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Edited Transcript of ASND earnings conference call or presentation 3-Apr-19 8:30pm GMT

Full Year 2018 Ascendis Pharma A/S Earnings Call

HELLERUP Apr 15, 2019 (Thomson StreetEvents) -- Edited Transcript of Ascendis Pharma A/S earnings conference call or presentation Wednesday, April 3, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jan Møller Mikkelsen

Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director

* Jonathan A. Leff

Ascendis Pharma A/S - Senior VP & Chief Medical Officer

* Scott T. Smith

Ascendis Pharma A/S - CFO, Senior VP & Member of Executive Board

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Conference Call Participants

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* Adam Anderson Walsh

Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst

* Alethia Rene Young

Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research

* James William Birchenough

Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst

* Joseph Patrick Schwartz

SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Analyst

* Michelle Lim Gilson

Canaccord Genuity Limited, Research Division - Analyst

* Tiago Felipe Fauth

Crédit Suisse AG, Research Division - Research Analyst

* Vasiliana Vireen Moussatos

Wedbush Securities Inc., Research Division - MD of Equity Research

* Yuko Oku

JP Morgan Chase & Co, Research Division - Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Ascendis Pharma Year-end 2018 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Scott Smith, Senior Vice President and Chief Financial Officer of Ascendis Pharma. Sir, you may begin.

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Scott T. Smith, Ascendis Pharma A/S - CFO, Senior VP & Member of Executive Board [2]

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Thank you, operator. Thank you, everyone, for joining our full year 2018 financial results conference call today. I'm Scott Smith, Chief Financial Officer of Ascendis. Joining me on today's call is Jan Mikkelsen, President and Chief Executive Officer; and Dr. Jonathan Leff, Chief Medical Officer.

Before we begin, I would like to remind you that this conference call will contain forward-looking statements that are intended to be covered under the safe harbor provided by the Private Securities Litigation Reform Act. Examples of such statements may include, but are not limited to, progress on our pipeline candidates and our expectations with respect to their continued progress, statements regarding our strategic plans, our goals regarding our clinical pipeline, statements regarding the market potential of our pipeline candidates and statements regarding the planned regulatory filings.

These statements are based on information that is available to us today. Actual results or events could differ materially from those in the forward-looking statements, and we may not achieve our goals, carry out our plans or intentions or meet the expectations or projections disclosed in our forward-looking statements. And you should not place undue reliance on these statements. Our forward-looking statements do not reflect the potential impact of any licensing agreements, acquisitions, mergers, dispositions, joint ventures or investments that we may enter into or terminate. We assume no obligation to update these statements as circumstances change, except as required by law.

For additional information concerning the factors that could cause actual results to differ materially, please see the Forward-Looking Statements section in today's press release and the Risk Factors section of our annual report on Form 20-F, which was filed with the SEC on March 28, 2018.

On today's call, we will discuss our full year 2018 financial results and provide a business update. Following some prepared remarks, we will then open up the call to questions.

I will now turn the call over to Jan Mikkelsen, our President and Chief Executive Officer.

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [3]

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Good afternoon, everyone. Thank you for joining us today. Today, we are reporting our full year 2018 financial results, and I will review some of our major achievements and milestones during the past year.

In 2018, we continue to make progress towards our strategic goal to create sustainable growth by building a diversified pipeline of 3 independent product opportunities in rare disease endocrinology. For TransCon Growth Hormone, we successfully advanced our Phase III program, including the pivotal heiGHt Trial, fliGHt or switch trial and the enliGHten long-term extension trial. For TransCon PTH, we completed our Phase I program. Our data reinforce the target product profile of this product candidate as a true replacement therapy for patients living with hypoparathyroidism. For TransCon CNP, we completed and reported positive Phase I results. The clinical results support our target product profile to provide continuous and therapeutic levels of CNP for 24 hours a day, 7 days a week, without increasing cardiovascular risk and with a weekly administration.

