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

Ladies and gentlemen, thank you for standing by, and welcome to the Ascendis Pharma's 2020 Virtual Oncology R&D Day. [Operator Instruction]. I would now like to introduce your host for today's program, Scott Smith, Senior Vice President and Chief Financial Officer, at Ascendis Pharma. Please go ahead, Sir.

Thank you, operator, and thank you, everyone, for joining our first ever, and hopefully last virtual, Oncology R&D Day. I'm Scott Smith, Chief Financial Officer of Ascendis. Joining me on today's call are Jan Mikkelsen, President and Chief Executive Officer; Kennett Sprogøe, Head of Innovation and Research; Dr. Juha Punnonen, Head of Oncology; Dr. Stina Singel, Head of Clinical Development Oncology; and Dr. Dana Pizzuti, Head of Development operations. Turning to Slide 2. As you might have expected, we'll be making some forward-looking statements. Please refer to the Risk Factors section of our most recent annual report on Form 20-F and the associated SEC filings. And then here on Slide 3 is the agenda. As you can see, I only get 1 minute. So I'll just say that we'll go through the entire presentation, which we expect will take about an hour and then open the call for questions. And now I'll turn it over to Jan.

Thank you, Scott. Today is a great moment for Ascendis pharma. It's the first time we have a dedicated research phase for oncology. Most people know Ascendis Pharma for their Rare Disease Endocrinology pipeline, know us as a platform company that is developing highly differentiated product opportunities, which are basic impossible to make without the TransCon Technology. We have seen how we have addressed major unmet medical need in rare disease endocrinology. We have advanced our TransCon Growth Hormone from the idea state to preclinical Phase-I, Phase-II, multiple Phase-III trial and now in a situation where we have filed both in Europe and the U.S. and be waiting for an expected accrual next year. Really have validated the technology platform from idea states out to and successful filing. We are in a situation that we have broadened our pipeline in rare disease entomology to 3 independent product opportunities. In addition to our TransCon Growth Hormone, we have TransCon PTH, which is really addressing one of the last major unmet medical need in rare disease endocrinology, where you in hypoparathyroidism, not have hormone replacement. And this is what we have seen really to a successful Phase II trial, and we just have initiated by filing in both Europe and U.S. for initiating our Phase III trial. A major unmet medical need where we have seen by TransCon really addressing the different aspects of this disease. Our last independent product opportunities in rare disease endocrinology is TransCon CNP, which also is a late-stage product opportunity where we basically now are initiating the second Phase II trial, really building off a strong clinical packet for 2 independent Phase-II trial, both placebo-controlled double-blinded. So what we really are doing now, we are applying the same principle from what we have been really changing the drug development paradigm that it's not necessary to have high-risk when you develop highly differentiated product opportunities addressing major unmet medical need. We expect that we can do the same thing in oncology. And that is basic what we will clearly take now with our 2 leading potential best-in-class product opportunities, TransCon TLR7/8 Agonist and TransCon IL-2 Beta/Gamma. Ascendis is still well-funded company. End of last quarter, we ended with about EUR 960 million in cash or cash equivalents. What you are seeing today is basically a part of our strategic plan. We came down within 2019 with our Vision 3x3, how we at Ascendis, want to build a leading biopharma company. Our goal is really to achieve sustainable growth to multiple approaches, not be a single product opportunity, not be a single therapeutic company. We want to build a pipeline in each single therapeutic area. We are moving into. We have already done that in rare disease endocrinology. And we're really on track not only to get the approval in each single indication, but also to be in a position that we basically are building on global clinical reach. We're also building on label expansion and also finding new product opportunities. Because we have the synergy, the economy of scale, it makes sense for us to go out and do internal commercialization. This is why we're executing on major, major speed to -- really to be ready to a potential launch of our TransCon Growth Hormone in next year and a potential launch of TransCon PTH shortly thereafter. We are now in a position that what you have seen successfully being executed in rare disease endocrinology, we're now applying to the second therapeutic area. We started that effort in 2018. And now we start to see the results. Next year, we will have 2 clinical program. That is our expectation for 2021. But we are not stopping there. Oncology will be an area where you will see in the company coming year, how we're really building pipeline building on multiple approaches, multiple high-value product opportunities really addressing major unmet medical need. But we will not stop there. We're still in our VISION 3x3, which are running through 2025, also with identify a third therapeutic area, which we also work dedicated on. But before, we go directly into oncology, I'm really happy that Kennett Sprogøe, our Head of Innovation and Research would really give you an opportunity to really listen to why it's really possible to do what we're doing. And this is where the TransCon Technology. So please, Kennett, try to explain the power of the TransCon Technology.

