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

Okay. We'll continue with our next session. I'm Paul Choi, and I cover the mid cap biotechnology sector here at Goldman Sachs. We're very pleased to have Ascendis here in our session here. Before we begin, to my left is CEO, Jan Mikkelsen; and to my far left, CFO, Scott Smith. I think Tim is going to read some forward language here before we begin the Q&A, but we'll let Tim go here.

Comments during this discussion. Actual results made materially from those expressed or implied, and you should not place undue reliance on these statements. For information concerning the factors that can cause actual results to differ materially, please see the Risk Factors section of our most recent Annual Report on Form 20-F. And with that, let me turn it back to Paul.

Thanks, Tim. So maybe what we'll do is let Jan kick it off with some high-level statements -- comments on the state of affairs at Ascendis and then we'll go into Q&A. If any audience members along the way have a question, please raise your hand. We'll try and get a mic to you. [Operator Instructions] But with that, I'll turn it over to Jan for some opening comments here.

First, thanks, Paul, for inviting us down here. This year, it's an extremely interesting, transformative to year from Ascendis. And we started as a platform technology company. We started to develop product opportunity out from the TransCon technology. We built first a product opportunity called TransCon Growth Hormone. It was the fundamental for our product opportunity in rare disease endocrinology. We then added 2 other product opportunity to our rare disease endocrinology pipeline, TransCon PTH, TransCon CNP. We are building a Ascendis Pharma out from the fundamental of our rare disease endocrinology at outlined in our Vision 3x3. We have the vision to get our approval of SKYTROFA in 2021. We have seen now how it basically fulfilling our commercial goals, building up to be the leading brand in value in the growth hormone market and at the same time grow the growth hormone market. TransCon PNT be it's still our second product. We expect later this year to get an approval here in Europe. We believe we have a pathway forward in the U.S., how to deal with the CIL. We are filing this month, our briefing document and we believe that we can get this product as fast as possible out to the patients because they really need it. TransCon CNP, our last product opportunity in our rare disease endocrinology. We are now going to the regulatory interaction in both U.S. and Europe, discussing how our [ pivotal trial ] really can capture what we believe is essential for us. It's essential for the patient with achondroplasia to ensure that we also can address comorbidity besides provide linear growth. All these 3 product opportunities has been developed out for the concept to be best-in-class but also product opportunity that are in sites where all of them have a billion potential. We do that because we want to generate Ascendis Pharma into a sustainable, probably leading biopharma company. And you don't do that on small product. You're building large product opportunities where there is a huge unmet medical need that we really are addressing with our product opportunities. The commercialization effort we're doing on a global base today. We are in a position that we have established ourselves here in the U.S. It will be the fundament for where we were launching all the endocrinology product. When we come to Europe, we will have our launch of SKYTROFA here in Q3 and getting ready for launching the TransCon PTH early next year. Both U.S. and Europe, we have ERP program for PTH. Rest of the world, we have our JV in Greater China. There will be a region where we do out-licensing. Rest will be built on our international operation through sales and distribution channels. We are fulfilling our vision to have a global commercial reach. We will be there where the patients are. You saw our research data in Oncology, we believe we're developing paradigm shift compound there. It's early stages with the clinical data, but it's built on a fundamental that all the signs, all the knowledge we have from these errors together with the TransCon technology really are building up unique product opportunities. Will we be an oncology company? No. We can be a leading endocrinology company, but we can never be a leading oncology company. But it's not the same time to say that we will not bring substantial value by investing resources in this. Ophthalmology, as we also are doing, we have the same vision. We are not going to be an ophthalmology company because we will focus all our efforts on the endocrinology area and this is how we're building Ascendis Pharma into what we call a sustainable leading biopharma company that our aim is to be profitable as fast as possible, which we hope we can reach in the coming year.

Okay. Great. Thank you for that overview. Maybe sort of grade yourself on thinking about how you're executing against your 3x3 vision, where would you say you are currently with regard to executing on your strategic plan, maybe to start.

