Argenx SE

Annual

Report

2022

2022 Annual Report including the

Annual Financial Statements for

the Year ended December 31, 2022

argenx SE (herein

argenx

or the

Company

and, together with its subsidiaries, the

Group,

) is a European public company (

Societas Europaea

) incorporated under the

laws of the Netherlands with its statutory seat in Rotterdam, the Netherlands, which

is publicly listed in Belgium and the United States of America (

U.S.

). The applicable

regulations with respect to public information and protection of investors, as well as the

commitments we make by argenx to securities and market authorities, are described in

this annual report (

Annual Report

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”, “believe”, “can”, “could”, “estimate”, “expect”, “intend”,

“is designed to”, “may”, “might”, “objective”, “plan”, “potential”, “project”, “predict”,

“target”, “will”, “should”, or other variations or the negative of such terms, or by

discussion of strategy, although not all forward-looking statements contain these

identifying words. These statements relate to our future results of operations and

financial positions, prospects, developments, 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 disclaim any obligation

to update forward-looking statements, except as may be otherwise required by law. The

forward-looking statements in this Annual Report involve known and unknown risks,

uncertainties and other factors that could cause our actual future results, performance

and achievements to differ materially from those forecasted or suggested herein. These

include changes in general economic and business conditions, as well as the factors

described in section 2 “

Risk Factors

” of this Annual Report.

Table of Contents

To our Shareholders

Shareholder Letter

2022 In Brief

2023 Outlook

Presentation of the Group

1.1

Company Profile

1.2

Strategy and Objectives

1.3

Our Products and Product Candidates

1.4

Collaboration Agreements

1.5

License Agreements

1.6

Distribution Agreements

1.7

Manufacturing and Supply

1.8

Intellectual Property

1.9

Regulation

Risk Factors

2.1

Risk Factors Related to argenx’s Financial Position

and Need for Additional Capital

108

2.2

Risk Factors Related to Commercialization of

argenx’s Products and Product Candidates,

Including for New Indications

111

2.3

Risk Factors Related to Other Government Regulations

121

2.4

Risk Factors Related to the Development and Clinical

Testing of argenx’s Products and Product Candidates

127

2.5

Risk Factors Related to argenx’s Dependence

on Third Parties

134

2.6

Risk Factors Related to argenx’s Business and Industry

139

2.7

Risk Factors Related to argenx’s Intellectual Property

143

2.8

Risk Factors Related to argenx’s Organization

and Operations

150

Corporate Governance

3.1

Dutch Corporate Governance Code “Comply or Explain”

157

3.2

Management Structure

159

3.3

Report of the Non-Executive Directors

184

3.4

Remuneration Report and Compensation Statement

189

3.5

Risk Appetite & Control

222

General Description of the Company and

its Share Capital

4.1

Legal Information on the Company

228

4.2

Share Capital

229

4.3

Share Classes and Principal Shareholders

234

4.4

General Meeting and Voting Rights

236

4.5

Anti-Takeover Provisions

237

4.6

Amendments of Articles of Association

237

4.7

Transparency Directive

238

4.8

Dutch Financial Reporting Supervision Act

238

4.9

Dividends and Other Distributions

239

4.10

Financial Calendar 2023

239

Operating and Financial Review

5.1

Overview

241

5.2

Basis of Presentation

243

5.3

Capitalization and Indebtedness

250

5.4

Critical Accounting Estimates and Judgments

252

5.5

Results of Operation

253

5.6

Liquidity and Capital Resources

258

5.7

Off-Balance Sheet Arrangements

261

5.8

Contractual Obligations

262

5.9

Information Regarding the Independent Auditor

263

5.10

Material Contracts and Related Party Transactions

263

5.11

Employees

266

5.12

Legal and Arbitration Proceedings

267

5.13

Insurance

267

Non-Financial Information

8.1

Regulations and Compliance

359

8.2

NFRD

359

8.3

EU Taxonomy

368

Glossary

9.1

Cross Reference table for annual reporting requirement

372

9.2

Management Confirmations

373

9.3

Definitions

374

Consolidated Financial Statements

Consolidated Statements of Financial Position

269

Consolidated Statements of Profit or Loss

271

Consolidated Statements of Comprehensive Income and Loss

272

Consolidated Statements of Cash Flows

273

Consolidated Statements of Changes in Equity

275

Notes to the Consolidated Financial Statements

276

Company Financial Statements

Signatures of Executive and Non-Executive Directors

336

Company Balance Sheet on December 31, 2022 argenx SE

338

Company Profit and Loss Account for the Year Ended

December 31, 2022 argenx SE

339

Notes to the Company Financial Statements of argenx SE

340

Other Information

347

Independent Auditor’s Report

348

To our

Shareholders

Shareholder Letter

2022 In Brief

2023 Outlook

Shareholder Letter

Dear Shareowners,

Commitment is the word that comes to

mind when I look back at 2022 and all that

we accomplished as a team. For the first

time in our history, we were able to honor

our commitment and deliver a transforma-

tive therapy to patients with the potential

to change how generalized myasthenia

gravis (

gMG

) is treated. It was also

our first opportunity to show our

ability to execute commercially

in the same way we have in

developing breakthrough

pipeline candidates. We had

an ambitious task before us

to launch VYV-

GART globally

and bring

our first-in-

class im-

munology

innovation

to people

living with

gMG

. We

are proud

to say we

accomplished

what we set out to

do, thanks to the unwavering commitment

demonstrated by our team of Argonauts.

It was a year of pivotal growth for us as

an organization as we broadened our core

capabilities to launch VYVGART in the U.S.,

Japan and Europe. We expanded our

teams and our global reach, while main-

taining a strong connection among our

employees through our unified commit-

ment to our patients and their supporters.

This commitment helped drive our strong

commercial performance in the first year

of launch – generating over $400 million

in net sales globally. Our strategies to

engage and activate our key stakeholders

were the right ones to empower patients

to demand better, and to provide what we

believe is best-in-class patient support,

drive rapid physician adoption of VYVGART

and enable broad and appropriate access

to this important therapy.

The stories we hear from patients continue

to inspire our everyday work and fuel us

on our mission to reach argenx 2025. We

heard from a woman living with gMG, who

loved to garden before her diagnosis but

had to give it up because of her symptoms.

We talked to another patient who had

not been able to travel to see her family

because she was not able to physically sit

on a plane. There are gMG patients who

can no longer walk or hold a job, or who

had lost their love of food because of

difficulty swallowing. In the first year of

our VYVGART launch, we were motivated

by the significant unmet needs of all of

these patients and were humbled to be

able to bring another treatment option to

the gMG community.

Peter Verhaeghe

Tim Van Hauwermeiren

We will be prepared in the year ahead

to bring another first-in-class treatment

option to the gMG community with the

expected launch of our subcutaneous

formulation of efgartigimod, anticipated

in June 2023. We know gMG presents

itself differently for each person and want

to offer multiple ways in which patients

can individualize their treatment to their

unique experience.

2022 was also the first year where our

innovation mission and commitment to

patients truly intersected, bringing our

vision of redefining the treatment of

autoimmunity to life. This was clearly

demonstrated by the progress we made

across our pipeline, advancing our clinical

trials one step further. We reported

positive pivotal data from our second

autoimmune indication, immune throm-

bocytopenia (

ITP

), in May and presented

these data during a plenary session at the

American Society of Hematology annual

meeting. We initiated several clinical

trials and are evaluating efgartigimod in

ten autoimmune indications with three

more to start this year. We are set up for

a busy 2023 and are expecting five clinical

data readouts from efgartigimod and

ARGX-117.

Through our commitment to both science

and the patient, we are always striving to

better understand and learn about the cli-

nical findings we observe, which is perhaps

best demonstrated by our ‘bedside to

bench’ approach. In 2022, we produced

and published on new breakthrough

translational biology that emerged from

our Phase 2 clinical trial in pemphigus and

may show a potential disease-modifying

mechanism for efgartigimod. These data

were presented at the Society for Investi-

gative Dermatology in May 2022.

We are excited to continue to demonstrate

our commitment to innovation in 2023

and beyond as we progress closer to

‘argenx 2025’. This is our core mission

– simply put. We want to seek out break-

throughs in immunology and bring them

to patients. We see real innovation, real

impact as the only way to revolutionize

the way autoimmunity is treated. We

believe that when you follow scientific

breakthroughs to meet the needs of

patients – the opportunity is limitless.

Thank you first to the patients and their

families who inspire us, to our sharehol-

ders for your continued support and belief

in our mission, and to our employees for

your commitment and passion every day.

We are very proud of the progress we

continue to make and are confident that

we can achieve even more in the year to

come.

Sincerely,

Tim Van Hauwermeiren & Peter Verhaeghe

2022

In Brief

In 2022, we executed on our global launch

of VYVGART® (efgartigimod alfa) (

VYVGART

)

our first-in-class neonatal Fc receptor (

FcRn

)

blocker, which is now approved in the U.S.,

Japan and Europe. There are now over

3,000 people globally living with gMG

who are on VYVGART.

gMG is just the beginning and efgartigimod

is now being evaluated in ten autoimmune

indications with three more to start in

2023. We announced positive Phase 3 data

from ADAPT-SC evaluating subcutaneous

(

) efgartigimod in gMG and also from

ADVANCE evaluating VYGART (intravenous

(

)) in ITP. We are well on our way

to achieve our ‘argenx 2025’ vision of

efgartigimod either being commercially

available or in clinical development in

fifteen indications by 2025.

Operational

Highlights

We are advancing a pipeline of

differentiated immunology assets across

four commercial franchises including

neurology, hematology/rheumatology,

dermatology and nephrology. Our

wholly-owned pipeline currently consists

of efgartigimod, ARGX-117 targeting

component 2 (

) and ARGX-119 targeting

muscle-specific kinase (

MuSK

). Our core

mission is innovation, and we continue

to invest in our immunology innovation

program (

IIP

) from which we drive pipeline

expansion by collaborating with leading

disease biologists who are researching

first-in-class disease targets or pathways.

We believe that our IIP has a track record

of success and eight programs have

demonstrated human proof-of-concept

since our inception.

Operational

Highlights

Global

Efgartigimod

Launch

•

Generated global net product VYVGART revenue of

$400.7 million in 2022.

•

VYVGART was approved for the treatment of gMG

in the U.S., Japan and Europe:

◦

On December 17, 2021, the U.S. Food and

Drug Administration (

FDA

) approved VYVGART

for the treatment of gMG in adult patients

who are anti-acetylcholine receptor antibody

positive (

AChR.AB+

). The U.S. commercial

launch was initiated in January 2022.

◦

On January 20, 2022, Japan’s Ministry of

Health, Labour and Welfare (

MHLW

) approved

VYVGART (efgartigimod alfa) for the treatment

of adult patients with gMG who do not have

sufficient response to steroids or non-steroidal

immunosuppressive therapies (

ISTs

). The Japan

commercial launch was initiated in May 2022.

◦

On August 11, 2022, the EU Commission

granted marketing authorization for VYVGART

(efgartigimod alfa-fcab) as an add-on to

standard therapy for the treatment of adult

patients with gMG who are AChR-AB+. The

approval is applicable in all 27 European Union

(

) Member States, Iceland, Norway and

Liechtenstein. The commercial launch in

Germany was initiated in September 2022.

•

In addition, in 2022, we made the following progress

towards our global launch of VYVGART:

◦

argenx Canada was established in February

2022 in preparation for a potential Health

Canada approval, expected in the third quarter

of 2023, and, if granted, commercial launch

in Canada.

◦

argenx UK Ltd. was established in August

2022 in preparation for launch in the United

Kingdom (

◦

argenx Netherlands Services B.V. was

established in September 2022 in preparation

for launch in the Netherlands.

◦

argenx Italy S.r.l. incorporated under the laws

of Italy, having its registered office in Milan,

Italy and its address at Largo Francesco Richini

6, 20122 Milan, Italy.

◦

Zai Lab Ltd (

Zai Lab

) filed for approval of

efgartigimod in the People’s Republic of China

(

PRC

) in the second quarter of 2022. The

approval decision is expected in 2023.

◦

Medison Pharma Ltd (

Medison

) filed for

approval of efgartigimod in Israel in the

second quarter of 2022. The approval decision

expected in 2023.

◦

Additional distribution partnership

agreements for other territories were

announced in 2022 to further expand global

patient reach. For example, we entered

into VYVGART commercial and distribution

agreements with Medison in Central and

Eastern Europe and with Genpharm Services

FZ-LLC (

Genpharm

) for the Gulf Cooperation

Council, comprising Saudi Arabia, Kuwait, the

United Arab Emirates, Qatar, Bahrain and Oman

(collectively, the

GCC

◦

Expanded large-scale manufacturing

capabilities and capacity through collaboration

with FUJIFILM Diosynth Biotechnologies

Denmark ApS (

Fujifilm

) based in Hillerød,

Denmark, to provide large-scale drug

substance manufacturing of efgartigimod

(in addition to Lonza Sales AG (

Lonza

)).

Pipeline of

Differentiated

Antibody

Candidates

Efgartigimod is our first-in-class neonatal FcRn

blocker. We expect our leadership in FcRn blockade

to expand to include thirteen autoimmune indications

in the pipeline by the end of 2023, including in our

commercial franchises listed below:

•

Neurology franchise:

◦

ADAPT-SC: Positive topline data of SC

efgartigimod, announced on March 22,

2022, followed by acceptance of a biologics

license application (

BLA

) by the FDA for SC

efgartigimod for gMG in adult patients. The

BLA was granted a Prescription Drug User

Fee Act (

PDUFA

) target action date that was

recently extended by three months to June

20, 2023.

◦

ADHERE: Topline data from registrational

ADHERE clinical trial of SC efgartigimod

for chronic inflammatory demyelinating

polyneuropathy (

CIDP

) expected in thesecond

quarter of 2023.

◦

ALKIVIA: Registrational Phase 2/3 ALKIVIA

clinical trial ongoing of SC efgartigimod for

three subtypes of idiopathic inflammatory

myopathies (

Myositis

), including immune-

mediated necrotizing myopathy (

IMNM

anti-synthetase syndrome (

ASyS

) and

dermatomyositis (

), with an analysis

planned for the Phase 2 portion of the clinical

trial including 30 patients of each subtype.

◦

Thyroid eye disease (

TED

): Registrational

clinical trial to start in TED in the fourth

quarter of 2023.

Efgartigimod

◦

gMG data from our neuromuscular franchise

presented during the American Association

of Neuromuscular and Electrodiagnostic

Medicine annual meeting and Myasthenia

Gravis Foundation of America scientific session

on September 21, 2022, including new data

analyses from ADAPT+ and real-world case

studies on the adult AChR antibody negative

gMG patient population.

•

Hematology/rheumatology franchise:

◦

ADVANCE: Positive topline data of VYVGART

for ITP, announced on May 5, 2022.

◦

ADVANCE-SC: Topline data from the second

registrational ADVANCE-SC clinical trial of

SC efgartigimod for primary ITP expected

in the second half of 2023.

◦

Sjögren’s syndrome (

Primary

SjS

): Phase 2

proof-of-concept clinical trial ongoing through

partnership with IQVIA Ltd (

IQVIA

) with topline

results expected in 2024.

◦

Post-COVID-19 Postural Orthostatic

Tachycardia Syndrome (

PC-POTS

): Phase 2

proof-of-concept clinical trial ongoing through

partnership with IQVIA with topline results

expected in fourth quarter of 2023.

◦

Anti-neutrophil cytoplasmic antibody-

associated vasculitis (

): Phase 2 proof-of-

concept clinical trial to start in fourth quarter

of 2023.

•

Dermatology franchise:

◦

ADDRESS: Topline data from registrational

ADDRESS trial of SC efgartigimod for

pemphigus vulgaris (

) and pemphigus

foliaceus (

) expected in the second half of

2023.

◦

BALLAD: Registrational Phase 2/3 BALLAD trial

of SC efgartigimod in bullous pemphigoid (

)

ongoing with interim results after the first 40

patients expected in 2024.

◦

Novel translational data from the open-label

Phase 2 clinical trial of efgartigimod for the

treatment of PV and PF that further support

the potential role of FcRn blockade and

potential of efgartigimod in autoimmune

skin blistering disorders were published in

the journal Frontiers of Immunology and

presented during the Society for Investigative

Dermatology Annual Meeting in May 2022.

•

Nephrology franchise:

◦

Phase 2 proof-of-concept clinical trial

ongoing through partnership with Zai Lab.

Membranous Nephrology (

◦

Phase 2 proof-of-concept clinical trial ongoing

through partnership with Zai Lab. Lupus

Nephritis (

◦

Antibody-mediated rejection (

AMR

): Phase

2 proof-of-concept clinical trial to start in the

fourth quarter of 2023.

ARGX-117 (C2 inhibitor):

◦

ARDA: Phase 2 proof-of-concept clinical trial

of ARGX-117 in multifocal motor neuropathy

(

MMN

) ongoing with interim results expected

in mid-2023.

◦

Phase 2 proof-of-concept clinical trial to start

in delayed graft function (

DGF

) in the second

half of 2023.

◦

DM was announced as the third indication

for ARGX-117.

ARGX-119 (muscle-specific tyrosine kinase

(

MuSK

) agonist):

◦

Phase 1 dose-escalation trials in healthy

volunteers started in the first quarter of

2023 with subsequent Phase 1b clinical

trial to assess early signal detection in

patients.

LEO Pharma exercised it’s exclusive, worldwide option

to ARGX-112 targeting IL22 receptor, which triggered a

€5.0 million payment to us.

Creation of OncoVerity, Inc. (

OncoVerity

◦

argenx, the University of Colorado Anschutz

Medical Campus and the University of

Colorado Health (

UCHealth

) created an

asset-centric spin-off, OncoVerity, focused on

optimizing and advancing the development of

cusatuzumab, an 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 the experience from argenx on the CD70/

CD27 pathway. OncoVerity is the fourth spin-

off company from our IIP.

ARGX-117

OncoVerity

ARGX-119

LEO Pharma

Corporate

Achievements

Appointment of Camilla Sylvest and Ana Cespedes

in 2022, and Steve Krognes in the first quarter as

non-executive directors to our board of directors

(

Board of Directors

Expansion to 843 employees (as of December 31, 2022)

to support further growth of our business, including

fully staffed commercial teams in the U.S., Europe

and Japan.

Prof. Hans de Haard, our chief scientific officer, retired

effective January 1, 2023 and transitioned to consult

within our IIP and as a strategic advisor to the research

and development committee of our Board of Directors.

Peter Ulrichts, Ph.D., our former head of clinical

science, assumed the chief scientific officer role.

Keith Woods, our chief operating officer, was succee-

ded as chief operating officer by Karen Massey effective

March 13, 2023. Mr. Woods will transition to serve

as an advisor to our Board of Directors.

Board of

Directors

843

Employees

Hans de Haard

Keith Woods

400.7

million

Global net product

VYVGART revenue

2.2

billion

Cash

720.3

million

Operating loss

709.6

million

Loss

804.1

million

Raised

Fiscal 2022

In gross proceeds in global offering of

2,683,334 ordinary shares (including

ordinary shares represented by

American Depositary Shares (

ADSs

)),

which included the full exercise of

the underwriters’ option to purchase

350,000 additional ADSs.

(cash, cash-equivalents

and current financial

assets) enabling

execution of our

ambitious strategy

objectives.

Financial

Highlights

2023

Outlook

Initiate POC studies in ANCA and

AMR

ARDA MMN interim results

Initiate Phase 1 study

Initiate DGF POC study

VYVGART gMG Approval in China

VYVGART gMG Approval in Canada

VYVGART gMG Launch in France, UK, Italy

SC efgartigimod gMG PDUFA Date

SC efgartigimod gMG Approval in EU

SC efgartigimod gMG Submission in Japan

VYVGART ITP Submission in Japan

ADHERE data in CIDP

ADDRESS data in Pemphigus

POC data in Post-COVID POTS

Initiate registrational trial in TED

ADVANCE (SC) data in ITP

Planned Commercial Milestones

Efgartigimod

Additional pipeline

ARGX-117

Planned Clinical Milestones

ARGX-119

YE 2023

3Q 2023

YE 2023

June 20, 2023

4Q 2023

1Q 2023

Mid-2023

2Q 2023

2H 2023

4Q 2023

Mid-2023

2H 2023

1Q 2023

The table above is subject to risks and uncertainties that may materially impact the achievement

of our 2023 outlook. For more information, please refer to section 2 “

Risk Factors

” of this Annual

Report for a discussion of such risks and uncertainties.

David

“Pemphigus is always in the back

of my mind. If I have something on my

skin, I look twice. If I feel a strange itch or

sensation on my scalp, I wonder if that’s a

lesion popping up.”

The future belongs

to those who dare

to do more.

David was diagnosed with Pemphigus

Vulgaris 18 years ago

When he started experiencing symptoms, David was a

commercial airline pilot. It took almost a year to get a diagnosis,

and he wondered if he’d ever be able to fly again.

What was your life like when you started experiencing symptoms and

eventually got diagnosed with pemphigus vulgaris?

I’ll never forget the dermatologist saying: ‘I know what’s wrong with you. It’s very serious. But I

can’t treat it. You need to go see a specialist at a university.’ And he wrote two words on a piece

of paper, words I’d never seen before: Pemphigus vulgaris.

When the Director of Dermatology comes into your room and says, ‘I’ve tried everything, I don’t

know what else to do,’ that’s a low point for me. I didn’t know where to go from there. I needed

full-time care. I walked like I was 90 years old with 70% of my body covered in open sores and I

had a lot of nerve pain. I was on a fentanyl patch and it did nothing. I had to move back in with

my parents. I didn’t know if I’d ever get back to flying as a pilot.

How have you responded to treatments and adjusted to living with PV?

I returned to work in 2007. Not long after that I met my wife. We rode motorcycles together and

we were married 12 years ago. I entered into long-term remission. I had a minor flare at the end

of 2019, but this time I knew what to look for, so we caught it early.

While I wouldn’t wish pemphigus vulgaris on my worst enemy, I’m actually glad I have it. It might

sound strange, but it’s made me who I am today. I don’t know if I would have met my wife.

I’ve made lifelong friends through other patients.

How does having PV affect your mental health?

Pemphigus is always in the back of my mind. If I have something on my skin, I look twice. If I feel

a strange itch or sensation on my scalp, I wonder if that’s a lesion popping up. If I get a sore, I

wonder: is it pemphigus popping up? And what does that mean for the rest of my life? With

pemphigus, there are worries about income and insurance. I live with these concerns and

manage the stress, because stress is a big autoimmune trigger.

What are your coping mechanisms?

I love to cook. I’m into barbecue and slow smoking. A brisket can take 12-18 hours. For me the

process is very soothing and cathartic. And then getting to feed my friends and family is a big

stress reliever.

What advice do you have for others who are newly diagnosed with PV?

First, you need to become an expert in the disease. If you understand it and the available treat-

ments and future treatments in development, that will help you be your own advocate. Second,

you have to preserve your mental health. This disease is difficult and can lead to depression.

Sometimes it helps to talk to people. Finding another PV patient can help, and so can seeing

a professional.

Dina

“I believe it’s important that people

with ITP have an accurate source of

information and a way to connect with

others with ITP so we can learn from each

other and be with people who understand

the challenges of living with ITP.”

The future belongs

to those who dare

to do more.

Dina is working and raising children

while living with ITP

Diagnosed with immune thrombocytopenia (ITP) in 2014,

Dina became her own advocate. Today she struggles with the

fatigue of ITP, but still manages to work and raise her family.

How did your journey with ITP begin?

I was diagnosed with ITP in 2014. It was an accident when I was seeking treatment for a tick bite

and Lyme disease. When my platelets stayed low after Lyme, a hematologist monitored me for

6 months and confirmed ITP. During this time I began my self-advocacy efforts by researching ITP

on the internet and finding and reaching out to patient advocacy organizations.

How have the symptoms of ITP impacted your life?

My symptoms were atypical in that I did not experience excessive bruising while I had very low

platelet levels. My most significant symptom was and is debilitating fatigue and exhaustion that

impacts my ability to do my job and engage in my relationships with my family and manage my

responsibilities at home. I get frustrated some days, like when I don’t have the energy to prepare

the evening meal for the family, so I have to rely on the ready-made meals from the store. I also

struggle to do what I used to do with my family, like hiking and vacationing.

How have you relied on community to cope with ITP?

Belgium does not have an ITP patient advocacy organization of its own, but I was able to access

a Platelet Disorder Support Association (PDSA) international alliance member organization in the

Netherlands. In one of the organization’s publications, I saw a call out to join a study for people

with ITP who still had their spleen. So I reached out to the contact and was ultimately included in

the study. This opportunity helped me better understand my experience with ITP, and the treat-

ment allowed me to stop the roller coaster of ever-changing platelet levels.

It’s so important that people with ITP have a way to find valid sources of information, like medical

journals and organizations like PDSA or the Dutch ITP organization. We also need a way to

connect with others with ITP. We can learn from one another and it helps to be with people who

understand your challenges.

How else can people with ITP advocate for themselves?

It’s important to be part of the decision-making process about your treatment approaches.

I really embrace the idea that while my doctor may know the most about the treatment options,

I know the most about my body and have to be involved in all the decisions made about what’s

done to my body.

The future belongs

to those who dare

to do more.

Mihoko

“Above all, I want to become a role

model for other MG patients. We cannot

recover completely, and face challenges in

terms of mental health and our appearance,

but we can figure out ways and means

to live with the disease. I want to

encourage others by sharing

my experience.”

I didn’t even know what the next

day would bring after being diagnosed

with MG

Ms. Suzuki, 52 years old, was diagnosed with MG in 2008,

when she was in her 30s.

I felt heaviness in my body when I travelled a long distance for a relative’s wedding. I also felt

my eyelids drooping and found difficulty in swallowing food. I thought I was just tired because I

was very busy at work at the time and wasn’t getting enough sleep. But a little later, when I was

driving my car, I started to see two traffic signals or two roads. That’s when I thought: ‘There’s

something wrong with me,’ so I decided to see a doctor.

After undergoing MRI scans at the department of neurosurgery, Ms. Suzuki was

referred to a university hospital with a suspected disease, and was diagnosed

with MG. She underwent thymectomy and began medical treatment.

When I started receiving treatment, it was hard for me not knowing when I would lose my motor

functions, or even what tomorrow might bring. It was also difficult for me to make plans to meet

with my friends, and I could not commit to completing tasks at work. I was in an unstable state of

mind, as if I were walking down a narrow path and somehow trying to make it to tomorrow.

After ending up in the hospital due to MG symptoms, she met a doctor who

changed her life.

A doctor who always reaches out to patients accepted my desire to adjust my treatment so I

could go back to work. I came to think: ‘This doctor is helping me stay alive!’

I also met other patients with MG at the hospital. We were able to open up to each other right

away because we shared MG in common. Meeting other MG patients who had come through the

same situation and being able to talk with them helped me to become more positive, and start

thinking that ‘I want to do something.’

With the slogan: “We are now in a dark tunnel, but one day we will pass through the tunnel and

morning will surely come,” they encouraged each other. “There’s something fun even in the dark

tunnel. Never give up hope.”

I thought seriously about how to live with MG.

Ms. Suzuki was able to overcome her mental and physical suffering with the

help of medical care and her friends. Despite the limitations her illness imposes,

she is living her life by figuring out the best way to handle her situation.

In my daily life, I cannot cook at all. I live by myself, so I buy precooked food or ask my family to

send me food. I can’t go shopping frequently, so I buy things when I go out on an errand or use

home delivery services.

Since I cannot hold buttons between my fingers when changing clothes, I wear mainly pullovers

and shawls. In addition, I don’t use an electric toothbrush because according to my doctor it

could chip my teeth due to the impact of the treatment. Everything takes time, so I get up early

to make sure I have enough time to do everything.

I feel happy after changing my living environment, perspective, and mindset.

Above all, I want to become a role model for other MG patients. We cannot recover completely,

and face challenges in terms of mental health and our appearance, but we can figure out ways

and means to live with the disease. I want to encourage others by sharing my experience.

Many MG patients may think that their future is uncertain because of their disease. Although we

can’t change reality, I think it is important for all of us to change our current living environment,

perspective, and mindset and try to get to a place where we can achieve sufficient happiness to

alleviate some of the suffering and hardship we may experience. It’s not easy, but you can try it at

any time you like. If you are facing a tough time, why don’t you contact me as your friend? Let’s

go forward together without giving up!

Presentation

of the Group

1.1

Company Profile

1.2

Strategy and Objectives

1.3

Our Products and Product Candidates

1.4

Collaboration Agreements

1.5

License Agreements

1.6

Distribution Agreements

1.7

Manufacturing and Supply

1.8

Intellectual Property

1.9

Regulation

Presentation

of the Group

1.1

Company Profile

1.1.1

General

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 have a particular focus on rare, autoimmune diseases that fit into our

growing commercial franchises focused on neurology, hematology and rheumatology,

dermatology and nephrology. Through the building and use of commercial franchises,

we plan to leverage capabilities and an organizational footprint for subsequent potential

launches across our broad immunology pipeline. On December 17, 2021, the FDA appro-

ved efgartigimod in the U.S., which is marketed as VYVGART (efgartigimod alfa-fcab), for

the treatment of gMG in adult patients who are AChR-AB+. On January 20, 2022, MHLW

approved VYVGART (efgartigimod alfa) for the treatment of adult patients with gMG

who do not have sufficient response to steroids or non-steroidal ISTs. On August 11,

2022 the EU Commission granted marketing authorization for VYVGART (efgartigimod

alfa-fcab) as an add-on to standard therapy for the treatment of adult patients with

gMG who are AChR-AB+ in all 27 EU Member States, Iceland, Norway and Liechtenstein

(collectively, with the U.S. and Japan, the

VYVGART Approved Countries

). With these

regulatory milestones, VYVGART is the first-and-only approved FcRn blocker in the U.S.,

Europe and Japan.

argenx was founded on April 25, 2008 and is registered with the trade register of the

Dutch Chamber of Commerce under number 24435214. Our registered office is at

Laarderhoogtweg 25, 1101 EB Amsterdam, the Netherlands. Our commercial name

is “argenx” and, since April 26, 2017, our corporate name is “argenx SE”.

Our ordinary shares are listed on the regulated market of Euronext Brussels in Belgium

under ISIN NL0010832176 under the symbol “ARGX” since 2014 and our ADSs, each

representing one ordinary share in argenx (or a right to receive such share), are listed

on the Nasdaq Global Select Market (

Nasdaq

) under the symbol “ARGX” since 2017.

argenx SE is the parent entity of the Group and the sole shareholder of:

•

argenx Benelux BV

(prior to October 31, 2022 known as argenx IIP BV), a private

company with limited liability (

besloten vennootschap/société à responsabilité

limitée

) incorporated under the laws of Belgium, having its registered seat in

Zwijnaarde, Belgium and its address at Industriepark-Zwijnaarde 7, 9052 Zwijnaarde,

Belgium, and

•

argenx BV

, a private company with limited liability (

besloten vennootschap/société à

responsabilité limitée

) incorporated under the laws of Belgium, having its registered

seat in Zwijnaarde, Belgium and its address at Industriepark-Zwijnaarde 7, 9052

Zwijnaarde, Belgium. argenx BV is the sole shareholder of:

◦

argenx US

Inc., incorporated under the laws of the state of Delaware, U.S.,

having its registered office in Wilmington, Delaware and its address at 33 Arch

Street, Boston, Massachusetts 02110;

◦

argenx Japan

KK., incorporated under the laws of Japan, having its registered

office in Tokyo, Japan and its address at HULIC JP Akasaka Building 2-5-8,

Akasaka, Minato-ku, Tokyo, 107-0052, Japan;

◦

argenx Switzerland

SA, incorporated under the laws of Switzerland, having its

registered office in Geneva, Switzerland, and its address at Rue du Pré-de-la-

Bichette 4, 1202 Geneva, Switzerland;

◦

argenx France

SAS, incorporated under the laws of France, having its registered

office in Paris, France, and its address at rue Camille Desmoulins 13, 92130 Issy

Les Moulineaux, France;

◦

argenx UK

Ltd., incorporated under the laws of the UK, having its registered

office in Gerrards Cross, UK, and its address at Spaces Gerrards Cross Chalfont

Park, Building 1 Gerrargs Cross, SL9 0BG, UK;

◦

argenx Netherlands

Services BV, incorporated under the laws of the

Netherlands, having its registered office in Laarderhoogtweg 25, 1101 EB

Amsterdam, the Netherlands;

◦

argenx Germany

GmbH, incorporated under the laws of Germany, having its

registered office in Munich, Germany, and its address at Konrad-Zuse-Platz 8,

81829 Munich, Germany;

◦

argenx Canada

, Inc., incorporated under the laws of Ontario, having its

registered office in Ontario, Canada and its address at 9131 Keele Street Suite

A4, Vaughan, Ontario, Canada, L4K 0G7; and

◦

argenx Italy

S.r.l., incorporated under the laws of Italy, having its registered

office in Milan, Italy and its address at Largo Francesco Richini 6,

20122 Milan, Italy.

The following chart provides an overview of the Group as of December 31, 2022 and

as of the date of this Annual Report. Percentages refer to both the share of capital

and voting rights.

argenx Corporate Legal Structure

1.1.2

Overview

Our Pipeline

•

Efgartigimod (FcRn blocker):

efgartigimod is a human IgG1 Fc fragment that is

designed to target the neonatal FcRn and reduce immunoglobulin G (

IgG

). FcRn

is foundational to the immune system and functions to recycle IgG, extending its

serum half-life over other Ontario 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. It has the potential to address

a multitude of severe autoimmune diseases where pathogenic IgGs are believed

to be mediators of disease. We are evaluating both IV efgartigimod (10 mg/kg)

(VYVGART) and SC efgartigimod (1000 mg efgartigimod PH20). SC efgartigimod is

co-formulated with recombinant human hyaluronidase PH20 (rHuPH20), Halozyme,

Inc.’s (

Halozyme

) ENHANZE® drug delivery technology. ENHANZE® facilitates the SC

injection delivery of biologics that are typically administered via IV infusion.

argenx Benelux BV

Belgium

100%

argenx BV

Belgium

100%

argenx

Switzerland SA

100%

argenx

Japan KK

100%

argenx

Canada Inc.

100%

argenx

France SAS

100%

argenx

Germany GMBH

100%

argenx

Netherlands

Services BV

100%

argenx

US Inc.

100%

argenx

UK Ltd.

100%

argenx

Italy S.r.l.

100%

argenx SE

the Netherlands

◦

gMG: In May 2020, we announced positive topline results from the Phase 3

ADAPT clinical trial of IV 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. Data from the ADAPT clinical trial and the

subsequent open-label extension (ADAPT+) formed the basis for the regulatory

approvals of VYVGART in the U.S., Japan and the EU.

◦

In March 2022, we announced positive topline results from the Phase 3

ADAPT-SC study. SC efgartigimod 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 announced

the acceptance of a BLA by the FDA with a PDUFA target action date that was

recently extended by three months to June 20, 2023.

◦

Registrational clinical trials are ongoing in five additional autoimmune

indications:

–

ITP:

The ADVANCE trial of VYVGART was initiated in the fourth quarter

of 2019 and positive topline data of IV efgartigimod for primary ITP were

announced on March 22, 2022. The ADVANCE-SC trial of SC efgartigimod

started in the fourth quarter of 2020 and topline data are expected in

the second half of 2023.

–

PV and PF:

The ADDRESS trial of SC efgartigimod was initiated in 2020.

The topline data of SC efgartigimod for PF and PV are expected in the

second half of 2023.

–

CIDP:

The ADHERE trial of SC efgartigimod was initiated at the end of

2019 and topline data are expected in the second quarter of 2023.

–

BP:

The BALLAD trial of SC efgartigimod in BP was initiated in the second

half of 2022. An interim analysis of the first 40 patients is expected in

2024.

–

Myositis:

The ALKIVIA trial of SC efgartigimod initiated in the third

quarter of 2022 for three subtypes of Myositis, including IMNM, ASyS

and DM. Interim analysis of the first 30 patients of each subset is

expected in 2024.

◦

Clinical trials in four additional autoimmune indications through partnership

agreements with Zai Lab and IQVIA started in 2022:

–

Zai Lab launched the Phase 2 proof-of-concept trials in two kidney

indications, LN and MN.

–

IQVIA launched the Phase 2 proof-of-concept trials in Primary SjS and

PC-POTS. Topline results from the PC-POTS trial are expected in the

fourth quarter of 2023 and from the Primary SjS trial in 2024.

•

ARGX-117 (C2 inhibitor):

ARGX-117 is a novel complement inhibitor targeting C2,

blocking function of both the classical and lectin pathways while leaving the

alternative pathway intact. ARGX-117 has the potential to be a pipeline-in-a-product

candidate with indications that fit within our commercial franchises.

◦

Final Phase 1 data of ARGX-117 confirmed the interim data reported in July

2021 showing a favorable safety profile across single and multiple ascending

doses (

MADs

) of both IV and SC formulations. Pharmacokinetic (

) and

pharmacodynamic (

) profiles demonstrated potential for infrequent dosing

schedules.

◦

Phase 2 ARDA proof-of-concept trial started at the end of 2021 in MMN

and interim data are expected in mid-2023.

◦

Phase 2 proof of concept clinical trial to start in DGF following kidney

transplantation in the second half of 2023.

◦

DM was announced as the third indication for ARGX-117.

•

ARGX-119 (MusK agonist):

ARGX-119 is an agonist SIMPLE Antibody™ to the MuSK

receptor with potential in multiple neuromuscular indications. Phase 1 dose-

escalation clinical trial started in the first quarter of 2023 with a subsequent Phase 1b

clinical trial planned to assess early signal detection in patients thereafter.

•

ARGX-118 (Galectin-10):

ARGX-118 is an antibody against Galectin-10, the protein

of Charcot-Leyden crystals which are implicated as a major contributor to airway

inflammation and to the persistence of mucus plugs.

•

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:

◦

ARGX-112 (LP-0145)

, a SIMPLE Antibody inhibitor of interleukin-22 receptor

(

IL-22R

) and out-licensed to LEO Pharma.

◦

ARGX-114 (AGMB-101)

, a SIMPLE Antibody agonist to the mesenchymal-

epithelial transition factor (

MET

) receptor and out-licensed to AgomAb

Therapeutics NV (

AgomAb

◦

ARGX-115 (ABBV-151)

, a SIMPLE Antibody inhibitor of glycoprotein A

repetitions predominant (

GARP

)- transforming growth factor beta (

TGF-

) and

out-licensed to AbbVie S.A.R.L (

AbbVie

◦

ARGX-116 (STT-5058)

, a SIMPLE Antibody inhibitor of ApoC3 and out-licensed

to Staten Biotechnology B. V.

◦

Cusatuzumab (Anti-CD70 Antibody)

: Cusatuzumab is an anti-CD70 monoclonal

antibody. CD70, a tumor necrosis factor receptor ligand, and its receptor

CD27 are expressed on leukemic stem cells and AML blasts but not on

hematopoietic stem cells. OncoVerity, an asset-centric spin-off was created to

focus on optimizing and advancing the development of cusatuzumab, a novel

anti-CD70 antibody, in 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 the experience from argenx on the CD70/CD27

pathway.

Immunology Innovation Program

Our IIP is a 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 scienti-

fic 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. As part of our long-term strategy, we continue to invest in the IIP.

For example:

•

Efgartigimod emerged from a collaboration with Professor Sally Ward and University

of Texas Southwestern Medical Center (

UT Southwestern)

that 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 UT Southwestern. 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.

•

ARGX-117 was built in collaboration with Broteio Pharma B.V. (

Broteio

) which

was launched in 2017 with support from Professor Erik Hack and the University

of Utrecht, to conduct research to demonstrate preclinical proof-of-concept of

the mechanism of ARGX-117. Professor Hack has done renowned research 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 ARGX-117, which is equipped 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 the 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.

Our Suite of Technologies

Through our IIP, we collaborate with scientific and academic partners to identify im-

munology 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 and our partners bring a wealth of

disease and target biology expertise.

•

SIMPLE Antibody

platform: Our proprietary SIMPLE Antibody platform, 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 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 dehydrated hereditary stomatocytosis (

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®

and

ACT-Ig®

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.

•

Halozyme’s

ENHANZE

SC drug delivery technology: We have exclusive access

to ENHANZE for the FcRn and C2 targets and four additional targets. The global

collaboration and license agreement with Halozyme was announced in February

2019 and expanded in October 2020. The ENHANZE® technology has the potential

to shorten drug administration time, reduce healthcare practitioner time and offer

additional flexibility and convenience for patients.

•

In April 2021, we entered into a collaboration and license agreement with Elektrofi,

Inc. (

Elektrofi

) to explore Elektrofi’s high-concentration, low-volume delivery

technology for efgartigimod, and up to one additional target.

1.2

Strategy and Objectives

1.2.1

Company’s Strategies

Our goal is to deliver therapies that are first-in-class and best-in-class to patients

suffering from serious autoimmune diseases for which a significant unmet medical need

exists. We focus on attaining this goal in a manner that is disciplined for a company of

our size. We plan to:

•

Execute our global launch.

With the commercial launch of VYVGART as the first-and-

only approved neonatal FcRn blocker in the U.S., Japan and the EU, we have already

taken the first steps in executing

our plans for a global launch for VYVGART for the

treatment of gMG. We aim for further approvals in additional jurisdictions in the

course of 2023. We have already built our commercial infrastructure to support the

commercialization of VYVGART in the U.S., Europe and Japan as well as built out

additional commercialization infrastructure to support other indications in certain

of these key territories if and when new indications receive approval. In 2023, we

expect VYVGART approvals in Canada in the third quarter of 2023, and in the PRC

and Israel by the end of 2023. We also plan to launch VYVGART in France, Italy

and the UK by the end of 2023 following review of each country’s respective

reimbursement dossier.

•

Expand applications for our lead product efgartigimod.

Our goal is to maximize the

commercial potential of our existing products and product candidates by exploring

additional indications, as well as formulations that may expand the target patient

populations within existing indications. We are further developing our lead product,

efgartigimod, to market regulatory approval for the treatment of gMG, ITP, PV, CIDP,

BP, Myositis, PC-POTS, Primary SjS, MN, LN, TED, AV and AMR. We expand the use

of our products and product candidates in existing indications by developing new

formulations, such as an SC version of efgartigimod, that may reach more patient

groups by capturing different patient preferences and providing additional optionality

with regards to dosing. In this respect, we announced the acceptance of a BLA by

the FDA with a PDUFA target action date of June 20, 2023 for SC efgartigimod in

gMG patients.

•

Advance our pipeline of assets.

In addition to new indications for efgartigimod, we

plan to advance our other product candidates. In particular, we have advanced the

clinical development of ARGX-117 in a Phase 2 proof-of-concept clinical trial in MMN

and plan to advance in Phase 2 proof-of-concept clinical trials in DGF in the context

of kidney transplants and DM. We have also advanced ARGX-119 into a Phase 1

clinical trial in healthy volunteers and plan to advance early-stage pipeline candidates

as well as expand our pipeline of future product candidates through the IIP.

•

Leverage our suite of technologies to seek strategic collaborations and maximize

the value of our pipeline.

Our suite of technologies and productive discovery

capabilities have yielded several potential product candidates for which we seek to

capture value, while maintaining our focus and discipline. We plan to collaborate on

product candidates that we believe have promising utility in disease areas or patient

populations but fall outside our commercial franchises or are better served by the

resources of larger biopharmaceutical companies. In addition to collaborating on our

products and product candidates, we may also elect to enter into collaborations for

access to partner technology platforms or capabilities from which we can develop

differentiated potential pipeline assets.

•

Implement our “argenx 2025” vision.

We hope to make efgartigimod globally

available to patients across our four commercial franchises. We aspire to make

efgartigimod either commercially available or in clinical development in fifteen active

indications. We plan to make progress across our broader immunology pipeline

with ARGX-117 in multiple late-stage clinical trials and demonstrate clinical proof-

of-concept with ARGX-119. Finally, we will invest in the continued expansion of our

differentiated pipeline through our IIP.

•

Continue to build innovation into every step of our development, highlighted by our

collaborative IIP translating immunology breakthroughs into medicines.

Our IIP is

our core business strategy connecting the specialized insight into disease and target

biology of our external scientific and academic collaborators with our unparalleled

experience as antibody engineers. Co-creation has led to a deep pipeline of highly

differentiated product candidates. Through the IIP, we hope to together transcend

breakthrough research and publications to our ultimate and unifying mission of

creating new potential treatment options for patients.

1.2.2

Trends

Other than as disclosed in section 1 “

Presentation of the Group

” and 2 “

Risk Factors

”

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.

Following the approval of VYVGART for the treatment of gMG in the U.S. by the FDA

on December 17, 2021, we transitioned from a clinical-stage to a commercial-stage

biotechnology company, have commercialized VYVGART in the VYVGART Approved

Countries and are working to expand commercialization in other jurisdictions, and

to launch new products and product candidates, including new indications.

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, 2022.

For more information, please refer to section 1 “

Presentation of the Group

”

section 2 “

Risk Factors

”

and to note 29 “

Commitments

” of our consolidated

financial statements in section 6 “

Consolidated Financial Statements

”

1.2.3

Competitive Position

We participate in a highly innovative industry characterized by a rapidly growing under-

standing 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.

We compete with a wide range of biopharmaceutical companies, who are developing

products for the treatment of gMG 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. 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 com-

petition 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 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 techno-

logies complementary to, or necessary for, the development of our products.

Competition in the autoimmune field is intense and involves multiple monoclonal anti-

bodies, other biologics and small molecules either already marketed or in development

by many different companies including large pharmaceutical companies such as AbbVie

(Humira/rheumatoid arthritis), Amgen, Inc. (

Amgen

) (Enbrel/rheumatoid arthritis),

Biogen, Inc. (Tysabri/multiple sclerosis), GlaxoSmithKline plc (

GSK

) (Benlysta/lupus),

F. Hoffman-La Roche AG (

Roche

) (Rituxan/often used off label) and Janssen Pharmaceu-

ticals, Inc. (

Janssen

) (Remicade/rheumatoid arthritis and Stelara/psoriasis). In addition,

these and other pharmaceutical companies have monoclonal antibodies or other

biologics in clinical development for the treatment of autoimmune diseases.

In addition to the current standard of care, we are aware that AstraZeneca PLC is selling

Soliris and Ultomiris for the treatment of adult patients with gMG who are AChR-AB+

and that GSK, Roche, Novartis AG, CSL Behring, Grifols, S.A., BioMarin Pharmaceutical,

Inc., Curavac, UCB S.A./RA Pharmaceuticals, Inc., DAS Therapeutics, Inc., Takeda Phar-

maceutical Co Ltd, RemeGen Co, Immunovant, Inc., Cartesian Therapeutics, Inc., Horizon

Therapeutics PLC, AstraZeneca PLC, Chugai/Genentech, Inc., Regeneron Pharmaceuticals,

Inc./Alnylam Pharmaceuticals, Inc. and Johnson & Johnson Innovation, Inc., among

others, are developing drugs that may have utility for the treatment of myasthenia gravis

(

). 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.

1.2.4

Our Competitive Strengths

We believe that the combination of our technologies, expertise and focus will enable us

to overcome many of the challenges associated with antibody drug development and

positions us to be a leader in delivering therapies to patients suffering from severe auto-

immune, neuromuscular, hematology, dermatology and nephrology diseases for which

the current treatment paradigm is inadequate.

Productive discovery capabilities through our IIP fuel a deep pipeline of clinical and

preclinical product candidates. We are 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 candi-

dates and believe this level of productivity affords us a breadth of options with regard to

independently advancing or partnering our pipeline assets.

In November 2020, we announced the agreement to acquire an FDA Priority Review

Voucher (

PRV

) from Bayer Healthcare Pharmaceuticals, Inc. for $98.0 million. A PRV

entitles the holder to FDA priority review of a single new drug application (

NDA

) or BLA,

which reduces the target review time and may potentially lead to an expedited approval.

During the third quarter of 2022, the Company utilized this PRV and submitted it with

the BLA filing for SC efgartigimod for the treatment of gMG.

In November 2022, we announced an agreement to acquire a new PRV for $102 million,

which we expect to redeem for a future marketing application for efgartigimod.

1.3

Our Products and

Product Candidates

The following table summarizes key information on our portfolio of lead product and

product candidates as of the date of this Annual Report.

Breadth and Depth within Autoimmune Pipeline

1.3.1

VYVGART

Approval

On December 17, 2021, the FDA approved VYVGART for the treatment of gMG in adult

patients who are AChR-AB+. These patients represent 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). On January 20, 2022, MHLW

granted marketing authorization for VYVGART (efgartigimod alfa) for the treatment of

adult patients with gMG who are AChR-AB+. With these regulatory milestones, VYV-

GART is the first-and-only approved neonatal FcRn blocker in the U.S., Japan and the EU.

Program

Indication

Preclinical

Phase 1

Proof of Concept

Registrational

Commercial

VYVGART

gMG (IV)

Efgartigimod

ARGX-117

ARGX-119

Multifocal Motor Neuropathy

Dermatomyositis

Neuromuscular Indications

NEUROLOGY

HEMATOLOGY AND RHEUMATOLOGY

DERMATOLOGY

NEPHROLOGY

Delayed Graft Function After Kidney Transplant

gMG (SC)

CIDP

Myositis

Thyroid Eye Disease

ITP (IV)

ITP (SC)

COVID-19 Mediated POTS

Sjogren's Syndrome

Anca Vasculitis

Pemphigus

Bullous Pemphigoid

Lupus Nephritis

Antibody Mediated Rejection

Membranous Nephropathy

gMG is a rare and chronic neuromuscular disease characterized by debilitating and

potentially life-threatening muscle weakness. VYVGART is a human IgG1 antibody

fragment that binds to FcRn, resulting in the reduction of circulating IgG antibodies.

The action of AChR autoantibodies at the neuromuscular junction is a key driver of

gMG (Howard JF Jr, Utsugisawa K, Benatar M, et al. Safety and efficacy of efficacy of

eculizumab in AChR antibody-positive refractory gMG (REGAIN): a phase 3, randomized,

double-blind, placebo-controlled, multicenter study. Lancet Neurol. 2017; 16: 976–86).

The approval of VYVGART is based on results from the global Phase 3 ADAPT clinical

trial, which were published in the July 2021 issue of The Lancet Neurology.

We integrated input from the gMG community into the ADAPT clinical trial design.

Through listening to and learning from the gMG patient community, we understand that

every gMG patient experiences the course of disease differently. As a result, we desig-

ned a clinical trial to reflect the individualized nature of gMG with a dosing approach

that we believe is adapted to each patient’s individual response.

The Phase 3 ADAPT clinical trial was a randomized, double-blind, placebo-controlled,

multi-center, global clinical trial evaluating the safety and efficacy of efgartigimod in

patients with gMG. A total of 167 adult patients with gMG in North America, Europe

and Japan enrolled in the clinical trial and were treated. Patients were eligible to enroll

in ADAPT regardless of antibody status, including patients with AChR antibodies and

patients where AChR antibodies were not detected. Patients were randomized in a

1:1 ratio to receive efgartigimod or placebo for a total of 26 weeks. ADAPT was designed

to enable an individualized treatment approach with an initial treatment cycle followed

by a variable number of subsequent treatment cycles.

The ADAPT clinical trial met its primary endpoint, demonstrating that significantly more

anti-AChR-AB+ gMG patients were responders on the MG-activities of daily living

(

MG-ADL

) scale following treatment with VYVGART compared with placebo (68% vs. 30%;

p<0.0001). Responders were defined as having at least a two-point reduction on

the MG-ADL scale sustained for four or more consecutive weeks during the first

treatment cycle.

Additionally, there were significantly more responders on the quantitative myasthenia

gravis (

QMG

) scale following treatment with VYVGART compared with placebo (63% vs.

14%; p<0.0001). Responders were defined as having at least a three-point reduction on

the QMG scale sustained for four or more consecutive weeks during the first treatment

cycle.

As shown in figure 1, minimal symptom expression (

MSE

) is an increasingly important

data point for physicians and patients because it is a measure of symptom-free status.

In ADAPT, 40% of patients achieved MSE – or an MG-ADL score of 0 or 1 – at any time

during cycle one. The right side shows depth of response. Over half of patients treated

with efgartigimod experienced an improvement of five points or more on the MG-ADL

scale by week four.

Figure 1: Percentage of patients with MG-ADL and QMG total score change four weeks after initial infusion

of the first cycle in AChR-Ab+ population.

VYVGART

Placebo

VYVGART

Placebo

≥10

Change

Worsening

Improvements in Total QMG at Week 4

Percent

26%

10%

19%

24%

10% 10%

≥9

Change

Worsening

14%

15%

17%

13%

16%

12%

13%

20%

13%

10%

Improvements in Total MG-ADL at Week 4

Percent

Figure 2: Mean change in total MG-ADL from cycle 1 baseline over time in AChR-Ab+ population.

VYVGART had a demonstrated safety profile in the ADAPT clinical trial. The most com-

mon adverse events in ADAPT were respiratory tract infection (33% vs 29% placebo),

headache (32% vs 29% placebo), and urinary tract infection (10% vs. 5% placebo).

There is a pre-approval access program (

PAA

) for gMG patients that remains open in

the EU, the UK, Hong Kong and Canada for eligible patients.

Commercialization and Regulatory Plans

VYVGART was launched in the U.S. in January 2022, in Japan in May 2022 and in

Germany in September 2022 following approval in each region. The European commer-

cial launch of VYVGART is still ongoing.

We have established our own sales force in the U.S., Japan and Europe for VYVGART for

the treatment of gMG. We plan to expand our own sales and marketing capabilities and

promote our products and product candidates if and when regulatory approval has been

obtained in the relevant jurisdictions. For example, we established argenx Canada in the

first quarter of 2022 in preparation for a potential Health Canada approval request and if

granted commercial launch in Canada. We also established argenx UK in August 2022 in

preparation for potential Medicines and Healthcare Products Regulatory Agency (

MHRA

)

approval.

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, a commercial-stage biopharmaceutical company, for the development and

commercialization of efgartigimod in Greater China (

Zai Lab Agreement

). Zai Lab filed

for approval in the PRC in the second quarter of 2022. Under the Zai Lab Agreement,

we received a $75.0 million upfront payment in the form of 568,182 newly issued

Zai Lab shares calculated at a price of $132.0 per share, a $75.0 million guaranteed

non-creditable, non-refundable development cost-sharing payment and a $25.0 million

-5

-4

-3

-2

-1

Placebo

VYVGART

Mean chane (+/-SE)

Week

milestone payment in connection with FDA approval of VYVGART (

Zai Lab Payments

We will also be eligible for tiered royalties based on annual 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 will also

be responsible for seeking requisite regulatory approvals, and Medison filed for approval

in Israel in the second quarter of 2022. 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, 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 GCC on an exclusive

basis for Genpharm’s own account and own name (

Genpharm Agreement)

We intend to sign additional distribution partnerships for other territories.