Thank you, Jan. I will do my best. Before we dive into how we have matured our TransCon Technology into a platform that has not only been transformative in endocrinology, but also now has a potential to transform oncology therapy. I would like to take a step back and reflect on how we started on TransCon Technology. So Ascendis Founding scientists had a vision. It was to provide precise release of active drug from a prodrug without changing the molecules biology. The reason was that in addition to being brilliant chemists, they also had a deep understanding of the fundamentals of biology. They've realized that the conventional way everybody was creating longer acting products was to permanently modify the drugs on encapsulating them into various polymeric materials. They understood when you permanently change a molecule, you may also change how it acts. Because yes, you're reducing the clearance and you're getting a longer circulatory time, but you may also change how it interacts with receptors and how it distributes in the body. In short, you may change the mode of action of that drug. The revolutionary solution was to combine prodrug and predictable release technologies into one platform to ensure tailored delivery of unmodified drug. The result is what we call the TransCon Technology Platform. What our technology does is to reversibly conjugate a drug to a carrier and predictably release the unmodified drug under physiological conditions. Next slide, please. If we look at our transient conjugation platform, it is really a powerful and very flexible platform. It consists of 3 components: if we start at the bottom, it's a parent drug. This can be antibodies, antibody fragments, it can be proteins, peptides or even small molecules. We take the parent drug and conjugate it to one of our carrier platforms. It can either be the soluble carriers that we are using in our endocrinology pipeline. And it can also be insoluble carriers, which we'll discuss a lot more on this call that we are applying for intratumoral administration. We linked the 2 components using our TransCon linkers. And we have a broad variety of different linker families that each has what in common that you can tailor them to support daily and up to half yearly or even beyond for administration frequencies. Moving to Slide 10. We can look a little bit at the heart of the TransCon Technology, which is the TransCon linker. In contrast to other linkers that has been used in the past to deliver drug payloads, our linkers are designed to be time independent and only to rely on pH and temperature for linker cleavage. What this means is that interpatient variability or even intra-tissue variability is reduced because the linker only relies on physiological pH and temperature for drug release. Another important feature is that this provides us with excellent in vitro in vivo correlation, which is important when we develop our drugs. Because once we calculate when we designed the product, what the optimal release rate would be for a given therapeutic. When we then design it in the lab and prove that we have the right kinetics in a test tube in our lab in Heidelberg, then we know that this release rate is also the release rate we get -- when we give the drugs to the patients. Once this drug has been released from the TransCon prodrug, the linker remains covalently bound to the carrier and is excreted together with it. As mentioned on the previous slide, we have many different linker families. They are optimized to attach to different functional groups, which means that we can attach our linkers and carriers to many, many different types of molecules, not only compound classes, but also different drugs. If we then look a little more in detail at the bottom on the slide on how the linker actually works, you can follow the schematic. The linker reacts with itself in an intramolecular reaction, in this case, a cyclization, which cleaves the transient bond between the drug and the linker, whereas the permanent link between the linker and the carrier cannot be cleaved, ensuring that the linker always remain bound to the carrier. Going to Slide 11, please. Here, we are looking at our soluble TransCon platform. This is the one that we are using for our clinical pipeline in endocrinology rare diseases, including our Growth Hormone product, and it's also the platform that we're using on our TransCon IL-2 beta-gamma that Juha will tell you a lot more about in a couple of minutes. The parent drug is bound to the carrier using a TransCon linker. The result is an inactive prodrug that circulates in the bloodstream and slowly releases the unmodified drug. Physiological conditions, the linkers autocleaves at its designed determined rate and predictably release unmodified parent drug. This released unmodified drug is in free to distribute in the body and interact with receptors in various target tissues. Next slide, please. Our other carrier platform is our hydrogel system. This is built on exactly the same 3 component as our soluble platform, a carrier, a linker and a parent drug. The only difference is that for localized delivery, we use our insoluble hydrogel carrier that remains at the injection site after administration. And again, just like for our soluble platform, after injection, the linker starts to autocleave at a predictable rate to release the unmodified parent drug. This is what allows us to have a sustained high local concentration of drug with low systemic exposure. And after the drug has been released, the hydrogel has a built-in lag period, which cautiously took the grade after drug release into small polymer species that are renally cleared. We constant -- next slide, please. We constantly invest into research and into strengthening and evolving our technologies. Especially for what we're discussing today of oncology, it's relevant to talk about our TransCon hydrogel. We believe with the TransCon hydrogel, we have developed a very powerful platform that can solve many of the issues that are associated with traditional intratumoral drug delivery. The TransCon intratumoral platform addresses the problems of conventional IT administration, which include rapid clearance from the tumor, high systemic exposure and toxicity. Our vision was to get to a situation where the drug you deliver preferentially acts on the tumor with limited systemic toxicity. We have achieved this by linking our drugs to the hydrogel and injecting this directly into the tumor tissue. The result of this is what you see on this slide. In blue, you have the tumor concentration of the drug released from the TransCon prodrug injected into a mouse tumor. And in black, this is resulting systemic concentration of the release drug reaching the blood. The concentration for difference is a staggering 1,000 fold. For drugs reaching the tumor through systemic circulation, this would be examples such as tablets and IV infusions, especially -- at best, you can achieve the same concentration of drug in the blood, as you have in the tumor, but often, it's a lot less. And the effects may be short-lived. But with TransCon prodrugs, you can get 1,000 fold higher concentration in the tumor compared to the blood and the high local concentrations are sustained. Just imagine what this can do to the therapeutic window of compounds typically use in oncology. Next slide, please. For those of you who have been following Ascendis for some time, this slide is familiar to you. It's our algorithm for product innovation and the blueprint for the work that we do in the innovation department. You have seen how we applied this to build an impressive pipeline in endocrinology, and we intend to do the same in oncology. As always, we start by focusing on the patient. We identify areas of high unmet medical need, and then we look for therapies that may address it. We like to work on compounds that are well understood. We want to understand the biology, with pharmacology and then think about how we can play around with the pharmacokinetics to create better drugs. We apply our chemical expertise and knowledge of our linkers and carriers to identify the best combinations of TransCon components and to create clearly differentiated product. Our analysis try to ensure that our products are not just differentiated as of today, but also in the future. So that we can make products that nobody else can make. Then we look at the clinical and regulatory environment to identify how we can move our products forward to patients in the most efficient manner. Stephen will later discuss in the call how we are doing this for our oncology. These things in our algorithm is what we believe leads to a higher value and lower risk pipeline. Our unique algorithm has reached clinical validation for 3 out of 3 products in rare endocrine diseases. And we continue to apply our algorithm to build a pipeline in oncology. And as Jan mentioned, we're not stopping here. We continue to look for more areas because we see multiple areas that could benefit from our technology. Next slide, please. So as just described, the key feature of TransCon Technology is that the activity of our therapeutics come from the released unmodified parent drug. Another key feature is that despite working with well understood and characterized biology because our prodrugs are new chemical entities, they may also qualify for new composition of matter IP. This is quite unique as you can have the benefit of working on a well-understood drug, but when made into a TransCon prodrug, you can also get new patent life. So moving to Slide 16 and summing up this introduction to the TransCon platform, then our founding scientists had a vision to combine the benefits of prodrugs and predictable release technologies with the known biology of the parent drug. And this is what we call the TransCon Technology platform. We have validated it within endocrinology with a high success rate in multiple clinical programs. This year, TransCon Growth Hormone, we have filed both the BLA and MMA and TransCon PTH has completed Phase II and is ready for Phase III. Building on the success in endocrinology, we apply our algorithm to build yet another high-value pipeline this time in oncology. We have developed our intratumoral platform, and it aims to transform intratumoral administration of small molecules, peptides, proteins, antibody fragments and antibodies. Common for those are that TransCon prodrugs and new chemical entities eligible for new composition of matter IP. To sum up, our vision is to leverage our validated TransCon Technologies to turn the body's immune system into the therapeutic in order to improve patient outcomes. And with this, I would like to turn the call over to our Head of Oncology, Dr. Juha Punnonen.

