Good day and thank you for standing by. Welcome to the First Quarter 2022 Ascendis Pharma Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions]. I'd like to hand the conference over to your speaker today, Tim Lee, Senior Director Investor Relations. Please go ahead.

Thank you, Operator. Thank you everyone for joining our first quarter 2022 financial results conference call today. I'm Tim Lee, Senior Director of Investor Relations of Ascendis Pharma. Joining me on the call today is Jan Mikkelsen, President and Chief Executive Officer, Scott Smith, Senior Vice President and Chief Financial Officer, Dr. Dana Pizzuti, Head of Development Operations and Chief Medical Officer, Dr. Juha Punnonen, Head of Oncology, and Dr. Stina Singel, Head of Clinical Development Oncology. Before we begin, I would like to remind you that this conference call will contain forward-looking statements that are intended to be covered under Safe Harbor provided by the Private Securities Litigation Reform Act. Examples of such statements may include, but are not limited to our U.S. commercialization and continued development of SKYTROFA for the U.S. market, the commercialization of TransCon hGH for the EU market, our progress on our pipeline candidates and our expectations with respect to their continued progress; statements regarding our strategic plans, our goals regarding our clinical pipeline, including the timing of clinical results, statements regarding the U.S. market approval of SKYTROFA and our pipeline product candidates; statements regarding our planned regulatory filings, our expansion into new therapeutic areas and statements regarding our ability to create a sustainable, leading global biopharma company. These statements are based on information that is available to us today. Actual results and events could differ materially from those in the forward-looking statements and we may not be able to achieve our goals, carry out our plans or intentions, or beat the expectations or projections disclosed in our forward-looking statements, and you should not place undue reliance on these statements. Our forward-looking statements do not reflect the potential impact of any licensing agreements, acquisitions, mergers, dispositions, joint ventures, or investments that we may enter into…

Thanks, Tim, and good afternoon. 2021 was an extraordinary year for Ascendis. As we became a fully integrated commercial states biopharma company, with the launch of SKYTROFA in the U.S. and the expansion of our clinical pipeline to five independent programs in endocrinology, rare disease and oncology. These such as this confirm that we have the right strategy. The people, and capabilities in place to allow us to achieve our vision three-by-three, and to build a sustainable, profitable, leading global biopharma company. In 2022, we have already achieved and important milestone. In March, we reported results for trends current PTH Phase III program and our PaTHway trial make the primary and all key secondary endpoint. TransCon PTH is our product candidate, addressing a major unmet medical need for adults with chronic [Indiscernible] patients. And that's [Indiscernible] population with around 200,000 patients in North America, Europe, and Japan alone. It is to where part biotech company to have two potential blockbuster product candidates in a row achieving that target product profile and successfully meet their Phase III trial objectives. What has put Ascendis in this unique position. First, our TransCon Technology Platform and our [Indiscernible] to product innovation. The uniqueness of the TransCon Technology Platform. Combining the benefits of two independent technology platforms, the classical pool of technology and a predictable sustainable technology. The TransCon technology platform can be applied for to multiple dock types. We believe this combined with our validated across to product innovation enabled us to achieve a higher rate of success compared to traditional drug development. [Indiscernible]. Our commitment to patients and the science. Our commitment to patient and science has guided our product development strategies. We seek to design optimal clinical programs to bring different [Indiscernible] product candidates to patients as quickly as possible with robust…

