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

Welcome. Let's go ahead and get started. This is the fireside chat with Ascendis Pharma. My name is Vikram Purohit and I'm one of the Biotech Analyst with Morgan Stanley Research. I need to read a brief disclosure before we get started. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. With that, let's get started. Happy to have with me Jan Mikkelsen, CEO; Scott Smith, CFO; and Tim Lee, Investor Relations from Ascendis Pharma. Thank you for joining us.

Jan, maybe just to start off with, could you give us some opening remarks on just a quick overview of the business and recap some of the key achievements that you think the company has hit throughout the course of the year?

Vikram, before Jan starts, if I can make my own disclosure?

Oh yes, please?

We may make forward-looking comments during this presentation. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in detail in our SEC filings. With that let me turn it back over to Jan.

Thanks, Tim. So it's a pleasure to be here. First of all, this is the first time I'm coming to a real conference after some years and meeting all the people again. It's really, really a pleasure and also a pleasure to be back here and tell the story about Ascendis again. We are a company that's built on a platform technology, the TransCon technology. We have utilized that technology platform to develop a pipeline in rare disease endocrinology. We're now moving into oncology and we'll move into the third therapeutic area. Our most advanced product opportunity SKYTROFA is now launched in the U.S., and we see the benefit of that. The other part is now we have our TransCon PTAs. We just did our filing a few weeks ago, and we hope to see the product in the market next year. And we have CNP coming out in the end of the year. Our oncology pipeline is maturing. We're coming with our, what we call a complete paradigm shift, how to treat tumor with an intratumoral delivery form, our TransCon TLR7/8, where we will come out with data this quarter. And next quarter, we will go to our IL-2. So really a busy year for us and will continue to be busy.

Great. Let's start with SKYTROFA. Been on the market now for 3 quarters, as the product launch has evolved, what have been some of the key metrics that you've been tracking? And could you recap for us kind of how does it evolve over time?

First of all, SKYTROFA is a unique product. For more than 30 years, people have tried to develop a long-acting growth hormone because it has been proven again and again, it's impossible to give the optimal outcome with a daily treatment in a pediatric setting. So when we came out last year with our once-weekly SKYTROFA, we came out and addressed an unmet medical need that annually 15 to 20 programs had tried to deliver. We came out with the only product opportunities that by modes of acting using the same somatropin molecule that you see in daily growth hormone, the same molecule that induces growth hormone because we should not only look on analyzed high velocity, which are the primary outcome in a pediatric setting. You should look on what you really want to do because the children are missing sufficient induced growth hormone. You want to provide them all the endocrine help they're getting. And this is not only growth velocity. This is how to basically get the right body composition, get exercise capacity, metabolic parameter, bone quality and other things like that. That is why it was extremely important for us to provide the mode of action with the proven entity. We can do that through the TransCon technology. Every time anyone had tried to change the somatropin molecule that have not been possible to prove that you can get the same benefit that you have seen with a somatropin molecule. We launched it here in the U.S. last year. We were in position, we launched that into an established market. The growth hormone market on a world market is about $4 million -- $4 billion. In the U.S., it's about $1.5 billion. So it's about the largest segment today. We launched it and what we see now is how we really are picking up in sales. So what I'm looking for, first of all, we look first in beginning of prescription. Will the physician really write prescription, yes, they write all the prescription that really we know because this is a benefit for them as is a benefit for the patients? When the patients are on the treatment, do they continue on the treatment? Yes. So when we now looking on some of the key parameter, it's basically how we're building up our revenue and we saw how we from last quarter to the quarter before, could double the revenue. We hope we can double the revenue again this quarter here again. And the nice thing with this is accumulative. For example, if we come out with this quarter with $9 million in net sales, we basic already have $36 million sales in next year's revenue. And this is how we're basically building up the SKYTROFA to what we want to achieve to be the leading brand in the growth hormone market in value, be in a situation where the growth hormone market with basic growth from 1% to 3% to about 10% in value every year. At the same time, we want to have it to be a highly profitable product. And everything must be following all the different KPEs we're following, is basic supporting that we can do this. It will take some time, we doing label extension. We have now our adult growth hormone deficiency trial, where we will erode all the patients this year. We expect to have that done in Q4, meaning that we can have a readout next year. We are investing in label expansion with our Turner trial, where we're just filing the protocol. So we are dedicated to make SKYTROFA to the leading brand in value. And we're doing that by both our global reach and our label expansion activity, taking all the necessary indication basically to really to address the entire growth hormone market.

