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

Hello and good afternoon. Welcome again to the 19th Annual Global Healthcare Conference. Before I get started, let me read the requisite disclosures. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. And with that, let me introduce myself. I'm David Lebowitz, one of the biotechnology analysts at Morgan Stanley. And I'm happy to have with me from Ascendis, CEO, Jan Mikkelsen; and CFO, Scott Smith. Ascendis is now a commercial-stage biotechnology with the recent approval of SKYTROFA for pediatric growth hormone deficiency, but they also have a deep platform technology called TransCon, which can be applied to a wide variety of diseases. I guess, Jan, if you could start off just giving a top-level overview of the company and your mission.

Yes. Hi, David, it's Tim. Let me just make a quick comment. We may make forward-looking statements during this discussion. Actual results may differ materially from those expressed as a result of certain risks and uncertainties. These risks and uncertainties are described in our SEC filings. And with that, let me pass it over to Jan.

So both thanks to David, thanks to Tim. And what is really, really interesting is that -- and where we see the huge benefit, we have our Vision 3x3. Vision 3x3 is basically what we have in our corporate deck. I cannot remember what slide it is. But in our corporate deck, we have our Vision 3x3. And this is basically the strategic part where we are following how we can build Ascendis Pharma to a leading biopharma. And the cornerstone -- one of the cornerstone in our Vision 3x3 is the approval of the 3 independent product opportunities in rare disease endocrinology. And you can see, as you said before, we are on track. So when you think about TransCon Growth Hormone, we wanted to get first approval in pediatric growth hormone deficiency. We got it now in the US with SKYTROFA. We have the next one, it's TransCon PTH for hypoparathyroidism. And we have our open-label extension data being generated all the time. We have our Phase III readout here in Q1, and we expect to do a filing -- an NDA filing here in the mid-summer next year and then expected approval thereafter. The last product opportunity in our rare disease endocrinology is TransCon CNP. And we're also providing you update later this year about the clinical program. So that is one of the cornerstone. The cornerstone is getting expanding out on the 3 rare disease endocrinology product, both in global reach, and this is where we now have all our 3 product opportunities basically running on a global reach. We have in, for example, for TransCon Growth Hormone, we have in China through our VISEN company that we own, large portion of 44%, which our commercial arm in greater China, we have enrolled the entire trial for Phase III for TransCon Growth Hormone, be it conducting the trial for pediatric growth hormone deficiency now in Japan. For TransCon PTH, we basically have planned trial -- Phase III trial that is supporting European and U.S. approval, we're running a small Phase III trial for just around minimum 12 patients for TransCon PTH in Japan and VISEN Pharmaceuticals will conduct a Phase III trial also in Greater China. But we're not stopping there with the global reach because we want to build up [ single ] of our 3 independent product opportunity through a leading global brand. And meaning want to do it to label expansion. This is why we have growth hormone is a trial going on in adult growth hormone deficiency with our global trial. For TransCon PTH, we will also initiate in the near future a pediatric HB trial. So we really are expanding to label expansion, really building up a global leading brand of each of our single product opportunity. One of the uniqueness we have in our rare disease endocrinology pipeline, we never wanted to go down in small products. We don't believe we'll be basically build out the right profitability to be a leading biopharma if we not have launched rare disease product. And this is what you can see with growth hormone, we are addressing $4 billion established market segment on a global basis. We believe we can grow that market segment. When we go to PTS, we're really bullish about that because we have never seen such a hormone replacement therapy being implemented. We believe the market potential that is much larger. And TransCon CNP potential is our product opportunity where we will start in achondroplasia and then build up to label expansion. For commercialization strategy on a global basis, we have already outlined what we're doing in the U.S. We do it because we have a pipeline of products. By having a pipeline of product in the same therapeutic area, we have the synergy, economy, scale to do it ourselves. If we only had a single product, I will be very doubtful we will do it in the same manner because it's really difficult to get the right financial return on such an investment. In Greater China, the second largest pharmaceutical market, we have VISEN Pharmaceuticals. And in Europe, Japan and South Korea, we are building up our strategic pathway, obviously can be part of the value-creating also in this segment. So then you can say, what is the 3x3? The 3x3 is also the building of what we have shown extremely successful in rare disease endocrinology we want to repeat. And we now have 2 clinical programs in oncology, a complete different technology -- TransCon technology being applied into intratumoral delivery with our TransCon TLR7/8, first time you have a true intratumoral delivery where you inside the tumor can kick start with hemological environment to be reactive because we can have a continuous exposure for weeks or months, and we basically will be in a position that we can do it and that at the same time have low systemic exposure, really have a favorable, safe, effective treatment. The other one is our TransCon TLR, IL-2, best-in-class beta/gamma, we believe, is a unique opportunity. This has not anything to do with intratumoral delivery. This is systemic, the same technology platform user growth hormone, PTH and CNP is exactly the same one we use with our IL-2, combined with intelligent optimal [indiscernible]. And then you can say what is the last 1 of the 3. It will be the [indiscernible]. We're also working on that to generate to innovate our pipeline again in the therapeutic area. And this is how we want to build Ascendis Pharma up to a leading biopharma. And we can do it by our TransCon technology because in the TransCon technology, we basically can make highly differentiated product opportunities, no one else can do it. But because it's in here in a product technology, we can keep up the mode of action. We can keep up the same established target engagement because we're not changing the liberated parent drug. By doing that, we can also do it in a highly successful manner. And this is what we have proven basically in the rare disease endocrinology pipeline.

