Navigating Growth: Cultural Risks and Knowledge Acquisition in Biotech Investments

This is Zack Fuss, an investor at Irenic Capital. Today, we're breaking down Argenx, an immunology company founded in 2008 by its three founding partners. Today, it's a $30 billion company set to produce over a billion dollars in sales. They're known for their skill in developing antibodies for complex disease targets and owe a large part of their medical breakthroughs to llamas, which have similar antibodies in their immune system to those found in humans. 

To break down Argenx, I'm joined by Julia Angeles, an investment manager at Baillie Gifford. Throughout this conversation, we'll discuss how Argenx navigates the complex world of drug development, clinical trials, regulatory approvals, and the ultimate commercialization of autoimmune therapies. We'll also learn more about their transition from a venture capital backed business to its 2017 IPO, and today, a meaningful revenue generating business. We hope you enjoy this business breakdown.

Note: This conversation was recorded on 19 July 2023.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. 

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Shownotes

(00:03:49) - (First question) - Ways the immune system protects us and fails us

(00:06:00) - Current patient treatments and evolving solutions to existing problems 

(00:07:52) - The key difference between how the biotech community is addressing big diseases versus autoimmune disorders

(00:09:55) - What sparked Julia’s interest in Argenx

(00:14:01) - Explanation how we use animal antibodies to help research progression

(00:15:25) - The foundations of the business

(00:17:57) - The evolution of the business and its commercial success thus far

(00:20:22) - Transitioning from lab antibodies to a commercial product ready for consumers

(00:23:42) - The infrastructure needed to maintain and grow Argenx

(00:26:43) - Indicators of commercial success

(00:29:27) - The basic revenue model for this business type

(00:30:49) - Go to market strategies for developed drugs 

(00:34:39) - Pricing and patient protection of these newly developed drugs 

(00:37:46) - Cures versus creating treatments with recurring revenue streams

(00:39:38) - The importance of the current team composition 

(00:41:44) - Julia’s perspective on what they are willing to invest to grow the company

(00:43:49) - Normalized profitability for biotech companies such as this

(00:45:59) - Potential risks to the current business model

(00:49:22) - Lessons learned from studying Argenx