Thank you very much, Kennett, and hello, everyone. I will give an overview of our approach and vision in oncology. I will also present an update on our 2 lead programs, TransCon TLR7/8 Agonist and TransCon IL-2 beta/gamma, before turning it to Stina, who will then summarize our strategy for the clinical studies. I do believe TransCon Technologies are ideally suited for oncology as the sustained, predictable release of active drugs may provide optimal modulation of tumor microenvironments and activation of cytotoxic cells mediating antitumor responses with the potential of turning cold tumors hot. These technologies are applicable for diverse drug classes and mechanisms of action and allowing for combination approaches that might not be otherwise feasible. Through these technologies, we expect to have the potential of not only turning cold tumor hot, but to actually have the tumor removed with the help of the immune system, which, of course, really is the onco in cancer. Our strategy and vision in oncology is to create best-in-class oncology therapies by applying TransCon systemic and intratumoral approaches to parent drugs addressing clinically validated pathways. We're aiming to improve outcomes with parent drugs that are currently limited by sub-optimal efficacy and systemic toxicity, using the Ascendis' unique algorithm for product innovation that Kennett just described. We're building a diversified, high-value pipeline addressing multiple indications and as was already introduced, we have the 2 near-term IND candidates that I will also describe in more detail in just a moment. The overall goal, of course, is to bring these therapies to patients and enable rapid path to global commercialization. We envision a major opportunity for both systemic and intratumoral TransCon approaches. Historically, intratumoral treatments have been challenging. However, there is clinical proof of concept that that approach can work. TVEC and oncolytic virus has been approved for the treatment of advanced melanoma, while clearly, there is also need for improvement. Conventional IT treatments, particularly delivering small molecules has major challenges to the short team exposures, high-systemic Cmax and need for frequent dosing. This was exemplified, for example, the STING agonist that was presented at ASCO Annual Meeting last year that showed very short half-lives, ranging from 8.0 to 28.0 minutes, which is not -- nothing to be surprised about when it comes to small molecules as the half-life is expected to be very short when injecting 3 soluble small molecules. And that suggests that those kinds of treatments would require very frequent dosing. In contrast with the TransCon approaches, we expect to have the opportunity to overcome these limitations of conventional intratumoral treatments. TransCon intratumoral approaches aim for slow release intratumorally, allowing for potential activity in tumor and training lymph nodes for weeks or months while keeping systemic exposures minimal. Because the systemic exposures are low, the systemic toxicities are also expected to be minimal, enabling the design and approaches for multiagent combinations without added toxicity. Because of the slow long-lasting sustained release, there is potential for long dosing intervals, enabling treatments of hard to access tumors. We believe TransCon Technology provides potential for sustained modulation of tumor microenvironments with infrequent dosing and minimize systemic toxicity. We have 2 -- we have developed 2 near-term IND candidates using TransCon Technologies for both systemic and intratumoral administration. TLR7/8 Agonist is designed to activate antigen presenting cells and enhance antigen presentation and thereby, promote activation of cytotoxic immune cells. TransCon IL-2 beta/gamma is designed to aid T cell and MK-cell expansion, priming and activation as well as infiltration of immune cells into tumors. Because TransCon is applicable to multiple drug classes, proteins, peptides, small molecules, there's a major opportunity to expand the pipeline, and we are working on several additional TransCon candidates in preclinical research with the goal of impacting all the critical steps of the cancer immunity cycle. Because of the expected favorable safety profile, we also believe in the potential of multiple combination approaches within the pipeline. Moving on to our first IND candidate, TLR7/8 Agonist. It is designed for intratumoral sustained release with minimal systemic exposure aiming for superior efficacy. Each injection is designed to provide sustained exposure in the tumor for weeks and months to enhance immune modulation and activation. Because of the low systemic exposure, we expect the safety profile to be very favorable, which also then allows for combination approaches and infrequent dosing because of the long-lasting activity. We believe there is a very broad opportunity for TransCon TLR7/8 Agonist, because essentially all solid tumors are accessible for reinjection, and we expect efficacy with infrequent dosing, enabling also treatment of these hard to access tumors. Brief introduction to TLRs, toll-like receptors. There are innate immune sensors of danger associated with pathogens or cell death. They activate the innate immunity, antigen presenting cells, in particular, resulting in priming and expansion of cytolytic and helper T cells, and they also inhibit suppressive mechanisms that limit antitumor responses. And overall, TLRs activates several key pathways critical in-house defense against tumors. The parent drug in TransCon TLR7/8 Agonist is resiquimod, a small molecule agonist of both TLR 7 and TLR 8. Because resiquimod activates both TLR 7 and TLR 8, it has the potential to activate both conventional dendritic cells and plasmacytoid dendritic cells because TLR 7 is mainly expressed on these plasmacytoid DCs and TLR 8 is primarily expressed on conventional dendritic cells. This is in contrast to more selective TLR 7 or TLR 8 or in fact TLR 9 agonists, which preferentially activate only 1 or the other cell type. Resiquimod is a potent activator of the innate immunity. It elevates proinflammatory cytokines: IL-12, interferons, TNF alpha, IL-1 chemokines. It also enhances antigen presentation through upregulation of MHC Class II molecules and custimulatory molecules such as CD 80 and CD 86 and overall enhances antitumor immunity. TransCon TLR7/8 Agonist