. If we
determine that the prices we reported were in error, we may be required to restate those prices and pay additional rebates
or refunds to the extent we understated the rebate or overcharged the government due to the error. Additionally, there are
penalties associated with submission of incorrect pricing or other data by the specified deadline, as well as potential
allegations under the False Claims Act and other laws and regulations.
Recently enacted legislation in the U.S. has imposed additional rebates under government programs. For example,
effective January 1, 2024, under the American Rescue Plan of 2021, the cap on Medicaid drug rebates at 100 percent of
the average manufacturer price was eliminated, which may require pharmaceutical manufacturers to pay more in
Medicaid rebates than they receive on the sale of products.
In addition, the Infrastructure Investment and Jobs Act,
effective January 1, 2023, requires manufacturers of certain single-source drugs (including biologics and biosimilars)
separately paid for under Medicare Part B for at least 18 months and marketed in single-dose containers or packages
(known as refundable single-dose containers or single-use package drugs) to provide refunds for discarded units that
exceed a defined applicable percentage. Manufacturers that fail to pay such refunds shall be subject to civil monetary
penalties. This requirement applies to VYVGART, and potentially other of our products in the future. As a result, we
owe refunds to CMS starting this year. Although we will evaluate options to reduce the amount of refunds owed,
pursuing any such actions will be time-consuming and costly. Even if we invest resources to reduce the amount of
refunds owed to CMS, it is possible that we will be delayed or unsuccessful in achieving a reduction worthy of our
investment.
Maintaining compliance with these government price reporting and discounting obligations is time-consuming and
costly, and a failure to comply can result in substantial fines, penalties, all of which could adversely impact our financial
results.
We may not obtain or maintain adequate pricing and coverage or reimbursement status for our products and product
candidates.
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Sales of VYVGART and VYVGART SC and our product candidates, if approved, will depend, in part, on the extent to
which third-party payors, including government health programs in the U.S. (such as Medicare Parts B and D and
Medicaid) and other countries, commercial health insurers, and managed care organizations, provide coverage and
establish adequate reimbursement levels for such products and product candidates. Patients generally rely on third-party
payors to reimburse all or part of the associated healthcare costs, and are unlikely to use our products unless coverage is
provided and reimbursement is adequate to cover a significant portion of the cost of our products.
In the U.S., no uniform policy of coverage and reimbursement for products exists among commercial third-party payors.
Commercial third-party payors decide which products they will pay for and establish reimbursement levels, often relying
upon Medicare coverage policy and payment limitations. However, decisions regarding the extent of coverage,
formulary tier placement, utilization management requirements (including step therapy), and the amount of
reimbursement to be provided for any product candidate that we develop through approval will be made on a plan-by-
plan basis. Even under U.S. government healthcare programs such as Medicare and Medicaid, coverage and
reimbursement policies can vary significantly. Medicare Part D is administered by commercial insurance companies
under contract with the CMS, and their coverage and reimbursement policies may vary, subject to certain statutory and
regulatory requirements. Additionally, Medicaid programs vary from state to state in their coverage policies and
reimbursement rates, subject to certain federal requirements. Further, from time to time, typically on an annual basis,
payment rates are updated and revised by third-party payors. Such updates could impact the demand for our products, to
the extent that patients who are prescribed our products, if approved, are not separately reimbursed for the cost of the
product.
The process for determining whether a third-party payor will provide coverage for a product may be separate from the
process for setting the price of a product or for establishing the reimbursement rate that such a payor will pay for the
product. Even if we do obtain adequate levels of reimbursement, third-party payors, such as government or private
healthcare insurers, carefully review and increasingly question the coverage of, and challenge the prices charged for,
products. Increasingly, third-party payors are requiring that biopharmaceutical companies provide them with
predetermined discounts from list prices and are challenging the prices charged for products. We may also be required to
conduct expensive pharmacoeconomic studies to justify the coverage and the amount of reimbursement for particular
medications. We cannot be sure that coverage and reimbursement will be available for any product that we
commercialize and, if reimbursement is available, what the level of reimbursement will be.
Moreover, coverage policies and third-party payor reimbursement rates may change at any time. Therefore, even if
favorable coverage and reimbursement status is attained for one or more products for which we receive marketing
approval in one or more indications, less favorable coverage policies and reimbursement rates may be implemented in
the future. For instance, even though favorable coverage and reimbursement status has been attained for VYVGART for
the treatment of gMG in the U.S., access to VYVGART for any other indication may be reduced or restricted by limited
payor coverage due to treatment criteria, which may prevent us from realizing its full commercial potential.
In addition,
the coverage and reimbursement levels for our products for the treatment in one indication may have an adverse impact
on the coverage and reimbursement levels of such products or product candidates in other indications for which
marketing approval has previously been or may subsequently be obtained. Inadequate coverage or reimbursement may
diminish or prevent altogether any significant demand for our products and/or may prevent us entirely from entering
certain markets or indications, which would prevent us from generating significant revenues or sustaining net
profitability in the future, which would adversely affect our business, financials and results of operations.
In many foreign countries, pricing, coverage, and level of reimbursement of prescription drugs are subject to
governmental control, and we and our collaborators may be unable to obtain coverage, pricing, and/or reimbursement on
terms that are favorable to us or necessary for us or our collaborators to successfully commercialize our marketed
products in those countries. In some foreign countries, the proposed pricing for a drug must be approved before it may be
lawfully marketed. The requirements governing drug pricing and reimbursement vary widely from country to country,
and may take into account the clinical effectiveness, cost, and service impact of existing, new, and emerging drugs and
treatments. For example, the EU provides options for EU Member States to restrict the range of medicinal products for
which their national health insurance systems provide reimbursement and to control the prices of medicinal products for
human use. An EU Member State may approve a specific price for the medicinal product or it may instead adopt a
system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. Our
results of operations may suffer if we or our collaborators are unable to market our products in foreign countries or if
coverage and reimbursement for our marketed products in foreign countries is limited or delayed.
If we fail to obtain orphan drug designation or we do not have valid and enforceable patents covering our products
and their uses and product candidates and fail to obtain and/or maintain orphan drug exclusivity for our products or
product candidates, our competitors may be able to sell products to treat the same conditions and our revenue may be
reduced.
We have and may from time to time seek orphan drug designation in the U.S., Japan, or the EU for certain indications
addressed by our products and product candidates. With regard to these designations or future designations we may
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obtain, we may not be the first to obtain marketing approval of these drugs for such indication due to the uncertainties
associated with developing therapeutic products, and we may not obtain orphan exclusivity upon approval. In addition,
exclusive marketing rights in the U.S. may be limited if we seek approval for an indication broader than the orphan-
designated indication, or may be lost if the FDA later determines that the request for designation was materially
defective or if we are unable to assure sufficient quantities of the product to meet the needs of patients with the rare
disease or condition. Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not
effectively protect the product from competition because different drugs with different active moieties or different
principal molecular structural features can be approved for the same condition. Even after an orphan drug is approved,
the MHRA, the EMA, the FDA, the MHLW (collectively, the
Relevant Regulatory Authorities
) or other comparable
regulatory authorities can subsequently approve the same drug with the same principal molecular structural features for
the same condition if the regulator concludes that the later drug is safer, more effective, or makes a major contribution to
patient care.
Further, in the U.S., a September 2021 Eleventh Circuit decision in Catalyst Pharmaceuticals, Inc. vs. Becerra regarding
interpretation of the Orphan Drug Act exclusivity provisions as applied to drugs approved for orphan indications
narrower than the drug’s orphan designation could significantly broaden the scope of orphan drug exclusivity for such
products. In January 2023, the FDA, however, issued a Federal Register notice clarifying its approach to orphan drug
exclusivity following the Catalyst decision. Consistent with the court’s decision, the FDA set aside its approval of the
drug at issue in the case, but announced that, while complying with the court’s order in Catalyst, the FDA intended to
continue to apply its regulations tying the scope of orphan-drug exclusivity to the uses or indications for which a drug is
approved to matters beyond the scope of that order. Legislation has also been introduced that may reverse the Catalyst
decision but its passage is uncertain at this time.
Risk Factors Related to the Development and Clinical Testing of argenx’s Products and Product Candidates
Failure to successfully identify, select and develop our products in other indications, or additional products or
product candidates could impair our ability to grow.
Our long-term growth strategy entails developing and marketing additional products and product candidates, including
efgartigimod for new indications, empasibrubart and ARGX-119. This requires substantial resources, whether or not any
product candidates or new indications are ultimately identified. The success of this strategy depends partly upon our
ability to identify, select, develop, and ultimately, commercialize promising product candidates. We are heavily
dependent on precise, accurate and reliable scientific data to identify, select and develop promising product candidates
and products. Our business decisions may therefore be adversely influenced by inaccurate, improper or fraudulent
scientific data, including data sourced from third parties. Even with accurate scientific data, our technology platforms
may fail to discover and to generate additional products and products candidates, that are suitable for further
development.
Even if we identify additional product candidates, they may not be suitable for clinical development as a result of
harmful side effects, limited efficacy or other characteristics that indicate that it is unlikely to be a product that will
receive approval by the Relevant Regulatory Authorities, and other comparable regulatory authorities or achieve market
acceptance. For example, we have previously announced that certain clinical trials did not meet their primary endpoints.
We consequently decided not to pursue additional development in pemphigus and plan to prioritize clinical development
of efgartigimod in its ongoing severe autoimmune indications. If we do not successfully identify, develop and
commercialize product candidates and VYVGART in new indications based upon our technological approach, we may
not be able to obtain product or collaboration revenues in future periods.
Obtaining regulatory approval for our products and product candidates is inherently uncertain. To obtain the requisite
regulatory approvals to market and sell any of our products and product candidates, we or our collaborators for such
candidates must successfully demonstrate that our products are safe and effective in humans. Clinical trials are expensive
and can take many years to complete, and their outcome is inherently uncertain. Further, success in early clinical trials or
in one indication does not guarantee success in later clinical trials or in other indications.
Failure to successfully develop or obtain marketing approval for our products and product candidates could
negatively impact our business.
The time required to obtain approval by the Relevant Regulatory Authorities and other comparable regulatory authorities
is unpredictable but typically takes many years, if obtained at all, following the commencement of clinical trials and
depends upon numerous factors, including the substantial discretion or interpretation of the regulatory authorities. This
lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain
regulatory approval to market any of our product candidates, including for new indications. We may experience delays in
our ongoing or planned clinical trials, for a large variety of reasons outside our control in complying with regulatory
approvals which can adversely affect the timing of clinical trials, including as described in
“Item 3.D. — Risk Factors —
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Risk Factors Related to Other Government Regulations — All aspects of our business ranging from preclinical, clinical
trials, marketing and commercialization are highly regulated and any delay by relevant regulatory authorities could
jeopardize our development and approval process or result in other suspensions, refusals or withdrawal of approvals.
”
In addition, ongoing efforts by the Trump administration to limit the size of the FDA and other agencies of HHS,
including through reductions in staff, may further increase the unpredictability in approval timelines for our products and
product candidates.
For example, on February 11, 2025, President Trump issued an executive order on workforce
optimization, seeking to reduce the size of the federal workforce through large-scale reductions in force and by placing
limitations on the number of new employee hires. Whether this executive order and other similar Trump administration
efforts to reduce the federal work force will have an adverse effect on FDA’s ability to timely review drug and biologic
product applications remains uncertain.
If we are unable to obtain regulatory approval of our products and product candidates on a timely basis or at all, our
business, financial operations and/or financial condition may be impacted.
Certain of our clinical trials have not succeeded, and may in the future also not succeed, and even if they succeed, we
may not obtain regulatory approval for our products or product candidates or regulatory approval may be delayed.
Certain of our clinical trials have not succeeded, and may in the future also not succeed. We could experience
operational challenges as we undertake an increasing number of clinical trials, including those conducted in countries
outside the EU, UK and the U.S. that may subject us to further delays and expenses as a result of increased shipment
costs, additional regulatory requirements and the engagement of non-EU, non-UK and non-U.S. contract research
organizations (
CROs
), as well as expose us to risks associated with clinical investigators and institutions who apply
different standards of diagnosis, screening and medical care or are otherwise unfamiliar with standards and requirements
imposed by the Relevant Regulatory Authorities.
If we experience delays in the completion of, or termination of, any clinical trial of our products or product candidates,
our commercial prospects may be harmed. Any delays in completing our clinical trials may increase our costs, slow
down our product candidate development and approval process and jeopardize our ability to commence product sales
and generate revenues. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical
trials may also ultimately lead to the denial of regulatory approval of our product candidates or result in the development
of our product candidates being stopped early. Significant clinical trial delays could also allow our competitors to bring
products to market before we do or shorten any periods during which we have the exclusive right to commercialize our
products and product candidates.
Even if clinical trials are initiated, our development efforts may not be successful. Even if we obtain positive results from
preclinical trials or initial clinical trials, we may not achieve the same success in future clinical trials, which may
negatively impact the price of our ordinary shares or ADSs.
Regulatory approval of our products or product candidates may be delayed or refused for many reasons, including for
reasons outside our control such as:
•
the Relevant Regulatory Authorities or other comparable regulatory authorities may disagree with the design or
implementation of our clinical trials;
•
we may be unable to demonstrate, to the satisfaction of the Relevant Regulatory Authorities or other comparable
regulatory authorities, that our product candidates are safe, pure, potent and effective for any of their proposed
indications;
•
the results of clinical trials may not meet the level of statistical significance required by the Relevant Regulatory
Authorities or other comparable regulatory authorities for approval;
•
the chemistry, manufacturing and controls information submitted in an application is insufficient; and
•
the facilities of third-party manufacturers with which we contract for the manufacture of our product candidates are
not adequate to support approval of our product candidates.
Any of these occurrences may harm our business, results of operations and financial condition significantly.
9
If we decide to pursue accelerated approval for any of our product candidates, it may not lead to faster development
or regulatory review or approval and we may still need to conduct additional clinical trials, which could increase the
expense of obtaining, if at all, necessary marketing approvals.
Recently, the accelerated approval pathway has come under scrutiny by various stakeholders, and the FDORA revised
the requirements for this pathway. Although this legislation did not change the standard for accelerated approval, the
FDA is now authorized to require a post-approval clinical trial to be underway prior to approval or within a specified
time period following approval, and must specify conditions of any required post-approval clinical trial. FDORA also
requires sponsors to submit progress reports for required post-approval studies. Failure to conduct due diligence for
required post-approval studies is deemed a prohibited act under the FDCA. FDORA also details procedures the FDA
must follow to withdraw an accelerated approval on an expedited basis, including where the required post-approval
studies are not conducted with due diligence or fail to verify clinical benefit, other evidence demonstrates that the
product is not shown to be safe or effective under the conditions of use, or the sponsor disseminates false or misleading
promotional materials with respect to the product.
If we decide to pursue accelerated approval for any of our product candidates, the failure to obtain accelerated approval
(or the withdrawal of any accelerated approval) could result in a longer time period to commercialization of such product
candidate, if any, and could increase the cost of development of such product candidate and harm our competitive
position in the marketplace. For example, if standard of care were to evolve or if any of our competitors were to receive
approval for a drug or biological product for a disease or condition for which we are seeking accelerated approval before
we receive accelerated approval, we may not be able to demonstrate that our product candidate provides a meaningful
advantage over other available therapies and accelerated approval may not occur.
Our products and product candidates may have serious adverse, undesirable or unacceptable side effects, and we or
others may identify undesirable or unacceptable side effects caused by any of our products or product candidates
before and after they have received marketing approval.
Undesirable side effects that may be caused by our product candidates, or by the combination of our product candidates
with other medical products, could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could
result in more restrictive labeling or the delay or denial of regulatory approval by the Relevant Regulatory Authorities or
other comparable regulatory authorities. We have observed adverse events and treatment emergent adverse events in our
clinical trials, and we may see additional adverse events and treatment emergent adverse events in our ongoing and
future clinical trials. Such side effects may be more serious than those observed to date, and as a result, our ongoing and
future clinical trials may be negatively impacted. Moreover, as we seek to develop product candidates, including
products in new indications, patients may experience new or more serious effects. Drug-related side effects caused by
any of our products or product candidates that we or others identify could, among other things, affect patient recruitment,
the ability of enrolled patients to complete the clinical trial, result in potential product liability claims, damage sales of
our existing products, result in significant reputational damage for us and our product development, and other issues
including the delay of other program
s.
They can also cause the Relevant Regulatory Authorities or other comparable regulatory authorities to withdraw
approvals or revoke licenses of such products and require us to take such products off the market, require the addition of
labeling statements, specific warnings, or a contraindication or other modification of the product labeling, request the
issuance of safety alerts, require a REMS to ensure that the benefits of the product outweigh its risks, and/or require us to
change the way the product is administered, conduct additional clinical trials or change the labeling of the product.
If our target patient population is smaller than expected, we are unable to successfully enroll and retain patients in
our clinical trials, or experience significant delays in doing so, we may not realize the full commercial potential of
any products or product candidates.
Currently, we mainly develop products or product candidates for the treatment of rare diseases for which the target
patient population can be small. If the actual number of patients with these disorders is smaller than we expected, we
may encounter difficulties in enrolling sufficient patients in our clinical trials, thereby delaying or preventing
development and approval of our products or product candidates. Physicians, who are an important source of patients for
clinical trials, may also be less familiar with these rare diseases and may therefore fail to identify these conditions in
their patients and therefore may not refer them to our clinical trials.
Patient enrollment, a significant factor in the timing of clinical trials, depends on many factors, including the size and
nature of the patient population, eligibility criteria for the clinical trial, the proximity of patients to clinical sites,
competition for patient recruitment from competing clinical trials, the design of the clinical trial, the availability of
alternate approved therapies for the indication the clinical trial is investigating, and clinicians’ and patients’ perceptions
as to the potential advantages of the drug being studied in relation to other available therapies. We compete with other
companies to enroll target patient populations, as set forth in
“
Item 3.D. Risk Factors—
Risk Factors Related to
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Commercialization of argenx’s Products and Product Candidates, Including for New Indications—We face significant
competition for our drug discovery and development efforts.
” Even if product candidates obtain significant market share
for their approved indications, because certain potential target populations are small, we may never recoup our
investment in such product candidate without obtaining regulatory approval for additional indications for such product
candidates.
Even once enrolled, we may be unable to retain a sufficient number of patients to complete any of our clinical trials. In
addition, any negative results we may report in clinical trials of our drug candidates may make it difficult or impossible
to recruit and retain patients in other clinical trials of that same drug candidate. Delays in the completion of any clinical
trial of our product candidates will increase our costs, slow down our product candidate development and approval
process and delay or potentially jeopardize our ability to commence product sales and generate revenue. In addition,
some of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also
ultimately lead to the denial of regulatory approval of our product candidates.
Risk Factors Related to argenx’s Dependence on Third Parties
We rely, and expect to continue to rely, on third parties to conduct some of our research activities and clinical trials
and for parts of the development and commercialization of our existing and future research programs, products and
product candidates. If our relationships with such third parties are not successful, our business may be adversely
affected.
We have relied upon and plan to continue to rely upon third parties, including independent clinical investigators, CROs,
CMOs and other third-party service providers with the applicable protocol, legal and regulatory requirements and
scientific standards, and our reliance on these third parties does not relieve us of our regulatory responsibilities. To the
extent our collaborators or the CROs or investigators fail to enroll participants for our clinical trials, fail to conduct the
clinical trial to GCP standards or in full compliance with legal and regulatory requirements or are delayed for a
significant time in the execution of clinical trials, including achieving full enrollment, we may be affected by increased
costs, program delays or both, which may harm our business.
In addition, we are, and expect to continue to be, dependent on partnerships with partners and licensees relating to the
development and commercialization of our existing and future research programs, products and product candidates. We
currently have collaborative research relationships with various pharmaceutical companies such as AbbVie, Zai Lab,
Genmab and with various academic and research institutions worldwide for the development of product candidates
resulting from such collaborations. We also have distribution agreements in place with Medison, Genpharm and Handok
for the distribution of VYVGART. We had, have and will continue to have discussions on potential partnering
opportunities with various pharmaceutical companies. If we fail to enter into or maintain collaborations on reasonable
terms or at all, our ability to develop our existing or future research programs and product candidates and to
commercialize our existing or future products could be delayed, the commercial potential of our products could change
and our costs of development and commercialization could increase.
While we have agreements governing our relationships with these third parties, we have limited influence over their
actual performance and control only certain aspects of their activities. If independent investigators, third-party service
providers or CROs fail to devote sufficient resources to the development of our product candidates, or if their
performance is substandard, it may delay or compromise the prospects for approval and commercialization of any
product candidates that we develop. In addition, regulatory authorities enforce GCP requirements through periodic
inspections of clinical trial sponsors, principal investigators and clinical trial sites. If we, our investigators or any of our
CROs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable
and the Relevant Regulatory Authorities or comparable regulatory authorities may require us to perform additional
clinical trials before approving our marketing applications. Upon inspection by a given regulatory authority, such
regulatory authority may determine that our clinical trials do not fully comply with GCP regulations, which may require
us to repeat clinical trials and delay the regulatory approval process. Our collaborative partners may not adhere to or may
terminate collaboration agreements with all associated consequences or disagree on the interpretation of contractual
terms. We may not be able to control our collaborative partners’ compliance with all applicable requirements for the
commercialization of our products, which could adversely affect such commercialization and the profitability of such
products. Failures by our collaborative partners to meet their contractual, regulatory, or other obligations to us, or any
disruption in the relationships between us and our collaborative partners, could have a material adverse effect on our
product pipeline and business.
We face significant competition in establishing successful relationships with third-party service providers and
appropriate collaborative partners. These third-party service providers may have contractual relationships with other
entities, some of which may be our competitors, which may draw their time and resources away from our programs. In
addition, some of our third-party service providers or CROs have the ability to terminate their respective agreements
with us, and if such agreements terminate, we may not be able to enter into arrangements with alternative CROs or
investigators or to do so on commercially reasonable terms. In addition, we may not be able to find appropriate
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collaboration partners. Our ability to reach a definitive agreement for a partnership will depend, among other things,
upon an assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed partnership
and the proposed collaborator’s evaluation of a number of factors. These factors may include the design or results of
clinical trials, the likelihood of regulatory approval, the potential market for the subject product candidate, the costs and
complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the
existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such
ownership regardless of the merits of the challenge and industry and market conditions generally. The collaborator may
also consider alternative product candidates or technologies for similar indications that may be available to collaborate
on and whether such a partnership could be more attractive than the one with us. In addition, in the U.S., legislative,
executive and regulatory proposals were recently enacted or are pending to, among other things, prevent drug shortages,
improve pandemic preparedness and reduce the dependency of the United States on foreign supply chains and
manufacturing. While we are still assessing these developments, they could impact our selection and utilization of
CMOs, vendors and other suppliers and could have a material adverse impact on our business, financial condition and
results of operations.
Disruptions caused by our reliance on third parties for our manufacturing process may delay or disrupt our business,
product development and commercialization efforts.
We do not have the ability to internally source the raw materials necessary to produce our products or product
candidates, and do not currently have, nor do we plan to acquire, the infrastructure or capability internally to
manufacture our products or product candidates and depend on a worldwide supply chain and third parties for both.
Disruptions caused by our reliance on such third-party suppliers, service providers and manufacturers may delay or
disrupt our business, product development and commercialization efforts.
Reliance on Third-Party Suppliers and Service Providers
For some of our raw materials, we rely on a single source of supply and there are limited supplies of the raw materials. If
prices increased, or we were to experience an unexpected loss of supply of or if any supplier was unable to meet our
demand for any of our products and product candidates, including for example if VYVGART is approved for additional
indications, we could experience delays in our research or planned clinical trials or risk shortages in commercial supply
which could materially impact our revenue potential. These issues could be exacerbated by pressure on the supply chain,
for example due to power shortages, telecommunications failures, natural disasters such as floods, hurricanes and
wildfires, extreme weather conditions, public health crises, changed laws or regulations or geopolitical events, including
trade disputes or economic sanctions enacted as a result of international conflict. The cost of our raw materials may also
increase based on increased tariffs on foreign exports. As we continue to grow our business we may need to establish
additional sources of supply for our products. The lead time needed to establish a relationship with a new supplier can be
lengthy and require us to devote substantial time and resources. The time and effort to qualify a new supplier could result
in additional costs, or delays, which could adversely affect our business.
Additionally, certain of the raw materials required in the manufacture and the formulation of our products and product
candidates may be derived from biological sources, including mammalian tissues, bovine serum and human serum
albumin. There are certain European regulatory restrictions on using these biological source materials including rigorous
testing requirements, which could limit or delay production. Regulatory authorities may require additional studies if we
adopt a new supplier. If there are changes in the regulation requirements that our suppliers are unable to meet, our
clinical development or commercial activities may be delayed or interrupted.
We may not be able to engage a back-up or alternative supplier or service provider in a timely manner or at all if any of
these third parties were to cease or interrupt production or otherwise fail to supply these materials, products, or services
to us for any reasons, including due to regulatory requirements or actions (including recalls), adverse financial
developments at or affecting the supplier, failure by the supplier to comply with cGMPs, contamination, business
interruptions, or labor shortages or disputes. Interruptions in the supply of these materials, products or services may also
result from international conflict, trade disputes or economic sanctions enacted by, or imposed on, the U.S., the UK, the
EU or any other country or region.
Reliance on Third-Party Manufacturing
We rely on and expect to continue to rely on CMOs. We also rely on certain third parties to perform filling, finishing,
distribution, laboratory testing and other services related to the manufacture and supply of our products and product
candidates.
We do not control the manufacturing process at our CMOs and are completely dependent on them for the production of
our products and product candidates in accordance with relevant regulations (such as cGMPs), we are responsible for
ensuring that our products comply with regulatory requirements. If our CMOs cannot successfully manufacture material
that conforms to our specifications and the strict regulatory requirements of the Relevant Regulatory Authorities or other
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comparable regulatory authorities, our business could be adversely affected, including an inability to initiate or continue
clinical trials of product candidates under development, delay in submitting regulatory applications, or receiving
regulatory approvals for product candidates, including new indications, subjecting third-party manufacturing facilities to
additional inspections by regulatory authorities, requirements to cease distribution or to recall batches of our products or
product candidates and an inability to meet commercial demands for our marketed products.
Most notably, we contract with Lonza for their manufacturing sites in Slough, UK, Portsmouth, U.S, Singapore and
Visp, Switzerland as well as with Fujifilm, based in Denmark for activities relating to the development of cell banks,
development of our manufacturing processes and the manufacturing of drug substance. We use additional contract
manufacturers to fill, test, label, package, store and distribute our (investigational) drug products. Our products and
product candidates are biologics and require multiple processing steps that are more difficult than those required for most
small molecule chemical pharmaceuticals. While we work with our CMOs and partners on optimization, strengthening
and upscaling our manufacturing, problems with these manufacturing processes, such as capacity issues, or even minor
deviations from the normal process or from the materials used in the manufacturing process, which may not be
detectable by us in a timely manner, could lead to manufacturing failures or product defects, resulting in lot failures,
product recalls, product liability claims and insufficient inventory.
We face risks inherent in relying on limited CMOs, as any failure in their ability to successfully manufacture our
products or product candidates as described above or any disruption, such as supply shortages or disruptions of raw
materials, fires, pandemics, natural hazards or acts of vandalism at the CMO could significantly interrupt our
manufacturing capability. Alternative production plans in place or disaster-recovery facilities available to us may not be
sufficient. In case of a disruption, we may have to establish additional alternative manufacturing sources. This would
require substantial investment on our part, which we may not be able to obtain on commercially acceptable terms or at
all. Additionally, we may experience significant manufacturing delays as we build or locate replacement facilities and
seek and obtain necessary regulatory approvals. If this occurs, we will be unable to satisfy manufacturing needs on a
timely basis, if at all. Also, operating any new facilities may be more expensive than operating at our current facilities.
Further, business interruption insurance may not adequately compensate us for any losses that may occur, and we would
have to bear the additional cost of any disruption. For these reasons, a significant disruptive event of the manufacturing
facility could have drastic consequences, including placing our financial stability at risk.
Accuracy and timing of our financial reporting is partially dependent on information received from third-party
partners, which we do not control.
We have collaborated, and plan to continue to collaborate, with third parties, including distributor and licensing partners,
on certain product candidates. As part of some of these collaborations, our collaboration partners are responsible for
providing us with financial information regarding specific projects, including funds spent, liabilities incurred and
expected future costs, on which we rely for our own financial reporting. If our collaboration partners fail to provide us
with the necessary financial information within the agreed upon timeframes, or if such financial information proves
inaccurate, it would adversely impact the timing and accuracy of our own financial reporting. Any inaccuracy in our
financial reporting could cause investors to lose confidence in our financial reporting. This in turn may lead to
reputational damage or affect our ability to obtain, and the terms of, any future financing, which may harm our business.
We and our third-party manufacturers and suppliers may become exposed to liability, fines, penalties or other
sanctions and substantial expenses in connection with environmental compliance or remediation activities.
Our third-party manufacturers’ and suppliers’ operations, including research, development, testing and manufacturing
activities, are subject to numerous environmental, health and safety laws and regulations. These laws and regulations
govern, among other things, the controlled use, handling, release and disposal of and the maintenance of a registry for,
hazardous materials and biological materials, laboratory procedures and exposure to pathogens. We do not have control
over our manufacturers’ or suppliers’ compliance with environmental, health and safety laws and regulations. If we, or
they fail to comply with such laws and regulations, we could be subject to liability, fines, penalties or other sanctions and
incur substantial expenses to comply or remediate the activities.
We face a risk of environmental liability inherent in our current and historical activities, including liability relating to
releases of or exposure to hazardous or biological materials. Environmental, health and safety laws and regulations are
becoming more stringent. We may be required to incur substantial expenses in connection with future environmental
compliance or remediation activities, in which case, our production and development efforts may be interrupted or
delayed, and our financial condition and results of operations may be materially adversely affected.
Risk Factors Related to Other Government Regulations
We are subject to healthcare laws, regulation and enforcement. The failure to comply with these laws could harm our
results, operations and/or financial condition.
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Our current and future operations are and may become directly, or indirectly through our customers and third-party
payors, subject to various U.S. federal and state, EU, Japanese, Chinese, UK, Canadian and Israeli healthcare laws, and
healthcare laws of other jurisdictions in which we conduct our business. This includes, but is not limited to, the U.S.
FDCA, the U.S. False Claims Act and EU Directive 2001/83/EC. EU Directive 2001/83/EC provides that where
medicinal products are being promoted to persons qualified to prescribe or supply them, no gifts, pecuniary advantages
or benefits of any kind may be supplied, offered or promised to such persons, except under certain circumstances. This
provision was also transposed into the Human Medicines Regulations 2012 in the UK.
Healthcare providers, physicians and others play a primary role in the recommendation and prescription of any products
for which we obtain marketing approval. Healthcare laws also impact our arrangements with healthcare professionals
who participate in our clinical research programs, healthcare professionals and others who recommend, purchase, or
provide our approved products, and other parties through which we market, sell and distribute our products for which we
obtain marketing approval.
Therefore, the healthcare laws we are subject to may impact, among other things, our proposed sales, marketing and
education programs and constrain our business and financial arrangements with third-party payors. For example, the
provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement,
purchase, supply, order or use of medical products is generally not permitted in countries that form part of the EU, or the
UK. Some EU Member States have enacted laws explicitly prohibiting the provision of these types of benefits and
advantages to induce or reward improper performance generally, and the UK has enacted similar restrictions.
Infringement of these laws can result in substantial fines and imprisonment, as well as associated reputational harm. Any
action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant
legal expenses and divert our management’s attention from the operation of our business.
The shifting compliance environment and the need to maintain robust and expandable systems to comply with multiple
jurisdictions with different compliance or reporting requirements increases the possibility that we or our collaborative
partners may run afoul of one or more of these requirements. We continue to expand, enhance and refine our internal
ethics and compliance function and program to ensure compliance with the different healthcare laws and regulations. As
we continue to grow our headcount to support our business, we face increased compliance risk as we need to train and
supervise additional personnel to comply with relevant healthcare laws and regulations. This involves substantial costs
and, notwithstanding our investment, there can be no assurance that our policies and procedures will be followed at all
times or will effectively detect and/or prevent all compliance violations by our employees, consultants, subcontractors,
agents and partners.
It is possible that governmental authorities will conclude that our business practices do not comply with current or future
statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our
operations are found to be in violation of any of these laws or any other governmental regulations applicable to us, we
may be subject to significant civil, criminal and administrative investigations, penalties, damages, fines, disgorgement,
imprisonment, exclusion of drugs from government funded healthcare programs, such as Medicare and Medicaid in the
U.S., additional reporting requirements and oversight, reputational harm and the curtailment or restructuring of our
operations. Managing such investigations and defending against or appealing any such actions or penalties can be costly
and time-consuming and may require significant financial and personnel resources. Therefore, even if we are successful
in managing any such governmental investigations and/or defending against or appealing any such actions or penalties
that may be brought against or imposed upon us, our business may be impaired. Efforts to ensure that our business
arrangements with third parties comply with applicable healthcare laws and regulations also involve substantial costs.
The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of
healthcare reform. In the U.S., federal and state enforcement bodies have recently increased their scrutiny of interactions
between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions,
convictions and settlements in the healthcare industry. Ensuring business arrangements comply with applicable
healthcare laws, as well as responding to possible investigations by government authorities, can be time and resource
consuming and can divert a company’s attention from the business.
All aspects of our business, including preclinical research, clinical trials, marketing and commercialization, are
highly regulated, and any delay by relevant regulatory authorities could jeopardize our development and approval
process and/or result in suspensions of marketing authorizations, refusals to approve our products, or withdrawal of
existing approvals.
Before we can commence clinical trials for a product candidate, we must complete extensive preclinical testing to
support our IND or planned IND applications in the U.S. or Japan, or our clinical trial applications (
CTAs
) in the UK or
in the EU, or comparable applications in other jurisdictions. We cannot be sure that we will be able to submit INDs or
CTAs or comparable applications for our development programs on the timelines we expect, if at all. We also cannot
guarantee that submission of INDs or CTAs or comparable applications will result in the Relevant Regulatory
Authorities or other regulatory authorities allowing clinical trials to begin.
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Clinical trials must be conducted in accordance with Relevant Regulatory Authorities' and other comparable regulatory
authorities’ legal requirements and regulations and are subject to oversight by these governmental agencies as well as
IRBs and ethics committees. In addition, clinical trials must be conducted in compliance with GCPs and clinical supplies
of our products and product candidates must be produced under cGMPs and other regulations. We could encounter
delays if a clinical trial is suspended or terminated, by us, by the IRB or ethics committee, by the data review committee
or data safety monitoring board for such clinical trial, or by the Relevant Regulatory Authorities or other comparable
regulatory authorities. Such authorities may impose a suspension or termination due to a number of factors, including
failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the
clinical trial operations or clinical trial site by the Relevant Regulatory Authorities or other comparable regulatory
authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, including those
relating to the class to which our products and product candidates belong, failure to demonstrate a benefit from using the
product or product candidate, changes in governmental regulations or administrative actions, or lack of adequate funding
to continue the clinical trial.
If we experience delays in the completion of, or termination of, any clinical trial of our products or product candidates,
the costs of our clinical programs may increase, the commercial prospects of our products and product candidates may be
harmed, and our ability to generate product revenues from any of these products and product candidates may be delayed.
Significant clinical trial delays could also allow our competitors to bring products to market before we do, or shorten any
periods during which we have the exclusive right to commercialize our products and product candidates.
Moreover, we must obtain separate regulatory approvals in each jurisdiction where we want to market, and approval by
one regulatory authority does not ensure approval by any other regulatory authority. As approval procedures can vary
among countries and may change over time, this can require additional clinical testing, and the time required to obtain
approval may differ. We can provide no assurances that such approval will be obtained on the timeline that we expect or
at all. In addition, we anticipate submitting applications for approval of VYVGART in new indications, but can provide
no assurances that such applications will be accepted or that we will receive approval on our anticipated timeline, or at
all.
If VYVGART or any new formulations of VYVGART are not approved in one or more jurisdictions including beyond
the countries where VYVGART is approved, or if such approvals are significantly delayed, it could have a material
adverse effect on our business. It is possible that none of our other existing product candidates or any product candidates
we may seek to develop in the future will ever obtain regulatory approval in any other jurisdiction for any indication.
Even if approval is obtained, the Relevant Regulatory Authorities or other comparable regulatory authorities may
approve the product for fewer or more limited indications or patient sub-segments than requested and/or with a label that
does not include the labeling claims necessary or desirable for the successful commercialization of that product. Further,
the Relevant Regulatory Authorities or other comparable regulatory authorities may impose extensive and ongoing
unique regulatory requirements, such as granting approval contingent on the performance of costly post-marketing
clinical trials, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the product.
The costs of compliance with all Relevant Regulatory Authorities' and other applicable authorities' regulations,
requirements or guidelines could be substantial, and failure to comply could result in sanctions, including fines,
injunctions, civil penalties, denial of applications for marketing authorization of our products, delays, suspension or
withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions and criminal
prosecutions, any of which could significantly increase our and/or our collaborative partners’ costs or delay or prevent
the development and commercialization of our product candidates. At this time, we cannot guarantee or know the exact
nature, precise timing and detailed costs of the efforts that will be necessary to complete the remainder of the
development of our research programs and product candidates.
We are subject to privacy laws, regulation and potential enforcement. The failure to comply with these laws could
harm our results, operations and/or financial conditions.
Privacy laws, regulation and potential enforcement are particularly relevant to our business as we collect, store and
process patient data, including sensitive health data as well as human biological samples such as blood or tissue, in the
context of our clinical development activities, post-marketing approval monitoring obligations, and associated activities.
We also collaborate on a regular basis with third parties where we may seek to use data collected by third parties on our
or their behalf, or we may seek to share data collected by us with such third parties to further our research or commercial
initiatives.
The GDPR imposes a broad range of strict requirements on companies, including with respect to cross-border transfers
of personal data and imposes substantial penalties in the event of non-compliance. We face uncertainty as to the exact
interpretation of the requirements under the GDPR, and we may be unsuccessful in implementing all measures required
by data protection authorities or courts in interpretation of the GDPR.
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In addition, national laws of EU Member States may partially deviate from the GDPR and impose different obligations
from country to country.
Also, in the field of handling genetic data, the GDPR specifically allows EU Member States’
laws to impose additional and more specific requirements or restrictions, and European national laws have historically
differed quite substantially in this field, leading to additional uncertainty. Apart from the GDPR, privacy laws continue
to evolve and expand in Europe. For example, violations of the Directive 2002/58/EC of the European Parliament and of
the Council of July 12, 2002 (as amended, the
e-Privacy Directive
) can result in administrative measures, including fines,
or criminal sanctions. The EU is in the process of developing a new e-Privacy Regulation to replace the e-Privacy
Directive, and the new e-Privacy Regulation may impose additional obligations and risk for our business.
Following its departure from the EU, the UK has maintained in force substantially equivalent provisions to the GDPR
(
UK GDPR
). Similar concerns as those described above with respect to GDPR apply to our compliance with the UK
GDPR and other UK data protection rules as well.
Beyond the EU and UK, privacy and data protection laws and regulations continue to develop and expand around the
world, including in other jurisdictions in which we operate, such as the U.S., Japan, and Canada. Such laws and
regulations impose increasing restrictions and obligations on the processing of personal data, including sensitive
personal data such as genetic data. For example, in the U.S., the federal Health Insurance Portability and Accountability
Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, and state privacy
laws, such as the California Consumer Privacy Act of 2018, as amended, and the Washington My Health My Data Act of
2023, impose obligations on covered businesses, including, but not limited to, providing specific disclosures in privacy
notices and affording residents certain rights related to their personal data. Privacy laws continue expanding globally and
may require us to modify our data collection or processing practices and to incur significant expenses associated with our
compliance efforts.
We continue to evaluate and consider whether and how to incorporate artificial intelligence solutions into certain aspects
of our business, which may pose significant risks, including to data privacy. The legal regulatory regime relating to
artificial intelligence is uncertain and evolving, and compliance with existing and new laws and regulations governing
artificial intelligence may give rise to significant costs, which could increase our operating expenses. Further, these
compliance obligations may make it harder for us to conduct our business using artificial intelligence, require us to
change our business practices, or prevent or limit our use of artificial intelligence, which could make our business less
efficient or put us at a competitive disadvantage. Implementation of artificial intelligence into our business could pose
certain risks to our patients or partners. For example, if we incorporate artificial intelligence into our business, our use of
artificial intelligence may result in cybersecurity incidents that implicate the personal data of our patients or partners.
In addition, if we are investigated by a data protection authority, we may face fines and other penalties. Any such
investigation or charges by data protection authorities could have a negative effect on our existing business and on our
ability to attract and retain new clients or pharmaceutical partners. We may also experience hesitancy, reluctance, or
refusal by clients or pharmaceutical partners to continue to use our products and solutions due to the potential risk
exposure as a result of the current and future data protection obligations. Such clients or pharmaceutical partners may
also view any alternative approaches to compliance as being too costly, too burdensome, too legally uncertain, or
otherwise objectionable and therefore decide not to do business with us. Any of the foregoing could harm our business,
prospects, financial condition and results of operations.
Failure to comply with anti-corruption laws and regulations, anti-money laundering laws and regulations, economic
sanctions and/or export control regulations and other laws governing our operations could have an adverse impact
on our business.
We are or may become subject to various laws and regulations regarding anti-corruption, anti-money laundering,
economic sanctions, investment restrictions, anti-fraud and export control regulations issued by multiple jurisdictions.
These include the UK Bribery Act 2010 and the U.S. Foreign Corrupt Practices Act of 1977, as amended, which
prohibits, among other things, payments, offers, or promises made for the purpose of improperly influencing any act or
decision of a foreign official. The nature of our business means that we engage in significant interactions with foreign
officials. In the UK, from September 1, 2025, it will also be an offense under the Economic Crime and Corporate
Transparency Act 2023 for a large organization to fail to prevent certain fraudulent activities by an associated person
(such as an employee, agent, or subsidiary), unless it can demonstrate that it had reasonable prevention procedures in
place to prevent the fraudulent activity.
We are also subject to economic sanctions and export control rules and regulations imposed by multiple jurisdictions,
including the U.S., UK, and EU. Any change in export or import regulations, economic sanctions regulations or related
legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or
technologies targeted by such regulations, could decrease our ability to manufacture, import, export or sell our products
internationally, which could adversely affect our business.
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We have mechanisms in place to promote compliance with such rules and regulations. However, there can be no
assurance that our policies and procedures will be followed at all times or will effectively detect and/or prevent
violations of applicable compliance regimes by our employees, consultants, sub-contractors, agents and partners. In the
event of non-compliance, we could be subject to substantial civil or criminal penalties, including economic sanctions
against us, incarceration for responsible employees and managers, the possible loss of export or import privileges,
reputational harm, and resulting loss of revenue and profits, which could have a material adverse impact on our business,
financial conditions and operations.
Our performance tracked by our Environmental, Social and Governance metrics is subject to risks and the outcomes
may not achieve the anticipated benefits or align with new regulations and stakeholders’ expectations.
There has been an increasing focus from stakeholders and regulators relating to environmental, social and governance
(
ESG
) matters across all industries in recent years. The standards and stakeholder expectations continue to evolve and
criteria to evaluate ESG practices may change rapidly. We are subject to evolving rules, including the European Union’s
Corporate Sustainability Reporting Directive (
CSRD
). We may also be subject to other U.S. state specific legislation,
such as California’s recently enacted climate disclosure laws, which will require in-scope companies to report on
greenhouse gas emissions, climate-related financial risks, and the use of carbon offsets and emissions reduction claims
relating to their cooperate operations or products. The future of the California climate disclosure law is uncertain, and
two of three are subject to ongoing litigation. The CSRD increases the depth of required disclosures. The specific
information required to be reported on is set out in the European Sustainability Reporting Standards (
ESRS
).
The Dutch government is in the process of implementing the CSRD into Dutch legislation. In 2025, we published our
first CSRD report in alignment with the CSRD and the ESRS for the financial year 2024 and this year’s Annual Report
is the first time we have reported a more extensive set of prescribed ESG data points. Performance tracked by our ESG
metrics is also highly dependent on third-parties, such as our suppliers and CROs, that we do not control, which may
adversely affect our reputation.
In response to new ESG initiatives and regulations we may voluntarily elect, or be required, to adopt strategies, policies,
or procedures related to ESG matters. Such efforts could divert management’s attention from central operational matters
and cause us to expend significant capital and human resources. Moreover, increasingly, different stakeholder groups
have divergent views on ESG matters, which increases the risk that any action or lack thereof with respect to
sustainability or ESG matters will be perceived negatively by at least some stakeholders and adversely impact our
business and reputation. The current sociopolitical landscape has led to rapid and unpredictable shifts in public
sentiment, which has resulted in dynamics that increase the risk of reputational damage, boycotts and shifts in consumer
behavior that could adversely affect our business and reputation. Reports could also lead to the disclosure of information
that may have a negative impact on our operations and reputation which may lead to additional exposure. Failure to
accurately comply with any sustainability reporting obligations may result in enforcement actions, sanctions, fines and
penalties, reputational harm or private litigation.
We may become exposed to liability and substantial expenses in connection with environmental compliance or
remediation activities.
Our operations, including our research, development, testing and third-party manufacturing activities, are subject to
numerous environmental, health and safety laws and regulations and for which we may become liable.
If we or one of our CMOs or third-party distributors, manufacturers, licensees or co-marketers fail to comply with such
laws and regulations, such failure could result in substantial fines, penalties or other sanctions which could also bring
significant reputational loss to our business.
We face a risk of environmental liability inherent in our current and historical activities, including liability relating to
releases of our exposure to hazardous or biological materials. Furthermore, environmental, health and safety laws and
regulations are becoming more stringent. Both us and our CMOs may be required to incur substantial expenses in
connection with future environmental compliance or remediation activities, in which case, our production and
development efforts may be interrupted or delayed, and our financial condition and results of operations may be
materially adversely affected.
Risk Factors Related to argenx’s Financial Position
We expect to increase our expenses for the foreseeable future, and we may not be able to raise additional capital, be
profitable or sustain net profitability in the future in order to fund our operations.
We intend to continue to conduct research and development, preclinical testing, clinical trials and regulatory compliance
activities as well as the continued commercialization of VYVGART and other products candidates, for current and future
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indications, and we intend to continue our efforts to expand our sales, marketing and distribution infrastructure. We
anticipate that our operating expenses will increase as we execute our strategic objectives and as we experience delays or
encounter issues relating thereto, including failed clinical trials, ambiguous clinical trial results, safety issues or other
regulatory challenges.
To be profitable or sustain net profitability in the future, we must succeed in commercializing products that generate
significant product net sales. Our future results of operations and profitability may fluctuate from period to period, and
we will need to generate significant revenues to be profitable or sustain net profitability in the future. We may not be
able to generate these revenues, and we may never achieve profitability on a sustained basis in the future. If we do not
succeed in sustaining profitability, we would not be able to use deferred tax assets against taxable profits which would
result in a de-recognition of our deferred tax asset balance.
To finance our operations, we may need to raise additional capital through a combination of public or private equity or
debt financings or other sources, which may include collaborations with third parties. Our ability to raise additional
funds on acceptable terms or at all will depend on financial, economic and market conditions and other factors, over
which we may have no or limited control. If we are unable to raise additional capital if and when needed, or if the terms
are not acceptable, our business strategy could be impacted, and we may be forced to delay, reduce or terminate one or
more of our research or development programs or the commercialization of any of our products or product candidates,
including new indications, or be unable to expand our operations or otherwise capitalize on our business opportunities,
all of which may have a material adverse impact on our business, financial condition and results of operations.
Our assets, earnings and cash flows and the investment of our cash and cash equivalents may be subject to risks
which may cause losses and affect the liquidity of these investments.
We invest our cash in accordance with an established internal investment policy. Currently, substantially all of our
available cash and cash equivalents and current financial assets are invested in either current accounts, savings accounts,
term accounts or highly liquid money market funds. Any future investments may include term deposits, corporate bonds,
commercial paper, certificates of deposit, government securities and money market funds in accordance with our cash
investment policy. These investments may be subject to general credit, liquidity, market, inflation, foreign currency and
interest rate risks and we may realize losses in the fair value of these investments or a complete loss of these
investments. The aforementioned risks associated with our cash flows and investment portfolio may adversely affect our
results of operations, liquidity and financial condition.
Due to the international scope of our operations, our assets, earnings and cash flows are influenced by movements in
exchange rates of several currencies, particularly the euro and Japanese Yen. Our revenue from outside of the U.S. will
increase as our products, whether commercialized by us or our business partners or our collaborators gain marketing
approval in such jurisdictions. If the U.S. dollar weakens against a specific foreign currency, our revenues will increase,
having a positive impact on net income, but our overall expenses will increase, having a negative impact. Conversely, if
the U.S. dollar strengthens against a specific foreign currency, our revenues will decrease, having a negative impact on
net income, but our overall expenses will decrease, having a positive impact. Continued volatility in foreign exchange
rates is likely to impact our operating results and financial condition.
Risk Factors Related to argenx’s Business and Industry
Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory
standards and requirements, or insider trading violations, which could significantly harm our business.
We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional
failures to comply with governmental regulations, comply with healthcare fraud and abuse and anti-kickback laws and
regulations in the U.S. and other markets, failure to report financial information or data accurately or disclose
unauthorized activities to us, among others. In particular, sales, marketing and business arrangements in the healthcare
industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and
other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting,
marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee
misconduct could also involve the improper use of material information, including improper trading based upon,
information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our
reputation. We maintain a global compliance program and remain focused on its evolution and enhancement. Our
program includes efforts such as risk assessment and monitoring, fostering a culture encouraging employees and third
parties to raise good faith questions or concerns, and defined processes and systems for reviewing and remediating
allegations and identified potential concerns. It is not always possible, however, to identify and deter employee
misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown
or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming
from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not
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successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business
and results of operations, including the imposition of significant fines or other sanctions.
We may become exposed to costly and damaging liability claims.
We are exposed to potential product liability and professional indemnity risks that are inherent in the research,
development, manufacturing, marketing and use of pharmaceutical products and marketing of human therapeutic
products. The current and future use of products and product candidates by us and our collaborators in clinical trials and
the sale of any approved products may further expose us to liability claims. If any of our products or product candidates
were to cause adverse side effects during clinical trials or after approval of the product candidate, we may be exposed to
substantial liabilities. These claims might be made by patients who use the product, healthcare providers, pharmaceutical
companies, physicians, payors, caregivers, investors, employees, government agencies, or our collaborators or others
selling such products. Physicians and patients may not comply with any warnings that identify known potential adverse
effects and patients who should not use our product candidates. Any claims against us, regardless of their merit, could be
difficult and costly to defend and could materially adversely affect the market for our products and product candidates or
any prospects for commercialization of our products and product candidates. Any such claims, regardless of their merit,
could also adversely affect our reputation and the trust that physician and patients place in our products.
Product liability risk in the EU will increase in the future once plaintiff-friendly reforms, such as Directive (EU)
2024/2853 (
Product Liability Directive
), take effect. The Product Liability Directive introduces claimant-friendly
changes. This includes, for instance, the expansion of the definition of “damage” (e.g. by including medically recognized
psychological harm), creating rebuttable presumptions as to defect and causation to help claimants prove their case (e.g.
if the claimant faces excessive difficulties to prove this due to scientific complexity) and abolishing minimum or
maximum financial thresholds for claims. The Product Liability Directive, like its predecessor, provides that claims shall
expire if the injured person does not initiate proceedings within ten years after the defective product was placed on the
market. However, it extends this longstop period to 25 years if this is due to the latency of the underlying personal
injury. Member States must transpose the Product Liability Directive into national law by December 2026.
Regardless of the merits or eventual outcome, litigation or liability claims may result in:
•
decreased demand for our products due to negative public perception;
•
damage to our reputation;
•
withdrawal of clinical trial participants or difficulties in recruiting new clinical trial participants;
•
initiation of investigations by regulators;
•
costs to defend or settle the related litigation;
•
a diversion of management’s time and our resources;
•
substantial monetary awards to clinical trial participants or patients;
•
product recalls, withdrawals or labeling, marketing or promotional restrictions;
•
loss of revenues from product sales; and
•
the inability to successfully commercialize our product candidates, if approved.
Although we maintain product liability insurance, we may not be able to maintain insurance coverage at a reasonable
cost or to obtain adequate insurance coverage to satisfy any liability that may arise. Product liability claims could delay
or prevent completion of our clinical development programs. In addition, claims made by patients, healthcare
professionals or others might not be fully covered by product liability insurance and could result in investigations of the
safety of our products or product candidates or may result in recalls. If a successful product liability claim or series of
claims is brought against us for uninsured liabilities or in excess of insured liabilities, our assets may not be sufficient to
cover such claims and our business, financial condition and results of operations would be adversely affected.
In the ordinary course of business we may also face substantial, complex or extended litigation that could cause us to
incur significant costs and distract our management. This is especially relevant for biopharmaceutical companies. Such
litigation or proceedings could substantially increase our operating expenses and could adversely affect our business.
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We may engage in strategic transactions, including acquisitions, collaborations, licenses or investments in other
companies or technologies, and we may not realize the benefits of such transactions.
We may enter into strategic transactions, including acquisitions, collaborations, licenses or investments for or in other
companies or technologies that complement or augment our existing business and facilitate our access to new products,
research projects or geographical areas. However, we may not be able to identify appropriate targets or enter into such
transactions under satisfactory conditions. In addition, we may need additional funding to finance these transactions
including through issuances of public or private equity or convertible debt securities, which could be dilutive to our
shareholders and ADS holders.
Integrating any newly acquired companies, business, technologies or products could be expensive, time-consuming, and
may never be successful. Integration efforts often take a significant amount of time, place a significant strain on
managerial, operational and financial resources, result in loss of key personnel and could prove to be more difficult or
expensive than we predict. The diversion of our management’s attention and any delay or difficulties encountered in
connection with any future transactions we may consummate could result in the disruption of our ongoing business or
inconsistencies in standards and controls that could negatively affect our ability to maintain third-party relationships. We
cannot assure that we will achieve the expected synergies to justify any such transaction, which could have a material
adverse effect on our business, financial condition, results of operations and future growth prospects and our investors’
ability to realize on their investment.
Our business and operations could suffer in the event of system failures or unauthorized or inappropriate use of or
access to our systems.
We are increasingly dependent on our information technology systems and infrastructure for our business. We collect,
store and transmit sensitive information including intellectual property, proprietary business information, including
highly sensitive clinical trial data, and personal data in connection with business operations. The secure maintenance of
this information is critical to our operations and business strategy. Some of this information could be an attractive target
of criminal attack or unauthorized access and use by third parties with a wide range of motives and expertise, including
organized criminal groups, “hacktivists”, patient groups, disgruntled current or former employees and others. Cyber-
attacks are of ever-increasing levels of sophistication, and despite our security measures, our information technology and
infrastructure may be vulnerable to such attacks or may be breached, including due to employee error or malfeasance.
Although we are making significant efforts to maintain the security and integrity of our information systems and are
exploring various measures to manage the risk of a security breach or disruption, there can be no assurance that our
security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful
or damaging. Despite the implementation of security measures, our internal computer systems and those of our
contractors and consultants are vulnerable to damage or interruption from computer viruses, unauthorized or
inappropriate access or use, natural disasters, pandemics, terrorism, war (including the ongoing conflict in Ukraine and
the ongoing conflict in Israel and the Gaza Strip), and telecommunication and electrical failures. For example, the loss of
pre-clinical trial data or data from completed or ongoing clinical trials for our product candidates could result in delays in
our regulatory filings and development efforts, as well as delays in the commercialization of our products, and
significantly increase our costs. To the extent that any disruption, security breach or unauthorized or inappropriate use or
access to our systems were to result in a loss of or damage to our data, or inappropriate disclosure of confidential,
personal or proprietary information, we could incur notification obligations to affected individuals and government
agencies, liability, including potential lawsuits from patients, collaborators, employees, stockholders or other third
parties and liability under foreign, federal and state laws that protect the privacy and security of personal data, and the
development and potential commercialization of our product candidates could be delayed.
Not all of our contracts contain limitations of liability, and even where they do, there can be no assurance that limitations
of liability in our contracts are sufficient to protect us from liabilities, damages or claims related to our data privacy and
security obligations. We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to
mitigate liabilities arising out of our privacy and security practices.
We are highly dependent on public perception of our products.
We are highly dependent upon consumer perceptions of the safety and quality of our products. We could be adversely
affected if we, or any of our collaborators, are subject to negative publicity or if any of our products or any similar
products distributed by other companies prove to be, or are asserted to be, harmful to patients, or for example, be deemed
cruel to animals. In addition, if patients have negative perceptions of our products and our competitors are successful in
developing biosimilar or interchangeable products for our products and product candidates, patients may choose the
other biosimilar or interchangeable products sold by our competitors. Because of our dependence upon consumer
perception, any adverse publicity associated with illness or other adverse effects resulting from patients’ use or misuse of
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our products or any similar products distributed by other companies, or adverse results reported by us, our collaborators
or other companies relating to clinical studies may subject our products to class warnings or negatively impact our public
perception of our products and product candidates, which could have a material adverse impact on our business,
prospects, financial condition and results of operations.
Risk Factors Related to argenx’s Intellectual Property
We may be unable to adequately maintain, enforce or protect our intellectual property rights in products, product
candidates and platform technologies which could adversely affect our ability to maximize the value for patients in
our marketed products and product candidates.
Our commercial success depends in part on obtaining and maintaining patents and other forms of intellectual property
rights for our products, product candidates and platform technologies. Failure to obtain, maintain, enforce, protect, or
extend adequate patent and other intellectual property rights, which can be challenging and costly, could adversely affect
our ability to develop and market our products and product candidates and reduce any competitive advantage we may
have.
We cannot be certain that patents will be issued or granted with respect to applications that are currently pending and we
may not be the first to file patent applications related to our product candidates and products. The scope of patent
protection that the European Patent Office and the USPTO will grant with respect to products in our product pipeline is
uncertain and may vary. It is possible that the European Patent Office and USPTO will not allow broad claims that cover
molecules closely related to our products and product candidates as well as the specific molecule and competitors may
be free to market substantially similar molecules if granted approval, thereby reducing our market potential. We and our
current or future licensors, licensees or collaboration partners may not be able to prepare, file, prosecute and maintain all
necessary or desirable patent applications at a reasonable cost or in a timely manner. Our current and future licensors’,
licensees’ or collaboration partners’ ability to ensure the issuance, scope, validity, enforceability and commercial value
of licensed technology is uncertain and we may need to rely on them to obtain costly additional IP licenses. Additionally,
such parties may not fully comply with applicable patent rules or laws, which could result in loss of patent rights, or such
parties may disagree with us as to the strategy for prosecution, maintenance or enforcement of any such patent rights.
Filing, prosecuting, and defending patents on product candidates in all jurisdictions throughout the world would be
prohibitively expensive and the laws of certain jurisdictions may not protect our rights to the same extent as the laws of
the U.S., UK or EU. We may face difficulties in enforcing patent rights in the future, including in certain jurisdictions
where we have not yet filed patent applications.
Competitors may use our and our licensors’ or collaboration partners’ technologies in jurisdictions where we have not
obtained patent protection, or where broad research exemptions are available, to develop their own products and may
export otherwise infringing products to territories where we, our licensors or collaboration partners have patent
protection, but where enforcement is not as strong as that in the U.S., UK and the EU. In such cases, we would have little
effective recourse to prevent such products from competing with ours.
In addition, some countries have compulsory licensing laws under which a patent owner may be compelled to grant
licenses to third parties, and other countries limit the enforceability of patents against government agencies or
government contractors. In these countries, the patent owner may have limited remedies, which could materially
diminish the value of such patent.
Intellectual property litigation could lead to substantial resource diversion or issued patents could be found invalid,
not infringed, or unenforceable if challenged in the applicable patent office or court.
Our patents may remain open to invalidity challenges after allowance or grant, whereby third parties can challenge the
scope or validity of such granted patent. In the course of such proceedings, we may be compelled to limit the scope of
patent claims thus challenged or may lose the claims altogether.
We may elect to initiate adversarial proceedings in order to enforce or defend any intellectual property rights owned by
or licensed to us, or to determine or challenge the scope or validity of intellectual property rights of third parties to
protect our competitive position. We may need to divert substantial time and resources to the enforcement and protection
of our or our collaboration partners’ intellectual property rights. In addition, the outcomes are uncertain and any
remedies or damages awarded may not be meaningful. An adverse ruling of non-infringement, limiting claim scope, or
invalidating one or more of our issued patents could allow third parties to commercialize our products after the
expiration of our market exclusivity or use our platform technologies to compete directly with us, without payment to us.
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We may be subject to claims challenging the inventorship or ownership of our intellectual property or be required to
make additional payments to secure intellectual property from collaborators.
Many of our consultants and employees, including in the senior management team (consisting of our CEO and senior
personnel reporting directly to the CEO) (
Senior Management Team
), were previously employed at other competing or
potentially competing biotechnology or pharmaceutical companies and some have executed proprietary rights, non-
disclosure and non-competition agreements in connection with such previous employment. Although we take measures
to ensure third parties, consultants and employees do not use such proprietary information in their work for us, we may
be subject to claims that we or these consultants and employees have improperly used or disclosed confidential
information or intellectual property of their former employer.
Additionally, many of our collaborators do not commit to assigning all intellectual property arising out of our
collaborations to us and, instead, grant us options to acquire intellectual property or commit to making such intellectual
property available to us at a fair price. As such, we may be required to make additional payments to secure valuable
intellectual property rights under our existing collaborations or become subject to inventorship disputes.
In addition, although we take steps to ensure that our collaborators do not use our intellectual property rights other than
for the purposes of our collaboration, there may be instances where former or current collaborators or other third parties
nevertheless apply for or obtain patent protection for inventions to which we believe we have rights, in whole or in part.
In such cases, we may elect to assert our ownership of such intellectual property. There is no guarantee that we will be
successful in asserting such claims.
In addition, while it is our policy to require our employees and contractors who may be involved in the development of
intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in
ensuring effective assignment of intellectual property under such agreements. Our assignment agreements may not be
self-executing, or may be breached, and we may be forced to bring or defend against claims to assert ownership of such
intellectual property. There is no guarantee we will be successful in pursuing such claims, which could result in us
paying monetary damages or losing valuable personnel or intellectual property rights.
Third-party intellectual property rights could adversely affect our ability to commercialize our products and product
candidates.
Our competitive position may suffer if valid and enforceable third-party intellectual property rights cover our products,
product candidates, manufacturing processes, or those of our partners. In such cases, our freedom to develop or
commercialize products or product candidates may require obtaining a license, designing around third party intellectual
property rights with significant time and materials costs, or invalidating the third party rights.
If our products are found
to infringe a valid and enforceable patent claim, we and our partners could be prevented from continuing to develop or
commercialize the affected product without an appropriate license, which may be costly or unavailable on commercially
reasonable terms, if at all. Similarly, other companies may have filed patent applications or have patents directed toward
similar targets for certain of our products and we may not be aware of unpublished pending patent applications or patent
applications that are amended to cover our products or platform technologies.
Even if we or our partners can obtain the appropriate license, it may be non-exclusive, thereby providing our competitors
with opportunity to access the same licensed technology. If the breadth and scope of protection provided by our or our
partners’ patents, licensed patents or patent applications is threatened or limited, it could dissuade companies from future
collaborations with us to license, develop or commercialize products and product candidates which would have an
adverse effect on our competitive business position.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation,
some of our confidential information could be disclosed in any such proceedings.
We may not be successful in obtaining or maintaining necessary rights to our products and product candidates
through acquisitions and in-licenses.
We may be unable to acquire or in-license third-party intellectual property rights necessary or useful for development or
commercialization of our product, product candidates or technology. We sometimes collaborate with U.S. and non-U.S.
academic institutions and typically receive an option to negotiate a license to the institution’s proprietary interest in any
collaboration technology. However, we may be unable to successfully negotiate such license and the institution may
offer such intellectual property rights to third parties thereby blocking our ability to pursue the applicable program.
In addition, our competitor companies may be unwilling to license desirable or necessary intellectual property rights to
us, or we may be otherwise unable to license or acquire other third party intellectual property rights on commercially
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reasonable terms which could negatively impact current development or hinder our ability to pursue development of new
programs.
Under our existing licenses, failure to comply with our obligations thereunder could result in termination of such
licenses, thereby limiting our ability to develop and commercialize products covered by such licensed technology.
Moreover, despite our efforts to comply with our contractual obligations, our licensors could conclude we have
materially breached any such agreement and we could incur significant costs and disruption to our business defending
against any breach alleged by the licensor.
Moreover, several of our existing license agreements are sub-licenses from third parties. We have little control if our
licensors fail to comply with their obligations under their upstream license agreements, whereby the original third-party
licensor may have the right to terminate the original license and possibly our sub-license. In such cases, we may not be
able to procure a direct license covering such intellectual property possibly materially affecting our ability to develop
and commercialize certain products and product candidates.
If our brand protection strategies, including the filing, prosecution and enforcement of trademarks and trade names,
are not adequately executed, we may not be able to build name recognition for approved products in our markets of
interest in line with our strategic priorities.
Third parties may seek to oppose, attempt to cancel our trademark applications, or challenge, infringe or circumvent our
registered and unregistered trademarks, including through counterfeiting of our products. In the event that our
trademarks are successfully challenged, we may not be able to use these trademarks to continue to effectively market our
branded products and could be forced to rebrand them, which could result in loss of their brand recognition or require us
to devote resources to develop new brand profiles. Such efforts could also hinder our efforts to commit to and deliver on
strategic internal initiatives.
If we attempt to enforce our trademarks or assert trademark infringement claims, a court may determine that our
trademarks are invalid or unenforceable or that the party against whom we have asserted trademark infringement has
superior rights with respect to such marks. If we are unable to establish name recognition and adequately protect and
enforce our trademark portfolio, we may not be able to compete effectively in the market or build brand recognition for
new products globally.
We may not be able to obtain protection under the U.S. Drug Price Competition and Patent Term Restoration Act of
1984 (Hatch-Waxman Act) and similar non-U.S. legislation for extending the term of patents covering each of our
products and product candidates.
Depending upon the timing, duration and conditions of FDA marketing approval of our product candidates, one or more
of our U.S. patents may be eligible for limited patent term extension under the Hatch-Waxman Act and similar
legislation in the EU and the Asia Pacific region. However, the patent term extension under the Hatch Waxman Act
cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, and only one
patent applicable to an approved drug may be extended.
In the EU, the term of a patent for a medicinal product can be extended by a supplementary protection certificate (
SPC
),
but not beyond a maximum of five years (except for patents for products for pediatric use, for which the term can be
extended by a further six months). However, products containing a compound for which an SPC has already been
granted are not eligible for SPC protection. Therefore, we will not be able to extend the term of a patent relating to a
medical compound for which an SPC has already been granted, even if the patented product relates to a different medical
use of that compound.
If we are unable to obtain patent term extension, the term of any such extension is less than we request, or the statutes
governing patent term extension are amended to reduce the term of such extensions, our patent exclusivity for that
product will be shortened and our competitors may obtain approval to market competing products sooner than we expect.
Changes in patent laws or patent jurisprudence could diminish the value of patents in general thereby impairing our
ability to protect our products.
Changes in patent law across jurisdictions, or changes in any relevant government’s enforcement procedure may weaken
our ability to obtain new patents or to enforce rights in our owned and licensed patents. For example, the U.S. Supreme
Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in
certain circumstances or weakening the rights of patent owners in certain situations. Relatedly, the U.S. Congress is
considering multiple draft bills that, if passed, may have a significant impact on U.S. patent laws. Any such changes by
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the U.S. Congress or U.S. courts and the relevant law-making bodies in other countries may materially affect our patents
or patent applications and we cannot predict the effects of future changes in patent law.
We may be unable to protect the confidentiality of our trade secrets and their disclosure to competitors, harming our
market position.
In addition to patent protection, we rely on trade secret protection for our proprietary information, including, for
example, certain aspects of our llama immunization and antibody affinity maturation approaches. However, while we
take appropriate measures to prevent misappropriation of our trade secrets and restrict access to them internally, trade
secrets are difficult to protect. Despite requiring our licensors, collaborators, suppliers, consultants and advisors to
execute confidentiality agreements, we cannot fully protect against willful or inadvertent unauthorized disclosure of our
trade secrets by such counterparties to competitors, and we may not be able to secure adequate legal or equitable
remedies to prevent our competitors from using these trade secrets. Any such disclosure, whether willful or inadvertent,
could enable our competitors to duplicate or build upon our technology.
In addition, enforcing a claim that a third party unlawfully misappropriated trade secrets is expensive, time-consuming
and the outcome is unpredictable, and the enforceability of the underlying confidentiality agreements protecting these
trade secrets may vary across jurisdictions. Further, if any of our trade secrets were to be lawfully obtained or
independently developed by a competitor or other third party, they could use such technology to compete with us.
Risk Factors Related to argenx’s Organization and Operations
Our future growth and ability to compete depends on maintaining our culture, retaining our key personnel and
recruiting additional qualified personnel.
We believe that our corporate culture has been, and will continue to be a key contributor to our success. However, as we
continue to grow and evolve, our ability to foster our key values - innovation, co-creation, empowerment, excellence and
humility that we believe are important to support our growth - may be impacted. For example, investors, regulators,
customers, employees and other stakeholders continue to focus on ESG matters, including in workforce policies and
initiatives and we may not be able to meet the different expectations and demands of all our stakeholders in that respect,
which could result in adverse publicity, harm our reputation and negatively impact our ability to attract, retain and
motivate qualified employees and our future success. As we implement more complex organizational structures, and
increase our headcount to support the growth in our business, we may find it increasingly difficult to maintain the
beneficial aspects of our corporate culture, which could similarly negatively impact our ability to attract, retain and
motivate qualified employees and our future success.
As a global organization in a highly competitive and specialized industry, our success also depends upon the continued
contributions of our key management, scientific, medical and technical personnel, many of whom have been
instrumental for us and have substantial experience with our product and related technologies. These key management
individuals include the members of the Board of Directors and Senior Management Team. Difficulties in recruiting or
the loss of key managers, scientific, medical or technical personnel could delay our research and development activities.
In addition, it may be difficult to attract and retain highly qualified management, scientific and medical personnel,
particularly if we expand into fields that will require additional skills.
As a Dutch company listed on Euronext Brussels in addition to Nasdaq, our remuneration practices and policies may be
limited by local governance rules or shareholder guidance for EU companies. Such limitations may make it more
difficult to successfully compete for key talent in a number of markets with differing remuneration practices and policies
compared to our competitors. For example, the Dutch Corporate Governance Code 2022 (
DCGC
) places certain
limitations on the ability to grant equity incentives to Non-Executive Directors, while Belgian law requires Non-
Executive Directors to receive part of their remuneration in the forms of shares, but not stock options. The DCGC also
places limitations on amount of severance payment permitted in the event of dismissal.
Many other biotechnology and pharmaceutical companies and academic institutions that we compete against for
qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry
than we do. Additionally, an inflationary environment, combined with the tight labor market for the recruitment and
retention of skilled workers, could make it more costly for us to attract or retain employees. In order to meet the
compensation expectations of our prospective and current employees due to inflationary factors, we may be required to
increase our operating costs. Therefore, we might not be able to attract or retain these key persons on conditions that are
economically acceptable.
Global geo- and socio-political threats and macro-economic uncertainty and other unforeseen political crises could
materially and adversely affect our business and financial performance.
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Many geo- and socio-political threats and macro-economic uncertainties are outside of our control and could adversely
affect consumer confidence and disposable income levels, increase difficulty in forecasting our financial results and have
other impacts on our business and financial performance. Such geo- and socio-political threats could also result in
volatility in stock markets in general, causing our stock to have extreme price and volume fluctuations unrelated to our
business and financial performance. Such geo- and socio-political threats and uncertainties include:
•
general economic and market conditions, including instability resulting from inflationary pressures, increasing
interest rates and the ongoing Russia-Ukraine and Middle East conflicts;
•
geopolitical events, including natural disasters, public health issues (including pandemics), acts of war (such as the
Russia-Ukraine and Middle East conflicts), and terrorism;
•
economic and trade sanctions, import and export regulations, customs, outbound investment
•
restrictions, changes in trade agreements, trade barriers or other restrictions on foreign trade, and changes in trade
regulations and restrictions, including between the U.S. and other countries;
•
global or regional economic conditions that impact companies and customers with which we do business;
•
political or social unrest, economic instability, repression, or human rights issues;
•
disruptions in supply chains;
•
risks related to other government regulation or required compliance with local laws; and
•
consumer and commercial credit availability, unemployment, and consumer debt levels;
•
local licensing and reporting obligations.
Due to our international operations and the fact that we run clinical trials in a large number of jurisdictions, the eruption
of global conflicts may negatively impact our ability to conduct or complete clinical trials in the affected regions, which
could adversely affect our business and financial performance. For example, on June 12, 2024, the U.S. Department of
the Treasury’s Office of Foreign Assets Control issued General License 6D to replace General License 6C. General
License 6D authorizes “clinical trials and other medical research activities” that would otherwise be prohibited by U.S.
sanctions targeting Russia, and General License 6D does not have an expiration date. Additionally, the conflict between
Russia and Ukraine and the sanctions imposed upon Russia by the U.S., the UK, and the EU, among others could have a
material adverse impact on our business, financial conditions and operations. The sanctions and export controls
landscape is evolving and may change unexpectedly at any time.
We also perform development activities in a number of countries exposed to geopolitical risk and if conflicts in those
countries were to escalate further and impact neighboring countries, it could impact our development activities in those
countries.
Changes in U.S.-Mainland China relations, including tariffs, export controls, sanctions, and other regulations may
adversely impact our collaboration with Zai Lab in Mainland China, Hong Kong, Taiwan and Macau (together, Greater
China). The U.S. government has taken steps and continues to take steps with regard to U.S.-Mainland China relations
that will impact companies with connections to the U.S. or Mainland China, including by imposing tariffs affecting
certain products manufactured in Mainland China, imposing certain sanctions on individuals and entities in the Mainland
China, and issuing statements indicating enhanced review of companies with significant Mainland China-based
operations. The U.S. government may pass laws that could potentially severely restrict our ability to contract with certain
Chinese biotechnology companies without losing our ability to contract with or receive funding from the U.S.
government. Such restrictions could have an adverse impact on our operations.
Several countries are considering or have implemented tariffs, trade barriers or restrictions, as well as other measures
impacting cross-order commerce, which could negatively affect our business, financial conditions and results of
operations, including by negatively impacting our revenues from product sales or our cost of goods sold. The U.S.
federal government has implemented tariffs on certain foreign goods and may implement additional or revised tariffs in
the future. Such actions could give rise to an escalation of trade measures by the U.S. and impacted countries.
Developments with regard to the timing and manner in which tariffs will be implemented; the amount, scope, and nature
of tariffs; the countries subject to new or additional tariffs imposed by the U.S.; tariffs imposed by other countries on
goods imported from the U.S.; and other wide-ranging retaliatory measures are rapidly evolving and may change
unexpectedly at any time.
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Any new legislation, executive orders, tariffs, export controls, sanctions and/or other regulations that may be
implemented, any unfavorable government policies on international trade, including tariffs and export controls, the
renegotiation of existing trade agreements, any increased scrutiny on companies with significant Mainland China-based
operations, and any retaliatory actions taken by the U.S., EU, Chinese or other governments due to trade tensions could
have an adverse effect on our business, including the development and commercialization of products containing argenx-
licensed material. Further, general political uncertainty may have an adverse impact on our business, financial condition
and results of operations. For example, significant political events in the U.S. may cast uncertainty on global financial
and economic markets, especially following the recent U.S. presidential election.
We face risks related to natural disasters and public health issues, that could negatively affect our business and
financial condition.
Our business could be adversely impacted by the effects of catastrophic global events including natural disasters such as
earthquakes, fires, hurricanes, tornados, floods or significant power outages and public health crises, such as the
COVID-19 pandemic.
For example, the manufacturing of all of our products and product candidates requires using cells which are stored in a
cell bank. We have one master cell bank for each product manufactured in accordance with cGMPs. However, it is
possible that we could lose multiple cell banks and have our manufacturing significantly impacted by the need to replace
these cell banks, which could materially adversely affect our business, prospects, financial condition and results of
operations. Public health issues could also negatively affect our business and financial condition. We operate and
conduct our clinical trials globally. We cannot presently predict the scope and severity of any potential future business
shutdowns or disruptions as a result of public health issues. If we or any of the third parties with whom we engage,
including the suppliers, contract manufacturers, clinical trial sites, regulators and other third parties, were to experience
shutdowns, quarantines, or other business disruptions due to natural disasters or global public health issues, it may
impair our or our third-party partners’ ability to initiate clinical trials and recruit and retain patients, particularly if
quarantine or travel restrictions impede healthcare provider or patient movement, impact the usability of the data due to
treatment interruptions and require protocol amendments. In addition, regulatory authorities may restrict their operations
or be delayed in their operations during a pandemic, the outbreak of new variants or other public health issues, including
further to travel restrictions which could adversely affect our ability to obtain regulatory approval for and to
commercialize our products and product candidates and have a material adverse effect on our business and financial
results.
We are exposed globally to unanticipated changes in tax laws and regulations, adjustments to our tax provisions,
exposure to additional tax liabilities, or adjustments of our tax assets.
As a company active in research and development, we have benefited from certain research and development tax
incentives including tax credits and a payroll withholding tax exemption. We also expect to benefit from the Belgian
innovation income deduction.
The determination of our provision for income taxes and other tax liabilities requires judgment, including the adoption of
certain accounting policies and our determination of whether our deferred tax assets are, and will remain, fully available
in future periods. We cannot guarantee that our interpretation of applicable tax laws (including with respect to our
eligibility for, or our calculation of, tax incentives such as the Belgian RD tax credit, the Belgian payroll withholding
tax exemption for RD personnel, the Belgian innovation income deduction and similar tax incentives in other
jurisdictions in which we have material operations or sales), our transfer pricing policies or our organizational and
operational structure will not be questioned by the relevant tax authorities, or that the relevant tax laws and regulations,
or the interpretation thereof, including through tax rulings, will not be subject to change. Our effective tax rates could be
adversely affected, now or in the future, by changes in tax laws, treaties and regulations or the interpretation thereof by
the relevant tax authorities in countries where we have material operations. A successful challenge to tax positions in
Belgium or other country where we have material operations may lead to adjustments in the amounts recorded in our
financial statements and could have a significant impact on our effective tax rate and on our deferred tax assets. An
increase of the effective tax rates could have an adverse effect on our business, financial position, results of operations
and cash flows.
In 2021, the Organisation of Economic Co-operation and Development (
OECD
) published a proposal that included a
global minimum tax (
Pillar Two
). To date, many jurisdictions are in various stages of implementation of Pillar Two
rules.
Based on current information, management expects that the Company will be subject to the Pillar Two Directive and
domestic laws in 2025, as it is the year the Company has met all requirements under the Pillar Two legislation. The
Company does not expect the Pillar Two rule to have a material impact on the effective tax rate of the Group.
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In case of a change of control, we could be exposed to the risk of losing any unused tax credit and innovation income
deduction. Furthermore, if any legislator decides to eliminate, or change the conditions for claiming such tax incentives,
or reduce the scope or the rate of such incentives, any of which it could decide to do at any time, our results of operations
could be adversely affected including through the de-recognition of deferred tax assets.
We may encounter difficulties efficiently managing our growth and our increasing development, regulatory, and sales
and marketing capabilities, which could disrupt our operations.
We have grown, and expect to continue to grow, significantly in the number of employees and scope of operations over
recent years, particularly in the areas of drug research, drug development, regulatory affairs, and sales and marketing. To
manage our anticipated future growth, we must continue to implement and improve our managerial, operational and
financial systems, expand our facilities and continue to recruit and train additional qualified personnel. In particular, we
must efficiently leverage our own sales and marketing capabilities in order to launch or market our products candidates
effectively.
Due to our limited financial resources and the limited experience of our management team in managing a company with
such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train
additional qualified personnel. Our limited financial, manufacturing and management resources, could cause us to forgo
or delay the pursuit of opportunities with potential product candidates that later prove to have greater market potential,
fail to capitalize on viable commercial products or profitable market opportunities or relinquish rights to such product
candidates through collaborations, licensing or royalty arrangements in circumstances where it would have been more
advantageous for us to retain sole development and commercialization rights. Any inability to manage growth could
delay the execution of our strategic objectives or disrupt our operations, which in turn could materially harm our
business and prospects.
Risk Factors Related to the ADSs
Holders of our ADSs have fewer rights than our ordinary shareholders.
Except as described in this Annual Report or any deposit agreements, holders of ADSs are not treated as our
shareholders unless they withdraw the ordinary shares underlying their ADSs in accordance with the deposit agreement
and applicable laws and regulations. The depositary, or its nominee, is the holder of the ordinary shares underlying the
ADSs. ADSs are transferable on the books of the depositary. The depositary may refuse to deliver, transfer or register
transfers of ADSs. Temporary delays in the cancellation of ADSs and withdrawal of the underlying ordinary shares may
arise. In addition, ADS holders may not be able to cancel their ADSs and withdraw the underlying ordinary shares when
they owe money for fees, taxes and similar charges and when it is necessary to prohibit withdrawals in order to comply
with any laws or governmental regulations that apply to ADSs or to the withdrawal of ordinary shares or other deposited
securities.
Holders of ADSs may vote them in person or by proxy in accordance with applicable laws and regulations and our
articles of association (
Articles of Association
). We cannot guarantee that holders of ADSs will receive the voting
materials in time to ensure that they can instruct the depositary to vote the ordinary shares underlying their ADSs.
Holders of our ADSs may not be able to exercise their right to give voting instructions or to vote in person or by proxy
and they may not have any recourse against the depositary or us if their ordinary shares are not voted as they have
requested or if their shares cannot be voted.
The price of our ADSs may be volatile and may fluctuate due to factors beyond our control. An active public trading
market may not be sustained.
The stock markets in general, and biopharmaceutical companies in particular, have experienced extreme price and
volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.
The trading price of our ADSs depends on a number of factors, including those described elsewhere in this “Risk
Factors” section, many of which are beyond our control and may not be related to our operating performance, which may
limit or prevent investors from readily selling their ADSs or ordinary shares and may otherwise negatively affect the
liquidity of our ADSs and ordinary shares. We provide guidance regarding our cash and expenses, which are inherently
uncertain. Any guidance that we provide may not always be accurate or may vary. If we fail to meet our guidance, or if
we have to revise such guidance, the price of our ADSs or ordinary shares could decline. Sales of a substantial number
of ADSs or our ordinary shares in the public market, or the perception that these sales might occur, could depress the
market price of ADSs or our ordinary shares and could impair the market price of our securities or our ability to raise
capital through the sale of additional equity securities.
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In addition, an active public trading market for our ADSs may not be sustained. Further, fluctuations in exchange rates
may also impact the price of our ADSs and ordinary shares which may result in heavy trading by investors seeking to
exploit such differences, or impact the proceeds holders receive.
If securities or industry analysts cease coverage of us, or publish inaccurate or unfavorable research about our
business, the price of our ADSs or ordinary shares and our trading volume could decline.
The trading market for the ADSs and ordinary shares depends in part on the research and reports that securities or
industry analysts publish about us or our business. We do not have control over these analysts. If no or too few securities
or industry analysts cover us, the trading price of our ADSs and ordinary shares would likely be negatively affected. If
one or more of the analysts who cover us downgrade our ADSs or ordinary shares or publish inaccurate or unfavorable
research about our business, the price of our ADSs or ordinary shares would likely decline.
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our
ability to comply with applicable regulations could be impaired, and the trading price of our ADSs may be negatively
impacted.
We are required to comply with various corporate governance and financial requirements under the Sarbanes-Oxley Act
of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the
listing rules of the Nasdaq Global
Market (the
Nasdaq listing Rules
) and requirements, and other applicable securities rules and regulations. We are
required to furnish a report by management on, among other things, the effectiveness of our internal control over
financial reporting and an attestation report on internal control over financial reporting issued by our independent
registered public accounting firm. Undetected material weaknesses in our internal controls could lead to financial
statement restatements and require us to incur the expense of remediation. Moreover, any failure to maintain internal
control over financial reporting or any material weaknesses or significant deficiency thereover, could result in a loss of
investors’ in the accuracy, completeness and reliability of our financial statements, subject us to sanctions or
investigations, or negatively impact the trading price of our ADSs or ordinary shares.
Risk Factors Related to being a Foreign Private Issuer or a Dutch Company
The risks in this subsection that relate to our status as a foreign private issuer will change if we lose our status as a
foreign private issuer under U.S. law.
We are a Dutch European public company with limited liability. The rights of our shareholders may be different from
the rights of shareholders in companies governed by the laws of U.S. jurisdictions.
We are a Dutch European public company with limited liability (
Societas Europeae
). The rights of shareholders and the
responsibilities of members of our Board of Directors may be different from the rights and obligations of shareholders in
companies governed by the laws of U.S. jurisdictions.
As a result of these differences between Dutch corporate law and our Articles of Association, on the one hand, and the
U.S. federal and state laws, on the other hand, in certain instances, our shareholders and holders of our ADSs could
receive less protection than they would as shareholders or ADS holders of a listed U.S. company.
For example, provisions of our Articles of Association may make it more difficult for a third party to acquire control of
us or effect a change in our Board of Directors. We have adopted several provisions that may have the effect of making a
takeover of our Company more difficult or less attractive. These provisions could discourage potential takeover attempts
that other shareholders may consider to be in their best interest and could adversely affect the market price of our
securities.
Holders of our ordinary shares outside the Netherlands, and holders of ADSs may not be able to exercise pre-emptive
rights or preferential subscription rights, respectively.
In the event of an increase in our share capital, holders of our ordinary shares are generally entitled under Dutch law to
full pre-emptive rights, unless these rights are excluded either by a resolution of the shareholders at a General Meeting,
or by a resolution of the Board of Directors (if the Board of Directors has been designated by the shareholders at a
General Meeting for this purpose).
However, making pre-emptive rights available to holders of ordinary shares or ADSs representing ordinary shares also
requires compliance with applicable securities laws in the jurisdictions where holders of those securities are located,
which we may be unable or unwilling to do. In particular, holders of ordinary shares or ADSs located in the U.S. would
not be able to participate in a pre-emptive rights offering unless we registered the securities to which the rights relate
under the U.S. Securities Act of 1933, as amended (
Securities Act
) or an exemption from the registration requirements.
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In addition, ADS holders would not be able to participate in a pre-emptive rights offering unless we made arrangements
with the depositary to extend that offering to holders of ADSs, which we are not required to do.
Claims of U.S. civil liabilities may not be enforceable against us or the members of our Senior Management Team
and our Board of Directors.
A significant amount of our assets are located outside the U.S. The majority of the members of our
Senior Management
Team
and our directors are not U.S. residents and we do not have significant assets in the U.S. As a result, it may not be
possible, or more difficult, for investors to enforce against them or us in U.S. courts, including judgments predicated
upon the civil liability provisions of the U.S. federal securities laws. There are no treaties between the U.S. with either
the Netherlands or Belgium providing for the reciprocal recognition and enforcement of judgments, other than arbitration
awards, in civil and commercial matters. Consequently, a final judgment for payment given by a court in the U.S. based
on civil liability, whether or not predicated solely upon U.S. securities laws, would not automatically be recognized or
enforceable in the Netherlands or in Belgium unless the underlying claim was re-litigated before a Dutch or Belgian
court of competent jurisdiction. This will depend on the applicable Dutch or Belgian national rules. In addition, there is
doubt as to whether a Dutch or Belgian court would impose civil liability on us or the members of our management or of
our Board of Directors in an original action predicated solely upon the U.S. federal securities laws brought in a court of
competent jurisdiction against us, our management or directors.
As a foreign private issuer, we are exempt from various rules and regulations that a U.S. domestic public company
would be required to follow, including those requirements under U.S. securities laws and Nasdaq listing standards.
As a “foreign private issuer” defined in the SEC’s rules and regulations, we are not subject to all of the disclosure and
corporate governance requirements applicable to companies organized within the United States. For example, are exempt
from certain provisions of the U.S. Securities Exchange Act of 1934, as amended (
Exchange Act
), that are applicable to
U.S. domestic public companies. We are subject to Dutch laws and regulations with regard to such matters. While we
furnish quarterly unaudited financial information to the SEC on Form 6-K, the information we furnish to the SEC is less
extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers.
As a foreign private issuer listed on Nasdaq, we are subject to corporate governance listing standards. However, we are
permitted to rely on home country governance requirements and certain exemptions thereunder. Certain of our corporate
governance practices may differ significantly from the Nasdaq corporate governance listing standards. These practices
may afford less protection to shareholders than they would enjoy if we complied fully with corporate governance listing
standards.
As a Dutch public company with limited liability, we are not obligated to, and do not comply with, all the best practice
provisions of the DCGC, which may affect shareholders’ rights. We are required to disclose in our annual report, filed in
the Netherlands, whether we comply with the provisions of the DCGC. If we do not comply with the provisions of the
DCGC (for example, because of a conflicting Nasdaq Listing Rule or otherwise), we must list the reasons for any
deviation from the DCGC in our annual report filed in the Netherlands.
We may lose our foreign private issuer status which would then require us to comply with the Exchange Act’s
domestic reporting regime and cause us to incur significant legal, accounting and other expenses.
In order to maintain our current status as a foreign private issuer, either (a) a majority of our ordinary shares must be
either directly or indirectly owned of record by non-residents of the U.S. or (b)(i) a majority of our executive officers or
directors may not be U.S. citizens or residents, (ii) more than 50% of our assets cannot be located in the U.S. and (iii) our
business must be administered principally outside the U.S. As of February 19, 2025, we believe at least 50% of our
outstanding ordinary shares were held by U.S. residents (assuming that all our ordinary shares represented by ADSs
were held by residents of the U.S.).
The regulatory and compliance costs to us as a U.S. domestic issuer may be significantly higher than those we incur as a
foreign private issuer. We also expect that if we were required to comply with the rules and regulations applicable to
U.S. domestic issuers, it would make it more difficult and expensive for us to obtain director and officer liability
insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.
These rules and regulations could also make it more difficult for us to attract and retain qualified members of our Board
of Directors.
If we were to be classified as a passive foreign investment company for U.S. federal income tax purposes, this could
result in adverse U.S. tax consequences to certain U.S. holders.
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If the Company is classified as a passive foreign investment company (
PFIC
) for any taxable year, U.S. investors may be
subject to adverse U.S. federal income tax consequences described below under
“
Item 10.E Taxation — Certain Material
U.S. Federal Income Tax Considerations for U.S. Holders
” The Company will be classified as a PFIC for U.S. federal
income tax purposes for any taxable year in which, taking into account a pro rata portion of the income and assets of
25% or more owned subsidiaries, either (i) at least 75% of its gross income consists of “passive income” or (ii) at least
50% of the average quarterly value of its assets is attributable to assets that produce, or are held for the production of,
passive income.
