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

Good morning, and welcome to day 2 of the Goldman Sachs Global Healthcare Conference. My name is Paul Choi, and I cover the SMid Cap Biotechnology sector. My pleasure to welcome to our first session here of Ascendis. And what we'll do is let Jan kick it off maybe with a little bit of prepared remarks, and then we'll go into Q&A. [Operator Instructions] I'll turn it over to Jan and Scott to kick it off.

I'm Tim Lee, Senior Director of Investor Relations. Just a quick comment. We may make forward-looking comments during this discussion. Examples of such statements may include, but are not limited to, our financial expectations and expected timing of the FDA review of our NDA for TransCon PTH and potential launch of TransCon PTH in the U.S. Actual results may differ materially from those expressed or implied, and you should not place undue reliance on these statements. For information concerning the factors that could cause actual results to differ materially, please see the Risk Factors section of our most recent annual report on Form 20-F. Note a brief regulatory comment on May 14th, we announced that the FDA extended the PDUFA date of our NDA for TransCon PTH in adults with hypoparathyroidism to August 14th. We recently engaged with FDA as we seek to begin finalizing remaining items, including labeling. Given these ongoing interactions, we do not intend to comment further on the status of our NDA at this time, and we will not be taking any questions on this topic today. We expect to communicate an update at a further time when we have additional material updates about the FDA regulatory process. And with that, let me turn it back.

So first of all, thank you, Paul, for inviting us. 2024 is always an interesting year for us because we are born as a platform company and we can utilize the TransCon technology in basic [indiscernible]. And we have explored mainly the technology in rare disease endocrinology, and built up a pipeline of 3 what we call large rare disease endocrinology products. The most advanced one we had is one that both approved in Europe and U.S. and now in multi other countries and being sold under SKYTROFA in the U.S. And I think you have seen how we are progressing to really building up SKYTROFA to what we really want to do at the leading brand in value first and then to a blockbuster here in the U.S. This meaning that we go through a changing environment where we're getting more and more coverage in our SKYTROFA revenue sales because there's some way necessary to achieve that by really getting the penetration. We see the penetration increasing year by year. And we have the landmark and going for 10,000 patients, 10,000 patients being treated with the TransCon technology, 10,000 patients really seeing the benefit of the SKYTROFA. We will penetrate the sales of SKYTROFA by multiple means. It's not only increasing our market assets, but also to label expansion. The first indication we are fighting for is our adult growth hormone deficiency. We got all the data. We're getting ready for the filing. We will progress further in other indications like Turner, where we will come out with Phase II data later this year. So you can see that we really are investing in our SKYTROFA brand, the TransCon Growth Hormone, both related to global commercialization, but also in label expansion to build it up to the blockbuster status we want. Our second product is our TransCon PTH which are the brand name in Europe. We got it approved in Europe last year. We're now getting for approval in multiple other countries. We have seen the successful launch in Germany. It's what we gave of an update after our first quarter is continue. We see the same really positive development that we expected, where we see more and more prescribing physician taking more and more patients on it. So we have no doubt when we really are going Europe direct, where we will be directly in 12, 14 countries [indiscernible] being initiated in the end of this year, '25 will be the large year where we're getting more and more countries basic into our direct. We also are in a situation where we're going to sales and distribution agreement with both SKYTROFA and YORVIPATH and building up a network of really how really to do commercialization, and our aim is basic in the next 3, 4 years to hit about 50 countries where we're commercializing our rare disease endocrinology pipeline. Why do I call it pipeline? Because we actually have our third candidate getting off with [indiscernible] data later this year. This is our TransCon CNP. We have a strong aim for being into achondroplasia because we want to be the leader in growth disorder out from the fundamentals that we have the leading best-in-class product in growth hormone. We also believe we have that in TransCon CNP. We are trying really to aim what we believe is the key element how to address the comorbidities of achondroplasia, not only provides the linear growth, but really address the comorbidities. We have really positive readout of our Phase II data, and we really hope we can confirm that in our Phase I trial. So that was our rare disease endocrinology. But don't forget our Oncology pipeline. I do not know if some of you have seen our initial data with a small subset in our ASCO presentation. And I have always believed in our TransCon IL-2. I always believe that we will be the first that really coming up with a best-in-class product opportunity as we did in growth hormone, where there was 25, 30 years development before we saw it. So that is basically what we want to do in order to and with the initial days, it will look extremely promising. And we also have utilizing our TransCon technology in Ophthalmology, which now is a spin-out company, independent [indiscernible], and exactly how we want to continue to develop utilizing the TransCon technology to really develop best-in-class product opportunity. We're also doing that in obesity. We will do it other big products where we really will use the TransCon technology. But it was a short intro.