For a discussion of total revenues by geographic market, please see note 18

“

Segment Reporting

” in our consolidated financial statements.

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 in autoimmunity and fueled by the resi-

lience 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 implemented a PAA on February 21, 2022 through which investigational therapies

are made available in certain circumstances to treat gMG patients who are unable to

participate in an ongoing clinical trial. As of the date of this Annual Report, the PAA has

approved over 150 gMG patients in ten countries. With the approval of VYVGART in the

U.S., Japan and EU, the PAA program remains open only in countries where VYVGART is

not yet launched or reimbursed.

1.3.2

Efgartigimod (formerly ARGX-113)

Development

Mechanism of Action

As shown in figure 3, efgartigimod is a human IgG1 Fc fragment equipped with our

ABDEG mutations that is designed to target the FcRn and reduce IgG. FcRn is founda-

tional to the immune system and functions to recycle IgG, extending its serum half-life

over other Igs 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. As of the date

of this Annual Report, efgartigimod has been evaluated in over 1,300 subjects with a

cumulative exposure of over 1,000 patient years. Efgartigimod has been observed to

significantly reduce concentrations of all IgG subtypes without decreasing levels of other

Igs or human serum albumin, which is also recycled by FcRn.

In a randomized, double-blind, placebo-controlled

first-in-human study of 62 healthy volunteers, efgarti-

gimod treatment resulted in rapid and specific clea-

rance of serum IgG levels. Single administration of

efgartigimod reduced IgG levels up to 50% while mul-

tiple dosing further lowered IgGs on average by 75%

from baseline. Approximately eight weeks following

the last administration, IgG levels returned to baseline.

Efgartigimod did not alter homeostasis of albumin

or Igs other than IgG and no serious adverse events as

defined by the competent authorities related to efgar-

tigimod infusion were observed.

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 date of this Annual Report, we continue to

evaluate efgartigimod in ten autoimmune indications

where significant unmet need exists despite the

availability of commonly used therapies. These include gMG, CIDP and Myositis within

our neurology franchise; ITP, PC-POTS and Primary SjS within our hematology and

rheumatology franchise; PV, PF and BP within our dermatology franchise; and LN and

MN within our nephrology franchise. In 2023, we announced our intention to expand

efgartigimod into three new indications: TED, AV and AMR.

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 intravenous Ig (

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. For example, steroids and ISTs are often used to treat a multitude of

autoimmune diseases, but for the indications in our pipeline thus far, these have

been observed to be lacking in both safety and tolerability.

•

Furthermore, for each indication, there is a defined path forward with established

precedent for how to run proof-of-concept and registrational clinical trials with

generally accepted clinical and regulatory endpoints.

Endosome

Lysosome

Endothelial Cell

lgG Antibody

VYVGART

FcRn

Figure 3: Efgartigimod’s mechanism of action

blocks the recycling of IgG antibodies and

removes them from circulation

•

Finally, as we work towards achieving our ‘argenx 2025’ vision, we select indications

where there is a reasonable fit within our growing commercial franchises.

Formulations

Overview

We are developing two formulations of efgartigimod to address the needs of patients,

physicians, and payors across indications and geographies, including IV efgartigimod

(VYVGART) and the ENHANZE® (licensed from Halozyme) SC formulation.

IV (VYVGART)

We conducted a Phase 1 clinical trial in healthy volunteers to evaluate the safety,

tolerability, PK, PD, and immunogenicity of single and multiple doses of efgartigimod. In

the first part of the clinical trial, 30 subjects were randomized to receive a single dose of

efgartigimod or placebo ranging from 0.2 mg/kg to 50 mg/kg. In the second part of the

clinical trial, 32 subjects were randomized to receive MADs of efgartigimod or placebo

up to a maximum of 25 mg/kg.

In the MAD part of the Phase 1 clinical trial, repeat administration of both 10 mg/kg

and 25 mg/kg of efgartigimod every seven days, four doses in total, and 10 mg/kg every

four days, six doses in total, was associated with a gradual reduction in levels of all four

classes of IgG antibodies by 60% to 85%, with 10 mg/kg dose results shown in figure 4.

For all doses in the MAD part of the Phase 1 clinical trial, we observed the reduction in

circulating IgG antibody levels to persist for more than four weeks after the last dose

with levels below 50% at approximately three weeks and did not return to baseline

levels for more than one month. PK analysis of serum baseline levels of efgartigimod

indicates that it has a half-life of approximately three to four days with no drug accumu-

lation following subsequent weekly dosing. The prolonged activity on the levels of IgG

antibodies is consistent with the mechanism of action of efgartigimod and the effect of

our proprietary ABDEG technology (detailed in section 1.8.2 “

Platform Technologies

”)

on increasing the intracellular recycling of efgartigimod. In both the single and MAD

portions, no significant reductions in IgM, IgA or serum albumin were observed.

IgG1

% T

IgG2

placebo (n=2)

active (n=6)

IgG3

% T

IgG4

Days post infusion

100

150

100

150

100

150

100

150

100

150

Total IgG

Figure 4: Reduction in the levels of four IgG antibody classes and total IgG levels in the MAD part of our

Phase 1 clinical trial of efgartigimod in healthy volunteers at a dose of 10 mg/kg every seven days.

SC – Partnership with Halozyme

In 2020, we and Halozyme expanded the existing global collaboration and license agree-

ment that was signed in February 2019. Under the expansion, we gained the ability to

access Halozyme’s ENHANZE® drug delivery technology for three additional exclusive

targets upon nomination bringing the total to six potential targets under the collabora-

tion. To date, two targets have been nominated including the human FcRn and C2.

In July 2019, we evaluated an SC formulation of efgartigimod that incorporates Halozyme’s

ENHANZE® drug delivery technology in a Phase 1 clinical trial in healthy volunteers,

which demonstrated retained PD profile of IV-formulated efgartigimod.

ENHANZE® has demonstrated across multiple FDA-approved products the ability

to remove traditional limitations on the volume of biologics that can be delivered

subcutaneously, potentially shortening drug administration time, reducing healthcare

practitioner time, and offering additional flexibility and convenience for patients.

In November 2022, we announced that the FDA accepted for priority review a BLA for SC

efgartigimod (1000 mg efgartigimod-PH20) for the treatment of adult patients with gMG

who are AChR-AB+. The BLA has been granted a PDUFA target action date of June 20,

2023.

SC – Partnership with Elektrofi

In April 2021, we entered into a collaboration and license agreement with Elektrofi to

explore Elektrofi’s high-concentration, low-volume delivery technology for efgartigimod,

and up to one additional target. See section 1.5.1 “

Our Exclusive License with Elektrofi

for Efgartigimod

” for more information.

1.3.3

Efgartigimod (formerly ARGX-113)

Indications

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 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, respi-

ratory 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 open-label extension (ADAPT+) formed the basis for the regulatory

approvals of VYVGART in the U.S., Japan and the EU.

ADAPT-SC Trial Design

In January 2021, we initiated ADAPT-SC, a registrational non-inferiority bridging study

of SC efgartigimod for the treatment of gMG. The design of the bridging study is based

on the demonstrated association between total IgG reduction and clinical benefit in

gMG and incorporates feedback from the FDA. The study is comparing the PD effect

of 1000 mg SC efgartigimod with 10 mg/kg IV efgartigimod. The primary endpoint is

the percent change from baseline of total IgG levels measured at day 29.

On March 22, 2022, we announced positive topline results from the Phase 3 ADAPT-SC

study. SC efgartigimod 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 announced the acceptance of a BLA by the FDA with

a PDUFA target action date that was recently extended by three months to June 20, 2023.

Other Clinical Trials

We are currently evaluating alternative dosing regimens of efgartigimod IV in adult gMG

patients in the ADAPT NXT clinical trial. In addition, a clinical trial of efgartigimod IV in

pediatric gMG patients is ongoing. In 2022, a Phase 1 clinical trial evaluating the effect of

efgartigimod or placebo on immune response to the polyvalent pneumococcal vaccine

(PNEUMOVAX 23) was completed.

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 thrombo-

cytopenia. 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 the fourth quarter of 2019, the first of two registrational clinical trials, the ADVANCE

Phase 3 clinical trial, was initiated to evaluate 10 mg/kg IV efgartigimod (VYVGART) for

the treatment of primary ITP. The second registrational ADVANCE-SC clinical trial of 1000

mg SC efgartigimod for the treatment of primary ITP was initiated in the fourth quarter

of 2020. Positive phase 3 topline data for the ADVANCE clinical trial were announced

on May 5, 2022. ADVANCE was the second registrational clinical trial of VYVGART and

the first Phase 3 clinical trial of a neonatal FcRn blocker in ITP. The ADVANCE clinical

trial enrolled 131 adult patients with chronic and persistent ITP. Patients were heavily

pretreated and 67% of patients had received three or more prior ITP therapies, including

59% who had prior thrombopoietin receptor agonist (TPO-RAs) experience, 34% with

prior rituximab experience and 37% with a history of splenectomy.

The clinical trial met its primary endpoint 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.

Key platelet-derived secondary endpoints showed VYVGART-treated patients had a

statistically significant benefit compared to placebo on (1) cumulative number of weeks

where platelet counts were at least 50x109/L in the chronic ITP population (p=0.0009)

and (2) sustained platelet response in the overall population, including both chronic

and persistent ITP patients (p=0.0108). Numerically fewer WHO-classified bleeding

events occurred in treated patients throughout the clinical trial but the difference from

placebo was not statistically significant. A higher proportion of treated patients in the

overall population achieved a durable, sustained platelet response compared to placebo,

defined as a sustained platelet response on at least six of the last eight scheduled visits

between weeks 17 and 24 of treatment (p=0.0265), but was not considered statistically

significant based on hierarchical testing.

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

(

IWG

) responder status:

•

51.2% of VYVGART-treated patients were classified as IWG responders and 27.9% as

complete responders compared to 20% of placebo patients as IWG responders and

4.4% as complete responders.

•

IWG responders are defined as having a platelet count of at least 30x109/L, a two-

fold increase in platelet count from baseline, and the absence of bleeding for two

separate, consecutive weekly visits. Complete responders are patients with platelet

counts of 100x109/L and the absence of bleeding for two separate, consecutive

weekly visits.

Mean platelet count change from baseline: VYVGART-treated patients demonstrated

a rapid onset of platelet count improvement with statistically significant separation

from placebo observed at week one and maintained through 20 out of 24 weeks of the

clinical trial.

Ten VYVGART-treated patients switched to a biweekly (every two weeks) dosing schedule

after achieving platelet counts of 100x109/L for three out of four consecutive visits,

compared to one placebo patient. Nine of the ten treated patients achieved a sustained

platelet response.

VYVGART was well-tolerated in this 24-week study and the observed safety and

tolerability profile was consistent with previous clinical trials.

SC efgartigimod is being evaluated in a second registrational clinical trial in ITP,

ADVANCE-SC topline data are expected in the second half of 2023. The clinical trial

design for ADVANCE-SC is the same as for ADVANCE but the target enrollment was

increased based on the results of the Phase 3 ADVANCE clinical trial.

Phase 2 Trial

We completed a randomized, double-blind, placebo-controlled Phase 2 clinical trial to

evaluate the safety, efficacy and PK of efgartigimod in 38 adult primary ITP patients.

Full results from the Phase 2 clinical trial were published in the peer-reviewed American

Journal of Hematology. Efgartigimod was well-tolerated and showed a correlation of

reduced IgG levels, increased platelet counts and reduced bleeding in ITP patients.

The primary endpoint analysis demonstrated efgartigimod to be well-tolerated in all

patients, with most treatment emergent adverse events (

TEAEs

) observed characterized

as mild (Common Terminology Criteria for Adverse Events grading 1 and 2). There were

no dose-related safety observations and the safety profile was consistent with previous

observations in healthy volunteers and MG patients. No increased risk of infection was

apparent in the efgartigimod-treated groups compared to the placebo group.

Overview

PV is an autoimmune disorder associated with mucosal and skin blisters that lead to

pain, difficulty swallowing and skin infection. This chronic, potentially life-threatening

disease is triggered by IgG autoantibodies targeting desmoglein-1 and -3, which are

present on the surface of keratinocytes and important for cell-to-cell adhesion in the

epithelium. Autoantibodies targeting desmogleins result in loss of cell adhesion, the

primary cause of blister formation in PV. Similar to MG and ITP, disease severity of

pemphigus correlates to the amount of pathogenic IgGs targeting desmogleins.

Currently, there are an estimated 19,000 pemphigus patients in the U.S., of which an

estimated 13,100 patients are suffering from PV. Several disease activity measurements

exist for the clinical evaluation of PV patients, including the pemphigus disease area

index (

PDAI

), autoimmune bullous skin disorder intensity score, and the PV activity score

(

PVAS

). The PDAI is reported to have the highest validity and is recommended for use in

clinical trials of PV.

Phase 3 ADDRESS Clinical Trial

In the fourth quarter of 2020, the registrational ADDRESS clinical trial was initiated of

SC efgartigimod for the treatment of PV and PF. This is a randomized, double-blinded,

placebo-controlled study, where the objective is to assess efficacy, safety and tolerability

in up to 150 newly diagnosed or relapsing patients with moderate to severe pemphigus.

Patients are randomized to receive either SC efgartigimod or placebo for 30 weeks.

Patients start on concomitant steroids based on what we determine to be the optimized

dosing regimen from the Phase 2 study. The primary endpoint will assess the proportion

of patients who achieve complete remission on a minimal steroid dose at 30 weeks.

The ADDRESS clinical trial will evaluate efficacy and safety, including the potential to

drive fast onset of disease control and complete remission and the ability to taper

corticosteroids. A relevant minority portion of the patients in the ADDRESS clinical trial

are participating at sites in Ukraine or Russia. Following a risk assessment relating to the

conflict between Russia and Ukraine, we increased target enrollment, which delayed

expected topline data of SC efgartigimod for PV and PF to the second half of 2023.

Phase 2 Trial

We completed an open-label Phase 2 adaptive clinical trial in which, through sequential

cohorts, 34 patients were dosed at 10 or 25 mg/kg IV efgartigimod (VYVGART) with

various dosing frequencies, as monotherapy or add-on therapy to low dose oral

prednisone. The primary endpoint of the clinical trial was safety and tolerability. The

full Phase 2 clinical trial results were published in The British Journal of Dermatology.

In this clinical trial, we observed:

•

a favorable tolerability profile, consistent with data from previous efgartigimod

studies and those adverse events were mostly mild;

•

a major decrease in serum total IgG and anti-desmoglein autoantibodies and

correlated with improved PDAI scores;

•

that 90% (28/31) of patients demonstrated early disease control; median time to

disease control for monotherapy and combination therapy was 17 days;

•

complete clinical remission in 64% (14/22) of patients receiving optimized prolonged

treatment with efgartigimod in combination with a median dose of 0.26 mg/kg/day

prednisone within 2 – 41 weeks; and

•

a favorable tolerability profile, consistent with data from previous efgartigimod

studies.

Novel translational data from the open-label Phase 2 study of efgartigimod for the

treatment of PV that further support the potential role of FcRn blockade and potential

of efgartigimod in autoimmune skin blistering disorders were published in the journal

Frontiers of Immunology and presented during the Society for Investigative Dermatology

annual meeting in May 2022.

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. CIDP affects

approximately 16,000 patients in the U.S.

Most CIDP patients require treatment and IVIg which is the preferred first-line therapy.

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.

ADHERE Clinical Trial

At the end of 2019, we initiated the registrational ADHERE clinical trial evaluating

SC efgartigimod for the treatment of CIDP. The ADHERE clinical trial is a randomized,

withdrawal study evaluating 1000 mg weekly SC efgartigimod expected to enroll appro-

ximately 130 patients. The clinical trial consists of an open-label Stage A followed by a

randomized, placebo-controlled Stage B with a planned interim responder analysis after

the first 30 patients enroll in Stage A. In order to enter Stage A and receive efgartigimod,

both patients who are treatment-naïve or on therapy must first receive a confirmed

diagnosis of CIDP by an independent panel of experts and demonstrate active disease.

To show active disease, patients who are on current CIDP therapy have to demonstrate

a minimal clinically meaningful worsening after treatment withdrawal based on at least

one CIDP clinical assessment tool, including the Inflammatory Neuropathy Cause and

Treatment Disability Score (

INCAT Disability Score

), Inflammatory Rasch-built Overall

Disability Scale (

I-RODS

) or mean grip strength. To advance to Stage B, patients need to

demonstrate a minimal clinically meaningful response to efgartigimod equivalent with

the loss observed on the same efficacy scale on which worsening is observed during

the withdrawal period. In Stage B, patients are randomized to either SC efgartigimod

or placebo for up to 48 weeks. The primary endpoint is event-driven and based on the

adjusted INCAT Disability Score in Stage B.

Interim Analysis from ADHERE Clinical Trial

In February 2021, we announced a “go” decision to transition into the second, placebo-

controlled stage of this clinical trial based on a planned efficacy and safety assessment

following the enrollment of 30 patients into the initial part of the ADHERE clinical trial.

The ADHERE clinical trial is expected to enroll at least 130 patients in total to support

potential registration of SC efgartigimod for the treatment of CIDP. The interim analysis

achieved the pre-defined threshold for continuation, which was based on response

rates seen in precedent clinical trials of current standard of care in CIDP. The decision

to continue enrollment was confirmed by an independent data monitoring committee.

In addition, the safety and tolerability data observed to date is consistent with that of

efgartigimod in other clinical trials.

We expect to announce the topline data of the ADHERE clinical trial in the second

quarter of 2023.

Idiopathic Inflammatory Myopathies (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 iden-

tification 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 SC efgartigimod for the treatment

of Myositis in the third quarter of 2022. The study plans to enroll approximately 240

patients in three Myositis subtypes, IMNM, ASys and DM. The study will be conducted

in 2 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.

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.

An interim analysis of the first 30 patients in each subset is expected in 2024.

Overview

BP is the most common autoimmune blistering disease and is driven by autoantibodies

affecting the skin. The disease typically affects elderly people and early key symptoms

are itch and rash and patients develop fluid-filled blisters during disease progression.

The prevalence of BP is twelve per 100,000 adults and the incidence increases with

age. BP is associated with a high disease burden and can have a significant impact on

the quality of life of patients. The mortality of BP in the U.S. is 2.4% or higher than the

mortality in the general population of the same age. There are currently no approved

therapies available for BP. First line treatment consists of topical or systemic cortico-

steroids, which result in substantial morbidity and increased mortality, conventional

immunosuppressants as corticosteroid-sparing agents, rituximab and IVIg.

BP is a well characterized autoimmune disease in which the binding of autoantibodies to

hemidesmosomal proteins, BP180 and BP230, initiates a cascade of inflammatory events

resulting in blister formation. BP180 and BP230 are involved in the stable attachment

of keratinocyte to the underlying matrix. The autoantibody actions include mechanical

disruption of keratinocyte adhesion and cytokine release. Immune complex formation

initiates complement activation leading to the recruitment mast cells, neutrophils,

eosinophils and other immune cells and to the release of proteases and inflammatory

mediators. All these effects, which start with the binding of the autoantibodies, induce

the blistering observed in BP.

BALLAD Trial

We initiated the Phase 2/3 BALLAD registrational clinical trial evaluating SC efgartigimod

in BP in the second half of 2022, in which we plan to enroll 160 patients.

The clinical trial population are newly diagnosed and relapsing patients within one year

from diagnosis. Patients will be randomized 1-to-1 to receive efgartigimod or placebo

for total duration of 36 weeks. The primary endpoint is the proportion of participants

in complete remission while off oral corticosteroids for at least eight weeks at week 36.

Secondary endpoints relate to cumulative steroid doses, IGA BP score, time to achieving

control of disease activity, change from baseline in average itch, and quality of life

measures. In our Half Year 2022 report, we announced that the registrational BALLAD

clinical trial is ongoing of SC efgartigimod for BP with interim analysis planned of first

40 patients in 2024.

New Efgartigimod Indications

We are also evaluating four indications in proof-of-concept clinical trials through our

partnerships with Zai Lab and IQVIA:

•

MN is an autoimmune, glomerular disease and the most frequent cause of nephrotic

syndrome. MN is characterized by thickening of the glomerular capillary walls caused

by immune complex deposition. 70% of MN patients have IgG autoantibodies against

PLA2R. In patients without PLA2R autoantibodies, there can be detectable anti-

THSd7A or anti-NELL1 antibodies. 20 – 30% of patients progress to end-stage renal

disease. There are no current approved therapies for MN.

•

LN is a glomerulonephritis and one of the most severe and common organ

manifestations of the autoimmune disease systemic lupus erythematosus (

SLE

LN is a substantial cause of morbidity and death among patients with SLE.

Autoantibodies associated with LN include anti-dsDNA and anti-nuclear antibodies.

5 –20% of LN patients progress to end-stage renal disease. Oral corticosteroids

and broad immunosuppressants are current standard of care but are not uniformly

effective.

•

Primary SjS is a systemic autoimmune disease of the exocrine glands that can affect

salivary and lacrimal glands, mostly, and result in severe dryness of mucosal surfaces,

primarily in the eyes and mouth. In addition to sicca symptoms, patients can

experience significant fatigue, chronic pain, major organ involvement, neuropathies

and lymphomas. Autoantibodies are present in the majority of patients and include

antinuclear antibodies and antibodies against Primary SjS-related antigen A and B

(anti-SSA Ro and SSB La). There are no current FDA-approved therapies and patients

are most often treated with IVIg, in severe cases, or eyes drops and corticosteroids in

more mild to moderate patients.

•

PC-POTS has been emerging after resolution of COVID-19 infection in previously

healthy patients. PC-POTS is a disorder of the autonomic nervous system that

is characterized by a rise in heart rate when moving to a standing position and

additional symptoms of shortness of breath, headache, fatigue, poor concentration,

weakness and anxiety. The large majority of patients are women between 15 and

50 years of age. There is a strong association of PC-POTS to activating autoantibodies

to autonomic G-protein coupled receptors, including the β1 and β2-adrenergic

receptors and M2 and M3 muscarinic receptors. There are no current FDA-approved

therapies and symptomatic treatments focus on blood volume, kidney sodium levels,

heart rate reduction and vessel constriction.

Zai Lab Limited

Our Zai Lab strategic collaboration allows us to accelerate development of efgartigimod

into new autoimmune indications with Zai Lab taking operational leadership of the

Phase 2 proof-of-concept clinical trials.

Zai Lab initiated the Phase 2 proof-of-concept clinical trials in 2022 in MN and LN, which

both fall within our emerging nephrology franchise.

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 oversight 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.

Primary SjS and PC-POTS are the first indications we identified to be further developed

under the Asset Development Agreement.

In 2022, IQVIA launched the Phase 2 clinical trials in Primary SjS and PC-POTS.

Additional Efgartigimod Indications

In January 2023, we announced our plans to launch clinical trials in three new indica-

tions including a registrational clinical trial in TED and proof-of-concept clinical trials in

AV and AMR.

1.3.4

ARGX-117 Development

ARGX-117 is a highly differentiated therapeutic monoclonal antibody 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 ARGX-117 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.

ARGX-117 exhibits both pH- and calcium dependent binding. These unique characteris-

tics enable ARGX-117 to capture free C2 in circulation and release it in the endosome

to be sorted for degradation in the lysosome. ARGX-117 is equipped with NHANCE

mutations increasing its affinity for FcRn and allowing it to recycle back into circulation

to capture more C2.

We obtained the rights to ARGX-117 as part of our IIP. argenx and Broteio launched a

collaboration in 2017 to conduct research, with support from the University of Utrecht,

to demonstrate preclinical proof-of-concept of the mechanism of ARGX-117. Based on

promising preclinical data generated under this collaboration agreement, we exercised

the exclusive option to license the program and assumed responsibility for further

development and commercialization.

In addition to an IV formulation, we have exclusive access to Halozyme’s

ENHANZE® SC drug delivery technology for the C2 target.

Figure 5

Cell

ARGX-117

pH 7.4

: 1.5mM

Lysosome

Endosome

FcRn

pH and Ca

switch

No effector

function

Optimal

recycling

Phase 1 Data

We conducted a Phase 1 healthy volunteer clinical trial of IV and SC ARGX-117. This first-

in-human clinical trial was a double-blind placebo-controlled study designed to assess

the safety, tolerability, PK and PD of a broad dose range of ARGX-117 in 102 healthy

subjects. In the single ascending dose part, we evaluated 70 subjects and tested up to

80 mg/kg administered IV and up to 60 mg/kg administered SC. In the MAD part of the

study, we evaluated 32 subjects to understand the safety and tolerability of repeated

administrations and in particular to generate a data-set to optimally inform a PK/PD

model.

The majority of the observed TEAEs were categorized as grade 1 (or mild). Few grade

2 (or moderate) TEAE were observed and, in the MAD part of the study, no grade 2 or

higher TEAEs were observed. Overall, we concluded that single and multiple administra-

tions of ARGX-117 or placebo have a favorable safety and tolerability profile supporting

the investigation of study drug in patient studies.

We observed a dose-dependent reduction of free C2 levels. After one dose of 30 mg/kg

ARGX-117, free C2 levels were reduced by 95% for more than 100 days. In the MAD part

of the study, we could reach full complement blockade with more than 99% reduction of

free C2 levels.

Following analysis of Phase 1 data, and the observed favorable safety and tolerability

profile and consistent PK/PD profile, we launched a Phase 2 proof-of-concept clinical

trial in MMN in the fourth quarter of 2021 within our neuromuscular franchise. Proof-of-

concept ARDA clinical trial is ongoing to evaluate safety, tolerability, and potential dosing

regimen in MMN. Interim data from ARDA are expected in mid-2023.

Overview of MMN and Current Treatment

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 usually misdiagnosed as amyo-

trophic lateral sclerosis (

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 IG M (

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 regularly to

address the disease’s progressive nature.

DGF and/or Allograft Failure

We intend to start a phase 2 proof-of-concept clinical trial in the second half of 2023 to

evaluate ARGX-117 for the prevention of DGF (n) and/or allograft failure after kidney

transplantation. This occurs in up to 40% of kidney transplant recipients and is often a

result of ischemia reperfusion injury.

There is compelling evidence from kidney biopsies of mannose-binding lectin and C4d

co-staining indicating involvement of both the classical and lectin pathways, making C2

an ideal target. Furthermore, there is a well-established process to measure kidney func-

tion and establish proof-of-concept and achieve registration. On this basis, combined

with the significant unmet medical need, we have chosen DGF (n) and allograft failure

after kidney transplantation as second indication for ARGX-117.

Dermatomyositis

In January 2023, we announced DM as the third indication for ARGX-117.

1.3.5

Immunology Innovation Program

Overview

Our IIP is a 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. The IIP has

been foundational in building our pipeline, and every current pipeline candidate from

both our wholly-owned and partnered pipeline emerged from an IIP collaboration. As

part of our long-term strategy, we have committed to continued investment in the IIP.

Our Suite of Technologies

Through our IIP, we collaborate with scientific and academic partners to identify immu-

nology breakthroughs and build potential pipeline candidates. This is done through co-

creation where we bring to the collaboration our unique suite of antibody engineering

technologies and experience in clinical development and our partners bring a wealth of

disease and target biology expertise.

Together with our antibody discovery and development expertise, this suite of techno-

logies has enabled us to build our broad pipeline of products and product candidates,

across all stages of development and we believe will ensure continuous development

of innovative and relevant programs. Our key technologies are outlined below:

Antibody Engineering and Other Technology Capabilities

Our Proprietary SIMPLE Antibody Platform

Our proprietary SIMPLE Antibody platform 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 allows us to access and explore a broad target universe, including novel and

complex targets, while minimizing the long timelines associated with generating anti-

body candidates using traditional methods.

Our Fc Engineering Technologies

Our antibody engineering technologies – NHance, ABDEG, POTELLIGENT and DHS muta-

tions – focus on engineering the Fc region of antibodies in order to augment their inter-

actions with components of the immune system, thereby potentially expanding the the-

rapeutic index of our product candidates by modifying their half-life, tissue penetration,

rate of disease target clearance and potency. In addition, we obtained a non-exclusive

research license and option for the SMART-Ig and ACT-Ig technologies. 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 speciali-

zed immune cells known as natural killer (

) 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.

An illustration of the FcRn-mediated antibody

recycling mechanism is shown in figure 6.

[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.

NHANCE

NHance refers to two mutations that we in-

troduce 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 7, [1] NHance

antibodies bind to FcRn with higher affinity,

specifically under acidic pH conditions. [2]

Blood Circulation (pH 7.4)

Cell

Antibody

Lysosome

Endosome

(pH 6.0)

FcRn

Degraded serum proteins

Figure 6: The FcRn-mediated recycling mechanism

Due to these tighter bonds, NHance FcRn-me-

diated 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, ARGX-111, ARGX-117

and a number of our discovery-stage pro-

grams utilize NHance.

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 chan-

ges, 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 techno-

logy 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 num-

ber of our products and product candidates,

including efgartigimod.

As shown in figure 8, our ABDEG technology

can also be used with our pH-dependent

SIMPLE Antibodies in a mechanism referred to

as sweeping. Certain SIMPLE Antibodies 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.

Cell

Antibody with NHance

Lysosome

Endosome

FcRn

Degraded serum proteins

Figure 7

Figure 8: SIMPLE Antibody and ABDEG

technologies work in concert to sweep diseases

targets.

Cell

SIMPLE Antibody with ABDEG

Lysosome

Endosome

FcRn

Target

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 exclu-

ding 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

Chugai and Clayton

In 2020, we entered into a research license and option agreement with Chugai under

which we may access Chugai’s SMART-Ig (“Recycling Antibody” and part of “Sweeping

Antibody” technology) and ACT-Ig (Antibody half-life extending technology). 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. The 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 a collaboration and license agreement with

Elektrofi to explore new SC formulations utilizing Elektrofi’s small volume injection

technology for efgartigimod, and up to one additional target.

For more information on our collaborations, see section 1.4 “

Collaboration Agreements

”.

Other IIP Programs

ARGX-119

In January 2022, we announced that ARGX-119 is an antibody that targets MuSK, a

protein located at the neuromuscular junction, in an agonistic or activating manner. We

intend to develop ARGX-119 in a range of neuromuscular diseases, potentially including

congenital MG, a rare hereditary subtype of MG, MuSK-associated MG, a rare autoim-

mune subtype of MG, spinal muscular atrophy and ALS, both rare, severe neuromuscular

indications.

Phase 1 dose-escalation clinical trial in healthy volunteers started in the first quarter of

2023, with a subsequent Phase 1b clinical trial to assess early signal detection in patients

thereafter.

ARGX-118

We have exercised our option to exclusively acquire rights to ARGX-118, a highly differen-

tiated antibody against Galectin-10, the protein of Charcot-Leyden crystals, which are

implicated as a major contributor to severe asthma and to the persistence of mucus plugs.

argenx and VIB vzw (

VIB

) continue to pursue pre-clinical development of the program

under the collaboration.

Other Partnered Programs

See sections 1.4 “

Collaboration Agreements

” and 1.5 “

License Agreements

” for a

description of collaboration and license agreements that we have entered into to further

leverage our IIP.

1.4

Collaboration Agreements

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 biotechno-

logy companies to leverage our platform technology and accelerate product candidate

development. We have entered into multiple collaboration agreements with pharma-

ceutical partners, as described below.

1.4.1

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 GARP (the

AbbVie Collaboration Agreement

). ARGX-115 (ABBV-151) employs our

SIMPLE Antibody 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 develop-

ment activities up to completion of investigational new drug (

IND

)-enabling studies.

AbbVie has an exclusive option to obtain a worldwide, exclusive license to the ARGX-115

(ABBV-151) program to develop and commercialize products and has now 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.

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-pro-

motion 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 option and license

agreement ends, with respect to the ARGX-115 (ABBV-151) program, upon the earliest

of (i) a technical failure of the IND-enabling studies which is outside of our control, (ii)

AbbVie’s election to not exercise its option or (iii) following AbbVie’s exercise of the

option, 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) ten years after the first commercial sale of

such product sold in that country under the AbbVie Collaboration Agreement.

1.4.2

Our Strategic Partnership with Zai Lab

for Efgartigimod

Pursuant to the Zai Lab Agreement, Zai Lab obtains the exclusive right to develop and

commercialize efgartigimod in the aforementioned countries. Zai Lab will also contribute

patients to our global Phase 3 clinical trials of efgartigimod. Additionally, the collabora-

tion with Zai Lab is expected to accelerate efgartigimod global development by initiating

multiple Phase 2 proof-of-concept clinical trials in new autoimmune indications under

our supervision; first indications for such proof-of-concepts studies are kidney conditions

LN and MN.

Pursuant to the Zai Lab Agreement, we have received value worth $175.0 million from

the Zai Lab Payments. We are also eligible to receive tiered royalties (mid-teen to low-

twenties on a percentage basis) based on annual net sales of efgartigimod in the PRC.

1.4.3

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 der-

matologic 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, clinical trial application CTA approval of a Phase 2a clinical trial for LP0145 was

received.

LEO Pharma, against payment of an option fee to us, was granted an option to obtain an

exclusive, worldwide license to further develop and commercialize a product, following

the exercise of the option, LEO Pharma will assume full responsibility for the continued

development, manufacture and commercialization of such product and be 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.

In 2021, we signed two amendments to the LEO Pharma Collaboration Agreement, to

extend LEO Pharma’s option period with six months, to allow LEO Pharma to undertake

chemistry, manufacturing and control development work in advance of the exercise by

LEO Pharma of its option, and updating the provisions regarding the management of

patents.

In September 2022, LEO Pharma exercised its option and has assumed full responsibility

of the program for the continued development, manufacture and commercialization of

such product and be subject to diligence obligations in respect of continuation of de-

velopment and commercialization of such product, which triggered a milestone payment

of €5.0 million.

1.4.4

Our Strategic Collaboration with Shire

In February 2012, we entered into a collaboration agreement with Shire AG (

Shire

now known as Shire International GmbH) to discover, develop and commercialize novel

human therapeutic antibodies against up to three targets to address diverse, rare and

unmet diseases (

Shire Collaboration Agreement

). Pursuant to the Shire Collaboration

Agreement, for any target selected for study under the collaboration, the parties worked

together to conduct research and development through discovery of antibodies with

certain specificity for and functional activity against those targets.

Up through a specified period, we have granted Shire an exclusive option, against

payment of a one-time option fee, to obtain all right, title and interest in any antibodies

discovered under a study and to obtain an exclusive, worldwide license under our

intellectual property which is necessary to further develop and commercialize products

incorporating such antibodies. Following such exercise, Shire has the diligence obligation

to continue to develop and commercialize at least one licensed product.

Shire may exercise exclusive options to develop and commercialize programs arising

under our expanded agreement against an option fee. In July 2018, Shire exercised

such an exclusive option to in-license an antibody discovered and developed using our

licensed technologies, triggering a milestone payment by Shire to us.

In addition to option fees, Shire is obligated to pay us on a per-product basis upon

achievement of specified development, regulatory and commercial milestones and a

percentage of net sales as a royalty. Accordingly, we are eligible to receive payments in

aggregate amounts of up to $3.8 million, $4.5 million and $22.5 million, upon achieve-

ment of development, regulatory and commercial milestones, respectively, for a product

generated against one of the three initial targets named in the Shire Collaboration

Agreement. For products generated against additional targets, development and regu-

latory milestone payments remain the same, and we are eligible to receive payments in

aggregate amounts of up to $60.0 million for achievement of commercial milestones. The

royalties payable to us are tiered, single digit and are subject to customary reductions.

If Shire does not exercise its option with respect to any discovered antibody within

a specified period, we are free to research, develop and commercialize antibodies in

relation to the applicable study target, subject to negotiation of a license from Shire for

the use of any antibodies that were discovered during the applicable study, or any Shire

confidential information, Shire intellectual property or Shire’s interest in any joint intel-

lectual property. If (a) Shire (i) does not exercise its option, or (ii) exercises its option but

later abandons development of such antibody or (iii) the Shire Collaboration Agreement

is terminated other than for our breach or insolvency, and (b) Shire is no longer pursuing

a development program with respect to the applicable study target, we may elect to

continue the development of such antibody at our sole cost and expense, subject to

negotiation of a license from Shire under which Shire will receive either specified

royalties, if we commercialize the program ourselves, or a percentage of sublicensing

revenues, if the program is subsequently sublicensed to a third party.

Unless earlier terminated, the collaboration term ends with the expiry of the last royalty

term under the Shire Collaboration Agreement. Each royalty term expires, 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 or (ii) ten years after the first commercial

sale of such product sold in that country under the Shire Collaboration Agreement. Shire

may terminate the agreement for any reason upon prior written notice to us.

1.4.5

Creation of OncoVerity for Cusatuzumab

In 2022, we, the University of Colorado Anschutz Medical Campus and UCHealth created

an asset-centric spin-off, OncoVerity, focused on optimizing and advancing the develop-

ment of cusatuzumab, a novel anti-CD70 antibody, in 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 the experience from argenx on the

CD70/CD27 pathway.

1.5

License Agreements

We are 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 Fc 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.

1.5.1

Our Exclusive License with Elektrofi

for Efgartigimod

In April 2021, we entered into a collaboration and license agreement with Elektrofi to

explore new SC formulations utilizing Elektrofi’s small volume injection technology for

efgartigimod, and up to one additional target (the

Elektrofi Agreement

). 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 future

milestones payments across both targets pending achievement of pre-defined develop-

ment, regulatory, and commercial milestones. Elektrofi will also receive a mid-single

digit royalty on sales of commercialized products.

1.5.2

Our Non-Exclusive Research License

with Chugai for SMART-lg and ACT-lg

In September 2020, we entered into a non-exclusive research license and option agree-

ment with Chugai, allowing us to access Chugai’s SMART-lg and ACT-lg Fc engineering

technologies for conducting feasibility studies. 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.

1.5.3

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 the Clayton Foundation’s proprie-

tary DHS mutations to extend the serum half-life of therapeutic candidates.

1.5.4

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 an exclusive license from Halozyme was human

C2 associated with the product candidate ARGX-117, 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 studies on other target-specific molecules in combination with ENHANZE®

and may nominate up to four additional targets we have not yet nominated for an

exclusive commercial license.

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 has no rights

to any of our current or future product candidates which use ENHANZE®. Halozyme

provides dedicated specialist support to us which it has accrued over ten years of

licensing ENHANZE® to its collaborators.

In return for achieving the first patient dosed with SC efgartigimod in the Phase 3 study

for ITP, we made a $15.0 million milestone payment in February 2021. Upon nomination

of any future target for an exclusive commercialization license and confirmation by

Halozyme that such a license is available, we will pay $12.5 million to Halozyme per

target. We will be obligated to pay clinical development, regulatory and commercial

milestones totaling $160.0 million for the first product that uses ENHANZE® and is

specific for a given target. Throughout the term of the ENHANZE License Agreement, we

must provide Halozyme on an annual basis a guidance forecast setting out all projected

milestone payments for products for the following four calendar quarters. We are also

obligated to pay Halozyme a percentage of net sales as a royalty of any licensed product

that uses ENHANZE®. This royalty varies with net sales volume, ranging from the low to

mid-single digits, and it is reduced by a maximum of 50% if following ten years from the

first commercial sale of the product in a country, the last valid claim within the licensed

ENHANZE® patent(s) expires. We have diligence obligations with respect to the conti-

nuation 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 section 3 “

Corporate Governance

”, our non-executive director

James M. Daly is also a non-executive member of the board of directors of Halozyme.

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, does not control or have significant influence over argenx or

Halozyme. However, the ENHANZE License Agreement does constitute a related party

transaction under the applicable SEC rules and will therefore be reported as such in our

annual report on Form 20-F for the fiscal year ended December 31, 2022. Mr. Daly did

not participate in any discussions and decision making relating to the ENHANZE License

Agreement. Consequently, no further disclosures regarding Halozyme have been added

in section 5.10.2 “

Related Party Transactions

”.

In March 2022, we announced our Phase 3 ADAPT-SC clinical trial evaluating SC

efgartigimod achieved the primary endpoint of total IgG reduction from baseline at

day 29, demonstrating statistical non-inferiority to VYVGART (efgartigimod alfa-fcab) IV

formulation in gMG patients. Based on these results, we submitted a BLA to the FDA on

September 21, 2022. The BLA has been granted a PDUFA target action date of June 20,

2023.

1.5.5

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 develop-

ment and commercialization of a series of agonistic anti-MET SIMPLE Antibodies,

including ARGX-114 (AGMB-101), a halofuginone-mimetic SIMPLE 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.

1.5.6

Our Exclusive License with Broteio

for ARGX-117

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, ARGX-117

(

Broteio Agreement

). Under the Broteio Agreement, we and Broteio jointly developed

the complement-targeted antibody to seek to establish preclinical proof-of-concept

using our proprietary suite of technologies. Upon successful completion of these 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 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.

1.5.7

Our Exclusive License with VIB

for ARGX-118

In November 2016, we entered into a collaboration under our IIP with VIB to develop

antibodies against Galectin-10, the protein of Charcot-Leyden 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 and VIB jointly developed anti-

bodies 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.

1.5.8

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 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.

1.5.9

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 (the

BioWa Agreement

). Pursuant to the BioWa 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 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 ten 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 mainte-

nance 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 $36.0 million per commercial target should we

achieve annual global sales of over $1.0 billion.

Pursuant to the POTELLIGENT License Agreements, we have the right to grant subli-

censes 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.

1.5.10 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 agree-

ment 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 (the

System

The System is used for the manufacturing of, amongst others, efgartigimod, ARGX-117

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 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 the System. We are

obligated to make development, regulatory and commercial milestone payments to

Lonza. Through December 31, 2022, we paid Lonza an aggregate amount of £0.6 million,

which includes milestone payments made under the Multi-Product License. Upon

commercialization of our products developed using the System, we are obligated to pay

Lonza a percentage of net sales as a royalty for each product manufactured, except for

ARGX-109, which is wholly-owned, and next generation efgartigimod. The Lonza royalty

is tiered, ranging in the low single digits and is reduced by half if the product in a country

is not protected by a valid claim. During 2022, we made an aggregate payment of

$1.7 million to Lonza for the royalty on net sales for manufacturing of efgartigimod.

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.

1.5.11

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 agree-

ment 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 (ABBV-151) which was discovered under the original collaboration

(

GARP License

). Upon the expiration of the GARP Agreement, the GARP License will be-

come 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 (ABBV-151) product. We also have

diligence obligations with respect to the continued development and commercialization

of ARGX-115 (ABBV-151) products.

1.5.12 Our Exclusive License 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 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.

1.6

Distribution Agreements

We are parties to the Medison Agreement, the Medison Multi-Regional Agreement and

the Genpharm Agreeement.

1.7

Manufacturing and Supply

We utilize third-party contract manufacturers who act in accordance with the FDA’s

good laboratory practices (

GLPs

) and 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 contract with Lonza based in Slough, UK, Portsmouth, U.S. and

Singapore 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 contracted

with Fujifilm based in Hillerød, Denmark, for activities relating to the large-scale manu-

facturing of efgartigimod drug substance. We use additional contract manufacturers to

fill, label, package, store and distribute (investigational) drug products.

1.8

Intellectual Property

1.8.1

Introduction

We strive to protect the proprietary technologies that we believe are important to our

business, including pursuing and maintaining patent protection intended to cover the

platform technologies incorporated into, or used to produce, our product candidates,

the compositions of matter of our product candidates and their methods of use, as well

as other inventions that are important to our business. In addition to patent protection,

we also 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 patent

and other proprietary protection for commercially important technologies, inventions

and know-how related to our business, defend and enforce our intellectual property

rights, particularly our patent rights, preserve the confidentiality of our trade secrets

and operate without infringing valid and enforceable intellectual property rights of

others. Specifically, we are materially dependent on patent and other proprietary pro-

tection related to our core platform technologies, described in section 1.8.2 “

Platform

Technologies

”, and our product candidates, as described in section 1.8.3 “

Our Internal

Programs

” and section 1.8.4 “

Our Partnered Programs

”.

The patent positions for biotechnology companies like us are generally uncertain

and can involve complex legal, scientific and factual issues. In addition, the coverage

claimed in a patent application can be significantly reduced before a patent is issued,

and its scope can be reinterpreted and even challenged after issuance. As a result,

we cannot guarantee that any of our platform technologies and product candidates

will be protectable or remain protected by enforceable patents. We cannot predict

whether the patent applications we are currently pursuing will issue as patents in any

particular jurisdiction or whether the claims of any issued patents will provide sufficient

proprietary protection from competitors. Any patents that we hold may be challenged,

circumvented or invalidated by third parties.

As of January 1, 2023, our patent portfolio (which includes both proprietary and

in-licensed patent families) comprised approximately 433 granted patents and approxi-

mately 402 pending patent applications, including approximately 46 issued U.S. patents,

approximately 17 granted European patents and approximately 370 issued patents in

other jurisdictions.

1.8.2

Platform Technologies

With regard to our platform technologies, we own or have intellectual property rights di-

rected to our SIMPLE Antibody discovery platform, the ABDEG and NHance technologies.

With regard to our SIMPLE Antibody discovery platform, we own a patent family

containing six issued U.S. patents with composition of matter claims directed to chimeric

antibodies containing variable domains comprising complementary determining

regions (

CDRs

) obtained from conventional heterotetrameric llama antibodies fused

to one or more domains of a human antibody, polynucleotides encoding such chimeric

antibodies, libraries of expression vectors comprising cDNA sequences encoding camelid

antibodies, method claims directed to the preparation of such chimeric antibodies, and

methods of modulating the binding of a human target antigen to its ligand or receptor

by administering such a chimeric antibody. The U.S. patents are expected to expire in

2029 to 2033. In addition, the patent family contains patents that have been granted in

Australia, Canada, Europe, the UK, Israel, India and Japan, and pending applications in

the PRC and Japan (divisional). In addition, we have a second patent family containing

patents granted in the U.S. (two), Australia, Europe, the UK, Israel, India and Japan, and

one patent application pending in Canada, with composition of matter claims directed to

a chimeric antibody containing variable regions with CDRs derived from a llama antibody

and certain amino acid substitutions corresponding to amino acids present in a human

germline variable region. The granted patents have a basic patent expiry date in 2031.

With regard to the ABDEG™ platform, we co-own with, and exclusively license from,

UT Southwestern, a patent family containing a granted U.S. patent with composition of

matter claims directed to an isolated FcRn-antagonist comprising a variant Ig Fc region

having an increased affinity for an Fc gamma receptor relative to a wild-type IgG1 Fc

region, and method of use claims directed to a method of using such an FcRn-antagonist

to treat certain antibody-mediated disorders. The U.S. parent patent expires in 2036

(including patent term adjustment). In addition, in this patent family, we also have gran-

ted patents in Australia, the PRC, Eurasia, Europe, Japan, Macao, Mexico, New Zealand

and Singapore, and we have multiple patent applications pending in the U.S. (divisional)

and various other countries and regions in North America, South America, Europe, Asia

and South Africa. The granted patents have a basic expiry date in 2034. In addition, we

own a second patent family containing pending patent applications in the U.S. and 15

other jurisdictions with claims directed to methods of reducing the serum levels of an

Fc-containing agent in a subject by administering to the subject an FcRn-antagonist con-

taining a variant Ig Fc region containing certain amino acid substitutions. A U.S. patent, if

issued from the U.S. patent application, is expected to expire in 2036.

With regard to the NHance platform, we have exclusively licensed from the UT

Southwestern two U.S. patents 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.

1.8.3

Our Internal Programs

Efgartigimod

efgartigimod incorporates the ABDEG platform technology.

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. This patent family has

granted patents in Australia, Canada, Chile, the PRC, Colombia, Hong Kong, Israel, Japan,

Mexico, New Zealand, Russia, the U.S. and South Africa, and pending patent applications

in Brazil, India and the U.S. (divisional application). The patent family has a basic expiry

date in 2033. Furthermore, ARGX-109 incorporates or employs the SIMPLE Antibody

platform technology and the NHance platform technology.

Our ARGX-117 Product Candidate

With regard to the ARGX-117 product candidate, we own or have rights in three 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, Europe and Asia, directed to composition of matter claims and method

of treatment claims. The in-licensed patent family from Broteio has granted patents in

Australia, the PRC, Europe, Hong Kong, Mexico and the U.S. (two issued patents in the

U.S.), which have a basic expiry date in 2034. The other two patent families have basic

expiry dates in 2039 and 2040. ARGX-117 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 two patent families

from/with NYU Langone Health, a U.S. medical center based in New York, and three

patent families from/with the LUMC, with one U.S. granted patent and several pending

applications in multiple jurisdictions.

Our ARGX-118 Product Candidate

With regard to the ARGX-118 product candidate, we co-own one patent family 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 Ame-

rica, South America, Europe and Asia. The patent family has a basic expiry date in 2039.

1.8.4

Our Partnered Programs

Our Cusatuzumab (ARGX-110) Product Candidate

With regard to the cusatuzumab product candidate, we have five issued U.S. patents,

including, one U.S. granted patent with composition of matter claims directed to the

cusatuzumab antibody, one U.S. granted patent with claims directed to the epitope

cusatuzumab binds to, one U.S. granted patent with claims directed to a polynucleotide

that encodes antibodies that bind to the epitope cusatuzumab binds to, and, one U.S.

granted patent and one U.S. granted patent with method of use claims directed to the

treatment of cancer and immunological disorders with the cusatuzumab antibody. The

issued U.S. patents expire in 2032 and 2033, without taking a potential patent term

extension into account. In addition, we have patents that have been granted in Australia,

Canada, the PRC, Europe, Indonesia, Israel, India, Japan and Russia and patent applica-

tions pending in Brazil and the U.S. (divisional application). 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 granted U.S. patent with composition of matter claims directed to an antibody that

binds GARP the presence of TGF-β and method of use claims directed to the use of such

an antibody in the treatment of cancer. The U.S. patent has a basic expiry date in 2034,

without taking a potential patent term extension into account. In addition, the patent

family contains at least 18 patent applications pending in U.S. (continuation-in-part) and

various other countries and regions in North America, South America, Europe and Asia.

Further, we co-own with, and exclusively license from, UCL two more patent families

with composition of matter claims directed to an antibody that binds an epitope of a

complex formed by human GARP and TGF-β as well as method of use claims directed to

the use of such an antibody in the treatment of cancer. These two patent families have

basic expiry dates 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 basic expiry date in 2037. Furthermore, ARGX-112 (LP-0145)

incorporates the SIMPLE Antibody platform technology.

The term of individual patents depends upon the legal term of the patents in the count-

ries in which they are obtained. In most countries in which we file, the patent term is

20 years from the earliest date of filing a non-provisional patent application.

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 section 1.9.1 “

Licensure

and Regulation of Biologics in the U.S.

”. Similar provisions are available in Europe and in

certain other jurisdictions to extend the term of a patent that covers an approved drug.

It is possible that issued U.S. patents covering each of our 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. We also intend to seek patent term exten-

sions in any jurisdictions where they are available, however, 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.

1.8.5

Trade Secret Protection

In addition to patent protection, we also rely on trade secret protection 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.

1.9

Regulation

Government authorities in the U.S., at the federal, state and local level, and in the EU

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, some 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 applica-

ble statutes and regulations and other regulatory authorities, require the expenditure of

substantial time and financial resources.

1.9.1

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, with the exception

that the section of the FDCA that governs the approval of drugs via NDAs does not apply

to the approval of biologics. Biologics are approved for marketing under provisions of

the Public Health Service Act (

PHSA

) via BLAs. However, the application process and

requirements for approval of BLAs are very similar to those for NDAs. The failure to

comply with the applicable U.S. requirements at any time during the product develop-

ment process, including preclinical testing and clinical testing, the approval process

or post-approval process may subject an applicant to delays in the conduct of a study,

regulatory review and approval, and/or administrative or judicial sanctions. These

sanctions may include, but are not limited to, the FDA’s refusal to allow an applicant to

proceed with clinical testing, refusal to approve pending applications, license suspension

or revocation, warning or untitled letters, adverse publicity, product recalls, product

seizures, total or partial suspension of production or distribution, injunctions, fines and

civil or criminal investigations and penalties brought by the FDA or the Department of

Justice or other governmental entities.

An applicant seeking approval to market and distribute a new biologic in the U.S. gene-

rally must satisfactorily complete each of the following steps:

•

preclinical laboratory tests, animal studies and formulation studies all performed in

accordance with applicable regulations, including the GLPs;

•

submission to the FDA of an IND application for human clinical testing, which 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, strength, quality and

purity;

•

FDA audits of the clinical trial sites 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.

Preclinical Studies and INDs

Before testing any biological product candidate in humans, the product candidate must

undergo preclinical testing. Preclinical tests include laboratory evaluations of product

chemistry, formulation and stability, as well as animal studies to evaluate the potential

for activity and toxicity. The conduct of the preclinical tests and formulation of the

compounds for testing must comply with federal regulations and requirements. The

results of the preclinical tests, together with manufacturing information and analytical

data, are submitted to the FDA as part of an IND application. The IND automatically be-

comes effective 30 days after receipt by the FDA, unless before that time the FDA raises

concerns or questions about the product candidate or conduct of the proposed clinical

trial, including concerns that human research subjects will be exposed to unreasonable

health risks, and places the proposed clinical trial on clinical hold. In that case, the IND

sponsor and the FDA must resolve any outstanding FDA concerns before the clinical trial

can begin.

As a result, submission of the IND may result in the FDA not allowing the clinical trial

to commence or on the terms originally specified by the sponsor in the IND. If the FDA

imposes a partial or complete clinical hold, this action would delay either a proposed

clinical trial or cause suspension of an ongoing study, or in the case of a partial clinical

hold place limitations on the conduct of the study such as duration of treatment, until

all outstanding concerns have been adequately addressed and the FDA has notified the

company that investigation may proceed and then only under terms authorized by the

FDA. This could cause significant delays or difficulties in completing planned clinical trials

in a timely manner. The FDA may impose clinical holds on a biological product candidate

at any time before or during clinical trials due to safety concerns or non-compliance.

Human Clinical Trials in Support of a BLA

Clinical trials involve the administration of the investigational product candidate to

healthy volunteers or patients with the disease to be treated under the supervision of

a qualified principal investigator in accordance with GCPs. Clinical trials are conducted

under study protocols detailing, among other things, the objectives of the study,

inclusion and exclusion criteria, the parameters to be used in monitoring safety, and

the effectiveness criteria to be evaluated. A protocol for each clinical trial and any sub-

sequent protocol amendments must be submitted to the FDA as part of the IND.

A sponsor who wishes to conduct a clinical trial outside the U.S. may, but need not,

obtain FDA authorization to conduct the clinical trial under an 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 study data through an onsite

inspection, if necessary.