Based on our historic and anticipated operations, the composition of our income and the projected composition and
estimated fair market values of our assets, we do not believe that we were a PFIC for our most recent taxable year and do
not expect to be classified as a PFIC for the current taxable year or for the foreseeable future. However, our status as a
PFIC is a factual determination made on an annual basis, and we cannot provide any assurances regarding our PFIC
status for the current or future taxable years.
ITEM 4. INFORMATION ON THE COMPANY
A. HISTORY AND DEVELOPMENT OF THE COMPANY
Our legal and commercial name is
argenx SE
. We were incorporated under the laws of the Netherlands on April 25,
2008, as a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid). From
incorporation until August 28, 2009, our research and development activities were initially performed in the Netherlands,
then Belgium, by argenx N.V. and its legal predecessors. Since August 28, 2009, all our research and development
activities have been performed by our wholly-owned subsidiary, argenx BV, under a license provided by argenx N.V.
Throughout this time, argenx BV assigned all resulting intellectual property to argenx N.V. On May 28, 2014, we
converted to a Dutch public company with limited liability (naamloze vennootschap). On April 26, 2017, we converted
to a Dutch European public company with limited liability (Societas Europaea or SE). On May 5, 2017, we transferred
the legal ownership of all intellectual property rights of argenx SE to argenx BV, effective retroactively as of January 1,
2017. As a result, since January 1, 2017, (i) argenx BV holds all legal and economic ownership of our intellectual
property rights, and (ii) the research and development agreement between
argenx SE
and argenx BV has been
terminated.
Our official seat is in
Amsterdam, the Netherlands
, and our registered office is at
Laarderhoogtweg 25, 1101 EB
Amsterdam, the Netherlands
. We are registered with the trade register of the Dutch Chamber of Commerce under
number
24435214
. Our European legal entity identifier number (LEI) is
7245009C5FZE6G9ODQ71
. Our telephone
number is
+31 (0) 10 70 38 441
. Our website address is
www.argenx.com
. This website is not incorporated by reference
in this Annual Report. The SEC maintains an Internet site that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the SEC at www.sec.gov. The registered agent for service
of process in the U.S. is CT Corporation System, with an address at 111 8th Avenue, New York, NY 10011.
For information on our capital expenditure for the years ended
December 31, 2024
,
2023
and
2022
,
please see
“
Note 4 — Property, Plant and Equipment
” and “
Note 5 — Intangible Assets
” in our consolidated financial statements
which are appended at the end of this Annual Report on Form 20-F for the period ended
December 31, 2024
, and which
are incorporated herein by reference. We anticipate our capital expenditure in
2025
to be financed from the cash flows
from operating activities and cash reserves. For more information on our capital expenditures and requirements, see
“
Item 5.B. — Liquidity and Capital Resources — Cash Flows — Operating and Capital Expenditure Requirements
” in
our Annual Report for the period ended
December 31, 2024
which is incorporated herein by reference.
No takeover bid has been instigated by third parties in respect of our equity during the current or previous fiscal years.
B. BUSINESS OVERVIEW
We are a commercial-stage, global, fully-integrated biopharma company developing a deep pipeline of differentiated
therapies for the treatment of severe autoimmune diseases. By combining our suite of antibody engineering technologies
with the disease biology expertise of our research collaborators, we aim to translate immunology breakthroughs into a
pipeline of novel antibody-based medicines through our discovery engine, the IIP. We developed and are
commercializing the first approved FcRn blocker in more than 30 countries and we are evaluating efgartigimod in
multiple serious autoimmune diseases. We are also advancing our second asset, empasiprubart, a C2 inhibitor, now in
Phase 3. Several earlier stage experimental medicines, including ARGX-119, a MuSK agonist, are now in its first patient
proof-of-concept studies.
For additional information regarding our Company’s principal markets and revenue breakdown, see “
Item 5.A. —
Operating Results
” in our Annual Report for the period ended
December 31, 2024
which is incorporated herein by
reference.
30
2024
In Brief
Operational Highlights
In
2024
, we established our ‘Vision 2030’ outlining our long-term commitment to transform the treatment of severe
autoimmune disease with VYVGART, empasiprubart and our expanding pipeline of antibody-based therapeutics. With
our eyes set on 2030, we are targeting the treatment of 50,000 patients globally, securing 10 labeled indications across all
approved medicines, and advancing five pipeline candidates into Phase 3 development.
In 2024, we made important progress to reach this goal. We grew our global commercial footprint in gMG to reach more
than 10,000 patients and we remain on track to expand into additional regions throughout 2025. We received FDA
approval for VYVGART HYTRULO for the treatment of CIDP and have been working hard to bring VYVGART
HYTRULO to CIDP patients, reaching approximately 1,000 patients by the end of 2024. This, together with our
continued growth in MG, translated in $2.2 billion in product net sales in 2024. We look forward to continued
commercial execution as we expand our patient reach through label enabling studies in seronegative gMG and ocular
MG patient populations and we continue to innovate on the patient experience with our pre-filled syringe (PFS) with
VYVGART SC, with an PDUFA Date of April 10, 2025.
We made significant progress in evaluating efgartigimod across additional autoimmune diseases. We announced the GO-
decisions for primary Sjögren’s disease (SjD) and three subsets of myositis (immune-mediated necrotizing myopathy
(IMNM), anti-synthetase syndrome (ASyS), dermatomyositis (DM)), for which we are currently running Phase 3 clinical
trials. We continue to evaluate efgartigimod in more than 10 additional indications, and this year, we added autoimmune
encephalitis to the line-up. We are excited to add another indication in 2025.
In 2024 we made significant progress with our second asset, empasiprubart (ARGX-117) targeting complement
component 2 (C2). empasiprubart has now shown proof-of-concept in multifocal motor neuropathy (MMN) and has
started its first Phase 3 in this indication. We additionally announced CIDP as the 4th indication for which we go straight
to a Phase 3 clinical trial, expected to start in 2025.
Beyond our first two assets, efgartigimod and empasiprubart, we worked to further advance our third clinical pipeline
asset, ARGX-119, targeting muscle-specific kinase (MuSK). ARGX-119 has started its first proof-of-concept clinical
trial in congenital myasthenic syndrome (CMS) and amyotrophic lateral sclerosis (ALS) this year and we have
announced a 3rd indication, spinal muscular atrophy (SMA). We believe ARGX-119 has potential as a novel treatment
modality in multiple serious indications.
Our immunology innovation program (IIP) is a key driver for our future sustainable growth. This is reflected in 4 new
investigational new drugs (INDs) that will start Phase 1 clinical trials in 2025 to continue to deliver immunology
innovations to the patients who need them.
Reach More Patients Globally with VYVGART
•
VYVGART is now approved in the U.S., Japan, the EU, the UK, Switzerland, Israel, Mainland China, Canada, South
Korea, United Arab Emirates, Australia and Kuwait (through Genpharm Services FZ-LLC (Genpharm)) for the
treatment of gMG. VYVGART is now also approved and launched in Japan for the treatment of ITP. VYVGART SC
is now approved in the U.S., the EU, the UK, Japan, China (through Zai Lab), Australia and Kuwait (through
Genpharm) for the treatment of gMG and in the U.S., Japan, and China for the treatment of CIDP. VYVGART is the
only gMG treatment available as both an intravenous (IV) and a simple SC injection, providing choice to patients in
how and where they are treated.
•
In
2024
, we generated product net sales of
$2.2 billion
•
Pricing and reimbursement discussions for VYVGART and VYVGART SC remain ongoing in multiple jurisdictions,
including in several countries in the EU, with new agreements in place in France, Luxembourg, Belgium, the
Netherlands, Poland, Slovakia and Austria.
•
We filed for approval of VYVGART for gMG in Saudi Arabia and are expecting a decision on approval in 2025.
•
We filed for approval of VYVGART SC for CIDP in the EU and are expecting a decision on approval in 2025.
•
We received approval of the PFS for gMG in Europe on February 13, 2025.
•
We filed for approval of the PFS for gMG and CIDP in the U.S. with a PDUFA Date of April 10, 2025. We also filed
for approval in Canada and Japan with expected decisions on approval in 2025.
31
Advance Extensive Pipeline
We continue to demonstrate breadth and depth within our immunology pipeline and have advanced multiple pipeline-in-
a-product candidates. With efgartigimod, we are furthering our leadership in neonatal Fc receptor (FcRn) and we are
continuing its development in more than 10 indications today. Beyond efgartigimod, we are advancing our other clinical
pipeline programs, including empasiprubart (C2 inhibitor) which has now shown proof-of-concept in MMN and initiated
its first Phase 3 clinical trial, and is in Phase 2 POC clinical trials in delayed graft function (DGF) and DM. We also
announced CIDP as the 4th indication for empasiprubart during our RD Day on July 16, 2024 and plan to start a
registrational study in CIDP evaluating empasiprubart head-to-head versus intravenous IgG (IVIg) in first half of 2025.
In addition, we have initiated Phase 1b/2a clinical trials of ARGX-119, a MuSK agonist, in CMS congenital myasthenic
syndromes and ALS. Four new pipeline candidates were nominated in 2024 from our immunology innovation program
(IIP), including: ARGX-213, ARGX-121 and ARGX-220 and ARGX-109. Phase 1 results expected for ARGX-109 in
second half of 2025 and for ARGX-213 and ARGX-121 in first half of 2026.
Pioneer the FcRn Pathway with efgartigimod
Neurology indications:
•
CIDP (ADHERE): following the positive topline results from the ADHERE clinical trial in CIDP, a supplemental
biologics license application (sBLA) for efgartigimod SC was approved for the treatment of CIDP and launched in
July 2024 in the U.S. We also received approval in Japan and China for the treatment of CIDP.
•
Myositis (ALKIVIA): In November 2024, we announced the GO decision to continue Phase 3 of the ALKIVIA
clinical trial.
◦
The decision to continue clinical development of efgartigimod SC in each of the three myositis
subtypes, including IMNM, ASyS and DM, is supported by the efficacy and safety results from the Phase 2
portion of the seamless Phase 2/3 ALKIVIA clinical trial. Overall, the clinical trial met its primary endpoint,
demonstrating a statistically significant treatment effect in mean total improvement score (TIS) at week 24, and
showed improvement across all six core set measures of the TIS in favor of efgartigimod SC compared to placebo.
The observed safety and tolerability profile was consistent to that demonstrated with other clinical trials.
◦
Topline results expected 2H 2026.
•
TED (UplighTED): registrational clinical trials in thyroid eye disease (TED) ongoing with efgartigimod PFS. Topline
results expected 2H 2026.
•
Seronegative gMG (ADAPT-SERON): registrational clinical trial in seronegative gMG patients ongoing with
efgartigimod IV. Topline results expected 2H 2025.
•
Ocular MG (ADAPT-OCULUS): registrational clinical trial in ocular MG patients ongoing with efgartigimod PFS.
Topline results expected 1H 2026.
Hematology/rheumatology indications:
•
ITP (ADVANCE-IV): positive clinical trial results formed the basis of approval in Japan for ITP, received on March
26, 2024.
•
ITP (ADVANCE-NXT): confirmatory clinical trial in ITP ongoing with efgartigimod IV in the U.S. Topline results
expected in 2H 2026.
•
Primary SjD (RHO): following the analysis of topline data from the Phase 2 POC clinical trial through our
partnership with IQVIA Ltd (IQVIA) in SjD we decided to continue the development of efgartigimod PFS to Phase 3
(UNITY), which was initiated at the end of 2024. Topline results expected in 2027.
•
Systemic Sclerosis (SSc): Phase 2 POC clinical trial ongoing. Topline results expected in 2H 2026.
Nephrology indications:
•
Lupus Nephritis: Phase 2 POC clinical trial ongoing through our partnership with Zai Lab. Topline results expected in
2H 2025.
|
32
|
||
•
Antibody-mediated rejection: shAMRock Phase 2 POC clinical trial in antibody-mediated rejection (AMR) has been
initiated.
In 2024 we made the decision to stop development in PC-POTS (ALPHA), Bullous Pemphigoid (BALLAD) and
membranous nephrology based on review of the Phase 2 data.
Broaden Immunology Pipeline with empasiprubart and ARGX-119
empasiprubart (C2 inhibitor):
•
MMN (ARDA): based on the positive Phase 2 POC data of empasiprubart in MMN we have advanced empasiprubart
into Phase 3 (EMPASSION). Topline results expected in 2H 2026.
◦
In January 2024, we reported positive clinical data from the first cohort of the Phase 2 POC ARDA
clinical trial establishing POC in MMN. empasiprubart demonstrated a 91% reduction in the need for IVIg rescue
compared to placebo [HR (95% CI) = 0.09 (0.2 : 0.44)].
◦
In July 2024, we reported positive clinical data from the second cohort of the Phase 2 POC ARDA
clinical trial confirming POC in MMN. empasiprubart demonstrated a 84% reduction in the need for IVIg rescue
compared to placebo [HR: (95% CI) = 0.16 (0.02 : 1.54)].
◦
Safety profile was consistent with Phase 1 data in both cohorts.
◦
We are also conducting a natural history study (IMMERSION) in MMN.
•
DGF (VARVARA) and DM (EMPACIFIC) Phase 2 POC clinical trials ongoing in DGF and DM. Topline results
expected 2H 2025 and 1H 2026, respectively.
•
CIDP (EMVIGORATE): Phase 3 clinical trial in CIDP expected to start in 1H 2025.
ARGX-119 (MuSK agonist):
•
Phase 1 dose-escalation clinical trial in healthy volunteers completed; data supports advancement in POC studies.
•
CMS: Phase 1b clinical trial started to assess early signal detection in patients with CMS. Topline results expected in
2H 2025.
•
ALS (reALiSe): Phase2a clinical trial started to assess early signal detection in patients with ALS. Topline results
expected 1H 2026.
Build out the Innovation Ecosystem
•
In January 2024, we announced the nomination of four new pipeline candidates, including: ARGX-213 targeting
FcRn, furthering argenx’s leadership in this new class of medicine; ARGX-121 targeting Immunoglobulin A (IgA)
and ARGX-220, which are first-in-class targets broadening argenx’s focus across the immune system; and
ARGX-109, targeting IL-6, which plays an important role in inflammation. Preclinical work is ongoing in each
candidate and the first healthy volunteer studies are expected to start in 2025.
Corporate Achievements
•
Dr. Brian Kotzin joined the Board of Directors in May 2024 as a non-executive director and chairperson of the
research and development committee
•
Mr. Peter Verhaeghe, who has served as a non-executive director since July 2014, was reappointed as a non-executive
director and chairperson of the Board of Directors for a term of 2 years
•
Dr. Pamela Klein, who has served as a non-executive director since April 2016, was reappointed as a non-executive
director for a term of 2 years
•
Expansion to 1,599 full-time employees (as of December 31, 2024) to support further growth of our business,
including fully staffed commercial teams in the U.S., Europe, Japan and Canada
33
2024
Financial Highlights
•
Product net sales
of
$2.2 billion
•
Research development
of
$1 billion
•
Transition to sustainable operating profitability in 2025 enables continued investment in innovation
.
2025
Outlook
The table above is subject to risks and uncertainties that may materially impact the achievement of our
2025
outlook. For
more information, please refer to “
Item 3.D. — Risk Factors
” of this Annual Report for a discussion of such risks and
uncertainties.
Our Medicines
VYVGART is a first-in-class antibody fragment targeting FcRn. VYVGART is the only gMG treatment available as
both an IV and a simple SC injection (VYVGART SC).
VYVGART is approved in more than 30 countries and VYVGART SC is now approved in the U.S., the EU, the UK,
Japan, Israel, China and in Australia for the treatment of gMG. VYVGART SC is now also approved in the U.S., China
and Japan (as VYVDURA) for the treatment of CIDP. VYVDURA is also approved for the treatment of ITP in Japan.
Our Pipeline
|
34
|
||
•
efgartigimod is an IgG1 antibody Fc fragment that has been engineered for increased affinity to FcRn compared
to endogenous IgG. efgartigimod selectively reduces IgG by blocking FcRn-mediated IgG recycling without
impacting antibody production, or affecting other parts of the immune system. It is approved in three
indications, including gMG, CIDP and ITP, and is being evaluated in more than 10 additional serious
autoimmune indications.
•
empasiprubart (C2 inhibitor):
empasiprubart is a novel complement inhibitor targeting C2, blocking the
function of both the classical and lectin pathways while leaving the alternative pathway intact. We believe
empasiprubart has the potential to be a pipeline-in-a-product candidate and is being evaluated in 4 serious
autoimmune diseases, of which 2 indications are in Phase 3.
•
ARGX-119 (MusK agonist):
ARGX-119 is an agonist SIMPLE ANTIBODY™ to the MuSK receptor with
potential in multiple neuromuscular indications. It is currently in proof-of-concept studies for CMS (Phase 1b
clinical trial), ALS (Phase 2a) and will start in SMA in 2025.
•
Preclinical Candidates:
Four INDs to start Phase 1 studies in 2025:
◦
ARGX-213, targets FcRn, furthering argenx’s leadership in this new class of medicine
◦
ARGX-121 targeting IgA and ARGX-220 both broadening argenx’s focus across the immune system
◦
ARGX-109, targets IL-6, which plays an important role in inflammation
•
In addition to our wholly-owned pipeline, we have candidates that emerged from our IIP that we out-licensed to
a partner for further development and for which we have milestone, royalty or profit-share agreements. These
candidates include, amongst others: cusatuzumab (
anti-CD70 antibody – OncoVerity
), ARGX-112 (
LP-0145 –
anti-IL-22R antibody – LEO Pharma
), ARGX-114 (
AGMB-101 – agonistic anti-MET antibody – Agomab
) and
ARGX-115 (
ABBV-151 – anti-GARP antibody – AbbVie
).
Immunology Innovation Program (IIP)
Our IIP is central to our core business strategy of co-creation and innovation. The IIP also serves as our discovery engine
to identify novel targets and together, in collaboration with our scientific and academic partners, to build potential new
pipeline candidates. Every current pipeline candidate from both our wholly-owned and partnered pipeline emerged from
an IIP collaboration. The IIP enables us to build our broad pipeline of products and product candidates and advance our
long-term strategy to be a sustainable, integrated immunology company.
Examples of our IIP programs include:
•
efgartigimod emerged from a collaboration with Professor Sally Ward at the University of Texas Southwestern
Medical Center and later became one of the blueprints for our IIP collaborations. Professor Ward’s research
identified the crucial role that FcRn plays in maintaining and distributing IgGs throughout the body.
efgartigimod is a human IgG1 Fc fragment that is equipped with ABDEG™ mutations, which we in-licensed
from the University of Texas Southwestern Medical Center. These proprietary mutations modified efgartigimod
to increase its affinity for FcRn while retaining the pH-dependent binding that is characteristic of FcRn
interactions with its natural ligand, endogenous IgG.
•
empasiprubart was built in collaboration with Broteio Pharma B.V. (
Broteio
). Broteio was launched in 2017
with support from Professor Erik Hack and the University of Utrecht, to conduct research demonstrating
preclinical POC of the mechanism of action of empasiprubart. Professor Hack is a renowned researcher in the
role of inflammation in disease, specifically in the complement system, and has contributed research and
expertise to the approval of two complement inhibitors. His understanding of the mild phenotype associated
with a natural C2 deficiency and C2’s unique positioning at the junction of the classical and lectin pathways led
to our interest in engineering empasiprubart with our proprietary NHANCE™ mutations and LALA mutations.
•
ARGX-119 was built in collaboration with the Leiden University Medical Center (
LUMC
) and New York
University (
NYU
) with support from teams led by Professor Verschuuren and Professor Steve Burden,
respectively. Both groups have world-class expertise in unraveling the biological mechanism of neuromuscular
disease and translating these insights from the lab to the patient.
We bring to the collaboration our unique suite of antibody discovery and antibody engineering technologies and
experience in clinical development to complement our partners’ expertise in disease and target biology. Our suite of
technologies include amongst others our SIMPLE ANTIBODY™ platform technology and NHANCE™, ABDEG™,
|
35
|
||
POTELLIGENT
®
, and DHS mutations that focus on engineering the Fc region of antibodies in order to augment their
intrinsic therapeutic properties. For more information, please see
“Item 4.B — Business overview — Antibody
Engineering and Other Technology Capabilities
”.
Our Suite of Technologies
•
Through our IIP, we collaborate with scientific and academic partners to identify immunology breakthroughs and
build potential pipeline candidates. This is done through co-creation. We bring to the collaboration our unique suite of
antibody engineering technologies and experience in clinical development to complement our partners’ expertise in
disease and target biology.
•
SIMPLE ANTIBODY™
platform technology: Our proprietary SIMPLE ANTIBODY™ platform technology, based
on the powerful llama immune system, allows us to exploit novel and complex disease biology targets. The platform
sources antibody variable regions (
V-regions
) from the immune system of outbred llamas, each of which has a
different genetic background. The llama produces highly diverse panels of antibodies with a high human homology,
or similarity, in their V-regions when immunized with targets of human disease. Our SIMPLE ANTIBODY™
platform technology allows us to access and explore a broad target universe while potentially minimizing the long
timelines associated with generating antibody candidates using traditional methods.
•
NHANCE™, ABDEG™, POTELLIGENT
®
, and
DHS mutations
focus on engineering the Fc region of antibodies in
order to augment their intrinsic therapeutic properties. In addition, we obtained a non-exclusive research license and
option from Chugai Pharmaceutical Co., Ltd. (
Chugai
) for the
SMART-Ig
®
(‘Recycling Antibody’ and part of
‘Sweeping Antibody’) and
ACT-Ig
®
(Antibody half-life extending) technologies. These technologies are designed to
enable us to expand the therapeutic index of our product candidates, which is the ratio between toxic and therapeutic
dose, by potentially modifying their half-life, tissue penetration, rate of disease target clearance and potency. In 2020,
we also entered into a non-exclusive research agreement with the Clayton Foundation under which we may access the
Clayton Foundation’s proprietary DHS mutations to extend the serum half-life of therapeutic antibodies.
Our Products and Product Candidates
The following table summarizes key information on our portfolio of lead products and product candidates as of the date
of this Annual Report.
36
Our
Programs
VYVGART
Approvals and Regulatory Plan
Our two approved medicines, VYVGART and VYVGART SC, are FcRn blockers. VYVGART is approved in more
than 30 countries for the treatment of adults with gMG who are anti-acetylcholine receptor (AChR) antibody positive
(AChR-AB+) and for the treatment of adults with gMG who do not have sufficient response to steroids or non-steroidal
immunosuppressive therapies (ISTs), including seronegative patients, in Japan. VYVGART is now also approved for the
treatment of adult patients with ITP in Japan. Our second product, VYVGART SC, is a subcutaneous combination of
efgartigimod alfa and recombinant human hyaluronidase PH20 (rHuPH20), Halozyme Therapeutics, Inc.’s (Halozyme)
ENHANZE
®
SC drug delivery technology. It has been approved for the treatment of adults with gMG who are AChR-
AB+ as VYVGART HYTRULO in the U.S. and China, as VYVGART in the EU, and as VYVGART SC in the UK,
Israel. It has also been approved as VYVDURA in Japan for the treatment of adults with gMG who do not have
sufficient response to steroids or non-steroidal ISTs, including seronegative patients. VYVGART SC has now also been
approved for the treatment of adults with CIDP in the U.S. and China as VYVGART HYTRULO and in Japan as
VYVDURA.
More approvals and launches of both VYVGART and VYVGART SC in multiple jurisdictions and countries are
planned following pricing and reimbursement negotiations. The following table summarizes the status of regulatory
approvals and commercialization efforts for VYVGART IV, VYVGART SC and PFS as March 17, 2025:
|
Product
|
Product name
|
Indication
|
Geography
|
Submission
|
Approval
|
Launched
|
||||||
|
VYVGART
IV
|
VYVGART
|
gMG
|
US
|
December 17, 2021
|
December 17, 2021
|
|||||||
|
VYVGART
|
gMG
|
Europe
|
August 10, 2022
|
Germany was the
first European
country to launch on
September 1, 2022
|
||||||||
|
VYVGART
|
gMG
|
Canada
|
September 19, 2023
|
November 6, 2023
|
||||||||
|
VYVGART
|
gMG
|
Israel
|
April 24, 2023
|
Not marketed
|
||||||||
|
VYVGART
|
gMG
|
Japan
|
January 20, 2022
|
May 9, 2022
|
||||||||
|
VYVGART
|
gMG
|
The UK
|
March 14, 2023
|
Not marketed
|
||||||||
|
VYVGART
|
gMG
|
China
|
June 30, 2023
|
September 5, 2023
|
||||||||
|
VYVGART
|
gMG
|
Australia
|
February 24, 2025
|
Not available
|
||||||||
|
VYVGART
|
gMG
|
Kuwait
|
February 19, 2025
|
Not available
|
||||||||
|
VYVGART
|
gMG
|
Saudi Arabia
|
Submitted
|
Not available
|
Not available
|
|||||||
|
VYVGART
|
gMG
|
Korea (the Republic
of)
|
January 20, 2025
|
Not available
|
||||||||
|
VYVGART
|
gMG
|
United Arab
Emirates
|
October 30, 2024
|
Not marketed
|
||||||||
|
VYVGART
|
gMG
|
Switzerland
|
October 3, 2024
|
Not marketed
|
||||||||
|
VYVGART
|
ITP
|
Japan
|
March 26, 2024
|
On the market since
launch of IV
product
|
||||||||
|
Not available
|
gMG
|
Brazil
|
Planned
submission 2H
2025
|
Not available
|
Not available
|
|||||||
|
Not available
|
gMG
|
Singapore
|
Not available
|
Not available
|
Not available
|
|
37
|
||
|
Product
|
Product name
|
Indication
|
Geography
|
Submission
|
Approval
|
Launched
|
||||||
|
VYVGART
SC
|
VYVGART
HYTRULO
|
gMG
|
US
|
June 20, 2023
|
June 20, 2023
|
|||||||
|
VYVGART
HYTRULO
|
CIDP
|
US
|
June 21, 2024
|
On the market since
launch of SC
product
|
||||||||
|
VYVGART
|
gMG
|
Australia
|
February 24, 2025
|
Not available
|
||||||||
|
VYVGART
|
gMG
|
Europe
|
November 15, 2023
|
Germany was the
first European
country to launch on
December 15, 2023
|
||||||||
|
VYVGART
|
CIDP
|
Europe
|
Submitted
|
Expected in 2H 2025
|
Not available
|
|||||||
|
Not available
|
gMG
|
Switzerland
|
February 10, 2025
|
Not available
|
||||||||
|
VYVGART
|
gMG
|
The UK
|
February 6, 2024
|
Not marketed
|
||||||||
|
VYVGART
SC
|
gMG
|
Israel
|
September 23, 2024
|
Not marketed
|
||||||||
|
VYVGART
HYTRULO
|
gMG
|
China
|
July 9, 2024
|
December 3, 2024
|
||||||||
|
VYVGART
HYTRULO
|
CIDP
|
China
|
November 5, 2024
|
On the market since
launch of SC
product
|
||||||||
|
VYVDURA
|
gMG
|
Japan
|
January 18, 2024
|
April 17, 2024
|
||||||||
|
VYVDURA
|
CIDP
|
Japan
|
December 27, 2024
|
On the market since
launch of SC
product
|
||||||||
|
PFS
|
VYVDURA
|
gMG
|
Japan
|
Submitted
|
Expected in 2H 2025
|
Not available
|
||||||
|
VYVDURA
|
CIDP
|
Japan
|
Submitted
|
Expected in 2H 2025
|
Not available
|
|||||||
|
Not available
|
gMG
|
U.S.
|
Submitted
|
Expected in 1H 2025
|
Not available
|
|||||||
|
Not available
|
CIDP
|
U.S.
|
Submitted
|
Expected in 1H 2025
|
Not available
|
|||||||
|
VYVGART
|
gMG
|
Europe
|
February 13, 2025
|
February 13, 2025
|
||||||||
|
VYVGART
|
CIDP
|
Europe
|
Submitted
|
Expected in 1H 2025
|
Not available
|
|||||||
|
Not available
|
gMG
|
Canada
|
Submitted
|
Expected in 2H 2025
|
Not available
|
|||||||
|
Not available
|
CIDP
|
Canada
|
Submitted
|
Expected in 2H 2025
|
Not available
|
|||||||
|
Not available
|
gMG
|
The UK
|
Submitted
|
Not available
|
Not available
|
Commercialization
We have established our own sales force in the U.S., Japan, Europe and Canada for VYVGART for the treatment of
gMG and CIDP (where approved). We plan to expand our own sales and marketing capabilities and promote our
products and product candidates in other regions if we decide there is a business case to do so after regulatory approval
has been obtained.
Development and commercialization may also be done through collaborations with third parties. In January 2021, we
entered into an exclusive out-license agreement with Zai Lab (
Zai Lab Agreement
), a commercial-stage
biopharmaceutical company, for the development and commercialization of efgartigimod in Greater China, (which
includes Mainland China, Hong Kong, Taiwan and Macau,
Greater China
). Zai Lab announced approval of VYVGART
in Mainland China in June 2023 for the treatment of adult gMG patients and in 2024 Zai Lab also announced the
approval of VYVGART SC for gMG and CIDP. Under the Zai Lab Agreement, we received and continue to be eligible
for certain sales-based milestone payments and royalties based on annual product net sales of efgartigimod in Greater
China.
In October 2021, we announced an exclusive distribution agreement with Medison to commercialize efgartigimod for
gMG in Israel (
Medison Agreement
). Medison filed for and obtained approval for VYVGART in April 2023 and for
VYVGART SC in September 2024. On June 6, 2022 we announced an exclusive multi-regional agreement with
Medison to commercialize efgartigimod in 14 countries, including Poland, Hungary, Slovenia, Czech Republic,
|
38
|
||
Romania, Bulgaria, Lithuania, Croatia, Slovakia, Estonia, Latvia, Greece, and Cyprus, for the treatment of adult patients
with gMG (
Medison Multi-Regional Agreement
).
In January 2022, we entered into a partnership agreement with Genpharm, under which Genpharm shall purchase
VYVGART from us for the resale in the Gulf Cooperation Council (comprising Saudi Arabia, Kuwait, the United Arab
Emirates, Qatar, Bahrain and Oman) on an exclusive basis for Genpharm’s own account and own name (
Genpharm
Agreement
).
In 2023, we entered into the Handok Agreement for the distribution of VYVGART in South Korea and in 2024 we
received approval for VYVGART in South Korea.
We intend to sign additional distribution partnerships for other territories.
In the U.S., argenx advertises certain products via digital and traditional media channels, including the internet and
television.
For a discussion of total revenues by geographic market, please see “
Note 17 — Segment Reporting
” in our consolidated
financial statements
which are appended to our Annual Report for the period ended
December 31, 2024
, and which are
incorporated herein by reference
.
Pre-Approval Access Program
We are committed to improving the lives of people suffering from rare diseases. We are driven to discover new
treatment approaches fueled by the resilience of patients to urgently deliver them. We aim to do this in partnership; we
listen to patients, supporters and advocacy communities, and we hear their stories. Their insights guide us as we develop
our investigational therapies and motivate us to advance the understanding of rare diseases.
We have a Pre-Approval Access program (PAA) for patients with gMG which opened on February 21, 2021 for patients
who are unable to participate in an ongoing clinical trial. In 2024, we approved access to this PAA for over 403 gMG
patients in 14 countries. The PAA program remains open in countries where VYVGART is not yet launched or
reimbursed.
efgartigimod (formerly ARGX-113) Development
Mechanism of Action
As shown in
Figure 1
, efgartigimod is a human IgG1 Fc fragment equipped with our ABDEG™ mutations that is
designed to target the FcRn and reduce IgG. FcRn is foundational to the immune system and functions to recycle IgG,
extending its serum half-life over other IgGs that are not recycled by FcRn. IgGs that bind to FcRn are rescued from
lysosomal degradation. By binding to FcRn, efgartigimod can reduce IgG recycling and increase IgG degradation.
Compared to alternative immunosuppressive approaches, such as B-lymphocyte (B-cell) depleting agents, efgartigimod
acts in a highly selective manner. For efgartigimod, we now have an estimated 8,000 patients years of safety follow-up
between clinical trials and real world experience. efgartigimod has been observed to significantly reduce concentrations
of all IgG subtypes without decreasing levels of other IgGs or human serum albumin, which is also recycled by FcRn,
discussed in more detail in
“Item 4.B. — Business Overview — Formulations
” below.
|
39
|
||
Figure 1: efgartigimod’s mechanism of action blocks the recycling of IgG antibodies and removes them from circulation
Based on its mechanism of action in targeting FcRn to selectively reducing IgGs, efgartigimod has the potential to
address a multitude of severe autoimmune diseases where pathogenic IgGs are believed to be mediators of disease.
As of the end of 2024, we are evaluating efgartigimod in more than 10 serious autoimmune indications and plan to
continue to expand into new indications.
Indication Selection Strategy
We utilize the following strategy to select indications for efgartigimod:
•
We first start with a strong, unifying biological rationale. The indications in our pipeline are unified in that there
exists a wide range of supportive evidence that demonstrates that each is IgG-mediated. This ranges from published
literature, clinical trials with currently used therapies such as IVIg, PLEX, or rituximab, and other experiments, such
as passive transfer models.
•
We also look at indications where a significant clinical or commercial opportunity exists. These are disease areas
where there is a significant unmet need for innovation as patients are often not well-managed by current therapies and
their respective side effects.
•
Furthermore, for each indication, there is a defined path forward with established precedent for how to run POC and
registrational clinical trials with generally accepted clinical and regulatory endpoints.
Formulations
Overview
We are developing two formulations of efgartigimod to address the needs of patients, physicians, and payers across
indications and geographies, including efgartigimod IV (VYVGART) and efgartigimod SC (VYVGART SC).
Scientific Publications
We refer to our key scientific publications from our Phase 3 studies with either the IV or SC formulation in gMG, ITP
and CIDP.
•
Publication in The Lancet Neurology of Phase 3 ADAPT study data in generalized myasthenia gravis:
https://
www.thelancet.com/journals/laneur/article/PIIS1474-4422(21)00159-9/abstract
•
Publication in The Lancet of Phase 3 ADVANCE-IV study data in primary immune thrombocytopenia:
https://
www.thelancet.com/journals/lancet/article/PIIS0140-6736(23)01460-5/abstract
•
Publication in The Lancet Neurology of Phase 3 ADHERE study data in chronic inflammatory demyelinating
polyneuropathy:
https://www.thelancet.com/journals/laneur/article/PIIS1474-4422(24)00309-0/abstract
|
40
|
||
efgartigimod Indications
Clinical trial overview
|
Clinical
Trial
|
Stage
|
Indication
|
Patients
|
Primary Endpoint
|
Status
|
|||||
|
ADAPT
|
Registrational
|
gMG
|
The proportion of responders based on the
Myasthenia Gravis Activities of Daily
Living (MG-ADL) score
|
Marketed
|
||||||
|
ADAPT-SC
|
Registrational
|
gMG
|
The proportion of responders based on the
Myasthenia Gravis Activities of Daily
Living (MG-ADL) score
|
Marketed
|
||||||
|
ADAPT-
SERON
|
Registrational
|
seronegative
gMG
|
110
|
MG-ADL total score change from baseline
to day 29 (w4)
|
Ongoing clinical
trial results expected
2H 2025
|
|||||
|
ADAPT-
OCULUS
|
Registrational
|
ocular MG
|
92-124
|
Change in MGII PRO ocular score from
baseline to day 29 (w4)
|
Ongoing clinical
trial results expected
1H 2026
|
|||||
|
ADHERE
|
Registrational
|
CIDP
|
322
|
The hazard ratio for the time to first adjusted
INCAT deterioration
|
Marketed
|
|||||
|
ADVANCE-
IV
|
Registrational
|
ITP
|
The proportion of patients that achieved
sustained platelet response
|
Marketed
|
||||||
|
ADVANCE-
NXT
|
Registrational
|
ITP
|
63
|
Extent of disease control (cumulative
number of weeks over the planned 24-week
treatment period with platelet counts of ≥
50×109/L
|
Ongoing clinical
trial results expected
in 2H 2026
|
|||||
|
BALLAD
|
Registrational
|
BP
|
98
|
The proportion of participants in complete
remission while off oral corticosteroids for
at least eight weeks at week 36
|
Clinical trial
discontinued in
2024
|
|||||
|
ALKIVIA
|
Registrational
|
Myositis
|
Target 240
|
The total improvement score (TIS) at the
end of treatment period
|
Ongoing clinical
trial results expected
in 2H 2026
|
|||||
|
RHO
|
PoC
|
Primary SjD
|
Target 30
|
The proportion of responders to the
Composite of Relevant endpoints for SjD
(CRESS; response on ≥ three out of five
items) at week 24
|
GO decision made
in 2024 advanced in
Phase 3
|
|||||
|
UNITY
|
Registrational
|
Primary SjD
|
Target 580
|
The change from baseline on the
ClinESSDAI score (w48)
|
Ongoing clinical
trial results expected
in 2027
|
|||||
|
ALPHA
|
PoC
|
POTS post-
COVID19
|
53
|
The co-primary endpoints are 1)
COMPASS-31 and 2) the Malmö POTS
Symptom score at the end of the 24-week
treatment period
|
Clinical trial
discontinued in
2024
|
|||||
|
In
partnership
with Zai Lab
|
PoC
|
LN
|
Target 60
|
The change in urine protein creatinine ratio
from baseline to end of the treatment period
|
Ongoing clinical
trial results expected
in 2H 2025
|
|||||
|
In
partnership
with Zai Lab
|
PoC
|
MN
|
Target 70
|
The change in urine protein creatinine ratio
from baseline to end of the treatment period
in the anti-PLA2R Ab seropositive
population
|
Clinical trial
discontinued in
2024
|
|||||
|
uplighTED
|
Registrational
|
TED
|
Target 108/
trial
|
Percentage of participants who were
proptosis responders at week 24
|
Ongoing clinical
trial results expected
in 2H 2026
|
|
41
|
||
|
Clinical
Trial
|
Stage
|
Indication
|
Patients
|
Primary Endpoint
|
Status
|
|||||
|
shAMRock
|
PoC
|
AMR
|
Target 30
|
Safety and tolerability. Efficacy measures
such as estimated glomerular filtration rate,
histology and urine protein creatinine ratio
are captured in the secondary endpoints
|
Clinical trial has
been initiated in
2024
|
|||||
|
ADAPT-
JUNIOR IV
|
Phase 2/3
|
gMG
|
Target over
12
|
To confirm an age-adjusted optimum dose
of efgartigimod IV and provide (model-
predicted) evidence for a treatment response
|
Ongoing clinical
trial
|
|||||
|
ADAPT-
JUNIOR SC
|
Phase 2/3
|
gMG
|
Target over
12
|
To confirm an appropriate dose of
efgartigimod PH20 SC in pediatric
participants with gMG
|
Ongoing clinical
trial
|
|||||
|
Other clinical
trials
|
PoC
|
AAV
|
Clinical trial
discontinued in
2024
|
|||||||
|
PoC
|
SSc
|
To be con
firmed
|
To be confirmed
|
Ongoing clinical
trial results expected
in 2H 2026
|
gMG
Overview
gMG is a rare and chronic autoimmune disease where IgG autoantibodies disrupt communication between nerves and
muscles, causing debilitating and potentially life-threatening muscle weakness.
In myasthenia gravis (
MG
), IgG autoantibodies either bind and occupy or cross-link and internalize the receptor on the
muscle cells, thereby preventing the binding of acetylcholine, the signal sent by the nerve cell. In addition, these
autoantibodies can cause destruction of the neuromuscular junction by recruiting complement, a potent cell-destroying
mechanism of the human immune system. The muscle weakness associated with MG usually presents initially in ocular
muscles and can then spread into a generalized form affecting multiple muscles, known as gMG. Approximately 85% of
people with MG progress to gMG within 24 months (source: Behin et al. New Pathways and Therapeutics Targets in
Autoimmune Myasthenia Gravis. J Neuromusc Dis 5. 2018. 265-277). MG in the ocular form initially causes droopy
eyelids and blurred or double vision due to partial paralysis of eye movements. As MG becomes generalized it affects
muscles in the neck and jaw, causing problems in speaking, chewing and swallowing. MG can also cause weakness in
skeletal muscles leading to problems in limb function. In the most severe cases, respiratory function can be weakened to
the point where it becomes life-threatening. These respiratory crises occur at least once in the lives of approximately
15% to 20% of MG patients. The U.S. prevalence of MG is estimated at approximately 20 cases per 100,000 (source:
Philips et al, Ann NY Acad Sci. 2003).
Patients with confirmed AChR antibodies account for approximately 85% of the total gMG population (Behin et al. New
Pathways and Therapeutics Targets in Autoimmune Myasthenia Gravis. J Neuromusc Dis 5. 2018. 265-277).
In May 2020, we announced positive topline results from the pivotal ADAPT clinical trial of efgartigimod for the
treatment of gMG. The topline results from the ADAPT clinical trial showed that efgartigimod was well-tolerated,
demonstrated clinically meaningful improvements in strength and quality of life measures, and provided the option of an
individualized dosing schedule for gMG patients. The full Phase 3 ADAPT results were published in The Lancet
Neurology in July 2021. The data from the ADAPT clinical trial and the subsequent OLE (ADAPT+) formed the basis
for the regulatory approvals of VYVGART in the U.S., Japan, the EU, Mainland China, Israel, the UK and Canada.
On March 22, 2022, we announced positive topline results from the Phase 3 ADAPT-SC clinical trial, a registrational
non-inferiority bridging clinical trial of efgartigimod SC for the treatment of gMG. efgartigimod SC achieved the
primary endpoint of total IgG reduction from baseline at day 29, demonstrating statistical noninferiority to VYVGART
IV formulation in gMG patients. Based on these results, we received regulatory approval in the U.S., the EU, China,
Japan, Switzerland, the UK, Israel and Australia.
42
Other clinical trials
In 2024, we initiated registrational clinical trials to expand the VYVGART label into broader MG populations, including
in seronegative gMG patients (ADAPT-SERON) and ocular MG patients (ADAPT-OCULUS). We also have clinical
trials ongoing in pediatric gMG patients (ADAPT-JUNIOR) with efgartigimod IV and efgartigimod SC.
CIDP
Overview
CIDP is a chronic autoimmune disorder of peripheral nerves and nerve roots caused by an autoimmune-mediated
destruction of the myelin sheath, or myelin producing cells, insulating the axon of the nerves and enabling speed of
signal transduction. The cause of CIDP is unknown, but abnormalities in both cellular and humoral immunity have been
shown. CIDP is a chronic and progressive disease: onset and progression occur over at least eight weeks in contrast with
the more acute Guillain-Barré-syndrome. Demyelination and axonal damage in CIDP lead to loss of sensory and/or
motor neuron function, which can lead to weakness, sensory loss, imbalance and/or pain. U.S. prevalence for CIDP
patients is 42,000 of whom 24,000 are treated patients.
Most CIDP patients require treatment, the majority currently with IVIg. Glucocorticoids and plasma exchange are used
to a lesser extent as they are either limited by side effects upon chronic use, in the case of glucocorticoids, or
invasiveness of the procedure and access, which is restricted to specialized centers in case of plasma exchange.
Alternative immunosuppressant agents are typically reserved for patients ineligible for or refractory to IVIg,
glucocorticoids or plasma exchange.
In July 2023, we announced positive topline results from the ADHERE clinical trial evaluating VYVGART SC
(efgartigimod alfa and hyaluronidase-qvfc) in adults with CIDP. The clinical trial met its primary endpoint
(p=0.000039), demonstrating a significantly lower risk of relapse with VYVGART SC compared to placebo (HR: 0.39
95% CI: 0.25; 0.61). 67% of patients in open-label Stage A demonstrated evidence of clinical improvement, indicating
that IgG autoantibodies play a significant role in the underlying biology of CIDP.
VYVGART SC was well-tolerated with a safety profile that is consistent with prior clinical trials and the known profile
of VYVGART. The most frequent treatment-related adverse event was ISRs, which occurred in a lower percentage of
patients than previous VYVGART SC clinical trials (20% in Stage A; 10% in Stage B). All ISRs were mild to moderate
and resolved over time. 99% (226/249) of eligible patients continued to the ADHERE-Plus OLE clinical trial.
Based on these results, we received regulatory approval in the U.S. in June 2024, in China in November 2024 and in
Japan in December 2024. Regulatory review is currently ongoing in other jurisdictions including in the EU.
Primary ITP
Overview
Primary ITP is an acquired autoimmune bleeding disorder, characterized by a low platelet count (100×109/L) in the
absence of other causes associated with thrombocytopenia. In most patients, IgG autoantibodies directed against platelet
receptors can be detected. They accelerate platelet clearance and destruction, inhibit platelet production, and impair
platelet function, resulting in increased risk of bleeding and impaired quality of life. Primary ITP is differentiated from
secondary ITP, which is associated with other illnesses, such as infections or autoimmune diseases, or which occurs after
transfusion or taking other drugs, such as cancer drugs. Platelet deficiency, or thrombocytopenia, can cause bleeding in
tissues, bruising and slow blood clotting after injury. Patients may suffer from depression and fatigue as well as side
effects of existing therapies, impairing their quality of life. Current therapeutic approaches include non-specific
immunosuppression (e.g., steroids and rituximab), inhibition of platelet clearance (e.g., splenectomy, IVIg, anti-D
globulin, and spleen tyrosine kinase inhibitor fostamatinib13) or stimulation of platelet production (e.g., thrombopoietin
receptor agonist TPO-RA). Splenectomy remains the only treatment that provides sustained remission off therapy for
one year or longer for a high proportion of patients. ITP affects approximately 72,000 patients in the U.S. (sources:
Current Medical Research and Opinion, 25:12, 2961-2969; Am J Hematol. 2012 Sep; 87(9): 848–852; Pediatr Blood
Cancer. 2012 Feb; 58(2): 216–220).
Phase 3 ADVANCE Clinical Trials
In 2019, the first of two registrational clinical trials, the ADVANCE clinical trial, was initiated to evaluate efgartigimod
IV (VYVGART) for the treatment of primary ITP. The second registrational ADVANCE-SC clinical trial of
efgartigimod SC for the treatment of primary ITP was initiated in 2020.
|
43
|
||
In May 2022, we announced positive Phase 3 data from the ADVANCE clinical trial. Primary endpoint was met,
demonstrating that a significantly higher proportion of patients with chronic ITP receiving VYVGART (17/78; 21.8%)
compared to placebo (2/40; 5%) achieved a sustained platelet response (p=0.0316), defined as having platelet counts
greater than or equal to 50x109/L on at least four of the last six scheduled visits between weeks 19 and 24 of treatment.
There was also a statistically significant separation from placebo in key platelet-derived secondary endpoints. Additional
secondary endpoint data from the ADVANCE clinical trial are consistent with primary and secondary platelet-derived
endpoints and provide additional context on metrics that often drive treatment decisions, including on International
Working Group responder status.
VYVGART was well-tolerated in this 24-week clinical trial and the observed safety and tolerability profile was
consistent with previous clinical trials. Results from ADVANCE-IV clinical trial were published in The Lancet in
September 2023.
In November 2023, results of the second registrational clinical trial as part of the ongoing ITP development program for
VYVGART in adult patients with chronic and persistent ITP were announced. Patients were heavily pre-treated and 75%
of patients had received three or more prior ITP therapies. The clinical trial did not meet the primary endpoint of a
sustained platelet count response in chronic ITP patients. Secondary endpoints were also not met, including additional
endpoints on International Working Group responder status and mean platelet count change from baseline.
VYVGART SC was well-tolerated in ADVANCE-SC; the observed safety and tolerability profile was consistent with
ADVANCE-IV and the confirmed safety profile of VYVGART and VYVGART SC.
Based on the results of the ADVANCE-IV clinical trial we received regulatory approval for VYVGART for the
treatment of adults with ITP in Japan in March 2024. We have initiated ADVANCE-NEXT in the U.S. with
efgartigimod IV in ITP in 2024.
Myositis
Overview
Myositis are a rare group of autoimmune diseases that can be muscle specific or affect multiple organs including the
skin, joints, lung, gastrointestinal tract and heart. Myositis can be very severe and disabling and have a material impact
on quality of life. Initially these Myositis were classified as either DM or polymyositis, but as the underlying
pathophysiology of Myositis has become better understood, including through the identification of characteristic
autoantibodies, new polymyositis subgroups have emerged. Two of these subtypes are IMNM and ASyS. Proximal
muscle weakness is a unifying feature of each Myositis subset.
•
IMNM is characterized by skeletal muscle weakness due to muscle cell necrosis. The muscle weakness is typically
symmetrical – on both sides of the body – and affects proximal muscles including hips, thighs, upper arms, shoulder
and neck. The muscle weakness can be severe and lead to difficulty in completing daily tasks. Characteristic
autoantibodies of IMNM, include anti-signal recognition particle and anti-3-hydroxy-3-methylglutaryl-coenzyme A
reductase autoantibodies.
•
ASyS is characterized by muscle inflammation, inflammatory arthritis, interstitial lung disease, thickening and
cracking of the hands (mechanic’s hands) and Raynaud phenomenon. Autoantibodies associated with ASyS attack
tRNA synthetase enzymes and include anti-Jo-1 and anti-PL1 and PL-12 most commonly.
•
DM is characterized by muscle inflammation and degeneration and skin abnormalities, including heliotrope rash,
Gottron papules, erythematous, calcinosis and edema. DM is associated with Myositis-specific autoantibodies,
including anti-Mi-2, anti-MDA-5, anti-TIF-1γ and others.
There are no current FDA-approved therapies for IMNM or ASyS. IVIg (Octagam 10%) was approved by the FDA for
the treatment of DM in July 2021. Myositis patients are most often treated with high-dose steroids.
ALKIVIA Clinical Trial
We initiated the registrational ALKIVIA clinical trial of efgartigimod SC for the treatment of Myositis in 2022. The
clinical trial will enroll approximately 240 patients in three Myositis subtypes, IMNM, ASyS and DM. The clinical trial
is being conducted in two Phases, with an analysis of the Phase 2 portion of the clinical trial, including 30 patients of
each subtype, followed by conduct of the Phase 3 portion of the clinical trial only if a signal is observed in the Phase 2
portion of the clinical trial.
|
44
|
||
The primary endpoint is the total improvement score (
TIS
) at the end of the treatment period. Key secondary endpoints
include response rates at the end of treatment, time to response, and duration of response in TIS, as well as change from
baseline in individual TIS components. Other secondary endpoints include quality of life and other functional scores.
In November 2024, argenx announced our 'GO' decision to continue clinical development of efgartigimod SC in the
seamless phase2/3 ALKIVIA clinical trial (ongoing) in all three Myositis subtypes following analysis of topline data
from the Phase 2 portion of the clinical trial. The decision is supported by the efficacy and safety results from the Phase
2 portion of the seamless Phase 2/3 ALKIVIA clinical trial. Overall, the clinical trial met its primary endpoint,
demonstrating a statistically significant treatment effect in mean TIS at Week 24, and showed improvement across all six
core set measures of the TIS in favor of efgartigimod SC compared to placebo. The observed safety and tolerability
profile was consistent to that demonstrated with other clinical trials.
TED
Overview
TED is an autoimmune orbital disease associated with Graves’ disease and other autoimmune thyroid pathologies such
as Hashimoto’s thyroiditis. TED is characterized by extraocular muscle enlargement, orbital adipose tissue expansion,
and orbital inflammation, which can lead to proptosis, diplopia, or vision loss in severe cases. Persistent orbital
symptoms often impair patient QoL long-term.
Substantial nonclinical and clinical evidence supports thyrotropin receptor autoantibodies as causative in the pathology
of TED. Clinical evidence supports the removal of autoantibodies as a mechanism for the treatment of TED. By reducing
IgGs, including TED-associated pathogenic IgG autoantibodies, efgartigimod is expected to ease disease manifestations.
Additionally, IgG reduction could address the underlying hyperthyroidism. Side effects and tolerability issues with
current therapies, including steroids and teprotumumab (only FDA-approved biologic), are treatment limiting for many
patients based on comorbidities and a significant unmet need remains for safe and convenient therapies
.
UplighTED Clinical Trials
The UplighTED program aims to evaluate the efficacy and safety of weekly efgartigimod for SC administration in pre-
filled syringe, coformulated with rHuPH20 (efgartigimod PH20 SC) in two randomized, placebo-controlled, double-
blinded studies. Adult participants with moderate-to-severe active TED, with controlled baseline autoimmune thyroid
pathology are dosed with 1000mg efgartigimod PH20 SC or placebo PH20 SC for 24 weeks and evaluated for proptosis
response. At the end of the treatment period, participants will enter a follow-up observational period to assess safety,
tolerability, and durability of efgartigimod PH20 SC treatment while off therapy or an open-label treatment period
depending on their response to study treatment.
SjD
Overview
SjD is a chronic, progressive autoimmune disease, characterized by lymphocytic infiltration and progressive destruction
of exocrine glands. B-cells play a pivotal role in the development of the disease and this results amongst others in
production of IgG autoantibodies, especially those which target SSA/Ro, SSB/La ribonuclear complexes. In addition to
symptoms of dry eyes, dry mouth, chronic pain and fatigue, a substantial subset of patients suffer from extraglandular
systemic disease. There are no FDA-approved treatments currently registered for the treatment of SjD.
Phase 2 RHO Clinical Trial (in partnership with IQVIA)
In March 2024, argenx announced its plan to continue the development of efgartigimod to Phase 3 in adults with primary
SjD, following the analysis of topline data from the Phase 2 RHO clinical trial.
•
The decision to advance the clinical development of efgartigimod in SjD was supported by the safety, efficacy and
biomarker results from the clinical trial. The observed safety and tolerability profile was consistent with other clinical
trials. Efficacy assessments showed a treatment effect across multiple clinical endpoints, which were also consistent
with biomarker data.
◦
In the RHO clinical trial, efgartigimod demonstrated increased response on composite endpoints
(CRESS, STAR, ESSDAI (22-34%)). A response was observed in four out of five items of CRESS.
|
45
|
||
◦
The IgG reduction and biomarker data correlated to clinical benefit and efgartigimod was well
tolerated and safe similar to other clinical trials.
Phase 3 UNITY Clinical Trial (in partnership with IQVIA)
In 2024, we initiated a Phase 3 clinical trial evaluating efgartigimod PH20 SC for the treatment of SjD. The Unity
clinical trial is a randomized, placebo-controlled, double-blind clinical trial evaluating safety and efficacy of
efgartigimod PH20 SC. The clinical trial plans to enroll 480 patients with at least moderate systemic disease
(ClinESSDAI ≥6). Patients have to be on stable background treatment and positive for anti-SSA/Ro. At the end of the
48-week treatment period, participants who complete the clinical trial may roll over into an OLE. The primary endpoint
is change from baseline in the clinESSDAI (Clinical ESSDAI). Key secondary endpoints will focus on patient-reported
outcomes, ESSDAI (EULAR Sjögrens Syndrome Disease Activity Index), and STAR (Sjögren's Tool for Assessing
Response, composite endpoint).
LN
Overview
LN is an inflammatory autoimmune disease of the kidney and one of the most severe and common organ manifestations
of the autoimmune disease systemic lupus erythematosus (
SLE
). In patients with SLE, approximately 25% to 50% have
signs or symptoms of kidney disease at SLE onset. Approximately 40% to 60% of patients with SLE will develop renal
involvement during the course of disease, with substantial morbidity or mortality. Pathogenic autoantibodies and
complement deposits are critically involved in SLE pathogenesis and particularly LN, where renal deposition of immune
complexes is a hallmark of the disease. Autoantibodies associated with LN include anti-dsDNA, anti-C1q, anti-
cardiolipin, anti-Smith and anti-nuclear antibodies. 10-30% of LN patients progress to end-stage renal disease. Oral
corticosteroids and broad immunosuppressants are current standards of care but are not uniformly effective. Belimumab
(Benlysta) and voclosporin (Lupkynis) are approved by the FDA for the treatment of LN.
Phase 2 POC Clinical Trial (in partnership with Zai Lab)
In 2023, we initiated a POC clinical trial to evaluate the efficacy and safety of efgartigimod IV in Chinese patients with
active LN. The clinical trial plans to enroll approximately 60 patients with LN class III or IV (with or without class V).
The primary endpoint is the change in urine protein creatinine ratio from baseline to end of the treatment period. Key
secondary endpoints include proportion of patients achieving complete and partial renal response at the end of treatment
period and time to complete renal response and partial renal response. Other secondary endpoints include additional
efficacy measurements, PK, PD, immunogenicity, biomarkers, safety, and quality of life assessments.
Other efgartigimod Indications
AMR
AMR
is an autoimmune disease that affects transplanted organs and can contribute to allograft loss. AMR in kidney
allografts is driven by donor specific antibodies, which often target HLA antigens expressed by endothelial allograft
cells. Through different mechanism, donor specific antibodies can induce microvascular inflammation, a
histopathological hallmark of AMR. Microvascular inflammation leads to loss in organ function which, if continued, can
result in allograft loss. The unmet need for an efficacious treatment is very high, as evidenced by AMR being the leading
cause of kidney transplant failure. There are currently no approved therapies for treating AMR.
Phase 2 shAMRock Clinical Trial Design
In the end of 2024, we initiated a Phase 2 POC study to evaluate efgartigimod PFS in kidney transplant recipients with
AMR. The clinical trial will enroll ~30 participants, randomized 1x1x1 across 2 treatment arms and placebo. Primary
endpoint is safety and tolerability and secondary endpoints include efficacy endpoints around estimated glomerular
filtration rate, kidney biopsy,
urine protein creatinine ratio
and survival
.
46
Partnerships for efgartigimod indications
Zai Lab Limited
Pursuant to the Zai Lab Agreement, Zai Lab obtained the exclusive right to develop and commercialize efgartigimod in
Greater China. Zai Lab will also contribute patients to our global Phase 3 clinical trials of efgartigimod. Our Zai Lab
strategic collaboration allows us to accelerate development of efgartigimod into new autoimmune indications with Zai
Lab taking operational leadership of selected Phase 2 POC clinical trials.
In 2022 Zai Lab initiated the Phase 2 POC clinical trials in MN and LN, which both fall within the emerging nephrology
indications. Zai Lab also completed a Phase 1 PK/PD clinical trial to support the approval of efgartigimod for gMG in
Mainland China and to obtain regulatory approvals to enroll Chinese patient into our global Phase 3 clinical trials.
IQVIA
On December 2, 2021 we entered into a strategic asset development agreement (
Asset Development Agreement
) with
IQVIA. Pursuant to the Asset Development Agreement, IQVIA shall perform asset and indication development services
for efgartigimod through an advanced outsourcing model. Such services include, but are not limited to, overall product
indication development strategy, design of clinical trial protocol, set-up, execution and management of clinical
development plans for an indication for efgartigimod selected by us.
To enable and encourage fast and innovative delivery of the services by IQVIA, the Asset Development Agreement
contains an innovative earn-back and bonus plan based upon the performance of IQVIA.
Clinical trials that have been discontinued:
•
In May 2024, the decision was made to discontinue planned development of efgartigimod in AAV following the risk
assessment of all ongoing clinical trials based on learnings from ADDRESS (PV) and ADVANCE SC (ITP) clinical
trials. We determined the risk did not outweigh the benefit in AAV given the potentially unmanageable interference
of background medications.
•
In June 2024, we announced results from the Phase 2 ALPHA clinical trial of efgartigimod in PC-POTS. Based on
the results, we decided not to move forward development of efgartigimod in PC-POTS.
•
In October 2024, we announced the discontinuation of development of efgartigimod in MN. This decision was based
on the observation that no clear signal was seen in the blinded data, which was part of an interim review by the
executive data review team and the data and safety monitoring board.
•
Early January 2025, we announced our decision to discontinue development in BP based on results from 98 patients
in the Phase 2 BALLAD clinical trial.
empasiprubart (ARGX-117) Development
Mechanism of Action
empasiprubart is a differentiated therapeutic mAb targeting C2 equipped with our proprietary NHANCE™ mutations.
By addressing a novel target at the intersection of the complement and lectin pathways of the complement cascade, we
believe empasiprubart represents a broad pipeline opportunity across several severe autoimmune indications. Activation
of the classical and lectin pathway of complement may contribute to tissue damage and organ dysfunction in a number of
autoimmune inflammatory diseases and ischemia-reperfusion conditions. Targeting C2 also leaves the alternative
pathway of the complement system intact, which is an important component of the innate defense system.
empasiprubart exhibits both pH- and calcium dependent binding. These unique characteristics enable empasiprubart to
capture free C2 in circulation and release it in the endosome to be sorted for degradation in the lysosome. empasiprubart
is equipped with NHANCE™ mutations increasing its affinity for FcRn and allowing it to recycle back into circulation
to capture more C2.
In addition to an IV formulation, we have exclusive access to Halozyme’s ENHANZE® SC drug delivery technology for
the C2 target.
|
47
|
||
Figure 3: LEFT: empasiprubart exhibits both pH- and calcium dependent target binding. RIGHT: empasiprubart is
equipped with NHANCE™ mutations increasing its affinity for FcRn at acidic pH and allowing it to recycle back into
circulation.
empasiprubart Indications
MMN
Overview
MMN is a debilitating neuromuscular autoimmune disorder that is characterized by slowly progressive muscle weakness
due to motor neuron degeneration. It mainly affects hands and forearms, mainly in males, and the median age of
diagnosis is around 40 years. Diagnosis takes about a year and a half and is often misdiagnosed as ALS. There are
estimated to be around 13,000 patients with MMN in the U.S. and this number is increasing.
Specific pathophysiologic characteristics of MMN include the presence of IgM autoantibodies against the ganglioside
GM1 and conduction block, i.e., impaired propagation of action potentials along the axon. GM1 is widely expressed in
the nervous system by neurons, particularly around the nodes of Ranvier, and Schwann cells.
IVIg is the only approved treatment for MMN and needs to be dosed frequently to address the disease’s progressive
nature.
Phase 2 POC ARDA Clinical Trial
The Phase 2 POC ARDA clinical trial was a randomized, double-blinded, placebo-controlled multicenter clinical trial to
evaluate the safety and tolerability, efficacy, PK, PD, and immunogenicity of two dose regimens of empasiprubart in
adults with MMN. The primary endpoint was safety and tolerability. Additional endpoints included time to IVIg
retreatment, biomarker analyses of C2 levels, and changes in measurements on key functional scores (modified medical
research council -10 sum score, grip strength, MMN-RODS as well as several patient-reported quality of life outcome
measures (fatigue severity score (FSS), chronic acquired polyneuropathy patient-reported index (CAP-PRI), and values
of the patient global impression change scale).
At the start of the year argenx announced positive data from the first cohort (n=16) of the Phase 2 POC ARDA clinical
trial which was confirmed with the results of the second cohort (n=16) in July 2024, establishing POC in MMN.
empasiprubart demonstrated a 91% reduction in the need for IVIg rescue compared to placebo [HR (95% CI) = 0.09
(0.02; 0.44)] in cohort 1 and a 84% reduction in the need for IVIg rescue compared to placebo [HR (95% CI) = 0.16
(0.02; 1.54)] in cohort 2.
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Based on these results argenx initiated the EMPASSION Phase 3 clinical trial evaluating empasiprubart in MMN at the
end of 2024.
Phase 3 EMPASSION Clinical Trial Design
A Phase 3, randomized, double-blinded, double-dummy clinical trial evaluating the efficacy and safety
of empasiprubart versus intravenous immunoglobulin in adults with multifocal motor neuropathy. The clinical trial
comprises a screening period of up to 15 weeks, including a minimum of 2 IVIg cycles; a 24-week (6-month),
randomized, double-blinded, double-dummy treatment period (part A) evaluating the efficacy and safety of
empasiprubart vs IVIg continuation; a 24-month OLE period (part B); and a 15-month safety follow-up period starting
after the last dose of IMP. The primary objective is to demonstrate the efficacy of empasiprubart compared to IVIg in
improving functional ability. This will be measured by change from baseline in the 25-item MMN-RODS centile score at
week 24. Additional key secondary endpoints include changes in measurements on key functional scores (modified
medical research council -14 sum score, grip strength) as well as patient-reported quality of life outcome measures
(polyneuropathy patient-reported index, and values of the patient global impression change scale and evaluation of
manual dexterity using 9HPT.
DGF
Overview
DGF, a complication after kidney transplantation, is defined as the need for dialysis in the first week after transplant.
DGF occurs in up to 40% of patients receiving a deceased donor graft, and is associated with worse long-term transplant
outcomes. DGF is often the clinical representation of ischemia reperfusion injury, in which the classical and lectin
complement pathways play an important role, as shown by compelling evidence from both (in-house) in vitro and in
vivo preclinical, and clinical trials. There are currently no approved therapies to reduce DGF risk. Furthermore, there is a
well-established process to measure kidney function and DGF, and to establish POC and achieve registration. On this
basis, combined with the significant unmet medical need, we have chosen DGF after kidney transplantation as second
indication for empasiprubart.
Phase 2 POC VARVARA Clinical Trial
The Phase 2 POC VARVARA clinical trial was initiated in 2023 and is a randomized, placebo-controlled, double-
blinded clinical trial to evaluate the efficacy, safety and tolerability of empasiprubart in improving allograft function in
recipients at risk for DGF. The clinical trial will include approximately 102 recipients of an at-risk deceased donor
kidney. After a short screening period of 24 hours, patients are randomly assigned in a 1:1 ratio to receive two doses of
empasiprubart IV or placebo, of which one dose is administered during transplantation and one a week later. Participants
receive standardized background induction and maintenance immunosuppression. They are evaluated for 52 weeks, with
one additional safety follow-up visit in week 64. The primary endpoint is the estimated glomerular filtration rate at six
months. Key secondary endpoints include DGF risk, safety, and PK, PD and immu
nogenicity.
DM
Overview
Please refer to
“
Item 4.B — efgartigimod Indications
”
(Myositis) for more information on DM.
Phase 2 POC EMPACIFIC Clinical Trial
The EMPACIFIC clinical trial is a Phase 2 POC, randomized, double-blinded, placebo-controlled, multicenter clinical
trial to evaluate the safety, tolerability, and efficacy of multiple dose regimens of IV empasiprubart in adults with DM. A
total of 56 adult participants with a clinical diagnosis of DM and active muscle disease will be randomized (1:1:1:1) to
one of four treatment arms (three empasiprubart dose regimens and one placebo arm). Participants will receive loading
doses on days 1 and 8, followed by maintenance doses every four weeks until the end of the 52-week treatment phase.
The primary objective is to evaluate safety and tolerability. The secondary objective is to evaluate clinical efficacy, using
the mean TIS at weeks 13, 25, and 52 as endpoint.
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CIDP
Overview
Please refer to
“
Item 4.B — efgartigimod Indications
”
(CIDP) for more information on CIDP.
Phase 3 EMVIGORATE Clinical Trial
In July 2024, we announced our plan to start a head-to-head Phase 3 development of empasiprubart versus IVIg in CIDP
in 1H 2025.
ARGX-119 Development
ARGX-119 is a humanized agonist mAb that specifically targets and activates MuSK to promote maturation and
stabilization of the neuromuscular junction (
NMJ
). We plan to develop ARGX-119 in a range of neuromuscular diseases
including CMS, a rare hereditary subtype of MG, ALS, and SMA, all severe neuromuscular indications.
NMJs are specialized synapses formed between motor neurons and muscle cells, which are essential for the ability to
move and breathe. At the NMJ, motor neurons release acetylcholine, which binds to AChRs on the muscle to initiate
muscle contraction. Deficits in the NMJ can cause neuromuscular disorders, which can range in severity from mild to
life-threatening skeletal muscle weakness. MuSK is an essential component for the formation and function of NMJs.
ARGX-119 is the first and highly specific agonist mAb targeting human MuSK being developed for patients with
neuromuscular disease, such as CMS and ALS. This mAb is derived from llamas and discovered using the argenx
SIMPLE ANTIBODY™ platform technology. We developed ARGX-119 through our IIP program in collaboration with
the world leading key opinion leaders on MuSK and the neuromuscular junction, including Professor Steve Burden from
NYU and Professor Verschuuren from LUMC. In collaboration with Professor Burden, it was shown that ARGX-119
holds promising preclinical POC data in Dok7 congenital myasthenic syndrome, observed in a mouse model bearing the
most common patient mutation and in ALS using ALS patient derived NMJ on-a-chip models. Based on these data,
clinical development for ARGX-119 was initiated as activation of MuSK by ARGX-119 may stabilize, mature, and
improve the function of the NMJ in patients with CMS or ALS, significantly reducing weakness and fatigability and
improving quality of life.
A Phase 1 dose-escalation clinical trial in healthy volunteers was completed in 2024; data support advancement in POC
studies.
A Phase 1b and 2a clinical trial in CMS and ALS respectively initiated in 2024 to assess early signal detection in
patients. Early January 2025, we announced SMA as the third indication for ARGX-119 for which we expect to initiate a
POC clinical trial in 2025.
Phase 1b Clinical Trial Design
The Phase 1b, multicenter, randomized, double-blinded, placebo-controlled clinical trial is designed to assess the safety,
tolerability, PK, immunogenicity, and preliminary efficacy of ARGX-119 for the first time in participants with DOK7-
CMS. The clinical trial is designed to demonstrate proof of biology for ARGX-119 through a preliminary evaluation of
its efficacy with measures of muscle weakness and fatigability, activities of daily living, and patient-reported outcomes
of global health in participants with DOK7-CMS. The clinical trial will be up to approximately 11 months long,
comprising the following periods, a screening period: up to 28 days, a treatment period of 12 weeks and a follow-up
period of approximately seven months. At baseline, eligible participants will be randomized in a 4:1 ratio to receive IV
infusions of ARGX-119 or placebo. The primary objective is to evaluate the safety and tolerability of ARGX-119 in
participants with DOK7 CMS. The secondary objective is to assess the PK, immunogenicity of ARGX-and efficacy of
ARGX-119 in participants with DOK7 CMS.
Phase 2a reALiSe Clinical Trial Design
The ReALiSe clinical trial is a Phase 2a, double-blinded, randomized, placebo-controlled, and active-treatment extension
clinical trial to assess the safety, tolerability, efficacy, pharmacokinetics, and immunogenicity of ARGX-119 in
participants with amyotrophic lateral sclerosis. The clinical trial is designed to demonstrate proof of ARGX-119 activity
through an evaluation of efficacy by assessing the impact of ARGX-119 on ALS disease outcomes, including muscle
function in participants with ALS. Approximately 60 participants are planned to be enrolled, screened, and randomized
1:1:1:1 to one of three ARGX-119 intravenous dose arms or placebo IV for the double-blinded treatment period. This
clinical trial will last up to 100 weeks. The clinical trial will contain the following periods: a screening period (up to four
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weeks), a double-blinded treatment period (24 weeks), an active-treatment extension period (48 weeks), and a safety-
follow-up period (24 weeks). The primary objective is evaluate the safety and tolerability of ARGX-119 in participants
with ALS. The secondary objective is to assess the efficacy of ARGX-119 on electrophysiological measures of disease
progression in participants with ALS using MScan to measure motor unit number and other MScan‑derived
neurophysiological markers. MScan provides parameters that have been associated with ALS disease progression (i.e.,
motor unit loss and/or enlarged motor units due to reinnervation). Additional exploratory outcome measures, including
SVC and ALSFRS-R, will be used to explore ARGX-119 impact on ALS-relevant outcome measures.
ARGX-213, ARGX-121, ARGX-220 and ARGX-109 Development
We continue to invest in our discovery engine, the IIP, to drive long-term sustainable pipeline growth. Through the IIP,
four new pipeline candidates were nominated in 2023, including: ARGX-213 targeting FcRn and furthering argenx’s
leadership in this new class of medicine; ARGX-121 targeting IgA and ARGX-220, which broaden argenx’s focus
across the immune system; and ARGX-109, targeting IL-6, which plays an important role in inflammation. Preclinical
work is ongoing for each candidate and we expect Phase 1 results in 2025 and 2026.
Antibody Engineering and Other Technology Capabilities
Our Proprietary SIMPLE ANTIBODY™ Platform
Our proprietary SIMPLE ANTIBODY™ platform technology sources V-regions from conventional antibodies existing
in the immune system of outbred llamas. Outbred llamas are those that have been bred from genetically diverse parents,
and each has a different genetic background. The llama produces highly diverse panels of antibodies with a high human
homology in their V-regions when immunized with human disease targets. We then combine these llama V-regions with
Fc regions of fully human antibodies, resulting in antibodies that we then produce in industry-validated production cell
lines. The resulting antibodies are diverse and, due to their similarity to human antibodies, we believe they are well
suited to human therapeutic use. With this breadth of antibodies, we are able to test many different epitopes. Being able
to test many different epitopes with our antibodies enables us to search for an optimized combination of safety, potency
and species cross-reactivity with the potential for maximum therapeutic effect on disease. These antibodies are often
cross-reactive with the rodent version of chosen disease targets. This rodent cross-reactivity enables more efficient
preclinical development of our product candidates because most animal efficacy models are rodent-based. By contrast,
most other antibody discovery platforms start with antibodies generated in inbred mice or synthetic antibody libraries,
approaches that we believe are limited by insufficient antibody repertoires and limited diversity, respectively. Our
SIMPLE ANTIBODY™ platform technology allows us to access and explore a broad target universe, including novel
and complex targets, while minimizing the long timelines associated with generating antibody candidates using
traditional methods.
Our Antibody Engineering Technologies
Through licensing we have obtained access to a broad range of antibody engineering technologies. NHANCE™,
ABDEG™, POTELLIGENT
®
and the DHS mutations focus on engineering the Fc region of antibodies, while
SMART‑Ig
®
and ACT‑Ig
®
technologies allow to make sweeping antibodies.
Fc engineering can augment antibodies interactions with components of the immune system, thereby potentially
expanding the therapeutic index of our product candidates by modifying their half-life, tissue penetration, rate of disease
target clearance and potency. For example, our NHANCE™ and ABDEG™ engineering technologies enable us to
modulate the interaction of the Fc region with FcRn, which is responsible for regulating half-life, tissue distribution and
PD properties of IgG antibodies. Similarly, the POTELLIGENT
®
engineering technology modulates the interaction of
the antibody Fc region with receptors located on specialized immune cells known as natural killer (
NK
) cells. These NK
cells can destroy the target cell, resulting in enhanced antibody-dependent cell-mediated cytotoxicity (
ADCC
).
NHANCE™ and ABDEG™: Modulation of Fc Interaction with FcRn.
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An illustration of the FcRn-mediated antibody recycling mechanism is shown in
Figure 4
. [1] Serum proteins, including
IgG antibodies, are routinely removed from the circulation by cell uptake. [2] Antibodies can bind to FcRn, which serves
as a dedicated recycling receptor in the endosomes, which have an acidic environment, and then [3A] return to the
circulation by binding with their Fc region to FcRn. [3B] Unbound antibodies end up in the lysosomes and are degraded
by enzymes. Because this Fc/FcRn interaction is highly pH-dependent, antibodies tightly bind to FcRn at acidic pH (pH
6.0) in the endosomes but release again at neutral pH (pH 7. 4) in the circulation.
Figure 4: The FcRn-mediated recycling mechanism
NHANCE™
NHANCE™ refers to two mutations that we introduce into the Fc region of an IgG antibody. NHANCE™ is designed to
extend antibody serum half-life and increase tissue penetration. In certain cases, it is advantageous to engineer antibodies
that remain in the circulation longer, allowing them to potentially exert a greater therapeutic effect or be dosed less
frequently. As shown in Figure 5, [1] NHANCE™ antibodies bind to FcRn with higher affinity, specifically under acidic
pH conditions. [2] Due to these tighter bonds, NHANCE™ FcRn-mediated antibody recycling is strongly favored over
lysosomal degradation, although some degradation does occur. [3] NHANCE™ allows a greater proportion of antibodies
to return to the circulation potentially resulting in increased bioavailability and reduced dosing frequency. ARGX-109,
empasiprubart and a number of our discovery-stage programs utilize NHANCE™.
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Figure 5: NHANCE™ mutations favor the FcRn-mediated recycling of IgG antibodies.
ABDEG™
ABDEG™ refers to five mutations that we introduce in the Fc region that increase its affinity for FcRn at both neutral
and acidic pH. In contrast to NHANCE™, ABDEG™-modified Fc regions remain bound to FcRn if the pH changes,
occupying FcRn with such high affinity that they deprive endogenous IgG antibodies of their recycling mechanism,
leading to enhanced clearance of such antibodies by the lysosomes. Some diseases mediated by IgG antibodies are
directed against self-antigens. These self-directed antibodies are referred to as autoantibodies. We use our ABDEG™
technology to reduce the level of these pathogenic autoantibodies in the circulation by increasing the rate at which they
are cleared by the lysosomes. ABDEG™ is a component in a number of our products and product candidates, including
efgartigimod.
As shown in
Figure 6
, our ABDEG™ technology can also be used with our pH-dependent SIMPLE ANTIBODY™
generated antibodies in a mechanism referred to as sweeping. Certain antibodies generated through the SIMPLE
ANTIBODY™ platform bind to their target in a pH-dependent manner. These antibodies [1] bind tightly to a target at
neutral pH while in circulation, and [2] release the target at acidic pH in the endosome. [3] The unbound target is
degraded in the lysosome. [4] However, when equipped with our ABDEG™ technology, the therapeutic antibodies
remain tightly bound to FcRn at all pH levels and are not degraded themselves. Instead, they are returned to the
circulation where they can bind new targets. We believe this is especially useful in situations where high levels of the
target are circulating or where the target needs to be cleared very quickly from the system.
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Figure 6: SIMPLE ANTIBODY™ and ABDEG™ platform technologies work in concert to sweep diseases targets.
POTELLIGENT®
POTELLIGENT
®
modulates the interaction of the Fc region with the Fc gamma receptor IIIa located on specialized
immune cells, known as NK cells. These NK cells can destroy the target cell, resulting in enhanced ADCC.
POTELLIGENT
®
changes the Fc structure by excluding a particular sugar unit such that it enables a tighter fit with the
Fc gamma receptor IIIa. The strength of this interaction is a key factor in determining the killing potential of NK cells.
An independent publication reported that the exclusion of this sugar unit of the Fc region increases the ADCC-mediated
cell-killing potential of antibodies by 10- to 1000-fold. cusatuzumab and ARGX-111 utilize POTELLIGENT
®
(source:
Expert Opin Biol Ther 2006; 6:1161-1173;
http://www.tandfonline.com/doi/full/10.1517/14712598.6.11.1161%20
).
SMART-Ig®, ACT-Ig® and DHS
In 2020, we entered into a research license and option agreement with Chugai under which we may access Chugai’s
SMART-Ig
®
and ACT-Ig
®
. In 2020, we also entered into a non-exclusive research agreement with the Clayton
Foundation under which we may access the Clayton Foundation’s proprietary DHS mutations to extend the serum half-
life of therapeutic antibodies.
SC drug delivery technologies
We have exclusive access to Halozyme’s ENHANZE
®
SC drug delivery technology for the FcRn and C2 targets and
four additional targets. ENHANZE
®
has the potential to shorten drug administration time, reduce healthcare practitioner
time, and offer additional flexibility and convenience for patients.
In addition, in April 2021, we entered into the Elektrofi Agreement with Elektrofi to explore new SC formulations
utilizing Elektrofi’s high concentration technology for efgartigimod, and up to one additional target.
For more information on our collaborations, please refer to
“
Item 4.B. — Business Overview — Collaboration
Agreements
”
and to “
Item 4.B. — Business Overview — License Agreements”
.
Partnered Programs
Refer to “
Item 4.B. — Business Overview — Collaboration Agreements
”
and to “
Item 4.B. — Business Overview —
License Agreements
” for a description of collaboration and license agreements that we have entered into to further
leverage our IIP.
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Strategy and Objectives
•
Our goal is to transform the lives of at least 50,000 patients and their communities before 2030 by providing them
with life-changing medicines built on scientific breakthroughs in immunology. To reach this goal, we plan to deliver
a set of different strategies:
•
Maximize the VYVGART® opportunity: redefine treatment expectations for MG and CIDP, and deliver 6 additional
labelled indications
We plan to do this through our differentiated scientific and clinical activities and our commercial
execution to drive VYVGART preference. Our PFS with PDUFA Date in April 2025 as a perfect example of our
continued innovation for the patient experience. Beyond neurology, we plan to establish argenx and VYVGART in
rheumatology as we prepare for data in Myositis and SjD, while also maximizing the therapeutic potential of
VYVGART in other indications through the execution of multiple Phase 2 and Phase 3 studies.
•
Maximize the empasiprubart opportunity: establish its potential as a pipeline-in-a-product
We plan to develop argenx
as scientific leader in complement inhibitions and elevate the differentiation story. In particular, we have advanced
the clinical development of empasiprubart in MMN, currently in Phase 3, DGF in the context of kidney transplants
and DM, currently in Phase 2, and expect to start a registrational clinical trial for our fourth selected indication, CIDP
in 2025. For both MMN and CIDP we will prepare for launches, building on key elements of the VYVGART
playbook.
•
Build a sustainable, diversified portfolio of breakthrough and differentiated antibody-based products
We plan to
further advance ARGX-119 to a differentiated first-in-class MuSK agonist in multiple indications (CMS, ALS, SMA,
1 new indication), maximize our leadership position in the FcRn space through multiple generations of projects (e.g.
ARGX-213), substantially grow our clinical portfolio of differentiated pipeline-in-a-product opportunities
(ARGX-109, ARGX-121, ARGX-220, ARGX-213, other), create an exciting portfolio of promising new assets
(through our IIP) and advance our clinical trial designs and speed.
•
Grow a unique, global biotech company by scaling the argenx Way: one company, one plan, on a mission to achieve
the unthinkable
We plan to embed the argenx Way throughout the organization, who we are through our cultural
pillars and how we work through our operating principles. We want to demystify innovation and make it everyone’s
business, strengthen the ‘winning’ competencies to share the future of argenx and advance our partnership approach
to access. To be able to continue in this way, we plan to remain a magnet for talent and create unlimited opportunities
for growth and development of our people, an important driver of developing the business.
•
Ensure long-term sustainability
We plan to continue to seek out, listen to and prioritize on behalf of the patient in all
what we do, accelerate the science of immunology by being an active and trusted partner in the global immunology
ecosystem through high-quality publications and patent applications, elevate and expand our relationships with
regulatory, payors and policy stakeholders and create long-term shareholder value.
•
In our 2030 vision
, we aim to build on our strong strategic pillars to have a continuous pipeline of innovation,
strengthen our FcRn leadership and scale in a disciplined way. Our goal is to have 5 new molecules in Phase 3
development, 10 labelled indications and reaching 50,000 patients who are on treatment by 2030.
Competitive position
We participate in a highly innovative industry characterized by a rapidly growing understanding of disease biology,
quickly changing technologies, strong intellectual property barriers to entry, and a multitude of companies involved in
the creation, development and commercialization of novel therapeutics. Many of these companies are highly
sophisticated and often strategically collaborate with each other.
Competition in the autoimmune field is intense and involves multiple
monoclonal antibodies (
mAbs
)
, other biologics and
small molecules either already marketed or in development by many different companies, including large pharmaceutical
companies. We compete with a wide range of biopharmaceutical companies, who are developing products for the
treatment of gMG, CIDP, ITP and other autoimmune diseases, including products that are in the same class as
VYVGART, as well as products that are similar to some of our product candidates. We are aware of several FcRn
inhibitors that are in clinical development or marketed. Competitive product launches may erode future sales of our
products, including our existing products and those currently under development, or result in unanticipated product
obsolescence. Such launches continue to occur, and potentially competitive products are in various stages of
development. We could also face competition for use of limited international infusion sites, particularly in new markets
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as competitors launch new products. We cannot predict with accuracy the timing or impact of the introduction of
competitive products that treat diseases and conditions like those treated by our products or product candidates. In
addition, our competitors compete with us to recruit and retain qualified scientific and management personnel, establish
clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or
necessary for, the development of our products.
Please refer to “
Item 3.D. — Risk Factors — Risk Factors Related to
Commercialization of argenx's Products and Product Candidates, Including for New Indications — We face significant
competition for our drug discovery and development efforts”
for further details on the competition we face.
Manufacturing and Supply
We utilize third-party contract manufacturers who act in accordance with the FDA’s current good manufacturing
practices (
cGMPs
) for the manufacture of drug substance and drug product. We continue to build our global network of
contract manufacturers to support the development and commercialization of our products. We work with Lonza teams
based in Slough, UK, Portsmouth, U.S., Singapore and Visp, Switzerland for activities relating to the development of
cell banks, development of our manufacturing processes and the manufacturing of drug substance, thereby using
validated and scalable systems broadly accepted in our industry. In 2022, we started our collaboration with FUJIFILM
Diosynth Biotechnologies Denmark ApS (
Fujifilm
) based in Hillerød, Denmark, for activities relating to the large-scale
manufacturing of efgartigimod drug substance. We use additional contract manufacturers to fill, label, package, store and
distribute (investigational) drug products.
Intellectual Property
Introduction
We strive to protect and maintain exclusivity for the proprietary technologies that we believe are important to our
business, patients, and shareholders. We continue to pursue and maintain patent protection intended to cover core
platform technologies incorporated into, or used to produce, our product candidates and commercial products. We will
seek protection for our innovations in key global jurisdictions. We continue to focus our exclusivity strategies on all
aspects of our assets, including our compositions of matter, methods of use for our approved products, and other
inventions that are important to our business (e.g., the patient innovations described in our product labels/product inserts
and our core manufacturing technologies).
Our intellectual property portfolio continues to grow and keep pace with the innovations arising from our discovery,
development, and commercial efforts. We expect the total volume of patent positions under our management to increase
each year as our pipeline evolves. We currently oversee more than 500 pending applications and granted patents. More
importantly, as we continue to innovate for patients, we will work to protect our patient innovations with new intellectual
property filings to enable future reinvestment for patients.
In addition to patent protection, we rely on trademarks and trade secrets to protect aspects of our business that are not
amenable to, or that we do not consider appropriate for, patent protection, including certain aspects of our llama
immunization and antibody affinity maturation approaches.
Our commercial success depends in part upon our ability to obtain and maintain exclusivity, including regulatory
exclusivities, patent, and other proprietary protection for commercially important technologies, inventions and know-
how related to our business. We will defend and enforce our intellectual property rights, particularly our patent rights,
and preserve the confidentiality of our trade secrets while operating without infringing valid and enforceable intellectual
property rights of others. Specifically, we are materially dependent on regulatory, patent and other proprietary protection
related to our core platform technologies, described in
“
Item 4.B. — Business Overview
—
Intellectual Property
—
Platform Technologies
” below and our product candidates, as described in
“
Item 4.B.
—
Business Overview
—
Intellectual Property
—
Our internal Programs
” below and
“
Item 4.B.
—
Business Overview
—
Intellectual Property
—
Our Partnered Programs
” below.
The patent positions for biotechnology companies like us are generally uncertain and can involve complex legal,
scientific, and factual issues. In addition, the coverage recited in the claims in a patent application can be significantly
reduced before a patent is issued, and claim scope can be reinterpreted and even challenged after issuance. As a result,
we cannot guarantee that any of our platform technologies and product candidates, or products will be protectable or
remain protected by enforceable patents. We cannot predict whether pending patent applications will issue as patents in
any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from
competitors. Any patents we hold may be challenged, circumvented, or invalidated by third parties.
The term of individual patents depends on the patent laws in the countries in which they are obtained. In most countries,
the patent term is 20 years from the earliest date of filing a non-provisional patent application.
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In the U.S., the term of a patent covering an FDA-approved drug may be eligible for a limited patent term extension
under the Drug Price Competition and Patent Term Restoration Act of 1984 (
Hatch-Waxman Act
) as compensation for
the loss of patent term during the FDA regulatory review process as described in
“
Item 4.B. — Business Overview
—
Regulation
—
Licensure and Regulation of Biologics in the U.S.
” below. Similar provisions are available in the EU and
in other jurisdictions to extend the term of a patent that covers an approved drug or its use. It is possible that issued U.S.
patents covering each of our products/product candidates may be entitled to patent term extensions. If our product
candidates receive FDA approval, we intend to apply for patent term extensions, if available, to extend the term of
patents that cover the approved product candidates and/or their uses. We also intend to seek patent term extensions in
any jurisdictions where available. There is no guarantee that the applicable authorities, including the FDA, will agree
with our assessment of whether such extensions should be granted, and if granted, the length of such extensions.
Platform Technologies
With regard to our platform technologies, we own or control intellectual property rights directed to our SIMPLE
ANTIBODY™ discovery platform, the ABDEG™ and NHANCE™ technologies.
With regard to our SIMPLE ANTIBODY™ discovery platform, we have a broad patent portfolio providing exclusivity
on the SIMPLE ANTIBODY™ platform. We expect to enjoy exclusivity under this patent portfolio until between 2029
and 2033.
With regard to the ABDEG™ platform, we co-own the technology with the University of Texas Southwestern Medical
Center and enjoy certain exclusive license rights. We have a broad patent portfolio covering the composition of matter
and uses of certain FcRn antagonists to achieve certain biological effects. The composition of matter and other relevant
patents in the U.S. expire in 2036 whereas in many other countries the base expiry date is 2034.
With regard to the
NHANCE™
platform, we exclusively licensed two U.S. patents from the University of Texas
Southwestern Medical Center with composition of matter claims directed to an IgG molecule comprising a variant
human Fc domain, and method of use claims directed to a method of blocking FcRn function in a subject by providing to
the subject such an IgG molecule. The U.S. patents are expected to expire earliest in 2027 to 2028. The patent family
also includes a granted European patent.
Our Internal Programs
efgartigimod
efgartigimod incorporates the ABDEG™ platform technology. We anticipate several more patient innovations to evolve
during development for which we will seek additional patent protection.
Our ARGX-109 Product Candidate
With regard to our wholly-owned ARGX-109 product candidate, we have one patent family with composition of matter
claims directed to ARGX-109. The patent family has a base expiry date in 2033. We anticipate several more patient
innovations to evolve during development for which we will seek additional patent protection. Furthermore, ARGX-109
incorporates or employs the SIMPLE ANTIBODY™ platform technology and the NHANCE™ platform technology.
empasiprubart Product Candidate
With regard to the empasiprubart product candidate, we own or have rights to multiple patent families (including one in-
licensed patent family from Broteio) with several granted patents and pending patent applications in multiple
jurisdictions in North America, South America, the EU and Asia, directed to composition of matter claims and method
of treatment claims. The in-licensed patent family from Broteio has granted patents in several countries/regions and has a
base expiry date in 2034. Additional patent families include granted patents with base expiry dates in 2039 and 2040. We
anticipate several more patient innovations to evolve during development for which we will seek additional patent
protection. empasiprubart product candidate incorporates or employs the NHANCE™ platform technology.
