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

Q1 2019 Ascendis Pharma A/S Earnings and Business Update Call

HELLERUP May 31, 2019 (Thomson StreetEvents) -- Edited Transcript of Ascendis Pharma A/S earnings conference call or presentation Thursday, May 30, 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

* Jessica Macomber Fye

JP Morgan Chase & Co, Research Division - Analyst

* Michelle Lim Gilson

Canaccord Genuity Limited, Research Division - Analyst

* Shveta Vilas Dighe

Wedbush Securities Inc., Research Division - Associate

* Tazeen Ahmad

BofA Merrill Lynch, Research Division - VP

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the First Quarter 2019 Ascendis Pharma Earnings Conference Call. (Operator Instructions) As a reminder, this call will be 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. 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 first quarter 2019 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 our 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 filed on April 3, 2019.

Please note that our TransCon product candidates are investigational product candidates and not approved for commercial use. The safety and effectiveness of any TransCon product candidates has not yet been established. None of the statements made on the conference call regarding our TransCon product candidates shall be viewed as promotional. On today's call, we will discuss our first quarter 2019 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. Jan?

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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, and thank you for joining us today. In my view, 2019 has been the most transformative period in Ascendis history. As we validated our TransCon platform with clinical results from the Phase III heiGHt and fliGHt Trials for TransCon Growth Hormone. For TransCon Growth Hormone, not only did the heiGHt Trial achieve its primary objective of noninferiority compared with daily growth hormone in pediatric growth hormone deficiency. It also demonstrate superior efficacy with comparable safety and tolerability to our daily growth hormone therapy. The safety profile was further reinforced in the fliGHt Trial. In heiGHt, we also demonstrated a threefold lower incident of poor responders in the TransCon growth hormone versus daily growth hormone, which contribute to a higher observed annual growth velocity for the TransCon Growth Hormone arm.

In addition, we initiated our global Phase II trial for TransCon PTH in adults subject with hypoparathyroidism and will soon be all enrolling patients with a goal of completing the trial and reporting top line data in the fourth quarter of this year.

And we are on track to initiate a global Phase II trial for TransCon CNP, our candidate for children with achondroplasia in the third quarter of this year.

Our long-term dedication to our TransCon Growth Hormone program is an example of our commitment to patients and science. In the past, we have shared with you the importance of understanding the biology of growth hormone on our conference call. I have been reflected recently on our journey. Two years ago, in March 2007 (sic) [2017], we shared our target product profile by saying. The goal is to achieve all the integrated effects of growth hormone treatment, including catch-up and sustained growth velocity; improved body composition, including fat mass and muscle; better bone health; and improved quality of life. We believe maintaining the same mode of action and tissue distribution is critical to mimic all these effect of the native growth hormone. We have the only long-acting growth hormone product in clinical development that is based on the release of an unmodified human growth hormone, the same as endogenous and daily growth hormone. Our TransCon Technology allows unmodified growth hormone to diffuse freely into the tissues, maximizing its ability to carry out the same effects as endogenous or daily growth hormone. Later that year at our November conference call, we discussed, TransCon Growth Hormone is built on delivering the same active growth hormone as daily growth hormone at the same maximum concentration and overall exposure per week that physicians have come to expect for over 30 years. We are developing our TransCon Growth Hormone to have comparable clinical benefit and the same optimal product feature as daily growth hormone with an easy-to-remember once-weekly administration. We have applied many decades of learning regarding growth hormone product design in this program.

We had now successfully developed TransCon Growth Hormone from the idea phase to positive Phase III data. And develop TransCon PTH and TransCon CNP from the idea phase to positive clinical data. The driver for this success is our focus on the science, one of our 3 core values. Patients, science and passion. We believe, we can offer a lower risk product development opportunity for each of our product candidates by applying our TransCon Technologies to validated targets and PARADOX, combined with a high-level knowledge of well-understood biology for each product opportunity.

