TABLE OF CONTENTS
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
ARGENX SE
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
As of | ||||||||
June 30, | December 31, | |||||||
(in thousands of $) |
| Note |
| 2023 |
| 2022 | ||
ASSETS |
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|
|
|
|
|
| |
Non‑current assets | ||||||||
Property, plant and equipment | $ | |
| $ | | |||
Intangible assets | |
| | |||||
Deferred tax asset | | | ||||||
Other non-current assets | 4 | |
| | ||||
Research and development incentive receivables | |
| | |||||
Investment in joint venture | | | ||||||
Prepaid expenses | 5 | | — | |||||
Total non‑current assets | $ | |
| $ | | |||
Current assets |
|
|
|
|
| |||
Inventories | 6 | $ | | $ | | |||
Prepaid expenses |
|
| |
| | |||
Trade and other receivables |
| 7 |
| |
| | ||
Research and development incentive receivables |
|
| |
| | |||
Financial assets |
| 8, 18 |
| |
| | ||
Cash and cash equivalents |
| 9, 18 |
| |
| | ||
Total current assets |
|
| $ | |
| $ | | |
TOTAL ASSETS |
|
| $ | |
| $ | |
The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements
2
As of | ||||||||
June 30, | December 31, | |||||||
(in thousands of $) |
| Note |
| 2023 |
| 2022 | ||
EQUITY AND LIABILITIES |
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|
|
|
|
|
| |
Equity |
|
|
|
|
| |||
Equity attributable to owners of the parent |
| 10 |
|
|
|
| ||
Share capital |
|
| $ | |
| $ | | |
Share premium |
| |
| | ||||
Translation Differences | | | ||||||
Accumulated losses |
|
| ( |
| ( | |||
Other reserves |
|
| |
| | |||
Total equity |
|
| $ | |
| $ | | |
Non-current liabilities |
|
|
| |||||
Provisions for employee benefits |
|
| $ | |
| $ | | |
Lease liabilities | | | ||||||
Deferred tax liabilities | | | ||||||
Total non-current liabilities | $ | | $ | | ||||
Current liabilities |
|
| ||||||
Lease liabilities | $ | | $ | | ||||
Trade and other payables | 12 | | | |||||
Tax liabilities | | | ||||||
Total current liabilities | $ | | $ | | ||||
Total liabilities |
|
| $ | |
| $ | | |
TOTAL EQUITY AND LIABILITIES |
|
| $ | |
| $ | |
The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements.
3
ARGENX SE
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF PROFIT OR LOSS
Six Months Ended | ||||||||
June 30, | ||||||||
(in thousands of $ except for shares and EPS) |
| Note | 2023 |
| 2022 | |||
Product net sales |
| 13,14 | $ | |
| $ | | |
Collaboration revenue | | | ||||||
Other operating income |
| |
| | ||||
Total operating income |
| |
| | ||||
Cost of sales | ( | ( | ||||||
Research and development expenses |
| 15 | ( |
| ( | |||
Selling, general and administrative expenses |
| 16 | ( |
| ( | |||
Loss from investment in joint venture | ( | — | ||||||
Total operating expenses | ( | ( | ||||||
Operating loss |
| $ | ( |
| $ | ( | ||
Financial income |
| |
| | ||||
Financial expense | ( | ( | ||||||
Exchange gains/(losses) |
| |
| ( | ||||
Loss for the period before taxes |
|
| $ | ( |
| $ | ( | |
Income tax benefit |
| 17 | $ | |
| $ | | |
Loss for the period |
|
| $ | ( |
| $ | ( | |
Loss for the period attributable to: | ||||||||
Owners of the parent | ( | ( | ||||||
Weighted average number of shares outstanding |
|
| |
| | |||
Basic and diluted loss per share (in $) |
| ( |
| ( |
The notes are an integral part of these unaudited condensed consolidated interim financial statements.
4
ARGENX SE
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME AND LOSS
Six Months Ended | ||||||||
June 30, | ||||||||
(in thousands of $ except for shares) |
| Note | 2023 |
| 2022 | |||
Loss for the period |
| $ | ( |
| $ | ( | ||
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 to profit or loss, net of tax | ||||||||
Fair value gain/(loss) on investments in equity instruments designated as at FVTOCI | 18 | ( | ( | |||||
|
| |||||||
Other comprehensive loss, net of income tax |
| $ | ( |
| $ | ( | ||
Total comprehensive loss attributable to: |
| $ | ( |
| $ | ( | ||
Owners of the parent |
| ( |
| ( |
The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements.