Our ARGX-119 Product Candidate
With regard to the ARGX-119 product candidate, we in-licensed patent families from/with NYU Langone Health, a U.S.
medical center based in New York, and additional patent families from/with the LUMC, with a U.S. granted patent and
several pending applications in multiple jurisdictions. We anticipate several more patient innovations to evolve during
development for which we will seek additional patent protection.
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Our ARGX-118 Product Candidate
With regard to the ARGX-118 product candidate, we co-own a patent portfolio with VIB, an inflammation research
center in Ghent, Brussels, and Ghent University, with one U.S. granted patent and pending patent applications in
multiple jurisdictions in North America, South America, the EU and Asia. The patent family has a base expiry date in
2039.
Our Partnered Programs
Our cusatuzumab (ARGX-110) Product Candidate
With regard to the cusatuzumab product candidate, we have a broad patent portfolio that include claims to the
composition of matter, uses of the molecule, and other important inventions. The issued U.S. patents expire in 2032 and
2033, without taking a potential patent term extension into account. cusatuzumab incorporates or employs the SIMPLE
ANTIBODY™ and POTELLIGENT
®
platform technologies.
Our ARGX-115 (ABBV-151) Product Candidate
With regard to the ARGX-115 (ABBV-151) product candidate that we co-own with, and exclusively license from, the
Ludwig Institute for Cancer Research and UCL, we have a patent portfolio that includes a U.S. patent with a base expiry
date in 2034, without taking a potential patent term extension into account. There is a second family with meaningful
patent coverage to the composition of matter and epitope claims that are expected to expire in 2036 and 2038.
Furthermore, ARGX-115 (ABBV-151) incorporates or employs the SIMPLE ANTIBODY™ platform technology.
Our ARGX-112 (LP-0145) Product Candidate
With regard to the ARGX-112 (LP-0145) product candidate, we have one patent family with composition of matter
claims directed to an antibody that binds human IL-22R. The patent family has a base expiry date in 2037. Furthermore,
ARGX-112 (LP-0145) incorporates the SIMPLE ANTIBODY™ platform technology.
Collaborations and licenses
We follow a disciplined strategy to maximize the value of our pipeline. We plan to retain all development and
commercialization rights to those products and product candidates that we believe we can commercialize successfully, if
approved.
We have partnered, and plan to continue to partner, to develop products and product candidates that we believe have
promising utility in disease areas or have patient populations that may benefit from resources of other biopharmaceutical
companies. We expect to continue to collaborate selectively with pharmaceutical and biotechnology companies to
leverage our platform technology and accelerate product candidate development.
We are also party to several license agreements under which we license patents, patent applications and other intellectual
property to third parties. We have also entered into several license agreements under which we license patents, patent
applications and other intellectual property from third parties. License agreements can relate to research and
development and/or commercialization of the relevant product candidates (and technologies) or products. The licensed
intellectual property covers some of our product candidates and some of the antibody engineering technologies that we
use. Some of these licenses impose various diligence and financial payment obligations on us. We expect to continue to
enter into these types of license agreements in the future.
We have entered into multiple collaboration agreements with pharmaceutical partners and license agreements, as
described below.
OncoVerity for cusatuzumab
In 2022, we, the University of Colorado Anschutz Medical Campus and the University of Colorado Health (
UCHealth
)
created an asset-centric spin-off, OncoVerity, Inc (
OncoVerity)
, focused on optimizing and advancing the development
of cusatuzumab, a novel anti-CD70 antibody, in acute myeloid leukemia (
AML
). OncoVerity is an entity of co-creation,
combining the extensive translational biology insights from Dr. Clayton Smith, M.D. from the University of Colorado
with our experience on the CD70/CD27 pathway.
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In 2023, we granted an exclusive license for cusatuzumab to OncoVerity and provided, together with a joint venture of
University of Colorado Health and University License Equity Holdings, Inc. on the University of Colorado Anschutz
Medical Campus, and funding for ongoing clinical development of cusatuzumab.
In 2024, we participated in a further funding round to support the continued, ongoing, clinical development of
cusatuzumab by OncoVerity.
Our Strategic Partnership with LEO Pharma for ARGX-112 (LP0145)
In May 2015, we entered into a collaboration agreement with LEO Pharma A/S (
LEO Pharma
) to develop and
commercialize ARGX-112 (LP0145) for the treatment of dermatologic indications involving inflammation (
LEO
Pharma Collaboration Agreement
). ARGX-112 (LP0145) employs our SIMPLE ANTIBODY™ technology and blocks
the IL-22R in order to neutralize the signaling of cytokines implicated in autoimmune diseases of the skin. LEO Pharma
funded more than half of all product development costs up to clinical trial application (
CTA
) approval of a first product
in a Phase 1 clinical trial, with our share of such costs capped, which was achieved in April 2018. Since then, LEO
Pharma has been solely responsible for funding the clinical development of the program. In May 2021, CTA approval of
a Phase 2a clinical trial for LP0145 was received.
In September 2022, LEO Pharma, exercised its option to obtain, and was granted an exclusive, worldwide license to
further develop and commercialize ARGX-112 against payment of a €5.0 million option fee to us. LEO Pharma assumed
full responsibility for the continued development, manufacture and commercialization of such product and is subject to
diligence obligations in respect of continuation of development and commercialization of such product. We are eligible
to receive additional development, regulatory and commercial milestone payments in aggregate amount of up to €120.0
million, as well as tiered royalties on product sales at percentages ranging from the low single digits to the low teens,
subject to customary reductions.
Unless earlier terminated, the term of the LEO Pharma Collaboration Agreement ends upon the later of (i) the expiration
of the last license granted under the agreement, and (ii) the fulfilment of all payment obligations under the agreement.
LEO Pharma may terminate the LEO Pharma Collaboration Agreement for any reason upon prior written notice to us.
LEO Pharma’s royalty payment obligations expire, on a product-by-product and country-by-country basis, upon the later
of (i) a time when no valid claims covering such product, and (ii) (a) in major market countries with no composition of
matter patent covering such product, the expiration of the data exclusivity period or (b) in countries that are not major
market countries, a double-digit number of years after the first commercial sale of such product sold in that country.
Our Strategic Partnership with Zai Lab for efgartigimod
Pursuant to the Zai Lab Agreement, Zai Lab obtained the exclusive right to develop and commercialize efgartigimod in
Greater China. Zai Lab will also contribute patients to our global Phase 3 clinical trials of efgartigimod. Our Zai Lab
strategic collaboration allows us to accelerate development of efgartigimod into new autoimmune indications with Zai
Lab taking operational leadership of selected Phase 2 POC Clinical trials.
We are eligible to receive a one-time sales based milestone and tiered royalties (mid-teen to low-twenties on a
percentage basis) based on annual net sales of efgartigimod in Greater China thereafter.
Our Strategic Partnership with AbbVie for ARGX-115 (ABBV-151)
In April 2016, we entered into a collaboration agreement with AbbVie to develop and commercialize ARGX-115
(ABBV-151) as a cancer immunotherapy against the novel target glycoprotein A repetitions predominant (
GARP
) (the
AbbVie Collaboration Agreement
). ARGX-115 (ABBV-151) employs our SIMPLE ANTIBODY™ platform technology
and works by stimulating a patient’s immune system after a tumor has suppressed the immune system by co-opting
immunosuppressive cells such as regulatory T cells. Under the terms of the AbbVie Collaboration Agreement, we were
responsible for conducting and funding all ARGX-115 (ABBV-151) research and development activities up to
completion of investigational new drug
(IND
) enabling studies.
AbbVie has exercised its option and obtained a worldwide, exclusive license to the ARGX-115 (ABBV-151) program to
develop and commercialize products and has assumed development obligations, including the sole responsibility for all
research, development and regulatory costs relating to ARGX-115 (ABBV-151)-based products. Subject to the
continuing progress of ARGX-115 (ABBV-151) by AbbVie, we are eligible to receive development, regulatory and
commercial milestone payments in aggregate amounts of up to $110 million, $190 million and $325 million,
respectively, as well as tiered royalties on product sales at percentages ranging from the mid-single digits to the lower
teens, subject to customary reductions.
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Pursuant to the AbbVie Collaboration Agreement, we have the right, on a product-by-product basis, to co-promote
ARGX-115 (ABBV-151) based products in the European Economic Area (
EEA
) and Switzerland and to combine the
product with our own future oncology programs (if any). The co-promotion effort would be governed by a co-promotion
agreement negotiated in good faith by the parties.
Unless earlier terminated upon mutual agreement, for material breach or as otherwise specified in the AbbVie
Collaboration Agreement, the term of the license agreement ends, with respect to the ARGX-115 (ABBV-151) program,
upon fulfilment of all payment obligations under the agreement.
AbbVie may terminate the AbbVie Collaboration Agreement for any reason upon prior written notice to us. AbbVie’s
royalty payment obligations expire, on a product-by-product and country-by-country basis, on the date that is the later of
(i) such time as there are no valid claims covering such product, (ii) expiration of regulatory or market exclusivity in
respect of such product or (iii) 10 years after the first commercial sale of such product sold in that country under the
AbbVie Collaboration Agreement.
Our Exclusive License with Elektrofi for efgartigimod
In April 2021, we entered into the Elektrofi Agreement with Elektrofi to explore new SC formulations utilizing
Elektrofi’s high concentration technology for efgartigimod, and up to one additional target. The Elektrofi-enabled
formulations are aimed to promote additional optionality for patients through at-home and self-administration
capabilities.
Under the terms of the Elektrofi Agreement, we made an upfront payment and committed to future milestones payments
across both targets pending achievement of pre-defined development, regulatory, and commercial milestones. Elektrofi
is also eligible to receive a mid-single digit royalty on sales of commercialized products.
Our collaboration with Genmab
In 2023, we entered into a collaboration with Genmab to jointly discover, develop and commercialize novel therapeutic
antibodies with applications in immunology, as well as in oncology therapeutic areas. The multiyear collaboration is
expected to leverage the antibody engineering expertise and knowledge of disease biology of both companies to
accelerate the identification and development of novel antibody therapeutic candidates with a goal to address unmet
patient needs in immunology and cancer. Under the terms of the collaboration, we and Genmab each have access to the
suites of proprietary antibody technologies of both companies to advance the identification of lead antibody candidates
against differentiated disease targets.
Our Non-Exclusive Research License and Option Agreement with Chugai for SMART-Ig
®
and ACT-Ig
®
In September 2020, we entered into a non-exclusive research license and option agreement with Chugai, allowing us to
access Chugai’s SMART-Ig
®
and ACT-Ig
®
engineering technologies for conducting feasibility clinical trials. These
technologies are designed to enable us to make sweeping antibodies and expand the therapeutic index of our product
candidates, which is the ratio between toxic and therapeutic dose, by potentially modifying their half‑life, tissue
penetration, rate of disease target clearance and potency.
Our Non-exclusive License with the Clayton Foundation for DHS mutations
In October 2020, we entered into a non-exclusive research agreement with the Clayton Foundation relating to the non-
exclusive in-license for Clayton Foundation’s proprietary DHS mutations to extend the serum half-life of therapeutic
candidates.
Our Exclusive License with Halozyme for ENHANZE
®
In February 2019, we entered into an in-license agreement with Halozyme for the use of certain patents, materials and
know-how owned by Halozyme and relating to its ENHANZE
®
, for application in the field of prevention and treatment
of human diseases (the
ENHANZE
®
License Agreement
). Pursuant to the ENHANZE
®
License Agreement, we were
granted exclusive rights to apply ENHANZE
®
to biologic products against pre-specified targets, in order to research,
develop and commercialize SC formulations of our therapeutic antibody-based product candidates.
Our first therapeutic target for which we received an exclusive license from Halozyme was FcRn, which allows us to
apply ENHANZE
®
to efgartigimod and any other product candidates selective and specific for FcRn. Moreover, the
breadth of our exclusive license to FcRn precludes either Halozyme itself or any of its current or future partners from
utilizing ENHANZE
®
in the context of an FcRn-targeted product. Our second therapeutic target for which we received
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an exclusive license from Halozyme was human C2 associated with the product candidate empasiprubart, which is being
developed to treat severe autoimmune diseases. Pursuant to the ENHANZE
®
License Agreement, we also have the right
to nominate future targets for an exclusive ENHANZE
®
license if the target in question has not already been licensed by
Halozyme or is not already being pursued by Halozyme.
In October 2020, we expanded our collaboration with Halozyme for ENHANZE
®
drug delivery technology to include
three additional exclusive targets upon nomination bringing the total to six potential targets. From the effective date of
the ENHANZE
®
License Agreement, we have a seven-year period in which to conduct research and preclinical trials on
other target-specific molecules in combination with ENHANZE
®
.
In September 2024, we expanded the existing global collaboration and license agreement with Halozyme by nominating
four additional targets for a total of six, including FcRn and C2.
The royalty rate for all products under the agreement is a tiered low-to-mid-single digit rate based on target and annual
net sales until expiration of Halozyme's ENHANZE® related patents, when the rate will be reduced in one or more steps.
Royalties will be paid for the longer of 10 years from the first commercial sale or until the expiration of the last valid
claim of a co-formulation patent.
Pursuant to the ENHANZE
®
License Agreement, we have the right to grant sublicenses to our subsidiaries and to third
parties both for research/preclinical work (for example, to subcontractors) and for development and commercialization.
Halozyme provides dedicated specialist support to us which it has accrued over 10 years of licensing ENHANZE
®
to its
collaborators.
We have diligence obligations with respect to the continuation of development and commercialization of product
candidates, but we are not obligated to utilize ENHANZE
®
for every product candidate directed to a given exclusive
target(s).
We may terminate the ENHANZE
®
License Agreement at any time, either in its entirety or on a target-by-target basis,
by sending Halozyme prior written notice. Absent early termination, the ENHANZE
®
License Agreement will
automatically expire upon the expiry of our royalty payment obligations under the agreement. In the event the
ENHANZE
®
License Agreement is terminated for any reason, the license granted to us would terminate but Halozyme
would grant our sublicensees a direct license following such termination. In the event the ENHANZE
®
License
Agreement is terminated other than for our breach, we would retain the right to sell licensed products then on hand for a
certain period of time post-termination.
As also set out in
“Item 6.A — DIRECTORS AND SENIOR MANAGEMENT
” below, our n
on-executive director in the
Board of Directors (
Non-Executive Director
)
James Daly previously served as a non-executive member of the board of
directors of Halozyme. Mr. Daly did not participate in any discussions and decision making relating to the ENHANZE
®
License Agreement. The ENHANZE
®
License Agreement with Halozyme was not a related party transaction in
accordance with IAS 24 - Related Party Disclosures, since Mr. Daly, in his role as
Non-Executive Director
, did not
control or have significant influence over argenx or Halozyme.
Our Exclusive License with Agomab for ARGX-114 (AGMB-101)
In March 2019, we entered into an exclusive out-license with Agomab for the use of certain patent rights relating to our
proprietary suite of technologies for the development and commercialization of a series of agonistic anti-MET SIMPLE
ANTIBODY™ generated antibodies, including ARGX-114 (AGMB-101), a halofuginone-mimetic antibody directed
against the MET receptor. Agomab is required to use commercially reasonable efforts to develop and commercialize at
least one licensed product. In connection with our entry into this agreement, we received a profit-sharing certificate
which entitles us to 20% of all distributions to Agomab’s shareholders (which shall be reduced to 10% following the
filing of an IND and is subject to further adjustment upon the occurrence of certain financings). Upon the occurrence of
a qualified initial public offering of Agomab, the profit-sharing certificate will automatically be converted into the
equivalent number of ordinary shares in Agomab. This agreement is subject to mutual termination for material breach or
insolvency and automatically expires upon the expiration of the last to expire of our licensed patent rights.
Our Exclusive License with Broteio for empasiprubart
In March 2017, we entered into a collaboration with Broteio in connection with our IIP, to develop an antibody against a
novel target in the complement cascade, empasiprubart (
Broteio Agreement
). Under the Broteio Agreement, we have
jointly developed the complement-targeted antibody and established preclinical POC using our proprietary suite of
technologies. Upon successful completion of these preclinical studies, we exercised an exclusive option to in-license the
program in March 2018 and assumed responsibility for further development and commercialization. Pursuant to the
Broteio Agreement, we are obligated to make milestone payments upon the occurrence of certain development
milestones (up to an aggregate of €4.0 million), commercialization milestones (up to an aggregate of €10.0 million) and
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pay tiered royalties on net sales in the low single digits. We may terminate the Broteio Agreement for convenience upon
90 days prior written notice. The Broteio Agreement is also subject to mutual termination for material breach or
insolvency and automatically expires upon the expiration of our financial obligations thereunder.
Our Exclusive License with VIB for ARGX-118
In November 2016, we entered into a collaboration under our IIP with VIB vzw (
VIB
) to develop antibodies against
Galectin-10, the protein of Charcot-Ley-den Crystals, which play a major role in severe asthma and the persistence of
mucus plugs, including ARGX-118 (
VIB Agreement
). Pursuant to the VIB Agreement, we are jointly developing
antibodies against Galectin-10 using our proprietary suite of technologies. Upon successful completion of this initial
research, we exercised an exclusive option to in-license the program and assumed responsibility for further development
and commercialization.
Under the VIB Agreement, including as amended in November 2018, we are obligated to make
milestone payments upon the occurrence of certain development milestones (up to an aggregate of €4.0 million),
commercialization milestones (up to an aggregate of €11.0 million) and pay tiered royalties on net sales in the low single
digits. We may terminate the VIB Agreement for convenience upon 90 days prior written notice. The VIB Agreement is
also subject to mutual termination for material breach, insolvency or certain patent challenges and automatically expires
upon the expiration of VIB’s licensed patent rights.
Our Exclusive License with the University of Texas for NHANCE™ and ABDEG™
In February 2012, we entered into an exclusive in-license with the Board of Regents of the University of Texas System
(
UT BoR
) for the use of certain patent rights relating to the NHANCE™ platform for any use worldwide (the
UT
Agreement
). The UT Agreement was amended on December 23, 2014 to also include certain additional patent rights
relating to the ABDEG™ platform. Upon commercialization of any of our products that use the in-licensed patent rights,
we will be obligated to pay UT BoR a percentage of net sales as a royalty until the expiration of any patents covering the
product. This royalty varies with net sales volume and is subject to an adjustment for royalties we receive from a
sublicensee of our rights under the UT Agreement, but in any event does not exceed 1%. In addition, we must make
annual license maintenance payments to UT BoR until termination of the UT Agreement and we have assumed certain
development and commercial milestone payment and reimbursement obligations. We also have diligence requirements
with respect to development and commercialization of products which use the in-licensed patent rights.
Pursuant to the UT Agreement, we may grant sublicenses to third parties. If we receive any non-royalty income in
connection with such sublicenses, we must pay UT BoR a percentage of such income varying from low-middle single
digits to middle-upper single digits depending on the nature of the sublicense. Such fees are waived if a sublicensee
agrees to pay the milestone payments as set forth in the UT Agreement.
We may unilaterally terminate the UT Agreement for convenience upon prior written notice. Absent early termination,
the UT Agreement will automatically expire upon the expiration of all issued patents and filed patent applications within
the patent rights covered by the UT Agreement. Our royalty payment obligations expire, on a product-by-product and
country-by-country basis, at such time as there are no valid claims covering such product.
Our Non-Exclusive License with BioWa and Non-Exclusive Commercial Licenses with BioWa and Lonza for
POTELLIGENT
®
In October 2010, we entered into a non-exclusive license agreement with BioWa, Inc. (
BioWa
) for the use of certain
patents and know-how owned by BioWa and relating to its POTELLIGENT
®
platform technology, for use in the field of
prevention and treatment of human diseases. Pursuant to this agreement, we are granted a non-exclusive right to use
POTELLIGENT
®
to research and develop antibodies and products containing such antibodies using POTELLIGENT
®
.
In 2013 and 2014, we entered into non-exclusive license agreements for POTELLIGENT
®
CHOK1SV with BioWa and
Lonza Sales AG (
Lonza
) for the further development, manufacturing and commercialization of ARGX-110 and
ARGX-111, respectively (the
POTELLIGENT
®
License Agreements
).
Upon commercialization of our products developed using POTELLIGENT
®
, we will be obligated to pay BioWa and
Lonza a percentage of net sales of a licensed product as a royalty. This royalty varies with net sales volume, ranging in
the low single digits, and it is reduced by half if during the following 10 years from the first commercial sale of the
product in a country the last valid claim within the licensed patent(s) that covers the product expires or ends. In addition,
we must make annual research license maintenance payments which cease with commencement of our royalty payments
to BioWa. We have diligence requirements with respect to the continuation of development and commercialization of
products.
We have also assumed certain development, regulatory and commercial milestone payment obligations and
must report on our progress toward achieving these milestones on an annual basis. Milestones to BioWa are to be paid
on a commercial target-by-commercial target basis, and we are obligated to make milestone payments in aggregate
amounts of up to $36 million per commercial target should we achieve annual global sales of over $1 billion.
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Pursuant to the POTELLIGENT
®
License Agreements, we have the right to grant sublicenses to third parties. BioWa
retains a right of first negotiation for the exclusive right to develop and commercialize, in certain countries only, any
product we develop using POTELLIGENT
®
.
We may terminate the POTELLIGENT
®
License Agreements at any time by sending BioWa and Lonza prior written
notice. Absent early termination, the POTELLIGENT
®
License Agreements will automatically expire upon the expiry of
our royalty obligations under the POTELLIGENT
®
License Agreements. In the event a POTELLIGENT
®
License
Agreement is terminated for any reason, the license granted to us would terminate but BioWa would grant our
sublicensees a direct license following such termination. In the event the POTELLIGENT
®
License Agreement is
terminated other than for our breach or insolvency, we would retain the right to sell licensed products then on hand for a
certain period of time post-termination.
Our non-exclusive license with Lonza for Multi-product GS Xceed
®
-License
On February 4, 2015, we entered into a non-exclusive multi-product in-license agreement with Lonza (the
Multi-Product
License
) for use of Lonza’s proprietary glutamine synthetase gene expression system known as GS Xceed
®
consisting of
Chinese hamster ovary cell line and the vectors for the manufacturing of drug substance. This system is used for the
manufacturing of, amongst others, efgartigimod, empasiprubart and ARGX-119.
Pursuant to the Multi-Product License, we have the right to grant sublicenses to certain pre-approved third parties
without prior written consent of Lonza, but otherwise we must obtain Lonza’s prior written consent.
We have assumed certain development, regulatory and commercial milestone payment obligations to Lonza. We are
required to pay such milestones using this system.
We may terminate the Multi-Product License on a product-by-product basis by giving Lonza prior written notice. Lonza
may terminate the Multi-Product License solely in case of breach or insolvency events. Absent early termination, the
Multi-Product License will automatically expire upon the expiry of the last valid claim for such product. We or our
strategic partners would retain the right to sell the respective products then on hand post-termination.
Our Collaboration with Université Catholique de Louvain (UCL) and Sopartec S.A. (Sopartec) for GARP
In January 2013, we entered into a collaboration and exclusive product license agreement with UCL and its technology
transfer company Sopartec to discover and develop novel human therapeutic antibodies against GARP (
GARP
Agreement
). Pursuant to the GARP Agreement, each party is responsible for all of its own costs in connection with the
activities assigned to it under a mutually agreed research plan.
In January 2015, we exercised the option we were granted under the GARP Agreement to enter into an exclusive,
worldwide commercial in-license for use of certain GARP-related intellectual property rights owned by UCL and the
Ludwig Institute for Cancer Research to further develop and commercialize licensed products, including the GARP-
neutralizing antibody ARGX-115 which was discovered under the original collaboration (
GARP License
). Upon the
expiration of the GARP Agreement, the GARP License will become a fully paid-up, perpetual worldwide exclusive
license under the GARP intellectual property for any purpose, subject to UCL’s retention of non-commercial research
rights.
Pursuant to the GARP License, we may grant sublicenses to third parties and affiliates of such third parties. In 2016, we
entered into an exclusive collaboration and license agreement with AbbVie regarding ARGX-115. From any income we
receive in connection with these sublicenses, such as in connection with AbbVie Collaboration Agreement, we must pay
Sopartec a percentage of that income in the lower teen digit range. Royalty payment obligations expire on a product-by-
product and country-by-country basis when there are no valid claims covering the ARGX-115 product. We also have
diligence obligations with respect to the continued development and commercialization of ARGX-115 products.
Our Exclusive Licenses with NYU Langone Health and LUMC for ARGX-119
In 2019 and 2020, we entered into collaboration and exclusive license agreements with NYU Langone Health and
LUMC, respectively, under our IIP to develop antibodies targeting the MuSK, for the treatment neuromuscular diseases,
which play a major role at the neuromuscular junction (
NYU and LUMC Agreements
). Pursuant to the NYU and LUMC
Agreements, we, NYU and LUMC jointly developed antibodies against MuSK using our proprietary suite of
technologies. Under the NYU and LUMC Agreements, as amended, we are obligated to make milestone payments upon
the occurrence of certain development milestones, commercialization milestones and pay tiered royalties on net sales in
the low single digits.
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Trade Secret Protection
In addition to patent protection, we rely on trade secret protection to ensure exclusivity for our proprietary information
that is not amenable to, or that we do not consider appropriate for, patent protection, including, for example, certain
aspects of our llama immunization and antibody affinity maturation approaches. However, trade secrets can be difficult
to protect. Although we take steps to protect our proprietary information, including restricting access to our premises and
our confidential information, as well as entering into agreements with our employees, consultants, advisors and potential
collaborators, third parties may independently develop the same or similar proprietary information or may otherwise gain
access to our proprietary information. As a result, we may be unable to meaningfully protect our trade secrets and
proprietary information.
Regulation
Government authorities in the U.S., at the federal, state and local level, and in the EU and its Member States, and other
countries and jurisdictions, extensively regulate, among other things, the research, development, testing, manufacture,
quality control, approval, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing,
post-approval monitoring and reporting, and import and export of pharmaceutical products, including biological
products. In addition, many countries and jurisdictions regulate the pricing of pharmaceutical products. The processes for
obtaining marketing approvals in the U.S. and in other countries and jurisdictions, along with subsequent compliance
with applicable statutes and regulations and other regulatory authorities, require the expenditure of substantial personnel
and financial resources, and breach of which can result in enforcement activity under civil, administrative and / or
criminal law.
Licensure and Regulation of Biologics in the U.S.
In the U.S., biological products used for the prevention, treatment, or cure of a disease or condition in a human being are
subject to regulation under the U.S. Federal Food, Drug, and Cosmetic Act (
FDCA
) and its implementing regulations.
Biologics are approved for marketing under provisions of the Public Health Service Act (
PHSA
) via biologics license
applications (
BLAs
).
An applicant seeking approval to market and distribute a new biologic in the U.S. generally must satisfactorily complete
each of the following steps:
•
preclinical laboratory tests, animal studies and formulation studies all performed in accordance with applicable
requirements, including the GLPs;
•
submission to the FDA of an IND application for human clinical testing, which contains results of the preclinical
tests, together with manufacturing information and analytical data and must become effective before human clinical
trials may begin;
•
approval by an institutional review board (
IRB
) representing each clinical site before each clinical trial may be
initiated;
•
performance of adequate and well-controlled human clinical trials to establish the safety, potency and purity of the
product candidate for each proposed indication, in accordance with good clinical practices (
GCPs
);
•
preparation and submission to the FDA of a BLA for a biological product requesting marketing for one or more
proposed indications, including submission of detailed information on the manufacture and composition of the
product in clinical development and proposed labeling;
•
one or more FDA inspections of the manufacturing facility or facilities, including those of third parties, at which the
product, or components thereof, are produced to assess compliance with cGMP requirements and to assure that the
facilities, methods and controls are adequate to preserve the product’s identity, potency, quality and purity;
•
FDA inspections of the clinical trial sites and/or sponsor to assure compliance with GCPs, and the integrity of clinical
data in support of the BLA;
•
payment of user fees and securing FDA approval of the BLA and licensure of the new biological product; and
•
compliance with any post-approval requirements, including the potential requirement to implement a risk evaluation
and mitigation strategy (
REMS
) and any post-approval studies required by the FDA.
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Human Clinical Trials in Support of a BLA
Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined. Additional
clinical trials may be required after approval.
•
Phase 1 clinical trials are initially conducted in a limited population to test the product candidate for safety, including
adverse effects, dose tolerance, absorption, metabolism, distribution, excretion and PD in healthy humans or, in
patients.
•
Phase 2 clinical trials are generally conducted in a limited patient population to identify possible adverse effects and
safety risks, evaluate the efficacy of the product candidate for specific targeted indications and determine dose
tolerance and optimal dosage. Multiple Phase 2 clinical trials may be conducted by the sponsor to obtain information
prior to beginning larger Phase 3 clinical trials.
•
Phase 3 clinical trials are undertaken within an expanded patient population to gather additional information about
safety and effectiveness necessary to evaluate the overall benefit-risk relationship of the drug and to provide an
adequate basis for physician labeling.
A sponsor who wishes to conduct a clinical trial outside the U.S. may, but is not required to, obtain FDA clearance to
conduct the clinical trial under an effective IND. If a foreign clinical trial is not conducted under an IND, the sponsor
may submit data from the clinical trial to the FDA in support of the BLA so long as the clinical trial is well-designed and
well-conducted in accordance with GCPs, including review and approval by an independent ethics committee, and the
FDA is able to validate the clinical trial data through an onsite inspection, if necessary. In some cases, the FDA may
approve a BLA for a product candidate but require the sponsor, or the sponsor may otherwise choose, to conduct
additional clinical trials to further assess, amongst other things, the product candidate’s safety and effectiveness after
approval. Such post-approval clinical trials are typically referred to as Phase 4 clinical trials. Failure to exhibit due
diligence with regard to conducting required Phase 4 clinical trials could result in FDA enforcement, including
withdrawal of approval for products.
Review and Approval of a BLA
The results of product candidate development, preclinical testing and clinical trials, including negative or ambiguous
results as well as positive findings, are submitted to the FDA as part of a BLA requesting a license to market the product.
The BLA also must contain extensive manufacturing information and detailed information on the composition of the
product and proposed labeling as well as payment of a user fee, unless exempt.
The FDA has 60 days after submission of the application to conduct an initial review to determine whether the BLA is
sufficient to file based on the agency’s threshold determination that it is sufficiently complete to permit substantive
review. If the FDA determines the BLA is not sufficiently complete, it will refuse to file the BLA. Once the submission
has been filed, the FDA begins an in-depth review of the application. Under the goals agreed to by the FDA under the
PDUFA, the FDA has 10 months from the filing date in which to complete its initial review of a standard application and
respond to the applicant, and six months from the filing date for an application granted priority review. The FDA does
not always meet its PDUFA goal dates and they may be extended in certain circumstances.
After the FDA’s evaluation of the application and accompanying information, including the results of any necessary
inspections, the FDA will issue an approval letter, or a complete response letter. An approval letter authorizes
commercial marketing of the product with specific prescribing information for specific indications. Under the PHSA, the
FDA may approve a BLA if it determines that the product is safe, pure and potent and the facility where the product will
be manufactured meets standards designed to ensure that it continues to be safe, pure and potent. If the application is not
approved, the FDA will issue a complete response letter, which will identify the deficiencies in the application. Sponsors
that receive a complete response letter may resubmit to the FDA information addressing the issues identified by the
FDA, withdraw the application, or request a hearing. Even if a BLA is resubmitted with data and information addressing
the deficiencies, the FDA may decide that the BLA does not satisfy the criteria for approval.
The FDA may also refer the application to an advisory committee, consisting of independent experts, for review,
evaluation and recommendation as to whether the application should be approved, particularly when applications present
difficult or novel questions of safety or efficacy. The FDA is not bound by the recommendations of an advisory
committee, but it considers such recommendations carefully when making decisions.
If the FDA approves a new product, it may require testing and surveillance programs to monitor the product after
commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms,
including REMS, to help ensure that the benefits of the product outweigh the potential risks. REMS can include
medication guides, communication plans for healthcare professionals, and/or elements to assure safe use. This can
include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under
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certain circumstances, special monitoring, and the use of patent registries. The FDA may prevent or limit further
marketing of a product based on the results of post-market studies or surveillance programs.
After approval, many types of changes to the approved product, such as adding new indications, certain manufacturing
changes, and additional labeling claims, are subject to further testing requirements and FDA review and approval.
Expedited Development and Review Programs
The FDA is authorized to designate products meeting certain criteria for expedited development and review programs.
Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets
the conditions for qualification, or the time period for FDA review or approval may not be shortened.
The FDA may designate a product for fast track review if it is intended, whether alone or in combination with one or
more other products, for the treatment of a serious or life-threatening disease or condition, and demonstrates the potential
to address unmet medical needs for such a disease or condition. For fast track products, sponsors may have more
frequent interactions with the FDA and the FDA may initiate review of sections of a fast track product’s application
before the application is complete (rolling review). The sponsor must also provide, and the FDA must approve, a
schedule for the submission of the remaining information and the sponsor must pay applicable user fees. However, the
FDA’s PDUFA clock for a rolling review application does not begin until the last section of the application is submitted.
A product may be designated as a breakthrough therapy if it is intended, either alone or in combination with one or more
other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that
the product may demonstrate substantial improvement over existing therapies on one or more clinically significant
endpoints, such as substantial treatment effects observed early in clinical development. The FDA may take certain
actions with respect to breakthrough therapies, including holding meetings with the sponsor throughout the development
process; providing timely advice to the product sponsor regarding development and approval; involving more senior
staff in the review process; assigning a cross-disciplinary project lead for the review team; and taking other steps to
design the clinical trials in an efficient manner. Breakthrough therapy designation also comes with all of the benefits of
fast-track designation.
The FDA may designate a product for priority review if it is a product that treats a serious condition and, if approved,
would provide a significant improvement in safety or effectiveness. The FDA determines, on a case-by-case basis,
whether the proposed product represents a significant improvement when compared with other available therapies.
Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition,
elimination or substantial reduction of a treatment-limiting product reaction, documented enhancement of patient
compliance that may lead to improvement in serious outcomes, or evidence of safety and effectiveness in a new
subpopulation. A priority designation is intended to direct overall attention and resources to the evaluation of such
applications, and to shorten the FDA’s goal for taking action on a marketing application from 10 months to six months
after accepting the application for filing.
The FDA may grant accelerated approval to a product for a serious or life-threatening condition that provides meaningful
therapeutic advantage to patients over existing treatments based upon a determination that the product has an effect on a
surrogate endpoint that is reasonably likely to predict clinical benefit or on a clinical endpoint that can be measured
earlier than an effect on irreversible morbidity or mortality (
IMM
) and that is reasonably likely to predict an effect on
IMM or other clinical benefit (intermediate clinical endpoint), taking into account the severity, rarity, or prevalence of
the condition and the availability or lack of alternative treatments. Products granted accelerated approval must meet the
same statutory standards for safety and effectiveness as those granted traditional approval.
For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radio-
graphic image, physical sign, or other measure that is thought to predict clinical benefit but is not itself a measure of
clinical benefit. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. An
intermediate clinical endpoint is a measurement of a therapeutic effect that is considered reasonably likely to predict the
clinical benefit of a product, such as an effect on IMM.
The accelerated approval pathway is most often used in settings in which the course of a disease is long and an extended
period of time is required to measure the intended clinical benefit of a product, even if the effect on the surrogate or
intermediate clinical endpoint occurs rapidly. Thus, accelerated approval has been used extensively in the development
and approval of products for treatment of a variety of cancers in which the goal of therapy is generally to improve
survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large
clinical trials to demonstrate a clinical or survival benefit.
The accelerated approval pathway is usually contingent on a sponsor’s agreement to conduct, in a diligent manner, a
post-approval confirmatory clinical trial or studies to verify and describe the product’s clinical benefit. These
confirmatory clinical trials must be completed with due diligence, and the FDA may require that the confirmatory
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clinical trial be designed, initiated, and/or fully enrolled prior to, or within a certain period following, approval. The FDA
must also specify the conditions of any required post-approval clinical trial. Sponsors are required to submit progress
reports for required post-approval studies, and the failure to conduct with due diligence a required post-approval clinical
trial, including a failure to meet any required conditions specified by the FDA, or to submit timely reports, are prohibited
acts under the FDCA. Failure to conduct required post-approval studies, or confirm a clinical benefit during post-
marketing studies, would allow the FDA to withdraw the product from the market on an expedited basis. Unless
otherwise informed by the FDA, all promotional materials for product candidates approved under accelerated approval
are subject to prior review by the agency.
Orphan Drug Designation and Exclusivity
Orphan drug designation in the U.S. is designed to encourage sponsors to develop products intended for rare diseases or
conditions. In the U.S., a rare disease or condition is statutorily defined as a condition that affects fewer than 200,000
individuals in the U.S. or that affects more than 200,000 individuals in the U.S. and for which there is no reasonable
expectation that the cost of developing and making available the product for the disease or condition will be recovered
from sales of the product in the U.S. An application for designation as an orphan product can be made any time prior to
the filing of an application for approval to market the product. If the FDA grants orphan drug designation, the generic
identity of the product and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation qualifies
a company for tax credits. Orphan drug designation does not convey any advantage in or shorten the duration of the
regulatory review and approval process.
If a product that has orphan drug designation subsequently receives the first FDA approval for the disease or condition
for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not
approve any other application to market the same drug for the same indication for seven years from the date of such
approval, except in limited circumstances, such as a showing of clinical superiority to the product with orphan
exclusivity by means of greater effectiveness, greater safety or providing a major contribution to patient care, or if the
holder of the orphan exclusivity is unable to supply the market. Competitors, however, may receive approval of either a
different product for the same indication or the same product for a different indication, which could be used off-label in
the orphan indication. Orphan drug exclusivity also could block the approval of one of our products for seven years if a
competitor obtains approval before we do for the same product, as defined by the FDA, for the same indication we are
seeking approval, or if our product is determined to be contained within the scope of the approval of the competitor’s
product for the same indication or disease.
Post-Approval Regulation
If regulatory approval for marketing of a product or new indication for an existing product is obtained, the sponsor will
be required to comply with all post-approval regulatory requirements, including those that the FDA has imposed as part
of the approval process. The sponsor will be required to report certain adverse reactions and production problems to the
FDA, provide updated safety and efficacy information and comply with requirements concerning advertising and
promotional labeling. Manufacturers and other parties involved in the drug supply chain for prescription drug and
biological products must also comply with product tracking and tracing requirements and must notify the FDA of
counterfeit, diverted, stolen and intentionally adulterated products or products that are otherwise unfit for distribution in
the U.S. Manufacturers and certain of their subcontractors are required to register their establishments with the FDA and
certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for
compliance with ongoing regulatory requirements, including cGMPs. Accordingly, the sponsor and its third-party
manufacturers must continue to expend time, money and effort in the areas of production and quality control to maintain
compliance with cGMPs and other regulatory requirements.
A biological product may also be subject to official lot release, meaning that the manufacturer is required to perform
certain tests on each lot of the product before it is released for distribution. If the product is subject to official lot release,
the manufacturer must submit samples of each lot, together with a release protocol showing a summary of the history of
manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot, to the FDA. The FDA may
in addition perform certain confirmatory tests on lots of some products before releasing the lots for distribution. Finally,
the FDA will conduct laboratory research related to the safety, purity, potency and effectiveness of biological products.
Any distribution of biological products and samples must comply with the U.S. Prescription Drug Marketing Act and the
PHSA.
Once approval of a BLA is granted, the FDA may revoke or suspend the approval if compliance with regulatory
requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery
of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with
manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved
labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or
imposition of distribution or other restrictions under a REMS program. FDA also has authority to require post-market
studies, in certain circumstances, on reduced effectiveness of a product and may require labeling changes related to new
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reduced effectiveness information. Other potential consequences for a failure to maintain regulatory compliance include,
among other things:
•
restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market, or
product recalls;
•
fines, untitled letters, or warning letters;
•
refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or
revocation of product license approvals;
•
product seizure or detention, or refusal to permit the import or export of products; or
•
injunctions or the imposition of civil or criminal penalties.
Pediatric Studies and Exclusivity
Under the Pediatric Research Equity Act of 2003, as amended (
PREA
), certain BLAs or supplements thereto must
contain data that are adequate to assess the safety and effectiveness of the product for the claimed indications in all
relevant pediatric sub-populations, and to support dosing and administration for each pediatric subpopulation for which
the product is safe and effective. Sponsors must also submit an initial Pediatric Study Plan (
PSP
), within 60 days of an
end-of-Phase 2 meeting or, if there is no such meeting, as early as practicable before the initiation of the Phase 3 or
Phase 2/3 clinical trial. The initial PSP plans must contain an outline of the proposed pediatric clinical trial or studies the
applicant plans to conduct, including clinical trial objectives and design, any deferral or waiver requests and other
information required by regulation. The applicant and the FDA must agree upon a final plan. The FDA or the applicant
may request an amendment to the plan at any time.
The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all
pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data
requirements. Unless otherwise required by regulation, PREA does not apply to a biologic for an indication for which
orphan designation has been granted, except that PREA will apply to an original BLA for a new active ingredient that is
orphan-designated if the biologic is a molecularly targeted cancer product intended for the treatment of an adult cancer
and is directed at a molecular target that FDA determines to be substantially relevant to the growth or progression of a
pediatric cancer.
Pediatric exclusivity is another type of non-patent regulatory exclusivity in the U.S. and, if granted for a biologic,
provides for the attachment of an additional six months of protection to the term of any existing regulatory exclusivity
(i.e., reference product exclusivity and orphan drug exclusivity) that has at least 9 months left to expiration. This six-
month exclusivity may be granted if a BLA sponsor submits reports of pediatric studies that fairly respond to a written
request from the FDA for such studies, were conducted in accordance with commonly accepted scientific principles and
protocols, and have been reported in accordance with filing requirements.
Biosimilars and Exclusivity
The Biologics Price Competition and Innovation Act (
BPCIA
) established a regulatory scheme authorizing the FDA to
approve biosimilars and interchangeable biosimilars.
Under the BPCIA, an applicant may submit an application for licensure of a biologic product that is “biosimilar to” or
“interchangeable with” a previously approved biological product or “reference product.” For the FDA to approve a
biosimilar product, it must find that the proposed biosimilar is highly similar to the reference product notwithstanding
minor differences in clinically inactive components and that there are no clinically meaningful differences between the
product and the reference product in terms of safety, purity, or potency. For the FDA to approve a biosimilar product as
interchangeable with a reference product, the agency must find that the biosimilar product is biosimilar to the reference
product and that it can be expected to produce the same clinical results as the reference product in any given patient, and
(for products administered multiple times) that the biologic and the reference biologic may be alternated or switched
after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to
exclusive use of the reference biologic without such alternation or switch.
Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following
the date of approval of the reference product. The FDA may not approve a biosimilar product until 12 years from the
date on which the reference product was approved. Even if a product is considered to be a reference product eligible for
exclusivity, another company could market a competing version of that product if the FDA approves a full BLA for such
product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to
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demonstrate the safety, purity and potency of their product. We note that patent positions may be available to preclude
the introduction into commerce of such competing product independent of any FDA exclusivities. The BPCIA also
created certain exclusivity periods for biosimilars approved as interchangeable products. Products deemed
interchangeable by the FDA may be substituted by pharmacies as dictated by individual state law.
U.S. Patent Term Restoration
Depending upon the timing, duration, and specifics of FDA review and approval of our product candidates, some of our
U.S. patents may be eligible for limited patent term extension under the Hatch-Waxman Act that permits restoration of
the patent term of up to five years as compensation for patent term lost during the FDA regulatory review process.
Patent-term restoration, however, cannot extend the remaining term of a patent beyond a total of 14 years from the
product’s approval date, and only those claims covering such approved product, a method for using it or a method for
manufacturing it may be extended. The patent-term restoration period is generally one-half the time between the
effective date of an IND and the submission date of a BLA plus the time between the submission date of a BLA and the
approval of that application, except that the review period is reduced by any time during which the applicant failed to
exercise due diligence. Only one patent applicable to an approved biologic is eligible for the extension and the
application for the extension must be submitted within 60 days of approval from FDA and prior to the expiration of the
patent. The U.S. Patent and Trademark Office (
USPTO
), in consultation with the FDA, reviews and approves the
application for any patent term extension or restoration. In the future, we may apply for restoration of patent term for our
currently owned or licensed patents to add patent life beyond the current expiration date, depending on the expected
length of the clinical trials and other factors involved in the filing of the relevant BLA.
Regulation and Procedures Governing Approval of Medicinal Products in the European Union and the UK
Similar to the U.S., the EU, and the UK comprehensively regulate, among other things, the development, manufacturing,
placing on the market, advertising, distribution, import and export of medicinal products. Particularly, the placing on the
market of a medicinal product for human use in the EU requires a marketing authorization (
MA
). Main Provisions
governing medicinal products in the EU are Directive 2001/83/EC and Regulation (EC) No 726/2004 (each as amended).
Regulation (EC) No 141/2000 and Regulation (EC) No. 847/2000 (each as amended) are also of particular relevance for
orphan medicinal products. While directives need to be transposed into national law by member states of the EU (
EU
Member States
) before they are applicable, regulations directly apply in the EU Member States once these have been
enacted.
The process governing approval of MA applications (
MAA
) for the placing on the market of medicinal products in the
EU and the UK generally follows the same lines as in the U.S. It entails satisfactory completion of pharmaceutical
development, pre-clinical trials and adequate and well-controlled clinical trials to establish the safety and efficacy of the
medicinal product for each proposed indication. The EU also requires the submission to relevant competent authorities
for clinical trials authorization and to the European Medicines Agency (
EMA
) or to competent authorities in EU member
states and granting of such MA by the EU Commission or relevant national authorities before the medicinal product can
be marketed and sold in the EU or the relevant EU Member States. The below mentioned principles and rules generally
apply within the EEA, i.e., the EU including Iceland, Liechtenstein and Norway.
Following the UK’s departure from the EU, a separate MA is required from the Medicines and Healthcare Products
Regulatory Agency (the
MHRA
), the UK medicines regulator, in order to place medicinal products on the market in the
Great Britain (England, Wales and Scotland), which has been extended to Northern Ireland following the Windsor
Framework having taken effect (see below)). Under the recently introduced International Recognition Procedure (IRP),
the MHRA may take into account decisions from the EMA (and certain other international regulators) when considering
an application for an MA. In respect of Northern Ireland, the UK government and the EU have agreed to replace the
Northern Ireland Protocol (pursuant to which the EU regulatory framework continued to apply to Northern Ireland) with
the ‘Windsor Framework’. Under the Windsor Framework, the MHRA is responsible for approving all medicinal
products destined for the entire UK market (including Northern Ireland), and the EMA no longer has any role in
approving medicinal products destined for Northern Ireland. The medicines aspects of the Windsor Framework came
into force on January 1, 2025.
Clinical Trial Approval
Both non-clinical and clinical data are generally required to support an MA for a medicinal product in the EU. Non-
clinical investigations are performed to demonstrate the health or environmental safety of new biological substances.
Non-clinical (pharmaco-toxicological) investigations must generally be conducted in compliance with the principles of
good laboratory practice (GLP) as set forth in EU Directive 2004/10/EC (as amended).
Clinical trials are comprehensively regulated under the Clinical Trials Regulation (EU) No 536/2014 (
CTR
), which
entered into application on January 31, 2022, and (gradually) replaces the Clinical Trials Directive 2001/20/EC (
CTD
).
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By January 30, 2025, all still ongoing clinical trials under the CTD must be transitioned to the CTR. The CTR, aims to
simplify and streamline the approval of clinical trials in the EU.
As before, many of the legal obligations are on the so-called sponsor, which is defined as the individual, company,
institution, or organization that takes responsibility for the initiation, for the management and for setting up the financing
of a clinical trial. The sponsor must obtain an authorization from the competent authority in the EU Member State(s) in
which the clinical trial will be conducted as well as an approval from the competent national ethics committee in
accordance with relevant national legislation in each of the relevant member states, before the commencement of such
clinical trial.
The CTR also imposes requirements, among others, regarding the conduct of a clinical trial (which must be conducted in
accordance with the protocol and good clinical practice to generate acceptable data for MA submission), safety reporting
of adverse events and reactions, changes to clinical trials, protection and informed consent of clinical trial subjects.
Clinical trials conducted outside the EEA must follow the principles set forth in EU legislation if their results are to be
submitted in an application for an MA in the EU.
Before its exit from the EU, the UK implemented the CTD into national law through the Medicines for Human Use
(Clinical Trials) Regulations 2004 (as amended). The entry into application of the CTR took place after the UK’s
departure from the EU, so it does not apply to Great Britain. The MHRA ran a consultation on reforms to the UK clinical
trials legislation, the outcome of which was published in March 2023. New draft legislation was laid for consideration
before the UK P
ar
liament in mid-December 2024. The draft regulations include a 12-month implementation period. The
UK’s new clinical trials regime is therefore expected to come into force in early 2026 or thereafter.
Orphan Designation and Exclusivity
Regulation (EC) No. 141/2000 and Regulation (EC) No. 847/2000 (each as amended) provide that a product can be
designated as an orphan medicinal product by the EU Commission if its sponsor can establish: (i) that the product is
intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition, (ii) either
(a) the prevalence of the condition is not more than five in ten thousand persons in the EU when the application is made,
or (b) without incentives it is unlikely that the marketing of the product in the EU would generate sufficient return to
justify the necessary investment in its development and (iii) there exists no satisfactory method of diagnosis, prevention,
or treatment of the condition in question that has been authorized in the EU or, if such method exists, the product has to
be of a significant benefit compared to products available for the condition.
An orphan designation provides a number of benefits, including fee reductions and, regulatory assistance. If an MA is
granted for an orphan medicinal product, this generally results in a ten-year period of market exclusivity for the approved
orphan indication. It is, however, not possible to combine non-orphan and orphan indications within the same MA. Thus,
for non-orphan indications treated with the same active pharmaceutical ingredient, a separate MA has to be sought.
Alternatively, the orphan designation may be waived to allow for the addition of non-orphan indications to an existing
MA. As a result, the approved medicinal product would no longer profit from the orphan designation’s benefits.
During an orphan medicinal product’s market exclusivity period, neither the EMA, the EU Commission nor the EU
Member States can accept an application or grant an MA for a “similar medicinal product.” A “similar medicinal
product”, i.e., a medicinal product containing a similar active substance or substances as contained in an authorized
orphan medicinal product, and which is intended for the same therapeutic indication. The market exclusivity period for
the authorized therapeutic indication may, however, be reduced to six years if, at the end of the fifth year, it is
established that the product no longer meets the criteria for orphan designation. For orphan medicinal products intended
for pediatric use, the market exclusivity period may be prolonged by additional two years if they are authorized with a
pediatric indication based on the results from studies conducted under an EMA-approved pediatric investigation plan or
if they are authorized without a pediatric indication but the results of the studies conducted under the EMA-approved
pediatric investigation plan are reflected in the summary of product characteristic and, if appropriate, in the package
leaflet. Market exclusivity may also be revoked in very select cases, such as if (i) it is established that a similar medicinal
product is safer, more effective or otherwise clinically superior; (ii) the MA holder (
MAH
) for the authorized orphan
medicinal product consents to the second orphan application; or (iii) the MA holder for the authorized orphan medicinal
product cannot supply sufficient quantities. Orphan designation must be requested before submitting an MAA and is
reconfirmed during the MAA process. Orphan designation does not convey any advantage in, or shorten the duration of,
the regulatory review and MA approval process.
Since January 1, 2021, a separate process for orphan designation has applied in Great Britain. There is no pre-marketing
authorization orphan designation (as there is in the EU) and the application for orphan designation is reviewed by the
MHRA, at the time of an MAA for a UK or Great Britain marketing authorization. Until January 1, 2025, a UK-wide
orphan MAA could only be considered in the absence of an active EU orphan designation. From January 1, 2025, MAs
granted for products that fulfil UK orphan criteria are valid UK-wide (including in Northern Ireland), regardless of
whether there is an EU orphan designation or EU authorization as an orphan medicinal product. The criteria are the same
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as in the EU and, following implementation of the Windsor Framework from January 1, 2025, apply to the whole of the
UK. The criteria are that: the medicine must be intended for the treatment, prevention or diagnosis of life-threatening or
chronically debilitating diseases; the prevalence of the condition must be no more than five in 10,000 persons in the UK
or it must be unlikely that the medicine’s marketing would generate sufficient returns to justify the investment needed
for its development; and there must be no satisfactory method of diagnosis, prevention or treatment of the condition
concerned in the UK, or if such method exists the medicine must be of significant benefit to those affected by the
condition.
Marketing Authorization
To obtain an MA for a medicinal product under the EU regulatory framework, an applicant must submit an MAA, either
to the EMA using the centralized procedure or to competent authorities in the EU Member States using the other
procedures (decentralized procedure, national procedure, or mutual recognition procedure). An MA may be granted only
to an applicant established in the EU. Regulation (EC) No. 1901/2006 provides that prior to obtaining an MA in the EU,
an applicant must demonstrate compliance with all measures included in an EMA-approved pediatric investigation plan,
covering all subsets of the pediatric population, unless the EMA has granted a product-specific waiver, class waiver, or a
deferral for one or more of the measures included in the pediatric investigation plan.
The centralized procedure provides for the grant of a single MA by the EU Commission that is valid for all EEA
Member States. Pursuant to Regulation (EC) No. 726/2004 (as amended), the centralized procedure is compulsory for
specific products, including for medicines produced by certain biotechnological processes, products designated as
orphan medicinal products, advanced therapy medicinal products (gene therapy, somatic cell therapy or tissue
engineered products) and products with a new active substance indicated for the treatment of certain diseases, including
products for the treatment of cancer and auto-immune diseases and other immune dysfunctions and neurodegenerative
disorders. The centralized procedure is optional for certain other medicinal products.
Under the centralized procedure, the EMA’s Committee for Medicinal Products for Human Use (
CHMP
) is responsible
for conducting the assessment of a product to define its risk/benefit profile. The CHMP recommendation is then sent to
the EU Commission, which adopts a decision binding in all EEA Member States. Under the centralized procedure, the
maximum timeframe for the evaluation of an MA application is 210 days, excluding clock stops when additional
information or written or oral explanation is to be provided by the applicant in response to questions asked by the
CHMP, which can considerably extend the 210 days. Accelerated evaluation (150 days excluding clock stops) may be
granted by the CHMP in exceptional cases, when a medicinal product is of major interest from the point of view of
public health and, in particular, from the viewpoint of therapeutic innovation.
MAs have an initial validity for five years, in principle, and they may be renewed after five years on the basis of a
reevaluation of the risk benefit balance by the EMA, or by the competent authority of the EU Member State. Once
renewed, the MA is valid for an unlimited period, unless the EU Commission or the competent authority decides, on
justified grounds relating to pharmacovigilance, to proceed with one additional five-year renewal period. Any MA that is
not followed by the placement of the medicinal product on the EU market or on the market of the authorizing EU
Member State(s) within three years after authorization, or if the drug is removed from the market for three consecutive
years, ceases to be valid. In Great Britain, centrally authorized products converted from EU to UK marketing
authorizations will have the same renewal date.
Following the departure of the UK from the EU, the UK is no longer covered by European centralized marketing
authorizations issued by the EMA. As of January 1, 2025, the MHRA regulates medicines through UK-wide MAs and
EU centralized MAs are not valid anywhere in the UK. Instead, medicines that were previously within scope of the EU
centralized procedure are authorized by the MHRA under UK-wide MAs.
European Data and Market Exclusivity
In the EU, innovative medicinal products, approved on the basis of a complete independent data package, qualify for
eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity (for the
more comprehensive protections applying to orphan medicinal products, please refer to
“Item 4.B — Business overview
—
Orphan Designation and Exclusivity
” above). The data exclusivity, if granted, prevents generic or biosimilar
applicants from referencing the innovator’s preclinical and clinical trial data contained in the dossier of the reference
product when applying for a generic or biosimilar MA in the EU, for a period of eight years from the date on which the
reference product was first authorized in the EU. During the additional two-year period of market exclusivity, a generic
or biosimilar MAA can be submitted, and the innovator’s data may be referenced, but no generic or biosimilar product
can be marketed in the EU until the expiration of the market exclusivity period. The overall ten-year period will be
extended to a maximum of 11 years if, during the first eight years of those 10 years, the MA holder obtains an MA for
one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are
determined to bring a significant clinical benefit in comparison with currently approved therapies. There is no guarantee
that a product will be considered by the EMA to be an innovative medicinal product, and products may not qualify for
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data exclusivity. Even if a product is considered to be an innovative medicinal product so that the innovator gains the
prescribed period of data exclusivity, another company nevertheless could also market another version of the product if
such company obtained an MA based on an MAA with a complete independent data package of pharmaceutical tests,
preclinical tests and clinical trials. Similar arrangements apply in the UK.
Regulatory Requirements after Marketing Authorization
Following MA approval, the MA holder is required to comply with a range of requirements applicable to the
manufacturing, marketing, promotion and sale of the medicinal product. These include compliance with the EU’s
stringent pharmacovigilance or safety reporting rules under Directive 2001/83/EC and Regulation (EU) 726/2004 (each
as amended) and the associated guideline on good pharmacovigilance practices (as amended), pursuant to which post-
authorization studies and additional monitoring obligations can be imposed. In addition, the manufacturing of authorized
medicinal products, for which a separate manufacturer’s license is mandatory, must also be conducted in strict
compliance with the principles of good manufacturing practice (
GMP
) set forth in Commission Directive 2017/1572
GMP and comparable requirements of other regulatory bodies in the EU, which mandate the methods, facilities and
controls used in manufacturing, processing and packing of products to assure their safety and identity. Further, the
wholesale distribution of authorized medicinal products requires a separate distribution license and must be conducted in
strict compliance with good distribution practice standards. Finally, the marketing and promotion of authorized
medicinal products is strictly regulated under Directive 2001/83/EC, (as amended) and as transposed into national laws.
Potential consequences for a failure to maintain regulatory compliance mainly depend on the relevant regulations in the
EU Member States, but are, for example, in Germany, similar to those in the U.S. Please refer to
“Item 4.B — Business
overview —
Post-Approval Regulations
” above.
Proposal for new EU Pharmaceutical Legislation
On April 26, 2023, the EU Commission has published a proposal for a new directive (COM/2023/192 final) and a new
regulation (COM/2023/193 final), which would revise and replace the existing general pharmaceutical legislation,
including e.g., Directive 2001/83/EC, as well as Regulations (EC) No. 726/2004, No. 141/2000, or No. 1901/2006 (
EU
Pharmaceutical Legislation
).
Proposed amendments include, among others, modifications to the orphan designation
criteria as well as the introduction of a modulated framework for orphan market exclusivity. Regarding the latter, the
regulation proposal envisages a shift to a staggered approach. Those orphan medicinal products that address a high
unmet medical need shall still benefit from a market exclusivity period of ten years. Well-established use orphan
medicinal products will have a five-year market exclusivity period. Nine years of market exclusivity shall apply for all
other orphan medicinal products. In certain cases, exclusivity periods may be prolonged (e.g., obtaining of an MA for
one or more new therapeutic indications).
Other key points of the proposed new EU Pharmaceutical Legislation include new measures to prevent and mitigate
medicine shortages, to simplify the market entry of generics and biosimilars and the introduction of a new data
protection regime for medicinal products. The proposal remains to be agreed and adopted by the European Parliament
and European Council and may therefore be substantially revised before adoption, which is not anticipated before early
2026.
Brexit and the Regulatory Framework in the UK
On January 31, 2020, the UK officially ceased being a Member State of the EU (
Brexit
). For a period thereafter,
immediate arrangements applied governing pharmaceutical legislation in the UK. However, as from January 1, 2025,
following the implementation of the Windsor Framework, the MHRA is now the only authority approving medicines for
the UK market. The Windsor Framework replaced the Northern Ireland Protocol, under which the EU regulatory
framework continued to apply in Northern Ireland, and made the following key regulatory changes for medicines: (i)
removed EU licensing processes in relation to Northern Ireland for novel medicines; (ii) removed any requirement for
EU Falsified Medicines Directive packaging, labelling and serialization barcode for medicines in Northern Ireland; and
(iii) required all medicines placed on the UK market to be labelled ‘UK Only’, indicating they are not for sale in the
Republic of Ireland or other EU countries. More broadly, with the exception of the CTR, the UK and the EU’s regimes
for the marketing, promotion and sale of medicinal products remain aligned, as the UK’s Human Medicines Regulations
2012 (as amended) implemented prior EU legislation on these topics before Brexit, and remain in force post-Brexit.
However, these regulatory regimes may diverge increasingly in future, now that the UK’s regulatory system is formally
independent from the EU.
Regulation and Procedures Governing Approval of Medicinal Products in Japan
In order to market any medical products in Japan, a company must comply with numerous and varying regulatory
requirements regarding quality, safety and efficacy in the context, among other things, of clinical trials, marketing
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approval, commercial sales and distribution of products. A person who manufactures or markets medical products in
Japan is subject to the supervision of the Ministry of Health, Labour and Welfare (
MHLW
), primarily under the Act on
Securing Quality, Efficacy and Safety of Pharmaceuticals and Medical Devices (
Pharmaceutical and Medical Devices
Act
). This entails the satisfactory completion of pharmaceutical development, preclinical studies and adequate and well-
controlled clinical trials to establish the safety and efficacy of the medical product for each proposed indication. It also
requires the filing of a notification of clinical trials with the Pharmaceuticals and Medical Devices Agency (Japan)
(
PMDA
) and the obtaining of marketing approval from the relevant authorities before the product can be marketed and
sold in the Japanese market.
Business License
Under the Pharmaceutical and Medical Devices Act, a company or individual must obtain a Marketing Authorization
Holder (
MAH
) license from the MHLW to engage in the marketing or provision of medical products. This requirement
applies to medical products that are either manufactured by the company itself outsourced to a third party for
manufacturing or imported.
To manufacture medical products for the Japanese market, a company must obtain a manufacturing license from the
MHLW for each production facility. This license is separate from the marketing authorization and is required for both
domestic and foreign manufacturing sites.
Marketing Approval
Under the Pharmaceutical and Medical Devices Act, it is generally required to obtain marketing approval from the
MHLW for the marketing of each medical product. An application for marketing approval must be made through the
PMDA, which implements a marketing approval review.
Clinical Trial
Under the Pharmaceutical and Medical Devices Act, it is required to file notification of clinical trials with the PMDA.
The data of clinical trials and other pertinent data, which must be attached to an application for marketing approval, must
be obtained in compliance with the standards established by the MHLW, such as GLPs and GCPs stipulated by the
ministerial ordinances of the MHLW.
Regulatory Requirements after Marketing Approval
A MAH that has obtained marketing approval for a new pharmaceutical is subject to re-examination by the PMDA for a
specified period after receiving marketing approval. Such re-examination period for VYVGART is stated to be 10 years
after the marketing approval in January 2022. The purpose of this re-examination process is to ensure the safety and
efficacy of a newly approved pharmaceutical by imposing on the MAH the obligation to gather clinical data for a certain
period after the marketing approval was granted to enable the PMDA to re-examine the product. Results of use and other
pertinent data must be attached to an application for a re-examination. An MAH that has obtained a marketing approval
is also required to investigate, among other things, the results of use and to periodically report to the PMDA pursuant to
the Pharmaceutical and Medical Devices Act.
Price Regulation
Japan's public medical insurance systems cover virtually the entire Japanese population. The public medical insurance
system, however, does not cover any medical product which is not listed on the National Health Insurance (
NHI
) price
list published by the Minister of the MHLW. Accordingly, an MAH of medical products must first have a new medical
product listed on the NHI price list to obtain coverage under the public medical insurance system. VYVGART was listed
on the NHI price list in April 2022 and the price was adjusted in February 2024. VYVDURA was listed in April 2024.
The NHI price of a medical product is determined either by price comparison of comparable medical products with
necessary adjustments for innovation, usefulness or size of the market; or, in the absence of comparable medical
products, by the cost calculation method, determined after considering of the opinion of the manufacturer. Prices on the
NHI price list are subject to revision, generally once every year, based on the actual prices at which the medical products
are purchased by medical institutions.
Coverage, Pricing and Reimbursement
Significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we may
obtain regulatory approval. Even if our product candidates are approved for marketing, sales of such product candidates
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will depend, in part, on the extent to which third-party payors, including government health programs in the U.S. (such
as Medicare and Medicaid), commercial health insurers, and managed care organizations, provide coverage and establish
adequate reimbursement levels for such product candidates. Moreover, increasing efforts by governmental and third-
party payors in the EU, the U.S. and other markets to cap or reduce healthcare costs may cause such organizations to
limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or
provide adequate payment for our product candidates. We expect to experience pricing pressures in connection with the
sale of any of our product candidates due to the trend toward managed healthcare, the increasing influence of health
maintenance organizations and additional legislative changes.
The downward pressure on healthcare costs in general,
particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result,
increasingly high barriers are being erected to the entry of new products.
In the U.S. and markets in other countries, patients generally rely on third-party payors to reimburse all or part of the
costs associated with their treatment. Adequate coverage and reimbursement from governmental healthcare programs,
such as Medicare and Medicaid, and commercial payors is critical to new product acceptance. Patients are unlikely to
use any product candidates we may develop unless coverage is provided and reimbursement is adequate to cover a
significant portion of the cost of such product candidates.
Factors payors consider in determining reimbursement are based on whether the product is (i) a covered benefit under its
health plan; (ii) safe, effective and medically necessary; (iii) appropriate for the specific patient; (iv) cost-effective; and
(v) neither experimental nor investigational.
The Medicare and Medicaid programs increasingly are used as models for how private payors and other governmental
payors develop their coverage and reimbursement policies for drugs and biologics. Some third-party payors may require
pre-approval of coverage for new or innovative devices or drug therapies before they will reimburse healthcare providers
who use such therapies. It is difficult to predict at this time what third-party payors will decide with respect to the
coverage and reimbursement for our product candidates. No uniform policy for coverage and reimbursement for drug
products exists among third-party payors in the U.S. Therefore, coverage and reimbursement for drug products can differ
significantly from payor to payor including formulary tier placement and utilization management requirements (if any).
As a result, the coverage determination process is often a time-consuming and costly process that will require us to
provide scientific and clinical support for the use of our products to each payor separately, with no assurance that
coverage and adequate reimbursement will be applied consistently or obtained in the first instance. The position of a
product on a formulary generally determines the co-payment that a patient will need to make to obtain the product and
can strongly influence the adoption of a product by patients and physicians. Third-party payors may limit coverage to
specific products on a formulary, which might not include all of the approved products for a particular indication.
Additionally, a payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate
will be approved or that cost-sharing will be acceptable for patients. Coverage policies and third-party reimbursement
rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more of our
products for which we or our collaborators receive marketing approval, less favorable coverage policies and
reimbursement rates may be implemented in the future.
Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of
medical products and services and imposing controls to manage costs, especially drugs when an equivalent generic drug
or a less expensive therapy is available. It is possible that a third-party payor may consider our product candidate and
other therapies (in some cases even off-label treatments) as substitutable and only offer to reimburse patients for the less
expensive product. Even if we show improved efficacy or improved convenience of administration with our product
candidate, pricing of existing drugs may limit the amount we will be able to charge for our product candidate. These
payors may deny or revoke the reimbursement status of a given drug product or establish prices for new or existing
marketed products at levels that are too low to enable us to realize an appropriate return on our investment in product
development. If reimbursement is not available or is available only at limited levels, we may not be able to successfully
commercialize our product candidates and may not be able to obtain a satisfactory financial return on products that we
may develop.
In Mainland China, VYVGART has been included in the NRDL for the treatment of adults with gMG who are AChR-
AB+ after going through price negotiations with the National Healthcare Security Administration (NHSA) since January
2024, which means that the price of this drug can be (partly) reimbursed by the social security program of Mainland
China for the treatment of this indication in accordance with relevant rules within certain period. According to the
current regulations of Mainland China, if we want our products in addition to VYVGART to be included in the NRDL or
want VYVGART to be included in the NRDL for the treatment of other indications, we will need to go through price
negotiations with the NHSA, for which purpose we will likely need to significantly reduce their prices. Although the
inclusion of our products in the NRDL may increase the demand for the relevant products, our potential revenue from
the sales of these products may still decrease as a result of lower prices.
Furthermore, rules and regulations regarding reimbursement change frequently, in some cases at short notice, and we
believe that changes in these rules and regulations are likely. Outside the U.S., we will face challenges in ensuring
obtaining adequate coverage and payment for any product candidates we may develop. Pricing of prescription
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pharmaceuticals is subject to governmental control in many countries. In order to secure coverage and reimbursement for
any product that might be approved for sale, we have needed and may need to conduct expensive pharmacoeconomic
studies in order to demonstrate the medical necessity and cost-effectiveness of the product, and the cost of these studies
would be in addition to the costs required to obtain FDA or other comparable marketing approvals. Conducting such
studies could be expensive, involve additional risk and result in delays in our commercialization efforts. Even after
pharmacogenomic studies are conducted, product candidates may not be considered medically necessary or cost-
effective. A decision by a third-party payor not to cover any product candidates we may develop could reduce physician
utilization of such product candidates once approved and have a material adverse effect on our sales, results of
operations and financial condition. Third-party reimbursement and coverage may not be adequate to enable us to
maintain price levels sufficient to realize an appropriate return on our investment in product development. The insurance
coverage and reimbursement status of newly approved products for orphan diseases is particularly uncertain, and failure
to obtain or maintain adequate coverage and reimbursement for any such product candidates could limit our ability to
generate revenue. As noted above, in the U.S., we plan to have various programs to help patients afford our products,
including patient assistance programs and co-pay coupon programs for eligible patients. More specifically, patients can
enroll into MY VYVGART PATH™, a patient support program that provides personalized support from a nurse case
manager and committed support team. In addition to providing support on questions on the treatment and on navigating
the insurance process, the program provides a VYVGART Co-pay Program to eligible patients, aids in referring patients
to charitable foundations that may be able to help with out-of-pocket costs and informs patients of financial assistance
programs that may be available.
The containment of healthcare costs also has become a priority of U.S. federal, state and international governments and
the prices of pharmaceuticals have been a focus in this effort. Governments have shown significant interest in
implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for
substitution of generic products. Net prices for drugs may be reduced by mandatory discounts or rebates required by
government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of
drugs from countries where they may be sold at lower prices than in the U.S. Increasingly, third-party payors are
requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices
charged for medical products. We cannot be sure that reimbursement will be available for any future product candidate
that we commercialize and, if reimbursement is available, the level of reimbursement. In addition, many pharmaceutical
manufacturers must calculate and report certain price reporting metrics to the government, such as average sales price
and best price. Penalties may apply in some cases when such metrics are not submitted accurately and timely. Adoption
of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing
controls and measures, could further limit our potential revenue from the sale of any products for which we may obtain
approval.
The delivery of healthcare in the EU, including the establishment and operation of health services and the pricing and
reimbursement of medicinal products, is almost exclusively a matter for national, rather than EU, provisions and
regulations. National governments and health service providers have different priorities and approaches to the delivery of
healthcare and the pricing and reimbursement of products in that context. Therefore, in the EU, pricing and
reimbursement schemes vary widely from EU Member State to another. Some EU Member States provide that products
may be marketed only after a reimbursement price has been agreed. Some EU Member States may require the
completion of additional studies that compare the cost-effectiveness of a particular product candidate to currently
available therapies (so called health technology assessments) in order to obtain reimbursement or pricing approval. EU
Member States may approve a specific price for a product or may instead adopt a system of direct or indirect controls on
the profitability of the company placing the medicinal product on the market. Other Member States allow companies to
fix their own prices for products but monitor and control prescription volumes and issue guidance to physicians to limit
prescriptions.
Recently, many EU Member States have increased the amount of discounts required on medicinal products and these
efforts could continue as Member States attempt to further manage healthcare expenditures. For example, Germany
recently introduced a specific discount on certain combination products with new active ingredients.
The downward
pressure on healthcare costs in general, particularly medicinal prescription products, has become intense. As a result,
increasingly high barriers are being erected to the entry of new products. Political, economic and regulatory
developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement
has been obtained. Reference pricing used by various EU Member States and parallel trade (arbitrage between low-
priced and high-priced Member States) can further reduce prices. Special pricing and reimbursement rules may apply to
orphan medicinal products. Inclusion of orphan drugs in reimbursement systems tend to focus on the medical usefulness,
need, quality and economic benefits to patients and the healthcare system as for any drug. Acceptance of any medicinal
product for reimbursement may come with cost, use and often volume restrictions, which again can vary by country. In
addition, results-based rules of reimbursement may apply. There can be no assurance that any EU Member State that has
price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing
arrangements for any of our products, if approved in those countries. Historically, products launched in the EU do not
follow price structures of the U.S. and generally prices tend to be significantly lower.
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Outside the U.S., international operations are generally subject to extensive governmental price controls and other
market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada and other
countries has and will continue to put pressure on the pricing and usage of our product candidates. In many countries, the
prices of medical products are subject to varying price control mechanisms as part of national health systems. Other
countries allow companies to fix their own prices for medical products but monitor and control company profits.
Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to
charge for our product candidates. Accordingly, in markets outside the U.S., the reimbursement for our products may be
reduced compared with the U.S. and may be insufficient to generate commercially reasonable revenue and profits.
Government Pricing and Reimbursement Programs for Marketed Drugs in the U.S.
Medicaid, the 340B Drug Pricing Program, and Medicare
Federal law requires that a pharmaceutical manufacturer, as a condition of having its drug and biological products
receive federal reimbursement under Medicaid and Medicare Part B, must pay rebates to state Medicaid programs for all
units of its covered outpatient drugs dispensed to Medicaid beneficiaries and paid for by a state Medicaid program under
either a fee-for-service arrangement or through a managed care organization. This federal requirement is effectuated
through a Medicaid drug rebate agreement between the manufacturer and the Secretary of U.S. Department of Health
and Human Services (
HHS
). The Centers for Medicare Medicaid Services (
CMS
) administers the Medicaid drug
rebate agreements, which provide, among other things, that the drug manufacturer will pay rebates to each state
Medicaid agency on a quarterly basis and report certain price information on a monthly and quarterly basis. The rebates
are based on prices reported to CMS by manufacturers for their covered outpatient drugs, including average
manufacturer price (
AMP
) and best price. Effective January 1, 2024, the Medicaid total rebate amount is no longer
capped at 100% of a covered outpatient drug’s AMP, which means that a manufacturer could pay a total rebate amount
on a unit of the drug that is greater than the average price the manufacturer receives for the drug.
The terms of participation in the Medicaid drug rebate program impose an obligation to correct the prices reported in
previous quarters, as may be necessary. Any such corrections could result in additional or lesser rebate liability,
depending on the direction of the correction. In addition to retroactive rebates, if a manufacturer were found to have
knowingly submitted false information to the government, federal law provides for civil monetary penalties for failing to
provide required information, late submission of required information, and false information.
A manufacturer must also participate in a federal program known as the 340B drug pricing program in order for federal
funds to be available to pay for the manufacturer’s drug and biological products under Medicaid and Medicare Part B.
Under this program, the participating manufacturer agrees to charge certain safety net healthcare providers no more than
an established discounted price for its covered outpatient drugs. The formula for determining the discounted price is
defined by statute and is based on the AMP and the unit rebate amount as calculated under the Medicaid drug rebate
program, discussed above. Manufacturers are required to report pricing information to the Health Resources and
Services Administration on a quarterly basis. The Health Resources and Services Administration has also issued
regulations relating to the calculation of the ceiling price as well as imposition of civil monetary penalties for each
instance of knowingly and intentionally overcharging a 340B covered entity.
Federal law also requires that manufacturers report data on a quarterly basis to CMS regarding the pricing of drugs that
are separately reimbursable under Medicare Part B. These are generally drugs and biologics, such as injectable products,
that are administered incident to a physician service and are not generally self-administered. The pricing information
submitted by manufacturers is the basis for reimbursement to physicians and suppliers for drugs covered under Medicare
Part B. Under the Inflation Reduction Act (
IRA
), manufacturers are also required to provide quarterly rebates for certain
single-source drugs and biologics (including biosimilars) covered under Medicare Part B with prices that increase faster
than the rate of inflation. This requirement started on January 1, 2023 for drugs approved on or before December 1, 2020
and begins six quarters after a drug is first marketed for all other drugs. As with the Medicaid drug rebate program,
federal law provides for civil monetary penalties for failing to provide required information, late submission of required
information, and false information.
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Additionally, the Infrastructure Investment and Jobs Act added a requirement, effective January 1, 2023, for
manufacturers of certain single-source drugs (including biologics and biosimilars) separately paid for under Medicare
Part B for at least 18 months and marketed in single-dose containers or packages (known as refundable single-dose
containers or single-use package drugs) to provide annual refunds for any portions of the dispensed drug that are unused
and discarded if those unused or discarded portions exceed an applicable percentage defined by statute or regulation.
Manufacturers will be subject to periodic audits and those that fail to pay refunds for their refundable single-dose
containers or single-use package drugs shall be subject to civil monetary penalties.
Medicare Part D provides prescription drug benefits for seniors and people with disabilities. Beginning in 2025, the IRA
eliminates the coverage gap phase and associated manufacturer discounts under Medicare Part D, significantly lowers
the enrollee maximum out-of-pocket cost and establishes a new manufacturer discount program, which requires 10%
discounts in the initial phase, and 20% discounts in the catastrophic phase. Although these discounts represent a lower
percentage of enrollees’ costs than coverage gap discounts, the new manufacturer contribution during the catastrophic
phase could be considerable for certain high-cost drugs and the total contributions by manufacturers to a Part D
enrollee’s drug expenses may exceed those currently provided. The IRA also requires manufacturers to provide annual
Medicare Part D rebates for single-source drugs and biological products with prices that increase faster than the rate of
inflation.
The IRA also allows HHS to directly negotiate the selling price of a statutorily specified number of drugs and biologics
each year that CMS reimburses under Medicare Part B and Part D. Only high-expenditure single-source biologics that
have been approved for at least 11 years (7 years for single-source drugs) can qualify for negotiation, with the negotiated
price taking effect two years after the selection year. Negotiations for Medicare Part D products began in 2023 with the
negotiated price taking effect in 2026, and negotiations for Medicare Part B products will begin in 2026 with the
negotiated price taking effect in 2028.
U.S. Federal Contracting and Pricing Requirements
Manufacturers are also required to make their covered drugs, which are generally drugs approved under NDAs or BLAs,
available to authorized users of the Federal Supply Schedule (
FSS
) of the General Services Administration. The law also
requires manufacturers to offer deeply discounted FSS contract pricing for purchases of their covered drugs by the
Department of Veterans Affairs, the Department of Defense, the Coast Guard, and the Public Health Service (including
the Indian Health Service) in order for federal funding to be available for reimbursement or purchase of the
manufacturer’s drugs under certain federal programs. FSS pricing to those four federal agencies for covered drugs must
be no more than the Federal Ceiling Price (
FCP
), which is at least 24% below the Non-Federal Average Manufacturer
Price (
Non-FAMP
) for the prior year. The Non-FAMP is the average price for covered drugs sold to wholesalers or other
middlemen, net of any price reductions.
The accuracy of a manufacturer’s reported Non-FAMPs, FCPs, or FSS contract prices may be audited by the
government. Among the remedies available to the government for inaccuracies is recoupment of any overcharges to the
four specified federal agencies based on those inaccuracies.
If a manufacturer were found to have knowingly reported
false prices, in addition to other penalties available to the government, the law provides for significant civil monetary
penalties per incorrect item. Finally, manufacturers are required to disclose in FSS contract proposals all commercial
pricing that is equal to or less than the proposed FSS pricing, and subsequent to award of an FSS contract, manufacturers
are required to monitor certain commercial price reductions and extend commensurate price reductions to the
government, under the terms of the FSS contract Price Reductions Clause. Among the remedies available to the
government for any failure to properly disclose commercial pricing and/or to extend FSS contract price reductions is
recoupment of any FSS overcharges that may result from such omissions.
Healthcare Law and Regulation
Healthcare providers and third-party payors play a primary role in the recommendation and prescription of
pharmaceutical products that are granted marketing approval. Our current and future arrangements with providers,
researchers, consultants, third-party payors and customers are subject to broadly applicable federal and state fraud and
abuse, anti-kickback, false claims, transparency and patient privacy laws and regulations and other healthcare laws and
regulations that may constrain our business and/or financial arrangements. Restrictions under applicable federal and state
healthcare laws and regulations include, without limitation, the following:
•
the U.S. federal Anti-Kickback Statute (
AKS
) prohibits, among other things, persons and entities from knowingly and
willfully soliciting, receiving, offering, or paying remuneration, directly or indirectly, in cash or in kind, to induce or
reward either the referral of an individual for, or the purchase, lease, order or recommendation of, any good facility,
item, or service, for which payment may be made, in whole or in part, under a federal healthcare program such as
Medicare and Medicaid. This statute has been interpreted to apply to arrangements between pharmaceutical
manufacturers on the one hand and prescribers, purchasers formulary managers and other persons and entities on the
other. Although there are a number of statutory exceptions and regulatory safe harbors protecting certain activities
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from prosecution, the exceptions and safe harbors are drawn narrowly, and arrangements may be subject to scrutiny
or penalty if they do not fully satisfy all elements of an available exception or safe harbor. A person or entity can be
found guilty of violating the AKS without actual knowledge of the statute or specific intent to violate it. In addition,
the government may assert that a claim including items or services resulting from a violation of the AKS constitutes a
false or fraudulent claim for purposes of the federal False Claims Act or federal civil money penalties statute.
Violations of the AKS carry potentially significant civil and criminal penalties, including imprisonment, fines,
administrative civil monetary penalties, and exclusion from participation in federal healthcare programs.
•
the U.S. federal false claims and civil monetary penalties laws, including the civil False Claims Act and federal civil
monetary penalty laws, which, among other things, impose criminal and civil penalties, including through civil
whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented,
to the U.S. federal government, claims for payment or approval that are false or fraudulent, knowingly making, using
or causing to be made or used, a false record or statement material to a false or fraudulent claim or obligation to pay
or transmit money to the federal government, or from knowingly making a false statement to avoid, decrease or
conceal an obligation to pay money to the U.S. federal government. In addition, the government may assert that a
claim including items and services resulting from a violation of the AKS constitutes a false or fraudulent claim for
purposes of the False Claims Act. Manufacturers can be held liable under the False Claims Act even when they do not
submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent
claims. The False Claims Act also permits a private individual acting as a “whistleblower” to bring qui tam actions on
behalf of the federal government alleging violations of the False Claims Act and to share in any monetary recovery.
When an entity is determined to have violated the federal civil False Claims Act, the government may impose civil
fines and penalties for each false claim, plus treble damages, and exclude the entity from participation in Medicare,
Medicaid and other federal healthcare programs;
•
the U.S. federal Health Insurance Portability and Accountability Act of 1996 (
HIPAA
) which imposes criminal and
civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to
defraud any healthcare benefit program, or obtaining by means of false or fraudulent pretenses, representations, or
promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program,
regardless of the pay (e.g., public or private) or knowingly and willfully falsifying, concealing or covering up a
material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare
benefits, items or services relating to healthcare matters; similar to the AKS, a person or entity does not need to have
actual knowledge of the statute or specific intent to violate it in order to have committed a violation;
•
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (
HITECH
)
and its implementing regulations, and as amended again by the Omnibus Rule in 2013, which imposes certain
obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and
transmission of individually identifiable health information without appropriate authorization by covered entities
subject to the Final HIPAA Omnibus Rule, i.e., certain covered health plans, healthcare clearinghouses and healthcare
providers, as well as their business associates, those independent contractors or agents of covered entities that perform
certain services for or on their behalf involving the use or disclosure of individually identifiable health information.
HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties
directly applicable to business associates and possibly other persons, and gave state attorneys general new authority to
file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’
fees and costs associated with pursuing federal civil actions;
•
the federal transparency requirements known as the federal Physician Payments Sunshine Act, under the Patient
Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010
(collectively, the
ACA
), which requires certain manufacturers of drugs, devices, biologics and medical supplies to
report annually to CMS information related to payments and other transfers of value made by that entity to physicians
(currently defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician
providers such as physician assistants and nurse practitioners and teaching hospitals, as well as ownership and
investment interests held by physicians and their immediate family members. Failure to submit required information
may result in civil monetary penalties for all payments, transfers of value or ownership or investment interests that are
not timely, accurately, and completely reported in an annual submission;
•
federal government price reporting laws, which require us to calculate and report complex pricing metrics in an
accurate and timely manner to government programs;
•
federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities
that potentially harm consumers;
•
analogous state and local laws and regulations, including: state anti-kickback and false claims laws; state laws that
require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and
the relevant compliance guidance promulgated by the U.S. federal government, or otherwise restrict payments that
may be made to healthcare providers and other potential referral sources; state and local laws that require the
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licensure of sales representatives; state laws that require drug manufacturers to report information related to payments
and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing
information; state laws governing the privacy and security of health information in certain circumstances, many of
which differ from each other in significant ways and may not have the same effect; and state laws related to insurance
fraud in the case of claims involving private insurers; and
•
EU, UK and other foreign law equivalents, including reporting requirements detailing interactions with and payments
to healthcare providers and data privacy and security laws and regulations that may be more stringent than those in
the U.S.
State and foreign laws, including for example the EU General Data Protection Regulation (
GDPR
), also govern the
privacy and security of health information in some circumstances, many of which differ from each other in significant
ways and often are not preempted by HIPAA, thus complicating compliance efforts. There are ambiguities as to what is
required to comply with these state requirements and if we fail to comply with an applicable state law requirement, we
could be subject to penalties.
We have and will continue to spend substantial time and money to ensure that our business arrangements with third
parties comply with applicable healthcare laws and regulations. Recent healthcare reform legislation has strengthened
these federal and state healthcare laws. Because of the breadth of these laws and the narrowness of the statutory
exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge
under one or more of such laws.
Other laws that may affect our ability to operate include:
•
the anti-inducement law prohibits, among other things, the offering or giving of remuneration, which includes,
without limitation, any transfer of items or services for free or for less than fair market value (with limited
exceptions), to a Medicare or Medicaid beneficiary that the person know or should know is likely to influence the
beneficiary’s selection of a particular supplier of items or services reimbursable by a federal or state governmental
program; and
•
European and other foreign law equivalents of each of the laws, including reporting requirements detailing
interactions with and payments to healthcare providers.
In the U.S., to help patients afford our approved product, we may utilize programs to assist them, including patient
assistance programs and co-pay coupon programs for eligible patients. Government enforcement agencies have shown
increased interest in pharmaceutical companies’ product and patient assistance programs, including reimbursement
support services, and a number of investigations into these programs have resulted in significant civil and criminal
settlements. In addition, at least one insurer has directed its network pharmacies to no longer accept co-pay coupons for
certain specialty drugs the insurer identified. Our co-pay coupon programs could become the target of similar insurer
actions. In addition, in November 2013, the CMS issued guidance to the issuers of qualified health plans sold through the
ACA’s marketplaces encouraging such plans to reject patient cost-sharing support from third parties and indicating that
the CMS intends to monitor the provision of such support and may take regulatory action to limit it in the future. The
CMS subsequently issued a rule requiring individual market qualified health plans to accept third-party premium and
cost-sharing payments from certain government-related entities. In September 2014, the Office of the Inspector General
of the HHS issued a Special Advisory Bulletin warning manufacturers that they may be subject to sanctions under the
AKS and/or civil monetary penalty laws if they do not take appropriate steps to exclude Part D beneficiaries from using
co-pay coupons. Accordingly, companies exclude these Part D beneficiaries from using co-pay coupons. Additionally,
certain third-party payors are modifying benefit designs based on the availability of manufacturer cost-sharing assistance
(e.g., copay accumulator or maximizer programs). Following a federal district court decision vacating the provisions of
the 2021 Notice of Benefit and Payment Parameter final rule that provided health plans with discretion whether to
include manufacturer assistance toward the cost-sharing limit, CMS stated its intent to address this issue in future
rulemaking. It is possible that changes in insurer policies regarding co-pay coupons and/or the introduction and
enactment of new legislation or regulatory action could restrict or otherwise negatively affect these patient support
programs, which could result in fewer patients using affected products, and therefore could have a material adverse
effect on our sales, business, and financial condition.
Third-party patient assistance programs that receive financial support from companies have become the subject of
enhanced government and regulatory scrutiny. The Office of the Inspector General of the HHS has established
guidelines that suggest that it is lawful for pharmaceutical manufacturers to make donations to charitable organizations
who provide co-pay assistance to Medicare patients, provided that such organizations, among other things, are bona fide
charities, are entirely independent of and not controlled by the manufacturer, provide aid to applicants on a first-come
basis according to consistent financial criteria and do not link aid to use of a donor’s product. However, donations to
patient assistance programs have received some negative publicity and have been the subject of multiple government
enforcement actions, related to allegations regarding their use to promote branded pharmaceutical products over other
less costly alternatives. Specifically, in recent years, there have been multiple settlements resulting out of government
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claims challenging the legality of their patient assistance programs under a variety of federal and state laws. It is possible
that we may make grants to independent charitable foundations that help financially needy patients with their premium,
co-pay, and co-insurance obligations. If we choose to do so, and if we or our vendors or donation recipients are deemed
to fail to comply with relevant laws, regulations or evolving government guidance in the operation of these programs, we
could be subject to damages, fines, penalties, or other criminal, civil, or administrative sanctions or enforcement actions.
We cannot ensure that our compliance controls, policies, and procedures will be sufficient to protect against acts of our
employees, business partners, or vendors that may violate the laws or regulations of the jurisdictions in which we
operate. Regardless of whether we have complied with the law, a government investigation could impact our business
practices, harm our reputation, divert the attention of management, increase our expenses, and reduce the availability of
foundation support for our patients who need assistance.
Violations of these laws or any future enacted laws can subject us to criminal, civil and administrative sanctions
including monetary penalties, damages, fines, disgorgement, individual imprisonment and exclusion from participation
in government funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and
oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-
compliance with these laws, reputational harm, and we may be required to curtail or restructure our operations.
Moreover, we expect that there will continue to be federal and state laws and regulations, proposed and implemented,
that could impact our future operations and business.
Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is
possible that some of our business activities could be subject to challenge under one or more of such laws. Ensuring that
our internal operations and future business arrangements with third parties comply with applicable healthcare laws and
regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business
practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable
fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of the laws
described above or any other governmental laws and regulations that may apply to us, we may be subject to significant
penalties, including administrative, civil and criminal penalties, damages, fines, disgorgement, the exclusion from
participation in federal and state healthcare programs, individual imprisonment, reputational harm, and the curtailment or
restructuring of our operations, as well as additional reporting obligations and oversight if we become subject to a
corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws. Further,
defending against any such actions can be costly and time-consuming, and may require significant financial and
personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought
against us, our business may be impaired. If any of the physicians or other providers or entities with whom we expect to
do business are found to not be in compliance with applicable laws, they may be subject to criminal, civil or
administrative sanctions, including exclusions from government funded healthcare programs and imprisonment. If any of
the above occur, our ability to operate our business and our results of operations could be adversely affected.
