Good day and thank you for standing by. Welcome to the Ascendis Pharma Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker for today, Mr. Tim Lee, Senior Director of Investor Relations for Ascendis Pharma. Please go ahead.

Thank you, operator and thank you everyone for joining our second quarter 2022 financial results conference call today. I am Tim Lee, Senior Director of Investor Relations of Ascendis Pharma. Joining me on the call today are 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. Stina Singel, Head of Clinical Development Oncology; and Joe Kelly, Head of U.S. Commercial Endocrinology. Before we begin, I would like to remind you that this conference call will include forward-looking statements that are intended to be covered under the 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 U.S. – excuse me, 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 product pipeline candidates, statements regarding our planned filings, our extension – our expansion into the 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 for those in the forward-looking statements and we may not be able to achieve our goals, carry out our plans or intentions or 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,…

Thanks, Tim and good evening everyone here from Copenhagen. With our recent clinical and regulatory progress for TransCon PTH and the commercial progress for SKYTROFA, we continue to work towards fulfilling our Vision 3x3 to become a sustainable, profitable leading biopower company. For TransCon PTH, we have reported positive Phase 3 data, which met the composite primary endpoint and all key secondary endpoint highlighting its potential to address a major unmet medical need for adult patients with hypoparathyroidism. After a positive and construct a pre-NDA meeting with FDA, we are on track to submit regulatory filings in the U.S. in the coming weeks and during Q4. This year, we continue to advance our goal of making SKYTROFA the leading product in a growing growth hormone market, and our planning to launch SKYTROFA in Europe next year. We have now achieved successful Phase 3 results for two independent product candidates in a row and continue to see highly consistent clinical trial hotels across multiple basis and populations. We believe that we are well positioned to drive sustainable, long-term growth without 3 additional independent clinical product candidates in rare disease endocrinology and oncology that as the same algorithm for innovation that we used for SKYTROFA or TransCon PTH. We believe that we are on track to become cash flow positive. Given our strong cash position of around €1 billion, combined with the expected revenue from SKYTROFA in the U.S. combined with the expected U.S. launch of TransCon PTH in the middle of next year. Now, let me update you on each of our programs. For TransCon Growth Hormone market as SKYTROFA in the U.S., our commercial strategy is to build SKYTROFA into the leading growth hormone product in value, while growing the overall value of the growth hormone market. Our once-weekly SKYTROFA…

Thanks, Jan. As Jan noted, we are in a very strong position to achieve Vision 3x3 to become a sustainable cash flow positive biopharma company with the U.S. commercialization of SKYTROFA, near-term regulatory filings for TransCon PTH, and nearly €1 billion on hand. Reported U.S. SKYTROFA revenue for the second quarter more than doubled sequentially to €4.4 million from €1.9 million in Q1. Growth in SKYTROPA revenues reflects the strong increase in reimbursed demand and we continue to see robust increase in cumulative new patient prescriptions as summarized in the press release. Based on the increasing success rate of patient reimbursement and our continued momentum gaining prescriptions, I want to reiterate Jan’s comments. We believe we can achieve the current Ascendis compiled sulfide analyst consensus estimate of €25 million for the full year 2022 SKYTROFA revenues, which consists of 14 publishing analysts. Now turning to operating expenses. Research and development costs for the second quarter were €90.4 million compared to €83.3 million during the second quarter of 2021. This reflects ongoing normalization of our overall R&D cost structure as more programs progress from early through late-stage development and approval. Selling, general and administrative expenses for the second quarter were €56.6 million compared to €35.3 million during the second quarter of 2021. These expenses primarily reflect higher commercial costs in the U.S. following the launch of SKYTROFA. Finance income for the second quarter was €71.1 million, which includes a net foreign exchange rate gain of €30.6 million related to the translation of our U.S. dollar holdings of cash, cash equivalents and marketable securities and our U.S. dollar-denominated convertible senior notes to euro and a non-cash €39.3 million gain from remeasurement of the conversion option embedded in the convertible notes. Finance expenses for the second quarter were €9.3 million, primarily related to…

[Operator Instructions] Your first question comes from the line of Jessica Fye from JPMorgan. Your line is open.