If I look at how we're executing on our Vision 3x3, the fundamentals of Vision 3x3 is our rare disease endocrinology. And there was to have one product being launched in '21. There was our SKYTROFA getting the approval of PTH. In '23, we will reach that and getting CNP in the market approved in '25. We are all on target to reach that. So I feel pretty confident for that. What I believe where we potential have -- some way come to a states where we moved into the last start to be an integrated company was to building up our own commercial organization here in U.S., and I feel really, really proud of the commercial organization here in U.S., launching our first product now and in the last quarter, we came in the forward-looking guidance saying this year, we believe after this basic second year of launch, we will hit EUR 150 million to EUR 160, it's a little bit harder to hit than dollars. And we believe if we see an increased trend in reimbursed patients compared to what we saw last year, after our Q2, we will come with a new forecast. So I'm really feeling that the team have really executed on our vision, how to bring highly revenue-generating product into a Ascendis with high profit margin as fast as possible.

Great. Maybe sticking with the commercial side. You had a very strong performance, as you mentioned here in Q1 and delivered a solid consensus speed. Could you maybe speak to the trends in the growth hormone market? And what allowed you guys to do so well in the quarter here and have such a healthy outlook for the remainder of the year?

I don't think it's only the healthy outlook of the remaining of the year, I think it's the coming years because I actually see this is not the beginning of the end but it is the beginning of the beginning. And this is where I see we are first in the launch of SKYTROFA. We are investing on major aspect in SKYTROFA, end of this year, we will come up with the next [ prodrug ] area, adult growth hormone deficiency, which not only can really shows the proof that we are the best-in-class product opportunity in this area, but also open up for a highly under-penetrated market segment because the adult growth hormone deficiency is highly underpenetrated, not compared to what we call the pediatric, which I think is pretty well penetrated. So we see the growth potential of SKYTROFA, not only here in the U.S. as really highly prospective, but we also see that we'll achieve the rest of the world. One of the element you also see now is what I call the consolidation of the growth hormone market. If anyone of you want to write a textbook about biosimilars, use the growth hormone market first. Was the first one where you saw Teva coming in, you saw Ascendis coming in. And you saw the impact of having 6 products with identical profile really fighting out in the marketplace. All of them were identical, partly differentiation in needle, partly differentiation in the pen device, but the same product. And we're also seeing today, to our knowledge, there's only 3 sales forces out in the growth hormone in the U.S. now. This is basic Pfizer, Novo and us. The rest are leaving and that's exactly what we expected to see as a consolidation of the market. And this is a basic when you have a product like SKYTROFA, coming with an improved treatment, you basically will see and change in the entire market segment.

Great. You spoke to some expansion opportunities here in the market, specifically the adult segment as well as the things like potentially like Turners and so forth. So how do you think about maybe the growth opportunity and sizing that up relative to where the pediatric market is currently?

Yes. Basically, all of them are pediatric turner known as 5, 6 different indications. And -- we will see the penetration in this segment also coming. We are dedicated to our lab expansion effort. The first one we will take up is our adult growth hormone deficiency, which also improving what we call on a complete different endpoint, body composition that we potentially can have the effect at least as good a steady growth hormone.

Great. Maybe turning to another area of investor focus, which is TransCon PTH. You recently provided an update to the market. And can you maybe since your last investor call provide us an update on where you are right now with regard to resolving the particular matter that was identified in the CRO?

