Ascendis Pharma A/S Q3 FY2021 Earnings Call

Good day and thank you for standing by. Welcome to the Q3 2021 Ascendis Pharma Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker for today, Mr. Scott Smith, Senior Vice President and Chief Financial Officer of Ascendis Pharma. Please go ahead, sir.

Thank you, Operator. Thank you everyone for joining our conference call today. I am Scott Smith, Chief Financial Officer of Ascendis. Joining me on today’s call are Jan Mikkelsen, President and Chief Executive Officer; Jesper Hoiland, Global Chief Commercial Officer; Dr. Dana Pizzuti, Head of Development Operations and Chief Medical Officer; and Dr. Juha Punnonen, Head of 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 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, 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, statements regarding the U.S. market potential of SKYTROFA and our pipeline product candidates and statements regarding our regulatory filings. These statements are based on information that is available to us today. Actual results or events could differ materially from those in the forward-looking statements and we may not achieve our goals, carry out our plans or intentions or meet 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 or terminate. We assume no obligation to update these statements as circumstances change, except as required by law. For additional information concerning the factors that could cause actual results to differ materially, please see the Forward-Looking Statements section in today’s press release and the Risk Factors section of our most recent annual report on Form 20-F. SKYTROFA was approved by the FDA in August 2021 for the treatment of pediatric patients one-year and older, who weigh at least 11.5 kilograms and have growth failure due to inadequate depletion of endogenous growth hormone. Otherwise, please note that our product candidates are investigational product candidates and not approved for commercial use, as investigational products, the safety and effectiveness of the product candidates have not been reviewed or approved by any regulatory agency. None of the statements made on the conference call regarding our product candidates shall be viewed as promotional. On today’s call, we will discuss our third quarter 2021 financial results and provide further business updates. With following some prepared remarks, we will then open up the call to questions. I will now turn the call over to Jan Mikkelsen, our President and Chief Executive Officer. Jan?

