Hello. Thank you for standing by. Welcome to Ascendis Pharma's Second Quarter 2024 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. I would now like to turn the call over to Tim Lee, Senior Director of Investor Relations at Ascendis Pharma. Sir, you may begin.

Thank you, operator, and thank you, everyone, for joining our second quarter 2024 financial results conference call. We apologize for the delay due to some technical issues that we had here. I'm Tim Lee, Senior Director, Investor Relations at Ascendis Pharma. Joining me on the call today are Jan Mikkelsen, President and Chief Executive Officer; Scott Smith, Executive Vice President and Chief Financial Officer; Dr. Stina Singel, Executive Vice President and Head of Clinical Development Oncology; Camilla Harder Hartvig, Executive Vice President and Global Chief Commercial Officer; and Joe Kelly, US General Manager. Before we begin, I'd 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 statements regarding our commercialization and continued development of SKYTROFA and YORVIPATH, the US and European markets, as well as certain financial expectations, our pipeline candidates and our expectations with respect to their continued progress and potential commercialization, our strategic plans, our goals regarding our clinical pipeline, including the timing of clinical results, our ongoing and planned regulatory filings for expectations regarding the timing and the results of regulatory decisions, and our exploration of market opportunities in therapeutic areas outside of endocrinology rare disease. These statements are based on information that is available to us as of today. Actual results may differ and could differ materially from those in our forward-looking statements and should not place undue reliance on these statements. We assume no obligation to update these statements as circumstances change, except as required by law. For additional information concerning the factors that can cause actual results to differ materially, please see our forward-looking statements section in today's press release in the Risk Factors section of our most recent annual report on Form 20-F filed with the SEC on February 7th, 2024. TransCon Growth Hormone or TransCon hGH is approved in the US by the FDA and the EU has received MAA authorization from the European Commission for the treatment of pediatric growth hormone deficiency. TransCon PTH is approved in the US by the FDA for the treatment of hypoparathyroidism in adults, and the European Commission and the United Kingdom's Medicines and Healthcare Products Regulatory Agency have granted marketing authorization for TransCon PTH as a replacement therapy indicated for the treatment of adults with chronic hypoparathyroidism. Otherwise, please note that our product candidates are investigational and not approved for commercial use. As investigational products, the safety and effectiveness of product candidates have not been reviewed or approved by any regulatory agency. None of the statements during this conference call regarding our product candidates shall be viewed as promotional. On the call today, we'll discuss our second quarter 2024 financial results and provide further business updates. Following some prepared remarks, we will then open up the call for questions. With that, let me turn it over to Jan.