Yes. Basically, what we said on the last call, nothing has changed. We are filing the briefing document this month. We basically are in a consideration that is basically getting finalized now. We're getting ready to do it. We believe it's really addressing the concerns of -- if they related to our delivered dose, addressing the concerns related to potential hyper and hypocalcemic episode on extremes. It's never been observed in our clinical trial, will never be observed in our clinical trial. So we basically believe that it's a situation where we are talking about a theoretical risk, which we can address without doing additional clinical trial. There is no request about clinical trials. It's not a change of supply chains. It's not change of anything. Just qualify a theoretical concern about extremes of delivered dose, and we believe we can address that. We see patients coming into our ERP program in Europe now. It's a different compared to the U.S. because it's open for both new patient and PTH experienced patients. Where in U.S., it's our ERP program is only open to PTH experienced patients, and we see patients coming in every week. It gives us the comfort but what we really observed in our Phase II -- what we observed in our Phase III. We saw the best retention of any patient group ever in this one. We see the same thing in our ERP program, where we basically can see really the benefit of coming on a TransCon PTH treatment.

Great. You mentioned earlier that you're in the position to sort of file your response and briefing documents to the agency. Can you maybe give us a framework in terms of what sort of time lines and updates you will be providing in the coming weeks and months with regard to the process here?

Yes, it's very simple. It's very, very, very simple. As I said before, we are filing the briefing document in the next weeks. We will have around 30 days for expected Type A meeting. Then 30 days after, there will likely be an -- or up to 30 days. We will get the minutes back and then we will refile our filing, where the change will be implemented compared to what we have addressed in the CIL. And at that time, I think we will get a clarity about it's going to be a Type A filing or Type 1 or Type 2 filing, which are dependent on the review time. It can either be up to 2 months or up to 6 months. And Scott can explain when we want to disclose the different elements.

Yes. So we would -- we would expect the outside time to do a disclosure would be at the time of the minutes, which would be about 30 days after the meeting. We also have our earnings call, most likely the first week of August. So you might expect some update there, too.

Okay. Great. So thanks for that framework. Maybe switching to the commercial side of things and as you think about the TransCon PTH opportunity here, can you maybe speak about what -- since it's been a while since you initially completed your clinical studies, what feedback has been like in more recent months with regard to TransCon PTH and how you think about sizing up both the market opportunity and what the pace of adoption might potentially look like?

Yes. I think we need to go back to the unmet medical need first, because that is where we really are going to address a patient population that have no replacement therapy. The patient population is patients that have not sufficient [indiscernible] PTH to have a normal life, like type 1 diabetes. It's one of the last rare diseases where there is no end replacement therapy for missing [indiscernible] hormone. One of the reason of that is really simple, it's very hard to develop an optimal treatment. So the best way to treat a patient today is to take a short-acting PTH, it could be FORTEO, it could be NATPARA, now is being recalled from the market and take it into an infusion pump and then provide a PK profile that also reflect PD's effect that basically mimic the physiological level, 24 hours, 7 days a week. This is how we provided the optimal treatment. What we enabled with our TransCon technology was basically to mimic this physiological profile with a single insulin-like treatment. One single subcutaneous injection a day. Suddenly, it opens up for this patient group that can get a normal life and this is both addressing short-term symptoms, how they can focus, how they can function, how they can work, how can -- they can be physical active but also long-term complication like cardiovascular issues, renal damage, cardiovasculation issues, cataract, et cetera and et cetera. So when you look on the financial burden of having hyperpara is amazing for the patients. Being in a position coming out with a first-in-class treatment for this patient group, we believe we really are providing a benefit to the patient that no one had access to. We also observed that in our Phase II trial and Phase III trial, where we see the highest level of retention ever in any clinical trial I've been part of. So even the burden of daily injection is totally overcoming the benefit you get of this treatment. When we looked on the patient population, we couldn't actually find one single part of the patient population that are not really -- some way got the benefit of this treatment. And then we also saw that physicians recognize that by providing a new guideline here in the U.S. A guideline when you really read it, basically saying that the vast majority of all patients should be on PTH treatment. I think it illustrates the unmet medical need, how the physician really want the treatment. So when -- from a physician perspective, I would treat all patients in the U.S. that have hyperpara. [indiscernible] Treat every type 1 diabetes patient. Would all of them be treated? Likely not. Will all of them being reimbursed? Likely not. But we believe as a big portion of this patient really will come on treatment very, very, very fast. We receive the same thing in Europe because there is some much more concern about long-term complication and what we call the cost in the health care system from long-term complication. This is why we really are providing TransCon PTH as a global commercialization product already as fast as possible from the approval side.