Understood. Jan and Scott, you mentioned with your last earnings update that EUR 25 million in sales for the year represents what you think is an achievable block for SKYTROFA. Looking from now to the end of the year, what needs to happen from a pricing standpoint, from a volume standpoint to help you get there?

Nothing, we just need to execute what we're doing now.

Okay. I mean in terms of -- can you provide any color on just kind of what you need to see even from like an inflection of prescription standpoint, what would need to happen?

No, we just need to continue what we're doing. Everything what we're doing, that improving it will be an improvement in our expectation to the yearly revenue.

Okay. All right. Fair enough.

Pretty simple.

Okay. What if you think about the launch in Europe then, you guided to a mid-2023 launch, I believe? How do you think the initial phase of that launch would look if you were to juxtapose it versus what we've seen in the U.S. so far?

So one of the elements we did in 2015, that was when we got our first positive Phase II data for SKYTROFA, at that time called TransCon Growth Hormone. We said we want to reach the patient. We wanted to be a fully integrated company from idea states out to the patient. We wanted to focus on large product opportunity that at least, at least had $1.5 billion in expected sales revenue. And I think we're beating that in all our expectations. But we also wanted to have a pipeline in the same therapeutic area. This is why we build up a pipeline of 3 independent product opportunity in rare disease endocrinology, as we do now in oncology. We have our SKYTROFA, TransCon Growth Hormone, we have our TransCon PTH, and we have our TransCon CNP. Why do we do that? Because to be a highly profitable company, you need to have synergy and economy of scale in each single indication you move into. You know a lot of key opinion leaders. There come sometime and want to talk with you on one product, but they get the knowledge of all 3 product opportunities. And this is why when we're making a long strategy next year on our SKYTROFA, it's basic, we're not launching SKYTROFA. We are launching a pipeline of products. And we will submit -- we expect to do that here in Q4. And therefore when you see how we can launch one product after the other one in Europe, it's because we need this synergy, this kind of scale to be sure that we can do it in a highly profitable manner. So when we talk about going into different clusters, different region in the world, for example, in rare disease endocrinology. We have a company where we own 44% of the share in Greater China, that's how we're doing there. We will make a global commercialization with all different means. Sometimes we will do it direct. Other places, we will do it to and company ownership. But what we always will do, as I said, we'll try to ensure that we create the value we have in the different product opportunities. That is what we want to do in each single place in the world where we would be with our rare disease product.

Okay. Understood. Let's turn over to PTH on that note then. A fair amount of investor questions on comparing and contrasting the different end markets for SKYTROFA and TransCon PTH. What do you think are some of the key differences people should keep in mind?

If I look on TransCon PTH and look on the unmet medical need we're really addressing. Look at the U.S., just in the U.S., there are 80,000 to 100,000 patients. All of them have the severity of a disease where the patient cannot function because of the short-term symptoms, they have the long-term complication if they take conventional therapy, that basic of building up a situation in the body, that basic increased renal damage, classification and other effects, the quality of life in the level where have it compared to severe heart disease. So we have a severe condition on the large rare disease here in U.S., in endocrinology. When I see how we're addressing that, we do normalization of the physiological PTH level, 24 hours, 7 days a week. We do that with an easy insulin-like treatment, receive 1 single injection a day. When I see the benefit for the patient, not only on biochemical parameter like CM calcium, 24-hour urinary calcium, phosphate level, something that both improve short-term symptom and long-term complication, but also seeing how the quality of life is improving because the rest of the normal PTH level. We basically bring life back to this patient and they deserve it. Many of them came from a situation where they had a normal life. 75% are coming from post surgery, where they're doing the operation typical in the head and neck, damages the parotid glands. So they were used to have a normal life, function as a normal person. And what we basically are providing to them and treatment often that basically give them their life back. And I think we really deserve to give them their life back. And this is why I'm so extremely anxious for the patients. When I hear the story of other patients, when I hear the physician, the physician coming and telling me, this is one of the most positive experience I ever had, the patient come with flowers, chocolate bag to me. But what we really are thinking, in my view, we're thinking about how we really can give them their life back as they call it. And I think this is what we want to bring out to the patient as fast as possible. We see the urgent need here in the U.S. that no treatment option today. We see the urgent need, we see the patient, and that is what we are focused on to do as fast as possible. So I hope next year, we will be in a position that we can launch our TransCon PTH here in the U.S. and get it out as fast as possible to the patient. We do a segmentation of the market. We look at the patient, what we call PTH experience patients. This is a patient that had some kind of knowledge about what PTH could do, there's about 4,000 to 5,000 patients. And then you have about 70,000 to 80,000 patients that basically are on conventional therapy. And we are addressing both of this population as fast as possible, but also the new patient that's coming in every year, which are about 3,000 to 4,000 of the patient that's coming in. So when I look on the rare disease endocrinology pipeline, there's no doubt for me that TransCon PTH is going to be a product opportunity that really will help a lot of patients, but sure also is a high-value product opportunities. No doubt about that.