5
ARGENX SE
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
Six Months Ended | ||||||||
June 30, | ||||||||
(in thousands of $) |
| Note |
| 2023 |
| 2022 | ||
Operating loss |
|
|
| $ | ( |
| $ | ( |
Adjustments for non-cash items |
|
|
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| |||
Amortization of intangible assets |
|
| |
| ||||
Depreciation of property, plant and equipment |
|
| |
| ||||
Provisions for employee benefits | | |||||||
Expense recognized in respect of share-based payments |
| 11 |
| |
| |||
Fair value gains on financial assets at fair value through profit or loss | — | ( | ||||||
Loss from investment in joint venture | | — | ||||||
|
| $ | ( |
| $ | ( | ||
Movements in current assets/liabilities |
|
|
|
|
| |||
(Increase)/decrease in trade and other receivables |
|
| ( |
| ( | |||
(Increase)/decrease in inventories | 6 | | ( | |||||
(Increase)/decrease in other current assets |
|
| ( |
| ( | |||
Increase/(decrease) in trade and other payables |
|
| ( |
| ( | |||
Movements in non-current assets/liabilities | ||||||||
(Increase)/decrease in non‑current prepaid expenses | ( | — | ||||||
(Increase)/decrease in other non‑current assets |
|
| ( |
| ( | |||
Cash flows used in operating activities | $ | ( | $ | ( | ||||
Interest paid | ( | ( | ||||||
Income taxes paid | ( | ( | ||||||
Net cash flows used in operating activities |
|
| $ | ( |
| $ | ( | |
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| ||||
Purchase of property, plant and equipment |
|
| ( |
| ( | |||
(Increase)/decrease in current financial assets | 8 | — | ( | |||||
Purchase of current financial investments (1) | ( | — | ||||||
Sale of current financial investments (1) | | — | ||||||
Interest received |
|
| |
| | |||
Investment in joint venture | ( | — | ||||||
Net cash flows (used in) / from investing activities |
|
| $ | |
| $ | ( | |
|
|
|
|
| ||||
Principal elements of lease payments | ( | ( | ||||||
Proceeds from issue of new shares, gross amount |
| 10 |
| — |
| | ||
Issue costs paid | — | ( | ||||||
Exchange gain from currency conversion on proceeds from issue of new shares | 10 | — | | |||||
Payment on employee withholding taxes related to restricted stock unit awards | ( | — | ||||||
Proceeds from exercise of stock options | 10 | | | |||||
Net cash flows from financing activities |
|
| $ | |
| $ | | |
Increase/(decrease) in cash and cash equivalents |
|
| $ | |
| $ | | |
Cash and cash equivalents at the beginning of the period |
|
|
| $ | |
| $ | |
Exchange gains/(losses) on cash & cash equivalents |
|
| $ | |
| $ | ( | |
Cash and cash equivalents at the end of the period |
|
|
| $ | |
| $ | |
(1) Due to the change in the maturity of the current financial assets during current year, the presentation has been changed from net basis to gross basis
The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements.
