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Edited Transcript of ASND.OQ earnings conference call or presentation 11-Nov-20 9:30pm GMT

·50 min read

Q3 2020 Ascendis Pharma A/S Earnings Call HELLERUP Nov 12, 2020 (Thomson StreetEvents) -- Edited Transcript of Ascendis Pharma A/S earnings conference call or presentation Wednesday, November 11, 2020 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Dana Pizzuti Ascendis Pharma A/S - SVP of Development Operations * Jan Møller Mikkelsen Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director * Jesper Høiland Ascendis Pharma A/S - Senior VP & Global Chief Commercial Officer * Scott T. Smith Ascendis Pharma A/S - CFO, Senior VP & Member of Executive Board ================================================================================ Conference Call Participants ================================================================================ * Alethia Rene Young Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research * David Neil Lebowitz Morgan Stanley, Research Division - VP * James William Birchenough Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst * Jessica Macomber Fye JPMorgan Chase & Co, Research Division - Analyst * Joori Park SVB Leerink LLC, Research Division - Associate * Leland James Gershell Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst * Michelle Lim Gilson Canaccord Genuity Corp., Research Division - Analyst * Tazeen Ahmad BofA Merrill Lynch, Research Division - VP ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter 2020 Ascendis Pharma Earnings Conference Call. (Operator Instructions) Please be advised that today's conference may be recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, Scott Smith, Senior Vice President and Chief Financial Officer at Ascendis Pharma. Please go ahead, sir. -------------------------------------------------------------------------------- Scott T. Smith, Ascendis Pharma A/S - CFO, Senior VP & Member of Executive Board [2] -------------------------------------------------------------------------------- Thank you, operator. Thank you, everyone, for joining our third quarter 2020 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; Dr. Mark Bach, Head of Clinical Development and Medical Affairs for Endocrinology Rare Diseases; Jesper Høiland, Global Chief Commercial Officer; Dr. Dana Pizzuti, Head of Development operations; and Dr. Juha Punnonen, Head of Oncology. 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 our 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 prospectus supplement filed on July 9, 2020. Please note that our TransCon product candidates are investigational product candidates and are not approved for commercial use. As investigational products, the safety and effectiveness of the TransCon product candidates has not been reviewed or approved by any regulatory agency. 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 third quarter 2020 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 Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [3] -------------------------------------------------------------------------------- Thanks, Scott, and good afternoon, everyone. We are now almost through 2020, which has been, again, a very transformative and successful year for Ascendis. Now 11 months into 2020, we have met or exceeded all of our corporate goals to date. We have advanced our clinical programs, bringing them closer to addressing major unmet needs for patients. And we have built out our first 2 product opportunities in oncology that have the potential to represent a new paradigm shift in treatment patient with cancer. Why are we able to execute in this manner, day-in and day-out. It is because we are a company -- as a company driven by the following fundamentals. Ascendis 3 core values; the patients, science and passion; the power of TransCon technology; a clear vision where long-term strategic mindset on how to build a sustainable leading biopharma companies. People ask me, how do you motivate Ascendis employees to take a meeting with their colleagues at 6 am in the morning or stay up until midnight to speak with a patient group? My answer is that is not me that motivates our people. It is the core values of Ascendis. We put the patient first to drive our decision-making. Everything we do is to develop product opportunities that address unmet medical needs for patients as fast as possible. We are dedicated to using science and biological understanding, built by the scientific community over many decades to guide our patient focus and decision. And finally, we're passionate about realizing our shared vision and goals. We trust each other's strengths. And when we are facing challenges, we remain optimistic and commit to work together as one team to achieve extraordinary results. What enables Ascendis to develop a continuous flow of diversified, highly differentiated product opportunity with a high probability of success as demonstrated by our clinical results? It is the power of the TransCon technology platform and our dedication to science. We have already demonstrated clinical validation of the TransCon technology in 3 independent endocrinology rare disease programs. Combining our TransCon technologies, the clinically validated parent drug has allowed us to harness well-known biology and the power of mother nature to deliver highly differentiated product opportunity with a high probability of success. We believe we are just getting started with TransCon and that we have a real opportunity to transform patient lives. Now we are embarking on applying this successful approach, and our unique approach to product innovation to create potential high-value product candidates in multiple therapeutic areas. And we are now getting ready to enter the clinic in oncology. TransCon is a unique technology approach compared to other technologies. And we at Ascendis can create highly differentiated product opportunities, not possible by other technologies, and at the same time have expected high clinical development success as we are building on scientifically validated biological pathways and parent drug. Last, the value of having a strong vision and a strategic mindset with a clear direction on how to build a sustainable long-term value company is essential for success. Our pipeline strategy has been a key part of our successful vision. The first fundamental in our pipeline strategy is to focus on large orphan drug product opportunities with a well established unmet medical need, where the TransCon technology can make a major difference. The second fundamental is that we must build multiple product candidates in each of our therapeutic areas in order to achieve synergies, economy of scale and realized the huge advantage from a therapeutic focus in clinical development, regulatory affairs, medical affairs and commercialization. We believe that combining these 2 elements provides a fundamental for creating economy of scale, achieving long-term sustainable growth to highly differentiated product and building a leading biopharma company. Our current vision, Vision 3x3, provides clear direction and strategic goals year-by-year on how we want to build a long-term sustainable leading biopharma company through multiple approaches. I have to say the results we have delivered to date by pulling all these things together, our values, our TransCon technology and our Vision 3x3 have exceeded my expectations. Not only do we continue to execute year-by-year, quarter-by-quarter, we have accomplished what many companies have tried and failed to do. We continue to push ourselves to deliver not only in endocrinology rare disease, but also in oncology, where I truly believe we have the opportunity to transform the treatment of cancer. We are planning an investor call later this month to share more with you about our vision and strategy in