Earnings Call Transcript - ASND Q2 2023

Operator, Operator

Hello, and welcome to Ascendis Pharma Q2 2023 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 hand the conference over to Tim Lee, Senior Director, Investor Relations, Ascendis Pharma A/S. Sir, you may begin.

Tim Lee, Senior Director, Investor Relations

Thank you, operator, and thank you, everyone, for joining our second quarter 2023 financial results conference call. I'm Tim Lee, Senior Director, Investor Relations of Ascendis Pharma. Joining me on the call today is Jan Mikkelsen, President and Chief Executive Officer; Scott Smith, Executive Vice President and Chief Financial Officer; and Dr. Stina Singel, Executive Vice President and Head of Clinical Development Oncology. 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 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 revenue projections for SKYTROFA, the commercialization of TransCon hGH for the EU market and our planned of SKYTROFA in Germany, statements regarding our NDA for TransCon PTH and expected timing of the potential approval and launch of TransCon PTH in the U.S. market, statements regarding the expected timing of the potential approval and launch of TransCon PTH in Europe, statements regarding the potential approval of TransCon CNP, our expectations regarding our new TransCon technology, and 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 our pipeline product candidates, statements regarding our ongoing and planned regulatory filings, and our expectations regarding the timing and the results of regulatory decisions, our expansion into new therapeutic areas and statements regarding our progress towards Vision 3x3 and our ability to create a sustainable, profitable and leading global pharma company. These statements are based on information that is available to us today. Actual results and events could differ materially from those in our forward-looking statements, and we may not be able to achieve our goals, carry out our plans, our intentions, our 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 our forward-looking statements section in today's press release and the risk factor sections of our most annual report on Form 20-F, filed February 16, 2023. TransCon Human Growth Hormone, or TransCon hGH, is approved by the FDA in the U.S. under the brand name SKYTROFA for the treatment of pediatric patients one year and older weighing at least 11.5 kilograms and having growth failure due to inadequate secretion of endogenous growth hormones. In addition, the European Commission has granted a marketing authorization for SKYTROFA to Ascendis Pharma developed under the name TransCon hGH as a once weekly subcutaneous injection for the treatment of children and adolescents aged 3 to 18 for growth failure due to insufficient secretion of endogenous growth hormone. In general, we refer to this product as TransCon growth hormone, unless we're referring to the product in the context of particular jurisdictions such as the United States or the European Union. Otherwise, please note that our product candidates are investigational and are 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 the call today, we'll discuss our second quarter 2023 financial results and we'll provide further business updates. Following some prepared remarks, we will then open up the call for questions. I'll now turn the call over to Jan Mikkelsen, President and Chief Executive Officer.