Healthcare Reform
In the U.S., the EU and other foreign jurisdictions, there have been a number of legislative and regulatory changes to the
healthcare systems that could affect our future results of operations. In particular, there have been and continue to be a
number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs and improve the quality of
healthcare. For example, the ACA, effective since March 2010, is a sweeping law intended to broaden access to health
insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new
transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health
industry and impose additional health policy reforms.
Healthcare reforms that have been adopted, and that may be adopted in the future, could result in further reductions in
coverage and levels of reimbursement for pharmaceutical products, increases in rebates payable under U.S. government
rebate programs and additional downward pressure on pharmaceutical product prices. As discussed above, in August
2022, the IRA was enacted codifying, among other things: a Medicare drug price negotiation program, under which HHS
directly negotiates the selling price of statutorily specified number of Part B and Part D drugs and biologics each year;
inflation rebates which penalizes drug manufacturers that increase prices of Medicare Part B and Part D drugs at a rate
greater than the rate of inflation; and a redesign of the Part D benefit. The IRA permits the Secretary of HHS to
implement many of these provisions through guidance, as opposed to regulation, for the initial years. Manufacturers that
fail to comply with the IRA may be subject to various penalties, including civil monetary penalties. The IRA also
extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan
year 2025. These provisions will take began taking progressively starting in 2023, although certain policies have been
subject to legal challenges. For example, the provisions related to the negotiation of selling prices of high-expenditure
single-source drugs and biologics have been challenged in multiple lawsuits. Additionally, we cannot predict whether the
U.S. Congress will amend the IRA or if the government will adopt new or different interpretations of the law in future
guidance or rulemaking. However, at this time, the Trump administration is continuing to implement the IRA and to
defend the law in litigation. While it is unclear how the IRA will be implemented in the future and the outcome of the
litigation, it will likely have a significant impact on the pharmaceutical industry.
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We expect that additional U.S. federal healthcare reform measures will be adopted in the future, any of which could limit
the amounts that the U.S. federal government will pay for healthcare products and services, which could result in
reduced demand for our product candidates or additional pricing pressures.
Further, legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and
promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be
enacted, or whether FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on
the marketing approvals, if any, of our product candidates, may be. In addition, increased scrutiny by the U.S. Congress
of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more
stringent product labeling and post-marketing conditions and other requirements.
Individual states in the U.S. have also become increasingly aggressive in passing legislation and implementing
regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement
constraints, affordability review boards, discounts, restrictions on certain product access and marketing cost disclosure
and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk
purchasing. Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm
our business, results of operations, financial condition and prospects. In addition, regional healthcare authorities and
individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which
suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate
demand for our products or put pressure on our product pricing, which could negatively affect our business, results of
operations, financial condition and prospects.
In the EU, similar political, economic and regulatory developments may affect our ability to profitably commercialize
our current or any future products. In addition to continuing pressure on prices and cost containment measures,
legislative developments at the EU (such as the above-mentioned EU Pharmaceutical Legislation) or EU Member State
level may result in significant additional requirements or obstacles that may increase our operating costs. In general the
healthcare budgetary constraints in most EU Member States have resulted in restrictions on the pricing and
reimbursement of medicines by relevant health service providers. Coupled with ever-increasing EU and national
regulatory burdens on those wishing to develop and market products, this could prevent or delay marketing approval of
our product candidates, restrict or regulate post-approval activities and affect our ability to commercialize any products
for which we obtain marketing approval.
In international markets, reimbursement and healthcare payment systems vary significantly by country, and many
countries have instituted price ceilings on specific products and therapies.
We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or
administrative action, either in the U.S. or abroad. If we or our collaborators are slow or unable to adapt to changes in
existing requirements or the adoption of new requirements or policies, or if we or our collaborators are not able to
maintain regulatory compliance, our product candidates may lose any regulatory approval that may have been obtained
and we may not sustain or achieve profitability in the future, which would adversely affect our business.
Environmental Issues which may Influence the Use of our Material Fixed Assets
Our primary research and development activities take place in our facilities in Zwijnaarde, Belgium. For these activities
we require, and have obtained, the necessary environmental and biohazard permits from the responsible governments,
required by us for the manner in which we use said facilities.
New shares created during
2024
As a result of the exercise of stock options and vesting of RSUs under our Equity Incentive Plan,
1,566,469
new shares
were created in
2024
.
Equity Incentive Plan
means
the equity incentive plan as adopted by our Board of Directors on
December 18, 2014, which was approved by the General Meeting on May 13, 2015, and amended by the General
Meeting on April 28, 2016, and November 25, 2019, and the Board of Directors on December 18, 2019, November 5,
2020, December 15, 2021 and on February 27, 2023 and on February 28, 2024.
The following table shows the developments in our share capital for the year ended
December 31, 2024
and on
February
19, 2025
:
|
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|
||
|
Number of shares outstanding on December 31, 2022
|
55,395,856
|
|
|
Number of shares outstanding on December 31, 2023
|
59,194,488
|
|
|
Exercise of stock options
|
1,478,225
|
|
|
Vesting of RSUs
|
88,244
|
|
|
Number of shares outstanding on December 31, 2024
|
60,760,957
|
|
|
Exercise of stock options in January 2025
|
223,971
|
|
|
Exercise of stock options in February 2025
|
5,929
|
|
|
Number of shares outstanding on February 19, 2025
|
60,990,857
|
C. ORGANIZATIONAL STRUCTURE
As of
December 31, 2024
,
argenx SE
has one subsidiary, argenx BV, which is based in Belgium, and argenx BV has
thirteen subsidiaries. The following table sets out the following information for each of our principal subsidiaries: the
country of incorporation, and percentage ownership and voting interest held by us (directly or indirectly through
subsidiaries).
|
As per December 31, 2024
|
||||
|
Name
|
Country
|
Participation
|
||
|
argenx SE
|
The Netherlands
|
100
%
|
||
|
argenx B.V.
|
Belgium
|
100
%
|
||
|
argenx Benelux B.V.
|
Belgium
|
100
%
|
||
|
argenx US, Inc.
|
USA
|
100
%
|
||
|
argenx Switzerland, S.A.
|
Switzerland
|
100
%
|
||
|
argenx Japan KK.
|
Japan
|
100
%
|
||
|
argenx France SAS
|
France
|
100
%
|
||
|
argenx Germany GmbH
|
Germany
|
100
%
|
||
|
argenx Canada Inc.
|
Canada
|
100
%
|
||
|
argenx UK Ltd.
|
United Kingdom
|
100
%
|
||
|
argenx Netherlands Services B.V.
|
The Netherlands
|
100
%
|
||
|
argenx Italy S.r.l.
|
Italy
|
100
%
|
||
|
argenx Spain S.L.
|
Spain
|
100
%
|
||
|
argenx Austria Services GmbH
|
Austria
|
100
%
|
||
|
argenx Australia Pty. Ltd.
|
Australia
|
100
%
|
||
The following chart provides an overview of the Group as of the date of this Annual Report. Percentages refer to both
the share of capital and voting rights.
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|
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D. PROPERTY, PLANTS AND EQUIPMENT
Our principal executive, operational offices and laboratory space located in Zwijnaarde, Belgium. In 2024, we added
new office space in Zwijnaarde. The total future cash flows related to these leases are represented below in
“
Note 21 — Leases
”
in our consolidated financial statements which are appended to our Annual Report for the period
ended
December 31, 2024
and which are incorporated herein by reference
.
We also lease office space in Amsterdam (the Netherlands), Boston (U.S.), Tokyo (Japan), Geneva (Switzerland),
Munich (Germany), Issy-Les-Moulineaux (France), Vaughan, Ontario (Canada), Gerrards Cross (UK) and Milan (Italy).
In addition, our lease liabilities include a lease plan for company cars with maturity dates up to four years.
For a discussion of contractual obligations, please see
“
Note 28 — Commitments
”
in our consolidated financial
statements which are appended to our Annual Report for the period ended
December 31, 2024
and which are
incorporated herein by reference.
We have our principal executive, operational offices and laboratory space located in Zwijnaarde, Belgium.
The
following table sets forth our key leased facilities worldwide as of
December 31, 2024
:
|
Facility location
|
Use
|
Approx. size (m2)
|
Lease expiry
|
|||
|
Zwijnaarde, Belgium (leased)
|
Operations and Laboratory Space
|
4,951
|
September 30, 2031
|
|||
|
Zwijnaarde, Belgium (leased)
|
Office Space
|
3,765
|
March 31, 2037
|
|||
|
Boston, Massachusetts (leased)
|
Office Space
|
2,379
|
August 31, 2030
|
|||
|
Tokyo, Japan (leased)
|
Office Space
|
546
|
January 17, 2027
|
Environment, Health and Safety
Our primary research and development activities take place in our facilities in Zwijnaarde, Belgium. For these activities
we require, and have obtained, the necessary environmental and biohazard permits from the responsible governments,
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following “Operating and Financial Review and Prospects” should be read together with the information in our
financial statements and related notes included elsewhere in this Annual Report. The following discussion is based on
our financial information prepared in accordance with the IFRS Accounting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB), which may differ in material respects from generally accepted
accounting principles in other jurisdictions, including U.S. GAAP. The following discussion includes forward-looking
statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those
anticipated in these forward-looking statements as a result of many factors, including but not limited to those described
in
“Item 3.D. — Risk Factors”
and elsewhere in this Annual Report. Please also see “
Cautionary Statement Regarding
Forward-Looking Statements
in this Annual Report.
A. OPERATING RESULTS
The review of the financial condition and results of operations of certain items from the year ended
December 31, 2022
,
and year-to-year comparisons between the years ended
December 31, 2023
and
December 31, 2022
that are not included
in this Annual Report can be found in
“Item 5 — Operating and Financial Review and Prospects”
of our annual report
on Form 20-F for the year ended
December 31, 2023
.
Overview
Since our inception in 2008, we have focused most of our financial resources and efforts towards developing our
SIMPLE ANTIBODY™ Platform and antibody engineering technologies, identifying potential product candidates,
establishing process, development and manufacturing capabilities for our product candidates and advancing multiple
discovery programs into the clinic. In 2022, we executed on our global launch of VYVGART our first-in-class neonatal
FcRn blocker for intravenous use, which is now approved in the U.S., Japan, the EU, Canada, China and other EMEA
jurisdictions for gMG.
In 2023, we launched VYVGART SC, the first-and-only neonatal FcRn blocker administered by subcutaneous injection.
As of the year ended December 31, 2024, it is now approved in the U.S., Japan, the EU, Canada, China and other EMEA
jurisdictions for gMG.
In 2024, we successfully started the sale of VYVGART SC for the treatment of CIDP in the U.S. and obtained approval
in China and Japan. The commercialization of VYVGART IV and VYVGART SC generated global product net sales of
$2.2
billion in 2024 as compared to
$1.2 billion
in 2023.
On our research and development, we continue towards advancing a deep pipeline of both clinical and preclinical-stage
product candidates for the treatment of severe autoimmune diseases. Leveraging our technology suite and clinical
expertise, we have advanced several candidates into late-stage clinical development and we currently have multiple
programs in the discovery stage.
As of
December 31, 2024
and
December 31, 2023
, we had cash and cash equivalents amounting to
$1.5 billion
and
$2.0
billion
, respectively; in addition to current financial assets of
$1.9 billion
and
$1.1 billion
, respectively.
Our Statement of Financial Position shows total assets of
$6.2 billion
for the year ended
December 31, 2024
, compared
to
$4.5 billion
for the year ended
December 31, 2023
. The main reason for the material change in balance sheet total is
the operational growth of the Company in the period.
Since our inception, we have incurred significant operating losses. For the year ended
December 31, 2024
the Company
recorded its first annual profit for the year of
$833 million
. In 2023, the Company recorded a loss for the year of
$295 million
. As of
December 31, 2024
, we had accumulated losses of
$1.6 billion
.
VYVGART and VYVGART SC are the only approved products we currently have.
We expect our expenses to continue to increase as we continue to execute registrational and proof-of-concept studies
across efgartigimod, empasiprubart and ARGX-119, as well as the continued investment in our IIP. We anticipate that
our expenses will increase if and as we execute on the following elements.
Research and development activities:
•
Execute the registrational study of efgartigimod in three myositis subsets (IMNM, ASyS, and DM);
•
Execute the Phase 3 clinical studies of efgartigimod in pediatric, seronegative and ocular MG;
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•
Execute the Phase 4 study switching CIDP patients from IVIg to VYVGART SC;
•
Execute the confirmatory study of efgartigimod in primary ITP;
•
Execute the registrational studies of efgartigimod in TED;
•
Execute the registrational study of efgartigimod in SjD;
•
Execute the Phase 2 study of efgartigimod in LN with our partner Zai Lab;
•
Execute the Phase 2 studies of efgartigimod in AMR, SSc and AIE;
•
Execute the Phase 3 studies of empasiprubart in MMN and CIDP;
•
Execute the Phase 2 studies of empasiprubart in DGF and DM;
•
Execute the Phase 1b/Phase 2a studies of ARGX-119 in CMS and ALS, respectively;
•
Execute on the launch of Phase 2 study of ARGX-119 in SMA;
•
Continue the research and development of our other clinical and preclinical-stage product candidates and discovery
stage programs; and
•
Seek regulatory approvals for any product candidates, including new indications, that successfully complete clinical
trials.
Pre-commercial and commercial activities:
•
Continue the build-out of our sales, marketing and distribution infrastructure and scale-up of manufacturing
capabilities for the commercial expansion of VYVGART and VYVGART SC and any other product candidate,
including new indications, for which we may obtain approval; and
•
Expand our global reach enabling us to commercialize any product candidates, including new indications, for which
we may obtain regulatory approval.
Other activities:
•
Seek to enhance our technology platform and discover and develop additional product candidates;
•
Maintain, expand and protect our intellectual property portfolio, including litigation costs associated with defending
against alleged patent infringement claims;
•
Add clinical, scientific, operational, financial and management information systems and personnel, including
personnel to support our product development and potential future commercialization efforts;
and,
•
Experience any delays or encounter any issues, including failed studies, ambiguous clinical trial results, safety issues
or other regulatory challenges.
We expect that the costs of development and commercialization might also increase due to current and future
collaborations with research and development partners as well as commercial partners.
Information pertaining to the year ended
December 31, 2023
was included in our annual report on Form 20-F for the
year ended
December 31, 2023
under
“
Item 5 — Operating and Financial Review and Prospects
’’
which was filed with
the SEC on
March 21, 2024
.
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Basis of presentation
Foreign Currency Transactions
Functional and presentation currency
Items included in the consolidated financial statements of each of the entities are valued using the currency of their
economic environment in which the entity operates. The consolidated financial statements are presented in USD ($),
which is the Company’s functional and presentation currency.
Revenue from sale of product
Revenue from the sale of products is recognized at an amount that reflects the consideration that the Company expects to
be entitled to receive in exchange for transferring goods to a customer, at the time when the customer obtains control of
the goods rendered, this means when the customer has the ability to direct the use of the asset. The consideration that is
committed in a contract with a customer can include fixed amounts, variable amounts, or both. The amount of the
consideration may vary due to discounts, rebates, returns, chargebacks or other similar items. Contingent consideration is
included in the transaction price when it is highly probable that the amount of revenue recognized is not subject to future
significant reversals.
Our product net sales mainly consist of sales of VYVGART and VYVGART SC in the U.S., Japan, EMEA and China.
Product net sales are recognized once we satisfy the performance obligation at a point in time under the revenue
recognition criteria in accordance with IFRS 15 Revenue from contracts with customers.
Revenue arising from the commercial sale of VYVGART and VYVGART SC is presented under ‘‘
Note 17 — Segment
Reporting
’’ in our consolidated financial statements which are appended to our Annual Report for the period ended
December 31, 2024
and which are incorporated herein by reference
.
In accordance with IFRS 15,
such revenue is
recognized when the product is physically transferred, in accordance with the delivery and acceptance terms agreed with
the customer. Payment of the transaction price is payable at the point the customer obtains the legal title to the goods.
Revenue from Collaboration and License Agreements
Revenues to date have consisted principally of milestones, license fees, non-refundable upfront fees and research and
development service fees in connection with collaboration and license agreements.
We recognize revenue when the customer obtains control of promised goods or services, in an amount that reflects the
consideration that we expect to receive in exchange for those goods and services. In order to determine revenue
recognition for agreements that we determine to be in the scope of IFRS 15, we followed the IFRS 15 5-step model. The
Company has only recognized revenue from its collaboration with Zai Lab in the current year.
Under the collaboration agreement, the Company provides clinical and commercial supply to Zai Lab. The Company
concludes to recognize such sales as revenue given that the Company acts as principal in the transaction as the risk
related to inventory is borne by the Company until the inventory is transferred to Zai Lab. The revenue related to clinical
supply is recorded under line item “Collaboration revenue”. The revenue related to commercial supply is recorded under
line item “Product net sales” in the Consolidated Statements of Profit or Loss.
The income related to royalties or sales-
based milestones on sales made in China is recorded under line item “Collaboration revenue”.
Research and Development Expenses
Research and development expenses consist principally of:
•
external research and development expenses related to (i) chemistry, manufacturing and control costs for our product
candidates, both for preclinical and clinical testing, all of which is conducted by specialized contract manufacturers,
(ii) fees and other costs paid to CROs in connection with preclinical testing and the performance of clinical trials for
our product candidates, (iii) costs associated with regulatory submissions and approvals, QA and pharmacovigilance
and (iv) costs associated with post-approval clinical trials;
•
personnel expenses related to compensation of research and development staff and related expenses, including
salaries, benefits and share‑based payment expenses;
•
Business Information Systems (BIS) related expenses; and
|
86
|
||
•
other expenses.
Our research and development expenses may vary substantially from period to period based on the timing of our
research and development activities, including the timing of the initiation of clinical trials, material used in RD phase
and enrollment of patients in clinical trials. Research and development expenses are expected to increase as we advance
the clinical development of efgartigimod, empasiprubart ARGX-119 and further advance the research and development
of our other early-stage pipeline candidates. The successful development of our product candidates is highly uncertain.
At this time, we cannot reasonably estimate the nature, timing and estimated costs of the efforts that will be necessary to
complete the development of, or the period, if any, in which material net cash inflows may commence from any of our
product candidates. This is due to numerous risks and uncertainties associated with developing drugs, as further
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of:
•
personnel expenses related to compensation of commercial and enabling staff and related expenses, including salaries,
benefits and share‑based payment expenses;
•
professional fees related to commercial and enabling functions;
•
Board of Directors expenses consisting of directors’ fees, travel expenses and share-based compensation for non-
executive board members;
•
marketing and promotional activities related to the global commercialization of VYVGART and VYVGART SC for
the treatment of gMG, CIDP and ITP (in Japan); and
•
other Selling, general and administrative expenses, including leasing costs, office expenses and travel costs.
We expect our general and administrative expenses to increase as we continue to support our growth. Such costs include
increases in our personnel, additional BIS-related expenses, and expenses and costs associated with compliance with the
regulations governing public companies. We expect our selling and marketing expenses to increase due to marketing and
promotional activities with respect to the ongoing commercial launch of VYVGART, VYVGART SC and preparation of
commercial launch of our other product candidates.
Financial Income (Expense)
Financial income mainly reflects interest earned on our cash and cash equivalents and current financial assets and net
gains on our cash and cash equivalents and current financial assets held at fair value through profit or loss. Financial
expense corresponds mainly to interest expenses arising from lease liabilities.
Exchange Gains (Losses)
Our exchange gains (losses) relate to (i) our transactions denominated in foreign currencies, mainly in euro, and which
generate exchange gains or losses and (ii) the translation at the reporting date of assets and liabilities denominated in
foreign currencies into USD, which is our functional and presentation currency. For more information on currency
exchange fluctuations on our business, please see “
Note 25 — Financial Risk Management
—
Foreign exchange risk
’’ in
our consolidated financial statements which are appended to our Annual Report for the period ended
December 31,
2024
. We have no derivative financial instruments to hedge interest rate and foreign currency risk.
Income Tax Benefit (Expense)
For the year ended December 31, 2024 the Company recognized its Belgian based deferred tax assets. For more
information on income taxes and deferred taxes, please see “
Note 23 — Income taxes
” in our consolidated financial
statements which are appended to our Annual Report for the period ended
December 31, 2024
and which are
incorporated herein by reference
.
|
87
|
||
Results of Operations
Comparison of Years Ended
December 31, 2024
and
2023
|
Year Ended December 31,
|
||||||||
|
(in thousands of $ except for shares and EPS)
|
2024
|
2023
|
% Change
|
|||||
|
Product net sales
|
$
|
2,185,883
|
$
|
1,190,783
|
84
%
|
|||
|
Collaboration revenue
|
4,348
|
35,533
|
(88)
%
|
|||||
|
Other operating income
|
61,808
|
42,278
|
46
%
|
|||||
|
Total operating income
|
2,252,039
|
1,268,594
|
78
%
|
|||||
|
Cost of sales
|
(227,289)
|
(117,835)
|
93
%
|
|||||
|
Research and development expenses
|
(983,423)
|
(859,492)
|
14
%
|
|||||
|
Selling, general and administrative expenses
|
(1,055,337)
|
(711,905)
|
48
%
|
|||||
|
Loss from investment in a joint venture
|
(7,644)
|
(4,411)
|
73
%
|
|||||
|
Total operating expenses
|
(2,273,693)
|
(1,693,643)
|
34
%
|
|||||
|
Operating loss
|
(21,654)
|
(425,049)
|
(95)
%
|
|||||
|
Financial income
|
157,509
|
107,386
|
47
%
|
|||||
|
Financial expense
|
(2,464)
|
(906)
|
172
%
|
|||||
|
Exchange (losses)/gains
|
(48,211)
|
14,073
|
(443)
%
|
|||||
|
Profit/(Loss) for the year before taxes
|
$
|
85,180
|
$
|
(304,496)
|
128
%
|
|||
|
Income tax benefit
|
747,860
|
9,443
|
7819
%
|
|||||
|
Profit/(Loss) for the year
|
$
|
833,040
|
$
|
(295,053)
|
382
%
|
|||
|
Weighted average number of shares outstanding
|
59,855,585
|
57,169,253
|
||||||
|
Weighted average number of shares for purpose of diluted profit/
(loss) per share
|
65,177,815
|
57,169,253
|
||||||
|
Basic profit/(loss) per share (in $)
|
13.92
|
(5.16)
|
||||||
|
Diluted profit/(loss) per share (in $)
|
12.78
|
(5.16)
|
||||||
Product net sales
|
Year Ended December 31,
|
||||||
|
(in thousands of $)
|
2024
|
2023
|
||||
|
United States
|
$
|
1,895,919
|
$
|
1,046,592
|
||
|
Japan
|
89,389
|
56,432
|
||||
|
China
|
39,177
|
14,907
|
||||
|
Rest of the World
|
161,398
|
72,852
|
||||
|
Total product net sales
|
$
|
2,185,883
|
$
|
1,190,783
|
||
Our product net sales have increased in the U.S. and other countries as the Company continues to execute on the global
commercialization of VYVGART and VYVGART SC and obtain further approvals worldwide.
|
88
|
||
Collaboration Revenue
|
Year Ended December 31,
|
||||||||
|
(in thousands of $)
|
2024
|
2023
|
% Change
|
|||||
|
AbbVie
|
$
|
—
|
$
|
30,000
|
(100)
%
|
|||
|
Zai Lab
|
4,348
|
5,533
|
(21)
%
|
|||||
|
Total collaboration revenue
|
$
|
4,348
|
$
|
35,533
|
(88)
%
|
|||
Our collaboration revenue decreased by
$31 million
to
$4 million
for the year ended
December 31, 2024
, compared to
$36 million
for the year ended
December 31, 2023
. The collaboration revenue recognized in the year ended
December 31, 2024
was mainly the result of the clinical supply of product and
royalties on product net sales of
VYVGART in Greater China through Zai Lab.
Other Operating Income
|
Year Ended December 31,
|
||||||||
|
(in thousands of $)
|
2024
|
2023
|
% Change
|
|||||
|
Research and development incentives
|
$
|
46,106
|
$
|
27,815
|
66
%
|
|||
|
Payroll tax rebates
|
11,855
|
11,925
|
(1)
%
|
|||||
|
Grants
|
13
|
2,538
|
(99)
%
|
|||||
|
Change in fair value on non-current financial assets
|
3,834
|
—
|
100
%
|
|||||
|
Total other operating income
|
$
|
61,808
|
$
|
42,278
|
46
%
|
|||
Other operating income increased by
$20 million
to
$62 million
for the year ended
December 31, 2024
, compared to
$42 million
for the year ended
December 31, 2023
. The
$20 million
increase was primarily driven by:
•
the increase in research and development incentives due to a Belgian research and development tax incentive scheme,
as a result of the overall increased research and development costs incurred;
•
the increase in payroll tax rebates for the year ended
December 31, 2024
, as a result of higher research and
development personnel expenses eligible for rebates for the year ended
December 31, 2024
•
an increase of $4 million due to the change in fair value on our profit share in AgomAb for the year ended
December 31, 2024
.
For more information regarding governmental policies that could affect our operations, see “
Item 4.B. — Business
|
89
|
||
Research and Development Expenses
|
Year Ended December 31,
|
||||||||
|
(in thousands of $)
|
2024
|
2023
|
% Change
|
|||||
|
External research and development expenses
|
$
|
605,082
|
$
|
483,192
|
25
%
|
|||
|
Personnel expenses
|
310,992
|
226,344
|
37
%
|
|||||
|
BIS expenses
|
34,012
|
19,935
|
71
%
|
|||||
|
Materials and consumables
|
5,863
|
4,057
|
45
%
|
|||||
|
Depreciation and amortization
|
6,204
|
105,546
|
(94)
%
|
|||||
|
Other expenses
|
21,270
|
20,418
|
4
%
|
|||||
|
Total Research and development expenses
|
$
|
983,423
|
$
|
859,492
|
14
%
|
|||
Our research and development expenses totaled
$983 million
and
$859 million
for the years ended
December 31, 2024
and
2023
, respectively. The increase of
$124 million
in
2024
as compared to
2023
is primarily driven by Personnel
expenses and External research and development expenses. This is offset by the decrease in Depreciation and
amortization resulting from the use of a Priority Review Voucher (PRV) for priority review by the FDA of its
VYVGART HYTRULO for use in CIDP in 2023.
Personnel expenses relate to internal and external RD personnel. The expenses also include share-based compensation
expenses related to the grant of stock options and RSUs to our research and development employees. We employed on
average
805
full-time equivalents in our research and development functions in the year ended
December 31, 2024
,
compared to
607
in the year ended
December 31, 2023
.
Our external research and development expenses for the year ended
December 31, 2024
totaled to
$605 million
,
compared to
$483 million
for the year ended
December 31, 2023
. The expenses reflect clinical trial costs and
manufacturing expenses related to the development of our product candidate portfolio. The table below provides
additional detail on our external research and development expenses by program:
|
Year Ended December 31,
|
||||||||
|
(in thousands of $)
|
2024
|
2023
|
% Change
|
|||||
|
efgartigimod
|
$
|
405,347
|
$
|
361,676
|
12%
|
|||
|
empasiprubart
|
86,254
|
47,636
|
81%
|
|||||
|
ARGX-119
|
26,098
|
13,731
|
90%
|
|||||
|
cusatuzumab
|
10,856
|
14,298
|
(24)%
|
|||||
|
Other programs
|
76,527
|
45,851
|
67%
|
|||||
|
Total
|
$
|
605,082
|
$
|
483,192
|
25%
|
|||
External research and development expenses for our lead product efgartigimod totaled
$405 million
for the year ended
December 31, 2024
, compared to
$362 million
for the year ended
December 31, 2023
relating to the efforts in evaluating
in more than 15 severe autoimmune diseases including MG, CIDP and ITP
.
External research and development expenses for empasiprubart totaled
$86 million
for the year ended
December 31,
2024
compared to
$48 million
for the year ended
December 31, 2023
.
This increase of
$39 million
was due to the ramp-
up of Phase 2 clinical trials in MMN, DGF, DM and CIDP.
External research and development expenses for ARGX-119 increased by
$12 million
to
$26 million
for the year ended
December 31, 2024
as we continue to invest in proof-of-concept studies ongoing in ALS and CMS.
Our investments in other programs have increased by
$31 million
with four new pipeline candidate nominations to IIP
alongside our continued Discovery programs.
|
90
|
||
Selling, general and administrative Expenses
|
Year Ended December 31,
|
||||||||
|
(in thousands of $)
|
2024
|
2023
|
% Change
|
|||||
|
Personnel expenses
|
$
|
424,916
|
$
|
303,033
|
40
%
|
|||
|
Marketing services
|
306,987
|
202,146
|
52
%
|
|||||
|
Professional fees
|
170,215
|
108,820
|
56
%
|
|||||
|
BIS expenses
|
27,295
|
20,408
|
34
%
|
|||||
|
Facilities and occupancy expenses
|
20,888
|
11,264
|
85
%
|
|||||
|
Supervisory board
|
9,724
|
8,362
|
16
%
|
|||||
|
Depreciation and amortization
|
3,149
|
2,366
|
33
%
|
|||||
|
Other expenses
|
92,163
|
55,506
|
66
%
|
|||||
|
Total Selling, general and administrative expenses
|
$
|
1,055,337
|
$
|
711,905
|
48
%
|
|||
The increase in our Selling, general and administrative expenses for the year ended
December 31, 2024
was principally
resulting from:
•
increased professional and marketing fees, including promotional and marketing costs primarily due to the scaling of
our commercial operations relating to VYVGART and VYVGART SC;
•
increased costs of personnel expenses is related to planned increase in the headcount of our Selling, general and
administrative employees recruited to strengthen our enabling functions and the scaling of our commercial operations
relating to VYVGART and VYVGART SC; and
•
continued investment in our IT infrastructure.
We employed on average
835
full-time equivalents in our selling, general and administrative functions in the year ended
December 31, 2024
, compared to
681
in the year ended
December 31, 2023
.
Financial Income and (Expense)
For the year ended
December 31, 2024
, financial income amounted to
$158 million
compared to
$107 million
for the
year ended
December 31, 2023
. The increase of
$50 million
in
2024
related primarily to the capital increase of our
financial assets.
Exchange Gains (Losses)
Exchange losses totaled
$48 million
for the year ended
December 31, 2024
, compared to exchange gains of
$14 million
for the year ended
December 31, 2023
. The losses were mainly attributable to unrealized exchange rate losses on the
cash and cash equivalents, in addition to current financial assets position in euro during the year ended
December 31,
2024
.
91
B. LIQUIDITY AND CAPITAL RESOURCES
Sources of Funds
The table below sets forth our capitalization as of
December 31, 2024
on an actual basis based on the information
available in our Consolidated Financial Statements:
|
(in thousands of $)
|
As of December 31, 2024
|
||
|
Shareholder equity
|
$
|
5,498,283
|
|
|
Share capital
|
7,227
|
||
|
Share premium
|
5,948,916
|
||
|
Legal reserve(s)
1)
|
126,832
|
||
|
Retained earnings
|
(1,571,804)
|
||
|
Other reserves
|
987,112
|
||
|
Total
|
$
|
5,498,283
|
1)
Legal reserves are the amount of translation differences.
Since our inception in 2008, we have invested most of our resources in developing our product candidates, building our
intellectual property portfolio, developing our supply chain, conducting business planning, raising capital and providing
general and administrative support for these operations.
December 31, 2023
To date, we have funded our operations
through public and private placements of equity securities, upfront, milestone and expense reimbursement payments
received from our collaborators, funding from governmental bodies, proceeds from exercise of employee stock options
and interest income from the investment of our cash and cash equivalents, in addition to current financial assets. Through
December 31, 2024
, we have raised gross proceeds of
$5.9 billion
from private and public offerings of equity securities.
We currently have two products approved by the FDA, VYVGART and VYVGART SC; therefore, our commercial
operations have also started to contribute to the funding of our operations. We have made product net sales of
$2.2 billion
during the twelve months ended
December 31, 2024
.
As we continue to invest in innovation and the our cash flows may fluctuate, are difficult to forecast and will depend on
many factors.
We have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect
our liquidity over the next five years, other than leases and commitments as part of our operations, which are detailed in
“
Note 28 — Commitments
” in our consolidated financial statements which are appended to our Annual Report for the
period ended
December 31, 2024
and which are incorporated herein by reference
.
For more information as to the risks associated with our future funding needs, see “
Item 3.D. —
Risk Factors
—
Risk
For more information as to our financial instruments, please see “
Note 25 — Financial Risk Management
” in our
consolidated financial statements which are appended to our Annual Report for the period ended
December 31, 2024
and which are incorporated herein by reference
.
92
Cash Flows
Comparison for the Years Ended
December 31, 2024
and
2023
The table below summarizes our cash flows for the years ended
December 31, 2024
and
2023
.
|
Year Ended December 31,
|
|||||||||
|
(in thousands of $)
|
2024
|
2023
|
Variance
|
||||||
|
Cash and cash equivalents at the beginning of the year
|
$
|
2,048,844
|
$
|
800,740
|
$
|
1,248,104
|
|||
|
Net cash flows used in operating activities
|
(82,747)
|
(420,327)
|
337,580
|
||||||
|
Net cash flows from/(used in) investing activities
|
(717,594)
|
308,210
|
(1,025,804)
|
||||||
|
Net cash flows from financing activities
|
279,759
|
1,336,727
|
(1,056,968)
|
||||||
|
Exchange gains/(losses) on cash and cash equivalents
|
(28,326)
|
23,494
|
(51,820)
|
||||||
|
Cash and cash equivalents at the end of the year
|
$
|
1,499,936
|
$
|
2,048,844
|
$
|
(548,908)
|
|||
As of
December 31, 2024
, the Company had
$1.5 billion
of cash and cash equivalents compared to
$2.0 billion
as of
December 31, 2023
. For more information, please see “
Note 11 — Cash and Cash Equivalents
” in our consolidated
financial statements which are appended to our Annual Report for the period ended
December 31, 2024
and which are
incorporated herein by reference
.
Net Cash Used in Operating Activities
Net cash outflow used in our operating activities decreased by
$338 million
to a net outflow of
$83 million
for the year
ended
December 31, 2024
, compared to a net outflow of
$420 million
for the year ended
December 31, 2023
.
The decrease in net cash used in operating activities results primarily from an increase in product net sales of
VYVGART and VYVGART SC, partly offset by:
(i)
the increase in research and development expenses incurred in relation to the manufacturing and clinical
development activities of efgartigimod and the advancement of other clinical, preclinical and discovery-stage
product candidates;
(ii)
the increase in personnel expenses, marketing expenses and consulting expenses incurred for the commercial
growth of VYVGART and VYVGART SC; and
(iii)
the further increase in working capital as a result of our inventory levels, including prepaid inventory
Net Cash Used in/from Investing Activities
Investing activities for the year ended
December 31, 2024
,
consist primarily of the net movements in current financial
assets of $754 million, and interests received, partly offset by payments related to regulatory and sales based milestones
to Halozyme and investment in OncoVerity, resulting in a cash outflow of
$718
million.
Investing activities for the year ended
December 31, 2023
, consist primarily of
net movements in current financial assets
of
$272 million, and purchase of a priority review voucher for $102 million,
partly offset by payments related to
regulatory and sales based milestones to Halozyme and investment in OncoVerity
, resulting in a cash inflow of
$308 million
.
Net Cash Provided by Financing Activities
The net cash inflow from financing activities was
$280 million
for the year ended
December 31, 2024
, compared to a net
cash inflow of
$1.3 billion
for the year ended
December 31, 2023
. The net cash inflows were mainly attributed to
proceeds received from the exercise of stock options in
2024
as compared to inflows from issuance of new shares in
2023.
|
93
|
||
Operating and Capital Expenditure Requirements
We have achieved after-tax profitability as of
December 31, 2024
, mainly resulting from the recognition of deferred tax
assets held by argenx BV, a subsidiary of the Company. As of the year ended December 31, 2024, we had accumulated
losses of
$1.6 billion
. Our losses resulted principally from costs incurred in research and development, preclinical testing
and clinical development of our research programs, and from selling, general and administrative costs associated with
commercial expansion.
We anticipate that our operating expenses will increase as we intend to continue to conduct research and development
and continue our efforts to expand our sales, marketing and distribution infrastructure. Although we have generated
product net sales of
$2.2 billion
from global product net sales of VYVGART and VYVGART SC for the treatment of
gMG and CIDP for the year ended December 31, 2024, which supports our current profitability, we can provide no
assurances that we will be able to be profitable or sustain net profitability in the future based on these indications alone
or that we will be able to receive regulatory approval of and commercialize VYVGART and VYVGART SC in other
indications or in other countries.
On the basis of current assumptions, we expect that our existing cash and cash equivalents and current financial assets
will enable us to fund our operating expenses and capital expenditure requirements through at least the next twelve
months. Due to the numerous risks and uncertainties associated with the development and commercialization of
efgartigimod and our other product candidates and discovery stage programs and because the extent to which we may
enter into collaborations with third parties for the development of these product candidates is unknown, we are unable to
estimate the amounts of increased capital outlays and operating expenses associated with completing the research and
development of our product candidates. Our future capital requirements for efgartigimod and our other product
candidates and discovery stage programs will depend on many factors, including:
•
the progress, timing and completion of preclinical testing and clinical trials for our current or any future product
candidates;
•
the number of potential new product candidates we identify and decide to develop;
•
the time and costs involved in obtaining regulatory approval for our product candidates and any delays we may
encounter as a result of evolving regulatory requirements or adverse results with respect to any of our product
candidates;
•
selling and marketing activities undertaken in connection with the commercialization of VYVGART, VYVGART SC
or potential commercialization of any of our current or any future product candidates, if approved, and costs involved
in the creation of an effective sales and marketing organization;
•
manufacturing activities undertaken for VYVGART, VYVGART SC and potential commercialization of any of our
current or any future product candidates, if approved, and costs involved in the creation of an effective supply chain;
•
the costs involved in growing our organization to the size needed to allow for the research, development and potential
commercialization of our current or any future product candidates;
•
the costs involved in filing patent applications and maintaining and enforcing patents or defending against claims or
infringements raised by third parties;
•
the maintenance of our existing collaboration agreements and entry into new collaboration agreements; and
•
developments related to the global economic uncertainties and political instability.
For more information as to the risks associated with our future funding needs, see “
Item 3.D.
—
Risk Factors
—
Risk
Factors — Risk Factors Related to argenx’s Financial Position and Need for Additional Capital
".
Cash Investment Policy
The Company has adopted a policy whereby cash and cash equivalents and current financial assets are invested with
several highly reputable banks and financial institutions. The main purpose of the Cash Investment Policy is to preserve
|
94
|
||
the available cash and to ensure sufficient short-term liquidity at all times. Therefore, the Company holds its cash, cash
equivalents and current financial assets mainly with banks which are independently rated A- or higher. Amounts of cash
held with banks rated lower than A- are limited to insignificant balances. The maximum amount and tenor of time
deposits depends on the rating of the counterparty bank. The Company also holds cash equivalents in the form of money
market funds with a low historical volatility. These money market funds are highly liquid investments and can be readily
convertible into a known amount of cash. The Company has adopted a policy whereby money market funds must have a
minimum rating of A of which 95% should have a AAA-rating.
For more information as to our treasury policy and liquidity, please see “
Note 25 — Financial Risk Management
” in our
consolidated financial statements which are appended to our Annual Report for the period ended
December 31, 2024
and which are incorporated herein by reference
.
Working capital statement
As of
December 31, 2024
, the Company had
$1.5 billion
of c
ash and cash equivalents
and
$1.9 billion
of current
f
inancial assets
, while the sh
areholder equity
amounted to
$5.5 billion
and the non-current and current
Lease liabilities
to
$33 million
and
$7 million
, respectively.
In accordance with item 3.1 of Annex 11 of the Commission Delegated Regulation (EU) 2019/980 we make the
following statement:
In our opinion, the working capital of the Company is sufficient for the Company’s present requirements, at least for a
period of 12 months from the date of this Annual Report.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off‑balance sheet arrangements, as
defined in the applicable rules and regulations, such as relationships with unconsolidated entities or financial
partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of
facilitating financing transactions that are not required to be reflected on our balance sheets.
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
For a discussion of our research and development policies, see the “
Item 4
—
Information on the Company
” and “
Item
D. TREND INFORMATION
Other than as disclosed elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands,
commitments or events for the current financial period that are reasonably likely to have a material effect on our net
revenues, income, profitability, liquidity, capital resources or prospects, or that caused the disclosed financial
information to be not necessarily indicative of future operating results or financial conditions.
There has been no significant change in the financial performance or the financial position of the Group since the
balance sheet date of
December 31, 2024
.
For more information, please refer to
“Item 4.B —
Business Overview
”,
“
Item 5.A.
—
Operating Results
”,
“
Item 5.B.
—
Liquidity and Capital Resources
”
and
“
Note 28 — Commitments
’’ in our consolidated financial statements which are
appended to our Annual Report for the period ended
December 31, 2024
and which are incorporated herein by reference.
E. CRITICAL ACCOUNTING ESTIMATES
See
“
Note 3 — Critical accounting judgments and major sources of estimation uncertainty
’’ in our consolidated
financial statements which are appended to our Annual Report for the period ended
December 31, 2024
and which are
incorporated herein by reference.
95
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. DIRECTORS AND SENIOR MANAGEMENT
Our Board of Directors
As at
December 31, 2024
, we have a one-tier board structure consisting of
1
Executive Director and
9
Non-Executive
Directors, and a Senior Management Team responsible for the day-to-day operations.
Our Board of Directors had 5 formal meetings in the course of
2024
.
The meetings were held in the months February,
May, July, October and December. The committees of the Board of Directors also convened regularly and at least once
per quarter.
. (Refer to
“
Item 6.C. —
Board Practices
—
Report Audit and Compliance Committee”
,
Item 6.C.
—
Board
Practices
—
Report Audit and Compliance Committee”
,
“
Item 6.C.
—
Board Practices
—
Report Audit and Compliance
Committee”
, and
“
Item 6.C. —
Board Practices
—
Report Audit and Compliance Committee”
)
” below for the separate
reports of the committees.
All Board of Director meetings and 16 out of 19 formal committee meetings were also attended by Mr. Van
Hauwermeiren, as executive director. In addition, several members of the
Senior Management Team
were invited to
discuss specific items included on the Board of Director and committee meetings’ agendas
(please refer to
“
Item 6.A. —
Set out below is a summary of certain provisions of Dutch corporate law as of the date of this Annual Report, as well as
a summary of relevant information concerning our Board of Directors and certain provisions of our Articles of
Association and the Board By-Laws.
This summary does not purport to give a complete overview and should be read in conjunction with and is qualified in
its entirety by reference to the relevant provisions of Dutch law as in force on the date of this Annual Report, the Articles
of Association and Board By-Laws. The Articles of Association are available in the governing Dutch language and an
unofficial English translation thereof, and the Board By-Laws are available in English, on our website.
The following table sets forth certain information with respect to the current members of our Board of Directors,
including their ages as of
December 31, 2024
:
|
Name
|
Age
|
Position
|
Nationality
|
Date of Initial
Appointment
|
Date of last (re-)
Appointment
|
Term
expiration
|
||||||
|
Tim Van Hauwermeiren
|
52
|
CEO and
executive
director
|
Belgium
|
July 15, 2008
|
May 10, 2022
|
2026
|
||||||
|
Mr. Peter Verhaeghe
|
66
|
Non-Executive
Director
(chairperson)
|
Belgium
|
October 15, 2008
|
May 7, 2024
|
2026
|
||||||
|
Mr. Steve Krognes
|
56
|
Non-Executive
Director
|
U.S. and Norway
|
February 27,
2023
|
February 27, 2023
|
2027
|
||||||
|
Dr. Donald deBethizy
|
74
|
Non-Executive
Director (vice-
chairperson)
|
U.S.
|
May 13, 2015
|
May 2, 2023
|
2025
1)
|
||||||
|
Dr. Pamela Klein
|
63
|
Non-Executive
Director
|
U.S.
|
April 28, 2016
|
May 7, 2024
|
2026
|
||||||
|
Anthony Rosenberg
|
71
|
Non-Executive
Director
|
UK
|
April 26, 2017
|
May 11, 2021
|
2025
|
||||||
|
James Daly
|
63
|
Non-Executive
Director
|
U.S.
|
May 8, 2018
|
May 10, 2022
|
2026
|
||||||
|
Camilla Sylvest
|
52
|
Non-executive
director
|
Denmark
|
September 8,
2022
|
September 8, 2022
|
2026
|
||||||
|
Dr. Ana Cespedes
|
51
|
Non-executive
director
|
Spain
|
December 12,
2022
|
December 12, 2022
|
2026
|
||||||
|
Dr. Brian Kotzin
|
76
|
Non-Executive
Director
|
U.S.
|
May 7, 2024
|
May 7, 2024
|
2028
|
|
96
|
||
1)
On February 27, 2025, it was announced that Donald deBethizy will retire from the Board of Directors after the 2025 General Meeting. Anthony Rosenberg will succeed as the vice-chairperson of the
Board of Directors.
Mr. Peter Verhaeghe
Peter Verhaeghe has served as a member and chairperson of the board of arGEN-X B.V. since October 2008 and as Non-
Executive Director on our Board of Directors since July 2014.
Mr. Verhaeghe is the managing partner of VVGB Advocaten-Avocats, a corporate finance law and tax law firm, a
position he has held since July 1999. He is currently lead counsel to a number of Belgian, Dutch, French, U.S. and Swiss
life sciences companies. Mr. Verhaeghe has served on the boards of directors of Participatiemaatschappij Vlaanderen
NV since May 2018 and miDiagnostics NV since April 2020. He has also served as chairman of the board of Haretis SA
(Luxembourg) since March 2011 and as chairman of the LP advisory committee of Bioqube Factory Fund I NV since
September 2020. Mr. Verhaeghe previously served as a member of the board of directors of CzechPak Manufacturing
s.r.o., Innogenetics NV (now Fujirebio Europe N.V.), Tibotec-Virco NV, and Biocartis SA. He was also the president of
the board of directors of Merisant France SAS, a member of the management board of Merisant Company 2 S.à. rl., and
chairman of the board of directors of PharmaNeuroBoost NV.
Mr. Steve Krognes
Steve Krognes has served as a member of our Board of Directors and as a chairperson of our
Audit and Compliance
Committee
since February 2023.
Mr. Krognes also serves on the boards of directors of Guardant Health, Inc., Denali Therapeutics, Inc., and Pliant
Therapeutics, Inc. In September 2023, he also was appointed to the board of directors of ClayvstBio. He previously
served on the boards of directors of RLS Global AB and Corvus Pharmaceuticals, Inc. and Gritstone Bio, Inc. Mr.
Krognes was the chief financial officer of Denali Therapeutics, Inc. from 2015 until retiring from that position in April
2022. Mr. Krognes led successful financings for Denali Therapeutics, Inc., including its initial public offering in 2017,
and contributed significantly to the company’s strategy, growth and strong financial position. His extensive leadership
experience in the biotech and pharmaceutical industries includes 12 years in total at Roche and Genentech, Inc., during
which Mr. Krognes served as chief financial officer of Genentech, Inc. for six years and global head of Roche’s mergers
acquisition team for six years. He also chaired the Genentech Access to Care Foundation and represented Genentech
on the board and executive committee of the California Life Science Association. Before that, Mr. Krognes worked as an
investment banker at Goldman Sachs, as a management consultant at McKinsey Company, and as a venture capitalist
in Scandinavia.
Dr. Donald deBethizy
Donald deBethizy has served as a member of our Board of Directors since May 2015.
Dr. deBethizy has 30 years of experience in research and development, as well as financial, business and operating
management, and board work in the biotechnology and consumer products industries.
He is the president of White City Consulting ApS, also known as Custom Coaching) a consulting company that
specializes in advising technology-focused companies. Dr. deBethizy currently serves on the boards of directors of
Lophora ApS and Proterris, Inc. and as a board advisor for Cereno Scientific AB.
Previously, Dr. deBethizy served as president and CEO of Santaris Pharma A/S until October 2014, when the company
was sold to Roche. From March 1997 to June 2012, Dr. deBethizy was co-founder and CEO of Targacept, Inc., a U.S.
biotechnology company listed on Nasdaq. From June 2012 to May 2013, he was special advisor to the chairman of
Targacept, Inc.’s board of directors. From May 2013 to November 2014, Dr. deBethizy served as executive chairman of
Contera Pharma ApS until it was sold to Bukwang Pharma, and from July 2015 to November 2017, he served as
chairman of Rigontec GmbH until it was sold to Merck Inc. He previously served as chairman of the boards of directors
of Albumedix Ltd (sold to Sartorius AG in September 2022), Saniona AB, and TME Pharma NV and AG. Dr. deBethizy
was also a member of the boards of directors of Asceneuron SA, Serendex Pharmaceuticals A/S, Enbiotix Inc., Ligocyte
Pharmaceuticals until it was sold to Takeda Pharmaceutical Co Ltd, Biosource Inc., and NOXXON Pharma N.V. Dr.
deBethizy has held adjunct appointments at Wake Forest University Babcock School of Management, Wake Forest
University School of Medicine, and Duke University.
Dr. Pamela Klein
Pamela Klein has served as a member of our Board of Directors since April 2016.
|
97
|
||
Since 2008, Dr. Klein has been a principal and founder of PMK BioResearch, a company offering strategic consulting in
oncology drug development to corporate boards, management teams and the investment community. She has also been a
venture partner in Ysios Capital Partners, SGIEC, S.A.U. since 2023. She currently serves as a member of the board of
directors of several companies including Shasqi and Patrys Ltd; as well as various scientific advisor boards. In 2023, Dr.
Klein also joined the boards of directors of Frontier Medicines Corp, Ona Therapeutics SL, and Sardona Therapeutics,
Inc. Previously, Dr. Klein served on the board of directors of Sardona Therapeutics, Inc., F-Star Therapeutics, Inc. until
March 2023, Jiya Acquisition Corp, and Spring Bank Pharmaceuticals, Inc. until its merger with F-Star Therapeutics in
July 2020. Dr. Klein previously spent seven years at the National Cancer Institute as research director of the NCI-Navy
Breast Center, after which she joined Genentech as vice president of development until 2001. She also served as chief
medical officer for Intellikine, Inc., which was acquired by Takeda American Holdings.
Anthony Rosenberg
Anthony Rosenberg has served as a member of our Board of Directors since April 2017.
He currently serves as chief executive officer of TR Advisory Services GmbH, his own consultancy firm advising on
business development, licensing, and mergers and acquisitions. Mr. Rosenberg also currently serves as chairman of the
boards of directors of NUCLIDIUM AG, Oculis SA and Cullinan Therapeutics Inc. Previously Mr. Rosenberg held the
positions of Managing Director at MPM Capital, a venture capital firm (2015 until 2020); head of MA and Licensing
of Novartis International (2013 to 2015); and head of business development and licensing at Novartis Pharma (2005 to
2012). Mr. Rosenberg also previously served on the boards of directors of SiO2 Material Science (until March 2023),
Radius Health Inc., TriNetX, Inc., iOmx Therapeutics AG, and Clinical Ink, Inc.
James Daly
James Daly has served as a member of our Board of Directors since May 2018. Mr. Daly currently also serves as a
director of Acadia Pharmaceuticals, Inc. and Madrigal Pharmaceuticals, Inc. He was formerly a member of the board of
Halozyme, Bellicum Pharmaceuticals, Inc. and Chimerix, Inc.
In 1985, he joined GlaxoSmithKline where he held various positions, including senior vice president of the respiratory
division with full responsibility for sales, marketing and medical affairs. Mr. Daly moved to Amgen Inc. in 2001 where
he was senior vice president for the North America commercial operations until 2011. In 2012, he joined Incyte Corp, a
publicly-traded company focused on oncology and inflammation, where he was chief commercial officer until June
2015.
Camilla Sylvest
Camilla Sylvest has served as a member of our Board of Directors since September 2022. Ms. Sylvest currently serves as
the executive vice president of commercial strategy and corporate affairs of Novo Nordisk A/S.
Ms. Sylvest has more than 28 years of working experience within Novo Nordisk A/S and was based in Switzerland,
Denmark, Germany, Malaysia, and Mainland China. Over the years, Ms. Sylvest has headed up Novo Nordisk A/S
affiliates of growing size and complexity in Europe. She was also corporate vice president of the business area Oceania
and Southeast Asia and senior vice president and general manager of the Novo Nordisk A/S region of Mainland China.
Ms. Sylvest also serves as a member of the board of Danish Crown A/S.
Dr. Ana Cespedes
Ana Cespedes has served as a member of our Board of Directors since December 2022. Dr. Cespedes is currently the
chief operating officer of the International AIDS Vaccine Initiative, a global organization dedicated to developing
accessible vaccines and antibodies for infectious diseases. She will resign from the International AIDS Vaccine Initiative
as of the end of March 2025 and she will become the chief executive officer of Vitamin Angels at the end of March
2025.
Prior to joining the International AIDS Vaccine Initiative, Dr. Cespedes held several roles at Merck KGaA, most
recently serving as global head of strategy and engagement, government, and public affairs. She founded and led the
global market access and pricing function for the company and worked with stakeholders to communicate the clinical,
economic, and societal value of innovative medicines. Prior to that, Dr. Cespedes led the first integrated corporate affairs
group at Serono Iberia and Merck Spain, was managing director of the Spanish branch of the company’s nonprofit
organization, and worked as a senior consultant at Arthur Andersen. Dr. Cespedes is a founding member of the National
Congress of Corporate Affairs in Spain, the London School of Economics Market Access Academy, and the Cooperation
for Oncology Data. She is also the founder of Living Mindfulness S.L. Dr. Cespedes is also a member of the steering
committee of ProPatiens Institute.
|
98
|
||
Dr. Brian Kotzin
Brian Kotzin has served as a member of our Board of Directors and as a chairperson of our research and development
committee since May 7, 2024.
He is a former member of the board of directors at Vera Therapeutics, Inc., Rigel Pharmaceuticals, Inc. and Kyverna
Therapeutics, Inc. He served as Senior Vice President for Nektar Therapeutics, Inc. from April 2017 to June 2023, and
has held various leadership positions at Nektar Therapeutics, Inc., including serving as Chief Medical Officer and Head
of Clinical Development from January 2021 to September 2021 and again from May 2022 to June 2023. He currently is
the interim chief medical officer at Nektar Therapeutics, Inc. From 2004 to 2015, Dr. Kotzin was Vice President, Global
and Clinical Development and Head, Inflammation Therapeutic Area at Amgen Inc., directing the global development
efforts for product candidates in the inflammation area. During his employment at Amgen Inc, he also served as Vice
President of Translational Sciences and Head of Medical Sciences from 2006 to 2011. Prior to entering the life sciences
industry, Dr. Kotzin held several positions as a professor at the University of Colorado Health Sciences Center, where
his research focused on immunopathogenesis of inflammatory diseases. He has also held leadership roles at several
national organizations, including as a member of the American College of Rheumatology (ACR) Board of Directors,
Member and Chairperson of the NIH Immunological Sciences Study Section, Chairperson of the NIH Autoimmunity
Centers of Excellence, and Member of the Board of Directors for the Federation of Clinical Immunology Societies.
Attendance Record Board of Director Meetings
In
2024
, 5 Board of Directors meetings were held. The meeting attendance rate for our directors is set out in the table
below.
|
Name
|
Number of meetings attended in 2024 since
appointment (and up to resignation, as
applicable)
|
Attendance %
|
||
|
Mr. Peter Verhaeghe (chairperson)
|
5
|
100%
|
||
|
Tim Van Hauwermeiren
|
5
|
100%
|
||
|
Mr. Steve Krognes
|
5
|
100%
|
||
|
Dr. Donald deBethizy (vice-chairperson)
|
5
|
100%
|
||
|
Dr. Pamela Klein
|
5
|
100%
|
||
|
Anthony Rosenberg
|
5
|
100%
|
||
|
James Daly
|
5
|
100%
|
||
|
Camilla Sylvest
|
5
|
100%
|
||
|
Dr. Ana Cespedes
|
5
|
100%
|
||
|
Dr. Brian Kotzin
1)
|
4
|
100%
|
1)
Dr. Brian Kotzin was appointed to the Board of Directors as of May 7, 2024.
In
2024
, all of the 5 Board of Directors meetings with solely the Non-Executive Directors being present were held as
closed sessions at the beginning or the end of other meetings. These meetings were attended by all Non-Executive
Directors appointed at such time.
|
99
|
||
|
Name
|
Number of meetings attended in 2024 since
appointment
|
Attendance %
|
||
|
Mr. Peter Verhaeghe (chairperson)
|
5
|
100%
|
||
|
Dr. Donald deBethizy (vice-chairperson)
|
5
|
100%
|
||
|
Dr. Pamela Klein
|
5
|
100%
|
||
|
Anthony Rosenberg
|
5
|
100%
|
||
|
James Daly
|
5
|
100%
|
||
|
Camilla Sylvest
|
5
|
100%
|
||
|
Dr. Ana Cespedes
|
5
|
100%
|
||
|
Dr. Brian Kotzin
1)
|
4
|
100%
|
1)
Dr. Brian Kotzin was appointed to the Board of Directors as of May 7, 2024.
Activities
The agenda for the Board of Directors centers around the key business objectives for long-term value creation and the
key risks involved, as well as the manner in which the Senior Management Team implements our strategy including our
research and development pipeline and the commercialization of our products, our culture to ensure proper monitoring
by the Non-Executive Directors, our financial position as well as the results of our subsidiaries, significant investment
proposals, yearly budgets, the internal risk management and control system, talent development, succession planning and
remuneration and appointment matters.
In
2024
, the Board of Directors primarily discussed the Company's innovation mission and objectives and reviewed the
scientific pipeline and regulatory developments for all product candidates, ensuring the required progression thereof. The
Board of Directors furthermore reviewed and discussed the commercialization strategies and opportunities, contributing
to our successful product launches and sales ramp-up. The Board of Directors also spent a significant amount of time on
talent development and succession planning, both for the senior leaders within the Company (within and beyond the
Senior Management Team
) and the Board of Directors. This lead to the appointment of Dr. Brian Kotzin as a Non-
Executive Director and chairperson of the research and development committee and the renewal of the appointment of
Dr. Pamela Klein and Mr. Peter Verhaeghe as Non-Executive Directors and Mr. Peter Verhaeghe's reappointment as
chairperson of the Board of Directors. A lot of time was also spent discussing and evaluating the Company's rapid
growth and how to maintain our unique company culture through these periods of growth. Finally, the Board of
Directors spent time discussing our ESG journey and shareholder feedback on say-on-pay and how to address that.
Our Senior Management
The following table sets forth certain information with respect to the members of our Senior Management Team,
including their ages, as of
December 31, 2024
:
|
Name
|
Age
|
Position
|
Nationality
|
Date of Initial
Appointment
|
||||
|
Tim Van Hauwermeiren
|
52
|
CEO and Executive Director
|
Belgium
|
July 15, 2008
|
||||
|
Karen Massey
|
46
|
COO
|
Australia
|
March 13, 2023
|
||||
|
Karl Gubitz
|
55
|
CFO
|
South Africa
|
June 1, 2021
|
||||
|
Dr. Peter Ulrichts
|
45
|
Chief Scientific Officer
|
Belgium
|
January 1, 2023
|
||||
|
Malini Moorthy
|
55
|
General Counsel
|
Canada
|
February 14, 2022
|
||||
|
Arjen Lemmen
|
40
|
Vice-President Corporate
Development Strategy
|
The Netherlands
|
May 1, 2016
|
||||
|
Andria Wilk
|
52
|
Global Head of Quality
|
UK
|
January 13, 2020
|
||||
|
Dr. Luc Truyen
|
60
|
Chief Medical Officer
|
Belgium
|
April 1, 2022
|
Tim Van Hauwermeiren
Tim Van Hauwermeiren co-founded our Company in 2008 and has served as our CEO since July 2008. He has served as
a member of our Board of Directors since July 2014.
|
100
|
||
Mr. Van Hauwermeiren has almost 30 years of general management and business development experience across the life
sciences and consumer goods sectors. He also serves on the boards of directors of iTeos Therapeutics, Inc. and Lexeo
Therapeutics, Inc.
Karen Massey
Karen Massey has served as our COO since March 2023.
Ms. Massey has over 20 years of experience in the pharmaceutical and biotechnology industry, including in commercial,
product development, corporate strategy, and innovation roles. Prior to joining argenx, Ms. Massey was with Genentech
(Roche Group) for over nine years, where she most recently served as senior vice president of product development and
global clinical operations and previously held various commercial leadership roles across marketing and business
operations, including as the vice president of the multiple sclerosis and neuromyelitis optica business. Ms. Massey
started her biopharmaceutical career in marketing at Pfizer Inc., and returned there, after two years as a management
consultant at Bain Company, to take on leadership positions in corporate strategy and sales and as a commercial lead
in Latin America.
Karl Gubitz
Karl Gubitz has served as our CFO since June 2021.
Mr. Gubitz previously worked at Pfizer Inc. for nearly 20 years, most recently as vice president of finance within the
global oncology business. Within Pfizer Inc., Mr. Gubitz held country, regional, and global positions, and consistently
delivered top-line growth. He managed teams of over 250 colleagues in financial leadership roles within the global
internal medicine and global innovative products businesses. Prior to joining Pfizer Inc. in 2003, Mr. Gubitz held various
management roles at PricewaterhouseCoopers LLP.
Dr. Peter Ulrichts
Peter Ulrichts has served as our chief scientific officer since January 2023. In this role, he oversees the development of
all clinical and pre-clinical compounds within our pipeline.
Dr. Ulrichts previously served in various roles at the Company since he joined us in 2010, including, most recently, as
our head of clinical science. As a research scientist, Dr. Ulrichts was involved in the development of various therapeutic
antibodies for the treatment of cancer and autoimmune diseases. In 2013, he headed the development of our FcRn
antagonist efgartigimod until the first-in-human clinical trial. He subsequently transitioned to become the lead scientist
of our efgartigimod program.
Malini Moorthy
Malini Moorthy has served as our general counsel since February 2022.
She has over 25 years of extensive global legal and compliance experience in the biopharmaceutical and medical device
industries. She was most recently senior vice president and chief deputy general counsel of legal, compliance, and
government affairs at Medtronic plc, where she played a pivotal role in shaping and driving enterprise and functional
strategies. Before joining Medtronic plc, Ms. Moorthy spent four years at Bayer Corporation as the head of global
litigation and investigations and 10 years at Pfizer Inc., where she progressed to lead civil litigation globally. Ms.
Moorthy began her career as a law firm associate, first with McCarthy Tétrault LLP and Genest Murray Desbrisay
Lamek LLP in Toronto, Canada and then Salans LLP (now Dentons US LLP) in New York City.
Dr. Luc Truyen
Luc Truyen has served as our chief medical officer since April 2022 and previously served as our head of research and
development operations management from September 2021 to April 2022.
Prior to this, Dr. Truyen was with Johnson Johnson (and its subsidiary companies) for over 20 years holding various
leadership positions, primarily within neuroscience. In his most recent position prior to joining argenx, Dr. Truyen was
global head of development and external affairs for neuroscience, managing the strategy and delivery of the early and
late portfolio of assets for mood disorders, schizophrenia, and neurodegenerative and neuroinflammatory disorders.
Besides Dr. Truyen’s strong track record in clinical development resulting in several globally innovative drug approvals,
his broad-based experience also includes leading global clinical development operations for the whole Johnson
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Johnson pharmaceutical group as well as serving as the head of research and development and chief medical officer of
Janssen Alzheimer Immunotherapy Research Development LLC, an internal spin-out from Johnson Johnson.
Arjen Lemmen
Arjen Lemmen joined argenx in 2016 and has served as our vice president of corporate development strategy since
2019. He has successfully executed several transactions including a number of programs within the IIP.
Prior to joining the Company, Mr. Lemmen served as a corporate finance specialist at Kempen Co NV focusing on
mergers and acquisitions, equity capital markets and strategic advisory transactions in the European life sciences
industry.
Andria Wilk
Andria Wilk joined argenx as global head of quality in January 2020. Ms. Wilk has more than 25 years of experience in
quality assurance within the pharmaceutical industry. Most recently, Ms. Wilk served as senior director, head of medical,
regulatory clinical quality assurance at H Lundbeck A/S, where she managed the global medical, regulatory clinical
quality assurance group based in the EU, U.S., and Asia. In this role, she was responsible for the global audit programs
and quality assurance support for all clinical trial and post-marketing activities and related computerized systems.
Prior to H Lundbeck A/S, she held various quality assurance positions of increasing responsibility within AstraZeneca
plc, Takeda Global Research, Development Centre Europe, and Astellas Pharma Inc.
General Information About Our Directors and Senior Management
As of the date of this Annual Report (or in any period before), none of the members of our Board of Directors and senior
management has or has had a family relationship with any other member of our Board of Directors or senior
management, and there are no arrangements or understandings with major shareholders, customers, suppliers or
others,pursuant to which any person referred to above was selected as a member of our Board of Directors or senior
management. For further information regarding any arrangements pursuant to which our Board of Directors or senior
management were appointed, see
“Item 7.B. — Related Party Transactions
—
Agreements with Our Senior
Management
”.
B. COMPENSATION
Remuneration Report and Compensation Statement
Letter of the Chairperson of the Remuneration and Nomination Committee
Dear Stakeholders,
The Remuneration and Nomination Committee is pleased to present the 2024 remuneration report and compensation
statement (the 2024 Remuneration Report). This report outlines the Remuneration and Nomination Committee’s role and
activities over the past financial year and provides an outlook for 2025. It also explains the efforts made to continuously
align our remuneration framework with the interests of the Board of Directors and those of our stakeholders, ensuring
sustainable value creation as argenx evolves.
In line with our current remuneration policy, approved in 2021 (the 2021 Remuneration Policy), and in anticipation of
the revised policy we are submitting for approval at the 2025 General Meeting (the Proposed 2025 Remuneration
Policy), this report highlights our commitment to a remuneration structure that fosters performance-based remuneration
and transparency on targets and long-term alignment. Both policies are designed to ensure that the compensation of the
Board of Directors remains closely tied to the Company’s strategic goals and stakeholder interests.
The CEO’s remuneration, in particular, is structured to include a well-balanced mix of short-term and long-term
incentives. This approach rewards not only immediate achievements, but also sustained progress in our business
strategies, individual objectives, and key strategic non-financial metrics that we believe underpin our long-term mission
and Vision 2030.
On behalf of the Board of Directors, I am pleased to provide insight into how the Company’s achievements and
continued progress in 2024 have shaped the remuneration of our CEO, COO, and CFO (the Named Executive Officers or
NEOs), as well as our Non-Executive Directors.
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This report details the implementation of the 2021 Remuneration Policy, prepared in accordance with the DCGC and the
draft, non-binding disclosure guidelines of the European Commission. It reflects our commitment to transparency and
alignment with best governance practices while ensuring that our remuneration framework supports the Company’s
strategic objectives and long-term value creation.
Looking Back on 2024
In 2024, we conducted our annual comprehensive base pay review for our Named Executive Officers, to ensure our
compensation framework remains competitive and aligned with industry benchmarks. Based on the recommendation of
the Remuneration and Nomination Committee, the Board of Directors approved the following compensation changes:
•
The CEO’s base pay increased by 15% to EUR 700,000 ($757,680). While the broader workforce has received
progressive increases in line with Company guidelines over the past two years, the CEO’s base pay remained
unchanged between 2022 and 2023, at his personal request. We believe that the approved base pay increase was
necessary to maintain fairness, ensure market competitiveness, and recognize our CEO’s exceptional leadership in
delivering sustained value to our shareholders. Even after this increase, the CEO’s base pay remains at the 27th
percentile of our newly defined global peer group.
•
The COO and CFO each received a 6% base pay increase, reflecting their critical roles and contributions to the
Company’s continued growth and success.
These adjustments reinforce our commitment to a balanced, performance-driven remuneration structure that supports
long-term value creation while maintaining fairness and transparency.
Company Performance
As detailed in our Shareholder Letter, 2024 was a year marked by remarkable progress and significant achievements
such as receiving regulatory approval in Japan for VYVGART for the treatment of adults with ITP and receiving FDA
approval for VYVGART HYTRULO for the treatment of CIDP patients. Our Senior Management Team, including the
Named Executive Officers, navigated multiple hurdles while capitalizing on strategic opportunities. We established our
‘Vision 2030’, a long-term commitment to transforming the treatment of severe autoimmune diseases through innovative
therapies such as VYVGART and VYVGART HYTRULO, empasiprubart, and our expanding pipeline of antibody-
based therapeutics. Over the past year, we have made substantial progress in our ambitious target to treat 50,000 patients
globally, secure 10 labelled indications, and advance five pipeline candidates into Phase 3 development by 2030.
Notably, we reached over 10,000 gMG patients, expanded our global footprint with multiple approvals for gMG and
CIDP (approximately touching approximately1,000 patients), and initiated label-enabling studies that further our reach in
the market.
We have also advanced several key assets:
•
efgartigimod has progressed, with GO-decisions announced for SjD to enter into a Phase 3 clinical trial and for
Myositis to continue the Phase 3 clinical trial based on the Phase 2 data.
•
empasiprubart has advanced into a Phase 3 clinical trial for MMN and a Phase 3 clinical trial for CIDP will
commence in 1H 2025.
•
ARGX-119 has entered proof-of-concept clinical trials in CMS and ALS.
•
Four new INDs advancing into Phase 1 clinical trials, further underpinning our commitment to delivering
immunology innovations.
Financially, our strong performance is reflected in reaching $2.2 billion in product net sales, an impressive increase from
$1.2 billion in 2023, along with significant advancements in our clinical pipeline, including 10 Phase 2 clinical trials and
10 Phase 3 clinical trials. These achievements have enabled us to meet or exceed all quantitative short-term incentive
targets, while qualitative metrics relating to building a robust organization were also achieved.
Moreover, the Remuneration and Nomination Committee appreciates the strategic shift driven by our management’s
focus on operational and commercial excellence. This focus has well positioned argenx among its peers to capitalize on
emerging opportunities, particularly in light of the positive Phase 2 proof-of-concept data for empasiprubart, which has
paved the way for its advancement into Phase 3 clinical trial for MMN (EMPASSION).
2021-2024 Performance and Long-Term Incentive Plan Outcome
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As a shareholder, you will be pleased that in 2024, the Euronext Brussels share price rose by 74.7% from €343.50 per
share on the last trading day of 2023 to €600.00 per share on December 31, 2024. In a three-year long-term incentive
(LTI) period between December 31, 2021 and December 31, 2024, the share price rose by approximately 90.3%, from
€315.30 to €600.00 per share.
Stakeholder Engagement and Looking Forward to 2025
Shareholders play a crucial role in our success by providing invaluable support and fostering strong partnerships that are
essential to our growth. We deeply appreciate their continued commitment and strive to keep them well-informed,
ensuring a lasting and productive relationship. In 2024 and 2025 to date, we have actively engaged with our investor
community on several topics, including on the 2023 remuneration report (which led to a positive voting outcome of
58.6%), the proposed 2024 remuneration policy (which led to a voting outcome of 68.9% where a 75% majority was
required) and the Proposed 2025 Remuneration Policy. In 2024, we held over 70 dedicated meetings with shareholders.
As at the date of this Annual Report, we have conducted more than 20 meetings in 2025. These discussions focused on
key remuneration events and have been instrumental in driving continuous improvements in our remuneration practices.
Key points raised during these interactions include:
•
We received concerns from stakeholders they were not able to determine if and how pay-for-performance was
embedded in our remuneration. To address this feedback, this 2024 Remuneration Report includes enhanced
disclosure on the 2024 performance targets and corresponding pay-out for the NEOs. We have also introduced
prospective disclosure on the short-term incentive
(
STI
) metrics set for 2025 and for the newly introduced
performance share units (
PSUs
) against a threshold-target-maximum framework
. In the Proposed 2025 Remuneration
Policy, we will commit to this enhanced prospective disclosure against a threshold-target-maximum framework going
forward.
•
Feedback indicated that at this stage in the evolution of the Company stock options could be perceived as
performance-based incentives, potentially compromising the objectivity of our Non-Executive Directors. To respond
to feedback from a number of stakeholders and upholding the highest standards of governance and independence, we
decided to no longer grant stock options to Non-Executive Directors as from 2024. Instead, we transitioned to a
remuneration structure based on fixed fees and non-performance-based equity compensation, namely RSUs. This new
structure is aligned with best practices while maintaining fairness and transparency.
•
Historically, stock price appreciation was considered an inherent performance target in stock option grants. However,
in response to shareholder feedback, the Proposed 2025 Remuneration Policy introduces a more structured,
performance-driven approach to LTI. Under the revised framework, stock options will be limited to a maximum of
50% of the Executive Director’s total LTI grant, while at minimum 50% will be allocated as PSUs, tied to predefined
performance criteria beyond share price appreciation. To further reinforce this performance-based approach, RSUs
have been eliminated, ensuring that the entire LTI is 100% ‘at-risk’. This fully aligns Executive Director rewards with
long-term value creation and strategic objectives. This refined approach strengthens the link between Executive
Director compensation and sustained company performance while addressing shareholder concerns regarding
performance measurement.
•
Some stakeholders expressed concerns regarding the perceived lack of a cap on the LTI awards. In response, the
Proposed 2025 Remuneration Policy introduces a clearly defined cap on total awards as a multiple of base pay.
Notably, the Founder CEO has requested that his target and maximum LTI opportunities be set at 7x and 10x base
pay, respectively. Future incoming Executive Directors will also be subject to capped LTI awards, ensuring
consistency, transparency, and alignment with stakeholder expectations while maintaining a competitive and
performance-driven compensation structure.
•
Investor feedback prompted a revision of the vesting profile for stock option grants to enhance alignment with market
best practices. In line with our peers, the Proposed 2025 Remuneration Policy introduces a three-year cliff vest for the
CEO’s stock option grants, replacing the previous monthly vesting schedule that began one year after the grant date.
Additionally, the newly introduced PSUs will also be subject to a three-year cliff vesting schedule, reinforcing a long-
term commitment to performance and shareholder value creation.
•
Concerns were raised regarding the Board of Directors’ discretion in granting an additional $98,368 (25% of the
target incentive) in 2023 to the CEO in recognition of the successful execution of the Company’s business plan.
While this discretionary adjustment was deemed appropriate in this instance due to the significant over achievement
of business results, we acknowledge the importance of transparency and a more detailed disclosure of pay-for-
performance approach. In the event of any future discretionary adjustments will be accompanied by detailed
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disclosure of the performance targets and corresponding payouts to ensure clear alignment between compensation and
measurable achievements.
More information on how we further specifically addressed stakeholder concerns, including from our latest engagement in
2025, will be included in the explanatory notes of the Proposed 2025 Remuneration Policy.
We will continue to engage actively with our key stakeholders and proxy advisors throughout 2025 and onwards,
remaining available to address any questions or concerns regarding corporate governance and executive compensation.
Moreover, we foster an open dialogue within our organization, guided by our unified culture and core values of co-
creation, humility, excellence, empowerment and innovation. This underpins our vision for long-term value creation
while balancing the interests of all stakeholders.
Based on ongoing conversations with our shareholders and the positive feedback received regarding the performance of
our Named Executive Officers and the Company’s overall results, I am confident that our current and proposed
remuneration policies effectively support argenx’s strategic and operational objectives.
On behalf of the Remuneration and Nomination Committee,
Dr. Donald deBethizy
Chairperson, Remuneration and Nomination Committee
Introduction
In compliance with article 2:135b of the Dutch Civil Code, the European Shareholder Rights Directive and the DCGC,
this 2024 Remuneration Report contains information on how we implemented our 2021 Remuneration Policy for the
Board of Directors in financial year 2024.
Remuneration in 2025
This 2024 Remuneration Report also provides early insight on remuneration that will be set in financial year 2025, for
example with respect to benchmarking and peer group selection and prospectively regarding STI and LTI targets. This
2024 Remuneration Report also includes information on the Proposed 2025 Remuneration Policy, which will be
submitted to the 2025 General Meeting for a binding vote and which will be available shortly after publication of this
Annual Report. Please refer to
“Item 6.B — Compensation —
Looking Forward
” for more information.
Statement of voting at general meetings
The table below sets out the votes on the remuneration reports and compensation statement of the past years as well as
the votes on the 2021 Remuneration Policy during the annual General Meeting held in 2021. This 2024 Remuneration
Report as well as the Proposed 2025 Remuneration Policy, which will be available shortly after this Annual Report, will
be put to an advisory and binding vote, respectively, at the 2025 General Meeting to be held on May 27, 2025.
|
Resolution
|
Percentage of votes cast for the resolution
|
|
|
Resolution to approve the remuneration report (2024 AGM)
|
58.6%
|
|
|
Resolution to approve the remuneration report (2023 AGM)
|
44.1%
|
|
|
Resolution to approve the remuneration report (2022 AGM)
|
51.9%
|
|
|
Resolution to approve the remuneration report (2021 AGM)
|
76.6%
|
|
|
Resolution to amend the remuneration policy (2021 AGM)
|
76.6%
|
2024
Remuneration
2021 Remuneration Policy
The 2021 Remuneration Policy is designed to reward contributions toward achieving Company objectives and
generating long-term stakeholder value. Its primary goal is to offer competitive remuneration packages that align with
market practices in the key regions where the Company competes for talent, ensuring strong support for the Company’s
long-term business strategy.
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To maintain market competitiveness, the Company conducts regular reviews, typically annually but at least once every
three years, of the total remuneration of members of the Board of Directors and members of the Senior Management
Team. These reviews assess both compensation levels and program design, benchmarking against a carefully selected
group of reference companies.
Under the 2021 Remuneration Policy, total compensation is structured to align with or slightly exceed the market median
for fixed compensation, benefits, and short-term variable incentives. The LTI component consists of equity grants, with
award sizes positioned between the 50th and 75th percentile of the global reference group.
The 2021 Remuneration Policy was approved at the 2021 General Meeting with a 76.6% majority vote and is available
on the Company’s website at
https://www.argenx.com/investors/governance/
remuneration-policy
.
Benchmarking and peer group selection in 2024
Under the Proposed 2025 Remuneration Policy, the methodology of benchmarking and peer group selection is different
than described below for determination of 2024 remuneration. Please refer to Section 3.4.9 “
Peer Group Selection
”
where we describe the updated benchmarking process, the objective peer group selection criteria and outcome for
remuneration in 2025 in connection with the Proposed 2025 Remuneration Policy.
The 2024 remuneration was determined following a comprehensive benchmarking exercise conducted in the third
quarter of 2023 in collaboration with AON Radford, an independent third-party compensation advisor. To ensure a
globally competitive compensation structure, the Company benchmarked against both U.S. and European peer groups,
reflecting its position as a global company competing for top talent in both regions. This approach supports the execution
of the Company’s business strategy while aligning executive pay with long-term sustainable value creation for
stakeholders.
The following criteria were used to select the peer group for the 2024 remuneration as part of the Company’s benchmark
performed in the third quarter of 2023, ahead of setting the long-term incentive schemes of 2024 in December 2023 and
the annual cash compensation for 2024 in the first quarter of 2024:
•
Sector
: Biotechnology and Pharmaceutical industries
•
Stage of development
: market companies
•
Market Capitalization
: 1/4x – 3x argenx’s 30‐day average market value as of November 2023, corresponding
with a market capitalization between $5 ‐ 60 billion
•
Revenue
: 1/4x – 3x argenx’s trailing 12 months revenue, corresponding with an annual revenue between $160 million
-$2 billion
•
Headcount (secondary criteria)
: 1/3x – 3x argenx’s projected financial year ended December 31, 2023 corresponding
with a headcount between 400‐4,000 employees
With the goal of arriving at a sufficiently sized U.S. and EU peer group of at least 15 peer companies disclosing detailed
compensation information, a number of companies were added to the European peer group following a qualitative
review by AON Radford to identify companies with relevant similarities in business model and therapeutic focus. This
led to the following selection of peer companies used by us in the 2023 benchmark for the 2024 remuneration:
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|
Company name
|
Country of
Headquarters
|
|
|
ACADIA Pharmaceuticals Inc.
|
USA
|
|
|
Alnylam Pharmaceuticals, Inc.
|
USA
|
|
|
Amicus Therapeutics, Inc.
|
USA
|
|
|
BeiGene, Ltd.
|
Cayman Islands
|
|
|
BioMarin Pharmaceutical Inc.
|
USA
|
|
|
Blueprint Medicines Corporation
|
USA
|
|
|
CRISPR Therapeutics AG
|
Switzerland
|
|
|
Exelixis, Inc.
|
USA
|
|
|
Incyte Corporation
|
USA
|
|
|
Intra-Cellular Therapies, Inc.
|
USA
|
|
|
Ionis Pharmaceuticals, Inc.
|
USA
|
|
|
Neurocrine Biosciences, Inc.
|
USA
|
|
|
Sarepta Therapeutics, Inc.
|
USA
|
|
|
Seagen Inc. (formerly Seattle Genetics, Inc.)
|
USA
|
|
|
United Therapeutics Corporation
|
USA
|
Award levels
Our Board of Directors sets award levels based on the outcome of our benchmarking exercise. Our 2021 remuneration
policy, contains the following framework:
|
Non-Executive Directors
|
Senior Management Team
(including the CEO)
|
|||
|
Cash-based compensation
(base pay + STI)
|
50th percentile of the companies in Reference
Peer Group
|
50th percentile of the companies in Reference
Peer Group
|
||
|
Equity-based compensation
(LTI)
|
50th percentile of the companies in Reference
Peer Group
|
Between the 50th to 75th percentile of the
companies in Reference Peer Group
|
Application of the 2021 Remuneration Policy in
2024
Named Executive Officer Remuneration during
2024
This chapter contains a detailed overview of the remuneration paid for the year ended December 31,
2024
to the NEOs.
Of the NEOs, only the CEO is a statutory director in the Board of Directors. The remuneration of the NEOs in
2024
consisted
of base pay and benefits, STI pay in the form of variable cash remuneration, and LTI pay in the form of
Company equity, consisting of stock options and restricted stock units (
RSUs
).
Total Named Executive Officer Remuneration
The majority of NEO compensation is provided in the form of variable remuneration, which is a combination of
performance-dependent (short-term cash incentives) and stock options and service-dependent (RSUs) compensation.
Variable (short-term) compensation allows the Board of Directors to set challenging annual objectives aligning the
priorities of the NEOs with the short-term strategic objectives of the Company. Company equity in the form of stock
options provides an incentive to the NEOs to contribute to Company (stock price) value increase over the long-term (3
years) vesting period of the stock options. Company equity in the form of RSUs also provides an incentive for value
creation over the long-term (4 years) vesting period of the RSUs. The combination of variable pay in the form of cash-
award STI pay, and stock option based and RSU based LTI pay, ensures a balanced incentive for short-term focus on and
performance of near-term strategic targets, while contributing to sustainable long-term value creation and ensuring long-
term commitment (retention) of the executive. In addition, the Company provides severance arrangements as applicable
for the industry and pension and fringe benefits, including a performance based corporate bonus for all employees in the
Company of up to €3,948 ($4,266) in accordance with Belgian practice. Moreover, in accordance with the DCGC, when
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determining the remuneration package of the executives, scenario analyses are performed annually and taken into
account in setting the total remuneration levels and target and maximum awards under the STI and LTI plans.
Base pay
In 2024, compared to 2023, the base pay of the NEOs was increased in line with the total argenx employee population
annual base pay increase guidelines (CEO +15%, COO +6%, CFO +6%). The increases for the NEOs followed a review
of the individual’s performance over the preceding year(s), in light of comprehensive analysis of benchmark data
showing the relative positioning of base salaries compared to the relevant external and internal peers. This process
ensures that the Company’s compensation packages are a fair reflection of individual performance while also remaining
competitive and aligned with the market. The merit principles and base pay increase framework applied are identical to
those applicable to all employees in the organization and are based on the individuals’ performance and contributions
over the preceding period.
With respect to the CEO, at his request his base pay remained unchanged between 2022 and 2023; accordingly, the
increase in 2024 was the first increase since then. This increase was deemed necessary to ensure fairness in light of
industry benchmarks and to recognize the continued outstanding commitment and performance of the CEO in delivering
exceptional value to our shareholders. Even with this adjustment, the CEO places only at the 27
th
percentile of our new
global peer group for base pay.
With respect to the COO, the Board of Directors recognized the outstanding performance and the achievement and over
achievement of short-term targets. Consequently, and in line with pay practice applied consistently across the wider
workforce, the COO’s base pay was increased by 6.1% in 2024 versus 2023. The increase consisted of a merit increase
and an additional base pay increase to recognize her exceptional performance mentioned above, her competitive
placement versus the benchmark data and her critical role in our ongoing success.
With respect to the CFO, the Board of Directors recognized outstanding performance for the second year in a row in
2024, including achievement and over achievement of short-term targets, and established that the CFO’s base pay was
still below the midpoint for base pay for CFOs in the reference peer group. Consequently, and in line with pay practice
applied consistently across the wider workforce, the CFO’s base pay was increased by 6% in 2024 versus 2023,
consisting of a merit increase and an additional base pay increase to move the CFO closer to the benchmarked midpoint.
The base pay increase was consistent with the base pay increase of 6% between 2023 and 2022.
Please refer to
“Item 6.B — Compensation —
Total Named Executive Officer Remuneration
” for an overview of the total
value of the remuneration paid to the NEOs for the last 3 years.
Variable Cash
The NEOs were eligible for a variable cash payment for the performance of pre-defined short-term performance targets
in 2024, with the target variable cash compensation set as a percentage of their base pay (60% for CEO, 50% for COO
and 40% for CFO). The Board of Directors has set a cap of 200% pay-out per target, and a 200% overall pay-out cap.
The Board of Directors evaluated the pay-out of each target, with ‘at target’, ‘maximum per target’ and ‘actual pay-out’
explained in detail in the table below.
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CEO
When considering the variable pay pay-out of the CEO, the Board of Directors primarily reviewed whether the key objectives of the Company’s business plan for
2024 were achieved.
Personal targets set for the CEO, in addition to his overall responsibility for delivering the business plan, were the following:
|
Performance Metric
and Weighting
|
Measurement
(how the Board of Directors
evaluated the target)
|
Threshold
|
Target
|
Max
|
Achievement
|
Vesting
|
Actual
pay-out
(USD)
1)
|
|||||||
|
Embed our culture and
innovation mission (25%)
|
•
Integrating our newly hired
people through dedicated
culture/ways of working
sessions organized with our
global managers and culture
champions
•
Champion four innovation
initiatives
|
N/A
|
Key hires successfully
onboarded and
4 innovation initiatives
championed
|
N/A
|
•
Key hires successfully
onboarded and
•
5 innovation
initiatives
championed
|
25%
|
227,304
|
|||||||
|
Talent development (25%)
|
Internal leadership talent pool assessed,
increased and enhanced through direct
personal involvement in the Personal
Development Plan of undisclosed
number of key high potentials and future
Company leaders
|
25
|
35
|
50
|
50
|
50%
|
227,304
|
|||||||
|
Deliver continued
VYVGART growth (25%)
|
•
Global annual operating budget
revenue targets ($ targets)
(75%)
•
New launches (patient on drug
target (25%)
|
80% of annual
operating budget
target
|
100% annual operating
budget target
|
120% annual
operating budget
target
|
120% annual operating
budget target
|
50%
|
227,304
|
|||||||
|
Advance the Pipeline (25%)
|
10 high quality IIP programs per
OGSM definition
•
4 INDs on track for 2025
•
MMN on accelerated path
|
•
8 IIP Programs
and
•
3 INDs on
track and
•
IND accepted
|
•
10 IIP programs and
•
4 INDs on track and
•
First site activated
|
Minimum 2 out of 3:
•
12 IIP programs
and/or
•
5 INDs on track
and/or
•
First patient
randomized
|
•
11 IIP programs
delivered
•
5 INDs on track
•
First patient
randomized
|
50%
|
113,652
|
1)
Amounts paid out in Euro have been converted to USD using the average rate for the period of 1.0824 EUR/USD.
|
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|
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COO
When considering the variable pay pay-out of the COO, the Board of Directors primarily reviewed whether the following key objectives of the Company’s business
plan for which the COO had key responsibilities for
2024
were achieved.
Personal targets set for the COO, in addition to her overall responsibility for delivering commercial performance, were the following:
|
Performance Metric
and Weighting
|
Measurement
(how the Board of Directors
evaluated the target)
|
Threshold
|
Target
|
Max
|
Achievement
|
Vesting
|
Actual
pay-out
(USD)
1)
|
|||||||
|
Scale commercial engine by
leveraging the new operating
model (25%)
|
Successful onboarding of key hires
and cross-functional indication
teams delivering their OGSMs
|
Key hires
successfully
onboarded with
max 2 attritions
|
Key hires successfully
onboarded with no
attrition
AND
80% of OGSM targets
delivered
|
Key hires
successfully
onboarded with no
attrition AND
90% of OGSM
targets delivered
|
•
Key hires successfully
onboarded with no
attrition AND
•
90% of OGSM targets
delivered
|
50%
|
168,741
|
|||||||
|
Integrate our newly hired
colleagues to the argenx
culture and operating
principles, leveraging the
operating excellence model
to create a global network of
leaders (25%)
|
Measured by operating excellence
model self-assessment
|
At least 3
significant, global
operational wins
by applying
operating
principles
|
At least 5 significant,
global operational wins
by applying operating
principles
|
At least 7 significant,
global operational
wins by applying
operating principles
|
At least 7 significant,
global operational wins
by applying operating
principles
|
50%
|
168,741
|
|||||||
|
Deliver continued
VYVGART growth (25%)
|
•
Global annual operating budget
revenue targets ($ targets)
(75%)
•
New launches (patient on drug
target (25%)
|
80% of annual
operating budget
target
|
100% annual operating
budget target
|
120% annual
operating budget
target
|
120% annual operating
budget target
|
50%
|
168,741
|
|||||||
|
PFS with self-administration
delivered according to plan,
maintaining subcutaneous
Gen-1 option (25%)
|
FDA acceptance
|
FDA acceptance
|
FDA acceptance with no
concerns and review on
track
|
FDA acceptance with
PDUFA date 6
months
|
FDA acceptance with no
concerns and review on
track
|
25%
|
84,371
|
CFO
When considering the variable pay pay-out of the CFO, the Board of Directors primarily reviewed whether the key commercial and operational objectives of the
Company’s business plan for
2024
were achieved.