In addition, we will only advance the program if the product candidate continues to demonstrate it can achieve the target product profile. In the case of growth hormone, we invested many years to study the biology related to the disease and to build up scientific understanding of the disease. We learned about the importance of both the direct and indirect effects of growth hormone. The importance of having the right balance between growth hormone and IGF-1 activity and the relevance of each in all aspects of the child's growth and development not just heiGHt, but also all the parameters for the body composition, cardiovascular effect. We also learned about growth hormone penetration into target issues. And develop an understanding of how exchanging the site and structure of the growth hormone molecule could limit its effect and ability to penetrate the growth rate and other tissues, including activation of a growth hormone receptor. We saw that other long-acting growth hormone product candidate in development did not always fit with our understanding of the biology and when these programs did not achieve the expected results it strengthened our confidence in our approach.

Our belief in learning and understanding the biology of the disease drove us to advance our product candidates and in this case to finally provide a potential once-weekly long-acting growth hormone therapy that not only matches the current standard of care but may in fact offer greater therapeutic benefit. For growth hormone, we believe our TransCon platform provides a perfect fit between the growth hormone biology and the unmet medical need. Importantly, it all starts with the patient. At the beginning of our agreement for product innovation, it is always the unmet patient need. When we consider this we look deeply into the current therapeutic options, how they may or may not fully address what patient need. We look from the view of the patient. For growth hormone, we understood the burden of daily therapy is heiGHt for families and patient, who may have to undergo thousands of injection over the course of the treatment. As a result of the burden of these injection, patients often missed doses and may achieve suboptimal treatment outcome.

For hypoparathyroidism, we know that patients are highly concerned not only about the short-term symptoms that burden their daily lives, but also the long-term effect of uncontrolled urinary calcium levels. Those living with hypoparathyroidism have a far, far, greater risk of kidney failure. Yet no treatment to date restores PTAs to physiological levels helping to regulate serum and urinary calcium levels for the entire day. And for achondroplasia, there remain no approved medical therapy to date. The comorbidities are significant for achondroplasia and for other related skeletal disorder, we have that sTfR cyclical pathway. We look at areas where there's a strong patient need where we can improve efficacy, safety and tolerability to potentially develop best-in-class products that disrupt the status quo and set a new treatment standard. We are enabling this concept in endocrinology rare diseases, and we now pursuing the same goal in our next therapeutic area oncology. Importantly, it is the science and the patient that matter. One of the quotes I really like is from Neil Degrasse Tyson, as it reflects our way of thinking. The good thing about science is that it's true whether or not you believe in it. Thank you. Let me turn the call over to Jonathan for a clinical update.

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

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Thanks, Jan. 2019 is off to a busy start with all of our clinical programs advancing nicely. As Jan described, the Phase III top line results for heiGHt have strengthened our confidence in the future of the TransCon pipeline. I will now provide an update on our 3 endocrinology clinical programs and the key milestones we are working to achieve in 2019. In March, we reported positive top line results for the pivotal Phase III heiGHt Trial, which demonstrated that once-weekly TransCon Growth Hormone had comfortable safety and tolerability to daily GENOTROPIN with a significantly greater increase in annualized heiGHt velocity over the 1-year study period in treatment-naive children, with growth hormone deficiency.

Recently, we had the opportunity to discuss our top line results in detail with investigators following presentation of the results at 3 relevant conferences ENDO 2019, the Pediatric Endocrine Society, and the Pediatric Endocrine Nurses Society. Feedback continues to be positive, and we see increasing enthusiasm about the potential of once-weekly TransCon Growth Hormone as a potential safe and effective alternative to daily hGH therapy. In addition to heiGHt, we recently announced preliminary data from our fliGHt or switch trial evaluating safety and tolerability of TransCon Growth Hormone in subjects who are previously treated with various commercially available daily therapies. Importantly, the trial included some subjects under 3 years of age who had not been previously treated with growth hormone therapy.