Maybe we'll kick it off with what's top of mind with investors and just sort of what happened with the recent PDUFA extension. Can you maybe walk us through the mechanics as to why the FDA considered it major amendment and pushed off the PDUFA to August?

It's always an element in any review process that FDA always can decide what they really want to do. We can always speculate. We can always think about it. But I believe -- we believe, as I said, that we have a clean pathway. We hope we will get the approval here in August. And this product opportunity is really have proven a benefit when we see it not only in our Phase II trial -- not only in our Phase III trial, we're also seeing how it in our EAP program in the U.S., where we're basically taking more and more patients in every week. We also have seen the benefit of that in our [indiscernible] in Germany where we really see the penetration in all the benefit to the product. So I have no doubt that people in the U.S. also should -- with hyperparathyroidism also should get the benefit for that, and that is what we're aiming for.

In many ways, we've sort of seen this movie before with SKYTROFA, and just can you maybe remind us how that PDUFA was extended and how quickly it ended up being approved?

Yes. If anyone can repeat what [indiscernible] what happened for about 2.5 years ago. We also got a major amendment to SKYTROFA. And when you're dealing with a combination product, it's a more complicated pathway than, for example, in a straight NDA where you have a tablet because we are involving many more divisions by if they [indiscernible] are much more alignment between the regulatory system. And therefore, it often somebody goes to a more complicated process.

Maybe touching on something you brought up with regard to the EAP. I guess, just in terms of sizing and you talked about patients joining on a weekly basis. Where do you think in terms of the sizing of the EAP, it might ultimately end up roughly between now and the PDUFA potentially?

Yes. The U.S. EAP program is very much restricted to a subpopulation of adult patient with hypoparathyroidism, because your basic will be -- only can be elected in our EAP program if you have previously being treated with PTH therapy. And at the same time, it's restricted not to every physician, it's restricting to [indiscernible] that basically are going to do all the different and necessary contract work to be part of such a program. So therefore, it's only a subpopulation of the subpopulation we can enroll. We are extremely enthusiastic about what we're seeing of this program. We are extremely enthusiastic to see how we really are providing benefit to this patient group too.

Maybe you can comment with regard to the EAP, what you've seen in terms of patient behavior, compliance and adherence, particularly following the titration period, kind of outside of a controlled clinical trial setting, what does the patient experience look like to date?

Yes. I think it comes back for the question because if people have followed our Phase II trial and follow our Phase III trial, the retention we have seen in this trial has been far over any kind of expectation we ever have seen. We have lost very, very few patients in a period of [indiscernible]. We see exactly the same pattern in our EAP program. And when we go back to, for example, in Germany, we actually for the first time, had an investigator collecting data or how to directly transfer patients from NATPARA over to TransCon PTH. And I believe when I watched that data, it's really proving with all the data collected both related to biochemical control, but also related to health care [indiscernible] how we really are providing a treatment benefit compare to what we call was established by NATPARA. So it really is a superior treatment [indiscernible].

You bring up something interesting, which is people -- as people size up the market opportunity, people just think about how many patients are in NATPARA, which is relatively small. But you've talked about how patients adherence here on TransCon PTH has been -- has been quite durable and extended and so essentially becomes continuous therapy. So at least as we think about it, it seems like the market sizing and opportunity here could be substantial far and above and beyond what the NATPARA sales are even at a peak. And so maybe first, how do you and the team internally think about sizing up the PTH opportunity and about the switch opportunity versus de novo patient opportunity?

