Earnings Release • Mar 15, 2017
Earnings Release
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Breda, the Netherlands / Ghent, Belgium – argenx (Euronext Brussels: ARGX), a clinical-stage biotechnology company developing a deep pipeline of differentiated antibody-based therapies for the treatment of severe autoimmune diseases and cancer, today announced its fourth quarter business update and full year results for 2016, in accordance with IFRS as adopted by the European Union.
The full year results will be discussed during a conference call and webcast presentation today at 3 pm CET / 10 am EDT. To participate in the conference call, please select your phone number below, and use the confirmation code 75576807. The webcast may be accessed on the homepage of the argenx website at www.argenx.com or by clicking here.
"The past year was one of significant growth for argenx, and we have seen the momentum maintained into the first months of 2017. We continued to build our proprietary pipeline and advanced both our lead programs, ARGX-113 and ARGX-110, through key safety and early efficacy inflection points. Our early studies guided us on the attributes of each drug and enabled us to choose the indications we believe were best-suited for Phase 2 study. By the end of the first quarter, we plan to launch four proof-of-concept Phase 2 studies: MG and ITP for ARGX-113, and AML and TCL for ARGX-110," commented Tim Van Hauwermeiren, CEO of argenx. "We were also busy outside the clinic with the start of our collaboration with AbbVie for our novel immuno-oncology product, ARGX-115, under which we received an upfront payment of \$40 million and through the expansion of our shareholder base with blue-chip U.S. investors resulting in a €46 million investment over the course of 2016."
Announced the extension of our strategic partnership with Shire for a further year until May 30, 2018.
Products in Clinical Development: ARGX-113
T-cell lymphoma:
Acute Myeloid Leukemia:
Expanded to 58 employees in support of expansion of the business
Recognized by Frost & Sullivan with 2016 European Frost & Sullivan Award for Technology Innovation for SIMPLE AntibodyTM platform, as it yields unprecedented epitope coverage, allowing to interaction with disease biology in a much more precise manner.
We continue to implement our business plan through advancing our deep pipeline of differentiated antibody-based therapies, including ARGX-113, ARGX-110, ARGX-115 and ARGX-112, the forging of collaborations with a select number of pharmaceutical companies and the strengthening of our shareholder base.
In 2017, we aim to execute our ambitious business plan as follows:
With the expected progression of our development activities, we anticipate hiring more personnel and consultants to support the steady growth over the past year.
We will also aim to further transition our shareholder base from its historic venture capital investors to blue-chip, long-term institutional investors and increase liquidity and free float of our ordinary shares and continue our disciplined cash management. It is in this context that we will further align our corporate governance model with international standards and implement the following changes on the occasion of the annual shareholder meeting of April 26, 2017:
| Year ended | Year ended | ||
|---|---|---|---|
| in thousands of euros | December 31, 2015 | December 31, 2016 | Variance |
| Revenue | 6,854 | 14,713 | 7,859 |
| Other operating income | 3,101 | 2,439 | (662) |
| Total operating income | 9,955 | 17,152 | 7,197 |
| Research and development expenses | (20,635) | (31,557) | (10,922) |
| General and administrative expenses | (4,925) | (7,011) | (2,086) |
| Operating loss | (15,605) | (21,416) | (5,811) |
| Financial income | 112 | 73 | (39) |
| Exchange gains/(losses) | 181 | (31) | (212) |
| Total comprehensive loss | (15,312) | (21,374) | (6,062) |
| Net increase (decrease) in cash, cash-equivalents and current financial assets | (13,645) | 54,402 | 68,047 |
| compared to year end 2014 and 2015 | |||
| Cash, cash-equivalents and current financial assets at the end of the period | 42,327 | 96,729 | 54,402 |
Our total operating income includes revenue from our collaborations and other operating income and totaled €17.2 million in 2016 compared to €10.0 million in 2015.
To date, our revenue has consisted principally of collaboration revenue in the form of (i) upfront payments, including upfront licensing fees, (ii) milestone payments based on achievement of research and development goals and (iii) research and development service fees related to charges for full time equivalents (FTEs) at contracted rates and reimbursement of research and development expenses. In 2016, our revenue reached €14.7 million compared to €6.9 million in 2015. This increase of €7.8 million is principally explained by the payments received in connection with entering into the collaboration agreements with LEO Pharma in May 2015 and with AbbVie in April 2016.
Our other operating income corresponds to various grants, research and development incentives and payroll tax rebates received from governmental agencies. Our other operating income decreased to €2.4 million in 2016 compared to €3.1 million in 2015, as a result of a decrease in grants received from the Flemish government.
Our research and development (R&D) expenses totaled €31.6 million in 2016, compared to €20.6 million in 2015. The €11.0 million increase in 2016 reflects (i) increased clinical trial and product manufacturing activities, (ii) the recruitment of additional R&D personnel and consultants, and (iii) the share based payment costs recognized in compensation for the grant of stock options to our R&D personnel. In 2016, our R&D costs accounted for 82% of our total operating expenses compared to 81% in 2015. We employed the equivalent of 46.9 full time employees in our R&D department on December 31, 2016 compared to the equivalent of 31.4 full time employees at the same date in 2015.
In 2016, our general and administrative (G&A) expenses were €7.0 million compared to €4.9 million in 2015. The €2.1 million increase in 2016 is explained by (i) additional expenses incurred for supporting activities (ii) the recruitment of new employees to strengthen our G&A activities, and (iii) the share based payment costs recognized in compensation for the stock options granted to our G&A employees, consultants and Board members. Our G&A costs accounted for 18% of our total operating expenses in 2016 compared to 19% in 2015. On December 31, 2016, we employed the equivalent of 9.9 full time employees in our G&A department compared to 5.8 full time employee employees on December 31, 2015.