was designed for sustained intratumoral release of resiquimod. Resiquimod was transiently conjugated to TransCon Hydrogel Carrier designed for sustained activation of intratumoral APCs, driving tumor antigen presentation and induction of immune-stimulatory cytokines in the tumor. Importantly, TransCon TLR7/8 Agonist resulted in sustained release of resiquimod over several weeks. Subcutaneous administration in rats resulted in long-lasting sustained release of resiquimod as illustrated on the left. In contrast to the free resiquimod, soluble parent drug, which resulted in very high rapid Cmax and short exposure, TransCon TLR7/8 Agonist provided a long-lasting, sustained release with the half-life of about 10 days in contrast to free parent resiquimod with a half-life of approximately 10 hours. As shown on the right, intratumoral administration of TransCon TLR7/8 Agonist in mice in CT 26 tumor model similarly resulted in a very long effective half-life of reception of approximately 12 days. In other words, TransCon technology-enabled approximately 25 fold increased half-life when compared to the free soluble resiquimod and importantly, avoids the high Cmax that often associates with the adverse events. We have also shown potent tumor growth inhibition following a single dose of TransCon TLR7/8 Agonist in tumor models in mice. As illustrated on the left, a single dose of TransCon TLR7/8 Agonist provided significant tumor growth inhibition in contrast to the parent free soluble resiquimod at equimolar dose that provided only limited modest tumor growth inhibition in this system. Importantly, resiquimod, free resiquimod resulted in -- at the same doses, resulted in high concentrations and high Cmax as well as induction of systemic circulating cytokines, such as TNF alpha, IL-6, interferon gamma and MCP-1. On the other hand, TransCon TLR7/8 Agonist resulted only modest or minimal increases in these systemic cytokines. Therefore, we believe TransCon TLR7/8 Agonist has the potential to provide more potent antitumor benefits without dose-limiting toxicity because these cytokines such as IL-6 and TNF-alpha associated with cytokine release syndrome in patients. We've also shown abscopal effects in the noninjected tumors following the single dose of TransCon TLR7/8 Agonist, in this case, in the CT26 tumor model. As illustrated on the right, we've also evaluated combinations with immunotherapies, such as IL-2 shown here. We've also generated data with TransCon IL-2 beta/gamma, which I will share in a moment. But the exciting part is that we do achieve activities both in injected tumor and the noninjected tumor. We are moving TransCon TLR7/8 Agonist towards IND. Now by the end of the year in December, and Stina will then describe the clinical plans in more detail. Before then, I will also introduce and summarize our program on IL-2. IL-2 beta/gamma, which is designed for receptor bias and long-lasting activity. IL-2 is, of course, perhaps the most validated cytokine in the treatment of cancer aldesleukin is approved for the treatment of advanced melanoma and renal cell carcinoma, while clearly, well Type IL-2 associates with challenges. It has suboptimal receptor binding properties as a therapeutic because it has 2 receptors, alto receptor alpha, beta gamma and IL-2 receptor beta/gamma. And the alpha, beta gamma receptor activates key regulatory cells and endothelial cells, reducing efficacy and increasing risk of adverse events such as capillary leak syndrome. On the other hand, the PK is also clearly suboptimal. The half-life of IL-2 is approximately 1.5 hours, and that results in the requirement of frequent dosing that associates with high Cmax and then associates with the severe adverse events that have been observed with these treatments. There are, of course, several IL-2 approaches in development. However, to our knowledge, none of these have fully solved the shortcomings of IL-2. And we believe to design an optimal IL-2 for the treatment of cancer what needs to overcome both of these shortcomings, namely to generate a molecule that selectively activates the beta/gamma receptor and provides the proper exposure without a high Cmax. These properties are important for both safety and efficacy of the molecule because reduced binding to the alpha receptor is expected to avoid activation of Tregs and endothelial cells, while promoting potent activation of cytotoxic lymphocytes. So we embarked on the generation of such an optimized IL-2 molecule in a 2-step fashion. First, we generated an IL-2 variant with selectivity for the beta/gamma receptor. This was achieved by introducing a cysteine residue at the alpha binding side of IL-2 and then permanently conjugating a small PEG molecule, 5 kD PEG molecule at the cystine at the interface of IL-2 and the IL-2 receptor alpha chain, thereby interfering with the binding of IL-2 to the alpha chain, while retaining the interaction with the IL-2 and the beta/gamma chains intact. This data in this slide shows that we have succeeded in generating these molecules that we have named IL-2 beta/gamma. As illustrated at the top part of the slide, binding of IL-2 beta/gamma to the alpha chain was low or minimal, whereas the binding to IL-2 receptor beta chain was retained. This is in contrast to the comparator wild-type IL-2 illustrated at the bottom of the slide. Importantly, we have also confirmed the receptor cell activity in primary human cells as illustrated in this slide, using primary human T regulatory cells, Human CD8-positive T cells and human NK cells. Substantially reduced potency on primary human Treg cells was observed while the potency change was minimal when it comes to CD8-positive T cells and NK cells. We then used the TransCon technologies to generate a fully optimized, biased IL-2 with long-lasting exposure. We used the same TransCon linker and TransCon carrier, a 40 kilo dalton PEG molecule that has been successfully used in the TransCon Growth Hormone program that has now achieved clinical validation in positive Phase III clinical studies. TransCon IL-2 beta/gamma was designed to enable every 3-week dosing, and I will also soon show some of our data that support the feasibility of those -- this dosing regimen. We have evaluated the PK and pharmacodynamic properties of TransCon IL-2 beta/gamma in nonhuman primates, and I believe the data support the potential best-in-class properties of the