Earnings Release • Mar 11, 2016
Earnings Release
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argenx reports fourth quarter business update and full year 2015 financial results
Breda, the Netherlands / Ghent, Belgium - argenx (Euronext Brussels: ARGX), a clinical-stage biopharmaceutical company focused on creating and developing differentiated therapeutic antibodies for the treatment of cancer and severe autoimmune diseases, today announced its fourth quarter business update and full year results for 2015, 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 / 9 am EDT. To participate in the conference call, please select your phone number below, and use the confirmation code 61559035. The webcast may be accessed on the homepage of the argenx website at www.argenx.com or by clicking here.
"We are very proud of our recent progress in our ongoing clinical programs and through expansion of our antibody pipeline. In 2015 we began development of ARGX-115, a cancer immunotherapy asset and the first preclinical program out of our Innovative Access Program. We also achieved important milestones across all of our programs, driven by our lead autoimmune candidate, ARGX-113, which entered the clinic in the fourth quarter of 2015, the fourth development program from our SIMPLE AntibodyTM platform to have reached clinical stages in just six years. Looking forward we expect the multiple ascending dose portion of our Phase 1 study will read out in mid-2016," said Tim Van Hauwermeiren, Chief Executive Officer of argenx.
"We also made significant progress on the corporate side of our business. Our business development activities continued strong in 2015 with the announcement of our new partnership with LEO Pharma to develop antibody-based treatments for skin conditions. And on the financial front, we announced an investment from a well-established U.S-based investment fund. With a strong cash position, a wellbalanced pipeline of wholly-owned and partnered clinical assets and several innovative early stage programs in oncology and auto-immune diseases, we feel we have positioned the Company for future success."
ARGX-113
| 2015 | 2014 | ||
|---|---|---|---|
| Revenue | 6,854 | 3,756 | 3,098 |
| Other operating income | 3,101 | 1,621 | 1,480 |
| Total operating income | 9,955 | 5,377 | 4,578 |
| Research and development expenses | (20,635) | (12,641) | (7,994) |
| General and administrative expenses | (4,925) | (3,479) | (1,446) |
| Operating profit/(loss) | (15,605) | (10,743) | (4,862) |
| Financial income and expense | 112 | 134 | (22) |
| Exchange gains/(losses) | 181 | 295 | (114) |
| Profit/(loss) for the period | (15,312) | (10,314) | (4,998) |
| Net increase (decrease) in cash, cash-equivalents and financial assets |
(13,645) | 32,752 | (46,397) |
| Cash, cash-equivalents and financial assets at the end of the period |
42,327 | 55,973 | (13,646) |
Consolidated statement of profit and loss and other comprehensive income
Operating income was EUR 10 million in 2015 compared to EUR 5.4 million in 2014. The Group's operating income includes a mix of (i) revenues in the form of research and development funding and technical success milestone payments received from the Group's industrial partnerships and (ii) other operating income corresponding to government grants and tax incentive credits.
In 2015, the revenue reached EUR 6.9 million compared to EUR 3.8 million in 2014. This increase of EUR 3.1 million is explained by (i) the increase of revenue recognized in 2015 from the collaborations with Bayer and Shire, (ii) the partial recognition of an upfront payment received following the signature of a new partnership with LEO Pharma in 2015, and (iii) a milestone payment received from the partner Bird Rock Bio in August 2015.
Other operating income increased to EUR 3.1 million in 2015 compared to EUR 1.6 million in 2014. This increase is explained by (i) the recognition of a new government grants received in 2015 from the Flemish government's Institute for the Promotion of Innovation by Science and Technology (IWT) and (ii) the increase of tax incentive credits received from the Belgian government following the recruitment of new highly qualified research and development personnel in 2015.
Research and Development (R&D) expenses totaled EUR 20.6 million in 2015, compared to EUR 12.6 million in 2014. The EUR 8 million increase in 2015 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 the R&D employees of the Group. In 2015, R&D costs accounted for 81% of the total operating expenses compared to 78% in 2014. The Group employed the equivalent of 31.4 full time employees in R&D on 31 December 2015 compared to the equivalent of 27.5 full time employees at the same date in 2014.
In 2015, General and Administrative (G&A) expenses were EUR 4.9 million compared to EUR 3.5 million in 2014. The EUR 1.4 million increase in 2015 is explained by (i) additional expenses incurred for supporting activities as a public company such as investor relations, legal and audit fees, (ii) the recruitment of new employees to strengthen the Company's G&A activities, and (iii) the share based payment costs recognized in compensation for the stock options granted to the G&A employees, consultants and board members of the Group. G&A costs accounted for 19% of the total operating expenses in 2015 compared to 22% in 2014. On 31 December 2015, the Group employed the equivalent of 5.8 full time employee in its G&A department compared to 3 full time employee employees on 31 December 2014.
The Group's operating loss before net financial income and tax was EUR 15.6 million in 2015 compared to EUR 10.7 million on 31 December 2014. This increase results primarily from the increase in operating expenses as indicated above.