2018 was the best year ever for Ascendis Pharma, and this trend has continued into 2019. First, we introduced our next strategic road map through 2025, Vision 3x3. The strategic goal of Vision 3x3 is to achieve sustainable growth through multiple approaches. We also established oncology as our second therapeutic area. Next, we reported for TransCon PTH, the initiation of a global Phase II trial. And finally, for TransCon Growth Hormone, we reported top line results from our first Phase III clinical trial, the heiGHt Trial. Not only did the trial achieve its primary objective of noninferiority compared to daily growth hormone in pediatric growth hormone deficiency, but it also demonstrated superior efficacy while maintaining comparable safety and tolerability to a daily growth hormone therapy. In addition, we also demonstrated a threefold lower incidence of poor responders in the TransCon Growth Hormone arm versus daily growth hormone, which contribute to the higher observed annual growth velocity for the TransCon Growth Hormone arm.

As I reflect on our successes and the recent Phase III heiGHt data, I'm inspired by the possibility of shifting the way our industry thinks about drug development, to prove that it's possible to develop highly differentiated product addressing significant unmet medical needs without high development risk. The traditional paradigm for research and development assumes that the development of novel therapies addressing significant unmet medical needs comes with high development risk. Now we are sharing this traditional paradigm with the positive clinical result for our third rare disease endocrinology product candidate in a row and with the successful TransCon Growth Hormone Phase III data.

With the TransCon technology, we are able to leverage the validated biology of existing drugs to create highly differentiated product candidates. By identifying significant unmet medical need, studying the science underlying the disease and applying our TransCon technologies to an existing clinical validated parent drug, we are able to create new product candidates designed to solve unmet medical need. We are able to provide simple to design, highly differentiated product candidate with an expected higher success rate compared to traditional drug development and with advanced commercial potential. This unique approach to product innovation, one that incorporates our scientific focus, analytical mindset and development expertise, gives us a holistic look at important product opportunities. The recent announcement of our Phase III heiGHt Trial results is an excellent example.

For TransCon Growth Hormone, we started with somatropin, the same compound as daily growth hormone, a hormone that has been the standard of care for the treatment of pediatric growth hormone deficiency for more than 30 years. We know that a long-acting growth hormone was needed because of the limitation of once-daily therapies. We applied our TransCon technology to somatropin and created a once-weekly product candidate, providing continued levels of unmodified growth hormone at the same therapeutic level as daily growth hormone but over 1 week.

We first had promising results in Phase I and Phase II trials. It was exciting to see that the Phase III heiGHt Trial not only confirmed those results but demonstrated superior efficacy on the primary end point and a lower incidence of poor responder with comparable safety and tolerability to a daily growth hormone. This is an achievement that, despite many earlier attempts in past decades, has not been done until now. Our Phase III results for TransCon Growth Hormone have the potential to establish a new treatment paradigm for patients who need growth hormone therapy.

The TransCon Growth Hormone program is a validation of the TransCon technology as well as our aspiration for product innovation. And it's a clear example of how we can take a product idea and apply our lower-risk approach to drug development to create a new product candidate with the potential to make a meaningful difference in patients' lives.

We are continuing this approach with our 2 other endocrinology programs. We have already translated our product approach for TransCon PTH and TransCon CNP into clinical results that reinforcing their respective target product profile. We are now expanding into another high potential, new therapeutic area as we apply our approach for product innovation to a second therapeutic area, oncology. We are looking forward to share more about this interesting high-value oncology pipeline with you in the coming months.

Now let me turn the call over to Scott before we open up to questions.

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Scott T. Smith, Ascendis Pharma A/S - CFO, Senior VP & Member of Executive Board [4]

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Thanks a lot, Jan. Turning to our financial results for the full year ended December 31, 2018, let me review some highlights.

For the full year 2018, we reported a net loss of EUR 130.1 million or EUR 3.17 per basic and diluted share compared to a net loss of EUR 123.8 million or EUR 3.68 per basic and diluted share during 2017. The 2018 net loss includes an unrealized noncash gain of EUR 20.7 million compared to an unrealized noncash loss of EUR 13.7 million in 2017 due to foreign currency exchange rate fluctuations.