Thanks, Jan. As Jan eloquently laid out, 2022 is an important transition year for Ascendis. We have demonstrated we have all the elements of success in place to deliver sustainable growth, and we have a strong balance sheet to support execution of our Vision 3x3 strategy and long-term profitability. Turning now to our financial results for the quarter ended March 31, 2022, we reported a net loss of €125.5 million or €2.21 per based and diluted share compared to a net loss of €62.3 million or €1.17 per basic and diluted share during the first quarter of 2021. And we ended the first quarter with cash equivalents and marketable securities totaling approximately €1.1 billion. Let me now run through some key components of these results. Total revenues for the first quarter were €6.8 million compared to €0.7 million during the first quarter of 2021. Revenues include U.S. SKYTROFA net sales, as well as licensed clinical supply and services provided to third parties, primarily VISEN Pharmaceuticals. Reported U.S. SKYTROFA net sales for the first quarter, which are net of provisions to cover estimated sales deductions and product returns were €1.9 million. Now turning to operating expenses, research and development costs for the First Quarter were €83.2 million compared to €88.1 million during the first quarter of 2021. This reflects stabilization of our overall R&D costs due to successful progression of early-stage programs through late-stage development and approval. Selling general and administrative expenses for the first quarter were €47.4 million compared to 37.2 million during the first quarter of 2021. These higher expenses primarily reflect increased costs to establish our commercial organization in the US. Finance income and expenses for the first quarter included a net foreign exchange rate gain of €11.7 million compared to a net gain of 34.2 million during…

Thank you. [Operator Instructions] And then in the interest of time, we kindly ask that you please limit yourselves to one question and one follow-up. You may rejoin the queue, if you have any additional questions. And our first question comes from Jessica Fye from JPMorgan. Your line is open.

Hey, guys. Good afternoon. Thanks for taking my question. In line with SKYTROFA number, I had a couple of questions there just to kind of clarify what we're seeing here. Also, patients who have been prescribed SKYTROFA, what proportion were reimbursed during the first quarter? And in light of the lag that you mentioned between plans adopting coverage, and patients starting up on reimbursed product after they finish using their free drug, can you tell us of the patients who have been prescribed SKYTROFA, what proportion of those patients are on plans that now cover SKYTROFA? And I have a follow-up.

Thanks, Jess, for the two questions. Let us start with the last question you have about the time. This is actually a time that is still out getting developed when you come to a more steady-state situation. So, if we start to discuss the number now, then it will basically a completely different number in two to tweet we from now in two to three months from now. Because it's basic applying a general principle, because we have the faster program. In the faster program, you come in without the majority of the patient comes. So, we basically having positioned that as we also have seen from the data that Scott released, the majority of the patient is still coming from [Indiscernible] patients, so still many of them will have daily growth hormone supply, and first of all, it will take some time before they have used up the daily growth hormone supply before they start with SKYTROFA. and also, the reimbursement system in that. Now, there's a wider delay in this number, we've come out, as we said before, in a situation when we come up with our Q2 finances, we will give you an updated perspective both on what we expect to be our revenue basis for rest of the year, and we will also give you a much more solid data. Why do we believe we can provide you much more solid data, because we will have all the fundamental analytic for two full quarters? And when we have that, we feel much more in comfort for basic being a position, can give you information, data than can give you a way to make and realize forecasting of the sales. For the first question, I think Scott has some question related to that.

Just your question related to how many patients are reimbursed now that came onto therapy, I think is the one that I'm addressing. Once the patient receives their first claim reimbursed, I would say we have limited information after they start being dispensed via the specialty pharmacy. However, from a financial perspective, as I mentioned, we've taken that provision for a variety of different discounts and rebates and product returns. And we try to be as conservative as possible until, as Jan mentioned, we got our experience around how the patient evolves over time.

So basically, what we're doing here when we talk about net revenue, the basic at some of what I call basically a worst-case scenario, both we incorporate already at those states if that's a product recall and other things like that, because we don't want to be in position that we suddenly are in a position that we need to redo a lot of expected revenue basis on a net base because some wins incomes up in the end of the year. And I was a pretty conservative way to do it, but we believe it's a right way to do it because they give you a great fundamental for having what we call it a real net revenue basic, instead of what we call a percent net revenue basis.

Okay. Thanks. And follow-up question was just do you expect priority review in the U.S. for TransCon PTH?

I think Dana Pizzuti has her hands up in the air, so I do not know what that mean.

Just I think we're going to make a strong case for it. And I think it's always up to the agency to make their ultimate decisions, but we'll be talking with them about it definitely.

Thanks

Thank you. Our next question comes from Josh Schimmer from Evercore, ISI. Your line is open.

