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Riddle. What is the biggest biotechnology company in the euro zone? It is the Belgian-Dutch Argenx, which capitalizes nearly 22 billion euros on the stock market. In the game of comparisons, let’s say that it is an identical weight to that of Saint-Gobain and that this makes the company the second most influential of the Bel20 index on the Brussels Stock Exchange, behind the colossus of beer AB InBev .
The history between European biotechnology and investors is tumultuous. In short: it started late, was punctuated by missed appointments and ended in a cascade of disappointments. To make matters worse, the greatest successes were quickly confiscated by pharmaceutical majors, most of the time American. Hence a form of cornflakes complex, which somewhat resembles what has happened in the world of high technology and digital technology.
But let’s focus on Argenx, the spearhead of Benelux research that has taken the lead in European renewal. Created in 2008, the laboratory specializes in therapeutic antibodies for autoimmune diseases. In the world of biotechnologies, there are those who seek. And those who seek and who find, that is to say who have obtained marketing authorization. This is the pivotal moment that transforms a medical research company into a commercial company. Before that, it depends 100% on external funding. From there, it can start financing all or part of its activities. Argenx is at this stage. The company is not yet profitable, but it has started to earn a turnover from the sale of its first treatment. A considerable stumbling block has therefore been overcome. Instead of burning truckloads of cash, Argenx now only consumes wheelbarrows.
The treatment that made Argenx change dimension responds to the sweet name of “efgartigimod”. Or Vyvgart, for its commercial version. From the company’s “SIMPLE” research platform, it has been sold for a few months to treat generalized myasthenia gravis, but it is in advanced clinical trials for several other rare diseases. The laboratory also has a phase II monoclonal antibody, cusatuzumab, formerly co-developed with Janssen, and a phase I candidate, ARGX-117. The other molecules in the catalog are still in the preclinical stage. In this sector, savvy investors know that it is better to bet on players who have late-stage products and who have several irons in the fire. Why ? Because it takes on average eleven and a half years between the discovery of a molecule and its marketing. With a probability of success of 7%. And again, this is an average: for innovative treatments and complicated indications, this percentage is even lower. Hence a number of medical-scholarship fiascos in recent years, because there are many candidates and few elected.
To stay in the same lexical field, let’s say that Argenx is in a favorable tie. The company should see its turnover reach 800 million euros next year, if the ramp-up of Vyvgart goes as planned. By way of comparison, revenues were limited to 22 million euros five years before. For profitability, we will still have to wait, but the multiplication of marketing authorizations for Vyvgart is fertile ground. After the United States at the end of 2021 and Japan in May, the deployment started in Europe in September. Canada and China are expected to follow next year. The company has $2.3 billion in reserve to support the ramp-up.
In the sector, you pay for the prospect of success. And the lower the risk, the more you pay. Argenx is therefore generously valued, because the company is close to the goal.