6
ARGENX SE
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
Attributable to Owners of the Parent | |||||||||||||||||||||||||
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| Share-based |
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| Total |
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payment and | Equity | ||||||||||||||||||||||||
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| income tax | Attributable |
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deduction on | Other | to Owners | |||||||||||||||||||||||
Share | Share | Accumulated | Translation | share-based | comprehensive | of the | Total | ||||||||||||||||||
(in thousands of $) | Capital | Premium | Losses |
| Difference |
| payments |
| income |
| Parent | Equity | |||||||||||||
Balance year ended December 31, 2021 |
| $ | |
| $ | |
| $ | ( |
| $ | |
| $ | | $ | ( |
| $ | |
|
| $ | | |
Loss for the period |
| $ |
| $ |
| $ | ( | $ | $ | $ | $ | ( | $ | ( | |||||||||||
Other comprehensive income / (loss) | ( | ( | ( | ( | |||||||||||||||||||||
Total comprehensive income/(loss) for the period | — | — | ( | ( | — | ( | ( | ( | |||||||||||||||||
Income tax benefit from excess tax deductions related to share-based payments | | | | ||||||||||||||||||||||
Share-based payment |
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| | |
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Issue of share capital | |
| |
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| |
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Transaction costs for equity issue | ( | ( | ( | ||||||||||||||||||||||
Exercise of stock options |
| |
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Balance period ended June 30, 2022 |
| $ | |
| $ | |
| $ | ( |
| $ | |
| $ | | $ | ( |
| $ | |
|
| $ | | |
Balance year ended December 31, 2022 | $ | |
| $ | |
| $ | ( |
| $ | |
| $ | | $ | ( |
| $ | |
|
| $ | | ||
Total loss of the period |
| $ |
|
| $ |
|
| $ | ( | $ |
|
| $ |
| $ |
|
| $ | ( | $ | ( | ||||
Other comprehensive income / (loss) | | ( | ( | ( | |||||||||||||||||||||
Total comprehensive income/(loss) for the period | — | — | ( | | — | ( | ( | ( | |||||||||||||||||
Income tax benefit from excess tax deductions related to share-based payments | | | | ||||||||||||||||||||||
Share-based payment |
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Exercise of stock options |
| |
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| | ||||||||||||
Ordinary shares withheld for payment of employees' withholding tax liability | ( | ( | ( | ||||||||||||||||||||||
Balance period ended June 30, 2023 |
| $ | |
| $ | |
| $ | ( |
| $ | |
| $ | | $ | ( |
| $ | |
|
| $ | |
Please refer to note 10 for more information on the share capital.
The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements.
7
ARGENX SE
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. General information about the Company
argenx SE is a Dutch European public company with limited liability incorporated under the laws of the Netherlands. The Company (COC 24435214) has its official seat in Rotterdam, the Netherlands, and its registered office is at Laarderhoogteweg 25, 1101 EB Amsterdam, the Netherlands.
argenx SE is a publicly traded company with ordinary shares listed on Euronext Brussels under the symbol “ARGX” since July 2014 and with American Depositary Shares listed on Nasdaq under the symbol “ARGX” since May 2017.
2. Basis of preparation
The unaudited condensed consolidated interim financial statements for the six months ended June 30, 2023 have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as issued by the IASB and as adopted by the European Union. The unaudited condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended December 31, 2022.
All amounts herein are presented in thousands of $, unless otherwise indicated, rounded to the nearest $ ‘000.
The unaudited condensed consolidated financial statements have been approved for issue by the Company’s Board of Directors (the “Board”) on July 25, 2023.
3. Significant accounting policies
There were no significant changes in accounting policies, critical accounting judgements and key sources of estimation uncertainty applied by us in these unaudited condensed consolidated interim financial statements compared to those used in the annual consolidated financial statements as of December 31, 2022.
4. Other non-current assets
As of | ||||||
June 30, | December 31, | |||||
(in thousands of $) |
| 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 |
| $ | |
| $ | |
Please also refer to note 18 for more information on the financial instruments.
5. Non-current prepaid expense
Non-current prepaid expense is related to prepaid inventory. Please also refer to note 6 for more information on inventory.
8
6. Inventories
As of | ||||||
June 30, | December 31, | |||||
(in thousands of $) |
| 2023 |
| 2022 | ||
Raw materials and consumables |
| $ | |
| $ | |
Inventories in process |
| |
| | ||
Finished goods | | | ||||
Total inventories |
| $ | |
| $ | |
The cost of inventories, which is recognized as an expense and included in the “cost of sales” on the unaudited condensed consolidated statements of profit or loss, amounted to $
As a result of the detection of a latent defect in the second quarter of 2023 in drug substance batches produced in 2022 at one of the facilities awaiting approval, the Company has decreased inventory with an amount of $
Included in inventory are products which could be used either for commercial activities, or for in-house preclinical and clinical programs, non-reimbursed pre-approval programs and clinical programs carried out by Zai Lab.