Yes. There is an indication we are getting approved first is adult growth hormone, adult hypoparathyroidism. And this is a patient population that really contain 2 major groups: 1 coming with a genetic background or [indiscernible] background, and typical will do to either the pediatric phase and when they go out to adult, we identified with the disease. The second part is postsurgical. And this is a population when you go typical to get a head and neck operation. You have an incident of ending up with hypoparathyroidism because the 4 different claims is really hard to avoid not to damage. So in many cases, I have seen frequency down to best cases, 1% to 2%. The patients that go to such an operation will have chronic hypoparathyroidism. In some cases, I have seen up to 8% to 10%, dependent on the specialty, how aggressive they are in the operation. We see a big demographic difference in the number of patients with postsurgical. For example, in Germany, there is about 70,000 patients with diagnosed chronic hypoparathyroidism. And when you go to U.S., our best number is between 80,000 to 100,000, and when you look at the demographic between these 2 regions, you will say as something wrong. No. But because if you take the correlation to the number of head and neck operation, it is fit [indiscernible] . So we see the same pattern in Germany, in Austria. We see it in South Korea. We see it in other countries where there is a different way of treatment. So when we went into our Phase II trial and Phase III trial, we saw all patients benefit from this treatment. There was no subpopulation of the hypoparathyroidism patients say they don't have any benefit. All of them have the benefit for it. When we then talk about a target population of 20,000 in Germany is we take the patient group that really are a big burden for the society meeting that, for example, are coming to a late stage of renal diseases that got diagnosed with renal diseases. They often go to emergency room because they have a high level of [indiscernible] to manage the quality of life in a normal manner. This is what we call the initial target population. We still believe every patient with chronic hyperparathyroidism will benefit from it. And this is where I believe we will see different penetration in different countries where there will be much more openers to take this kind of treatment into a higher population of the patients compared to other places where we only present to see 10% to 20% of the patient being treated. And nothing to do if there is not a treatment benefit but its basic is what we call the health economic cost for the society to support it.

Maybe sticking on the subject of Germany here and the launch to date of YORVIPATH in Europe. Maybe remind us what the cadence of reimbursement approvals might look like over the next 12 to 18 months? And then I had another follow-up question for that.

Germany is that different compared to what you see in U.S. Because when the doctor really meet the patient, prescribe it is immediately reimbursed. It's not like in U.S. where you go in and get a prescription, then you find out if someone really want to fund it. And this is where you have a prescription [indiscernible] from the health care system in the specific country. So what we see, we see the growth of the prescription. And typical, when we look on a very, very successful [indiscernible], we had defined 260 physicians as the target physicians first in our initial phase and we basically are going up and climbing and said we wanted to have 50% in the first period of launch and be getting it, and typically, we will see a pattern where we take one, two, three patient first on it, see how the product really function and then expanding for the patient population. It's true because how we see [indiscernible] This is a little bit more conservative than other regions. But it's very, very successful what we have seen until now where we basically are getting exactly the number of physicians that we basic -- wanted to see and we will penetrate the 260 up to the level here in the first year [indiscernible].

And I think that, as Jan said, as the physicians get experienced and the patients get experience with the product, we would expect essentially same store sales to increase towards the back half of the year. The other thing to keep in mind is some patients do have supply of another product that is running out and typically in Germany, the patient has to finish the product running out, for example, from another -- a short-acting PTH product that's being pulled from the market. So I'd say the initial groundwork is pretty good with the KOLs deliver accelerating growth towards the back half of the year.

Yes. I think the acceleration will come from 2 places. That will come from directly or [indiscernible] Germany, because there the physician will have experience. For example, the 1 physician that was in our short-term EAP program in Germany with us only running from 3 or 4 months, but 1 of them got a kick start. And this physician today have more than 20 patients on treatment now. And I think we will see the same pattern in the second part. The third part is that NATPARA, which we know, is going out of the market. And to our knowledge, there's still 600 to 800 patients on NATPARA in Germany, and they need to get switched basically in the end of the year because this is where the supply of product is running out.

Okay. Maybe this to further comment, too, because you asked earlier the NATPARA market. Keep in mind in our clinical trials, almost all the patients were naive, in addition to being spread across all the postsurgical, nonsurgical like ADH1. And in Germany, that's actually what we're seeing both experienced and valued patients.

And Scott, maybe one more for you. Can you just remind us what is embedded in the revenue guidance, the mix of SKYTROFA versus -- and it includes international sales for YORVIPATH?

Yes. So our guidance for the EUR 320 million to EUR 340 million is specifically for SKYTROFA only. So we gave 3 components. That was one component. The second component being operating expenses at EUR 600 million, and the third component, becoming cash flow -- operating cash flow breakeven on a quarterly basis in '24.