Thanks, Tim. Good afternoon, everyone. With the recent US approval of YORVIPATH as the first and the only FDA-approved treatment of hypoparathyroidism in adults, Ascendis has successfully obtained approval for two out of three endocrinology rare disease product candidates in two major markets, the US and EU. With pivotal data from our third product candidate TransCon CNP in achondroplasia expected in the coming weeks, we are nearing our vision to achieve approval of all three product candidates by the end of 2025. Our algorithm for product innovation, combined with our TransCon technology, has enabled us to bring new highly differentiated product candidates through clinical development with a higher success rate compared to traditional drug development. We continue to develop new product candidates in endocrine rare disease and larger therapeutic areas such as oncology, obesity, metabolic disease, and cardiovascular, aiming for best-in-class potential to make a meaningful difference for patients globally based on our strong scientific focus. Let us begin with YORVIPATH. In the US alone, an estimated 70,000 to 90,000 patients are living with hypoparathyroidism. For those who haven't seen it, please take time to watch the patient-organized FDA hearing on the hypoparathyroidism associated website, providing an in-depth understanding of the serious consequences of having this disease. With the FDA approval of YORVIPATH, physicians and adult patients in the United States can now look forward to having a treatment option for the treatment of hypoparathyroidism. We are preparing for YORVIPATH's launch in the US, leveraging our established commercial infrastructure and expertise. We are expanding our dedicated team of sales reps and field medical personnel who will engage with around 6,000 physicians treating about 80% of patients with hypoparathyroidism in the US. Other key launch initiatives are underway, including the rollout of our patient support programs designed to support access to YORVIPATH. For example, eligible patients on commercial insurance will pay as little as $5 a month for the YORVIPATH prescription. Additionally, in line with our goal to take care of all patients with this disease, we will also introduce a patient assistance program. We have also started engaging US payers and expect product availability in the US in the first quarter of 2025 or sooner if possible. Consistent with responsible pricing, we will launch with a best price corresponding to $285,000 annual per patient, reflecting the value of YORVIPATH to the US healthcare system. In the US, there are around 140 patients currently active in the expanded HHS program and about 50 more patients in the open-label extension of our clinical studies. Physicians will begin transferring these patients over to the commercial product as soon as it is available. In Europe, the number of patients and prescribing physicians indicating YORVIPATH continues to increase, and we see a good mix of experienced and new patients. This was the first full quarter of commercial launch in Germany and Austria, where sales momentum continues to build. We now have more than 250 patients on treatment and an estimated 125 prescribers in these two markets. YORVIPATH patient retention is extremely strong, currently around 98%. As physicians gain more experience with YORVIPATH, we expect them to bring more patients on therapy, including those finishing the remaining supplies. The interest in serving patients under named patient programs prior to full commercial launch is increasing. We now have patients in these programs in more than 10 countries and expect more by the end of the year. Moving to SKYTROFA, we are proud to have more than 11,000 patients prescribed SKYTROFA in the first three years since launch and to have achieved market leadership while expanding the overall growth hormone market. A key component of our strategy to make SKYTROFA a blockbuster product in the US includes simplifying broad market access for both treatment-naive or switch patients as well as expanding our label. In the first half of the year, the reset for broader market access for SKYTROFA was largely completed. While this broader access to SKYTROFA will support long-term demand, in the short term, it negatively impacted our first half net revenue. Scott will share more details. With our market access transition largely complete, SKYTROFA is now positioned as a premium product with a net value per patient of around three times compared to daily growth hormone. We are now focused on using our new market access coverage to drive further demand, continue to expand the overall growth hormone market, and aim to reach blockbuster status for SKYTROFA in the US alone. Finally, to build on our market leadership position, we plan to submit a supplemental BLA for adult growth hormone deficiency to the FDA in the third quarter of this year, marking our first SKYTROFA label expansion. We also expect topline data from our Phase 2 trial in Turner syndrome in the fourth quarter of 2024. Switching to TransCon CNP, I am extremely excited about our program in achondroplasia, especially as we approach the results from our pivotal trial in the coming weeks. We have consistently stated over the past eight years since we announced our product candidate that our aim is to develop a treatment that addresses both linear growth and comorbidities that affect health and quality of life for people living with achondroplasia. Earlier this year, you saw comprehensive results for our Phase 2 ACcomplisH trial, demonstrating that our once-weekly TransCon CNP increased annualized growth velocity to about 5.6 centimeters after 12 months of treatment. For the first time, we also demonstrated that, compared to placebo, TransCon CNP improved quality of life related to physical function and well-being in children with achondroplasia, with a favorable side effect and tolerability profile. Now, we hope to replicate these results with more patients in our pivotal ApproaCH trial, expecting topline data in the next few weeks, one quarter earlier than guided. This trial enrolled 84 children aged 2 to 11 with achondroplasia, with a mean age of 5.7 years, similar to our Phase 2 trial. We also continue to enroll in a Phase 2 trial of TransCon CNP in combination with TransCon growth hormone SKYTROFA designed to show that adding SKYTROFA to TransCon CNP could provide catch-up growth for patients who start CNP treatment late. We expect to complete enrollment in this combination trial during the fourth quarter of 2024, with topline data expected in the second quarter of 2025. Turning to oncology, we continue advancing three Phase 2 trials with multiple indication-specific cohorts to study the best-in-class potential of our two product candidates, TransCon IL-2 beta/gamma and TransCon TLR7/8 Agonist in different combination scenarios. We plan to present initial results from our TransCon IL-2 beta/gamma in combination with chemotherapy in platinum-resistant ovarian cancer later this month at the ESMO conference in Barcelona. I am pleased with how these programs are progressing. In closing, for Ascendis, it's all about the patients. Patients tell us that the US approval of YORVIPATH is transformative for them. We hear from parents that SKYTROFA has changed the lives of their children and themselves. With data expected in the next few weeks for TransCon CNP, our goal is to demonstrate that we can also transform the lives of people living with achondroplasia. With our ongoing progress in our oncology program and exploration of other areas of innovation in large market opportunities such as obesity, we continue to position Ascendis for sustainable growth with an expanded pipeline and transformative TransCon product candidates. I'll now turn it over to Scott for a financial update.