The Group recorded a net financial income of EUR 0.3 million in 2015 compared to EUR 0.4 million in 2014. The net financial income generated represents essentially the returns on the financial investments of the Group's cash and cash equivalents and financial instruments, and realized foreign exchange gains and losses.
As the Group has incurred losses in all the relevant reporting periods it had no taxable income and therefore no income taxes have been paid.
In 2015, the Group generated a net loss of EUR 15.3 million compared to a net loss of EUR 10.3 million in 2014. As explained above, this increase in the net loss in 2015 results from (i) the increase of R&D expenses in relation with the progression of the clinical activities of the Group, (ii) the increase in G&A expenses incurred for supporting activities as a public company (iii) and the non-cash share based payment accrued on the stock options granted to the employees, consultants and board members of the Group.
The Group's main current assets consist of its cash, cash equivalents and current financial assets. On 31 December 2015, the Group's cash, cash equivalents, financial instruments and current financial assets amounted to EUR 42.3 million compared to EUR 56 million on 31 December 2014.
• Liabilities
The Group's current liabilities relate primarily to trade and other payables and deferred revenue from its industrial agreements with pharmaceutical and biotechnology companies.
On 31 December 2015 the trade payables and other payables were EUR 4.5 million compared to EUR 5 million on 31 December 2014. These amounts include accruals and invoices received but not yet paid, mainly in relation with manufacturing and clinical development activities incurred by the Group.
Deferred revenue totalled EUR 4.1 million on 31 December 2015 compared to EUR 3.5 million at the end of 2014. The increase in 2015 mainly relates to the upfront payment received from the industrial partnerships signed with LEO Pharma in May 2015, which will be recognized as revenue over the course of the agreement.
The Group has no loan outstanding or any long term financial lease commitments at the end of 2015.
Cash flow from operating activities represented a net outflow of EUR 13.9 million in 2015 compared to a net outflow of EUR 5.2 million in 2014. This increase results primarily from the significant increase in operating losses incurred in 2015 due notably to the increase of R&D expenses in relation with the progression of the clinical and manufacturing activities of the Group as explained above.
Cash flow from investing activities represented a net inflow of EUR 16.8 million in 2015 compared to a net outflow of EUR 23.3 million in 2014. The net cash inflow in 2015 corresponds to the movements in the current financial assets resulting from the transfer of cash from money market funds to cash and cash equivalents.
Cash flow from financing activities represented a net inflow of EUR 0.2 million in 2015 compared to a net inflow EUR 37.7 million in 2014. The proceeds received in 2015 correspond to the exercise of stock options by an employee who left the Group in 2015. The amount in 2014 corresponds to the gross proceeds of EUR 41.8 million received from the IPO.
argenx continues to implement its business plan, developing its portfolio of highly differentiated antibody products ARGX-113, ARGX-110, ARGX-111 and ARGX115, forging strategic alliances with a select number of pharmaceutical companies and diversifying its shareholder base onboarding longterm, high quality investors
argenx will progress its antibody products to clinical proof of concept, typically a key value inflection point in drug development. The Phase 1 study for ARGX-113 in healthy volunteers will be completed. The indications for the Phase 2 clinical proof of concept will be selected and start of the first Phase 2 study is planned by the end of 2016. argenx will also continue to progress ARGX-110 towards clinical proof of concept in T cell lymphoma and anticipates the start of a first clinical trial in leukemia patients based on earlier communicated, promising preclinical data highlighting the role of CD70 in leukemic stem cell biology. Likewise the Phase 1 safety expansion study of ARGX-111 focusing on Metamplified patients is expected to be completed. In addition, argenx will continue to advance ARGX-115 through preclinical studies. argenx will also continue to add novel discovery assets to its proprietary product pipeline, thereby leveraging its Innovative Access Program.
In terms of business development activities, argenx is aiming to further leverage its suite of proprietary technologies for the creation of highly differentiated antibody products against novel and complex targets across various therapeutic areas in collaboration with both new and existing partners.
argenx will also aim to further transition its shareholders' base from its historic venture capital investors to blue-chip, long-term institutional investors and increase liquidity and free float of its stock.
argenx combines the diversity of the llama immune system with antibody engineering to advance a clinical pipeline to treat patients with cancer and autoimmune diseases. Our platforms allow us to unlock novel and complex targets and develop antibody-based drugs designed for greater efficacy and longer duration of effect. The strength of our team, our deep understanding of the biology, and our committed collaborations with industry leaders contribute to the success of our journey. argenx is listed on the Euronext Brussels exchange under the symbol ARGX. www.argenx.com
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Joke Comijn, Corporate Communications Manager +32 (0)477 77 29 44 +32 (0)9 243 40 70 [email protected]
Mark Swallow/David Dible Citigate Dewe Rogerson +44 207 282 2948 [email protected]
Beth DelGiacco (US IR) Stern Investor Relations +1 212 362 1200 [email protected]
Forward-looking Statements
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. 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' actual results may differ materially from those predicted by the forward-looking statements. argenx undertakes no obligation to publicly update or revise forward-looking statements, except as may be required by law.
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