oncology and latest progress. Let me review some of our important achievements in this quarter. Let me start with TransCon Growth Hormone, our lonapegsomatropin. All science tells us that growth hormone needs to remain unmodified to achieve the same mode of action as daily growth hormone the same as endogenous growth hormone, and you have heard us say this for years. The recent data updates and FDA reviews of long-acting growth hormone analogs further confirm the signs and demonstrate that you cannot cheat nature. If you modify a hormone, you will modify its effect which comes with consequence. We believe TransCon Growth Hormone may provide a major improvement to daily growth hormone therapy, an alternative that maintains the mode of action of daily growth hormone, addresses overall endocrine health and provides convenient weekly administration. Together, this benefit could potentially lead to better outcome for patient and an expansion of the growth hormone market. In Europe, we submitted our first M&A filing for TransCon Growth Hormone for the treatment of pediatric growth hormone deficiency, ahead of schedule. Our submission followed the agreement of EMA to our proposed pediatric investigation plan, or PIP, covering children from 6 months to less than 18 years of age. We are pleased by the EMA decision because we believe it reflects the unique product feature of lonapegsomatropin, which enables the long-acting release of unmodified somatropin. To our knowledge, the approval of our PIP reflects the first time PDCO, the European committee responsible for overseeing pediatric drug development programs has concluded that a development program for a long-acting growth hormone treatment supports the clinical development in children. In the U.S., we received notice that the FDA accepted our BLA filing for TransCon Growth Hormone for the treatment of pediatric growth hormone deficiency. And we now have a PDUFA date of June 25, 2021. We were pleased to hear that there were no filing issue, and we look forward to continuing to engage with FDA during its review. We have also completed and submitted the routine day 120 safety and efficacy update from the enliGHten Trial. We are pleased to report that of the 306 children treated with TransCon Growth Hormone in our Phase III program, 160 children have completed at least 2 years of therapy, and more than 140 children in the U.S. have now been using our novel auto-injector for at least 26 weeks successfully. With this updated safety assessment, the overall safety profile has remained consistent with what was reported with our original BLA filing. The observed safety profile continued to be comparable to that observed for daily growth hormone and no safety information has been identified that would negatively impact the established benefit-risk profile of TransCon Growth Hormone. Updated efficacy analysis show that the analyzed height velocity was within the expected range for second year therapy, indicating long-term efficacy with continued treatment. Building on our objective of creating global clinical wins, we recently announced the filing of a clinical trial notification with the PMDA in Japan, ahead of schedule, to initiate our Phase III riGHt trial for the treatment of pediatric growth hormone deficiency. The riGHt trial will randomize treatment naive children with growth hormone deficiency in a one-to-one manner to TransCon Growth Hormone or daily growth hormone. As with our pivotal heiGHt trial, the primary efficacy endpoint is analyzed height velocity at week 52. A third arm will include treatment-experienced children with growth hormone deficiency. The trials will be conducted entirely in Japan. The target enrollment is 40 subjects in the treatment-naive population and more than 10 subjects in the switch arm. An opportunity to continue in an extension phase will be offered. I am also pleased to tell you that the global foresiGHt Trial of TransCon Growth Hormone in adult growth hormone deficiency is progressing as planned. In adults, we measure body composition, fat mass, lean mass, et cetera. We believe that TransCon Growth Hormone will perform well compared to daily growth hormone. Finally, the commercial team continues the planned preparation for the expected launch of TransCon Growth Hormone as quickly as practical after approval. During the coming months, we are looking forward to keeping you updated about the progress of Ascendis first commercial launch, and our vision of how to develop TransCon Growth Hormone to become the leading growth hormone product in the global growth hormone market. Turning to TransCon PTH. For TransCon PTH, we submitted ahead of schedule an amendment to our IND with the FDA for the PaTHway of Phase III clinical trials evaluating safety, tolerability and efficacy of TransCon PTH in adults with hypoparathyroidism, or HP. We have also submitted regulatory filings to enable initiation of European and Canadian sites for PaTHway. PaTHway trial is a 6-month randomized, double-blinded placebo control with an open-label extension period similar to our Phase II trial. We plan to enroll about 76 adults with chronic HP, who are currently on the standard of care, randomized in the 3:1 fashion to TransCon PTH versus placebo. At the same time, we initiate the PaTHway Phase III trial. We announced the preliminary 6-month results from the open-label extension portion of the Phase II PaTH Forward trial. PaTH Forward is a global Phase II trial, evaluating the safety, tolerability and efficacy of TransCon PTH in adult subjects with HP. These results were better than we could have possibly hoped for. These data indicate that the TransCon PTH can eliminate standard of care treatment for HP since 100% of patients were able to remove active vitamin D and 91% of patients were able to stop both active vitamin D and therapeutic calcium supplement. In addition, and very important for the patient, our results demonstrate continued improvement in measures of quality of life in TransCon PTH treated subject using SF-36. For those subjects, we initiated a path forward on the placebo arm. When they switched to TransCon PTH, they were also able to normalize all domains and subdomains on their SF-36 scores. Turning to TransCon CNP. The ACcomplisH Trial is proceeding as planned. And today, we are announcing the filing in collaboration with VISEN for an IND to initiate the Phase II, ACcomplisH China Trial of TransCon CNP. The ACcomplisH China Trial is a Phase II randomized, double-blinded, placebo-controlled trial evaluating the safety, efficacy and pharmacokinetic of multiple subcutaneous doses of TransCon CNP administrated once weekly. The primary objective of the clinical trial are to determine the safety and growth velocity of TransCon CNP in infants and children of age less than 11 years with achondroplasia and include cohort expansion of optimal doses. All subjects who completed the trial will have the opportunity to receive TransCon CNP in long-term extension trial. Moving to our second therapeutic area, oncology. We remain on track to achieve our final corporate goal of the year to file an IND or similar for TransCon TLR7/8 agonist in December. On November 20, we are looking forward to have a virtual oncology research and development date, where we will provide an update on our vision in oncology and an update on our 2 most advanced pipeline candidates, TransCon TLR7/8 agonist and TransCon IL-2 beta/gamma. We will share our vision to create potential best-in-class oncology therapeutics by applying our systemic and intratumoral TransCon technologies to clinical validated parent drugs and biological pathways. As we continue to execute our clinical programs, we continue to build out our global clinical development and medical affairs capability with the hiring of Dr. Mark Bach. Mark joined us as Senior VP of Clinical Development and