Further, each clinical trial must be reviewed and approved by the IRB either centrally

or individually at each institution at which the clinical trial will be conducted. The IRB

will consider, among other things, clinical trial design, patient informed consent, ethical

factors and the safety of human subjects. An IRB must operate in compliance with FDA

regulations. The FDA, IRB, or the clinical trial sponsor may suspend or discontinue a cli-

nical trial at any time for various reasons, including a finding that the clinical trial is not

being conducted in accordance with FDA requirements or the subjects or patients are

being exposed to an unacceptable health risk. Clinical testing also must satisfy extensive

GCPs and the requirements for informed consent. Additionally, some clinical trials are

overseen by an independent group of qualified experts organized by the clinical trial

sponsor, known as a data safety monitoring board or committee. This group may recom-

mend continuation of the study as planned, changes in study conduct, or cessation of

the study at designated check points based on access to certain data from the study.

Clinical trials typically are conducted in three sequential phases, but the phases may

overlap or be combined. Additional studies 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, on occasion, in

patients, such as cancer 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 proceed if the Phase 2 clinical trials demonstrate that a dose

range of the product candidate is potentially effective and has an acceptable safety

profile. 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.

In some cases, the FDA may approve a BLA for a product candidate but require the spon-

sor to conduct additional clinical trials to further assess the product candidate’s safety

and effectiveness after approval. Such post-approval clinical trials are typically referred

to as Phase 4 clinical trials. These studies are used to gain additional experience from

the treatment of patients in the intended therapeutic indication and to document a

clinical benefit in the case of biologics approved under accelerated approval regulations.

If the FDA approves a product while a company has ongoing clinical trials that were not

necessary for approval, a company may be able to use the data from these clinical trials

to meet all or part of any Phase 4 clinical trial requirement or to request a change in

the product labeling. Failure to exhibit due diligence with regard to conducting required

Phase 4 clinical trials could result in withdrawal of approval for products.

Progress reports detailing the results of the clinical trials, among other information,

must be submitted at least annually to the FDA, and written IND safety reports must be

submitted to the FDA and the investigators fifteen days after the clinical trial sponsor

determines the information qualifies for reporting for serious and unexpected suspected

adverse events, findings from other studies or animal or in vitro testing that suggest a

significant risk for human subjects and any clinically important increase in the rate of a

serious suspected adverse reaction over that listed in the protocol or investigator bro-

chure. The sponsor must also notify the FDA of any unexpected fatal or life-threatening

suspected adverse reaction as soon as possible but in no case later than seven calendar

days after the sponsor’s initial receipt of the information.

A drug being studied in clinical trials may be made available to individual patients in

certain circumstances. Pursuant to the 21

Century Cures Act, as amended, the manu-

facturer of an investigational drug for a serious disease or condition is required to make

available, such as by posting on its website, its policy on evaluating and responding to

requests for individual patient access to such investigational drug. This requirement

applies on the earlier of the first initiation of a Phase 2 or Phase 3 clinical trial of the

investigational drug, or as applicable, 15 days after the drug receives a designation as a

breakthrough therapy, fast track product, or regenerative advanced therapy.

Compliance with cGMP Requirements

Before approving a BLA, the FDA typically will inspect the facility or facilities where the

product is manufactured. The FDA will not approve an application unless it determines

that the manufacturing processes and facilities are in compliance with cGMP require-

ments and adequate to assure consistent production of the product within required spe-

cifications. The PHSA emphasizes the importance of manufacturing control for products

like biologics whose attributes cannot be precisely defined. The manufacturing process

must be capable of consistently producing quality batches of the product candidate

and, among other things, the sponsor must develop methods for testing the identity,

strength, quality, potency, and purity of the final biological product. Additionally, appro-

priate packaging must be selected and tested, and stability studies must be conducted

to demonstrate that the biological product candidate does not undergo unacceptable

deterioration over its shelf life.

Manufacturers and others involved in the manufacture and distribution of products

must also register their establishments with the FDA and certain state agencies. Both

domestic and foreign manufacturing establishments must register and provide additio-

nal information to the FDA upon their initial participation in the manufacturing process.

Establishments may be subject to periodic unannounced inspections by government

authorities to ensure compliance with the FDCA, cGMPs and other requirements.

Manufacturers may have to provide, on request, electronic or physical records regarding

their establishments.

Disclosure of Clinical Trial Information

Sponsors of clinical trials of FDA-regulated products, including biological products,

are required to register and disclose certain clinical trial information on the

website

Information related to the product, patient population, phase of investigation, clinical

trial sites and investigators, and other aspects of a clinical trial are then made public

as part of the registration. Sponsors are also obligated to disclose the results of their

clinical trials after completion. Disclosure of the results of clinical trials can be delayed

in certain circumstances for up to two years after the date of completion of the clinical

trial. Competitors may use this publicly available information to gain knowledge regar-

ding the progress of clinical development programs as well as clinical trial design.

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 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.

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 ten 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 a priority review of an application,

if the BLA is not filed under the program. If the BLA is submitted under the program,

additional 2 months are added to the review clock, whether standard or priority review

for a total review time of 12 or 8 months, respectively. The FDA does not always meet its

PDUFA goal dates for standard and priority reviews. The review process and the PDUFA

goal date may also be extended by three months if the FDA so requests or if the appli-

cant otherwise provides additional information or clarification regarding information

already provided in the submission which may be deemed as substantial information.

After the FDA’s evaluation of the application and accompanying information, including

the results of any potential inspections of the manufacturing facilities and any FDA audits

of clinical trial sites to assure compliance with GCPs, the FDA will issue an approval let-

ter, 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 and the conditions that must be met in order to secure approval of the

application, and when possible, will outline recommended actions the sponsor might

take to obtain approval of the application. Sponsors that receive a complete response

letter may submit to the FDA information that represents a complete response to the

issues identified by the FDA, withdraw the application or request a hearing. The FDA will

not approve an application until issues identified in the complete response letter have

been addressed.

The FDA may also refer the application to an advisory committee for review, evaluation

and recommendation as to whether the application should be approved. In particular,

the FDA may refer applications for novel biological products or biological products that

present difficult questions of safety or efficacy to an advisory committee. Typically, an

advisory committee is a panel of independent experts, including clinicians and other

scientific experts, that reviews, evaluates and provides a recommendation as to whether

the application should be approved and under what conditions. The FDA is not bound by

the recommendations of an advisory committee, but it considers such recommendati-

ons carefully when making decisions.

If the FDA approves a new product, it may limit the approved indications for use of the

product. It may also require that contraindications, warnings or precautions be included

in the product labeling. In addition, the FDA may call for post-approval studies, including

Phase 4 clinical trials, to further assess the product’s safety after approval. The agency

may also require testing and surveillance programs to monitor the product after com-

mercialization, 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, communica-

tion plans for healthcare professionals and elements to assure safe use (

ETASU

). ETASU

can include, but are not limited to, special training or certification for prescribing or

dispensing, dispensing only under 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, manufacturing changes and additional labeling claims, are subject to further

testing requirements and FDA review and approval.

Such regulatory reviews can result in denial or modification of the planned changes, or

requirements to conduct additional tests or evaluations that can substantially delay or

increase the cost of the planned changes.

Fast Track, Breakthrough Therapy and Priority Review Designations

The FDA is authorized to designate certain products for expedited review if they are

intended to address an unmet medical need in the treatment of a serious or life-threa-

tening disease or condition. These programs are referred to as fast track designation,

breakthrough therapy designation and priority review designation.

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 it demonstrates the potential to address unmet

medical needs for such a disease or condition. For fast track products, sponsors may

have greater interactions with the FDA and the FDA may initiate review of sections of

a fast track product’s application before the application is complete. This rolling review

may be available if the FDA determines, after preliminary evaluation of clinical data

submitted by the sponsor, that a fast track product may be effective. 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 goal

for reviewing a rolling review does not begin until the last section of the application is

submitted. Fast track designation may be withdrawn by the FDA if the FDA believes that

the designation is no longer supported by data emerging in the clinical trial process.

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.

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 effecti-

veness in the treatment of a condition, elimination or substantial reduction of a treat-

ment-limiting product reaction, documented enhancement of patient compliance that

may lead to improvement in serious outcomes and 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 ten months to six months.

Accelerated Approval Pathway

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, 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 FDA has limited experience with accelerated approvals based on inter-

mediate clinical endpoints, but has indicated that such endpoints generally may support

accelerated approval where the therapeutic effect measured by the endpoint is not itself

a clinical benefit and basis for traditional approval, if there is a basis for concluding that

the therapeutic effect is reasonably likely to predict the ultimate clinical benefit of a

product.

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 study or studies to verify

and describe the product’s clinical benefit. As a result, a product candidate approved on

this basis is subject to rigorous post-marketing compliance requirements, including the

completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical

endpoint. These confirmatory clinical trials must be completed with due diligence, and

the FDA may require that the confirmatory clinical trial be designed, initiated, and/

or fully enrolled prior to approval. 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 regulations are subject to prior review by the agency. The Food and Drug

Omnibus Reform Act (

FDORA

) was recently enacted and includes provisions related to

the accelerated approval pathway. Pursuant to FDORA, the FDA is authorized to require

a post-approval study to be underway prior to approval or within a specified time

period following approval. FDORA also requires the FDA to specify the conditions of any

required post-approval study not later than 180 days following approval and not less

frequently than every 180 days thereafter until completion or termination of such study.

Such conditions may include imposing milestones such as a target date of study com-

pletion or requiring sponsors to submit progress reports. FDORA also enables the FDA

to initiate enforcement actions or criminal prosecutions for the failure to conduct with

due diligence a required post-approval study, including a failure to meet any required

conditions specified by the FDA or to submit timely reports.

Orphan Drug Designation

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.

Orphan drug designation qualifies a company for tax credits and market exclusivity for

seven years following the date of the product’s marketing approval if granted by the FDA

and if it is the first FDA approval for that product for the disease for which it has such

designation. 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. The product must then go through the review and

approval process like any other product in order to be marketed.

A sponsor may request orphan drug designation of a previously unapproved product

or new orphan indication for an already marketed product. In addition, a sponsor of a

product that is otherwise the same product as an already approved orphan drug may

seek and obtain orphan drug designation for the subsequent product for the same rare

disease or condition if it can present a plausible hypothesis that its product may be

clinically superior to the first drug. Whether a large molecule product (i.e., a biological

product) is the same as another product is based on whether the two products have

the same principal molecular structural features. More than one sponsor may receive

orphan drug designation for the same product for the same rare disease or condition,

but each sponsor seeking orphan drug designation must file a complete request for

designation.

If orphan drug exclusivity is granted by the FDA, the period of exclusivity begins on

the date that the marketing application is approved by the FDA and applies only to

the indication for which the product has been designated. The FDA may approve a

second application for the same product for a different use or a second application for

a clinically superior version of the product for the same use. The FDA cannot, however,

approve the same product made by another sponsor for the same indication during

the market exclusivity period unless it has the consent of the sponsor or the sponsor is

unable to provide sufficient quantities of the product.

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 as well as any post-approval requirements 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 for notifying 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, which impose certain procedural

and documentation requirements upon manufacturers. 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 pharmaceutical products. Any distribution of prescription biological products and

pharmaceutical samples must comply with the U.S. Prescription Drug Marketing Act and

the PHSA.

Once an approval is granted, the FDA may revoke or suspend the approval of the BLA 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 pro-

blems 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; impo-

sition 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 reduced effectiveness infor-

mation. 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 or holds on post-approval clinical trials;

•

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;

•

injunctions or the imposition of civil or criminal penalties.

The FDA strictly regulates marketing, labeling, advertising and promotion of products

that are placed on the market. Pharmaceutical products may be promoted only for the

approved indications and in accordance with the provisions of the approved labeling.

Although physicians may prescribe legally available products for unapproved uses or in

patient populations that are not described in the product’s approved labeling (known

as “off-label use”), companies with approved products may not market or promote such

off-label uses. The FDA does not regulate the behavior of physicians in their choice of

treatments, but the FDA regulations do impose stringent restrictions on manufacturers’

communications regarding off-label uses. The FDA and other agencies actively enforce

the laws and regulations prohibiting the promotion of off-label uses, and a company

that is found to have improperly promoted off-label uses may be subject to significant

liability, including investigation by federal and state authorities. Prescription biological

product promotional materials must be submitted to the FDA in conjunction with their

first use or first publication.

Pediatric Studies and Exclusivity

Under the Pediatric Research Equity Act of 2003 (as amended,

PREA

), a BLA or supple-

ment 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 pediatric study plans prior to

the assessment data. Those plans must contain an outline of the proposed pediatric

study or studies the applicant plans to conduct, including study objectives and design,

any deferral or waiver requests and other information required by regulation. The

applicant, the FDA, and the FDA’s internal review committee must then review the

information submitted, consult with each other and 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 marketing exclusivity in the U.S. and,

if granted, provides for the attachment of an additional six months of marketing protec-

tion to the term of any existing regulatory exclusivity. This six-month exclusivity may be

granted if a BLA sponsor submits pediatric data that fairly respond to a written request

from the FDA for such data. The data do not need to show the product to be effective in

the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to

the FDA’s request, the additional protection is granted. If reports of requested pediatric

studies are submitted to and accepted by the FDA within the statutory time limits,

whatever statutory or regulatory periods of exclusivity cover the product are extended

by six months.

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 pro-

duct 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 there are no clinically meaningful differences between the reference product and

proposed biosimilar product in terms of safety, purity and potency. For the FDA to ap-

prove a biosimilar product as interchangeable with a reference product, the agency must

find that the biosimilar product can be expected to produce the same clinical results as

the reference product, and (for products administered multiple times) that the biologic

and the reference biologic may be switched after one has been previously administered

without increasing safety risks or risks of diminished efficacy relative to exclusive use of

the reference biologic.

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 twelve 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

demonstrate the safety, purity and potency of their product. However, to rely on such

exclusivities for establishing or protecting our market position is not without risk, as

such laws are subject to changes by the legislature. The BPCIA also created certain exclu-

sivity periods for biosimilars approved as interchangeable products. At this juncture, it is

unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily

substituted by pharmacies, which are governed by state pharmacy law.

U.S. Patent Term Restoration

Depending upon the timing, duration and specifics of FDA 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 prior to the expiration of the

patent. The 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 its

current expiration date, depending on the expected length of the clinical trials and other

factors involved in the filing of the relevant BLA.

1.9.2

Regulation and Procedures Governing

Approval of Medicinal Products in the

EU and the UK

In order to market any medicinal product outside of the U.S., a company also must

comply with numerous and varying regulatory requirements of other countries and

jurisdictions regarding quality, safety and efficacy and governing, among other things,

clinical trials, marketing authorization, commercial sales and distribution of products.

Whether or not it obtains FDA approval for a product, an applicant will need to obtain

the necessary approvals by the comparable regulatory authorities before it can initiate

clinical trials or marketing of the product in those countries or jurisdictions. Specifically,

no medicinal product may be placed on the market of an EU member state unless a

marketing authorization has been issued by the competent authorities of that member

state in accordance with Directive 2001/83/EC or a centralized marketing authorization

has been granted in accordance with Regulation (EC) No 726/2004, read in conjunction

with Regulation (EC) No 1901/2006 and Regulation (EC) No 1394/2007. The process go-

verning approval 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 studies 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 of a marketing authorization application (

MAA

) and granting of such MAA by

these authorities before the product can be marketed and sold in the EU. Following

the UK’s departure from the EU, a separate MAA is required in order to place medicinal

products on the market in the Great Britain (England, Wales and Scotland) (under

the Northern Ireland Protocol, the EU regulatory framework will continue to apply in

Northern Ireland in this regard and centralized EU marketing authorizations will continue

to be recognized).

Clinical Trial Approval

In April 2014, the EU adopted the new Clinical Trials Regulation (EU) No 536/2014, which

replaced the Clinical Trials Directive 2001/20/EC as of January 31, 2022. The transitional

provisions of the new Regulation offered sponsors the possibility to choose between

the requirements of the previous Directive and the new Regulation if the request for

authorization of a clinical trial was submitted by January 30, 2023. If the sponsor chose

to submit under the previous Directive, the clinical trial continues to be governed by the

Directive until three years after the new Regulation became applicable (i.e., January 31,

2025). If a clinical trial continues for more than three years after the Regulation became

applicable, the new Regulation will at that time begin to apply to the clinical trial. The

new Regulation (EU), which is directly applicable in all EU Member States, aims to sim-

plify and streamline the approval of clinical trials in the EU. The main characteristics of

the new Regulation include: a streamlined application procedure via a single-entry point

through the Clinical Trials Information System; a single set of documents to be prepared

and submitted for the application as well as simplified reporting procedures for clinical

trial sponsors; and a harmonized procedure for the assessment of applications for clini-

cal trials, which is divided in two parts (Part I contains scientific and medicinal product

documentation and Part II contains the national and patient-level documentation). Part

I is assessed by a coordinated review by the competent authorities of all EU Member

States in which an application for authorization of a clinical trial has been submitted

(

Concerned Member States

) of a draft report prepared by a reference member state.

Part II is assessed separately by each Concerned Member State. Strict deadlines have

also been established for the assessment of CTAs.

Prior to its exit from the EU, the UK implemented Directive 2001/20/EC into national law

through the Medicines for Human Use (Clinical Trials) Regulations 2004 (as amended).

However, implementation of the new EU Clinical Trials Regulation took place after the

UK’s departure from the EU, and so the new Clinical Trial Regulation described in the

preceding paragraph does not apply to Great Britain. The MHRA, the UK medicines

regulator, ran a consultation on reforms to the UK clinical trials legislation which closed

in March 2022. The outcome of that consultation has not yet been published and the

future regulatory framework for clinical trials in the UK is currently uncertain.

Orphan Designation and Exclusivity

Regulation (EC) No. 141/2000 and Regulation (EC) No. 847/2000 provide that a product

can be designated as an orphan drug by the EU Commission if its sponsor can establish:

(1) that the product is intended for the diagnosis, prevention or treatment of a life-threa-

tening or chronically debilitating condition, (2) either (i) the prevalence of the condition

is not more than five in ten thousand persons in the EU when the application is made,

or (ii) 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 (3)

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 a marketing authorization is granted for an orphan medicinal

product, this results in a ten-year period of market exclusivity. During this market exclu-

sivity period, neither the EMA, the European Commission nor the EU Member States

can accept an application or grant a marketing authorization for a “similar medicinal

product”. A “similar medicinal product” is defined as 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 exclu-

sivity 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 because, for example, the product is sufficiently pro-

fitable not to justify market exclusivity. 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 marketing authorization holder for the

authorized orphan product consents to the second orphan application; or (iii) the mar-

keting authorization holder for the authorized orphan product cannot supply enough

orphan medicinal product. Orphan designation must be requested before submitting an

application for marketing approval. Orphan designation does not convey any advantage

in, or shorten the duration of, the regulatory review and approval process.

Since January 1, 2021, a separate process for orphan designation has applied in Great

Britain. There is now no pre-marketing authorization orphan designation (as there is in

the EU) and the application for orphan designation will be reviewed by the MHRA, at

the time of an MAA for a UK or Great Britain marketing authorization. The criteria are

the same as in the EU, save that they apply to Great Britain only (e.g., there must be no

satisfactory method of diagnosis, prevention or treatment of the condition concerned

in Great Britain, as opposed to the EU, and the prevalence of the condition must be no

more than five in 10,000 persons in Great Britain).

Marketing Authorization

To obtain a marketing authorization for a product under the EU regulatory system, an

applicant must submit an MAA, either to the EMA using the centralized procedure or to

competent authorities in the EU using the other procedures (decentralized procedure,

national procedure, or mutual recognition procedure). A marketing authorization may

be granted only to an applicant established in the EU. Regulation (EC) No. 1901/2006

provides that prior to obtaining a marketing authorization in the EU, an applicant must

demonstrate compliance with all measures included in an EMA-approved pediatric

investigation plan (

PIP

), 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 PIP.

The centralized procedure provides for the grant of a single marketing authorization by

the EU Commission that is valid for all EEA Member States. Pursuant to Regulation (EC)

No. 726/2004, 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, soma-

tic 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 neurodegene-

rative disorders. The centralized procedure is optional for products that contain a new

active substance for any other indications, which are a significant therapeutic, scientific

or technical innovation and whose authorization would be in the interest of public

health in the EU.

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 proce-

dure, the maximum timeframe for the evaluation of an MAA 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. Clock stops may extend the ti-

meframe of evaluation of an MAA considerably beyond 210 days. Accelerated evaluation

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. If the CHMP accepts such a request, the time limit of 210 days

will be reduced to 150 days (excluding clock stops), but it is possible that the CHMP may

revert to the standard time limit for the centralized procedure if it determines that it is

no longer appropriate to conduct an accelerated assessment.

Following the departure of the UK from the EU, Great Britain is no longer covered by

centralized marketing authorizations (under the Northern Ireland Protocol, centralized

EU authorizations will continue to be recognized in Northern Ireland). However, all medi-

cinal products with a current centralized authorization were automatically converted to

UK marketing authorizations on January 1, 2021, and there is a further period, recently

extended to December 31, 2023, during which the MHRA may rely on a decision

taken by the EU Commission on the approval of a new marketing authorization in the

centralized procedure, in order to more quickly grant a new Great Britain marketing

authorization. A separate application is, however, still required.

European Data and Market Exclusivity

In the EU, innovative medicinal products, approved on the basis of a complete indepen-

dent data package, qualify for eight years of data exclusivity upon marketing authoriza-

tion and an additional two years of market exclusivity. 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 marketing authorization 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 eleven years if, during

the first eight years of those ten years, the marketing authorization holder obtains a

marketing authorization 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 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 a marketing authorization based on an MAA with

a complete independent data package of pharmaceutical tests, preclinical tests and

clinical trials. Similar arrangements apply in the UK.

Periods of Authorization and Renewals

A marketing authorization is valid for five years, in principle, and it may be renewed after

five years on the basis of a reevaluation of the risk benefit balance by the EMA for a

centrally authorized product, or by the competent authority of the authorizing member

state for a nationally authorized product. Once renewed, the marketing authorization

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 addi-

tional five-year renewal period. Any marketing authorization that is not followed by the

placement of the drug on the EU market (in the case of the centralized procedure) or on

the market of the authorizing member state (for a nationally authorized product) 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.

Regulatory Requirements after Marketing Authorization

Following approval, the holder of the marketing authorization 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 pharma-

covigilance or safety reporting rules, pursuant to which post-authorization studies and

additional monitoring obligations can be imposed. In addition, the manufacturing of aut-

horized products, for which a separate manufacturer’s license is mandatory, must also

be conducted in strict compliance with the EMA’s GMP requirements and comparable

requirements of other regulatory bodies in the EU, which mandate the methods, facili-

ties and controls used in manufacturing, processing and packing of products to assure

their safety and identity. Finally, the marketing and promotion of authorized products,

including industry-sponsored continuing medical education and advertising directed

toward the prescribers of products and/or the general public, are strictly regulated in

the EU under Directive 2001/83EC, as amended.

The aforementioned EU rules are generally applicable in the EEA, and similar arrange-

ments apply in the UK.

Brexit and the Regulatory Framework in the UK

In June 2016, the electorate in the UK voted in favor of leaving the EU (commonly

referred to as “Brexit”), and the UK officially withdrew from the EU on January 31,

2020. Pursuant to the formal withdrawal arrangements agreed between the UK and

the EU, the UK was subject to a transition period until December 31, 2020, during

which EU rules continued to apply. However, the EU and the UK concluded a trade and

cooperation agreement (

TCA

), which was provisionally applicable since January 1, 2021

and has been formally applicable since May 1, 2021. The TCA includes specific provisions

concerning pharmaceuticals, which include the mutual recognition of GMP, inspections

of manufacturing facilities for medicinal products and GMP documents issued, but does

not foresee wholesale mutual recognition of UK and EU pharmaceutical regulations.

The UK has implemented EU legislation on the marketing, promotion and sale of

medicinal products through the Human Medicines Regulations 2012 (as amended) and

has not yet enacted significant legislative change in this area following its exit from

the EU. The regulatory regime in Great Britain therefore largely aligns with current EU

regulations. However, these regimes may diverge increasingly as time passes, now that

Great Britain’s regulatory system is independent from the EU, and the TCA does not

provide for mutual recognition of UK and EU pharmaceutical legislation. For example, as

already explained, the new Clinical Trials Regulation which became effective in the EU on

January 31, 2022 has not been implemented into UK law, and a separate application will

need to be submitted for clinical trial authorization in the UK. Furthermore, the position

in Northern Ireland differs in certain respects from that of the rest of the UK (England,

Wales and Scotland) as some EU rules continue to be applicable to Northern Ireland

following the UK’s departure from the EU.

1.9.3

Regulation and Procedures Governing

Approval of Medicinal Products in Japan

In order to market any medical products in Japan, a company must comply with nume-

rous and varying regulatory requirements in Japan regarding quality, safety and efficacy in

the context, among other things, of clinical trials, marketing approval, commercial sales

and distribution of products. A person who manufactures or markets medical products

in Japan is subject to the supervision of the 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 develop-

ment, 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 person is required to obtain from

the MHLW a marketing license in order to conduct the business of marketing, leasing

or providing medical products that are manufactured (or outsourced to a third party for

manufacturing) or imported by such person.

Also, in order to conduct the business of manufacturing medical products which will

be marketed in Japan, a person is required to obtain from the MHLW a manufacturing

license for each manufacturing site.

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. Also, the data of clinical trials and other pertinent data,

which must be attached for 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 marketing license-holder that has obtained marketing approval for a new pharmaceu-

tical must have that pharmaceutical re-examined by the PMDA for a specified period

after receiving marketing approval. Such re-examination period for VYVGART is stated

to be ten (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 phar-

maceutical by imposing on the marketing license-holder the obligation to gather clinical

data for a certain period after the marketing approval was granted so that the PMDA has

the opportunity to re-examine the product. Results of usage and other pertinent data

must be attached for an application for a re-examination. A marketing license holder

that has obtained a marketing approval is also required to investigate, among other

things, the results of usage and to periodically report to the PMDA pursuant to the

Pharmaceutical and Medical Devices Act.

Price Regulation

In Japan, 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, a marketing license-holder of medical products must first have a

new medical product listed on the NHI price list in order to obtain its coverage under the

public medical insurance system. The NHI price list listed VYVGART in April 2022.

The NHI price of a medical product is determined either by price comparison of com-

parable medical products with necessary adjustments for innovativeness, usefulness or

size of the market; or, in the absence of comparable medical products, by the cost calcu-

lation method, determined after considering of the opinion of the manufacturer. Prices

on the NHI price list will be subject to revision, generally once every year, on the basis of

the actual prices at which the medical products are purchased by medical institutions.

1.9.4

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 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 con-

nection 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 reimbur-

sement for drug products can differ significantly from payor to payor. 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. Each plan determines whether

or not it will provide coverage for a product, what amount it will pay the manufacturer

for the product, on what tier of its formulary the product will be placed and whether

to require step therapy. 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. For example, the payor may require co-payments that patients find

unacceptably high. Further, one payor’s determination to provide coverage for a product

does not assure that other payors will also provide coverage and reimbursement for the

product, and the level of coverage and reimbursement can differ significantly from payor

to payor.

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 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. Third-party payors may limit coverage

to specific products on an approved list, also known as a formulary, which might not

include all of the approved products for a particular indication.

In the PRC, the newly created National Healthcare Security Administration (

NHSA

) an

agency responsible for administering the PRC’s social security system, organized a price

negotiation with drug companies for certain new drugs that had not been included in

the national Reimbursable Drug List (

RDL

) at the time of the negotiation in November

2019, which resulted in an average price reduction by over 60% for 70 of the 119 drugs

that passed the negotiation. NHSA, together with other government authorities, review

the inclusion or removal of drugs from the PRC’s National Drug Catalog for Basic Medical

Insurance, Work-related Injury Insurance and Maternity Insurance, or provincial or local

medical insurance catalogues for the national medical insurance program regularly,

and the tier under which a drug or device will be classified, both of which affect the

amounts reimbursable to program participants for their purchases of those drugs. These

determinations are made based on a number of factors, including price and efficacy. We

may also be invited to attend the price negotiation with NHSA upon receiving regulatory

approval in the PRC, but we will likely need to significantly reduce our prices, and to

negotiate with each of the provincial healthcare security administrations on reimburse-

ment ratios. On the other hand, if the NHSA or any of its local counterpart includes our

drugs and devices in the national RDL or provincial RDL, which may increase the demand

for our drug candidates and devices, our potential revenue from the sales of our drug

candidates and devices may still decrease as a result of lower prices. Moreover, eligibility

for reimbursement in the PRC does not imply that any drug or device will be paid for in

all cases or at a rate that covers our costs, including licensing fees, research, develop-

ment, manufacture, sale and distribution.

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 prescrip-

tion 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 fai-

lure to obtain or maintain adequate coverage and reimbursement for any such product

candidates could limit our ability to generate revenue. Further, due to the COVID-19

pandemic, millions of individuals have lost/will lose employer-based insurance coverage,

which may adversely affect our ability to commercialize our products. 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 com-

mercialize 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. Further,

these prices for drugs may be reduced by mandatory discounts or rebates required by

government healthcare programs. 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. 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. Obtaining and maintaining reimbursement status is time-

consuming and costly.

In the EU, pricing and reimbursement schemes vary widely from country to country.

Some countries provide that products may be marketed only after a reimbursement

price has been agreed. Some countries 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 reim-

bursement or pricing approval. For example, the EU provides options for its Member

States to restrict the range of products for which their national health insurance systems

provide reimbursement and to control the prices of medicinal products for human use.

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

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 countries in the EU have increased the

amount of discounts required on pharmaceuticals and these efforts could continue as

countries attempt to manage healthcare expenditures, especially in light of the severe

fiscal and debt crises experienced by many countries in the EU. The downward pressure

on healthcare costs in general, particularly 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 nego-

tiations, 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 drugs. 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 country 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.

Outside the U.S., international operations are generally subject to extensive governmen-

tal 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 mecha-

nisms 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.

The delivery of healthcare in the EU, including the establishment and operation of

health services and the pricing and reimbursement of medicines, is almost exclusively

a matter for national, rather than EU, law and policy. 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. In general, however, 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.

1.9.5

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

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 dispen-

sed 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 ma-

nufacturer 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. For non-innovator pro-

ducts, generally generic drugs marketed under abbreviated NDAs, the rebate amount is

13% of the average manufacturer price (

AMP

) for the quarter. The AMP is the weighted

average of prices paid to the manufacturer (1) directly by retail community pharmacies

and (2) by wholesalers for drugs distributed to retail community pharmacies. For inno-

vator products (i.e., drugs that are marketed under NDAs or BLAs), the rebate amount

is the greater of 23.1% of the AMP for the quarter or the difference between such AMP

and the best price for that same quarter. The best price is essentially the lowest price

available to non-governmental entities. Innovator products may also be subject to an

additional rebate that is based on the amount, if any, by which the product’s AMP for a

given quarter exceeds the inflation-adjusted baseline AMP, which for most drugs is the

AMP for the first full quarter after launch. Since 2017, non-innovator products are also

subject to an additional rebate. To date, the rebate amount for a drug has been capped

at 100% of the AMP; however, effective January 1, 2024, this cap will be eliminated,

which means that a manufacturer could pay a 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 cor-

rections 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

drugs 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 determin-

ing 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 (

HRSA

) on a quarterly basis. HRSA 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, 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. As with the Medicaid drug rebate program,

federal law provides for civil monetary penalties for failing to provide required informa-

tion, late submission of required information, and false information.

Recently, the Infrastructure Investment and Jobs Act, effective January 1, 2023, added

a requirement 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 con-

tainers or single-use package drugs) to provide annual refunds if those portions of the

dispensed drug that are unused and discarded 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 disa-

bilities. Medicare Part D enrollees once had a gap in their coverage (between the initial

coverage limit and the point at which catastrophic coverage begins) where Medicare did

not cover their prescription drug costs, known as the coverage gap. However, beginning

in 2019, Medicare Part D enrollees paid 25% of brand drug costs after they reached

the initial coverage limit – the same percentage they were responsible for before they

reached that limit – thereby closing the coverage gap from the enrollee’s point of view.

Most of the cost of closing the coverage gap is being borne by innovator companies and

the government through subsidies. Each manufacturer of drugs approved under NDAs or

BLAs is required to enter into a Medicare Part D coverage gap discount agreement and

provide a 70% discount on those drugs dispensed to Medicare Part D enrollees in the

coverage gap, in order for its drugs to be reimbursed by Medicare Part D. Beginning in

2025, the Inflation Reduction Act (

IRA

) eliminates the coverage gap under Medicare Part

D by significantly lowering the enrollee maximum out-of-pocket cost and requiring ma-

nufacturers to subsidize, through a newly established manufacturer discount program,

10% of Part D enrollees’ prescription costs for brand drugs below the out-of-pocket

maximum, and 20% once the out-of-pocket maximum has been reached. Although these

discounts represent a lower percentage of enrollees’ costs than the current discounts

required below the out-of-pocket maximum (that is, in the coverage gap phase of Part

D coverage), the new manufacturer contribution required above the out-of-pocket ma-

ximum could be considerable for very high-cost patients and the total contributions by

manufacturers to a Part D enrollee’s drug expenses may exceed those currently provided.

The IRA will also allow HHS to negotiate the selling price of certain drugs and biologics

that CMS reimburses under Medicare Part B and Part D, although only high-expenditure

single-source biologics that have been approved for at least 11 years (7 years for drugs)

can be selected by CMS for negotiation, with the negotiated price taking effect two

years after the selection year. The negotiated prices, which will first become effective in

2026, will be capped at a statutory ceiling price. Beginning in October 2022 for Medicare

Part D and January 2023 for Medicare Part B, the IRA will also penalize drug manufactu-

rers that increase prices of Medicare Part D and Part B drugs at a rate greater than the

rate of inflation.

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 Sche-

dule (

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.

1.9.6

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, order or recommendation of, any

good 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 and formulary managers on the

other. 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. On December 2, 2020, the Office of Inspector General (

OIG

)

published further modifications to the AKS. Under the final rules, OIG added safe

harbor protections under the AKS for certain coordinated care and value-based

arrangements among clinicians, providers, and others. This rule (with exceptions)

became effective January 19, 2021. We continue to evaluate what effect, if any, the

rule will have on our business;

•

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 laws and regulations, including: state anti-kickback and false

claims laws, which may apply to our business practices, including, but not limited

to, research, distribution, sales and marketing arrangements and claims involving

healthcare items or services reimbursed by any third party payor, including

commercial insurers; 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 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.

Some state laws require pharmaceutical companies to comply with the April 2003

Office of Inspector General Compliance Program Guidance for Pharmaceutical Manu-

facturers and/or the Pharmaceutical Research and Manufacturers of America’s Code on

Interactions with Healthcare Professionals, in addition to requiring pharmaceutical

manufacturers to report information related to payments to physicians and other

healthcare providers or marketing expenditures. Several states also impose other

marketing restrictions or require pharmaceutical companies to make marketing or price

disclosures to the state and require the registration of pharmaceutical sales representa-

tives State and foreign laws, including for example the EU General Data Protection

Regulation, which became effective May 2018, 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 reim-

bursement 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 OIG 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. 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 OIG 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 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.

On December 2, 2020, the HHS published a regulation removing safe harbor protection

for price reductions from pharmaceutical manufacturers to plan sponsors under Part

D, either directly or through pharmacy benefit managers (

PBMs

), unless the price

reduction is required by law. The rule also creates a new safe harbor for price reductions

reflected at the point-of-sale, as well as a safe harbor for certain fixed fee arrangements

between PBMs and manufacturers. Implementation of this change and new safe harbors

for point-of-sale reductions in price for prescription pharmaceutical products and PBM

service fees has been delayed until January 1, 2032. Further, on December 31, 2020,

CMS published a new rule, effective January 1, 2023, requiring manufacturers to ensure

the full value of co-pay assistance is passed on to the patient or these dollars will count

toward the AMP and Best Price calculation of the drug. On May 21, 2021, PhRMA sued

the HHS in the U.S. District Court for the District of Columbia, to stop the implemen-

tation of the rule claiming that the rule contradicts federal law surrounding Medicaid

rebates, and on May 17, 2022, the court vacated the rule.

Violations of these 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 govern-

mental 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 ad-

ditional 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 adver-

sely affected.

1.9.7

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, in March 2010, the ACA entered into

force. The ACA 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 pharma-

ceutical products, increases in rebates payable under U.S. government rebate programs

and additional downward pressure on pharmaceutical product prices. On September 9,

2021, the Biden administration published a wide-ranging list of policy proposals, most

of which would need to be carried out by Congress, to reduce drug prices and drug

payment. The HHS plan includes, among other reform measures, proposals to lower

prescription drug prices, including by allowing Medicare to negotiate prices and disin-

centivize price increases, and to support market changes that strengthen supply chains,

promote biosimilars and generic drugs, and increase price transparency. As discussed

above, these initiatives recently culminated in the enactment of the IRA in August

2022, which will, among other things, allow HHS to negotiate the selling price of certain

drugs and biologics that CMS reimburses under Medicare Part B and Part D, although

only high-expenditure single-source drugs that have been approved for at least 7 years

(11 years for biologics) can be selected by CMS for negotiation, with the negotiated

price taking effect two years after the selection year. The negotiated prices, which will

first become effective in 2026, will be capped at a statutory ceiling price. Beginning in

January 2023 for Medicare Part B and October 2022 for Medicare Part D, the IRA will

also penalize drug manufacturers that increase prices of Medicare Part B and Part D

drugs at a rate greater than the rate of inflation. 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 effect progressively starting in 2023, although they

may be subject to legal challenges.

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 bio-

logical product pricing, including price or patient reimbursement constraints, 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, finan-

cial 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

or member state level may result in significant additional requirements or obstacles

that may increase our operating costs. The delivery of healthcare in the EU, including

the establishment and operation of health services and the pricing and reimbursement

of medicines, is almost exclusively a matter for national, rather than EU, law and

policy. National governments and health service providers have different priorities

and approaches to the delivery of health care and the pricing and reimbursement of

products in that context. In general, however, 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 achieve or sustain profitability,

which would adversely affect our business.

1.9.8

Environmental Issues which may

Influence the Use of our Material

Fixed Assets

Our primary research and development activities take place in our facilities in Zwij-

naarde, 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.

Risk Factors

2.1

Risk Factors Related to argenx’s Financial Position

and Need for Additional Capital

108

2.2

Risk Factors Related to Commercialization of

argenx’s Products and Product Candidates,

Including for New Indications

111

2.3

Risk Factors Related to Other Government Regulations

121

2.4

Risk Factors Related to the Development and Clinical

Testing of argenx’s Products and Product Candidates

127

2.5

Risk Factors Related to argenx’s Dependence

on Third Parties

134

2.6

Risk Factors Related to argenx’s Business and Industry

139

2.7

Risk Factors Related to argenx’s Intellectual Property

143

2.8

Risk Factors Related to argenx’s Organization

and Operations

150

Risk Factors

The occurrence of any of the events or circumstances described

in these risk factors, individually or together with other

circumstances, could have a material adverse effect on the

business, results of operations, financial condition and prospects

of argenx. 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.

2.1

Risk Factors Related to

argenx’s Financial Position

and Need for Additional Capital

2.1.1

We have Incurred Significant Losses Since

our Inception and Expect to Incur Losses

for the Foreseeable Future. We may Never

Achieve or Sustain Profitability.

Since our inception, we have incurred significant operating losses, totaling $2,109.8 million

of cumulative losses. To date we have commercialized VYVGART for the treatment of

gMG in the VYVGART Approved Countries (see section

1.1.1

above). We do not currently

have any marketing approvals for any other product candidates or VYVGART in other

indications. Our losses resulted principally from costs incurred in research and develop-

ment, preclinical testing and clinical development of our research programs, and from

general and administrative costs associated with 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 indications, and we intend to continue our

efforts to expand our sales, marketing and distribution infrastructure. These expenses,

together with anticipated general and administrative expenses, may result in incurring

further significant losses for the foreseeable future. We anticipate that our expenses will

increase substantially if and 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.

Although we have generated revenue of $400.7 million from global product net sales

of VYVGART in fiscal year 2022, we can provide no assurances that we will be able to

achieve or sustain profitability based on sales in that indication alone or that we will be

able to receive regulatory approval of and commercialize VYVGART in other indications

or in other countries. To become and remain profitable, we must succeed in developing

and commercializing products that generate significant revenue. This will require us to

be successful in a range of challenging activities, including completing preclinical testing

and clinical trials of our products and our product candidates, including new indications,

discovering and developing additional products and product candidates, including new

indications, obtaining regulatory approval for any product candidates that successfully

complete clinical trials, establishing manufacturing and marketing capabilities, obtaining

funding or reimbursement for our products, and ultimately selling products for which we

may obtain regulatory approval. We may never succeed in these activities and, even if

we do, may never generate revenue that is significant enough to achieve profitability.

2.1.2

We may Need to Raise Substantial

Additional Funding Which may not be

Available to us on Acceptable Terms

or at all.

Although we have significant positions of cash and cash equivalents of $800.7 million

and other current financial assets of $1,391.8 million as of December 31, 2022, our cash

burn increased significantly in 2022 as compared to 2021 and to previous fiscal years,

in part due to the commercial launches of VYVGART. We expect to sustain our current

cash burn in the near term as we continue to develop new products and new product

candidates, and to obtain regulatory approval of our products in additional jurisdictions.

Developing products and product candidates, including new indications, and conducting

clinical trials is time-intensive, expensive and risky. Our future capital requirements will

depend on many factors, including: (i) the success, cost and timing of our development

activities, preclinical testing and clinical trials for our product and product candidates,

(ii) the time and costs involved in obtaining regulatory approvals and any delays we may

encounter, including as we seek regulatory approval in additional jurisdictions or other

indications, (iii) commercialization, manufacturing, sales and marketing of products and

product candidates, (iv) securing adequate and uninterrupted supply chains, (v) the

costs involved in growing our organization to the size needed to allow for the research,

development and potential commercialization of our products or product candidates,

(vi) the costs involved in filing patent applications and maintaining and enforcing

patents or defending against claims or infringements raised by third parties, (vii) the

maintenance of our existing collaboration agreements and entry into new collaboration

agreements, and (viii) the amount of revenue, if any, we may derive either directly or in

the form of royalty payments from future sales of our products or product candidates,

if approved.

To finance our operations, we may need to raise additional capital through a combi-

nation 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 fac-

tors, 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 the 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.

2.1.3

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.

As of December 31, 2022, we had cash and cash equivalents and current financial assets

of $2,192.5 million compared to $2,336.7 million in December 31, 2021. We historically

have invested substantially all of our available cash and cash equivalents and current

financial assets in either current accounts, savings accounts, term accounts or highly

liquid money market funds, pending their use in our business. For example, we have

invested in USD denominated cash deposit accounts and in current financial assets

with a significant portion of the proceeds from our U.S. public offerings. 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

management policy. These investments may be subject to general credit, liquidity, mar-

ket, inflation and interest rate risks and we may realize losses in the fair value of these

investments or a complete loss of these investments, which would have a negative

effect on our financial condition. The market 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 between

the U.S. dollar, our functional currency since January 1, 2021, and the euro, Swiss francs,

Japanese yen and British pounds. Our revenue from outside of the U.S. will increase as

our products, whether commercialized by us or our business partners or our collabo-

rators gain marketing approval in such jurisdictions. We do not have any exchange rate

hedging arrangements in place. Accordingly, 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.

2.2

Risk Factors Related to

Commercialization of

argenx’s Products and

Product Candidates,

Including for New Indications

2.2.1

We will Face Significant Challenges

in Successfully Commercializing our

Products and Additional Product

Candidates After they are Launched.

The commercialization of VYVGART in other indications or other approved product

candidates, or entrance of any of our products or product candidates into other markets

will require us to further expand our sales and marketing organization, enter into colla-

boration 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 VYVGART Approved Countries 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 prema-

turely 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 and Genpharm

to perform sales and marketing services in Israel and Central and Eastern Europe, the

PRC and the GCC, 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 signifi-

cant 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.

2.2.2

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. This will depend on a number of factors, many

of which are beyond our control, including, but not limited to:

•

the efficacy and safety as demonstrated by clinical trials and subsequent prevalence

and severity of any side effects;

•

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;

•

availability of alternative approved therapies;

•

sales, marketing and distribution support;

•

labeling may require significant use or distribution restrictions or safety warnings;

•

potential product liability claims;

•

acceptance by physicians, patients and healthcare payors of each product as safe,

effective and cost-effective, and any subsequent changes thereof;

•

relative convenience, ease of use, including administration, perceived dosing

complexity and other perceived advantages over alternative and/or new products;

•

patient continued commitment required to receive periodic in-center infusions;

•

prevalence and severity of adverse events discovered before or after marketing

approval has been received;

•

consumer perceptions or publicity regarding the Company or the safety and quality

of our product and product candidates, clinical trials for new indications, or any

similar products distributed by other companies;

•

limitations, precautions or warnings listed in the summary of product characteristics,

patient information leaflet, wording of package labeling or instructions for use, and

any subsequent changes thereof;

•

the cost of treatment with our products in relation to alternative and/or new

treatments;

•

the extent to which products are approved for inclusion and reimbursed on

formularies of hospitals and managed care organizations, and any subsequent

changes thereof; and

•

whether our products are designated in the label, under physician treatment

guidelines or under reimbursement guidelines as a first-line, second-line, or third-line

last-line therapy, and any subsequent changes thereof.

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 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, commercia-

lization efforts and financial condition.

Moreover, efforts to educate the medical community and third-party payors on the

benefits of our products 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.

2.2.3

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. Currently, our

only commercial revenue is generated by VYVGART in gMG. We face and expect to

continue to face intense competition from other biopharmaceutical companies, who

are developing products for the treatment of gMG 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 FcRn inhibitors that are in clinical development.

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 accep-

tance than our products or technology platforms and medical advances or rapid techno-

logical development by competitors may result in our 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 pro-

ducts 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.

2.2.4

Our Products, Product Candidates and

new Indications for Which we have

Obtained or Intend to Seek Approval as

Biological Products, Including for New

Indications, may Face Competition Sooner

than Anticipated.

In the U.S., the BPCIA created an abbreviated approval pathway for biological products

that are biosimilar to or interchangeable with an FDA-licensed reference biological pro-

duct. Under the BPCIA, an application for a biosimilar product may not be submitted to

the FDA until four years following the date that the reference product was first licensed

by the FDA. In addition, the approval of a biosimilar product may not be made effective

by the FDA until twelve years from the date on which the reference product was first

licensed. During this twelve-year period of exclusivity, another company may still market

a competing version of the reference product if the FDA approves a full BLA for the com-

peting product containing the sponsor’s own preclinical data and data from adequate

and well-controlled clinical trials to demonstrate the safety, purity and potency of their

product. The law is complex and is still being interpreted and implemented by the FDA.

As a result, its ultimate impact, implementation and meaning are subject to uncertainty.

We believe that any of our product candidates approved as a biological product under

a BLA should qualify for the twelve-year period of exclusivity, as was the case with

VYVGART. However, there is a risk that this exclusivity could be shortened due to cong-

ressional 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. Moreover, an inter-

changeable biosimilar product, once approved, may be substituted under existing state

law for any one of our reference products in a way that is similar to traditional generic

substitution for non-biological products. Any non-interchangeable biosimilar products

may also be substituted by a healthcare provider but, under existing law, will not be

automatically substituted at the pharmacy. The extent of the impact of such substitution

will depend on a number of marketplace and regulatory factors that are still developing.

In the EU, biosimilars are evaluated for marketing authorization pursuant to a set of

general and product class-specific guidelines. In addition, in an effort to spur biosimilar

utilization and/or increase potential healthcare savings, some EU Member States

have adopted, or are considering the adoption of, biosimilar uptake measures such as

physician prescribing quotas or automatic pharmacy substitution of biosimilars for the

corresponding reference products. Some EU Member States impose automatic price

reductions upon market entry of one or more biosimilar competitors. While the degree

of competitive effects of biosimilar competition differs among EU Member States and

among products, the overall use of biosimilars and the rate at which product sales of

innovative products are being affected by biosimilar competition is increasing.

2.2.5

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.

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. Healthcare reform initiatives in the U.S. recently culmina-

ted in the enactment of IRA in August 2022, which, among other things, will allow HHS

to negotiate the selling price of certain drugs and biologics that the CMS reimburses

under Medicare Part B and Part D, although only high-expenditure single-source biolo-

gics that have been approved for at least 11 years (7 years for drugs) can be selected by

CMS for negotiation, with the negotiated price taking effect two years after the selection

year. The negotiated prices, which will first become effective in 2026, will be capped at

a statutory ceiling price. Beginning in October 2022 for Medicare Part D and January

2023 for Medicare Part B, 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. The IRA

will also cap out-of-pocket spending for Medicare Part D enrollees and make other Part

D benefit design changes beginning in 2024. Beginning in 2025, the IRA eliminates the

coverage gap under Medicare Part D by significantly lowering the enrollee maximum

out-of-pocket cost to $2,000 and by requiring manufacturers to subsidize, through a

newly established manufacturer discount program, 10% of Part D enrollees’ prescription

costs for brand drugs below the out-of-pocket maximum, and 20% once the out-of-po-

cket maximum has been reached (plans will also be required to cover 20% in this case).

Although these discounts represent a lower percentage of enrollees’ costs than the

current discounts required below the out-of-pocket maximum (that is, in the coverage

gap phase of Part D coverage), the new manufacturer contribution required above the

out-of-pocket maximum could be considerable for very high-cost patients and the total

contributions by manufacturers to a Part D enrollee’s drug expenses may exceed those

currently provided. These Part D design changes may also incentivize Part D plans to

exclude certain drugs in their formularies, which could affect the supply, demand, and

pricing of our product and product candidates.

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 com-

ply with IRA may be subject to various penalties, including civil monetary penalties. IRA

also extends enhanced subsidies for individuals purchasing health insurance coverage in

ACA marketplaces through plan year 2025. These provisions will take effect progressively

starting in 2023, although they may be subject to legal challenges. The full economic im-

pact of IRA is unknown at this time, but 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 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 imple-

menting regulations designed to control pharmaceutical and biological product pricing,

including price or reimbursement constraints, discount requirements, marketing cost

disclosure and price transparency reporting, and programs designed to encourage im-

portation from other countries and bulk purchasing. 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 pharmaceuticals, which could result in reduced demand for our

products and product candidates or additional pricing pressures.

2.2.6

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 of Operations and

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 among these

and any other programs in which we participate, 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, govern-

mental 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. We may incur significant civil monetary penalties if we are found to have

knowingly submitted false prices or other information to the government, or to have

charged 340B covered entities more than the statutorily mandated ceiling price. Certain

failures to timely submit required data also could result in a civil monetary penalty for

each day the information is late. We could also become subject to allegations under the

False Claims Act and other laws and regulations. In addition, misreporting and failure

to timely report data to CMS also can be grounds for CMS to terminate our Medicaid

rebate agreement, pursuant to which we participate in the Medicaid Drug Rebate

Program. In the event that CMS terminates our rebate agreement, no federal payments

would be available under Medicaid or Medicare Part B for our covered outpatient drugs.

Recently enacted legislation in the U.S. has imposed additional rebates under govern-

ment programs. For example, under the American Rescue Plan Act of 2021, effective

January 1, 2024, the statutory cap on Medicaid Drug Rebate Program rebates that

manufacturers pay to state Medicaid programs will be eliminated. Elimination of this

cap may require pharmaceutical manufacturers to pay more in Medicaid rebates than

they receive on the sale of products for products that have undergone substantial price

increases. In addition, the Infrastructure Investment and Jobs Act, effective January 1,

2023, added a requirement 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 if those

portions of the dispensed drug that are unused and discarded 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. We expect that this

requirement will apply to VYVGART and potentially other of our products in the future.

As a result, we expect that we will 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.

2.2.7

We may not Obtain or Maintain Adequate

Coverage or Reimbursement Status for

our Products and Product Candidates.

Sales of VYVGART for gMG 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 ade-

quate reimbursement levels for such products and product candidates. 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. Commercial payors often rely upon Medicare

coverage policy and payment limitations in setting their own coverage and reimbur-

sement policies. However, decisions regarding the extent of coverage and amount of

reimbursement to be provided for any product candidate that we develop through

approval will be made on a plan-by-plan basis. One commercial payor’s determination

to provide coverage for a product does not assure that other commercial payors will

also provide coverage and adequate reimbursement for the product. Additionally, a

commercial third-party payor’s decision to provide coverage for a drug does not imply

that an adequate reimbursement rate will be approved. Each plan determines whether

or not it will provide coverage for a product, what amount it will pay the manufacturer

for the product, on what tier of its formulary the product will be placed and whether

to require step therapy. 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.

Even under U.S. government healthcare programs such as Medicare and Medicaid,

coverage and reimbursement policies can vary significantly. Medicare Part D is adminis-

tered by commercial insurance companies under contract with the CMS. The many Part

D plans operated by these companies vary considerably in their coverage and reimbur-

sement policies, much like the commercial plans that these same companies offer, as

described above. Medicare Part B and Medicaid coverage and reimbursement rates are

more uniform, but even Medicaid programs vary from state to state in their coverage

policies and reimbursement rates.

Patients who are prescribed treatments for their conditions and providers prescribing

such services generally rely on third-party payors to reimburse all or part of the

associated healthcare costs. Patients 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. 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 dis-

counts 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 indi-

cations, 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 the treatment of gMG or for any other indication may be reduced or restricted by

limited payer 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 becoming profitable, which would adversely affect our business, financials

and results of operations.

2.2.8

If we Fail to Obtain Orphan Drug

Designation or Obtain or Maintain

Orphan Drug Exclusivity for our

Products or Product Candidates,

our Competitors may Sell Products

to Treat the same Conditions and

our Revenue will be Reduced.

Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is

intended to treat a rare disease or condition, defined as a patient population of fewer

than 200,000 in the U.S., or a patient population greater than 200,000 in the U.S. where

there is no reasonable expectation that the cost of developing the drug will be recove-

red from sales in the U.S. In the EU, after a recommendation from the EMA’s Committee

for Orphan Medicinal Products (

COMP

), the EU Commission grants orphan drug de-

signation to promote the development of products that are intended for the diagnosis,

prevention or treatment of a life-threatening or chronically debilitating condition either

affecting not more than five in 10,000 persons in the EU or when, without incentives,

it is unlikely that sales of the drug in the EU would be sufficient to justify the necessary

investment in developing the drug or biological product. In each case there must be no

satisfactory method of diagnosis, prevention or treatment of such condition, or, if such

a method exists, the medicine must be of significant benefit to those affected by the

condition.

In the U.S., orphan drug designation entitles a party to financial incentives such as tax

advantages and user fee waivers. In addition, if a product receives the first FDA approval

for the indication for which it has orphan designation, the product is entitled to orphan

drug exclusivity, which means the FDA may not approve any other application submitted

by another applicant to market a same or similar biological product for the same indica-

tion for a period of seven years, except in limited circumstances. Whether a biological

product is the same as another product is based on whether the two products have the

same principal molecular structural features. Orphan designation does not, however,

truncate the duration of the regulatory review and approval process.