molecules. Half-life of both the prodrug, as shown here, and the released IL-2 beta/gamma was approximately 32 hours, which I believe compares very favorably to other alternative IL-2 approaches in development. We then evaluated the effects of TransCon IL-2 beta/gamma on flat cell counts in these [indiscernible] monkeys. This is an expansion of our earlier studies we already reported at AACR earlier this year, and we had tested also higher dose as compared to the previous data set. And the results are very encouraging. As illustrated on the upper left corner with the higher single dose of 0.3 milligram per kilo, we observed a very robust increase in absolute lymphocyte counts. When comparing to our previous data with out as looking on the right, it is easy to observe the benefit of TransCon IL-2 beta/gamma. Importantly, as illustrated at the bottom part of the slide, in contrast to Aldesleukin, we observed no or minimal increase in circulating eosinophil following administration of TransCon IL-2 beta/gamma. The observed robust prolonged enhancement in lymphocyte counts supports the potential for every 3-week dosing in patients, while the minimal effect on eosinophils such as low-risk of vascular leak syndrome. We also then evaluated the selective expansion of CD8-positive T cells and NK cells in these same animals. And as shown in the upper part of the slide, as expected, based on the total lymphocyte expansion, there was also a very potent CD8-positive T cell expansion, which are, of course, the important cells in the treatment of cancer. And as shown at the bottom part, the NK cell expansion was similarly impressive in the range of 20-, 25-fold from the baseline. As shown on the right part of the slide, we also observed very potent increase in Ki67 marker, which indicates proliferation of these cells. As expected based on the biased receptor binding properties, we also observed strong increase in the ratio of CD8-positive T cells to Treg cells as well as a potent increase in the ratio of NK cells over Treg cells. This is consistent with the observed minimal binding to IL-2 receptor alpha chain and the ratios of CD8+ T cells and NK cells over Tregs are accordingly increased following administration of TransCon IL-2 beta/gamma in these animals. Importantly, despite of a very robust expansion and activation of CD8+ T cells and NK cells, we observed minimal impact on systemic cytokines in these monkeys treated with TransCon IL-2 beta/gamma. As shown in the left side of the slide, minimal effect on circulating IL-5 or IL-6 were observed following a single dose of TransCon IL-2 beta/gamma that was used in these studies. This is in contrast to our earlier data without looking that triggered a quite potent IL-5 and IL-6 response despite of the modest lymphocyte increase. Generally speaking, PK and pharmacodynamic effects of IL-2 molecules have translated well from nonhuman primates to human, and we are very hopeful that TransCon IL-2 beta/gamma will demonstrate a similar profile in patients as we have observed in these nonhuman primates. We are in preparations to advance the program to evaluate these questions in patients, and we expect to file an IND or similar in Q3 next year. Stina will tell more about the clinical plans in a moment, but before then, I wanted to also briefly mention of some of our exciting combination experiments. Mechanistically, it's an exciting opportunity to combine TransCon IL-2 beta/gamma and TransCon TLR7/8 Agonist, and we have observed complete tumor regressions with this combination. We now also wanted to evaluate the potential immune memory and potential cross-immunity following treatment with this combination. We used Syngeneic CT26 tumor model and for the memory response analysis, we rechallenged the complete responders, 73 days after the initial treatment with the same CT26 cell line. We then subjected those complete responders to a new tumor line, different tumor line. In this case, EMT6, which is a memory derived tumor cell line in contrast to CT26, which is a colon derived cell line. This experiment was done 28 days after the CT26 rechallenge. And again, there is no new treatment involved in these rechallenged and new challenge steps. This data show some of the data. Importantly, the right-hand side of the slide shows that 6 out of 8 of the animals from the initial experiment demonstrated complete tumor responses. And these 6 animals were then subjected to the rechallenged experiment that I just introduced. And as shown on the left-hand side of the slide, 6 out of the 6 animals that were rechallenged with the CT26 tumor demonstrated complete tumor growth inhibition. These 6 animals there were then challenged with the new tumor type, EMT6, which is a memory derived tumor line as I introduced in contrast to CT26, which is colon direct tumor line. And excitingly, all 6 animals, again, were able to completely prevent the tumor growth in this experiment, illustrating protection against the initial tumor and also a new tumor type suggesting potent antitumor memory and cross-reactive antitumor immunity. These results are important because it has been well demonstrated that there is significant heterogeneity in different metastatic tumors even within the same cancer patient. And it is, of course, important that we aim to treat every single tumor. This data showing cross-reactive memory responses against different tumor types suggest that we can induce powerful, long-lasting and cross-reactive antitumor responses, further supporting the potential for the combination in the treatment of cancer. To summarize this section, we do believe TransCon offers a potential paradigm shift in how cancer is treated. We have 2 near-term IND candidates demonstrating potentially best-in-class properties. TransCon TLR7/8 Agonist designed for intratumoral, long-term sustained release for superior efficacy with minimal systemic adverse events. TransCon IL-2 beta/gamma designed for IL-2 receptor beta/gamma cell activity, combined with low Cmax and long exposure. The combination resulted in potent antitumor responses and immunological memory, including gross immunity against the new tumor type. We are planning for the INDs. TransCon TLR7/8 Agonist is planned by the end of year now in December, and TransCon IL-2 beta/gamma, IND or similar is planned for Q3 next year. With that, I will turn it to Stina, who will summarize the clinical strategy.