Thanks so much for taking my question. For TransCon PTH, put a lot of interest and enthusiasm for the product to have nephron protective and potentially cardio protective properties. When do you think you'll be in a position to generate clinical data to really support that, and go beyond the theoretical in term of tangible proven advantage? Thanks.

So, when we look on the potential of TransCon PTH, we believe the way we're providing PTH to the patient, giving the right molecule in the physiological level, 24 hours a day, is providing, as you say, total right. We are getting to a pace where we be do normalization of all biochemical, physical, everything what we are measured, including quality of life parameters. When we specifically go to element like cardiovascular risk, I actually think we already have what are called surrogate markers that might best way have a strong scientific clinical correlation, for example, phosphate -- calcium phosphate complex. I think that is a strong scientific connection that also are providing. If you have them elevated up to a high level, they are providing what we call the cardiovascular risk. If, for example, a [Indiscernible] to the kidney, which are a huge issue for the patient group because that basic item positioned you, don't bring all the [Indiscernible] into the kidney system and basing our going to be no [Indiscernible]. And one of the elements we can do just is that when we now have patient already in treatment for two, three, four years. We can go back and look on the -- for example, the filtration. Look at the way the way the basic are performing. And sure, we cannot have what we call doubled guidance, placebo-controlled because we cannot really be in a position that we can defend to have patient going out on treatment for a long time without giving them access to home medication. But what we can do with I believe is a very strong benchmark, is compared to all the data that is built on the patient population of patient with hybrid bio-terrorism. And I'd think that will be a strong comparison to it. But I believe also in this case, there is strong surrogate markers like Urinary 24-Hour Calcium with basic iron, a position that we really can give a strong scientific rationale why it should be giving a positive impact on that. Dana also has a few comments to add in.

Oh yeah. Josh, as we've looked at the data and some of the correlation between the PTH levels that we have and the urinary calcium levels. What we're seeing is that it doesn't take much PTH to restore the resorptive ability in the kidney. So, I don't know how long it's going to take to see clinical benefits or the lack of progression of like particularly renal complications related to the calcium. But the longer that we look, the better we could be or more stable these patients should be. So that's one way that we're looking at it.

Are there ways to quantify the amount of calcium in the kidney like there are for the heart?

The way we actually qualifying what we call the -- how to look on what we call the short-term weight is to look on 24-hour urinary calcium. Because just looking different documentation from 50 days, a clear correlation between what we call [Indiscernible] impact impairment compared to other effect that you see with having an elevated 24-hour urinary calcium. But as Dana said, it's really interesting from scientific perspective would be seeing now because we basic can track, because we have so many patients of different doses, and what we see, different part of the body because it's a much organ disease. And we see the threshold, which we believe is the most important, the stable feasible logical PTH level. But different organ has basic different way to respond to it. And as Dana said before, the kidney is actually one of the easiest organs some way to normalize with the PTH. And we see that really, really easy in low-dose PTH, as long is a constant in the low level of the physiological level then we see the improvement.

Thank you. Our next question comes from David Lebowitz from Citi. Your line is open.

Thank you very much for taking my question. Could you -- understanding that at this point in time you're not comfortable giving us a timing in certain specific and reimbursement, could you run us through the typical process for a patient coming to a doctor to get prescribed for growth hormone, what it takes to get the prescription, how the prescription gets submitted to the ensurer, how long can they be looking at depending on what the nature of their ensure is and where their status of coverage is. Just to get us some sort of idea of what the process is facing these patients right now.