In the EU, orphan drug designation entitles a party to financial incentives such as

reduction of fees or fee waivers and ten years of market exclusivity following drug or

biological product approval. This period may be reduced to six years if the orphan drug

designation criteria are no longer met, including where it is shown that the product

is sufficiently profitable not to justify maintenance of market exclusivity. If we fail to

obtain or if we lose orphan drug status for one or more of our products and product

candidates, the aforementioned incentives and market exclusivity may not or no longer

be available to us, which is likely to increase the overall cost of development and to

decrease the competitive position of such product and product candidate including from

biosimilars. Similar considerations apply in the UK.

We may from time to time seek orphan drug designation in the U.S. or Europe for

certain indications addressed by our products and product candidates. For example, in

September 2017, the FDA granted orphan drug designation for the use of efgartigimod

for gMG, and upon approval of VYVGART, the FDA granted seven years of orphan drug

exclusivity for VYVGART for the treatment of gMG in adult patients who are AChR-AB+.

In July 2022, the FDA granted orphan drug designation for the use of efgartigimod

co-formulated with rHuPH20 for the treatment of gMG, and we expect to obtain orphan

drug exclusivity for this product with this use if our BLA is approved. In January 2019, the

FDA granted orphan drug designation for the use of efgartigimod for the treatment of

ITP and for the use of cusatuzumab for the treatment of AML, and in August 2021, the

FDA granted orphan drug designation for the use of efgartigimod co-formulated with

rHuPH20 for the treatment of CIDP. In December 2022, the MHLW granted orphan drug

designation for the use of efgartigimod for the treatment of ITP. With regard to these

designations or future designations we may obtain, we may not be the first to obtain

marketing approval of these drugs for such indication due to the uncertainties associa-

ted with developing therapeutic products, and we may not obtain orphan designation

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 defec-

tive 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 FDA, EMA or other foreign regulator 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.

2.3

Risk Factors Related to Other

Government Regulations

2.3.1

We are Subject to Healthcare Laws,

Regulation and Enforcement. The Failure

to Comply with these Laws could Harm

our Results of Operations and Financial

Conditions.

Our current and future operations may be directly, or indirectly through our customers

and third-party payors, subject to various U.S. federal and state, EU, Japanese, Chinese,

UK, Canadian and other jurisdictions’ healthcare laws including anti-kickback statutes,

anti-bribery, anti-corruption provisions, false claims acts, including the AKS, Food, Drug

& Cosmetic Act, False Claims Act and more. Healthcare providers, physicians and others

play a primary role in the recommendation and prescription of any products for which

we obtain marketing approval. These laws may impact, among other things, our propo-

sed sales, marketing and education programs and constrain our business and financial

arrangements with third-party payors, healthcare professionals who participate in our

clinical research programs, healthcare professionals and others who recommend, pur-

chase, or provide our approved products, and other parties through which we market,

sell and distribute our products for which we obtain marketing approval.

In addition, our current and future operations are subject to other healthcare-related

statutory and regulatory requirements and enforcement by regulatory authorities in

jurisdictions in which we conduct our business. 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 per-

mitted in the countries that form part of the EU. 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 through the Bribery Act 2010. Infringements of these laws can result in

substantial fines and imprisonment, as well as associated reputational harm. We are also

subject to EU Directive 2001/83/EC and the Human Medicines Regulations 2012. 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 the 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. The expansion and maintenance of an internal

compliance program involves substantial costs and, notwithstanding our investment,

mechanisms put in place to ensure compliance with applicable laws and regulations and

our best efforts, the program may not be fully successful as 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 that may

apply to us, we may be subject to significant civil, criminal and administrative investiga-

tions, 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 if we become subject to a corporate

integrity agreement or similar agreement to resolve allegations of non-compliance with

these laws, 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. Further, if any of the physicians or other healthcare providers or entities with

whom we expect to do business is found to be not in compliance with applicable laws,

they may be subject to criminal, civil or administrative sanctions, including exclusions

from government funded healthcare programs. Efforts to ensure that our business

arrangements with third parties comply with applicable healthcare laws and regulations

also involves 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. 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.

2.3.2

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.

Before we can commence clinical trials for a product candidate, we must complete

extensive preclinical testing and studies that support our planned IND applications in the

U.S. or Japan, or our CTAs in the UK or in the EU, or a comparable application in other

jurisdictions. We cannot be sure that we will be able to submit INDs or CTAs or compara-

ble applications for our preclinical 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 MHRA, EMA, FDA, MHLW (collectively, the

Relevant Regulatory Authorities

) or

other regulatory authorities allowing clinical trials to even begin.

Clinical trials must be conducted in accordance with Relevant Regulatory Authorities

and other applicable regulatory authorities’ legal requirements and regulations and are

subject to oversight by these governmental agencies and IRBs and ethics committees

at the medical institutions where the clinical trials are conducted. In addition, clinical

trials must be conducted in compliance with GCPs and with supplies of our products and

product candidates produced under cGMPs and other regulations. We could encounter

delays if a clinical trial is suspended or terminated, by us, by the IRBs or ethics com-

mittees of the institutions in which such clinical trials are being conducted, by the data

review committee or data safety monitoring board for such clinical trial 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 applicable 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 regulati-

ons 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 to our clinical trials will increase, the com-

mercial prospects of our products and product candidates may be harmed, our ability to

generate product revenues from any of these products and product candidates will be

delayed and our product candidate development and approval process may be jeopardi-

zed. 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. For instance, only VYVGART for the treatment of gMG

has obtained regulatory approval in the VYVGART Approved Countries. Efgartigimod

was recently awarded a positive scientific opinion under the Early Access to Schemes

program by the MHRA. Zai Lab and Medison have submitted a request for approval of

VYVGART in gMG in the PRC and Israel, respectively. We can provide no assurances that

such approval will be obtained on the timeline that we expect or at all. In addition, we

anticipate to file requests for approval of VYVGART in new indications, but can provide

no assurances that such requests 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 VYVGART Approved Countries, 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 or indication.

Further, Relevant Regulatory Authorities may impose extensive and ongoing unique

regulatory requirements, for example, they:

•

may withdraw an approval or revoke a license;

•

may refuse to grant approval, or may require additional data before granting

approval, notwithstanding that approval may have been granted by another

comparable foreign authority;

•

may approve a product candidate for fewer or more limited indications or patient

sub-segments than requested; or

•

may grant 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 candidate; or

•

may approve a product candidate with a label that does not include the labeling

claims necessary or desirable for the successful commercialization of that product

candidate.

The costs of compliance with all Relevant Regulatory Authorities and 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

collaborative partners’ costs or delay 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.

2.3.3

We are Subject to Privacy Laws,

Regulation and Potential Enforcement.

Our Failure to Comply with these Laws

could Harm our Results of Operations

and 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 EU General Data Protection Regulation (

GDPR

) imposes a broad range of strict

requirements on companies, including with respect to cross-border transfers of personal

data. The GDPR allows the imposition of substantial penalties in the event of non-com-

pliance, including fines of up to €10,000,000 or up to 2% of total worldwide annual

turnover for certain comparatively minor offenses, or up to €20,000,000 or up to 4% of

total worldwide annual turnover for more serious offenses. We face uncertainty as to

the exact interpretation of the requirements under the GDPR, and we may be unsuc-

cessful in implementing all measures required by data protection authorities or courts in

interpretation of the GDPR.

In addition, national laws of EU Member States may partially deviate from the GDPR

and impose different obligations from country to country, so that we do not operate

in a uniform legal landscape in the EU. 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.

Following its departure from the EU, the UK has maintained in force substantially equi-

valent provisions to the GDPR (

UK GDPR

). Similar concerns as those described above

apply to our compliance with the UK GDPR.

Privacy laws continue to evolve and expand in Europe. For example, Directive 2002/58/

EC of the European Parliament and of the Council of July 12, 2002 (as amended, the

e-Privacy Directive

) required the EU Member States to implement laws to meet

strict privacy requirements related to electronic communications, cookies and online

monitoring, and other digital privacy. Violations of these requirements 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.

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 increa-

sing 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 Insu-

rance Portability and Accountability Act of 1996, as amended by the Health Information

Technology for Economic and Clinical Health Act, imposes specific requirements relating

to the privacy, security, and transmission of individually identifiable health information

and the California Consumer Privacy Act of 2018 imposes obligations on covered

businesses, including, but not limited to, providing specific disclosures in privacy notices

and affording California residents certain rights related to their personal data. If we are

investigated by a data protection authority, we may face fines and other penalties. Any

such investigation or charges by such 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, in particular, future)

data protection obligations imposed on them by certain data protection authorities in

interpretation of current law. 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.

2.3.4

Failure to Comply with Anti-Corruption

Laws and Regulations, Anti-Money

Laundering Laws and Regulations,

Economic Sanctions, and/or Export

Control Regulations could have an

Adverse Impact on our Business.

We are subject to various federal and foreign laws and regulations regarding anti-corrup-

tion, anti-money laundering, economic sanctions, and export control regulations. 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.

We are also subject to economic sanctions and export controls rules and regulations

imposed by, amongst others, the U.S. Department of the Treasury’s Office of Foreign

Assets Control, other agencies of the U.S. government, HM Treasury and other agencies

of the UK government, the EU, and the United Nations. Any change in export or import

regulations, economic sanctions regulations or related legislation, shift in the enforce-

ment or scope of existing regulations, or change in the countries, governments, persons

or technologies targeted by such regulations, could decrease our ability to export or sell

our products internationally. Any limitation on our ability to export or sell our products

could adversely affect our business.

We have mechanisms in place to ensure compliance with applicable anti-corruption,

anti-money laundering, and economic sanctions 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 em-

ployees, consultants, sub-contractors, agents and partners. As a result, 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.

2.3.5

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 manu-

facturing 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 contract manufacturing organizations (

CMOs

) or other 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.

Furthermore, environmental, health and safety laws and regulations are becoming more

stringent. Our CMOs may be required to incur substantial expenses in connection with

future environmental compliance or remediation activities, in which case, our produc-

tion and development efforts may be interrupted or delayed, and our financial condition

and results of operations may be materially adversely affected.

2.4

Risk Factors Related to the

Development and Clinical

Testing of argenx’s Products

and Product Candidates

2.4.1

Failure to Successfully Identify, Select

and Develop Efgartigimod in Other

Indications, 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 in new indications, which 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 improper or fraudulent scientific data sourced from third parties.

Any irregularities in the scientific data used by us to determine our focus in research

and development of product and product candidates, could impair our ability to grow.

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. If we do not successfully identify, develop and commercialize product

candidates and efgartigimod in new indications based upon our technological approach,

we may not be able to obtain product or collaboration revenues in future periods.

2.4.2

VYVGART for the Treatment of gMG

is our Only Product that has Obtained

Regulatory Approval in the VYVGART

Approved Countries. Our Other Products

and Product Candidates – including

Additional Indications or Methods of Use

for Efgartigimod, ARGX-117 and ARGX-119

– are Either in Preclinical or Clinical

Development or are Pending Marketing

Approval.

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, pure, 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.

The time required to obtain approval by the Relevant Regulatory Authorities is unpredic-

table but typically takes many years, if obtained at all, following the commencement of

clinical trials and depends upon numerous factors, including the substantial discretion 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

trials, including as described in the header “ – 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.”

If we are unable to obtain regulatory approval of our products and product candidates

on a timely basis or at all, our business may be impacted.

2.4.3

Our Clinical Trials may Fail, and Even

if they Succeed, we may not Obtain

Regulatory Approval for our Products

and Product Candidates or Regulatory

Approval may be Delayed.

Even if clinical trials are initiated, our development efforts may not be successful.

Many of our clinical trials are blinded, which may cause us to incur significant expenses

without any visibility as to the likelihood of successful results. Even if we obtain positive

results from preclinical studies or initial clinical trials, we may not achieve the same

success in future trials.

Regulatory approval of our products or product candidates may be delayed or refused

for many reasons, including:

•

the Relevant Regulatory Authorities may disagree with the design or implementation

of our clinical trials;

•

we may be unable to demonstrate, to the satisfaction of the FDA or comparable

foreign regulatory authorities, that our product candidates are safe, pure, potent and

effective for any of their proposed indications;

•

we may be unable to demonstrate our product candidates’ clinical and other benefits

outweigh their safety risks;

•

the FDA may determine that clinical trial results are not generalizable to the U.S.

population and/or U.S. medical practice based on the proportion and results of

subjects outside of the U.S. where differences in patient management might affect

the treatment response;

•

the results of clinical trials may not meet the level of statistical significance required

by the FDA or comparable foreign regulatory authorities for approval;

•

the chemistry, manufacturing and controls information submitted in a marketing

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.

We could also experience operational challenges as we undertake an increasing number

of clinical trials, including those conducted in countries outside the EU 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 and non-U.S.

contract research organizations (

CROs

), as well as expose us to risks associated with

clinical investigators who are unknown to the Relevant Regulatory Authorities, and apply

different standards of diagnosis, screening and medical care.

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.

2.4.4

If we Decide to Pursue Accelerated

Approval for any of our Product

Candidates, it may not Lead to a

Faster Development or Regulatory

Review or Approval Process and does

not Increase the Likelihood that our

Product Candidates will Receive

Marketing Approval. If we are Unable to

Obtain Approval Under an Accelerated

Pathway, we may be Required to Conduct

Additional Clinical Trials Beyond those

that we Contemplate, Which could

Increase the Expense of Obtaining,

Reduce the Likelihood of Obtaining,

and/or Delay the Timing of Obtaining,

Necessary Marketing Approvals.

In the future, we may decide to pursue accelerated approval for one or more of our

product candidates. Under the FDA’s accelerated approval program, the FDA may

approve a drug or biological product for a serious or life-threatening disease or condition

that provides a meaningful advantage over available therapies based upon a surrogate

endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that

can be measured earlier than irreversible morbidity or mortality that is reasonably likely

to predict an effect on irreversible morbidity or mortality or other clinical benefit. For

products granted accelerated approval, post-marketing confirmatory trials are required

to verify and describe the anticipated effect on irreversible morbidity or mortality or

other clinical benefit. These confirmatory trials must be completed with due diligence,

and the FDA may require that the trial be designed, initiated, and/or fully enrolled prior

to approval. If we were to pursue accelerated approval for a product candidate for a

disease or condition, we would do so on the basis that there is no available therapy for

that disease or condition. If standard of care were to evolve or if any of our competitors

were to receive full approval on the basis of a confirmatory trial for a drug or biological

product for a disease or condition for which we are seeking accelerated approval before

we receive accelerated approval, the disease or condition may no longer qualify as

one for which there is no available therapy, and accelerated approval of our product

candidate may not occur.

Moreover, the FDA may withdraw approval of any product candidate approved under

the accelerated approval pathway if, for example:

•

the trial or trials required to verify the predicted clinical benefit of our product

candidate fail to verify such benefit or do not demonstrate sufficient clinical benefit

to justify the risks associated with such product;

•

other evidence demonstrates that our product candidate is not shown to be safe or

effective under the conditions of use;

•

we fail to conduct any required post-approval trial of our product candidate with due

diligence; or

•

we disseminate false or misleading promotional materials relating to the relevant

product candidate.

Recently, the accelerated approval pathway has come under scrutiny within the FDA and

by Congress. The FDA has put increased focus on ensuring that confirmatory studies are

conducted with diligence and, ultimately, that such studies confirm the benefit. FDORA

was recently enacted, which included provisions related to the accelerated approval

pathway. Pursuant to FDORA, the FDA is authorized to require a post-approval study

to be underway prior to approval or within a specified time period following approval.

FDORA also requires the FDA to specify conditions of any required post-approval study

and requires sponsors to submit progress reports for required post-approval studies.

FDORA enables the FDA to initiate enforcement action for the failure to conduct with

due diligence a required post-approval study, including a failure to meet any required

conditions specified by the FDA or to submit timely reports.

Failure to obtain accelerated approval for our product candidates 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.

2.4.5

Our Products and Product Candidates

may have Serious Adverse, Undesirable

or Unacceptable Side Effects or Even

Cause Death, and we or Others may

Identify Undesirable or Unacceptable Side

Effects Caused by VYVGART or any of our

Products or Product Candidates 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 Regula-

tory Authorities. While our preclinical studies and clinical trials for our product candida-

tes to date show that our product candidates have generally been well tolerated from a

risk-benefit perspective, we have observed adverse events and TEAEs in our clinical trials

to date, and we may see additional adverse events and TEAEs 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 could 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 programs.

Additionally, if we or others identify undesirable or unacceptable side effects caused by

VYVGART or any of our other product candidates after they receive marketing approval,

a number of potentially significant negative consequences could arise, including:

•

regulatory authorities may withdraw approvals or revoke licenses of such products

and require us to take such products off the market;

•

regulatory authorities may require the addition of labeling statements, specific

warnings, or a contraindication or request the issuance of field alerts to physicians

and pharmacies;

•

regulatory authorities may require a medication guide outlining the risks of such side

effects for distribution to patients, or that we implement a REMS plan to ensure that

the benefits of the product outweigh its risks;

•

we may be required to change the way the product is administered, conduct

additional clinical trials or change the labeling of the product;

•

we may be subject to limitations on how we may promote the product;

•

sales of the product may decrease significantly;

•

we may be subject to litigation or product liability claims; and

•

our reputation may suffer.

Any of these events could negatively impact us, our collaborators or our potential future

partners. Further, we are developing an SC formulation of efgartigimod co-formulated

with rHuPH20, an SC drug delivery technology, for the treatment of gMG and other

indications, and side effects or adverse events associated with rHuPH20, may affect

multiple of our products, and our product candidates. Further, the Relevant Regulatory

Authorities could require a change of label or even revoke the license, which could

harm our reputation and have a material adverse effect on our ability to commercialize

VYVGART.

2.4.6

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 de-

velopment and approval of our products or product candidates. Physicians, who are an

important source of referral 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 clinaical trial, the proximity of patients to clinical sites, competition for patient

recruitment from competing clinical trials, the design of the clinical protocol, the

eligibility criteria for the clinical trials, 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 the risk factor header “ – 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 com-

plete 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 ab-

ility 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.

In addition, certain of patients enrolled in our clinical trials are located in areas subject

to conflict, hostilities or war, or countries that continue to be impacted by COVID-19.

See the risk factors under the headers – “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.” and “We face risks related to

natural disasters and public health issues, such as the COVID-19 pandemic, that could

negatively affect our business and financial condition.”

2.5

Risk Factors Related

to argenx’s Dependence

on Third Parties

2.5.1

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 indepen-

dent clinical investigators, CROs, CMOs and other third-party service providers, to assist

us in the conduct of certain of our research activities and clinical trials and to monitor

and manage data for our ongoing preclinical studies and clinical trials. We also depend

on our collaborators and on medical institutions and CROs to conduct our research

activities and clinical trials in compliance with regulatory and legal requirements, inclu-

ding GCPs or GMPs, our standard operating procedures and our applicable protocols.

Nevertheless, we are responsible for ensuring that each of our studies and clinical

trials is conducted in accordance 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 and with various academic and research institutions worldwide for

the development of product candidates resulting from such collaborations. We also have

distribution agreements with Medison and Genpharm for the distribution of VYVGART.

We had, have and will continue to have discussions on potential partnering oppor-

tunities 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 these GCPs through periodic inspections of trial sponsors, principal

investigators and 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 or 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 collabo-

rative 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

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 colla-

borator’s evaluation of a number of factors. These factors may include the design or re-

sults 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.

2.5.2

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 product 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 can-

didates 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 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 made worse during a pandemic or due to geopolitical events, including trade

disputes or economic sanctions enacted as a result of international conflict.

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. 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 of our products and product candidates.

Although 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 comparable regulatory

authorities, our business could be adversely affected in a number of ways, 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 commer-

cial demands for our marketed products.

We contract with Lonza based in Slough, UK, Portsmouth, U.S. and Singapore and

Fujifilm for activities relating to the development of cell banks, development of our

manufacturing processes and the manufacturing of drug substance, and use additional

contract manufacturers to fill, test, label, package, store and distribute our (investiga-

tional) 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. 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 a fire, pandemic, natural hazards or 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 expen-

sive 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.

2.5.3

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 incur-

red 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 repor-

ting. 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.

2.5.4

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 and our third-party manufacturers and suppliers operations, including research, de-

velopment, 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 opera-

tions may be materially adversely affected.

2.6

Risk Factors Related to

argenx’s Business and Industry

2.6.1

Our Employees may Engage in Misconduct

or Other Improper Activities, Including

Noncompliance with Regulatory

Standards and Requirements, or

Consider 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, or failure to report financial information or data accurately or

disclose unauthorized activities to us. In particular, sales, marketing and business arran-

gements in the healthcare industry are subject to extensive laws and regulations inten-

ded 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,

including improper trading based upon, information obtained in the course of clinical

studies, 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 allegati-

ons 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 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.

2.6.2

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 pharma-

ceutical 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 ad-

versely 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.

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 VYVGART and any of our other product

candidates, if approved.

Although we maintain product liability insurance, we may not be able to maintain insu-

rance 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.

2.6.3

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 re-

lationships. 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.

2.6.4

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 infrastruc-

ture for our business. We collect, store and transmit sensitive information including

intellectual property, proprietary business information, including highly sensitive clinical

trial data, and personal information 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.

The pervasiveness of cybersecurity incidents in general and the risks of cyber-crime are

complex and continue to evolve. 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 con-

sultants are vulnerable to damage or interruption from computer viruses, unauthorized

or inappropriate access or use, natural disasters, pandemics (including COVID-19),

terrorism, war (including the ongoing conflict in Ukraine), and telecommunication and

electrical failures. Such events could cause interruption of our operations. 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 or proprietary information, including

but not limited to patient, employee or vendor 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 information, and the development and potential commercialization of our

product candidates could be delayed.

2.6.5

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 ot-

her companies prove to be, or are asserted to be, harmful to patients, or for example, be

deemed cruel to animals. Because of our dependence upon consumer perception, any

adverse publicity associated with illness or other adverse effects resulting from patients’

use or misuse of our products or any similar products distributed by other companies

could have a material adverse impact on our business, prospects, financial condition and

results of operations.

2.7

Risk Factors Related to

argenx’s Intellectual Property

2.7.1

Failure to Adequately Enforce or Protect

our Intellectual Property Rights in

Products, Product Candidates and

Platform Technologies could Adversely

Affect our Ability to Develop and Market

our 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 protect or to obtain, maintain or extend adequate

patent and other intellectual property rights, which may be challenging and costly, could

adversely affect our ability to develop and market our products and product candidates

and erode or negate 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. The scope of patent protection that the European Patent

Office and the U.S. Patent and Trademark Office (

USPTO

) will grant with respect to the

antibodies in our product pipeline is uncertain and may vary by jurisdiction. It is possible

that the European Patent Office and the USPTO will not allow broad antibody claims that

cover antibodies closely related to our products and product candidates as well as the

specific antibody. As a result, upon receipt of EMA or FDA approval, competitors may

be free to market antibodies almost identical to ours thereby decreasing our market

potential.

We and our current or future licensors, licensees or collaboration partners may not be

able to prepare, file and prosecute all necessary or desirable patent applications at a

reasonable cost or in a timely manner. Further, the issuance, scope, validity, enforceabi-

lity and commercial value of our and our current or future licensors’, licensees’ or colla-

boration partners’ patent rights are highly uncertain. Moreover, in some circumstances,

we may need to rely on patent procurement activities of our licensors, licensees or colla-

boration partners or obtain additional costly licenses. Such parties may not fully comply

with applicable patent rules or disagree with us as to the prosecution, maintenance or

enforcement of any patent rights. Even if patents do issue and such patents cover our

products and product candidates, third parties may initiate proceedings challenging the

validity, enforceability or scope of such patents, which may result in the patent claims

being narrowed or invalidated. Our and our licensors’, licensees’ or collaboration part-

ners’ patent applications cannot be enforced against third parties practicing the techno-

logy claimed in such applications unless and until a patent issues from such applications,

and then only to the extent the issued claims cover the technology.

Furthermore, because patent applications are confidential for a period of time after

filing, and some remain so until issued, we cannot be certain that we or our licensors

were the first to file any patent application related to a product and product candidate.

Even where we have a valid and enforceable patent, we may not be able to exclude

others from practicing our invention where the other party can show that they used

the invention in commerce before our filing date, or if the other party is able to obtain

a compulsory license. Any of the aforementioned situations could cause harm to our

ability to protect our intellectual property, which in turn would allow competitors to

market comparable products which could materially adversely affect our competitive

position and as such our business, financial condition and results of operation.

We enjoy only limited geographical protection with respect to certain patents and may

face difficulties in certain jurisdictions. We often file our first patent application (i.e.,

priority filing) at the UK Intellectual Property Office, the European Patent Office or the

USPTO. International applications under the Patent Cooperation Treaty are usually

filed within twelve months after the priority filing. We have so far not filed for patent

protection in all national and regional jurisdictions where such protection may be avai-

lable. If we fail to timely file a patent application in any such country or major market,

we may be precluded from doing so at a later date. In addition, the grant proceeding

of each national/regional patent may lead to situations in which applications might in

some jurisdictions be refused by the relevant patent offices, while granted by others.

Furthermore, competitors may use our and our licensors’ or collaboration partners’

technologies in jurisdictions where we have not obtained patent protection to develop

their own products and, further, may export otherwise infringing products to territories

where we and our licensors or collaboration partners have patent protection, but

enforcement is not as strong as that in the U.S., UK and the EU. Finally, 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.

2.7.2

Issued Patents could be Found Invalid

or Unenforceable if Challenged in the

Applicable Patent Office or Court.

Once granted, patents may remain open to invalidity challenges for a given period after

allowance or grant, during which time third parties can raise objections against such

granted patent. In the course of such proceedings, the patent owner may be compelled

to limit the scope of the allowed or granted claims thus challenged or may lose the

allowed or granted claims altogether.

To protect our competitive position, we may from time to time need to resort to litiga-

tion 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. Enforcement of intellectual property rights is difficult, unpredictable

and expensive, and many of our or our licensors’ or collaboration partners’ adversaries

in these proceedings may have the ability to dedicate substantially greater resources to

prosecuting these legal actions than we or our licensors or collaboration partners can.

In addition, litigation involving our patents carries the risk that one or more of our

patents will be held invalid or held unenforceable. Such an adverse court ruling could

allow third parties to commercialize our products or use our platform technologies, and

then compete directly with us, without payment to us.

2.7.3

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 our senior management, were

previously employed at other biotechnology or pharmaceutical companies, including

our competitors or potential competitors. Some of these consultants and employees

executed proprietary rights, non-disclosure and non-competition agreements in connec-

tion with such previous employment. Although we try to ensure that our consultants

and employees do not use the proprietary information or know-how of others in their

work for us, we may be subject to claims that we or these consultants and employees

have used or disclosed confidential information or intellectual property of any such

consultant’s or employee’s former employer or have breached their non-competition

agreement. Additionally, many of our collaborators do not commit to assigning all

intellectual property arising out of the collaboration 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 or our licensors may have inventorship disputes arise

from conflicting obligations of employees, consultants or others who are involved in

developing our products and product candidates.

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 executing such an agreement

with such party. Our and their assignment agreements may not be self-executing or

may be breached and we may be forced to bring claims against third parties or defend

claims they may bring against us to determine the ownership of what we regard as our

intellectual property.

There is no guarantee we will be successful in defending such claims, which would

result in us paying monetary damages, or lose valuable personnel or intellectual

property rights.

2.7.4

Third-Party Intellectual Property

Rights could Adversely Affect our

Ability to Commercialize our Products

and Product Candidates.

Our competitive position may suffer if third-party intellectual property rights cover our

products or product candidates or our manufacture or uses relevant to our development

plans. In such cases, we may not be in a position to develop or commercialize products

or product candidates unless we successfully pursue costly and time-consuming

litigation to nullify or invalidate the third-party intellectual property right concerned or

enter into a license agreement with the intellectual property right holder. We are aware

of certain U.S. issued patents held by third parties that arguably cover certain aspects

of our product candidates, including cusatuzumab. One such third-party patent family

of potential relevance to cusatuzumab is scheduled to expire in 2028. In the event that

a patent has not expired at the time of approval of such product candidate and the

patent owner were to bring an infringement action against us, we may have to argue

that our product, its manufacture or use does not infringe a valid claim of the patent in

question. Alternatively, if we were to challenge the validity of any issued U.S. patent in

court, we would need to overcome a statutory presumption of validity that attaches to

every U.S. patent. In the event that a patent is successfully asserted against us such that

the patent is found to be valid and enforceable and infringed by our product, unless we

obtain a license to such a patent, we could be prevented from continuing to develop or

commercialize our product. Similarly, other companies have filed patent applications or

have patents on the targets for certain of our products or their uses. There can be no

assurance any such patents will not be asserted against us or that we will not need to

seek licenses from such third parties.

It is also possible that we are unaware of relevant patents or applications or of relevant

scientific discoveries. In general, patent applications in the U.S. and elsewhere are

published approximately 18 months after the earliest filing from which priority is

claimed, with such earliest filing date being commonly referred to as the priority date.

Additionally, publications of discoveries in scientific literature often lag behind the actual

discoveries. Therefore, patent applications covering our products, product candidates or

platform technology could have been filed by others and relevant discoveries may have

been made without our knowledge. Additionally, pending patent applications which

have been published can, subject to certain limitations, be later amended in a manner

that could cover our products or platform technologies.

Third-party intellectual property right holders, including our competitors, may actively

bring infringement claims against us that we may not be able to successfully settle or

otherwise resolve.

If we fail in any such dispute, we or our licensees may be temporarily or permanently

prohibited from commercializing any of our products and product candidates that are

held to be infringing. We might, if possible, also be forced to redesign products and

product candidates so that we no longer infringe the third-party intellectual property

rights. We may be required to seek a license to any such technology that we are found

to infringe, which license may not be available on commercially reasonable terms, or

at all. Even if we or our licensors or collaboration partners obtain a license, it may be

non-exclusive, thereby giving our competitors access to the same technologies licensed

to us or our licensors or collaboration partners. In addition, if the breadth or strength

of protection provided by our or our licensors’ or collaboration partners’ patents and

patent applications is threatened, it could dissuade companies from collaborating with

us to license, develop or commercialize current products and product candidates. Furt-

hermore, because of the substantial amount of discovery required in connection with

intellectual property litigation, there is a risk that some of our confidential information

could be compromised by disclosure during this type of litigation.

2.7.5

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 that

we identify as an appropriate strategic fit for our Company and necessary for our pro-

duct candidates and technology. A number of more established companies with greater

resources may pursue strategies to license or acquire third-party intellectual property

rights that we may consider attractive.

We sometimes collaborate with U.S. and non-U.S. academic institutions to accelerate

our preclinical research or development. Typically, these institutions provide us with

an option to negotiate a license to any of the institution’s rights in technology resulting

from the collaboration. Regardless of such option, we may be unable to negotiate a li-

cense within the specified timeframe or under terms that are acceptable to us, in which

case the institution may offer the intellectual property rights to other parties, potentially

blocking our ability to pursue our applicable product candidate or program.

In addition, companies that perceive us to be a competitor may be unwilling to assign or

license rights to us. We also may be unable to license or acquire third-party intellectual

property rights on terms that would allow us to make an appropriate return on our

investment, in which case we may have to abandon development of that product

candidate or program.

Existing license agreements impose various development, payment and other obligati-

ons. If we fail to comply with our obligations under these agreements, the licensor may

have the right to terminate the license. Several of our existing license agreements are

sub-licenses from third parties who are not the original licensors of the intellectual pro-

perty at issue. If the licensors fail to comply with their obligations under these upstream

license agreements, the original third-party licensor may have the right to terminate the

original license, which may terminate the sublicense, causing us to lose our rights to the

applicable intellectual property if we are unable to secure our own direct license with

the owner of the relevant rights on reasonable terms.

Further, if disputes over intellectual property that we have licensed or our associated

obligations prevent or impair our ability to maintain our current licensing arrangements

on acceptable terms, we may be unable to successfully develop and commercialize the

affected products and product candidates.

2.7.6

If our Trademarks and Trade Names are

not Adequately Protected, we may not

be Able to Build Name Recognition in our

Markets of Interest.

Our registered or unregistered trademarks or trade names may be challenged, infringed,

circumvented or declared generic or determined to be infringing on other marks. Third

parties may oppose or attempt to cancel our trademark applications or trademarks or

otherwise challenge our use of the trademarks. In the event that our trademarks are

successfully challenged, we may not be able to use these trademarks to market our

products in those countries and could be forced to rebrand our products, which could

result in loss of brand recognition and could require us to devote resources to adver-

tising and marketing new brands. Our competitors may infringe our trademarks and we

may not have adequate resources to enforce our trademarks. If we attempt to enforce

our trademarks and assert trademark infringement claims, a court may determine that

the marks we have asserted are invalid or unenforceable or that the party against whom

we have asserted trademark infringement has superior rights to the marks in question.

Over the long term, if we are unable to establish name recognition, we may not be

able to compete effectively. If other entities use trademarks similar to ours in different

jurisdictions, or have senior rights to ours, it could interfere with our use of our current

trademarks throughout the world.

2.7.7

We may not be Able to Obtain Protection

Under the 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. The Hatch-Waxman Act permits a patent term extension of up to

five years for a patent covering an approved product as compensation for effective

patent term lost during product development and the FDA regulatory review process.

The patent term extension 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. However, we may not receive an extension if we fail to

apply within applicable deadlines or prior to expiration of relevant patents or otherwise

fail to satisfy applicable requirements. Moreover, the length of the extension could be

less than we request. If we are unable to obtain patent term extension or the term of

any such extension is less than we request, the period during which we can enforce

our patent rights for that product will be shortened and our competitors may obtain

approval to market competing products sooner than we expect.

2.7.8

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 and regulations in the various countries or jurisdictions or

changes in the governmental bodies that enforce them or changes in how the relevant

governmental authority enforces them may weaken our ability to obtain new patents or

to enforce patents that we have licensed or that we may obtain in the future. We cannot

predict future changes in the interpretation of patent laws or changes to patent laws

that might be enacted into law by U.S. and foreign legislative bodies. 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. Such changes may materially affect our patents or

patent applications and our ability to obtain additional patent protection in the future.

2.7.9

We may be Unable to Protect the

Confidentiality of our Trade Secrets

and Know-How.

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, trade secrets are difficult to protect,

and we have limited control over the protection of trade secrets used by our numerous

licensors, collaborators and suppliers.

We require our employees, consultants, advisors and potential collaborators to enter

into confidentiality agreements. Moreover, we put in place appropriate procedures to

identify confidential material and restrict access to documentation. However, current or

former employees, consultants, advisors and potential collaborators may unintentionally

or willfully disclose our confidential information to competitors despite these procedu-

res or in violation of our confidentiality agreements. In addition, the need to share trade

secrets and other confidential information increases the risk that such trade secrets

become known to our competitors or inadvertently incorporated into the technology

of others. Any disclosure, either intentional or unintentional, or misappropriation by

third parties (such as through a cybersecurity breach) of our trade secrets or proprietary

information could enable competitors to duplicate or surpass our technological

achievements.

Enforcing a claim that a third party illegally obtained and is using trade secrets is

expensive, time-consuming and the outcome is unpredictable, and the enforceability

of confidentiality agreements may vary from jurisdiction to jurisdiction. Moreover, if

any of our trade secrets were to be lawfully obtained or independently developed by a

competitor or other third party, we would have no right to prevent them from using that

technology or information to compete with us.

2.8

Risk Factors Related to

argenx’s Organization

and Operations

2.8.1

Our Future Growth and Ability to Compete

Depends on Retaining our Key Personnel

and Recruiting Additional Qualified

Personnel.

As a global organization in a highly competitive and specialized industry, our success

depends upon the continued contributions of our key management, scientific, medical

and technical personnel, many of whom have been instrumental for us and have sub-

stantial experience with our product and related technologies. These key management

individuals include the members of our 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 that have differing remuneration practices and

policies as we are bound by more restrictive remuneration practices than our compe-

titors. For example, the Dutch Corporate Governance Code 2016 (

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. In addition, the U.S. has propo-

sed legislation that imposes restrictions on our ability to prevent departing employees

from competing with us following their departure. If finalized, such legislation could also

adversely affect our ability to retain employees who may go to competitors with more

resources than us and who are not bound by similar remuneration policies.

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.

2.8.2

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.

Many geo- and socio-political threats and macro-economic uncertainties are outside of

our control, including general economic and market conditions, consumer and commer-

cial credit availability, inflation, interest rates, unemployment, consumer debt levels,

political crises, such as terrorist attacks, war and other political instability, economic

sanctions and other challenges affecting the global economy, including the Russia-

Ukraine conflict, disruptions in supply chains, and changes in trade agreements which

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 fluctua-

tions unrelated to our business and financial performance.

Due to our international operations and the fact that we run clinical trials in a large

number of jurisdictions, the eruption of global conflicts, such as the continuing conflict

between Russia and Ukraine 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, a relevant minority of the patients in the ADDRESS

trial of SC efgartigimod for PF and PV are participating in studies conducted in Ukraine or

Russia. The U.S. Department of the Treasury’s Office of Foreign Assets Control has issued

General License 6B, which authorizes “ongoing clinical trials and medical research acti-

vities”. Following a risk assessment relating to the conflict between Russia and Ukraine,

we increased target enrollment, which delayed expected topline data of SC efgartigimod

for PV and PF to the second half of 2023. 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 disrupt:

•

the recruitment and enrollment of eligible patients who may not be able to travel

safely to clinical trial sites or may be forced to withdraw for a number of reasons;

•

the closure or destruction of clinical sites or treatment facilities;

•

the ability to compensate patients or staff living in sanctioned countries;

•

the manufacturing process for our products or supply chain, which could increase

the costs of raw material and production costs;

•

the ability to transport, deliver, supply and collect necessary materials, products

or services to clinical trial sites or deliver them to third-party central laboratories’

for analysis;

•

the ability to collect data from clinical trial sites and ensure the integrity of any

data collected;

•

the destruction or disruption of our data centers or our critical business or

information technology systems; or

•

the ability to submit data collected at Russian or Ukrainian sites due to the

incompleteness or the fact that auditing by regulatory authorities was not fully

possible.

To date, other than as described above and elsewhere in this Annual Report, we have no

indication that the conflict between Russia and Ukraine and the corresponding sanctions

imposed on Russia will significantly hinder our clinical development activities performed

in the affected regions or regulatory activities relevant for our pending or expected ap-

proval requests. Moreover, we do not generate revenues in Russia, and we gather more

regular feedback from and to stakeholders and team members in Russia and Ukraine.

However, we also perform development activities in a number of countries neighboring

Russia and Ukraine and if the conflict were to escalate further and impact neighboring

countries, it could impact our development activities in those countries.

2.8.3

We Face Risks Related to Natural

Disasters and Public Health Issues,

such as the COVID-19 Pandemic, 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 an earthquake, fire, hurricane, tornado, flood or

significant power outage and pandemics, 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 pro-

duct 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, including in areas impacted by COVID-19

in North America, Europe, the PRC and Japan. We cannot presently predict the scope

and severity of any potential future business shutdowns or disruptions as a result of CO-

VID-19. 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 to stop the spread of

a pandemic, 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 treat-

ment interruptions and require protocol amendments. We and our third-party partners

will continue to monitor the impact of COVID-19 on all ongoing clinical trials and will

implement changes as necessary. In addition, if we and/or one of our partners elect not

to move forward with some or all of our clinical programs as a result of the COVID-19

pandemic or otherwise, we would not be entitled to some or all of the future payments

which we are eligible to receive under the collaboration agreement with such partner.

The COVID-19 pandemic has also impacted third parties in a number of different ways.

For example, we were informed by our drug substance and drug product manufacturing

partners about potential limitations in the availability of critical manufacturing materials

due to the demand outweighing the available manufacturing capacity for these

materials and prioritizations imposed by the U.S. government on the manufacturing of

COVID-19 vaccines and therapeutics. Moreover, as of the date of this Annual Report,

the FDA is subject to ongoing travel restrictions that impact FDA oversight operations.

Should the FDA determine that an inspection is necessary for approval of a marketing

application and an inspection cannot be completed during the review cycle due to

restrictions on travel, the FDA has stated that it generally intends to issue, depending on

the circumstances, a complete response letter or defer action on the application until

an inspection can be completed. While the number of FDA inspection-related delays de-

creased in 2022, there is a risk that such delays may occur again. Regulatory authorities

outside the U.S. may adopt similar restrictions or other policy measures in response to

the COVID-19 pandemic and may experience delays in their regulatory activities. Such

restrictions and delays 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.

2.8.4

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 significantly in the number of employees and scope of operations over

recent years and expect to experience significant growth in the number of our employees

and the scope of our operations also in the near future, 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 circums-

tances 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.

2.8.5

We have benefited from certain research

and development incentives in Belgium,

which may be re-evaluated if our

shareholder base changes significantly.

The Belgian authorities may challenge

our eligibility for or our calculation of

such incentives.

As a company active in research and development in Belgium, we have benefited from

certain research and development tax incentives, in particular a tax credit and a payroll

withholding tax exemption. The tax credit is calculated as a percentage of qualifying

investments in research and development; it can be offset against corporate income

tax and is refunded to us in cash after five years to the extent it could not be offset.

The payroll tax exemption results in a reduction of the payroll cost for highly qualified

personnel engaged in research and development projects. We also expect to benefit

from the Belgian innovation income deduction, which allows net profits attributable

to revenue from among others patented products (or products for which the patent

application is pending) to be taxed at a lower effective tax rate than other revenues. The

relevant Belgian authorities may challenge our eligibility for, or our calculation of, such

tax incentives and, should such a challenge be successful, we may be liable for additional

taxes, and penalties and interest related thereto, which could have a significant impact

on our results of operations and future cash flows. In case of a change of control of the

Company, we could be exposed to the risk of losing the unused tax credit and innovation

income deduction. Furthermore, if the Belgian 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.

2.8.6

We are exposed to unanticipated changes

in tax laws and regulations, adjustments

to our tax provisions, exposure to

additional tax liabilities, or forfeiture of

our tax assets.

The determination of our provision for income taxes and other tax liabilities requires

significant 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 or

our 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,

by the relevant tax authorities, will not be subject to change. Any adverse outcome of

such a review or change in law may lead to adjustments in the amounts recorded in our

financial statements and could have a materially adverse effect on our operating results

and financial condition.

Dealings between current and former group companies as well as additional companies

that may form part of our group in the future are subject to transfer pricing regulations,

which may be subject to change and could affect us. Compliance with these laws and

regulations will be more challenging as we expand our international operations, inclu-

ding in connection with potential approvals of our products and product candidates in

Europe, the U.S. and elsewhere.

Our effective tax rates could be adversely affected by changes in tax laws, treaties and

regulations or the interpretation thereof by the relevant tax authorities in countries

where we have material operations, including changes to the Belgian innovation

income deduction, to the corporate income tax base, or to other tax incentives and the

implementation of new tax incentives. A successful challenge to our qualifications for

and application of these tax incentives by the tax authorities in Belgium or other country

where we have material operations would have a significant impact on our effective tax

rate and on our 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.

On December 14, 2022, the Council of the EU adopted Directive (EU) 2022/2523 on

ensuring a global minimum level of taxation for multinational enterprise groups and

large-scale domestic groups in the Union (Pillar Two Directive). The Pillar Two Directive

should be implemented in the EU Member States’ national law by December 31, 2023.

If the Pillar Two Directive is implemented under domestic laws in any of the jurisdictions

in which the Group operates, or via international treaties entered into between such

jurisdictions, the Pillar Two Directive may have an impact on the Group’s effective tax

rate as well as increase the Group’s tax compliance costs incurred to track and collect

such taxes. Based on current information, we expect that the Group could become

subject to the Pillar Two Directive and implementing domestic laws as early as 2025.

However, whether the Pillar Two Directive will have an impact on the Group’s tax

liabilities and operations cannot be determined accurately and remains uncertain.

In addition, we may not be able to use, or changes in tax regulations may affect the

use of, certain unrecognized tax assets or credits that we have built over the years.

For instance, we have considerable material tax assets in Belgium and some of these tax

assets may be forfeited in whole, or in part, as a result of various transactions, including

corporate reorganizations or transactions relating to our shareholding structure, or their

utilization may be restricted by statutory law in the relevant jurisdiction.

Corporate

Governance

3.1

Dutch Corporate Governance Code “Comply or Explain”

157

3.2

Management Structure

159

3.3

Report of the Non-Executive Directors

184

3.4

Remuneration Report and

Compensation Statement

189

3.5

Risk Appetite & Control

222

Corporate Governance

3.1

Dutch Corporate Governance

Code “Comply or Explain”

As a Dutch company, we are subject to the DCGC. A copy of the DCGC can be found

www.mccg.nl

.The DCGC is based on the notion that a company is a long-term

alliance between the various stakeholders of the company. Stakeholders are groups and

individuals who, directly or indirectly, influence – or are influenced by – the attainment

of our objectives: employees, shareholders and other lenders, suppliers, customers

and other stakeholders. Our Board of Directors has responsibility for weighing these

interests, generally with a view to ensuring our and our subsidiaries’ continuity of us and

our subsidiaries, as we seek to create long-term value. If stakeholders are to cooperate

within and with the company, they need to be confident that their interests are duly

taken into consideration. Good entrepreneurship and effective supervision are essential

conditions for stakeholder confidence in management and supervision. This includes

integrity and transparency of the actions of, and accountability for the supervision by,

the Board of Directors.

The DCGC is based on a “comply or explain” principle. Accordingly, companies are

required to state the extent to which they comply with the principles and best practice

provisions of the DCGC in their annual report and, where they do not comply with them,

why and to what extent they deviate from them.

We acknowledge the importance of good corporate governance and we fully endorse

the underlying principles of the DCGC, which is reflected in a policy that complies with

the best practice provisions as stated in the DCGC (the

Board By-Laws

). The Board By-

Laws are available on our website (

www.argenx.com/investors

). However, we deviate

from the best practice provisions in the areas set out below, for the reasons explained

in this section. These deviations all relate to our remuneration practices, which are in

line with our remuneration policy as approved by our annual general meeting of share-

holders held in 2021 (

2021 General Meeting

•

Pursuant to best practice provisions 3.1.2 under vi of the DCGC, shares should

be held for at least five years after they are awarded. In accordance with our

remuneration policy, pursuant to our equity incentive plan (

Equity Incentive Plan

restricted stock units (

RSUs

) vest in four equal tranches, which means that one

fourth of the RSUs granted are settled at each anniversary of the date of grant, and

no lock-up period applies to any shares acquired at such settlement, except as may

be applicable pursuant to our minimum equity holding guidelines for directors and

senior management personnel further specified in section 3.4.2 “

Reference Group

and Setting Reward Levels

”. Our Equity Incentive Plan was crafted recognizing

that equity incentives are an important factor in the key jurisdictions in which we

operate for attracting and retaining qualified personnel. The Equity Incentive Plan is

regularly reviewed by our Board of Directors and our remuneration and nomination

committee in particular, based on external benchmarking done by an independent

third party. The main purpose of such review and benchmark is to test whether the

Equity Incentive Plan, including the type, size and conditions of grants and their

vesting and exercisability thereunder, is fair and competitive in the key markets

where we compete for talent and as such can support our ability to attract and retain

talent in such markets. Hence, we deviate from best practice provision 3.1.2 under

vi to allow for a competitive equity incentive plan. At the same time, we believe our

current Equity Incentive Plan promotes long-term value creation. For instance, the

four-year vesting period of the RSUs ensures that a RSU package granted cannot be

fully settled within four years after the grant date. In 2021, our Board of Directors

amended our Equity Incentive Plan in line with our updated remuneration policy,

adding specifically the granting of RSUs to the equity incentive scheme and including

the aforementioned vesting schemes. In 2023, our Board of Directors adopted

equity holding guidelines for our Board of Directors and senior management

team. Considering the importance of competitive remuneration for our ability to

attract and retain highly qualified persons, alignment with the reference group is

prioritized over compliance with this best practice provision 3.1.2. We will continue

to review our Equity Incentive Plan conditions against our reference group, and if our

benchmark exercise shows that a five-year lockup period as prescribed by the DCGC

becomes competitive practice in our key talent markets, we will consider adhering in

full to this best practice principle.

•

Pursuant to best practice provision 3.2.3. of the DCGC, the severance payment

in the event of dismissal should not exceed one year’s base compensation. Our

remuneration policy provides that a severance payment equal to 18 months base

compensation to our chief executive officer (

CEO

). The severance component of

the remuneration package is, like all other components, benchmarked against and

aligned with the severance components as identified within the reference group. On

this topic, considering the importance of competitive remuneration for our ability

to attract and retain highly qualified persons, alignment with the reference group is

prioritized over compliance with this best practice provision 3.2.3. We currently do

not envision to change our practice in this respect.

•

Pursuant to best practice provision 3.3.2. of the DCGC, non-executive directors

should not be granted any shares or rights to shares as remuneration. We note that

the ‘best practices’ and usages regarding granting equity incentives to non-executive

directors vary significantly between the key jurisdictions in which we operate. For

example, we conduct a significant part of our operations in Belgium and the Belgian

Corporate Governance Code requires that non-executive directors receive part of

their remuneration in the form of shares, but not stock options. Our benchmarking

confirms that offering equity incentives to non-executive directors in the form of

options and/or shares is on the other hand widely accepted market practice in the

U.S., with over 90% of our U.S. reference group companies granting stock options

to directors (benchmark of September 2022). We believe it is in the interest of our

stakeholders that we are equipped to recruit the talent on our Board of Directors

proportionate to our international ambitions. For this reason, we aligned our

remuneration practices with those prevalent in the key markets in which we need

to compete for talent. Considering specifically our significant activities in the U.S.

and the specialized knowledge and experience needed on our Board of Directors to

maximize our chances of success in this region, we need to align our remuneration

practices for non-executive directors with the U.S. companies in our reference group,

meaning we offer share options and/or restricted share units to our non-executive

directors. We believe this is a conscious and well-considered deviation from the

DCGC that is required to serve our long-term global goals and ambitions. On this

topic, considering the importance of competitive remuneration for our ability to

attract and retain highly qualified persons, alignment with the reference group is

prioritized over compliance with this best practice provision 3.3.2. We currently

do not envision to change our practice in this respect, unless the practice in our

reference group changes. If our benchmark exercise shows that offering only cash

(no equity incentives) or equity excluding stock options becomes competitive practice

in our key markets, we will consider adhering in full to this best practice principle.

3.2

Management Structure

3.2.1

General

We have a one-tier board structure consisting of one executive director and eight

non-executive directors (as of December 31, 2022), and a senior management team

(consisting of our CEO and senior personnel reporting directly to the CEO) responsible

for the day-to-day operations. We have opted for this structure to allow for a division

of responsibilities between our Board of Directors and our senior management team,

keeping our Board of Directors at a manageable size whilst being able to involve some or

all members of our senior management team in discussions with the Board of Directors

if and when necessary.

In practice, all members of our senior management team are regularly involved in the

discussions of our Board of Directors and its committees, in order to provide information

and context to the various issues the Board of Directors needs to decide on. In addition

to being present at meetings from time to time, our senior management and other

senior leaders in the organization keep regular contact (face to face or via electronic

means) with members of the Board of Directors and its committees.

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 (

Articles of

Association

) and Board By-Laws (terms of reference) concerning our Board of Directors.

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.

3.2.2

Statement of the Board of Directors

Responsibilities for the Financial Statements and Management Report

In accordance with Article 5:25c(2)(c) of the Dutch Financial Supervision Act (Wet

toezicht financiële verslaggeving) (

DFSA

), the Board of Directors hereby certifies that,

to the best of our knowledge, our consolidated financial statements as of December 31,

2022, prepared in accordance with International Financial Reporting Standards (

IFRS

) as

adopted by the EU, and with the legal requirements applicable in the Netherlands, give

a true and fair view of the assets, liabilities, financial position and profit or loss of the

company and the undertakings included in the consolidation taken as a whole, and that

the management report includes a fair review of the development and performance of

the business and the position of argenx and the undertakings included in the consolida-

tion taken as a whole, together with a description of the principal risks and uncertainties

that they face.

Responsibility for this Annual Report

The Board of Directors declares that the information contained in this Annual Report,

including our consolidated financial statements as of December 31, 2022 and the

management report, is, to the best of its knowledge, in accordance with the facts and

contains no omission likely to affect its import. The Board of Directors is responsible for

the information given in this Annual Report.

In Control Statement

Our Board of Directors is responsible for the oversight of our risk management activities

and has specifically designated 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 is responsible for day-to-day risk management processes. Our Board of

Directors expects our senior management 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 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.

See section 3.5 “

Risk Appetite & Control

” for further information on our risk appetite

and control.

3.2.3

Board of Directors

Responsibilities

Under Dutch law (Section 2:129 paragraph 1 of the Dutch Civil Code (

DCC

)), our Board

of Directors is collectively responsible for our general affairs. Our Board of Directors, our

executive director as well as our non-executive directors, define our strategy (as further

set out in section 1.2 “

Strategy and Objectives

”). Our strategy is regularly discussed and

monitored at our Board of Directors meetings.

Pursuant to our Articles of Association, our Board of Directors will divide its duties

among its members, with our day-to-day management entrusted to the executive

director(s). The non-executive directors are tasked with supervising our management

and advising the executive director(s). In addition, both the executive director(s) and

the non-executive directors must perform the duties assigned to them pursuant to the

Articles of Association. The division of tasks within our Board of Directors is determined

(and amended, if necessary) by our Board of Directors. Our executive director(s) may not

(i) serve as chairperson of our Board of Directors; (ii) determine the remuneration of an

executive director or (iii) nominate directors for appointment.

Each director has a duty to properly perform the duties assigned to him or her and to

act in our corporate interest. Under Dutch law, the corporate interest extends to the

interests of all corporate stakeholders, such as shareholders, creditors, employees and

other stakeholders.

Composition, Appointment and Dismissal

The Articles of Association provide that our Board of Directors will consist of our execu-

tive 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 shareholders at a general meeting of our shareholders

(

General Meeting

) for a period of four years as either executive directors or as non-

executive directors. In accordance with best practice principle 2.2.1 of the DCGC, execu-

tive directors may be re-appointed for periods of not more than four years at a time. In

accordance with best practice principle 2.2.2 of the DCGC, non-executive directors are

appointed for a period of four years and may subsequently be re-appointed for another

four-year period. Non-executive directors may subsequently be reappointed again for

a period of two years, which appointment 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) may be adopted by a simple majority of the votes cast. A nomination for

appointment of an executive director must state the candidate’s age and the positions

he or she holds, or has held, insofar as these are relevant for the performance of the du-

ties of an executive director. The nomination must state the reasons for the nomination

of the relevant person. A nomination for appointment of a non-executive director must

state the candidate’s age, his or her profession, the number of shares he or she holds

and the employment positions he or she holds, or has held, insofar as these are relevant

for the performance of the duties of a non-executive director. Furthermore, the names

of the legal entities of which he or she is already a supervisory board member or a non-

executive member of the board shall be indicated; if those include legal entities which

belong to the same group, a reference to that group will be sufficient. The nomination

must state the reasons for the nomination of the relevant person.