7. Trade and other receivables
Trade and other receivables are composed of receivables which are detailed below:
As of | ||||||
June 30, | December 31, | |||||
(in thousands of $) |
| 2023 |
| 2022 | ||
Trade receivables |
| |
| | ||
Other receivables | | | ||||
Interest receivable |
| |
| | ||
Total trade and other receivables |
| $ | |
| $ | |
The carrying amounts of trade and other receivables approximate their respective fair values. On June 30, 2023 and December 31, 2022, the Company did not have any provision for expected credit losses.
8. Current financial assets
These current financial assets relate to term accounts with an initial maturity longer than
As of | ||||||
June 30, | December 31, | |||||
(in thousands of $) |
| 2023 |
| 2022 | ||
Money market funds |
| $ | |
| $ | |
Term accounts | | | ||||
Total Current Financial Assets |
| $ | |
| $ | |
Please also refer to note 18 for more information on the financial instruments.
9
9. Cash and cash equivalents
As of | ||||||
June 30, | December 31, | |||||
(in thousands of $) |
| 2023 |
| 2022 | ||
Money market funds |
| $ | |
| $ | |
Term accounts | | | ||||
Cash and bank balances |
| |
| | ||
Total cash and cash equivalents |
| $ | |
| $ | |
On June 30, 2023, cash and cash equivalents amounted to $
Please also refer to note 18 for more information on the financial instruments.
10. Shareholders’ capital
On June 30, 2023, the Company’s share capital was represented by
Number of shares outstanding on December 31, 2022 |
| |
Exercise of stock options | | |
Vesting of RSUs | | |
Number of shares outstanding on June 30, 2023 |
| |
11. Share based payments
The Company has an equity incentive plan for the employees, key consultants, board members, senior managers and key outside advisors (“key persons”) of the Company and its subsidiaries. In accordance with the term of the plan, as approved by shareholders, employees may be granted stock options and/or restricted stock units.
11.1 Stock options
On April 3, 2023, the Company granted a total of
Stock options granted in | Apr-23 | |
Number of options granted | ||
Fair value of options (in USD) (*) | $ | |
Share price (in USD) (*) | $ | |
Exercise price (in USD) (*) | $ | |
Expected volatility | % | |
Expected option life (in years) | ||
Risk‑free interest rate | % | |
Expected dividends | — | |
(*) amounts have been converted to US dollar at the closing rate of grant date |
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
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into
● | of the total stock options granted on the first anniversary of the granting of the stock options; and |
● | of the total grant on the first day of each month following the first anniversary of the date of grant of the stock options. |
Upon leave of the employee, consultant or director, 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 4th year following the date of grant of those stock options, and in any case no later than the expiration date of the option.
The total share-based payment expense related to stock options recognized in the unaudited condensed consolidated statement of income or loss totaled $
11.2 Restricted Stock Units (RSUs)
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
The total share-based payment expense related to RSUs recognized in the unaudited condensed consolidated interim statements of profit or loss totaled $
12. Trade and other payables
As of | ||||||
June 30, | December 31, | |||||
(in thousands of $) |
| 2023 |
| 2022 | ||
Trade payables | $ | |
| $ | | |
Short term employee benefits | | | ||||
Gross-to-net accruals | | | ||||
Other | | | ||||
Total trade and other payables | $ | | $ | |
The carrying amounts of trade and other payables approximate their respective fair values.
Trade payables correspond primarily to clinical 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.
11
The movement in gross-to-net accruals as of June 30, 2023 and as of June 30, 2022 was as follows:
Distribution | |||||||||
Rebates and | fees, product | ||||||||
charge backs | returns and | Total | |||||||
(in thousands of $) |
| other | |||||||
Balance at January 01, 2022 | $ | — |
| $ | — | $ | — | ||
Current estimate related to the sales made in current year | | | | ||||||
(Credits or payments related to sales made during the year) | ( | ( | ( | ||||||
Balance at June 30, 2022 | $ | | $ | | $ | | |||
Balance at January 01, 2023 | $ | | $ | | $ | | |||
Current estimate related to the sales made in current year | | | | ||||||
Adjustments for prior year sales | | ( | ( | ||||||
(Credits or payments related to sales made during the year) | ( | ( | ( | ||||||
(Credits or payments related to sales made during the prior year) | ( | ( | ( | ||||||
Balance at June 30, 2023 | $ | | $ | | $ | |
13. Product net sales
For the six months ended June 30, 2023, the product gross sales was fully related to sales of VYVGART and amounts to $
For the six months ended June 30, 2022, the product gross sales was fully related to sales of VYVGART and amounts to $
Refer to note 14 for the breakdown of product net sales by regions for six month ended June 30, 2023.