Medical Affairs for Endocrinology Rare Diseases and will report to me. Mark is a pediatric endocrinologist with 30 years of experience, building and leading clinical teams that have successfully launched innovative pharmaceutical products into global markets, including Janssen and Merck. Mark's experience managing global clinical programs across Europe, Asia and North America aligns well with our Vision 3x3 of establishing global clinical reach to bring our endocrinology rare diseases product candidate to market as fast and safe as possible. Each of the milestones we have achieved this quarter and throughout the year represent significant element of the company's Vision 3x3, our vision to create long-term sustainable growth. Our mission is to develop a pipeline of multiple innovative therapeutics, not just a single product opportunity. We have a powerful technology platform that we can apply to create multiple product opportunities in multiple therapeutic areas. What all these product opportunities have in common is that they can truly address unmet medical needs. That is what motivates us and drives us, seeing our therapeutics providing benefit to patients, improving clinical outcome and fighting to bring them to the patient as fast as possible. This is my measure of success. And I think we can truly consider ourselves successful in achieving our goals to date. We look forward to sharing more with you as we move ahead in 2021 to advance our endocrinology rare disease product candidate to patients and bring our quality pipeline into clinic. Now let me turn the call over to Scott for a financial review before we open for questions. -------------------------------------------------------------------------------- Scott T. Smith, Ascendis Pharma A/S - CFO, Senior VP & Member of Executive Board [4] -------------------------------------------------------------------------------- Thank you, Jan. Turning to our financial results for the quarter ended September 30, 2020. We reported a net loss of EUR 121.7 million, or EUR 2.31 per basic and diluted share compared to a net loss of EUR 25.1 million EUR 0.53 per basic and diluted share during the same period in 2019. Now let me run through some of the key components of these results. Research and development costs for the third quarter were EUR 64.1 million compared to EUR 46.3 million during the same period in 2019. The increase in R&D costs reflect continued advancement of our pipeline with the primary drivers, including an overall increase in personnel and R&D infrastructure costs. And for TransCon HGH, our lonapegsomatropin, costs were higher due to manufacturing of product supply as well as increased clinical trial activities. As a reminder, we currently expense manufacturing costs of lonapegsomatropin as R&D in advance of our anticipated product launch. At the time of product approval, a portion of these R&D costs may be reversed and capitalized as inventory, which will result in a onetime benefit to R&D costs. For both TransCon PTH and TransCon CNP, costs were higher primarily due to increased manufacturing, device development and clinical trial costs. And finally, costs were higher due to the continued build-out of our oncology therapeutic area. Selling, general and administrative expenses for the third quarter were EUR 17.5 million compared to EUR 10 million during the same period in 2019. These higher costs primarily reflect an increase in personnel related, IT and other infrastructure costs as well as expenses associated with the continued build-out of our commercial capabilities. Financial income and expenses include an unrealized loss of EUR 39.6 million compared to an unrealized gain of EUR 27.4 million during the same period in 2019 due to foreign currency exchange rate fluctuations, primarily on our U.S. dollar holdings of cash and marketable securities. We ended the third quarter with cash, cash equivalents and marketable securities totaling EUR 957.5 million. As Jan detailed out, we continue to execute on our goal of building a leading biopharma company with a diverse pipeline of potential high-value product candidates in multiple therapeutic areas. The combination of our values, our validated TransCon technologies and our strategic vision 3x3 has allowed us to deliver unique product candidates and clinical results with an expected high probability of success that you have seen first in endocrinology rare diseases. And we look forward to sharing more with you about our oncology therapeutic area. We remain on track to achieve our final corporate milestone for 2020 of submitting our first oncology IND or similar filing in December for our TransCon TLR7/8 agonist. And look forward to sharing progress on the rest of our pipeline over the near term, including for lonapegsomatropin, continued execution of the enliGHten trial, our ongoing long-term Phase III extension trial of subjects that completed the height and flight trials; continued execution of the Fore ForesiGHt trial, a global Phase III randomized controlled clinical trial in adult GHD and execution of the right trial, a Phase III randomized controlled clinical trial in pediatric GHD in Japan. For TransCon PTH, continued execution of the Phase II PaTH Forward trial, which continues to retain 58 subjects in the open-label extension. Execution of the pathway trial, a North American and European Phase III randomized controlled clinical trial in adult hypoparathyroidism, and further global clinical reach and label expansion for TransCon PTH in 2021. For TransCon CNP, execution of 2 randomized controlled Phase II clinical trials in achondroplasia, the ongoing ACcomplisH trial and the ACcomplisH China Trial, which is being conducted through our strategic investment in VISEN Pharmaceuticals, for which we recently filed an IND. And lastly, in our oncology therapeutic area, as mentioned, we plan to submit our first oncology IND or similar filing in December of this year for our TransCon TLR7/8 agonist, followed by an IND or similar filing for TransCon IL-2 beta gamma in 2021. With our extensive clinical development programs, the recent addition of Dr. Mark Bach to our team has strengthened our ability to achieve global market leadership, with the advancing of our endocrinology rare disease portfolio and the future potential launch of our product candidates, if approved. We look forward to seeing you all virtually at our upcoming Oncology Research Day on Friday, November 20th, at 12 noon Eastern time. Operator, we are now ready to take questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question comes from Jessica Fye with JPMorgan. -------------------------------------------------------------------------------- Jessica Macomber Fye, JPMorgan Chase & Co, Research Division - Analyst [2] -------------------------------------------------------------------------------- As we approach the launch for TransCon Growth Hormone, can you share a little more about how you're thinking about the commercial strategy? Do you anticipate being able to launch immediately post-approval? Or should we think about any lag for whatever reason? And how should we think about the time frame within which you'll be able to get on commercial plans? -------------------------------------------------------------------------------- Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [3] -------------------------------------------------------------------------------- Thanks, Jes. It's always great to hear you. And first of all, I am really pleased to have Jesper here in the room, so he can take over some of the questions. But I think what we have said currently, and this is what we are executing on now, and this is what we have shared with you is our plan for the U.S. So when Jesper talks, he will mainly be focused on the U.S., and we will on later stage come up with how we really are going to executing also