Hey, guys. Good afternoon. Thanks for taking my questions. I have one high-level question and then a few specific ones. First, what are the PTH and/or SKYTROFA assumptions that are embedded in your expectation to become cash flow positive? And just to confirm, should we take that to mean you expect to become cash flow positive without the need for additional capital. Maybe I’ll stop there and come back with the other product-specific ones.

Thanks, Jess. We are in a unique position at Ascendis. During the last years, we have built up a unique pipeline of five independent product opportunity. Each of them have a posted potential. For what is unique to the pipeline, we believe we can make it extremely successful. We have not failed in one single clinical trial yet. We have managed to move each single product opportunity from preclinical states how to get SKYTROFA approved now in Europe and U.S. We have moved TransCon PTH from preclinical into positive Phase 3 trial and we now expect to fight in the next weeks here in the U.S. If we just focus on these two product opportunities and to be profitable and to be cash positive. There is two different elements. This is like a bucket. You fill in the bucket when you start with some water, and then you have a whole things run out. We started with €1 billion of water now. And then we fill in with revenues from SKYTROFA in the U.S. our expected loans of TransCon PTH next year. And then we have a whole – what is interesting now, we have such a mature pipeline with not really a new reality increasing R&D expenses because we take product out nearly in the same stage as we take it in. So this is why Scott and I, the management and everyone feeling now we are in a position we can hit profitability with our current €1 billion the pocket of cash. Scott, any additional thing?

I don’t have anything to add to that, Jan. That was right.

Great. The other one I had was just – how many of the 1,707 patients who have gotten SKYTROFA prescription have received a pen or started taking SKYTROFA at this point? And then switching to CNP, what do you expect to learn from the accomplished data and the open-label extension data that will become available in the fourth quarter. And I’m also curious of your thoughts on it seems like now two other agents in the space have had a tough time detecting an efficacy signal in kids under age 5, what proportion of the kids in your accomplished trial are under age 5?

Yes. Still a lot of questions. Let me start on – that is the last part because – and I can say remember most of the question here in the later Copenhagen hours. But I do believe that you need to think about how we decide our countries drive. We decided out from the perspective is that we wanted to really to see the expected strength of our product opportunity. And we did it in a way where we double blinded it and having an internal placebo control, where we randomize each single of the four cohort to one to three. So we basically have in our this time, the same amount of placebo as we have treated patients in each singular arm. They are different compared to anyone else, there are some trying to compare to historical data, some way trying to compare to pretreatment outcome. That is a big difference. So we basically will have 1 year of – data in a well-controlled double-blinded trial with about 10 to 12 patients in each single arm. We will be in a position that we really want to treat all the patients. We were not just selected to over and anything. We’ve been leading that basin down for a newborn, you should have the treatment option. And we believe we also have such a strong product opportunities we can see in effect there. So what we are doing and what we expect to share with you in Q4, we will share with you all the data so you can take an informed decision about the strength of this product opportunity, how it can really help the patient. We will show you the annualized growth rate of CT for each single cohort. 1 year, we will compare to placebo. We will…

[Operator Instructions] Your next question is from the line of Josh Schimmer from Evercore. Your line is now open.

Thanks for taking the question. A couple of questions about SKYTROFA. First, in terms of access dynamics and parameters, can you give us a sense of the percent of targeted covered lives that are able to access SKYTROFA, there is a front-line option or a switch option without any step edit requirements. And we’ve also heard some concerns about the device potentially jamming at times. Maybe you can help quantify the rate at which that is occurring and whether there are any mitigation steps to correct that, especially as Novo Nordisk may be launching once a week with a competitive device as well. Thanks so much.