Thanks, Jan. SKYTROFA volume more than doubled in the second quarter of 2024 compared to the second quarter last year, while reported revenue was EUR26.2 million compared to EUR35.9 million reported in the second quarter of 2023, a decrease of 27% year-over-year. The increase in SKYTROFA volume was offset by higher sales deductions for Q2 and an adjustment to Q1 2024 sales deduction accruals as well as for periods in 2023. These adjustments reflect the reset of broader market access to support continued growth of SKYTROFA as the market value leader and a potential blockbuster in the US alone. In total, Q2 2024 reported revenue was reduced by a true-up of EUR27.1 million, of which EUR19.5 million was attributable to first quarter 2024 sales and EUR7.6 million to sales prior to January 1, 2024. SKYTROFA revenue for the first half of 2024 totaled EUR91.2 million, a 35% year-over-year increase compared to EUR67.4 million during the same period in 2023. First half 2024 SKYTROFA volume more than doubled, but was partially offset by an accrual true-up of EUR7.6 million, which was attributable to periods prior to January 1, 2024. With the advent of broader market access, we believe the overall growth hormone market will continue to grow the number of patients treated. We estimate that by the end of Q2 2024, SKYTROFA penetration in the US pediatric growth hormone deficiency treated patient population was 18% or a little under 10% of the overall treated growth hormone market, still with our single indication for pediatric GHD, leaving lots of room for further growth in market expansion. Based on year-to-date results and current trends, we now expect full-year 2024 SKYTROFA revenue to be in the range of EUR220 million to EUR240 million. Shifting to TransCon PTH, second quarter YORVIPATH revenue of EUR5.2 million reflected the first full quarter of commercial revenue in Germany and Austria, as well as initial revenue in other markets, with YORVIPATH revenue continuing to increase from EUR1.5 million in Q1, driven by growing patient and physician demand. Closing out the top line, total revenue for the second quarter was EUR36 million, including EUR4.6 million tied to rendering of services and license revenue. Turning to expenses, R&D costs in the second quarter of 2024 totaled EUR83.5 million compared to EUR105 million during the second quarter of 2023. The 21% decline was largely tied to lower external development costs for TransCon TLR7/8 Agonist and lower costs for TransCon PTH as well as Eyconis spin-off. SG&A expenses in the quarter totaled EUR74.3 million compared to EUR70.3 million during the second quarter of 2023. The increase was primarily due to higher employee costs, including the impact from global commercial expansion. Total operating expenses were EUR157.8 million for the second quarter, a 10% decrease compared to EUR175.3 million during the second quarter of 2023. Total operating expenses for the first half of 2024 were EUR295 million. Net finance income in the quarter was EUR29.4 million compared to EUR26.4 million in the second quarter of last year. As a reminder, the net finance line can fluctuate quarter-to-quarter, driven in part by non-cash items related to our outstanding convertible notes. We ended the second quarter with cash, cash equivalents, and marketable securities totaling EUR259 million compared to EUR399 million as of December 31, 2023. Finally, earlier today and subsequent to June 30, 2024, therefore, not included in the reported cash balance, we announced that we have entered into a new capped synthetic royalty funding agreement with Royalty Pharma for $150 million in exchange for a 3% royalty on net sales of YORVIPATH within the United States. The royalty payments are capped at 1.65 times the purchase price if fully paid prior to December 31, 2029, or two times thereafter. Further details are disclosed in a separate 6-K, also filed today. Looking ahead for the full year 2024, based on current plans, we expect SKYTROFA revenue to be in the range of EUR220 million to EUR240 million. Total operating expenses, which include SG&A and R&D, to be approximately EUR600 million, including YORVIPATH-related launch activities in the US. Pending launch timing of YORVIPATH in the US, we currently expect to achieve operating cash flow breakeven on a quarterly basis in 2024 or 2025. Before we turn it over to the operator for Q&A, I want to reiterate that with data lock and the top-line results for our pivotal ApproaCH trial expected in the coming weeks, we plan to institute a quiet period starting Thursday and we will unfortunately not be able to participate in upcoming investor conferences. With that, operator, we are now ready to take questions.