Okay. That's helpful. Now a natural point of comparison for a lot of people, for commercial performance is NATPARA. And what gives you confidence that this could get stronger uptick than what NATPARA saw before it was retracted from the market?

Yes, some way, I'm always lost in translation. Perhaps it's my Danish, why we compare it to NATPARA because NATPARA was an adjunct lately. Meaning is that if you know anything about endocrinology, adjunct is when you take something partly away and then you add something and this is an adjunct lately. We're going after a complete different class of product opportunity, what we call hormone replacement therapy, meaning is that if you not have sufficient induced hormones, you add it back. This is a hormone replacement therapy. Meaning is that you restore the normal hormone level and that is what we're doing. Its 2 different product opportunities for 2 different class. But the differentiation is not only coming into the [indiscernible]. It's coming into the clinical data we generated. We showed that we really were a hormone replacement. The patient to be successful in our trial, they needed to stop completely active vitamin D. They needed only to take calcium supplement to what you get in a classical multivitamin 600 milligram. At the same time, they need to have normal CM calcium. We also saw the positive impact on urinary culture, normalization again. We saw the quality of life we got, which have never been proved by any other PTH product. We also saw normalization of everything else bone turnover. We just came up with new data about bone. It's actually showed over 2 years how we normalize bone turnover. If you take an HP patient, typically they have a high bone density. Then you say, ah, this sounds really good to have high bone density. I can give you a lot of diseases where high both density, is not really beneficial. It's actually developed and much more fractured bone structure. The same thing happening, it's severe HP. When you have high bone density, you have the more, fresher bone -- it's actually been shown in -- even with statistics. So what you're doing with TransCon PTH, you restore the normal remodeling a bone because bone is not a dated one that you're born with and die with. It basically change every second and third years. And that is what you see. What we saw with the data was really unique, we saw [indiscernible], much more, higher bone density, much more remodeling, pretty obvious. And this is what we have seen everything with TransCon PTH restoring all the natural process you ever have seen for having physiological PTHs.

Okay, fair enough understood. Let's pivot in the time we have the CNP. So we're looking for data from accomplished in the fourth quarter of this year. Just level set for us, what can we expect to learn, what are you looking for?

When we disclose data, we like to give you the data in such a manner that some people say we give you too much data. But we like to give you data so you really can understand the data. So when I think about what we want to like give you in the end of the year when we unblind that ACcomplisH trial and also give you data from the open-label extension trial. Safety show its priority number one because it's a pediatric and for all trial safety. We're already know the safety because we can look at that -- in a blinded manner, and it's really safe product. What we like to do is go into elements like efficacy. And we have 2 ways to look at efficacy. We actually have the -- as the only company, to my knowledge have double-blinded 12-month data for 4 different cohorts, different concentration, 6, 20, 50, 100 micrograms per kilo per week compared to placebo. That means that we can take an inter-patient cohort comparison compared to placebo compared 6 microgram, 20, 50 and 100. Meaning is that a small cohort 10 to 12 each single cohort and we have patients from 2 years up to 10 years. Actually, we have like last portion of our patient is actual under 5, meaning is there about. I think in average that's about 4.0%, that is under 5. That is one thing we will show you that data set. The other thing is we will show you, for example, the 6 microgram. What was happening when we basically were in position that we look on this patient group, which will be very near placebo, what happened after the 12 months where we have analyzed height velocity, then we move it up to 20, then we moved up to 50 and then we moved up to 100. So we will also show you the 6 months 100 microgram data. Because that you can also come out and compare it to showing how -- what is really happening. This is more an inter-patient comparison because of the same group that basically have been titrated up. So this is the transparency we like to give up. This is the data we will like to show you. And what we really hope we can prove there is that we have the efficacy, we have the safety and tolerability with a once weekly dosing to be best-in-class in that group. And that is the data we hope we can show in the -- here in Q4.