The personal targets set for the CFO, in addition to his overall responsibility for delivering commercial performance, were the following:
|
110
|
||
|
Performance Metric
and Weighting
|
Measurement
(how the Board of Directors
evaluated the target)
|
Threshold
|
Target
|
Max
|
Achievement
|
Vesting
|
Actual
pay-out
(USD)
|
|||||||
|
ERP process simplification
time reduction (25%):
•
Simplify project
management module;
embed forecasting
capabilities and insight
generation
•
Global process owner
automation
centralization
|
Measured by successful completion
of projects and internal customer
feedback
|
75% of projects
successfully
delivered
|
85% of projects
successfully delivered
|
100% of projects
successfully
delivered
|
85% of projects delivered
|
25%
|
55,300
|
|||||||
|
Protect and preserve
company and critical assets
(25%):
•
Strong audit ratings from
internal external audits
•
Partnership with audit
and compliance
committee
•
Sustainable future tax
rate
•
Working capital
|
•
Audit and compliance
committee partnership:
measured by feedback
•
Sustainable future tax rate:
measured by filings of key
rulings (US Bilateral Advance
Pricing Arrangements,
expanded Belgian Innovation
Income Deduction ruling for
ARGX-113 IV SC for CIDP
and ITP, Switzerland, and
Japan)
•
Working capital: measured
against agreed terms
|
•
No major
findings
external
•
Audit and
Compliance
Committee
rates
partnership
with CFO as
"strong" (7+)
•
US ruling filed
•
Annual
operating
budget + 10%
|
•
No major findings
internal external
audit
•
Audit and Compliance
Committee rates
partnership as very
strong (8+)
•
US + Japan rulings
filed
•
Annual operating
budget
|
•
No major
findings internal
external audit
and no minor
findings external
•
Audit and
Compliance
Committee rates
partnership as
excellent (9+)
•
US / Japan /
Switzerland
rulings filed
•
Annual operating
budget -10%
|
•
No major internal
external audit findings
•
Audit and Compliance
Committee rates
partnership as 9+
•
US and Japan rulings
filed
•
Annual operating
budget -10%
|
25%
|
55,300
|
|||||||
|
Deliver continued
VYVGART growth (25%)
|
•
Global annual operating budget
revenue targets ($ targets)
(75%)
•
New launches (patient on drug
target) (25%)
|
80% of annual
operating budget
target
|
100% annual operating
budget target
|
120% annual
operating budget
target
|
120% annual operating
budget target
|
50%
|
110,600
|
|||||||
|
Ensure internal and external
alignment of expectations
and grow investor base
(25%)
|
•
Analyst expectations vs actual
revenue disclosed per quarter,
measured by average % change
in Nasdaq stock price on the
trading day of earnings
communications (50%)
•
Add generalist shareholders to
the top 35 list (50%)
|
On average no
more than 20%
change and 1
generalist
shareholder added
|
On average no more than
10% change and 2
generalist shareholder
added
|
On average no more
than 5% change and
4 generalist
shareholders added
|
Average change of 4%
and 4 generalist
shareholders added
|
50%
|
110,600
|
|
111
|
||
Corporate Bonus
All employees are eligible to annually earn a performance based corporate bonus with a maximum value of €3,948
($4,266) per year, based on three equally weighted Company-wide goals. In 2024, the targets focused on (i) continued
increased cybersecurity awareness, (ii) building argenx together by bringing the cultural pillars and operating principles
to life through participation in Culture Labs, and (iii) supporting development and growth of all employees through
personal development plans. A pay-out of €3,350 ($3,636) was made to all employees.
Equity
In
2024
, the Company granted a mix of stock options and RSUs to the NEOs. The number of instruments to be granted
in the course of
2024
was determined pursuant to the annual benchmark exercise performed with the help of AON
Radford. This benchmark exercise takes place in the third quarter of each calendar year.
Determination of target value of CEO equity grant
For the 2023 CEO equity granted on the first business day in July 2023, being July 3, 2023, the determination of the
target value for the CEO followed the below steps:
•
The total target value of $6,986,986 was established in the third quarter of 2022.
•
Immediately thereafter, the target value was subsequently converted into a fixed number of stock options and RSUs to
be granted on the grant date of July 3, 2023.
•
For the conversion into a fixed number of stock options; a Black-Scholes value of $151.03 per stock option was used
based on the 30-day average stock price of $366.58 before July 22, 2022. Based on this valuation, the number of
stock options to be granted on July 3, 2023 was fixed at 30,000 stock options.
•
For the conversion into a fixed number of RSUs; the value of $366.58 per RSU was based on the 30-day average
stock price of $366.58 before July 22, 2022. Based on this valuation, the number of RSUs to be granted on July 3,
2023 was fixed at 6,700 RSUs.
•
Consequently, the fixed number of stock options and RSUs, 30,000 and 6,700 respectively, were embedded in the
2023 equity allocation scheme.
•
On the grant date of July 3, 2023, the stock price was $389.73 compared to $366.58 on the date on which the number
of stock options and RSUs were fixed following conversion of the target value.
•
This resulted in a value at grant on July 3, 2023 of $8,084,605 compared to the target value of $6,986,986 in the third
quarter of 2022. This difference is explained by the stock price increase in the intervening period.
1)
•
Consequently, by fixing the number of equity instruments in the third quarter of 2022 while the grant takes place in
the second quarter of the next year, any positive or negative fluctuations in the stock price between the third quarter of
2022 and July 3, 2023 were not taken into account.
The same determination methodology was followed between the approval of the 2021 Remuneration Policy and 2024.
Updated determination of target value of CEO equity grant as of 2024
As referenced in the 2023 remuneration report, the Company took concrete steps in 2024 to close the time gap between
the benchmarking exercise when determining the target value. The below steps have been followed in 2024 for the
determination of the target value for the CEO:
•
The total target value of $7,080,000 was established in the third quarter of 2023.
•
In contrast to 2023, the target value was not immediately converted into a fixed number of stock options and RSUs.
1)
These amounts do not reflect the actual economic value realized by the beneficiary. Amounts included represent the expenses with respect to the
assumptions used in the Black-Scholes model differ between Belgian beneficiaries versus non-Belgian beneficiaries, resulting in the CEO’s stock
based compensation expenses to be higher than other beneficiaries. For a description of the assumptions used, see ”
|
112
|
||
•
Instead, the number of stock options was calculated by dividing the target value through the then applicable Black-
Scholes value based on 30 calendar days preceding the 15
th
day of the month in which the grant occurs (the Reference
Date), rounded up to the nearest whole number granted as stock options.
•
The numbers of RSUs was calculated by dividing the target value through the average closing price 30 calendar days
preceding the Reference Date, rounded up to the nearest whole number granted as RSUs.
•
The 30-calendar day average closing price on June 15, 2024 was $375.68.
•
Consequently, 18,279 stock options and 6,672 RSUs were granted on the grant date of June 28, 2024.
•
The stock price on the day preceding the grant of June 28, 2024 was $445.76 compared to the 30-calendar day
average of $375.68 on the Reference Date of June 15, 2024.
•
This resulted in a total value at grant on June 28, 2024 of $6,209,313 compared to the target value of $5,080,000 on
the Reference Date of June 15, 2024. This difference is explained by the stock price increase in the intervening
period.
2)
•
Even though the time period between the valuation date and grant date has been drastically reduced from 8 months to
2 weeks, stock fluctuations whether positive or negative, will still influence the grant value compared to the target
value. For instance, in 2024, we announced the FDA approval of VYVGART HYTRULO for CIDP on June 21,
2024, which positively influenced the stock price between June 15, 2024 and July 1, 2024.
The above determination methodology will be applied going forward, irrespective of whether the Proposed 2025
Remuneration Policy will be approved. It will for the first time be used for the determination of the 2025 target value for
stock options and PSUs.
2)
These amounts do not reflect the actual economic value realized by the beneficiary. Amounts included represent the expenses with respect to the
assumptions used in the Black-Scholes model differ between Belgian beneficiaries versus non-Belgian beneficiaries, resulting in the CEO’s stock
based compensation expenses to be higher than other beneficiaries. For a description of the assumptions used, see “
|
113
|
||
The following table sets out the number, value and key terms of equity instruments granted to the NEOs in
2024
:
|
RSUs granted in 2024
|
Stock options granted in 2024
|
|||||||||||||||||||||
|
Name
|
# RSUs
|
Key terms
|
Value at
grant in
$
|
Benchmark
value in $
|
# Stock
options
|
Exercise
price in
€
|
Exercise
price in
$
|
Key terms
|
Value at
grant in $
1)
|
Benchmark
value in $
1)
|
Total
|
|||||||||||
|
Tim Van
Hauwermeiren,
CEO
|
6,762
|
RSUs vest and
are settled in 4
equal
installments of
25% over a 4
year period
|
3,014,500
|
2,540,348
|
18,279
|
416.40
|
445.76
|
1/3 vests after year 1
2/3 vest in monthly
installments in year 2 and 3
Options not exercisable
until the 4th calendar year
after the grant year
|
3,194,813
|
2,540,050
|
6,209,313
|
|||||||||||
|
Karen Massey,
COO
|
4,712
|
2,100,610
|
1,770,204
|
12,738
|
416.40
|
445.76
|
1/3 vests after year 1
2/3 vest in monthly
installments in year 2 and 3
|
2,018,973
|
1,770,072
|
4,119,583
|
||||||||||||
|
Karl Gubitz,
CFO
|
4,712
|
2,100,610
|
1,770,204
|
12,738
|
416.40
|
445.76
|
2,018,973
|
1,770,072
|
4,119,583
|
|||||||||||||
1)
Amounts shown represent the expenses with respect to stock options measured using the Black-Scholes model. For a description of the assumptions used in valuing these awards, see “
Note 13 — Share-
Based Payments
” to our Consolidated Financial Statements
which are appended to our Annual Report for the period ended
December 31, 2024
and which are incorporated herein by reference
.
Based on
the approved 2024 equity allocation scheme, the total equity target value for Tim Van Hauwermeiren is equal to $5,080,000 and the total equity target value for Karen Massey and Karl Gubitz is equal
to $3,040,000 for each. The CEO, COO and CFO received their respective equity grants at target value converted into a number of stock options and RSUs on the Reference Date of the 30-days average
share price of $375.68 per share preceding the Reference Date and the Black-Scholes model fair market value of $138.96 per stock option. This results in the number of stock options and RSUs shown
above. The amounts shown above represent the actual value received at the grant date of June 28, 2024 at which date the Company’s share price was equal to $445.76. The difference of $70.08 per share
is explained by the stock price increase in the intervening period primarily due to approval of VYVGART HYTRULO for CIDP in the U.S. by the FDA. For more information on the CEO equity grant,
please refer to
“
Item 6. B — Compensation — Equity —
Determination of target value of CEO equity grant
”
above. The fair market value based on the Black-Scholes model for Tim Van Hauwermeiren
is $174.78 and the fair market value for the COO and CFO is $158.50. These amounts do not reflect the actual economic value realized by the beneficiary. Amounts shown represent the expenses with
respect to the stock options awards granted in 2024 measured using the Black-Scholes model with unobservable assumptions. The assumptions used in the fair valuation differ between Belgian
beneficiary versus non-Belgian beneficiary. For a description of the assumptions used in valuing these awards, see
“
Note 13 — Share-Based Payments
“
to our Consolidated Financial Statements
which
are appended to our Annual Report for the period ended
December 31, 2024
and which are incorporated herein by reference
.
|
114
|
||
Pension and fringe benefits
The benefits paid to the NEOs are jurisdiction dependent. For the CEO, these included benefits customary in the Belgian
market, and which are standard components of Belgian-based employee packages: pension contributions, a
hospitalization insurance, a representation allowance and a company car. The Company pension contribution percentage
of base pay for the CEO is equal to the Company pension contribution percentage for all employees in Belgium. For the
COO, these included benefits customary in the Swiss market, and which are standard components of Switzerland-based
employee packages: car allowance, lunch allowance, health insurance allowance, representation allowance and pension
contributions For the CFO, these included benefits customary in the U.S. market, and which are standard components of
our U.S.-based employee packages: a company-administered health and 401k plan, with a 4% company match.
Equity holding requirements for Named Executive Officers
In
2023
, the Company implemented the following holding requirements for the Named Executive Officers :
•
CEO: 3x base pay
•
Other NEOs: 1x base pay
The minimum equity stake has to be built up over a maximum of five years and continues to apply for the duration of
employment and for two years thereafter.
Severance arrangements
In accordance with our 2021 Remuneration Policy, the CEO has an 18-month notice period for termination (or
alternatively, 12 months severance in lieu of notice). For the other NEOs, no contractual arrangements have been made
for severance.
In the year ended December 31,
2024
, no severance payments were granted to the NEOs.
Clawback policy
In the event that any variable remuneration (cash or equity) is paid to members of the Senior Management Team,
including the NEOs, based on financial information which later proves to be incorrect and leads to an accounting
restatement (i) due to the material noncompliance of the Company with any financial reporting requirement under
applicable securities laws, including any required accounting restatement to correct an error in previously issued
financial statements of the Company that is material to the previously issued financial statements of the Company, or (ii)
that corrects an error that is not material to previously issued financial statements of the Company, but would result in a
material misstatement if the error were corrected in the current period or left uncorrected in the current period, then the
difference between the paid compensation and the compensation which would have been payable without such
accounting restatement, shall be claimed back from the executive, all as further set out in the Executive Compensation
Clawback Policy, as adopted by the Board of Directors on July 25, 2023.
In the year ended December 31,
2024
, no variable remuneration was clawed back and no variable remuneration was
adjusted (retroactively).
If the Proposed 2025 Remuneration Policy is approved at the 2025 General Meeting, new management agreements that
are entered into with the Company will not have notice periods exceeding 12 months unless otherwise required by local
law. No severance arrangements will be paid in the event of serious culpable or negligent behavior on the part of an
Executive Director being dismissed. We also will not pay severance if the agreement is terminated at the initiative of an
Executive Director, other than due to serious culpable conduct or neglect on the part of the Company.
Remuneration of Other Members of the Senior Management Team
For the purposes of U.S. governance reporting requirements, all senior level employees reporting directly to the CEO
qualify as the Company’s ‘executives’. The remuneration disclosures in relation to this more extensive group of senior
personnel (excluding the NEOs) in this 2024 Remuneration Report is presented on an aggregated basis, with the
exception of equity remuneration, which is presented on an individual basis.
Aggregate compensation for other members of the Senior Management Team
|
115
|
||
The following table sets forth information regarding aggregate compensation paid to members of the Senior
Management Team (other than the NEOs) during the year ended
December 31, 2024
.
|
(in $)
|
Compensation
|
|
|
Base pay
|
2,563,047
|
|
|
Corporate bonus
|
—
|
|
|
Variable STI
1)
|
1,376,604
|
|
|
Compensation in the form of stock options
|
10,525,234
|
|
|
Compensation in the form of RSUs
|
8,994,991
|
|
|
Other benefits
2)
|
4,095,467
|
|
|
Total
|
27,555,343
|
1)
Variable STI includes a performance based Company wide corporate bonus of $3,636 per member of the Senior Management Team.
2)
Other benefits consists of the lease of a company car, employer-paid medical insurance premiums, pension contributions, social security costs
and allowance. In 2024, employer social security costs were impacted by the increase of share-price at year end against the share-price as of
December 31, 2023.
For more information on equity granted to members of the Senior Management Team (other than the NEOs), during
2024, please refer to
“Item 6.B. — Compensation —
Summary of Other members of the Senior Management Team
”
below.
Non-Executive Director Remuneration
Pursuant to the 2021 Remuneration Policy, the remuneration of the Non-Executive Directors consists of (i) a cash
retainer fee calculated on the basis of their membership or chairpersonship of the Board of Directors and/or its
committees, and (ii) a long-term equity incentive in the form of stock options and RSUs. One of the key points raised by
stakeholders in respect of the 2021Remuneration Policy was that granting stock options to Non-Executive Directors may
be perceived as performance-based remuneration, potentially affecting the objectivity of our Non-Executive Directors.
To address this concern, the Company decided to no longer grant stock options to Non-Executive Directors as of 2024.
Consequently, in 2024, the remuneration of the Non-Executive Directors consisted of cash retainer fees and RSUs. Our
Proposed 2025 Remuneration Policy will formally reflect this change.
Total Non-Executive Director remuneration
The following table sets forth the information regarding the remuneration earned by the Non-Executive Directors during
the year ended
December 31, 2024
:
|
Name
|
Cash retainer fees
earned or paid in cash
(in $)
|
RSU awards
(in $)
1)
|
Total
(in $)
|
|||
|
Mr. Peter Verhaeghe
|
117,500
|
474,734
|
592,234
|
|||
|
Mr. Steve Krognes
|
85,000
|
474,734
|
559,734
|
|||
|
Dr. Pamela Klein
|
70,000
|
474,734
|
544,734
|
|||
|
Dr. Donald deBethizy
|
90,000
|
474,734
|
564,734
|
|||
|
Anthony Rosenberg
|
82,500
|
474,734
|
557,234
|
|||
|
James Daly
|
92,500
|
474,734
|
567,234
|
|||
|
Camilla Sylvest
|
70,000
|
474,734
|
544,734
|
|||
|
Dr. Ana Cespedes
|
70,000
|
474,734
|
544,734
|
|||
|
Dr. Brian Kotzin
|
53,333
|
712,324
2)
|
765,657
|
1) There is a difference between the annual equity compensation target amount of $400,000 and the value at grant of $474,777. On the Reference Date,
the annual equity compensation target amount of $400,000 was divided by the average closing price of the Company’s shares of $375.68 30
calendar days preceding the Reference Date. The Company’s share price on the grant date of June 28, 2024 was $445.76. The difference of $70.08
per share is explained by the share price increase in the intervening period primarily due to approval of VYVGART HYTRULO for CIDP in the
U.S. by the FDA.
|
116
|
||
2) Dr. Brian Kotzin joined the Board of Directors in May 2024 and pursuant to the 2021 Remuneration Policy and 2024 equity allocation scheme, he
was eligible to a sign-on grant representing an additional 50% (equal to $200,000) of the Non-Executive Director annual equity compensation
target amount.
|
117
|
||
Annual cash
The Board of Directors has set the annual cash retainer fees, including for members of the Audit and Compliance Committee, the research and development
committee, the Remuneration and Nomination Committee and the commercial committee and, in each case, the additional remuneration for the respective chairperson
as follows. In 2024, the annual cash retainer fees were at the 50th percentile of cash remuneration in the peer group for 2024 remuneration.
|
In $
|
||||||||||||||||||||||
|
Relevant body
|
Position
|
Fees in $
|
Mr. Peter
Verhaeghe
|
Mr. Steve
Krognes
|
Dr. Pamela
Klein
|
Dr. Donald
deBethizy
|
Anthony
Rosenberg
|
James Daly
|
Camilla
Sylvest
|
Dr. Ana
Cespedes
|
Dr. Brian
Kotzin
|
|||||||||||
|
Board of Directors
|
Chairperson
|
95,000
|
95,000
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||
|
Member
|
60,000
|
—
|
60,000
|
60,000
|
60,000
|
60,000
|
60,000
|
60,000
|
60,000
|
40,000
|
||||||||||||
|
Audit Compliance
Committee
|
Chairperson
|
25,000
|
—
|
25,000
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
|
Member
|
12,500
|
12,500
|
—
|
—
|
—
|
12,500
|
12,500
|
—
|
—
|
—
|
||||||||||||
|
Remuneration Nomination
Committee
|
Chairperson
|
20,000
|
—
|
—
|
—
|
20,000
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
|
Member
|
10,000
|
10,000
|
—
|
—
|
—
|
—
|
—
|
—
|
10,000
|
—
|
||||||||||||
|
Commercial Committee
|
Chairperson
|
20,000
|
—
|
—
|
—
|
—
|
—
|
20,000
|
—
|
—
|
—
|
|||||||||||
|
Member
|
10,000
|
—
|
—
|
—
|
—
|
10,000
|
—
|
10,000
|
—
|
—
|
||||||||||||
|
Research Development
Committee
|
Chairperson
|
20,000
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
13,333
|
|||||||||||
|
Member
|
10,000
|
—
|
—
|
10,000
|
10,000
|
—
|
—
|
—
|
—
|
—
|
||||||||||||
|
Total
|
117,500
|
85,000
|
70,000
|
90,000
|
82,500
|
92,500
|
70,000
|
70,000
|
53,333
|
|||||||||||||
Equity compensation
In
2024
, the Non-Executive Directors received only RSUs. The target amount of $400,000 was at the 50
th
percentile of the peer group for 2024 remuneration:
|
RSUs granted in 2024
|
||||||||
|
Name
|
# RSUs
|
Key terms
|
Value at grant in $
1)
|
Total
|
||||
|
Mr. Peter Verhaeghe
|
1,065
|
RSUs granted in 2024 vest after 1 year and
are subject to a 3-year holding period from
the date of grant
|
474,734
|
474,734
|
||||
|
Mr. Steve Krognes
|
1,065
|
474,734
|
474,734
|
|||||
|
Dr. Pamela Klein
|
1,065
|
474,734
|
474,734
|
|||||
|
Dr. Donald deBethizy
|
1,065
|
474,734
|
474,734
|
|||||
|
Anthony Rosenberg
|
1,065
|
474,734
|
474,734
|
|||||
|
James Daly
|
1,065
|
474,734
|
474,734
|
|||||
|
Camilla Sylvest
|
1,065
|
474,734
|
474,734
|
|||||
|
Dr. Ana Cespedes
|
1,065
|
474,734
|
474,734
|
|||||
|
Dr. Brian Kotzin
|
1,598
2)
|
712,324
2)
|
712,324
2)
|
|||||
1)
There is a difference between the annual equity compensation target amount of $400,000 and the value at grant of $474,777. On the Reference Date, the annual equity compensation target amount of
$400,000 was divided by the average closing price of the Company’s shares of $375.68 30 calendar days preceding the Reference Date. The Company’s share price on the grant date of June 28, 2024
was $445.76. The difference of $70.08 per share is explained by the share price increase in the intervening period primarily due to approval of VYVGART HYTRULO for CIDP in the U.S. by the FDA.
2)
Dr. Brian Kotzin joined the Board of Directors in May 2024 and pursuant to the 2021 Remuneration Policy and 2024 equity allocation scheme, he was eligible to a sign-on grant representing an
additional 50% (equal to $200,000) of the Non-Executive Director annual equity compensation target amount.
|
118
|
||
Holding requirements
In 2023, the Company implemented the following holding requirements for Non-Executive Directors: 3x annual Board
of Director membership retainer fees worth of Company stock for the duration of their role.
The minimum equity stake is required to be built up over a maximum of five years and continues to apply for the
duration of their role and for at least two years after departure.
In the Proposed 2025 Remuneration Policy, the Company is further revising this. It is proposed that a Non-Executive
Director is required to hold at least 5x annual Board of Director membership retainer fees (as at the date of this Annual
Report USD 60,000) worth of Company stock for the duration of their role.
Severance arrangements
In the year
ended December 31,
2024
, no severance payments were granted to the Non-Executive Directors.
Non-Executive Director equity treatment on departure
In 2023, the Company updated the terms of the Equity Incentive Plan applicable to Non-Executive Directors, with
respect to leaver rules. In particular, and following shareholder feedback on the potential negative impact of having
multi-year service based vesting requirements for Non-Executive Director equity, the Equity Incentive Plan was updated
to reflect that Non-Executive Directors will lose their unvested equity if they are dismissed at the general meeting, but
not if they resign on their own initiative or if, at the end of their term, they do not apply for re-appointment.
In the proposed 2024 remuneration policy, the Company proposed a 1-year vest term combined with a 3-year post vest
holding requirement. Despite the proposed 2024 remuneration policy not being approved in the 2024 General Meeting,
we applied this updated vesting term and post-vest holding requirement to the RSUs granted to Non-Executive Directors
in 2024 to address shareholder feedback. In the Proposed 2025 Remuneration Policy, the Company is further revising
this. It is proposed that all RSUs granted will not be subject to any vesting conditions and that no RSUs may be sold until
after the 4
th
anniversary of the grant date, except to the extent necessary to cover immediate tax obligations resulting
from the grant.
Pay Ratios
Overall pay ratios
The total expense for the non-equity remuneration paid to the CEO (being the only statutory Executive Director on the
Board of Directors) for the year ended
December 31, 2024
, totalled
$1,598,471
. The table below shows the evolution
over the past five years of CEO compensation, the performance of the Company’s stock price and the median
remuneration on a full-time equivalent basis (annualized for the employees who joined or left us during the year) of
employees, other than the CEO:
|
2020
|
2021
|
2022
|
2023
|
2024
|
||||||||
|
Base pay of the CEO (EUR)
|
€
|
525,000
|
551,250
|
606,368
|
606,368
|
700,000
|
||||||
|
Base pay of the CEO (USD)
|
$
|
553,167
|
580,825
|
638,901
|
655,787
|
757,680
|
||||||
|
Non-equity remuneration of the CEO (USD) (base pay,
short-term cash incentive, pension contributions and
other compensation elements)
|
$
|
1,144,301
|
1,285,136
|
1,443,925
|
1,285,056
|
1,598,471
|
||||||
|
Total remuneration of the CEO (USD) (non-equity
remuneration, STI and LTI)
|
$
|
8,160,745
|
7,263,828
|
7,778,298
|
11,944,835
1)
|
1
)
|
7,807,786
|
|||||
|
Non-equity median salary paid to employees (USD)
|
$
|
163,062
|
157,349
|
153,193
|
159,500
|
180,543
|
||||||
|
Non-equity remuneration ratio employee/CEO
|
14
%
|
12
%
|
11
%
|
12%
2)
|
11
%
|
|||||||
|
Average remuneration paid to Non-Executive Director
(USD)
|
$
|
57,925
|
54,484
|
48,587
|
59,230
|
81,204
|
||||||
|
Number of employees on December 31
|
336
|
650
|
843
|
1,148
|
1,599
|
|||||||
|
Share price at end of year Euronext (EUR) on
December 31
|
€
|
242.00
|
315.30
|
348.30
|
343.50
|
600.00
|
||||||
|
Share price at end of year Euronext (USD) on
December 31
|
$
|
296.96
|
357.11
|
371.50
|
379.57
|
623.34
|
|
119
|
||
1)
Based on the approved 2023 equity allocation scheme, the total equity target value for Tim Van Hauwermeiren is equal to $6,986,986. Please
refer to
“Item 6.B. — Compensation — Equity —
Determination of target value of CEO equity grant
” above for more information on the
variation in granted equity value between 2023 and 2024.
2)
The increase in the remuneration ratio between the CEO and other employees between 2022 and 2023 is caused by the increase in salary of
employees when base salary of the CEO remained unchanged.
The comparison of non-equity compensation above is made between the compensation paid to the CEO, the Company’s
sole statutory
Executive Director
on the Board of Directors, and the median compensation paid to employees. The
Company has opted to compare non-equity salaries, because whereas the number of stock options granted is linked to the
overall size of remuneration packages granted, the value of equity components depends on the evolution of the
Company’s share price, volatility and the risk-free rate, which is unknown at the time of grant and as such the forward-
looking valuation methods for stock options normally do not provide an accurate representation of actual economic value
granted. In the assumptions used, the fair valuation differs between a Belgian beneficiary versus a non-Belgian
beneficiary. For a description of the assumptions used in valuing these awards, please refer to “
Note 13 — Share-Based
Payments
in our consolidated financial statements
which are appended to our Annual Report for the period ended
December 31, 2024
and which are incorporated therein by reference
.
Regional pay ratios
Due to the global spread of employees over multiple continents, it is deemed relevant to also include the above
comparison separately to U.S. employees, EU employees and Japanese employees. Due to the overall higher
compensation level in the business segment in the U.S. compared to the EU, there is a significant difference in the pay
ratio when the CEO’s compensation is compared to the median compensation of all employees, compared to employees
in the U.S. The following information is provided for reference purposes:
|
Ratio of non-equity compensation of the median employee compared to the CEO for the year ended December 31, 2024
|
||
|
All employees
|
11%
|
|
|
European employees
|
7%
|
|
|
North-America Employees
|
16%
|
|
|
Japan employees
|
5%
|
|
Total employment costs (excluding any costs related stock options and RSUs) paid in the year ended December 31,
2024
was split between regions as follows:
|
Total employment costs in the year ended December 31, 2024
|
||
|
(in millions of $)
|
||
|
Europe
|
186.7
|
|
|
North-America
|
204.9
|
|
|
Japan
|
13.9
|
|
|
120
|
||
Share-based payment ratios
|
2020
|
2021
|
2022
|
2023
|
2024
|
||||||
|
Stock options granted to the CEO
|
50,000
|
25,000
|
25,000
|
30,000
|
18,279
|
|||||
|
Median stock options granted to employees
|
2,900
|
981
|
900
|
600
|
306
|
|||||
|
Ratio employee/CEO for stock options
|
6
%
|
4
%
|
4
%
|
2
%
|
2
%
|
|||||
|
RSUs granted to the CEO
|
N/A
|
5,700
|
5,700
|
6,700
|
6,762
|
|||||
|
Median RSUs granted to the employees
|
N/A
|
200
|
200
|
94
|
148
|
|||||
|
Ratio employee/CEO for RSUs
|
N/A
|
4
%
|
4
%
|
1
%
|
2
%
|
|||||
|
Median number of stock options granted to Non-Executive
Directors
|
10,000
|
2,700
|
2,700
|
1,600
|
N/A
|
|||||
|
Median stock options granted to employees
|
2,900
|
981
|
900
|
600
|
306
|
|||||
|
Ratio Non-Executive Directors/employee stock options
|
29
%
|
36
%
|
33
%
|
38
%
|
N/A
|
|||||
|
Median number of RSUs granted to Non-Executive
Directors
|
N/A
|
600
|
600
|
350
|
1,124
|
|||||
|
Ratio Non-Executive Directors/employee RSUs
|
N/A
|
33
%
|
33
%
|
27
%
|
13
%
|
Other Disclosures
Remuneration by subsidiaries
In the year ended December 31,
2024
, no remuneration was granted and allocated by subsidiaries or other companies
whose financials are consolidated, other than the regular remuneration payments made by the entities with whom
members of Senior Management Team have their employment contracts.
No loans or guarantees
In the year ended December 31,
2024
, no loans were granted to members of our Senior Management Team and Non-
Executive Directors and no guarantees or the like have been granted in favor of any member of Senior Management
Team or the Board of Directors.
Deviations
In the year ended December 31,
2024
, the Company did not deviate from the decision-making process for the
implementation of the 2021 Remuneration Policy for the NEOs and Non-Executive Directors and no deviations took
place from the 2021 Remuneration Policy.
Key terms of equity plan applicable to grants in
2024
Stock options granted pursuant to the Equity Incentive Plan shall vest with respect to one third of the shares upon the
first anniversary of the date of grant, with the remaining two thirds vesting in 24 equal monthly installments with the
stock options fully vesting upon the third anniversary of the date of grant, subject, in each case, to the optionee’s
continued status as a service provider. Stock options are exercisable when vested, and in any case not after the stock
option expiration date included in each individual stock option grant, which is 10 years, or in the case of Belgian tax
resident employees, at their election either five years or 10 years from the date of grant.
Each stock option shall be granted with an exercise price equal to the fair market value upon the date of grant and shall
have a term equal to five or 10 years from the date of grant. Optionees may prefer to elect the five-year period as this
may limit their personal tax obligations in respect of the stock option in respect to the jurisdiction where stock options
are taxed at grant, compared to a ten-year stock option. Stock options granted to Belgian tax resident beneficiaries
(including the CEO) are not exercisable prior to the fourth year following the year of the grant. Stock options granted to
Non-Executive Directors vest at once on the third anniversary of the date of grant.
RSUs granted under the Equity Incentive Plan shall vest over a period of four years with respect to one fourth of the
shares upon each anniversary of the date of grant. At the time of vesting, the holder of such RSUs receives shares in the
share capital of the Company for free equal to the number of RSUs vested minus a certain number of shares required to
cover employee taxes payable by us on behalf of the holder of RSUs, if applicable. In 2024, the Equity Incentive Plan
was updated to reflect stakeholder feedback in relation to RSUs granted to Non-Executive Directors. RSUs granted in
2024 to Non-Executive Directors vest after one year instead of four years and are subject to a three-year holding period.
|
121
|
||
Unvested equity incentives shall vest in the event of a (i) sale, merger, consolidation, tender offer or similar acquisition
of shares or other transaction or series of related transactions as a result of which a change in control occurs, (ii) sale or
other disposition of all or substantially all of the Company’s assets or (iii) the Company’s dissolution and/or liquidation.
The Board of Directors, upon approval of a majority of the Non-Executive Directors, may amend or terminate the Equity
Incentive Plan or may amend the terms of the Equity Incentive Plan, or any outstanding stock options or RSUs, provided
that the Company will compensate any affected individual for any direct negative impact of such amendment.
We plan to amend the Equity Incentive Plan to reflect the Proposed 2025 Remuneration Policy if it is approved at the
2025 General Meeting.
Peer group selection
We have rapidly evolved and will continue to evolve into a fully integrated immunology company with a strong presence
globally. To thrive and continue building the organization, we need executive and non-executive talent with a deep
understanding of the global market in which we operate. We therefore compete for global talent. This is why we have
established a global peer group focused on six key criteria that reflect the companies we benchmark against in attracting
and retaining top talent.
In connection with the benchmark exercise for 2025 remuneration ahead of setting fixed and variable pay levels, the
following criteria were used for the first time in the third quarter of 2024 to select the new global peer group (the
Peer
Group
).
Compared to the European and Global peer groups used for the determine of the remuneration until 2024, the 2025 Peer
Group consists of 15 companies. We deem a minimum of 15 companies appropriate, because (i) our industry tends to
evolve quickly, with companies emerging and disappearing (due to mergers or otherwise) relatively often, and (ii) we
deem it relevant to have a certain consistency in the companies comprising our peer group over the longer term.
If there are not 15 companies meeting each of the criteria, we will include in our reference group all companies that meet
the criteria, and supplement with companies that meet all but one criterion. The least relevant criterion will be dropped
first, in the order as displayed below (from most to least relevant).
|
Selection Criterion
in order of relevance
|
Range of Peers based on Criterion
|
Relevance of criterion
|
|||
|
1.
|
Sector
|
Biopharmaceutical companies, excluding
diagnostics and animal health companies
|
Biopharmaceutical companies have characteristic pay and
incentive structures compared to other industries.
Within the biopharmaceutical industry, excluding
diagnostics and animal health companies is appropriate
because the talent focus of such companies is different
and therefore they are not typically our competitors for
talent. In addition, their pay structures tend to differ from
those in our industry making these less relevant
comparators.
|
||
|
2.
|
Listing location
|
Listed on a major US Stock Exchange
|
Being listed on a major US stock exchange brings
additional complexity, expertise requirements and
potential liabilities to company officers and directors,
which is typically reflected in a different pay structure of
executives and board members serving on US listed
companies, versus companies without a US listing. Our
benchmark exercise shows that having a listing on a major
US stock exchange tends to have a more significant
relevance for pay structure applied by companies than
does location of headquarters, which is why we do not
apply a ‘location of headquarters’ filter.
|
||
|
122
|
||
|
Selection Criterion
in order of relevance
|
Range of Peers based on Criterion
|
Relevance of criterion
|
|||
|
3.
|
Innovation focus
|
At least 25% of revenue is spent on RD
|
Innovation focused, RD driven companies tend to have
a typical remuneration structure which differs from
companies who focus on commercializing external
innovations.
To ensure we continue to be able to compete with other
innovators, we limit our peer group selection to other
companies who continue to significantly invest in their
RD activities.
|
||
|
4.
|
Global reach
|
Generates product revenues both within
and outside the US
|
Leading commercial operations both inside and outside
the United States puts unique demands on the skills and
expertise of key individuals, in addition to the strain of
splitting their time and efforts across continents. For this
reason, we compare pay practices to other global
companies instead of companies with mostly local
activities.
|
||
|
5.
|
Revenue
|
1/4 – 4x of our annual revenue
|
We compare ourselves to organizations that also have
significant product revenues, as a reflection of overall size
and complexity of the organization. Using a relatively
wide range for this metric is appropriate to ensure we
include relevant peers while ensuring a level of stability in
the peer group over time. In setting the range, we also
considered the rapid development in our own revenues
since our first year of product commercialization (2023)
and our internal revenue projections for the immediate
future.
|
||
|
6.
|
Market Cap
|
1/4 – 4x our market cap (based on 30 day
average closing price)
|
Whereas market cap can give some indication of overall
size and complexity of comparator organizations, we also
recognize that companies in our sector tend to have
volatile stock prices and market cap can vary significantly
even throughout a given calendar year.
1)
Using a relatively wide range for this metric is appropriate
to ensure we include relevant peers while ensuring a level
of stability in the peer group year-over-year.
By going as low as 1/4x our value and as high as 4x our
value, we aim to ensure that we are not positioning
ourselves on either end of the peer group for this metric,
to avoid establishing a peer group that is considered
aspirational.
Finally, given that market cap is influenced by a range of
factors that do not necessarily correlate to the
organization’s size or complexity or talent needs, we
deem this the least relevant filter. If we are unable to reach
our minimum of 15 peer companies meeting all selection
criteria, we will include companies who meet all other
criteria and are closest to our market cap criterion (but no
more than 2x the high end of our range) in order to make
up the 15. If we cannot make up to 15 applying this
modified filter, we will include companies who are
outside of but close to our revenue filter limits.
|
||
1)
As at March 17, 2025, the delta between our 52-week high and low was approximately 104%,
https://
live.euronext.com/nl/product/equities/NL0010832176-XBRU.
|
123
|
||
|
Company Name
|
Country of Headquarters
|
|
|
Alnylam Pharmaceuticals, Inc.
|
USA
|
|
|
Amicus Therapeutics, Inc.
|
USA
|
|
|
Ascendis Pharma A/S
|
Denmark
|
|
|
BeiGene, Ltd.
|
Cayman Islands
|
|
|
Biogen Inc.
|
USA
|
|
|
BioMarin Pharmaceutical Inc.
|
USA
|
|
|
BioNTech SE
|
Germany
|
|
|
Blueprint Medicines Corporation
|
USA
|
|
|
Genmab SE
|
Denmark
|
|
|
Incyte Corporation
|
USA
|
|
|
Insmed Inc.
|
USA
|
|
|
Jazz Pharmaceuticals plc
|
Ireland
|
|
|
Moderna, Inc.
|
USA
|
|
|
Sarepta Therapeutics, Inc.
|
USA
|
|
|
Ultragenyx Pharmaceutical Inc.
|
USA
|
Looking Forward
Increased disclosure
During our stakeholder outreach in relation to our proposed 2024 remuneration policy as well as the Proposed 2025
Remuneration Policy, we received feedback that the disclosure on STI and LTI in previous remuneration reports was not
consistent with best practices. Consequently, stakeholders were not able to determine if and how pay-for-performance
was embedded in our remuneration. To address this feedback, in the Proposed 2025 Remuneration Policy we therefore
commit to a more detailed prospective disclosure for both the STI and LTI and retrospective disclosure against a
threshold-target-maximum framework, including actual achievement and corresponding payout.
To showcase our commitment to address stakeholder feedback, this 2024 Remuneration Report contains the prospective
disclosure on the STI and LTI for the Named Executive Officers despite the Proposed 2025 Remuneration Policy not
having been approved yet.
STI
CEO
Distinction
Under the current 2021 Remuneration Policy, the annual STI opportunity for the CEO consists of an at-target
opportunity of 60% of base pay, and a maximum opportunity of 120% of base pay. The Proposed 2025 Remuneration
Policy does not include any change to the current founder CEO’s 2025 STI opportunity. Therefore, for 2025 the STI
opportunity remains equal to 60% of base pay at target and a maximum payout of 120% of base pay.
In order to remain competitive in attracting, motivating and retaining any future Executive Director (including a future
CEO), we target competitive remuneration levels in the Proposed 2025 Remuneration Policy. Therefore, and based on
the Peer Group benchmark data, the annual STI opportunity for a future Executive Director will be up to 100% of base
pay at target and a maximum payout of up to 200% of base pay.
The majority of the targets under the Proposed 2025 Remuneration Policy will be quantitative in nature and at least 50%
of the total STI opportunity for an Executive Director will be linked to financial performance metrics. Qualitative targets
will be milestone-based to the extent possible.
STI
The top priorities identified in 2025 for the CEO include delivering continued VYVGART growth, advancing the
pipeline, further embedding our culture and innovation mission by making it everyone’s business and ensuring business
continuity by having a succession plan in place for senior key leader. The following metrics apply for 2025, which will
|
124
|
||
be reported in more detail along with their final assessment and payout as part of the remuneration report on financial
year ended December 31, 2025, to be published in 2026.
|
Performance metric
|
Target
|
Measurement (how the
Board of Directors will
evaluate the metric
and why it has been
chosen)
|
Threshold
|
Target
|
Max
|
|||||
|
Revenue (50%)
|
Deliver continued
VYVGART growth
|
Annual operating budget
revenue target delivered
and successful PFS self-
administration approval
and launch in US
|
Targets and Executive Director achievement
will be disclosed retroactively in the 2025
remuneration report
|
|||||||
|
Pipeline (20%)
|
Advance the pipeline
|
MG combo clinical trial
launched Q3
|
||||||||
|
Nominate 2 new
ARGX-xxx candidates
and graduate 3
discovery projects to
lead identification (PPD)
|
||||||||||
|
Innovation (20%)
|
Embed our culture and
innovation mission
|
Champion key
innovation projects
|
||||||||
|
All variable pay eligible
employees have 1x
performance goal linked
to innovation
|
||||||||||
|
Key innovations
recognized, celebrated
and cascaded throughout
the Company
|
||||||||||
|
Scaling the argenx way
(10%)
|
Talent development
|
Succession plan in place
for key senior leaders
|
||||||||
COO
The top priorities identified in 2025 for the COO include delivering continued VYVGART growth growth and leading
digital transformation and scaling the argenx way. The following metrics apply for 2025, which will be reported in more
detail along with their final assessment and payout as part of the remuneration report on financial year ended December
31, 2025, to be published in 2026.
|
125
|
||
|
Performance metric
|
Target
|
Measurement (how the
Board of Directors will
evaluate the metric
and why it has been
chosen)
|
Threshold
|
Target
|
Max
|
|||||
|
Revenue (40%)
|
Deliver continued
VYVGART growth
|
Annual operating budget
revenue target delivered
and successful PFS self-
administration approval
and launch in US
|
Targets and COO achievement will be
disclosed retroactively in the 2025
remuneration report
|
|||||||
|
Pipeline acceleration
(20%)
|
Not disclosed
|
Not disclosed
|
||||||||
|
Digital transformation
(20%)
|
Embed our culture and
innovation mission
|
Successful onboarding
of Business Information
Systems (BIS) leader
and deliver on the BIS
OGSM
|
||||||||
|
Scaling the argenx way
20%)
|
Talent development
|
Successful onboarding
of key hires and
leadership teams' their
OGSM
|
||||||||
|
Elevate the operational
excellence community
to a leadership
community and their
OGSM delivered
|
||||||||||
CFO
The top priorities identified in 2025 for the CFO include delivering continued VYVGART growth, delivering profit and
loss leadership and to further drive productivity. The following metrics apply for 2025, which will be reported in more
detail along with their final assessment and payout as part of the remuneration report on financial year ended December
31, 2025, to be published in 2026.
|
Performance metric
|
Target
|
Measurement (how the
Board of Directors will
evaluate the metric
and why it has been
chosen)
|
Threshold
|
Target
|
Max
|
|||||
|
Revenue (30%)
|
Deliver continued
VYVGART growth
|
Annual operating budget
revenue target delivered
and successful PFS self-
administration approval
and launch in US
|
Targets and CFO achievement will be
disclosed retroactively in the 2025
remuneration report
|
|||||||
|
PL (25%)
|
Financial performance
|
Target effective tax rate
in 2025 in line with
annual operating budget
|
||||||||
|
Digital transformation
(25%)
|
Internal financial
systems
|
Time required to close
the quarter reduced by
|
||||||||
|
Annual operating budget
process transformation
|
||||||||||
|
Financial accounts
automation
|
||||||||||
|
Scaling the argenx way
(20%)
|
Strategic organizational
growth
|
Management headcount
growth
|
||||||||
|
126
|
||
LTI
PSU
During our stakeholder outreach in relation to our proposed 2024 remuneration policy, the vast majority of the feedback
we received on the introduction of PSUs was positive. This was confirmed in the outreach relating to the Proposed 2025
Remuneration Policy. Irrespective of the Proposed 2025 Remuneration Policy being approved at 2025 General Meeting,
we will introduce PSUs. The LTI grant will therefore consist of 50% stock options and 50% PSUs.
PSUs are granted on the last business day of June, i.e., on June 30 in 2025. PSUs have a 3-year performance period and
in 2025 will therefore cover the period between January 1, 2025 and December 31, 2027. PSUs will have a 3-year cliff
vest. The performance metrics will be challenging long-term goals essential for the Company’s success and will be set
within the following framework:
•
at least 50% of the pay opportunity will be linked to financial performance metrics such as revenue growth;
•
at least 40% of the pay opportunity will be linked to innovation and pipeline development metrics, such as delivering
clinical and regulatory milestones; and
•
up to 10% of the pay opportunity will be linked to people and culture metrics essential for sustainable, long-term
value creation.
The grant value of the PSUs will be determined after publication of this Annual Report on June 30, 2025, in accordance
with the determination methodology described under
“Item 6.B. — Compensation —
Total Named Executive Officer
Remuneration — Equity
”
above. Further details on the PSU grant will be included in the 2025 remuneration report, to be
published in 2026.
2025 PSU grant performance metrics
The below performance metrics will apply to the 2025 PSU grant for all Named Executive Officers and all others
members of Senior Management Team.
|
Performance Metric
|
Target
|
Measurement (how the
Board of Directors will
evaluate the metric
and why it has been
chosen)
|
Threshold
|
Target
|
Max
|
|||||
|
Maximize the
VYVGART opportunity
(65%)
|
2027 annual revenue
(50%)
|
Minimum product net
sales of undisclosed
amount
|
Targets and Executive Director achievement
will be disclosed retroactively in the 2027
remuneration report, published in 2028
|
|||||||
|
Build a portfolio of
breakthrough antibody-
based products (15%)
|
gMG Label Expansion
(15%)
|
Seronegative gMG and
ocular gMG approved
by the FDA
|
||||||||
|
FDA submissions (15%)
|
Undisclosed number of
indications approved or
submitted to the FDA
|
|||||||||
|
Ensure long-term
sustainability as an
independent company
(10%)
|
Pipeline progression
(10%)
|
Undisclosed number of
pipeline assets into
phase 2 and/or
undisclosed number of
additional pipeline
assets IND / clinical
trial application
submitted
|
||||||||
|
Scaling the argenx way
(10%)
|
Talent retention (10%)
|
Three-year average
voluntary employee
turnover equal to or
|
||||||||
|
127
|
||
Summary of Named Executive Officer Remuneration
Total remuneration Named Executive Officers
The following table sets forth the total value of the remuneration paid to the NEOs for the last three years:
|
(in $)
|
Base pay
1)
|
Base pay in
% change
vs the prior
year
1)
|
Sign on
bonus
|
Corporate
bonus
|
Variable
short-term
incentive
|
Variable
cash as %
of
maximum
opportunity
|
Compensati
on in the
form of
stock
options
2)
|
Compensati
on in the
form of
RSUs
|
Other
benefits
3)
|
% fixed (of
total)
4)
|
Total
|
|||||||||||
|
CEO - Tim Van Hauwermeiren
|
||||||||||||||||||||||
|
2024
|
757,680
|
15%
|
—
|
—
|
795,563
|
60%
|
3,194,813
|
3,014,500
|
45,230
|
10%
|
7,807,786
|
|||||||||||
|
2023
|
655,787
|
—%
|
—
|
—
|
590,215
|
60%
|
8,084,605
5)
|
2,575,174
|
39,054
|
6%
|
11,944,835
|
|||||||||||
|
2022
|
638,901
|
10%
|
—
|
—
|
766,682
|
60%
|
4,174,684
|
2,159,689
|
38,342
|
9%
|
7,778,298
|
|||||||||||
|
COO - Karen Massey
6)
|
||||||||||||||||||||||
|
2024
|
655,657
|
37%
|
—
|
3,636
|
573,593
|
50%
|
2,018,973
|
2,100,610
|
842,014
|
24%
|
6,194,483
|
|||||||||||
|
2023
|
481,471
|
N/A
|
338,000
7)
|
2,921
|
467,662
|
50%
|
3,939,093
|
2,296,517
|
127,393
|
8%
|
7,653,057
|
|||||||||||
|
CFO - Karl Gubitz
|
||||||||||||||||||||||
|
2024
|
553,000
|
7%
|
—
|
3,636
|
331,800
|
40%
|
2,018,973
|
2,100,610
|
260,571
|
15%
|
5,268,590
|
|||||||||||
|
2023
|
516,043
|
6%
|
—
|
3,556
|
260,866
|
40%
|
2,626,062
|
1,287,587
|
62,798
|
12%
|
4,756,913
|
|||||||||||
|
2022
|
487,600
|
79%
|
—
|
3,745
|
243,800
|
40%
|
2,623,633
|
1,356,048
|
91,203
|
12%
|
4,806,030
|
|||||||||||
|
COO - Keith Woods
8)
|
||||||||||||||||||||||
|
2023
|
305,022
|
(48)%
|
—
|
—
|
—
|
—
|
—
|
—
|
46,034
|
100%
|
351,056
|
|||||||||||
|
2022
|
583,774
|
5%
|
—
|
3,745
|
583,774
|
50%
|
2,601,982
|
1,364,014
|
205,032
|
15%
|
5,342,321
|
|||||||||||
1)
The base pay of the CEO is paid in EUR (for 2024 the base pay exchange rate used in this table is 1.0824 EUR/USD ), the base pay of the COO is paid in CHF (for 2024 the base pay exchange rate used
in this table is 1.1363 CHF/USD). The base pay of the CFO is paid in USD. The percentage presenting the change in base pay is calculated using the currency of payment.
2)
Amounts shown represent the expenses with respect to stock options measured using the Black-Scholes model. For a description of the assumptions used in valuing these awards, see “
Note 13 — Share-
Based Payments
” to our Consolidated Financial Statements
which are appended to our Annual Report for the period ended
December 31, 2024
and which are incorporated herein by reference
.
3)
Other benefits consists of the lease of a company car, employer-paid medical insurance premiums, pension contributions, social security costs and other allowances. In 2024, employer social security
costs were impacted by the increase of share-price at year end against the share-price as of December 31, 2023.
4)
Fixed compensation is considered as base pay and other benefits.
5)
Based on the approved 2024 equity allocation scheme, the total equity target value for Tim Van Hauwermeiren is equal to $5,080,000 and the total equity target value for Karen Massey and Karl Gubitz
is equal to $3,040,000 for each. The CEO, COO and CFO received their respective equity grants at target value converted into a number of stock options and RSUs on the Reference Date of the 30-days
average share price of $375.68 per share preceding the Reference Date and the Black-Scholes model fair market value of $138.96 per stock option. This results in the number of stock options and RSUs
shown above. The amounts shown above represent the actual value received at the grant date of June 28, 2024 at which date the Company’s share price was equal to $445.76. The difference of $70.08
per share is explained by the stock price increase in the intervening period primarily due to approval of VYVGART HYTRULO for CIDP in the U.S. by the FDA. For more information on the CEO
equity grant, please refer to
“
Item 6. B. — Compensation — Equity —
Determination of target value of CEO equity grant
”
above. The fair market value based on the Black-Scholes model for Tim Van
Hauwermeiren is $174.78 and the fair market value for the COO and CFO is $158.50. These amounts do not reflect the actual economic value realized by the beneficiary. Amounts shown represent the
expenses with respect to the stock options awards granted in 2024 measured using the Black-Scholes model with unobservable assumptions. The assumptions used in the fair valuation differ between
Belgian beneficiary versus non-Belgian beneficiary. For a description of the assumptions used in valuing these awards, see
“
Note 13 Share-Based Payments
“
to our Consolidated Financial Statements
which are appended to our Annual Report for the period ended
December 31, 2024
and which are incorporated herein by reference
.
6)
Karen Massey joined as COO in March 2023, and consequently no comparison to 2022 is available. Ms. Massey’s remuneration shows the remuneration paid for the period March 13, 2023 through
December 31, 2023. Her 2023 variable pay pay-out has been pro-rated to reflect this as well. The increase year over year for 2024 is not representative as it is comparing to a partial work year.
|
128
|
||
7)
In 2023, the Company paid a sign-on bonus to Karen Massey to allow the Company to make an overall competitive offer of employment and in recognition of lost corporate benefits as a result of early
departure at Ms. Massey’s previous employer. Ensuring a competitive offer in this way and securing Ms. Massey as the Company’s new COO was deemed by the Board of Directors to be in the best
interest of the Company and its stakeholders.
8)
Keith Woods resigned as COO March 2023 and his employment relationship ended on June 30, 2023 and consequently the remuneration numbers show his remuneration for the period January 1, 2023
through June 30, 2023. No equity award or variable pay was paid to Mr. Woods in the year ended December 31, 2023.
Stock option overview Named Executive Officers
The table below shows (i) the stock options held as of
January 1, 2024
, (ii) the stock options granted to the NEOs which vested during the year ended
December 31,
2024
, (iii) the number of stock options scheduled to vest in the years ending
December 31, 2025
,
December 31, 2026
and
December 31, 2027
and (iv) the respective
exercise price of such stock options. Each stock option was granted pursuant to the Equity Incentive Plan:
|
Information regarding the reported financial year
|
||||||||||||||||||||||||||||||||
|
Opening
Balance
|
During the Year
|
Closing balance
|
||||||||||||||||||||||||||||||
|
Name of Directors,
Position
|
Specification
plan
|
Performance
Period
|
Award
Date
|
Vesting
date
|
End of
retention
period
|
Exercise
Period
|
Exercise
price of
stock
option (€)
|
Stock
options
held at the
beginning
of the
period
|
Stock
options
awarded
|
Stock
options
exercised
|
Stock
options
forfeited
|
Stock
options
vested
|
Stock
options
subjected
to a service
period
|
Stock
options
awarded
and
unvested
|
Stock
options
held at the
end of the
year
|
Stock
options
subjected
to a
retention
period
|
||||||||||||||||
|
Tim Van
Hauwermeiren, CEO
|
Equity
incentive
plan
|
21/12/2018 -
01/12/2021
|
21/12/2018
|
(1)
|
31/12/2021
|
01/01/2022 -
21/12/2028
|
86.32
|
80,000
|
—
|
—
|
—
|
—
|
—
|
—
|
80,000
|
—
|
||||||||||||||||
|
20/12/2019 -
01/12/2022
|
20/12/2019
|
(1)
|
31/12/2022
|
01/01/2023 -
20/12/2029
|
135.75
|
80,000
|
—
|
—
|
—
|
—
|
—
|
—
|
80,000
|
—
|
||||||||||||||||||
|
21/12/2020 -
01/12/2023
|
21/12/2020
|
(1)
|
31/12/2023
|
01/01/2024 -
21/12/2030
|
247.60
|
50,000
|
—
|
—
|
—
|
—
|
—
|
—
|
50,000
|
—
|
||||||||||||||||||
|
24/12/2021 -
01/12/2024
|
24/12/2021
|
(1)
|
31/12/2024
|
01/01/2025 -
24/12/2031
|
309.20
|
25,000
|
—
|
—
|
—
|
8,333
|
—
|
—
|
25,000
|
—
|
||||||||||||||||||
|
23/12/2022 -
01/12/2025
|
23/12/2022
|
(1)
|
31/12/2025
|
01/01/2026 -
23/12/2032
|
359.60
|
25,000
|
—
|
—
|
—
|
8,334
|
8,333
|
8,333
|
25,000
|
25,000
|
||||||||||||||||||
|
03/07/2023 -
01/07/2026
|
03/07/2023
|
(1)
|
31/12/2026
|
01/01/2027 -
03/07/2033
|
355.40
|
30,000
|
—
|
—
|
—
|
14,167
|
15,833
|
15,833
|
30,000
|
30,000
|
||||||||||||||||||
|
28/06/2024 -
01/06/2027
|
28/06/2024
|
(1)
|
31/12/2027
|
01/01/2028 -
28/06/2034
|
416.40
|
—
|
18,279
|
—
|
—
|
—
|
18,279
|
18,279
|
18,279
|
18,279
|
||||||||||||||||||
|
Total
|
290,000
|
18,279
|
—
|
—
|
30,834
|
42,445
|
42,445
|
308,279
|
73,279
|
|||||||||||||||||||||||
|
Karen Massey, COO
|
Equity
incentive
plan
|
03/07/2023 -
01/07/2026
|
03/07/2023
|
(1)
|
N/A
|
03/07/2024 -
03/07/2033
|
355.40
|
22,500
|
0
|
—
|
—
|
10,625
|
11,875
|
11,875
|
22,500
|
—
|
||||||||||||||||
|
28/06/2024 -
01/06/2027
|
28/06/2024
|
(1)
|
N/A
|
28/06/2025 -
28/06/2034
|
416.40
|
—
|
12,738
|
—
|
—
|
—
|
12,738
|
12,738
|
12,738
|
—
|
||||||||||||||||||
|
Total
|
22,500
|
12,738
|
—
|
—
|
10,625
|
24,613
|
24,613
|
35,238
|
3
5
,
2
3
8
|
—
|
||||||||||||||||||||||
|
Karl Gubitz, CFO
|
Equity
incentive
plan
|
01/07/2021 -
01/07/2024
|
01/07/2021
|
(1)
|
N/A
|
01/07/2022 -
01/07/2031
|
255.10
|
24,000
|
—
|
—
|
—
|
4,667
|
—
|
—
|
24,000
|
—
|
||||||||||||||||
|
01/07/2022 -
01/07/2025
|
01/07/2022
|
(1)
|
N/A
|
01/07/2023 -
01/07/2032
|
357.50
|
16,000
|
—
|
—
|
—
|
5,333
|
3,111
|
3,111
|
16,000
|
—
|
||||||||||||||||||
|
03/07/2023 -
01/07/2026
|
07/03/2023
|
(1)
|
N/A
|
03/07/2024 -
03/07/2033
|
355.40
|
15,000
|
—
|
—
|
—
|
7,083
|
7,917
|
7,917
|
15,000
|
—
|
||||||||||||||||||
|
28/06/2024 -
01/06/2027
|
28/06/2024
|
(1)
|
N/A
|
28/06/2025 -
28/06/2034
|
416.40
|
—
|
12,738
|
—
|
—
|
12,738
|
12,738
|
12,738
|
—
|
|||||||||||||||||||
|
Total
|
55,000
|
12,738
|
—
|
—
|
17,083
|
23,766
|
23,766
|
67,738
|
—
|
|||||||||||||||||||||||
1)
1/3rd of the stock options vests on the first anniversary of the date of grant and the remaining 2/3rd vest in equal installments (24 in total) over the next two years, each time upon the 1st day of each next
month.
|
129
|
||
RSU overview Named Executive Officers
The table below shows (i) the RSUs held as of
January 1, 2024
, (ii) the RSUs granted to the NEOs which vested during the year ended
December 31, 2024
and (iii)
the number of RSUs scheduled to vest in the years ending
December 31, 2025
,
December 31, 2026
,
December 31, 2027
and
December 31, 2028
. Each RSU was
granted pursuant to the Equity Incentive Plan:
|
Information regarding the reported financial year
|
||||||||||||||||||||||||
|
Opening
balance
|
During the Year
|
Closing balance
|
||||||||||||||||||||||
|
Name of
Directors,
Position
|
Vesting period
|
Award
Date
|
Vesting
date
|
End of
retention
period
|
RSUs
held at
the
beginning
of the
year
|
RSUs
awarded
|
RSU
Forfeited
|
RSUs
vested
|
RSUs
subject
to a
service
condition
|
RSUs
awarded
and
unvested
|
RSUs
held at
the
closing
of the
year
|
RSUs
subject
to a
retention
period
|
||||||||||||
|
Tim van
Hauwermeiren,
CEO
|
24/12/2021 - 24/12/2025
|
24/12/2021
|
(1)
|
N/A
|
2,850
|
—
|
—
|
1,425
|
—
|
1,425
|
1,425
|
—
|
||||||||||||
|
23/12/2022 - 23/12/2026
|
23/12/2022
|
(1)
|
N/A
|
4,275
|
—
|
—
|
1,425
|
—
|
2,850
|
2,850
|
—
|
|||||||||||||
|
03/07/2023 - 03/07/2027
|
07/03/2023
|
(1)
|
N/A
|
6,700
|
—
|
—
|
1,675
|
—
|
5,025
|
5,025
|
—
|
|||||||||||||
|
28/06/2024 - 28/06/2028
|
28/06/2024
|
(1)
|
N/A
|
—
|
6,762
|
—
|
—
|
6,762
|
6,762
|
—
|
||||||||||||||
|
Total
|
13,825
|
6,762
|
—
|
4,525
|
—
|
16,062
|
16,062
|
—
|
||||||||||||||||
|
Karen Massey,
COO
|
03/07/2023 - 03/07/2027
|
03/07/2023
|
(1)
|
N/A
|
5,025
|
—
|
—
|
1,256
|
—
|
3,769
|
3,769
|
—
|
||||||||||||
|
28/06/2024 - 28/06/2028
|
28/06/2024
|
(1)
|
N/A
|
—
|
4,712
|
—
|
—
|
—
|
4,712
|
4,712
|
—
|
|||||||||||||
|
Total
|
5,025
|
4,712
|
—
|
1,256
|
—
|
8,481
|
8,481
|
—
|
||||||||||||||||
|
Karl Gubitz, CFO
|
01/07/2021 - 01/07/2025
|
01/07/2021
|
(1)
|
N/A
|
2,700
|
—
|
—
|
1,350
|
—
|
1,350
|
1,350
|
—
|
||||||||||||
|
01/07/2022 - 01/07/2026
|
01/07/2022
|
(1)
|
N/A
|
2,700
|
—
|
—
|
900
|
—
|
1,800
|
1,800
|
—
|
|||||||||||||
|
03/07/2023 - 03/07/2027
|
07/03/2023
|
(1)
|
N/A
|
3,350
|
—
|
—
|
837
|
—
|
2,513
|
2,513
|
—
|
|||||||||||||
|
28/06/2024 - 28/06/2028
|
28/06/2024
|
(1)
|
N/A
|
—
|
4,712
|
—
|
—
|
—
|
4,712
|
4,712
|
—
|
|||||||||||||
|
Total
|
8,750
|
4,712
|
—
|
3,087
|
—
|
10,375
|
10,375
|
—
|
||||||||||||||||
1)
RSUs vest over a period of four years with 1/4th of the total grant vesting at each anniversary of the date of grant.
|
130
|
||
Summary of other members of the Senior Management Team
Stock options overview other members of the Senior Management Team
The following table sets forth information regarding stock option and RSU awards granted to members of the Senior Management Team during the year ended
December 31, 2024
:
|
RSUs granted in 2024
|
Stock options granted in 2024
|
|||||||||||||||||
|
Name
|
# RSUs
|
Key terms
|
Value at grant
in $
|
# Stock
options
|
Exercise
price in
€
|
Exercise
price in
$
|
Key terms
|
Value at
grant in
$
1)
|
Total
|
|||||||||
|
Peter Ulrichts
|
4,712
|
RSUs vest and are settled in 4
equal installments of 25% over
a 4 year period.
|
2,100,421.12
|
12,738
|
416.40
|
445.76
|
1/3 vests after year 1 2/3 vest in
monthly installments in year 2
and 3.
|
2,740,705
|
$
|
4,841,126
|
||||||||
|
Malini Moorthy
|
4,712
|
2,100,421.12
|
12,738
|
416.40
|
445.76
|
2,018,973
|
4,119,394
|
|||||||||||
|
Luc Truyen
|
4,712
|
2,100,421.12
|
12,738
|
416.40
|
445.76
|
2,250,490
|
4,350,911
|
|||||||||||
|
Arjen Lemmen
|
4,712
|
2,100,421.12
|
12,738
|
416.40
|
445.76
|
2,740,705
|
4,841,126
|
|||||||||||
|
Andria Wilk
|
1,331
|
593,306.56
|
3,599
|
416.40
|
445.76
|
774,360
|
1,367,667
|
|||||||||||
1.
These amounts do not reflect the actual economic value realized by the beneficiary. Amounts shown represent the expenses with respect to the Stock options awards granted in
2024
measured
using the Black-Scholes model with unobservable assumptions. The assumptions used in the fair valuation differ between Belgian beneficiary versus non-Belgian beneficiary. The fair value of
Belgian beneficiary was higher than non-Belgian beneficiary resulting in stock based compensation expense to be higher for Belgian beneficiaries than other beneficiaries. For a description of the
assumptions used in valuing these awards, see “
Note 13 Share-Based Payments
in our consolidated financial statements which are appended to our Annual report for the period ended
December 31, 2024
and which are incorporated herein by reference.
|
131
|
||
The table below shows (i) the stock options held as of
January 1, 2024
, (ii) the stock options granted to members of Senior Management Team (other than the NEOs)
which vested during the year ended
December 31, 2024
, (iii) the number of stock options scheduled to vest in the years ending
December 31, 2025
,
December 31,
2026
and
December 31, 2027
and (iv) the respective exercise price of such stock options. Each stock option was granted pursuant to the Equity Incentive Plan:
|
Information regarding the reported financial year
|
||||||||||||||||||||||||||||||||
|
Opening
balance
|
During the Year
|
Closing balance
|
||||||||||||||||||||||||||||||
|
Name of Directors,
Position
|
Specification
plan
|
Performance
period
|
Award
date
|
Vesting
date
|
End of
retention
period
|
Exercise
period
|
Exercise
price of
stock
option in €
|
Stock
options
held at the
beginning
of the year
|
Stock
options
awarded
|
Stock
options
exercised
|
Stock
options
forfeited
|
Stock
options
vested
|
Stock
options
subject to
a service
condition
|
Stock
options
awarded
and
unvested
|
Stock
options
held at the
end of the
year
|
Stock
options
subject to
a retention
period
|
||||||||||||||||
|
Peter Ulrichts, CSO
|
Equity
incentive
plan
|
20/12/2019 -
01/12/2022
|
20/12/
2019
|
(1)
|
31/12/
2022
|
01/01/2023 -
20/12/2029
|
135.75
|
5,000
|
—
|
1,000
|
—
|
—
|
—
|
—
|
4,000
|
—
|
||||||||||||||||
|
21/12/2020 -
01/12/2023
|
21/12/
2020
|
(1)
|
31/12/
2023
|
01/01/2024 -
21/12/2030
|
247.60
|
9,900
|
—
|
2,249
|
—
|
—
|
—
|
—
|
7,651
|
—
|
||||||||||||||||||
|
24/12/2021 -
01/12/2024
|
24/12/
2021
|
(1)
|
31/12/
2024
|
01/01/2025 -
24/12/2026
|
309.20
|
3,420
|
—
|
—
|
—
|
1,140
|
—
|
—
|
3,420
|
—
|
||||||||||||||||||
|
23/12/2022 -
01/12/2025
|
23/12/
2022
|
(1)
|
31/12/
2025
|
01/01/2026 -
23/12/2027
|
359.60
|
16,000
|
—
|
—
|
—
|
3,812
|
3,811
|
3,811
|
16,000
|
16,000
|
||||||||||||||||||
|
03/07/2023 -
01/07/2026
|
03/07/
2023
|
(1)
|
31/12/
2026
|
01/01/2027 -
03/07/2028
|
355.40
|
15,000
|
—
|
—
|
—
|
7,083
|
7,917
|
7,917
|
15,000
|
15,000
|
||||||||||||||||||
|
28/06/2024 -
01/06/2027
|
28/06/
2024
|
(1)
|
31/12/
2027
|
01/01/2028 -
28/06/2034
|
416.40
|
—
|
12,738
|
—
|
—
|
2,782
|
9,956
|
9,956
|
12,738
|
12,738
|
||||||||||||||||||
|
Total
|
49,320
|
12,738
|
3,249
|
—
|
14,817
|
21,684
|
21,684
|
58,809
|
43,738
|
|||||||||||||||||||||||
|
Malini Moorthy,
Legal Counsel
|
Equity
incentive
plan
|
01/04/2022 -
01/04/2025
|
01/04/2022
|
(1)
|
N/A
|
01/04/2023 -
01/04/2032
|
282.50
|
16,500
|
—
|
10,000
|
—
|
8,000
|
2,667
|
2,667
|
6,500
|
—
|
||||||||||||||||
|
03/07/2023 -
01/07/2026
|
03/07/2023
|
(1)
|
N/A
|
03/07/2024 -
03/07/2033
|
355.40
|
15,000
|
—
|
—
|
—
|
7,083
|
7,917
|
7,917
|
15,000
|
—
|
||||||||||||||||||
|
28/06/2024 -
01/06/2027
|
28/06/2024
|
(1)
|
N/A
|
01/01/2028 -
28/06/2034
|
416.40
|
—
|
12,738
|
—
|
—
|
0
|
12,738
|
12,738
|
12,738
|
—
|
||||||||||||||||||
|
Total
|
31,500
|
12,738
|
10,000
|
—
|
15,083
|
23,322
|
23,322
|
34,238
|
—
|
|||||||||||||||||||||||
|
Luc Truyen, CMO
|
Equity
incentive
plan
|
01/10/2021 -
01/10/2024
|
01/10/2021
|
(1)
|
31/12/2024
|
01/01/2025 -
01/10/2026
|
259.5
|
24,000
|
—
|
—
|
—
|
6,667
|
—
|
—
|
24,000
|
—
|
||||||||||||||||
|
23/12/2022 -
01/12/2025
|
23/12/2022
|
(1)
|
31/12/2025
|
01/01/2026 -
23/12/2027
|
359.6
|
16,000
|
—
|
—
|
—
|
5,334
|
5,333
|
5,333
|
16,000
|
16,000
|
||||||||||||||||||
|
03/07/2023 -
01/07/2026
|
03/07/2023
|
(1)
|
31/12/2026
|
01/01/2027 -
03/07/2028
|
355.4
|
15,000
|
—
|
—
|
—
|
7,083
|
7,917
|
7,917
|
15,000
|
15,000
|
||||||||||||||||||
|
28/06/2024 -
01/06/2027
|
28/06/2024
|
(1)
|
31/12/2027
|
01/01/2028 -
28/06/2034
|
416.4
|
—
|
12,738
|
—
|
—
|
—
|
12,738
|
12,738
|
12,738
|
12,738
|
||||||||||||||||||
|
Total
|
55,000
|
12,738
|
—
|
—
|
19,084
|
25,988
|
25,988
|
67,738
|
43,738
|
|||||||||||||||||||||||
|
132
|
||
|
Information regarding the reported financial year
|
||||||||||||||||||||||||||||||||
|
Opening
balance
|
During the Year
|
Closing balance
|
||||||||||||||||||||||||||||||
|
Name of Directors,
Position
|
Specification
plan
|
Performance
period
|
Award
date
|
Vesting
date
|
End of
retention
period
|
Exercise
period
|
Exercise
price of
stock
option in €
|
Stock
options
held at the
beginning
of the year
|
Stock
options
awarded
|
Stock
options
exercised
|
Stock
options
forfeited
|
Stock
options
vested
|
Stock
options
subject to
a service
condition
|
Stock
options
awarded
and
unvested
|
Stock
options
held at the
end of the
year
|
Stock
options
subject to
a retention
period
|
||||||||||||||||
|
Arjen Lemmen, Vice
President of
Corporate
Development
Strategy
|
Equity
incentive
plan
|
28/06/2018 -
01/06/2021
|
28/06/2018
|
(1)
|
31/12/2021
|
01/01/2022 -
28/06/2028
|
80.82
|
695
|
—
|
695
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||
|
21/12/2018 -
01/12/2021
|
21/12/2018
|
(1)
|
31/12/2021
|
01/01/2022 -
21/12/2028
|
86.32
|
15,952
|
—
|
15,952
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
|
20/12/2019 -
01/12/2022
|
20/12/2019
|
(1)
|
31/12/2022
|
01/01/2023 -
20/12/2029
|
135.75
|
37,555
|
—
|
37,555
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
|
21/12/2020 -
01/12/2023
|
21/12/2020
|
(1)
|
31/12/2023
|
01/01/2024 -
21/12/2030
|
247.60
|
50,000
|
—
|
2,326
|
—
|
—
|
—
|
—
|
47,674
|
—
|
||||||||||||||||||
|
24/12/2021 -
01/12/2024
|
24/12/2021
|
(1)
|
31/12/2024
|
01/01/2025 -
24/12/2031
|
309.20
|
16,000
|
—
|
—
|
—
|
5,333
|
—
|
—
|
16,000
|
—
|
||||||||||||||||||
|
23/12/2022 -
01/12/2025
|
23/12/2022
|
(1)
|
N/A
|
23/12/2023 -
23/12/2032
|
359.60
|
16,000
|
—
|
—
|
—
|
5,333
|
5,333
|
5,333
|
16,000
|
—
|
||||||||||||||||||
|
03/07/2023 -
01/07/2026
|
03/07/2023
|
(1)
|
N/A
|
03/07/2024 -
03/07/2033
|
355.40
|
15,000
|
—
|
—
|
—
|
7,084
|
7,917
|
7,917
|
15,000
|
—
|
||||||||||||||||||
|
28/06/2024 -
01/06/2027
|
28/06/2024
|
(1)
|
31/12/2027
|
01/01/2028 -
28/06/2034
|
416.40
|
—
|
12,738
|
—
|
—
|
0
|
12,738
|
12,738
|
12,738
|
12,738
|
||||||||||||||||||
|
Total
|
151,202
|
12,738
|
56,528
|
—
|
17,750
|
25,988
|
25,988
|
107,412
|
12,738
|
|||||||||||||||||||||||
|
Andria Wilk, Global
Head of Quality
|
Equity
incentive
plan
|
21/12/2020 -
01/12/2023
|
21/12/2020
|
(1)
|
31/12/2023
|
01/01/2024 -
21/12/2025
|
247.60
|
9,900
|
—
|
9,813
|
—
|
—
|
—
|
—
|
87
|
—
|
||||||||||||||||
|
24/12/2021 -
01/12/2024
|
24/12/2021
|
(1)
|
31/12/2024
|
01/01/2025 -
24/12/2031
|
309.20
|
4,446
|
—
|
—
|
—
|
756
|
—
|
—
|
4,446
|
—
|
||||||||||||||||||
|
23/12/2022 -
01/12/2025
|
23/12/2022
|
(1)
|
31/12/2025
|
01/01/2026 -
23/12/2027
|
359.60
|
4,600
|
—
|
—
|
—
|
1,127
|
1,032
|
1,032
|
4,600
|
4,600
|
||||||||||||||||||
|
03/07/2023 -
01/07/2026
|
03/07/2023
|
(1)
|
31/12/2026
|
01/01/2027 -
03/07/2033
|
355.40
|
4,600
|
—
|
—
|
—
|
1,809
|
1,915
|
1,915
|
4,600
|
3,830
|
||||||||||||||||||
|
28/06/2024 -
01/06/2027
|
28/06/2024
|
(1)
|
31/12/2027
|
01/01/2028 -
28/06/2034
|
416.40
|
—
|
3,599
|
—
|
—
|
786
|
2,813
|
2,813
|
3,599
|
2,813
|
||||||||||||||||||
|
Total
|
23,546
|
3,599
|
9,813
|
—
|
4,478
|
5,760
|
5,760
|
17,332
|
11,243
|
|||||||||||||||||||||||
1)
1/3rd of the stock options vests on the first anniversary of the date of grant and the remaining 2/3rd vest in equal installments (24 in total) over the next two years, each time upon the 1st day of each next
month.
RSU overview other members of the Senior Management Team
The table below shows (i) the RSUs held as of
January 1, 2024
, (ii) the RSUs granted to members of Senior Management Team (other than the NEOs) which vested
during the year ended
December 31, 2024
and (iii) the number of RSUs scheduled to vest in the years ending
December 31, 2025
,
December 31, 2026
,
December 31,
2027
and
December 31, 2028
. Each RSU was granted pursuant to the Equity Incentive Plan:
|
133
|
||
|
Information regarding the reported financial year
|
|||||||||||||||||||||||||
|
Opening
balance
|
During the Year
|
Closing balance
|
|||||||||||||||||||||||
|
Name of
Directors,
Position
|
Vesting period
|
Award
date
|
Vesting
date
|
End of
retention
period
|
RSU’s
held at
the
beginning
of the
year
|
RSUs
awarded
|
RSUs
forfeited
|
RSUs
vested
|
RSUs
subject
to a
service
condition
|
RSUs
awarded
and
unvested
|
RSUs
held at
the
closing
of the
year
|
RSUs
subject
to a
retention
period
|
|||||||||||||
|
Peter Ulrichts,
CSO
|
24/12/2021 - 24/12/2025
|
12/24/2021
|
(1)
|
N/A
|
380
|
—
|
—
|
190
|
—
|
190
|
190
|
||||||||||||||
|
23/12/2022 - 23/12/2026
|
12/23/2022
|
(1)
|
N/A
|
2,700
|
—
|
—
|
900
|
—
|
1,800
|
1,800
|
—
|
||||||||||||||
|
03/07/2023 - 03/07/2027
|
7/3/2023
|
(1)
|
N/A
|
3,350
|
—
|
—
|
837
|
—
|
2,513
|
2,513
|
—
|
||||||||||||||
|
28/06/2024 - 27/06/2028
|
6/28/2024
|
(1)
|
N/A
|
—
|
4,712
|
—
|
—
|
—
|
4,712
|
4,712
|
—
|
||||||||||||||
|
Total
|
6,430
|
4,712
|
—
|
1,927
|
—
|
9,215
|
9,215
|
—
|
|||||||||||||||||
|
Malini Moorthy,
General Counsel
|
01/04/2022 - 01/04/2026
|
4/1/2022
|
(1)
|
N/A
|
4,050
|
—
|
—
|
1,350
|
—
|
2,700
|
2,700
|
—
|
|||||||||||||
|
03/07/2023 - 03/07/2027
|
7/3/2023
|
(1)
|
N/A
|
3,350
|
—
|
—
|
837
|
—
|
2,513
|
2,513
|
—
|
||||||||||||||
|
28/06/2024 - 27/06/2028
|
6/28/2024
|
(1)
|
N/A
|
—
|
4,712
|
—
|
—
|
—
|
4,712
|
4,712
|
—
|
||||||||||||||
|
Total
|
7,400
|
4,712
|
—
|
2,187
|
—
|
9,925
|
9,925
|
—
|
|||||||||||||||||
|
Luc Truyen,
CMO
|
01/10/2021 - 01/10/2025
|
10/1/2021
|
(1)
|
N/A
|
2,700
|
—
|
—
|
1,350
|
—
|
1,350
|
1,350
|
—
|
|||||||||||||
|
23/12/2022 - 23/12/2026
|
12/23/2022
|
(1)
|
N/A
|
2,700
|
—
|
—
|
900
|
—
|
1,800
|
1,800
|
—
|
||||||||||||||
|
03/07/2023 - 03/07/2027
|
7/3/2023
|
(1)
|
N/A
|
3,350
|
—
|
—
|
837
|
—
|
2,513
|
2,513
|
—
|
||||||||||||||
|
28/06/2024 - 27/06/2028
|
6/28/2024
|
(1)
|
N/A
|
—
|
4,712
|
—
|
—
|
—
|
4,712
|
4,712
|
—
|
||||||||||||||
|
Total
|
8,750
|
4,712
|
—
|
3,087
|
—
|
10,375
|
10,375
|
—
|
|||||||||||||||||
|
Arjen Lemmen,
Vice President of
Corporate
Development
Strategy
|
24/12/2021 - 24/12/2025
|
12/24/2021
|
(1)
|
N/A
|
1,800
|
—
|
—
|
900
|
—
|
900
|
900
|
—
|
|||||||||||||
|
23/12/2022 - 23/12/2026
|
12/23/2022
|
(1)
|
N/A
|
2,700
|
—
|
—
|
900
|
—
|
1,800
|
1,800
|
—
|
||||||||||||||
|
03/07/2023 - 03/07/2027
|
7/3/2023
|
(1)
|
N/A
|
3,350
|
—
|
—
|
837
|
—
|
2,513
|
2,513
|
—
|
||||||||||||||
|
28/06/2024 - 27/06/2028
|
6/28/2024
|
(1)
|
N/A
|
—
|
4,712
|
—
|
—
|
—
|
4,712
|
4,712
|
—
|
||||||||||||||
|
Total
|
7,850
|
4,712
|
—
|
2,637
|
—
|
9,925
|
9,925
|
—
|
|||||||||||||||||
|
Andria Wilk,
Global Head of
Quality
|
24/12/2021 - 24/12/2025
|
12/24/2021
|
(1)
|
N/A
|
494
|
—
|
—
|
247
|
—
|
247
|
247
|
—
|
|||||||||||||
|
23/12/2022 - 23/12/2026
|
12/23/2022
|
(1)
|
N/A
|
750
|
—
|
—
|
250
|
—
|
500
|
500
|
—
|
||||||||||||||
|
03/07/2023 - 03/07/2027
|
7/3/2023
|
(1)
|
N/A
|
1,000
|
—
|
—
|
250
|
—
|
750
|
750
|
—
|
||||||||||||||
|
28/06/2024 - 27/06/2028
|
6/28/2024
|
(1)
|
N/A
|
—
|
1,331
|
—
|
—
|
—
|
1,331
|
1,331
|
—
|
||||||||||||||
|
Total
|
2,244
|
1,331
|
—
|
747
|
—
|
2,828
|
2,828
|
—
|
|||||||||||||||||
1)
RSUs vest over a period of four years with 1/4th of the total grant vesting at each anniversary of the date of grant.
|
134
|
||
Summary of Non-Executive Director Equity compensation
Stock Option overview Non-Executive Directors
The table below shows (i) the stock options held at
January 1, 2024
, (ii) the stock options granted to the Non-Executive Directors which have vested during the year
ended
December 31, 2024
, (iii) the number of stock options scheduled to vest in the years ending
December 31, 2025
and
December 31, 2026
and (iv) the respective
exercise price of such stock options. No stock options were granted in 2024 to Non-Executive Directors and consequently Dr. Brian Kotzin does not hold any stock
options and is as such not included in the below table.
|
Information regarding the reported financial year
|
||||||||||||||||||||||||||||
|
Opening
balance
|
During the Year
|
Closing balance
|
||||||||||||||||||||||||||
|
Name of
Directors
|
Performance
period
|
Award
date
|
Vesting
date
|
End of
retention
period
|
Exercise
period
|
Grant
price in €
|
Stock
options held
at the
beginning of
the year
|
Stock
options
awarded
|
Stock
options
exercised
|
Stock
options
vested
|
Stock
options
subject to a
service
condition
|
Stock
options
awarded and
unvested
|
Stock
options held
at the end
of the year
|
Stock
options
subject to a
retention
period
|
||||||||||||||
|
Mr. Peter
Verhaeghe
|
18/12/2014 -
18/12/2017
|
12/18/2014
|
(1)
|
12/31/2017
|
01/01/2018 -
18/12/2024
|
7.17
|
2,000
|
—
|
2,000
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||
|
18/06/2016 -
18/06/2019
|
6/18/2016
|
(1)
|
12/31/2019
|
01/01/2020 -
18/06/2026
|
11.38
|
10,000
|
—
|
6,000
|
—
|
—
|
—
|
4,000
|
—
|
|||||||||||||||
|
21/12/2018 -
21/12/2021
|
12/21/2018
|
(1)
|
12/31/2021
|
01/01/2022 -
21/12/2028
|
86.32
|
10,000
|
—
|
—
|
—
|
—
|
—
|
10,000
|
—
|
|||||||||||||||
|
20/12/2019 -
20/12/2022
|
12/20/2019
|
(1)
|
12/31/2022
|
01/01/2023 -
20/12/2029
|
135.75
|
10,000
|
—
|
—
|
—
|
—
|
—
|
10,000
|
—
|
|||||||||||||||
|
21/12/2020 -
21/12/2023
|
12/21/2020
|
(1)
|
12/31/2023
|
01/01/2024 -
21/12/2030
|
247.60
|
10,000
|
—
|
—
|
—
|
—
|
—
|
10,000
|
—
|
|||||||||||||||
|
24/12/2021 -
24/12/2024
|
12/24/2021
|
(2)
|
12/31/2024
|
01/01/2025 -
24/12/2031
|
309.20
|
2,700
|
—
|
—
|
2,700
|
—
|
—
|
2,700
|
—
|
|||||||||||||||
|
23/12/2022 -
23/12/2025
|
12/23/2022
|
(2)
|
12/31/2025
|
01/01/2026 -
23/12/2032
|
359.60
|
2,700
|
—
|
—
|
—
|
—
|
2,700
|
2,700
|
2,700
|
|||||||||||||||
|
03/07/2023 -
03/07/2026
|
7/3/2023
|
(2)
|
12/31/2026
|
01/01/2027 -
03/07/2033
|
355.40
|
1,600
|
—
|
—
|
—
|
—
|
1,600
|
1,600
|
1,600
|
|||||||||||||||
|
Total
|
49,000
|
0
|
8,000
|
2,700
|
—
|
4,300
|
41,000
|
4,300
|
||||||||||||||||||||
|
Mr. Steve
Krognes
|
03/04/2023 -
03/04/2026
|
4/3/2023
|
(2)
|
12/31/2026
|
03/04/2024 -
03/04/2033
|
340.70
|
2,400
|
0
|
2,400
|
2,400
|
2,400
|
|||||||||||||||||
|
Total
|
2,400
|
—
|
—
|
—
|
—
|
2,400
|
2,400
|
2,400
|
||||||||||||||||||||
|
135
|
||
|
Information regarding the reported financial year
|
||||||||||||||||||||||||||||
|
Opening
balance
|
During the Year
|
Closing balance
|
||||||||||||||||||||||||||
|
Name of
Directors
|
Performance
period
|
Award
date
|
Vesting
date
|
End of
retention
period
|
Exercise
period
|
Grant
price in €
|
Stock
options held
at the
beginning of
the year
|
Stock
options
awarded
|
Stock
options
exercised
|
Stock
options
vested
|
Stock
options
subject to a
service
condition
|
Stock
options
awarded and
unvested
|
Stock
options held
at the end
of the year
|
Stock
options
subject to a
retention
period
|
||||||||||||||
|
Dr. Pamela
Klein
|
21/12/2018 -
21/12/2021
|
12/21/2018
|
(1)
|
N/A
|
21/12/2019 -
21/12/2028
|
86.32
|
1,500
|
—
|
1,500
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||
|
20/12/2019 -
20/12/2022
|
12/20/2019
|
(1)
|
N/A
|
20/12/2020 -
20/12/2029
|
135.75
|
10,000
|
—
|
2,500
|
—
|
—
|
—
|
7,500
|
—
|
|||||||||||||||
|
21/12/2020 -
21/12/2023
|
12/21/2020
|
(1)
|
N/A
|
21/12/2021 -
21/12/2030
|
247.60
|
10,000
|
—
|
—
|
—
|
—
|
—
|
10,000
|
—
|
|||||||||||||||
|
24/12/2021 -
24/12/2024
|
12/24/2021
|
(2)
|
12/31/2024
|
24/12/2022 -
24/12/2031
|
309.20
|
2,700
|
—
|
—
|
2,700
|
—
|
—
|
2,700
|
—
|
|||||||||||||||
|
23/12/2022 -
23/12/2025
|
12/23/2022
|
(2)
|
12/31/2025
|
23/12/2023 -
23/12/2032
|
359.60
|
2,700
|
—
|
—
|
—
|
—
|
2,700
|
2,700
|
2,700
|
|||||||||||||||
|
03/07/2023 -
03/07/2026
|
7/3/2023
|
(2)
|
12/31/2026
|
03/07/2024 -
03/07/2033
|
355.40
|
1,600
|
—
|
—
|
—
|
—
|
1,600
|
1,600
|
1,600
|
|||||||||||||||
|
Total
|
28,500
|
—
|
4,000
|
2,700
|
—
|
4,300
|
24,500
|
4,300
|
||||||||||||||||||||
|
Dr. Donald
deBethizy
|
18/06/2016 -
18/06/2019
|
6/18/2016
|
(1)
|
N/A
|
18/06/2017 -
18/06/2026
|
11.38
|
10,000
|
—
|
—
|
—
|
—
|
—
|
10,000
|
—
|
||||||||||||||
|
21/12/2018 -
21/12/2021
|
12/21/2018
|
(1)
|
N/A
|
21/12/2019 -
21/12/2028
|
86.32
|
10,000
|
—
|
—
|
—
|
—
|
—
|
10,000
|
—
|
|||||||||||||||
|
20/12/2019 -
20/12/2022
|
12/20/2019
|
(1)
|
N/A
|
20/12/2020 -
20/12/2029
|
135.75
|
10,000
|
—
|
—
|
—
|
—
|
—
|
10,000
|
—
|
|||||||||||||||
|
21/12/2020 -
21/12/2023
|
12/21/2020
|
(1)
|
N/A
|
21/12/2021 -
21/12/2030
|
247.60
|
10,000
|
—
|
—
|
—
|
—
|
—
|
10,000
|
—
|
|||||||||||||||
|
24/12/2021 -
24/12/2024
|
12/24/2021
|
(2)
|
12/31/2024
|
24/12/2022 -
24/12/2031
|
309.20
|
2,700
|
—
|
—
|
2,700
|
—
|
—
|
2,700
|
—
|
|||||||||||||||
|
23/12/2022 -
23/12/2025
|
12/23/2022
|
(2)
|
12/31/2025
|
23/12/2023 -
23/12/2032
|
359.60
|
2,700
|
—
|
—
|
—
|
—
|
2,700
|
2,700
|
2,700
|
|||||||||||||||
|
03/07/2023 -
03/07/2026
|
7/3/2023
|
(2)
|
12/31/2026
|
03/07/2024 -
03/07/2033
|
355.40
|
1,600
|
—
|
—
|
—
|
—
|
1,600
|
1,600
|
1,600
|
|||||||||||||||
|
Total
|
47,000
|
—
|
—
|
2,700
|
—
|
4,300
|
47,000
|
4,300
|
||||||||||||||||||||
|
136
|
||
|
Information regarding the reported financial year
|
||||||||||||||||||||||||||||
|
Opening
balance
|
During the Year
|
Closing balance
|
||||||||||||||||||||||||||
|
Name of
Directors
|
Performance
period
|
Award
date
|
Vesting
date
|
End of
retention
period
|
Exercise
period
|
Grant
price in €
|
Stock
options held
at the
beginning of
the year
|
Stock
options
awarded
|
Stock
options
exercised
|
Stock
options
vested
|
Stock
options
subject to a
service
condition
|
Stock
options
awarded and
unvested
|
Stock
options held
at the end
of the year
|
Stock
options
subject to a
retention
period
|
||||||||||||||
|
Anthony
Rosenberg
|
13/12/2016 -
13/12/2019
|
12/13/2016
|
(1)
|
N/A
|
13/12/2017 -
13/12/2026
|
14.13
|
15,000
|
—
|
7,200
|
—
|
—
|
—
|
7,800
|
—
|
||||||||||||||
|
21/12/2018 -
21/12/2021
|
12/21/2018
|
(1)
|
N/A
|
21/12/2019 -
21/12/2028
|
86.32
|
10,000
|
—
|
—
|
—
|
—
|
—
|
10,000
|
—
|
|||||||||||||||
|
20/12/2019 -
20/12/2022
|
12/20/2019
|
(1)
|
N/A
|
20/12/2020 -
20/12/2029
|
135.75
|
8,840
|
—
|
—
|
—
|
—
|
—
|
8,840
|
—
|
|||||||||||||||
|
21/12/2020 -
21/12/2023
|
12/21/2020
|
(1)
|
N/A
|
21/12/2021 -
21/12/2030
|
247.60
|
3,640
|
—
|
—
|
—
|
—
|
—
|
3,640
|
—
|
|||||||||||||||
|
24/12/2021 -
24/12/2024
|
12/24/2021
|
(2)
|
12/31/2024
|
24/12/2022 -
24/12/2031
|
309.20
|
2,700
|
—
|
—
|
2,700
|
—
|
—
|
2,700
|
—
|
|||||||||||||||
|
23/12/2022 -
23/12/2025
|
12/23/2022
|
(2)
|
12/31/2025
|
23/12/2023 -
23/12/2032
|
359.60
|
2,700
|
—
|
—
|
—
|
—
|
2,700
|
2,700
|
2,700
|
|||||||||||||||
|
03/07/2023 -
03/07/2026
|
7/3/2023
|
(2)
|
12/31/2026
|
03/07/2024 -
03/07/2033
|
355.40
|
1,600
|
—
|
—
|
—
|
—
|
1,600
|
1,600
|
1,600
|
|||||||||||||||
|
Total
|
44,480
|
—
|
7,200
|
2,700
|
—
|
4,300
|
37,280
|
4,300
|
||||||||||||||||||||
|
James Daly
|
21/12/2020 -
21/12/2023
|
12/21/2020
|
(1)
|
N/A
|
21/12/2021 -
21/12/2030
|
247.60
|
10,000
|
—
|
—
|
—
|
—
|
—
|
10,000
|
—
|
||||||||||||||
|
24/12/2021 -
24/12/2024
|
12/24/2021
|
(2)
|
12/31/2024
|
24/12/2022 -
24/12/2031
|
309.20
|
2,700
|
—
|
—
|
2,700
|
—
|
—
|
2,700
|
—
|
|||||||||||||||
|
23/12/2022 -
23/12/2025
|
12/23/2022
|
(2)
|
12/31/2025
|
23/12/2023 -
23/12/2032
|
359.60
|
2,700
|
—
|
—
|
—
|
—
|
2,700
|
2,700
|
2,700
|
|||||||||||||||
|
03/07/2023 -
03/07/2026
|
7/3/2023
|
(2)
|
12/31/2026
|
03/07/2024 -
03/07/2033
|
355.40
|
1,600
|
—
|
—
|
—
|
—
|
1,600
|
1,600
|
1,600
|
|||||||||||||||
|
Total
|
17,000
|
—
|
—
|
2,700
|
—
|
4,300
|
17,000
|
4,300
|
||||||||||||||||||||
|
Camilla
Sylvest
|
03/10/2022 -
03/10/2025
|
10/3/2022
|
(2)
|
12/31/2025
|
03/10/2023 -
03/10/2032
|
368.50
|
4,050
|
—
|
—
|
—
|
—
|
4,050
|
4,050
|
4,050
|
||||||||||||||
|
03/07/2023 -
03/07/2026
|
7/3/2023
|
(2)
|
12/31/2026
|
03/07/2024 -
03/07/2033
|
355.40
|
1,200
|
—
|
—
|
—
|
—
|
1,200
|
1,200
|
1,200
|
|||||||||||||||
|
Total
|
5,250
|
—
|
—
|
—
|
—
|
5,250
|
5,250
|
5,250
|
||||||||||||||||||||
|
Dr. Ana
Cespedes
|
23/12/2022 -
23/12/2025
|
12/23/2022
|
(2)
|
12/31/2025
|
23/12/2023 -
23/12/2032
|
359.60
|
4,050
|
—
|
—
|
—
|
—
|
4,050
|
4,050
|
4,050
|
||||||||||||||
|
03/07/2023 -
03/07/2026
|
7/3/2023
|
(2)
|
12/31/2026
|
03/07/2024 -
03/07/2033
|
355.40
|
800
|
—
|
—
|
—
|
—
|
800
|
800
|
800
|
|||||||||||||||
|
Total
|
4,850
|
—
|
—
|
—
|
—
|
4,850
|
4,850
|
4,850
|
||||||||||||||||||||
|
137
|
||
1)
1/3rd of the stock options vests on the first anniversary of the date of grant and the remaining 2/3rd vest in equal monthly installments (24 in total) over the next two years, each time upon the 1st day of
each next month.