Thanks, Scott, and good afternoon. Every quarter, I reflect on how the Ascendis team work together with patients and physicians to satisfy major unmet medical needs. I also reflect upon the significant progress we have made towards our key development milestone to bring safe, highly differentiated products to patients as fast as possible. This quarter was special for Ascendis. It marks a defining moment for the company on our Vision 3x3 path to achieving sustainable growth as a fully integrated leading global biopharma company. For years, we have worked to understand the reality behind growth hormone deficiency. We studied the science. We learned from previous successes and failures in trying to develop long-acting growth hormone therapies. And we worked diligently in understanding the clinical data in pediatric and adult growth hormone deficiency. There have been very limited innovations since daily injection of recombinant human growth hormone were introduced over 30 years ago and now Ascendis has the first FDA approved once-weekly product that offers pediatric growth hormone deficient patients, caregivers and physicians what they have been seeking for decades. The approval of TransCon Growth Hormone in the U.S. is the culmination of determined efforts by us and our team over many years to bring the first TransCon technology product all the way from the concept stage through non-clinical and clinical development, manufacturing and device development, and regulatory review, so we can finally go out to the patients. With this approval of SKYTROFA in the U.S., we believe we are just beginning to unlock the potential of what we are seeking to accomplish with the TransCon technology platform and algorithm for product innovation, to develop highly differentiated products addressing major unmet medical needs, which are expected to have high development success, a real paradigm shift. The same excitement we have for TransCon Growth Hormone exists across our entire portfolio of our five independent clinical product candidates. Why am I so optimistic? Because we believe the first FDA approved product is a strong endorsement for the TransCon technology platform. Our accolades for product innovation and Ascendis infrastructure and expertise in product and device development are strong reasons why we are so enthusiastic about the prospects for our pipeline programs. TransCon PTH and TransCon CNP in endocrinology rare disease, as well as our oncology programs, TransCon TLR7/8 Agonist and TransCon IL-2 β/γ. We believe the ability to build a sustainable robust pipeline and not face the common challenges that many biopharma companies encounter in finding a second act to follow their first product, as we from the beginning have set out to build a sustainable pipeline in multiple therapeutic areas. Approval in the U.S. is a major success for Ascendis. But we will, of course, not stop there. We expect to receive European Commission approval of TransCon Growth Hormone for pediatric growth hormone deficiency later this year or early next year. We expect to report Phase III data for TransCon PTH in adult hypoparathyroidism in Q1 2022, followed by a planned U.S. FDA filing in mid-2022. Our research and development engine continues to produce promising new product candidates and we expect to continue the clinical development with additional regulatory submissions in rare disease endocrinology, oncology and also in our third therapeutic area. After we launched SKYTROFA in the U.S. in mid-October, we quickly received our first commercial order and first commercial patient on therapy. The Ascendis commercial team is executing on the long-term strategy, which is designed to maximize the long-term value of our Growth Hormone product and lay the fundamentals for future product launches into the endocrinology rare disease area. We attempt to create a global market-leading brand based on demonstrating clinical benefit and strong value proposition for patients, caregivers, healthcare providers and payers. With TransCon Growth Hormone, we believe we can expand the global Growth Hormone market while at the same time reducing the societal costs that result from suboptimal or lack of treatment. I am often asked about our pricing strategy and what we mean by premium responsible pricing. Our healthcare economic outcomes also demonstrate that with premium responsible pricing, TransCon Growth Hormone may deliver meaningful savings to the payer by potentially improving patient outcomes compared to daily growth hormone. Our payer resource covering 21,000 pediatric growth hormone deficient patients in the U.S. indicates only 20% to 30% of patients are adherent to daily injection therapy, and therefore may experience suboptimal outcomes. With this in mind, we have established a better price for SKYTROFA in the U.S. that takes into account the expected milligram per kilo dose difference for SKYTROFA compared to daily growth hormone in real-world practice. Also, on an annual basis, the rack price is mid-to-high single percent higher compared to the leading daily growth hormone common product. This is what we mean by premium responsible pricing and can be considered a win-win for patients, the caregivers, physicians, and society. We also understand the importance of U.S. market access for