in the upcoming hopeful expected European approval, which we actually are some way seeing also coming near now. So Jesper, will you tell about the overall strategic plan related to the U.S. market? -------------------------------------------------------------------------------- Jesper Høiland, Ascendis Pharma A/S - Senior VP & Global Chief Commercial Officer [4] -------------------------------------------------------------------------------- Absolutely. Thanks for the question, Jessica. I have spent more than 30 years in the area of endocrinology and growth hormone. And I can only say I am super excited about the lonapegsomatropin opportunity that we're having in the U.S. I certainly think it can be transformational going from once daily to once weekly is what all patients and parents and caretakers will look forward to. We are in process of hiring in the people to be ready to launch shortly after the PDUFA date, which is the 25th of June next year, as you know. So shortly thereafter, we will hopefully be up and running with the entire team, the level of management under me is in place, and we are recruiting in according to the plan. And we will certainly be completely ready and full of energy when we come on to the market. You know about the commercial strategy. Commercial is -- the commercial market, that's what it's all about in this segment, and that's where we will be focusing. And of course, pricing which I only guess -- also guess that someone will talk to is that we will make that decision at the point of time of having the approval of the product before the launch. -------------------------------------------------------------------------------- Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [5] -------------------------------------------------------------------------------- Adding one comment to Jesper is from the manufacturing perspective, yes, we are ready to launch exactly after we get in our approval. We have the capacity. We are producing the drug. We are there. So we are not having a lag period where we need to go out and start manufacturing for it is already established. -------------------------------------------------------------------------------- Operator [6] -------------------------------------------------------------------------------- Our next question comes from Michelle Gilson with Canaccord Genuity. -------------------------------------------------------------------------------- Michelle Lim Gilson, Canaccord Genuity Corp., Research Division - Analyst [7] -------------------------------------------------------------------------------- Could you maybe talk a little bit about the CNP trial and the overall program? The current ACcomplisH Trial is enrolling patients 2 to 10 years old. Do you have plans to to bring TransCon CNP into younger patients? And I guess, how young would you anticipate needing to go to address more debilitating comorbidities associated with achondroplasia? And then could you remind us why CNP is the right approach in the achondroplasia versus FGFR inhibition? -------------------------------------------------------------------------------- Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [8] -------------------------------------------------------------------------------- Thanks. Let me basically start from your last question. CNP has been known for 20 years or more. There has been extensive research on CNP. There has been extensive knowledge about how CNP basically in a bare-bare cell specific manner can make an inhibition of the hyperactivation signaling you have in the FGFR3 receptor in achondroplasia. It has proven that if you have extensive concentration of CNP because there is in the world patients that got bored either with a continuous activation of the NPR-B receptor or having a high concentration of CNP. Just looking on all the knowledge we have from the scientific literature and what we have seen in our preclinical finding, basically the CNP molecule is an extremely safe molecule, and the main effect on CNP is basically to provide in growth disorder a possibility to overcome the hypersignaling pathway of the FGFR3 pathway in a safe, safe manner. You can basically say, also from a cardiovascular perspective, everyone know that CNP is basically also preventing and protecting cardiovascular diseases. So it's basically -- it's a multiple hormone that have a lot of benefit. Then you can say, why is tyrosine kinase 3 inhibitor has even been successful? Why have they not even been successful in oncology? It's because it's impossible to make them specific enough. So out from their perspective is that it's really hard for me to imagine a compound and developing a tyrosine kinase, which have been broadly tried in oncology and have already and always shown high levels of toxicity compared to the benefit risk. How will it be possible to apply that basically into a setting of achondroplasia, where you don't want to have a general inhibition of FGFR1, FGFR2 and FGFR3 because that is what you get with tyrosine kinases inhibitor. Even you call it tyrosine 3 kinases, basically, it has the same inhibition of all 3 kinases. And we know how essential the different kinases, tyrosine kinases are in the -- basically in the development of a child and also in an adult setting. So this is basically when we analyzed for about 5, 6 years ago, we only saw one safe possibility, and it also has been proven to be bare safe, everything what we are seeing is CNP is -- that is a safe manner to control the hyperactive pathway of FGFR3. Going back to our overall program. As I have -- somebody has said before, you can conduct Phase II trial in complete different ways. You can have a single-arm trial and then compare to historical data. And then you basically mitigate the risk from a Phase II into a Phase III setting. What we did in this case here, we basically not only have 1 Phase II trial, we basically have 2 Phase II trials. Both of them are placebo-controlled, double-blinded, meaning is that having 2 independent Phase II trials, we basically will be in a position that we can analyze, not only for efficacy, where we really believe because our continuous exposure of CNP, we can have a continuous inhibition of the FGFR3 pathway that we will see major outcome improvement, not only to height, which we believe is a parameter that is easy to measure, but we really want to address the comorbidities of this disease. This is why we're developing TransCon CNP. And this is what we have now in 2 -- in the presented Phase II trial, where one what we call ACcomplisH China, basically, is what we call cohort expansion, where you have an optimal dose and you will select a cohort in many more patients when you have the optimal dose. The other part will be going back down to a newborn. Yes. This is also what we basically are filing on now is to have the opportunity to treat children from a newborn. If we need to address element of spinal stenosis, we need to initiate the treatment basically as early as possible. This is the only way you can avoid before you basically are closing up the bone fusion, and that is happening basically in the first 2 years of life. And this is why we need to go back to be newborn to really have the optimal way to address comorbidities. -------------------------------------------------------------------------------- Michelle Lim Gilson, Canaccord Genuity Corp., Research Division - Analyst [9] -------------------------------------------------------------------------------- So have you -- since you are initiating the Phase II trial in China, have you chosen the doses that you are planning to expand? -------------------------------------------------------------------------------- Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [10] -------------------------------------------------------------------------------- We still are doing dose