Preliminary results from fliGHt show that TransCon Growth Hormone was safe and well tolerated in both populations. The adverse event profile of TransCon Growth Hormone was similar to the published safety profile of daily growth hormone therapies with no drug-related discontinuations or drug-related serious adverse events, no neutralizing antibodies and a low level of low titer nonneutralizing antibodies. At our upcoming R&D day on June 26, we plan to review more detailed data from the fliGHt Trial. Additionally, subjects from heiGHt and fliGHt have rolled into our long-term extension. The enliGHten Trial, which is now completed enrollment and will follow participants for several years. We are pleased that 96% of those in heiGHt and fliGHt have chosen to continue in enliGHten. We think this reflects significant interest in our once-weekly growth hormone amongst subjects and their caregivers. We are also introducing the growth hormone auto-injector next month into the enliGHten Trial. Our device is designed to be patient-friendly, delivering a single low volume injection. It requires a small 31-gauge needle that is only 4 millimeters in length, which is comparable to needles used to administer daily growth hormone. To aim patient convenience, the TransCon Growth Hormone cartridges can be stored at room temperatures. This is an important feature for both caregivers and patients as all, except one daily therapy requires refrigeration. The auto-injector also includes an empty-all design to reduce waste and has an expected life span of 4 years. The auto-injector will be part of the BLA filing. The combined safety data from heiGHt, fliGHt and enliGHten forms the expected safety database to support our planned BLA filing following input from regulatory authorities in Europe and the U.S. We now have a large safety database that includes approximately 300 subjects with pediatric GHD, who are either treatment-naive or previously treated. We are on track and working towards our U.S. BLA for submission in the first half of 2020. Our second pipeline program TransCon PTH is also making planned progress. The Phase II trial called PaTH Forward evaluates TransCon PTH in adult subjects with hypoparathyroidism with the goal of expanding our safety database and identifying an appropriate starting dose for Phase III. We plan to initiate approximately 20 sites worldwide. Trial sites continue to come on board reflecting our global focus for conducting clinical trials. There is significant interest among the patient community in participating in the trial. To review, PaTH Forward is a global randomized double-blind placebo-controlled parallel group trial in approximately 40 adult subjects who are currently receiving standard of care therapies, which are active vitamin D and calcium supplements. The trial is evaluating 3 fixed doses of TransCon PTH and the down titration regimen for the complete removal of standard of care. After 4 weeks of dosing, all subjects may enter an open-label extension that will evaluate the long-term safety and efficacy of TransCon PTH.

During recent interaction with investigators and patients, we are learning more and more about the unmet need in hypoparathyroidism. Current standard of care does not fully control the disease either in the short or long term. As a result, patients with hypoparathyroidism have an estimated fourfold greater risk of renal disease compared to healthy individuals. The burden of this illness remains significant, and we are committed to improve its care.

As you know, once-daily TransCon PTH is designed to restore PTH to physiologic levels for 24 hours a day. By providing sustained levels of PTH, we help to control and maintain serum and urinary calcium levels in the normal range and thereby prevent many of the short and long-term impacts of the disease.

Finally, we are preparing to advance our third pipeline candidate, TransCon CNP into a Phase II trial with achondroplasia. During the third quarter. TransCon CNP is a long-acting prodrug of C-Type natriuretic peptide in development for achondroplasia and potentially for other fibroblast growth factor receptor-related skeletal disorders. We have designed it to provide a continuous exposure to CNP at safe therapeutic levels in a single once-weekly subcutaneous dose.

During the first quarter, we completed analysis of our Phase I trial in healthy adult subjects. For which preliminary data were reported late last year. The results show that once-weekly TransCon CNP provided continuous exposure to CNP, where the PK profile designed to maximize efficacy with once-weekly dosing. No serious AEs were reported. TransCon CNP was generally well tolerated at doses up to 150 micrograms per kilogram, and the resting blood pressure and heart rate were unchanged from predose at all time points in all cohorts.

We plan to present these results at medical conferences this summer, which are attended by world experts in skeletal disorders. As a lead up to our Phase III trial, we are also actively recruiting subjects for the ACHieve Study, a global natural history study designed to gain insight into the experience of pediatric subjects with achondroplasia. Through this effort, we're just spreading in the medical and patient communities about our program. We're very encouraged by the interest, a great indicator of the need for a treatment option for these patients. During the first quarter, TransCon CNP also received Orphan Drug Designation from the U.S. FDA. We believe this is in part an acknowledgment of the great need for a treatment for achondroplasia as there are no FDA-approved therapies for this rare condition. We have also been engaged in productive regulatory discussions in both the U.S. and EU, regarding our TransCon CNP development program.