If we dig into TransCon hGH or SKYTROFA, on the recent -- your recent call, you highlighted premium responsible pricing. And I guess, what -- certainly, investors are trying to understand is what exactly does that mean in terms of how it is being priced versus human growth hormone, the daily version? To what extent is that premium? What magnitude? And how does that impact your access going forward when payers start coming on board?

Yes. We define the way we want to be known that we know, we develop best-in-class product opportunities. That is basic, the best you can get. You can also say that having such a product profile. We can go for premier pricing. And we will go for premium pricing. But we also know we could do it in a responsible manner. We know the patients want to have our products. Think about, you're sitting in a nursing room, you're sitting in a nurse room. You're sitting with the parents. You're sitting with a nurse. You're looking at the treatment option after your child has been diagnosed with pediatric growth hormone deficiency. You know you need to start a treatment to get the right outcome. You can go for a daily injection that you typically need to be keeping into a [ cool change ] all the time. You can go for weekly. You can keep approval all the time, one single injection once a week, that is an obvious choice. We don't need to have exclusivity. We just need to be there. Then you go over to the physician. The physician know the data. They know the lack of adherence. They know SKYTROFA in the US are providing higher growth outcome compared to a daily growth hormone. They know that it's the safe and tolerability [indiscernible]. They want to prescribe it. Then you can see the last one for the US market is the reimbursement system. How can we be sure that we get the right market access? How can we be sure that the patients are getting reimbursed fast -- broadly to all the patients? And this is where we build up a lot of pharmacoeconomic data. Basically coming with data showing that those basic treatment gap, there's about 1/3 of patients that are being diagnosed that's never getting treatment. And if you see the health component of this patient who decide. If you look at the patient that even starting treatment, you see that big proportion that nobody are adherent to the therapy. And what is the meaningful of not being adherent to a therapy as an extra burden of drug purchases. By coming to this kind of data packet and discuss it from a scientific sound manner, we basically can prove even if it take a premium pricing, the reimbursement system is also a winner. And that is what we want to do with each of our single product opportunity, provide a rich situation for the patient, for the physician and here in the US the reimbursement system, in other countries like Europe, other places, it's the society. The society can see the benefit of providing this treatment option up to the patients because it's providing the pharmacoeconomic benefit for them. And this is why we believe we can build up leading local brands because it's a winning situation for everyone, the patients, the physicians, the reimbursement system, the society.

Now there's going to be other long-acting competitors entering the market such as a Novos therapy. And I'm curious, given the way that you have differentiated devices, the labeling will look different potentially, how do you think it'll be -- physicians and parents will look at the 2 therapies and differentiate between the 2?

Yes. You are 100% right. And this is what we're working on in our awareness campaign and everything that end. We need to really explain the paradigm shift that is now happening. Old days, there was more daily growth. But all of them were built on the same entity, the same somatropin molecule. There was differentiation in devices. One had a room temperature stability. The other one had [ cool chains ]. But there was what you basically had everyone provided the same mode of action, the same clinical benefit but the packaging was a little bit different. When you go over to the long-acting paradigm shift, we are the only product in the long-acting space that basically are providing the somatropin molecule that you see in daily growth hormone, that you see as an [indiscernible]. Just to get our labeling clearly defined, in our US labeling, out from the proto complex we released a somatropin molecule, the same as daily growth. When you look on the other long-acting growth hormone clinical development, they have proven the consequence of not liberating as somatropin molecule. They have proven the consequence of having a modified entity. You can look at the data from the 2 other long-acting growth hormone in adult growth hormone deficiency. One of them could not even show a benefit compared to placebo. The other one could show the benefit compared to placebo. But when you look at the same IGF-1 and the primary outcome, they only got half of the outcome. This is why I'm really proud of to be part of Ascendis Pharma that it's providing a long-acting growth hormone with at least the same benefit as daily growth hormone but with a once-weekly demonstration without compromising safety, without compromising tolerability and basically have, what I call, optimal parameter for the patient. And device that's providing room temperature stability, so you never have the problematic situation that you need to find out how to starting, how to travel and do all the things like that. And this is what we believe we are generating an integrated superior treatment option that you have compared to what you see today.