Yes. This is a question where there is so many, many, many scenarios for answering the question. First of all, it's fair most upended are you a new patient or you already have been started a treatment on daily growth more. Then you just take the big group of these two into the NIM patient, your basic go -- need to go through all the different kind of test that involve stem test, x-ray of -- you still have open growth played. A lot of different tests that take a period of time, really to get established that you have the diagnose of growth hormone deficiency. If you take the patient that's coming from already established data platform, its -- from that perspective, it's much, much, much easier because you already have been to all the different diagnosis and therefore have expected. This is why potentially we see a majority of the patient coming for suites patient because they don't need to go to the entire system to be established with diagnose of having growth to more deficiency. Those two big, big groups, then you go into each of the two big groups. They're not dependent, are you coming for system where we already have market assist or no market assist. And then there's different place to have market assets. This is not reciprocal way to have market assets, you have different what are called power of market assets, and even holds a basic acquire a lot of different elements to fulfill it. And it would take different times and different system, you have depending on the market's assets that you have in your insurance. But what we see of all these groups, we get all the groups now and we get them both, what we call the already have to pre -authorization, we also get them from the system where you go to medical exception. This is mainly typically where there is no marketing state, but still getting medical exception. Because if you have a chart not data growth, that's are growing and you have SKYTROFA, some an optimal treatment option. This is actually possible to get medical exception. And this is where we see them come from. Suddenly not, I cannot answer your question better because this is describing about 200 different paths in the complexity of the U.S. system related to basic getting reimbursed and established [Indiscernible] as a commercial treated patient.

Thank you for that. And one follow-up here. Could you possibly outline for us what the revenues might have been before provisions to give us just perspective on the level of impact at this point.

I think this is something we typically we're disclosing in our numbers. Because as I said, and what Scott said we do it in a very, very conservative manner, where the both subtracting element like [Indiscernible] but we also basic taking away if there is any kind of material they're not getting sold and other things like that. So, I think we have four, five ways where we're subtracting for what we call the gross margin. And then you have gross margin one, you have gross margin two, you have gross margin three, you have gross margin four, before we go back to the final one, we call net-net revenue. And that is what we give to you. And that is not realized net-net revenue. This is where we believe that in the future, if there's any kind of discounting coming, then we will take it away. So, it's not what we call net-net revenue of today. This is where we will be in a position where we expect for future if there will be any kind of element that we need to discount it is already been taken into consideration.

Thank you. Our next question comes from Vikram Purohit from Morgan Stanley. Your line is open.

Great. Thanks for taking my question. So first, could you just give us an update on where TransCon hGH stands in Europe? And what are the next steps there for securing reimbursement across some of the key geographies that you need to start commercializing in to really start industrially ramping that launch?

Yeah. It's a question and what we were really waiting for was basic TransCon PTH to get the positive Phase III data that we achieved. And you can say why? Because the complexity of the Europe is that it's not a single market, it's a multiple differentiated market. And one of the elements we are focused on is to be profitable and having a PML Flame. And this is a way to have the optimal way to penetrate the different European market. We will be in a position that we can build on facility, the economy of scale of launching to extremely important product, just after each other. Now we have the Phase 3 data. We have the approval in Europe. We basic are executing on our European strategy. And this is a strategy that is built on not spending 120 million and generate $5 million in revenue, it's building and P&L play because we are a European company, essentially enough know what to do, because it's -- I've seen certainly not a lot of company coming into Europe and believe that is a place where you basically can execute and make a highly profitable business on what are called rapid global expansion. You don't do that, you go country-by-country, build it up, and take high-volume, high-margin country as the first date and then you build the expansion from there.

Got it. Thank you. And a follow-up on a separate topic. So, for the PLR78 and IL-2 readouts that we're looking forward to in 3Q and 4Q, what could we expect to learn in terms of number of patients, amount of follow-up, and what do you hope to see from each of these readouts to feel like each program has a viable path forward? Thanks.

I will start with a few remarks and then Stina will take over. When we moved into oncology, I got to ask multiple time, why do you do that again? You have rare disease endocrinology; you can dominate that. Perhaps it's easier to dominate rare disease, endocrinology than going into oncology. But why I'm actual [Indiscernible] produce in the same way because we have the TransCon technology, and the way we have our algorithm for in which where we can really make highly differentiated product opportunities that no one else ever, ever have to meet. And when I think the sedative, we building up in our pipeline approach, the kickstart, the kickstarter inside tumor, that we placed inside a tumor and [Indiscernible] that get sustained released over weeks of one single injection. And then you activate the immune system inside the tumor. And then we going out and say, you have today established checkpoint inhibitor but we are also seeing the limitation. And we are not here to develop something in synergy with checkpoint inhibitor. We are here to develop something that is improvement the next-generation compared to checkpoint inhibitors. And this is our vision, and that is what we're building up with clinical data that really can support that issue. So Stina can give a little bit more perspective. What we have seen in our initial readout, we have seen with all the data.