Thank you so much, Johan. Hello, everyone. I'm Stina Singel. I recently joined Ascendis as Head of Clinical Development in Oncology. I'm a medical oncologist with more than 15 years of combined experience from academia and industry. Glad to be here. Next slide. From a clinical perspective, we see that there is still a large unmet medical need despite advancements. Immunotherapy, in particular, checkpoint inhibitors have given hope for many cancer patients. But the fact is, most cancer patients do not benefit from checkpoint inhibitors. You can see from the study in the box here that in the U.S., even though we have about 50% of patients who may be eligible to receive checkpoint inhibitors, only about 12.5% of them actually benefit. So immunotherapy, while it has so-called race detail in survival curve for multiple tumor types, more effective therapies are clearly needed. Our clinical development strategy in oncology is to take advantage of the clinically validated TransCon Platform. We'll first quickly build a safety and tolerability profile while we identified the right dose. Across various indications, as monotherapy and in combination with standard of care. Importantly, for us, we want to combine with internal pipeline. We will then establish proof-of-concept efficacy in indications of high unmet medical need, particularly in indications with strong scientific rationale. Then we plan to expand to other indications based on unmet need and emerging data and the ever-changing treatment landscape. Here's an overview of our first-in-human study for TransCon TLR7/8 Agonist. As in any first-in-human study, we start out with dose escalation, either as monotherapy or combination with checkpoint inhibitor. Then we'll go into dose expansion, looking at indication-specific as proof-of-concept efficacy while we combined with standard of care checkpoint inhibitor. The objectives are fairly standard for Phase-I study. We'll reevaluate safety and tolerability, define the maximum tolerated dose and recommended Phase II dose. We'll define pharmacokinetics and pharmacodynamics profile. And we'll look at preliminary antitumor efficacy. Our initial indication selection is based on strong scientific rationale to focus on human papillomavirus associated cancers. HPV causes most oropharyngeal, cervical, anal and other tumor types in the anogenital region. You can see in the figure on the left-hand side, that persistent infection with HPV is possible because HPV alters TLR expression, which leads to decrease in PTH1 response, decrease in inflammatory cytokines, decreased activation of antigen-presenting cells. At the same time, HPV also decreases HLA expression, and ultimately, we see a decrease of adaptive immunity. For our dose expansion cohort, we have an initial focus in these HPV-associated tumors, which include head and neck squamous cell cancer, and other cancers such as anal cancer, cervical, vulvar, penile, and vaginal cancers. Then we plan to expand to other indications based on unmet need, emerging data and the changing treatment landscape. This slide points out that we start out with HPV-associated tumor type, but we do intend to expand to other tumor types to evaluate for clinical benefits where there is unmet medical need. To sum up the TransCon TLR7/8 Agonist, we believe that the sustained IT delivery, using the valid data TransCon platform offers a new treatment paradigm with potential for superior efficacy and safety. We have an IND submission anticipated by end of this year. We are engaging major academic centers for that first-in-human study. The clinical development strategy aims to first build the safety tolerability profile across multiple indications with standard of care combination partners. They will establish proof of count of efficacy, focusing on indications of high unmet need that have strong scientific rationale for TLR7/8 Agonist. That will expand to other tumor types based on unmet needs and changing treatment landscapes. Turning now our attention to our second program, TransCon IL-2 beta/gamma. As you can see here that the first-in-human study has the same clinical strategy and we start out with dose escalation, quickly establish our safety and tolerability profile for monotherapy and combination with standard of care checkpoint inhibitor. Then we'll go into dose expansion. We intend to combine with checkpoint inhibitor with chemotherapy and excitedly for us to combine the TransCon TLR7/8 Agonist. We believe that TransCon IL-2 beta/gamma has a potential to be backbone agent in oncology. TransCon IL-2 beta/gamma, it has the potential to be best-in-class IL-2 molecule. We plan to have IND or similar submission in quarter 3 of 2021. Our clinical development strategy for this program is similar to that of the TLR program and that we plan to quickly build safety and tolerability profile across multiple indications with standard of care combination partners and internal pipeline. Then we want to establish proof-of-concept efficacy, focusing on indications of high unmet need that drives insufficient benefit from checkpoint inhibitors alone. Then we will expand the other indications based on unmet need and changing treatment landscape. So with that, I'm going to hand it back to Juha to summarize.