Now if we jump on to TransCon PTH, there is going to be data coming up later this year, 84-week data, plus some Phase III data early next year. One of the topics that certainly has come up was bone mineral density and how that might be impacted by the therapy. Obviously given the mechanism, it should decline. The question is that some investors might have is where does it decline to? And obviously, we'll have insight on that at the 84-week data. But if you could give me your thoughts on why some of the risks that some investors might have been highlighting, you think, are might be unfounded and ultimately where do you think the bone mineral density settles out?

Yes. I think one of the element at Ascendis, we have as our core values is the patient. Next after that is science. So we basically never trying to discuss out from perception, but trying to look at data and science and try to understand it. So when we started with TransCon PTH, we were looking on all the data that had been generated with infusion pumps where you took either PTH 1-34 or PTH 1-84 and provided them infusion pumps and to both short-term, long-term effects. And what we observed through all the clinical data was that you could normalize all parameter of the body, all parameters that you expected to have an effect on PTH to a normal level. When we started off Phase I trial and we went to Phase II and specific in the open-label extension trial, we could basically repeat that. We can see how we could normalize serum calcium through a true replacement therapy, meaning is that we had a hormone replacement therapy where you basically could start standard of care. We can see how we can normalize phosphate, how we could normalize calcium phosphate complex. We show how we've restored the normal reabsorption capacity of the kidney system measured by 24-hour urinary calcium. I can continue on everything like that. But perhaps the only big surprise from me was the huge impact on quality of life it could provide to this patient, how we could show independent of background, independent of burden of standard of care. All of them had a huge benefit of having a stabilized physiological PTH level measured by different means that all address the quality of life of this patient and that is traumatic. This is why we have 58 patients still after 1/2 years in the open-label extension. And I can guarantee, I've never seen anything like that with our daily injections. So when it comes to bone density, bone turnover, the basic part of the signs as all [ of the other ] we expected to see a normalization and we saw it. When you have an HP patient, you can look at bone markers, you can look at bone density. And then you go to [indiscernible] before you start the treatment. How do a patient come into the trial? They come into the trial with very low level of bone markers because PTH specific on trabecular bone provide a bone turnover. And if you don't have sufficient doses of PTH, you have low level of bone turnover, meaning is that the number of both anabolic and catabolic bone markers are low. The consequence of low bone turnover is that you're building up a high bone density. And you say, wow, that is really good. No, it's not good. This is not a good quality bone density, it's called old dominant sleeping bone structure. Meaning is that it's basic when you go to, for example, HP patient with real long disease like, for example, going away from the post surgeon one, but more to the genetic hemological. You basically can even show which are very difficult to see higher fracture rate in this patient group. And you can look at in all different kind of structured element analyses, you see this is an unhealthy bone structure. So what we saw first in the first 26-week and 58 weeks, we saw that the bone markers, both antibody and catabolic bone marker, started from the low level of the normal line and went up to high level of the normal level of 26 weeks, exactly as what we had hoped for. Because you [ weighed ] on to the bone, you suddenly wake them up to start to be having a normal bone turnover. And then in the 58-weeks, we saw it was trending directly to the [indiscernible] of the normal level. And I said, wow, beautiful biology. This does follow the textbook of hormone regulation. Then we go to the bone density, exactly the same thing happening. We have shown you the 26-week and what we saw that we saw the set score where you normalize bone density to, what I call, an age, gender and other parameter match compared to a normal population. This is the set score. So when you have set score of zero, then you have basically what you will see in a normal population. So what we observe was that, yes, it was trending down to specific for the tropical approach. We didn't see any change in bone density for the cortical bone. But maybe for the trabecular bone where we know PTH has an effect. What I expect to see, I think, we are starting now to get the data from the 58 weeks not because it's going to a central reading. So therefore we always get that data later than the data we will generate from a normal biochemical analysis. I would expect that this will stop decreasing so much but still trending in a positive right direction, trending down to zero where we expected to be because we are normalizing all processes in the body by restoring the normal physiological PTH level. So all the places in the body where PTH affect and we restore the normal physiological level, we have seen all the data and all the data indicate everything is going normalized. And that is exactly what you expected to see because based upon 30 -- a little bit more than 30 case studies where you analyze long-term treatment of PTH with infusion pump where you have the same physiological level. And if you look the data from 15, then from 3 to 9 years after treatment, all of them even as children have a normal bone structure, have a normal bone marker, just restore the normal bone metabolism that you expect to see in a normal human.