Thanks, Jan. For the TLR7/8 program, we expect to have about 18 patients dosed by the time that we disclose our data by end of the year. And depending on how many patients may get to the first tumor assessment at week 9, we do expect to have approximately 10 patients with efficacy valuable data. For the IL-2 beta gamma program, we are actively in dose escalation. So, it really depends on when we may or may not hit a maximum tolerated dose. We will have more patients. But as the Jna has mentioned before, we're already dose escalating in dose levels 3, which is the microgram per kilogram. And we're doing it with the standard three plus three dose escalation. Three to six patients per dose level cohort in monotherapy and in combination with pembrolizumab.

So, we're not seeing above the yield to rates that's about 20 company in the IL-2 rates. Wnt to see how fast we're progressing. And why I will be progressing so fast? Because we designed it in an optimal [Indiscernible] the right efficacy without safety concern. And what we see today is really everything has line out how we designed it. So, I'm really, really looking forward to share this data with you later this year.

Thank you. Our next question comes from Leland Gershell, from Oppenheimer. Your line is open.

Good afternoon. Thanks for taking my questions. I just wanted two for me. First, maybe for Scott, just looking at the OPEX through FGNA was maybe a little bit down this quarter versus Fourth Q, earlier in a launch and you guided to a modest increase the rest of the year, just wondering what was behind perhaps not spending as much this past quarter given the SKYTROFA launch. Thanks.

Thanks for your question, Leland, I think that as we alluded to with regard to R&D, to some extent in SG&A, there have been onetime cost to build the infrastructure. So, I think a combination of some costs, rolling off, offset by increased personnel basically lead to flattish expenses.

And then also want to ask in terms of the China trial, given all the COVID impact in that geography, wanted to ask if there is any particular impact to accomplish with respect to COVID-19, things.

Yeah. And just a quick follow-up on. I should have added that. We also are basically in steady-state with the SG&A infrastructure, as well as the R&D infrastructure. And then your question about the status. It was the status of accomplish in China.

No, the East European part of -- as I understood your question, it's not like you're addressing the East European elements.

Now, Shanghai and so forth, just wondering if there's been any impact on the ACcomplisH trial that in regarding with the -- in that region. Thanks.

Yeah. The company's trial is actually pretty interesting because we managed to get a lot of enrollments done, so we actually got the cording as we wanted to do. We actually are following up a lot of that, but we also realized that China is also the country that basic ties element, [Indiscernible] effected on the COVID situation and their other parts that's not affected with it. So, from that perspective, we feel that we're doing that. But as we said before, we also planning to basic do the same parallel in the European and the U.S.A. we feel that and be getting so much response from the patient groups that we would like to see the same core expansion. So, we will do the same thing in what we call and U.S. and here you focus to try where we do exactly the same thing, what we did in China to have it doubled. And it's mainly being driven out from their perspective is that we have so many children in our shift tried. This is our natural to try. And the basic asking us why can be not come into a treatment and we will patient four weeks, we will do what we can do for patients and this is as a why we explained the SS to basically having TransCon, CNP in this patient group to once thing, just to add in with Scott comes about it. Ascendis Pharma is not now matured. We have matured to estates when we take new product up, as we will do in our third [Indiscernible], when we see new product coming to Oncology. We are basic nearly with the same speed are taking up in the opposite end, like SKYTROFA finalized out in commercial manufacturing now, our top research and development. We do the same thing now with PTH, finalizing the validation batch and all the PPQ activities. Next year, we move them out to commercial manufacturing. We do that in nearly in the same speed as we generate the pipeline. So, this is why we're coming to a steady-state in Ascendis Pharma. Building on, we are a machine developed to develop rocks successfully. And as we continue to do with the speed and dedication we have. So, our overall plan is a new product be approved every year or every second year, and if looked at, we really can fulfill that ambition.