Thank you. Our first question comes from the line of Jessica Fye with JPMorgan. Your line is open.

Hey, guys. Good afternoon. Thanks for taking my question. I want to better understand how you project getting SKYTROFA to a blockbuster in the US based on the kind of reset of net price and what you said about where you are in terms of penetration in GHD and the broader treated growth hormone market. Can you walk through that a little bit? Thank you.

Thanks, Jess. I will start, and I have my two commercial colleagues with me here today, so they can also provide more details if that is desired. Currently, we see the market is about $1.4 billion, the entire growth market in the US. As I stated in my prepared remarks, when we look at the net value per patient, we basic with SKYTROFA have about three times the net value on a yearly treatment. When we see our efforts, when we look at developing the long-acting segment, we see SKYTROFA as the preferred brand. Even in places where we just have the same level of market access, SKYTROFA is the preferred product. Even in places where we don't have market access, we really see SKYTROFA coming in because it provides a unique improvement compared to the other products' potential. So when we see our label expansion efforts, we believe that in the coming year, it will be possible for us not only to address the pediatric growth hormone deficiency market. In the next few weeks, we will file for adult growth hormone deficiency. We have Turner syndrome data coming in for Phase 2 later this year, and we will initiate trials very quickly. We can do it in a basket manner, so we can get to the full cohort for all the different growth hormone indications. That gives you a high-level view of how we see developing SKYTROFA to a blockbuster in the US. With the reset of market access, we believe we can maintain that value as we have today and expand from there. Joe or Camilla, do you have further comments or want to provide more in-depth insights from my side? Thanks.

Thank you. Our next question comes from the line of Tazeen Ahmad with Bank of America Securities. Your line is open.

Hi, guys. Good afternoon. Thanks for taking my question. With regards to this new net price that you have for SKYTROFA, can you talk to us about the competitive dynamics? Namely, are the daily injector manufacturers offering deeper discounts? And can you also talk about the level of impact that you're seeing from the relatively recent launch of the Novo competing product? Thanks.

Thanks for the question. This aligns with some of the earlier questions. Yes, today, there are two other long-acting products in the US market. We see one of them particularly due to the well-known tolerability and other aspects. SKYTROFA is performing extremely well. In general, we see that SKYTROFA has a preferred position in some of the major accounts. What I'm generally observing is that there is no doubt that SKYTROFA has best-in-class potential, and we are starting to realize this opportunity in the market. This is the strength we want to continue building, not only in pediatric growth hormone deficiency but also across different label expansions we will be doing. For example, the largest volume supplier of growth hormone saw a revenue decline of 73%. Clearly, there was a reset of the entire market that came unexpectedly fast for many of us.

Thank you. Our next question comes from the line of Derek Archila with Wells Fargo. Your line is open.