Yes. Thanks. Let me start on the last question, which are always easier for me to remember and Scott you give me the thing for the first one. Let us talk about the SKYTROFA device. When you talk about device, you talk the way you treat the patient and how you basically have a treatment option for the patient. And what we did developed with SKYTROFA and its developed auto-injector, which we just really got the award for because the basic how it was patient friendly and other things like that, really showing how we really have succeeded with what we tried to develop with SKYTROFA auto-injector. So one of the things we wanted to build in this auto-injector is basic to have room temperature stability. And this has really been the key element for the leading position of the daily growth hormone market because it is really a huge burden for patient caregiver or ways to have a cool chain stores when you’re traveling or other things, just moving from one home to the other home doing other things. And this is why we built it up in this way. But one of the unique rebuild up was single-use contracts because it also gives them unique opportunities for the caregiver never being doubt. Did they really give the child and injection that week or not. And we’re really seeing unique benefit with that. What I get from every week I get an update about complaint because in the complaints, we have an active monitoring about what do we see out in the market. And now we have basic 1,000 patients in treatment and other things like that. So the numbers start to come in. And I can guarantee when I look at the numbers there, I’m not getting any data that indicating that we have any issues with what you are referring to with the auto-injector. We cannot see it from the data. Sometimes perception are stronger than reality. But when I look on the data, we have no indication from that perspective. The first question, I think the first question we can answer, but we can answer under this assumption that its basic is acceleration and is changing day-by-day because as you see in our press release, we have about 5%, 7% of U.S. life cohort. But this means that it really is a highly diverse positioning, and this position is changing day by day, week by week because as Joe is doing with his people, the commercial team, they are trying to their market access team to improve every day, every week that our patients and the physicians have the most optimal way to get access to the patient of SKYTROFA. Scott, do you have any comments or pass that to Joe?

Yes. I would just maybe augment that, Josh, by saying there is a variety of coverage. And we believe that our formulary positioning is basically in line with our goal of preserving and growing the value of this market, specifically for our SKYTROFA product, what we believe is a premium product.

Yes. I think one of the key elements, you can have different kind of strategy and position about a brand, about SKYTROFA how we want to be having an overall strategy for us. We have a superior problem. We believe we have a best-in-class product opportunities. We believe the properties that we have with SKYTROFA is providing the endocrine benefit that a patient should deserve. What we see today is that when we position that into the market, we have two goals, to be number one in value in the U.S. market, but the other one to ensure that the entire growth hormone market will grow to a level from the current 1% to 3% to a higher level because we are providing a better treatment out consultation. And therefore, from the society perspective, we can someday share the benefit everyone gets out to it. This is why we believe our market asset strategy is building on not being in a position where we’re not getting and taking market assets except that we’re feeling this is into the framework where we believe we can see these two elements. Joe, I would like to introduce you to Joe. Joe is the Head of our U.S. Commercial team. And Joe, do you have some further comments to this discussion?

Yes. Thanks. Yes, and Scott, Josh. But yes, I’ll just really reinforce our strategy around gaining profitable access for SKYTROFA, and that’s something we’re continuing to execute on. And as Jen has mentioned a couple of times already. Commercially, we’ve made some tactical adjustments by reallocating resources to capitalize where we know we have access opportunities with better targeting and we’re also reinvesting in areas that hasn’t looking to me to help us increase the number of patients that get reimbursed. And if you look at June by itself, representing half of our revenues, in Q2, it’s an example of our approach working, and we’re just getting started.

Okay. Thanks very much.

And one thing I would like to say, I would like to see what we have seen here in the last two quarters now where we have doubled the revenue from last quarter to this quarter. Our goal is we can continue doing that. This is how we want really to build up the brand. And I believe Joe and the entire commercial team because they are really function as a team is really now dedicated to get that to happen. We believe patients in the U.S. with growth hormone deficiency deserve to have the treatment option of SKYTROFA and get what we believe is the benefit of this treatment.

Your next question is from the line of Tazeen Ahmad from Bank of America. Your line is open.

Hi, good afternoon. Thank you for taking my question. Jan, I just wanted to get your thoughts about the competitive landscape for achondroplasia. So we know about the competitive advantage your products would have potentially on dosing, dosing frequency. But I also wanted to get your thoughts on BridgeBio, which recently did show some early-stage data for an oral molecule that is developing. It’s early, of course, you’d still be several years ahead. But I guess, in theory, how do you view the potential profile of an orally delivered drug if efficacy is somewhat comparable to your proposed weekly injection? Thank you.