escalation, and we are learning, and we want to be quite sure if we do it right. And that is basically what we're doing now. We basically want to ensure that we see the right growth velocity, we see the right safety before we really go out to, what I call, broadly and cohort expansion. So we are in a position that we're following this trial basically month-by-month to be sure and also potentially, we will still enroll more cohort to ensuring that we basically have the optimal dose for treating this patient group. -------------------------------------------------------------------------------- Operator [11] -------------------------------------------------------------------------------- Our next question comes from Joseph Schwartz with SVB Leerink. -------------------------------------------------------------------------------- Joori Park, SVB Leerink LLC, Research Division - Associate [12] -------------------------------------------------------------------------------- I am Joori, dialing in for Joe. My first one is on CNP, TransCon CNP. I was wondering what your thoughts are on the FDA possibly wanting 2-year data in different age groups for achondroplasia based on a competitor's filing. And assuming the FDA wants 2-year data, I was just wondering, does this impact your strategy for TransCon CNP? -------------------------------------------------------------------------------- Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [13] -------------------------------------------------------------------------------- This is a great question. What I believe also in the data. And the data saying is if you have a small marginal effect where you have 1 centimeter potential, it's somewhat hard to see and believe that you basically will like to continue 2 years because you basically had a product that could do the same thing, which are approved in Japan, you can use growth hormone. And you basically will get 1 centimeter more in growth velocity basically in an achondroplasia patient group. But it has been very, very hard to prove that continues over time. And I think this is one of the reason why you potentially will have a kind of scientific question because they already had been established clinical trials and applying growth hormone into achondroplasia. Compared to our situation, Dana, you can comment about how you see that and how it could potentially impact us? -------------------------------------------------------------------------------- Dana Pizzuti, Ascendis Pharma A/S - SVP of Development Operations [14] -------------------------------------------------------------------------------- Sure. I think that the FDA guidance and reviewing the output of that advisory committee was a recommendation that 2 years is a good interval to assess safety as well as the continuation of efficacy. I think that the way that you come up with the 2 years is maybe somewhat flexible. I believe that they don't articulate for specific 2 years of placebo-controlled trials because there was concerns in that advisory committee that were expressed about keeping these kids on placebo for that long of a time. So -- but I think that there will be a way within the context of our current program for us to be able to accumulate a certain number of patients at 2 years so that it wouldn't really impact our potential plan for filing. Does that answer your question? -------------------------------------------------------------------------------- Joori Park, SVB Leerink LLC, Research Division - Associate [15] -------------------------------------------------------------------------------- Yes. And then for TransCon HGH, based on your market research, for your launch assuming approval, how do you anticipate patrons switching to TransCon HGH from daily growth hormone? Should we expect -- are you expecting a gradual ramp from for when patients switch over? Or are you detecting a lot of demand from patients ready to switch and it could be more aggressive? -------------------------------------------------------------------------------- Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [16] -------------------------------------------------------------------------------- I think to step one step back to where Jesper was saying, there was a good reason why we made 2 Phase III trials: 1 Phase III trial, that was many patients, the high trial which was for basically what we call a major part of our regulatory filing related to efficacy and also safety. But we also made a switch trial with the same number of patients because we wanted to prove that we basically have a safe algorithm for also switching patients that is coming from established daily growth hormone. And we did that because we saw that was an investment to ensuring that the physician will have a sufficient knowledge, sufficient understanding and see the benefit of what we can achieve by both taking the new patient and also switching patients. But you also need to remember that typical patients the vast majority have idiopathic growth hormone deficiency, and they're currently only in a treatment about 3 to 4 years before they basically are out of treatment and then you basically recycle the entire patient population in less than 3 to 4 years. But Jesper, you can comment about how much we expect to focus also on with respect to patients. -------------------------------------------------------------------------------- Jesper Høiland, Ascendis Pharma A/S - Senior VP & Global Chief Commercial Officer [17] -------------------------------------------------------------------------------- Absolutely. First and foremost, it will be a push and pull strategy from our side. Patients that are newly diagnosed is, of course, the first ones that we will hope to be putting on lonapegsomatropin. And then, of course, we will also see switches. Switches very much also have to do with a very, very important point of market access. And we anticipate to get a gradual market access as we come into the market on the basis of the negotiations that we'll have with the PBMs and health plans. But we certainly believe that for new patients, it's really a great start; for patients that are currently well-established on growth hormone, less likely unless we really get that sort of market access that we are aiming for and believe that we will get with a new, really innovative way of treating patients going forward. As said, I spent more than 30 years in this area and the colleagues that we have attracted also have a very, very strong background not only in growth hormone, but also in endocrinology, from market access to sales and marketing, everyone is in place, operations. So we'll be up and running in a not-too-distant future, and I cannot wait to present end of next year. -------------------------------------------------------------------------------- Operator [18] -------------------------------------------------------------------------------- Our next question comes from Tazeen Ahmad with Bank of America. -------------------------------------------------------------------------------- Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [19] -------------------------------------------------------------------------------- Wanted to get your thoughts on how you're thinking in general about receptivity to pricing? So for growth hormone, you've obviously demonstrated in clinical -- with clinical data that you are superior to daily treatment? And with that in mind, I guess I would ask why wouldn't you want to price at a premium to daily growth hormone? And then I have a follow-up. -------------------------------------------------------------------------------- Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [20] -------------------------------------------------------------------------------- I think that question is so clear that Jesper will take it. -------------------------------------------------------------------------------- Jesper