Okay great. And you also mentioned that you're going to be starting a new Phase II study as well. What was the rationale for this?

That is pretty interesting because one of the things when I look and trial and I look and obvious looking lot on the data, we have 57 patients in ACcomplisH. The trial now is going to year 2. We have 57 patients that we have no patient going to down dosing or anything like that. What is keeping all this patient into this trial? Is that just analyzed height velocity or something else I don't know. I need to look on the blinded data, analyze everything, but there must be something more than analyzed height velocity. They must get some benefit. And what we want to do in the IIb is try to see if we can confirm any of this benefit because this treatment of achondroplasia is not only to provide them and analyze height velocity increase, but addressing some of the comorbidities, addressing some of the underlying things why they have not optimal quality of life. And that is what we would like somebody to prove in that, setting there. This is what we do in the IIb setting, try to understand what is really giving them with this kind of unique retention in our trial. I actually think it's the only ACcomplisH trial. I know where there has 100% retention with no down titration or anything like that. There must be something in this product that we want to quantify.

Okay understood. Maybe one last question on CNP, what's your current thinking around the regulatory path forward, what do you think you'll need to be -- able to eventually file? And what sort of regulatory feedback have you received from the agency so far?

Yes, I think it will be much better and Ascendis will be much better positioned to answer that question in Q4 when we have unblinded all the data. It's much easier to discuss with regulatory agencies, data when you have them. So I will wait to really answer that question when we basically are in a position. We have seen the data that will be unblinded end of this year.

Okay understood. Let's touch on oncology before we have to close out here. So 2 readouts expected by the end of the year, 3Q for the TLR7/8 and then 4Q for the IL-2 beta gamma, what can we expect to learn?

And just to recall.

Yes.

TLR7/8 is the first in class, in my view, intratumoral delivery technology. The idea behind that is to take a well-known compound, a well-known component, TLR7/8 which are impossible basically to administrate in a systemic manner because of systemic toxicity. But we know from mode of actions, it will do the right thing if it's placed inside the tumor. So we use the TransCon technology to copy to a hydrogel being placed inside like an injection inside the tumor it liberate inside tumor over weeks and unmodified TLR7/8. This unmodified TLR will basically kick start the tumor to be reactive. And facing today, you can inject all tumors because every place has tumors, you have biopsies. It's because you basic are injecting this is the same thing you can do. So the TLR7/8 is designed to be the kick start of a hematological system without any kind of toxicity in systemic part on it. And that is what we basically like to provide to you end of this quarter it will be this month here. We will like -- we have about 20 patients that basic went to efficacy evaluation. All of them are late stage 4th line, 5th line patient. And we will like to give you a data and what we're looking for. We are looking for a lot of different elements. First of all outcome are there -- mono-therapy effect are there combination effect. Are there data that supported from biomarker, both in injected tumors non-injected tumor, are there data that support that we have the sustained to release -- and the entire safety part. That is what we will like to give for the TLR7/8. The other thing we want to do is Q4 is our IL-2. And every one of you will be tired of listening to IL-2 because there are 25 IL-2 companies. And when I look at that and saying is, how can we be differentiated by that. And I believe you can be differentiated because what we basic designed our TransCon IL-2, we designed it out from eliminating all the weakness we saw in all other programs, basic building on habit and highly potent, non-alpha compound. But more important, giving -- in such and PK profile that you basic achieve 2 things, not a high Cmax promoting off-label toxicity. But still so long that you do the same thing with -- as you can see with aldesleukin sustained activation because that is the key. My question was always, why do, we not see mono-therapy effect with all the non-alpha today. Yes, I don't think they're potent enough. Just look on ALC, absolute lymphocyte count. Do anyone actually go to the level of [indiscernible]. It's hard for me to see anyone doing it. Why should you see mono-therapy with that if it's not immunological stimulating as much as poor looking. I cannot see any reason for it because this is how they're active. So this is the data we do. We still have our IL-2 in dose escalation. We are moving far higher than we ever thought about even with this highly potent molecule, and we hope we will share this data to you. So when I see the pipeline we have built on Ascendis, first, our rare disease endocrinology. We can be a profitable company just on SKYTROFA and TransCon PTH. But what we're building in, we're building in sustainability, sustainability, both in rare disease, also new therapeutic area in oncology and now also what will come up in the third therapeutic area, will also be disclosed end of the year.

Okay great. With that, we're actually at time for Jan, Scott, Tim. Thanks for your time. Appreciate it. Thank everyone, for joining.

Thanks. Bye.