Yes. Is not really my job to make comments about our company’s product. But I’m always willing to share my personal analysis of the entire competitive landscape. First of all, my fundamental from the scientific perspective, and this is where I always believe, product opportunities, mode of action is direct the clinical outcome in the end independent on how you do the clinical trucks, number one. This is an oncology stock that got positioned into a pediatric indications. From the mode of action and where the target tissue are in the growth plate, I need to be convinced by data, data and data that is a safe product because that is pretty royalty number one. It needs to be safe in the doses, where it provided a therapeutic effect. And then my question come in when I look at the data, I have no clue how to analyze it because one of the key elements I need to understand because I have seen so many, many, many, many data with annualized growth velocity for three months, six months and everything like that. If you just see at delta, it’s meaningless for me. I need to see absolute growth velocities. I need to see background. I need to see other things like that. So, for me, I have no evidence. I have no opinion if this product is function or not because I can personally not judge it. For the competitive landscape is that safety is number one in a pediatric achondroplasia patient. You cannot compromise safety. Whatever you talk about, you can never compromise safety. And this is why we believe together with see growth velocities I need to see background and need to see other things like that. So, for me, I have no evidence, I had no opinion that this product will function or not because I can personally not judge. For the competitive landscape, we expect safety is not the one in a pediatric achondroplasia patient, you cannot compromise safety whatever you talk about, you can never compromise safety. And this is why believe together with [indiscernible] that the CNP pathway has now proven with so many patient data is an extremely safe partway to utilize. So, now we just need – I would say just need, we need to find out how we can optimize the treatment received, so we really get the best out of the CNP treatment. And that is what we are hopeful, we will get some clues about we can just need. We need to find how we can optimize the treatment received, so we really get the best out of CNP treatment and that is what we are hopeful we will get some clues about, we can give you some comfort that is possible when we come out with our data in Q4 with basic are coming from a patient group from age 2 up to age 10, because we also believe that should have a treatment option on the front.

Please standby for your next question. Next question is from the line of David Lebowitz from Citibank. Your line is open.

Thank you very much for taking my question. I guess with respect to the number of prescriptions at this point, to what extent are the patients getting reimbursement overall? And to what extent are patients receiving discounts or through the launch at this point? And in addition, how long are the prescriptions for each one mentioned as far as duration?

Typical a prescription is for 1 year. Typical a patient get drugs for months. Some patients will get drugs for three months. But I would say it’s much, much, much more common just to get a one month supply. So, when we talk about a prescription, it basically will have a duration for 1 year before it starts to be renewed. What Joe has indicated, we had the overall goal when we launched SKYTROFA here in the U.S. We wanted to build it up in the leading brand in value. We also wanted to do it in a growth hormone market, there will be increase in value at the same time. After that, we built out our commercial loan strategy, our market access strategy, and you can have different tactics to achieve our overall goal. And what Joe and his team have done is really optimizing this tactic. And that is why we see the results now where we really see the benefit of the change of tactic and how really to achieve our corporate goal on how we want to develop SKYTROFA. So, what we are doing now, we are converting on a higher and higher rate that prescription over to reimbursed life. And that is our goal because this is where we recognize revenue. We don’t recognize revenue up from prescription. We recognize revenue when we are selling to the system in the U.S. that distributes the drug to the patients.

Got it. And with respect to an initial prescription, how long does it actually take until that patient becomes a full paying customer? And has – do you have enough data to see how that’s evolved since launch?

We have a lot of data, and it’s evolving week and once per month. Some of them is a few days, some of them I do not know because I have not got it yet. But if Joe, if you can comment about some of their own metrics and how we are really improving how we really can optimize this because this is one of the way how we see, we have changed a lot tactics.

