Annual Report 2024

Annual Report 2024

Basis of presentation

Foreign Currency Transactions

Functional and presentation currency

Items included in the consolidated financial statements of each of the 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 functional and presentation currency.

Revenue from sale of product

Revenue from the sale of products is recognized at an amount that reflects the consideration 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 mainly consist of sales of VYVGART and VYVGART SC in the U.S., Japan, EMEA and China. 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 and VYVGART SC is presented under “Note 17 Segment Reporting” in our consolidated financial statements which are appended to our Annual Report for the period ended December 31, 2024. In accordance with IFRS 15, 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.

Revenue from Collaboration 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 collaboration and license agreements.

We recognize revenue when the customer obtains control of promised goods or services, 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, we followed the IFRS 15 5-step model. The Company has only recognized revenue from its collaboration with Zai Lab in the current year.

Under the collaboration agreement, the Company provides clinical and commercial supply to Zai Lab. The Company concludes to recognize such sales as revenue given that the Company acts as principal in the transaction as the risk related to inventory is borne by the Company until the inventory is transferred to Zai Lab. The revenue related to clinical supply is recorded under line item “Collaboration revenue”. The revenue related to commercial supply is recorded under line item “Product net sales” in the Consolidated Statements of Profit or Loss. The income related to royalties or sales-based milestones on sales made in China is recorded under line item “Collaboration revenue”.

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, (iii) costs associated with regulatory submissions and approvals, QA and pharmacovigilance and (iv) costs associated with post-approval clinical trials;
  • personnel expenses related to compensation of research and development staff and related expenses, including salaries, benefits and share‑based payment expenses;
  • Business Information Systems (BIS) related expenses; and
  • other expenses.

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, material used in R&D phase and enrollment of patients in clinical trials. Research and development expenses are expected to increase as we advance the clinical development of efgartigimod, empasiprubart ARGX-119 and further advance the research and development of our other early-stage pipeline candidates. The successful 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 further described in Section 2 “Risk Factors”.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of:

  • personnel expenses related to compensation of commercial and enabling staff and related expenses, including salaries, benefits and share‑based payment expenses;
  • professional fees related to commercial and enabling functions;
  • Board of Directors expenses consisting of directors’ fees, travel expenses and share-based compensation for non-executive board members;
  • marketing and promotional activities related to the global commercialization of VYVGART and VYVGART SC for the treatment of gMG, CIDP and ITP (in Japan); and
  • other Selling, general and administrative expenses, including leasing costs, office expenses and travel costs.

We expect our general and administrative expenses to increase as we continue to support our growth. Such costs include increases in our personnel, additional BIS-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, VYVGART SC and preparation of commercial launch of our other product candidates.

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 interest expenses arising from lease liabilities.

Exchange Gains (Losses)

Our exchange gains (losses) relate to (i) our transactions denominated in foreign currencies, mainly in euro, and 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. For more information on currency exchange fluctuations on our business, please see “Note 25 Financial Risk Management” in our consolidated financial statements which are appended to our Annual Report for the period ended December 31, 2024. We have no derivative financial instruments to hedge interest rate and foreign currency risk.

Income Tax Benefit (Expense)

For the year ended December 31, 2024 the Company recognized its Belgian based deferred tax assets. For more information on income taxes and deferred taxes, please see “Note 23 Income taxes” in our consolidated financial statements which are appended to our Annual Report for the period ended December 31, 2024.