It is important to remember that achondroplasia is not just about short stature. Individuals living with this condition often experience severe skeletal complications and comorbidities. We are extremely passionate about the potential for advancing a treatment option that could positively impact children living with achondroplasia. We are on track to initiate the Phase II trial in children with achondroplasia in the third quarter of 2019.

For Ascendis, 2019 is shaping up to be a truly momentous year. One that has already revealed data to validate our TransCon Technology platform and seen the completion of both the heiGHt and fliGHt clinical trials. We are well on our way towards building a robust pipeline of significant products in rare endocrine diseases. Looking ahead, we are focused on presenting data on all 3 of our programs throughout the year, preparing the BLA filing for TransCon Growth Hormone, which is expected in the first half of 2020, executing the Phase II PaTH Forward trial for TransCon PTH with the goal of top line data in Q4 this year and initiating a Phase II trial for TransCon CNP in the third quarter.

We are moving full steam ahead, and it is an exciting time for Ascendis. But we didn't get here by ourselves. We are grateful for the many contributions of our investigators, study coordinators, patients and caregivers, and of course, our employees. I'll now turn the call over to Scott for a financial update.

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Scott T. Smith, Ascendis Pharma A/S - CFO, Senior VP & Member of Executive Board [5]

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Thank you, Jonathan. Turning to our financial results for the 3 months ended March 31, 2019. Let me review some highlights.

For the first quarter, we reported a net loss of EUR 53.6 million or EUR 1.24 million per basic and diluted share compared to a net loss of EUR 41.4 million or EUR 1.07 per basic and diluted share during the same period in 2018.

The first quarter 2019 net loss includes an unrealized noncash gain of EUR 3.1 million compared to an unrealized noncash loss of EUR 7 million in the 2018 quarter due to foreign currency exchange rate fluctuations.

Research and development costs for the first quarter were EUR 51.3 million compared to EUR 30.5 million during the same period in 2018. Higher R&D costs during the 2019 quarter reflect increased personnel and infrastructure costs due to growth in headcount. For TransCon Growth Hormone, costs were higher, primarily due to ongoing preparation of validation batches, which were partially offset by lower clinical trial costs related to our Phase III program. For TransCon PTH, costs were higher, primarily, due to manufacturing of TransCon PTH for use in our clinical trials and preparation for validation batches, new and ongoing costs associated with our Phase II clinical trial, which were partially offset by lower preclinical costs. For TransCon CNP, costs were lower, primarily due to lower manufacturing costs and preclinical costs, which were partially offset by higher clinical trial costs.

As a reminder, our R&D expenses, including manufacturing-related expenses vary from quarter-to-quarter reflecting timing of ongoing development activity.

General and administrative expenses for the first quarter of 2019 were EUR 10.4 million compared to EUR 4.7 million during the 2018 period. These higher costs primarily reflected increase in personnel and site costs as well as costs of building out commercial capabilities.

We ended the first quarter with cash and cash equivalents of EUR 696.7 million and 46,927,115 ordinary shares outstanding, which includes net proceeds from a follow-on of financing completed in March 2019 of approximately $539.4 million or approximately EUR 480.3 million. All of our milestones, we laid out in January remained on track. Furthermore, with the success of the TransCon platform in the heiGHt and fliGHt trial and our recent financing, we are well positioned and capitalized to deliver on our Vision 3x3 strategic road map, including initiating plans to expand our product candidates into other endocrinology rare disease indications, advancing our objective of achieving global reach based on ongoing regulatory activities and discussions not only in the U.S. and Europe, but also in Japan, South Korea, and through VISEN Pharmaceuticals in China. And planning to establish a global commercial presence for endocrinology rare disease portfolio.

In addition, we have several significant upcoming milestones expected in the remainder of this year, including introduction of the growth hormone auto-injector into the enliGHten Trial, initiation of our Phase II clinical trial of TransCon CNP, top line data from the TransCon PTH Phase II clinical trial and release of further data from our endocrinology rare disease pipeline.

We are very excited to be hosting our second R&D Day in New York City on June 26, where we will provide a detailed update on our 3 endocrinology rare disease programs, including detailed data on TransCon Growth Hormone from the heiGHt and fliGHt trials, updates on our TransCon PTH and TransCon CNP programs, an introduction to our commercial organization and an introduction of our oncology vision, strategic goals and product candidates. This will be one of the most important events for Ascendis this year for delivering on our vision of achieving sustainable growth and building a leading biopharma company.