Research and development costs for 2018 were EUR 140.3 million compared to EUR 99.6 million during 2017. Higher R&D costs in 2018 reflect increased personnel and infrastructure costs due to growth in headcount and overall R&D activities. For TransCon Growth Hormone, costs were higher primarily due to costs related to running our Phase III clinical program, including our heiGHt, fliGHt and enliGHten trials; preparation of validation batches; and continued development of our proprietary auto-injector, which were partially offset by lower costs associated with manufacturing of TransCon Growth Hormone for use in our clinical trials.

For TransCon PTH, costs were higher primarily due to execution of the Phase I clinical study as well as Phase II enabling and ongoing device development activities, which were partially offset by lower preclinical costs. For TransCon CNP, costs were higher primarily due to continued progression of the program, including execution of the Phase I trial and Phase II enabling activities.

General and administrative expenses for 2018 were EUR 25.1 million compared to EUR 13.5 million during 2017. These higher costs primarily reflect an increase in personnel and site costs as well as the initial costs of building out commercial capabilities.

We ended 2018 with cash and cash equivalents of EUR 277.9 million on a reported basis. In March this year, subsequent to the December 31 year-end, we completed a follow-on financing, further strengthening our cash position. Net proceeds from this March 2019 financing were approximately $539.8 million or approximately EUR 476.9 million. With this financing, Ascendis is well capitalized to pursue our Vision 3x3 and realize significant upcoming business milestones across our portfolio. As of December 31, 2018, the company had 42,135,448 ordinary shares outstanding. As of the completion of the March 2019 financing, the company has 46,927,115 ordinary shares outstanding.

Turning to 2019. We expect an increase in expenses as we continue to advance our endocrinology rare disease pipeline, expand into our new therapeutic area of oncology and invest in the TransCon technology platforms. We expect R&D expenses will include, for TransCon Growth Hormone: manufacturing costs related to preparation of validation batches and clinical trial supplies; clinical trial costs primarily related to the enliGHten Trial as subjects roll over from the heiGHt and fliGHt trials; costs associated with ongoing development of our proprietary auto-injector, including use in the enliGHten Trial; and preparations for the BLA filing, which we anticipate in the first half of 2020.

For both TransCon PTH and TransCon CNP: costs associated with the respective Phase II clinical trials as well as ongoing costs to support nonclinical and manufacturing activities and additionally for TransCon PTH, ongoing device development activities; and finally, increased costs related to our growing organization and activity level, including increased overall R&D headcount and infrastructure and costs to support initial program evaluation and preclinical activities associated with oncology. We expect SG&A expenses will include continued investment in personnel, systems and infrastructure to support our rapidly progressing portfolio and growing organization as well as continuing to build out our commercial capabilities to support key prelaunch activities as we approach a potential launch of TransCon Growth Hormone.

We are pleased to report our progress across all of our endocrinology rare disease product candidates over the course of 2018 and so far in the first part of 2019. In addition, we have a number of significant upcoming milestones for the remainder of the year, including top line data from our Phase III fliGHt Trial, introduction of our oncology pipeline, initiation of our Phase II clinical trial of TransCon CNP and top line data from the TransCon PTH Phase II clinical trial.

In 2018, we set out to provide you with clinical validation for our endocrinology rare disease portfolio, and we are very pleased with the progress we have made thus far with our 3 product candidates. In 2019, we are continuing to fulfill our vision for building a leading, fully integrated biopharma company through multiple approaches for sustainable growth, and we look forward to sharing these developments with you.

Operator, we are now ready to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Michelle Gilson with Canaccord Genuity.

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Michelle Lim Gilson, Canaccord Genuity Limited, Research Division - Analyst [2]

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I guess I'm wondering what should we be looking for in terms of data from the Phase II PaTH study for TransCon PTH in hypoparathyroidism in the fourth quarter. Are there any other end points that you're planning to look at aside from safety and ability to titrate off supplements that we should be focused on, especially as you get into the extension portion of that study? Specifically, you presented at ENDO on a PRO that you developed with the broad group.