Our operating loss before net financial income and tax was €21.4 million in 2016 compared to €15.6 million in 2015. This increase results primarily from the increase in our operating expenses as indicated above.
We recorded financial income of €0.1 million in 2016 and in 2015. Our financial income reflects interest earned on our cash and cash equivalents and current financial assets.
The exchange loss of €0.03 million recorded in 2016 and the gains of €0.2 million in 2015 are linked to foreign exchange differences arising from the translation of foreign currency transactions and foreign currency monetary assets and liabilities.
In the year ended December 31, 2016, we generated a total comprehensive loss of €21.4 million compared to a total comprehensive loss of €15.3 million in 2015. Notwithstanding the significant increase in our operating income over the period, this increase of €6.1 million in total comprehensive loss in 2016 results from (i) the increase of R&D expenses in relation with our manufacturing and clinical activities, (ii) the increase in G&A expenses incurred for our supporting activities (iii) and the share based payment costs recognized in compensation for the stock options granted to our employees, consultants and Board members.
Our main current assets consist of our cash, cash equivalents and current financial assets. On December 31, 2016, our cash, cash equivalents and current financial assets amounted to €96.7 million compared to €42.3 million on December 31, 2015.
Our current liabilities relate primarily to trade and other payables and deferred revenue from our collaboration agreements with pharmaceutical and biotechnology companies.
On December 31, 2016 our trade payables and other payables were €12.2 million compared to €4.5 million on December 31, 2015. These amounts include accruals and invoices received but not yet paid, mainly in relation with our manufacturing and clinical development activities.
Our deferred revenue totaled €30.2 million on December 31, 2016 compared to €4.1 million on December 31, 2015. The increase in 2016 mainly relates to the upfront payments received from our collaboration agreements with LEO Pharma in May 2015 and with AbbVie in April 2016.
We have no loans outstanding or long term financial lease commitments at the end of 2016.
Cash flow from operating activities represented a net inflow of €10.6 million in 2016 compared to a net outflow of €13.9 million in 2015. The net cash inflow in 2016 results primarily from the upfront payment of \$40 million (€35.1 million as of the date the payment was received) from AbbVie in April 2016.
Cash flow from investing activities represented a net outflow of €0.8 million in 2016 compared to a net inflow of €16.8 million in 2015. The net cash outflow in 2016 results from investments in office, laboratory and IT equipment.
Cash flow from financing activities represented a net inflow of €44.6 million in 2016 compared to a net inflow €0.2 million in 2015. The net cash inflow in 2016 is attributed to two private placements of our ordinary shares issued to institutional investors in January and June 2016 for total gross proceeds of €46 million.
Participant Free Call Dial-In Numbers: UK 0800 694 0257
Participant Standard International Dial-In: UK Standard International +44 (0) 1452 555 566
Participant UK Local Call Dial-In Numbers: UK 0844 493 3800 UK National Call0871 700 0345
Participant Local Call Dial-In Numbers:
| Australia | 0290 371 687 |
|---|---|
| Austria | 0192 865 68 |
| Belgium | 0817 000 61 |
| Croatia | 0177 766 11 |
| Czech Republic 2288 804 60 | |
| Denmark | 3272 7625 |
| Finland | 0923 195 187 |
| France | 0176 742 428 |
| Germany | 0692 222 3479 |
| Germany | 0692 222 4918 |
| Hungary | 0618 088 303 |
| India | 0223 098 5304 |
| Ireland | 0143 196 48 |
| Ireland | 0150 601 53 |
| Italy | 0236 008 146 |
| Latvia | 6778 2516 |
| Luxembourg | 2088 0695 |
| Netherlands | 0207 176 886 |
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| Slovenia | 0160 093 64 |
| South Africa | 2110 032 02 |
| Spain | 9141 436 69 |
| Sweden | 0850 336 434 |
| Switzerland | 0565 800 007 |
| USA | 1631 510 7498 |
argenx a clinical-stage biotechnology company developing a deep pipeline of differentiated antibodybased therapies for the treatment of severe auto-immune diseases and cancer. We are focused on developing product candidates with the potential to be either first-in-class against novel targets or best-in-class against known, but complex, targets in order to treat diseases with a significant unmet medical need. Our ability to execute on this focus is enabled by our suite of differentiated technologies. Our SIMPLE AntibodyTM Platform, based on the powerful llama immune system, allows us to exploit novel and complex targets, and our three antibody engineering technologies are designed to enable us to expand the therapeutic index of our product candidates. www.argenx.com
Joke Comijn, Corporate Communications Manager +32 (0)477 77 29 44 +32 (0)9 310 34 19 [email protected]
Beth DelGiacco (US IR) Stern Investor Relations +1 212 362 1200 [email protected]
The contents of this announcement include statements that are, or may be deemed to be, "forwardlooking statements." These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes," "estimates," "anticipates," "expects," "intends," "may," "will," or "should," and include statements argenx makes concerning the intended results of its strategy; its financial condition, results of operation and business outlook; the sufficiency of its cash, cash equivalents and current financial assets; and the momentum of its product candidate pipeline as well as the advancement of, and anticipated clinical development and regulatory milestones and plans related to, argenx's product candidates and clinical trials. By their nature, forward-looking statements involve risks and uncertainties and readers are cautioned that any such forward-looking statements are not guarantees of future performance. argenx's actual results may differ materially from those predicted by the forward-looking statements. argenx undertakes no obligation to publicly update or revise the information in this press release, including any forward-looking statements, except as may be required by law.
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