Ascendis Pharma A/S (ASND) Earnings Call Transcript & Summary

Hello, I'd like to welcome you all once again to the Morgan Stanley 18th Annual Global Healthcare Conference. I'm one of the biotechnology analysts here. My name is David Lebowitz. Before we get into it, let me just read the requisite disclosures. Please note that this webcast is for Morgan Stanley's clients and appropriate Morgan Stanley employees only. This webcast is not for members of the press. If you are a member of the press, please disconnect and reach out separately. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. [Operator Instructions]

And with that, I'm happy to welcome the next company into the virtual chat with me. We have from Ascendis Pharmaceuticals, CEO, Jan Mikkelsen; CFO, Scott Smith; and the Head of Development Operations, Dana Pizzuti. I guess to start with, Ascendis is a platform company. The platform is TransCon, transient conjugation. Could you just, I guess, bring us up to speed of what TransCon is? And what type of benefit it can provide?

First, Dave, thanks a lot for inviting us. It's a pleasure to be here, and I will go directly to your question. You're 100% right. Ascendis Pharma is a technology platform company, where we're applying the TransCon technology basic in all our product development. And then you can say, what is the uniqueness of the TransCon technology? It basically have proven that it can break the traditional paradigm you have in drug development. Often if you make highly differentiated product opportunities, addressing major unmet medical need, it's typically associated with high-risk in development. This is why you only have 3%, 5% of Phase I trials basically ending out to the patients. That is what you see across all different therapeutic areas. Then you can ask a question, why can we at Ascendis Pharma build up a rare disease endocrinology pipeline, start with 3 independent Phase III programs. Move them to Phase I, Phase II now for 2 of them, move them into Phase III BLA filing, M&A filing and still be successful. It comes back to the TransCon technology platform. What we can do in the TransCon technology, combining the benefit of a classical product technology, combined with the benefit on a predictable release technology. And then you can just think, oh, you just released something slowly. No. What you really are creating a complete new chemical entity, which have all the benefit of a product at predictable release. And when we start with a parent drug, like we do in TransCon Growth Hormone, that already have established safety, established efficacy like daily growth hormone, which are the same as in industrial growth hormone. If we go to TransCon PTH, we start with a molecule that is well-known from FORTEO PTH 1-34. We don't have the inherit risk you have in the classical product development related to target, related to parent drug because we already are established and working on the benefit of a drug that already have a well-recognized efficacy and safety story. But what we are not comprising, we are not comprising that we make highly differentiated product opportunities that basically no one else have managed to do before. And this is why we come out with a best-in-class growth hormone, really are making a new opportunity for children, the pediatric growth hormone deficiency. We're coming out as a first in the class in pediatric growth hormone deficiency. For PTH, one of the huge unmet medical needs in basically the only left rare disease endocrinology disease, where you not have a treatment option today. And this is not small, this is more than 250,000 just in the western world. On CMP, we do the same thing, going back to the wild-type molecule and building on all the well-known target knowledge for the last 15, 20 years, but still make a highly differentiated product opportunity no one else can meet. But we were not stopping there in rare disease because now what we're doing is all our unique algorithm from product development, together with our strong TransCon technology platform, we're now starting to apply that in oncology. And our vision is really to make a change for patients into this group to really making product opportunities that will both focus on immuno-oncology, not only on trying to turn tumors into a treatable tumor, may get from cold to warm, where we use our new intratumoral delivery technology, long-acting for months inside the tumor, but also working on the general way to tune the immunological system to be really prime for having optimal action. So this is why when you look at Ascendis Pharma, yes, we got born with our platform technology, the TransCon technology. We have executed in rare diseases where we have proven that we really can make highly differentiated products, addressing major unmet needs in a high success rate. And now we transfer that over to other therapeutic areas.

So with that in mind, let's dig into your lead drug. TransCon hGH. This is under review at the FDA. Could you run us through the data for this drug and explain how it's different from other long-acting human growth hormones supplements?