Yes. Thanks David. It really varies quite a bit from patients that already come in approved, reimbursed to folks that go on our free drug program. And within those 1,700 patients that were prescribed SKYTROFA, but there is a subset that again, are reimbursed rather quickly, a subset that do go on our free drug program. And then there is another subset that don’t go on free drug, but are going through the reimbursement process through medical exceptions and sometimes appeals. But at this point, David, we are not willing to share specifics about that data, but I can tell you that some of the tactics that we have adjusted are really showing that we can accelerate that process to where we are getting approvals much quicker now than we were before from the PBMs and the payers. Whether we are on formulary or not on formulary, we are seeing patients get the authorizations in both categories.

Thanks Joe. Scott has an additional comment.

I would just say importantly, Dave, the increase in SKYTROFA revenue from Q1 to Q2 reflects the underlying increase in reimbursed demand. And you can see there the acceleration based on the tactics that Joe and the team have implemented.

Thanks Scott.

Your next question is from the line of Li Watsek from Cantor. Your line is open.

Hey. Thanks for taking my questions. I guess I will start with TransCon CNP. Just can you remind us, I guess from the Phase 2 data would be considered, I guess good clinical outcomes. And I guess, other than the growth velocity, what other clinical outcomes that we should focus on that are most relevant for these patients?

These are extremely interesting questions from that perspective is that from the regulatory perspective, there has now been a clear status of the procedure that the primary endpoint is analyzed growth velocity. And this is when a precision has been established, it’s really, really hard to drive away from that perspective. So, this is why we have focused so much on analyze growth velocity as the primary endpoint because that is how regulatory want to have approval of this product. But you are 100% right, analyzed growth velocity is only an indication of effect. We want to treat the co-morbidities. We want to improve the quality of life. We want to improve the wellness and life span. And this is why I am so thrilled. And honestly, I am thrilled because if you have so many pediatric patients now going after 2 years and none of them have stopped, missed drug or anything of that, but continued to be on treatment. There is some clear benefit in the trials. At least that is my belief. What we would love to do, and this is what we are going to do. When we have un-blinded all the data, we are looking on all the different elements on clean data and other things like that, we are hopeful we can see potentially some effect that we basically can follow-up on and try to understand data. But currently, I have only a lot of ideas on a huge menu list of what we potentially could see, but I need to look at the data and understand the data to such a level what we can do it. But what we like to do – and this is why we now are initiating the 2b trial, which we started eight patient pediatric children for two another that basically are starting now on treatment. And we know when we have analyzed the first series of data, we potentially can take end point from that air into our Phase 2b trial and potential start to have that in our interaction with regulatory agencies of taking them on secondary endpoint or other part. So, what we drilled and we believe and hope that we can prove some benefit that really addressing the co-morbidities.

Okay. Great. So, I guess just a follow-up here. You mentioned maybe the regulatory pathway and maybe a possible – maybe an accelerated ones. I just wonder if you have any interactions with the FDA about this possibility and again, get a sense on what agency would like to see because it seems like TransCon CNP is quite safe. So, I wonder how you are thinking about this possibility from here?

I can start with my thinking and then Dana can follow-up. But I think the key element we are waiting for is the data. It’s must, must productive is much more effective to come and discuss when we have the data here in Q4. Today, we can only speculate. We can think but we need to see the data. And then we can start a positive dialogue with regulatory agencies in different places in the world to find out how it can be as fast as possible, get this unique product opportunity out to the patient on a property perspective. Dana, do you have any comments?

Jan, yes, you are absolutely right. We haven’t had any communication with FDA and our plan is to take the pace, the accomplished data. And then we are already planning the Phase 2b, and then we will have two studies eventually that will form the basis of our discussion.

So, more to come after the data.

Your next question is from the line of Vikram Purohit from Morgan Stanley. Your line is open.

Good afternoon. Thanks for taking my question. So, I had one on SKYTROFA. As you have progressed now through another quarter of the launch, are you still seeing the majority of patients coming from being switch patients versus treatment-naive patients? And for patients switching over from other therapy, is there a particular agent that you are seeing the majority of patients switch from?