14. Segment reporting
The following table summarizes our product net sales by territory of sales based on the country of the entity that recognizes product net sales:
Six Months Ended | ||||||
June 30, | ||||||
(in thousands of $) |
| 2023 | 2022 | |||
Product net sales | $ | $ | ||||
United States | | | ||||
Japan | | | ||||
EMEA | | | ||||
Total |
| $ | |
| $ | |
We sell our products through a limited number of distributors and wholesalers.
12
The non-current assets of the Company, with the exception of the deferred tax assets, are geographically located as shown in the table below:
As of | ||||||
June 30, | December 31, | |||||
(in thousands of $) | 2023 |
| 2022 | |||
Belgium | $ | |
| $ | | |
United States | |
| | |||
Japan | |
| | |||
Germany | | | ||||
France | | | ||||
Italy | | — | ||||
Total | $ | |
| $ | |
15. Research and development expenses
Six Months Ended | ||||||
June 30, | ||||||
(in thousands of $) | 2023 |
| 2022 | |||
Personnel expense | $ | |
| $ | | |
External research and development expenses | |
| | |||
Materials and consumables | |
| | |||
Depreciation and amortization | |
| | |||
Other expenses | |
| | |||
Total research and development expenses | $ | |
| $ | |
16. | Selling, general and administrative expenses |
Six Months Ended | ||||||
June 30, | ||||||
(in thousands of $) | 2023 | 2022 | ||||
Personnel expense | $ | | $ | | ||
Professional and marketing fees | | | ||||
Supervisory board | | | ||||
Depreciation and amortization | | | ||||
IT expenses | | | ||||
Other expenses | | | ||||
Total selling, general and administrative expenses | $ | | $ | |
17. Income tax benefit
The Company recorded an income tax benefit of $
1. |
13
18. Financial instruments and financial risk management
The Company carried the following assets at fair value on June 30, 2023 and December 31, 2022, respectively:
At June 30, 2023 | |||||||||
(in thousands of $) |
| Level 1 |
| Level 2 |
| Level 3 | |||
Non-current financial assets |
| $ | |
| $ | — |
| $ | |
Current financial assets | | — | — | ||||||
Cash equivalents |
| |
| — |
| — | |||
Assets carried at fair value |
| $ | |
| $ | — |
| $ | |
At December 31, 2022 | |||||||||
(in thousands of $) |
| Level 1 |
| Level 2 |
| Level 3 | |||
Non-current financial assets |
| $ | |
| $ | — |
| $ | |
Current financial assets |
| |
| — |
| — | |||
Cash equivalents | | — | — | ||||||
Assets carried at fair value |
| $ | |
| $ | — |
| $ | |
Non-current financial assets – Level 3
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.
In March 2021, AgomAb Therapeutics NV secured $
In June 2022, AgomAb Therapeutics NV secured €
Non-current financial assets – Level 1
As part of the license agreement for the development and commercialization for efgartigimod in Greater China, the Company obtained, amongst others,
19. Related party transaction
The Company has a joint venture agreement with the University of Colorado Anschutz Medical Campus and UCHealth resulting in a separate legal entity, OncoVerity, Inc. During the first six months of 2023, the Company contributed $
20. Contractual obligations and commitments
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 commercialization or potential future commercialization. In December 2018, the Company signed its first commercial supply
14
agreement with Lonza related to the reservation of commercial drug substance supply capacity for efgartigimod. In the aggregate, as of June 30, 2023, the Company has outstanding commitments for efgartigimod under the first commercial supply agreement of $
During 2022, the Company signed an agreement with Fujifilm, for activities relating to the large-scale manufacturing of efgartigimod drug substance. In the aggregate, as of June 30, 2023, the Company has outstanding commitments for efgartigimod under the commercial supply agreement of $
21. Events after the balance sheet date
On July 17, 2023, the Company offered
The Company generated its first commercial sale of Vyvgart Hytrulo in the United States during July 2023, which trigged a milestone payment of $
No other events have occurred after the balance sheet date that could have a material impact on the unaudited condensed consolidated financial statements.
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