Høiland, Ascendis Pharma A/S - Senior VP & Global Chief Commercial Officer [21] -------------------------------------------------------------------------------- I mean, of course, pricing is what it boils down to, but it's not the WAC price, meaning the list price that we are going to aim for, it's the net price that is of true interest here. And that, of course, boils down to the negotiations that we're going to have with the PBMs and health plans. But as you're pointing out, we're having a superior product. And of course, there you will anticipate to demand superior price. I mean I have never seen Apple introducing a new phone that was cheaper than the previous phone that they put on the market. -------------------------------------------------------------------------------- Tazeen Ahmad, BofA Merrill Lynch, Research Division - VP [22] -------------------------------------------------------------------------------- Okay. So with that in mind, how long do you think it will take for the switch patients to convert to your product? I would assume that for new patients, doctors would prescribe TransCon right away. But for the current market, can you talk to us about what you think the potential dynamics would be for anybody who might be comfortable with daily treatments, whether it be the parents or the referring physicians, how should we be thinking about that? -------------------------------------------------------------------------------- Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [23] -------------------------------------------------------------------------------- First of all, Tazeen, the patient dynamic is that you switch basically all patients to a cycle in 3 to 4 years. So if you talk about switch, and the impact on switching patients, it's basically for all the modeling Jesper has done, everything what I have seen for Jesper's organization basically have only an impact in the first 2, 2.5 years because this is where you basically can switch some patients over because after 3, 4 years, it's basically empty eggs you're talking about. And this is where you also need to see that from the modeling perspective is that switch patient is something that impacts the first 1 to 2 years. But after 3, 4, it's only empty eggs. -------------------------------------------------------------------------------- Jesper Høiland, Ascendis Pharma A/S - Senior VP & Global Chief Commercial Officer [24] -------------------------------------------------------------------------------- I would also like to add, one has to just take the parent perspective and child perspective. For many of these patients, it's a daily challenge to inject their growth hormone. And therefore to be given the opportunity to get it once-weekly is really what the market has been craving for very, very long time. As long as I have been in this industry, which is over 30 years in endocrinology, since I sold my first growth hormone, I firmly believe that a once-weekly is what you truly, truly want. I used to refer to the patient as Little John, and Little John will certainly appreciate only to go through that hassle once a week. If you think about it, when I started in growth hormone in the '80s, we always said you treat with 6x and then you take Sunday off. And that was truly because of that sort of relaxation. Often in those days, it was intramuscular injections that you ended up getting and so on and so forth. And in this instance, Little John would really appreciate getting it once weekly. Also because when the children get to an age where they used to stay over with the friends, when they are going to grandmothers, grandfathers, what have you, they will appreciate not having to go through that sort of injection. So from my point of view, we have best-in-class product, and we will be first to the market in the pediatric segment. So I cannot see ourselves not doing a real good job. It boils down to market access. There will be some NDC blocks from certain plants, but that will also overcome, again, that's the push-pull strategy that I'm thinking of in this respect. -------------------------------------------------------------------------------- Operator [25] -------------------------------------------------------------------------------- Our next question comes from David Lebowitz with Morgan Stanley. -------------------------------------------------------------------------------- David Neil Lebowitz, Morgan Stanley, Research Division - VP [26] -------------------------------------------------------------------------------- Given that there are other long actings out there for growth hormone, they did not achieve superiority, but how is the communications ongoing right now with the community on those products is, I guess, how viable are they as a competitor in your mind? And also, with respect to the growth hormone, clearly, the adult data is coming up at a subsequent point. But is there some level of inquiry on that and potential for off-label use in that population ahead of data in adults? -------------------------------------------------------------------------------- Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [27] -------------------------------------------------------------------------------- I think you need to separate the 2 different indications, pediatric growth hormone deficiency and adult growth hormone deficiency. First of all, the doses you are using is complete different, 4 to 5 different higher in the pediatric indication. The demographic and the course of the disease is quite different where the pediatric growth hormone deficiency, the vast majority is idiopathic growth hormone deficiency, idiopathic, as we always call it. If we don't know exactly the cause, we call it idiopathic because it sounds better for the patient. If you go over to the adult, they're coming completely differently. Typically, it could be coming from trauma, it could be coming from the oncology setting and other things like that. In the pediatric, there is a complete different kind of dosage, there's a different ways that you need to have safety aspect. So having one product approved in the adult, which are the small, small segment of this here, this is under 10% today. Under 10% is the adult market today in the growth hormone market. It will be highly, highly unlikely that anyone can prescribe that into the pediatric segment. So let me then go to the competitive landscape. So Jesper said it in the right, good manner. We're not only first to market, we are also what we know, have seen best-in-class in the pediatrics segment. And that is -- the pediatric group market is 90% of the entire market. So if you look on our product to only one other product that is coming behind us, the one that's coming behind us nearest is the OPKO Pfizer. And we have today, at least I am not seeing any filing of the BLA, yet I expect it's coming because people are saying that it will be filed. But at least, we have not seen the filing yet. The other point that I want to raise up is that this product is a product that have basically proven to fail in another Phase III trial in adult growth hormone deficiency, where it basically proved that you could not get the tissue distribution, could not get the effect on truncal effect that you basically could have significant compared to placebo with none of other growth hormone product ever have failed. So it basically have proven that you're not providing the same endocrine benefit that you see with daily growth hormone. This is the product we are talking about. Where we have shown -- we have seen the integrated benefit of -- all endocrine benefit with our TransCon Growth Hormone product. At the same time, we're waiting for filing. The only information we basically have seen of this product, it's nothing to what really, at least from my perspective, can make any