I think still we see what we actually was experienced in the first quarters or the first full quarter Q1, we also saw that in Q2. We see a small majority of the patient coming from switch patients. So, it’s a small majority of patient and there is no single daily growth hormone, they are coming from, it’s basically broadly among all the daily growth hormones. Honestly, this is pretty expected because there is no difference between the daily growth hormone. All of them are identical. So, there is no difference. So, I think this is following science. There is no different than daily growth. We see no switches from anyone that is preferable.

Got it. That’s helpful. And a follow-up question on a separate topic. For the transcendIT-101 data we are expecting to see in the third quarter here. First, what parameters of data do you expect to report out on? And then – how are you defining success for this readout? And what is the internal hurdle you are trying to meet here from this data set?

Yes. I can start initially, and I think Stina is on the phone and she can follow-up. The transcendIT where we take our TransCon TLR7/8 agonist we injected inside the tumor in patients with solid tumor. Its mechanism is to kick-start the tumor. The hemological system and at the same time, you provide very low systemic exposure to ensure that you are having an extreme safe program. So, one of the element which we already have disclosed has shown the successful design of these product opportunities. We have disclosed the safety. We have disclosed the PK profile. We have disclosed how we have stain released inside tumor with a low systemic toxicity. So, from that perspective is that what we are optimizing now is how we can also see the clinical activity or the target engagement in injected tumor and non-injected tumor. And Stina and her entire team have designed a huge claim, both related to biomarkers, tissues other things like that. And Dana – sorry, Stina, you can some way explain how we are progressing and when we will select and recommend Phase 2 dose.

Thank you, Jan. So, at the end of quarter three this year, we expect to have a formal analysis of the Phase 1 dose finding portion of transcendIT-101. We expect, as Jan mentioned, will summarize what we have seen in dose escalation cohorts for monotherapy in combination with pembro. Our PK from the dynamic data, clinical safety and initial look at antitumor activity. Does that answer your question?

Vikram’s line is already closed. Our next question is from Joseph Schwartz from SVB Securities. Your line is now open.

Hi, I am Jerry, in for Joe. Thank you for taking our questions. The first one is on SKYTROFA. I was just wondering, what are some factors that went into building our confidence to reach €25 million by year-end? Could we – and when can we expect to see an upper bound in guidance? And I have a follow-up.

So, what we are doing at the company is that we have coming off with clear description of some of the key parameter we are following the launch with. What we are giving you now is the revenue that we have seen quarter-by-quarter for the last two quarters. And we have seen more than 100% increase in the revenue from last quarter to this quarter. We believe we can continue doing that because we see the continued execution of some of the KPIs that is really following the launch. And I think we have provided you a guidance today. We have come out with a clear measure. We feel comfort that we can reach what you for sell side results have in consensus, with its comfort, we can reach that. And I don’t believe we actually can move further into more discussion about what our own expectation is, we give you the comfort that the guidance that you have as consensus, we can reach.

Okay. That’s helpful. Thank you. And then my next question is on TransCon CNP. I was just wondering if you could elaborate more on your Phase 2b trial that you plan to conduct? How does this fit in and complement your two Phase 2 trials? And do you have plans higher than the 100 micrograms per kg per week that all your patients in your OLE study design? Thank you.

First of all, one of the element in conducting this trial is that we have an achieve trial. And we have 100 patients now, I think in mainly Europe and U.S. We have not seen any of this patient move away from our national history study. They are still in there. And basically, they have a high level of expectation that potentially we give them a treatment option. And that is exactly one of the reasons why we are initiating the Phase 2b trial to give them a hope, a treatment option for a product. From our side, it also is a trial that will give us the insight in potential how we can explore all parameters, except analyze growth velocity, which are the key parameters we have now been focused on in the company’s trial. When we have the data in Q4, we basically will analyze the data back and forth as we always do, go deep in the science, try to understand the data, look on each single patient, what’s happening, what is done. And then we will potentially can incorporate other secondary endpoint in that trial and build it up in our sedating discussion with regulatory agencies. So, the purpose of that Phase 2b is basically improve clinical evidence of what we can achieve with TransCon CNP.

This concludes today’s conference call. Thank you all for participating. You may now disconnect.