Our Board of Directors designates one executive director as CEO. In addition, the Board

of Directors may grant other titles to executive directors. 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 will not be consi-

dered 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.

As a foreign private issuer, under the listing requirements and rules of Nasdaq, we are

not required to have a majority independent directors on our Board of Directors, except

that our 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, inclu-

ding the members of our audit and compliance committee, are “independent directors”

under Rule 10A-3 of the U.S. Securities Exchange Act of 1934, as amended (

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 has or has had a family relationship with

any other member of our Board of Directors or senior management.

Directors may be suspended or removed by the shareholders at a General Meeting at

any time, with or without cause, by means of a resolution passed by a simple majority

of the votes cast. Under Dutch law (Section 2:134 paragraph 1 of the DCC), executive

directors 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

We value diversity among our colleagues as an integral component in building a

sustainable growth platform and believe that a diverse workforce enhances our

overall performance and success. We take pride in creating and sustaining a culture

and environment where each of us can excel. We bring together people with diverse

backgrounds experiences and functional expertise. By doing so, we broaden the scope

of ideas and creativity essential to developing and delivering innovative therapies to

patients. Acknowledging and benefiting from different perspectives promotes diversity

of thought and empowers innovation. It also contributes to our commitment to improve

lives of patients, wherefore we need teams with a healthy mix of contrasting perspecti-

ves and backgrounds that reflect the diverse communities we serve. We recognize that

our people are our greatest strength. Fostering an inclusive work environment where

everyone feels safe and encouraged to contribute leads to better work outcomes and

supports high levels of employee commitment and retention. We aspire to be a con-

sciously global company. Our success is built on, and dependent on true collaboration

in cross-functional and often cross-regional teams in which open communication is

encouraged and safeguarded. Everyone has a voice and is encouraged to contribute to

the benefit of our common goals, irrespective of race, ethnicity, age, gender or cultural

background. Good ideas as well as real concerns are taken seriously, regardless of who

brings them forward.

In 2022, we adopted our new diversity, equity and inclusion policy, which sets out the

basis for our inclusion, equity and diversity management throughout our organization

in a way that we believe best supports our business objectives and our people. We mo-

nitor and annually report on relevant diversity, equity and inclusion metrics, initiatives

and developments in this Annual Report and in our 2021 environmental, social and

corporate governance (

ESG

) reports, of which an updated version will be published in

the second quarter of fiscal 2023.

Our policy is that we aim to balance our Board of Directors and senior management

team in terms of gender, age, background, race, ethnicity, sexual orientation, experience

and nationality as much as reasonably possible while still having our Board of Directors

and senior management team composed of the best possible candidates overall. It has

been and will remain our priority to have the best available specialists on our Board of

Directors and in our senior management team, who make a balanced panel of directors

and managers able to advise and guide argenx to further growth and success for all its

stakeholders. This means we require a number of specialties and character traits to be

present. We will actively seek to further improve diversity on our Board of Directors if

and when proposing new appointments to our Board of Directors, whilst recognizing

that, considering the specialist nature of our business, aspects other than diversity are

relevant as well for the ultimate decision to select a board member.

We aim to foster an inclusive work environment in support of our strategic plan and

priorities. We continue to raise the bar in this regard, and to commit to measures and

goals designed to support our maturing company culture. We have set ourselves the

goal of gender balance across all levels at argenx, including our Board of Directors.

Our plan of action to achieve our goal of gender balance includes a number of recruit-

ment and development-related initiatives to promote balanced and diversified candidate

pools as well as diversity amongst persons receiving promotion and development

opportunities. We value our fair, inclusive recruitment process, which is standardized

across the organization and focuses on pre-identified ‘what counts’ factors. The process

involves a diverse group of colleagues from across the organization, who are provided

with training to recognize existing biases. Recruitment decisions are based on a group

evaluation of available candidates, to encourage different perspectives. Our onboarding

program is designed to promote inclusion by building a strong social fabric across teams,

functions and geographic locations. Once hired, employees are encouraged to participate

in a personal development program aimed at building on their individual strengths to

benefit the broader team and taking into account their individual career aspirations. We

offer opportunities for promotion, training and career development solely based on job-

related, appropriate criteria such as skills, competencies, experience, aptitude and en-

thusiasm and giving account to each individual’s experience, ambitions and capabilities.

We will continue to implement our diversity, equity and inclusion policy by seeking new

ways to improve and support diversity, equity and inclusion at the Company. We from

time to time report on specific initiatives taken with respect to our diversity, equity and

inclusion policy in our annual ESG report, of which an updated version will be published

in the second quarter of fiscal 2023.

In accordance with Dutch legislation as entered into force on January 1, 2022, we will

report to the Sociaal-Economische Raad whether or not we have complied with our

diversity goals, and if we have not, the reasons for this.

As of December 31, 2022, our Board of Directors consisted of 9 directors, including

1 executive director and 8 non-executive directors. Of the directors who chose to

disclose their gender, the Board of Directors contained 5 male directors and 3 female

directors (non-executive directors), translating into a 55.55% male / 33

1/3

% female

balance for our full Board of Directors (compared to 6 males and 2 females (75% / 25%)

as of December 31, 2021) and a 62.5% male / 37.5% female balance for our non-exe-

cutive directors (compared to 5 males and 2 females (71.4% / 28.6%) as of December

31, 2021). As of December 31, 2022 and December 31, 2021, we estimated that our

Company leadership team consisted of 31 persons, comprised of a mix of 19 males and

12 females, (61% / 39% respectively). In making this calculation we define our leader-

ship team as consisting of our senior management team and the (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, 2022, 63% of our workforce were female

and 37% were male (compared to 58% female and 42% male as of December 31, 2021).

Board Diversity Matrix (as of the Date of this Annual Report)

Country of Principal Executive Offices

The Netherlands

Foreign Private Issuer in the U.S.

Yes

Disclosure of gender identity prohibited

by Dutch Law

Total Number of Directors

Gender:

Number of Directors

Female:

Male:

Non-

Binary: 0

Did Not Disclose

Gender identity: 1

Demographic Background Categories

Number of Directors in Each Demographic Category

Underrepresented individual in home

country jurisdiction

LGTBQ+

Did not disclose demographic background

Meetings and Decision-Making

Our Board By-Laws, that 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, inso-

far 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 Artic-

les 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.

Resolutions of the Board of Directors may also be adopted outside of a meeting in wri-

ting, 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 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 remune-

ration in accordance with best practice provision 3.2.2 but may not participate in the

adoption of resolutions (including any deliberations in respect of such resolutions)

relating to their remuneration.

Committees

In accordance with the DCGC, our non-executive directors can set up specialized com-

mittees 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:

•

an audit and compliance committee; and

•

a remuneration and nomination committee.

The composition and function of all these committees complies with all applicable requi-

rements of Euronext Brussels, the DCGC, the Exchange Act, the exchange on which the

ordinary shares and the ADSs are listed and U.S. Securities and Exchange Commission

(

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

directors and other internal and external persons in argenx, in order to facilitate discus-

sions 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 commercial committee.

Audit and Compliance Committee

Our audit and compliance committee consists of four members: Steve Krognes (chair-

person), effective February 27, 2023, Peter K. M. Verhaeghe, Anthony A. Rosenberg and

James M. Daly. Mr. Lanthaler was chairperson until February 27, 2023. Our Board of

Directors previously established that Mr. Lanthaler qualified and Mr. Krognes qualifies

as an “audit committee financial expert” as defined under the Exchange Act and Article

39 paragraph 1 of Directive 2014/56/EU of the European Parliament and of the Council

of 16 April 2014 amending Directive 2006/43/EC on statutory audits of annual accounts

and consolidated accounts and 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 ac-

curacy and integrity of our accounting and financial reporting processes and audits and

reviews of our consolidated financial statements, the implementation and effectiveness

of an internal control system and our compliance with legal and regulatory require-

ments, 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 our head of ethics and compliance 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

supervises the status of the Company’s cyber security 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 with

Nasdaq listing rules and the DCGC, that was last updated on February 28, 2022 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 func-

tioning, but at least four times a year and at least once a year meets separately with our

independent auditor. See section 3.3.7 “

Report Research and Development Committee

”

for an overview of the number of meetings and attendance rates.

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.

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: J. Donald deBethizy (chairperson), Peter K. M. Verhaeghe and Ana Cespedes.

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 directors;

•

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;

•

drawing up selection criteria and appointment procedures for directors and making

proposals for appointment and re-appointment of the directors;

•

periodically assessing the size and composition of our Board of Directors and making

a proposal for a composition profile of the non-executive directors;

•

periodically assessing the diversity (including gender diversity) on our Board of

Directors and leadership teams, and taking into account any gaps between our then

current diversity metrics and the goals specified in our diversity, equity and inclusion

policy when making recommendations to the Board of Directors;

•

periodically assessing the functioning of individual directors and reporting on this to

the non-executive directors; and

•

supervising the policy of the executive directors on the selection criteria and

appointment procedures for senior management.

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. See section 3.3.8

“

Report Commercial Committee

” for an overview of the number

of meetings and attendance rates.

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 two members, who are also

members of our Board of Directors: J. Donald deBethizy and Pamela Klein. Non-director

members of the research and development committee include David Lacey, 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.

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;

•

performing strategic reviews of our key research and development programs;

•

reporting to our Board of Directors on the outcome of the strategic reviews;

•

reviewing our scientific publication and communications plan;

•

evaluating and challenging the effectiveness and competitiveness of our research

and development endeavors;

•

reviewing and discussing emerging scientific trends and activities critical to the

success of our research and development;

•

reviewing our clinical and preclinical product pipeline; and

•

engaging in attracting, retaining and developing our senior research and

development personnel.

All members of the research and development committee shall have adequate

industrial, academic and/or practical experience with the research and development of

biopharmaceuticals.

One purpose of our research and development committee is to engage in discussion

with our research and development personnel, and the committee’s responsibilities to

carry out this purpose include, among others: monitoring the research and development

activities, performing strategic reviews of the key research and development programs

and reviewing the scientific publication plan, all with the intent to support our innova-

tion mission.

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 delibera-

tions, including any recommendations to the Board of Directors or the senior manage-

ment 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.

See section 3.3.7 “

Report Research and Development Committee

” for an overview of

the number of meetings and attendance rates.

Commercial Committee

Our commercial 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 commercial committee consists of three permanent members: James M.

Daly (chairperson), Anthony A. Rosenberg and Camilla Sylvest.

The commercial committee is responsible for, among other things:

•

reviewing the performance of our commercial activities;

•

serving as a sounding board to our branded and unbranded strategic marketing plans,

size and scope of our franchises, pre and post launch market access plan of action;

•

reviewing and discussing global commercial and political trends affecting our

industry and development; and

•

reporting to our Board of Directors on the outcome of the strategic reviews.

The non-executive directors shall appoint and dismiss the members of the com-

mercial committee. All members of the commercial committee shall have adequate

industrial, academic and/or practical experience with the commercialization of (bio)

pharmaceuticals.

Our commercial committee meets as often as is required for its proper functioning and

in practice meets at least once per quarter. The commercial committee reports regularly

to our Board of Directors on the outcome of its strategic reviews and any recommenda-

tions to the Board of Directors or senior management team. See section 3.3.8 “

Report

Commercial Committee

” for an overview of the number of meetings and attendance

rates.

3.2.4 Non-Executive Directors

Our Board of Directors as of December 31, 2022 comprised the following eight non-

executive directors:

Peter K. M. 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 also serves on

the board of directors of Participatiemaatschappij Vlaanderen

NV since May 2018, as chairman of the board of Haretis SA

(Luxembourg) since March 2011, and as member of the board

of directors of miDiagnostics since April 2020. Mr. Verhaeghe

also serves as the chairman of the LP & advisory committee

of Bioqube Factory Fund I NV. Mr. Verhaeghe served as the

president of the board of directors of Merisant France SAS, as a

member of the management board of Merisant Company 2 sàrl

and as a member of the board of directors of CzechPak Manufac-

turing s.r.o. He previously also served as director of Innogenetics NV

(Belgium), Tibotec-Virco NV, Biocartis SA, and as the chairman of the

board of directors of PharmaNeuroBoost NV and as liquidator in charge of KBC Private

Equity Fund Biotech NV from April 2009 to December 2012. Mr. Verhaeghe holds a

degree in law (J.D.) from the University of Leuven and an LL.M. degree from Harvard Law

School. At the annual General Meeting held on May 10, 2022 (

2022 Annual Meeting

he was reappointed for a new term of 2 years.

Dr. Werner Lanthaler (until February 27, 2023)

Dr. Werner Lanthaler has served as a member of our Board of Directors from July 2014

until February 27, 2023. Dr. Lanthaler is the CEO of Evotec SE, a global drug discovery

and development organization, a position he has held since March 2009.

He also serves on the supervisory board of AC Immune SA (Switzerland).

Dr. Lanthaler previously served on the supervisory boards of Bioxell SpA

and Pantec Biosolutions AG. Dr. Lanthaler holds a degree in psycho-

logy, a Ph. D. in business administration from Vienna University

of Economics and Business and a Master’s degree in public

administration from Harvard University. The Board of Directors

nominated Mr. Lanthaler for re-appointment for a term of an

additional 2 years during our 2022 General Meeting. Such re-

appointment beyond the first 8 years on our Board of Directors

was deemed in the best interest of the Company, to allow for the

successful selection, appointment and onboarding of Mr. Lanthaler’s

successor. Mr. Lanthaler resigned from our Board of Directors following

our board meeting of February 28, 2023 upon appointment and onboarding of

Mr.Krognes, who was appointed as a non-executive director of the Company and

chairperson of the Company’s audit and compliance committee.

Mr. Steve Krognes (effective February 27, 2023)

Mr. Krognes serves as a member of our Board of Directors and as a chairperson of our

audit and compliance committee since February 27, 2023. Mr. Krognes also serves on

the boards of directors of Guardant Health, Inc., Denali Therapeutics, Inc.,

and Gritstone bio, Inc. He previously served on the board of directors

of RLS Global AB and Corvus Pharmaceuticals, Inc. Mr. Krognes was

the chief financial officer of Denali Therapeutics, Inc., from 2015

until retiring from that position in April 2022. Steve joined Denali

Therapeutics, Inc., as the founding chief financial officer, building

and leading the finance team as well as supervising the IT and

facilities functions. He led successful financings for Denali

Therapeutics, Inc., including the initial public offering in 2017,

and has contributed significantly to the company’s strategy,

growth and strong financial position. His extensive leader-

ship experience in the biotech and pharmaceutical industry

includes 12 years in total at Roche and Genentech, Inc., serving

as chief financial officer of Genentech, Inc., for six years and global

head of Roche’s mergers & acquisition team for six years. He chaired

the Genentech Access to Care Foundation and represented Genentech on the board and

executive committee of the California Life Science Association. Before that, he worked

as an investment banker at Goldman Sachs, as a management consultant at McKinsey

& Company, and as a venture capitalist in Scandinavia. Mr. Krognes holds a master’s in

business administration (

MBA

) from Harvard Business School and a Bachelor of Science

in economics from the Wharton School of the University of Pennsylvania.

Dr. J. Donald deBethizy

Dr. J. 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 and

financial, business and operating management and board work in the biotechnology and

consumer products industry. He is the president of White City Consulting ApS an

executive coaching company. He currently serves on the supervisory boards of

Lophora ApS, Newron Pharmaceuticals SpA, Proterris, Inc. and a board

advisor for NDA Regulatory Service AB. Previously, Dr. deBethizy ser-

ved as president and CEO of Santaris Pharma A/S until October

2014, when the company was sold to Roche. From August

2000 to June 2012, Dr. deBethizy was co-founder and

CEO of Targacept, Inc. (

Targacept

), a U.S. biotechnology

company listed on Nasdaq. From May 2013 to Novem-

ber 2014, he served as executive chairman of Contera

Pharma ApS until it was sold to Bukwang Pharma

(Korea), and from July 2015 to November 2017, he served

as chairman of Rigotec GmbH until it was sold to Merck, Inc.

He previously served on the boards of Albumedix Ltd (Chair, company

sold to Sartorius AG in September 2022), Saniona AB (Chair), Asceneuron SA,

TME Pharma NV (Chair, TME NV and AG), Serendex Pharmaceuticals A/S, Enbiotix, Inc.,

Targacept, Ligocyte Pharmaceuticals until it was sold to Takeda Pharmaceutical Co Ltd

and Biosource, Inc. Dr. deBethizy has held adjunct appointments at Wake Forest Uni-

versity Babcock School of Management, Wake Forest University School of Medicine and

Duke University. Dr. deBethizy holds a B. Sc. in biology from the University of Maryland,

and an M.Sc. and a Ph.D. in toxicology from Utah State University.

Dr. Pamela Klein

Dr. Pamela Klein has served as a member of our Board of Directors since April 2016.

Dr. Klein is a principal and founder of PMK BioResearch, which offers strategic consulting

in oncology drug development to corporate boards, management teams and

the investment community, a position she has held since 2008. She

currently serves as a member of the board of directors of several

companies including F-Star Therapeutics, Inc., I-Mab and Patrys

Ltd; as well as various scientific advisor boards. Previously,

Dr. Klein served on the board of directors of Jiya Acquisition

Corp. Dr. Klein also spent seven years at the National Cancer In-

stitute as Research Director of the NCI-Navy Breast Center, af-

ter which she joined Genentech as Vice President, Development

until 2001. She served as chief medical officer for Intellikine, Inc.,

which was acquired by Takeda American Holdings. Dr. Klein holds

a Bachelor’s degree in biology from California State University and

an M.D. from Stritch School of Medicine, Loyola University Chicago

and is trained in internal medicine and medical oncology.

Anthony A. Rosenberg

Anthony A. Rosenberg has served as a member of our Board of Directors since April

2017. He currently serves as CEO of TR Advisory Services GmbH, his own consultancy firm

advising on business development, licensing and mergers and acquisitions. Mr. Rosenberg

also currently serves on the boards of directors of SiO2 Material Science,

Oculis SA (chairman) and Cullinan Oncology (chairman). Previously

Mr. Rosenberg held the positions of Managing Director at MPM Capital,

a venture capital firm (2015 until 2020); head of M&A 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

at Radius Health, Inc., TriNetX, Inc., iOmx Therapeutics AG, and

Clinical Ink. Msc. A.A. Rosenberg has a B.Sc. (Hons) from the

University of Leicester and a M.Sc. Physiology from the University

of London.

James M. Daly

James M. Daly has served as a member of our Board of Directors since May 2018.

He joined GlaxoSmithKline in 1985 where he held various positions, including

sr. vice president – respiratory division with with full responsibility for sales,

marketing and medical affairs. He moved to Amgen in 2002 where he

was sr. vice president for the North America commercial opera-

tions 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. Mr. Daly

currently serves as a director of Acadia Pharmaceuticals,

Inc., Halozyme, Bellicum Pharmaceuticals, Inc. and Mad-

rigal Pharmaceuticals, Inc., all Nasdaq-listed companies.

Mr. Daly holds a Bachelor of Science and an MBA from

the University at Buffalo, State University of New York. He was

reappointed for a new 4-year term at the 2022 General Meeting.

Camilla Sylvest

Camilla Sylvest was appointed as non-executive director on September 8, 2022 and

brings strong strategic and operational leadership in the scaling of global commercial

pharmaceutical organizations with a specific focus on company culture and sustainability.

Camilla Sylvest currently serves as the executive vice president, commer-

cial strategy & corporate affairs of Novo Nordisk A/S. Ms. Sylvest also

serves as the vice chair of the World Diabetes Foundation Board

and as a member of the board of directors of Danish Crown A/S.

Camilla Sylvest has more than 25 years of working experience

within Novo Nordisk A/S and was based in Switzerland, Denmark,

Germany, Malaysia and the PRC.

Over the years, Camilla Sylvest headed up affiliates of growing

size and complexity in Europe within Novo Nordisk A/S and

she was also corporate vice president business area Oceania and

Southeast Asia and senior vice president and general manager Novo

Nordisk region China. Camilla Sylvest holds a Master of Science in Economics

from the University of Odense, Denmark and an executive MBA from the Scandinavian

Management Institute in Copenhagen, Denmark.

Ana Cespedes

Ana Cespedes was appointed as non-executive director on December 12, 2022 and

brings robust experience across a broad range of critical areas for commercialization and

access, as well as for organizational effectiveness.

Ana Cespedes is the chief operating officer of the International

AIDS Vaccine Initiative (

IAVI

), a global organization dedicated to

developing accessible vaccines and antibodies for infectious

diseases. Prior to joining IAVI, Ms. Cespedes held several roles

at Merck KGaA, based in Boston, MA, most recently serving

as senior vice president, global marketing & strategy.

Ms. Cespedes 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 in-

novative medicines. Prior to that, Ms. Cespedes led the first integ-

rated 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.

Ms. 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.

Ms. Cespedes holds a B.S. and a Pharm.D. from the Complutense University of Madrid,

and an MBA from IESE Business School.

The following table sets forth certain information with respect to the current non-execu-

tive members of our Board of Directors, including their ages, as of December 31, 2022.

Name

Age

Gender

Position

Nation-

ality

Date of Initial

Appointment

Date of last (re-)

appointment

Term

expiration

Peter K. M. Verhaeghe

Non-Executive

Director

(chairperson)

Belgium

October 15, 2008

May 10, 2022

2026

Werner Lanthaler

Non-Executive

Director (vice-

chairperson)

Austria

July 9, 2014

May 10, 2022

2024

J. Donald deBethizy

Non-Executive

Director

U.S.

May 13, 2015

May 7 2019

2023

Pamela Klein

Non-Executive

Director

U.S.

April 28, 2016

May 12, 2020

2024

Anthony A. Rosenberg

Non-Executive

Director

April 26, 2017

May 11, 2021

2025

James M. Daly

Non-Executive

Director

U.S.

May 8, 2018

May 10, 2022

2026

Camilla Sylvest

Non-executive

director

Denmark

September 8,

2022

September 8,

2022

2026

Ana Cespedes

Non-executive

director

Spain

December 12,

2022

December 12,

2022

2026

Werner Lanthaler resigned effective February 27, 2023 and was succeeded by Steve Krognes effective February 27, 2023 whose

term will expire at our 2027 annual General Meeting.

The address for our non-executive directors is our registered office, Laarderhoogtweg

25, 1101 EB Amsterdam, the Netherlands.

Steve Krognes was appointed at an extraordinary General Meeting on February 27,

2023. Peter K.M. Verhaeghe, and James M. Daly were re-appointed at the 2022 General

Meeting.

The following table sets forth the companies and partnerships of which the current non-

executive members of our Board of Directors have been a member of the administrative,

management or supervisory bodies or partner at any time in the previous five years,

indicating whether or not the individual is still a member of the administrative, manage-

ment or supervisory bodies or partner, as of the date of this Annual Report, other than

argenx or our subsidiaries:

Name

Current

Past

Peter K. M. Verhaeghe

VVGB Advocaten – Avocats

PharmaNeuroBoost NV

Haretis SA

Biocartis SA

Participatiemaatschappij

Vlaanderen NV

Fujirebio Europe NV

(formerly Innogenetics NV)

miDiagnostics NV

Tibotec-Virco NV

Bioqube Factory Fund I NV

Merisant France SAS

Merisant Company 2 sàrl

CzechPak Manufacturing s. r. o.

Bever Zwerfsport BV

Werner Lanthaler

Evotec SE

Bioxell SpA

AC Immune SA

Pantec Biosolutions AG

J. Donald deBethizy

White City Consulting ApS

Rigotec GmbH

Newron Pharmaceuticals SpA

TME Pharma NV and AG

Protteris, Inc.

Saniona AB

Lophora ApS

Albumedix A/S

Albumin Holdings ApS

Asceneuron SA

Innovent LLC

Pamela Klein

PMK BioResearch

Olema Oncology

Patrys Limited

Jiya Acquisition Corp.

I-Mab

F-Star Therapeutics, Inc.

Werner Lanthaler resigned effective February 27, 2023 and was succeeded by Steve Krognes effective February

27, 2023 whose term will expire at our 2027 annual General Meeting.

Name

Current

Past

Anthony A. Rosenberg

Cullinan Oncology, Inc.

Radius Health, Inc.

Oculis SA

TriNetX, Inc.

TR Advisory Services GmbH

Clinical Ink, Inc.

iOmx Therapeutics AG

MPM Capital

SiO2 Material Science

James M. Daly

Acadia Pharmaceuticals, Inc.

Chimerix, Inc.

Halozyme Therapeutics, Inc.

Bellicum Pharmaceuticals, Inc.

Madrigal Pharmaceuticals

Coherus Biosciences

Camilla Sylvest

Novo Nordisk

–

World Diabetes Foundation

Crown A/S

Ana Cespedes

Instituto ProPatients

Merck KGaA

Merck Spain

Serono Iberia

Arthur Andersen

Steve Krognes

Denali Therapeutics, Inc.

R/S Global

Guardant Health, Inc.

Corvus Pharmaceuticals, Inc.

Gritstone bio, Inc.

3.2.5 Senior Management

Our senior management team acts as our executive management. Of these people,

only our CEO, Mr. Tim Van Hauwermeiren, is part of our Board of Directors as executive

director. Our senior management team comprised of the following persons in 2022 and

on the date of this Annual Report (appointment/retirement dates noted as relevant):

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. Mr. Van Hauwermeiren has more than 20 years of

general management and business development experience

across the life sciences and consumer goods sectors.

Mr. Van Hauwermeiren holds a Bachelor of Science and

Master of Science in bioengineering from Ghent Univer-

sity (Belgium) and an executive MBA from The Vlerick

School of Management. Tim Van Hauwermeiren serves

on the board of directors of iTeos Therapeutics, Inc.,

and Aelin Therapeutics NV where he is chairman. At our

2022 General Meeting, he was reappointed as executive

director to the Board of Directors for a new term of four years.

Keith Woods

Keith Woods has served as our chief operating officer from April

2018 to March 2023, at which time, he was succeeded by Karen

Massey. Mr. Woods will transition to serve as an advisor to our

Board of Directors. Mr. Woods has over 30 years of experience

in the biopharmaceutical industry. He most recently served

as senior vice president of North American operations for

Alexion Pharmaceuticals, Inc. (

Alexion

), where he managed

a team of several hundred people in the U.S. and Canada

and was responsible for more than $1 billion in annual sales.

Within Alexion, he previously served as vice president and

managing director of Alexion UK, overseeing all aspects of Alexion’s

UK business, vice president of U.S. operations and executive director

of sales, leading the launch of Soliris in atypical hemolytic uremic syndrome.

Prior to joining Alexion, he held various positions of increasing responsibility within

Roche, Amgen and Eisai Co., Ltd., over a span of 20 years. Keith Woods holds a Bachelor

of Science in marketing from Florida State University.

Karen Massey (effective March 13, 2023)

Karen Massey has served as our chief operating officer 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 develop-

ment 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 ma-

nagement consultant at Bain & Company, to take on leadership

positions in corporate strategy, sales and as a commercial lead in

Latin America. Ms. Massey holds a Bachelor of Economics from the

University of Sydney and an MBA from the NYU Stern School of Business.

Karl Gubitz

Karl Gubitz has served as our chief financial officer since June 2021. Mr. Gubitz worked

at Pfizer, Inc., for nearly 20 years, most recently as vice president of finance within the

global oncology business. During his tenure at Pfizer, Inc., he successfully negotiated

the commercialization model for tanezumab with Eli Lilly and Company in all non-U.S.

markets as well as the Myovant Sciences Ltd. co-commercialization agreement

for Orgovyx™.

Within Pfizer, Inc., Mr. Gubitz held country, regional, and global

positions, and consistently delivered top-line growth. He mana-

ged 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 Pricewater-

houseCoopers LLP.

He holds an MBA from Henley Management College in the UK,

Bachelor’s degree in computing from the University of South Africa,

and Bachelor of commerce from the University of Pretoria.

Prof. Hans de Haard

Prof. Hans de Haard is a co-founder of argenx and has served as our chief

scientific officer since July 2008. Prof. de Haard has been active in the

antibody engineering field since 1989. He also serves as a Professor

of immunology at University of Franche-Comté (France). Prof. de

Haard holds a Master of Science in biochemistry from the Higher

Professional Education for Laboratory Technicians (Oss, the

Netherlands) and a Master of Science in chemistry from the

Institute of Technology (Rotterdam, the Netherlands) and a

Ph. D. in molecular immunology from Maastricht University.

Prof. de Haard retired as chief scientific officer as of December

31, 2022 and was subsequently appointed as member of our

research and development committee, in which capacity Prof. de

Haard will remain involved with the Company as scientific advisor

and as ambassador of our IIP.

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; most recently, as our head of clinical science. As a re-

search 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 study.

He subsequently transitioned to become the lead scientist of our

efgartigimod program. Dr. Ulrichts holds a Bachelor of Science in

chemistry from Katholieke Universiteit Leuven, Belgium, as well as a

Master’s degree in Biotechnology and Ph.D. in Biomedical Sciences, both

from the University of Ghent, Belgium.

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 biopharmaceu-

tical and medical device industries. She was most recently senior vice

president and chief deputy general counsel, 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 ten 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. She

holds a Bachelor of Arts in political science and economics from

the University of North Carolina at Chapel Hill and a Bachelor of Laws

from the Faculty of Law at Queen’s University in Canada.

Luc Truyen

Luc Truyen has served as our chief medical officer since April 2022 and

previously served as our head of research and development opera-

tions management from September 2021 to April 2022. Prior to

this, Dr. Truyen was with Johnson & Johnson for over 20 years

holding various leadership positions, primarily within neuro-

science. In his most recent position prior to joining argenx, Dr.

Truyen was global head of development and external affairs –

neuroscience for neuroscience managing strategy and delivery

of the early and late portfolio of assets for mood disorders

and schizophrenia, and neurodegenerative and neuroinflam-

matory disorders. Besides Dr. Truyen’s strong track record in

clinical development resulting in several global innovative drug

approvals, his broad-based experience also includes leading

global clinical development operations for the whole Johnson &

Johnson pharmaceutical group as well as serving as head of the re-

search and development and chief medical officer of Janssen Alzheimer Immunotherapy

Research & Development LLC, an internal spin-out from Johnson & Johnson. Dr. Truyen

holds an M.D. and Ph.D. in Neurology from the University of Antwerp, Belgium.

Wim Parys (until March 31, 2022)

Wim Parys joined the Company as chief medical officer in 2019 and retired as on March

31, 2022. He had over 25 years of experience leading successful clinical programs in

biopharma, including the development and regulatory submission of seven

now-approved drugs. Prior to argenx, Mr. Parys was the research and

development head of the newly established global public health group

at Janssen (Johnson & Johnson) responsible for a portfolio including

programs in human immunodeficiency virus (

HIV

) (developing first

long-acting therapy), tuberculosis (

), dengue fever and malaria.

Before this, Mr. Parys was the head of development of the

infectious disease therapeutic area of Janssen and Tibotec Phar-

maceuticals Ltd. where he developed and launched innovative

drugs for HIV (Prezista™, Intelence™ and Edurant™), Hepatitis C

(Incivo™, Olysio™/Sovriad™), and TB (Sirturo™). Mr. Parys star-

ted his career within the Johnson & Johnson organization at the

Janssen Research Foundation in Belgium where he led the research

and development team developing galantamine (Reminyl™/Raza-

dyne™) for Alzheimer’s disease. Mr. Parys obtained his medical degree from

the Katholieke Universiteit in Leuven, Belgium and worked in private practice for nine

years prior to joining the industry. Following his retirement, Mr. Parys was appointed as

member of our research and development committee, in which capacity Mr. Parys has

agreed to continue to serve as medical advisor to the Company.

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.

He holds a Bachelor of Science in life science & technology

from the University of Groningen and a Master of engineering

management from Duke University.

Andria Wilk

Andria Wilk joined argenx as global head of quality in 2020. Ms. Wilk has more

than 20 years of experience in quality assurance (

) within the phar-

maceutical industry. Most recently, Ms. Wilk served as senior direc-

tor, head of medical, regulatory & clinical QA (

MRC QA

) at H

Lundbeck A/S (

Lundbeck

), where she managed the global MRC

QA group based in the EU, U.S. and Asia. In this role, she was re-

sponsible for the global audit programs and QA support for all

clinical trial and post-marketing activities and related computer-

ized systems. Prior to Lundbeck, she held various QA positions of

increasing responsibility within AstraZeneca PLC, Takeda Global

Research and Development Centre Europe and Astellas Pharma,

Inc. Ms. Wilk holds a joint Bachelor of Science in pharmacology

and biochemistry and is a member of Research Quality Association.

The following table sets forth certain information with respect to the members of our

senior management, including their ages, as of December 31, 2022 and as of the date

of this Annual Report:

Name

Age

Position

Nationality

Date of Initial

Appointment

Tim Van Hauwermeiren

CEO and Executive Director

Belgium

July 15, 2008

Keith Woods

Chief Operating Officer

U.S.

April 5, 2018

Karen Massey

Chief Operating Officer

Australian

March 13, 2023

Karl Gubitz

Chief Financial Officer

South Africa

June 1, 2021

Prof. Hans de Haard

Chief Scientific Officer

The Netherlands

July 1, 2008

Peter Ulrichts

Chief Scientific Officer

Belgium

January 1, 2023

Malini Moorthy

General Counsel

Canada

February 14, 2022

Arjen Lemmen

Vice-President Corporate

Development & Strategy

The Netherlands

May 1, 2016

Andria Wilk

Global Head of Quality

January 13, 2020

Luc Truyen

Chief Medical Officer

Belgium

April 1, 2022

Keith Woods retired as COO effective March 13, 2023 and was succeeded by Karen Massey effective

March 13, 2023.

Hans de Haard retired effective January 1, 2023 and was succeeded by Peter Ulrichts effective

January 1, 2023.

Malini Moorthy was appointed as general counsel effective February 14, 2022.

Luc Truyen succeeded Wim Parys who retired as our chief medical officer effective April 1, 2022.

The address for our senior management is Industriepark-Zwijnaarde 7, 9052 Zwijnaarde

(Ghent), Belgium.

The following table sets forth the companies and partnerships of which the members

of our senior management (or persons who have been members of our senior manage-

ment in 2022) have been a member of the administrative, management or supervisory

bodies or partner at any time in the previous five years, indicating whether or not the

individual is still a member of the administrative, management or supervisory bodies

or partner, as of the date of this Annual Report, other than argenx or our subsidiaries:

Name

Current

Past

Tim Van Hauwermeiren

Iteos Therapeutics, Inc.

–

Aelin Therapeutics NV

Keith Woods

–

Karen Massey

–

Genentech, Inc.

Karl Gubitz

–

Pfizer, Inc.

Prof. Hans de Haard

–

Peter Ulrichts

–

Malini Moorthy

–

Pfizer, Inc.

Bayer Corporation

Medtronic plc

Arjen Lemmen

–

Andria Wilk

–

H Lundbeck A/S

Luc Truyen

–

Johnson & Johnson

Keith Woods retired as COO effective March 13, 2023 and was succeeded by Karen Massey effective

March 13, 2023.

Malini Moorthy was appointed as our general counsel effective February 14, 2022.

Luc Truyen succeeded Wim Parys who retired as our chief medical officer effective April 1, 2022.

3.2.6

Confirmation of No Past Offenses

As of the date of this Annual Report and except as set out below, none of the members of

our Board of Directors and senior management team for at least the previous five years:

•

has been convicted of any fraudulent offenses;

•

has been a senior manager or a member of the administrative, management or

supervisory bodies of any company at the time of or preceding any bankruptcy,

receivership, liquidation or of such company being put into administration;

•

has been subject to any official public incrimination and/or sanction by any statutory

or regulatory authority (including any designated professional body); or

•

has ever been disqualified by a court from acting as a member of the administrative,

management or supervisory bodies of any company or from acting in the

management or conduct of affairs of any company.

3.2.7

Conflict-of-Interest Transactions

Directors must immediately report any (potential) direct or indirect personal interest in a

matter that conflicts with the interests of the Company and the business connected with

it to the chairperson of our Board of Directors and to the other directors. Directors must

also provide all relevant information, including information concerning their spouse,

registered partner or other partner, foster child and relatives by blood or marriage up

to the second degree as defined under Dutch law (Section 1:3 paragraph 1 of the DCC).

The non-executive directors will decide, without the director concerned being present,

whether there is a conflict of interest. Under Dutch requirements, a conflict of interest

in relation to a director in any event exists if we intend to enter into a transaction with

a legal entity (i) in which such director personally has a material financial interest,

(ii) which has an executive director or a member of the management board who is

related under family law to such director or (iii) in which such director has an executive

or non-executive position. A director will not participate in any discussions and decision

making if he or she has a conflict of interest in the matter being discussed. In case be-

cause of this no resolution can be adopted by the executive directors, the non-executive

directors will resolve on the matter. All transactions in which there are conflicts of inte-

rest with directors will be agreed on terms that are customary in the sector concerned.

Decisions to enter into transactions in which there are conflicts of interest with directors

that are of material significance to us or to the relevant director require the approval

of the non-executive directors. All transactions between us and legal or natural persons

who hold at least one tenth of our shares will be agreed on terms that are customary

in the sector in which we and our combined businesses are active. The non-executive

directors are required to approve such transactions that are of a material significance to

us or to such persons.

Dutch law provides that transactions with related parties are material and thereby

require approval of the Board of Directors if they are (a) not entered into in the ordinary

course of our business or (b) not concluded on normal market terms. The Board of Di-

rectors has established an internal procedure to periodically assess whether transactions

are concluded in the ordinary course of business and on normal market terms. We must

make material transactions must be made public by argenx at the time the transaction is

entered into. Transactions with related parties are considered material if (i) information

on the transaction qualifies as inside information under the (Regulation (EU) No.

596/2014) (

MAR

) and (ii) such transaction is entered into with one or more

holders of shares in argenx representing at least 10% of issued share capital, or a

member of our Board of Directors. Transactions that are individually non-material, but

which are entered into with the same related party during the same fiscal year, must be

evaluated in the aggregate to determine if they are material.

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. There are no conflicts of interests

between argenx and any administrative, management and supervisory bodies and

senior management, nor are there any potential conflicts of interests of the members of

our Board of Directors and senior management between any duties to argenx and their

private interests and or other duties.

3.2.8

Code of Business Conduct and 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

The audit and compliance committee of our Board of Directors is responsible for overse-

eing 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.

3.3

Report of the

Non-Executive Directors

3.3.1

Meetings

Our Board of Directors had five formal meetings in the course of 2022. The meetings

were held in the months March, May, July, September and December, most of which

were held (partially) via videoconferencing due to restrictions related to the COVID-19

pandemic. The committees of the Board of Directors also convened regularly (see also

sections 3.3.5 “

Report Audit and Compliance Committee

” to 3.3.8 “

Report Commercial

Committee

” below for the separate reports of the committees).

All Board of Director meetings and all 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.

3.3.2

Attendance Record Board

of Director Meetings

In 2022, five 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 2022 since appointment

Attendance

(in %)

Peter K. M. Verhaeghe (chairperson)

100

Tim Van Hauwermeiren

100

Werner Lanthaler

100

J. Donald deBethizy

100

Pamela Klein

100

Anthony A. Rosenberg

100

James M. Daly

100

Yvonne Greenstreet

–

Camilla Sylvest

100

Ana Cespedes

100

Yvonne Greenstreet resigned from our Board of Directors in March 2022.

Camilla Sylvest was appointed as member of our Board of Directors on September 8, 2022.

Ana Cespedes was appointed as member of our Board of Directors on December 12, 2022.

In 2022, all of the five 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, except one meeting held in March, which was not attended by Yvonne

Greenstreet.

Name

Number of meetings attended

in 2022 since appointment

Attendance

(in %)

Peter K. M. Verhaeghe (chairperson)

100

Werner Lanthaler

100

J. Donald deBethizy

100

Pamela Klein

100

Anthony A. Rosenberg

100

James M. Daly

100

Yvonne Greenstreet

–

Camilla Sylvest

100

Ana Cespedes

100

Yvonne Greenstreet resigned from our Board of Directors in March 2022.

Camilla Sylvest was appointed as member of our Board of Directors on September 8, 2022.

Ana Cespedes was appointed as member of our Board of Directors on December 12, 2022.

3.3.3 Activities

The agenda for the Board of Directors included long-term value creation as well as the

manner in which the senior management team implements our strategy, our culture to

ensure proper monitoring by the non-executive directors, our financial position as well

as the results of our subsidiaries, acquisitions, large investment proposals, yearly bud-

get, director changes and the internal risk management and control system, diversity,

equity and inclusion policy, adjustment of board fees and changes of office locations.

In 2022, specific attention was given to the statutory and governance topics including

the long-term succession and contingency planning of the Board of Directors and senior

management, leading to the appointment of Ms. Camilla Sylvest and Ms. Ana Cespedes

as non-executive director to our Board of Directors, the re-appointment of Mr. Peter

K.M. Verhaeghe, Mr. James Michael Daly and Mr. Werner Lanthaler as non-executive

directors and the re-appointment of Mr. Tim Van Hauwermeiren as executive director.

The Board of Directors furthermore discussed the long-term succession planning of the

senior management team leading to the appointment of Ms. Malini Moorthy as our

general counsel, Mr. Luc Truyen as our chief medical officer and Mr. Peter Ulrichts as

our chief scientific officer. The Board of Directors discussed the impact of COVID-19 and

related mitigating measures, business updates, review and approval of forecasts, the

Company’s preparation of and execution of commercial launches relating to VYVGART

in the U.S., Japan and Europe, and product portfolios, business and corporate develop-

ment, review and approval of consolidated financial statements, update research and

developments, committee reports, financing of the Company and the approval of the

proposed agenda’s and other meeting documents for General Meetings. The Board of

Directors discussed the appointment of Mr. Hans de Haard and Mr. Wim Parys as mem-

bers of our research and development committee. The Board of Directors furthermore

specifically discussed the input received from shareholders with respect to its remune-

ration policy and practices, its progress towards achieving the newly approved goals for

gender diversity in the Board of Directors and the Company leadership team and the

implementation and oversight over the Company’s healthcare compliance program.

3.3.4 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 2022 this 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 each member of the Board of Directors, followed by

a debrief to 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 2022. The Board of Directors identified certain strengths and weaknesses and

adopted a plan for further board development and succession in 2023.

3.3.5

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 argenx and its subsidiaries as a whole.

In 2022, the main points of discussion at the meetings were the key findings and risk

areas of the 2022 gap analysis on compliance, the key findings of the 2022 gap analysis

on ESG, the 2021 ESG report, the 2021 consolidated financial statements and press re-

lease, internal audit plan for 2022, internal and external auditors’ 2021 audit reports, the

interim consolidated financial statements and press releases, the external auditor’s 2021

audit plan and external audit report for the year 2022, the interim financial statements,

review of quarterly forecasts, updates on internal control activities, updates on corporate

audit activities, updates on tax priorities, policy and audit, update on the impact of the

Russia/Ukraine conflict on the risk reporting, and updates on cash, cash equivalents and

financial assets, the Company’s enterprise risk management system and dashboard, the

company’s corporate ethics and compliance program and the Company’s data privacy

program.

In 2022, seven audit and compliance committee meetings were held. The meeting

attendance rate for our directors is set out in the table below.

Name

Number of meetings attended

in 2022 since appointment

Attendance

(in %)

Peter K. M. Verhaeghe

100 %

Werner Lanthaler (chairperson)

85.71 %

100

Anthony A. Rosenberg

100 %

100

James M. Daly

100 %

100

3.3.6

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 senior management. During their deliberations in

2022, the main topics of discussion were the design and implementation of our diversity,

equity and inclusion policy, the review and discussion of our social disclosures in our

2021 ESG report, the long-term succession and contingency planning for the Board of

Directors and senior management, the achievements of senior management’s 2022

targets and their remuneration, the outcome of our say-on-pay vote at our 2022 General

Meeting and the numerous investor interactions in relation thereto to ensure broad

societal support for our remuneration practices and the strategy for our ESG reporting

on social aspects in 2023 and beyond.

In 2022, four 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 2022 since appointment

Attendance

(in %)

Peter K. M. Verhaeghe

100

Werner Lanthaler

100

J. Donald deBethizy (chairperson)

100

Yvonne

Greenstreet

–

One meeting was held prior to Yvonne Greenstreet’s resignation in 2022, which Mrs. Greenstreet was

unable to attend.

3.3.7

Report Research and

Development Committee

The research and development committee functions as a sounding board to our re-

search and development management, general management and the Board of Directors,

and monitors our research and development goals, strategies and measures. In 2022,

the committee held five 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 2022 since appointment

Attendance %

J. Donald deBethizy

Pamela Klein

100

David Lacey

100

Wim Parys

100

Wim Parys was appointed as non-director member of the research and development committee as of

May 3, 2022.

3.3.8 Report Commercial Committee

The commercial committee functions as a sounding board on branded and unbranded

strategic marketing plans for the Board of Directors. In 2022, the committee held

five formal meetings, in which it focused mainly on our preparation and subsequent

execution of our launch of VYVGART in gMG in the U.S., Japan, Europe, the Middle East

and Africa 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 2022 since appointment

Attendance %

Anthony A. Rosenberg

100

James M. Daly (chairperson)

100

Camilla Sylvest

100

Camilla Sylvest was appointed as a member of the commercial committee as of September 8, 2022.

3.4

Remuneration Report and

Compensation Statement

3.4.1

Introduction

We are pleased to present our 2022 remuneration report and compensation state-

ment. At our 2021 General Meeting, we received just over 51% approval for our 2021

remuneration report and compensation statement. Recognizing that there is room for

improvement, we have since had over 30 bilateral engagement meetings with share-

holders and shareholder representatives (jointly representing an estimated 50% or

more of our share capital) to obtain their feedback and understand any concerns with

our remuneration policy and practices. We believe that shareholder engagement is a

fundamental element in the decision-making process and therefore we actively seek

feedback on an ongoing basis. We have carefully considered the feedback received and

have reviewed our remuneration practices in the key markets where we compete for

talent. We also compared our practices to our most recent reference group data (as

of September 2022). The results of these efforts have led to a number of key changes

to our remuneration practices and a higher level of detail in this remuneration report

compared to prior years. We are committed to continually reviewing and improving our

remuneration and remuneration reporting practices.

Before going into detail on the key changes we have made, we want to highlight the

fact that as a dual listed, global biotech company, we face some unique challenges in

establishing an effective and appropriate performance-based remuneration programme.

In particular, it is challenging to balance adherence to local market (Dutch) remuneration

best practices and those of the countries in which we are listed (Belgium and the U.S.) as

these requirements are different and sometimes in conflict. Adding to this challenge, we

are simultaneously striving to ensure a remuneration structure that is competitive in the

global markets for talent in which we compete, in particular in the U.S. This is especially

true with respect to the design of our long-term incentive program in the form of equity

compensation, which was a recurring topic in most of the investor engagements we had

in the 12 month period leading up to this Annual Report. To be succesful in our global

mission, we need to effectively compete for top talent across a number of regions which

have differing and at times conflicting remuneration practices. To be able to effectively

compete for talent, we collect benchmark data on the composition and size of remune-

ration packages offered by our reference companies in these key jurisdictions, including

both EU and U.S. companies in our reference group (as further detailed in section 3.4.4

below), and to a large extent align our remuneration practices with those of our peers.

We aim to take a balanced approach by adopting practices that help attract top talent

while taking account of the best practices in our home jurisdiction (the Netherlands)

and those of the countries in which our shares are listed (Belgium and the U.S.).

3.4.2

Changes to our remuneration practices

in response to shareholder dissent

The feedback we collected showed differing views on the various remuneration practi-

ces and components including on our equity incentive practices and other methods of

linking pay and performance.

In particular:

We grant stock options to non-executive directors which is a form of performance-

based incentives and as such not in line with Dutch remuneration best practices;

We grant stock options and RSUs to our executives which are linked to Company

(share price) performance but are not linked to individual performance targets;

Some shareholders were of the view that we did not sufficiently disclose the met-

hod of setting award levels under our equity plan;

The RSUs we grant vest in equal portions of 25% over a four-year period, and under-

lying shares may be sold on vesting. This is not in line with Dutch remuneration best

practices (requiring a five-year holding period for shares). Additionaly, we did not

impose holding requirement for executives;

We did not disclose in detail the short-term performance targets and their achieve-

ments and corresponding pay-outs for our CEO and other key executives;

Certain proxy voting agencies held that we did not sufficiently address shareholder

concerns raised in relation to our 2020 annual report (76% majority approved).

To address shareholder feedback, we want to take the opportunity to further explain our

rationale for the abovementioned remuneration practices, and report on any changes to

our remuneration practices (implemented or expected) in relation thereto.

We grant stock options to our non-executive directors which is a form of perfor-

mance-based incentives and is as such not in line with Dutch remuneration best

practices.

With regard to non-executive directors participating in our Equity Incentive Plan

specifically: the DCGC recommends, as best practice, not to grant equity incentives to

non-executive directors; in contrast, the Belgian Corporate Governance Code requires

that at least part of the compensation of non-executive directors be paid in the form of

equity. Moreover, granting equity to non-executive directors is common practice among

the companies in our U.S. reference group (100% of these companies granted equity

in 2021, 94% of which also offered stock options) and to a lesser but still significant

extent, our 2022 EU reference group (56% grant equity, 33% of which also offered stock

options). Considering the anticipated need to attract a number of new, highly qualified

directors to our Board of Directors, our remuneration and nomination committee

recommended our Board of Directors continue to align the remuneration practices for

non-executive directors with those of our global reference group. We note that this

practice continues to be fully aligned with our shareholder-approved remuneration

policy. In 2022, based on the benchmarking exercise performed, we reduced the total

number of equity instruments to be granted to non-executive directors, to re-align the

projected value with the 50th percentile of our reference group.

In addition to stock options being a common remuneration component in the markets

where we compete for talent, they have the advantage of aligning the interests of

our non-executive directors with those of our shareholders. The use of stock options

rewards a focus on long-term value creation over short-term successes, as the value of a

stock option depends on the company’s value increasing in the time between the grant

and exercise of the stock option. To further solidify this effect, we have implemented a

three-year cliff vesting on stock options for non-executive directors and post-termination

holding requirements, to ensure equity incentive instruments are held as long term

investments in the Company.

Some shareholders hold that alignment of interests between the non-executive directors

and the shareholders should be avoided, as it could impact our directors’ independence.

We note that our Board of Directors (with the exception of our CEO) qualifies as

independent under Dutch, Belgian and U.S. independence rules. To address this concern

further, we have updated our Equity Performance Plan such that equity incentives

granted to directors and vested will not be forfeited if directors leave our Board of

Directors, unless they are discharged by the shareholders, thereby ensuring that directors

are not disincentivized from resigning from the Board of Directors if they are unable to

reconcile their views with management team’s or the other directors’. Directors who are

discharged by shareholders, however, will lose their unvested equity. Finally, we have

implemented post-termination holding requirements for non-executive directors which

continue to apply for 24 months after a director leaves the Board of Directors.

We grant stock options and RSUs to our executives which are linked to company

(share price) performance but are not linked to individual performance targets.

Some shareholders disagree with the use of stock options altogether.

Stock options are by nature performance-linked equity instruments. When we grant

options, the exercise price is set at the market value of the shares at the grant date. The

stock options vest over an extended time period (three years) and are bound to further

holding requirements or exercise restrictions for our directors and senior management

team, in line with our equity holding guidelines (see section 3.4.2, paragraph 4 below).

In addition, our executives who are Belgian tax residents (including our CEO) may not

exercise stock options in the first three years after they are granted. As a result, only

successful long-term value creation will lead to an actual value attribution to stock op-

tions, thereby directly aligning shareholder interests with the interests of individual key

persons. Multi-year vesting periods ensure that decision making in favor of long-term

value creation is prioritized over short-term successes. The post-termination holding

requirements further amplify this effect.

A vast majority of our reference group companies continue to use stock options as

an important compensation element. Moving away from stock options may harm our

competitive position in the key jurisdictions where we operate and compete for talent,

which we believe would not support long-term value creation.

Some shareholders have questioned the overall award levels or overall value generated

in the form of stock options. We note that the number of stock options and RSUs we

grant, is based on an expected value of such grant at the time the award level is set,

and which is aligned with the peer group percentile targets explained in section 3.4.4

below. Any value creation beyond the projected value at grant corresponds with real

value generated for our stakeholders, including shareholders, patients and employees,

by delivering on our key company goals and building our Company’s long-term success

and value. We believe that award value realized should not be viewed in isolation, but

should be viewed in light of the overall shareholder return realized. For illustration

purposes, we provide shareholder return realized in the 5-year period for argenx share-

holders versus European and U.S. biotech peers, as well as the Bel20 as reference for

other large cap Belgian listed companies.

Period: 5 years

(comparing closing prices on January 1, 2018 and December 31, 2022)

argenx stock price evaluation

+545%

NASDAQ Biotech index

+22.45%

Next Biotech

+23.55%

Bel20

-6.99%

We have so far not linked the vesting or exercisability of stock options to individual per-

formance targets. However, continued engagement with the Company is a requirement

for vesting equity. Persons who have not performed adequately do not receive full

recurring equity grants but may receive a reduced grant or no grant at all. As a result,

granted and vested stock options are linked to Company performance but are no longer

linked to individual performance, receiving and vesting a grant of stock options requires

continued high performance of the individual.

We are evaluating our options to address shareholder feedback with respect to lin-

king equity awards to performance. Some shareholders were of the view that we did

not sufficiently disclose the method of setting award levels under our equity plan;

We have included a more detailed explanation on how we set award levels under the

Equity Incentive Plan in section 3.4.4 of this Annual Report.

The RSUs we grant, vest in equal portions of 25% over a 4 year period, and under-

lying shares may be sold upon vesting. This is not in line with Dutch remuneration

best practices (requiring a 5 year holding period for shares). Additionally, we did not

impose a holding requirement for executives;

In addition to the participation of non-executive directors in our Equity Incentive

Plan, we also reviewed our reference group’s practices with respect to equity vesting

and exercisability requirements. The DCGC recommends that any shares granted to

executive directors are held for at least five years. However, 100% of our U.S. peers

granted annual equity which vested after one year. Instead of a five- year lockup, our

U.S. reference group companies typically implemented holding requirements which

prescribe a continued holding of company stock at a certain multiple of an individual’s

base salary, but they did not implement extended lock-up periods. In order not to risk

the competitiveness of our plan and to ensure it is in line with market practice, we

continue to allow RSUs to vest over four-years (25% each anniversary of the grant date).