Yes. TransCon Growth Hormone is our most advanced product opportunity, potentially when you see a potential huge impact on patient life. We will also think that TransCon PTH is potentially a larger opportunity related to that. But going back to TransCon Growth Hormone. People have basically tried to develop a growth hormone for -- I think since in the '80s when I was working at Novo Nordisk, that's where we basically started to think about making a long-acting growth hormone. And when you go out to the patient society here in the U.S., everyone is treated with the same daily growth hormone that we had in the '80s. Why is that possible? Is that because no one has tried? I can give you a list of 15, 16, 17 clinical program coming from big pharma, coming from large biotech, small biotech. What was in common from this kind of clinical? And why did none really hit the market in such a way that it was sustainable in the market? There was actually one product approved in the U.S. but got withdrawn because it didn't have the optimal efficacy compared to daily growth hormone. It comes up every time you change the somatropin molecule. Somatropin is the same as growth hormone, the same as the industrial growth hormone, the same as the daily growth hormone. Every time you modified it, you always changed the clinical outcome or safety aspect, immunogenic potential or other things like that. And this is why when we decide to move in and try to solve this paradigm why it has not been possible to develop a long-acting growth hormone, with the same efficacy, benefit, safety and tolerability as daily growth hormone, to the total endocrine health, not only on growth velocity but also related to body composition, cardiovascular effect because that is all the expected effect you expect to get off of growth hormone treatment. Even in the primary endpoint in children with growth hormone deficiency, you're only measuring growth velocity. Because we can liberate an unmodified growth hormone. The same somatropin as industrial growth hormone, the same growth hormone as daily growth hormone because then we can ensure we can have the same distribution in the body, hitting all the growth hormone receptor, you find throughout the entire body, in the brain, in the growth plate, under fat cells and muscle cells, basically everywhere and having the same receptor activation. We have the same balance between the direct effect, meaning it's when growth hormone go out to the target tissue, get its direct effect compared to the indirect effect that's coming from growth hormone function on the liver and providing mediator that sometime function in synergy, sometime it would function in opposite effect. And this is why when you look at TransCon Growth Hormone, is highly differentiated to any product, the 2 other late stage, long-acting product here, we're the only one that basically are providing the same endocrine health because we are providing the same unmodified somatropin molecule that you see in industrial growth hormone and daily growth hormone and, therefore, you have the same integrated health. And this is what we have proved to our integrated both preclinical safety program, Phase I, where we have direct comparison already to daily growth hormone, to Phase II study in adult growth hormone deficiency, in pediatric growth hormone deficiency. Three, independent Phase III trial, where we have now treated patients for more than 3 years. All what we observe, we have a superior product, providing all the endocrine benefit of growth hormone compared with a superior height velocity. And this is what we want also to show that we can do it in adult growth hormone deficiency, where we saw clearly that the 2 other long-acting products have not shown to their Phase III program, one complete phase in Phase III in adult growth hormone deficiency. The other one even the titrate to the same concentration of IGF-1, which are one of the mediator that basic one -- I mean, the situation only got half of the primary outcome compared to the daily growth hormone. This is how we are differentiated as the only product in the long-acting space that is building on 20 years proven efficacy, proven safety.

When we look at usage of growth hormone right now, how long on the pediatric side, how many years does a patient currently typically stay on therapy? And what -- how old are they when they typically start? How old are they when they typically stop? And how do you think this number could evolve when TransCon hits the market?

You see a treatment difference between Europe and U.S. Typically, Europe are initiating treatment perhaps 1 to 2 years earlier than the U.S. So many children face when they come into treatment in the U.S. can be -- that's a big spread. What you see children being up to 9, 10, 11 years before they really get initiated treatment because parents believe first, after some time, yes, potentially we need to initiate this treatment. And also the burden of daily treatment is high. It's a huge burden in having a daily treatment. And this is exactly why what you see in the sad part of this because of the high burden in a pediatric segment of daily injection, when you look on the persistence, meaning is when do children drop out of it. Basically after 2 to 3 years, they are -- more than 40%, 50% are dropped out. It's mainly coming because if you just miss 2 doses every week, which are often happening because you give children holidays, for injection typically in the weekend. So now you will actually miss weekend, then you get basic -- less than 50% of the outcome. And then you're ending up, what I call, the negative circle, where lack of real good outcome just promoting more and more lack of adherence and then you're basically stopping treatment. And this is why we hope it's possible to expand the market because we believe every child should have the opportunity to develop in the same natural manner as a child with a normal level of growth hormone. And that's why we believe we can achieve that, not only have a once-weekly product, but also integrated within a connected platform that is providing positive feedback to the children and the parents and the caregiver about when to inject. And also if they're not injecting, there is an easy follow-up. So we really can keep up the adherence and get the right outcome. And therefore, you can basically have higher level of persistence.

That was helpful. I guess one more question left on the human growth hormone before I move on to PTH, and that's with the adult population. How is growth hormone currently used in the adult population? And how might the foresiGHt Trial and success in that -- with that might change the market?

The adults are being treated where if you're optimally treated, you would take a daily injection. But in the same way as in the pediatric, it's not really happening. And this is why that there's typically are a huge difference when you look on post-marketing data compared to Phase III trial. You see basically a huge difference, and it's mainly driven by lack of adherence. From that perspective, we believe that we can develop also the adult growth hormone market because it today is underpenetrated. And we believe there is an opportunity to help many more patients with an optimal growth hormone treatment because it can be facilitated by a once-weekly product that give you the continuous exposure of growth hormone for 1 week. By doing that, you definitely will improve the outcome. And here, we're not only talking about what we expect to see by reduction of truncal fat even everyone wants to like to have less truncal fat. But we also see the incomplete higher level of quality of life this patient goes -- get in cognitive effect, metabolic change -- really extremely positive, so you have a higher chance to not get metabolic complication. Bone quality is also a very important element. And this is why we always refer to endocrine health. Because growth hormone, even if you have 2 different primary endpoints, you're missing in the pediatric, its growth velocity in adult, reduction of truncal fat, everyone expects that you get all the involvement of endocrine health, like body composition, mental health, cardiovascular, bone quality, et cetera, et cetera. And this is why it's so important for us basically to have the mode of action be the same as the industrial growth hormone.

Now if we jump on to TransCon PTH, you were highlighting in your opening comments how the market opportunity for this might actually be larger than hTH. Could you elaborate?