2)
Stock options vest upon third anniversary of the grant.
RSU overview Non-Executive Directors
The table below shows (i) the RSUs held at
January 1, 2024
, (ii) the RSUs granted to the Non-Executive Directors which have vested during the year ended
December 31, 2024
and (iii) RSUs scheduled to vest in the years ending
December 31, 2025
,
December 31, 2026
and
December 31, 2027
(in number of RSUs).
RSUs granted to Non-Executive Directors before 2024 vest over a period of four years with 1/4
th
of the total grant vesting at each anniversary of the grant date. RSUs
granted to Non-Executive Directors in 2024 will all vest on the 1st anniversary of the grant date in 2025 and are subject to a holding period of 3 years.
|
Information regarding the reported financial year
|
||||||||||||||||||||||
|
Opening
balance
|
During the Year
|
Closing balance
|
||||||||||||||||||||
|
Name of member of Board
of Directors
|
Vesting period
|
Award
date
|
Vesting
date
|
End of
holding
period
|
RSUs held
at the
beginning
of the year
|
RSUs
awarded
|
RSUs
vested
|
RSUs
subject to
a service
condition
|
RSUs
awarded
and
unvested
|
RSUs
held at
the
closing of
the year
|
RSUs
subject to a
holding
period
|
|||||||||||
|
Mr. Peter Verhaeghe
|
24/12/2021 - 24/12/2025
|
24/12/2021
|
(1)
|
N/A
|
300
|
—
|
150
|
—
|
150
|
150
|
—
|
|||||||||||
|
23/12/2022 - 23/12/2026
|
23/12/2022
|
(1)
|
N/A
|
450
|
—
|
150
|
—
|
300
|
300
|
—
|
||||||||||||
|
03/07/2023 - 03/07/2027
|
07/03/2023
|
(1)
|
N/A
|
350
|
—
|
87
|
—
|
263
|
263
|
—
|
||||||||||||
|
28/06/2024 - 28/06/2025
|
28/06/2024
|
(1)
|
28/06/2028
|
—
|
1065
|
—
|
—
|
1,065
|
1,065
|
—
|
||||||||||||
|
Total
|
1,100
|
1,065
|
387
|
—
|
1,778
|
1,778
|
—
|
|||||||||||||||
|
Mr. Steve Krognes
|
03/04/2023 - 03/04/2027
|
03/04/2023
|
(1)
|
N/A
|
525
|
0
|
—
|
394
|
394
|
—
|
||||||||||||
|
28/06/2024 - 28/06/2025
|
06/28/2024
|
(1)
|
28/06/2028
|
0
|
1,065
|
0
|
—
|
1,065
|
1,065
|
—
|
||||||||||||
|
Total
|
525
|
1,065
|
131
|
—
|
1,459
|
1,459
|
—
|
|||||||||||||||
|
Dr. Pamela Klein
|
24/12/2021 - 24/12/2025
|
24/12/2021
|
(1)
|
N/A
|
300
|
—
|
150
|
—
|
150
|
150
|
—
|
|||||||||||
|
23/12/2022 - 23/12/2026
|
23/12/2022
|
(1)
|
N/A
|
450
|
—
|
150
|
—
|
300
|
300
|
—
|
||||||||||||
|
03/07/2023 - 03/07/2027
|
07/03/2023
|
(1)
|
N/A
|
350
|
—
|
87
|
—
|
263
|
263
|
—
|
||||||||||||
|
28/06/2024 - 28/06/2025
|
28/06/2024
|
(1)
|
28/06/2028
|
—
|
1065
|
—
|
—
|
1,065
|
1,065
|
—
|
||||||||||||
|
Total
|
1,100
|
1,065
|
387
|
—
|
1,778
|
1,778
|
—
|
|||||||||||||||
|
Dr. Donald deBethizy
|
24/12/2021 - 24/12/2025
|
24/12/2021
|
(1)
|
N/A
|
300
|
—
|
150
|
—
|
150
|
150
|
—
|
|||||||||||
|
23/12/2022 - 23/12/2026
|
23/12/2022
|
(1)
|
N/A
|
450
|
—
|
150
|
—
|
300
|
300
|
—
|
||||||||||||
|
03/07/2023 - 03/07/2027
|
07/03/2023
|
(1)
|
N/A
|
350
|
—
|
87
|
—
|
263
|
263
|
—
|
||||||||||||
|
28/06/2024 - 28/06/2025
|
28/06/2024
|
(1)
|
28/06/2028
|
—
|
1065
|
—
|
—
|
1,065
|
1,065
|
—
|
||||||||||||
|
Total
|
1,100
|
1,065
|
387
|
—
|
1,778
|
1,778
|
—
|
|||||||||||||||
|
138
|
||
|
Information regarding the reported financial year
|
||||||||||||||||||||||
|
Opening
balance
|
During the Year
|
Closing balance
|
||||||||||||||||||||
|
Anthony Rosenberg
|
24/12/2021 - 24/12/2025
|
24/12/2021
|
(1)
|
N/A
|
300
|
—
|
150
|
—
|
150
|
150
|
—
|
|||||||||||
|
23/12/2022 - 23/12/2026
|
23/12/2022
|
(1)
|
N/A
|
450
|
—
|
150
|
—
|
300
|
300
|
—
|
||||||||||||
|
03/07/2023 - 03/07/2027
|
07/03/2023
|
(1)
|
N/A
|
350
|
—
|
87
|
—
|
263
|
263
|
|||||||||||||
|
28/06/2024 - 28/06/2025
|
28/06/2024
|
(1)
|
28/06/2028
|
—
|
1065
|
—
|
—
|
1,065
|
1,065
|
—
|
||||||||||||
|
Total
|
1,100
|
1,065
|
387
|
—
|
1,778
|
1,778
|
—
|
|||||||||||||||
|
James Daly
|
24/12/2021 - 24/12/2025
|
24/12/2021
|
(1)
|
N/A
|
300
|
—
|
150
|
—
|
150
|
150
|
—
|
|||||||||||
|
23/12/2022 - 23/12/2026
|
23/12/2022
|
(1)
|
N/A
|
450
|
—
|
150
|
—
|
300
|
300
|
—
|
||||||||||||
|
03/07/2023 - 03/07/2027
|
07/03/2023
|
(1)
|
N/A
|
350
|
—
|
87
|
—
|
263
|
263
|
—
|
||||||||||||
|
28/06/2024 - 28/06/2025
|
28/06/2024
|
(1)
|
28/06/2028
|
—
|
1065
|
—
|
—
|
1,065
|
1,065
|
—
|
||||||||||||
|
Total
|
1,100
|
1,065
|
387
|
—
|
1,778
|
1,778
|
—
|
|||||||||||||||
|
Camilla Sylvest
|
03/10/2022 - 03/10/2026
|
03/10/2022
|
(1)
|
N/A
|
675
|
—
|
225
|
—
|
450
|
450
|
—
|
|||||||||||
|
03/07/2023 - 03/07/2027
|
07/03/2023
|
(1)
|
N/A
|
263
|
—
|
66
|
—
|
197
|
197
|
—
|
||||||||||||
|
28/06/2024 - 28/06/2025
|
28/06/2024
|
(1)
|
28/06/2028
|
—
|
1065
|
—
|
—
|
1,065
|
1,065
|
—
|
||||||||||||
|
Total
|
938
|
1,065
|
291
|
—
|
1,712
|
1,712
|
—
|
|||||||||||||||
|
Dr. Ana Cespedes
|
23/12/2022 - 23/12/2026
|
23/12/2022
|
(1)
|
N/A
|
675
|
—
|
225
|
—
|
450
|
450
|
—
|
|||||||||||
|
03/07/2023 - 03/07/2027
|
07/03/2023
|
(1)
|
N/A
|
175
|
—
|
44
|
—
|
131
|
131
|
—
|
||||||||||||
|
28/06/2024 - 28/06/2025
|
28/06/2024
|
(1)
|
28/06/2028
|
—
|
1065
|
—
|
—
|
1,065
|
1,065
|
—
|
||||||||||||
|
Total
|
850
|
1,065
|
269
|
—
|
1,646
|
1,646
|
—
|
|||||||||||||||
|
Dr. Brian Kotzin
|
28/06/2024 - 28/06/2028
|
28/06/2024
|
(1)
|
28/06/2028
|
—
|
1,598
|
—
|
—
|
1,598
|
1,598
|
—
|
|||||||||||
|
Total
|
—
|
1,598
|
—
|
—
|
1,598
|
1,598
|
—
|
|||||||||||||||
1)
RSUs granted before 2024 vest over a period of four years with 1/4th of the total grant vesting at each anniversary of the date of grant. RSUs granted to Non-Executive Directors in 2024 will all vest on
the 1st anniversary of the grant date in 2025 and are subject to a holding period of 3 years.
|
139
|
||
C. BOARD PRACTICES
Director Independence
As a foreign private issuer, under the Nasdaq Listing Rules, we are not required to have a majority independent directors
on our Board of Directors, except that
Audit and Compliance Committee
is required to consist fully of independent
directors. However, our Board of Directors has determined that, taking into account any applicable committee
independence standards, all of our Non-Executive Directors, including the members of
Audit and Compliance
Committee
, are “independent directors” under Rule 10A-3 of the Exchange Act and the applicable rules of Nasdaq and
of the DCGC. In making such determination, our Board of Directors considered the relationships that each Non-
Executive Director has with us and all other facts and circumstances our Board of Directors deemed relevant in
determining the director’s independence, including the number of ordinary shares beneficially owned by the director and
his or her affiliated entities (if any).
The DCGC requires that the composition of Non-Executive Directors is such that the members are able to operate
independently and critically vis-à-vis one another, the Executive Directors, and any particular interests involved. As of
the date of this Annual Report, all Non-Executive Directors meet the independence criteria contained in the DCGC.
Therefore, in the opinion of the Non-Executive Directors, the composition of our Non-Executive Directors complies
with the independence requirements of best practice provisions 2.1.7 to 2.1.9 of the DCGC. Our Board of Directors has
consequently also determined that all members of our committees are independent under the applicable rules of the
DCGC.
As of the date of this Annual Report (or in any period before), none of the members of our Board of Directors and Senior
Management Team has or has had a family relationship with any other member of our Board of Directors or Senior
Management Team.
Directors may be suspended or removed by the General Meeting at any time, with or without cause, by means of a
resolution passed by a simple majority of the votes cast. Pursuant to the
Dutch Civil Code
,
Executive Director
s may also
be suspended by the board of directors. A suspension of an
Executive Director
by the board of directors may be
discontinued by the shareholders at any time at a General Meeting.
Diversity
In accordance with applicable Dutch legislation, we are required to report annually to the Social Economic Council
(Sociaal-Economische Raad) on (i) the gender ratio, i.e., the male and female Executive Directors and Non-Executive
Directors, as well as employees in managerial positions at the end of the financial year, (ii) the Company’s self-imposed
appropriate and ambitious targets in the form of a target figure to make the ratio between the number of male and female
Executive Directors and Non-Executive Directors, as well as in categories of employees in managerial positions to be
determined by the Company, more balanced, and (iii) the plan of action to achieve these targets. If we have not complied
with one or more of the foregoing, we are required to report on the reasons for this non-compliance.
As of
December 31, 2024
, our Board of Directors consisted of
10
directors, including
1
Executive Director and
9
Non-
Executive Directors. Of the directors who chose to disclose their gender, the Board of Directors contained
6
male
directors and
3
female directors (Non-Executive Directors), translating into a
60.00%
male /
30.00%
female balance for
our full Board of Directors (compared to
5
males and
3
females (Non-Executive Directors) (
55.56%
/
33.33%
) as of
December 31, 2023
) and a
66.67%
male /
33.33%
female balance for our Non-Executive Directors (compared to
62.50%
male/
37.50%
female as of
December 31, 2023
).
As of
December 31, 2024
, our Company leadership team consisted of
57
persons, comprised of a mix of
24
males and
28
females, (
42%
/
49%
respectively) while
5
positions remained vacant. Compared to
31
persons as of
December 31, 2023
,
comprised of a mix of
19
males and
12
females, (
61%
/
39%
respectively). Our leadership consists of all full time
employees reporting directly to our CEO, as well as all (other) leaders of our largest functions and projects. Each of
these positions is characterized by a high impact across the organization, leading a global and cross functional team and
having a global reach. We estimate that as of
December 31, 2024
,
58%
of our workforce were female and
42%
were
male (compared to
58%
female and
42%
male as of
December 31, 2023
)
.
Role of the Board in Risk Oversight
Our Board of Directors is responsible for the oversight of our risk management activities and has specifically designated
the audit and compliance committee (the
Audit and Compliance Committee
)
to assist our Board of Directors in this task
and prepare recommendations in this respect to the Board of Directors. While our Board of Directors oversees our risk
management, our
Senior Management Team
is responsible for day-to-day risk management processes. Our Board of
Directors expects our
Senior Management Team
to consider risk and risk management in each business decision, to
proactively develop and monitor risk management strategies and processes for day-to-day activities and to effectively
|
140
|
||
implement risk management strategies adopted by the Board of Directors. We believe this division of responsibilities is
the most effective approach for addressing the risks we face.
Composition, Appointment and Dismissal
The Articles of Association provide that our Board of Directors will consist of our Executive Director(s) and Non-
Executive Directors. The number of Executive Directors must at all times be less than the number of Non-Executive
Directors. The number of directors, as well as the number of Executive Directors and Non-Executive Directors, is
determined by our Board of Directors, provided that the Board of Directors must consist of at least three members.
Our directors are appointed by the General Meeting for a period of four years as either Executive Directors or as Non-
Executive Directors. This four-year term aligns with best practice 2.2.1 of the DCGC, which stipulates that executive and
Non-Executive Directors may be appointed for a maximum period of four years. We believe that appointing directors for
a four-year term, rather than for example annual (re-)appointments, promotes stability and continuity within the Board of
Directors. It also allows deserving candidates to be appointed for more than one year, enhancing our position in
recruitment processes, as longer appointment periods are generally more attractive to candidates. Additionally, it
contributes to the Board of Directors' and, by extension, the Company's ability to focus on long-term goals, in line with
the DCGC's principle that a company's strategy should aim for sustainable long-term value creation.
In accordance with best practice provision 2.2.1 of the DCGC, Executive Directors may be reappointed for periods not
more than four years at a time. In accordance with best practice provision 2.2.2 of the DCGC, Non-Executive Directors
may be reappointed once for a period of four years, after which the Non-Executive Director may be reappointed again
for a period of two years, which reappointment may be extended by at most two years. In the event of a reappointment
after an eight-year period, reasons will be given in the report of the Board of Directors. The Board of Directors is
required to make one or more proposals for each seat on our Board of Directors to be filled. A resolution to nominate a
director by our Board of Directors (with support from the remuneration and nomination committee (the
Remuneration
and Nomination Committee
) may be adopted by a simple majority of the votes cast.
Our Board of Directors conducts evaluations of all its directors and director candidates to create a well-rounded board,
designed to promote long-term shareholder value creation through strong leadership and oversight. The Board of
Directors recognizes that directors who serve on the board for longer terms can be valuable sources of continuity,
understanding of the business and historical insight.
Our Board of Directors designates one Executive Director as CEO and may grant other titles to Executive Directors (if
appointed). Our Board of Directors also designates a Non-Executive Director as chairperson of the Board of Directors
and a Non-Executive Director as vice chairperson of the Board of Directors. The legal relationship between an executive
member of the Board of Directors and argenx SE will not be considered as an employment agreement.
Employment
agreements between an Executive Director and a Group company (other than
argenx SE
) are permitted. In the absence of
an employment agreement, members of a board of directors generally do not enjoy the same protection as employees
under Dutch labor law.
For a discussion of date of expiration of the current term of office and the period during which the person has served in
that office,
“
Item 6.1.
—
Directors, Senior Management and Employees
-
Directors and Senior Management
”.
Except for the arrangements described in
“
Item 7.B.
—
Related Party Transactions
-
Agreements with Our Senior
Management
”, there are no arrangements or understanding between us and any of the Executive Directors providing for
benefits upon termination of their employment, other than as required by applicable law. In addition, the contracts
between us and our Non-Executive Directors do not provide for any benefits upon termination. In addition, the Company
is not party to any agreement with a director or employee providing for compensation if his or her employment is
terminated because of a public takeover offer in respect of the Company.
Committees
In accordance with the DCGC, our Non-Executive Directors can set up specialized committees to analyze specific issues
and advise the Non-Executive Directors on those issues and prepare resolutions with respect thereto.
The committees are advisory bodies only, and the decision-making remains within the collegial responsibility of the
Board of Directors. The Non-Executive Directors determine the terms of reference of each committee with respect to the
organization, procedures, policies and activities of the committee.
Our Non-Executive Directors have established and appointed (i) an
Audit and Compliance Committee
; and (ii)
the
Remuneration and Nomination Committee
.
|
141
|
||
The composition and function of these committees complies with all applicable requirements of Euronext Brussels, the
DCGC, the Exchange Act, the exchange on which the ordinary shares and the ADSs are listed and U.S. SEC rules and
regulations.
Only Non-Executive Directors qualify for membership of these committees. The audit and compliance committee and
the Remuneration and Nomination Committee may not be chaired by the chairperson of the Board of Directors or by a
former Executive Director of the Company.
In addition to the aforementioned legally required subcommittees, our Board of Directors may also opt to incorporate
informal committees consisting of
Non-Executive Director
s and other internal and external persons in argenx, in order to
facilitate discussions and act as a sounding board on specific projects, as well as on a more permanent basis. Our Board
of Directors has incorporated a research and development committee and a commercialization committee.
Audit and Compliance Committee
Our
Audit and Compliance Committee
consists of four members: Mr. Steve Krognes (chairperson), Mr. Peter
Verhaeghe, Anthony Rosenberg and James Daly.
Our Board of Directors previously established that Mr. Peter Verhaeghe, Anthony Rosenberg, James Daly and Mr. Steve
Krognes satisfy the independence requirements set forth in Rule 10A-3 of the Exchange Act and that Mr. Steve Krognes
qualifies as “audit committee financial experts” as defined by SEC rules and Article 39 paragraph 1 of Directive
2014/56/EU of the European Parliament and of the Council of April 16, 2014 amending Directive 2006/43/EC on
statutory audits of annual accounts and consolidated accounts and has the requisite financial sophistication under the
applicable Nasdaq rules and regulations. Further, our Board of Directors established that the composition of the
Audit
and Compliance Committee
meets the requirements under the Dutch Decree on Establishing Audit Committees.
Our
Audit and Compliance Committee
assists our Board of Directors in overseeing the accuracy and integrity of our
accounting, financial and non-financial (including sustainability) reporting processes and audits and reviews of our
consolidated financial statements as well as non-financial statements, the implementation and effectiveness of an internal
control system and our compliance with legal and regulatory requirements, the independent auditors’ qualifications and
independence and the performance of the independent auditors. Our
Audit and Compliance Committee
is also
responsible for monitoring the status of, and compliance with, our global ethics and compliance program and meets with
the head of our ethics and compliance function at least quarterly to discuss the status and overall effectiveness of the
program as well as any issues or incidents that occurred and remedial actions needed (if applicable). The committee
furthermore oversees climate-related risks and supervises the status of the Company’s cybersecurity program and
regularly (at least quarterly) discusses the status thereof with our Senior Management Team.
Our
Audit and Compliance Committee
is governed by a charter that complies the Nasdaq Listing Rules and the DCGC
and is publicly available on our website. It is responsible for, among other things, establishing methods and procedures
for supervising, and where necessary requiring improvements of, our financial reporting, risk management, ethics and
compliance and organization for the purpose of making appropriate recommendations to our Board of Directors in that
regard.
Our
Audit and Compliance Committee
meets as often as is required for its proper functioning, but at least four times a
year and at least once a year meets separately with our independent auditor.
Our
Audit and Compliance Committee
reports regularly to our Board of Directors on the exercise of its functions. It informs our Board of Directors about all
areas in which action or improvement is necessary in its opinion and produces recommendations concerning the
necessary steps or resolutions that need to be taken. The audit review and the reporting on that review cover us and our
subsidiaries as a whole. The members of the
Audit and Compliance Committee
are entitled to receive all information
which they need for the performance of their function, from our Board of Directors and employees. Every member of the
Audit and Compliance Committee
shall exercise this right in consultation with the chairperson of the
Audit and
Compliance Committee.
Please refer to
“Item 6.C — Board Practices —
Report Audit and Compliance Committee
”
for
an overview of the number of meetings and attendance rates.
Report Audit and Compliance Committee
The
Audit and Compliance Committee
reports regularly to our Board of Directors on the exercise of its functions. It
informs our Board of Directors about all areas in which action or improvement is necessary in its opinion and produces
recommendations concerning the necessary steps that need to be taken. The audit review and the reporting on that review
cover the Company and its subsidiaries as a whole.
In
2024
, the main points of discussion at the meetings were the
2023
consolidated financial statements and press release
as well as interim consolidated financial statements and press releases, internal audit and external auditors’ reports, the
review of quarterly forecasts, updates on tax priorities, cash management, CSRD implementation (including finalization
|
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|
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of the double materiality assessment), the Company’s ethics and compliance program, the Company’s cyber security
program and the Company’s privacy program.
In
2024
, 6 formal
Audit and Compliance Committee
meetings were held. The meeting attendance rate for our Non-
Executive Directors is set out in the table below.
|
Name
|
Number of meetings attended in 2024 since
appointment
|
Attendance %
|
||
|
Mr. Steve Krognes (chairperson)
|
6
|
100%
|
||
|
Mr. Peter Verhaeghe
|
6
|
100%
|
||
|
Anthony Rosenberg
|
6
|
100%
|
||
|
James Daly
|
6
|
100%
|
Remuneration and Nomination Committee
We have established a Remuneration and Nomination Committee, which serves as both the remuneration committee and
selection and appointment committee as prescribed by the DCGC. Our Remuneration and Nomination Committee
currently consists of three members: Dr. Donald deBethizy (chairperson), Peter Verhaeghe and Dr. Ana Cespedes. As
announced on February 27, 2025, Donald deBethizy will retire from the Board of Directors after the annual General
Meeting to be held on May 27, 2025 (the
2025 General Meeting
). Consequently, Dr. Ana Cespedes will succeed Dr.
Donald deBethizy as the chairperson of the Remuneration and Nomination Committee and Mr. Steve Krognes will
become a member of the Remuneration and Nomination Committee.
Our Remuneration and Nomination Committee is responsible for, among other things:
•
regularly reviewing the remuneration policy and practices in light of all relevant circumstances and benchmarks, and
recommending to the Non-Executive Directors the remuneration of the individual
Executive Director
s;
•
advising our Board of Directors in respect of the remuneration for the Non-Executive Directors;
•
preparing the remuneration report to be included in our annual report; and
•
drawing up selection criteria and appointment procedures for directors and making proposals for appointment and re-
appointment of the directors
.
The Remuneration and Nomination Committee consists of at least three members. The Remuneration and Nomination
Committee meets as often as is required for its proper functioning, but at least once per year to evaluate its functioning.
Please refer to
“Item 6.C — Board Practices —
Report Remuneration and Nomination Committee
”
for an overview of
the number of meetings and attendance rates.
Report Remuneration and Nomination Committee
The Remuneration and Nomination Committee assists the Board of Directors by, amongst other matters, regularly
reviewing our remuneration policy, preparing remuneration proposals and periodically assessing the size and
composition of the Board of Directors, as well as preparing the policy of the Senior Management Team on the selection
criteria and appointment procedures for the Senior Management Team. During their deliberations in
2024
, the main
topics of discussion were long-term succession and development planning for key company leadership. The key themes
in 2024 were around our evolving remuneration practices and needs in light of stakeholder feedback and engagement,
leading up to a proposed revised remuneration policy in 2024 and preparations for a further revised policy to be
proposed in 2025
.
In
2024
, 6 formal Remuneration and Nomination Committee meetings were held. The meeting attendance rate for our
Directors is set out in the table below.
|
Name
|
Number of meetings attended in 2024 since
appointment
|
Attendance %
|
||
|
Dr. Donald deBethizy (chairperson)
|
6
|
100%
|
||
|
Mr. Peter Verhaeghe
|
5
|
83.33%
|
||
|
Dr. Ana Cespedes
|
6
|
100%
|
|
143
|
||
Informal subcommittees
Research and Development Committee
The research and development committee consists of members of our Board of Directors and other persons, which
composition may vary from time to time. Currently, the research and development committee consists of three members
who are also members of our Board of Directors: Dr. Brian Kotzin (chairperson), Dr. Donald deBethizy and Dr. Pamela
Klein. Non-board member advisors of the research and development committee include David Lacey, Prof. Hans de
Haard and Wim Parys. Ad-hoc participants to the committee meetings include a variety of employees and/or external
advisors, depending on the needs of the committee and the topics under discussion. As announced on February 27, 2025,
Dr. Donald deBethizy will retire from the Board of Directors after the 2025 General Meeting. The Board of Directors
will examine the options for a replacement.
The research and development committee is responsible for, among other things:
•
monitoring and overseeing our research and development goals, strategies and measures;
•
serving as a sounding board to our research and development management, general management and Board of
Directors; and
•
performing strategic reviews of our key research and development programs. The research and development
committee also promotes transparency in RD practices, ensuring that findings, both positive and negative, are
reported accurately and openly, and reviews, comments on and makes recommendations in respect of our non-
financial reporting on RD related topics to the
Audit and Compliance Committee
and/or the Board of Directors.
All members of the research and development committee shall have adequate industrial, academic and/or practical
experience with the research and development of biopharmaceuticals.
Our research and development committee meets as often as is required for its proper functioning, but typically meets at
least once prior to each meeting of our Board of Directors and reports regularly to our Board of Directors on the outcome
of its deliberations, including any recommendations to the Board of Directors or the
Senior Management Team
. The
chairperson of our research and development committee reports to our Board of Directors on the research and
development committee’s discussions and strategic advice after each meeting on all matters within its duties and
responsibilities.
Please refer to
“Item 6.C — Board Practices —
Report Research and Development Committee
” for an
overview of the number of meetings and attendance rates.
Report Research and Development Committee
The research and development committee functions as a sounding board to our research and development management,
general management and the Board of Directors, and monitors our research and development goals, strategies and
measures. In
2024
, the committee held 4 formal meetings, in which it focused mainly on the vision and strategy on
science, the Company’s research and development pipeline including its preclinical and clinical stage product-
candidates, potential future indications for its commercial stage products and developments in relation to our IIP.
The meeting attendance rate for our directors is set out in the table below.
|
Name
|
Number of meetings attended in 2024 since
appointment
|
Attendance %
|
||
|
Dr. Brian Kotzin (chairperson)
1)
|
4
|
100%
|
||
|
Dr. Donald deBethizy
|
4
|
100%
|
||
|
Dr. Pamela Klein
|
4
|
100%
|
||
|
David Lacey (chairperson)
2)
|
4
|
100%
|
1)
Dr. Brian Kotzin was appointed chairperson of the research and development committee as of May 7, 2024.
2)
David Lacey resigned as chairperson effective May 7, 2024 and was replaced by Dr. Brian Kotzin effective May 7, 2024. He attended the other
meetings in 2024 as an advisor to the Board of Directors.
Commercialization Committee
Our commercialization committee consists of members of our Board of Directors and other persons, which composition
may vary from time to time. As of the date of this Annual Report, the commercialization committee consists of three
|
144
|
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permanent members: James Daly (chairperson), Anthony Rosenberg and Camilla Sylvest. Keith Woods serves as a non-
board member advisor of the committee.
The commercialization committee is responsible for, among other things:
•
reviewing and guiding the global sales and marketing strategy to ensure optimal product uptake and sustained growth
and promoting innovation within commercialization efforts;
•
overseeing the global product launch strategy and supervising all stages of product lifecycle; and
•
reviewing our partnerships and collaborations.
Our commercialization committee meets as often as is required for its proper functioning and in practice meets at least
once per quarter. The commercialization committee reports regularly to our Board of Directors on the outcome of its
strategic reviews and any recommendations to the Board of Directors or
Senior Management Team
.
Please refer to
“Item 6.C — Board practices —
Report Commercialization Committee
” for an overview of the number of
meetings and attendance rates.
Report Commercialization Committee
The commercialization committee functions as a sounding board on branded and unbranded strategic marketing plans for
the Board of Directors. In
2024
, the committee held 3 formal meetings, in which it focused mainly on the execution of
our launch of VYVGART in CIDP, the execution of our launch of VYVGART in ITP in Japan and gMG in several other
jurisdictions as well as the preparation for potential future launches, subject to obtaining further approvals.
The meeting attendance rate for our directors is set out in the table below.
|
Name
|
Number of meetings attended in 2024 since
appointment
|
Attendance %
|
||
|
James Daly (chairperson)
|
3
|
100%
|
||
|
Anthony Rosenberg
|
3
|
100%
|
||
|
Camilla Sylvest
|
3
|
100%
|
Corporate Governance Practices
Our Board By-Laws describe,
inter alia
, the procedure for holding meetings of the Board of Directors, for the decision-
making by the Board of Directors and the Board of Directors’ operating procedures.
In accordance with our Articles of Association, our Board of Directors meets at least once every three months to discuss
the state of affairs within the Company and the expected developments.
Under our Board By-Laws, the members of our Board of Directors must endeavor, insofar as is possible, to ensure that
resolutions are adopted unanimously. Where unanimity cannot be achieved and Dutch law, the Articles of Association or
the Board By-Laws do not prescribe a larger majority, all resolutions of our Board of Directors must be adopted by a
simple majority of the votes cast in a meeting at which at least a majority of the members of our Board of Directors then
in office are present or represented. The Articles of Association provide that in case of a tie of votes, the chairperson
does not have a casting vote and as such the proposal will be rejected in case of a tie.
Under the Board By-Laws, some specific matters require approval of the majority of the Non-Executive Directors. These
matters are set out in Schedule 1 of our Board By-Laws. Our Board By-Laws are available on our website. The Non-
Executive Directors may also determine that certain other matters shall require approval of a certain majority of the Non-
Executive Directors. Such matters shall be clearly specified and notified to the Executive Director(s) in writing.
Resolutions of the Board of Directors may also be adopted outside of a meeting in writing, provided that all directors in
office (in respect of whom no conflict of interest exists as referred to in the Articles of Association) have consented in
writing to this manner of decision-making. A director may issue a proxy for a specific Board of Directors meeting to
another director in writing.
A director having a direct or indirect personal interest that conflicts with the interest of the Company and its affiliated
enterprise has a conflict of interest. Each director shall inform all other directors of a conflict of interest without delay. A
|
145
|
||
director shall not participate in the deliberations and decision-making process in relation to an item if he has a conflict of
interest with respect thereto. In such case, the other directors shall resolve the item. In case because of this no resolution
can be adopted by the Executive Directors, the Non-Executive Directors will resolve on the matter. In case because of
this no resolution can be adopted by the Non-Executive Directors, the Board of Directors will resolve on the matter as if
there were no conflict of interest.
The
Executive Director
(s) are required to be asked their vision on their own remuneration in accordance with best
practice provision 3.2.2 of the DCGC but may not participate in the adoption of resolutions (including any deliberations
in respect of such resolutions) relating to their remuneration.
Board Evaluation
The Board of Directors evaluates its functioning and the functioning of its committees and of each individual director
annually. The evaluation process is performed with the help of an external professional board evaluation consultant. In
2024
, the evaluation was performed by Nasdaq Governance Solutions. The evaluation includes preparing specific
questionnaires focusing on the skills and competences most relevant to us, and the most material board topics and
challenges we face. The written questionnaire is then followed up by one-to-one interviews with the representative of
Nasdaq Governance Solutions with each member of the Board of Directors, followed by a debrief and discussion held
with the external evaluator and the entire Board of Directors both in writing (in form of a report) and in the form of a live
discussion of the evaluation report aimed at distilling specific learnings and conclusions.
Based on the self-evaluation performed, the Non-Executive Directors concluded that the Board of Directors and its
committees had properly discharged their responsibilities during
2024
. The Board of Directors identified certain
strengths and weaknesses and adopted a plan for further board development and succession in 2025. All directors
consider the Board of Directors to be a high performing, engaged, open and transparent board. The importance to
preserve this was highlighted by Nasdaq Governance Solutions. All Non-Executive Directors consider fostering further
development and education of great importance, which can be furthered in 2025 through advisory board sessions, deep-
dives and other educational courses.
D. EMPLOYEES
As of
December 31, 2024
, we had
1,599
employees and
774
consultants, which we refer to as “contingent workers”. At
each date shown below, we had the following number of employees, broken out by department and geography.
|
As of December 31,
|
||||||
|
2024
|
2023
|
2022
|
||||
|
Function:
|
||||||
|
Research and development
|
644
|
653
|
367
|
|||
|
Selling, general and administrative
|
955
|
495
|
476
|
|||
|
Total
|
1,599
|
1,148
|
843
|
|||
|
Geography:
|
||||||
|
Belgium
|
466
|
355
|
363
|
|||
|
U.S.
|
694
|
454
|
340
|
|||
|
Japan
|
139
|
116
|
75
|
|||
|
The Netherlands
|
34
|
22
|
—
|
|||
|
Switzerland
|
49
|
28
|
15
|
|||
|
France
|
38
|
40
|
11
|
|||
|
Germany
|
41
|
25
|
11
|
|||
|
Canada
|
19
|
16
|
5
|
|||
|
UK
|
44
|
37
|
—
|
|||
|
Italy
|
33
|
27
|
—
|
|||
|
Spain
|
32
|
20
|
—
|
|||
|
Rest of the World/Remote
|
10
|
8
|
23
|
|||
|
Total
|
1,599
|
1,148
|
843
|
|||
|
146
|
||
Collective bargaining agreements (
CBAs
) can be entered into in Belgium at the national, industry, or company levels.
These CBAs are binding on both employers and employees. We have no trade union representation or CBAs at the
company level, but we are subject to the national and chemical industry CBAs. The CBAs currently applicable to us
relate to employment conditions such as wages, working time, job security, innovation and supplementary pensions. We
have not had, and do not anticipate having, disputes on any of these subjects. CBAs may, however, change the
employment conditions of our employees in the future and hence adversely affect our employment relationships.
E. SHARE OWNERSHIP
For information regarding the share ownership of our directors and members of our executive committee,
see
“
Item 6.B.
F. DISCLOSURE OF A REGISTRANT’S ACTION TO RECOVER ERRONEOUSLY AWARDED
COMPENSATION
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A.
MAJOR SHAREHOLDERS
The following table sets forth information with respect to the beneficial ownership of our ordinary shares as at
February
19, 2025
for:
•
each person who is known by us to own beneficially more than 3% of our total outstanding ordinary shares;
•
each member of our Board of Directors and our Senior Management Team; and
•
all members of our Board of Directors and our Senior Management Team as a group.
Beneficial ownership is determined in accordance with the rules of the SEC, which may materially differ from other
rules applicable to us. The SEC rules generally attribute beneficial ownership of securities to persons who possess sole
or shared voting power or investment power with respect to those securities and include ordinary shares that can be
acquired within 60 days of
February 19, 2025
. The percentage ownership information shown in the table is based upon
60,990,857
ordinary shares outstanding as at
February 19, 2025
.
Except as otherwise indicated, all of the shares reflected in the table are ordinary shares and all persons listed below have
sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable
community property laws. The information is not necessarily indicative of beneficial ownership for any other purpose.
In computing the number of ordinary shares beneficially owned by a person and the percentage ownership of that person,
we deemed outstanding ordinary shares subject to options held by that person that are immediately exercisable or
exercisable within 60 days of
February 19, 2025
. We did not deem these shares outstanding, however, for the purpose of
computing the percentage ownership of any other person. The information in the table below is based on information
known to us or ascertained by us from public filings made by the shareholders.
|
147
|
||
|
Shares beneficially owned
|
||||
|
Name of beneficial owner
|
Number
|
Percentage
|
||
|
3% or Greater Shareholders:
|
||||
|
FMR LLC (1)
|
6,019,640.29
|
10.00
%
|
||
|
T. Rowe Price Group, Inc. (2)
|
5,822,086.00
|
9.70
%
|
||
|
Blackrock, Inc. (3)
|
3,658,398.00
|
6.11
%
|
||
|
4,200,942 (voting)
|
6.96 (voting)%
|
|||
|
Artisan Partners Limited Partnership (4)
|
3,015,243.00
|
5.00
%
|
||
|
Wellington Management Group LLP (5)
|
—
|
—
%
|
||
|
2,150,704 (voting)
|
3.62 (voting) %
|
|||
|
Capital Research and Management Company (6)
|
—
|
—
%
|
||
|
1,837,683 (voting)
|
3.07 (voting) %
|
|||
|
Janus Henderson Group plc (7)
|
1,784,723.00
|
3.02
%
|
||
|
Directors and Senior Management
|
||||
|
Tim Van Hauwermeiren (8)
|
* %
|
|||
|
Dr. Donald deBethizy (9)
|
* %
|
|||
|
Mr. Steve Krognes (10)
|
* %
|
|||
|
Mr. Peter Verhaeghe (11)
|
* %
|
|||
|
Dr. Pamela Klein (12)
|
* %
|
|||
|
Anthony Rosenberg (13)
|
* %
|
|||
|
James Daly (14)
|
* %
|
|||
|
Camilla Sylvest (15)
|
* %
|
|||
|
Ana Cespedes (16)
|
* %
|
|||
|
Brian Kotzin
|
—
%
|
|||
|
Karen Massey (17)
|
* %
|
|||
|
Karl Gubitz (18)
|
* %
|
|||
|
Luc Truyen (19)
|
* %
|
|||
|
Peter Ulrichts (20)
|
* %
|
|||
|
Arjen Lemmen (21)
|
* %
|
|||
|
Malini Moorthy (22)
|
* %
|
|||
|
Andria Wilk (23)
|
* %
|
|||
|
All executive officers and directors as a group (17 persons)
|
1.17
%
|
|||
•
Indicates beneficial ownership of less than 1% of the total outstanding ordinary shares.
1)
Based on the most recently available Schedule 13G filed with the SEC on February 12, 2025. According to its Schedule 13G, FMR LLC reported
having sole voting power over 5,708,605.90 ordinary shares and sole dispositive power over 6,019,640.29 ordinary shares. The Schedule 13G
contained information as of December 31, 2024 and may not reflect current holdings of the Company’s stock. Abigail P. Johnson is a director,
the chairman and the chief executive officer of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant
owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The
Johnson family group and all other Series B shareholders have entered into a shareholders' voting agreement under which all Series B voting
common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of
voting common shares and the execution of the shareholders' voting agreement, members of the Johnson family may be deemed, under the
Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. FMR LLC’s principal business office is located 245
Summer Street, Boston, MA 02210.
2)
Based on the most recently available Schedule 13G filed with the SEC on November 14, 2024. According to its Schedule 13G, T. Rowe Price
Associates, Inc. reported having sole voting power over 5,683,883 ADSs and sole dispositive power over 5,811,073 ADSs. The Schedule 13G
contained information as of September 30, 2024 and may not reflect current holdings of the Company’s stock. The address for T. Rowe Price
Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202.
3)
Based solely on the most recent transparency notification filed with Dutch the Authority for the Financial Markets (
Stichting Autoriteit
Financiële Markten
) (
AFM
) as of February 19, 2025. Consists of (a) 2,674,291 ordinary shares, 355 contracts for difference, and 1,010,752 stock
certificates (
certificaat van aandeel
) and (b) voting rights on (i) 3,084,810 ordinary shares, (ii) 512 contracts for difference, and 1,115,620 stock
certificates (
certificaat van aandeel
). Other information regarding this shareholder’s beneficial ownership of our shares is not known to us or, to
our knowledge, ascertainable from public filings.
4)
Based solely on the most recent transparency notification filed with the AFM as of February 19, 2025. Consists of 215,293 ordinary shares and
2,799,950 stock certificates (
certificaat van aandeel
). Other information regarding this shareholder’s beneficial ownership of our shares is not
known to us or, to our knowledge, ascertainable from public filings.
|
148
|
||
5)
Based solely on the most recent transparency notification filed with the AFM as of February 19, 2025. Consists of voting rights on 330,691
ADSs, 1,819,494 ordinary shares, and 519 total equity return swaps. Other information regarding this shareholder’s beneficial ownership of our
shares is not known to us or, to our knowledge, ascertainable from public filings.
6)
Based solely on the most recent transparency notification filed with the AFM as of February 19, 2025. Consists of voting rights on 206,694
ordinary shares and 1,630,989 ADSs. Other information regarding this shareholder’s beneficial ownership of our shares is not known to us or, to
our knowledge, ascertainable from public filings.
7)
Based solely on the most recent transparency notification filed with the AFM as of February 19, 2025. Consists of 10,882 ordinary shares and
1,773,841 ADSs. Other information regarding this shareholder’s beneficial ownership of our shares is not known to us or, to our knowledge,
ascertainable from public filings.
8)
Consists of (1) 67,088 ordinary shares (of which 14,343.69 ordinary shares are directly and indirectly held by Mr. Van Hauwermeiren and
52,744.31 ordinary shares are indirectly held by three of Mr. Van Hauwermeiren’s direct family members (being (i) his partner, Ms Vissers; (ii)
his daughter, Ms. F. Van Hauwermeiren; and (iii) his daughter, Ms. T. Van Hauwermeiren, who each hold the interest in these ordinary shares
through an entity, Stichting Administratiekantoor Cinclus, which entity in turn holds the interest in these ordinary shares through the Belgian civil
company (
société civile/burgerlijke maatschap
) “TVHNV”), and (2) 271,944 shares issuable upon the exercise of stock options that are
immediately exercisable or exercisable within 60 days of February 19, 2025.
9)
Consists of 837 ordinary shares and 42,700 shares issuable upon the exercise of stock options that are immediately exercisable or exercisable
within 60 days of February 19, 2025.
10)
Consists of 131 ordinary shares and 131 shares issuable upon the settlement of restricted stock units vesting within 60 days of February 19, 2025.
11)
Consists of 837 ordinary shares and 36,700 shares issuable upon the exercise of stock options that are immediately exercisable or exercisable
within 60 days of February 19, 2025.
12)
Consists of 837 ordinary shares and 20,200 shares issuable upon the exercise of stock options that are immediately exercisable or exercisable
within 60 days of February 19, 2025.
13)
Consists of 837 ordinary shares and 32,980 shares issuable upon the exercise of stock options that are immediately exercisable or exercisable
within 60 days of February 19, 2025.
14)
Consists of 837 ordinary shares and 12,700 shares issuable upon the exercise of stock options that are immediately exercisable or exercisable
within 60 days of February 19, 2025.
15)
Consists of 516 ordinary shares.
16)
Consists of 494 ordinary shares.
17)
Consists of 2,088 ordinary shares and 13,125 shares issuable upon the exercise of stock options that are immediately exercisable or exercisable
within 60 days of February 19, 2025.
18)
Consists of 2,670 ordinary shares and 47,417 shares issuable upon the exercise of stock options that are immediately exercisable or exercisable
within 60 days of February 19, 2025.
19)
Consists of 2,233 ordinary shares and 45,194 shares issuable upon the exercise of stock options that are immediately exercisable or exercisable
within 60 days of February 19, 2025.
20)
Consists of 1,292 ordinary shares and 28,411 shares issuable upon the exercise of stock options that are immediately exercisable or exercisable
within 60 days of February 19, 2025.
21)
Consists of 2,682 ordinary shares and 52,194 shares issuable upon the exercise of stock options that are immediately exercisable or exercisable
within 60 days of February 19, 2025.
22)
Consists of 1630 ordinary shares, 15,250 shares issuable upon the exercise of stock options that are immediately exercisable or exercisable within
60 days of February 19, 2025, and 1,350 shares issuable upon the settlement of restricted stock units vesting within 60 days of February 19, 2025.
23)
Consists of 600 ordinary shares and 12,172 shares issuable upon the exercise of stock options that are immediately exercisable or exercisable
within 60 days of February 19, 2025.
Each of our shareholders is entitled to one vote per ordinary share. None of the holders of our shares have different
voting rights from other holders of shares.
As of the date of this Annual Report, we are not directly or indirectly owned or controlled by any shareholder, whether
individually or acting in concert. We are not aware of any arrangement that may, at a subsequent date, result in a change
of control of the Company.
The number of record holders in the U.S. is not representative of the number of beneficial holders nor is it representative
of where such beneficial holders are resident since many of these ordinary shares were held by brokers or other
nominees. As of
February 19, 2025
, assuming that all of our ordinary shares represented by ADSs are held by residents
of the U.S., we estimate that approximately 52.18% of our outstanding ordinary shares were held in the U.S. by
approximately one institutional holder of record.
To our knowledge, and other than changes in percentage ownership as a result of the shares issued in connection with
our initial and follow-on U.S. public offerings or publicly disclosed in AFM filings and any amendments thereof,there
has been no significant change in the percentage ownership held by the major shareholders listed above.
149
B. RELATED PARTY TRANSACTIONS
Agreements with Our Senior Management Team
There are no arrangements or understandings in place with major shareholders, customers, suppliers or others pursuant to
which any member of our Board of Directors or Senior Management Team has been appointed.
Other than as set forth in this Annual Report, there are no arrangements or understandings in place with major
shareholders, customers, suppliers or others pursuant to which any member of our Board of Directors or Senior
Management Team has been appointed.
We have entered into a management agreement with Tim Van Hauwermeiren as our CEO, our sole executive director.
The key terms of his agreement are as follows:
|
Tim Van Hauwermeiren
|
|
|
Base Pay
|
|
|
Cash bonus
|
Maximum 60% of the base pay based on previously determined bonus targets
established by the Non-Executive Directors
|
|
Pension contributions (1)
|
$
29,118
|
|
Duration
|
Indefinite
|
(1)
Amounts shown represent pension contributions paid during the year ended
December 31, 2024
.
We may terminate Mr. Van Hauwermeiren’s services upon 18 months’ notice, or payment of 18 months’ pro-rated base
compensation in lieu of notice. Mr. Van Hauwermeiren would be entitled to the same payment in lieu of notice in the
event he terminates his services with us in circumstances in which it cannot reasonably be expected for him to continue
providing services to us (and after our failure to remedy such conditions after being provided at least 14 days’ notice).
Mr. Van Hauwermeiren would also be entitled to payment in lieu of notice in the event he terminated his services with
us in certain cases of our failure to comply with obligations under applicable law or his agreement (and after our failure
to remedy such non-compliance, if non-deliberate, after being provided at least 14 days’ notice). In these cases, there
will be a full acceleration of the vesting of any outstanding stock options held by Mr. Van Hauwermeiren. There will be
no notice period or payment in lieu of notice in certain cases of Mr. Van Hauwermeiren’s failure to comply with
obligations under applicable law or his agreement. Mr. Van Hauwermeiren may be dismissed immediately as an
executive director.
Karl Gubitz, our chief financial officer, has an employment contract with our subsidiary, argenx US Inc., for an
indefinite term.
Karen Massey, our chief operating officer has an employment contract with our subsidiary, argenx Switzerland SA, for
an indefinite term.
Peter Ulrichts, our chief scientific officer has an employment contract with our subsidiary, argenx BV, for an indefinite
term.
Arjen Lemmen, our vice president corporate development and strategy, has an employment contract with our subsidiary,
argenx BV, for an indefinite term. We may terminate his employment contract at any time, subject to a notice period and
a severance payment of at least 12 months. Mr. Lemmen entered into a secondment agreement with argenx BV, under
which Mr. Lemmen was seconded from argenx BV to argenx US Inc. in the U.S. from August 2022 until July 2024. In
connection with his secondment, Mr. Lemmen received a housing, a schooling and a cost of living allowance.
Andria Wilk, our global head of quality, has an employment contract with our subsidiary, argenx BV, for an indefinite
term.
Malini Moorthy, our general counsel has an employment contract with our subsidiary, argenx US, for an indefinite term.
Ms. Moorthy has also entered into a secondment agreement with argenx US, under which Ms. Moorthy was seconded
from argenx US to argenx BV and was based in Belgium for the period of April 1, 2023 through December 31, 2024.
This secondment was extended through December 31, 2026.
Luc Truyen, our head of research and development management operations and our chief medical officer, has an
employment contract with our subsidiary, argenx US Inc. for an indefinite term. Mr. Truyen entered into a secondment
agreement with argenx US Inc., under which Mr. Truyen has been seconded from argenx US Inc. to argenx BV and is
based in Belgium for the period of April 1, 2022 through November 30, 2026 (unless otherwise extended by the parties).
150
Indemnification Agreements
In connection with our initial U.S. public offering, we entered into indemnification agreements with each of our non-
executive directors and each member of our Senior Management Team. We have entered into such agreements with each
new non-executive director or member of our senior management when they have joined us since our initial U.S. public
offering. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to non-executive
directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the
opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore
unenforceable.
Transactions with Related Companies
From time to time, in the ordinary course of our business, we may contract for services from companies in which certain
of the members of our senior management or directors may serve as director or advisor. The costs of these services are
negotiated on an at arm’s length basis and none of these arrangements are material to us.
See also
“
Note 26 Related
Party Transactions
”
in our consolidated financial statements which are appended to our Annual Report for the period
ended December 31, 2024 and which are incorporated herein by reference.
Related Party Transactions Policy
In connection with our initial U.S. public offering, we entered into a related party transaction policy. Our Code of
Business Conduct and Ethics (Code of Conduct) and our Board Rules also include specific rules of transactions with
related parties.
C. INTERESTS OF EXPERTS AND COUNSEL
Not applicable.
ITEM 8. FINANCIAL INFORMATION
A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
Consolidated financial statements
Our consolidated financial statements, which were prepared in accordance with IFRS, as issued by the IASB, are
appended at the end of this Annual Report, starting at page F-1, and incorporated herein by reference.
Legal proceedings
From time to time we may become involved in legal, governmental or arbitration proceedings or be subject to claims
arising in the ordinary course of our business. Regardless of the outcome, litigation can have an adverse impact on us
because of defense and settlement costs, diversion of management resources and other factors. During the previous 12
months, there have not been any legal, governmental or arbitration proceedings (including any such proceedings which
are pending or threatened of which we are aware) which may have, or have had in the recent past, significant effects on
argenx and/or the Group’s financial position or profitability.
Dividend Distribution Policy
Our Board of Directors has declared a series of interim distributions on account of the Company’s freely distributable
reserves for such amounts as was required to pay up the aggregate nominal value of all such shares that were issued to
holders of vested RSUs, all in accordance with our Equity Incentive Plan. In accordance with Dutch law, our Board of
Directors prepared and filed an interim simplified balance sheet demonstrating that there were sufficient freely
distributable reserves for such interim distributions. Such interim simplified balance sheet was filed with the Dutch trade
register. The aggregate amount of these interim distributions amounted to approximately
€8,825
(
$9,170
) in
2024
.
Other than these interim distributions, we have not paid or declared any cash dividends on our ordinary shares, and we
do not anticipate paying any cash dividends in the foreseeable future. All of our outstanding shares have the same
dividend rights. We intend to retain all available funds and any future earnings to fund the development and expansion of
our business.
Even if future operations lead to significant levels of distributable profits, we currently intend that any earnings will be
reinvested in our business and that cash dividends will not be paid until we have an established revenue stream to
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support continuing cash dividends. In addition, payment of any future dividends to shareholders would be subject to
shareholder approval at a General Meeting, upon proposal of our Board of Directors, which proposal would be subject to
the approval of the majority of the Non-Executive Directors after taking into account various factors including our
business prospects, cash requirements, financial performance and new product development.
Our Articles of Association, as available on our website, contain the provision on the distribution of profits in article 20
(profits, distributions and losses).
B. SIGNIFICANT CHANGES
For details regarding events subsequent to the reporting period, please see “
Note 31 — Events After the Balance Sheet
Date
” in our consolidated financial statements, which are appended to our Annual Report for the period ended
December 31, 2024
and incorporated herein by reference.
ITEM 9. THE OFFER AND LISTING
A. OFFER AND LISTING DETAILS
C. MARKETS
The ADSs have been listed on Nasdaq under the symbol “
ARGX
” since May 18, 2017, and our ordinary shares have
been listed on Euronext Brussels under the symbol “
ARGX
” since July 2014.
B. PLAN OF DISTRIBUTION
Not applicable.
D. SELLING SHAREHOLDERS
Not applicable.
E. DILUTION
Not applicable.
F. EXPENSES OF THE ISSUE
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. SHARE CAPITAL
Not applicable.
B. MEMORANDUM AND ARTICLES OF ASSOCIATION
Corporate Objectives
Directors
Conflict of Interest
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Remuneration
Borrowing Powers
Rights, Preferences and Restrictions of Shares
Dividends and Other Distributions
Voting rights
Please see “
Exhibit 2.3—Shareholders’ Meetings and Consents—Quorum and Voting Requirements
” and “
Exhibit 2.3 —
Comparison of Dutch Corporate Law, our Articles of Association and Board of Directors By-Laws and DGCL
— Voting
Rights to Share in Company Profits
Please see “
Exhibit 2.3 — Dividends and Other Distributions — Rights to Share in Company Profits
”, incorporated
herein by reference.
Right to Surplus In the Event of Liquidation
Please see “
Exhibit 2.3 — Dividends and Other Distributions — Right to Surplus In the Event of Liquidation
”,
incorporated herein by reference.
Redemption Provisions
Please see “
Exhibit 2.3 — Dividends and Other Distributions
—
Redemption Provisions
”, incorporated herein by
reference.
Amendment of Articles of Association
Please see “
Exhibit 2.3 — Articles of Association and Dutch Law — Dividends and Other Distributions — Redemption
Provisions
”, incorporated herein by reference.
Shareholders’ Meetings and Consents
General Meeting, Voting Rights and Admission
General Meetings are held at the place where the Company has its official seat (being Amsterdam) or at Schiphol Airport
(municipality of Haarlemmermeer), the Netherlands. The Articles of Association provide that at least one annual General
Meeting shall be held within six months after the close of each fiscal year. Additional extraordinary General Meetings
may be held whenever our Board of Directors deems such to be necessary. Shareholders representing alone or in
aggregate at least one-tenth of our issued and outstanding share capital may, pursuant to the Dutch Civil Code, request
that a General Meeting be convened. If our Board of Directors has not taken the steps necessary to ensure that a General
Meeting will be held within the relevant statutory period after the request, the requesting persons may, at his/her/their
request, be authorized by a court in preliminary relief proceedings to convene a General Meeting.
We will give notice of any General Meeting by publication on our website and furthermore, to the extent required, in
another manner in accordance with the applicable stock exchange regulations. The notice convening any General
Meeting must include, among other items, an agenda indicating the place and date of the meeting, the items for
discussion and voting, the proceedings for registration including the registration date, as well as any proposals for the
agenda made by the Board of Directors or shareholders holding at least 3% of the issued share capital. For an annual
General Meeting, the agenda shall include, among other things, the adoption of the annual accounts, appropriation of our
profits and proposals relating to the composition of our Board of Directors.
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Pursuant to Dutch law, shareholders holding at least 3% of our issued and outstanding share capital have a right to
request our Board of Directors to include items on the agenda of any General Meeting. Our Board of Directors must
agree to these requests, provided that (i) the request was made in writing and motivated, and (ii) the request was received
by the chair person of our Board of Directors at least 60 days prior to the date of a General Meeting.
No resolutions shall be adopted on items other than those which have been included in the agenda. In accordance with
the DCGC, a shareholder may include an item on the agenda only after consulting our Board of Directors in that respect.
If one or more shareholders intends to request that an item be put on the agenda that may result in a change in the
Company’s strategy, our Board of Directors may invoke a response time of a maximum of 180 days until the day of a
General Meeting. In addition, pursuant to the Dutch Civil Code, our Board of Directors may invoke a statutory cooling-
off period up to a maximum of 250 days (
wettelijke bedenktijd
). For the Company, this will apply in case:
•
shareholders request our Board of Directors to have a General Meeting consider a proposal for the appointment,
suspension or dismissal of one or more directors, or a proposal for the amendment of one or more provisions in the
Articles of Association relating thereto; or
•
a public offering of shares in the capital of the Company is announced or made without the bidder and the Company
having been reached agreement about the offering; and
•
only if our Board of Directors also considers the relevant situation to be substantially contrary to the interests of the
Company and its affiliated enterprises.
If our Board of Directors invokes such a cooling-off period, this causes the powers of the General Meeting to appoint,
suspend or dismiss directors (and to amend the Articles of Association in this respect) to be suspended.
General Meetings are presided over by the chairperson of the Board of Directors or, if he/she is absent, by the vice
chairperson of the Board of Directors. If both the chairperson and the vice chairperson are absent, the Non-Executive
Directors present at the General Meeting shall appoint one of them to be chairperson. In General Meetings, members of
the Board of Directors have an advisory vote. The chairperson of the General Meeting may decide at his/her discretion to
admit other persons to the General Meeting.
The external auditor of the Company shall attend a General Meeting in which the annual accounts are discussed.
Our Board of Directors must give notice of a General Meeting, by at least such number of days prior to the day of the
meeting as required by Dutch law, which is currently 42 days.
Shareholders (as well as other persons with voting rights or meeting rights) may attend a General Meeting, to address the
General Meeting and, in so far as they have such right, to exercise voting rights pro rata to its shareholding, either in
person or by proxy. Shareholders may exercise these rights, if they are the holders of shares on the registration date
which is currently the 28th day before the day of a General Meeting, and they or their proxy have notified our Board of
Directors of their intention to attend a General Meeting in writing at the address and by the date specified in the notice of
said meeting.
All shareholders, and each usufructuary and pledgee to whom the right to vote on our shares accrues, are entitled, in
person or represented by a proxy authorized in writing, to attend and address a General Meeting and exercise voting
rights pro rata to their shareholding. Shareholders may exercise their rights if they are the holders of our shares on the
record date as required by Dutch law, which is currently the 28th day before the day of a General Meeting, and they or
their proxy have notified us of their intention to attend such General Meeting in writing or by any other electronic means
that can be reproduced on paper ultimately at a date set for that purpose by our Board of Directors which date may not be
earlier than the seventh day prior to such General Meeting, specifying such person’s name and the number of shares for
which such person may exercise the voting rights and/or meeting rights at such General Meeting. The convocation notice
shall state the record date and the manner in which the persons entitled to attend a General Meeting may register and
exercise their rights.
Each ordinary share confers the right on the holder to cast one vote at the General Meeting. Shareholders may vote by
proxy. The voting rights attached to any shares held by us are suspended as long as they are held in treasury.
Nonetheless, the holders of a right of usufruct (
vruchtgebruik
) in shares belonging to another and the holders of a right of
pledge in respect of ordinary shares held by us are not excluded from any right they may have to vote on such ordinary
shares, if the right of usufruct (
vruchtgebruik
) or the right of pledge was granted prior to the time such ordinary share
was acquired by us. We may not cast votes in respect of a share in respect of which there is a right of usufruct
(
vruchtgebruik
) or a right of pledge. Shares which are not entitled to voting rights pursuant to the preceding sentences
will not be taken into account for the purpose of determining the number of shareholders that vote and that are present or
represented, or the amount of the share capital that is provided or that is represented at a General Meeting.
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Decisions of the General Meeting are taken by an absolute majority of votes cast, except where Dutch law or the Articles
of Association provide for a qualified majority or unanimity. In accordance with Dutch law and generally accepted
business practices, our Articles of Association do not provide quorum requirements generally applicable to a General
Meeting. To this extent, our practice varies from the requirement of Nasdaq Listing Rule 5620(c), which requires an
issuer to provide in its bylaws for a generally applicable quorum, and that such quorum may not be less than one-third of
the outstanding voting stock.
One General Meeting was held in
2024
.
At the
2024
General Meeting, our annual report and annual accounts for the year ended December 31,
2023
were
approved, the allocation of losses of the year ended December 31, 2023 to the retained earnings of the Company was
approved, Dr. Brian Kotzin was appointed as a Non-Executive Director to the Board of Directors for a term of four
years, Mr. Peter Verhaeghe was reappointed as a Non-Executive Director to the Board of Directors for a term of two
years, Dr. Pamela Klein was reappointed as a Non-Executive Director to the Board of Directors for a term of two years,
the amendment of the Articles of Association was approved, the Board of Directors was authorized to issue shares and
grant rights to subscribe for shares in our share capital for up to 10% of the outstanding share capital at the date of the
meeting and for a period of 18 months from the meeting and to limit or exclude statutory pre-emptive rights with regard
to such (rights to subscribe for) shares, the appointment of
Deloitte Accountants B.V.
as the Company’s auditor for the
year ended December 31,
2024
was approved, and the appointment of EY Accountants B.V. as the Company’s auditor
for the year ended December 31, 2025 was approved.
Limitations on the Right to Own Securities
Please see “
Exhibit 2.3—Limitations on the Right to Own Securities
”, incorporated herein by reference.
Comparison of Dutch Corporation Law, our Articles of Association and Board By-Laws and U.S. Corporate Law
Please see “
Exhibit 2.3—Comparison of Dutch Corporate Law, our Articles of Association and Board of Directors By-
Laws and DGCL
”, incorporated herein by reference.
Change in the Capital
C. MATERIAL CONTRACTS
For additional information on our material contracts, please see
“
Item 4
—
Information on the Company”
,
“
Item 7.A.
—
D. EXCHANGE CONTROLS
Under Dutch law, subject to the 1977 Sanction Act (
Sanctiewet 1977
) or otherwise by international sanctions, there are
no exchange control restrictions on investments in, or payments on, shares (except as to cash amounts). There are no
special restrictions in our Articles of Association or Dutch law that limit the right of shareholders who are not citizens or
residents of the Netherlands to hold or vote shares.
E. TAXATION
This summary does not consider your particular circumstances. We urge you to consult your own independent tax
advisors about the income, capital gains and/or transfer tax consequences to you in light of your particular
circumstances of purchasing, holding and disposing of ordinary shares or ADSs.
Certain Material U.S. Federal Income Tax Considerations for U.S. Holders
The following discussion is a summary under present law of certain material U.S. federal income tax considerations
relating to the ownership and disposition of ADSs by a U.S. holder (as defined below). This summary addresses only the
U.S. federal income tax considerations for U.S. holders that hold ADSs as capital assets (generally, property held for
investment) and use the U.S. dollar as their functional currency. This summary does not address all U.S. federal income
tax matters that may be relevant to a particular U.S. holder and is not a substitute for tax advice. This summary does not
address tax considerations applicable to a holder of ADSs that may be subject to special tax rules including, without
limitation, banks, financial institutions or insurance companies, brokers, dealers or traders in securities, currencies,
commodities, or notional principal contracts, traders in securities that elect to mark-to-market, tax-exempt entities or
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organizations, including “individual retirement accounts” or “Roth IRAs”, real estate investment trusts, regulated
investment companies, persons that hold the ADSs as part of a “hedging,” “integrated” or “conversion” transaction or as
a position in a “straddle”, partnerships (including entities or arrangements classified as partnerships for U.S. federal
income tax purposes) or other pass-through entities (including S-corporations), or persons that will hold the ADSs
through such an entity, certain former citizens or long-term residents of the United States, persons that received the
ADSs as compensation for the performance of services, persons subject to special tax accounting rules as a result of any
item of gross income with respect to the shares being taken into account in an applicable financial statement, and holders
that own directly, indirectly, or through attribution 10% or more of the voting power or value of our ordinary shares and
ADSs. This summary does not address U.S. federal taxes other than the income tax (such as the Medicare surtax on net
investment income, the estate, gift, or alternative minimum tax), any election to apply Section 1400Z-2 of the U.S.
Internal Revenue Code of 1986, as amended (the Code) to gains recognized with respect to ADSs, or any U.S. state,
local, or non-U.S. tax considerations of the ownership and disposition of ADSs.
For the purposes of this summary, a “U.S. holder” is a beneficial owner of ADSs that is (or is treated as), for U.S. federal
income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation, or any other
entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the
United States, any state thereof, or the District of Columbia, (iii) an estate, the income of which is subject to U.S. federal
income taxation regardless of its source, or a trust, if a court within the United States is able to exercise primary
supervision over its administration and one or more U.S. persons have the authority to control all of the substantial
decisions of such trust.
If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds
ADSs, the U.S. federal income tax consequences relating to an investment in those ADSs will depend in part upon the
status of the partner and the activities of the partnership. A partnership that holds ADSs should consult its tax advisor
regarding the U.S. federal income tax considerations for it and for its partners of owning and disposing of ADSs in its
and their particular circumstances.
In general, a U.S. holder that owns ADSs will be treated as the beneficial owner of the underlying shares represented by
those ADSs for U.S. federal income tax purposes. Accordingly, no gain or loss will generally be recognized if a U.S.
holder exchanges ADSs for the underlying shares represented by those ADSs. Persons considering an investment in the
ADSs should consult their own tax advisors as to the particular tax consequences applicable to them relating to the
ownership and disposition of ADSs, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax
laws.
Distributions
Although we do not currently plan to pay dividends, and subject to the discussion under
“
Item 10.E.
—
Taxation
—
Certain Material U.S. Federal Income Tax Considerations for U.S. Holders
—
Passive Foreign Investment Company
Considerations
”
below, the gross amount of distributions paid with respect to our ordinary shares including Dutch or
Belgian tax withheld therefrom, if any (other than pro rata distribution), generally will be included in a U.S. holder’s
gross income as foreign source ordinary dividend income when actually or constructively received to the extent such
distribution is paid out of our current and accumulated earnings and profits as determined under U.S. federal income tax
principles. Distributions in excess of our current and accumulated earnings and profits will be treated as a non-taxable
return of capital and will be applied against and reduce, the U.S. holder’s adjusted tax basis in ADSs (but not below
zero) and distributions in excess of earnings and profits and a U.S. holder’s adjusted tax basis will generally be taxable to
the U.S. holder as either long-term or short-term capital gain depending upon whether the U.S. holder has held the ADSs
for more than one year as of the time such distribution is received. However, since we do not calculate our earnings and
profits under U.S. federal income tax principles, it is expected that any distribution will be reported as a dividend, even if
that distribution would otherwise be treated as a non-taxable return of capital or as capital gain.
Our dividends will not be eligible for the dividends-received deduction generally allowed to U.S. corporations.
Dividends paid to non-corporate U.S. holders that satisfy a minimum holding period (during which they are not
protected from the risk of loss) and certain other requirements may qualify for the preferential favorable tax rates
applicable to qualified dividend income, provided that we are a “qualified foreign corporation” and we are not a PFIC as
to the non-corporate U.S. holder in the taxable year of the dividend or the preceding taxable year. A qualified foreign
corporation includes a non-U.S. corporation that is eligible for the benefits of a comprehensive income tax treaties with
the United States. A non-U.S. corporation also will be considered to be a qualified foreign corporation with respect to
any dividend it pays on shares which are readily tradable on an established securities market in the United States. Our
ADSs are listed on Nasdaq, which is an established securities market in the United States, and we expect our ADSs to be
readily tradable on Nasdaq. However, there can be no assurance that the ADSs will be considered readily tradable on an
established securities market in the United States in any taxable year. U.S. holders should consult their own tax advisors
regarding the application of these rules given their particular circumstances.
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If dividends are subject to Dutch or Belgian withholding tax, a U.S. holder may be entitled, subject to generally
applicable limitations, to claim a U.S. foreign tax credit for Dutch or Belgian withholding tax imposed at the appropriate
rate. U.S. holders who do not elect to claim a credit for any foreign income taxes paid or accrued during the taxable year
may instead claim a deduction of such taxes. The rules relating to the foreign tax credit are complex and recent changes
to the foreign tax credit rules that apply to foreign taxes paid or accrued in taxable years beginning after December 27,
2021 introduced additional requirements and limitations. Each U.S. holder should consult its own tax advisors regarding
the foreign tax credit rules.
In general, the amount of a distribution paid to a U.S. holder in a foreign currency will be the dollar value of the foreign
currency calculated by reference to the applicable exchange rate on the day the U.S. holder receives the distribution,
regardless of whether the foreign currency is converted into USDs at that time. Any foreign currency gain or loss a U.S.
holder realizes on a subsequent conversion of foreign currency into USDs will be U.S. source ordinary income or loss. If
dividends received in a foreign currency are converted into USDs on the day they are received, a U.S. holder should not
be required to recognize foreign currency gain or loss in respect of the dividend.
Sale, Exchange or Other Taxable Disposition of ADSs
Subject to the discussion under
“
Item 10.E.
—
Taxation
—
Certain Material U.S. Federal Income Tax Considerations for
U.S. Holders
—
Passive Foreign Investment Company Considerations
”
below, a U.S. holder will generally recognize
capital gain or loss on the sale, exchange or other taxable disposition of ADSs in an amount equal to the difference
between the amount realized from such sale or exchange and the U.S. holder’s adjusted basis in the ADSs, each amount
determined in USD. The adjusted tax basis in ADSs generally will be equal to the USD cost of such ADSs. Any such
capital gain or loss generally will be long-term capital gain or loss if the U.S. holder’s holding period for such ADSs
exceeds one year as of the date of sale or other disposition. Long-term capital realized by a non-corporate U.S. holder is
generally eligible for a preferential reduced rates. The deductibility of capital losses for U.S. federal income tax purposes
is subject to certain limitations. Any such gain or loss that a U.S. holder recognizes generally will be treated as U.S.
source income or loss for foreign tax credit limitation purposes.
Passive Foreign Investment Company Considerations
In general, a non-U.S. corporation will be classified as a passive foreign investment company, or PFIC, for any taxable
year in which, after applying certain look-through rules with respect to certain dividends, rents, interest or royalties
received from its affiliates and taking into account its proportionate share of the income and assets of its 25% or more
owned subsidiaries, either: (i) at least 75% of its gross income is “passive income” or (ii) at least 50% of the average
quarterly value of its total gross assets is attributable to cash in excess of working capital requirements or assets that
produce “passive income” or are held for the production of “passive income”. Passive income for this purpose generally
includes dividends, interest, royalties, rents, gains from commodities and securities transactions, the excess of gains over
losses from the disposition of assets which produce passive income. While we are treated as a publicly traded company
for these purposes, the value of our assets, including goodwill and other intangibles, will be based on their fair market
value, which will depend on the market value of our ordinary shares and ADSs, which are subject to change.
Based on our historic and anticipated operations, the composition of our income and the projected composition and
estimated fair market values of our assets, we do not believe that we were a PFIC for our most recent taxable year and do
not expect to be classified as a PFIC for the current taxable year or for the foreseeable future. However, our possible
status as a PFIC is a factual determination made annually after the close of each taxable year and, therefore, may be
subject to change. Accordingly, there can be no assurance that we will not be a PFIC for any year in which a U.S. holder
holds ADSs. The Company does not intend to provide any annual assessments of its PFIC status.
If we were to be classified as a PFIC for any taxable year during which a U.S. holder owns ADSs, gain recognized on a
sale or other disposition (including certain pledges) of such U.S. holder’s ADSs would be allocated ratably over such
U.S. holder’s holding period. Amounts allocated to the taxable year of the sale or disposition and to any year before we
became a PFIC would be taxed as ordinary income and the amount allocated to each other taxable year would be subject
to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest
charge will be imposed on the resulting tax liability for each such year. In addition, to the extent that distributions
received by a U.S. holder on its ADSs in any taxable year exceed 125% of the average of the annual distributions on
such holder’s ADSs received during the preceding three taxable years (or, if shorter, the U.S. holder’s holding period),
such excess distributions will be subject to taxation in the same manner. Furthermore, dividends that are not excess
distributions would not be eligible for the preferential tax rate applicable to qualified dividend income received by
individuals and certain other non-corporate persons.
If the Company is a PFIC for any taxable year during which you own ADSs, the Company will generally continue to be
treated as a PFIC with respect to you for all succeeding years during which you own the ADSs, even if the Company
ceases to meet the threshold requirements for PFIC status. Certain elections may be available that will result in
alternative treatments (such as mark-to-market treatment) of the Shares. U.S. holders should consult their own tax
advisors concerning the Company’s possible PFIC status and the consequences to them if the Company were a PFIC for
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any taxable year, including whether any of these elections will be available, and, if so, what the consequences of the
alternative treatments will be in your particular circumstances.
Backup Withholding and Information Reporting
U.S. holders generally will be subject to information reporting requirements with respect to dividends on ADSs and on
the proceeds from the sale, exchange or disposition of the ADSs that are paid within the United States or through U.S.-
related financial intermediaries, unless the U.S. holder is a corporation or other “exempt recipient.” In addition, U.S.
holders may be subject to backup withholding on such payments, unless the U.S. holder provides a correct taxpayer
identification number and a duly executed IRS Form W-9 or otherwise establishes an exemption. Backup withholding is
not an additional tax, and the amount of any backup withholding will be allowed as a credit against a U.S. holder’s U.S.
federal income tax liability and may entitle such holder to a refund, provided that the required information is timely
furnished to the IRS.
Foreign Asset Reporting
Certain U.S. holders who are individuals and certain entities controlled by individuals may be required to report
information relating to an interest in ADSs, subject to certain exceptions (including an exception for shares held in
accounts maintained by U.S. financial institutions) by filing IRS Form 8938 (Statement of Specified Foreign Financial
Assets) with their federal income tax return. Investors who fail to report required information could become subject to
substantial penalties. U.S. holders are urged to consult their tax advisors regarding their information reporting
obligations, if any, with respect to their ownership and disposition of the ADSs.
Material Dutch Tax Consequences
The following summary outlines certain material Dutch tax consequences in connection with the acquisition, ownership
and disposal of the ADSs. All references in this summary to the Netherlands and Dutch law are to the European part of
the Kingdom of the Netherlands and its law, respectively, only. The summary does not purport to present any
comprehensive or complete picture of all Dutch tax aspects that could be of relevance to the acquisition, ownership and
disposal of the ADSs by a (prospective) holder of the ADSs. Depending on the particular situation of a holder of ADSs,
this summary may not describe all potentially relevant Dutch tax consequences in light of such a holder of
ADSs’ (specific) circumstances. The summary is based on the tax laws and practice of the Netherlands as in effect on the
date of this Annual Report, which are subject to changes that could prospectively or retrospectively affect the Dutch tax
consequences.
This summary does not address the Dutch tax consequences for a holder of ADSs that is considered to be affiliated
(
gelieerd
) to the Company within the meaning of the Dutch Withholding Tax Act 2021 (
Wet bronbelasting 2021
).
Generally, a holder of ADSs is considered to be affiliated to the Company for these purposes if (i) it has a qualifying
interest in the Company, (ii) the Company has a qualifying interest in such party, or (iii) a third party has a qualifying
interest in both the Company and such party. A party is equated with any qualifying unity (
kwalificerende eenheid
) of
parties of which it forms part. A qualifying unity is defined as entities that have been established and/or are acting jointly
with the primary purpose, or one of the primary purposes, to avoid the imposition of tax on one or more of such entities,
for example where the controlling interest (to be) held is divided into various non-controlling interests with the primary
purpose, or one of the primary purposes, to avoid the aforementioned tax. A qualifying interest is an interest that allows
the holder to have a decisive influence over the other party’s decisions, in such a way that it is able to determine the
activities of the other party. A party is in any case considered to have a qualifying interest in another party if it (directly
or indirectly) owns more than 50 per cent. of the voting rights in such other party.
For purposes of Dutch income and corporate income tax, shares, or certain other assets, which may include depositary
receipts in respect of shares, legally owned by a third party such as a trustee, foundation or similar entity or arrangement,
a “Third Party”, may under certain circumstances have to be allocated to the (deemed) settlor, grantor or similar
originator, the “Settlor”, or, upon the death of the Settlor, such Settlor’s beneficiaries, the “Beneficiaries”, in proportion
to their entitlement to the estate of the Settlor of such trust or similar arrangement, the “Separated Private Assets”.
The summary does not address the Dutch tax consequences of a holder of the ADSs who is an individual and who has a
substantial interest (
aanmerkelijk belang
) in the Company. Generally, a holder of the ADSs will have a substantial
interest in the Company if such holder of the ADSs, whether alone or together with such holder’s spouse or partner and/
or certain other close relatives, holds directly or indirectly, or as Settlor or Beneficiary of Separated Private Assets (i) (x)
the ownership of, (y) certain other rights, such as usufruct, over, or (z) rights to acquire (whether or not already issued),
shares (including the ADSs) representing 5% or more of the total issued and outstanding capital (or the issued and
outstanding capital of any class of shares) of the Company or (ii) (x) the ownership of, or (y) certain other rights, such as
usufruct over, profit participating certificates (
winstbewijzen
) that relate to 5% or more of the annual profit of the
Company or to 5% or more of the liquidation proceeds of the Company.
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In addition, a holder of the ADSs has a substantial interest in the Company if such holder, whether alone or together with
such holder’s spouse or partner and/or certain other close relatives, has the ownership of, or other rights over, shares, or
depositary receipts in respect of shares, in, or profit certificates issued by, the Company that represent less than 5% of the
relevant aggregate that either (a) qualified as part of a substantial interest as set forth above and where shares, or
depositary receipts in respect of shares, profit certificates and/or rights there over have been, or are deemed to have been,
partially disposed of, or (b) have been acquired as part of a transaction that qualified for non-recognition of gain
treatment.
Furthermore, this summary does not address the Dutch tax consequences of a holder of the ADSs who:
•
is an individual and receives income or realizes capital gains in respect of the ADSs in connection with such holder’s
employment activities or in such holder’s capacity as (former) board member or (former) supervisory board member;
•
is a resident of any non-European part of the Kingdom of the Netherlands; or
•
falls within the scope of the Dutch Minimum Taxation Act 2024 (
Wet minimumbelasting 2024
).
Dividend Withholding Tax
General
The Company is generally required to withhold dividend withholding tax imposed by the Netherlands at a rate of 15%
on dividends distributed by the Company in respect of our ordinary shares underlying the ADSs. The expression
“dividends distributed by the Company” as used herein includes, but is not limited to:
(a)
distributions in cash or in kind, deemed and constructive distributions and repayments of paid-in capital (
gestort
kapitaal
) not recognized for Dutch dividend withholding tax purposes;
(b)
liquidation proceeds, proceeds of redemption of our ordinary shares or, as a rule, consideration for the repurchase of
our ordinary shares by the Company in excess of the average paid-in capital recognized for Dutch dividend
withholding tax purposes;
(c)
the par value of our ordinary shares issued to a holder of our ordinary shares or an increase of the par value of our
ordinary shares, to the extent that it does not appear that a contribution, recognized for Dutch dividend withholding
tax purposes, has been made or will be made; and
(d)
partial repayment of paid-in capital, recognized for Dutch dividend withholding tax purposes, if and to the extent that
there are net profits (
zuivere winst
), unless (i) the shareholders at a General Meeting have resolved in advance to
make such repayment and (ii) the par value of our ordinary shares concerned has been reduced by an equal amount
by way of an amendment of our articles of association.
Holders of the ADSs Resident in the Netherlands
A holder of the ADSs that is an individual that is resident or deemed to be resident in the Netherlands for Dutch tax
purposes is generally entitled, subject to the anti-dividend stripping rules described below, to a full credit against its
income tax liability, or a full refund, of the Dutch dividend withholding tax.
A holder of the ADSs that is a legal entity that is resident or deemed to be resident in the Netherlands for Dutch tax
purposes is generally entitled, subject to the anti-dividend stripping rules described below, to a full credit against its
corporate income tax liability of the Dutch dividend withholding tax. If and to the extent such legal entity cannot credit
the full amount of Dutch dividend withholding tax in a given year, the Dutch dividend withholding tax may be carried
forward and credited against its corporate income tax liability in subsequent years (without time limitation).
A holder of the ADSs that is a legal entity that is resident or deemed to be resident in the Netherlands for Dutch tax
purposes that is exempt from Dutch corporate income tax but that is not qualifying exempt investment institution
(
vrijgestelde beleggingsinstelling
), is generally entitled, subject to the anti-dividend stripping rules described below, to
an exemption at source (subject to the completion of necessary procedural formalities) or a full refund of Dutch dividend
withholding tax on dividends received.
The same generally applies to holders of the ADSs that are neither resident nor deemed to be resident in the Netherlands
for Dutch tax purposes if the ADSs are attributable to a permanent establishment in the Netherlands of such non-resident
holder.
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Holders of the ADSs Resident Outside the Netherlands
A holder of the ADSs that is resident in a country for tax purposes with which the Netherlands has a tax treaty in effect,
may, depending on the terms of such tax treaty and subject to the anti-dividend stripping rules described below, be
eligible for a full or partial exemption from, or full or partial refund of, Dutch dividend withholding tax on dividends
received.
A holder of the ADSs, that is a legal entity (a) tax resident in (i) an EU Member State, (ii) Iceland, Norway or
Liechtenstein, or (iii) a country with which the Netherlands has concluded a tax treaty that includes an article on
dividends and (b) that is in its state of residence under the terms of a tax treaty concluded with a third state, not
considered to be resident for tax purposes in a country with which the Netherlands has not concluded a tax treaty that
includes an article on dividends (i.e., not an EU Member State, Iceland, Norway or Liechtenstein), is generally entitled,
subject to the anti-abuse rules and the anti-dividend stripping rules described below, to a full exemption from Dutch
dividend withholding tax on dividends received if it holds an interest of at least 5% (in shares or, in certain cases, in
voting rights) in the Company or if it holds an interest of less than 5%, in either case where, had the holder of the ADSs
been a Dutch resident, it would have had the benefit of the participation exemption (this may include a situation where
another related party holds an interest of 5% or more in the Company).
The full exemption from Dutch dividend withholding tax on dividends received by a holder of the ADSs, that is a legal
entity (a) tax resident in (i) an EU Member State, (ii) Iceland, Norway or Liechtenstein, or (iii) a country with which the
Netherlands has concluded a tax treaty that includes an article on dividends is not granted if (x) the interest held by such
holder (i) is held with the avoidance of Dutch dividend withholding tax of another person as (one of) the main purpose(s)
and (ii) forms part of an artificial structure or series of structures (such as structures which are not put into place for valid
business reasons reflecting economic reality), or (y) the holder of ADSs has a similar function to a qualifying investment
institution (
fiscale beleggingsinstelling
) or a qualifying exempt investment institution (
vrijgestelde beleggingsinstelling
).
A holder of the ADSs, that is an entity tax resident in (i) an EU Member State or (ii) Iceland, Norway or Liechtenstein,
or (iii) in a jurisdiction which has an arrangement for the exchange of tax information with the Netherlands (and such
holder as described under (iii) holds the ADSs as a portfolio investment (i.e., such holding is not acquired with a view to
the establishment or maintenance of lasting and direct economic links between the holder of the ADSs and the Company
and does not allow the holder of the ADSs to participate effectively in the management or control of the Company)),
which is exempt from tax in its country of residence and does not have a similar function to a qualifying investment
institution (
fiscale beleggingsinstelling
) or a qualifying exempt investment institution (
vrijgestelde beleggingsinstelling
),
and that would have been exempt from Dutch corporate income tax if it had been a resident of the Netherlands, is
generally entitled, subject to the anti-dividend stripping rules described below, to an exemption at source (subject to the
completion of necessary procedural formalities) or a full refund of Dutch dividend withholding tax on dividends
received. This exemption of full refund will in general benefit certain foreign pension funds, government agencies and
certain government controlled commercial entities.
No exemption, reduction, credit or refund of Dutch dividend withholding tax will be granted if the recipient of the
dividend paid by the Company is not considered the beneficial owner (
uiteindelijk gerechtigde
) of the dividend. A
recipient of a dividend is in any case not considered the beneficial owner of the dividend pursuant to the anti-dividend
stripping rules if, as a consequence of a combination of transactions and tested at group level, (i) a person (other than the
holder of the dividend coupon), directly or indirectly, partly or wholly benefits from the dividend, (ii) such person
directly or indirectly retains or acquires a comparable interest in the ADSs, and (iii) such person is entitled to a less
favorable exemption, refund or credit of dividend withholding tax than the recipient of the dividend distribution. The
term “combination of transactions” includes transactions that have been entered into by parties related to the recipient of
the dividend, that have been entered into in the anonymity of a regulated stock market, the sole acquisition of one or
more dividend coupons and the establishment of short-term rights or enjoyment on the ADSs (e.g., usufruct). The burden
of proof to demonstrate that the recipient of a dividend qualifies as the beneficial owner of such dividend lies with the
recipient, unless the amount of the withheld dividend withholding tax in respect of such recipient in the relevant calendar
is €1,000 or less.
Holders of the ADSs Resident in the U.S.
Dividends distributed by the Company to U.S. resident holders of the ADSs that are eligible for benefits under the
Convention between the Netherlands and the U.S. for the avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes and Income, dated December 18, 1992 as amended by the protocol of March 8, 2004 (
U.S.
Tax Treaty
), generally will be entitled to a reduced dividend withholding tax rate of 5% in case of certain U.S. corporate
shareholders owning at least 10% of the Company’s total voting power. Certain U.S. pension funds and tax-exempt
organizations may qualify for a complete exemption from Dutch dividend withholding tax.
Under the U.S. Tax Treaty such benefits are generally available to U.S. residents if such resident is the beneficial owner
of the dividends, provided that such shareholder does not have an enterprise or an interest in an enterprise that is, in
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whole or in part, carried on through a permanent establishment or permanent representative in the Netherlands and to
which enterprise or part of an enterprise the ADSs are attributable. A person may, however, not claim the benefits of the
U.S. Tax Treaty if such person’s entitlement to such benefits is limited by the provisions of Article 26 (the limitation on
benefits provision) of the U.S. Tax Treaty. The reduced dividend withholding tax rate can generally be applied at source
upon the distribution of the dividends, provided that the proper forms have been filed in advance of the distribution. In
the case of certain tax-exempt organizations, as a general rule, the so-called refund method applies; only when certain
administrative conditions have been fulfilled may such tax-exempt organization use the exemption method.