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [3]

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Thanks, Michelle. Great question. We cannot look forward to share the data from the Phase II with you because we think really this is an exciting development for the patient. And we now got the clearance to move into and starting recruiting patients. And we're really looking forward to really to initiate this trial and starting dosing the patients. From a top level, you're perfectly right. What we're looking for, we are looking for seeing what we really can achieve. But I think one of the main things when I look on the data that we have generated already in the Phase I trial, it gave us a strong confirmation about the effect on the TransCon PTH product. It showed how we can have the right PK profile. It showed the expected effect on calcium -- it showed an expected effect on urinary calcium. It showed everything what we expected out from the pathology. And you're right, what we're doing with our Phase II trial, we're confirming this. You can say target product profile we now saw in healthy volunteers or in a patient group, and then we do one thing else. We add in what I call how we really can titrate and take the patient away from the supplement activated (sic) [active] vitamin D/calcium supplement to a normal level of a normal patient group in that [age or] normal group. And this is what we will see in addition to this trial. Jonathan, you can add in also related to the patient-reported outcome, how we do our validation there.

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Jonathan A. Leff, Ascendis Pharma A/S - Senior VP & Chief Medical Officer [4]

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Sure. So we've gone through extensive validation testing for our PRO measure, the so-called HP/PES measure -- symptom measure, and that's included in the Phase II trial to validate it for ultimate use in our Phase III program.

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [5]

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And Michelle, you know I'm always getting excited when I talk about TransCon PTH. And I really get excited because I'm getting so much exposed to patients in -- with HP. And when I really talk with them, I hear not only the short-term symptom but long-term complications, how they get [renal damage] symptoms and everything like that. And also, what we have done in surveys, both with the patient and also physicians, how people [really] prescribe a true replacement therapy. I extremely [excited] for this product opportunity to get as fast as possible out to the patients.

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Operator [6]

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And our next question comes from Jessica Fye with JPMorgan.

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Yuko Oku, JP Morgan Chase & Co, Research Division - Analyst [7]

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This is Yuko on the call for Jessica. As we get closer to BLA filing, could you recap the preclinical work you've done evaluating PEG accumulation with TransCon Growth Hormone and whether your regulatory discussions have indicated any outstanding work that they would like you to complete related to that?

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [8]

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That is a really, really great question. And I'm so [lucky] that we basic concluded all that work for about 2 years ago. And what we did, [I actually think] we always had a dedicated pediatric program dedicated to the patient group that we want to treat pediatric growth hormone deficiency. And we actually think that we are one of the few companies that started there. You see a lot of hemophilia products that start up in the (inaudible) and adults and then they believe they also can get it into the pediatric population without performing the necessary needed preclinical work that need to get it approved in the pediatric. It sometime applies in the U.S., but definitely not -- applies in the U.S. but definitely not applying in Europe, I can guarantee. There are [always] requests that you want to see all the integrated preclinical [targets] in the right species for the right duration. And when you talk about Europe, the right species to evaluate it is [typical] juvenile primate and typical time period for about 6 to 12 months. We have conducted all this work. It has been shared both to EMEA (sic) [EMA]. It has been shared to FDA. The request after we have shared that to FDA was that we got asked, could we expand the age range. We wanted to only go down to 3 years down to newborn. And this is why Jonathan now in his fliGHt Trial has more children under 3 years. And this is exactly what we have done in our preclinical [target].

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Operator [9]

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And our next question comes from Adam Walsh with Stifel.

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Adam Anderson Walsh, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst [10]

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So I got a couple here, real quick. The first one, Jonathan, could you help clarify expectations around the fliGHt Trial? What will we be looking for in terms of IGF-1 exposure and also heiGHt and efficacy data? I know in the past you've talked about patients coming into the trial being on various -- varying length of growth hormone therapy. So can you kind of help us understand what exactly we should look upon when we get the data as a measure of success? That's one. And then the second one is would you expect TransCon Growth Hormone to ultimately go in front of an AdCom prior to approval?

