Argenx and the FDA's June 2025 Safety Alert: Navigating Regulatory Risk and Market Valuation Uncertainty

The recent U.S. Food and Drug Administration (FDA) safety alert regarding argenx SE's (NASDAQ: ARGX) flagship drug, Vyvgart Hytrulo, has ignited a firestorm of regulatory and market concerns. The alert, issued in June 2025, flagged a potential signal of “severe worsening of chronic inflammatory demyelinating polyradiculoneuropathy (CIDP)” in patients using the subcutaneous formulation of the drug. While argenx has maintained that the drug's overall safety profile remains consistent with its label, the announcement triggered a 1.59% drop in its stock price, marking its lowest level in over a year. This article dissects the regulatory, financial, and legal implications of the FDA's warning, assesses whether the stock's decline signals deeper erosion of investor confidence, and evaluates the long-term risks for argenx.

Regulatory Risk: A Signal or a Storm?

The FDA's alert centers on reports submitted to the FDA Adverse Event Reporting System (FAERS) indicating CIDP exacerbation in patients using Vyvgart Hytrulo. As of January 2025, 3.3% of 1,316 CIDP patients in the Adhere study experienced disease worsening, though post-marketing data show this rate dropping to less than 2%. The agency is evaluating whether label updates or additional safety measures are necessary. Analysts note that FAERS data are inherently limited—lacking causality and often influenced by confounding factors such as ineffective treatment rather than direct drug effects. For example, some patients who experienced worsening CIDP were successfully treated with the intravenous (IV) version of the drug, suggesting the subcutaneous (SC) formulation may not be the sole culprit.

Nonetheless, the FDA's scrutiny introduces regulatory uncertainty. While most analysts (Citi, Jefferies, William Blair) expect only label updates—such as monitoring language for rare cases of rapid worsening—others caution that even minor changes could impact prescribing patterns. For argenx, which relies heavily on Vyvgart for revenue, any restriction could dent market adoption, particularly in CIDP, where the drug competes with IV therapies.

Market Valuation: A Drop or a Dive?

The 1.59% decline in argenx's stock price following the FDA alert reflects immediate investor unease but may not signal a broader loss of confidence. Historical context is key: in 2024, the stock surged by 61.66%, driven by Vyvgart's commercial success and argenx's ambitious “Vision 2030” strategy. However, 2025 has seen a modest -3.74% annual return, with the stock trading at $591.99 as of July 25—below its 52-week high of $678.21 but above its average of $582.61.

Wall Street's optimism remains intact. Twenty-three analysts have set an average one-year price target of $764.20, implying a 45.55% upside from current levels. GuruFocus' GF Value model even estimates an intrinsic value of $1,931.10, a 267.79% upside. These valuations hinge on the assumption that the FDA will not impose significant restrictions and that argenx's pipeline—advancing five candidates into Phase 3 by 2030—will deliver growth.

Yet the stock's volatility underscores a critical question: Is the market overestimating argenx's resilience? The company's first-quarter 2025 revenue of $790 million (up 99% year-over-year) demonstrates strong commercial execution, but reliance on a single drug (Vyvgart) leaves it exposed. If the FDA mandates stricter warnings or usage limitations, sales could plateau or decline.

Legal Fallout: Class-Action Litigation and Precedents

The Pomerantz Law Firm's investigation into argenx for potential securities fraud adds another layer of risk. The firm is probing whether the company or its executives misrepresented Vyvgart's safety profile prior to the FDA's alert. While no lawsuit has been filed yet, precedents in biotech litigation suggest the outcome could be costly.

Consider the case of Replimune Group (NASDAQ: REPL), which faced a 75% stock plunge and a class-action lawsuit after the FDA rejected its Biologics License Application in July 2025. The lawsuit, Jboor v. Replimune Group, Inc., highlighted how regulatory setbacks can trigger legal action, particularly when companies overstate clinical trial results. Similarly, argenx's reliance on FAERS data (which are not peer-reviewed) could be scrutinized if investors claim the company downplayed risks.

For argenx, the worst-case scenario would mirror Homology Medicines' $420 million settlement in 2024, even if the case is dismissed. Legal costs, reputational damage, and investor skepticism could erode market value, particularly if the FDA's evaluation prolongs uncertainty.

Investment Implications: A Calculated Bet or a High-Risk Gamble?

For long-term investors, argenx presents a paradox: a high-growth story undermined by regulatory and legal risks. The company's pipeline, including efgartigimod and ARGX-119, offers potential for expansion into autoimmune and neuromuscular diseases, but these candidates are years from approval. In the short term, Vyvgart's fortunes are tied to the FDA's final decision.

Key Considerations for Investors:
1. Regulatory Outcome: Monitor the FDA's evaluation timeline. If label updates are minor, the impact on sales may be limited. A more severe restriction could force argenx to pivot its marketing strategy.
2. Legal Risks: The Pomerantz investigation could drag on for months, adding to volatility. Investors should assess the likelihood of a class-action lawsuit and its financial implications.
3. Pipeline Diversification: Argenx's reliance on Vyvgart remains a vulnerability. Until its pipeline delivers, the company is exposed to single-drug risk.
4. Market Sentiment: Analysts remain bullish, but sentiment can shift rapidly. A repeat of Replimune's stock collapse is unlikely, but not impossible.

Conclusion: A Tenuous Path Forward

The FDA's June 2025 alert has exposed argenx to regulatory and legal headwinds, but the company's long-term prospects depend on navigating these challenges. The 1.59% stock drop reflects short-term anxiety rather than a fundamental reevaluation of its value, but the ongoing litigation and FDA scrutiny could test investor patience. For risk-tolerant investors, argenx offers a high-reward opportunity—if the company can weather the storm. For others, the risks may outweigh the potential.

In the end, the story of argenx is one of innovation and vulnerability. As the FDA and courts weigh in, the market will decide whether the company's Vision 2030 is a roadmap to success or a path to ruin. For now, the ball is in the regulators' and investors' court.