Question from the audience?

So my understanding of the FDA review process is that in order for something to be classified as a major amendment, it needs to be submitted within 3 months prior to the PDUFA date, and it's typically either new clinical data or new analysis of the clinical data, which necessitates a 3-month extension versus manufacturing data, which typically necessitates a 2-month expansion. So, can you comment on the information request or the type of information requests that you got to, which you submitted the response? And then the second question pertains to comparison between NATPARA and TransCon PTH, as far as [indiscernible] rates are concerned, that may or may not contribute to an inconsistent delivery of the product.

Maybe I can just start off. So on the 3 months, I have to admit I've never heard of that before, that's totally new to me. But I think I'll just refer to Tim's prepared remarks that now that we've engaged with FDA around finalizing all of the remaining items, including labeling, we don't intend to comment further on this specific review as it's ongoing.

Maybe turning to the commercial SKYTROFA here. Your commercial progress to date on the launch has been solid, and you've reached significant dollar share here in the U.S. market. Maybe you can comment on how you think about the trajectory over the intermediate to longer term? And does growth primarily come from market expansion, further share gains, some mix of both? And how do you sort of think about the longer-term sales growth trajectory for SKYTROFA here?

Yes. So maybe I'll start off on that, Paul. So you're right, it was great to hit market value leadership so quickly after the launch, and we're really proud of what we've accomplished and now hitting over 10,000 patients prescribed SKYTROFA us really is a major milestone. As we expand to the next phase and basically to ensure that we hit not only revenue goals we laid out for you this year, but also in the long term to make SKYTROFA blockbuster itself, I think there's probably 2 elements. One is simplifying and expanding market access. And we've already done that. And you'll see, in the short term, there'll be more rebating. But longer term, it will support the revenue goals for 2024 and for achieving blockbuster status. But in addition to just the pediatric growth hormone deficiency labeling, as Jan mentioned earlier, we're totally focused on label expansion and making SKYTROFA and maintaining SKYTROFA as the #1 product.

You've talked about some interesting expansion opportunities starting with adult growth hormone deficiency and also Turners down the road here. And so maybe 1 question is, I think the IMS data suggests that the growth hormone market is about $3 billion, give or take, based on sales data, 3/4 of which is currently still branded sales approximately. So with regard to the adult growth hormone opportunity and Turners, can you maybe size up those opportunities there? And maybe as you sort of do your market research, what are some of the potential challenges of developing and growing those particular markets?

Going back to the adult growth hormone, market is very different compared to the pediatric market and 90% of the growth hormone market is the pediatric [indiscernible] on it. So 10% is basically adult. And to our best knowledge, we believe that the penetration is being 5% to 10%, meaning is that there is a huge opportunity still to grow this segment. And I believe one way we can grow this segment is really proving now with our data, how we really have an improvement in not only the primary endpoint because the primary endpoint is basic not the only reason why you treat the patient. You treat them because they're missing an essential growth hormone. And you see a positive endocrine effect on multiple [indiscernible]. It's not only what we call the body composition. This is cardiovascular effect. It's on bone, it's on cognitive effect and et cetera, et cetera. And that is what we really want to indicate on. And having this weekly treatment, we will, I believe, some way remove one of the limitation for why there is only 5% to 10% penetration in this segment here.

Another interesting expansion opportunity is a potential combination with TransCon CNP which is a program you've talked about here. And I guess maybe can you tell us what your scientists and teams suggest about the clinical potential here and you have an ongoing study. And maybe you can share with us what you would disclose with your initial Phase II top line results expected before year-end.