However, to ensure that company equity is held as a long term investment by our non-

executive directors and our senior management team, we have implemented holding

requirements for the duration of their engagement with the Company and a period of

24 months thereafter, as further detailed below:

Holding requirements

Following feedback from our shareholders on our 2021 remuneration report, our Board

of Directors introduced equity holding guidelines for our Board of Directors and senior

management team. The guidelines became effective in February 2022. Under these

guidelines, the following minimum shareholding requirements apply for the following

persons:

•

Non-executive directors: 1-year cash compensation

•

Executive directors: 3-year base cash compensation

•

Senior management members: 1-year base cash compensation

The holding requirements must be built up over a period of no more than five years, and

the shares beneficially held under such holding requirement may not be disposed of for

the duration of such director or senior management member’s service period with the

Company and a period of 24 months thereafter. The holding requirements do not apply

to directors or executives who had already retired or announced their retirement prior

to implementation of the policy on 3 March 2023.

We did not disclose in detail the short term performance targets and their

achievement and corresponding pay out for our CEO and other key executives.

We now disclose (retrospectively) the full set of short term performance targets for our

CEO, CFO and COO, which we understand to be market practice for companies of our

size and in our industry.

Certain proxy voting agencies held that we did not sufficiently address shareholder

concerns raised in relation to our 2021 report (76% majority approved).

We have attempted to collect as much feedback as we could by reaching out to a large

number of stakeholders. We have summarized the key findings of those engagements

in this section and provided detailed explanations and (where appropriate) remediating

actions accordingly.

3.4.3 Remuneration Policy

Our remuneration policy rewards contributions to achieving Company objectives and

generating stakeholder value. We aim to provide competitive remuneration packages

that align with market practices in the key markets where we compete for talent. We

conduct regular reviews (at least once every three years) of director and senior manage-

ment members’ total remuneration compared to our reference companies. Our remu-

neration policy and total compensation aligns or slightly exceeds the market median

for fixed compensation, benefits, and short-term variable compensation. The long-term

incentive component consists of equity grants, is the size of which is positioned between

the 50

and the 75

percentile of our global reference group. Our remuneration policy

2021 is available on our

website

. Our remuneration policy was adopted at the 2021

General Meeting with a 76% majority vote.

3.4.4

Reference Group and Setting

Reward Levels

As explained in section 3.4.1 above, we face challenges in setting remuneration levels

and structures which are competitive in the key markets where we compete for talent,

due to the global nature of our operations. As a result, a key aspect of how we set our

remuneration levels is how we define our reference group for benchmarking purposes,

which is explained in detail in this section 3.4.4.

This section describes how our Board of Directors sets the level of cash compensation

and the award levels under our equity plan. With the help of an independent outside

advisory firm, we conduct periodic reviews of compensation levels for senior manage-

ment and the Board of Directors by comparing against our reference group compensation

levels. The Company reviews the benchmark at least once every three years (the last

review was conducted in September 2022). The outcome of these benchmarking

activities is subsequently reviewed and discussed by our remuneration and nomination

committee, which then prepares recommendations to the Board of Directors for the

adjustment of our remuneration package composition, size and corresponding terms

and conditions.

We use a combined reference group composed of U.S.- and European-based biopharma-

ceutical companies, as we consider Europe and the U.S. key markets for talent in which

we compete. Japanese biopharmaceutical companies were not included in the reference

group as we did not identify any Japanese company that meets the relevant combina-

tion of criteria defined by our remuneration and nomination committee (shared below).

The companies included in the reference group take into account our global ambitions

and include relevant industry peers based on a combination of key criteria as reflected in

the below overview.

As the industry in which we operate is highly dynamic, marked by uncertainty, mergers,

acquisitions, setbacks and successes we aim to maintain a reference group that is com-

prised out of at least 24 companies, meeting a combination of the defined key criteria.

We deem this necessary to ensure that the reference group is representative

of the industry’s current landscape in which we compete for talent and includes relevant

companies with similar characteristics. As we grow and our industry evolves, companies

may enter or exit the market, or their business models may shift, making it necessary

to reassess the reference group for accurate comparisons. Therefore, regular updates to

the reference group and the criteria used is essential to ensure accurate benchmarking

and informed decision-making, and to ensure long-term stability and relevance of the

benchmarking outcomes.

Key Peer Company Selection Criteria for most recent benchmark (September 2022)

Element

Historical 2021 Peer Company

Selection Criteria

Current 2022 Peer Company

Selection Criteria

Sector

•

Biotechnology and

pharmaceutical industries

•

No change

Stage of

Development

•

Primarily phase 3 with some NDA/

recently market-stage companies

•

Market-stage companies

Market

Capitalization

•

$5 billion to $50 billion based on

our 30-day average market value

of approximately $16 billion as of

July 16, 2021

•

1/3x – 3x our 30-day average

market value as of May 20, 2022

•

$5 billion to $50 billion

(no change)

Headcount

•

200 to 2,000 employees based on

our projected FYE21 headcount at

that time (650 employees)

•

1/3x – 3x the midpoint of our

projected FYE 22 and FYE 23

headcount

•

300 to 2,500 employees

Revenue

•

N/A – not a criterion last year

•

Less than $1 billion in revenues

Years Public

(Secondary)

•

Preference towards companies

that went public in the last

ten years

•

No change

Current Reference Companies

US Peers

EU Peers

Acadia Pharmaceuticals, Inc.

Galapagos NV

Alnylam Pharmaceuticals, Inc.

UCB SA

Amicus Therapeutics, Inc.

ALK-Abelló A/S

BeiGene Ltd

Ascendis Pharma A/S

Biohaven Pharmaceutical Holding Co Ltd

Genmab A/S

BioMarin Pharmaceutical, Inc.

BioNTech SE

Blueprint Medicines Corp

Evotec SE

Denali Therapeutics, Inc.

Incyte Corporation

Intellia Therapeutics, Inc.

Horizon Therapeutics PLC

Intra-Cellular Therapies, Inc.

Recordati S.p.A.

Ionis Pharmaceuticals, Inc.

uniQure NV

Mirati Therapeutics, Inc.

Swedish Orphan Biovitrum AB

Neurocrine Biosciences, Inc.

CRISPR Therapeutics AG

Sarepta Therapeutics, Inc.

Idorsia Ltd.

Seagen, Inc.

Vifor Pharma AG

Abcam PLC

Hikma Pharmaceuticals PLC

Our Board of Directors sets award levels based on the outcome of our benchmarking

exercise. Our remuneration policy, contains the following guidance in this respect:

Non-executives

Senior management team

(including our CEO)

Cash-based

compensation

percentile of the companies in

our global reference group

percentile of U.S. companies in

our reference group for U.S.-based

executives, and at or around the

percentile of EU companies in

our reference group for EU-based

executives

Equity-based

compensation

percentile of the U.S. companies

in our reference group

to 75

percentile of the U.S.

companies in our reference group

3.4.5

Remuneration Components of our Senior

Management Team Compensation

Pursuant to our shareholder-approved remuneration policy, the remuneration

of our executive director(s) consists of the following components:

•

fixed-base compensation;

•

short-term variable compensation, based on the achievement of

pre-determined targets;

•

severance arrangements;

•

long-term variable compensation, in the form of stock options and RSUs; and

•

pension and fringe benefits.

We note that while our remuneration policy by law applies only to members of our

Board of Directors, we apply its principles to all our employees. In the rest of this

chapter 3.4, we have limited our reporting to members of our Board of Directors and

our senior management team unless explicitly mentioned otherwise.

Fixed-Base Compensation

We grant our senior management team members a fixed base (cash) compensation

determined on the basis of our benchmarking exercise explained in section

3.4.2

above.

The final determination of a senior management member’s fixed-base pay is made

considering the benchmark, the individual’s skills, experience and performance, the

remuneration practices and conditions across the wider organization and our inter-

actions with key stakeholders to secure broad public support for our remuneration

practices and the feedback from the individual on their own remuneration levels.

The target fixed cash compensation levels are set in accordance with our remuneration

policy (as detailed in section

3.4.4

) but we note that the actual base cash remuneration

for our executive director is below the targeted percentiles, taking into account the

feedback from our executive director on proposals of the remuneration and nomination

committee to increase the base pay to align more closely with the targeted percentile of

the benchmark.

Short-Term Variable Compensation based on the Achievement

of Pre-Determined Targets

The objective of our short-term annual incentive compensation is to ensure that our

senior management team is incentivized to achieve pre-defined performance targets

in the shorter term. Variable cash incentives are granted for achieving predetermined

specific performance targets. Our senior management team is eligible for an annual

short-term variable incentive of their annual base compensation. The short-term target

percentage is equal to up to 60% of the fixed-base compensation for our CEO, between

40–50% for our C-level employees (benchmarked per role) and up to 35% for vice pre

sident level members of our senior management team. The short-term incentive oppor-

tunity is capped at 200% of the target percentages, in line with the principles applied for

the broader employee base at the Company. We have not established pay-out caps per

individual target, but apply the pay-out cap of 200% of the total variable pay opportunity

(i.e. in case of our CEO, the maximum variable pay cap of 200% represents 120% of base

cash remuneration).

Long-term variable compensation, in the form of stock options and RSUs

Stock options and RSUs may be awarded every year, in accordance with our Equity In-

centive Plan, whereby the stock options vest over a three-year period and the RSUs vest

over a four-year period. Stock options may not be exercised by our Belgian tax resident

employees (including our CEO) until the fourth calendar year following the year of the

grant. RSUs vest 25% of the total grant at each anniversary of the grant date. Shares

obtained through the vesting of RSUs and through the exercise of stock options, are

subject to our equity holding requirements further explained in section

3.4.2

Severance Arrangements

Our CEO has a severance arrangement in place of 18 months if he is discharged for

reasons other than for cause.

Pension and Fringe Benefits

Pension and fringe benefits are awarded based on local market practices. For Belgium

tax resident employees (including our CEO) this includes a defined contribution pension

scheme operated by a third-party pension insurance organization, a company car

(as from a certain paygrade level) and a hospitalization plan. We note that the pension

arrangements offered to our Belgian based executives including our CEO mirror those

offered to other Belgian based employees.

Performance of Scenario Analyses

In accordance with the DCGC, when determining the remuneration package of our

executive director(s), scenario analyses are performed annually and taken into account

in setting the level of the base remuneration to be paid as well as the variable remune-

ration and the corresponding targets.

3.4.6

Executive Remuneration paid in 2022

Compensation of our CEO

The following table sets forth information regarding compensation we paid to Mr. Van

Hauwermeiren for services performed during the fiscal year ended December 31, 2022.

Compensation

(in $)

Financial year

ended December 31, 2022

Base salary

638,901

Short-term Incentive

766,689

Option awards

4,174,684

RSUs

2,159,689

Employer social security contribution stock options

–

Non-Equity Incentive Plan compensation

–

Pension contributions

23,384

Social security costs

–

Other

14,958

Total

7,778,305

Amount shown represents the expenses with respect to the option awards granted in 2022 to Mr. Van

Hauwermeiren measured using the Black Scholes formula. For a description of the assumptions used

in valuing these awards, see

note 13

to our financial statements included elsewhere in this Annual

Report. These amounts do not reflect the actual economic value realized by Mr. Van Hauwermeiren.

Amounts shown represent the expenses with respect to the RSUs awards granted in 2022, measured

using the Black Scholes formula. For a description of the assumptions used in valuing these awards,

see

note 13

to our consolidated financial statements in section 6 “

Consolidated Financial Statements

”.

We incur employer social security costs with respect to the options granted to members of our senior

management. The amount of employer social security costs depends on the actual economic value

realized and therefore varies based on the price of our ordinary shares. At each reporting date, we

make a calculation of the exposure.

Consists of $11,615 attributable to the lease of a company car, $182 in employer-paid medical

insurance premiums and $3,161 of allowance.

Increase in base salary for our CEO

Our CEO base salary increased by 10% from fiscal year 2021 to fiscal year 2022. The 10%

increase was deemed appropriate by our remuneration & nomination committee to

more closely align our CEO base pay to that of the reference group, and considering the

continued high performance of the CEO and the Company through its rapid growth over

the past years. We note that our CEO’s base pay continues to be below the reference

group 50th percentile. The aforementioned 10% includes inflation correction and merit

increase.

Variable vs Fixed Compensation Determination for CEO

The mix between fixed and variable cash based remuneration components (excluding

equity compensation) for our executive director for the last three years is set out below:

(in $)

2022

2021

2020

Fixed

677,243

621,071

599,230

Variable

766,682

523,799

456,362

Total

1,443,925

1,144,870

1,055,592

Using a fixed exchange rate of 1.05 USD / 1 EUR, taking into account that our CEO’s salary is paid in EUR

but our functional and reporting currency is in USD.

The ratio between fixed and variable cash payments to our CEO for the fiscal year ended

December 31, 2022 equals $677,243 / $766,682 or 46.9% / 53.1%, respectively.

Short term incentives

Name

Type

Company

strategy

Measure

Assesment of

performance

Achievement

Overall

achieve-

ment

(in %)

Overall

pay-out

(in %)

Tim Van

Hauwermeiren

CEO

Building the

Business

Commercial

launch

performance

Outperform VYVGART

launch forecast

Four quarterly beat & raise

events. Internal launch

forecast significantly

exceeded, while reinforcing

our science-based, patient-

focused and transparent

foundation and reputation

Overachieved

200

Financing

Raise >$500 million to

finance business plan

$805 million raised despite

unfavorable market

conditions

Overachieved

Building the

Organization

Pipeline

development

(co-creation)

Live the cultural pillar of

co-creation, including

modelling exemplary

collaboration with external

experts in our IIP

Personally engaged in our

IIP work for undisclosed

antibody targets;

successfully coached

next-

gen scientists and

guided

seamless transition of the

chief scientist officer role

Achieved

Commercial

launch

performance

(empowerment)

Ensure Company-wide

alignment behind business

plan to support key

priorities and empower

our people

Spent more than five

months on the road with

newly installed commercial

organization in support

of our launch priorities.

Personally welcomed all

new hires and reinforced

key priorities across the

company

Achieved

Keith Woods

COO

Building the

Business

Commercial

launch

performance

Outperform VYVGART

launch forecast

Four quarterly beat & raise

events. Internal launch

forecast significantly

exceeded, while reinforcing

our science-based, patient-

focused and transparent

foundation and reputation

Overachieved

200

Commercial

expansion

Deliver successful Japan

launch, EMA approval

for VYVGART in gMG in

Q3, sales in Germany in

Q4, Canada regulatory

submission in Q3

Significantly exceeded

internal target. Marketing

approval in Germany

ahead of schedule

Overachieved

Building the

Organization

Commercial

performance

(co-creation)

Live the cultural pillar of

co-creation leveraging

collaboration between

local teams globally

New operating model

for cross-regional

collaboration between

local commercial

organizations implemented

and fully operational,

contributing to above

expectation launches,

cross-regional sharing

of learnings on ongoing

basis and commercial and

scientific teams aligned on

patient-focused objectives

Achieved

Succession

planning &

development

High quality personal

development plans in

place for all direct reports.

Identify excellent successor

with broad buy-in across

the entire commercial

organization in accordance

with long-term succession

plan

High quality personal

development plans

in place. Selection of

successor progressed

significantly (and

completed as of the date

of this Annual Report) per

succession plan.

Achieved

Name

Type

Company

strategy

Measure

Assesment of

performance

Achievement

Overall

achieve-

ment

(in %)

Overall

pay-out

(in %)

Karl Gubitz

CFO

Building the

Business

Financing

Raise >$500 million to

finance the business plan

$805 million raised

despite unfavorable

market conditions

Overachieved

125

Commercial

performance,

transparency,

stakeholder

relations

Ensure internal and

external alignment of

expectations around

financial launch

performance

Expectations on

commercial launch

performance evolved in

line with launch dynamic,

while reinforcing science-

based, patient-focused and

transparent foundation

and reputation.

Achieved

Building the

Organization

Financial

performance,

Excellence

Drive expense discipline

and capital allocation

focused on innovation.

Establish procurement,

management reporting

Procurement and

management reporting

established; internal

efficiency gain measured

as significantly cost-saving.

Significantly improved

forecasting and budgeting

processes.

Achieved

Financial

performance,

Innovation

Improve our enterprise-

wide processes and tools,

including usability and

user-friendliness

Achieved, including

in relation to finance

related tools (enterprise

resource planning system

simplification) as measured

through internal survey

results.

Achieved

Remuneration of other members of our senior management

The following table sets forth information regarding aggregate compensation we paid to

members of our senior management team (excluding our CEO Mr. Van Hauwermeiren)

during the fiscal year ended December 31, 2022. We note that these numbers also

include compensation paid to persons who were part of our senior management for

part of 2022 (i.e., Mr. Wim Parys, Ms. Malini Moorthy and Mr. Luc Truyen).

(in $)

Compensation

Base salary

3,560,204

Short-term incentive

2,310,530

Option awards

14,218,284

RSUs

7,434,327

Employer social security contribution stock options

1,100,665

Termination benefits

–

Pension contributions

81,030

Social security costs

1,014,821

Other

356,581

Total

30,076,443

Amounts shown represent the expenses with respect to the option awards granted in 2022 to Mr. Karl

Gubitz, Mr. Keith Woods, Mr. Luc Truyen, Mr. Arjen Lemmen. Ms. Malini Moorthy and Ms. Andria Wilk

measured using the Black Scholes formula. For a description of the assumptions used in valuing these

awards, see

note 13

to our consolidated financial statements incorporated elsewhere in this Annual

Report. These amounts do not reflect the actual economic value realized by these members of our

senior management.

Amounts shown represent the expenses with respect to the RSUs awards granted in 2022, measured

using the Black Scholes formula. For a description of the assumptions used in valuing these awards,

see

note 13

to our consolidated financial statements in section 6 “

Consolidated Financial Statements

”.

The Company incurs employer social security costs with respect to the option awards granted to the

members of our senior management. The amount of employer social security costs depends on the

actual economic value realized and therefore varies based on the price of our ordinary shares. At each

reporting date, the Company makes a calculation of the exposure.

Consists of $35,536 attributable to the leases of company cars, $232,517 in car, housing and other

allowances and $88,529 in employer-paid medical insurance premiums.

Option Awards to our Senior Management in 2022

The following table sets forth information regarding option awards granted to our senior

management during the fiscal year ended December 31, 2022:

Name

Stock

options

Expiration

date

Exercise price

(in $)

Exercise price

(in EUR)

Tim Van Hauwermeiren

25,000

23/12/2032

383.55

359.6

Keith Woods

16,000

23/12/2032

383.55

359.6

Karl Gubitz

16,000

01/07/2032

381.31

357.5

Prof. Hans de Haard

–

Malini Moorthy

24,000

01/04/2032

301.31

282.5

Luc Truyen

16,000

23/12/2032

383.55

359.6

Wim Parys

–

Arjen Lemmen

16,000

23/12/2032

383.55

359.6

Andria Wilk

4,600

23/12/2032

383.55

359.6

On December 23, 2022, the Company granted options for which Belgian tax resident beneficiaries have

a 60-day period to choose between a contractual term of five or ten years.

Keith Woods retired as COO effective March 13, 2023 and was succeeded by Karen Massey effective

March 13, 2023.

Prof. de Haard retired effective December 31, 2022 and, therefore, was not granted any equity in 2022

and was succeeded by Peter Ulrichts effective January 1, 2023.

Mr. Parys retired effective March 30, 2022 and, therefore, was not granted any equity in 2022 and was

succeeded by Mr. Truyen effective April 1, 2022.

The following table sets forth information regarding RSUs granted to our senior manage-

ment during the fiscal year ended December 31, 2022:

Name

# of RSUs

Vesting End Date

Tim Van Hauwermeiren

5,700

23/12/2026

Keith Woods

3,600

23/12/2026

Karl Gubitz

3,600

01/07/2026

Prof. Hans de Haard

–

Malini Moorthy

5,400

01/04/2026

Wim Parys

–

Arjen Lemmen

3,600

23/12/2026

Luc Truyen

3,600

23/12/2026

Andria Wilk

1,000

23/12/2026

Mr. Parys retired effective March 30, 2022 and, therefore, was not granted any equity incentives in

2021 and was succeeded by Luc Truyen effective April 1, 2022.

RSUs vest equally over a period of four years with 1/4

of the total grant vesting at each anniversary of

the date of grant. RSUs do not have an expiry date.

The table below shows (i) the stock options held as of January 1, 2022, (ii) the stock op-

tions granted to our senior management which vested during the year ended December

31, 2022, (iii) the number of stock options exercised and vested during the year, (iv) the

respective exercise price of such stock options and (v) the stock options held as of De-

cember 31, 2022. Each stock option was granted pursuant to our Equity Incentive Plan:

Remuneration in Stock Options CEO and Senior Management

Information regarding the reported financial year

Opening

balance

During the Year

Closing balance

Name of Directors,

Position

Specification

of 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

vested

during the

year

Stock

options

subject to a

performance

condition

Stock

options

awarded

and

unvested

Stock

options

held at the

end of the

year

Stock

options

subject to

a retention

period

Tim van

Hauwermeiren,

chief executive

officer

Equity

Incentive

Plan

14/12/2017–

01/12/2020

14/12/2017

Please

refer to

footnote.

31/12/2020

01/01/2021–

14/12/2027

21.17

80,000

–

(7,500)

–

72,500

–

21/12/2018–

01/12/2021

21/12/2018

31/12/2021

01/01/2022–

21/12/2028

86.32

80,000

–

80,000

–

20/12/2019–

01/12/2022

20/12/2019

31/12/2022

01/01/2023–

20/12/2029

135.75

80,000

–

26,667

–

80,000

–

21/12/2020–

01/12/2023

21/12/2020

31/12/2023

01/01/2024–

21/12/2030

247.60

50,000

–

16,667

50,000

24/12/2021–

01/12/2024

24/12/2021

31/12/2024

01/01/2025–

24/12/2031

309.20

25,000

–

8,333

16,667

25,000

23/12/2022–

01/12/2025

23/12/2022

31/12/2025

01/01/2026–

23/12/2032

359.60

–

25,000

–

25,000

Total

315,000

25,000

(7,500)

51,667

58,334

332,500

100,000

Keith Woods,

chief operations

officer

Equity

Incentive

Plan

21/12/2018–

01/12/2021

21/12/2018

Please

refer to

footnote.

N/A

21/12/2019–

21/12/2028

86.32

25,000

–

(25,000)

–

N/A

20/12/2019–

01/12/2022

20/12/2019

N/A

20/12/2020–

20/12/2029

135.75

50,000

–

(15,000)

16,700

–

35,000

N/A

21/12/2020–

01/12/2023

21/12/2020

N/A

21/12/2021–

21/12/2030

247.60

50,000

–

16,668

16,667

50,000

N/A

24/12/2021–

01/12/2024

24/12/2021

N/A

24/12/2022–

24/12/2031

309.20

16,000

–

5,333

10,667

16,000

N/A

23/12/2022–

01/12/2025

23/12/2022

N/A

23/12/2023–

23/12/2032

359.60

–

16,000

–

16,000

N/A

Total

141,000

16,000

(40,000)

38,701

43,334

117,000

1/3 of the option vests on the first anniversary of the Award Date and the remaining 2/3rd vest during the following two years in equal parts of 1/24

, each time upon the 1

day of each month.

Information regarding the reported financial year

Opening

balance

During the Year

Closing balance

Name of Directors,

Position

Specifica-

tion of 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

vested

during the

year

Stock

options

subject to a

performance

condition

Stock

options

awarded

and

unvested

Stock

options

held at the

end of the

year

Stock

options

subject to

a retention

period

Karl Gubitz,

chief financial

officer

Equity

Incentive

Plan

01/07/2021–

01/07/2024

01/07/2021

Please

refer to

footnote.

N/A

01/07/2022–

01/07/2031

255.10

24,000

–

11,333

12,667

24,000

N/A

01/07/2022–

01/07/2025

01/07/2022

N/A

01/07/2023–

01/07/2032

357.50

–

16,000

–

16,000

N/A

Total

24,000

16,000

–

11,333

28,667

40,000

Prof. Hans de

Haard,

chief scientific

officer

Equity

Incentive

Plan

29/06/2012–

29/06/2015

29/06/2012

Please

refer to

footnote.

31/12/2017

01/01/2018–

18/12/2024

2.44

108,996

–

(108,996)

–

30/09/2014–

30/09/2017

30/09/2014

31/12/2018

01/01/2019–

15/12/2025

2.44

35,826

–

(35,826)

–

18/12/2014–

01/12/2017

18/12/2014

31/12/2017

01/01/2018–

18/12/2024

7.17

109,000

–

109,000

–

15/12/2015–

01/12/2018

15/12/2015

31/12/2018

01/01/2019–

15/12/2025

9.47

28,200

–

28,200

–

25/05/2016–

01/05/2019

25/05/2016

31/12/2019

01/01/2020–

25/05/2026

11.47

28,200

–

28,200

–

13/12/2016–

01/12/2019

13/12/2016

31/12/2019

01/01/2020–

13/12/2026

14.13

28,200

–

28,200

–

26/06/2017–

01/06/2020

26/06/2017

31/12/2020

01/01/2021–

26/06/2027

18.41

14,353

–

14,353

–

14/12/2017–

01/12/2020

14/12/2017

31/12/2020

01/01/2021–

14/12/2027

21.17

43,200

–

43,200

–

21/12/2018–

01/12/2021

21/12/2018

31/12/2021

01/01/2022–

21/12/2028

86.32

50,000

–

50,000

–

20/12/2019–

01/12/2022

20/12/2019

31/12/2022

01/01/2023–

20/12/2029

135.75

50,000

–

16,666

–

50,000

–

21/12/2020–

01/12/2023

21/12/2020

31/12/2023

01/01/2024–

21/12/2030

247.60

50,000

–

33,334

–

50,000

24/12/2021–

01/12/2024

24/12/2021

31/12/2024

01/01/2025–

24/12/2031

309.20

16,000

–

16,000

–

16,000

Total

561,975

(144,822)

66,000

417,153

66,000

1/3 of the option vests on the first anniversary of the Award Date and the remaining 2/3rd vest during the following two years in equal parts of 1/24

, each time upon the 1

day of each month.

Information regarding the reported financial year

Opening

balance

During the Year

Closing balance

Name of Directors,

Position

Specification

of 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

vested

during the

year

Stock

options

subject to a

performance

condition

Stock

options

awarded

and

unvested

Stock

options

held at the

end of the

year

Stock

options

subject to

a retention

period

Luc Truyen,

chief medical

officer

Equity

Incentive

Plan

01/10/2021–

01/10/2024

01/10/2021

Please

refer to

footnote.

31/12/2024

01/01/2025–

01/10/2026

259.50

24,000

–

9,333

14,667

24,000

23/12/2022–

01/12/2025

23/12/2022

31/12/2025

01/01/2026–

23/12/2032

359.60

–

16,000

–

16,000

Total

24,000

16,000

9,333

30,667

40,000

Wim Parys,

chief medical

officer

Equity

Incentive

Plan

21/12/2018–

01/12/2021

21/12/2018

Please

refer to

footnote.

31/12/2021

01/01/2022–

21/12/2028

86.32

125,000

–

(85,000)

–

40,000

–

20/12/2019–

01/12/2022

20/12/2019

31/12/2022

01/01/2023–

20/12/2029

135.75

50,000

–

16,667

–

50,000

–

21/12/2020–

01/12/2023

21/12/2020

31/12/2023

01/01/2024–

21/12/2030

247.60

50,000

–

16,666

16,667

50,000

Total

225,000

(85,000)

33,333

16,667

140,000

50,000

1/3 of the option vests on the first anniversary of the Award Date and the remaining 2/3rd vest during the following two years in equal parts of 1/24

, each time upon the 1

day of each month.

Information regarding the reported financial year

Opening

balance

During the Year

Closing balance

Name of Directors,

Position

Specification

of 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

vested

during the

year

Stock

options

subject to a

performance

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

26/06/2017–

01/06/2020

26/06/2017

Please

refer to

footnote.

31/12/2020

01/01/2021–

26/06/2027

18.41

4,306

–

(4,306)

–

14/12/2017–

01/12/2020

14/12/2017

31/12/2020

01/01/2021–

14/12/2027

21.17

6,328

–

(6,328)

–

28/06/2018–

01/06/2021

28/06/2018

31/12/2021

01/01/2022–

21/12/2028

80.82

3,195

–

(2,500)

–

695

–

21/12/2018–

01/12/2021

21/12/2018

31/12/2021

01/01/2022–

21/12/2028

86.32

15,952

–

15,952

–

20/12/2019–

01/12/2022

20/12/2019

31/12/2022

01/01/2023–

20/12/2029

135.75

50,000

–

12,518

–

50,000

–

21/12/2020–

01/12/2023

21/12/2020

31/12/2023

01/01/2024–

21/12/2030

247.60

50,000

–

16,666

16,667

50,000

24/12/2021–

01/12/2024

24/12/2021

31/12/2024

01/01/2025–

24/12/2031

309.20

16,000

–

5,333

10,667

16,000

23/12/2022–

01/12/2025

23/12/2022

N/A

23/12/2023–

23/12/2032

359.60

–

16,000

–

16,000

–

Total

145,781

16,000

(13,134)

34,517

43,334

148,647

66,000

Andria Wilk,

Global Head of

Quality

Equity

Incentive

Plan

20/12/2019–

01/12/2022

20/12/2019

Please

refer to

footnote.

31/12/2022

01/01/2023–

20/12/2029

135.75

9,400

–

2,354

–

9,400

–

21/12/2020–

01/12/2023

21/12/2020

31/12/2023

01/01/2024–

21/12/2030

247.60

9,900

–

2,663

2,662

9,900

24/12/2021–

01/12/2024

24/12/2021

31/12/2024

01/01/2025–

24/12/2031

309.20

4,446

–

2,935

756

4,446

23/12/2022–

01/12/2025

23/12/2022

31/12/2025

01/01/2026–

23/12/2032

359.60

–

4,600

–

4,600

Total

23,746

4,600

–

7,952

8,018

28,346

18,946

Malini Moorthy,

general counsel

Equity

Incentive

Plan

01/04/2022–

01/04/2025

01/04/2022

Please

refer to

footnote.

N/A

01/04/2023–

01/04/2035

282.50

–

24,000

–

24,000

N/A

Total

–

24,000

–

24,000

1/3 of the option vests on the first anniversary of the Award Date and the remaining 2/3rd vest during the following two years in equal parts of 1/24

, each time upon the 1

day of each month.

The table below shows (i) the RSUs held as of January 1, 2022, (ii) the RSUs granted to

our senior management which vested during the year ended December 31, 2022 and

(iii) the number of RSUs held as of December 31, 2022. Each RSU was granted pursuant

to the Equity Incentive Plan:

Remuneration in Restricted Stock Units (RSU’s) CEO and Senior Management

Information regarding the reported financial year

The main conditions of RSU plan

Opening

balance

During the Year

Closing balance

Name of Directors,

Position

Specification

of plan

Performance period

Award date

Vesting date

End of

retention

period

RSU’s held

at the

beginning

of the year

RSU’s

awarded

RSU’s

vested

RSU’s

subject to a

performance

condition

RSU’s

awarded

and unves-

ted

RSU’s held

at the

closing of

the year

RSU’s

subject to

a retention

period

Tim van Hauwermeiren,

chief executive officer

Equity

Incentive

Plan

24/12/2021 – 24/12/2025

24/12/2021

Please refer to

footnote.

N/A

5,700

–

(1,425)

4,275

N/A

23/12/2022 – 23/12/2026

23/12/2022

N/A

–

5,700

–

5,700

N/A

Total

5,700

(1,425)

9,975

Luc Truyen,

chief medical officer

Equity

Incentive

Plan

01/10/2021 – 01/10/2025

01/10/2021

Please refer to

footnote.

N/A

5,400

–

(1,350)

4,050

N/A

23/12/2022 – 23/12/2026

23/12/2022

N/A

–

3,600

–

3,600

N/A

Total

5,400

3,600

(1,350)

7,650

Keith Woods,

chief operations officer

Equity

Incentive

Plan

24/12/2021 – 24/12/2025

24/12/2021

Please refer to

footnote.

N/A

3,600

–

(900)

2,700

N/A

23/12/2022 – 23/12/2026

23/12/2022

N/A

–

3,600

–

3,600

N/A

Total

3,600

(900)

6,300

Karl Gubitz,

chief financial officer

Equity

Incentive

Plan

01/07/2021 – 01/07/2025

01/07/2021

Please refer to

footnote.

N/A

5,400

–

(1,350)

4,050

N/A

01/07/2022 – 01/07/2026

01/07/2022

N/A

–

3,600

–

3,600

N/A

Total

5,400

3,600

(1,350)

7,650

Options vest over a period of four years with 1/4

of the total grant vesting at each anniversary of the date of grant.

Information regarding the reported financial year

The main conditions of RSU plan

Opening

balance

During the Year

Closing balance

Name of Directors,

Position

Specification

of plan

Performance period

Award date

Vesting date

End of

retention

period

RSU’s held

at the

beginning

of the year

RSU’s

awarded

RSU’s

vested

RSU’s

subject to a

performance

condition

RSU’s

awarded

and unves-

ted

RSU’s held

at the

closing of

the year

RSU’s

subject to

a retention

period

Prof. Hans de Haard,

chief scientific officer

Equity

Incentive

Plan

24/12/2021 – 31/12/2022

24/12/2021

Please refer to

footnote.

N/A

3,600

–

(3,600)

–

N/A

Total

3,600

–

(3,600)

–

Malini Moorthy,

general counsel

Equity

Incentive

Plan

01/04/2022 – 01/04/2026

01/04/2022

Please refer to

footnote.

N/A

–

5,400

–

5,400

N/A

Total

–

5,400

–

5,400

Wim Parys

N/A

–

N/A

Total

–

Arjen Lemmen,

vice president of

corporate development

& strategy

Equity

Incentive

Plan

24/12/2021 – 24/12/2025

24/12/2021

Please refer to

footnote.

N/A

3,600

–

(900)

2,700

N/A

23/12/2022 – 23/12/2026

23/12/2022

N/A

–

3,600

–

3,600

N/A

Total

3,600

(900)

6,300

Andria Wilk,

global head of quality

Equity

Incentive

Plan

24/12/2021 – 24/12/2025

24/12/2021

Please refer to

footnote.

N/A

988

–

(247)

741

N/A

23/12/2022 – 23/12/2026

23/12/2022

N/A

–

1,000

–

1,000

N/A

Total

988

1,000

(247)

1,741

Options vest over a period of four years with 1/4

of the total grant vesting at each anniversary of the date of grant.

Arrangements with Respect to Leaver Equity

With respect to Mr. Wim Parys, the Board of Directors approved that his equity awards

will continue to vest until the end of the month in which he last performs services as

an advisor to the research and development committee of the Board of Directors. With

respect to Prof. Hans de Haard, the Board of Directors determined his long-term equity

incentives vested in full on December 31, 2022, consistent with the terms of his employ-

ment contract and in recognition of his significant contributions made as a founder of

argenx and his ever-lasting impact on our current and future value creation including as

a future member of the research and development committee, ambassador of our IIP

and mentor to talent, all as set out in a service agreement entered into between us and

Prof. de Haard, and for which no remuneration shall be paid.

3.4.7

Remuneration of Non-Executive Directors

The remuneration of the individual members of the Board of Directors is determined

by the Board of Directors, at the recommendation of our remuneration and nomination

committee, within the limits of the remuneration policy adopted by the shareholders at

a General Meeting. The description below reflects the remuneration policy approved at

our 2022 General Meeting.

Pursuant to the remuneration policy, the remuneration of the non-executive directors

consists of the following fixed and variable components:

•

a fixed fee;

•

if applicable, a fee for chairing the audit and compliance committee, the research

and development committee, the remuneration and nomination committee or the

commercial committee;

•

a fixed fee for board committee membership; and

•

a long-term variable incentive in the form of stock options and RSUs.

Fixed Fee

The Board of Directors has set the annual base remuneration, the annual remuneration

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:

Relevant Body

Position

Fees

(in $)

Fees

(in €)

Board of Directors

Chairperson

79,024

75,000

Member

47,414

45,000

Audit and compliance committee/

Research and development committee

Chairperson

15,805

15,000

Member

7,902

7,500

Remuneration and nomination committee

Chairperson

10,537

10,000

Member

5,268

5,000

Commercial committee

Chairperson

10,537

10,000

Member

5,268

5,000

Research and development committee

Chairperson

15,805

15,000

Member

7,902

7,500

In 2022, the non-executive director cash remuneration was increased by €10,000 to

re-align with the benchmark. These fees had not been increased to re-aligned the

benchmark since our Euronext initial public offering in 2014.

Long-Term Incentive Plan

Non-executive directors receive stock options and/or RSUs from time to time, ensuring

an overall fair and competitive remuneration that is in line with the remuneration practi-

ces of our reference companies. The conditions of our Equity Incentive Plan apply to our

non-executive directors, as set forth in section 3.4.7 “

Remuneration of Non-Executive

Directors

”.

The following table sets forth the information regarding the compensation earned by

our non-executive directors during the fiscal year ended December 31, 2022:

Name

Fees earned

or paid in cash

(in $)

Option awards

(in $)

RSU awards

(in $)

Total

(in $)

Peter K.M. Verhaeghe

92,194

456,407

230,130

778,731

Werner Lanthaler

68,487

–

68,487

Pamela Klein

55,317

444,481

230,130

729,927

J. Donald deBethizy

65,853

444,481

230,130

740,464

Anthony A. Rosenberg

60,585

444,481

230,130

735,195

James M. Daly

65,853

444,481

230,130

740,464

Yvonne Greenstreet

7,044

–

7,044

Camilla Sylvest

17,561

741,510

353,738

1,112,808

Ana Cespedes

4,390

666,721

345,194

1,016,306

These amounts do not reflect the actual economic value realized by the non-executive directors.

Amounts shown represent the expenses with respect to the stock option awards granted in 2022

to the non-executive directors measured using the Black Scholes formula. For a description of the

assumptions used in valuing these awards, see

note 13

to our consolidated financial statements in

section 6 “

Consolidated Financial Statements

”.

These amounts do not reflect the actual economic value realized by the non-executive directors.

Amounts shown represent the expenses with respect to the RSUs awards granted in 2022 to the non-

executive directors measured using the Black Scholes formula. For a description of the assumptions

used in valuing these awards, see

note 13

to our consolidated financial statements in section 6

“

Consolidated Financial Statements

”.

The table below shows (i) the stock options held at January 1, 2022, (ii) the stock options

granted to the non-executive directors which have vested during the year ended Decem-

ber 31, 2022, (iii) the number of stock options exercised and vested during the year,

(iv)

the respective exercise price of such stock options and (v) the stock options held as of

December 31, 2022:

Remuneration in Stock Options Non-Executive Directors

Information regarding the reported financial year

Opening

balance

During the Year

Closing balance

Name of

Directors,

Position

Specifi-

cation

of 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

vested

during the

year

Stock

options

subject to a

performance

condition

Stock

options

awarded

and

unvested

Stock

options

held at the

end of the

year

Stock

options

subject to

a retention

period

Peter Verhaeghe

Equity

Incentive

Plan

29/06/2012–

29/06/2015

29/06/2012

Please refer to

footnote.

N/A

01/01/2016–

29/06/2022

2.44

8,741

–

(8,741)

–

N/A

30/09/2014–

30/09/2017

30/09/2014

N/A

30/09/2015–

30/09/2024

2.44

2,885

–

2,885

N/A

30/09/2014–

30/09/2017

30/09/2014

N/A

30/09/2015–

30/09/2024

3.95

1,969

–

1,969

N/A

18/12/2014–

18/12/2017

18/12/2014

N/A

18/12/2015–

18/12/2024

7.17

5,000

–

5,000

N/A

16/06/2016–

18/06/2019

18/06/2016

N/A

18/06/2017–

18/06/2026

11.38

10,000

–

10,000

N/A

21/12/2018–

21/12/2021

21/12/2018

N/A

21/12/2019–

21/12/2028

86.32

10,000

–

10,000

N/A

20/12/2019–

20/12/2022

20/12/2019

N/A

20/12/2020–

20/12/2029

135.75

10,000

–

3,333

–

10,000

N/A

21/12/2020–

21/12/2023

21/12/2020

N/A

21/12/2021–

21/12/2030

247.60

10,000

–

3,334

3,333

10,000

N/A

24/12/2021–

24/12/2024

24/12/2021

Upon third

anniversary of

the grant

24/12/2024

24/12/2024–

24/12/2031

309.20

2,700

–

2,700

23/12/2022–

23/12/2025

23/12/2022

23/12/2025

23/12/2025–

23/12/2032

359.60

–

2,700

–

2,700

Total

61,295

2,700

(8,741)

6,667

8,733

55,254

5,400

Yvonne

Greenstreet

Equity

Incentive

Plan

01/07/2021–

03/03/2022

01/07/2021

Upon third

anniversary of

the grant

01/07/2022

01/07/2022–

01/07/2031

255.10

1,350

–

1,350

–

1,350

N/A

Total

1,350

–

1,350

–

1,350

–

1/3

upon the first anniversary of the option’s date of grant and for the remaining 2/3

during the following two years in equal parts of 1/24

, each time upon the 1

day of each next month.

Information regarding the reported financial year

Opening

balance

During the Year

Closing balance

Name of Direc-

tors, Position

Specifi-

cation

of 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

vested

during the

year

Stock

options

subject to a

performance

condition

Stock

options

awarded

and

unvested

Stock

options

held at the

end of the

year

Stock

options

subject to

a retention

period

Werner

Lanthaler

Equity

Incentive

Plan

21/12/2018–

21/12/2021

21/12/2018

Please refer to

footnote.

N/A

21/12/2019–

21/12/2028

86.32

10,000

–

10,000

–

20/12/2019–

20/12/2022

20/12/2019

N/A

20/12/2020–

20/12/2029

135.75

5,580

–

3,333

–

5,580

–

21/12/2020–

21/12/2023

21/12/2020

N/A

21/12/2021–

21/12/2030

247.60

10,000

–

3,334

3,333

10,000

N/A

24/12/2021–

24/12/2024

24/12/2021

Upon third

anniversary of

the grant

24/12/2024

24/12/2024–

24/12/2031

309.20

2,700

–

2,700

Total

28,280

–

6,667

6,033

28,280

2,700

J. Donald

deBethizy

Equity

Incentive

Plan

16/06/2016–

18/06/2019

18/06/2016

Please refer to

footnote.

N/A

18/06/2017–

18/06/2026

11.38

10,000

–

10,000

N/A

21/12/2018–

21/12/2021

21/12/2018

N/A

21/12/2019–

21/12/2028

86.32

10,000

–

10,000

N/A

20/12/2019–

20/12/2022

20/12/2019

N/A

20/12/2020–

20/12/2029

135.75

10,000

–

3,333

–

10,000

N/A

21/12/2020–

21/12/2023

21/12/2020

N/A

21/12/2021–

21/12/2030

247.60

10,000

–

3,334

3,333

10,000

N/A

24/12/2021–

24/12/2024

24/12/2021

Upon third

anniversary of

the grant

24/12/2024

24/12/2024–

24/12/2031

309.20

2,700

–

2,700

23/12/2022–

23/12/2025

23/12/2022

23/12/2025

23/12/2025–

23/12/2032

359.60

–

2,700

–

2,700

Total

42,700

2,700

6,667

8,733

45,400

5,400

1/3

upon the first anniversary of the option’s date of grant and for the remaining 2/3

during the following two years in equal parts of 1/24

, each time upon the 1

day of each next month.

Information regarding the reported financial year

Opening

balance

During the Year

Closing balance

Name of

Directors,

Position

Specifi-

cation

of 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

vested

during the

year

Stock

options

subject to a

performance

condition

Stock

options

awarded

and

unvested

Stock

options

held at the

end of the

year

Stock

options

subject to

a retention

period

Pamela Klein

Equity

Incentive

Plan

18/06/2015–

18/06/2016

18/06/2015

Please refer to

footnote.

N/A

18/06/2016–

18/06/2025

11.44

2,500

–

(2,500)

–

N/A

18/06/2016–

18/06/2017

18/06/2016

N/A

18/06/2017–

18/06/2026

11.38

10,000

–

(10,000)

–

N/A

21/12/2018–

21/12/2021

21/12/2018

N/A

21/12/2019–

21/12/2028

86.32

10,000

–

10,000

N/A

20/12/2019–

20/12/2022

20/12/2019

N/A

20/12/2020–

20/12/2029

135.75

10,000

–

3,333

–

10,000

N/A

21/12/2020–

21/12/2023

21/12/2020

N/A

21/12/2021–

21/12/2030

247.60

10,000

–

3,334

3,333

10,000

N/A

24/12/2021–

24/12/2024

24/12/2021

Upon third

anniversary of

the grant

24/12/2024

24/12/2024–

24/12/2031

309.20

2,700

–

2,700

23/12/2022–

23/12/2025

23/12/2022

23/12/2025

23/12/2025–

23/12/2032

359.60

–

2,700

–

2,700

Total

45,200

2,700

(12,500)

6,667

8,733

35,400

5,400

Anthony A.

Rosenberg

Equity

Incentive

Plan

13/12/2016–

13/12/2019

13/12/2016

Please refer to

footnote.

N/A

18/06/2017–

18/06/2026

14.13

15,000

–

15,000

N/A

21/12/2018–

21/12/2021

21/12/2018

N/A

21/12/2019–

21/12/2028

86.32

10,000

–

10,000

N/A

20/12/2019–

20/12/2022

20/12/2019

N/A

20/12/2020–

20/12/2029

135.75

8,840

–

3,333

–

8,840

N/A

21/12/2020–

21/12/2023

21/12/2020

N/A

21/12/2021–

21/12/2030

247.60

10,000

–

(4,160)

3,334

3,333

5,840

N/A

24/12/2021–

24/12/2024

24/12/2021

Upon third

anniversary of

the grant

24/12/2024

24/12/2024–

24/12/2031

309.20

2,700

–

2,700

23/12/2022–

23/12/2025

23/12/2022

23/12/2025

23/12/2025–

23/12/2032

359.60

–

2,700

–

2,700

Total

46,540

2,700

(4,160)

6,667

8,733

45,080

5,400

1/3

upon the first anniversary of the option’s date of grant and for the remaining 2/3

during the following two years in equal parts of 1/24

, each time upon the 1

day of each next month.

Information regarding the reported financial year

Opening

balance

During the Year

Closing balance

Name of

Directors,

Position

Specifi-

cation

of 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

vested

during the

year

Stock

options

subject to a

performance

condition

Stock

options

awarded

and

unvested

Stock

options

held at the

end of the

year

Stock

options

subject to

a retention

period

James M. Daly

Equity

Incentive

Plan

28/06/2018–

28/06/2021

28/06/2018

Please refer to

footnote.

N/A

28/06/2019–

28/06/2028

80.82

5,000

–

(5,000)

–

N/A

21/12/2018–

21/12/2021

21/12/2018

N/A

21/12/2019–

21/12/2028

86.32

10,000

–

(10,000)

–

N/A

20/12/2019–

20/12/2022

20/12/2019

N/A

20/12/2020–

20/12/2029

135.75

10,000

–

3,333

–

10,000

N/A

21/12/2020–

21/12/2023

21/12/2020

N/A

21/12/2021–

21/12/2030

247.60

10,000

–

3,334

3,333

10,000

N/A

24/12/2021–

24/12/2024

24/12/2021

Upon third

anniversary of

the grant

24/12/2024

24/12/2024–

24/12/2031

309.20

2,700

–

2,700

23/12/2022–

23/12/2025

23/12/2022

23/12/2025

23/12/2025–

23/12/2032

359.60

–

2,700

–

2,700

Total

37,700

2,700

(15,00)

6,667

8,733

25,400

5,400

Camilla Sylvest

Equity

Incentive

Plan

03/10/2022–

03/10/2025

03/10/2022

Upon third

anniversary of

the grant

03/10/2025

03/10/2025–

03/10/2032

368.50

–

4,050

–

4,050

Total

–

4,050

–

4,050

Ana Cespedes

Equity

Incentive

Plan

23/12/2022–

23/12/2025

23/12/2022

Upon third

anniversary of

the grant

23/12/2025

23/12/2025–

23/12/2032

359.60

–

4,050

–

4,050

Total

–

4,050

–

4,050

1/3

upon the first anniversary of the option’s date of grant and for the remaining 2/3

during the following two years in equal parts of 1/24

, each time upon the 1

day of each next month.

The table below shows (i) the RSUs held at January 1, 2022, (ii) the RSUs granted to the

non-executive directors which have vested during the year ended December 31, 2022

and (iii) the number of RSUs held at December 31, 2022:

Remuneration in restricted stock units (RSU’s) non-executive directors

Information regarding the reported financial year

The main conditions of RSU plan

Opening

balance

During the Year

Closing balance

Name of Directors,

Position

Specification

of plan

Performance period

Award date

Vesting date

End of

retention

period

RSU’s held

at the

beginning

of the year

RSU’s

awarded

RSU’s

vested

RSU’s

subject to a

performance

condition

RSU’s

awarded

and unves-

ted

RSU’s held

at the

closing of

the year

RSU’s

subject to

a retention

period

Peter Verhaeghe

Equity

Incentive Plan

24/12/2021 – 24/12/2025

24/12/2021

Please refer to

footnote.

N/A

600

–

(150)

450

N/A

23/12/2022 – 23/12/2026

23/12/2022

N/A

–

600

–

600

N/A

Total

600

(150)

1,050

Yvonne Greenstreet

Equity

Incentive Plan

01/07/2021 – 03/03/2022

01/07/2021

Please refer to

footnote.

N/A

225

–

(225)

–

N/A

Total

225

–

(225)

–

Werner Lanthaler

Equity

Incentive Plan

24/12/2021 – 24/12/2025

24/12/2021

Please refer to

footnote.

N/A

600

–

(150)

450

N/A

Total

600

–

(150)

450

J. Donald deBethizy

Equity

Incentive Plan

24/12/2021 – 24/12/2025

24/12/2021

Please refer to

footnote.

N/A

600

–

(150)

450

N/A

23/12/2022 – 23/12/2026

23/12/2022

N/A

–

600

–

600

N/A

Total

600

(150)

1,050

Vesting date: vest over a period of 4 years with 1/4

of the total grant vesting at each anniversary of the date of grant.

Information regarding the reported financial year

The main conditions of RSU plan

Opening

balance

During the Year

Closing balance

Name of Directors,

Position

Specification

of plan

Performance period

Award date

Vesting date

End of

retention

period

RSU’s held

at the

beginning

of the year

RSU’s

awarded

RSU’s

vested

RSU’s

subject to a

performance

condition

RSU’s

awarded

and unves-

ted

RSU’s held

at the

closing of

the year

RSU’s

subject to

a retention

period

Pamela Klein

Equity

Incentive Plan

24/12/2021 – 24/12/2025

24/12/2021

Please refer to

footnote.

N/A

600

–

(150)

450

N/A

23/12/2022 – 23/12/2026

23/12/2022

N/A

–

600

–

600

N/A

Total

600

(150)

1,050

Anthony A. Rosenberg

Equity

Incentive Plan

24/12/2021 – 24/12/2025

24/12/2021

Please refer to

footnote.

N/A

600

–

(150)

450

N/A

23/12/2022 – 23/12/2026

23/12/2022

N/A

–

600

–

600

N/A

Total

600

(150)

1,050

James M. Daly

Equity

Incentive Plan

24/12/2021 – 24/12/2025

24/12/2021

Please refer to

footnote.

N/A

600

–

(150)

450

N/A

23/12/2022 – 23/12/2026

23/12/2022

N/A

–

600

–

600

N/A

Total

600

(150)

1,050

Camilla Sylvest

Equity

Incentive Plan

03/10/2022 – 03/10/2026

03/10/2022

Please refer to

footnote.

N/A

–

900

–

900

N/A

Total

–

900

–

900

Ana Cespedes

Equity

Incentive Plan

23/12/2022 – 23/12/2026

23/12/2022

Please refer to

footnote.

N/A

–

900

–

900

N/A

Total

–

900

–

900

Vesting date: vest over a period of 4 years with 1/4

of the total grant vesting at each anniversary of the date of grant.

3.4.8

Pay Ratios Within the Company

Our total expense for the non-equity remuneration paid to our CEO (and only executive

director) for the year ended December 31, 2022, equaled $1,443,925.

The table below shows the evolution over the past five years of CEO compensation, the

performance of our 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 our emp-

loyees, other than the executive director:

Financial year ended December 31,

(in thousands of $,

unless otherwise indicated)

2018

2019

2020

2021

2022

Base salary of our CEO (EUR)

500,000

525,000

551,250

606,368

Base salary of our CEO (USD)

526,825

553,167

580,825

638,901

Non-equity remuneration of our

CEO (base salary, short-term cash

incentive, pension contributions

and other compensation

elements)

996,215

1,001,891

1,144,301

1,285,136

1,443,925

Non-equity median salary paid

to our employees

110,196

121,603

163,062

157,349

153,193

Ratio employee/CEO

11%

12%

14%

12%

11%

Average compensation paid to

non-executive director

59,891

60,372

57,925

54,484

48,587

Number of employees at end of

year

105

188

336

650

843

Share price at end of year

Euronext EUR

85.20

143.60

242

315.30

348.3

Share price at end of year

Euronext USD

97.55

161.32

296.96

357.11

371.50

Shown in USD, using a fixed exchange rate of 1.05 USD / 1 EUR, taking into account that our CEO’s

salary is paid in EUR but our functional and reporting currency is in USD.

In our prior years remuneration reports, the cash value of benefits like medical insurance and car

allowances was not included. For transparency, we have included these numbers in prior year and

current year numbers. No significant increase of these contributions was granted between the prior

financial years and 2022.

The decrease in the remuneration ratio between members of our CEO and other em-

ployees between 2021 and 2022 is primarily caused by our CEO receiving a short-term

incentive payout equal to 200% of the target for 2022, in comparison to 150% payout

related to 2021.

The comparison of non-equity compensation above is made between the compensation

paid to our single executive director, and the median compensation paid to our emp-

loyees. We have opted to compare non-equity salaries, because whereas the number of

options granted is linked to the overall size of remuneration packages granted, the value

of equity components depends on the evolution of our share price, volatility and the

risk-free rate, which is unknown at granting and as such the forward-looking valuation

methods for options normally do not provide an accurate representation of actual

economic value granted.