Thank you. Our next question comes from Joseph Schwartz, from SVB Securities. Your line is open.

Thank you. Just a question on SKYTROFA and then one on PTH. First, I was wondering if you could describe for us your free drug policy in terms of the duration of therapy that patients are entitled to receive before they need their insurance to cover the bill. And do you have any data at all that you can share with us that illustrates the success rate for patients being able to receive insurance coverage once their free drug supply runs out?

Good question from the perspective is that it's something we're analyzing a lot, looking on the data a lot every month and we see the expected development. We see the expected development is that when we start a patient, they have the opportunity to come into our staff program. But it's not actually all of them that are doing that, and we actually see there is perhaps two set that do it. Let's go directly into it. So, two set opt into this opportunity to get early assets today. And what we now of following, and this is where I'd really, really love to see more and more, more, more, more data. Because it has different patient groups. One with a U-patient, one with switch patients. But what is really dependent is also how we built up the market assess. Because more, more market assesses, and how we get market assess, is also change the ratio when they're moving over. So, what we're seeing is not a steady-state. But what we expect, we expect that the majority of patients that is starting on this faster program, basic will impact as commercial patients. But what we do not know is exactly the timing and how long time. It takes, we have some average time, but it's not meaningful for us to give you average time because it's actually changing month-by-month of getting faster and faster.

Okay. Thank you. And then on PTH, to what extent do patients feel better when they're on TransCon PTH therapy? I'm asking because it seems like many of the day-to-day symptom, you'd capture in a clinical trial are cognitive. But there seems to be bigger impact on physical functioning than cognitive in your data. So, I'm wondering why that is and what it might mean in the real world.

Yeah, it's a good question and Dana will come with follow up accretion about it. But what we did basic in Phase II and what we didn't Phase III, it's a little bit different because in Phase II we basic have the entire, I do not know how many years different software means we analyzed, it was 20 plus, or something like that. And we still physic improvement in all of them. Aster, Dana and she can explain it, is that she had intense discussion with regulatory agents and what their believe was the most important one and what they believe it particularly is one level like for us to move forward with the excellent selected this [Indiscernible], mainly in working in a strong discussion with FDA, which one was most important for this patient group. But Dana, you can explain some of the discussion.

As you know, from prior releases that we've had with the Phase II, we looked at sort of our -- the SF-36 scale. We saw normalization essentially across all the domains. Again, it's not disease-specific. And then we're continuing to develop our HPath, which is disease-specific instrument. Now, we still use both of them in the Phase III. And what the FDA asked us to do for Phase III was to focus on what we felt were some of the most important domains. And I think that in particular, they are particularly interested in the symptoms, and then the functioning, so we did sort of focus on those particular areas. And as we disclosed back in March, we were highly statistically significant for pretty much every single one. So, and then even if we drill down into some of the smaller ones, we still saw a very sort of favorable results for the patients. But the FDA asked us to focus on the things that they felt were probably the most important.

I think in all way to look at it too. Let's look about patient retention. Because I actually think patient retention is the short-term benefit you get on treatment. You don't stay in the clinical trial or in open labor extension because you believe long-term complication mainly are getting solved. You do it because you feel normal again. That you see the needly benefit of the drug. When I see we still have 57 out of 59 after more than 2.5 years in open day [Indiscernible]. We saw all the patient from all Phase III is now under treatment. I think this is the best way for me to measure. Sure, we can quantify it in all the different thing we did in our key secondary element, in our Phase II, but patient retention for me is the key element because this is the why the patient takes the therapy. Why then keep going everyday with a daily injection. With an adherence treatment about 98 to 99, they do it because they get the short-term relief, they're feeling normal again. And this is one of the best versions for me.

Thank you. This concludes today's conference call. Thank you for your participation and you may now disconnect. Everyone, have a wonderful day.