When we look on achondroplasia, this is one of a growth disorder. That is about 20, 40 additional growth disorder. We want to be the leader in growth disorder. And how can we do that? Because we have our cornerstone product, TransCon Growth Hormone and TransCon CNP. If we go specific to a contemplation, it's caused by hyperactivation of the FDR3 pathway with different mutations. And what we can do with the CNP therapy? What you can do by inhibition of the tyrosine kinase? It's basically doing a normalization of this pathway. And what do you see of the outcome in growth velocity? You basically are taking the limitation in growth up to be normal growth. So all of the children suddenly will be in a position that will have normal growth. And that is what when you look and analyze height velocity on an absolute level, this is what you see all products basic ending up in the same absolute analyzed height velocity, which are between 5.5 to 6, which are depending on the geographic, depending on the child, age, [indiscernible] and other things like that. So what do you then do with the child that has not been treated for, for example, 7 or 8 years before we go to treatment? That will basically have what we call lack of growth. The only way we know today how to do that is to give a growth hormone because growth hormone promote and catch up growth as they do in growth hormone deficiency. So wish if you have a child with growth hormone deficiency not being treated for 5 to 7 years, the lack 5 to 7 years of normal growth. The first 2 or 3 years of treatment that have a spurt coming up where you have more growth than you see in normal child. This is what we call catch-up growth and then they start to grow as a normal child, and they get exactly, as you can see out of our long-term data with SKYTROFA, they are hitting exactly 50% is getting higher than their parental height meaning that they're just going exactly as best to do out from the generic materials. And this is what we want to give to their children that basically, for example, if there's a desire from the child for the caregivers, we want to have more growth, we believe that the combination of growth hormone and CNP, it's basically the optimal combination because where CNP not only are ensuring that the growth plate is getting normal functional, but we're all ensure we can address the comorbidity with our continuous exposure of CNP because it needs to hit multiple pathways to reach that. And this is why we were running [indiscernible] to ensure that patients, caregivers, where they want to have more height than just normal growth, a catch-up growth, then that can come under the combination therapy in this way.

Great. you'll have your Phase III data from your pivotal trial for CMP also before year-end. And so I guess the question here is with a product approved on the market, are you assuming a regular review or potentially accelerated or faster review with the U.S. FDA? And then can you maybe just remind us how you're thinking about the regulatory timing for European?

I think it's a little bit too early to speculate about what pathway we're getting because I would like to see the data, and the data is always providing you the right pathway. We got accelerated approval for our TransCon PTH. When I look on the element of CNP, we know that the primary endpoint is analyzed height velocity. And we have a good feeling where we will end. What we really are looking at is the comorbidities, which we have built in a lot of secondary end point and we're really looking forward to really coming out and show how we can address this comorbidity because I believe this is the aim of this treatment.

Beyond the dosing schedule difference versus [indiscernible], don't you think will potentially resonate with [indiscernible] patients beyond maybe [indiscernible] with CNP here?

In 20, 30 years, everyone has understood how difficult it is to provide a daily injection of a child. This is the burden and the reason why for the last 20, 30 years, people have tried to make a once weekly growth hormone product. And I don't believe there's a big difference between a childhood growth hormone deficiency and achondroplasia, I believe that will be the same. So there will be a huge desire to go to a once a week treatment. I don't think there's no doubt about that. What you cannot compromise is safety and you cannot compromise efficacy. And when we look on the safety, yes, our safety is exactly as other CNP, actual thing is approved because we don't have a [indiscernible], so we have no risk of vessel dilation because the [indiscernible] is driving this vasodilation effect out of CNP. I also believe when we look on efficacy, we are not only aiming of providing analyzed height velocity be aiming on providing also addressing the comorbidity. So when I see all the key element of tolerability, efficacy and safety, and I think safety is the key one in this treatment. Everyone should focus on safety and efficacy and tolerability. I see us as a best-in-class on all these product opportunities. And you have seen how we have penetrated with SKYTROFA in the growth hormone deficiency market. And I think we can do it in each single segment where we are best in class.

We have a few minutes remaining. So I want to just briefly touch on oncology updates that might be coming in the next year or 2 since that often does not get as much attention. Can you maybe just remind us in terms of what IL-2 and TLR updates will get this year and safety sort of appropriate medical meeting at which we might expect those updates.

Yes, we had our first already here in ASCO, where we actually came out and illustrate how for first time, there is an IL-2 treatment that both have the right safety, the right efficacy and the right duration. For the first time, you have seen the team at 3 [indiscernible] you basically have dose stacking in [indiscernible] system, we see, for the first time, a clear response [indiscernible] clinical effect. We see it now in what we call well-defined sort of population. We are enrolling about 20 to 30 patients in each single of this top population. We are enrolling with different speed. And I believe, end of '24 will be the year of Ascendis oncology, where you will start [indiscernible] first well-defined soft population with patients being treated in this way. [indiscernible].

Great. we're nearly up on time. So I think we'll maybe just end it on that. My thanks to Jan and Scott, for joining us today, and we'll end the session.