Great. Maybe on that point, can you speak to where you are with regard to your launch preparation activities, both for the U.S. market and Europe?

Europe, U.S., be ready. We just need to approve. We have infrastructure. We have everything ready. We just need to go. Europe, we are launching SKYTROFA here in Q3, we have opened our ERP program. It's mainly focused on Germany because Germany is basically the first country we're launching in Europe. Then you'll be building out from Germany where you would go likely to [G3, G5], then you take sales and distribution agreement in many more of the European countries. And from that perspective, you basically get to what we call a European reach. So -- all that is being organized now being built up, so we can have the fast penetration of TransCon PTH as we want. Our international operation run out of Europe, out of our headquarter in Copenhagen, where we basically have the infrastructure being built up for building up our international operations.

Okay. Great. Maybe switching to achondroplasia and TransCon CNP. Can you maybe provide us an update on the status of that study and where are you currently with your Phase IIb program?

The Phase IIb trial, we are now enrolling the last number of patients in the trial and we are in a position that you can nearly calculate -- takes 1 year of treatment. The primary endpoint will be analyzed growth velocity, meaning it's the same as you see in other growth disorder. What we are discussing today with regulatory agencies is how we really can address the real issue in treatment achondroplasia is the comorbidities. And we are defining which element we will take up as a secondary endpoint to address them. It's a [indiscernible] discussion that we both have now finalized here or we're getting finalized in the U.S., and we will finalize and initiate in Europe in the next months. Meaning is that our vision of achondroplasia treatment is to fight [indiscernible] growth. We cannot -- we know that will be part of the treatment. But the main aim is provide a treatment that basically can help this patient group to deal with the comorbidities.

Great. Achondroplasia is an area of focus for many technology companies in biopharma such as yourself. Could you maybe speak to how you view the competitive intensity in the category and how you view TransCon CNP relative to the competitive landscape?

TransCon CNP is built on the same mode of action as BioMarin's product, is also CNP. The main difference is it's a short-acting one that have a covers for 2 to 3 hours in a 24-hour cycle. We redefined in a way where we want to keep continuous exposure all the time, 24 hours, 7 days a week with a once-weekly administration because we already from our experience from the daily growth hormone market know that in the real world, adherence is nearly impossible in a pediatric setting with a daily growth hormone treatment. So it was how we defined it. We are building on the 4 pillars: safety, efficacy, convenience and tolerability and want to be optimal in all 4 points. So when I see the competitive landscape is built on what we call the companies trying to address the CNP PaTHway, there is [indiscernible] once daily and has us with a once-weekly effect. Then there is the other competitive landscape, where I see multiple company coming up with where we're trying to utilizing compound that basically has been well known in oncology treatment. Tyrosine kinase inhibitors. Some of the leading companies basically are well positioned and failed oncology product that didn't have the right benefit risk in oncology into achondroplasia. I have not really any comments to that because I'm a scientific driven person, always look on data, always look on the safety of the patient as the first priority. And I believe we need to do that. This is why we are in this industry. We are here to make a treatment difference for the patients. So I think it's up to you to adjust this kind of concept of reposition and oncology product into achondroplasia. I think this is the key to biological system that's being positioned into achondroplasia. Growth hormone has been used also in achondroplasia. It's known, for example, some geographic region. Growth hormone is still being used in achondroplasia. Also being known that if you take hypochondroplasia and give growth hormone, you can get amazing growth effect because it's a little bit water call, not the same severity of disease in the FGFR3 paTHway. So sure, if you really want to have linear growth, potentially one of a more effective compound is growth hormone or potential in combination with CNP if we really want to have high level of growth. So I think the treatment landscape in achondroplasia is just starting to develop. And I believe in the next 1 or 2 or 3 years, you will see a lot of product opportunity being positioned into this area.