Hi there. Thanks for taking the questions. Just wanted to know what payer feedback you might have received thus far on the proposed YORVIPATH pricing in the US? And then I have a follow-up.

We are coming up with a responsible pricing structure to support our aim of treating every patient that has hypoparathyroidism. We believe that this pricing will be acceptable, and we have not received any negative feedback on it.

Got it. Very helpful. And then second question, just in terms of the patients you've talked about on YORVIPATH in Germany and Austria, I think you commented on around 250 patients on the approval call for the US. How do you think about that penetration relative to the overall market size in Germany? How do you believe you're tracking thus far in the launch? Is it ahead of or less than you expected? Thanks.

I can provide some initial comments, and then Camilla can provide further details. Our initial aim for penetration was to see one to two patients per physician in the beginning, which was our expectation. As physicians observe the benefits of YORVIPATH, we expect that they will start to prescribe more patients. Currently, around 125 prescribers have really utilized it in Germany and Austria, and we are extremely proud of this penetration. The retention rate is remarkable, standing at 98%. This retention shows the benefit YORVIPATH provides patients, aligning with our clinical trials' data.

Jan said it very well. We are very pleased with the uptake of YORVIPATH in Germany. We are benchmarking against all rare disease launches, and we are performing very well compared to them. The team is working hard on both breadth and depth, and this approach is working well, creating a mix between PTH naive patients and those switching from other therapies. Our rapid transition from existing patients to YORVIPATH is progressing quickly, and we are optimistic for the future.

We've seen that due to the manufacturing shortage of other products, there is a tendency to keep patients on existing paths until the accumulated drug is used in specific regions. However, we are now seeing a change, and we expect much more patient intake. We have now launched in Germany and Austria and will move to France and other European countries soon. In 2025, we plan to expand into at least 6-8 additional countries rapidly.

Thank you. Our next question comes from the line of Li Watsek with Cantor. Your line is open.

Hey, guys. Thanks for taking my questions. Maybe just a follow-up on SKYTROFA. Can you help us understand what went into the assumptions for the lower guidance for SKYTROFA this year? I'm looking for more details on what's driving that EUR100 million reduction, including dynamics between broader market access and pricing. And I have a follow-up.

I can provide some general statements first related to how we did the forecasting. We saw growth in volume between Q1 and Q2. If we utilize that growth to predict the rest of the year, it provides a lower value. We have reset our market access portfolio, allowing us to keep GTN consistent throughout the year. We observed a seasonal effect from last year that could potentially be an upside, although it may not materialize. This is how we moved forward with our guidance. It's nothing but a reflection of our belief in potential growth.

Healthcare providers currently have clarity about where they can provide SKYTROFA to patients with a high chance of reimbursement. They are documenting the intolerances experienced by pediatric growth hormone deficient patients while on other growth hormones, allowing us to resubmit for access. There is time left in this year, and we expect stability in 2025. We have identified where we can continue adding patients, expanding net revenue, and growing the overall market.

And I also wonder if you can talk a little bit about where you can further reduce costs. Is there any chance you can still breakeven this year, given the lower guidance for revenue?

Scott is good with numbers, so I will provide an overall perspective, and then Scott can add specifics. We are proud of keeping our operating expenses controlled. We have a robust internal system to maintain Ascendis Pharma's efficiency. Potential revenue generation in Europe is beginning to manifest. We are discussing with the FDA how we can assist patients in a treatment shortage situation here in the US. We are aiming for an earlier launch, leaning into patient needs and physician feedback. There are many avenues available for increasing revenue while keeping expenses controlled.

I think you summed it up well, Jan. As you know, we always look to be cost-effective and evaluate expenses not tied to getting the product to patients. We announced new financing for an additional $150 million, which demonstrates our commitment to controlling costs while supporting product delivery to patients.

Thank you. Please standby for our next question. Our next question comes from the line of Gavin Clark-Gartner with Evercore ISI. Your line is open.

Hey, guys. Thanks for taking the questions. First, I wanted to ask when the policies with more favorable access to SKYTROFA were implemented and when we should expect prescription uptake.