patients and families and we continue to work with payers to make SKYTROFA as widely available as possible. Our priority is contracting based on the value of SKYTROFA rather than focusing just on volume. We are committed to building a long-term relationship with U.S. payers and health systems as we work to bring our portfolio of products to the market in the future. As we have highlighted before, Ascendis' commercial leadership team is very experienced in endocrinology, especially in the growth hormone and PTH segment. They understand what it takes to create market-leading brands. Our U.S. commercial organization is in place and we tend to cover around the 1,400 growth hormone prescribers. The pediatric growth hormone market in the U.S. is concentrated with about 80% of all prescriptions coming from about 20% of the prescribers. In parallel, our experienced U.S. medical affairs team has been out in the field creating awareness with key opinion leaders and pediatric endocrinologists. A key component in the SKYTROFA launch in the U.S. has been the successful introduction of Ascendis Signature Access Program. It has several different elements to it. But it is basically a personalized patient support program with each patient assigning a nurse dedicated to working with them and their families, caregivers and physician from decision to treat through long-term therapy adherence. The program offers a suite of services including, but not limited to prior authorization support, out-of-pocket assistance, and training on SKYTROFA. As you know, as I say, in this industry, we always think globally. And so let us turn now to our clinical development programs for growth hormone in other parts of the world. This week, the European Medicines Agency Committee for Medicinal Products for Human Use or CHMP has TransCon Growth Hormone on their agenda. We believe we are on track to obtain a positive CHMP opinion followed by an expected European Commission approval for TransCon Growth Hormone by the end of the year or early next year. In Japan, we continue to screen and enroll patients in the 40-subject Phase III riGHt Trial for pediatric growth hormone deficiency and in China, VISEN Pharmaceuticals completed enrollment of its Phase III clinical trial of TransCon Growth Hormone in children with growth hormone deficiency in March of this year. Turning to potential label extension for TransCon Growth Hormone, we also have the global Phase III foresiGHt Trial underway for adult growth hormone deficiency. Looking ahead we expect to conduct additional trials to support an application for labeling extension beyond pediatrics and adult growth hormone deficiency. Moving to TransCon PTH, our excitement continues around the clinical progress and prospects. Physician and patient stories we have heard thus far indicate that TransCon PTH has the potential ability to transform patients. Given that 400,000 patients globally suffer from this condition and the lack of other treatment options, we believe TransCon PTH, if approved, has the potential to be our largest endocrinology rare disease product opportunity. We think it could represent a market opportunity greater than $5 billion. In September, we announced the 58-week open label density data from the central lab reading in the PaTH Forward Trial, the global Phase II trial of TransCon PTH in adult subjects with hypoparathyroidism. These BMD data complement previously announced bone turnover data and demonstrated, as expected, continued normalization and stabilization of the BMD Z-score between 26 weeks and 58 weeks. The BMD Z-scores parallel markers of bone turnover, which we believe is an indicator that the calcium metabolic processes in subjects in our Phase II trial are normalizing over time, as expected when PTH concentration is restored to physiological levels. We continue to have extremely high patient retention in the open-label extension study with 58 patients continuing in the trial as of November 2, 2020. I am also pleased when I hear about how many patients are remaining in the open-label extension study. This is the first time in my career that I have seen such strong patient commitment to taking a once-daily injection and staying on therapy in an open-label study. We believe this is a potential indication of how TransCon PTH may be having a positive impact on short-term symptoms as well as quality of life. We believe that when PTH concentration is restored to physiological levels, it can improve short-term symptoms that could also translate into a positive impact on long-term complications. We remain on track to report the 84-week Phase II data this quarter, and we expect to see similar trends as we saw with the 58-week data. Globally, all three Phase III HP trials that are underway are progressing. The PaTHway Japan, the Japanese Phase III trial is designed to enroll a minimum of 12 HP subjects, and in China, the Phase III trial in Greater China has been initiated by VISEN Pharmaceuticals. We are looking forward to reporting the topline Phase III results from the North America and European trials in adult HP patients in Q1 2022. If positive, our plan is to file an NDA in the United States for TransCon PTH in mid-2022. The strong data we have generated thus far reinforce our confidence in TransCon PTH as a potential first