Okay. Great. Maybe switching to your oncology programs. You recently announced some initial data for TransCon IL-2 and for your TLR 7/8 recently as well. So what aspects, I guess, of your oncology program based on the data you've disclosed so far make you the most excited about the opportunity?

Yes. I think both product opportunities are unique and basically a paradigm shifting thinking. Let me just take the TLR 7/8. Everyone, I think from a scientific perspective and hemological perspective, respect the native hemological system and if you can activate that you will have a way to treat in oncology. From the perspective of making it possible, has it been possible to do it? No. Because if you take a TLR 7/8 and give it systemic, the general toxicity is too high. If you just inject the TLR7/8 inside the tumor, it disappear after 2 hours. So what did we do? We used our TransCon technology platform placed a TLR 7/8 directly into the tumor or over weeks you provide an activation of the paTHway of the TLR 7/8 inside the tumor. And that is what we have seen -- really function as we hope for. The systemic concentration of TLR 7/8 is so low that there is no toxicity, but still inside the tumor, there is about 1,000 higher concentration. And this is why you see the biological effect really materialize there. We're seeing more and more data coming out. We see abscopal effect on monotherapy. We see complete responses in abscopal effect, where a non-injected tumor is completely eliminated. This program is getting to the next stage now. We had recommended Phase II. Now we go into cohort expansion in well-defined indication with much more early-stage patient. IL-2, I have a strong feeling for because I believe this is a product I have been followed for 20 years and Scott can say [indiscernible] you are also old that you have seen so many of them. But I have been to the first part of IL-2, seen it, how it failed 10 years after when we couldn't make the first [indiscernible] and now we see the 20 to 25 failing program happening now. Then the question is, how can you still be positive about such a product? Why should you not be depressive because every time I talk with investors who always look down in the table of saying, I burned myself for this product, I burned myself a company investing in and I lost money there. And I think this is how you see often biology. It comes in waves. You have first, second, third and then suddenly you'll succeed. So if anyone of you have any interest to learn about IL-2, try to really go down and understand the signs behind it. Understand why it's differentiated compared to all other IL-2 program you see out there, trying to integrate the last 30 years learning in one single thing. We did the same thing with SKYTROFA when in the '80s, I was part of the first long-acting growth hormone. And there was about 20 programs from big pharma, pharma in long-acting growth hormone. SKYTROFA was still the first once-weekly program being launched in the U.S., and I have the same confidence about IL-2. The biology is hard to understand, but I see the data we're getting now, just illustrate how its function, both with monotherapy effect. We get severe patients, I mean -- they need to have what we do in dose escalation there to be have 4 to 5 prior treatment. They are in a state where they really are having difficult tumor. We have a pancreatic patient that has now been stable for 1 year. One year stable pancreatitis that have met everywhere. We have a particular response in colorectal cancer, really impressive after 3 months. So that is monotherapy, no doubt its function.

Great. We're coming up on time here. So I just want to maybe briefly touch on your ambitions for your ophthalmology program where you're developing a long-acting Lucentis, there's been a lot of developments in the AMD space with like long-acting [indiscernible]. And so maybe can you talk about how you're picturing and thinking about positioning your long-acting program there?

Year. First of all, let's go back to our fundamentals. We are an endocrinology company. We still have such a strong technology platform that we can move in a lot of different therapeutic areas. What that means, we're going to be an oncology company? No. Would it mean that we're going to be an ophthalmology company? No. But we're still feeling that we can provide some more value by moving into this therapeutic area. And then we will do optimal partnership. We will do optimal business development to take the late-stage development of these activities. And I feel this is a way where we can create a lot of value for many of our shareholders because we basically are taking some opportunity where we can directly using the technology platform in these new areas. And this is how we see progressing in this way.

Very good. We're almost up on time here. So we'll end it there. My thanks to Jan and Scott, for joining us. Thank you very much, everyone.

Thanks so much.

Thanks so much.