Thank you very much, Tina. And yes, to summarize it all, truly believe there is tremendous potential for TransCon Technologies in the treatment of cancer. We have best-in-class potential using both systemic and intratumoral TransCon technologies. We have differentiated product candidates, TransCon TLR7/8 Agonist, with potential to improve efficacy and practicality of intratumoral treatments with the IND expected now by the end of the year. TransCon IL-2 beta/gamma has potential to become a backbone agent in oncology with IND or similar expected in quarter 3 next year. And perhaps most importantly, I believe we have an opportunity to go well beyond these 2 IND candidates and we have several earlier stage opportunities in preclinical research that we look forward to updating on at future presentations. Our key near-term focus is to bring TransCon TLR7/8 Agonist and TransCon IL-2 beta/gamma to the clinic, while the ultimate goal is to help cancer patients live longer and better. Thank you very much.

Operator, we're now ready to take questions.

[Operator Instruction] Our first question comes from the line of Jessica Fye from JPMorgan.

First, on the IL-2, is there any potential antitumor benefit lost or left on the table by not targeting the IL-2 receptor alpha, beta gamma? And how do you think about the risk or balance between safety and efficacy as it relates to alpha subunit?

Well, I mean, the alpha chain also expressed on CD8-positive T cells. So in that regard, it does play a role also in the activation and expansion of CD8-positive cells. But the key point is the balance of activation of CDH over T-regulatory cells. And for that optimal balance, I think it is important to avoid the alpha binding and alpha activation because the affinity of alpha is higher than the affinity of beta/gamma. And if we do have alpha binding, we do have significant activation of T regulatory cells and endothelial cells that both suppressed the immune response through the activation of the Tregs and increased the adverse -- risk of adverse events through the activation of the endothelial cells. So for the optimal activation of the important cytotoxic cells, we do believe it is ideal to avoid alpha binding.

I can only echo, you are here. And I think the data are clear. Because I think if we really go down and make a deep dive in the science, I think people know the benefit of NK cells, the note the benefit of CD8+ T-cells. And what you're basically seeing in Slide 41 in our deck, how are we changing this ratio. And I believe how we're really changing this ratio is mainly driven by the combination of the TransCon Technology and how we basically knocked off the alpha-binding. You see basics and increase 35 to 40 fold between the right cells. And that is basically driven by eliminating of the alpha. At the same time, we all avoid high Cmax, and we have a long continuous inside the optimal therapeutic window for our active ingredient beta/gamma. And that is what we really are believing that is supporting the science, supporting what we really want to achieve. We're missing that in the peer field what we basically can see that we develop in the subtype that we really want to see that we strongly believe is highly beneficial in really trimming the hemological system to be optimal prepared in the fight against cancer.

Okay. Great. And then sticking with the IL-2 for my follow-up. You talked about trying to kind of rapidly dose escalate to get to relevant doses. Can you elaborate a little bit on how long you think it will take to get to effective doses? If you think you can start at a dose level that could be close to efficacious or if you're going to need to start pretty low and making it take some time to get to efficacy?

That's a great question. We are not the first program to put an IL-2 molecule in the market to try to give it in outpatient setting. What we can learn from other programs in addition to what we understand about our molecule, we are intending to start at an efficacious dose. What I mean by quickly escalating is that we know a lot of the side effects are very acute, meaning that within the dose-limiting toxicity, evaluation window of 21 days, we should be able to see it. So essentially, every about 2 months or so, we should be able to dose escalate. And as I mentioned, we intend to start at a dose that is already efficacious based on what we understand from other programs in addition to our own data about our molecule in the nonhuman primate studies.

Great. If it's possible to ask one more on the TLR? Just as you think about the market opportunity in HPV-positive cancers. What proportion of head and neck cancer is HPV positive? And what proportion of head and neck and those other HPV-positive tumor types is amenable to intratumoral treatment?

Just from a high-level clinical development perspective, why do we start in one type of cancer? And this is pretty illustrated well in one of our slides, where we're basically saying we start in the HPV induced cancer in a higher frequent because we believe this is where we potentially can get the fast immediately effect on it. But from a clinical development strategy, we hope to see a benefit in all the different type of cancers that basically are illustrated in the way where we have expansion to a lot of different indications. And I think it's very well illustrated in slide 52. I know we gave you a lot of slides, but this is basically how we see it potential to expand to other indications. But we need to start one place where we believe we can get the fastest, the most solid, but our hope is that all solid tumor will basically get the benefit of this unique treatment. Stina?

Yes. Essentially, any tumor type in which you can stick a needle for a biopsy, you can do an intratumoral injection. So from that perspective, intratumoral approach should not limit the type of indication in solid tumors that you go into.

Our next question comes from the line of Michelle Gilson from Canaccord Genuity.

I was just hoping you could expand a bit on what you chose TLR7/8? And also, if there's a theoretical advantage of activating the plasmacytoid DCs versus just conventional DCs. And also, is there any theoretical advantage, I guess, of an intratumoral approach versus some of the ligand linked approaches for TLR7/8?