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) And our first question comes from Tazeen Ahmad with Bank of America Merrill Lynch.

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Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [2]

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Scott, maybe one for you. You provided some color on the R&D expense for the quarter already, but maybe just to give us a better sense of the rest of the year, what proportion of those expenses that you mentioned do you expect to continue throughout the rest of the year?

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Scott T. Smith, Ascendis Pharma A/S - CFO, Senior VP & Member of Executive Board [3]

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I think that in general, the expenses will continue throughout the year. I think when it comes to just annualizing the first quarter, there was a bolus of PPQ expenses in the quarter for about EUR 10 million. So rather than have that be spread out throughout the year, we took an upfront -- we had an upfront payment for that amount.

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Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [4]

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Just directionally speaking, just given the fact that you are going to be having more programs presumably in terms of the clinic, should we think that, that run rate should increase as the quarters progress throughout the year?

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Scott T. Smith, Ascendis Pharma A/S - CFO, Senior VP & Member of Executive Board [5]

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I would think based on what we've disclosed to date, I would expect at most continued run rate, if not trailing off as we roll off the TransCon Growth Hormone program. But you have to come to the R&D Day on June 26 to get a feel for our oncology pipeline programs as well and start modeling those out.

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Operator [6]

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Our next question comes from Joseph Schwartz with SVB Leerink.

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Unidentified Analyst, [7]

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I'm [Juri Park] dialing in for Joseph Schwartz. I guess the first question that I have is on the TransCon hGH program, in particular the adult trial. So I was wondering if you could provide an overview of your TransCon hGH trial for adults that you plan to initiate in 2020. How much of your trial site overlap is there between the heiGHt Trial in ped and the adult study? And can we expect enrollment in trial to go faster in adults due to your heiGHt and fliGHt trial experience in ped?

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Jonathan A. Leff, Ascendis Pharma A/S - Senior VP & Chief Medical Officer [8]

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Okay. This is Jonathan. We previously disclosed we are planning an adult growth hormone deficiency trial to initiate in 2020. We've not given any more specific time lines than that, although we are absolutely sticking to that time line. It's firmly in our plans. These are a different set of investigators. It would be very unusual for pediatric investigators to also see adult patients. So a different group of investigators in that study. So essentially 0 overlap. We will present a little more detail at our R&D Day in -- later in June.

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Unidentified Analyst, [9]

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Okay. Great. And then if I could just have a follow-up. If I can just a follow-up question. So for your commercialization, I know it's a little bit early, but for your 2 endocrinology programs behind TransCon PTH, I was wondering if there could be benefit from your commercialization infrastructure that you plan to implement with TransCon hGH. And how are you strategizing your efforts to launch hGH?

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [10]

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I think that what was really one of the core element of our vision in 2015, when we actually decided to focus on one single therapeutic area was to us to ensuring that we have the synergy, the economy of scale really to move forward and develop a commercial organization that can advance all 3 product opportunities under the same umbrella. So we see a lot of synergy in what we are doing, meaning basic -- if we specified U.S., we have one single commercial organization, and it basically can ensuring that we can get these 3 product opportunity out to the market. And not only that we're talking about the synergy and the economy of scale, but we're also talking about potential treatment synergy with some product like TransCon Growth Hormone and TransCon CNP.

So one of the core was actually to show that we don't believe in having a single product opportunity and develop an entire commercial organization for just one product. And that was why we wanted to have 3 independent product opportunities that potentially could go up to more than 9 different indication just being commercialized by one single organization. By doing that, you are providing a situation where you will see the highest value being creating out from the product opportunities.

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Operator [11]

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And our next question comes from Jessica Fye with JPMorgan.

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Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [12]

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When we think about oncology and where you may go with that therapeutic vertical, to the extent you are applying the TransCon technology to somewhat derisk targets, I'm curious how you define a derisked target and whether that has to be an approved mechanism or approved molecule or if that could be something that's maybe shown promise in the clinic but has never gotten all the way to market. And then bigger picture, can you maybe set some more expectations about what we could learn at the R&D Day with respect to the oncology vertical and the kind of the level of detail we'll learn about?

