Shares of biotechnology specialist Argenx (NASDAQ:ARGX) — which focuses on addressing severe autoimmune diseases – suffered a hefty decline on Wednesday following a clinical disappointment. Its Phase 3 study for a disease that causes skin blisters failed to meet its primary and secondary objectives. As a result, management must now rethink its approach regarding the underlying therapeutic, thus clouding ARGX stock.
According to the official press release, Argenx announced topline results from its ADDRESS study evaluating the efficacy of efgartigimod subcutaneous (SC) in adults with pemphigus vulgaris (PV) and pemphigus foliaceus (PF). Per the National Institutes of Health, pemphigus “is a disease that causes blistering of the skin and the inside of the mouth, nose, throat, eyes, and genitals.”
Further, the health agency explains that “[p]emphigus is an autoimmune disease in which the immune system mistakenly attacks cells in the top layer of the skin (epidermis) and the mucous membranes.” Unfortunately, the ADDRESS study showed that the number of PV patients achieving the primary endpoint of complete remission on a minimal dose of steroids (the traditional treatment option for pemphigus) was not significantly different from SC and placebo.
While vaguely described, the press release stated that the study failed to meet its secondary endpoints. The implication is that researchers required a higher administration of steroids to address pemphigus, thus clouding SC’s true efficacy.
ARGX Stock Suffers as Argenx Forced Back to the Drawing Board
To be sure, the ADDRESS study wasn’t a complete failure, which may offer some speculative hope for ARGX stock. Notably, the Phase 3 study showed that the SC therapeutic decreased certain antibodies — immunoglobulin G (IgG) and desmoglein autoantibody (DSG-1 and DSG-3) — linked to pemphigus. The reduction of the antibodies came out to a magnitude of 75%.
However, the problem that investors saw regarding ARGX stock was the unexpectedly robust effect of corticosteroids. Again, steroids represent the traditional treatment option for pemphigus. Specifically, this approach showed a reduction in the aforementioned antibodies of up to 70% among placebo patients –further, the impact correlated to a sustained clinical benefit.
Put another way, SC isn’t really that effective in treating pemphigus compared to the tried-and-true steroids approach. Regrettably, management decided not to proceed with SC’s indication for the autoimmune disease. The tough decision also reversed an auspicious run in ARGX stock, which now finds itself down 9% year-to-date.
Atop the disappointing results, Argenx is also reviewing a decision on whether to study the drug in a similar disease called bullous pemphigoid. Researchers need time to determine if the separate study requires a new trial design. Management added that it’s waiting to learn more from currently enrolled patients before deciding.
Why It Matters
Despite the disappointing news that was revealed early this morning, ARGX stock still carries a consensus strong buy. This assessment breaks down as 15 buys, four holds and zero sells. Analysts reiterated two of these buy ratings today, which may provide some solace for speculators. Overall, the average price target stands at $560.15, implying a 66% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