replacement hormone therapy in adults with HP. Now turning to TransCon CNP. We continue to move forward with two Phase II double-blinded placebo-controlled studies in children with achondroplasia. The first Phase II trial, the ACcomplisH Trial, is a dose escalation trial of 12 to 15 subjects in each cohort conducted mainly in North America, Australia and Europe. The second one, by VISEN Pharmaceuticals, is the ACcomplisH China trial, which is a cohort extension trial of at least 60 subjects conducted in China. Completing two independent randomized placebo-controlled trials will give us 52-week clinical data on over 120 subjects with achondroplasia treated with TransCon CNP and over 25 subjects with placebo treatment. We believe these two blinded trials will provide strong evidence of the potential safety and efficacy of TransCon CNP. Later this quarter we will provide an appropriate update on TransCon CNP, which will include a view of the biology and why we believe TransCon CNP has a unique product profile that is highly differentiated from other treatments in development. We will provide an overview of the program involving the status of the dose escalation cohort, cohort expansion and safety update on the blinded data. We also plan to discuss target engagement to illustrate that TransCon CNP is doing what we expect it to do, and we will give an update on expected timelines for data next year. Now moving to oncology, we want to transform cancer therapy by improving patient tumor outcomes using TransCon systemic and intratumoral technology designed to provide sustained modulation of the tumor microenvironment and activating pseudo-toxic immune cells. We all know that developing effective and safe products has been a challenge within the oncology field. We believe by using the TransCon technologies and our algorithm for product innovation to activate the body’s anti-tumor immune system, we expect to improve patient outcomes. This is how we are looking forward to making a real difference in the way cancer is treated. Our oncology programs have made major investments this year. For our TransCon TLR7/8 Agonist program, we believe we have identified a product candidate that is highly differentiated compared to other candidates by extending the duration of release of an active immunotherapy compound inside the tumor. With the TransCon technology, we aim to provide pure efficacy inside the tumor for weeks while reducing systemic toxicity compared to what has been seen with direct injection of a parent drug alone into the tumor. We believe the prolonged activation of the immune system inside the tumor for weeks will also generate a systemic effect, killing similar tumors in other parts of the body. Our transcenIT-101 trial for TransCon TLR7/8 Agonist in advanced cancer patients is ongoing. We have been dose-escalating subjects with TransCon TLR7/8 Agonist in the monotherapy model, and we had initiated dose escalation with checkpoint inhibitor in that combination arm during the third quarter. We expect to have initial results from the monotherapy dose escalation for TransCon TLR7/8 Agonist by year-end. We are presenting additional preclinical data for TransCon TLR7/8 Agonist at the Society for Immunotherapy of Cancer 36th Annual Meeting taking place in Washington, D.C. this week. Also in the third quarter, we submitted an IND to the U.S. FDA to initiate the TransCon IL-2 β/γ clinical program. This is a Phase I/II clinical trial to evaluate TransCon IL-2 β/γ in patients with advanced cancer. TransCon IL-2 β/γ is a long-acting product using the same systemic TransCon technology as TransCon Growth Hormone and is designed to improve cancer immunotherapy by providing long-acting exposure without a high mix of highly open IL-2 then selected for the β/γ receptor. The second oncology clinical stage product candidate is another sign of our commitment to solving unmet medical needs for patients by focusing on design. IL-2 is a highly validated cytokine in the treatment of cancer. We have reviewed the data generated by us from the long list of IL-2 compounds, and we believe TransCon IL-2 β/γ has the potential to be best-in-class and the first to fully solve the shortcomings of IL-2. Looking ahead to the rest of 2021, the fourth quarter is shaping up to be a busy one with the potential to obtain a positive CHMP opinion, the program update for TransCon CNP, first patient data on TransCon TLR7/8 Agonist and our 84-week data on TransCon PTH. We plan to announce the update for these R&D programs on a virtual Research and Development Program Update call in mid-December. We will provide additional details in the coming weeks. It was a great moment at Ascendis, achieving our first product approval in the U.S. It is worth reporting that pediatric growth hormone patients in the U.S. now have a new once-weekly treatment option. What makes me even happier is that I know we have the potential to help many more patients facing significant unmet medical needs. And as I said before, our goal at Ascendis has not just been to get products approved, but to get products approved that can make a meaningful difference to patients and not just once but multiple times in multiple therapeutic areas. Now, let me turn the call over to Scott for financial review before we open up for questions.