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

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This is one of the key question we actually was working with, and we actually started to think to move into next therapeutic area. And in -- for about 18 months, 24 months, when we have all that discussion, we actually said we will do the same thing that we did in rare disease endocrinology. We will not have one single product opportunity. We believe in pipelines. We believe there's a way you really get the synergy, economy of scale. But I also believe in what I call building up a pipeline with different kind of, you can say, targets.

So one thing we have done in common in oncology is that we're not moving away from really making a great success in rare disease endocrinology, validated target, validated parent drugs. So what you will see in our oncology is basically the same way of thinking, working on validated target, working on validated parent drugs. And potentially, I would like to come back to that, but we will really be focused on making highly differentiated product opportunities that no one else can make, really addressing major unmet medical need.

So what you will see on the Research Day will be some kind of mimic what you saw in 2016 on our Research Day when we disclosed our pipeline in rare disease endocrinology. We actually were in a position that we will show you preclinical data that basically support why we are highly differentiated, not only the data but also the science behind it and why we're really addressing a major unmet medical need.

So what we're doing in oncology is basically repeating the success, what we have in rare disease endocrinology with the different aspect from a business model perspective, have potentially a quite different different business model because it shows it's different to move into rare disease endocrinology and oncology where the rare disease endocrinology had a basic and easy pathway out to commercializing directly to the patient with a few clinical trials. The complexity in going into the highly -- area like oncology will be that you potentially see a different business model and also what we will see when we have our Research Day in late June.

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Operator [14]

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And our next question comes from Liana Moussatos with Wedbush.

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Shveta Vilas Dighe, Wedbush Securities Inc., Research Division - Associate [15]

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This is Shveta for Liana. Congrats on all the progress. Can you talk about the physician feedback you have received for the heiGHt and the fliGHt Trial data and then also comment on the pricing strategy for TransCon Growth Hormone?

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

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I think Jonathan will take the first part of it.

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Jonathan A. Leff, Ascendis Pharma A/S - Senior VP & Chief Medical Officer [17]

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Sure. I can do the second. It's pretty straightforward. The physician feedback has been amazing not only from the physicians but patients. The patient advocacy groups have been almost exuberant after the results. I mean it was such a remarkable result. I think really striking is how unambiguous it was. It was a very clean data set in terms of both efficacy and safety. So everybody is thrilled. We're hearing more and more anecdotes about the experiences and the extension study, enliGHten. Everyone is just really happy. There's very, very few dropouts in the trial, which I think is exemplary of that. And I think we won't comment on pricing. It's premature to consider a pricing strategy.

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

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But I think what we're thinking as a company and with respect to our core values and taking the focus on the patient, we want to be assuring that we believe we really have unique product opportunities that will provide in real world a much outcome for the patient. And we believe this is our core value to ensuring as much as possible of the patient population can get access to our product opportunity not only in U.S. but also in a global perspective. And that is what we want to implement and work on.

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Operator [19]

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And our next question comes from Michelle Gilson with Canaccord Genuity.

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Michelle Lim Gilson, Canaccord Genuity Limited, Research Division - Analyst [20]

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I guess from a high level, can you talk a little bit about how you see the hypoparathyroidism market evolving over time with the potential introduction of TransCon PTH? Just more specifically, maybe which patients do you think have the highest unmet need in the population for a more physiologic replacement therapy? And maybe help us to understand the market beyond patients treated with NATPARA on both a daily and twice daily or split dose regimen. And then how do you build the market from there?

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [21]

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I actually think that it's the same subject we are talking a lot for the time being and also because just in this day, we have the World Hypoparathyroidism Day, and one of the element which are really giving me the comfort that we have developed product opportunities really addressing a true major unmet medical need is when I listen to the patients. When I listen to the patient and hear the story, what kind of burden they have in a day-to-day and how the -- basic effect of the long-term complications you have of this disease. And if you want, you can go to our website. You can go to our website and see and listen to some of the patients. And I think that really influence me a lot. When we -- no doubt, the patient need it. When we hear them, we talk, we see the complication, everything else.