kind of judgment as to this is really a product that has the benefit you want to see because nothing has been disclosed, which makes me, obviously, wonder why. Going back to Novo Nordisk's comment, they have not publicly said that they basically have enrolled the patients to the Phase III trial. So you can see, from that perspective, they are at least multiple years behind us now. For the adult segment where Novo got approved, there is also proof there that basically it only got half the effects on the primary endpoint compared to daily growth hormone. And you can read that very, very easily out from the FDA document. It's even said in the label. You can look at it in the label, that is only getting half of the effect fit compared to daily growth hormone because the real competitor, the real benchmark is not placebo, it's daily growth hormone. You are in an established treatment with daily growth hormone, would you go out and then only get half the effect? This is my question. -------------------------------------------------------------------------------- Jesper Høiland, Ascendis Pharma A/S - Senior VP & Global Chief Commercial Officer [28] -------------------------------------------------------------------------------- If I may add in this context. So far, we haven't seen any long-acting growth hormones on the market. We're still waiting for that. And if I just push the way, I've always seen it, but I never talk about competition. I talk about our own product. And if you want to look at the success in this industry, the first and foremost is you hire people with the right background because it's all about the employees and the people that you're engaging that has the true vision of what you want to come through with. Second, it's the company, it's the reputation of the company, and there Ascendis is in a very strong position, having 3 products in the pipeline for endocrinology. So the endocrinologists and people that are treating growth hormone patients, PTH patients and as a general, they will see, we are not in for the short, we're in for the long and really becoming the partner of choice in the area of endocrinology. And first certainly comes to the product. And again, don't talk about the other company's product, talk about what it is that we are offering. And we are offering a somatropin at 191 amino acids that are truly standing out in a once-weekly setting. So as far as I'm concerned, from a commercial point of view, we are at the best possible place we can be when coming up with our growth hormone after the 25th of June next year. -------------------------------------------------------------------------------- Operator [29] -------------------------------------------------------------------------------- Our next question comes from Jim Birchenough with Wells Fargo. -------------------------------------------------------------------------------- James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [30] -------------------------------------------------------------------------------- Congrats on all the progress. I guess a couple from me or maybe a 2-part. Just on manufacturing, could you maybe just give us some comfort on your level of confidence in the manufacturing. We've seen in other areas manufacturing would be something that comes up late in the review cycle. And so what can you share with investors to give confidence that, that's not going to be an issue here? And then just on the commercial launch, what's the frequency that patients typically see their physicians? And do you have some benchmark for expected switch rates? Are there other products that have had similar differentiation that you could benchmark off to say, we expect 50% switch like enhanced products in Europe or 90% switch like Darzalex subcu? What's the benchmark for you guys? That would be the second part. -------------------------------------------------------------------------------- Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [31] -------------------------------------------------------------------------------- Jim, you're right. When you see the stream of CMC problem, you often see in the end of the filing, we actually took some of the precaution, and I think the most important precaution you ever can do when you talk about biological compound is that you are applying the same manufacturing site, the same process, the same scale between Phase III and launch. By doing that, you can basically proving that the patient got exposed to exactly the same compound, that you will basically have in your launch. So there is no changes between the Phase III material and the launch. By doing that, you basically avoid all, I would say, 90% of the discussion you have and you're getting issued with later on. The last 10% is reflecting is the plan that we're producing is basically living up to the manufacturing capabilities, systems, quality system, everything that you basically will expect for a product that is biological. And to our best knowledge and what we know is a place that has been already FDA preapproval inspected and other elements like that. So we believe that the way we basically look at the case by not having the risk of any kind of manufacturing change between Phase III and the launch was basically to minimize any risk that we couldn't have by running into CMC manufacturing issue truing the regulatory approval. Going back to the switch thing, I think we -- as we discussed before, its basically is something that will have an impact on the first 3, 4 years of revenue because the entire patient population in the U.S. will be switched from new initiation in the treatment in less than 3 to 4 years. And I believe that Jesper, you can comment about how we see the switch, but we see that we have conducted a trial, and we believe there will be a need for having basically patient can see a benefit also for switch patients. We'll start with the patient that potentially where you don't see the right outcome because you don't know either it's because they are noncompliant or it's a difficult-to-treat patient. It could be that you potentially will see a kind of the vast majority of the patient switching to a patient group that don't see the right outcome with daily growth hormone. -------------------------------------------------------------------------------- Jesper Høiland, Ascendis Pharma A/S - Senior VP & Global Chief Commercial Officer [32] -------------------------------------------------------------------------------- I should just add. I mean, the segment that I was thinking of when you asked the question was the GLP-1 segment where you saw once-daily and a once-weekly. So use that as an analogy. But I think that there are 3 factors that you really have to think about in this context. The first and foremost is we are going to come up with an auto-injector, where it will differentiate us highly, not only on the compound or the growth hormone, but also on how you're going to receive the growth hormone. The second point, which I think might be even more interesting is, there has currently been 7 players in the daily segment and what we have seen when we are looking at the competitive landscape is one by one, they're basically withdrawing from the growth hormone market, not basically going up withdrawing the products, but reducing their presence in the marketplace. They do no longer have sales forces in place. They start to not provide hot samples and so on and so forth. So you are seeing a changing environment in the daily segment already by now. And that's lastly where I see us again coming in, having people with the right sort of entry understanding of the market with the people that we have hired in so far that has years and years of growth hormone background that will really put us in the right place. So with those 3 sort of factors to look at, I think we are in a strong position to do