Thank you, Jan. Turning to our financial results for the quarter ended September 30, 2021. We reported a net loss of €80.3 million or €1.47 per basic and diluted share, compared to a net loss of €121.7 million or €2.31 per basic and diluted share during the same period in 2020. Now let me run through some of the key components of these results. Research and development costs for the third quarter were €58.8 million, compared to €64.1 million during the same period in 2020. The decline in R&D costs was driven by a one-time benefit in R&D costs. As a reminder, prior to FDA approval, we expensed pre-launch inventories of TransCon Growth Hormone as R&D costs. Upon FDA approval of SKYTROFA in Q3, €53.2 million was capitalized as inventory consisting of raw materials and work in progress, resulting in this one-time benefit. Excluding this one-time item, the increase in R&D costs reflects continued advancement of our pipeline with the primary drivers including the following; an overall increase in personnel-related costs; for TransCon Growth Hormone, R&D costs were higher due to investments to expand our future manufacturing capacity, as well as increased clinical trial-related activities to support increased global clinical reach and label extension. For TransCon PTH, R&D costs were higher primarily due to increased clinical trial spend, device development costs and manufacturing costs, including the completion of multiple drug substance PPQ batches, as well as initial costs of building commercial inventory. For TransCon CNP, R&D costs were higher primarily due to increased manufacturing and clinical trial related costs. Finally, for our oncology therapeutic area, R&D costs were higher due to increased manufacturing and clinical trial costs for TransCon TLR7/8 Agonist and also due to increased manufacturing and preclinical costs for TransCon IL-2 β/γ. Selling, general and administrative expenses for the third quarter were €39.3 million, compared to €17.5 million during the same period in 2020. These higher expenses primarily reflect an increase in personnel related and commercial expenses, as well as IP systems and other infrastructure costs as we prepared to launch SKYTROFA in the U.S. Finance, income and expenses in the third quarter include a foreign exchange rate gain of €21.3 million, compared to a foreign exchange rate loss of €39.6 million in the third quarter of 2020, primarily related to the translation of our U.S. dollar holdings of cash and marketable securities to euros. We ended the third quarter with cash, cash equivalents and marketable securities totaling €929.9 million, which includes the net proceeds from our follow-on financing completed in September. As of September 30, 2021, the company had 56,877,723 ordinary shares outstanding. In November, subsequent to the end of the third quarter, we completed our previously announced $25 million share repurchase program in which we purchased 154,837 of our ADSs in the open market. Turning to an update on our U.S. launch of SKYTROFA for pediatric GHD, the product is currently available in the U.S. and we have shipped multiple orders thus far into our specialty pharmacy and specialty distributor network for both initial prescriptions and channel inventory stocking. We are currently providing SKYTROFA for pediatric GHD patients through our dedicated patient support program known as the Ascendis Signature Access Program. Several insurance plans are providing initial coverage for SKYTROFA through the medical exceptions process. We are also in active discussions with U.S. commercial payers to broaden our access for 2022. We are encouraged by the early enthusiasm surrounding the launch and we look forward to updating you on our progress in the coming quarters. Turning to the remainder of 2021, key activities include for TransCon hGH, execution of U.S. SKYTROFA commercial launch activities, investment in expanding commercial manufacturing capacity to support anticipated future demand and continued execution in our ongoing Phase III clinical trials, including the enlighten long-term extension trial and the riGHt trial in Japan, both for pediatric GHD and the global foresiGHT Trial in adult GHD. For TransCon PTH, key activities include continued execution of the Phase II PaTH Forward Trial, which retains 58 subjects in the open-label extension, continued execution of the Phase III clinical program including the PaTHway Trial and the PaTHway Japan Trial, and ongoing manufacturing of PPQ batches and initial activities to build commercial inventory. For TransCon CNP, key activities include ongoing manufacturing activities, including scaling up production, continued execution of our Phase II clinical program, which includes the two randomized double-blind placebo-controlled clinical trials in achondroplasia, the ongoing ACcomplisH Trial and the ACcomplisH China trial, which is being coordinated through VISEN Pharmaceuticals. Lastly, in our oncology therapeutic area, key activities include continued execution of the transcendIT-101 trial for our TransCon TLR7/8 Agonist and the IL-2 lead trial for TransCon IL-2 β/γ. In addition to SKYTROFA commercial launch activities in the U.S., we expect other SG&A activities will include TransCon PTH prelaunch activities and continued investments in personnel, systems and infrastructure to support our rapidly progressing portfolio and growing organization. As Jan noted, we have a lot happening at Ascendis. So let me now also provide an update on the remaining corporate milestones and other disclosed events. For TransCon Growth Hormone, we continue to anticipate European Commission approval for pediatric GHD by early 2022, as well as completion of enrollment of the foresiGHt Trial in adult GHD by Q1 2022. For TransCon PTH, we plan to provide an 84-week update for PaTH Forward later this quarter. We then expect to report topline results from our Phase III PaTHway Trial in the first quarter of 2022, followed by an expected NDA filing in the U.S. in mid-2022. For TransCon CNP, we plan to provide a clinical program update in December, during the virtual R&D update, as Jan mentioned in his remarks. Finally, for TransCon TLR7/8 Agonist, we plan to present initial monotherapy dose escalation data for the transcendIT-101 trial at our virtual R&D update. With that, Operator, we are now ready to take questions.