We've also done a major research focused on the U.S. related to physician, more than 100 physicians, and really focused on would you really prescribe the product that is a true replacement therapy, a product that's really providing physiological PTH 24 hours, 7 days a week. And more than half of them will do it in the U.S. And this is also why we have the global reach in our Phase III program where we have addressed more than 200,000 patients. And I think this is why I personally believe this is not only for the patient and overall this area will really be a major benefit for us but also the high-value product opportunities because we're really addressing major unmet medical need. And when you come to our Research Day, we actually will continue and we'll share some of this more in-depth research that we have done in the U.S. market about how the physician see a true replacement therapy.

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Michelle Lim Gilson, Canaccord Genuity Limited, Research Division - Analyst [22]

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Okay. And maybe a follow-up. Can you also talk a little bit about what you're hoping to learn from the Phase II that will inform the Phase III other than starting dose? Will we maybe -- I guess, specifically from the individualized optimization that's planned for the extension? And then can you also just remind us of how you're reducing the supplements in the Phase II path as far as the pacing?

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

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So we learned a variety of things from the Phase II study. So certainly we'll confirm the proof of concept, which we're highly confident in knowing what we know from Phase I, where we're simply replacing the missing hormone 24 hours a day. So that's an easy one. We'll confirm the starting dose for Phase III, which we have a very good idea of even now. But we'll tweak that a little bit. And then, of course, it's titrated. So that's not crucial, crucial. We'll expand our safety database, which is always important. And then finally, we'll be testing out the algorithm for our titration regimen, down-titration of calcium and vitamin D. We have a very good idea of how to do that. I think it's always good to get a little more experience in the real world out there during clinical trials. And we'll refine that perhaps for Phase III.

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [24]

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I think in addition, the Phase II trial, it also give us an opportunity to take at least 40 patients into long-term extension trial, where we basically can follow them, look on the long-term complications like what you see with, for example, bone turnover. So we can normalize and get the right bone turnover and also look on some of the complications like what you put in and kind of follow and avoiding that we have further damage, for example, in kidney. And I think this is something that we think is rather important that we're building up -- not only addressing the short-term symptom but also looking on the long-term complication.

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Jonathan A. Leff, Ascendis Pharma A/S - Senior VP & Chief Medical Officer [25]

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Long-term renal complications in particular.

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

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Exactly.

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Operator [27]

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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 [28]

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My first one is on the auto-injector. You mentioned that that's going to be introduced into the enliGHten Trial next month and will obviously be part of the BLA filing, [as you've long said]. Is there a minimum amount of data that the FDA has guided to in order to get the device approved along with the drug like a certain number of patients that the agency would like to see treated with the device prior to filing? I guess the underlying concern is whether the auto-injector could somehow slow or delay the TransCon Growth Hormone filing. That's the first question.

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Jonathan A. Leff, Ascendis Pharma A/S - Senior VP & Chief Medical Officer [29]

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Okay. Thanks, Adam. So there is a requirement. It's a really minimal requirement actually. It's really just a couple of dozen patients for a couple of months. And they want to make sure that the real-life patients can actually use device and it's working properly. Of course, we've studied it in well over 100 subjects, both patients as well as untrained people. And it's worked really well, and we've reiterated the design and the instructions over many years. But this is the first time in actual patients with growth hormone. So they just want to make sure that it's working well. We'll actually greatly exceed the requirements that have been placed on us by FDA. We will have many, many months of exposure in dozens and dozens of patients. Probably close to 100 actually.

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Adam Anderson Walsh, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst [30]

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That's helpful. And then in terms of the granularity that you will disclose on the fliGHt Trial at the upcoming R&D Day, I know you've emphasized in the past to look at the fliGHt Trial as primarily a safety trial. And you've cautioned against making comparisons on, say, annual heiGHt velocity between the 6 months prior to entry and the 6 months on the TransCon Growth Hormone. I guess my question is beyond safety, are there anything -- is there anything on the efficacy side that we really should be looking at when we see those granular data for fliGHt at the R&D Day?