very well. Again, the last thing that is not talked so much about, I think, is the market access. It all boils down to what are you willing to do in this context in terms of pricing. And I think it's not the fast penetration you just should look at, it's, what I call, the area under the curve, i.e., what is the long-term valuation that you're creating by coming up with something as new and innovative as an auto-injector as a product that is once weekly instead of once daily. -------------------------------------------------------------------------------- Operator [33] -------------------------------------------------------------------------------- Our next question comes from Alethia Young with Cantor. -------------------------------------------------------------------------------- Alethia Rene Young, Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research [34] -------------------------------------------------------------------------------- I just wanted to talk a little bit about the PTH kind of feedback that you've been hearing from experts and KOLs as you kind of have the information disseminate? And then what do you think are some of the challenges from an educational basis and kind of educating the population? -------------------------------------------------------------------------------- Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [35] -------------------------------------------------------------------------------- I think that the feedback we are getting is basically first time in the life, where I feel this kind of anxious attachment for really helping patients. Patients where we believe that had consideration where they are keeping really -- because of symptoms, short-term symptoms, where the quality of life was extremely low. I am not talking on long term risk. I am not talking about other things like that, where patient basically coming back and the physician telling us, this is one of the most positive driver ever been part of because the physicians basically are getting their life back. And this is what we got indicated in a statistic meaningful manner through our SF-36, where you basically can see just where they start. They start in a way where you basically see the quality of life is down in a level of what you see in chronic heart diseases or other things like that, that is perhaps is more well known. But it's mean and indicate while 40% of the patient cannot work, 40% are basically on part time, and you're seeing them creating a normal life experience. The explanation of that is that only because we stabilized the calcium or it's the combination of a direct CNS effect. We believe potentially is a combination of both of them that basically gives them leg. And then we say on top of that, they basically we'll be in a position that the long-term complication, everything for cardiovascular, because of the calcification of soft tissue and other places, cataract, and other things, basal ganglia and also the kidney and other things like that is providing them a life where you basically are providing a hormone replacement that is restoring their normal physiological level of PTH. I believe it is so game-changing as when we basically got what I call basal insulin that basically provided to patients with diabetes in a situation type 1 diabetes that basal insulin level during nearly 24 hours a day. -------------------------------------------------------------------------------- Alethia Rene Young, Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research [36] -------------------------------------------------------------------------------- Definitely. And for the IND amendment with the FDA for the PaTHway Phase III clinical trial, have you guys talked about kind of what the details are around the amendment? -------------------------------------------------------------------------------- Dana Pizzuti, Ascendis Pharma A/S - SVP of Development Operations [37] -------------------------------------------------------------------------------- Well, we actually submitted it to FDA, and we're waiting for them to give us their feedback, even though it was based upon the communications we've had with them, but I think there's still a few details that they just need to get back to us on. But I don't think that there's anything substantial in terms of what we communicated. -------------------------------------------------------------------------------- Operator [38] -------------------------------------------------------------------------------- Our next question comes from Leland Gershell with Oppenheimer. -------------------------------------------------------------------------------- Leland James Gershell, Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst [39] -------------------------------------------------------------------------------- I wanted to ask with the IND filing in achondroplasia in China, I wanted to ask what the accessible market opportunity you see is or perhaps what VISEN sees for the Chinese market for the CNP? -------------------------------------------------------------------------------- Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [40] -------------------------------------------------------------------------------- Yes. I actually believe there is dual reason for what we're doing. And we're sure the primary reason is that we also want to ensuring the benefit of patient population in China with achondroplasia, hypochondroplasia, that can get access to treatment. But the other point for also us is that it's a way where we basically can accelerating the program because we have access to a large centralized patient population, where we basically can extremely fast recruit a lot of patients into our second Phase II trial on an optimal dose. So from that perspective, you can see this is why we took this strategic decision to be part of VISEN Pharmaceuticals, not only to give us the reason to basically commercializing all our endocrinology product opportunities growth hormone, PTH, CNP in Greater China, the second largest pharmaceutical market in the world, but it also give us unique opportunity as a company specific in the rare disease setting to conduct clinical trials in a speed and quality because we are really integrated into getting everything from quality to databases and other things like that. We basically can conduct clinical trials, which are very difficult for any other company that don't have this kind of set up to conduct in Greater China. -------------------------------------------------------------------------------- Leland James Gershell, Oppenheimer & Co. Inc., Research Division - MD & Senior Analyst [41] -------------------------------------------------------------------------------- That's helpful. And another China question. With the Phase III on the growth hormone side that they're running there for the better part of the year at this point, just want to know if you could provide us on any updates on the progress of that Phase III in the growth hormone deficiency? -------------------------------------------------------------------------------- Jan Møller Mikkelsen, Ascendis Pharma A/S - President, CEO, Member of Executive Board & Executive Director [42] -------------------------------------------------------------------------------- This is going exactly as planned. And you know it was basically a copy of our heiGHt trial with 150 patients in the same randomization, same endpoint. Basically, it's a total copy of what we did in our heiGHt trial. And currently, they are recruiting. And I believe, to my best knowledge, it's more than half of the patients of the entire trial have now been recruited. -------------------------------------------------------------------------------- Operator [43] -------------------------------------------------------------------------------- Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.