Due to the global spread of our employees over multiple continents, we deem it

relevant to also include the above comparison separately to our U.S. employees, EU

employees and Japanese employees. Due to the overall higher compensation level in

our business segment in the U.S. and Japan 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 our employees (the majority of which are EU citizens), as set out

above, or compared to employees in the U.S. and Japan. The following information is

provided for reference purposes:

Ratio of non-equity compensation of the median employee compared to the

CEO for the fiscal year ended December 31, 2022

All employees

11%

European employees

U.S. employees

15%

Japanese employees

Canadian employees

16%

Share-based payment ratios are as follows:

Financial year ended December 31,

2018

2019

2020

2021

2022

Stock options granted to our CEO

80,000

50,000

25,000

Median stock options granted to

our employees

2,500

2,800

2,900

981

900

Ratio employee/CEO

3.13%

3.50%

5.80%

3.9%

3.6%

Average number of stock options

granted to non-executive

directors

12,143

10,000

2,869

3,086

Median stock options granted to

our employees

2,500

2,800

2,900

981

900

Ratio non-executive directors/

employee

20.59%

28%

29%

34.20%

29.17%

The Board of Directors had offered Tim Van Hauwermeiren long-term equity equal to 130% of target,

resulting in 41,600 stock options and 9,360 RSUs but at the request of Tim Van Hauwermeiren, the

Board of Directors agreed to reduce the grant for 2022 to 25,000 stock options and 5,700 RSUs, and to

distribute the difference (of 16,600 stock options and 3,660 RSUs) to certain top-performing lower-

level employees of the Company identified by Tim Van Hauwermeiren.

Total employment costs (excluding any stock options) we paid in fiscal year 2022 was

split between regions as follows:

Total remuneration paid in the fiscal year ended December 31, 2022

(in millions of $)

57.5

U.S.

80.9

Japan

8.3

Canada

1.2

3.4.9

Long-Term Incentives Granted to

Key Persons – Equity Incentive Plan

Our Equity Incentive Plan providing for the granting of a mix of stock options and RSUs

was approved by our Board of Directors on March 15, 2021, as subsequently amended

on December 15, 2021. The aim of our Equity Incentive Plan is to encourage our senior

management, directors, all other key employees, and key outside consultants and

advisors to acquire an economic and beneficial ownership interest in our growth and

performance, to increase their incentive to contribute to our value and to attract and

retain key individuals.

Our Board of Directors has also established an equity incentive allocation scheme that

contains (i) the dates on which stock options and RSUs are granted each year, which

shall be the same date each year (other than for new hires) and (ii) the number of stock

options and RSUs granted to each person or to each group of persons, which shall be

based on objective criteria only.

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 remai-

ning two thirds vesting in twenty-four equal monthly instalments 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 ten 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 ten 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 option in respect to the jurisdiction where options are

taxed at grant, compared to a ten-year option. Stock options granted to Belgian tax

resident beneficiaries (including our 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 our shares for free equal to the num-

ber equal 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.

100% of any unvested equity incentives shall vest in the event of a (i) sale, merger, con-

solidation, 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 dis-

position of all or substantially all of our assets or (iii) our dissolution and/or liquidation.

Our 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 this Equity

Incentive Plan, also for any outstanding stock options or RSUs, provided that we will

compensate any affected optionee for any direct negative impact of such amendment.

Other Arrangements

In fiscal year 2022, no severance payments were granted to our senior management and

non-executive directors.

In fiscal year 2022, no variable remuneration was clawed back and no variable remune-

ration was adjusted (retroactively).

In fiscal year 2022, no remuneration was granted and allocated by subsidiaries or other

companies whose financials we consolidate, other than the regular remuneration

payments made by the entities with whom our management members have their

employment contracts.

In fiscal year 2022, no (personal) loans were granted to our senior management and

non-executive directors and no guarantees or the like have been granted in favor of any

of the senior management and the non-executive directors.

Deviations

In 2022, we did not deviate from the decision-making process for the implementation of

the 2021 remuneration policy for our senior management and non-executive directors

and no temporary deviations took place from the 2021 Remuneration Policies.

3.5

Risk Appetite & Control

Before reading this section, please carefully review the following cautionary statement:

3.5.1

Introduction

This section 3.5 provides a general description of our willingness to mitigate the risks

and uncertainties we face (also called our ‘risk appetite’), and to give a description of

the mitigating actions we have taken with regard to our most relevant risks.

3.5.2

General Description of our Risk Appetite

Our risk appetite serves as a guideline to determine the measures we may take in

mitigating some of the risks and uncertainties we face. Our risk appetite is aligned with

our strategy and priorities. The business we operate in is inherently high-risk. In general,

we are willing, and in our view required, to take significant risks to be able to operate

successfully in our line of business. Some of the risks and uncertainties we face are

entirely outside of our control whereas others may be influenced or mitigated.

The process of developing, implementing and improving risk management procedures

remains an ongoing effort. In accordance with guideline 400.110c of the Dutch Counsel

for annual reporting (Raad voor de Jaarverslaggeving), this risk management section

provides an overview of the risk mitigating actions taken or planned to be taken by us.

The mentioning of these mitigating actions may not in any way be viewed as an implied

or express guarantee that such mitigation will in practice be effective in limiting the risk

exposure and/or the potential damage to us from any such risk materializing.

In this section we will make the required disclosures regarding our risk appetite and

mitigating actions. We fully take the risk mitigation actions and risk management

described in this section into account while preparing the description of the main

risks and uncertainties we face, as set out in section 2 “

Risk Factors

”. Any mitigating

language used in this section does not have any impact on the risks and uncertain-

ties we face or their potential adverse effects as they are described in section 2

“

Risk Factors

”.

Section 2 “

Risk Factors

” describes the main risks and uncertainties we face already

fully having taken into account our risk management and the risk mitigating actions

described herein.

3.5.3

Controlling Actions We Take with

Regard to our most Relevant Risks

and Uncertainties

The following is a description of the main risks and uncertainties we face (being the first

risk of each category of risk factors set out in section 2 “

Risk Factors

”) and a description

of the measures we took to control them. A description of the expected impact upon

materialization of these risks is included for each risk in section 2 “

Risk Factors

”.

Risk factor

Measures taken to control these risks

We have incurred significant losses

since our inception and expect to

incur losses for the foreseeable

future. We may never achieve or

sustain profitability.

We have adopted a business model and strategic portfolio

management approach to spread risks over wholly-owned

programs as well as partnered programs, and to manage

risks within our own proprietary product candidates pipe-

line. We 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 indications, and we intend to continue our

efforts to expand our sales, marketing and distribution

infrastructure.

We will face significant challenges

in successfully commercializing our

products and additional product

candidates after they are launched.

We plan to focus on the successful development and

commercialization of the products and product candidates

after they are launched. We aim to expand our sales and

marketing organization, enter into collaboration arrange-

ments with third parties, outsource certain functions to

third parties, or use some combination of each. We have

already built, and continue to expand, our sales forces in

certain of the VYVGART Approved Countries 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.

We are subject to healthcare laws,

regulation and enforcement. Our

failure to comply with these laws

could harm our results of opera-

tions and financial conditions.

We are continuing to build and refine an internal pro-

gram to ensure compliance with the different healthcare,

compliance and reporting laws and regulations in multiple

jurisdictions.

Failure to successfully identify,

select and develop efgartigimod in

other indications, additional pro-

ducts or product candidates could

impair our ability to grow.

We remain committed to using technology and con-

tracting with parties that are able to achieve the level of

sophistication we need to accurately and reliably identi-

fy, select and develop efgartigimod in other indications,

additional products or product candidates. We expect

our spending to continue to increase as we expand our

global commercial infrastructure and drug inventory for

VYVGART™ for the treatment of gMG, the progress of our

clinical-stage pipeline, including ongoing clinical trials for

five indications of efgartigimod.

Risk factor

Measures taken to control these risks

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 commercia-

lization of our existing and future

research programs, products and

product candidates. If our relation-

ships with such third parties are

not successful, our business may be

adversely affected.

We endeavor to meet our contractual obligations and any

relevant milestone achievements under our collaboration

contracts, maintain a rich pipeline of possible collabo-

ration partners as well as foster good relationships with

existing and potential future collaboration partners in or-

der to limit reliance on a limited number of collaboration

partners. Furthermore, third-party contractor selection

and management is subject to our quality management

system. Customary contractual agreements are put in

place in an effort to protect us from under-performance.

We are typically spreading operational risks over various

service providers. Project management belongs to our

core internal competences.

Our employees may engage in

misconduct or other improper

activities, including noncomplian-

ce with regulatory standards and

requirements, or insider trading

violations, which could significantly

harm our business.

We have adopted a Code of Conduct, that is applicable to

all of our employees and directors, which addresses the

key risks related to potential breaches of ethical stan-

dards. All employees have accepted and are trained (and

retrained annually) on our Code of Conduct. We expect all

newcomers to accept, and commit to, the contents of the

Code of Conduct. To increase compliance and ensure our

colleagues know where to go with questions on the Code

of Conduct and its application, we have established the

argenx COMPASS Helpline, where our employees can raise

any concerns they may have regarding potential violations

of our policy confidentially or anonymously (to the extent

allowed by law).

Failure to adequately enforce or

protect our intellectual property

rights in products, product candi-

dates and platform technologies

could adversely affect our ability to

develop and market our products

and product candidates.

We strive to protect the proprietary technologies that we

believe are important to our business, including pursuing

and maintaining patent protection intended to cover the

platform technologies incorporated into, or used to produ-

ce, our product candidates, the compositions of matter of

our product candidates and their methods of use, as well

as other inventions that are important to our business. In

addition to patent protection, we also rely on trademarks

and trade secrets to protect aspects of our business that

are not amenable to, or that we do not consider appro-

priate for, patent protection, including certain aspects of

our llama immunization and antibody affinity maturation

approaches.

Our future growth and ability to

compete depends on retaining our

key personnel and recruiting ad-

ditional qualified personnel.

We offer competitive remuneration packages and share-

based incentives in the form of the Equity Incentive Plan.

We perform periodic benchmark analyses with an external

service provider to ensure the competitiveness of the

compensation offered to our key personnel in comparison

to other (reference group) companies. We pay close atten-

tion to creating an environment that supports the further

development of the talents of our key people.

3.5.4

Material Impact of Risk

Materialization in 2022

During the period between January 1, 2022 and December 31, 2022, we did not identify

any material impact as a result of materialization of previously identified risks and

uncertainties.

3.5.5

Financial Risks and Controls

In running our business, we seek to implement a sustainable policy regarding internal

control and risk management. Our Board of Directors has delegated an active role to our

audit and compliance committee in the design, implementation and monitoring of an

internal risk management and control system to manage the significant risks to which

we are exposed.

Our financial reporting is structured within a tight framework of budgeting, reporting

and forecasting. A distinction is made between reports for internal and external use.

External reporting at group level consists of an annual report (in the form of this Annual

Report), including financial statements audited by the independent auditor, as well semi-

annual reporting and quarterly updates, containing summarized financial information.

The external reports are based on the internal financial reporting.

Internal financial reporting consists of extensive consolidated monthly reports in which

current developments are compared to the monthly (cumulative) budgets and previous

forecasts. In addition, each quarter we reiterate or update our forecast for the annual

results, including the cash flow position at the end of the fiscal year. The quarterly

budgets are part of the annual group budget, which is prepared every year by our senior

management and approved by our Board of Directors. Our specialized finance and ad-

ministration department are primarily responsible for evaluating the draft internal and

external reporting, before these are finally approved by our Board of Directors.

Our Board of Directors discusses the financial results of the group at all formal board

meetings, which meetings are minuted.

Our internal controls over financial reporting are a subset of internal controls and

include policies and procedures that:

•

pertain to the maintenance of records that, in reasonable detail, accurately and fairly

reflect the transactions and dispositions of our assets;

•

provide reasonable assurance that transactions are recorded as necessary to permit

preparation of our financial statements in accordance with IFRS as issued by the

International Accounting Standards Board and as adopted by the EU, and that

receipts and expenditures are being made only by authorized persons; and

•

provide reasonable assurance regarding prevention or timely detection of

unauthorized acquisition, use or disposition of our assets that could have a material

effect on the financial statements.

Since we have securities registered with the SEC and are a large accelerated filer within

the meaning of Rule 12b-2 of the Exchange Act, we need to assess the effectiveness of

our internal controls over financial reporting and provide a report on the results of our

assessment. Our Board of Directors reviewed its internal controls over financial repor-

ting based on criteria established in the Internal Control – Integrated Framework (2013)

issued by the Committee of Sponsoring Organizations of the Treadway Commission and

engaged an external advisor to help assess the effectiveness of its controls.

3.5.6

Recent or Current Developments in our

System of Risk Management

In 2022, we further increased our attention to pro-active risk management by

making the evaluation of our core risks and uncertainties a standing discussion topic

for our Board of Directors.

General Description

of the Company and

its Share Capital

4.1

Legal Information on the Company

228

4.2

Share Capital

229

4.3

Share Classes and Principal Shareholders

234

4.4

General Meeting and Voting Rights

236

4.5

Anti-Takeover Provisions

237

4.6

Amendments of Articles of Association

237

4.7

Transparency Directive

238

4.8

Dutch Financial Reporting Supervision Act

238

4.9

Dividends and Other Distributions

239

4.10

Financial Calendar 2023

239

General Description

of the Company and

its Share Capital

4.1

Legal Information

on the Company

4.1.1

General

We were incorporated on April 25, 2008 in the Netherlands and under Dutch law. Our

commercial name is ‘argenx’ and since April 26, 2017, our corporate name is ‘argenx SE’.

We are a Dutch European public company (

Societas Europaea

or SE) registered

with the trade register of the Dutch Chamber of Commerce under number 24435214.

Our corporate seat is in Rotterdam, the Netherlands, and our registered office is at

Laarderhoogtweg 25, 1101 EB Amsterdam, the Netherlands. Our telephone number

is +31 (0) 10 70 38 441. Our website address is

http://www.argenx.com

Our European legal entity identifier number (

LEI

) is 7245009C5FZE6G9ODQ71. Our

ordinary shares are listed on Euronext Brussels under ISIN NL0010832176 under the

symbol “ARGX”. The ADSs are listed on Nasdaq, under the symbol “ARGX”.

4.1.2

Statutory/Corporate Objective

Pursuant to Article 3 of our Articles of Association, our corporate objectives are: (a) to

exploit, including all activities relating to research, development, production, marketing

and commercial exploitation; biological, chemical or other products, processes and

technologies in the life sciences sector in general, and more specifically in the diagnostic,

pharmaceutical, medical, cosmetic, chemical and agricultural sector; (b) to design and

develop instruments which may be used in medical diagnosis and affiliated areas; (c) the

worldwide distribution of, sale of and rendering services relating to our products and

subsidiaries directly to customers as well as through third parties; (d) to incorporate,

to participate in any way whatsoever, to manage, to supervise, to operate and to

promote enterprises, businesses and companies; (e) to render advice and services

to businesses and companies with which we form a group and to third parties; (f) to

finance businesses and companies; (g) to borrow, to lend and to raise funds, including

the issue of bonds, promissory notes or other securities or evidence of indebtedness as

well as to enter into agreements in connection with the aforementioned; (h) to render

guarantees, to bind us and to pledge our assets for obligations of the companies and

enterprises with which we form a group and on behalf of third parties; (i) to obtain,

alienate, manage and exploit registered property and items of property in general; (j) to

trade in currencies, securities and items of property in general; (k) to develop and trade

in patents, trademarks, licenses, know-how and other industrial property rights; and

(l) to perform any and all activities of industrial, financial or commercial nature, as well

as everything pertaining the foregoing, relating thereto or conductive thereto, all in the

widest sense of the word.

4.2 Share Capital

4.2.1

Authorized and Issued Share Capital

Under Dutch Law, a company’s authorized share capital sets out the maximum amount

and number of shares that it may issue without amending its articles of association.

Our Articles of Association provide for an authorized share capital in the amount

of €9.0 million divided into 90 million shares, each with a nominal value of €0.10.

All issued and outstanding shares have been fully paid up and the shares are held

in dematerialized form.

As of December 31, 2022 our issued and paid up share capital amounted to

€5,539,585.60, represented by 55,395,856 ordinary shares with a nominal value of

€0.10, each representing an identical fraction of our share capital. As of December 31,

2022, neither we nor any of our subsidiaries held any of our own shares.

4.2.2

Stock Options and Restricted Stock Units

In addition to the shares already outstanding, we have granted stock options which

upon exercise will lead to an increase in the number of our outstanding shares. A total

of 5,511,767 stock options (where each stock option entitles the holder to subscribe for

one new ordinary share) were outstanding and granted as of December 31, 2022. Upon

exercise of these 5,511,767 stock options, a total amount of $1,130 million in stock

option exercise price we will receive, increasing our share capital and share premium by

the same amount.

Further, we have granted RSUs which upon vesting will lead to an increase in the

number of our outstanding shares. A total of 385,280 RSUs (where the holder receives

an equal number of new ordinary shares, minus a certain number of shares required

to cover certain costs, if applicable) were outstanding and granted as of December 31,

2022.

Apart from the stock options and RSUs granted under our Equity Incentive Plan, we do

not currently have other stock options, RSUs, options to purchase securities, convertible

securities or other rights to subscribe for or purchase securities outstanding. For stock

option information through December 31, 2022, see note 13 “

Share-Based Payments

” in

our consolidated financial statements in section 6 “

Consolidated Financial Statements

”

4.2.3

New shares created during 2022

As a result of the exercise of stock options and vesting of RSUs under our Equity

Incentive Plan, 1,044,207 new shares were created in 2022.

On March 23, 2022, we offered 2,333,334 of our ordinary shares through a global

offering which consisted of (i) a public offering of 1,433,701 ADSs in the U.S. and certain

other countries outside the EEA at a price of $300 per ADS, before underwriting dis-

counts and commissions and offering expenses and (ii) a concurrent private placement

of 899,633 ordinary shares in the EEA and the UK at an offering price of €273.10 per

share, before underwriting discounts and commissions and offering expenses. On March

29, 2022, the underwriters of the offering exercised their over-allotment option to

purchase 350,000 additional ADSs in full. As a result, we received $804.1 million of gross

proceeds from this offering, decreased by $44.2 million of underwriter discounts and

commissions, and offering expenses, of which $44.0 million has been deducted from

equity. The total net cash proceeds from the offering amounted to $761.0 million.

The following table shows the developments in our share capital for the fiscal year

ending December 31, 2022:

Number of shares outstanding on December 31, 2020

47,571,283

Number of shares outstanding on December 31, 2021

51,668,315

Exercise of stock options in 2022

1,024,626

Vesting of RSUs

19,581

Global public offering in Euronext and Nasdaq on March 23, 2022

2,333,334

Over-allotment option exercised by underwriters on March 29, 2022

350,000

Number of shares outstanding on December 31, 2022

55,395,856

Issuance of shares in January 2023 relating to exercise of stock options

and vesting of RSU in December 2022

15,076

Exercise of stock options in January 2023

159,385

Exercise of stock options in February 2023

217

Number of shares outstanding on February 15, 2023

55,570,534

4.2.4 American Depository 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 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.

An ADS holder will not be treated as one of our shareholders and does not have share-

holder rights. Dutch law governs shareholder rights. The depositary will be the holder of

the shares underlying the ADSs. A registered holder of ADSs has ADS holder rights.

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.

The depositary has agreed to pay or distribute to ADS holders the cash dividends or

other distributions it or the custodian receives on shares or other deposited securities,

upon payment or deduction of its fees and expenses. ADS holders will receive these

distributions in proportion to the number of shares their ADSs represent. An ADS

holder may surrender his ADSs at the depositary’s office. Upon payment of its fees and

expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees,

the depositary will deliver the shares and any other deposited securities underlying

the ADSs to the ADS holder or a person the ADS holder designates at the office of the

custodian. Or, at an ADS holder’s request, risk and expense, the depositary will deliver

the deposited securities at its office, if feasible.

The depositary may charge the ADS holder a fee and its expenses for instructing the

custodian regarding delivery of deposited securities. ADS holders may instruct the

depositary how to vote the number of deposited shares their ADSs represent. If we

request the depositary to solicit the ADS holders’ voting instructions (and we are not

required to do so), the depositary will notify them of a General Meeting and send or

make voting materials available to them. Those materials will describe the matters to

be voted on and explain how ADS holders may instruct the depositary how to vote. For

instructions to be valid, they must reach the depositary by a date set by the depositary.

The depositary will try, as far as practical, subject to Dutch law and the provisions of

our Articles of Association or similar documents, to vote or to have its agents vote the

shares or other deposited securities as instructed by ADS holders. If we do not request

the depositary to solicit the ADS holders’ voting instructions, an ADS holder can still

send voting instructions, and, in that case, the depositary may try to vote as he instructs,

but it is not required to do so. In any event, the depositary will not exercise any discre-

tion in voting deposited securities and it will only vote or attempt to vote as instructed

or as described in the following sentence. If we asked the depositary to solicit an ADS

holder’s instructions at least 45 days before the meeting date but the depositary does

not receive voting instructions from an ADS holder by the specified date, it will consider

such ADS holder to have authorized and directed it to give a discretionary proxy to a

person designated by us to vote the number of deposited securities represented by its

ADSs. The depositary will give a discretionary proxy in those circum¬stances to vote on

all questions to be voted upon unless we notify the depositary that:

•

we do not wish to receive a discretionary proxy;

•

there is substantial shareholder opposition to the particular question; or

•

the particular question would have an adverse impact on our shareholders.

We are required to notify the depositary if one of the conditions specified above exists.

In order to give an ADS holder a reasonable opportunity to instruct the depositary as

to the exercise of voting rights relating to our shares, if we request the depositary to

act, we agree to give the depositary notice of any meeting and details concerning the

matters to be voted upon at least 30 days in advance of the meeting date.

4.2.5 Issue of Shares

The Articles of Association provide that shares may be issued or rights to subscribe for

our shares may be granted pursuant to a resolution of the shareholders at a General

Meeting, or alternatively, by our Board of Directors if so designated by the shareholders

at a General Meeting. A resolution of the shareholders at a General Meeting to issue

shares, to grant rights to subscribe for shares or to designate our Board of Directors as

the corporate body authorized to do so can only take place at the proposal of our Board

of Directors with the consent of the majority of the non-executive directors. Shares

may be issued or rights to subscribe for shares may be granted by resolution of our

Board of Directors, if and insofar as our Board of Directors is designated to do so by the

shareholders at a General Meeting. Designation by resolution of the shareholders at a

General Meeting cannot be withdrawn unless determined otherwise at the time of de-

signation. The scope and duration of our Board of Directors’ authority to issue shares or

grant rights to subscribe for shares (such as granting stock options or issuing convertible

bonds) is determined by a resolution of the shareholders at a General Meeting and

relates, at the most, to all unissued shares in our authorized capital at the relevant time.

The duration of this authority may not exceed a period of five years. Designation of our

Board of Directors as the body authorized to issue shares or grant rights to subscribe

for shares may be extended by a resolution of the shareholders at a General Meeting

for a period not exceeding five years in each case. The number of shares that may be

issued is determined at the time of designation. No shareholders’ resolution or Board of

Directors’ resolution is required to issue shares pursuant to the exercise of a previously

granted right to subscribe for shares. A resolution of our Board of Directors to issue

shares and to grant rights to subscribe for shares can only be taken with the consent of

the majority of the non-executive directors.

The 2022 General Meeting designated our Board of Directors as the corporate body

competent to issue additional shares and grant rights to subscribe for shares up to a

maximum of 10% of the outstanding capital at the date of the 2022 General Meeting,

and to limit or exclude pre-emptive rights of shareholders for such shares with the prior

consent of the majority of the non-executive directors for a period of 18 months.

4.2.6 Pre-Emption Rights

Dutch law (Section 2:96a of the DCC) and the Articles of Association give shareholders

pre-emptive rights to subscribe on a pro rata basis for any issue of new shares or, upon

a grant of rights, to subscribe for shares. Holders of shares have no pre-emptive rights

upon 1) the issue of shares against a payment in kind (being a contribution other than

in cash); (2) the issue of shares to our employees or the employees of a member of our

group; and (3) the issue of shares to persons exercising a previously granted right to

subscribe for shares.

A shareholder may exercise pre-emptive rights during a period of at least two weeks

from the date of the announcement of the issue of shares. Pursuant to the Articles

of Association, the shareholders at a General Meeting may restrict or exclude the pre-

emptive rights of shareholders. A resolution of the shareholders at a General Meeting to

restrict or exclude the pre-emptive rights or to designate our Board of Directors as our

corporate body authorized to do so, may only be adopted on the proposal of our Board

of Directors with the consent of the majority of the non-executive directors. A resolution

of the shareholders at a General Meeting to exclude or restrict pre-emptive rights, or

to authorize our Board of Directors to exclude or restrict pre-emptive rights, requires

a majority of at least two-thirds of the votes cast, if less than 50% of our issued and

outstanding share capital is present or represented at a General Meeting.

With respect to an issuance of shares pursuant to a resolution of our Board of Directors,

the pre-emptive rights of shareholders may be restricted or excluded by resolution of

our Board of Directors if and insofar as our Board of Directors is designated to do so by

the shareholders at a General Meeting. A resolution of our Board of Directors to restrict

or exclude pre-emptive rights can only be taken with the consent of the majority of the

non-executive directors.

The designation of our Board of Directors as the body competent to restrict or exclude

the pre-emptive rights may be extended by a resolution of the shareholders at a General

Meeting for a period not exceeding five years in each case. Designation by resolution

of the shareholders at the General Meeting cannot be withdrawn unless determined

otherwise at the time of designation.

See also sections 4.2.5 “

Issue of Shares

”

and 4.2.6 “

Pre-Emption Rights

” with respect to

the current right of the Board of Directors to limit or exclude pre-emptive rights.

4.2.7

Acquisition of Shares in our Capital

We may not subscribe for our own shares on issue. We may acquire fully paid-up shares

at any time for no consideration or, if:

•

our shareholders’ equity less the payment required to make the acquisition, does not

fall below the sum of called-up and paid-in share capital and any statutory reserves;

•

we and our subsidiaries would thereafter not hold shares or hold a pledge over

shares with an aggregate nominal value exceeding 50% of our issued share capital;

and

•

our Board of Directors has been authorized thereto by the shareholders at a

General Meeting.

As part of the authorization, the shareholders at a General Meeting must specify the

number of shares that may be repurchased, the manner in which the shares may be

acquired and the price range within which the shares may be acquired. An authorization

by the shareholders at a General Meeting to our Board of Directors for the repurchase

of shares can be granted for a maximum period of 18 months. No authorization of the

shareholders at a General Meeting is required if ordinary shares are acquired by us with

the intention of transferring such ordinary shares to our employees under the Equity

Incentive Plan. A resolution of our Board of Directors to repurchase shares can only be

taken with the consent of the majority of the non-executive directors.

Shares held by us in our own share capital do not carry a right to any distribution.

Furthermore, no voting rights may be exercised for any of the shares held by us or our

subsidiaries unless such shares are subject to the right of usufruct or to a pledge in favor

of a person other than us or our subsidiaries and the voting rights were vested in the

pledgee or usufructuary before we or our subsidiaries acquired such shares. Neither we

nor our subsidiaries may exercise voting rights in respect of shares for which we or our

subsidiaries have a right of usufruct or a pledge.

4.2.8 Reduction of Share Capital

The shareholders at a General Meeting may, upon a proposal by our Board of Directors

with the consent of the majority of the non-executive directors, resolve to reduce the

issued share capital by cancelling shares or by amending the Articles of Association to

reduce the nominal value of the shares. Only shares held by us or shares for which we

hold the depositary receipts may be cancelled. A resolution of the shareholders at a

General Meeting to reduce the number of shares must designate the shares to which

the resolution applies and must lay down rules for the implementation of the resolution.

A resolution to reduce the issued share capital requires a majority of at least two-thirds

of the votes cast, if less than 50% of our issued and outstanding share capital is present

or represented at a General Meeting.

4.3

Share Classes and

Principal Shareholders

As of February 15, 2023 our issued share capital amounted to €5,557,053.40 and was

represented by 55,570,534 ordinary shares. There is only one class of shares (ordinary

shares, including ordinary shares represented by ADSs), and there are no special rights

attached to any of the ordinary shares, nor special shareholder rights, including voting

rights, for any of our shareholders. Each shareholder has one vote.

Any substantial holding and gross short positions in issuing institutions and shares with

special controlling rights have to be notified. An issuing institution is a public limited

company (

naamloze vennootschap

) incorporated under Dutch law whose (depositary

receipts for) shares are admitted to trading on a regulated market in the Netherlands

or in another EU Member State or an EEA Member State, or a legal entity incorporated

under the law of a state that is not an EU Member State and whose (depositary receipts

for) shares are admitted to trading on a regulated market in the Netherlands.

Holders are required to report as soon as their substantial holding or short position

equals or exceeds 3% of the issued capital. Subsequently, holders should notify the

Dutch Authority for the Financial Markets (Stichting Autoriteit Financiële Markten)

(

AFM

) again when their substantial holding or short position consequently reaches,

exceeds or falls below a threshold. This can be caused by the acquisition or disposal

of shares by the shareholder or because the issued capital of the issuing institution is

increased or decreased. Pursuant to chapter 5.3 of the DFSA, relevant thresholds are:

3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%.

The duty to notify applies to legal entities as well as natural persons.

As of February 15, 2023, the following major shareholdings fall under the mandatory

notice provisions of chapter 5.3 of the DFSA on the basis of information provided by the

shareholders and/or the public register of all notifications made available pursuant to

the DFSA at the AFM’s website (see also section 4.2 “

Share Capital

”). No shareholdings

above 3% were reported to the Company directly.

Name of beneficial owner

Number

of shares

Capital

interest

Number of

voting rights

Voting

rights

T. Rowe Price Group, Inc.

5,505,351

9.95%

5,426,030

9.81%

FMR LLC

5,532,361.06

10.00%

5,527,972.06

9.99%

Artisan Investments GP LLC

2,674,146

4.89%

2,674,146

4.89%

The Vanguard Group

1,978,464

4.16%

–

BlackRock, Inc.

2,792,002

5.04%

3,319,096

5.99%

Baillie Gifford & Co.

–

2,966,216

6.24%

Wellington Management

Group LLP

–

2,276,361

4.81%

Based on the number of shares reported in, and at the time of, the most recent transparency

notification filed with the AFM.

Consisting of 7,110 ordinary shares and 5,498,241 ADSs. T. Rowe Price Group, Inc. has reported

holding 3,959,686 ADSs in its Schedule 13G/A filed with the SEC on February 14, 2023.

Consisting of voting rights on 7,110 ordinary shares and 5,418,920 ADSs.

FMR LLC has reported holding 5,532,356 ordinary shares in its Schedule 13G/A filed with the SEC on

February 9, 2023.

Consisting of 46,766 ordinary shares and 2,627,380, according to the AFM filing, depository receipts

and the respective number of voting rights. Artisan Investments GP LLC reported holding 2,615,415

ordinary shares in its Schedule 13G/A filed with the SEC on February 10, 2023.

Consisting of 2,045,011 ordinary shares, 1,291 contracts for difference, and 745,700, according to the

AFM filing, depository receipts.

Consisting of voting rights on 2,497,994 ordinary shares, 1,775 contracts for difference and 819,327,

according to the AFM filing, depository receipts.

Consisting of voting rights on 1,545,652 ordinary shares, 729,479 ADSs and 1,230 equity swaps.

The total number of stock options and RSUs outstanding as of February 15, 2023

amounts to 5,352,165 stock options and 385,280 RSUs.

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 our company.

As of the date of this Annual Report, as far as we are aware, there are no direct or

indirect relationships between us and any of our significant shareholders.

4.4 General Meeting and

Voting Rights

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. Other General Meetings will

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 DCC, request that a General Meeting be convened.

Within three months of it becoming apparent to our Board of Directors that our equity

has decreased to an amount equal to or lower than one-half of the paid-in and called-up

capital, a General Meeting would be held to discuss any requisite measures.

We will give notice of any General Meeting by publication on our website and further-

more, 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. 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 the 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 of our Board of Directors at

least sixty days prior to the date of a General Meeting.

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 forty-

two 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. Share-

holders may exercise these rights, if they are the holders of shares on the registration

date which is currently the 28

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.

Each shareholder may cast one vote for each ordinary share held.

Members of our Board of Directors may attend a General Meeting in which they have an

advisory role. The voting rights attached to shares are suspended as long as such shares

are held by us.

General Meetings resolutions are taken by an absolute majority, except where Dutch law

or our Articles of Association provide for a qualified majority or unanimity.

Three General Meetings were held in 2022. The 2022 General Meeting was held on

May 10, 2022. In this meeting our annual report and annual accounts for the fiscal year

2021 were approved, Mr. Van Hauwermeiren was reappointed as an executive director

to the Board of Directors for a term of four years, each of Peter Verhaeghe and Werner

Lanthaler were reappointed as non-executive directors to the Board of Directors for

terms of two years, James Daly was reappointed as a non-executive director to the

Board of Directors for a term of four years, and 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, proposed amendments to our Articles of Association were approved

and the appointment of Deloitte Accountants B.V. as the Company’s auditor for the 2022

fiscal year.

On September 8, 2022, an extraordinary General Meeting was held, to appoint Camilla

Sylvest as a non-executive director to the Board of Directors for a term of four years.

On December 12, 2022, an extraordinary General Meeting was held, to appoint Ana

Cespedes as non-executive director to the Board of Directors for a term of approxima-

tely four years ending on the day of the annual General Meeting to be held in 2026.

4.5 Anti-Takeover Provisions

Various protective measures are possible and permissible within the boundaries set by

Dutch law and Dutch case law. We have not implemented specific measures with the

aim of deterring takeover attempts. However, we have adopted several provisions that

may have the effect of making a takeover of argenx more difficult or less attractive,

including requirements that certain matters, including an amendment of our Articles of

Association, may only be brought to our shareholders for a vote upon a proposal by our

Board of Directors. No takeover bid has been instigated by third parties in respect of our

equity during the current or previous financial year and the current fiscal year.

4.6

Amendments of Articles

of Association

The shareholders at a General Meeting may amend the Articles of Association, at the

proposal of our Board of Directors, with the consent of the majority of the non-exe-

cutive directors.

Changing the rights of any of the shareholders will require the Articles of Association to

be amended.

The 2022 General Meeting approved the amendment of our Articles of Association to

align with current Dutch law and practice. The Articles of Association were amended

pursuant to the notarial deed of partial amendment of the Articles of Association,

executed on May 10, 2022. The full text of the Articles of Association and an unofficial

English translation thereof are available on our

website

4.7

Transparency Directive

We are a European public company with limited liability (

Societas Europaea

or SE)

incorporated and existing under the laws of the Netherlands. The Netherlands is our EU

home member state (

lidstaat van herkomst

) for the purposes of Directive 2004/109/EC

(as amended by Directive 2013/50/EU), or the Transparency Directive, as a consequence

of which we are subject to the DFSA in respect to certain ongoing transparency and

disclosure obligations. In addition, as long as our shares are listed on Euronext Brussels

and the ADSs on Nasdaq, we are required to disclose any regulated information which

has been disclosed pursuant to the DFSA as well as in accordance with the Belgian Law

of May 2, 2007, the Belgian Royal Decree of November 14, 2007 as well as Nasdaq listing

rules. We must publish our annual accounts within four months after the end of each

financial year and our half-yearly figures within two months after the end of the first six

months of each financial year. Within five calendar days after adoption of our annual

accounts, we must file our adopted annual accounts with the AFM. Pursuant to the

DFSA, we will be required, among other things, to make public without delay any change

in the rights attaching to our shares or any rights to subscribe our shares.

4.8 Dutch Financial Reporting

Supervision Act

DFSA applies to financial years starting from 1 January 2006. On the basis of the DFSA,

the AFM supervises the application of financial reporting standards by, among others,

companies whose corporate seat is in the Netherlands and whose securities are listed

on a Dutch Regulated Market or foreign stock exchange. Pursuant to the DFSA, the AFM

has an independent right to (i) request an explanation from us regarding its application

of the applicable financial reporting standards and (ii) recommend to us the making

available of further explanations. If we do not comply with such a request or recom-

mendation, the AFM may request that the Dutch Enterprise Chamber of the Amsterdam

Court of Appeal (Ondernemingskamer van het Gerechtshof te Amsterdam) (

Enterprise

Chamber

) order us to (i) make available further explanations as recommended by the

AFM, (ii) provide an explanation of the way we have applied the applicable financial

reporting standards to its financial reports or (iii) prepare our financial reports in accor-

dance with the Enterprise Chamber’s instructions.

This Annual Report also concerns the annual financial reporting within the meaning of

5:25c(2) DFSA.

4.9 Dividends and

Other Distributions

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 €3,000 ($3,500) in 2022.

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 re¬invested in our business and that cash dividends will

not be paid until we have an established revenue stream to support continuing cash di-

vidends. 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.

Under Dutch law, a Dutch European public company with limited liability (Societas Euro-

paea or SE) may only pay dividends if the shareholders’ equity (eigen vermogen) exceeds

the sum of the paid-up and called-up share capital plus the reserves required to be

maintained by Dutch law or our Articles of Association. Subject to such restrictions, any

future determination to pay dividends would be at the discretion of the shareholders at

our General Meeting.

Our Articles of Association, as available on our website, contain the provision on the

distribution of profits in article 20 (Profits, distributions and losses).

4.10 Financial Calendar 2023

May 2, 2023

Annual General Meeting in Amsterdam, the Netherlands

May 4, 2023

First quarter 2023 financial results

July 27, 2023

Half year and second quarter 2023 financial results

October 27, 2023

Third quarter 2023 financial results

Operating and

Financial Review

5.1

Overview

241

5.2

Basis of Presentation

243

5.3

Capitalization and Indebtedness

250

5.4

Critical Accounting Estimates and Judgments

252

5.5

Results of Operation

253

5.6

Liquidity and Capital Resources

258

5.7

Off-Balance Sheet Arrangements

261

5.8

Contractual Obligations

262

5.9

Information Regarding the Independent Auditor

263

5.10

Material Contracts and Related Party Transactions

263

5.11

Employees

266

5.12

Legal and Arbitration Proceedings

267

5.13

Insurance

267

Operating and

Financial Review

5.1

Overview

Since our inception in 2008, we have focused most of our financial resources and efforts

towards developing our SIMPLE AntibodyTM Platform and antibody engineering techno-

logies, 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, which is now approved in the U.S, Japan and Europe,

the successful commercialization of which generated a global product net sales of

$400.7 million. On our research and development, we continue towards advancing a

deep pipeline of both clinical- and preclinical-stage product candidates for the treat-

ment of severe autoimmune diseases, hematological disorders and cancer. 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 disco-

very stage. Through December 31, 2022, we have raised aggregate gross proceeds of

$4,318.5 million, including total net cash proceeds of $761.0 million from our U.S. public

offering on Nasdaq in March 2022.

As of December 31, 2022 and December 31, 2021, we had cash, cash equivalents and

current financial assets of $2,192.5 million and $2,336.7 million, respectively.

Our balance sheet shows our total assets accumulate to $3,134.3 million for the year

ended December 31, 2022, compared to $2,850.3 million for the year ended December

31, 2021 and $2,279.4 million for the year ended December 31, 2020. The main reason

for the material change in balance sheet total are the various equity financing rounds,

completed over the period covered by the financial statements.

Since our inception, we have incurred significant operating losses. For the years ended

December 31, 2022 and 2021, we incurred total comprehensive losses of $730.3 million

and $450.6 million, respectively. As of December 31, 2022, we had accumulated losses

of $2,109.8 million.

Although we have generated revenue of $400.7 million from global product net sales

of VYVGART in fiscal year 2022, we can provide no assurances that we will be able to

achieve or remain profitable based on sales in that indication alone or that we will be

able to receive regulatory approval of and commercialize VYVGART in other indications

or in other countries. On December 17, 2021, the FDA approved efgartigimod, which

is marketed as VYVGART™ (efgartigimod alfa-fcab), for the treatment of gMG in adult

patients who are AChR-AB+. On January 20, 2022, the PMDA approved VYVGART™

(efgartigimod alfa) for the treatment of adult patients with gMG who do not have suffi-

cient response to steroids or non-steroidal ISTs. On August 11, 2022, the EU Commission

granted marketing authorization for VYVGART™ (efgartigimod alfa-fcab) as an add-on

to standard therapy for the treatment of adult patients with gMG who are AChR-AB+.

These are the only approved products we currently have.

We expect our expenses to continue to increase as we expand our global commercial

infrastructure and drug product inventory for VYVGART™ for the treatment of gMG,

the advancement of our clinical-stage pipeline, including ongoing registrational clinical

trials across five indications of efgartigimod, and continued investment in our IIP. We

anticipate that our expenses will increase substantially if and as we:

Research and Development Activities:

•

execute the Phase 2/3 clinical trials of efgartigimod in ITP, CIDP, PF and in PV;

•

execute the Phase 2/3 clinical trials of efgartigimod in BP and Myositis and launch

Phase 2/3 clinical trials in other indications;

•

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

•

further build-out our sales, marketing and distribution infrastructure and scale-up

manufacturing capabilities for the continued commercialization of VYVGART™ for

which we obtained regulatory approval from the FDA, PMDA and EU Commission and

any 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 significantly

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, 2021 was included in our annual

report on Form 20-F for the year ended December 31, 2021 under section 5, “

Operating

and Financial Review

”, which was filed with the SEC on March 21, 2022.

5.2

Basis of Presentation

5.2.1

Foreign Currency Transactions

Functional and Presentation Currency

Items included in the consolidated financial statements of each of our entities are va-

lued using the currency of their economic environment in which the entity operates. As

of January 1, 2021, and for all periods thereafter, the consolidated financial statements

are presented in USD, which is the Company’s presentation currency.

Change in Functional and Presentation Currency as of January 1, 2021

As of January 1, 2021, the Company changed its functional and presentation currency

from EUR to USD. The change in functional currency was made to reflect that USD has

become the predominant currency for the Company, representing a significant part

of the Company’s cash flows and financing. The change has been implemented with

prospective effect.

The change in presentation currency, effective January 1, 2021, from EUR to USD is retro-

actively applied to comparative figures according to IAS 8 and IAS 21, as if USD had always

been the presentation currency of the consolidated financial statements. The change was

made to better reflect the economic footprint of the Company’s business going forward.

The Company believes that the presentation currency change will give investors and

other stakeholders a clearer understanding of the Company’s performance over time.

5.2.2

Revenue from Sale of Product

Revenue from the sale of goods is recognized at an amount that reflects the conside-

ration that we expect 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 considera-

tion 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 consist of sales of VYVGART in U.S., Japan and Europe. 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 is presented in the consolidated

financial statements of profit or loss under note 15 “

Product Net Sales

”. In accordance

with IFRS 15 “Revenue from Contracts with Customers”, such revenue is recognized

when the product is physically transferred, in accordance with the delivery and accep-

tance terms agreed with the customer. Payment of the transaction price is payable at

the point the customer obtains the legal title to the goods.

5.2.3

Revenue from Collaborations

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 collabora-

tion and license agreements.

We recognize revenue when the customer obtains control of promised goods or ser-

vices, 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, the following five steps are performed:

1. Identify the Contracts

In our current collaboration and license agreements, we are mainly licensing our

intellectual property and/or providing research and development products/services,

which might include a cost-sharing mechanism and/or in the future, selling our products

to collaborative partner entities. Revenue is generated through these arrangements

via upfront payments, milestone payments based on clinical and regulatory criteria,

research and development service fees and future sales-based milestones and sales-

based royalties. In some cases, the collaboration and license agreements also include an

equity subscription component. If this is the case, we analyze if the criteria to combine

contracts, as set out by IFRS 15, are met.

2. Identify Performance Obligations

Depending on the type of contract, there can be one or more distinct performance

obligations under IFRS 15. This is based on an assessment of whether the promises in

an agreement are capable of being distinct and are distinct from the other promises to

transfer goods and/or services in the context of the contract.

For our material ongoing collaboration and license agreement (i.e., the Zai Lab Agree-

ment), we assessed that there is more than one distinct performance obligation, being

the transfer of a license and supply of clinical and commercial product.

This is because we consider the performance obligation is distinct in the context of the

contract as the license has stand-alone value without our further involvement in the

research and development collaboration and that there is no interdependence between

the license and the clinical and commercial supply to be provided.

For other material collaboration and license agreements, we assessed that there is one

single performance obligation in our collaboration and license agreements, being the

transfer of a license combined with performance of research and development services.

3. Determine the Transaction Price

Our material ongoing collaboration and license agreements include non-refundable up-

front payments or license fees, milestone payments, the receipt of which is dependent

upon the achievement of certain clinical, regulatory or commercial milestones, royalties

on sales and research and development service fees.

3.1 Non-Refundable Upfront Payments or License Fees

If the license to our intellectual property is determined to be distinct from the other

performance obligations identified in the arrangement, we recognize revenue from

non-refundable upfront fees allocated to this license at the point in time the license

is transferred to the customer and the customer has the right to use the license.

For all our material ongoing collaboration and license agreements, we consider the

performance obligations related to the transfer of the license as distinct from the other

promises to transfer goods and/or services; we use judgement to assess the nature

of the performance obligation to determine whether the performance obligation is

satisfied over time or at a point in time. If over time, revenue is then recognized based

on a pattern that best reflects the transfer of control of the service to the customer.

3.2 Milestone Payments Other than Sales-Based Milestones

A milestone payment, being a variable consideration, is 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. We estimate the amount to be included

in the transaction price upon achievement of the milestone event. The transaction price

is then allocated to each performance obligation on a stand-alone selling price basis, for

which we recognize revenue as or when the performance obligations under the contract

are satisfied. At the end of each reporting period, we re-evaluate the probability of

achievement of such milestones and any related constraint, and, if necessary, adjusts

the estimate of the overall transaction price. Any such adjustments are recorded on a

cumulative catch-up basis, which would affect revenue and earnings in the period of

adjustment.

3.3 Research and Development Service Fees

Our material ongoing collaboration and license agreements may include reimbursement

or cost sharing for research and development services. Research and development

services are performed and satisfied over time given that the customer simultaneously

receives and consumes the benefits provided by us. Such costs reimbursements received

are recognized in revenues when costs are incurred and agreed by the parties.

3.4 Sales-Based Milestone Payments and Royalties

Our material ongoing collaboration and license agreements include sales-based

royalties, including commercial milestone payments based on the level of sales, and

the license has been deemed to be the predominant item to which the royalties and

commercial milestone payments relate. Related revenue is recognized as the subsequent

underlying sales occur.

4. Allocate the Transaction Price

In principle, an entity shall allocate the transaction price to each performance obligation

identified in the contract on a relative stand-alone selling price basis. As our material on-

going collaboration and license agreement (i.e., the Zai Lab Agreement) contains more

than one performance obligation, we allocate the transaction price to all performance

obligations identified.

5. Recognize Revenue

Revenue is recognized when the customer obtains control of the goods and/or services

as provided in the collaboration and license agreements. The control can be transferred

over time or at a point in time – which results in the recognition of revenue over time or

at a point in time, respectively.

As our ongoing collaboration and license agreement (i.e., the Zai Lab Agreement)

contains more than one performance obligation, we recognized revenue at the point in

time of the transfer of license and we recognize revenue over time for supply of clinical

and commercial products as the customer simultaneously receives the benefits provided

by our performance, satisfied over time.

Other ongoing collaboration and license agreements only contain one single perfor-

mance obligation which is, as the customer simultaneously receive the benefits provided

by our performance, satisfied over time, we recognize revenue over time.

The recognition of revenue over time is based on a pattern that best reflects the

satisfaction of the related performance obligation, applying the input method. The input

method estimates the satisfaction of the performance obligation as the percentage of

total collaboration costs that are completed each period compared to the total estima-

ted collaboration costs.

Research and development service fees are recognized as revenue when costs are

incurred and agreed by the parties as we act as a principal in the scope of its stake

of the research and development activities of its ongoing collaboration and license

agreements.

5.2.4 Other Operating Income

As a company that carries extensive research and development activities, we benefit

from various grants, research and development incentives and payroll tax rebates from

certain governmental agencies. These grants and research and development incentives

generally aim to partly reimburse approved expenditures incurred in our research and

development efforts. The primary grants, research and development incentives and

payroll tax rebates are as follows:

Government Grants

We have received several grants from agencies of the Flemish government to support

various research programs focused on technological innovation in Flanders. These grants

require us to maintain a presence in the Flemish region for a number of years and invest

according to pre agreed budgets.

Research and Development Incentives

Companies in Belgium can benefit from tax savings on amounts spent on research and

development by applying a one time or periodic tax deduction on research and develop-

ment expenditures for the acquisition or development of patents. This tax credit is a

reduction of the corporate income taxes for Belgian statutory purposes and is transfer-

rable to the next four accounting periods. These tax credits are paid to us in cash after

five years to the extent they have not been offset against corporate taxes due.

Payroll Tax Rebates

We also benefit from certain rebates on payroll withholding taxes for scientific person-

nel. The government grants and research and development incentives generally aim

to partly reimburse approved expenditures incurred in our research and development

efforts and are credited to the income statement, under other operating income, when

the relevant expenditure has been incurred and there is reasonable assurance that the

grant or research and development incentive is receivable.

Changes in Fair Value on Non-Current Financial Assets

In March 2019, we entered into a license agreement with AgomAb for the use of hepa-

tocyte growth factor-mimetic SIMPLE Antibodies™, developed under our IIP. In exchange

for granting this license, we received a profit share in AgomAb.

In June 2022, AgomAb secured €38.4 million as a result of the extension of Series B.

We 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

results in a change in fair value of non-current financial assets of $4.3 million recorded

through profit or loss. The fair value of non-current financial assets is updated at the end

of each reporting period.

5.2.5

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 and (iii) costs associated with regulatory

submissions and approvals, QA and pharmacovigilance;

•

personnel expense related to compensation of research and development staff and

related expenses, including salaries, benefits and share based compensation expenses;

•

materials and consumables expenses;

•

depreciation and amortization of tangible and intangible fixed assets used to develop

our product candidates; and

•

other expenses consisting of (i) costs associated with obtaining and maintaining

patents and other intellectual property and (ii) other costs such as travel expenses

related to research and development activities.

We incur various external expenses under our collaboration and license agreements for

material and services consumed in the discovery and development of our partnered pro-

duct candidates. Under our agreement with AbbVie, our own research and development

expenses were not reimbursed. Under our agreement with Zai Lab, we are responsible

for certain costs relating to future clinical trials involving efgartigimod conducted parti-

ally by Zai Lab.

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, production of product batches and enrolment of patients

in clinical trials. Research and development expenses are expected to increase as we

advance the clinical development of efgartigimod and ARGX-117 and further advance

the research and development of our other early-stage pipeline candidates. The success-

ful 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 fully described in

section 2 “

Risk Factors

” and including the uncertainty of:

•

the scope, rate of progress and expense of our research and development activities;

•

the successful enrollment in, and completion of clinical trials;

•

the ability to market, commercialize and achieve market acceptance for efgartigimod

or any other product candidate that we may develop in the future, if approved;

•

establishing and maintaining a continued acceptable safety profile for our product

candidates;

•

the terms, timing and receipt of regulatory approvals from applicable regulatory

authorities;

•

the successful completion of preclinical studies necessary to support IND applications

in the U.S. or similar applications in other countries;

•

the expense of filing, prosecuting, defending and enforcing patent claims and other

intellectual property rights; and our current and future collaborators continuing their

collaborations with us.

5.2.6

Selling, General and

Administrative Expenses

Selling, general and administrative expenses consist primarily of:

•

personnel expenses relating to salaries and related costs for personnel, including

share-based compensation, of our employees in executive, finance, business

development, marketing, commercial and support functions;

•

professional fees for business development, marketing, IT, audit, commercial, legal

services and investor relations costs;

•

Board of directors expenses consisting of directors’ fees, travel expenses and share-

based compensation for non-executive board members;

•

costs associated with commercial launch of VYVGART™ for the treatment of gMG

and marketing and promotional activities and continued investment in supply chain;

•

allocated facilities costs; and

•

other selling, general and administrative expenses, including leasing costs, office

expenses, travel costs.

We expect our general and administrative expenses to increase as we continue to

support our growth. Such costs include increases in our finance and legal personnel,

additional IT-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™ and preparation of commercial launch of our

other product candidates.

5.2.7

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 net losses on cash and cash equivalents and current financial assets held at fair

value through profit or loss and other financial expenses.

5.2.8 Exchange Gains (Losses)

Our exchange gains (losses) relate to (i) our transactions denominated in foreign

currencies, mainly in euro, Swiss francs, British pounds and Japanese yens 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 since January 1, 2021 and therefore the presentation currency

throughout this Annual Report unless otherwise specified. For more information on

currency exchange fluctuations on our business, please see note 26 “

Financial Risk

Management

”. We have no derivative financial instruments to hedge interest rate and

foreign currency risk.

5.2.9

Income Tax Expense

We have a history of losses. We expect to continue to incur losses as we continue to

invest in our clinical and pre-clinical development programs and our discovery platform,

and as we incur costs for the commercial launch of VYVGART, following the regulatory

approval by the FDA, the PMDA and the EU Commission. Consequently, we do not have

any deferred tax asset regarding certain tax losses on our consolidated statements of

financial position.

We incur current income tax expense on the profit generated in various subsidiaries in

view of the transfer price agreements set up between argenx BV and these subsidiaries.

5.3

Capitalization and

Indebtedness

The table below sets forth our capitalization as of December 31, 2022 on an actual basis:

(in thousands of $)

As of December 31,

2022

(audited)

Total current debt

(including current portion of non-current debt)

–

Guaranteed

–

Secured

–

Unguaranteed/unsecured

–

Total non-current debt

(excluding current portion of non-current debt)

–

Guaranteed

–

Secured

–

Unguaranteed/unsecured

–

Shareholder equity

2,813,699

Share capital

6,639

Share premium

4,309,887

Legal reserve(s)

129,280

Retained earnings

(2,109,791)

Other reserves

477,691

Total

2,813,699

Legal reserves are the amount of translation differences.

The table below sets forth our indebtedness as of December 31, 2022 on an actual basis:

(in thousands of $)

As of December 31,

2022

(audited)

A. Cash

77,477

Cash equivalents

723,263

Other current financial assets

1,391,808

D. Liquidity

(A)+(B)+(C)

2,192,548

Current financial debt

(including debt instruments,

but excluding current portion of non-current financial debt)

–

Current portion of non-current financial debt

3,417

Current financial indebtedness

(E + F)

3,417

Net current financial indebtedness

(G – D)

(2,189,131)

Non-current financial debt

(excluding current portion

and debt instruments)

9,009

Debt instruments

–

Non-current trade and other payables

–

Non-current financial indebtedness

(I)+(J)+(K)

9,009

M. Total financial indebtedness

(H)+(L)

(2,180,122)

See note 11 “

Cash and cash equivalents

” to our consolidated financial statements in section 6

“

Consolidated Financial Statements

”.

See note 10 “

Financial assets — current

” to our consolidated financial statements in section 6

“

Consolidated Financial Statements

”.

Please note that financial debt balances as presented in the table above do not include any indirect

or contingent indebtedness. For more information on the Company’s indirect and contingent

indebtedness, please see note 29 “

Commitments

” to our consolidated financial statements in section

6 “

Consolidated Financial Statements

”.

As of December 31, 2022, current financial debt (as disclosed in item E. in the table

above) included current liabilities related to short-term leases in the amount of

$3.4 million and non-current financial debt (as disclosed in item I. in the table above)

included non-current liabilities related to long-term leases in the amount of $9.0 million.