Irrespective of meeting the conditions of the relevant provisions of the U.S. Tax Treaty, dividends distributed by the
Company to a U.S. resident holder (i) who is a legal entity resident in the U.S. and (ii) that is in the U.S. under the terms
of a tax treaty with a third state not considered to be resident for tax purposes in a country with which the Netherlands
has not concluded a tax treaty that includes an article on dividends (not being an EU Member State, Iceland, Norway or
Liechtenstein), are generally, subject to the anti-dividend stripping rules described above, fully exempt from Dutch
dividend withholding tax if the U.S. resident holder of ADSs holds an interest of at least 5% in the Company or if it
holds an interest of less than 5%, in either case where, had the holder of ADSs been a Dutch resident, it would have had
the benefit of the participation exemption (this may include a situation where another related party holds an interest of
5% or more in the Company). The full exemption from Dutch dividend withholding tax on dividends received by a
U.S. holder of ADSs that is a legal entity is however not granted if (x) the interest held by such U.S. holder (i) is held
with the avoidance of Dutch dividend withholding tax of another person as (one of) the main purpose(s) and (ii) forms
part of an artificial structure or series of structures (such as structures which are not put into place for valid business
reasons reflecting economic reality) or (y) the U.S. holder of ADSs has a similar function to a qualifying investment
institution (
fiscale beleggingsinstelling
) or a qualifying exempt investment institution (
vrijgestelde beleggingsinstelling
).
Taxes on Income and Capital Gains
Holders of the ADSs Resident in the Netherlands: Individuals
A holder of the ADSs, who is an individual resident or deemed to be resident in the Netherlands for Dutch tax purposes
will be subject to regular Dutch income tax on the income derived from the ADSs and the gains realized upon the
acquisition, redemption and/or disposal of the ADSs by the holder thereof, if:
(a) such holder of the ADSs has an enterprise or an interest in an enterprise, to which enterprise the ADSs are
attributable; and/or
(b) such income or capital gain forms “a benefit from miscellaneous activities” (
resultaat uit overige werkzaamheden
)
which, for instance, would be the case if the activities with respect to the ADSs exceed “normal active asset
management” (
normaal, actief vermogensbeheer
) or if income and gains are derived from the holding, whether directly
or indirectly, of (a combination of) shares, debt claims or other rights (together, a “lucrative interest” (
lucratief belang
))
that the holder thereof has acquired under such circumstances that such income and gains are intended to be
remuneration for work or services performed by such holder (or a related person), whether within or outside an
employment relation, where such lucrative interest provides the holder thereof, economically speaking, with certain
benefits that have a relation to the relevant work or services.
If either of the abovementioned conditions (a) or (b) applies, income derived from the ADSs and the gains realized upon
the acquisition, redemption and/or disposal of the ADSs will in general be subject to Dutch income tax at the progressive
rates up to 49.5%.
If the abovementioned conditions (a) and (b) do not apply, a holder of the ADSs who is an individual, resident or
deemed to be resident in the Netherlands for Dutch tax purposes will not be subject to taxes on income and capital gains
in the Netherlands. Instead, such individual is generally taxed at a flat rate of 36% on deemed income from “savings and
investments” (
sparen en beleggen
), which deemed income is determined on the basis of the amount included in the
individual’s “yield basis” (
rendementsgrondslag
) at the beginning of the calendar year (minus a tax-free threshold; the
yield basis minus such threshold being the tax basis). For
2025
, the deemed income derived from savings and
investments will be a percentage of the tax basis up to 5.88
% that is determined based on the actual allocation of (i)
savings, (ii) other investments, and (iii) debts/liabilities within the individual’s yield basis. The tax-free threshold for
2025
is
€57,684. The percentages to determine the deemed income will be reassessed every year. A holder of the ADSs
that is able to demonstrate that its tax liability is determined on the basis of the deemed income derived from savings and
investments that exceeds the “actual returns” (
werkelijk rendement
) of such individual may under certain circumstances
elect to be taxed on the basis of such “actual returns” (
werkelijk rendement
) iinstead. These rules are subject to ongoing
litigation and may therefore change. A holder of ADSs may need to file (protective) appeals to any assessments based on
these rules to benefit from any beneficial case law.
Holders of the ADSs Resident in the Netherlands: Corporate Entities
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The
income derived from the ADSs and the gains realized upon the acquisition, redemption and/or disposal of the ADSs
by any holder of the ADSs that is an entity subject to corporate income tax in the Netherlands is generally subject to
Dutch corporate income tax levied at a rate of 25.8% (19% over profits up to and including €200,000), unless, and to the
extent that, the participation exemption (
deelnemingsvrijstelling
) applies.
Holders of the ADSs Resident Outside the Netherlands: Individuals
A holder of the ADSs who is an individual, not resident or deemed to be resident in the Netherlands will not be subject
to any Dutch taxes on income derived from the ADSs and the gains realized upon the acquisition, redemption and/or
disposal of the ADSs, unless:
(a) such holder has an enterprise or an interest in an enterprise that is, in whole or in part, carried on through a permanent
establishment (
vaste inrichting
) or a permanent representative (
vaste vertegenwoordiger
) in the Netherlands and to which
enterprise or part of an enterprise, as the case may be, the ADSs are attributable; or
(b) such income or capital gain forms a “benefit from miscellaneous activities in the Netherlands” (
resultaat uit overige
werkzaamheden in Nederland
) which would for instance be the case if the activities in the Netherlands with respect to
the ADSs exceed “normal active asset management” (
normaal, actief ver mogensbeheer
) or if such income and gains are
derived from the holding, whether directly or indirectly, of (a combination of) shares, debt claims or other rights
(together, a “lucrative interest” (
lucratief belang
)) that the holder thereof has acquired under such circumstances that
such income and gains are intended to be remuneration for work or services performed by such holder (or a related
person), in whole or in part, in the Netherlands, whether within or outside an employment relation, where such lucrative
interest provides the holder thereof, economically speaking, with certain benefits that have a relation to the relevant work
or services.
If either of the abovementioned conditions (a) or (b) applies, income derived from the ADSs and the gains realized upon
the acquisition, redemption and/or disposal of the ADSs will in general be subject to Dutch income tax at the progressive
rates up to 49.5%.
Holders of the ADSs Resident Outside the Netherlands: Legal and Other Entities
A holder of the ADSs, that is not an individuals and that is not resident or deemed to be resident in the Netherlands for
corporate income tax purposes, will not be subject to any Dutch taxes on income derived from the ADSs and the gains
realized upon the acquisition, redemption and/or disposal of the ADSs, unless:
•
such holder has an enterprise or an interest in an enterprise that is, in whole or in part, carried on through a permanent
establishment (
vaste inrichting
) or a permanent representative (
vaste vertegenwoordiger
) in the Netherlands and to
which enterprise or part of an enterprise, as the case may be, the ADSs are attributable; or
•
such holder has a substantial interest (
aanmerkelijk belang
) in the Company, that (i) is held with the avoidance of
Dutch income tax of another person as (one of) the main purpose(s) and (ii) forms part of an artificial structure or
series of structures (such as structures which are not put into place for valid business reasons reflecting economic
reality). If one of the abovementioned conditions applies, income derived from the ADSs and the gains realized upon
the acquisition, redemption and/or disposal of the ADSs will, in general, be subject to Dutch regular corporate income
tax, levied at a rate of 25.8% (19% over profits up to and including €200,000), unless, and to the extent that, with
respect to a holder as described under (a), the participation exemption (
deelnemingsvrijstelling
) applies.
Gift, Estate and Inheritance Taxes
Holders of the ADSs Resident in the Netherlands
Gift tax may be due in the Netherlands with respect to an acquisition of the ADSs by way of a gift by a holder of the
ADSs who is resident or deemed to be resident of the Netherlands at the time of the gift.
Inheritance tax may be due in the Netherlands with respect to an acquisition or deemed acquisition of the ADSs by way
of an inheritance or bequest on the death of a holder of the ADSs who is resident or deemed to be resident of the
Netherlands, or in case of a gift by an individual who at the date of the gift was neither resident nor deemed to be
resident in the Netherlands, such individual dies within 180 days after the date of the gift, while that individual, at the
time of the individual’s death, is resident or deemed to be resident in the Netherlands.
For purposes of Dutch gift and inheritance tax, an individual with the Dutch nationality will be deemed to be resident in
the Netherlands if such individual has been resident in the Netherlands at any time during the 10 years preceding the date
of the gift or such individual’s death. For purposes of Dutch gift tax, an individual not holding the Dutch nationality will
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be deemed to be resident of the Netherlands if such individual has been resident in the Netherlands at any time during the
12 months preceding the date of the gift.
Holders of the ADSs Resident Outside the Netherlands
No gift, estate or inheritance taxes will arise in the Netherlands with respect to an acquisition of the ADSs by way of a
gift by, or on the death of, a holder of the ADSs who is neither resident nor deemed to be resident of the Netherlands,
unless, in the case of a gift of the ADSs by an individual who at the date of the gift was neither resident nor deemed to be
resident in the Netherlands, such individual dies within 180 days after the date of the gift, while being resident or
deemed to be resident in the Netherlands.
Certain Special Situations
For purposes of Dutch gift, estate and inheritance tax, (i) a gift by a third party will be construed as a gift by the settlor,
and (ii) upon the death of the settlor, as a rule such settlor’s beneficiaries will be deemed to have inherited directly from
the settlor. Subsequently, such beneficiaries will be deemed the settlor, grantor or similar originator of the separated
private assets for purposes of the Dutch gift, estate and inheritance tax in case of subsequent gifts or inheritances.
For the purposes of the Dutch gift and inheritance tax, a gift that is made under a condition precedent is deemed to have
been made at the moment such condition precedent is satisfied. If the condition precedent is fulfilled after the death of
the donor, the gift is deemed to be made upon the death of the donor.
Value Added Tax
No Dutch value added tax will arise in respect of or in connection with the subscription, issue, placement, allotment or
delivery of the ADSs.
Other Taxes and Duties
No Dutch registration tax, capital tax, custom duty, transfer tax, stamp duty or any other similar documentary tax or
duty, other than court fees, will be payable in the Netherlands in respect of or in connection with the subscription, issue,
placement, allotment or delivery of the ADSs.
Residency
A holder of the ADSs will not be treated as a resident, or a deemed resident, of the Netherlands for tax purposes by
reason only of the acquisition, or the holding, of the ADSs or the performance by the Company under the ADSs.
Material Belgian Tax Consequences
The paragraphs below present a summary of certain Belgian federal income tax consequences of the ownership and
disposal of ADSs by an investor. This summary does not describe the tax treatment of investors that are subject to
special rules, such as banks, insurance companies, collective investment undertakings, dealers in securities or currencies,
persons that hold, or will hold, ADSs as a position in a straddle, share-repurchase transaction, conversion transactions,
synthetic security or other integrated financial transactions. The summary is based on laws, treaties and regulatory
interpretations in effect in Belgium on the date of this Annual Report, all of which are subject to change, including
changes that could have retroactive effect. Investors should appreciate that, as a result of evolutions in law or practice,
the eventual tax consequences may be different from what is stated below.
For the purposes of this summary, a resident investor is:
•
an individual subject to Belgian personal income tax (
personenbelasting/impôt des personnes physiques
), i.e., (i) an
individual having its domicile in Belgium, (ii) when not having its domicile in Belgium, an individual having its seat
of wealth in Belgium, or (iii) an individual assimilated to a resident for purposes of Belgian tax law;
•
a company subject to Belgian corporate income tax (
vennootschapsbelasting/impôt des sociétés
), i.e., a corporate
entity having its principal establishment, administrative seat or effective place of management in Belgium (and that is
not excluded from the scope of the Belgian corporate income tax); or
•
a legal entity subject to the Belgian tax on legal entities (
rechtspersonenbelasting/impôt des personnes morales
), i.e., a
legal entity other than a company subject to Belgian corporate income tax having its principal establishment,
administrative seat or effective place of management in Belgium.
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A non-resident investor is any person that is not a Belgian resident investor.
Investors should consult their own advisors regarding the tax consequences of an investment in the ADSs in light of their
particular situation, including the effect of any state, local or other national laws, treaties and regulatory interpretations
thereof
Dividends
For Belgian income tax purposes, the gross amount of all benefits paid on or attributed to the ADSs is generally treated
as a dividend distribution. By way of exception, the repayment of capital carried out in accordance with applicable Dutch
company law provisions is not treated as a dividend distribution to the extent that such repayment is imputed on fiscal
capital. This fiscal capital includes, in principle, the actual paid-up statutory share capital and, subject to certain
conditions, the paid-up share premiums and the cash amounts subscribed to at the time of the issue of profit-sharing
certificates. However, a repayment of capital is not fully imputed on fiscal capital if the company also has certain
reserves. Indeed, in such case, a reimbursement of capital is proratedly imputed on, on the one hand, fiscal capital and,
on the other hand, taxed reserves (whether or not incorporated in capital) and tax-exempt reserves incorporated in capital
(according to a specific priority rule). The part imputed on the reserves is treated as a dividend distribution subject to
applicable tax rules.
In general, a Belgian withholding tax of (currently) 30% is normally levied on dividends by any intermediary established
in Belgium that is in any way involved in the processing of the payment of non-Belgian sourced dividends (e.g., a
Belgian financial institution). For this purpose, “dividends” also include the price paid in case of a redemption of ADSs
(after deduction of the part of the fiscal capital represented by the redeemed ADSs) and, in the event of our liquidation,
any amounts distributed in excess of the fiscal capital.
However, no withholding tax will be triggered in case of a redemption which is carried out on a stock exchange and
meets certain conditions.
Further, the withholding tax rate is subject to such relief as may be available under applicable domestic or tax treaty
provisions.
Under Belgian law, non-Belgian dividend withholding tax is not creditable against Belgian income tax and is not
reimbursable to the extent that it exceeds Belgian income tax. Please refer to
“
Item 10.E.
—
Taxation
—
Certain Ma
terial
U.S. Federal Income Tax Considerations for U.S. Holders
—
Passive Foreign Investment Company Considerations
” for
a description of withholding tax that may be imposed on dividends by the Netherlands.
Belgian Resident Individuals
For Belgian resident individuals who acquire and hold ADSs as a private investment, the Belgian dividend withholding
tax fully discharges their personal income tax liability. If (and only if) the dividend income would be declared in the
personal income tax return, it will be taxed at the lower of the generally applicable 30% Belgian withholding tax rate on
dividends or, in case globalization is more advantageous, at the progressive personal income tax rates applicable to the
taxpayer’s overall declared income. The first €859 (for income year 2025) (amount applicable per year and per taxpayer)
of the reported ordinary dividend income will be exempt from tax, subject to certain conditions. For the avoidance of
doubt, all reported dividends (not only dividends distributed on our ADSs) are taken into account to assess whether the
said maximum amount is reached.
If the dividends are reported, the Belgian dividend withholding tax levied at source may be credited against the personal
income tax due and is reimbursable to the extent that it exceeds the personal income tax due, provided that the dividend
distribution does not result in a reduction in value of or a capital loss on our ADSs. The latter condition is not applicable
if the individual can demonstrate that it has held ADSs in full legal ownership for an uninterrupted period of 12 months
prior to the payment or attribution of the dividends.
Belgian resident individual investors who acquire and hold the ADSs for professional purposes must always declare the
dividend income in their personal income tax return and will be taxable at the investor’s personal income tax rate
increased with local surcharges. Belgian withholding tax levied may be credited against the personal income tax due and
is reimbursable to the extent that it exceeds the income tax due, subject to two conditions: (i) the taxpayer must own the
ADSs in full legal ownership on the dividend record date and (ii) the dividend distribution may not result in a reduction
in value of or a capital loss on the ADSs. The latter condition is not applicable if the investor can demonstrate that it has
held the full legal ownership of the ADSs for an uninterrupted period of 12 months prior to the payment or attribution of
the dividends.
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Belgian Resident Companies
Dividends received by Belgian resident companies are exempt from Belgian withholding tax provided that the investor
satisfies the identification requirements in Article 117, §11 of the Royal Decree implementing the ITC.
For Belgian resident companies, the gross dividend income (after deduction of any non-Belgian withholding tax but
including any Belgian withholding tax) must be declared in the corporate income tax return and will be subject to a
corporate income tax rate of 25%, except that a reduced corporate income tax rate of 20% applies to small companies
and medium sized enterprises (as defined by Article 2, §1, 5°, c)
bis
ITC) on the first €100,000 of taxable profits (subject
to certain conditions).
Belgian resident companies can generally (although subject to certain limitations) deduct 100% of the gross dividend
received from their taxable income (
Dividend Received Deduction
) provided that at the time of a dividend payment or
attribution: (i) the Belgian resident company holds ADSs representing at least 10% of our share capital or a participation
with an acquisition value of at least €2,500,000 (it being understood that only one out of the two tests must be satisfied);
(ii) the shares representing our share capital have been or will be held in full ownership for an uninterrupted period of at
least one year; and (iii) the conditions described in Article 203 of the ITC (relating to the taxation of the underlying
distributed income and the absence of abuse), or the Article 203 of the ITC Taxation Condition, are met (
Conditions for
Dividend Received Deduction
).
Conditions (i) and (ii) above are, in principle, not applicable for dividends received by an investment company within the
meaning of Article 2, §1, 5°, f) ITC. The Conditions for the application of the Dividend Received Deduction Regime
depend on a factual analysis and for this reason the availability of this regime should be verified upon each dividend
distribution.
On January 31, 2025, as part of the “Federal Government Agreement 2025-2029”, the new Belgian federal government
announced that the threshold of €2,500,000 in condition (i) above will be raised to €4,000,000. In addition, for “large
companies” to meet the condition (i) based on the acquisition value of their participation, such participation would also
need to have the nature of a “fixed financial asset” (the possibility to meet condition (i) via a 10% participation remains
applicable). Large companies are companies that, on a consolidated basis and for at least two of the last three closed
accounting periods, employed an average of more than 250 full-time equivalents and exceeded one of the following
threshold: (i) a turnover (excluding VAT) of €50,000,000 or (ii) a balance sheet total of €43,000,000. This change might
therefore have an impact on the tax treatment of dividends received from the ADSs below the said thresholds. This
change must first be adopted by the Belgian parliament before it can become law, the timing of which is uncertain but
may occur before the end of 2025.
Any Belgian dividend withholding tax levied at source can be cred
ited against the ordinary Belgian corporate income tax
and is reimbursable to the extent it exceeds such corporate income tax, subject to two conditions: (i) the taxpayer must
own the ADSs in full legal ownership on the dividend record date and (ii) the dividend distribution does not result in a
reduction in value of or a capital loss on the ADSs. The latter condition is not applicable: (i) if the taxpayer can
demonstrate that it has held the ADSs in full legal ownership for an uninterrupted period of 12 months immediately prior
to the payment or attribution of the dividends or (ii) if, during that period, the ADSs never belonged to a taxpayer other
than a Belgian resident company or a non-resident company that has, in an uninterrupted manner, invested the ADSs in a
PE in Belgium.
Belgian resident Organizations for Financing Pensions
For organizations for financing pensions (
OFPs
) i.e., Belgian pension funds incorporated under the form of an OFP
(
organisme voor de financiering van pensioenen/organisme de financement de pensions
) within the meaning of Article 8
of the Belgian Law of October 27, 2006, dividend income is generally tax exempt.
Subject to certain limitations, any Belgian dividend withholding tax levied at source may be credited against the
corporate income tax due and is reimbursable to the extent that it exceeds the corporate income tax due.
Belgian (or foreign) OFPs not holding the ADSs for an uninterrupted period of 60 days in full ownership results in a
rebuttable presumption that the arrangement (or a series of arrangements) is not genuine (
kunstmatig/pas authentique
)
and has been put in place for the main purpose or one of the main purposes of obtaining this withholding tax credit. The
withholding tax exemption will in such case not apply and/or any Belgian dividend withholding tax levied at source on
the dividends will in such case not be credited against the corporate income tax, unless counterproof is provided that the
arrangement or series of arrangements are genuine.
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Other Belgian resident Taxable Legal Entities
For taxpayers subject to the Belgian income tax on legal entities, the Belgian dividend withholding tax in principle fully
discharges their income tax liability. If the dividend is paid outside Belgium without the intervention of a Belgian paying
agent and without the deduction of Belgian withholding tax, the legal entity is in principle required to declare and pay
the 30% withholding tax to the Belgian tax authorities.
Belgian Non-Resident Individuals and Companies
Dividend payments on the ADSs through a professional intermediary in Belgium will, in principle, be subject to the 30%
withholding tax, unless the shareholder is resident in a country with which Belgium has concluded a double taxation
agreement and delivers the requested affidavit. Non-resident investors can also obtain an exemption of Belgian dividend
withholding tax if they are the owners or usufructors of the ADSs and they deliver an affidavit confirming that they have
not allocated the ADSs to business activities in Belgium and that they are non-residents, provided that the dividend is
paid through a Belgian credit institution, stock market company or recognized clearing or settlement institution.
If the ADSs are acquired by a non-resident investor in connection with a business in Belgium, the investor must report
any dividends received, which are taxable at the applicable non-resident individual or corporate income tax rate, as
appropriate. Any Belgian withholding tax levied at source can be credited against the non-resident individual or
corporate income tax and is reimbursable to the extent it exceeds the income tax due, subject to two conditions: (i) the
taxpayer must own the ADSs in full legal ownership on the dividend record date and (ii) the dividend distribution does
not result in a reduction in value of or a capital loss on the ADSs. The latter condition is not applicable if (i) the non-
resident individual or the non-resident company can demonstrate that the ADSs were held in full legal ownership for an
uninterrupted period of 12 months immediately prior to the payment or attribution of the dividends or (ii) with regard to
non-resident companies only, if, during the said period, the ADSs have not belonged to a taxpayer other than a resident
company or a non-resident company which has, in an uninterrupted manner, invested the ADSs in a Belgian PE.
Non-resident companies that have invested the ADSs in a Belgian establishment can deduct up to 100% of the gross
dividends included in their taxable profits if, at the date dividends are paid or attributed, the Conditions for Dividend
Received Deduction are satisfied. Application of the Dividend Received Deduction depends, however, on a factual
analysis to be made upon each distribution and its availability should be verified upon each distribution.
Capital Gains and Losses on ADSs
Belgian Resident Individuals
In principle, Belgian resident individuals acquiring the ADSs as a private investment should not be subject to Belgian
capital gains tax on the disposal of the ADSs; capital losses are not tax deductible.
On January 31, 2025, as part of the “Federal Government Agreement 2025-2029”, the new Belgian federal government
announced its intention to introduce a “general solidarity contribution” on capital gains on financial assets, including
shares and ADSs. The contribution’s rate would be 10% and would apply on capital gains realized after its entry into
force and only on capital gains accrued as of this date (historical capital gains remain exempt). Capital losses on
financial assets would be deductible from capital gains realized in the same taxable year (without possibility of loss carry
forward). The regime would include an exemption of the first €10,000 (indexed) on an annual basis. A special regime (a
higher exemption and lower rates) would apply to capital gains on substantial holdings of at least 20%. The introduction
of this 10% contribution may therefore materially affect the taxation of capital gains on ADSs realized by Belgian
Resident Individuals. However, this change must first be adopted by the Belgian parliament before it can become law.
Although the timing is unclear, the regime is currently expected to enter into force on January 1, 2026.
Under the current legislation, capital gains realized in a private (i.e., non-professional) context on the transfer for
consideration of shares by a private individual, are taxable at 33% (plus local surcharges) if the capital gain is deemed to
be realized outside the scope of the normal management of the individual’s private estate. Capital losses are, however,
not tax deductible in such event. Although we can infer from the “Federal Government Agreement 2025-2029” that this
capital gains tax regime will, in principle, remain unaffected, it remains unclear how it would interact with the
announced general solidarity contribution referred to above.
Gains realized by Belgian resident individuals upon the redemption of the ADSs or upon our liquidation are generally
taxable as a dividend.
Under the current legislation, Belgian resident individuals who hold the ADSs for professional purposes are taxable at
the ordinary progressive personal income tax rates (plus local surcharges) on any capital gains realized upon the disposal
of the ADSs, except for shares held for more than five years, which are taxable at a separate rate of 16.5% or (if the
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capital gain is realized in the framework of the cessation of activities and under certain circumstances) 10% (in each case
plus local surcharges). Capital losses on the ADSs incurred by Belgian resident individuals who hold the ADSs for
professional purposes are in principle tax deductible.
Although we can infer from the “Federal Government Agreement 2025-2029” that this capital gains tax regime will, in
principle, remain unaffected, it remains unclear how it would interact with the announced general solidarity contribution
referred to above.
Belgian Resident Companies
Belgian resident companies are normally not subject to Belgian capital gains taxation on gains realized upon the disposal
of our ADSs provided that the Conditions for Dividend Received Deduction (see above under “Dividends—Belgian
Resident Companies”) are met. In this respect, the announced changes to the Conditions for Dividend Received
Deduction (see above under “
Dividend—Belgian Resident Companies
”) may affect the tax treatment of capital gains on
shares for Belgian Resident Companies. If one of the Conditions for Dividend Received Deduction is not met, the capital
gains realized upon the disposal of our ADSs by a Belgian resident company are taxable at the ordinary corporate
income tax rate of, currently, 25%, unless the reduced corporate income tax rate of 20% on the first €100,000 of taxable
profits applies (see above).
Capital losses on our ADSs incurred by resident companies are as a general rule not tax deductible.
Our ADSs held in the trading portfolios (
handelsportefeuille/portefeuille commercial
) of qualifying credit institutions,
investment enterprises and management companies of collective investment undertakings which are subject to the Royal
Decree of 23 September 1992 on the annual accounts of credit institutions, investment firms and management companies
of collective investment undertakings (
Koninklijk besluit van 23 september 1992 op de jaarrekening van de
kredietinstellingen, de beleggingsondernemingen en de beheervennootschappen van instellingen voor collectieve
belegging/ arrêté royal du 23 septembre 1992 relatif aux comptes annuels des établissements de crédit, des entreprises
d’investissement et des sociétés de gestion d’organismes de placement collectif
) are subject to a different regime. The
capital gains on such shares are taxable at the ordinary corporate income tax rate of 25%. Capital losses on such shares
are tax deductible. Internal transfers to and from the trading portfolio are assimilated to a realization.
Capital gains realized by Belgian resident companies (both ordinary Belgian resident companies and qualifying credit
institutions, investment enterprises and management companies of collective investment undertakings) upon the
redemption of our ADSs or upon our liquidation are, in principle, subject to the same taxation regime as dividends. Refer
Belgian resident OFPs
OFPs are, in principle, not subject to Belgian capital gains taxation realized upon the disposal of the ADSs, and capital
losses are not tax deductible.
Capital gains realized by Belgian OFPs upon the redemption of ADSs or upon our liquidation will in principle be taxed
as dividends.
Other Belgian Taxable Legal Entities
Belgian resident legal entities subject to the legal entities income tax are, in principle, not subject to Belgian capital gains
taxation on the disposal of ADSs.
Capital gains realized by Belgian resident legal entities upon the redemption of ADSs or upon our liquidation will in
principle be taxed as dividends.
Capital losses on ADSs incurred by Belgian resident legal entities are not tax deductible.
Belgian Non-Resident Individuals and Companies
Non-resident individuals or companies are, in principle, not subject to Belgian income tax on capital gains realized upon
disposal of the ADSs, unless such ADSs are held as part of a business conducted in Belgium through a Belgian
establishment. In such a case, the same principles apply as described with regard to Belgian individuals (holding the
shares for professional purposes) or Belgian companies.
Non-resident individuals who do not use the shares for professional purposes and who have their fiscal residence in a
country with which Belgium has not concluded a tax treaty or with which Belgium has concluded a tax treaty that
confers the authority to tax capital gains on the ADSs to Belgium, might be subject to tax in Belgium if the capital gains
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are obtained or received in Belgium and arise from transactions which are to be considered speculative or beyond the
normal management of one’s private estate. Refer to
Item 10.E.
—
“
Taxation
—
Certain Material U.S. Federal Income
Tax Considerations for U.S. Holders
—
Passive Foreign Investment Company Considerations
”
. Such non-resident
individuals might therefore be obliged to file a tax return and should consult their own tax advisor. However, Belgium
has concluded tax treaties with more than 95 countries which generally provide for a full exemption from Belgian capital
gains taxation on such gains realized by residents of those countries.
Capital gains realized by non-resident individuals or non-resident companies upon the redemption of ADSs or upon our
liquidation will, in principle, be subject to the same taxation regime as dividends.
Tax on Stock Exchange Transactions
Upon the issue of the ADSs (primary market), no Tax on Stock Exchange Transactions (
taks op beursverrichtingen/taxe
sur opérations de bourse
) is due.
The purchase and the sale and any other acquisition or transfer for consideration of ADSs (secondary market
transactions) is subject to the Tax on Stock Exchange Transactions if (i) it is executed in Belgium through a professional
intermediary, or (ii) deemed to be executed in Belgium, which is the case if the order is directly or indirectly made to a
professional intermediary established outside of Belgium, either by private individuals with habitual residence in
Belgium, or legal entities for the account of their seat or establishment in Belgium (both, a Belgian Investor).
The Tax on Stock Exchange Transactions is levied at a rate of 0.35% of the purchase price, capped at €1,600 per
transaction and per party.
A separate tax is due by each party to the transaction, and both taxes are collected by the professional intermediary.
However, if the intermediary is established outside of Belgium, the tax will in principle be due by the Belgian Investor,
unless that Belgian Investor can demonstrate that the tax has already been paid. Professional intermediaries established
outside of Belgium can, subject to certain conditions and formalities, appoint a Belgian Stock Exchange Tax
Representative, which will be liable for the Tax on Stock Exchange Transactions in respect of the transactions executed
through the professional intermediary. If the Stock Exchange Tax Representative would have paid the Tax on Stock
Exchange Transactions due, the Belgian Investor will, as per the above, no longer be the debtor of the Tax on Stock
Exchange Transactions.
No Tax on Stock Exchange Transactions is due on transactions entered into by the following parties, provided they are
acting for their own account: (i) professional intermediaries described in Article 2, 9° and 10° of the Belgian Law of
August 2, 2002; (ii) insurance companies described in Article 2, §1 of the Belgian Law of July 9, 1975; (iii) professional
retirement institutions referred to in Article 2, 1° of the Belgian Law of October 27, 2006 concerning the supervision on
institutions for occupational pension; (iv) collective investment institutions; (v) regulated real estate companies; and (vi)
Belgian non-residents provided they deliver a certificate to their financial intermediary in Belgium confirming their non-
resident status.
The EU Commission adopted on February 14, 2013 the Draft Directive on a Financial Transaction Tax (
FTT
). The Draft
Directive currently stipulates that once the FTT enters into force, the Participating Member States shall not maintain or
introduce taxes on financial transactions other than the FTT (or VAT as provided in the Council Directive 2006/112/EC
of November 28, 2006 on the common system of value added tax). For Belgium, the Tax on Stock Exchange
Transactions should thus be abolished once the FTT enters into force. Due to the lack of progress in the negotiations on
the Draft Directive, the European Commission announced that it would endeavor to present a proposal for a new own
resource based on the FTT by June 2024 (with a view to its introduction by 1 January 2026). The European Commission
has, however, not published any proposals so far.
Annual Tax on Securities Accounts
The Belgian Annual Tax on Securities Accounts is a subscription tax, levied on securities accounts and not on the
holders thereof. A securities account is defined as an account on which financial instruments can be credited and debited.
The tax applies to securities accounts held both in Belgium and abroad when the account holder is a Belgian resident or
when the account forms part of the assets of a Belgian establishment of a non-Belgian resident. The tax applies to natural
persons residing in Belgium, as well as to companies and legal entities (subject to the tax for legal entities) that are
established in Belgium.
The tax is also applicable to securities accounts held by non-Belgian residents (both natural persons and legal persons) if
the securities account is held in Belgium. If the applicable double tax treaty however allocates the right to tax capital to
the jurisdiction of residence, Belgium would be prevented from applying the Annual Tax on Securities Accounts to the
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Belgian securities accounts held by non-Belgian residents. As described above, the tax applies whether or not the
account is held in Belgium if the account forms part of the assets of a Belgian establishment of a non-Belgian resident.
The Annual Tax on Securities Accounts is applicable to securities accounts of which the average value of the assets
amounts to more than €1,000,000 during the reference period. In principle, this reference period starts on 1 October and
ends on 30 September of the following year. The aforementioned threshold is assessed on the average value of the assets
in the securities account at reference points within the reference period (in principle December 31st, March 31st, June
30th and September 30th). The threshold is assessed per securities account and not per account holder.
The applicable tax rate is 0.15%, which is levied on the average value of the assets held in the securities account that
exceeds the €1,000,000 threshold. It is however limited to 10% of the difference between the average value and the
threshold of €1,000,000, in order to avoid that the Annual Tax on Securities Accounts would result in reducing the value
of the securities account below the €1,000,000 threshold.
The Annual Tax is in principle withheld, reported and paid by the Belgian intermediary. If the intermediary is
established outside of Belgium, the tax must in principle be reported and paid by the account holder, unless the account
holder can demonstrate that the tax has already been reported and paid by an intermediary. Intermediaries established
outside of Belgium can, subject to certain conditions and formalities, appoint a Belgian Annual Tax on Securities
Accounts Representative, which will be liable for reporting and paying the Annual Tax on Securities Accounts in respect
of securities accounts in scope of the Annual Tax that are held through such intermediaries. If the Annual Tax on
Securities Accounts Representative would have paid the Annual Tax on Securities Accounts due, the account holder
will, as per the above, no longer be the debtor of the Annual Tax on Securities Accounts.
The Annual Tax on Securities Accounts is however not applicable to securities accounts held by certain categories of
account holders active in the financial or fund sector, as listed in the relevant legislation (e.g. credit institutions,
insurance companies, investment companies, and certain collective investment undertakings). These exemptions do
however not apply if a non-qualifying third party has a direct or indirect claim on the value of the securities account.
Prospective investors are strongly advised to seek their own professional advice in relation to the possible impact of the
Annual Tax on Securities Accounts on their own personal tax position.
Enforcement of civil liabilities
We are a European public company with limited liability (
Societas Europaea
or
SE
) incorporated under the laws of the
Netherlands. A majority of our assets are located outside the U.S. As a result, it may not be possible for investors to
effect service of process within the U.S. upon such persons or to enforce against them or us in U.S. courts, including
judgments predicated upon the civil liability provisions of the federal securities laws of the U.S.
The U.S. and the Netherlands currently do not have a treaty providing for the reciprocal recognition and enforcement of
judgments, other than arbitration awards, in civil and commercial matters. Consequently, a final judgment for payment
given by a court in the U.S., whether or not predicated solely upon U.S. securities laws, would not automatically be
recognized or enforceable in the Netherlands. In order to obtain a judgment which is enforceable in the Netherlands, the
party in whose favor a final and conclusive judgment of the U.S. court has been rendered will be required to file its claim
with a court of competent jurisdiction in the Netherlands. Such party may submit to the Dutch court the final judgment
rendered by the U.S. court. This court will have a level of discretion in its assessment of the judgment rendered by the
relevant U.S. court. On the basis of case law by the Dutch Supreme Court, Dutch courts will in principle have to give
conclusive effect to a final and enforceable judgment of such court in respect of the contractual obligations thereunder
without re-examination or re-litigation of the substantive matters adjudicated upon, provided that: (i) the U.S. court
involved accepted jurisdiction on the basis of internationally recognized grounds to accept jurisdiction, (ii) the
proceedings before such court being in compliance with principles of proper procedure (
behoorlijke rechtspleging
), (iii)
such judgment not being contrary to the public policy of the Netherlands and (iv) such judgment not being incompatible
with a judgment given between the same parties by a Netherlands court or with a prior judgment given between the same
parties by a foreign court in a dispute concerning the same subject matter and based on the same cause of action,
provided such prior judgment fulfills the conditions necessary for it to be given binding effect in the Netherlands. Dutch
courts may deny the recognition and enforcement of punitive damages or other awards that do not fit to the Dutch legal
order. Moreover, a Dutch court may reduce the amount of damages granted by a U.S. court and recognize damages only
to the extent that they are necessary to compensate actual losses or damages. Enforcement and recognition of judgments
of U.S. courts in the Netherlands are solely governed by the provisions of the Dutch Civil Procedure Code.
Original actions or actions for the enforcement of judgments of U.S. courts relating to the civil liability provisions of the
federal or state securities laws of the U.S. are not directly enforceable in Belgium. The U.S. and Belgium currently do
not have a treaty providing for reciprocal recognition and enforcement of judgments, other than arbitral awards, in civil
and commercial matters. Consequently, a final judgment for payment given by a court in the U.S., whether or not
predicated solely upon U.S. securities laws, would not automatically be recognized or enforceable in Belgium. In order
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for a final judgment for the payment of money rendered by U.S. courts based on civil liability to produce any effect on
Belgian soil, it is accordingly required that this judgment be recognized and be declared enforceable by a Belgian court
pursuant to the relevant provisions of the PIL Code. Recognition or enforcement does not imply a review of the merits of
the case and is irrespective of any reciprocity requirement. A U.S. judgment will, however, not be recognized or declared
enforceable in Belgium if it infringes upon one or more of the grounds for refusal which are exhaustively listed in article
25 of the PIL Code. In addition to recognition or enforcement, a judgment by a federal or state court in the U.S. against
us may also serve as evidence in a similar action in a Belgian court if it meets the conditions required for the authenticity
of judgments according to the law of the state where it was rendered. In addition, with regard to enforcements by legal
proceedings in Belgium (including the recognition of foreign court decisions in Belgium), a registration tax at the rate of
3% of the amount of the judgment is payable by the debtor, if the sum of money which the debtor is ordered to pay by a
Belgian court, or by a foreign court judgment that is either (i) automatically enforceable and registered in Belgium, or (ii)
rendered enforceable by a Belgian court, exceeds €12,500. The registration tax is payable by the debtor. The debtor is
liable for the payment of the registration tax, in the proportion determined by the decision ordering payment or
liquidation or determining priority for creditors made or established against it. The debtor(s) are jointly and severally
liable in the event that they are ordered to pay jointly and severally. A stamp duty is payable as of the second certified
copy of an enforcement judgment rendered by a Belgian court, with a maximum of €1,450.
Dutch and Belgian civil procedure differ substantially from U.S. civil procedure in a number of respects. Insofar as the
production of evidence is concerned, U.S. law and the laws of several other jurisdictions based on common law provide
for pre-trial discovery, a process by which parties to the proceedings may prior to trial compel the production of
documents by adverse or third parties and the deposition of witnesses. Evidence obtained in this manner may be decisive
in the outcome of any proceeding. No such pre-trial discovery process exists under Dutch or Belgian law.
Subject to the foregoing and service of process in accordance with applicable treaties, investors may be able to enforce in
the Netherlands or Belgium judgments in civil and commercial matters obtained from U.S. federal or state courts.
However, no assurance can be given that those judgments will be enforceable. In addition, it is doubtful whether a Dutch
or Belgian court would accept jurisdiction and impose civil liability in an original action commenced in the Netherlands
or Belgium and predicated solely upon U.S. federal securities laws.
F. DIVIDENDS AND PAYING AGENTS
Not applicable.
G. STATEMENT BY EXPERTS
Not applicable.
H. DOCUMENTS ON DISPLAY
We are subject to the information reporting requirements of the U.S. Securities Exchange Act of 1934, as amended
(
Exchange Act
) applicable to foreign private issuers. Accordingly, we are required to file reports and other information
with the SEC. Those reports may be inspected without charge at the locations described below. As a foreign private
issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements,
and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery
provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file
periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities
are registered under the Exchange Act. Nevertheless, we will file with the SEC an Annual Report containing financial
statements that have been examined and reported on, with an opinion expressed by an independent registered public
accounting firm.
We maintain a corporate website at www.argenx.com. We make available on our website, free of charge, our Annual
Report and the text of our reports on Form 6-K, including any amendments to these reports, as well as certain other SEC
filings, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Information
contained on, or that can be accessed through, our website does not constitute a part of this Annual Report. We have
included our website address in this Annual Report solely as an inactive textual reference.
The SEC maintains a website (www.sec.gov) that contains reports and other information regarding registrants, such as
argenx SE, that file electronically with the SEC.
With respect to references made in this Annual Report to any contract or other document of argenx SE, such references
are not necessarily complete and you should refer to the exhibits attached or included elsewhere to this Annual Report
for copies of the actual contract or document.
170
I. SUBSIDIARY INFORMATION
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We take a centralized approach to managing our exposure to market risks globally. We coordinate our access to national
and international financial markets and consider and manage continuously the financial risks concerning our activities.
These risks relate to the adequacy of our equity and debt capitalization, the creditworthiness of our counterparties, our
short-term liquidity, the impact of changes in interest rates on our investments and fluctuations in foreign currency
exchange rates. We do not believe that risks relating to interest rates on borrowings are material as the Company has no
financial debt. We do not buy or trade financial instruments for speculative purposes. For additional information on risk
factors applicable to the Company, its business, financial condition and results of operations, please see
“Item 3.D. —
Risk Factors.”
See “
Note 25 — Financial Risk Management
’’ to our consolidated financial statements appended in our
Annual Report and incorporated by reference herein.
Capital risk
The Company manages its capital to ensure that it will be able to continue as a going concern. The capital structure of
the Company consists of equity attributed to the holders of equity instruments of the Company, such as capital, reserves
and accumulated losses as mentioned in the consolidated statements of changes in equity. The Company makes the
necessary adjustments in light of changes in the economic circumstances, risks associated to the different assets and the
projected cash needs of the current and projected research activities. On
December 31, 2024
, cash and cash equivalents
amounted to
$1.5 billion
,
current financial assets amounted to
$1.9 billion
and total capital amounted to
$5.5 billion
. The
current cash situation and the anticipated cash generation and usage are the most important parameters in assessing the
capital structure. The Company’s objective is to maintain the capital structure at a level to be able to finance its activities
for at least twelve months. Cash income from operations is taken into account and, if needed and possible, the Company
can issue new shares or enter into financing agreements.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient
collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. Concentrations in credit
risk are determined based on an analysis of counterparties and their importance on the overall outstanding contractual
obligations at year-end.
The Company's commercial revenue are concentrated as discussed in “
Note 17 — Segment Reporting
”, on a limited
number of U.S. customers with high quality creditworthiness. The Company sets customer specific credit limits in order
to reduce credit risk from commercial payers.
The Company applied the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all receivables. To measure the expected credit losses, receivables have been grouped based
on credit risk characteristics and the days past due. The provision for expected credit losses was not significant given that
there have been
no
credit losses over the last three years and the high quality nature of the Company’s customers.
Liquidity risk
The Company manages liquidity risk by maintaining adequate reserves, by continuously monitoring forecast and actual
cash flows, and by matching the maturity profile of financial assets and liabilities.
The Company’s main sources of cash are the sale of commercial product and exercise of stock options. This cash is
invested in savings accounts, term accounts and money market funds. These money market funds represent the majority
of the Company’s available sources of liquidity. Since all of these are immediately tradable and convertible in cash they
have an important mitigating effect on any short-term liquidity risk.
Interest rate risk
The only variable interest-bearing financial instruments are cash and cash equivalents and current financial assets.
Changes in interest rates may cause variations in interest income resulting from short-term interest-bearing assets. Lower
short-term interests may have a negative impact on the interest income of the Company.
|
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|
||
For the year ended
December 31, 2024
, if applicable interest rates would increase/decrease by
25
basis points, this would
have a positive/negative impact of
$8 million
(compared to
$8 million
for the year ended
December 31, 2023
and
$6
million
for the year ended
December 31, 2022
).
Cash and cash equivalents and current financial assets are invested with several highly reputable banks and financial
institutions. The main purpose of the Cash Investment Policy is to preserve the available cash and to ensure sufficient
short-term liquidity at all times. Therefore, the Company holds its cash and cash equivalents, in addition to current
financial assets mainly with banks which are independently rated A- or higher. Amounts of cash held with banks rated
lower than A- are limited to insignificant balances. The maximum amount and tenor of time deposits depends on the
rating of the counterparty bank. The Company also holds cash equivalents in the form of money market funds
with a low
historical volatility. These money market funds are highly liquid investments and can be readily convertible into a
known amount of cash. The company has adopted a policy whereby money market funds must have a minimum rating of
A, and whereby 95% of its money market funds should have a AAA-rating.
Foreign exchange risk
The Company undertakes transactions denominated in foreign currencies, causing exposures to exchange rate
fluctuations. The Company is mainly exposed to the Euro, Japanese yen, British pound and Swiss franc. To limit this
risk, the Company attempts to align incoming and outgoing cash flows in currencies other than USD.
The net exposure to exchange differences of the monetary assets (being from cash and cash equivalents
, in addition to
current financial assets) of the Company at the end of the reporting period are as follows:
|
As of December 31,
|
||||||
|
(in thousands of $)
|
2024
|
2023
|
2022
|
|||
|
EUR
|
756,676
|
923,773
|
613,866
|
|||
|
JPY
|
1,640
|
8,232
|
5,613
|
|||
|
GBP
|
11
|
7
|
59,026
|
|||
|
CHF
|
18
|
193
|
3,832
|
|||
|
CAD
|
3
|
266
|
657
|
|||
|
Other currencies
|
7
|
10
|
13
|
|||
On
December 31, 2024
, if the EUR would have strengthened/weakened versus the USD by
10 %
, this would have had a
negative/positive impact of
$76 million
, compared to
$92 million
and
$61 million
on
December 31, 2023
and
December 31, 2022
, respectively. On
December 31, 2024
, if other currencies would have strengthen/weakened against
the USD by
10%
, this would have had
no
significant impact.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. DEBT SECURITIES
Not applicable.
B. WARRANTS AND RIGHTS
Not applicable.
C. OTHER SECURITIES
Not applicable.
D. AMERICAN DEPOSITARY SHARES
In connection with our initial public offering on Nasdaq, the Bank of New York Mellon, as depositary, registered and
delivered ADSs. Each ADS represents one share (or a right to receive one share) deposited with ING Bank N.V., as
custodian for the depositary in the Netherlands. Each ADS also represents any other securities, cash or other property
which may be held by the depositary. The deposited shares together with our other securities, cash and other property
held by the depositary, are referred to as the deposited securities. The depositary’s office at which the ADSs are
administered is located at 101 Barclay Street, New York, New York 10286. The Bank of New York Mellon’s principal
executive office is located at 225 Liberty Street, New York, New York 10286.
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|
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A deposit agreement among us, the depositary, ADS holders and all other persons indirectly or beneficially holding
ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the
deposit agreement and the ADSs.
Fees and Charges
|
Persons depositing or withdrawing shares or ADS holders must pay:
|
For:
|
|
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
|
Issuance of ADSs, including issuances resulting from a
distribution of shares or rights or other property
|
|
Cancellation of ADSs for the purpose of withdrawal,
including if the deposit agreement terminates
|
|
|
$.05 (or less) per ADS
|
Any cash distribution to ADS holders
|
|
A fee equivalent to the fee that would be payable if securities distributed
to you had been shares and the shares had been deposited for issuance of
ADSs
|
Distribution of securities distributed to holders of
deposited securities (including rights) that are distributed
by the depositary to ADS holders
|
|
$.05 (or less) per ADS per calendar year
|
Depositary services
|
|
Registration or transfer fees
|
Transfer and registration of shares on our share register to
or from the name of the depositary or its agent when you
deposit or withdraw shares
|
|
Expenses of the depositary
|
Cable, telex and facsimile transmissions (when expressly
provided in the deposit agreement)
|
|
Converting foreign currency to USDs
|
|
|
Taxes and other governmental charges the depositary or the custodian
has to pay on any ADSs or shares underlying ADSs, such as stock
transfer taxes, stamp duty or withholding taxes
|
As necessary
|
|
Any charges incurred by the depositary or its agents for servicing the
deposited securities
|
As necessary
|
The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or
surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for
making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of
distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from
cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for
them. The depositary may collect any of its fees by deduction from any cash distribution payable (or by selling a portion
of securities or other property distributable) to ADS holders that are obligated to pay those fees. The depositary may
generally refuse to provide fee-attracting services until its fees for those services are paid.
From time to time, the depositary may make payments to us to reimburse us for costs and expenses generally arising out
of establishment and maintenance of the ADS program, waive fees and expenses for services provided to us by the
depositary or share revenue from the fees collected from ADS holders. In performing its duties under the deposit
agreement, the depositary may use brokers, dealers, foreign currency dealers or other service providers that are owned by
or affiliated with the depositary and that may earn or share fees, spreads or commissions.
The depositary may convert currency itself or through any of its affiliates and, in those cases, acts as principal for its own
account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including,
without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other
things, the difference between the exchange rate assigned to the currency conversion made under the deposit agreement
and the rate that the depositary or its affiliate receives when buying or selling foreign currency for its own account. The
depositary makes no representation that the exchange rate used or obtained in any currency conversion under the deposit
agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be
determined will be the most favorable to ADS holders, subject to the depositary’s obligations under the deposit
agreement. The methodology used to determine exchange rates used in currency conversions is available upon request.
|
173
|
||
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
On July 18, 2023, we entered into an Underwriting Agreement with J.P. Morgan Securities LLC, Morgan Stanley Co.
LLC, Goldman Sachs Co. LLC, BofA Securities, Inc., Cowen and Company, LLC, as representatives of the several
underwriters named therein, relating to a global offering of an aggregate of 2,244,899 ordinary shares of the Company,
nominal value €0.10 per share, including ordinary shares represented by ADSs, comprised of (i) 1,580,981 ADSs at a
public offering price of $490.00 per ADS in the U.S. and countries outside the EEA and (ii) 663,918 ordinary shares at
an offering price of €436.37 per ordinary share in a concurrent private placement in the EEA to certain legal entities all
of which are qualified investors within the meaning of Regulation 2017/1129 of the European Parliament and of the
Council of June 14, 2017, as amended. The offering was made pursuant to our effective shelf registration statement on
Form F-3ASR (File No. 333-258251) filed on July 29, 2021, as supplemented by a preliminary prospectus supplement
dated July 17, 2023, filed with the SEC on July 17, 2023, and a final prospectus supplement dated July 18, 2023, filed
with the SEC on July 20, 2023. In connection with this offering, we granted the underwriters a 30-day option to purchase
up to 336,734 additional ordinary shares (which may be represented by ADSs), which was exercised in full. The net
proceeds to us from the sale of the ADSs and ordinary shares in this offering, after deducting the underwriting discounts
and commissions and estimated offering expenses payable by the Company, was $1.2 billion (€1.1 billion). The offering
closed on July 24, 2023.
We have not used any of the net proceeds from the offering to make payments, directly or indirectly, to any director,
officer or general partner of ours or to their associates, persons owning 10% or more of any class of our equity securities,
or to any of our affiliates. We have invested the net proceeds from the offering in cash and cash equivalents and current
financial assets. There has been no material change in our planned use of the net proceeds from the offering as described
in our final prospectus supplement filed pursuant to Rule 424(b)(5) under the Securities Act with the SEC on July 20,
2023 (File No.333-258251). The registration statement was effective on July 29, 2021.
ITEM 15. CONTROLS AND PROCEDURES
A.
DISCLOSURE CONTROLS AND PROCEDURES
Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of
December 31, 2024
.
While there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including
the possibility of human error and the circumvention or overriding of the controls and procedures, our disclosure controls
and procedures are designed to provide reasonable assurance of achieving their objectives.
Based upon our evaluation, as of
December 31, 2024
, our CEO and CFO have concluded that the disclosure controls and
procedures, in accordance with Exchange Act Rule 13a-15(e), are (i) effective at the level of reasonable assurance in
ensuring that information required to be disclosed in the reports that are filed or submitted under the Exchange Act, is
recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms,
and (ii) are effective at the level of reasonable assurance in ensuring that information to be disclosed in the reports that
are filed or submitted under the Exchange Act is accumulated and communicated to the management of our company,
including our CEO and CFO, to allow timely decisions regarding required disclosure.
B.
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as
such term is defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act). Our internal control over financial
reporting is a process designed, under the supervision of our CEO and CFO, to provide reasonable assurance regarding
the reliability of financial reporting and preparation of financial statements for external reporting purposes in accordance
with IFRS, as issued by the IASB.
Our internal control over financial reporting includes policies and procedures that
pertain to the maintenance of records that, in reasonable detail, accurately and fairly, reflect transactions and dispositions
of assets, provide reasonable assurance that transactions are recorded in the manner necessary to permit the preparation
of financial statements in accordance with IFRS, as issued by the IASB, and that receipts and expenditures are only
carried out in accordance with the authorization of our management and directors, and provide reasonable assurance
regarding the prevention or timely detection of any unauthorized acquisition, use or disposition of our assets that could
have a material effect on our consolidated financial statements.
|
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|
||
Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements.
Moreover, projections of any evaluation of the effectiveness of internal control to future periods are subject to a risk that
controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or
procedures may deteriorate.
Our management has assessed the effectiveness of internal control over financial reporting based on the Internal Control-
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
2013. Based on this assessment, our management has concluded that our internal control over financial reporting as of
December 31, 2024
was effective.
C.
ATTESTATION OF THE REGISTERED PUBLIC ACCOUNTING FIRM
The effectiveness of our internal control over financial reporting as of
December 31, 2024
has been audited by
Deloitte
Accountants B.V.
, our independent registered public accounting firm.
Deloitte Accountants B.V.
’s audit report,
including its opinion on management’s assessment of internal control over financial reporting, is included in our audited
consolidated financial statements included in this Annual Report.
D.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During the period covered by this Annual Report, we have not made any change to our internal control over financial
reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Board of Directors previously determined that each of Mr. Verhaeghe, Mr. Rosenberg, Mr. Daly and Mr. Krognes
satisfy the independence requirements set forth in Rule 10A-3 of the Exchange Act and that Mr. Krognes qualifies as an
“audit committee financial expert” as defined by SEC rules, and has the requisite financial sophistication to meet the
requirements of the Nasdaq Listing Rules.
ITEM 16B. CODE OF ETHICS
We adopted a Code of Business Conduct and Ethics (
Code of Conduct
), that is applicable to all of our employees and
directors. The Code of Conduct is available on our website at
www.argenx.
com
/
investors
/governance/rules-codes-
compliance
. The
Audit and Compliance Committee
of our Board of Directors is responsible for overseeing the Code of
Conduct and is required to approve any waivers of the Code of Conduct for employees and directors. We expect that any
amendments to the Code of Conduct, and any waivers of its requirements, will be disclosed on our website.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Deloitte Accountants B.V.
has served as our independent registered public accounting firm for
2024
and
2023
. Our
accountants billed the following fees to us for professional services in each of those years:
|
Year Ended December 31,
|
||||||
|
Fees
|
2024
|
2023
|
||||
|
in thousands of $
|
||||||
|
Audit fees
1)
|
$
|
2,657
|
$
|
1,979
|
||
|
Audit-related fees
|
597
|
330
|
||||
|
Total
|
$
|
3,254
|
$
|
2,309
|
||
(1)
Audit services performed by
Deloitte Accountants B.V.
as the external auditor referred to in Section 1 of the Dutch Accounting Firms Oversight
Act (Wta) as well as by the
Deloitte
network
“Audit fees” are the aggregate fees billed for the statutory audit of our annual financial statements, and the audit of form
20-F as filed with the SEC.
“Audit-related fees” are the aggregate fees billed for permissible other assurance services. In 2024, “audit-related” fees
includes fees billed for the limited assurance engagement in relation to the Sustainability Statement.
2024
2023
, “Audit-
|
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|
||
Related Fees” includes fees billed for assurance and audit-related services regarding our public offerings on the Euronext
Brussels and Nasdaq.
No other fees were billed by
Deloitte Accountants B.V.
for the years ended
December 31, 2024
and
2023
.
Audit and Compliance Committee's Pre-Approval Policies and Procedures
Our audit and compliance committee has responsibility over, among other things, appointing, setting the compensation
of and overseeing the work of our independent registered public accounting firm, or external auditor. In recognition of
these responsibilities, our audit and compliance committee adopted a policy governing the pre-approval of all audit and
permitted non-audit services performed by our external auditor to ensure that the provision of such services does not
impair the external auditor’s independence from us and our management. Unless a type of service to be provided by our
external auditor has received general pre-approval from the audit and compliance committee, it requires specific pre-
approval by the audit and compliance committee in accordance with the pre-approval policy. Any payments proposed to
be made in connection with any proposed services that exceed pre-approved cost levels require specific pre-approval by
the audit and compliance committee.
Pursuant to the pre-approval policy, the audit and compliance committee may delegate its authority to pre-approve
services to the chairperson of the audit and compliance committee. Any decisions of the chairperson to grant pre-
approvals must be presented to the full audit and compliance committee at its next scheduled meeting. The audit and
compliance committee may not delegate its responsibilities to pre-approve services to management.
The audit and compliance committee has considered the non-audit services provided by
Deloitte Accountants B.V.
as
described above and believes that they are compatible with maintaining
Deloitte Accountants B.V.
’s independence as
our external auditor. In accordance with Regulation S-X, Rule 2-01, paragraph (c)(7)(i), no fees for services were
approved pursuant to any waivers of the pre-approval requirement.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not applicable.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING
ACCOUNTANT
According to mandatory external auditor rotation under EU Audit Regulation 537/2014, we were required to change our
external auditor for the financial year ended December 31, 2025.
Our audit and compliance committee carried out an extensive process for the appointment of the external auditor, which
involved the establishment of a selection committee that evaluated potential external auditors and recommended the
appointment of EY Accountants B.V. Upon the audit and compliance committee’s recommendation, the Non-Executive
Directors of the Board of Directors proposed to shareholders to appoint EY Accountants B.V. as external auditor of the
Company for the year ending December 31, 2025 at the 2024 annual General Meeting of shareholders. At the 2024
annual General Meeting held on May 8, 2024, our shareholders appointed EY Accountants B.V. as the Company’s
external auditors for the year ending December 31, 2025 as proposed by our Board of Directors.
The reports of Deloitte Accountants B.V. for the years ended December 31, 2023 and 2024 did not contain an adverse
opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting
principles. Further during the years ended December 31, 2023 and 2024 and the subsequent interim period through the
date of this filing on March 20, 2025, there were no disagreements with Deloitte Accountants B.V. on any matter of
accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements,
if not resolved to the satisfaction of Deloitte Accountants B.V., would have caused it to make reference to the subject
matter of the disagreements in connection with its report. There were no ”reportable events” as defined in Form 20-F.
During the years ended December 31, 2023 and 2024 and the subsequent interim period through the date of this filing on
March 20, 2025, neither the Company, nor someone on our behalf, consulted EY Accountants B.V. regarding either: the
application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion
that might be rendered on the Company’s consolidated financial statements, and either a written report was provided to
the Company or oral advice was provided that EY Accountants B.V. concluded was an important factor considered by
the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or any matter that was
either the subject of a disagreement or a reportable event as defined in Form 20-F.
|
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|
||
The Company has furnished Deloitte with a copy of the aforementioned disclosure and has formally requested and
received from Deloitte the letter addressed to the SEC, indicating their concurrence with the statements made. A copy of
Deloitte's letter, dated March 20, 2025, is filed as
Exhibit 15.2
to this Annual Report.
ITEM 16G. CORPORATE GOVERNANCE
As a foreign private issuer, the Nasdaq Listing Rules include certain accommodations in the corporate governance
requirements that allow foreign private issuers to follow “home country” corporate governance practices in lieu of the
otherwise applicable Nasdaq corporate governance standards. We intend to rely on certain exemptions for foreign private
issuers and to follow Dutch corporate governance practices in lieu of the Nasdaq corporate governance rules.
The following is a summary of the significant ways in which our corporate governance practices differ from those
required by the Nasdaq Listing Rules with which we are not required to comply:
•
Quorum at Shareholder Meetings.
In accordance with Dutch law and generally accepted business practices in the
Netherlands, our Articles of Association do not provide quorum requirements generally applicable to general
meetings of shareholders. To that extent, our practice varies from the requirement of Nasdaq Listing Rule 5620(c),
which requires an issuer to provide in its bylaws for a generally applicable quorum, and that such quorum may not be
less than one-third of the outstanding voting stock.
•
Solicitation of Proxies.
Although we must provide shareholders with an agenda and other relevant documents ahead
of any General Meeting, Dutch law does not have a regulatory regime for the solicitation of proxies, and the
solicitation of proxies is not a generally accepted business practice in the Netherlands. Thus, our practice varies from
the requirement of Nasdaq Listing Rule 5620(b).
•
Shareholder Approval.
We follow certain Dutch shareholder approval requirements for the issuance of securities in
connection with certain events such as the acquisition of stock or assets of another company, the establishment of or
amendments to equity-based compensation plans for employees, a change of control of us and certain private
placements. To this extent, our practice varies from the requirements of Nasdaq Rule 5635, which generally requires
an issuer to obtain shareholder approval for the issuance of securities in connection with such events.
•
Distribution of Annual Reports.
We do not follow Nasdaq Listing Rule 5250(d), which requires companies to make
available copies of their annual reports containing audited financial statements to their shareholders. The distribution
of our annual reports to shareholders is not required under Dutch corporate law or Dutch securities laws. Furthermore,
it is generally accepted business practice for Dutch companies not to distribute annual reports. In part, this is because
the Dutch system of bearer shares has made it impractical to keep a current list of holders of the bearer shares in order
to distribute the annual reports. Instead, we make our Annual Report available at our corporate head office in the
Netherlands (and at the offices of our Dutch listing agent as stated in the convening notice for the meeting) no later
than 42 days prior to convocation of any annual General Meeting. In addition, we post a copy of our annual reports on
our website prior to our annual General Meeting.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
Our Board of Directors has
adopted
an insider trading policy which governs the purchase, sale, and other dispositions of
our securities by our directors, senior executives, employees and consultants that are reasonably designed to promote
compliance with applicable insider trading laws, rules, and regulations, and any listing standards applicable to the
Company. Copy of our insider trading policy is filed as
Exhibit 11.1 to this Annual Report.
177
ITEM 16K.
CYBERSECURITY
Our approach to risk management is designed to identify, assess, prioritize and manage major risk exposures that could
affect our ability to execute our corporate strategy and fulfill our business objectives.
As part of our information security
and privacy program, the Information Security and Management System (the
ISMS
), we perform risk assessments in
which we map and prioritize information security risks identified through the processes described below, including risks
processes and are included with other enterprise risks as part of our broader enterprise risk management. We view
information security risks as one of the key risks categories we face. IT system vendors are subject to security review
and audits. For more information regarding the cybersecurity-related risks we face, please refer to
“
Item 3.D.
—
Risk
Factors
-
Risk Factors Related to argenx's Business and Industry
-
Our business and operations could suffer in the event
across our business as part of our ISMS. Among other things, we conduct audits and tests of our information systems
(including review and assessment by independent third-party advisors, who assess and report on the maturity of our
security measures and help identify areas for continued focus and improvement) and review information security threat
data security matters for our employees to be aware and vigilant against potential data security risks and data privacy is
incorporated into our overall compliance training, such as through privacy-specific training for employees and
contractors. Phishing training is also implemented regularly, which includes mock phishing emails to test employee
vigilance. In addition, employees are required to read and acknowledge information security policies that are relevant to
their specific role. We also have implemented and maintain information security incident response plans, which include
processes to triage, assess severity for, escalate, contain, investigate and remediate information security incidents, as well
as to comply with potentially applicable legal obligations and mitigate brand and reputational damage.
Information Security Governance and Oversight
effectiveness of our information security risk management practices and capabilities, including the division of
responsibilities for reviewing our information security risk exposure and risk tolerance, tracking emerging information
risks and ensuring proper escalation of certain key risks for periodic review by the Board of Directors and its
also oversees our internal control over financial reporting.
results of our enterprise risk assessments, including information security risk assessments, as well as management's
contains provisions regarding reporting to the Global Risk Management Committee. Additionally, the data protection
officer provides regular updates to the Senior Management Team, and the
Audit and Compliance Committee
as a
reports to the Global Corporate Compliance Committee, the Global Risk Management Committee and the General
to these regularly scheduled updates from the data protection officer, the Global Head of Business Information Systems
reports to the
Audit and Compliance Committee
or the full Board of Directors, as appropriate, on how certain
information security risks are being managed and progress towards agreed mitigation goals, as well as any potential
material risks from cybersecurity threats that have been detected by the information security team.
Our
information security team
is responsible for day-to-day identification, assessment and management of the
information security risks we face.
Our
Global Head of Business Information Systems
has
33 years
of experience in
information management systems and the managers reporting to the Global Head of Business Information Systems have
designed for the timely detection, reporting, and investigation of all security incidents, as well as the timely notification
of any reportable breaches (including any material cybersecurity incidents and personal data breaches) to the competent
authorities and the timely communication to the affected individuals, where relevant. We maintain records of breaches
on our quarterly corporate risk dashboard and our personal data breach register, and we monitor and regularly report our
security and data breach metrics to the Senior Management Team, including the Audit and Compliance Committee , the
global corporate compliance committee, and the global risk management committee. In addition to the ordinary-course
Board of Directors and Audit and Compliance Committee reporting and oversight described above, we also maintain
disclosure controls and procedures designed for prompt reporting to the Board of Directors and timely public disclosure,
as appropriate, of material events covered by our risk management framework, including information security risks.
|
178
|
||
PART III
ITEM 17. FINANCIAL STATEMENTS
Not applicable.
ITEM 18. FINANCIAL STATEMENTS
ITEM 19.
EXHIBITS
The exhibits listed in the Exhibit Index at the end of this Annual Report are filed as exhibits to this Annual Report.
|
|
|
Incorporated by Reference
|
||||||||
|
Exhibit
|
|
Description
|
|
Schedule/
Form
|
|
File Number
|
|
Exhibit
|
|
File Date
(mm/dd/yyyy)
|
|
1.1#
|
|
|
||||||||
|
1.2
|
||||||||||
|
2.1
|
Form F-1/A
|
333-217417
|
4.1
|
05/16/2017
|
||||||
|
2.2
|
Form 20-F
|
001-38097
|
97.1
|
03/21/2024
|
||||||
|
2.3#
|
||||||||||
|
4.1**
|
Form F-1
|
333-217417
|
10.2
|
04/21/2017
|
||||||
|
4.2†
|
Form F-1
|
333-217417
|
10.3
|
04/21/2017
|
||||||
|
4.3#†
|
||||||||||
|
4.4
|
Form 20-F
|
001-38097
|
4.7
|
03/30/2021
|
||||||
|
4.5†
|
Form 20-F
|
001-38097
|
4.9
|
03/16/2023
|
||||||
|
8.1
|
Form 20-F
|
001-38097
|
8.1
|
03/16/2023
|
||||||
|
11.1#
|
||||||||||
|
12.1#
|
||||||||||
|
12.2#
|
||||||||||
|
13.1*
|
||||||||||
|
179
|
||
|
13.2*
|
||||||||||
|
15.1#
|
||||||||||
|
15.2#
|
||||||||||
|
97.1
|
Form 20-F
|
001-38097
|
97.1
|
03/21/2024
|
||||||
|
101.INS#
|
Inline XBRL Instance Document
|
|||||||||
|
101.SCH#
|
Inline XBRL Taxonomy Extension Schema Document
|
|||||||||
|
101.CAL#
|
Inline XBRL Taxonomy Extension Calculation
Linkbase Document
|
|||||||||
|
101.DEF#
|
Inline XBRL Taxonomy Extension Definition Linkbase
Document
|
|||||||||
|
101.LAB#
|
Inline XBRL Taxonomy Extension Label Linkbase
Document
|
|||||||||
|
101.PRE#
|
Inline XBRL Taxonomy Extension Presentation
Linkbase Document
|
|||||||||
|
104
|
Cover Page Interactive Data File (formatted as Inline
XBRL and contained in Exhibit 101)
|
|
#
|
Filed herewith.
|
|
*
|
Furnished herewith.
|
|
†
|
Indicates a management contract or any compensatory plan, contract or arrangement.
|
|
**
|
Confidential treatment status has been granted as to certain portions thereto, which portions are omitted and
filed separately with the U.S. Securities and Exchange Commission.
|
|
180
|
||
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly
caused and authorized the undersigned to sign this Annual Report on its behalf.
Date:
March 20, 2025
|
ARGENX SE
|
|||
|
By:
|
/s/ Tim Van Hauwermeiren
|
||
|
Name:
|
Tim Van Hauwermeiren
|
||
|
Title:
|
Chief Executive Officer
|
||
|
F-1
|
INDEX TO FINANCIAL STATEMENTS
|
Audited consolidated financial statements as of and for the years ended
December 31, 2024
,
2023
and
2022
|
|
|
|
|
|
F-2
|
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING
FIR
M
To the shareholders and the Board of Directors of argenx SE
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of argenx SE and subsidiaries (the
“Company”) as of December 31, 2024, 2023 and 2022, the related consolidated statements of profit or loss,
comprehensive income or loss, cash flows, and changes in equity, for each of the three years in the period ended
December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Company as of December 31,
2024, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended
December 31, 2024, in conformity with IFRS
®
Accounting Standards (IFRS), issued by the International Accounting
Standards Board (IASB).
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria
established in
Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations
of the Treadway Commission and our report dated March 20, 2025, expressed an unqualified opinion on the Company's
internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matters communicated below are matters arising from the current-period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on
the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing
separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Trade and Other Payables | US Sales rebates and reserves — Refer to Notes 2.17, 3 and 14 to the financial
statements
Critical Audit Matter Description
The Company recognizes product net sales, relating to the sale of the products VYVGART and VYVGART SC. These
product net sales are accounted for in accordance with IFRS 15 Revenue from Contracts with Customers (“IFRS 15”),
whereby the sale of these products to customers is recognized for an amount that reflects the consideration to which the
Company expects to be entitled in exchange for these goods. The majority of the product gross sales are in the United
States of America, which are subject to reduction for significant components of variable consideration primarily
composed of mandatory rebates to government agencies, distributors, health insurance companies and managed
healthcare organizations. Together, we refer to these deductions as US sales rebates and reserves, as included in Notes
2.17, 3 and 14 to the financial statements.
|
F-3
|
The US sales rebates and reserves recorded by the Company represent estimates of the related obligations that will be
settled in a future period. The main sources of significant estimation uncertainty are the payer mix, representing the
portion of total sales that will be made into each payer channel, and the time lag between the point of sale and receipt of
a claim. The significant assumptions and estimates used to determine the liability for the variable considerations are
based upon contracts with customers, healthcare providers, payers and government agencies, regulated discounts
applicable to government-funded programs, historical experience of claims received, estimated payer mix and other
relevant factors. Given the complexity of this estimate, auditing this estimate required both extensive audit effort and a
high degree of auditor judgment when performing auditing procedures and evaluating the results of those procedures,
and therefore we identified the US sales rebates and reserves as a critical audit matter.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the US sales rebates and reserves included the following, among others:
•
We evaluated the key revenue contracts and key supply chain contracts, including evaluation of the accounting
treatment of the US sales rebates and reserves and the disclosures thereof in accordance with IFRS 15.
•
We evaluated the independent service auditor reports for the service providers used by the Company to process US
sales rebates and reserves on behalf of the Company.
•
We evaluated the appropriateness and consistency of the Company’s methodology and assumptions in developing the
US sales rebates and reserves, including testing the completeness and accuracy of the underlying data used by
management in their estimates.
•
We tested significant assumptions and key inputs used to calculate the US sales rebates and reserves, including the
payer mix, by comparing to historical data, testing the historical accuracy of estimates made by management and
evaluating the impact of changes in government legislation.
•
We tested the mathematical accuracy of the US sales rebates and reserves calculation.
•
We tested the rebate claims received during the financial year against source documentation.
Deferred Tax Assets | Recognition of deferred tax assets in Belgium — Refer to Notes 2.16, 3 and 23 to the
financial statements
Critical Audit M
at
ter Description
The Company recognizes deferred tax assets for the carryforward of unused tax losses, innovation income deductions,
and other timing differences, to the extent that it is probable that future taxable profit will be available against which the
unused tax losses and unused tax credits can be utilized. Under applicable tax law in Belgium, tax losses accumulated do
not expire and are recoverable against future taxable income. In the fourth quarter of the year ended December 31, 2024,
the Company concluded sufficient evidence was available to recognize the deferred tax assets held by argenx B.V., a
subsidiary of the Company in Belgium. The balance of net deferred tax assets related to argenx B.V. is USD 708 million
at December 31, 2024.
The recognition of argenx B.V.’s deferred tax asset requires subjective and complex auditor judgment due to a history of
recent losses. Significant judgment is applied by management to evaluate whether there is convincing evidence that
future taxable profits will be available against which the deferred tax assets can be utilized. This includes the evaluation
of all available evidence, including historical performance, the external competitive landscape and the forecasted taxable
profits within the look-forward period. A key estimate used to determine whether sufficient future taxable profits will be
available is the forecasted US product net sales in the look-forward period. This assessment, which includes the length of
the look-forward period utilized, requires significant management judgment.
Given the complexity of this judgment, auditing the recognition of the deferred tax assets required both extensive audit
effort and a high degree of auditor judgment when performing auditing procedures and evaluating the results of those
procedures. Therefore, we identified the recognition of the deferred tax assets in Belgium as a critical audit matter.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the recognition of the deferred tax assets in Belgium included the following, among
others:
|
F-4
|
•
We tested the effectiveness of internal controls over management's valuation of deferred tax assets in Belgium,
including the controls over the budget approval and assessment of the likelihood of future taxable profits being
available during the look-forward period.
•
We evaluated the appropriateness of the Company’s methodology to determine whether sufficient future taxable
profits will be available, including assessment of the number of years of forecasted future taxable profits used.
•
We involved tax specialists to assess whether the recognition of the deferred tax assets is in accordance with the
applicable accounting standards, the methodology applied to determine future taxable profits is consistent with
Belgium tax legislation and the deferred tax assets are calculated in accordance with Belgium tax legislation.
•
We tested key assumptions and inputs used to determine forecasted taxable profits, specifically the growth of US
product net sales by comparing this against historical performance of the Company, the approved budget and external
sources.
•
We assessed the Company’s ability to estimate taxable profits accurately by evaluating the historical accuracy of
forecasted commercial results made in the prior year in relation to the actual results incurred in the current year.
•
We tested the mathematical accuracy of the model used to determine forecasted taxable profits.
/s/
Deloitte Accountants B.V.
Rotterdam, The Netherlands
March 20, 2025
We have served as the Company's auditor since 2015.
|
F-5
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of argenx SE
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial
reporting
of argenx SE and subsidiaries (the “Company”) as of
December 31, 2024, based on criteria established in
Internal Control — Integrated Framework (2013)
issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on
criteria established in
Internal Control — Integrated Framework (2013)
issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the
Company and our report dated March 20, 2025, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/
Deloitte Accountants B.V.
March 20, 2025
|
F-6
|
ARGENX SE
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
As of December 31,
|
|||||||||||
|
(in thousands of $)
|
|
Note
|
2024
|
|
2023
|
2022
|
|||||
|
Assets
|
|
|
|
|
|
|
|
||||
|
Non‑current assets
|
|
|
|
|
|||||||
|
Property, plant and equipment
|
|
4
|
$
|
|
|
$
|
|
$
|
|
||
|
Intangible assets
|
|
5
|
|
|
|
|
|||||
|
Deferred tax assets
|
23
|
|
|
|
|||||||
|
Research and development incentive
receivables
|
|
|
|
|
|
||||||
|
Investment in a joint venture
|
26
|
|
|
|
|||||||
|
Prepaid expenses
|
|
|
|
||||||||
|
Other non-current assets
|
6
|
|
|
|
|||||||
|
Total non‑current assets
|
|
|
|
|
|
||||||
|
Current assets
|
|
|
|
|
|||||||
|
Inventories
|
7
|
$
|
|
$
|
|
$
|
|
||||
|
Prepaid expenses
|
|
8
|
|
|
|
|
|||||
|
Trade and other receivables
|
9
|
|
|
|
|||||||
|
Research and development incentive
receivables
|
|
|
|
|
|
||||||
|
Financial assets
|
|
10
|
|
|
|
|
|||||
|
Cash and cash equivalents
|
|
11
|
|
|
|
|
|||||
|
Total current assets
|
|
|
|
|
|||||||
|
Total assets
|
|
|
$
|
|
$
|
|
$
|
|
|||
The accompanying notes form an integral part of these consolidated financial statements.
|
F-7
|
|
As of December 31,
|
|||||||||||
|
(in thousands of $)
|
Note
|
2024
|
2023
|
2022
|
|||||||
|
Equity and liabilities
|
|
||||||||||
|
Equity
|
12
|
||||||||||
|
Equity attributable to owners of the parent
|
|||||||||||
|
Share capital
|
$
|
|
$
|
|
$
|
|
|||||
|
Share premium
|
|
|
|
||||||||
|
Translation differences
|
|
|
|
||||||||
|
Accumulated losses
|
(
|
(
|
(
|
||||||||
|
Other reserves
|
|
|
|
||||||||
|
Total equity
|
$
|
|
$
|
|
$
|
|
|||||
|
Non-current liabilities
|
|||||||||||
|
Provisions for employee benefits
|
|
|
|
||||||||
|
Lease liabilities
|
21
|
|
|
|
|||||||
|
Deferred tax liabilities
|
23
|
|
|
|
|||||||
|
Total non-current liabilities
|
|
|
|
||||||||
|
Current liabilities
|
|||||||||||
|
Lease liabilities
|
21
|
|
|
|
|||||||
|
Trade and other payables
|
14
|
|
|
|
|||||||
|
Tax liabilities
|
23
|
|
|
|
|||||||
|
Total current liabilities
|
|
|
|
|
|||||||
|
Total liabilities
|
|
$
|
|
|
|
||||||
|
Total equity and liabilities
|
|
$
|
|
$
|
|
$
|
|
||||
The accompanying notes form an integral part of these consolidated financial statements.
|
F-8
|
ARGENX SE
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
|
Year Ended December 31,
|
|||||||||||
|
(in thousands of $ except for shares and EPS)
|
Note
|
2024
|
2023
|
2022
|
|||||||
|
Product net sales
|
17
|
$
|
|
$
|
|
$
|
|
||||
|
Collaboration revenue
|
15
|
|
|
|
|||||||
|
Other operating income
|
16
|
|
|
|
|||||||
|
Total operating income
|
|
|
|
||||||||
|
Cost of sales
|
7
|
(
|
(
|
(
|
|||||||
|
Research and development expenses
|
18
|
(
|
(
|
(
|
|||||||
|
Selling, general and administrative expenses
|
19
|
(
|
(
|
(
|
|||||||
|
Loss from investment in a joint venture
|
26
|
(
|
(
|
(
|
|||||||
|
Total operating expenses
|
(
|
(
|
(
|
||||||||
|
Operating loss
|
$
|
(
|
$
|
(
|
$
|
(
|
|||||
|
Financial income
|
22
|
|
|
|
|||||||
|
Financial expense
|
22
|
(
|
(
|
(
|
|||||||
|
Exchange (losses)/gains
|
22
|
(
|
|
(
|
|||||||
|
Profit/(Loss) for the year before taxes
|
$
|
|
$
|
(
|
$
|
(
|
|||||
|
Income tax benefit
|
23
|
$
|
|
$
|
|
$
|
|
||||
|
Profit/(Loss) for the year
|
$
|
|
$
|
(
|
$
|
(
|
|||||
|
Profit/(Loss) for the year attributable to:
|
|||||||||||
|
Owners of the parent
|
|
(
|
(
|
||||||||
|
Weighted average number of shares
outstanding
|
24
|
|
|
|
|||||||
|
Weighted average number of shares for
purpose of diluted profit/(loss) per share
|
24
|
|
|
|
|||||||
|
Basic profit/(loss) per share (in $)
|
24
|
|
(
|
(
|
|||||||
|
Diluted profit/(loss) per share (in $)
|
24
|
|
(
|
(
|
|||||||
The accompanying notes form an integral part of these consolidated financial statements.
|
F-9
|
ARGENX SE
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OR LOSS
|
Year Ended December 31,
|
|||||||||||
|
(in thousands of $)
|
Note
|
2024
|
2023
|
2022
|
|||||||
|
Profit/(Loss) for the year
|
$
|
|
$
|
(
|
$
|
(
|
|||||
|
Items that may be reclassified subsequently to
profit or loss, net of tax
|
|||||||||||
|
Currency translation differences, arisen from
translating foreign activities
|
(
|
|
(
|
||||||||
|
Items that will not be reclassified subsequently
to profit or loss, net of tax
|
|||||||||||
|
Fair value gain/(loss) on investments in
equity instruments designated as FVTOCI
|
6
|
(
|
(
|
(
|
|||||||
|
Other comprehensive profit/(loss), net of
income tax
|
(
|
|
(
|
||||||||
|
Total comprehensive profit/(loss)
attributable to:
|
|||||||||||
|
Owners of the parent
|
$
|
|
$
|
(
|
$
|
(
|
|||||
The accompanying notes form an integral part of these consolidated financial statements.
|
F-10
|
ARGENX SE
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Year Ended December 31,
|
|||||||||||
|
(in thousands of $)
|
Note
|
2024
|
2023
|
2022
|
|||||||
|
Operating profit/(loss)
|
|
$
|
(
|
$
|
(
|
$
|
(
|
||||
|
Adjustments for non-cash items
|
|
|
|||||||||
|
Amortization of intangible assets
|
5
|
|
|
|
|||||||
|
Depreciation of property, plant and equipment
|
4
|
|
|
|
|||||||
|
Provisions for employee benefits
|
|
|
|
||||||||
|
Expense recognized in respect of share-based payments
|
13
|
|
|
|
|||||||
|
Fair value gains on financial assets at fair value through profit or
loss
|
6
|
(
|
|
(
|
|||||||
|
Loss from investment in a joint venture
|
26
|
|
|
|
|||||||
|
Other non-cash (benefit)/expenses
|
(
|
|
|
||||||||
|
$
|
|
$
|
(
|
$
|
(
|
||||||
|
Movements in current assets/liabilities
|
|
|
|||||||||
|
(Increase)/decrease in trade and other receivables
|
9
|
(
|
(
|
(
|
|||||||
|
(Increase)/decrease in inventories
|
7
|
(
|
(
|
(
|
|||||||
|
(Increase)/decrease in other current assets
|
(
|
(
|
(
|
||||||||
|
Increase/(decrease) in trade and other payables
|
14
|
|
|
|
|||||||
|
Movements in non-current assets/liabilities
|
|||||||||||
|
(Increase)/decrease in other non‑current assets
|
6
|
(
|
(
|
(
|
|||||||
|
(Increase)/decrease in non-current prepaid expense
|
|
(
|
|
||||||||
|
Net cash flows used in operating activities, before interest and
taxes
|
(
|
(
|
(
|
||||||||
|
Interest paid
|
(
|
(
|
(
|
||||||||
|
Income taxes received/(paid)
|
|
(
|
(
|
||||||||
|
Net cash flows used in operating activities
|
|
$
|
(
|
$
|
(
|
$
|
(
|
||||
|
Purchase of intangible assets
|
5
|
(
|
(
|
(
|
|||||||
|
Purchase of property, plant and equipment
|
4
|
(
|
(
|
(
|
|||||||
|
Purchase of current financial assets
|
10
|
(
|
(
|
(
|
|||||||
|
Sale of current financial assets
|
10
|
|
|
|
|||||||
|
Interest received
|
|
|
|
||||||||
|
Investment in a joint venture
|
26
|
(
|
(
|
(
|
|||||||
|
Net cash flows from/(used in) investing activities
|
|
$
|
(
|
$
|
|
$
|
(
|
||||
|
Principal elements of lease payments
|
21
|
(
|
(
|
(
|
|||||||
|
Proceeds from issue of new shares, gross amount
|
12
|
|
|
|
|||||||
|
Issue costs paid
|
12
|
|
(
|
(
|
|||||||
|
Exchange (losses)/gains from currency conversion on proceeds
from issue of new shares
|
|
(
|
|
||||||||
|
Payment of employee withholding taxes relating to restricted stock
unit awards
|
(
|
(
|
(
|
||||||||
|
Proceeds from exercise of stock options
|
12
|
|
|
|
|||||||
|
Net cash flows from financing activities
|
$
|
|
$
|
|
$
|
|
|||||
|
F-11
|
|
Increase/(decrease) in cash and cash equivalents
|
$
|
(
|
$
|
|
$
|
(
|
|||||
|
Cash and cash equivalents at the beginning of the year
|
$
|
|
$
|
|
$
|
|
|||||
|
Exchange gains/(losses) on cash and cash equivalents
|
$
|
(
|
$
|
|
$
|
(
|
|||||
|
Cash and cash equivalents at the end of the year
|
$
|
|
$
|
|
$
|
|
The accompanying notes form an integral part of these consolidated financial statements.
|
F-12
|
ARGENX SE
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
|
Attributable to owners of the parent
|
||||||||||||||||||||||||
|
(in thousands of $)
|
Share
capital
|
Share
premium
|
Accumulated
losses
|
|
Translation
differences
|
Share-based
payment and income
tax deduction on
share-based
payments
|
Fair value movement on
investment in equity
instruments designated as
at FVTOCI
|
|
Total equity
attributable to
owners of the
parent
|
Total equity
|
||||||||||||||
|
Balance on January 1, 2022
|
$
|
|
$
|
|
$
|
(
|
$
|
|
$
|
|
$
|
(
|
$
|
|
$
|
|
||||||||
|
Loss for the year
|
(
|
(
|
(
|
|||||||||||||||||||||
|
Other comprehensive income/(loss)
|
(
|
(
|
(
|
(
|
||||||||||||||||||||
|
Total comprehensive income/(loss) for the year
|
—
|
—
|
(
|
(
|
—
|
(
|
(
|
(
|
||||||||||||||||
|
Income tax benefit from excess tax deductions related to share-based payments
|
|
|
|
|||||||||||||||||||||
|
Share-based payment
|
|
|
|
|||||||||||||||||||||
|
Issue of share capital
|
|
|
|
|
||||||||||||||||||||
|
Transaction costs for equity issue
|
(
|
(
|
(
|
|||||||||||||||||||||
|
Exercise of stock options
|
|
|
|
|
||||||||||||||||||||
|
Ordinary shares withheld for payment of employees’ withholding tax liability
|
(
|
(
|
(
|
|||||||||||||||||||||
|
Balance on December 31, 2022
|
$
|
|
$
|
|
$
|
(
|
$
|
|
$
|
|
$
|
(
|
$
|
|
$
|
|
||||||||
|
Loss for the year
|
(
|
(
|
(
|
|||||||||||||||||||||
|
Other comprehensive income/(loss)
|
|
(
|
|
|
||||||||||||||||||||
|
Total comprehensive income/(loss) for the year
|
—
|
—
|
(
|
|
|
—
|
(
|
(
|
|
(
|
||||||||||||||
|
Income tax benefit from excess tax deductions related to share-based payments
|
|
|
|
|||||||||||||||||||||
|
Share-based payment
|
|
|
|
|
||||||||||||||||||||
|
Issue of share capital
|
|
|
|
|
|
|||||||||||||||||||
|
Transaction costs for equity issue
|
(
|
(
|
|
(
|
||||||||||||||||||||
|
Exercise of stock options
|
|
|
|
|
|
|||||||||||||||||||
|
Ordinary shares withheld for payment of employees’ withholding tax liability
|
(
|
(
|
(
|
|||||||||||||||||||||
|
Balance on December 31, 2023
|
$
|
|
|
$
|
|
|
$
|
(
|
|
$
|
|
$
|
|
$
|
(
|
|
$
|
|
|
$
|
|
|||
|
Profit for the year
|
|
|
|
|||||||||||||||||||||
|
Other comprehensive income/(loss)
|
(
|
(
|
(
|
(
|
||||||||||||||||||||
|
Total comprehensive income/(loss) for the year
|
—
|
—
|
|
|
(
|
—
|
(
|
|
|
|
||||||||||||||
|
Income tax benefit from excess tax deductions related to share-based payments
|
|
|
|
|||||||||||||||||||||
|
Share-based payment
|
|
|
|
|
||||||||||||||||||||
|
Exercise of stock options
|
|
|
|
|
|
|||||||||||||||||||
|
Ordinary shares withheld for payment of employees’ withholding tax liability
|
(
|
(
|
(
|
|||||||||||||||||||||
|
Balance on December 31, 2024
|
$
|
|
$
|
|
$
|
(
|
|
$
|
|
$
|
|
$
|
(
|
|
$
|
|
|
$
|
|
|||||
Please refer to ‘‘
Note 12 — Share Capital and Share Premium
’’ for more information on the share capital and movement in number of shares. See also ‘‘
Note 13 — Share-Based
Payments
’’ for more information on the share-based payments.
The accompanying notes form an integral part of these consolidated financial statements.
|
F-13
|
ARGENX SE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
argenx SE
is a
Dutch European public company with limited liability
incorporated under the laws of the Netherlands
The
Netherlands
. The company (
COC 24435214
) has its official seat in
Amsterdam, the Netherlands
, and its registered office
is at
Laarderhoogtweg 25, 1101 EB Amsterdam, the Netherlands
. An overview of the company and its subsidiaries (the
Company) are described in ‘‘
Note 30 — Overview of Consolidation Scope
’’.
argenx SE
is a publicly traded company with ordinary shares listed on
Euronext Brussels
under the symbol “
ARGX
”
The Company’s material accounting policies are summarized below.
The consolidated financial statements are prepared in accordance with the IFRS
®
Accounting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB).
The consolidated financial statements provide a general
overview of the Company’s activities and the results achieved. They present fairly the entity’s financial position, its
financial performance and cash flows, on a going concern basis.
The material accounting policy information applied in the preparation of the above consolidated financial statements are
set out below. All amounts are presented in thousands of US dollar, unless otherwise indicated, rounded to the nearest
$
‘000
.
The consolidated financial statements have been approved for issue by the Company’s Board of Directors (the “Board”)
on
March 19, 2025
.
•
In the current year, the Group has assessed and adopted amendments to IFRS
as issued by the IASB
that are
mandatorily effective for accounting periods that begin on or after January 1, 2024. Their adoption has not had any
material impact on the disclosures or on the amounts reported in these consolidated financial statements.
•
IFRS 18 Presentation and Disclosures in Financial Statements
IFRS 18 replaces IAS 1, carrying forward many of the requirements in IAS 1 unchanged and complementing them with
new requirements. In addition, some IAS 1 paragraphs have been moved to IAS 8
Accounting Policies, Changes in
Accounting Estimates and Errors
and IFRS 7
Financial Instruments: Disclosures
. Furthermore, the IASB has made
minor amendments to IAS 7
Statement of Cash Flows
and IAS 33
Earnings per Share
.
IFRS 18 introduces new requirements to:
•
present specified categories and defined subtotals in the statement of profit or loss
•
provide disclosures on management-defined performance measures (MPMs) in the notes to the financial statements
•
improve aggregation and disaggregation.
An entity is required to apply IFRS 18 for annual reporting periods beginning on or after January 1, 2027, with earlier
application permitted. The amendments to IAS 7 and IAS 33, as well as the revised IAS 8 and IFRS 7, become effective
when an entity applies IFRS 18. IFRS 18 requires retrospective application with specific transition provisions.
|
F-14
|
•
Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7)
The amendments address matters identified during the post-implementation review of the classification and measurement
requirements of IFRS 9
Financial Instruments
. The amendments are effective for reporting periods beginning on or after
January 1, 2026.