First of all, Michelle, we believe this approach that we are coming with have never been enabled before in patients. We are coming with a system that provide a continuous exposure inside a tumor for weeks, for months. At the same time, is associated with a very low systemic concentration. And I think the data you saw from Juha is really being supported with all our preclinical data where we're looking on potential side effects associated with any kind of cytokine induction. From that perspective, that is also what we have observed in our entire preclinical tox package. So what we're feeling confident, we are coming with a unique new approach, where, for first time, the TransCon Technology enabled that you can take already validated hardware, already validated molecule, pack them into the TransCon technology. And as Stina said, we can nearly inject in all solid tumor today because we potentially only need to do it once. And by doing that, we basically can place and compound that will activate the tumor and really addressing what the issue we have today with immuno-oncology is in the patient, it functioned -- often functioned well, but it's just functioned in too few of the patients. And by doing that, we basically are applying a well-known activator. And when you see the compound, what it's doing inside the tumor, we saw the data from Kennett, where we saw the high differentiation in exposure inside the tumor compared to this systemic is basically supporting that. What we also know from the fundamental deep knowledge about science, TLR and optimal compound, both in the acute and activating of dendrites from the NK cell lines and other elements. And we know NK cell lines are really, really good to find tumor cells and get them activated. So what we basically are seeing, a new concept which never have really been shown data that really are supported. And this is why we are so enthusiastic. And you can take the question, is TLR7/8, what we have selected here, I don't believe there will potentially be a major difference if we select some of the other TLR like compound, the consequence of what we want to induce is a TLR compound that activate the innate immune system inside the tumor to make it trend of reactivity. And that is what we see. And therefore, we selected TLR7/8 because we saw there was a lot of good clinical evidence was partly validated parent compound and is, therefore, it fits to our algorithm as Kennett explore in how we really like to work with the TransCon Technology unproven by all the proven parent drugs. Juha, do you have anything to add?

Jan, I think that sums it up nicely. And also, I mean, one of the advantages of TLR7 plus TLR8 activation, if the prod ability to activate the innate immunity via both activation of the plasmacytoid dendritic cells that are the primary source of interferon alpha as well as the conventional dendritic cells that are high producers of IL-12, for example, and I think it's well shown that both of those pathways are beneficial in anti-tumor responses. And therefore, we believe that it is useful to have a prod impact on these myeloid cells inside the tumor.

And if I could just do a follow-up, what our, I guess, the initial indication -- or the initial combinations that you would think would make the most sense for HPV-associated tumors. And what will you be looking at for those initial combination with TransCon TLR7/8?

Yes. So in the HPV associated tumor types, such as head and neck cancer and cervical cancer, we know that checkpoint inhibitor, pembrolizumab, particularly, is part of standard of care. So with TLR7/8 Agonist, we are planning to add to what is standard of care as an additive agent to make checkpoint inhibitors work even better.

I would now like to introduce the next question by Jim Birchenough from Wells Fargo.

It's Nick on for Jim today. So maybe just starting off with IL-2. Can you talk about how you would select the recommended Phase-II dose? Is this based on pharmacodynamic markers or more traditional clinical markers? And then is there a concern about persistent stimulation, activation of T cells and other immune cells by IL-2?

This is a very, very, very interesting question, which we actually integrated a lot when we designed the molecule. So we basically are addressing the element is, don't make it too short, but not too long exposure. And we saw, compared to some of our other molecules that have been now moving into clinical development, which are also building on, for example, eliminating of alpha. We definitely believe it had 2 major drawbacks. One was too short exposure, half-life, about 8 to 10 hours in primates. And the other point was to high Cmax. For basic is to keep it inside the therapeutic window, not too long time, not too short. And that was why we basically designed it basic in a situation that we thought that the exposure profile we now have built in our IL-2 is the balance between the 2. So you are 100% right that from the design perspectives, we wanted to be quite sure we've not entered into acceleration where we got over induction of the cells. And what we basically have seen in our preclinical system in the nonhuman pines, what, as Juha said, there really are potential one of the more good correlation between nonhuman prime and in human being in adoption and PK of this kind of cell types. And we believe, therefore, the system we use to evaluate and optimize is really would give us a good translation to the optimal effect that we have seen in nonhuman prime. And we also expect that it will be translated into the human setting. So we basically have addressed exactly all the questions you are asking. Related to the indication, I think, Stina, you will take over.

In terms of indication, we'll evaluate for the IL-2 beta/gamma program. As I mentioned, we will go after indications where it appears that checkpoint inhibitor alone is not benefiting enough for the patients. And we all know that multiple indications, you require a certain level of PD-L1 status to use checkpoint inhibitors, and those will be the indications that we will likely go into to see if adding our molecule, we can both deepen and expand the benefit of checkpoint inhibitors.

So basically, if I'll somewhere look on the hemological landscape in oncology today, we are seeing the success of checkpoint inhibitors. But we also know now the limitation even has been a huge success. What we are waiting for and what we want to be part on a very important development in, what is coming after the already stacked checkpoint inhibitors. And from the fundamental scientific perspective, we believe that potential our way of designing IL-2 could be a cornerstone in oncology in the future because some way from a hemological perspective, removing a break is one way to move forward, potential to activate and expand the right cells in a more direct manner, its potential and more effective manner. And this is the fundamental in our thinking is to build on the success of checkpoint inhibitor, but move it to the next stage.

Great. And then as a follow-on for the TLR7/8 program, how do you choose the linker because the intratumoral pH is not 7.4. And in terms of selecting a linker, would you even need different linkers for different tumors if pHs were different between different tumors?

We do it by selecting linkers where we believe that the different pH inside the tumor, have not dramatical effect on the release profile. And it's something the group of our research and innovation group are excellent people in the chemistry in all this to design, linker that basic are some way are compensating for the issue that you are raising. And it's exactly an important part of our thinking.