More information is included in our consolidated financial statements and related notes

included in section 6 “

Consolidated Financial Statements

”

5.4

Critical Accounting Estimates

and Judgments

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 fac-

tors 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.

5.4.1

Critical Estimates in

Applying Accounting Policies

Gross to Net Adjustments

Our product gross sales are subject to various deductions, which are primarily composed

of rebates to government agencies, distributors, health insurance companies and

managed healthcare organizations. These deductions represent estimates of the related

obligations, requiring the use of judgment when estimating the effect of these sales de-

ductions on product gross sales for a reporting period. These adjustments are deducted

from product gross sales to arrive at product net sales. The significant components of

variable consideration under revenue recognition policy summarizes the nature of these

deductions and how the deduction is estimated. After recording these, product net sales

represent our best estimate of the cash that we expect to ultimately collect.

5.5

Results of Operation

Year Ended December 31,

(in thousands of $)

2022

2021

% Change

Product net sales

400,720

–

100

Collaboration revenue

10,026

497,277

(98)

Other operating income

34,520

42,141

(18)

Total operating income

445,267

539,418

(17)

Cost of sales

(29,431)

–

100

Research and development expenses

(663,366)

(580,520)

Selling, general and administrative expenses

(472,132)

(307,644)

Loss from investment in joint venture

(677)

–

100

Total operating expenses

(1,165,607)

(888,164)

Operating loss

(720,340)

(348,746)

107

Financial income

27,665

3,633

661

Financial expense

(3,906)

(4,578)

(15)

Exchange loss

(32,732)

(50,053)

(35)

Loss for the year before taxes

(729,314)

(399,744)

Income tax (expense)/benefit

19,720

(8,522)

(331)

Loss for the year

(709,593)

(408,266)

Weighted average number of shares outstanding

54,381,371

51,075,827

Basic and diluted profit/(loss) per share (in $)

(13.05)

(7.99)

5.5.1

Product Net Sales

(in thousands of $)

Year Ended December 31,

2022

U.S.

377,659

Japan

15,764

Europe

5,678

Other

1,619

Total product net sales

400,720

The product net sales relate to sales made outside of the U.S., Japan and Europe and relate to named

patient sales made with the U.S. label.

For the twelve months ended December 31, 2022, the product net sales were related

to sales of VYVGART in the U.S. following the approval of VYVGART by the FDA on

December 17, 2021, in Japan following the approval of VYVGART by PMDA on January

20, 2022 and the EU following the approval of VYVGART by the EU Commission on

August 11, 2022. No product net sales were recognized during the comparable prior

periods. Product gross sales for twelve months ended December 31, 2022 was $446.9

million and the gross to net adjustment for twelve months ended December 31, 2022

was $46.2 million, resulting in $400.7 million of product net sales for twelve months

ended December 31, 2022.

5.5.2 Collaboration Revenue

Year Ended December 31,

(in thousands of $)

2022

2021

% Change

Zai Lab

–

151,903

(100)

Janssen

–

292,279

(100)

AbbVie

–

121

(100)

Upfront payments

–

444,303

(100)

Zai Lab

–

25,634

(100)

Janssen

–

22,865

(100)

AbbVie

–

102

(100)

Other

5,365

1,214

342

Milestone payments

5,365

49,815

(89)

Janssen

–

2,028

(100)

Other

424

298

Research and development service fees

424

2,326

(82)

Zai Lab

4,238

833

409

Other revenues

4,238

833

409

Total revenue

10,026

497,277

(98)

Our collaboration revenue decreased by $487.2 million to $10.0 million for the year

ended December 31, 2022, compared to $497.3 million for the year ended December

31, 2021. The collaboration revenue recognized in the year ended December 31, 2021

was the result of the recognition of the transaction price from Janssen due to the

termination of the collaboration agreement in 2021 and the closing of the strategic

collaboration for efgartigimod with Zai Lab during 2021.

There was no revenue recognized from upfront payments during the year ended

December 31, 2022. The revenue recognition from upfront payments for the year ended

December 31, 2021 was $444.3 million. The revenue recognized during the year ended

December 31, 2021 was primarily driven by the recognition of the upfront payment

received from Zai Lab upon strategic collaboration for efgartigimod and the recognition

of the upfront payment received under the collaboration agreement with Janssen upon

termination of the agreement.

The revenue recognition from milestone payments for the year ended December 31,

2022 and December 31, 2021 was $5.4 million and $49.8 million respectively. The

revenue recognized during the year ended December 31, 2022, from milestone pay-

ments primarily relates to €5.0 million triggered by the option exercised by LEO Pharma

to enter into the LEO Pharma Collaboration Agreement for ARGX-112. The revenue

recognized during the year ended December 31, 2021, from milestone payments was

mainly due to recognition of $25.0 million from Zai Lab upon regulatory approval of

efgartigimod by the FDA in the U.S. and recognition of $22.9 million as a result of the

termination of the collaboration agreement with Janssen.

The increase in revenue recognition from other revenues of $3.4 million was primarily

driven by the clinical and commercial supply of efgartigimod to Zai Lab.

5.5.3

Other Operating Income

Year Ended December 31,

(in thousands of $)

2022

2021

% Change

Grants

2,186

4,398

(50)

Research and development incentives

19,502

13,970

Payroll tax rebates

8,576

12,621

(32)

Change in fair value on non-current financial assets

4,256

11,152

(62)

Total

34,520

42,141

(18)

Other operating income decreased by $7.6 million to $34.5 million for the year ended

December 31, 2022, compared to $42.1 million for the year ended December 31, 2021.

The decrease was primarily driven by:

•

the change in fair value on our profit share in AgomAb was $4.3 million for the

year ended December 31, 2022, as compared to $11.2 million for the year ended

December 31, 2021;

•

the decrease in payroll tax rebates for the year ended December 31, 2022, as a result

of lower research and development personnel expenses eligible for rebates for the

year ended December 31, 2022; and

•

the decrease was offset by an 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.

For more information regarding governmental policies that could affect our operations,

see section 1.9 “

Regulation

”.

5.5.4

Research and Development Expenses

Year Ended December 31,

(in thousands of $)

2022

2021

% Change

Personnel expense

162,010

160,464

External research and development expenses

366,955

382,902

(4)

Materials and consumables

2,396

2,735

(12)

Depreciation and amortization

102,132

3,742

2,629

Other expenses

29,872

30,677

(3)

Total

663,366

580,520

Our research and development expenses totaled $663.4 million and $580.5 million

for the years ended December 31, 2022 and 2021, respectively. The increase of

$82.8 million for fiscal year 2022 as compared to fiscal year 2021 was primarily from the

derecognition of the PRV submitted with the BLA filing for SC efgartigimod for the treat-

ment of gMG, which resulted in a research and development expenses of $99.1 million

recorded under depreciation and amortization in the table above.

Personnel expense primarily relates to internal and external personnel. The expense

also includes share-based compensation expenses related to the grant of stock options

and RSUs to our research and development employees. We employed on average

474.8 full-time equivalents in our research and development functions in the year

ended December 31, 2022, compared to 349.7 in the year ended December 31, 2021.

Our external research and development expenses for the year ended December 31,

2022 totaled approximately $367.0 million, compared to approximately $382.9 million

for the year ended December 31, 2021. The expense reflects 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 $)

2022

2021

% Change

efgartigimod

280,572

311,038

(10)

cusatuzumab

13,554

24,630

(45)

ARGX-117

32,384

22,759

Other programs

40,445

24,475

Total

366,955

382,902

(4)

Other programs include general expenses not allocated to specific program of $22.7 million in 2022

and $6.6 million in 2021.

External research and development expenses for our lead product candidate efgartigimod

totaled $280.6 million for the year ended December 31, 2022, compared to $311.0 million

for the year ended December 31, 2021. This decrease corresponds primarily to manu-

facturing and clinical development activities in relation to:

•

the execution of the bridging study for ENHANZE® efgartigimod in MG;

•

the execution of two Phase 3 clinical trials in CIDP;

•

the execution of two Phase 3 clinical trials in ITP;

•

the execution of the Phase 3 clinical trial in PV and PF;

•

the execution of Phase 2 clinical trial in BP;

•

the execution of Phase 1 clinical trial in Myositis; and

•

the execution of pre-clinical and Phase 1 trials in new indications identified.

External research and development expenses for cusatuzumab totaled $13.6 million

for the year ended December 31, 2022 compared to $24.6 million for the year ended

December 31, 2021. This decrease of $11.1 million is the result of the termination of

the collaboration agreement with Janssen.

External research and development expenses for ARGX-117 totaled $32.4 million for the

year ended December 31, 2022 compared to $22.8 million for the year ended December

31, 2021. This increase of $9.6 million was due to increased research and development

expenses in relation to the advancement of our ARGX-117 program, a complement-

targeting antibody against C2.

External research and development expenses on other programs increased by

$16.0 million to $40.4 million for the year ended December 31, 2022, compared to

$24.5 million for the year ended December 31, 2021. Of the total research and develop-

ment expense, $22.7 million relates to general allocation of expenses.

5.5.5

Selling, General and

Administrative Expenses

Year Ended December 31,

(in thousands of $)

2022

2021

% Change

Personnel expenses

234,740

164,646

Professional and marketing fees

178,570

102,674

Supervisory board

6,912

12,958

(47)

Depreciation and amortization

2,211

2,126

IT expenses

17,431

8,977

Other expenses

32,268

16,263

Total Selling, general and administrative expenses

472,132

307,644

Our selling, general and administrative expenses totaled $472.1 million and

$307.6 million for the years ended December 31, 2022 and 2021, respectively. The in-

crease in our selling, general and administrative expenses for the year ended December

31, 2022 was principally due to an increase of personnel expense and professional and

marketing fees, resulting from:

•

increased costs of the salary and wages and benefits to our selling, general and

administrative employees due to planned increase in the headcount;

•

increased costs associated with additional employees recruited to strengthen our

selling, general and administrative activities, for the commercial launch of VYVGART;

•

increased professional and marketing fees, including promotional and marketing

costs primarily due to the commercial launch of VYVGART; and

•

continued investment in our IT infrastructure.

We employed on average 442.4 full-time equivalents in our selling, general and adminis-

trative functions in the year ended December 31, 2022, compared to 264.4 in the year

ended December 31, 2021.

5.5.6

Financial Income (and Expense)

For the year ended December 31, 2022, financial income amounted to $27.7 million

compared to $3.6 million for the year ended December 31, 2021. The increase of $24.0

million in 2022 related primarily to higher interest on term accounts.

For the year ended December 31, 2022, financial expense amounted to $3.9 million

compared to $4.6 million for the year ended December 31, 2021.

5.5.7

Exchange Gains (Losses)

Exchange losses totaled $32.7 million for the year ended December 31, 2022, compared

to exchange losses of $50.1 million for the year ended December 31, 2021. The decrease

was mainly attributable to unrealized exchange rate losses on the cash, cash equivalents

and current financial assets position in euro during the year ended December 31, 2022

as compared to unrealized exchange rate losses on the cash, cash equivalents and

current financial assets position during the year ended December 31, 2021.

5.6

Liquidity and Capital Resources

5.6.1

Sources of Funds

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 adminis-

trative support for these operations. We currently have only one approved product and

as of the year ended December 31, 2022, net product sales also started to contribute to

the funding of our operations. To date, we have funded our operations through public

and private placements of equity securities, upfront, milestone and expense reimburse-

ment payments received from our collaborators, funding from governmental bodies and

interest income from the investment of our cash, cash equivalents and financial assets.

Through December 31, 2022, we have raised gross proceeds of $4,318.5 million from

private and public offerings of equity securities. We have made net product sales of

$400.7 million during the twelve months ended December 31, 2022.

Our cash flows may fluctuate and are difficult to forecast and will depend on many

factors. On December 31, 2022, we had cash, cash equivalents and current financial

assets of $2,192.5 million, compared to $2,336.7 million on December 31, 2021.

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 our commitments to Lonza and Fujifilm which are detailed in note 29

“

Commitments

” to our consolidated financial statements in section 6 “

Consolidated

Financial Statements

”

For more information as to the risks associated with our future funding needs, see

section 2.1 “

Risk Factors Related to argenx’s Financial Position and Need for Additional

Capital

”

For more information as to our financial instruments, please see note 26 “

Financial Risk

Management

” in section 6 “

Consolidated Financial Statements

”

5.6.2 Cash Flows

The table below summarizes our cash flows for the years ended December 31, 2022

and 2021.

Year Ended December 31,

(in thousands of $)

2022

2021

Variance

Cash and cash equivalents at beginning

of the period

1,334,676

1,216,803

117,873

Net cash flows (used in)/from operating activities

(862,807)

(606,812)

(255,995)

Net cash flows (used in)/from investing activities

(461,184)

(347,070)

(114,114)

Net cash flows (used in)/from financing activities

843,757

1,121,342

(277,585)

Effect of exchange rate differences on cash and

cash equivalents

(53,702)

(49,587)

(4,115)

Cash and cash equivalents at end of the period

800,740

1,334,676

(533,936)

Net Cash Used in Operating Activities

Net cash outflow from our operating activities increased by $256.0 million to a net

outflow of $862.8 million for the year ended December 31, 2022, compared to a net

outflow of $606.8 million for the year ended December 31, 2021. The net cash outflow

from operating activities for the year ended December 31, 2022 resulted primarily from

(i) the 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 candidate, (ii) the personnel expenses

and consulting expenses incurred for the commercial launch of efgartigimod in the U.S.,

Japan, and Europe and (iii) the increase in working capital, primarily due to increase in

accounts receivables related to product net sales and the increase in inventory levels.

The net cash outflow of $606.8 million for the year ended December 31, 2021 was

primarily influenced by (i) the 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 candidate, (ii) the

personnel expenses and consulting expenses incurred in preparation of the commercial

launch of efgartigimod in the U.S. and Japan, and (iii) the manufacturing of inventory

ahead of the commercial launch of efgartigimod in the U.S.

Net Cash Used in/from Investing Activities

Investing activities for the year ended December 31, 2022, consist primarily of the

purchases of current financial assets and intangible assets. Cash flow from investing

activities represented a net outflow of $461.2 million for the year ended December 31,

2022, compared to a net outflow of $347.1 million for the year ended December 31,

2021.

The net outflow for the year ended December 31, 2022 related primarily to (i) the net

investment of $368.5 million in current financial assets, including money market funds

and term deposit accounts, compared to a net investment of $228.2 million for the year

ended December 31, 2021 and (ii) the cash outflow of $102.0 million during 2022 in

relation to the purchase of a PRV compared to a cash outflow of $98.0 million for a

PRV which was acquired in 2020, however, paid in 2021.

Net Cash Provided by Financing Activities

Financing activities primarily consist of net proceeds from our private placements and

public offerings of our securities and exercise of stock options. The net cash inflow from

financing activities was $843.8 million for the year ended December 31, 2022, compared

to a net cash inflow of $1,121.3 million for the year ended December 31, 2021. The net

cash inflows were attributed to (i) $760.6 million net cash proceeds from our global

offering in February 2022, compared to $1,091.7 million net cash proceeds from our

global offering and concurrent private placement in February 2021 and (ii) $93.2 million

proceeds received from the exercise of stock options in 2022, compared to $33.4 million

for the year ended 2021.

Operating and Capital Expenditure Requirements

We have never achieved profitability and, as of December 31, 2022, we had accumula-

ted losses of $2,109.8 million. We expect to continue to incur significant operating losses

for the foreseeable future as we continue our research and development efforts, incur

higher costs for continued commercialization of VYVGART, and seek to obtain regulatory

approval and commercialization of other pipeline candidates.

On the basis of current assumptions, we expect that our existing cash and cash equiva-

lents and current financial assets will enable us to fund our operating expenses and

capital expenditure requirements through at least the next twelve months. Our future

equity capital will depend on many factors. Because of the numerous risks and uncer-

tainties 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 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 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;

•

developments related to COVID-19 and its impact on the costs and timing associated

with the conduct of our clinical trials, preclinical programs, manufacturing activities

and other related activities; and

•

developments related to the global economic uncertainties and political instability

resulting from the conflict between Russia and the Ukraine.

For more information as to the risks associated with our future funding needs, see sec-

tion 2.1 of this Annual Report titled “

Risk Factors Related to argenx’s Financial Position

and Need for Additional Capital

”

5.6.3

Working Capital Statement

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 twelve months from the date of this

Annual Report.

5.7

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.

5.8 Contractual Obligations

Below an overview is given of our material contractual obligations at December 31,

2022:

Payments due by period

(in thousands of $)

Total

Less than

1 year

1 – 3 years

3 – 5 years

More than

5 years

Lease liabilities

12,402

3,408

4,784

3,043

1,167

Lease commitments not

commenced

18,038

–

18,038

We signed lease agreements for laboratory and office space in Zwijnaarde, Belgium,

offices in Amsterdam, Netherlands, Boston, U.S., and Tokyo, Japan, as disclosed in note 4

“

Property, Plant and Equipment

” in the consolidated financial statements in section 6

“

Consolidated Financial Statements

”

In January 2021, we entered into a binding lease agreement related to the envisioned

relocation of our Zwijnaarde facility to a newly built office in Zwijnaarde, with an annual

base rent of $1.8 million, which will be operational in the third quarter of 2028, and with

an initial term of 10.5 years. Included in the binding lease commitment is a rent-free

period of six months following the completion of the building. The total future cash

outflows related to this lease are represented in note 29 “

Commitments

” in our conso-

lidated financial statements which are appended to our Annual Report for the period

ended December 31, 2022 as “Lease commitments not commenced”.

In August 2022, we terminated our lease in Breda, the Netherlands in relation to office

space and replaced this on the same date with an annual lease in Amsterdam, the

Netherlands with an initial term of one year. We also lease office space in 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 29 “

Commitments

” in our

consolidated financial statements in section 6 “

Consolidated Financial Statements

”

5.9

Information Regarding the

Independent Auditor

The audited consolidated financial statements as of and for the fiscal year ended

December 31, 2022 and 2021 and 2020 have been audited by our independent auditor,

Deloitte Accountants B.V. (Deloitte), who rendered an unqualified audit report on these

financial statements. The partner of Deloitte who signed the auditors’ reports is a

member of the Netherlands Institute of Chartered Accountants (

Koninklijke Nederlandse

Beroepsorganisatie van Accountants

). The office of Deloitte is located at Wilhelminakade

1, 3072 AP Rotterdam, the Netherlands.

5.10 Material Contracts and

Related Party Transactions

5.10.1 Material Contracts

Our material contracts are described in sections 1.4 “

Collaboration Agreements

”,

1.5 “

License Agreements

” and 1.6 “

Distribution Agreements

”.

5.10.2 Related Party Transactions

Since January 1, 2022, we have not entered into any transactions with any related

parties which are – as a single transaction or in their entirety – material to us.

In addition, since January 1, 2022, there has not been, nor is there currently proposed,

any material transaction or series of similar material transactions to which we were or

are a party in which any of the members of our Board of Directors or senior management,

holders of more than 10% of any class of our voting securities, or any member of the

immediate family of any of the foregoing persons, had or will have a direct or indirect

material interest, other than the compensation and shareholding arrangements we

describe in section 4.3 “

Share Classes and Principal Shareholders

”, and the transactions

we describe below.

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.

Agreements with our Senior Management

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

Fixed-base compensation

$638,901

Short-term variable compensation

A target of 60% of the fixed-base compensation based

on previously determined bonus targets established by

the non-executive directors

Pension contributions

$23,384

Duration

Indefinite

Amounts shown represent pension contributions paid during the year ended December 31, 2022.

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 Hauwer-

meiren would be entitled to the same payment in lieu of notice in the event he termin-

ates 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 agree-

ment (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 Hauwer-

meiren’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.

Keith Woods, our chief operating officer, has an employment contract with our subsidiary,

argenx US Inc., 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 twelve months.

Karen Massey, our chief operating officer, joined argenx in March 2023 and has an

employment contract with our subsidiary, argenx US, Inc..

Prof. Hans de Haard, our chief scientific officer, had an employment contract with our

subsidiary, argenx BV, for an indefinite term. The contract was terminated with effect

as at December 31, 2022.

Peter Ulrichts, our chief scientific officer, since January 2023, 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 twelve months.

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, joined argenx in February 2022 and has an

employment contract with our subsidiary, argenx US, for an indefinite term.

Luc Truyen, our head of research and development management operations and, since

April 1, 2022, our chief medical officer, has an employment contract with our subsidiary,

argenx US, for an indefinite term.

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. We have entered into such agreements with each new non-executive di-

rector 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 U.S. Securities Act

of 1933, as amended (

Securities Act

) and is therefore unenforceable.

5.11 Employees

As of December 31, 2022, we had 843 employees and 216 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.

At December 31,

2022

2021

2020

Function

Research and development

367

289

193

Selling, general and administrative

476

361

143

Total

843

650

336

Geography

Belgium

363

296

213

U.S.

340

276

108

Japan

The Netherlands

–

Switzerland

France

–

Germany

–

Canada

–

Other EU - remote

–

Total

843

650

336

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.

5.12 Legal and Arbitration

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 twelve 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.

5.13 Insurance

We maintain an insurance portfolio that is common and appropriate for our business.

Our main insurances are commercial general liability insurances, including products

liability insurance, director and officer liability insurance and our maritime insurance

covering the risk of loss of product during transit and storage.

Consolidated

Financial Statements

Audited consolidated Financial Statements

for the Year ended December 31, 2022

Consolidated Statements of Financial Position

269

Consolidated Statements of Profit or Loss

271

Consolidated Statements of Comprehensive Income and Loss

272

Consolidated Statements of Cash Flows

273

Consolidated Statements of Changes in Equity

275

Notes to the Consolidated Financial Statements

276

Consolidated Statements of

Financial Position

Assets

As of December 31,

(in thousands of $)

Note

2022

2021

2020

Non current assets

Property, plant and equipment

16,234

15,844

11,582

Intangible assets

174,901

171,684

167,344

Deferred tax asset

79,222

32,191

15,038

Other non-current assets

40,894

54,876

7,816

Research and development incentive receivables

47,488

32,707

20,626

Investment in joint venture

1,323

–

Total non current assets

360,064

307,303

222,406

Current assets

Inventories

228,353

109,076

25,195

Prepaid expenses

76,022

58,946

27,913

Trade and other receivables

275,697

38,221

6,978

Research and development incentive receivables

1,578

–

463

Financial assets

1,391,808

1,002,052

779,649

Cash and cash equivalents

800,740

1,334,676

1,216,803

Total current assets

2,774,197

2,542,971

2,057,001

Total assets

3,134,261

2,850,274

2,279,407

The accompanying notes form an integral part of these consolidated financial statements.

Equity and liabilities

As of December 31,

(in thousands of $)

Note

2022

2021

2020

Equity

Equity attributable to owners of the parent

Share capital

6,640

6,233

5,744

Share premium

4,309,880

3,462,775

2,339,033

Translation differences

129,280

131,684

134,732

Accumulated losses

(2,109,791)

(1,400,197)

(991,932)

Other reserves

477,691

333,729

186,474

Total equity

2,813,699

2,534,224

1,674,051

Non-current liabilities

Provisions for employee benefits

870

417

156

Lease liabilities

9,009

7,956

6,181

Deferred tax liabilities

8,406

6,438

1,487

Deferred revenue

–

269,039

Total non-current liabilities

18,285

14,811

276,863

Current liabilities

Lease liabilities

3,417

3,509

3,476

Trade and other payables

295,679

293,415

275,192

Tax liabilities

3,181

4,315

3,497

Deferred revenue

–

46,328

Total current liabilities

302,277

301,239

328,493

Total liabilities

320,562

316,050

605,356

Total equity and liabilities

3,134,261

2,850,274

2,279,407

The accompanying notes form an integral part of these consolidated financial statements.

Consolidated Statements of

Profit or Loss

Year Ended December 31,

(in thousands of $ except for shares and EPS)

Note

2022

2021

2020

Product net sales

15, 18

400,720

–

Collaboration revenue

16, 18

10,026

497,277

41,243

Other operating income

34,520

42,141

23,668

Total operating income

445,267

539,418

64,911

Cost of sales

(29,431)

–

Research and development expenses

(663,366)

(580,520)

(370,885)

Selling, general and administrative expenses

(472,132)

(307,644)

(171,643)

Loss from investment in joint venture

(677)

–

Total operating expenses

(1,165,607)

(888,164)

(542,528)

Operating loss

(720,341)

(348,746)

(477,617)

Financial income

27,665

3,633

6,459

Financial expense

(3,906)

(4,578)

(7,960)

Exchange losses

(32,732)

(50,053)

(126,234)

Loss for the year before taxes

(729,314)

(399,743)

(605,352)

Income tax (expense)/benefit

19,720

(8,522)

(3,103)

Loss for the year

(709,594)

(408,265)

(608,455)

Loss for the year attributable to:

Owners of the parent

(709,594)

(408,265)

(608,455)

Weighted average number of shares outstanding

54,381,371

51,075,827

45,410,442

Basic and diluted loss per share (in $)

(13.05)

(7.99)

(13.40)

The financial income and financial expense for 2021 and 2020 presented in here has been adjusted to present on gross basis.

The accompanying notes form an integral part of these consolidated financial statements.

Consolidated Statements of

Comprehensive Income and Loss

Year Ended December 31,

(in thousands of $)

Note

2022

2021

2020

Loss for the year

(709,594)

(408,265)

(608,455)

Items that may be reclassified subsequently to profit or loss, net of tax

Currency translation differences, arisen from translating foreign

activities

(2,404)

(3,048)

–

Translation effect

–

162,273

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 at FVTOCI

(18,267)

(39,290)

–

Other comprehensive loss, net of income tax

(20,671)

(42,338)

162,273

Total comprehensive loss attributable to:

Owners of the parent

(730,266)

(450,603)

(446,182)

The accompanying notes form an integral part of these consolidated financial statements.

Consolidated Statements of

Cash Flows

Year Ended December 31,

(in thousands of $)

Note

2022

2021

2020

Operating loss

(720,341)

(348,746)

(477,617)

Adjustments for non-cash items

Amortization of intangible assets

99,766

776

246

Depreciation of property, plant and equipment

4,576

5,091

3,671

Provisions for employee benefits

459

260

Expense recognized in respect of share-based payments

157,026

179,366

96,932

Fair value gains on financial assets at fair value through

profit or loss

(4,256)

(11,152)

(2,951)

Non-cash revenue

–

(75,000)

–

Loss from investment in joint venture

677

–

(462,093)

(249,405)

(379,643)

Movements in current assets/liabilities

(Increase)/decrease in trade and other receivables

(222,260)

(31,632)

21,961

(Increase)/decrease in inventories

(119,277)

(83,880)

(23,852)

(Increase)/decrease in other current assets

(18,294)

(30,990)

(16,189)

Increase/(decrease) in trade and other payables

329

134,892

50,537

Increase/(decrease) in deferred revenue – current

–

(46,327)

(40,441)

Movements in non-current assets/liabilities

(Increase)/decrease in other non-current assets

(16,220)

(13,975)

(10,299)

Increase/(decrease) in deferred revenue – non-current

–

(269,039)

2,655

Net cash flows used in operating activities

(837,815)

(590,356)

(395,272)

Interest paid

(851)

(684)

(401)

Income taxes paid

(24,141)

(15,772)

(2,791)

Net cash flows used in operating activities

(862,807)

(606,812)

(398,463)

Year Ended December 31,

(in thousands of $)

Note

2022

2021

2020

Purchase of intangible assets

(102,986)

(117,811)

(4,071)

Purchase of property, plant and equipment

(837)

(3,623)

(1,068)

(Increase)/decrease in current financial assets

–

(228,239)

341,869

Purchase of current financial investments

(1,694,046)

–

Sale of current financial investments

1,325,540

–

Interest received

13,146

2,603

7,962

Investment in joint venture

(2,000)

–

Net cash flows (used in)/from from investing activities

(461,184)

(347,070)

344,692

Principal elements of lease payments

(4,165)

(3,855)

(2,550)

Proceeds from issue of new shares, gross amount

760,953

1,091,326

813,186

Issue costs paid

(781)

(528)

(613)

Exchange gain from currency conversion on proceeds from

issue of new shares

410

966

Payment of employee withholding taxes relating to restricted

stock unit awards

(5,855)

–

Proceeds from exercise of stock options

93,195

33,433

22,912

Net cash flows from financing activities

843,757

1,121,342

833,003

Net increase/(decrease) in cash and cash equivalents

(480,234)

167,460

779,232

Cash and cash equivalents at the beginning of the period

1,334,676

1,216,803

372,162

Exchange gains/(losses) on cash & cash equivalents

(53,702)

(49,587)

65,409

Cash and cash equivalents at the end of the period

800,740

1,334,676

1,216,803

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 consolidated financial statements.

Consolidated Statements of

Changes in Equity

Attributable to owners of the parent

(in thousands of $)

capital

premium

Accumula-

ted losses

Translation

differences

Share-based

payment and

income tax

deduction on

share-based

payments

Other com-

prehensive

income

Total equity

attributable

to owners of

the parent

Total

equity

Balance at January 1, 2020

5,209

1,505,641

(383,477)

(27,541)

80,577

–

1,180,409

Loss for the year

(608,455)

Other comprehensive income/(loss)

162,273

Total comprehensive income/(loss)

for the year

(608,455)

162,273

(446,182)

Income tax benefit from excess tax

deductions related to share-based

payments

8,965

Share-based payment

96,932

Issue of share capital

468

812,718

813,186

Transaction costs for equity issue

(613)

Exercise of stock options

21,287

21,354

Balance year ended December 31, 2020

5,744

2,339,033

(991,932)

134,732

186,474

–

1,674,051

Loss for the year

(408,265)

Other comprehensive income/(loss)

(3,048)

(39,290)

(42,338)

Total comprehensive income/(loss)

for the year

(408,265)

(3,048)

(39,290)

(450,603)

Income tax benefit from excess tax

deductions related to share-based

payments

7,179

Share-based payment

179,366

Issue of share capital

430

1,090,896

1,091,326

Transaction costs for equity issue

(528)

Exercise of stock options

33,374

33,433

Balance year ended December 31, 2021

6,233

3,462,775

(1,400,197)

131,684

373,019

(39,290)

2,534,224

Loss for the year

(709,594)

Other comprehensive income/(loss)

(2,404)

(18,267)

(20,671)

Total comprehensive income/(loss)

for the year

(709,594)

(2,404)

(18,267)

(730,266)

Income tax benefit from excess tax

deductions related to share-based

payments

3,946

Share-based payment

158,282

Issue of share capital

294

760,659

760,953

Transaction costs for equity issue

(781)

Exercise of stock options

113

93,082

93,195

Ordinary shares withheld for payment

of employees’ withholding tax liability

(5,855)

Balance year ended December 31, 2022

6,640

4,309,880

(2,109,791)

129,280

535,247

(57,557)

2,813,699

Please refer to

note 12

for more information on the share capital and movement in number of shares. See also

note 13

for more

information on the share-based payments.

The accompanying notes form an integral part of these consolidated financial statements.

Notes to the Consolidated

Financial Statements

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 Laarderhoogtweg 25,

1101 EB Amsterdam, the Netherlands. An overview of the company and its subsidiaries

(the Company) are described in

note 31

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.

Significant Accounting Policies

The significant Company’s accounting policies are summarized below.

2.1

Statement of Compliance and Basis

of Preparation

The consolidated financial statements are prepared in accordance with the International

Financial Reporting Standards and the interpretations issued by the IASB’s International

Financial Reporting Interpretation Committee as adopted by the European Union

(

EU-IFRS

) and in accordance with the legal requirements of Part 9 of Book 2 of the

Dutch Civil Code. The consolidated financial statements provide a general overview

of the Company’s activities and the results achieved. They provide a true and fair view

of the entity’s financial position, its financial performance and cash flows, on a going

concern basis.

The significant accounting policies applied in the preparation of the above consolidated

financial statements are set out below. All amounts are presented in thousands of 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 15, 2023.

2.2

Adoption of New and Revised Standards

New Standards and Interpretations applicable for the Annual Period beginning on

January 1, 2022

New standards and interpretations for the annual period beginning on January 1, 2022

did not have any material impact on our consolidated financial statements.

New Standards and Interpretations issued, but not yet applicable for the Annual Period

beginning on January 1, 2022

We have not early adopted any other standard, interpretation, or amendment that

has been issued but is not yet effective. Of the standards that are not yet effective, we

expect no standard to have a material impact on our financial statements in the period

of initial application.

2.3

Basis of Consolidation

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 circums-

tances 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 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 accoun-

ting 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. Unrealised losses are also eliminated unless the transaction

provides evidence of an impairment of the transferred asset.

2.4

Foreign Currency Transactions

2.4.1

Functional and Presentation Currency

Items included in the consolidated financial statements of each of our 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

presentation currency.

2.4.2

Transactions and Balances

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 differen-

ces arising on translation are recognized in the consolidated statements of profit or loss

and the consolidated statements of other comprehensive income. Non monetary assets

and liabilities denominated in foreign currencies are translated at the foreign exchange

rate ruling at the date of the transaction.

2.4.3

Financial Statements of Foreign Entities

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 are translated at average exchange rates (unless

this average is not a reasonable approximation of the cumulative effect of the

rates prevailing on the transaction dates, in which case income and expenses are

translated at the rate on the dates of the transactions).

•

all resulting exchange differences are recognised in the statements of other

comprehensive income.

2.5

Intangible Assets

2.5.1

Internally Generated Intangible Assets

Expenditure on research activities is recognized as an expense in the period in which

it is incurred.

An internally generated intangible asset arising from development (or from the

development phase of an internal project) is recognized if, and only if, all of the following

have been demonstrated:

•

the technical feasibility of completing the intangible asset so that it will be available

for use or sale;

•

the intention to complete the intangible asset and use or sell it;

•

the ability to use or sell the intangible asset;

•

how the intangible asset will generate probable future economic benefits;

•

the availability of adequate technical, financial and other resources to complete the

development and to use or sell the intangible asset; and

•

the ability to measure reliably the expenditure attributable to the intangible asset

during its development.

The amount initially recognized for internally generated intangible assets is the sum

of the expenditure incurred from the date when the intangible asset first meets the

recognition criteria listed above. Where no internally generated intangible asset can be

recognized, development expenditures are recognized in the consolidated statements

of profit or loss and the consolidated statements of other comprehensive income in the

period in which they are incurred.

Due to uncertainties inherent to the development and registration with the relevant

healthcare authorities of its products, the Company estimates that the conditions for

capitalization are not met until the regulatory procedures required by such healthcare

authorities have been finalized.

2.5.2

Acquired In-Process R&D, Software and

Databases and Other intangible assets

Intangible assets with finite useful lives that are acquired separately related to in-pro-

cess research and development projects, software and databases and other intangible

assets are carried at cost less accumulated amortization and accumulated impairment

losses. Intangible assets with indefinite useful lives are carried at cost less accumulated

impairment losses.

Payments for acquired in-process research and development projects obtained through

in-licensing arrangements are capitalized as intangible assets provided that they are

separately identifiable, controlled by the Company and expected to provide future

economic benefits. As the probability criterion in IAS 38 is always considered to be

satisfied for separately acquired research and development assets and the amount of

the payments is determinable, upfront and milestone payments to third parties for

pharmaceutical products or compounds for which regulatory marketing approval has

not yet been obtained are recognized as intangible assets.

Other intangible assets includes the PRV which the Company can use to obtain the prio-

rity 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 reviewed for impairment when

events or circumstances indicate that the carrying value may not be recoverable.

2.5.3

Amortization of Intangible Assets

Intangible assets, which comprises of acquired in-process research and development,

software and databases and other intangible assets, are amortized on a straight-line

basis over the estimated useful life as from the time they are available for use, or when

the underlying drug candidate is approved, generally on the following basis:

•

Acquired In-Process R&D – the longer of the patent protection life and the useful life

of the combined product

•

Software and Databases: 3 – 5 years

The estimated useful life and amortization method are reviewed at the end of each

reporting period, with the effect of any changes in estimate being accounted for on a

prospective basis.

During 2022, the Company used the PRV to accelerate the review of drug application of

SC efgartigimod for the treatment of generalized mysthania gravis, the intangible asset

for $99.1 million was amortized and derecognized upon filing of the related Biologic

License Application.

2.5.4

Derecognition of Intangible Assets

An intangible asset is derecognized either on disposal or when no future economic

benefits are expected from its use. Gains or losses arising from derecognition of an

intangible asset, measured as the difference between the net disposal proceeds, if any,

and the carrying amount of the asset, are recognized in the consolidated statements of

profit or loss and the consolidated statements of other comprehensive income when the

asset is derecognized.

2.6

Property, Plant and Equipment

Items of property, plant and equipment held for use in the production or supply of goods

or services, or for administrative purposes, are stated in the consolidated statement of

financial position at their cost, less accumulated depreciation and impairment losses.

Depreciation is recognized as from acquisition date onwards (unless asset is not ready

for use) so as to write off the cost or valuation of assets (other than freehold land and

properties under construction) less their residual values over their useful lives, using

the straight line method. The estimated useful lives, residual values and depreciation

method are reviewed at the end of each reporting period, with the effect of any changes

in estimate accounted for on a prospective basis.

Unless revised due to specific changes in the estimated useful life, annual depreciation

rates are as follows:

•

Office and lab equipment: 3 – 5 years

•

IT equipment: 3 years

An item of property, plant and equipment is derecognized upon disposal or when no

future economic benefits are expected to arise from the continued use of the asset.

Any gain or loss arising on the disposal or retirement of an item of property, plant and

equipment is determined as the difference between the sales proceeds, if any, and the

carrying amount of the asset and is recognized in the consolidated statements of profit

or loss and the consolidated statements of other comprehensive income.

2.7

Inventories

Inventories are carried at cost or net realisable value, whichever is lowest. Cost is deter-

mined using the first-in, first-out method. 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 recognised for the amount by which

the carrying amount exceeds its net realisable value.

Included in inventory are products which could, besides commercial activities, be used

in preclinical and clinical programs as well as in non-reimbursed pre-approval access

program. These products are charged to research & development expenses or selling,

general and administrative expenses, respectively, when dedicated to this channel.

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 saleable. The deter-

mination to capitalize is based on the particular facts and circumstances relating to the

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 saleable

is made on a quarterly basis and includes, but is not limited to, how far a particular pro-

duct or facility has progressed along the approval process, any known safety or efficacy

concern, potential labelling restrictions 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 to research and development expenses in the consolidated statements of

profit or loss and the consolidated statements of other comprehensive income.

2.8

Leases

The Company assesses whether a contract is or contains a lease, at inception of the

contract. The Company recognises 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 these leases, the Company recognises 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 incen-

tives 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 pre-

sented in the consolidated statements of financial position under the caption “

Property,

Plant and Equipment

”.

2.9

Impairment of Assets

2.9.1

Financial Assets

The impairment loss of a financial asset measured at amortised cost is calculated based

on the expected loss model.

For trade receivables, in the absence of a significant financing component, the allowance

is measured at an amount equal to lifetime expected credit losses. Those are the

expected credit losses that result from possible default events over the expected life

of those trade receivables.

2.9.2

Property, Plant and Equipment and Intangible Assets

At the end of each reporting period, the Company reviews the carrying amounts of its

tangible and intangible assets to determine whether there is any indication that those

assets have suffered an impairment loss. If any such indication exists, the recoverable

amount of the asset is estimated in order to determine the extent of the impairment

loss, if any. Where it is not possible to estimate the recoverable amount of an individual

asset, the Company estimates the recoverable amount of the cash generating unit to

which the asset belongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for

use are tested for impairment at least annually, and whenever there is an indication that

the asset may be impaired.

If the recoverable amount of an asset or cash generating unit is estimated to be less

than its carrying amount, the carrying amount of the asset or cash generating unit is

reduced to its recoverable amount. An impairment loss is recognized immediately in

the consolidated statements of profit or loss and the consolidated statements of other

comprehensive income.

Where an impairment loss subsequently reverses, the carrying amount of the asset is

increased to the revised estimate of its recoverable amount, but so that the increased

carrying amount does not exceed the carrying amount that would have been deter-

mined had no impairment loss been recognized for the asset or cash generating

unit in prior years. A reversal of an impairment loss is recognized immediately in the

consolidated statements of profit or loss and the consolidated statements of other

comprehensive income.

2.10

Financial Instruments

Financial assets and financial liabilities are recognized in the consolidated statements of

financial position when the Company becomes party to the contractual provisions of the

instrument. The Company does not use currency derivatives to hedge planned future

cash flows, nor does it make use of forward foreign exchange contracts. Additionally, the

Company does not have financial debt at December 31, 2022.

2.10.1

Financial Assets

Financial assets are initially recognized either at fair value or at transaction price. All

recognized financial assets are subsequently measured at either amortized cost or fair

value under EU-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 that (i) is held within a business model whose objective is to

collect the contractual cash flows and (ii) has contractual cash flows that are solely

payments of principal and interest on the principal amount outstanding is measured

at amortized cost (net of any write down for impairment), unless the asset is

designated at fair value through profit or loss (

FVTPL

) under the fair value option.

•

A financial asset that (i) is held within a business model whose objective is achieved

both by collecting contractual cash flows and selling financial assets and (ii) has

contractual term that give rise on specified dates to cash flows that are solely

payments of principal and interest on the principal outstanding, is measured at fair

value through other comprehensive income (

FVTOCI

), unless the asset is designated

at FVTPL under the fair value option.

•

All other financial assets are measured at FVTPL.

A financial asset is classified as current when the cash flows expected to flow from the

instrument mature within one year.

The Company derecognizes a financial asset when the contractual rights to the cash

flows from the asset expire, or the Company transfers the right to receive the contrac-

tual cash flows on the financial asset in a transaction in which substantially all the risks

and rewards of ownership of the financial asset are transferred.

The Company classifies non-derivative financial assets into the following categories:

•

financial asset at fair value through profit or loss or OCI (non-current financial assets,

current financial assets and cash equivalents)

•

financial assets at amortized cost (receivables and cash and cash equivalents)

Financial Assets at fair value through profit or loss or loss or OCI

Financial assets are designated at fair value through profit or loss if the Company mana-

ges such investments and makes purchases and sales decisions based on their fair value

in accordance with the Company’s investment strategy. Attributable transaction costs

are recognised in the consolidated statements of profit or loss and the consolidated

statements of other comprehensive income as incurred. Financial assets at fair value

through profit or loss are measured at fair value, and changes therein, which take into

account any dividend income, are recognized in the consolidated statements of profit or

loss and the consolidated statements of other comprehensive income.

2.10.1.1

Non-Current Financial Assets at fair value through profit

or loss or OCI

The Company holds investments in non-current financial assets, which based on EU-IFRS

9, are designated as financial assets at fair value through profit or loss or financial assets

at fair value through OCI. The fair value of listed investments is based upon the closing

price of such securities at each reporting date. If there is no active market for an equity

instrument, the Company establishes the fair value by using valuation techniques.

Based on EU-IFRS 9, the Company irrevocably elected to designate specific invest-

ments as a financial asset at fair value through OCI as the participation is not held for

trading purposes nor contingent consideration recognised by an acquirer in a business

combination.

2.10.1.2

Current Financial Assets at fair value through profit or loss

Current financial assets measured at fair value through profit or loss comprise of money

market funds.

2.10.1.3

Cash Equivalents Measured at fair value through profit or loss

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. These financial assets are used by the Company in the management of

the short-term commitments.

Financial Assets at Amortized Cost

2.10.1.4

Receivables

Trade and other receivables are designated as financial assets measured at amortized

cost. They are initially measured either at fair value 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 corre-

sponds to nominal value less expected credit loss provision.

Receivables mainly comprise trade and other receivables and current and non-current

research and development incentive receivables. These 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 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 are receivable.

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 as marketing and

selling costs recognized in the consolidated statements of profit or loss and consolidated

statements of other comprehensive income within “Selling, general and administrative”

expenses.

2.10.1.5

Cash

Cash are financial assets measured at amortized cost and comprise of cash balances and

savings accounts.

2.10.1.6

Cash Equivalents Measured at Amortized Costs

Cash equivalents measured at amortized cost comprise of term accounts that have an

initial maturity of less than 3 months that are subject to an insignificant risk of changes

in values. The financial assets are used by the Company in the management of short-

term commitments.

Cash and cash equivalents exclude restricted cash, which is presented in the consolida-

ted statements of financial position under the line “Other non-current assets”.

2.10.1.7

Current Financial Assets Measured at Amortized Costs

Current financial assets include financial assets measured at amortized costs and

comprise of term accounts that have an initial maturity equal or less than 12 months,

but exceeding 3 months.

2.10.2

Financial Liabilities

Financial liabilities are initially measured at their transaction price. Subsequent to initial

recognition, financial liabilities are measured at amortized cost.

Financial liabilities mainly comprise of trade and other payables and other liabilities.

Trade and other liabilities 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 expense related to

the Company’s research and development costs and gross-to-net accruals.

2.11

Investment in Joint Venture

The Group has an investment which qualifies as joint ventures under IAS 28 Investment

in associates and joint ventures. For joint ventures and associates, the Group recognises

its interest in the joint venture or associate as an investment and uses the equity met-

hod of accounting. The Group recognises its initial investment at cost and the investors’

share of the profits or losses is determined based on the proportionate ownership

interest.

Investment in joint ventures on December 31, 2022 was related to the investment in

Onco Verity, Inc. In July 2022, the Company entered into a joint venture agreement

with the University of Colorado Anschutz Medical Campus and UCHealth and created a

separate legal entity, OncoVerity, Inc., which is focused on optimizing and advancing the

development of cusatuzumab, a novel anti-CD70 antibody, in acute myeloid leukemia

(AML). The Company contributed $2 million and the investment has been designated

as investment in joint venture and accounted under IAS 28 Investment in associates

and joint ventures. The share of net loss resulting from investment in joint ventures is

presented in consolidated statements of profit or loss in line “

Loss from investment in

joint ventures

”.

2.12

Shareholder’s Equity

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, 2022, no profits were available for distribution.

2.13

Short-Term Employee Benefits

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.

2.14

Share-Based Payments

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 Com-

pany’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 such that the

cumulative expense reflects the revised estimate, with a corresponding adjustment to

the equity settled share based payment reserve.

2.15

Deferred Revenue

Current and non-current deferred revenue relates to cash received from collaboration

& license agreements prior to completion of the earnings process. These payments are

recognized as revenue over the estimated duration of the Company’s involvement in the

research and development programs provided for under the terms of the agreements.

2.16

Income Taxes

Income tax in the consolidated statements of profit or loss and the consolidated

statements of other comprehensive income 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 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. Deferred tax assets are recognized to the

extent that it is probable that future taxable profits will be available against which those

deductible temporary differences can be utilized. 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 current tax liabilities and assets, and they relate to income

taxes levied by the same tax authority on the same taxable entity, or on different taxable

entities which intend either to settle current tax liabilities and assets on a net basis, or to

realize the assets and settle the liabilities simultaneously.

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.

2.17

Revenue and Other Operating Income

Recognition

2.17.1

Product Net Sales

Revenue from the sale of goods is recognized at an amount that reflects the conside-

ration 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 consists of sales of VYVGART in U.S., Japan and Europe. Product

net sales are recognized once we satisfy the performance obligation at a point in time

under the revenue recognition criteria in accordance with EU-IFRS 15

Revenue from

contracts with customers

Revenue arising from the commercial sale of VYVGART is presented in the consolidated

statements of profit or loss under “Product net sales”. In accordance with EU-IFRS 15

Revenue from contracts with customers

, 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 EU-IFRS 15

Revenue from

contracts with customers

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, 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.

Our significant components of variable consideration are as follows:

Co-payment assistance:

We provide co-payment assistance to patients who have com-

mercial insurance and meet certain eligibility requirements. We use the expected-value

method for estimating co-payment assistance based on estimates of program redemp-

tion 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.

The estimated amounts described above are recognized in the consolidated statement

of Profit 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.

2.17.2

Collaborations and License Agreements

Collaboration revenue have consisted principally of milestones, license fees, non-

refundable upfront fees and research and development service fees in connection

with collaboration and license agreements.

The Company recognizes revenue when the customer obtains control of promised goods

or services, in an amount that reflects the consideration that the Company expects

to receive in exchange for those goods and services. In order to determine revenue

recognition for agreements that the Company determines to be in the scope of IFRS 15,

following five steps are performed:

1. Identify the Contracts

In our current collaboration and license agreements, we are mainly licensing our

intellectual property and/or providing research and development products/services,

which might include a cost-sharing mechanism and/or in the future, selling its products

to collaborative partner entities. Revenue is generated through these arrangements

via upfront payments, milestone payments based on clinical and regulatory criteria,

research and development service fees and future sales-based milestones and sales-

based royalties. In some cases, the collaboration and license agreements also include an

equity subscription component. If this is the case, the Company analyses if the criteria to

combine contracts, as set out by IFRS 15, are met.

2. Identify Performance Obligations

Depending on the type of contract, there can be one or more distinct performance

obligations under IFRS 15. This is based on an assessment of whether the promises in

an agreement are capable of being distinct and are distinct from the other promises to

transfer goods and/or services in the context of the contract.

For our material ongoing collaboration and license agreement (i.e. the Zai Lab Agree-

ment), the Company has assessed that there is more than one distinct performance

obligation, being the transfer of a license and supply of clinical and commercial product.

This is because the Company considers the performance obligations is distinct in the

context of the contract as the license has stand-alone value without the Company being

further involved in the research and development collaboration and that there is no

interdependence between the license and the clinical and commercial supply to be

provided.

For our material ongoing collaboration and license agreement (i.e., the Zai Lab Agree-

ment), the Company has assessed that there is more than one distinct performance

obligation, being the transfer of a license and supply of clinical and commercial product.

3. Determine the Transaction Price

Our material ongoing collaboration and license agreements include non-refundable upf-

ront payments or license fees, milestone payments, the receipt of which is dependent

upon the achievement of certain clinical, regulatory or commercial milestones, royalties

on sales and research and development service fees.

3.1 Non-refundable Upfront Payments or License Fees

If the license to the Company’s intellectual property is determined to be distinct from

the other performance obligations identified in the arrangement, the Company recog-

nizes revenue from non-refundable upfront fees allocated to this license at the point in

time the license is transferred to the customer and the customer has the right to use the

license.

For all our material ongoing collaboration and license agreements, the Company consi-

ders the performance obligations related to the transfer of the license as distinct from

the other promises to transfer goods and/or services. The Company utilizes judgement

to assess the nature of the performance obligation to determine whether the perfor-

mance obligation is satisfied over time or at a point in time. If over time, revenue is then

recognized based on a pattern that best reflects the transfer of control of the service to

the customer.

3.2 Milestone Payments Other than Sales Based Milestones

A milestone payment, being a variable consideration, is 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. The Company estimates the amount

to be included in the transaction price upon achievement of the milestone event. The

transaction price is then allocated to each performance obligation on a stand-alone

selling price basis, for which the Company recognizes revenue as or when the perfor-

mance obligations under the contract are satisfied. At the end of each reporting period,

the Company re-evaluates the probability of achievement of such milestones and any

related constraint, and, if necessary, adjusts the estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect

revenue and earnings in the period of adjustment.

3.3 Research and Development Service Fees

Our material ongoing collaboration and license agreements may include reimbursement

or cost sharing for research and development services. R&D services are performed and

satisfied over time given that the customer simultaneously receives and consumes the

benefits provided by us. Such costs reimbursements received are recognized in revenues

when costs are incurred and agreed by the parties.

3.4 Sales-Based Milestone Payments and Royalties

Our material ongoing collaboration and license agreements include sales based

royalties, including commercial milestone payments based on the level of sales, and

the license has been deemed to be the predominant item to which the royalties and

commercial milestone payments relate. Related revenue is recognized as the subsequent

underlying sales occur.

4. Allocate the Transaction Price

In principle, an entity shall allocate the transaction price to each performance obligation

identified in the contract on a relative stand-alone selling price basis. As our ongoing

collaboration and license agreement (i.e. the Zai Lab Agreement) contains more than

one performance obligation, the Company assesses to allocate the transaction price to

all performance obligations identified.

5. Recognize Revenue

Revenue is recognized when the customer obtains control of the goods and/or services

as provided in the collaboration and license agreements. The control can be transferred

over time or at a point in time – which results in the recognition of revenue over time or

at a point in time.

As our ongoing collaboration and license agreement (i.e. the Zai Lab Agreement) con-

tains more than one performance obligation, the Company recognised revenue at point

in time for transfer of license and the Company recognises revenue over time for supply

of clinical and commercial products as the customer simultaneously receive the benefits

provided by the Company’s performance, satisfied over time.

Other ongoing collaboration and license agreements only contain one single perfor-

mance obligation which is, as the customer simultaneously receive the benefits provided

by the Company’s performance, satisfied over time. As such, the Company recognizes

revenue over time. The recognition of revenue over time is based on a pattern that

best reflects the satisfaction of the related performance obligation, applying the input

method. The input method estimates the satisfaction of the performance obligation as

the percentage of total collaboration costs that are completed each period compared to

the total estimated collaboration costs.

Research and development service fees are recognized as revenue when costs are

incurred and agreed by the parties as the Company is acting as a principal in the scope

of its stake of the research and development activities of its ongoing collaboration and

license agreements.

2.17.3

Grants, Research and Development Incentives,

Payroll Tax Rebates and Changes in Fair Value on

Non-Current Financial Assets

Because it carries out extensive research and development activities, the Company

benefits from various grants, research and development incentives and payroll tax

rebates from certain governmental agencies. These grants, research and development

incentives and payroll tax rebates generally aim to partly reimburse approved expendi-

tures incurred in research and development efforts of the Company and are credited to

the consolidated statements of profit or loss, under the line “Other operating income”,

when the relevant expenditure has been incurred and there is reasonable assurance

that the grants or research and development incentives are receivable. Fair value gains

resulting from the change in the fair value of non-current financial assets are credited to

the consolidated statements of profit or loss, under the line “Other operating income”.

2.18

Cost of Sales

Cost of sales are related to the sale of VYVGART and are recognised when the associated

revenue is recognised. Cost of sales include material, manufacturing costs and other

costs attributable to production, including shipping costs, as well as royalties payable on

sales of VYVGART.

2.19

Trade Receivables

Trade receivables are initially recognized at their invoiced amounts less adjustments for

estimated revenue deductions such as rebates, chargebacks and returns.

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 as marketing

and selling costs recognized in the consolidated statements of profit or loss and the

consolidated statements of other comprehensive income within “Selling, general and

administrative” expenses.

2.20

Segment Reporting

Segment results include revenue and expenses directly attributable to a segment and

the relevant portion of revenue and expenses that can be allocated on a reasonable

basis to a segment. Segment assets and liabilities comprise those operating assets

and liabilities that are directly attributable to the segment or can be allocated to the

segment on a reasonable basis. Segment assets and liabilities do not include income

tax items.

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.