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Jonathan A. Leff, Ascendis Pharma A/S - Senior VP & Chief Medical Officer [31]

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Sure. So as you stated clearly, it's a safety trial and that's its main objective. However, of course, we're measuring heiGHt and we will report heiGHt. So it's important to understand the context. So if someone has been a treatment-naïve patient, you're going to expect greater heiGHt velocity in the first year because of all the catch-up growth they get primarily in the first 6 months. So if someone has been on a growth hormone already for 6 months or for a year or even for 2 years or more, you're obviously going to expect less heiGHt. So typically in the second year, you would expect about 15% to 20% less heiGHt velocity. So with all of those caveats, we'll present some subgroup data to give you a flavor for the heiGHt that we're actually seeing and put it in context of their prior exposure. So we're very pleased, and I think you'll be interested in hearing more at the R&D Day.

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [32]

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I also believe, Adam, that getting the real-world practice how really to switch already status patient over to daily growth is really, really important so the physician understand the algorithm, understand how to titrate. And we can show real-world practice how it gets done. There is also a small subgroup of patients where I have a strong strong feeling for myself, and this is for children under 3 years that we actually treated with our product there, basically down to nearly newborn. And I am actually really, really thrilled to see that we actually have our product also being applied in this really subgroup of patients where it really, really have the high, high, high burden of injection and other things because of basically growth hormone deficiency. And I'm really looking forward also to share this data with you because I have a strong, strong feeling for what we really do when we move down to basically newborn children.

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Adam Anderson Walsh, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Analyst [33]

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Looking forward to that. And then just one final one if I could, briefly. On enliGHten, when and how often will we see updates from that?

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

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So periodically, probably at earnings call, we will give you updates. There won't be a whole lot. We're just following this cohort that's pretty large now. Over time, we see them typically every 3 months or so. But we can provide updates along the way. Eventually, at medical meetings, we'll present. The 2-year data, for example, that will be an important cut to -- as a milestone as well.

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Operator [35]

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(Operator Instructions) And our next question comes from Athena Young (sic) [Alethia Young] with Cantor Fitzgerald.

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Alethia Rene Young, Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research [36]

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I just wanted to talk a little bit about the profile NATPARA has versus what you guys are trying to construct with your PTH therapy. And also, the second question, can you talk a little bit about maybe high-level commercial learning from the fliGHt study as well?

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

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I didn't really get the question, the NATPARA and how we compare.

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Alethia Rene Young, Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research [38]

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Yes. How you think -- what you're trying to construct versus what NATPARA is currently like your therapy versus theirs and how you think you can potentially expand the market is the first question.

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [39]

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Yes, exactly. But I think I'm not really never comparing us to NATPARA because NATPARA is nearly -- not providing the same target product profile. So it's not to expand out from NATPARA because we have a complete different product profile where we really are providing the true replacement therapy that really gives benefit for the patient on all aspect of disease. This is how we got this signed. So when I'm seeing NATPARA, yes, it can increase calcium. But it can also increase calcium by taking a lot of calcium supplement and activated vitamin D. Sure, you can spare some of them and still have the calcium, but you basically have no real positive impact on urinary calcium well illustrated to the FDA document.

So there was exactly what we actually got -- really got clarity about when we really went to what I call the FDA briefing documents related to NATPARA. So from that perspective, we see a complete different product profile. We are more focused on the unmet medical need both from the patient perspective but also talking with the physicians understanding, yes, this is the solution they have been waiting for. This is the product opportunity that can be in a position so we basically can normalize this patient group's PTH levels as one you actually develop a basic insulin and certainly you'll have diabetes patient that could have a basic level of insulin 24 hours, 7 days a week.

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Scott T. Smith, Ascendis Pharma A/S - CFO, Senior VP & Member of Executive Board [40]

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And then your second question on commercial insights from fliGHt. FliGHt, it turns out, was a very valuable experience because it provided real practical insights in the real world on how subjects might switch coming in on a daily therapy. And we did that in almost all the patients. They switched with few exceptions from daily therapies to TransCon. So how do you switch? What dose do you switch to? How do you monitor IGF-1? It was very practically helpful in the switching dynamic and will be very useful to our commercial colleagues.

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Operator [41]

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That's all the time we have for questions. We thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.

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Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [42]

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Thanks, everyone.

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Scott T. Smith, Ascendis Pharma A/S - CFO, Senior VP & Member of Executive Board [43]

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Thanks.