The new policies were implemented gradually during the first half of the year, with some becoming effective in Q2. The complexity of these agreements means that potential rebates compared to volume increases may not always align properly. While we've observed a double-digit increase in volume between Q1 and Q2, we expect the full impact of our efforts to resonate in the second half.

That makes sense. And I just wanted to ask about IQVIA data overall. Have you noticed any changes in capture rate trends over time?

I personally find the data difficult to interpret, as it’s sampled from limited locations. If everything is stable, you may observe an overall trend. Shifts among different PBMs and market access can create unpredictable differences in volume due to sampling variability. Care should be taken when analyzing this data.

Thank you. Please standby for our next question. Our next question comes from the line of Vikram Purohit with Morgan Stanley. Your line is open.

Hi, good afternoon. Thank you for taking my questions. Could you provide insight into the upcoming ApproaCH readout and the COACH readout in 2Q25? Specifically, what parameters of data do you expect to report, and how should we contrast this with competitor CNP datasets available in this space?

To compare our results, you should look at vosoritide, as it has a similar mode of action. However, our approach differs. We provide continuous exposure to the CNP molecule, whereas vosoritide is active only for two or three hours within a 24-hour dosing window. Our aim is to provide linear growth while addressing comorbidities of the disease. So far, we've demonstrated height velocity comparable to vosoritide through our Phase 2 data but also improved quality of life improvements related to physical function in children, which no other product has shown. We aim to incorporate key secondary endpoints to demonstrate how we address comorbidities. We expect topline data very soon, as the database has been locked, and statistical analysis is being conducted.

Thank you. Please standby for our next question. Our next question comes from the line of Kelly Shi with Jefferies. Your line is open.

Thank you for taking my questions. Could you elaborate more on your ongoing interactions with regulators regarding the commercialization of existing batches for the US launch, which seems likely in 4Q or the first quarter of next year?

We are having extremely constructive discussions with the FDA regarding the potential to address the shortage of PTH drops in the US. It is being driven by patients who are facing serious unmet medical needs. Both patient organizations and physicians recognize the issue, and everyone is working together to find a solution that prevents disruption of treatment due to shortages.

Thank you. Please standby for our next question. Our next question comes from the line of David Lebowitz with Citi. Your line is open.

Well, thank you for taking my question. I got two here. First, on the SKYTROFA adjustments, I just want to confirm that you came to an agreement on the new net pricing with the payers, and as part of it, you had to true-up on prior sales in the last couple of quarters. And then I'll have one more after that.

You have understood it correctly. This true-up reflects net revenue adjustments predominantly related to Q1 sales, including EUR7.6 million from 2023. To calculate real sales in Q2, you need to add this true-up to the reported net revenue. That essentially gives you our actual net sales for Q2.

You got it right, Jan.

Got it. And on CNP, what has occurred to accelerate the pivotal data timeline from prior updates?

The efficiency of our clinical operations team has allowed us to bring in data much faster than anticipated. The dedication from the team has been essential, comparable to what we have seen for both PTH and SKYTROFA, to get this product out to patients quickly.

Thank you. Please standby for our last question. Our last question comes from the line of Alex Thompson with Stifel. Your line is open.

Hey, great. Thanks for taking my question. Could you comment on the percentage of your payer contracts affected by the true-up, whether the duration of these changes are multi-year? It would be helpful to understand if it’s an issue we’ll potentially revisit next year. Also, could you confirm if the Royalty Pharma agreement was potentially the last source of external capital you think you'll need prior to achieving operating cash flow breakeven either this year or next year?

The implementation of the new contracts has been a continuous process into Q1 and Q2. We expect the GTN to remain consistent in 2025 and beyond. I cannot provide exact percentages for payer contracts affected by the true-up at this time. We aim to provide five years of guidance. Regarding the Royalty Pharma agreement, we will assess our financing needs continually as we approach operating cash flow breakeven.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.