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [11]

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I think, Adam, why I'm coming in now because I like the [2 products] of the fliGHt Trial. Jonathan has a clear dedicated mission from the clinical side. And we also are using the fliGHt Trial as a big part to support our commercial activity to ensuring that we optimal can enter in the market. So we also have a proven algorithm for physician-patient to show how we can switch patient that's already established on daily growth hormone can be switched over to our product in a safe manner. So you can also see this is a part of our integrated commercial assessment how can we get the fastest penetration of this product opportunity, TransCon Growth Hormone, and being a leading brand in the growth hormone market. That is exactly what we're doing. We're having an integrated Phase III program that's both addressing the new patients, as we do in the heiGHt Trial, but also patients that at least have been on 6-month treatment with daily because it provides us a unique algorithm how to change or what is the right dose and other things like that. So I think you should take it out from this holistic view. Jonathan?

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Jonathan A. Leff, Ascendis Pharma A/S - Senior VP & Chief Medical Officer [12]

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So yes, so as Jan just said, the fliGHt Trial is clearly very instructive for commercial purposes as to how switching will happen in the real world. But from a purely clinical development perspective, we should probably view this mainly as a safety study. So it clearly will provide a huge chunk of much needed safety data to round out a very comprehensive package that we'll be submitting to the FDA, so 146 subjects. So that's the primary deliverable from a clinical development perspective. Certainly, we're going to get a lot of information on IGF-1 levels, comparison of IGF-1 levels on TransCon to the IGF-1 levels that they came into the study on using a daily growth hormone product. That will be very interesting and very informative as it reads through to the marketplace when patients are actually switched. We will, of course, collect heiGHt in everybody. It will be somewhat compounded since almost everyone in the study has been previously exposed, some for 0 to 6 months, some for 1 year, some for even 2.5 years. So many of them have already gone through their growth spurt. So the analysis will have to carefully deconstruct them by previous exposures. And in so doing, there'll be a little bit of compounding. It will still be informative, for sure. But just [heighten or plunge] your expectations in terms of it won't be like heiGHt, which is completely clear cut data in treatment-naive patients. We'll also get information on things like immunogenicity as well and some patient-reported outcomes. So a really nice big data set which will be quite important moving forward. As for TransCon AdCom, I wouldn't expect an advisory committee. Of course, we could always get one. It's up to FDA's prerogative. My hope is that since the data set for heiGHt was so unambiguous, there really is not a lot of fodder for an advisory committee. So that would be my hope.

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [13]

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One thing I also need to say, I need to congratulate Jonathan because he also managed to finalize the fliGHt Trial in the most optimal, perfect manner, not meaning exactly on the time expected, but fliGHt has already been finalized all patient result. But more or less, he also had the same high level of retention of the patient. So I've never seen pediatric growth hormone trial being done in such a manner, and I think this is both the skills of Jonathan and his group and the entire Ascendis team that can do it, but also that we have a unique product opportunity.

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Operator [14]

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And our next question comes from Liana Moussatos with Wedbush Securities.

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Vasiliana Vireen Moussatos, Wedbush Securities Inc., Research Division - MD of Equity Research [15]

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What are your -- can you remind us of your commercial plans for TransCon hGH in the U.S., Europe, Rest of World and China?

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [16]

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Yes, that's a lot of geographic regions. So let us start to one of the more important markets, so what we are doing and what we have been dedicated in. But I think you need to [take it as a] concept that we are not a single product. We have a pipeline of 3 independent product opportunities in rare disease endocrinology. It give us the reason for us to do as a company because we have the synergy and economy of scale to move and forward integrate in the commercial organization. And Tom has been hired. He has been here for a long time. He had really built up a unique team of everyone that (inaudible), which are going to be extremely important, marketing, analytical, everything what we need, really, really executing on getting this infrastructure up and ready. So as soon as we get our approval, we're ready to go out and launch this product in the U.S. We will follow up in Europe. We're also seeing how we operate outside what we believe is our core areas, U.S. and Europe. We take a very opportunistic value-creating approach. For example, Greater China, where we made a JV, 50-50 owned. We have investor that's coming in with the capital, the infrastructure knowledge about how to do in China and we still have 50% upside. It gives us a huge opportunity in Greater China. You will see the same way, we will think. Jonathan's team are doing a great effort to [get the regulatory affairs], to get the alignment of our pathway now in Japan, South Korea, major markets for both growth hormone PTH. And we all have this strategy nearly aligned now, so we also can start to share plans with you how we will penetrate the rest of the world. So basic, we are dedicated here to get this unique product opportunity as fast as possible out to the benefit of the patients we dedicated to do that, while we also do it in a way where we create optimal value for everyone.