The Group continues to evaluate the impacts of the application of these amendments on the consolidated financial
statements in future periods.
We have not early adopted any standard, interpretation, or amendment that has been issued but is not yet effective.
The consolidated financial statements include the financial statements of the Company and entities controlled by the
Company (its subsidiaries). Control is achieved when the Company:
•
has power over the investee;
•
is exposed, or has rights, to variable returns from its involvement with the investee; and
•
has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control listed above.
The results of the subsidiaries are included in the consolidated statements of profit or loss and consolidated statements of
other comprehensive income or loss from the effective date of acquisition up to the date when control ceases to exist.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into
line with those used by other members of the Group.
All intercompany transactions and unrealized gains on transactions between group companies are eliminated. Unrealized
Items included in the consolidated financial statements of each of the entities are valued using the currency of their
economic environment in which the entity operates. The consolidated financial statements are presented in USD ($),
which is the Company’s functional and presentation currency.
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date.
Foreign exchange differences arising on translation are recognized in the consolidated statements of profit or loss and the
consolidated statements of other comprehensive income or loss as “Exchange (losses)/gains”. Non-monetary assets and
liabilities denominated in foreign currencies are translated at the foreign exchange rate applicable at the date of the
transaction.
For foreign entities using a different functional currency than USD:
•
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet;
•
income and expenses for each statement presenting profit or loss and statements of other comprehensive income or
loss are translated at average exchange rates.
|
F-15
|
Expenditure on research activities is recognized as an expense in the period in which it is incurred.
Upfront payments and development milestone payments for “Acquired In-Process RD” obtained through in-licensing
arrangements are capitalized as intangible assets under “Acquired In-Process RD” upon meeting the IAS 38
capitalization criteria. These intangibles are considered as intangible assets with definite useful lives and are carried at
cost less amortization and accumulated impairment losses. The Company has not started to amortize “Acquired In-
Process RD” as they are not available for use until regulatory approval has been obtained, but they are evaluated for
potential impairment on an annual basis or when facts and circumstances may indicate a risk of impairment.
Any
impairment charge is recorded in the consolidated statements of profit or loss and the consolidated statements of other
comprehensive income or loss under “Research and development expense”.
Once an asset included in “Acquired In-
Process RD” has received marketing approval from a regulatory authority, it is recorded under “Acquired RD
available for use” category.
Regulatory milestone payments and sales-based milestone payments for RD obtained through in-licensing
arrangements acquired are capitalized intangible assets under “Acquired RD available for use” upon meeting the IAS
38 capitalization criteria. All intangibles classified under “Acquired RD available for use” are considered as intangible
assets with finite useful lives and are carried at cost less accumulated amortization and accumulated impairment losses.
“Acquired RD available for use” is evaluated for potential impairment when the Company identifies indications based
on facts and circumstances of the asset. Any impairment charge is recorded in the consolidated statements of profit or
loss and the consolidated statements of other comprehensive income or loss under “Cost of sales”. “Acquired RD
available for use” is amortized under “Cost of sales” on a straight-line basis over the estimated useful life, being the
longer of the current patent protection life of the acquired RD and patent protection life of the combined product.
Other intangible assets could include a Priority Review Voucher (PRV) which the Company can use to obtain the
priority review by the FDA for one of its future regulatory submissions or may sell or transfer to a third party. The PRV
is initially measured at cost and annually reviewed for impairment when events or circumstances indicate that the
carrying value may not be recoverable.
Any impairment charge is recorded in the consolidated statements of profit or
loss and the consolidated statements of other comprehensive income or loss under “Research and development
expenses.”
Using the PRV results in amortization recorded in the consolidated statements of profit or loss and the
consolidated statements of other comprehensive income or loss under “Research and development expenses” and
subsequent derecognition of the intangible asset.
The current and non-current research and development incentive receivables relate to refunds resulting from research and
development incentives on Research and development expenses in Belgium and are credited to the consolidated
statements of profit or loss and the consolidated statements of other comprehensive income or loss under the line “Other
operating income” when the relevant expenditure has been incurred and there is a reasonable assurance that the research
and development incentives will be received.
Inventories are carried at cost or net realizable value, whichever is lowest. Cost comprises of costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to their present location and condition. If the expected
sales price less completion costs to execute sales (net realizable value) is lower than the carrying amount, a write-down
is recognized for the amount by which the carrying amount exceeds its net realizable value.
Included in inventory are products which could, besides commercial activities, be used in preclinical and clinical
programs, and free-of-charge, compassionate use and pre-approval access program. These products are expensed either
through “Research development expenses” or “Selling, general and administrative expenses”.
We capitalize inventory costs associated with products prior to the regulatory approval of these products, or for
inventory produced in production facilities not yet approved, when it is highly probable that the pre-approval inventories
will be sellable. The determination to capitalize is based on the particular facts and circumstances relating to the
|
F-16
|
expected regulatory approval of the product or production facility being considered. The assessment of whether or not
the product is considered highly probable to be sellable is made and includes, but is not limited to, how far a particular
product or facility has progressed along the approval process, any known safety or efficacy concern and other
impediments.
Previously capitalized costs related to pre-launch inventories could be required to be written down upon a change in such
judgement or due to a denial or delay of approval by regulatory bodies, a delay in commercialization or other potential
factors, which will be recorded under “Research and development expenses” in the consolidated statements of profit or
loss and the consolidated statements of other comprehensive income or loss.
Trade and other receivables are designated as financial assets measured at amortized cost. They are initially measured
either at their invoiced amounts or at transaction price, in the absence of a significant financing component less
adjustments for estimated revenue deductions such as rebates, chargebacks and returns. All receivables are subsequently
measured at amortized cost, which generally corresponds to nominal value less expected credit loss provision.
Loss allowance for expected credit losses are established using a simplified approach of forward-looking expected credit
loss model (ECL), which includes possible default events on the trade receivables over the entire holding period of the
trade receivable. These provisions represent the difference between the trade receivable’s carrying amount in the
consolidated statements of financial position and the estimated collectible amount. Charges for loss allowance for
expected credit losses are recorded under “Selling, general and administrative expenses” in the consolidated statements
of profit or loss and consolidated statements of other comprehensive income or loss.
Current financial assets measured at amortized costs comprise of term accounts that have an initial maturity equal or less
than twelve months, but exceeding three months.
Current financial assets measured at fair value through profit or loss comprise of money market funds.
Interests on Current financial assets are reported under Cash Flow from investment activities under “Interest received”
Cash are financial assets measured at amortized cost and comprise of cash at bank.
Cash equivalents measured at amortized cost comprise of term accounts that have an initial maturity of less than three
months that are subject to an insignificant risk of changes in values.
Cash equivalents measured at fair value through profit or loss comprise of money market funds that are readily
convertible to cash and are subject to insignificant risk of changes in value and which are used by the Company in the
management of its short-term commitments. The Company applies judgement at each reporting period on the
classification of its money market funds.
Cash and cash equivalents exclude restricted cash, which is presented in the consolidated statements of financial position
under the line “Other non-current assets”.
Interests on Cash and cash equivalents is reported under Cash Flow from investment activities under “Interest received”.
Trade and other payables are comprised of liabilities that are due less than one year from the balance sheet date and are
in general not interest bearing and settled on an ongoing basis during the financial year. They also include accrued
expenses related to the Company’s research and development activities, sales rebates and reserves and short-term
employee benefits. Trade and other payables are initially measured at their transaction price, which are subsequent to
initial recognition measured at amortized cost.
Short-term employee benefits include payables and accruals for salaries and bonuses to be paid to the employees of the
Company. They are recognized as expenses for the period in which employees perform the corresponding services.
|
F-17
|
The Company assesses whether a contract is or contains a lease, at inception of the contract. The Company recognizes a
right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee,
except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For
short-term leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the
term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits
from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the lessee uses its
incremental borrowing rate. The lease liability is subsequently measured by increasing the carrying amount to reflect
interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease
payments made. The lease liability is presented as a separate line in the consolidated statements of financial position.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or
before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently
measured at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the
shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset
or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-
use asset is depreciated over the useful life of the underlying asset. The right-of-use assets are presented in the
consolidated statements of financial position under the caption “Property, plant and equipment”.
Financial instruments are initially recognized either at fair value or at transaction price and subsequently measured at
either amortized cost or fair value under IFRS 9 on the basis of both the Company’s model for managing the financial
assets and the contractual cash flow characteristics of the financial asset. A financial asset is classified as current when
the cash flows expected to flow from the instrument mature within one year.
Profit share in AgomAb Therapeutics NV:
The Company holds investments in non-current financial assets, which based
on IFRS 9, are designated as financial assets at fair value through profit or loss. The fair value of listed investments is
based upon the closing price of such securities at each reporting date. As there is no active market for this equity
instrument, the Company establishes the fair value by using valuation techniques. The changes to the fair valuation is
recorded under “Other operating income” in the consolidated statements of profit or loss
.
Shares of Zai Lab Ltd:
Based on IFRS 9, the Company irrevocably elected to designate this specific investment as a
financial asset at fair value through OCI as the participation is not held for trading purposes nor contingent consideration
recognized by an acquirer in a business combination. The investment is recorded under “Other non-current assets” in
consolidated statements of financial position and changes to the fair valuation is recorded under “Fair value gain/(loss)
on investments in equity instruments designated as at FVTOCI” in the consolidated statements of other comprehensive
income or loss.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.
The Company has never distributed any dividends to its shareholders. As of
December 31, 2024
, no profits were
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of
the equity instruments at the acceptance date. Equity settled share based payments includes expenses related to stock
options and restricted stock units granted by the Company.
The fair value determined at the acceptance date of the equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Company’s estimate of equity instruments that will eventually vest, with a
corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of
equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in the
consolidated statements of profit or loss and the consolidated statements of other comprehensive income or loss such that
|
F-18
|
the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled share-based
payment reserve.
The share-based payment expense is recorded in the “Consolidated Statements of Profit or Loss” depending on the
nature of the services provided by each beneficiary.
Income tax in the consolidated statements of profit or loss and the consolidated statements of other comprehensive
income or loss represents the total of the current tax and deferred tax.
The current tax is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated
statements of profit or loss and consolidated statements of other comprehensive income or loss as it excludes items of
income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The
Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
end of the reporting period.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the
consolidated financial statements and the corresponding tax basis used in the computation of taxable profit. The
Company recognizes deferred tax assets, including the tax base of tax loss carryforwards, if management assesses that
these tax assets can be offset against positive taxable profits in the future. This judgment is made on an ongoing basis,
considering actual results, budgets, and business plans for the coming years. The realization of deferred tax assets
depends on all available factors as of reporting date.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that
it is not probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred
tax assets and liabilities are offset if there is a legally enforceable right to offset.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantially enacted
by the end of the reporting period.
The Company records uncertain tax positions in accordance with IAS 12 Income Taxes using the 2-step test whereby (1)
the Company determines whether it is probable that the tax positions will be accepted by relevant taxing authorities, and
(2) for those tax positions that are not probable that a tax authority will accept in full the position, the Company
recognizes uncertain tax positions using either the most likely amount or the expected value, depending on specific facts
and circumstances.
Revenue from the sale of products is recognized at an amount that reflects the consideration that the Company expects to
be entitled to receive in exchange for transferring goods to a customer, at the time when the customer obtains control of
the goods rendered, this means when the customer has the ability to direct the use of the asset. The consideration that is
committed in a contract with a customer can include fixed amounts, variable amounts, or both. The amount of the
consideration may vary due to discounts, rebates, returns, chargebacks or other similar items. Contingent consideration is
included in the transaction price when it is highly probable that the amount of revenue recognized is not subject to future
significant reversals.
Product net sales are recognized once we satisfy the performance obligation at a point in time under the revenue
recognition criteria in accordance with IFRS 15
Revenue from contracts with customers
.
Revenue arising from the commercial sale of commercial product is presented in the consolidated statements of profit or
loss and the consolidated statements of other comprehensive income or loss under “Product net sales”.
In accordance
with IFRS 15,
such revenue is recognized when the product is physically transferred, in accordance with the delivery and
acceptance terms agreed with the customer. Payment of the transaction price is payable at the point the customer obtains
the legal title to the goods.
The amount of revenue recognized reflects the various types of price reductions or rights of return offered by the
Company to its customers. Such price reductions and rights of return qualify as variable consideration under IFRS 15.
Products sold are covered by various Government and State programs (such as Medicare and Medicaid) under which
products are sold at a discount. Rebates are granted to healthcare authorities, and under contractual arrangements with
certain customers. Some wholesalers are entitled to chargeback incentives based on the selling price to the end customer,
|
F-19
|
under specific contractual arrangements. Rebates, chargebacks and other incentives are recognized in the period in which
the underlying sales are recognized as a reduction of product sales.
The significant components of variable consideration are as follows:
Co-payment assistance:
We provide co-payment assistance to patients who have commercial insurance and meet certain
eligibility requirements. We use the expected-value method for estimating co-payment assistance based on estimates of
program redemption using data provided by third-party administrators. Estimates for the co-payment assistance are
adjusted quarterly to reflect actual experience. We record an accrued liability for unredeemed co-payment assistance
related to products for which control has been transferred to customers.
Chargebacks:
Chargebacks are discounts that occur when contracted parties purchase directly from a specialty
distributor. Contracted parties, which currently consist primarily of Public Health Service Institutions and federal
government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price.
The specialty distributor, in turn, charges back the difference between the price initially paid by the specialty distributor
and the discounted price paid to the specialty distributor by the contracted parties to the Company. The reserves for
chargeback are based on known sales to contracted parties. We establish the reserves for chargebacks in the same period
that the related revenue is recognized, resulting in an accrued liability and reduction of product gross sales.
Rebates:
We are subject to government mandated rebates for Medicaid Drug Rebate Program, Medicare Part D
Prescription Drug Benefit Program, and other government health care programs in the U.S. Rebate amounts are based
upon contractual agreements or legal requirements with public sector benefit providers. We use the expected-value
method for estimating these rebates. The expected utilization of rebates is estimated based on third-party data from the
specialty pharmacies and specialty distributor. Estimates for these rebates are adjusted quarterly to reflect the most recent
information. We record an accrued liability and reduction of product sales for unpaid rebates related to products for
which control has been transferred to customers.
Medicare Part D Coverage Gap:
The Medicare Part D coverage gap is a federal program to subsidize the costs of
prescription drugs for Medicare beneficiaries in the U.S., which mandates manufacturers to fund a portion of the
Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. Funding of the coverage gap is
generally invoiced and paid in arrears. We estimate the impact of the Medicare Part D coverage gap using the expected-
value method based on an amount expected to be incurred for the current quarter’s activity, plus an accrual balance for
known prior quarters. Estimates for the impact of the Medicare Part D coverage gap are adjusted quarterly to reflect
actual experience. We record an accrued liability for unpaid reserves related to the Medicare Part D coverage gap.
Distributor fees:
The specialty distributor provides distribution services to the Company for a fee, based on a
contractually determined fixed percentage of sales. As the services being provided by the specialty distributor are not
distinct, the recurring service fees paid to specialty distributors are treated as variable consideration and a reduction to
the transaction price. We estimate these distributor fees and record such estimates in the same period the related revenue
is recognized, resulting in a reduction of product gross sales. We record an accrued liability for unpaid distributor fees.
Value-based arrangements (VBAs):
VBAs are arrangements with third party payers where the Company will pay the
third-party payers rebates and other fees on eligible purchases of the Company’s product. In consideration for the rebates
and fees paid, the third-party Payers will cover its’ patient purchases made of the Company’s products. The structure of
the rebates and fees are largely structured based on volume of product purchased. The rebates and fees paid will be
treated as variable consideration and a reduction to the transaction price. We use the expected-value method for
estimating the ultimate rebate and fee paid, which are based on the volume of product sold. We apply the applicable
rebate rate against a payer mix factor for the relevant patient populations and to the vials sold in the effective plan year
of the rebate to derive a liability recorded. Estimates for these agreements are adjusted quarterly to reflect the most
recent information. We record an accrued liability for unpaid value-based agreements.
The estimated amounts described above are recognized in the consolidated statements of profit or loss and the
consolidated statements of other comprehensive income or loss within “Product net sales” as a reduction of gross sales,
and within “Trade and other payables” in the consolidated statements of financial position. They are subject to regular
review and adjustment as appropriate based on the most recent data available to management. Each of the above items
require significant estimates, judgement and information obtained from external sources. If management’s estimates
differ from actual results, we will record adjustments that would affect product sales in the period of adjustment.
|
F-20
|
The Company has currently two active collaboration and license agreements in scope of IFRS 15:
Zai Lab
Under the collaboration agreement, the Company provides clinical and commercial supply to Zai Lab. The Company
concludes to recognize such sales as revenue given that the Company acts as principal in the transaction as the risk
related to inventory is borne by the Company until the inventory is transferred to Zai Lab. The revenue related to clinical
supply is recorded under line item “Collaboration revenue”. The revenue related to commercial supply is recorded under
line item “Product net sales” in the Consolidated Statements of Profit or Loss.
The income related to royalties on sales
made in China is recorded under line item “Collaboration revenue”.
AbbVie
For the collaboration agreement with AbbVie the Company has determined that the transfer of license combined with the
performance of research and development activities represent one single performance obligation. The Company
concluded that the license is not distinct in the context of the contract.
The transaction price is composed of a fixed part, being an upfront license fee, and a variable part, being milestone
payments and cost reimbursements for research and development activities delivered. Milestone payments are only
included in the transaction price to the extent it is highly probable that a significant reversal in the amount of cumulative
revenue recognition will not occur when the uncertainty associated with the variable consideration is subsequently
resolved. Management estimates the amount to be included in the transaction price upon achievement of the milestone
event. Sales-based milestones and sales-based royalties are a part of the Company’s arrangements but are not yet
included in its revenues
.
The transaction price has been allocated to the single performance obligation and revenues have been recognized over
the estimated service period based on an input model, being the percentage of completion method. The upfront license
fee has been fully recognized since 2021 as the performance obligation has been fulfilled at that time. Milestone
payments that become highly probable after the performance obligation has been fulfilled are therefore recognized at that
point in time.
Cost of sales are recognized when the associated revenue from product net sales is recognized. Cost of sales include
material, manufacturing costs and other costs attributable to production, including shipping costs relevant amortizations,
as well as royalties payable on sold products.
In the application of the Company’s accounting policies, which are described above, 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.
Product Sales are recognized when the Company has transferred control of the goods to the customer. Product Sales are
subject to various deductions, which are primarily composed of rebates to government agencies, distributors, health
insurance companies and managed healthcare organizations to arrive to ‘‘Product net sales’’. Certain deductions from
Product Sales are subject to payment based on claims after the initial recognition of the sale due to the time lag between
the point of sale and receipt of a claim.
Upon initial recognition of the Product Sales, the Company recognizes a liability for the variable consideration based on
the Company’s best estimate of expected claims. This estimate is a source of complexity and uncertainty as the Company
|
F-21
|
estimates the transaction price based upon contracts with customers, healthcare providers, payors and government
agencies, regulated discounts applicable to government-funded programs, historical experience of claims received,
estimated payer mix, and other relevant factors. These open claims are recorded as liabilities under “Sales rebates and
reserves’’ in the ‘‘Consolidated Statements of Financial Position’’.
The Company reviews these liabilities at each reporting period to take into account potential changes in the programs,
the volume of claims and/or the most probable final outcome associated to each sale. In line with IFRS 15, the Company
applies constraint in recognition of variable compensation on Product Net Sales. Due to the nature of these liabilities it is
not practicable to give meaningful sensitivity estimates due to the large volume of variables that contribute to the overall
rebates, chargebacks, and other incentives as outlined in “
Note 2.17 — Product net sales
”. Future events could cause the
assumptions within our valuation models to change and materially affect the future results of the Company.
Please refer to “
Note 14 — Trade and Other Payables
” for the movement over the period and the ending balance of the
sales rebates and reserves.
Deferred Tax Assets
The Company recognizes deferred tax assets if management assesses that these tax assets are recoverable in the future.
This judgment is made on an ongoing basis, considering actual results, forecasts, and business plans for the look-forward
period.
The Company has exercised a Critical Accounting Judgement with respect to defining the number of years of forecasted
future taxable profits to be considered as reliable as positive evidence towards its estimate on recognition of deferred tax
assets. The Company has aligned the duration of its deferred tax assessment with the time horizon of its annual operating
plan and long-range predictive estimates.
In the fourth quarter of the year ended December 31, 2024, the Company reassessed the body of evidence as part of its
2025 budgeting and forecasting cycle noting the shift of positive evidence outweighing negative evidence. Such positive
evidence, includes significant revenue growth in the U.S. based Product Net Sales, as well as, expectations regarding
future operating and taxable profits. The Company expects its future revenues to sustain its investments in its clinical and
pre-clinical pipeline.
This evaluation was done alongside the evolution of the external competitive landscape of our commercialized products,
and the positive evidence following our execution in the second half of 2024 on the approvals of VYVGART
HYTRULO for CIDP.
Our evaluation of the evidence for the current reporting period is further detailed in
“
Note 23 — Income taxes
” which presents the balance of
$
708
million
in net deferred tax assets for argenx BV as of
December 31, 2024.
The Company considers the evaluation of all available positive and negative evidence used in its overall recognition
conclusion to be a Critical Accounting Judgment.
The Company has determined that a key estimate in exercising this judgement is related to the growth of U.S. based
Product Net Sales. The forecasts for future growth in this market are important for the utilization of deferred tax assets
against taxable profits by argenx BV. Based on sensitivities and analysis over assumptions in the model, the Company
has determined that other inputs are less sensitive or significant to the recognition of our deferred tax assets. The
Company’s current sensitivities do not exceed the look-forward period.
The Critical Accounting Judgement and the key estimate relating to deferred tax assets are limited to the Company’s
subsidiary argenx BV which holds these assets.
No other Critical accounting judgments and major sources of estimation uncertainty have been made in the current
period by the Company.
|
F-22
|
|
(in thousands of $)
|
IT, office and
lab equipment
|
Right-of-use
assets
Buildings
|
Right-of-use
assets Vehicles
|
Leasehold
improvements
|
Leased
equipment
|
Total
|
||||||||||||
|
Cost
|
||||||||||||||||||
|
On January 1, 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||
|
Additions
|
|
|
|
|
|
|
||||||||||||
|
Disposals
|
(
|
|
|
|
|
(
|
||||||||||||
|
Currency translation
adjustment
|
(
|
|
|
|
|
(
|
||||||||||||
|
On December 31, 2022
|
|
|
|
|
|
|
||||||||||||
|
Additions
|
|
|
|
|
|
|
||||||||||||
|
Disposals
|
(
|
|
(
|
(
|
|
(
|
||||||||||||
|
On December 31, 2023
|
|
|
|
|
|
|
||||||||||||
|
Additions
|
|
|
|
|
|
|
||||||||||||
|
Disposals
|
(
|
(
|
(
|
|
|
(
|
||||||||||||
|
On December 31, 2024
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||
|
Depreciation and impairment
|
||||||||||||||||||
|
On January 1, 2022
|
$
|
(
|
$
|
(
|
$
|
(
|
$
|
(
|
$
|
(
|
$
|
(
|
||||||
|
Depreciation
|
(
|
(
|
(
|
(
|
(
|
(
|
||||||||||||
|
Disposals
|
|
|
|
|
|
|
||||||||||||
|
Currency translation
adjustment
|
|
|
|
|
|
|
||||||||||||
|
On December 31, 2022
|
(
|
(
|
(
|
(
|
(
|
(
|
||||||||||||
|
Depreciation
|
(
|
(
|
(
|
(
|
(
|
(
|
||||||||||||
|
Disposals
|
|
|
|
|
|
|
||||||||||||
|
On December 31, 2023
|
(
|
(
|
(
|
(
|
(
|
(
|
||||||||||||
|
Depreciation
|
(
|
(
|
(
|
(
|
(
|
(
|
||||||||||||
|
Disposals
|
|
|
|
|
|
|
||||||||||||
|
On December 31, 2024
|
$
|
(
|
$
|
(
|
$
|
(
|
$
|
(
|
$
|
(
|
$
|
(
|
||||||
|
Carrying Amount
|
||||||||||||||||||
|
On December 31, 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||
|
On December 31, 2023
|
|
|
|
|
|
|
||||||||||||
|
On December 31, 2024
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||
Depreciation is recognized as from the moment when the asset is ready for its intended use so as to depreciate the cost of
the assets less their residual values over their useful lives, using the straight-line method. Unless revised due to specific
changes in the estimated useful life, annual depreciation rates are as follows:
•
Office and lab equipment:
three
to
five years
•
IT equipment:
three years
Depreciation of right-of-use assets is done over the expected duration of the lease including lease extensions where
applicable.
As of
December 31, 2024
, there are
no
material commitments to acquire property, plant and equipment. Furthermore,
no
items of property, plant and equipment are pledged. See “
Note 21 — Leases
” for information for leases where the
Company is a lessee.
|
F-23
|
|
(in thousands of $)
|
Acquired RD
available for
use
|
Acquired In-
Process RD
|
Software
databases
|
Other
Intangibles
|
Total
|
||||||||||
|
Cost
|
|||||||||||||||
|
On January 1, 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||
|
Additions
|
|
|
|
|
|
||||||||||
|
Disposals
|
|
|
(
|
|
(
|
||||||||||
|
Derecognition
|
|
|
|
(
|
(
|
||||||||||
|
On December 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||
|
Additions
|
|
|
|
|
|
||||||||||
|
Derecognition
|
|
|
|
(
|
(
|
||||||||||
|
Reclassification
|
|
(
|
|
|
|
||||||||||
|
On December 31, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||
|
Additions
|
|
|
|
|
|
||||||||||
|
On December 31, 2024
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||
|
Amortization and impairment
|
|||||||||||||||
|
On January 1, 2022
|
$
|
|
$
|
|
$
|
(
|
$
|
|
$
|
(
|
|||||
|
Amortization
|
|
|
(
|
(
|
(
|
||||||||||
|
Derecognition
|
|
|
|
|
|
||||||||||
|
On December 31, 2022
|
|
$
|
|
$
|
(
|
$
|
|
$
|
(
|
||||||
|
Amortization
|
(
|
|
(
|
(
|
(
|
||||||||||
|
Derecognition
|
|
|
|
|
|
||||||||||
|
On December 31, 2023
|
(
|
$
|
|
$
|
(
|
$
|
|
$
|
(
|
||||||
|
Amortization
|
(
|
|
(
|
|
(
|
||||||||||
|
Derecognition
|
|
|
|
|
|
||||||||||
|
On December 31, 2024
|
$
|
(
|
$
|
|
$
|
(
|
$
|
|
$
|
(
|
|||||
|
Carrying Amount
|
|||||||||||||||
|
On December 31, 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||
|
On December 31, 2023
|
|
|
|
|
|
||||||||||
|
On December 31, 2024
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||
Acquired In-Process RD is mainly related to the in-licensing of the ENHANZE
®
drug delivery technology from
Halozyme. In line with its accounting policies, the Company has capitalized the upfront payment upon commencement
of the in-license agreement. In June 2023, the Company obtained the FDA approval for VYVGART HYTRULO. During
the year ended December 31, 2023, upon obtaining regulatory approval,
$
53
million
has been moved from “Acquired In-
Process RD” to “Acquired RD available for use”.
In 2024, the Company extended its collaboration with Halozyme and nominated
four
new targets to be in-licensed to the
ENHANZE
®
drug delivery technology. The cost of the license was capitalized as “Acquired In-Process RD”.
Further, the additions to “Acquired RD available for use” are related to sales-based milestones triggered during 2024.
The “Acquired RD available for use” are amortized under “Cost of sales” on a straight-line basis over their useful life.
The Company performs an annual impairment review on the intangible assets. This review did not result in the
recognition of an impairment charge for the years ended
December 31, 2024
,
2023
and
2022
.
|
F-24
|
In the fourth quarter of
2023
, the Company utilized the PRV submitted with the sBLA filing for VYVGART HYTRULO
for the treatment of CIDP, which resulted in the amortization of
$
102
million
of intangible assets which is recognized
under “Research and development expenses” within the consolidated statements of profit or loss and the consolidated
statements of other comprehensive income or loss and subsequent derecognition of
$
102
million
of intangibles included
under “Other intangibles” on the consolidated statements of financial position.
As of
December 31, 2024
, there are
no
material commitments to acquire intangible assets, except as set forth in
“
Note 28 — Commitments
”.
No
intangible assets are pledged as security for liabilities nor are there any intangible assets
whose title is restricted.
Other non-current assets consisted of non-current restricted cash and financial assets held at fair value through profit or
loss or through OCI.
|
As of December 31,
|
|||||||||
|
(in thousands of $)
|
2024
|
2023
|
2022
|
||||||
|
Non-current restricted cash
|
$
|
|
$
|
|
$
|
|
|||
|
Non-current financial assets held at fair value
through profit or loss
|
|
|
|
||||||
|
Non-current financial assets held at fair value
through OCI
|
|
|
|
||||||
|
Total other non-current assets
|
$
|
|
$
|
|
$
|
|
|||
Non-current restricted cash on
December 31, 2024
was mainly composed of deposit guarantees paid under the lease
agreements for the laboratory and offices of the Company.
Non-current financial assets held at fair value through profit or loss is comprised of the profit share in AgomAb
Therapeutics NV. In March 2019, the Company entered into a license agreement with AgomAb Therapeutics NV for the
use of HGF-mimetic SIMPLE Antibodies™, developed under the Company’s Immunology Innovative Program. In
exchange for granting this license, the Company received a profit share in AgomAb Therapeutics NV. Since AgomAb
Therapeutics NV is a private company, the valuation of the profit share is based on the post-money valuation coming
from its most recent financing round.
In June 2022, AgomAb Therapeutics NV secured
€
38
million
as a result of the extension of Series B. The Company used
the post-money valuation of this Series B financing round and the number of outstanding shares in determining the fair
value of the profit-sharing instrument, which resulted in a change in fair value of non-current financial assets of
€
4
million
recorded through profit or loss in 2022.
In October 2023, AgomAb Therapeutics NV secured
€
100
million
as a result of a Series C financing round. The
Company’s profit share was diluted, but resulting in no change of the fair value. In October 2024, AgomAb Therapeutics
NV secured
$
89
million
as a result of a Series D financing round. The Company’s profit share was diluted and resulted
in an increase of the fair value.
Fair value changes on non-current financial assets with fair value through profit or loss are recognized in the
consolidated statements of profit or loss and the consolidated statements of other comprehensive income or loss under
“Other operating income”.
As part of the license agreement for the development and commercialization for efgartigimod in Greater China, in 2021
the Company obtained, amongst others,
568,182
newly issued Zai Lab shares calculated at a price of
€
132
per share. The
fair value of the equity instrument at reporting date is determined by reference to the closing price of such securities at
each reporting date (classified as level 1 in the fair value hierarchy). The Company made the irrevocable election to
recognize subsequent changes in fair value through OCI under “Fair value gain/(loss) on investments in equity
instruments designated as at FVTOCI”.
December 31, 2024
,
2023
and
2022
.
|
F-25
|
|
As of December 31,
|
|||||||||
|
(in thousands of $)
|
2024
|
2023
|
2022
|
||||||
|
Cost on January 1
|
$
|
|
$
|
|
$
|
|
|||
|
Additions of the year
|
|
|
|
||||||
|
Cost on December 31
|
$
|
|
$
|
|
$
|
|
|||
|
Fair value adjustments on January 1
|
$
|
(
|
$
|
(
|
$
|
(
|
|||
|
Fair value adjustment of the year through profit or
loss
|
|
|
|
||||||
|
Fair value adjustment of the year through OCI
|
(
|
(
|
(
|
||||||
|
Fair value adjustment on December 31
|
$
|
(
|
$
|
(
|
$
|
(
|
|||
|
Net book value on December 31
|
$
|
|
$
|
|
$
|
|
|||
|
As of December 31,
|
|||||||||
|
(in thousands of $)
|
|
2024
|
|
2023
|
2022
|
||||
|
Raw materials and consumables
|
$
|
|
|
$
|
|
$
|
|
||
|
Inventories in process
|
|
|
|
||||||
|
Finished goods
|
|
|
|
||||||
|
Total inventories
|
|
$
|
|
|
$
|
|
$
|
|
|
The cost of inventories, which is recognized under “Cost of sales” in the consolidated statements of profit or loss and the
consolidated statements of other comprehensive income or loss, amounted to
$
168
million
for the year ended
December 31, 2024
(compared to
$
101
million
for the year ended
December 31, 2023
and
$
29
million
for the year ended
December 31, 2022
).
The Company
has pre-launch inventory awaiting regulatory approval amounting to
$
4.5
million
as of the current year
|
As of December 31,
|
|||||||||
|
(in thousands of $)
|
2024
|
2023
|
2022
|
||||||
|
Prepaid research and development expenses
|
$
|
|
$
|
|
$
|
|
|||
|
Prepaid inventory
|
|
|
|
||||||
|
Prepaid software
|
|
|
|
||||||
|
Prepaid advertising expenses
|
|
|
|
||||||
|
Other prepaid expenses
|
|
|
|
||||||
|
Total prepaid expenses
|
$
|
|
$
|
|
$
|
|
|||
|
F-26
|
|
As of December 31,
|
|||||||||
|
(in thousands of $)
|
2024
|
2023
|
2022
|
||||||
|
Trade receivables
|
$
|
|
$
|
|
$
|
|
|||
|
Tax receivables
|
|
|
|
||||||
|
Interest receivables
|
|
|
|
||||||
|
Other receivables
|
|
|
|
||||||
|
Total trade and other receivables
|
$
|
|
$
|
|
$
|
|
|||
The carrying amounts of trade and other receivables approximate their respective fair values.
On
December 31, 2024
,
2023
and
2022
, we did not have a material provision for expected credit losses.
Please also refer to “
Note 25 — Financial Risk Management
” for more information on the financial risk management.
These current financial assets relate to term accounts with an initial maturity longer than three months and less than 12
months and money market funds that do not qualify as cash equivalents as they are not expected to be used to meet
short-term commitments.
|
As of December 31,
|
|||||||||
|
(in thousands of $)
|
|
2024
|
|
2023
|
2022
|
||||
|
Money market funds
|
|
$
|
|
$
|
|
$
|
|
||
|
Term accounts
|
|
|
|
||||||
|
Total current financial assets
|
|
$
|
|
|
$
|
|
$
|
|
|
On
December 31, 2024
, the current financial assets included
$
104
million
(
€
100
million
)
held in EUR
which could
generate a foreign currency exchange gain or loss in the financial results in accordance with the fluctuations of the USD/
EUR exchange rate as the Company’s functional currency is USD.
Please also refer to “
Note 25 — Financial Risk Management
” for more information on the financial risk management.
|
As of December 31,
|
|||||||||
|
(in thousands of $)
|
|
2024
|
|
2023
|
2022
|
||||
|
Money market funds
|
|
$
|
|
$
|
|
$
|
|
||
|
Term accounts
|
|
|
|
||||||
|
Cash and bank balances
|
|
|
|
|
|||||
|
Total cash and cash equivalents
|
|
$
|
|
$
|
|
$
|
|
||
Cash and cash equivalents comprise of cash and bank balances, term accounts with an original maturity not exceeding
three months
and money market funds that are readily convertible to cash and are subject to an insignificant risk of
changes in value.
Cash positions are invested with preferred financial partners, which are considered to be high quality financial
institutions with sound credit ratings to reduce credit risk.
On
December 31, 2024
, the cash and cash equivalents included
$
653
million
(
€
628
million
) held in EUR, and
$
2
million
(
¥
257
million
) held in JPY which could generate a foreign currency exchange gain or loss in the financial results in
accordance with the fluctuations of the USD/EUR and USD/JPY exchange rates as the Company’s functional currency is
USD.
Please also refer to “
Note 25 — Financial Risk Management
” for more information on the financial risk management.
|
F-27
|
As of
December 31, 2024
, the Company’s share capital was represented by
60,760,957
shares. All shares were issued,
fully paid up and of the same class. The table below summarizes the share issuances as a result of offerings, exercise of
stock options and the vesting of restricted stock units under the Company’s Employee Stock Option Plan.
|
Number of shares outstanding on January 1, 2022
|
|
|
|
Exercise of stock options
|
|
|
|
Vesting of RSUs
|
|
|
|
Global public offering on Euronext and Nasdaq on March 23, 2022
|
|
|
|
Overallotment option exercised by underwriters on March 29, 2022
|
|
|
|
Number of shares outstanding on December 31, 2022
|
|
|
|
Exercise of stock options
|
|
|
|
Vesting of RSUs
|
|
|
|
Global public offering on Nasdaq on July 18, 2023
|
|
|
|
Over-allotment option exercised by underwriters on July 19, 2023
|
|
|
|
Number of shares outstanding on December 31, 2023
|
|
|
|
Exercise of stock options
|
|
|
|
Vesting of RSUs
|
|
|
|
Number of shares outstanding on December 31, 2024
|
|
On July 18, 2023, argenx SE offered
2,244,899
of its ordinary shares through a global offering which consisted of
expenses; and
663,918
ordinary shares in the European Economic Area at a price of
€
436.37
per share, before
underwriting discounts and commissions and offering expenses. On July 19, 2023, the underwriters of the offering
exercised their overallotment option to purchase
336,734
additional ADSs in full. As a result, argenx SE received
$
1.3
billion
in gross proceeds from this offering, decreased by
$
66
million
of underwriter discounts and commissions, and
offering expenses, of which
$
1
million
has been deducted from equity. The total net cash proceeds from the offering
amounted to
$
1.2
billion
.
On May 7, 2024, at the annual general meeting, the shareholders of the Company approved the authorization to the
Board to issue up to a maximum of
10
%
of the then-outstanding share capital, for a period of
18
months
.
On
December 31, 2024
, an amount of
€
461,348
, represented by
4,613,483
shares, still remained available under the
The Company has an equity incentive plan for the employees, key consultants, board members, senior management and
key outside advisors (“key persons”) of the Company and its subsidiaries. In accordance with the terms of the plan, as
approved by shareholders, employees may be granted stock options and/or restricted stock units.
The stock options are granted to key persons of the Company and its subsidiaries. The stock options may be granted to
purchase ordinary shares at an exercise price. The stock options have been granted free of charge. Each employee’s stock
option converts into
one
ordinary share of the Company upon exercise. The stock options carry neither rights to
dividends nor voting rights. Stock 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:
•
1/3rd
of the total stock options granted will vest on the first anniversary of the granting of the stock options, and
|
F-28
|
•
1/36th
of the total stock options granted will vest on the first day of each month following the first anniversary of the
granting of the stock options.
Stock options granted to non-executive directors vest on the third anniversary of the date of grant.
Upon leave of the key persons stock options must be exercised before the later of (i) 90 days after the last working day at
argenx, or (ii) March 31 of the fourth year following the date of grant of those stock options, and in any case no later
than the expiration date of the option.
In order to pre-finance the taxes that are paid upon the grant of stock options, Belgian employees have the ability, in
exchange for the taxes due upon the grant of the stock options, to transfer the economic benefits related to part of those
stock options to a third party. In the year ending
December 31, 2024
, the economic benefits of
20,823
stock options, for
which accelerated vesting applies, were transferred to a third party.
No other conditions are attached to stock options.
at the end of each period presented:
|
Outstanding stock options on December 31,
|
|||||||||
|
Expiry date
|
Exercise price per
stock options
(in $) ¹⁾
|
2024
|
2023
|
2022
|
|||||
|
2024
|
$
|
|
|
|
|
||||
|
2024
|
|
|
|
|
|||||
|
2024
|
|
|
|
|
|||||
|
2025
|
|
|
|
|
|||||
|
2025
|
|
|
|
|
|||||
|
2026
|
|
|
|
|
|||||
|
2026
|
|
|
|
|
|||||
|
2026
|
|
|
|
|
|||||
|
2027
|
|
|
|
|
|||||
|
2027
|
|
|
|
|
|||||
|
2023
|
|
|
|
|
|||||
|
2028
|
|
|
|
|
|||||
|
2023
|
|
|
|
|
|||||
|
2028
|
|
|
|
|
|||||
|
2024
|
|
|
|
|
|||||
|
2029
|
|
|
|
|
|||||
|
2024
|
|
|
|
|
|||||
|
2029
|
|
|
|
|
|||||
|
2025
|
|
|
|
|
|||||
|
2030
|
|
|
|
|
|||||
|
2025
|
|
|
|
|
|||||
|
2030
|
|
|
|
|
|||||
|
2025
|
|
|
|
|
|||||
|
2030
|
|
|
|
|
|||||
|
2025
|
|
|
|
|
|||||
|
2030
|
|
|
|
|
|||||
|
2026
|
|
|
|
|
|||||
|
2031
|
|
|
|
|
|||||
|
2026
|
|
|
|
|
|||||
|
2031
|
|
|
|
|
|||||
|
2026
|
|
|
|
|
|||||
|
2031
|
|
|
|
|
|||||
|
2027
|
|
|
|
|
|||||
|
F-29
|
|
Outstanding stock options on December 31,
|
|||||||||
|
Expiry date
|
Exercise price per
stock options
(in $) ¹⁾
|
2024
|
2023
|
2022
|
|||||
|
2032
|
|
|
|
|
|||||
|
2028
|
|
|
|
|
|||||
|
2033
|
|
|
|
|
|||||
|
2025
|
|
|
|
|
|||||
|
2026
|
|
|
|
|
|||||
|
2031
|
|
|
|
|
|||||
|
2028
|
|
|
|
|
|||||
|
2033
|
|
|
|
|
|||||
|
2028
|
|
|
|
|
|||||
|
2033
|
|
|
|
|
|||||
|
2027
|
|
|
|
|
|||||
|
2032
|
|
|
|
|
|||||
|
2027
|
|
|
|
|
|||||
|
2032
|
|
|
|
|
|||||
|
2029
|
|
|
|
|
|||||
|
2034
|
|
|
|
|
|||||
|
2027
|
|
|
|
|
|||||
|
2032
|
|
|
|
|
|||||
|
2029
|
|
|
|
|
|||||
|
2034
|
|
|
|
|
|||||
|
2028
|
|
|
|
|
|||||
|
2033
|
|
|
|
|
|||||
|
2029
|
|
|
|
|
|||||
|
2034
|
|
|
|
|
|||||
|
2029-2034 ²⁾
|
$
|
|
|
|
|
||||
|
|
|
|
|||||||
1)
Amounts have been converted to USD at the closing rate as of
December 31, 2024
.
2)
In December
2024
, the Company granted stock options for which the Belgian taxed beneficiaries had a 60-day period to choose between a
contractual term of
five
or
ten years
.
|
2024
|
2023
|
2022
|
|||||||||||||
|
Number of
stock
options
|
Weighted average
exercise price ¹⁾
|
Number of
stock
options
|
Weighted average
exercise price ¹⁾
|
Number of
stock
options
|
Weighted average
exercise price ¹⁾
|
||||||||||
|
Outstanding as of
January 1
|
|
$
|
|
|
$
|
|
|
$
|
|
||||||
|
Granted
|
|
|
|
|
|
|
|||||||||
|
Exercised
|
(
|
|
(
|
|
(
|
|
|||||||||
|
Forfeited
|
(
|
|
(
|
|
(
|
|
|||||||||
|
Outstanding as of
December 31
|
|
|
|
|
|
|
|||||||||
|
Exercisable as of December
31
|
|
$
|
|
|
$
|
|
|
$
|
|
||||||
1)
Amounts have been converted to USD at the closing rate of the respective period.
The weighted average share price at the date of exercise of options exercised during the year ended
December 31, 2024
was
$
498.58
, compared to
$
456.80
during the year ended
December 31, 2023
and
$
336.50
during the year ended
December 31, 2022
. The weighted average remaining contractual life of the stock options outstanding amounted to
5.89
years on
December 31, 2024
compared to
5.90
years on
December 31, 2023
and
6.20
years on
December 31, 2022
.
The
table below shows the weighted average remaining contractual life for each range of exercise price:
|
F-30
|
|
Exercise price
(in $)
|
|
Outstanding on
December 31, 2024
|
|
Weighted average
remaining
contractual life
(in years)
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
The fair market value of the stock options has been determined based on the Black-Scholes model using the following
unobservable assumptions:
•
The expected volatility, determined on the basis of the implied volatility of the share price over the expected life of
the option.
•
The expected option life, calculated as the estimated duration until exercise, taking into account the specific features
of the plans.
|
Stock options granted in
|
|
April 2024
|
|
June 2024
|
September 2024
|
December 2024 ¹⁾
|
|||||||
|
Number of options granted
|
|
|
|
|
|
||||||||
|
Average Fair value of
options (in $) ²⁾
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
|||
|
Share price (in $) ²⁾
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
|||
|
Exercise price (in $) ²⁾
|
$
|
|
|
$
|
|
$
|
|
$
|
|
||||
|
Expected volatility
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||
|
Average Expected option
life (in years)
|
|
|
|
|
|
||||||||
|
Risk‑free interest rate
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||
|
Expected dividends
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||
1)
In December
2024
, the Company granted a total of
20,296
stock options of which
3,158
stock options to Belgian taxed beneficiaries. Belgian
taxed beneficiaries can choose between a contractual term of
five
or
ten years
. The expected option life ranges between
3.88
and
6.07
years. This
estimate will be reassessed once the acceptance period of 60 days has passed and the beneficiaries will have made a choice between a contractual
term of
five
or
ten years
. The total fair value of the grant to Belgian taxed beneficiaries would be below
$
1
million
irrespective of
100
%
of the
stock options of Belgian taxed beneficiaries with a contractual term of
five years
or
100
%
of the stock options of Belgian beneficiaries with a
contractual term of
ten years
.
2)
Amounts have been converted to USD at the applicable rate prevailing at the grant date.
Below is an overview of the parameters used in relation to the determination of the fair value of grants during
2023
:
|
F-31
|
|
Stock options granted in
|
|
April 2023
|
July 2023
|
October 2023
|
December 2023 ¹⁾
|
||||||||
|
Number of options granted
|
|
|
|
|
|||||||||
|
Average Fair value of options
(in $) ²⁾
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||
|
Share price (in $) ²⁾
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||
|
Exercise price (in $) ²⁾
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||
|
Expected volatility
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||
|
Average Expected option life
(in years)
|
|
|
|
|
|
||||||||
|
Risk‑free interest rate
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||
|
Expected dividends
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||
1)
In December
2023
, the Company granted a total of
79,305
stock options. Belgian beneficiaries could choose between a contractual term of
five
or
which the beneficiaries made a choice between a contractual term of
five
or
ten years
years, the parameters and fair value used in the financial
year ending
December 31, 2023
has been reassessed.
2)
Amounts have been converted to USD at the applicable rate prevailing at the grant date.
Below is an overview of the parameter used in relation to the determination of the fair value of grants during
2022
:
|
Stock options granted in
|
|
April 2022
|
July 2022
|
October 2022
|
December 2022
|
||||||||
|
Number of options granted
|
|
|
|
|
|||||||||
|
Average Fair value of options
(in $) ¹⁾
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||
|
Share price (in $) ¹⁾
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||
|
Exercise price (in $) ¹⁾
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||
|
Expected volatility
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||
|
Average Expected option life
(in years)
|
|
|
|
|
|
||||||||
|
Risk‑free interest rate
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||
|
Expected dividends
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||
1)
Amounts have been converted to USD at the applicable rate prevailing at the grant date.
The total share-based payment expense related to stock options recognized in the consolidated statements of profit or
loss totaled
$
147
million
for the year ended
December 31, 2024
, compared to
$
164
million
for the year ended
December 31, 2023
and
$
120
million
for the year ended
December 31, 2022
.
The RSUs are granted to key persons of the Company and its subsidiaries. The RSUs have been granted free of charge.
Each employee’s RSUs converts into
one
ordinary share of the Company upon vesting. The RSUs carry neither rights to
dividends nor voting rights. RSUs once converted into ordinary shares, may be sold at any time from the date of vesting,
have no expiry date and may be held by the participant without limitation. The fair value of RSUs is based on the closing
sale price of the Company’s common stock on the day prior to the date of issuance. RSUs vest over a period of
four
years
with
1/4th
of the total grant vesting at each anniversary of the date of grant.
|
F-32
|
|
2024
|
2023
|
2022
|
|||||||||||||
|
Number of
RSUs
|
Weighted average
Grant Date Fair
Value
1)
|
Number of
RSUs
|
Weighted average
Grant Date Fair
Value
1)
|
Number of
RSUs
|
Weighted average
Grant Date Fair
Value
1)
|
||||||||||
|
Non-vested units on
January 1
|
|
$
|
|
|
$
|
|
|
$
|
|
||||||
|
Granted
|
|
|
|
|
|
|
|||||||||
|
Vested
|
(
|
|
(
|
|
(
|
|
|||||||||
|
Forfeited
|
(
|
|
(
|
|
(
|
|
|||||||||
|
Non-vested units on
December 31
|
|
$
|
|
|
$
|
|
|
$
|
|
||||||
1)
Amounts have been converted to USD at the closing rate of the respective period.
The total share-based payment expense related to RSUs recognized in the consolidated statements of profit or loss
totaled
$
88
million
for the year ended
December 31, 2024
compared to
$
69
million
for the year ended
December 31,
2023
and
$
37
million
for the year ended
December 31, 2022
.
|
As of December 31,
|
|||||||||
|
(in thousands of $)
|
|
2024
|
|
2023
|
2022
|
||||
|
Trade payables
|
|
$
|
|
$
|
|
$
|
|
||
|
Short‑term employee benefits
|
|
|
|
|
|||||
|
Sales rebates and reserves
|
|
|
|
||||||
|
Other
|
|
|
|
||||||
|
Total trade and other payables
|
|
$
|
|
$
|
|
$
|
|
||
The carrying amounts of trade and other payables approximate their respective fair values.
Trade payables correspond primarily to RD, commercial and manufacturing activities and include accrued expenses
related to these activities.
Short-term employee benefits include payables and accruals for salaries and bonuses to be paid to the employees of the
Company.
2023
and
2022
:
|
F-33
|
|
(in thousands of $)
|
Rebates and
chargebacks
|
Distribution fees,
product returns
|
Total sales
rebates and
reserves
|
||||||
|
Balance on January 1, 2022
|
$
|
|
$
|
|
$
|
|
|||
|
Current estimate related to the sales made in the
current year
|
|
|
|
||||||
|
(Credits or payments related to sales made during
the year)
|
(
|
(
|
(
|
||||||
|
Balance on December 31, 2022
|
$
|
|
$
|
|
$
|
|
|||
|
Current estimate related to the sales made in the
current year
|
|
|
|
||||||
|
Adjustment for prior year sales
|
(
|
(
|
(
|
||||||
|
(Credits or payments related to sales made during
the year)
|
(
|
(
|
(
|
||||||
|
(Credits or payments related to sales made during
prior year)
|
(
|
(
|
(
|
||||||
|
Balance on December 31, 2023
|
$
|
|
$
|
|
$
|
|
|||
|
Current estimate related to the sales made in the
current period
|
|
|
|
||||||
|
Adjustment for prior year sales
|
(
|
(
|
(
|
||||||
|
(Credits or payments related to sales made during
the year)
|
(
|
(
|
(
|
||||||
|
(Credits or payments related to sales made during
prior year)
|
(
|
(
|
(
|
||||||
|
Balance on December 31, 2024
|
$
|
|
$
|
|
$
|
|
|
Year Ended December 31,
|
|||||||||
|
(in thousands of $)
|
2024
|
2023
|
2022
|
||||||
|
Zai Lab
|
$
|
|
$
|
|
$
|
|
|||
|
AbbVie
|
|
|
|
||||||
|
Other
|
|
|
|
||||||
|
Total collaboration revenue
|
$
|
|
$
|
|
$
|
|
|||
For the years ended
December 31, 2024
, the collaboration revenue was generated under the agreement with Zai Lab.
This note should be read alongside ‘‘
Note 2.18 — Collaboration and license agreements
’’.
In April 2016, the Company entered into a collaboration agreement with AbbVie to develop and commercialize
ARGX-115 (ABBV-151). In October 2023, the Company achieved the second development milestone upon initiation of
a non-pivotal clinical trial, triggering a
$
30
million
payment.
Subject to the continuing progress of ARGX-115 (ABBV-151) by AbbVie, the Company is eligible to receive future
development, regulatory and commercial milestone payments in aggregate amounts of up to
$
50
million
,
$
190
million
and
$
325
million
, respectively, as well as tiered royalties on sales at percentages ranging from the mid-single digits to
the lower teens, subject to customary reductions.
|
F-34
|
|
Year Ended December 31,
|
|||||||||
|
(in thousands of $)
|
2024
|
2023
|
2022
|
||||||
|
Research and development incentives
|
$
|
|
$
|
|
$
|
|
|||
|
Payroll tax rebates
|
|
|
|
||||||
|
Grants
|
|
|
|
||||||
|
Change in fair value on non-current financial assets
|
|
|
|
||||||
|
Total other operating income
|
$
|
|
$
|
|
$
|
|
|||
The Company has accounted for tax incentives following a research and development tax incentive scheme in Belgium
according to which the incentive will be refunded after a
5
years
period, if not offset against the current tax payable over
the period.
The Company accounted for payroll tax rebates as a reduction in withholding income taxes for its highly qualified
personnel employed in its research and development department.
The Company manages its activities and operates as
one
business unit which is reflected in its organizational structure
and internal reporting. The Company does not distinguish in its internal reporting different segments, neither business
nor geographical segments. The chief operating decision-maker is the Board of Directors.
product net sales:
|
Year Ended December 31,
|
|||||||||
|
(in thousands of $)
|
2024
|
2023
|
2022
|
||||||
|
United States
|
$
|
|
$
|
|
$
|
|
|||
|
Japan
|
|
|
|
||||||
|
China
|
|
|
|
||||||
|
Netherlands
|
|
|
|
||||||
|
Rest of the World
|
|
|
|
||||||
|
Total product net sales
|
$
|
|
$
|
|
$
|
|
|||
The Company sells its products through a limited number of distributors and wholesalers. Five U.S. customers represent
approximately
87
%
of the product net sales during the twelve months ended
December 31, 2024
(compared to
86
%
and
shown in the table below:
|
Year Ended December 31,
|
|||||||||
|
(in thousands of $)
|
2024
|
2023
|
2022
|
||||||
|
China
|
$
|
|
$
|
|
$
|
|
|||
|
United States
|
|
|
|
||||||
|
Denmark
|
|
|
|
||||||
|
Other
|
|
|
|
||||||
|
Total collaboration revenue
|
$
|
|
$
|
|
$
|
|
|||
|
F-35
|
shown in the table below:
|
Year Ended December 31,
|
|||||||||
|
(in thousands of $)
|
2024
|
2023
|
2022
|
||||||
|
Netherlands
|
$
|
|
$
|
|
$
|
|
|||
|
Belgium
|
|
|
|
||||||
|
United States
|
|
|
|
||||||
|
Japan
|
|
|
|
||||||
|
Rest of the World
|
|
|
|
||||||
|
Total non-current assets
|
$
|
|
$
|
|
$
|
|
|||
|
Year Ended December 31,
|
|||||||||
|
(in thousands of $)
|
|
2024
|
|
2023
|
2022
|
||||
|
External research and development expenses
|
|
$
|
|
$
|
|
$
|
|
||
|
Personnel expenses
|
|
|
|
|
|||||
|
BIS expenses
|
|
|
|
||||||
|
Materials and consumables
|
|
|
|
|
|||||
|
Depreciation and amortization
|
|
|
|
|
|||||
|
Other expenses
|
|
|
|
|
|||||
|
Total Research and development expenses
|
|
$
|
|
$
|
|
$
|
|
||
|
Year Ended December 31,
|
|||||||||
|
(in thousands of $)
|
|
2024
|
|
2023
1)
|
|
2022
1)
|
|||
|
Personnel expenses
|
|
$
|
|
$
|
|
$
|
|
||
|
Marketing services
|
|
|
|
|
|||||
|
Professional fees
|
|
|
|
||||||
|
BIS expenses
|
|
|
|
||||||
|
Facilities and occupancy expenses
|
|
|
|
||||||
|
Supervisory board
|
|
|
|
|
|||||
|
Depreciation and amortization
|
|
|
|
||||||
|
Other expenses
|
|
|
|
|
|||||
|
Total Selling, general and administrative expenses
|
|
$
|
|
$
|
|
$
|
|
||
1)
Comparative figures have been presented to be consistent with the one adopted in the current year.
|
F-36
|
General and Administrative Expenses
’’ above are as follows:
|
Year Ended December 31,
|
|||||||||
|
(in thousands of $)
|
|
2024
|
|
2023
|
|
2022
|
|||
|
Short‑term employee benefits - Salaries
|
|
$
|
|
$
|
|
$
|
|
||
|
Short‑term employee benefits - Social Security
|
|
|
|
|
|
|
|||
|
Post‑employment benefits
|
|
|
|
|
|
|
|||
|
Termination benefits
|
|
|
|
|
|
|
|||
|
Share‑based payment
|
|
|
|
|
|||||
|
Employer social security contributions share-based payments
|
|
|
|
|
|
|
|||
|
Total personnel expenses
|
|
$
|
|
$
|
|
$
|
|
||
The post-employment benefits relate to the pension plans the Company has in place for its employees.
|
Year Ended December 31,
|
|||||||||
|
Average Number of FTEs
|
|
2024
|
|
2023
|
|
2022
|
|||
|
Research and development
|
|
|
|
|
|
|
|||
|
Selling, general and administrative
|
|
|
|
|
|
|
|||
|
Total number of FTEs
|
|
|
|
|
|
|
|||
|
Year Ended December 31,
|
|||||||||
|
(in thousands of $)
|
|
2024
|
2023
|
2022
|
|||||
|
Right-of-use assets
|
|
||||||||
|
Buildings
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Vehicles
|
|
|
|
||||||
|
Equipment
|
|
|
|
||||||
|
|
$
|
|
$
|
|
$
|
|
|||
|
Lease liabilities
|
|
||||||||
|
Current
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Non-current
|
|
|
|
||||||
|
|
$
|
|
$
|
|
$
|
|
|||
Additions to the right-of-use assets amounted to
$
26
million
for the year ended
December 31, 2024
, compared to
$
11
million
and
$
4
million
for the years ended
December 31, 2023
and
2022
respectively.
|
(in thousands of $)
|
Less than 1
year
|
1-3 years
|
3-5 years
|
More than 5
years
|
Total contrac
tual cash flows
|
Carrying value
|
|||||||||||
|
Lease liabilities
|
$
|
|
|
|
|
$
|
|
$
|
|
||||||||
|
F-37
|
shows the following amounts relating to leases:
|
Year Ended December 31,
|
|||||||||
|
(in thousands of $)
|
|
2024
|
|
2023
|
2022
|
||||
|
Depreciation charges
|
|
||||||||
|
Buildings
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Vehicles
|
|
|
|
||||||
|
Equipment
|
|
|
|
||||||
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Interest expense (included in finance cost)
|
$
|
|
$
|
|
$
|
|
|||
The total cash outflow for leases in
2024
,
2023
and
2022
was
$
8
million
,
$
4
million
and
$
4
million
respectively.
The Company did not enter into any lease agreement with variable lease payments or residual value guarantees. The
Company has leases that include extension options. These options provide flexibility in managing the leased assets and
align with the Company’s business needs. The Company exercises judgement in deciding whether it is reasonably
|
Year Ended December 31,
|
|||||||||
|
(in thousands of $)
|
2024
|
2023
|
2022
|
||||||
|
Interest income
|
$
|
|
$
|
|
$
|
|
|||
|
Net gain on cash equivalents current financial assets held
at fair value through profit or loss and cash equivalents
|
|
|
|
||||||
|
Financial income
|
$
|
|
$
|
|
$
|
|
|||
|
Net loss on cash equivalents current financial assets held
at fair value through profit or loss and cash equivalents
|
$
|
|
$
|
(
|
$
|
(
|
|||
|
Other financial expense
|
(
|
(
|
(
|
||||||
|
Financial expense
|
$
|
(
|
$
|
(
|
$
|
(
|
|||
|
Realized exchange (losses)/gains
|
$
|
(
|
$
|
|
(
|
||||
|
Unrealized exchange (losses)/gains
|
(
|
|
(
|
||||||
|
Exchange (losses)/gains
|
$
|
(
|
$
|
|
$
|
(
|
|||
The exchange losses of
$
48
million
for the year ended
December 31, 2024
were primarily attributable to unrealized
exchange rate gains on the cash and cash equivalents and current financial assets position in EUR due to the fluctuation
|
F-38
|
|
Year Ended December 31,
|
|||||||||
|
(in thousands of $)
|
|
2024
|
|
2023
|
|
2022
|
|||
|
Current year
|
|
$
|
(
|
|
$
|
(
|
|
$
|
(
|
|
Income tax prior years
|
|
(
|
(
|
(
|
|||||
|
Current tax (expense)/benefit
|
|
(
|
|
(
|
|
(
|
|||
|
Recognition of deferred tax assets
|
|
|
|
||||||
|
Originating and reversal of temporary differences
|
|
|
|
||||||
|
Deferred tax benefit
|
|
|
|
|
|
|
|||
|
Total tax benefit
|
$
|
|
$
|
|
$
|
|
|||
statutory tax rate to income before provision for income taxes is as follows:
|
Year Ended December 31,
|
|||||||||
|
(in thousands of $)
|
2024
|
2023
|
2022
|
||||||
|
(Profit)/Loss before taxes
|
$
|
(
|
$
|
|
$
|
|
|||
|
Income tax (expense)/benefit calculated at the Dutch
statutory federal income tax rates
|
(
|
|
|
||||||
|
Effect of intercompany asset deal/transaction
|
|
|
(
|
||||||
|
Effect of expenses not deductible in determining taxable
|
(
|
(
|
(
|
||||||
|
Effect of share based payment expenses that are not
deductible in determining taxable results
|
(
|
(
|
(
|
||||||
|
Effect of stock issue expenses that are not taxable in
determining taxable results
|
|
|
|
||||||
|
Effect of concessions
|
|
|
|
||||||
|
Effect of change of (de)recognition of deferred tax assets on
tax losses
|
|
(
|
(
|
||||||
|
Effect of different tax rates in jurisdictions in which the
company operates
|
|
(
|
(
|
||||||
|
Effect of change of (de)recognition of deferred tax assets
|
|
(
|
(
|
||||||
|
Effect of foreign exchange translation
|
(
|
|
|
||||||
|
Other
1)
|
(
|
|
(
|
||||||
|
Income tax (expense)/benefit recognized in the
consolidated statements of profit or loss
|
$
|
|
$
|
|
$
|
|
|||
1)
Comparative figures have been presented to be consistent with the one adopted in the current year.
Deferred tax assets are recognized to the extent that it is probable that sufficient taxable profits will be available in the
look-forward period. The Company believes that it is probable that sufficient future taxable profits will be generated to
support the recognized deferred tax asset for tax losses carried forward in Belgium. As part of its assessment, the
Company has taken into account recent taxable profits or losses, forecasted operating profits and taxable earnings, U.S.
based Product Net Sales from the commercialization of the VYVGART franchise, evolution of the external competitive
landscape, and likelihood that factors contributing to past losses will not recur, while considering the risks and
uncertainties associated with those forecasts. We consider that the management forecasts used specifically in this
assessment to be reasonable, based on historical accuracy and alignment with external market data.
|
F-39
|
The Company considered ordering rules established by tax legislation Belgium noting that under Belgian tax legislation,
tax losses and Innovation Income Deduction can be carried forward indefinitely. Based on the weight of available
evidence, in the fourth quarter of 2024, the Company recognized a consolidated tax benefit for previously unrecognized
net deferred tax assets existing as of December 31, 2023 amounting to
$
725
million
. As of December 31, 2024, the
Company’s balance of net deferred tax assets for argenx BV totaled
$
708
million
.
During 2022, argenx Benelux BV transferred certain pipeline activities to argenx BV through a transfer of assets,
(hereafter referred to as “asset deal”), for a total amount of
$
449
million
. As a result of the asset deal, argenx Benelux
BV realized a capital gain on this intellectual property, which results in the rate reconciling item categorized as “effect of
intercompany asset deal/transaction”.
|
As of December 31, 2024
|
|||||||||
|
(in thousands of $)
|
Assets
|
Liabilities
|
Net
|
||||||
|
Deferred tax assets/(liabilities)
|
|||||||||
|
Innovation income deduction
|
$
|
|
$
|
|
$
|
|
|||
|
Net operating loss carryforwards
|
|
|
|
||||||
|
Capitalized RD expenses
|
|
|
|
||||||
|
Intangible assets
|
|
|
|
||||||
|
Accruals and allowances
|
|
—
|
|
||||||
|
Share-based payments
|
|
—
|
|
||||||
|
Profit in inventory
|
|
—
|
|
||||||
|
Other tax carryforwards
|
|
|
|
||||||
|
Property, plant and equipment
|
|
(
|
|
||||||
|
Non-current fixed assets
|
|
(
|
(
|
||||||
|
Other
|
|
(
|
|
||||||
|
Netting by taxable entity
|
(
|
|
|
||||||
|
Net deferred tax assets
|
$
|
|
$
|
|
$
|
|
|||
|
As of December 31, 2023
|
|||||||||
|
(in thousands of $)
|
|
Assets
|
Liabilities
|
|
Net
|
||||
|
Deferred tax assets/(liabilities)
|
|||||||||
|
Accruals and allowances
|
$
|
|
$
|
—
|
$
|
|
|||
|
Share-based payments
|
|
—
|
|
||||||
|
Profit in inventory
|
|
—
|
|
||||||
|
Other tax carryforwards
|
|
|
|
||||||
|
Property, plant and equipment
|
|
(
|
|
||||||
|
Non-current fixed assets
|
|
(
|
(
|
||||||
|
Other
|
|
|
|
||||||
|
Netting by taxable entity
|
(
|
|
|
||||||
|
Net deferred tax assets/(liabilities)
|
|
$
|
|
|
$
|
(
|
|
$
|
|
|
F-40
|
|
As of December 31, 2022
|
|||||||||
|
(in thousands of $)
|
|
Assets
|
Liabilities
|
|
Net
|
||||
|
Deferred tax assets/(liabilities)
|
|||||||||
|
Accruals and allowances
|
$
|
|
$
|
—
|
$
|
|
|||
|
Share-based payments
|
|
—
|
|
||||||
|
Profit in inventory
|
|
—
|
|
||||||
|
RD capitalized expense
|
|
—
|
|
||||||
|
Property, plant and equipment
|
|
(
|
|
||||||
|
Intangible assets
|
|
(
|
(
|
||||||
|
Non-current fixed assets
|
|
(
|
(
|
||||||
|
Other
|
|
|
|
||||||
|
Netting by taxable entity
|
(
|
|
|
||||||
|
Net deferred tax assets/(liabilities)
|
|
$
|
|
|
$
|
(
|
|
$
|
|
The change in net deferred taxes recorded in the consolidated statements of financial position can be detailed as follows:
|
(in thousands of $)
|
|
Deferred tax
assets
|
|
Deferred tax
liabilities
|
||
|
Balance on January 1, 2024
|
|
$
|
|
|
$
|
(
|
|
Recognized in profit or loss
|
|
|
||||
|
Recognized in equity
|
|
|
||||
|
Effects of change in foreign exchange rate
|
|
|
||||
|
Balance on December 31, 2024
|
$
|
|
$
|
|
||
|
(in thousands of $)
|
|
Deferred tax
assets
|
|
Deferred tax
liabilities
|
||
|
Balance on January 1, 2023
|
|
$
|
|
|
$
|
(
|
|
Recognized in profit or loss
|
|
|
||||
|
Recognized in equity
|
|
|
||||
|
Effects of change in foreign exchange rate
|
(
|
(
|
||||
|
Balance on December 31, 2023
|
$
|
|
$
|
(
|
||
|
(in thousands of $)
|
|
Deferred tax
assets
|
|
Deferred tax
liabilities
|
||
|
Balance on January 1, 2022
|
|
$
|
|
|
$
|
(
|
|
Recognized in profit or loss
|
|
(
|
||||
|
Recognized in equity
|
(
|
|
||||
|
Effects of change in foreign exchange rate
|
(
|
|
||||
|
Balance on December 31, 2022
|
$
|
|
$
|
(
|
||
The Company also has unrecognized tax losses carried forward in the Netherlands in the amount of
$
46
million
as of
December 31, 2024
, compared to
$
33
million
on
December 31, 2023
and
$
35
million
on
December 31, 2022
. These
losses carried forward do not have an expiration date based upon the applicable enacted tax legislation in the
Netherlands.
As of
December 31, 2024
, the Company has
$
125
million
of undistributed earnings attributable to foreign subsidiaries
for which
no
provision for deferred tax liabilities have been recognized because the Company has control over the timing
of the reversal of the temporary differences and there are no plans of distributions in the foreseeable future.
|
F-41
|
On 23 May 2023, the International Accounting Standards Board (the IASB or Board) issued International Tax Reform –
Pillar Two Model Rules – Amendments to IAS 12 which clarified the application of IAS 12 Income Taxes arising from
tax law enacted or substantively enacted to implement the OECD/G20 Inclusive Framework on Base Erosion and Profit
Shifting Pillar Two model rules.
Based on current information, management expects that the Company will be subject to the Pillar Two Directive and
implementing domestic laws in 2025, as it is the year the Company has met all requirements under the Pillar Two
legislation. The company is currently in the process of determining the impact, if any, for 2025. Based on the
preliminary analysis, we do not expect the Pillar Two Rules to have a material impact on our effective tax rate.
It is unclear if the Pillar Two model rules create additional temporary differences, whether to remeasure deferred taxes
for the Pillar Two model rules, and which tax rate to use to measure deferred taxes. In response to this unclarity, the
amendments mentioned above introduced a mandatory temporary exception to the requirements of IAS 12 under which a
company does not recognize or disclose information about deferred tax assets and liabilities related to the Pillar Two
model rules. We continue to apply the temporary exception for the year ended December 31, 2024.
|
Year Ended December 31
|
|||||||||
|
(in thousands of $ except for shares and EPS)
|
2024
|
2023
|
2022
|
||||||
|
Profit/(Loss) for the period
|
|
$
|
|
|
$
|
(
|
|
$
|
(
|
|
Weighted average number of shares outstanding
|
|
|
|
|
|||||
|
Basic profit/(loss) per share (in $)
|
|
$
|
|
|
$
|
(
|
|
$
|
(
|
|
Weighted average number of shares for purpose of diluted profit/
(loss) per share
|
|
|
|
||||||
|
Diluted profit/(loss) per share (in $)
|
$
|
|
$
|
(
|
$
|
(
|
|||
Profit/(loss) per ordinary share is calculated by dividing the profit/(loss) for the period by the weighted average number
of ordinary shares during the year. Diluted profit/(loss) per share is calculated by adjusting the weighted average number
of shares by in the money outstanding dilutive stock options and RSUs.
As the Company reported a net loss in
2023
and
2022
, stock options and RSUs have an anti-dilutive effect rather than a
dilutive effect. As such, there is no difference between basic and diluted loss per ordinary share for those periods.
|
F-42
|
The financial risks are managed centrally. The Company coordinates the access to national and international financial
markets and considers and manages continuously the financial risks concerning the Company’s activities. These relate to
credit risk, liquidity risk, interest rate risk and currency risk. The Company does not buy or trade financial instruments
for speculative purposes.
|
Measurement category
|
Carrying amount on December 31
|
||||||||||
|
(in thousands of $)
|
|
|
2024
|
2023
|
|
2022
|
|||||
|
Financial assets - non-current
|
|
FVTPL
|
|
$
|
|
$
|
|
$
|
|
||
|
Financial assets - non-current
|
FVTOCI
|
|
|
|
|||||||
|
Research and development incentive
receivables - non-current
|
Amortized cost
|
|
|
|
|||||||
|
Restricted cash - non-current
|
|
Amortized cost
|
|
|
|
||||||
|
Trade and other receivables
|
Amortized cost
|
|
|
|
|||||||
|
Financial assets - current
|
FVTPL
|
|
|
|
|||||||
|
Financial assets - current
|
Amortized cost
|
|
|
|
|||||||
|
Research and development incentive
receivables - current
|
Amortized cost
|
|
|
|
|||||||
|
Cash and bank balances
|
|
Amortized cost
|
|
|
|
||||||
|
Cash equivalents
|
FVTPL
|
|
|
|
|||||||
|
Cash equivalents
|
Amortized cost
|
|
|
|
|||||||
|
Trade and other payables
|
Amortized cost
|
|
|
|
|||||||
The carrying amounts of trade and other payables and trade and other receivables are considered to be the same as their
fair values, due to their short-term nature.
Financial assets held at fair value through profit or loss or OCI consisted of equity instruments of listed and non-listed
companies and money market funds.
The Company has no restrictions on the sale of these equity instruments and the assets are not pledged under any of its
liabilities. These instruments are classified as financial assets held at fair value through profit or loss or OCI which
qualify for:
•
Level 1 fair value measurement with respect to current financial assets and cash equivalents based upon the closing
price (net asset value) of such securities at each reporting date.
•
Level 3 fair value measurement with respect to non-current financial assets.
The market price of these financial instruments might face fluctuations and might be affected by a variety of factors,
such as the global economic situation. Current financial assets and cash equivalents include collective investment funds
denominated in € and $ of which the underlying investments include bonds and other international debt securities. Based
on the weighted average maturity of the underlying instruments, amongst others, these investments are either classified
as current financial assets or cash equivalents.
The maximum exposure to credit risk is the carrying amount at reporting date.
|
F-43
|
|
As of December 31, 2024
|
|||||||||
|
(in thousands of $)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||
|
Non-current financial assets
|
|
$
|
|
|
$
|
–
|
|
$
|
|
|
Cash and cash equivalents
|
|
–
|
–
|
||||||
|
Assets carried at fair value
|
|
$
|
|
|
$
|
–
|
|
$
|
|
|
As of December 31, 2023
|
|||||||||
|
(in thousands of $)
|
|
Level 1
|
Level 2
|
Level 3
|
|||||
|
Non-current financial assets
|
|
$
|
|
|
$
|
–
|
|
$
|
|
|
Cash and cash equivalents
|
|
|
–
|
–
|
|||||
|
Assets carried at fair value
|
|
$
|
|
|
$
|
–
|
|
$
|
|
|
As of December 31, 2022
|
|||||||||
|
(in thousands of $)
|
Level 1
|
Level 2
|
Level 3
|
||||||
|
Non-current financial assets
|
$
|
|
$
|
–
|
$
|
|
|||
|
Current financial assets
|
|
–
|
–
|
||||||
|
Cash and cash equivalents
|
|
–
|
–
|
||||||
|
Assets carried at fair value
|
$
|
|
$
|
–
|
$
|
|
|||
During the disclosed calendar year,
no
transfers occurred between the applicable categories.
In March 2019, the Company entered into a license agreement with AgomAb Therapeutics NV for the use of HGF-
mimetic SIMPLE Antibodies™, developed under the Company’s Immunology Innovative Program. In exchange for
granting this license, the Company received a profit share in AgomAb Therapeutics NV. The changes in the value of this
In January 2021, as part of the license agreement for the development and commercialization for efgartigimod in Greater
China
, the Company obtained, amongst others,
568,182
newly issued Zai Lab shares calculated at a price of
$
132
per
share. The fair value of the equity instrument at period-end is determined by reference to the closing price of such
securities at each reporting date (classified as level 1 in the fair value hierarchy), resulting in a change in fair value. The
Company made the irrevocable election to recognize subsequent changes in fair value through OCI.
The Company manages its capital to ensure that it will be able to continue as a going concern. The capital structure of
the Company consists of equity attributed to the holders of equity instruments of the Company, such as capital, reserves
and accumulated losses as mentioned in the consolidated statements of changes in equity. The Company makes the
necessary adjustments in light of changes in the economic circumstances, risks associated to the different assets and the
projected cash needs of the current and projected research activities. On
December 31, 2024
, cash and cash equivalents
amounted to
$
1.5
billion
current financial assets amounted to
$
1.9
billion
and total capital amounted to
$
5.5
billion
. The
current cash situation and the anticipated cash generation and usage are the most important parameters in assessing the
capital structure. The Company’s objective is to maintain the capital structure at a level to be able to finance its activities
for at least twelve months. Cash income from operations is taken into account and, if needed and possible, the Company
can issue new shares or enter into financing agreements.
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient
collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. Concentrations in credit
risk are determined based on an analysis of counterparties and their importance on the overall outstanding contractual
obligations at year-end.
|
F-44
|
The Company's commercial revenue are concentrated as discussed in “
Note 17 — Segment Reporting
”, on a limited
number of U.S. customers with high quality creditworthiness. The Company sets customer specific credit limits in order
to reduce credit risk from commercial payers.
The Company applied the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all receivables. To measure the expected credit losses, receivables have been grouped based
on credit risk characteristics and the days past due. The provision for expected credit losses was not significant given that
there have been
no
credit losses over the last three years and the high quality nature of the Company’s customers.
Cash and cash equivalents and current financial assets are invested with several highly reputable banks and financial
institutions. The main purpose of the Cash Investment Policy is to preserve the available cash and to ensure sufficient
short-term liquidity at all times. Therefore, the Company holds its cash and cash equivalents, in addition to current
financial assets mainly with banks which are independently rated A- or higher. Amounts of cash held with banks rated
lower than A- are limited to insignificant balances. The maximum amount and tenor of time deposits depends on the
rating of the counterparty bank. The Company also holds cash equivalents in the form of money market funds
with a low
historical volatility. These money market funds are highly liquid investments and can be readily convertible into a
known amount of cash. The company has adopted a policy whereby money market funds must have a minimum rating of
A, and whereby 95% of its money market funds should have a AAA-rating.
The Company manages liquidity risk by maintaining adequate reserves, by continuously monitoring forecast and actual
cash flows, and by matching the maturity profile of financial assets and liabilities.
The Company’s main sources of cash are the sale of commercial product and exercise of stock options. This cash is
invested in savings accounts, term accounts and money market funds. These money market funds represent the majority
of the Company’s available sources of liquidity. Since all of these are immediately tradable and convertible in cash they
have an important mitigating effect on any short-term liquidity risk.
As of December 31, 2024
, the Company had lines of credit totaling
$
16
million
with the banks which were not used as of
year end.
The only variable interest-bearing financial instruments are cash and cash equivalents and current financial assets.
Changes in interest rates may cause variations in interest income resulting from short-term interest-bearing assets. Lower
short-term interests may have a negative impact on the interest income of the Company.
For the year ended
December 31, 2024
, if applicable interest rates would increase/decrease by
25
basis points, this would
have a positive/negative impact of
$
8
million
(compared to
$
8
million
for the year ended
December 31, 2023
and
$
6
million
for the year ended
December 31, 2022
).
The Company undertakes transactions denominated in foreign currencies, causing exposures to exchange rate
fluctuations. The Company is mainly exposed to the Euro, Japanese yen, British pound and Swiss franc. To limit this
risk, the Company attempts to align incoming and outgoing cash flows in currencies other than USD.
current financial assets) of the Company at the end of the reporting period are as follows:
|
F-45
|
|
As of December 31,
|
||||||
|
(in thousands of $)
|
|
2024
|
|
2023
|
|
2022
|
|
EUR
|
|
|
|
|
|
|
|
JPY
|
|
|
|
|||
|
GBP
|
|
|
|
|
|
|
|
CHF
|
|
|
|
|||
|
CAD
|
|
|
|
|||
|
Other currencies
|
|
|
|
|||
On
December 31, 2024
, if the EUR would have strengthened/weakened versus the USD by
10
%
, this would have had a
negative/positive impact of
$
76
million
, compared to
$
92
million
and
$
61
million
on
December 31, 2023
and
December 31, 2022
, respectively. On
December 31, 2024
, if other currencies would have strengthen/weakened against
In 2022, the University of Colorado Anschutz Medical Campus and the University of Colorado Health (UCHealth)
created an asset-centric spin-off, OncoVerity, Inc (OncoVerity), focused on optimizing and advancing the development
of cusatuzumab, a novel anti-CD70 antibody, in acute myeloid leukemia (AML). OncoVerity is an entity of co-creation,
combining the extensive translational biology insights from Dr. Clayton Smith, M.D. from the University of Colorado
with our experience on the CD70/CD27 pathway. argenx contributed
$
7
million
in
2024
(
$
13
million
and
$
2
million
in
2023
and
2022
respectively).
The investment has been accounted under IAS 28 Investment in associates and Joint Ventures using the equity method of
accounting and has been designated as an “Investment in a joint venture” in the consolidated statements of financial
position. The share of net loss resulting from investment in joint ventures is presented in consolidated statements of
profit or loss and the consolidated statements of other comprehensive income or loss in line “Loss from investment in a
joint venture”. The cash contributions made by the Company to the Joint Venture is reported under Cash flow from
investing activities under “Investment in a joint venture”.
See ‘‘
Note 30 — Overview of Consolidation Scope
’’ for an overview of the consolidated companies of the group, which
are all wholly-owned subsidiaries of
argenx SE
.
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have
been eliminated on consolidation and are not disclosed in this note.
The Company’s key management personnel consists of the members of the management team and the members of the
board of directors.
Remuneration of key management personnel
On
December 31, 2024
, the Senior Management Team consisted of
eight
members:
Chief Executive Officer
,
Chief
Operating Officer
,
Chief Financial Officer
,
Chief Scientific Officer
,
General Counsel
,
Chief Medical Officer
,
Vice
President Corporate Development and Strategy
and
Global Head of Quality Assurance
. They provide their services on a
full-time basis.
On
December 31, 2024
, the board of directors consisted of
ten
members: Mr.
Peter Verhaeghe
,
Dr. Donald deBethizy
,
Dr. Pamela Klein
,
Anthony Rosenberg
,
James Daly
,
Camilla Sylvest
,
Dr. Brian Kotzin
,
Dr. Ana Cespedes
, Mr.
Steve
Krognes
and
Tim Van Hauwermeiren
.
Only the Chief Executive Officer is a member of both the Senior Management Team and the board of directors. The
Chief Executive Officer does not receive any remuneration for his board membership, as this is part of his total
remuneration package in his capacity as member of the Senior Management Team.
|
F-46
|
|
|
Year Ended December 31,
|
||||||||
|
(in thousands of $, except for the number of stock options RSUs)
|
|
2024
|
|
2023
|
|
2022
|
|||
|
Remuneration of key management personnel
|
|
|
|
||||||
|
Short-term benefits for the Senior Management Team
|
|
|
|
||||||
|
Gross salary
|
$
|
|
$
|
|
$
|
|
|||
|
Variable pay
|
|
|
|
||||||
|
Employer social security
|
|
|
|
||||||
|
Other short term benefits
|
|
|
|
||||||
|
Termination Benefits
|
|
|
|
||||||
|
Post-employment benefits for the Senior Management
|
|
|
|
||||||
|
Cost of stock options granted in the year for the Senior
Management Team
|
|
|
|
||||||
|
Cost of restricted stock units granted in the year for the
Senior Management Team
|
|
|
|
||||||
|
Employer social security cost related to stock options
|
|
(
|
|
||||||
|
Total benefits for key management personnel
|
|
|
|
||||||
|
Numbers of stock options granted in the year
|
|||||||||
|
Senior Management Team
|
|
|
|
||||||
|
Numbers of restricted stock units granted in the year
|
|||||||||
|
Senior Management Team
|
|
|
|
||||||
|
Remuneration of Non-Executive Directors
|
|||||||||
|
Board fees and other short-term benefits for Non-
|
|
|
|
||||||
|
Cost of stock options granted in the year for Non-
|
|
|
|
||||||
|
Cost of restricted stock units granted in the year for Non-
Executive Directors
|
|
|
|
||||||
|
Total benefits for Non-Executive Directors
|
$
|
|
$
|
|
$
|
|
|||
|
Numbers of stock options granted in the year
|
|||||||||
|
Non-Executive Directors
|
|
|
|
||||||
|
Numbers of restricted stock units granted in the year
|
|||||||||
|
Non-Executive Directors
|
|
|
|
||||||
Other
No loans, quasi-loans or other guarantees were given by the Company or any of its subsidiaries to members of the board
of directors or the
Senior Management Team
. We have not entered into transactions with the Company’s key
management personnel, other than as described above with respect to remuneration arrangements relating to the exercise
of their mandates as members of the
Senior Management Team
and the board of directors.
The Company is currently not facing any outstanding claims or litigation that may have a significant adverse impact on
the Company’s consolidated financial position.
At balance sheet date, there were
no
commitments signed for the acquisition of property, plant and equipment.
In February 2019, the Company entered into a global collaboration and license agreement with Halozyme Therapeutics.,
which was later amended in September 2020 and again in September 2024.
|
F-47
|
Under the terms of the agreement, the Company will pay up to
$
95
million
to achievement of specific regulatory and
sales-based milestones related specifically to its FcRn target. This amount represents the maximum amount that would
be paid if all milestones would be achieved but excludes variable royalty payments based on unit sales.
Further, the Company will pay
up to
$
77.5
million
per other non-FcRn target subject to achievement of specified
development, regulatory and sales-based milestones.
This amount represents the maximum amount that would be paid
per target if all milestones would be achieved but excludes variable royalty payments based on unit sales. The Company
has a total of
six
nominated targets under this agreement including its FcRn target.
The Company’s manufacturing commitments with Lonza, its drug substance manufacturing contractor, relate to the
ongoing execution of the biologic license application (BLA) services for efgartigimod and its manufacturing activities
related to the potential future commercialization. In December 2018, the Company signed its first commercial supply
agreement with Lonza related to the reservation of commercial drug substance supply capacity for efgartigimod. In the
aggregate, the Company has outstanding commitments for efgartigimod under the commercial supply agreements of
$
496
million
.
The following auditors’ fees were expensed in the consolidated statements of profit or loss and the consolidated
statements of other comprehensive income or loss:
|
Year Ended December 31,
|
|||||||||
|
in thousands of $
|
2024
|
2023
|
2022
|
||||||
|
Audit fees
1)
|
$
|
|
$
|
|
$
|
|
|||
|
Audit-related fees
|
|
|
|
||||||
|
Total
|
$
|
|
$
|
|
$
|
|
|||
1)
Audit services performed by
Deloitte Accountants B.V.
as the external auditor referred to in Section 1 of the Dutch Accounting Firms Oversight
Act (Wta) as well as by the Deloitte network.
|
F-48
|
The parent company
argenx SE
is domiciled in
The Netherlands
. The Company,
argenx SE
, has
one
subsidiary, argenx
BV, which is based in Belgium. argenx BV has
fourteen
subsidiaries.
Details of the Company’s consolidated entities at
the end of the reporting period are as follows:
|
Name
|
Country
|
Participation
|
||
|
argenx SE
|
The Netherlands
|
|
||
|
argenx B.V.
|
Belgium
|
|
||
|
argenx Benelux B.V.
|
Belgium
|
|
||
|
argenx US, Inc.
|
USA
|
|
||
|
argenx Switzerland, S.A.
|
Switzerland
|
|
||
|
argenx Japan KK.
|
Japan
|
|
||
|
argenx France SAS
|
France
|
|
||
|
argenx Germany GmbH
|
Germany
|
|
||
|
argenx Canada Inc.
|
Canada
|
|
||
|
argenx UK Ltd.
|
United Kingdom
|
|
||
|
argenx Netherlands Services B.V.
|
The Netherlands
|
|
||
|
argenx Italy S.r.l.
|
Italy
|
|
||
|
argenx Spain S.L.
|
Spain
|
|
||
|
argenx Australia Pty. Ltd.
|
Australia
|
|
||
|
argenx Spain S.L. - Sucursal em Portugal
|
Portugal
|
|
||
|
argenx Austria Services GmbH
|
Austria
|
|
No events have occurred after the balance sheet date that could have a material impact on the consolidated financial
statements.
TABLE OF CONTENTS
Part IItem 1. Identity Of Directors, Senior Management and AdvisersItem 2. Offer Statistics and Expected TimetableItem 3. Key InformationItem 3. D. Risk FactorsItem 10. E Taxation Certain MaterialItem 4. Information on The CompanyNote 4 Property, Plant and EquipmentNote 5 Intangible AssetsItem 5. B. Liquidity and Capital Resources Cash Flows Operating and Capital Expenditure RequirementsItem 5. ANote 17 Segment ReportingItem 4. B Efgartigimod IndicationsItem 4. B. Business Overview CollaborationItem 4. B. Business Overview License AgreementsItem 4. B. Business Overview Collaboration AgreementsItem 4. B. Business OverviewItem 3. D. Risk Factors Risk Factors Related ToPart B. Under The Inflation Reduction Act (ira), Manufacturers Are Also Required To Provide Quarterly Rebates For CertainPart B. Under The Inflation Reduction Act (Part B For At Least 18 Months and Marketed in Single-dose Containers Or Packages (known As Refundable Single-doseNote 21 LeasesNote 28 CommitmentsItem 4A. Unresolved Staff CommentsItem 5. Operating and Financial Review and ProspectsNote 17 SegmentNote 25 Financial Risk ManagementNote 23 Income TaxesNote 11 Cash and Cash EquivalentsNote 3 Critical Accounting Judgments and Major Sources Of Estimation UncertaintyItem 6. Directors, Senior Management and EmployeesNote 13 Share-Item 6. B Compensation EquityNote 13 Share-based PaymentsNote 13 Share-basedItem 6. B. Compensation EquityItem 7. Major Shareholders and Related Party TransactionsNote 26 RelatedItem 8. Financial InformationNote 31 Events After The Balance SheetItem 9. The Offer and ListingItem 10. Additional InformationItem Of Gross Income with Respect To The Shares Being Taken Into Account in An Applicable Financial Statement, and HoldersItem 11. Quantitative and Qualitative Disclosures About Market RiskItem 12. Description Of Securities Other Than Equity SecuritiesPart IIItem 13. Defaults, Dividend Arrearages and DelinquenciesItem 14. Material Modifications To The Rights Of Security Holders and Use OfItem 15. Controls and ProceduresItem 16. [reserved]Item 16A. Audit Committee Financial ExpertItem 16B. Code Of EthicsItem 16C. Principal Accountant Fees and ServicesItem 16D. Exemptions From The Listing Standards For Audit CommitteesItem 16E. Purchases Of Equity Securities By The Issuer and Affiliated PurchasersItem 16F. Change in Registrant S Certifying AccountantItem 16F. Change in Registrant S CertifyingItem 16G. Corporate GovernanceItem 16H. Mine Safety DisclosureItem 16I. Disclosure Regarding Foreign Jurisdictions That Prevent InspectionsItem 16J. Insider Trading PoliciesItem 16K. CybersecurityPart IIIItem 17. Financial StatementsItem 18. Financial StatementsItem 19. ExhibitsNote 12 Share Capital and Share PremiumNote 30 Overview Of Consolidation ScopeNote 2. 17 Product Net SalesNote 14 Trade and Other PayablesNote 2. 18 Collaboration and License AgreementsNote 18 Research and Development ExpensesNote 19 Selling,Note 6 Other Non-current Assets