Looking forward, we're going to, I guess, have a first update, a long-awaited update on TransCon CNP and understanding that when you do provide this update that the data will still be blinded which obviously limits what you can communicate regarding the data. With that in mind, what do we expect to see and what could we theoretically learn from this particular update?

I think it's important for us to show how we are differentiated to all other treatment opportunities that getting pursued into the indication of [indiscernible]. We want to give you an update related to how we're progressing in the 2 independent double-blinded trial that is enrolling children from age 2 and up. Both of them are placebo-controlled and blinded for one. In the dose escalation, unblinded each cohort after 1 year. We're already doing that. But as you said, because we accumulate all the placebo group to each single cohort, we first will basically have, what we call, an unblinding of the entire trial. Later on when we have unblinded the last cohort because there we will first have the collected placebo patients. We will provide you an update related to the safety. You have seen another CMP product being approved. We can come up and showing the safety data on a blinded manner how we really can see the differentiation. We will provide you an update related to target engagement, how we see the biology, how we believe that with a continuous exposure of CMP, you basically can be in a position that you can have a stronger treatment regime and more highly effective compound. And that was basically being -- also being shown in our preclinical data, for example, our primates data. We will give you an update about how we think we want to address comorbidities because we are not running our TransCon CNP project for height. We know we will address height, but we're addressing the underlying comorbidity of this disease. This is why we are running our CNP program and we will give you an idea how we want to do that. We will also give you an idea about how we want to go down to newborns because some of the comorbidities can only be addressed by initiating the treatment just after birth, because some of them are already irreversible after less than 2 years of age. So you need to start early to address some of the comorbidities. So I believe our Q4 will be extremely busy. We will provide you, as we've said before, PTH, 84 weeks, CNP update. We will provide you an update also related to our oncology pipeline. But perhaps, also extremely important that potentially we will have a European approval of TransCon hGH. So the fourth quarter sound for us to be extremely busy related to all the data and information we would like to share with all of you.

We have actually come up on the end of our time. We didn't even get to oncology. If you want, we can just maybe throw out one question on oncology. Just run over a couple minutes. I guess, certainly, we're going see some TLR data coming up soon. And people are also particularly interested in IL-2. What are your thoughts on how TransCon can actually improve cancer therapy?

Yes. What we believe, we believe a lot in the immunological treatment that's starting to be implemented now. But we also see the huge limitation in what we have as a treatment option today. What we believe we can do with TransCon technology is to do the same thing we did in rare disease endocrinology. And we have basically 2 platforms we're utilizing. For the first time, we have what we call a true intratumoral delivery. Meaning is that, we can place inside the tumor a release of a compound for weeks and months. That is what we do in the TLR7/8. This is a delivery system where we're coupling the compound like TLR7/8 into a hydrogel with our TransCon linker injected inside the tumor. And we basically can kick-start with hemological system. Not like a normal traditional injection where you basically have all the drug disappearing after a few hours. But with these inside the tumor that activate them, the kick-starter for weeks and months with a single injection. That is what we call a complete different paradigm shift and we would like to show you this data. The other one is going more to the classical TransCon technology where we use our protein this time to develop what we call the highest potent IL-2 molecule. We made it basic, what we call, biased optimal manner in a situation without really compromised potency. At the same time, we then have a parental, optimal potency, optimal bias, and then we combined it with the TransCon technology to have the optimal coverage, but at the same time, low Cmax. By doing that in primary studies, they will see any more highly effective compound to induce the right cell types in a potency and fold. We have seen some soft population of cells going up hundredfold in the most safe manner. And I was so thrilled that we filed an IND but I believe we can make such a huge difference for the patients out there with providing a much more safe given hemological stimulation. And I believe when I see the data we have generated that we have the potential also there to be best-in-class in the entire IL-2 area.

Excellent. Thank you so much. Again, appreciate your time and look forward to chatting again soon.

Thank you so much.

Thanks a lot.