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Vasiliana Vireen Moussatos, Wedbush Securities Inc., Research Division - MD of Equity Research [17]

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So on your own, U.S. and Europe, and then partners for the rest of the world?

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [18]

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Yes, or something like Greater China where we went into a 50%-50% owned partnership.

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Operator [19]

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And our next question comes from Jim Birchenough with Wells Fargo.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [20]

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Just a question on TransCon PTH and the initial Phase II data we'll get by year-end. I'm just wondering if you could maybe frame what we should be looking for at that point in the analysis. Is it early enough to see effects on urine calcium? And is there any kind of responder analysis you might construct, i.e. normalization of serum calcium with reduction in urine calcium? Just trying to get a sense of what you're shooting for and if we'll be able to see that kind of profile emerge by year-end?

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Jonathan A. Leff, Ascendis Pharma A/S - Senior VP & Chief Medical Officer [21]

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Jim, it's Jonathan here. Thanks for the question. So the primary end point of that study is a very clinically meaningful end point. And it's the proportion of patients who achieve a normal calcium level, a significant reduction in calcium and vitamin D, essentially -- completely tapering off vitamin D and maybe maintaining a small amount, maybe 0, of calcium and a normal urinary calcium or a reduction in urinary calcium. So it's a composite end point, and that is certainly what we're expecting to see by the end of the year and that includes the urinary calcium component, which is one of the more clinically meaningful components of the study.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [22]

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And as a follow-up, you might have spoke to this earlier, Jonathan, but is this a composite end point that you vetted with FDA? And are you confident that, that would be the regulatory end point?

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Jonathan A. Leff, Ascendis Pharma A/S - Senior VP & Chief Medical Officer [23]

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We're quite confident that FDA is very aware of the issues of normalizing serum calcium, reducing supplementation and most importantly, managing urinary calcium. So to include all 3 of these in a composite end point, we're highly confident. And I've had discussions with them. They're very aware of what we're doing and supportive.

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Operator [24]

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And our next question comes from Tiago Fauth with Crédit Suisse.

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Tiago Felipe Fauth, Crédit Suisse AG, Research Division - Research Analyst [25]

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So just a quick question on TransCon hGH. If you could just update us where you stand on the manufacturing validation batches for regulatory purposes? And how does this [deliver the right] kind of fits into this validation? Is it a separate process? And what are some of the regulatory requirements around data with the auto-injector for approval?

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [26]

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Thanks. Great questions. So I will -- let me go to the manufacturing. First of all, as we're working with our biologicals, it was extremely important for us we didn't have that change in manufacturing between Phase III [and the market]. So therefore, we actually -- already when we started producing material for our Phase III trial, we actually performed the necessary upscaling and moved to a real manufacturing facility to ensure that we didn't need to change between Phase III and the market . And I think this is [worth actually] a major investment before we actually have the Phase III results. But I think this is a necessary thing you need to do because no one want to change for a biologic because of risk of never really can ensuring to have the same profile of the 2 product opportunity. Related to where we are in the validation batches, we're basic in a position that is 3 -- 4 major steps between the starting material to basic drug product. And now we are in a situation where we have complete finalizes the 2 first steps. We're now in the middle of the third step, going very, very, very well. So we basic mid -- half of the third step and then the fourth step. So we're really confident. Everyone will have seen now, we really are just repeating [the 8, 9] manufacturing batches that we basic have performed before. We are repeating them through the validation batches. So we're feeling really confident. Related to the auto-injector, which we really think is really unique because it's the only product opportunity that's integrated and connected health care platform with -- of course, we have automatic data capture of dose and injection time. And this auto-injector will be actually introduced now in the U.S. here in Q2. We're ready. Everything is going now. So we basic switching the patient from the vial-syringe that have been until now over to our auto-injector and DCC, [where] exactly our commercial presentation, that is actually happening here in April and May.

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Operator [27]

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And our next question comes from Alethia Young with Cantor Fitzgerald.