Your first question comes from the line of Jessica Fye from J.P. Morgan. Your line is open.

Hey guys. Good evening. Thanks for taking my questions. I have several a couple of commercial and a couple of pipeline. First, the commercial questions, when you talk about playing the long game with your SKYTROFA strategy, can you elaborate on what that means to you from a tactical standpoint? And second one on SKYTROFA is, how should we think about the net price per patient for SKYTROFA? Appreciate the commentary on the relative list price. But will net price end up similar to or different from existing products? And then I got a couple of pipeline follow-ups.

Thanks, Jess. Let me start and then I can turn it over to Jesper Hoiland. But first of all, when we think about SKYTROFA, we consider it a best-in-class product opportunity, an opportunity that has not been available for patients here in the U.S. for more than 30 years. I can count on multiple hands how many attempts there have been to develop growth hormone products, but we couldn't provide the same endocrine benefit that you could achieve with daily growth hormone. When we saw the labeling reflecting our clinical data, we were thrilled to be in a position to provide such a benefit to patients, to physicians, to caregivers, and also to society. So from our perspective, when you have a best-in-class product opportunity, it's not about going out and panicking; we want to grow for the long-term value of this product opportunity because we believe it's unique in the benefits it provides to patients. This is why we basically have defined what we call premium responsible pricing, which provides benefits on all aspects for us, but also for the patients, physicians, caregivers, and society as well. In terms of percentage pricing, yes, we have a higher list price, but we are also utilizing much less material per patient. We can also say that, yes, there is a benefit still for everyone as we develop our commercial strategy moving forward. Jesper, do you have more to comment on?

Yes. I appreciate your question, Jessica. On the tactical side, I can only say that we have hired a team with deep knowledge in the growth hormone space. Everyone that works in the commercial team has a background in endocrinology, in growth hormone, and everyone in PTH. Most of them on the commercial front line have won several excellence awards. We have taken the learnings that our team has had over the years and put it together to create the best plan that we can forward with the Ascendis program, which is truly standing out in the way that we are approaching the market and the commitments that we are making. We are in the process of implementing all of this, of course, in the middle of COVID and everything that’s going on in the marketplace. But all in all, I feel very confident that we are on the right trajectory going forward. On the net price that you asked for, as Jan is alluding to, we have set up a responsible pricing strategy, but also certainly with a price premium. We are in a class of our own; we are not in the commodity market for once-daily treatments; we are truly the first in the once-weekly segment, and we are going to segment ourselves into that because it’s the area under the curve that counts for us in terms of generating value for our investors and shareholders for the long term.

Okay. Great. And just a couple of pipeline questions if I could. Have you dosed patients in the ACcomplisH China study? And if not, when do you think that will happen? Is the plan still to use one dose in that expansion trial or could it be two dose levels? And to clarify, will we get timelines for data from these Phase II CNP trials at the December R&D Day? And then switching to oncology, what type of single-agent activity do you want to see for your IL-2 β/γ in the IL βelieγe trial to warrant moving forward?

That was a lot of questions, Jess. First of all, regarding oncology, we are focused on the TransCon TLR7/8 Agonist, and we expect that event to give you an update related to what we believe describes the uniqueness of this product opportunity and how it can create a different treatment paradigm for solid tumors. We will not present data from IL-2 β/γ because we are just starting to dose patients there, so we need a little bit more time before we can provide a program update. We expect to dose patients soon with the first batch, and we are thrilled about this unique product opportunity. For TransCon CNP, we will provide you with an update in December regarding our data and potential opportunities.

Great. Thank you.

Hi. Thank you for taking my questions. I guess, the first one, just following up on Jess’ questions on the launch. Have you guys settled on what metrics you will provide us to track this launch and what we should be focused on in terms of what’s most important for tracking progress here? And then in your early discussions surrounding the price, can you give us a sense of what the feedback from payers has been so far? Are they recognizing the best-in-class profile and some of the other benefits that you described that justify the premium responsible pricing? And then I have a couple on the pipeline as well.

I think we are coming to a stage where we’re just initiating our launch now. We are just in the beginning stages of our launch. We feel responsible as a company to give clear guidance, and we will come out with guidance when we feel that we have followed the launch period in such a manner that we are confident that we can give clear direction regarding how this launch is going. What we see from the commercial team is that we have a lot of KPIs from the launch, and I have to say that they are far exceeding my own expectations, which were already high. I feel really confident because I see the team we have and I'm not in doubt; they are the best team I’ve ever worked with in the growth hormone market, and they will execute uniquely. So, come 2022, we will provide guidance when we feel confident in giving clear direction on the performance of SKYTROFA as a launch. Until now, I have been highly, highly positively surprised by the feedback we have seen for our launch strategy.

Okay. And on the pipeline, I guess, for CNP in December, will you give us an update on the path forward for TransCon CNP in terms of the next studies and next steps for the program? When will we get an update on your thoughts in terms of a potential Phase III trial endpoint? I know that you’re running a natural history study that will inform that. And then on PTH, you mentioned that this is a $5 billion opportunity. What are you looking to show in the Phase III, maybe also from the Phase II open-label extension long-term data that would give you confidence that you can realize that $5 billion opportunity?

