Liquidity and Capital Resources

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 administrative support for these operations. We currently have 2 products approved by the FDA 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 reimbursement 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, 2023, we have raised gross proceeds of $5.6 billion from private and public offerings of equity securities. We have made product net sales of $1.2 billion during the twelve months ended December 31, 2023.

Our cash flows may fluctuate, are difficult to forecast and will depend on many factors. On December 31, 2023, we had cash, cash equivalents and current financial assets of $3,180 million, compared to $2,193 million on December 31, 2022.

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” in our consolidated financial statements which are appended to our Annual Report for the period ended December 31, 2023.

For more information as to the risks associated with our future funding needs, see Item “Risk Factors – 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 instruments and financial risk management” in our consolidated financial statements which are appended to our Annual Report for the period ended December 31, 2023.

Cash Flows

Comparison for the Years Ended December 31, 2023 and 2022

The table below summarizes our cash flows for the years ended December 31, 2023 and 2022.

Net Cash Used in Operating Activities

Net cash outflow used in our operating activities decreased by $442 million to a net outflow of $420 million for the year ended December 31, 2023, compared to a net outflow of $863 million for the year ended December 31, 2022.

The decrease in net cash outflow used in operating activities results primarily from an increase in net product sales related to VYVGART and VYVGART SC, partly offset by:

1. the increase in 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,
2. the increase in personnel expenses, marketing expenses and consulting expenses incurred for the commercial expansion of VYVGART and VYVGART SC,
3. the further increase in working capital as a result of our inventory levels, including prepaid inventory

Net Cash Used in/from Investing Activities

Investing activities for the year ended December 31, 2023, consist primarily of the net desinvestment of $272 million in current financial assets, and interests received, partly offset by payments related to regulatory and sales based milestones to Halozyme and investment in Oncoverity, resulting in a cash inflow of $308 million.

Investing activities for the year ended December 31, 2022, consists primarily of net investment of $369 million in current financial assets, and purchase of a priority review voucher for $102 million, partly offset by interests received, resulting in a cash outflow of $461 million.

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 $1,337 million for the year ended December 31, 2023, compared to a net cash inflow of $844 million for the year ended December 31, 2022. The net cash inflows were attributed to (i) $1.2 billion net cash proceeds from our global offering in July 2023, compared to $0.8 billion net cash proceeds from our global offering in February 2022 and (ii) $158 million proceeds received from the exercise of stock options in 2023, compared to $93 million for the year ended 2022.

Operating and Capital Expenditure Requirements

We have never achieved profitability and, as of December 31, 2023, we had accumulated losses of $2,405 million. Our losses resulted principally from costs incurred in research and development, preclinical testing and clinical development of our research programs, and from general and administrative costs associated with commercial roll out and expansion. We anticipate that our operating expenses will increase as we intend to continue to conduct research and development and continue our efforts to expand our sales, marketing and distribution infrastructure. Although we have generated net product sales of $1.2 billion from global product net sales of VYVGART and VYVGART SC for the treatment of gMG in fiscal year 2023, which supports our current path to profitability, we can provide no assurances that we will be able to achieve or sustain profitability based on this indication alone or that we will be able to receive regulatory approval of and commercialize VYVGART and VYVGART SC in other indications or in other countries.

On the basis of current assumptions, we expect that our existing cash and cash equivalents 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 multiple factors. Because of the numerous risks and uncertainties 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, VYVGART SC 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, VYVGART SC 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 the global economic uncertainties and political instability.

For more information as to the risks associated with our future funding needs, see “Risk Factors – Risk Factors Related to argenx’s Financial Position and Need for Additional Capital.”

Treasury and Liquidity Policy

The Company has adopted a policy whereby cash and cash equivalents and current financial assets are invested with several highly reputable banks and financial institutions. The Company holds its cash and cash equivalents mainly with different banks which are independently rated with a minimum rating of ‘A-’. The Company also holds short term investment funds in the form of money market funds with a recommended investment horizon of 6 months or shorter but with a low historical volatility. These money market funds are highly liquid investments, can be readily convertible into a known amount of cash. The company has adopted a policy whereby money market funds must have an average rating of “BBB” or higher.

For more information as to our treasury policy and liquidity, please see Note 26 “Financial instruments and financial risk management” in our consolidated financial statements which are appended to our Annual Report for the period ended December 31, 2023.

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 12 months from the date of this Annual Report.