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Alethia Rene Young, Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research [28]

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I guess I want to talk about further development beyond pediatric. So just how are you thinking about potentially running an adult study? Or do you think you'll need to run Prader-Willi or any of those sort of studies? And then just follow on to that is how do you think about the formulary positioning? Do you think you'll be on a formulary with daily, or do you think you'll have your own? Any color around that would be helpful.

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [29]

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I can take the last one and then Jonathan can give you the plan for our adult growth hormone deficiency trial and potential and other indication we are thinking about. And going to that, I actually think with this unique result we got out from the Phase III, we already had initial discussion with payer: Can we make an independent [pocket] compared to the daily growth hormone? Because -- their interest because they don't need to go into a renegotiation of all the contracts. Of course, it's also positive for us because we would be in a position that we basic don't need to wait to until they have finalized renegotiation of all the contracts. And what we're getting much more comfort is that we already initial [headcount] that really want to create it because this makes sense for them to create a new pocket of the once-weekly product. But when we got the results where we clearly have a [differentiation] and justification to be different compared to daily growth hormone because we basic have a better outcome. We basic also eliminating that large portion of the poor responders you see with daily growth hormone. We basic have a complete different treatment paradigm. And this is why we believe now we're feeling much, much more comfort that we will create a new pocket or at least the majority of the payer will do it because they are not one single. They are not homogeneous in the way of thinking. But we believe that potentially, the majority of people will be in a situation where they also can see the benefit and create a new pocket . And Tom and his commercial team have actually already went out and done the validation of this, and we're getting much, much more comfort that this is the way we will end up. Jonathan, will you talk about the phase first -- or the other trials we want to conduct?

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Jonathan A. Leff, Ascendis Pharma A/S - Senior VP & Chief Medical Officer [30]

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Sure. Sure. So we previously announced that we will be doing a adult growth hormone trial. When we start, it will depend on our resources. Clearly, our focus in the near term is all about the BLA and getting all the documentation required for that. We will start an adult growth hormone trial no later than next year for sure. We also are considering small for gestational age as well as all the other indications. I will note that very few companies, really all of them, do not have all of the indications. So it's unlikely we would ever do every indication. But we do feel that having a pediatric indication as well as an adult indication, at the very least, will serve us quite well moving forward.

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Operator [31]

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(Operator Instructions) And our next question comes from Joseph Schwartz of SVB Leerink.

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Joseph Patrick Schwartz, SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Analyst [32]

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So back on the auto-injector. I was wondering if you could give us any insight into how closely related it is to the BETACONNECT injector, which is already approved here and in Europe. And is it -- has it evolved significantly -- so significantly that you think that there's any regulatory risk? How are you balancing the desire to add additional functionality while not complicating it too much?

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [33]

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Joe, that is a great question. Okay. You're 100% right. Basic, a big part of our auto-injector is already built on proven technology. So you're right. The part of that, for example, our Bluetooth system, other parts, are actually the same as the U.S.-based product, the BETACONNECT system. So we feel pretty, pretty confident that what we have done with our own auto-injector that has really been mostly adapted to what I call a pediatric population and it's basic what we have done. And I'm feeling really, really confident that we have done all the necessary testing. We're now filing all the INDs related to the introduction. Jonathan, have we not filed it, or have we already filed it? I cannot remember.

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Jonathan A. Leff, Ascendis Pharma A/S - Senior VP & Chief Medical Officer [34]

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Yes, we filed it.

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [35]

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We already filed it. So we already have filed the IND to that, meaning is that we have all the [factual] study done, which [have been agreed]. We have all the, what I call, the testing done that was necessary to do the filing. And the positive part that the company that developed the BETACONNECT is actually the same company that actually also develop and manufacturing [us]. So this company has expertise to develop and to get auto-injector approved in the U.S. market. So I'm feeling pretty, pretty confident that we are doing something that we really are having a high success rate to get this introduced in the market.

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Operator [36]

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Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. And you may all disconnect. Everyone, have a wonderful day.

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [37]

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Thank you.

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Scott T. Smith, Ascendis Pharma A/S - CFO, Senior VP & Member of Executive Board [38]

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Thanks a lot. Bye-bye.