Let me start on CNP first. We would like to provide you an update about what we've learned about achondroplasia. We aim to explain how we believe continuous exposure to CNP can provide a completely new treatment paradigm compared to short-acting CNP products. This understanding echoes what we have achieved with growth hormone over the years. We are very confident in the unique product profile of TransCon CNP, which should become clear during our December update. Regarding PTH, I am so comfortable and bullish about PTH because we have observed significant benefits across diverse patient backgrounds. I believe that all chronic hypoparathyroidism patients can experience substantial benefits from TransCon PTH, whether they are coming from various genetic diseases or other causes. The data we're accumulating shows strong support for these benefits. Therefore, I feel confident that we can meet the needs of both the market and patients through our products.

Okay. Thank you guys so much for taking my questions. Congrats on launching SKYTROFA.

Thanks, Michelle.

Your next question comes from the line of Josh Schimmer from Evercore. Your line is open.

Hi. Thanks for taking the questions. The first one on SKYTROFA, can you provide details on your co-pay and how many lives are covered and where you expect that to be starting in 2022 and progressing throughout the year? Second, you mentioned starting trials to expand the SKYTROFA label beyond the pediatric and adult areas; what settings are you considering for those trials? Lastly, for the PTH device and ultimately the CNP device, are they going to be similar to the SKYTROFA device or different in any way? Thank you.

Thanks, Josh. Let me start with the device aspect: The device we are using for SKYTROFA and TransCon PTH is completely different. We have in SKYTROFA a single-use room temperature stable cartridge that provides optimal delivery for the patient. The PTH system, however, utilizes a multi-use pen device similar to insulin pens, with dosing designed for about two weeks before you need to start a new pen. This system provides optimized dosing for patients, and we will support titration in each pen to meet individual patient needs. For TransCon CNP, we have much potential, but we will share those details during our update as we continue to focus on patient needs and treatment optimization. Regarding potential expansion, we are fortunate to have a molecule designed to address multiple indications, and we will be addressing the p... I mean, the pediatric growth hormone deficiency indication initially, utilizing our data and identifying key metabolic impacts for adult growth hormone deficiency in future studies.

Thanks so much.

Yes. Sorry about that. I was on mute. Thanks for taking my question. Just regarding the potential commercialization in Europe, can you talk a bit more about how those markets compare? And then for oncology, are you ready to discuss what the next program could be there in December?

We are a European company, and we know the European markets very well. We are building a strategy to penetrate those markets, understanding that there is a diverse group of reimbursement systems. Some are quick, but many can take more than two years for reimbursement decisions. Therefore, our strategy for Europe focuses on building a pipeline presence with multiple products because single-product focus may result in unsustainable returns. We expect that as we gain approval for SKYTROFA in Europe, we will simultaneously be nearing completion of our Phase III PTH study, establishing a strong footing for our overall strategy. Regarding the oncology space, we have a lot of exciting discovering ahead. Our priority is developing powerful product candidates in this sector, and you will see updates about the same strong pipeline of opportunities there.

Hi. I’m Joori, diving in for Joe. Thank you for taking our questions. Following up on previous comments about SKYTROFA, how should we think about the adoption of treatment-naive patients versus the exception process? And how have those treatment-naive patients evolved as you enter the market?

After three to four weeks, obtaining new patients is challenging as diagnosing a patient as growth hormone deficient takes time. Thus, we expect that the proportion will gradually shift towards more treatment-naive patients as we continue expanding our market reach and as new diagnoses are confirmed over time.

Okay. That’s helpful. And my second question is on TransCon CNP. Why are you planning to provide updates in December rather than waiting until both studies are complete?

We aim to provide transparency to ensure that our stakeholders recognize progress, especially as this can significantly impact the patient's future. Our updates are intended to highlight ongoing successes and reaffirm commitment to meeting patient needs for these treatments.

At this time, we will now be closing the Q&A session. This concludes today’s conference call. Thank you all for joining. You may now disconnect.

Thanks a lot.