Jan Mikkelsen, President and CEO

Thanks, Tim. Good afternoon, everyone. In 2019, at the JP Morgan Conference, we announced our Vision 3x3 for building a leading sustainable global biopharma company by 2025. Today, I'm pleased to share with you an update on how close we are to achieving our vision. As outlined in our Vision 3x3, using our TransCon technology platform and our algorithm for product innovation, we are on the pathway to achieve the regulatory approval of three independent endocrinology rare disease products, TransCon Growth Hormone, TransCon PTH, and TransCon CNP, by 2025. In addition, we are building global commercialization capabilities to bring this growing portfolio of highly differentiated products to patients. In the U.S., for the second quarter, we reported SKYTROFA revenue of €36 million. SKYTROFA achieved growth hormone market value leadership in the U.S. in the second quarter with a penetration of less than 10% of treated U.S. pediatric growth hormone deficiency patients, which represent about half of the growth hormone market in the U.S. today. For the full year of 2023, we now expect SKYTROFA U.S. revenues to be €165 million to €170 million. We believe three factors continue to drive demand. First, a growing number of physicians have patients with over a year of experience on SKYTROFA, and these physicians have observed the long-term benefits for both treatment-naive and switch patients. Second, the consolidation of the daily growth hormone market continues and the recent approvals of two other long-acting growth hormone products, which could accelerate this shift to long-acting. Third, Ascendis has become a trusted partner within the endocrinology community, as we continue to invest in our products, in science, and in our support for patients and healthcare providers, and provide them with a reliable supply chain. In our global commercial reach, we are ready to launch SKYTROFA this month in Germany. Our medical affairs and commercial teams are in place and have been actively engaging endocrinologists across the country. We recently received FDA approval at Lonza for a high-capacity drug substance manufacturing site, for which we expect EU approval in the first half of next year. This added drug substance manufacturing capacity supports our goal to commercialize in new markets and additional indications, and to achieve our goal of global market leadership and value in a growing global growth hormone market. During the fourth quarter, we expect to see topline results for our global Phase 3 foresiGHt trial of our TransCon growth hormone in adult growth hormone deficiency. We believe adult growth hormone deficiency is an underpenetrated indication. The recent study showed that less than 4% of adult patients suspected of having growth hormone deficiency are treated with growth hormone. Moving to TransCon PTH for adult hypothyroidism, in June, we requested a Type A meeting with FDA and submitted an updated control strategy. The Type A meeting was held with FDA in late August based on the agency's availability. Following a constructive Type A meeting, we submitted additional information to the FDA supporting the updated control strategy. I believe the materials submitted to the FDA combined with that Type A meeting discussion will position us to resubmit the NDA for TransCon PTH for adults with hypoparathyroidism in October 2023. If our NDA is accepted, which we expect within 30 days following resubmission, the FDA will notify us whether the resubmission is Class 1 or Class 2 and provide a new PDUFA date, which we estimate could be in December this year or April 2024. It's important to note that we will not know the new PDUFA date until our resubmission is accepted and this classification is communicated to us. Besides this information, we will not comment further on the resubmission procedure while we are having ongoing communication with the FDA. In the European Union, we received our Day 180 assessment report with feedback on our MAA for TransCon PTH and have submitted our response to the list of outstanding issues. We remain on track for a European Commission decision during the fourth quarter. If approved, we plan to launch TransCon PTH in Germany in early 2024. Finally, today, we released new positive data supporting the potential beneficial effect of TransCon PTH on kidney function. Over the course of one year, patients in our Phase 3 trial demonstrated profound increases in eGFR, a key marker of kidney function, with increases of around 9 milliliters per minute across all patients. Importantly, in the subset of patients with eGFR less than 60 at baseline, the threshold for kidney dysfunction, TransCon PTH demonstrated increases of 11 to 12 milliliters per minute. Around half of the patients who had an eGFR of less than 60 after TransCon PTH treatment for one year experienced an eGFR improving to about 60, meaning they went from having a diagnosis of renal impairment to being within the normal range of kidney function. For patients treated with TransCon PTH, this improvement in eGFR of this magnitude may reduce the risk of progressing to chronic or late-stage kidney diseases. This is a major comorbidity in patients with hypoparathyroidism and a major contributor to medical costs. We plan to present detailed results at our upcoming medical conferences. The U.S. Expanded Access Program and German Compassionate Use Program for TransCon PTH continues to be open for enrollment of patients, and we expect to initiate comparable programs in additional countries. In the ongoing extension portion of our clinical trial, 145 out of the initial 154 patients from the original clinical trials continued treatment with TransCon PTH for over three years. We continue to prepare for the expected launch in the U.S. and Europe. We are confident that TransCon PTH, if approved, will become an important new treatment option for adult patients living with this serious disease. Switching now to TransCon CNP, following our end of Phase 2 meetings with U.S. and EU regulatory agencies, we have an agreed pathway to achieve regulatory approvals for TransCon CNP. First, the FDA and EU regulatory agencies confirmed that absolute analyses of growth velocity is acceptable as the primary endpoint for the pivotal Phase 3 trial ApproaCH. Second, these regulatory agencies agreed to our dose selection of 100 micrograms per kilogram per week for ApproaCH. Third, based on this discussion, we expect that an indication for treatment of achondroplasia will be supported by emulating the beneficial impact of TransCon CNP on comorbidities and other important aspects of achondroplasia in addition to height. Fourth, our pivotal Phase 3 trial ApproaCH is now fully enrolled with topline data expected in the second half of 2024. We believe that achondroplasia is a condition concerning skeletal growth and muscle disorder. Based on the rapid functional improvement observed in our ongoing Phase 2 ApproaCH trial and based on our review, there may be a primary muscular component to the achondroplasia phenotype, aside from the well-described effect on skeletal growth. We believe it's essential to have continuous exposure to CNP to ultimately improve muscle strength and endurance. In our pivotal trial, we will explore endpoints to measure how CNP might modulate muscular weakness. Additionally, this may present as a treatment option for adults living with achondroplasia. Our research in this area continues, and we expect to share more later this year, along with new data from ACcomplish where all the initial 57 patients have continued on treatment with TransCon CNP for over three years. Turning to oncology, we announced that we have completed dose escalation for TransCon IL-2 beta/gamma in combination with pembrolizumab and established a clear Recommended Phase 2 Dose at 120 micrograms per kilogram every 3 weeks. No dose-limiting toxicity, vascular leak syndrome, or grade 3 or 4 cytokine release syndrome were observed at any dose level evaluated. Finally, I'm excited to share with you some new developments expected to drive Ascendis' sustained growth. We have developed a new TransCon carrier platform, which integrates our reversible linkers and complements our two established carrier technologies, the soluble and hydrogel platforms. Among the many applications, we believe this technology can support high volume, low-cost manufacturing, enabling production for new therapeutic areas. We have established proof of principle for once-monthly dosing of the GLP-1 analog, semaglutide, and on our website, you can see our preclinical data. In summary, Ascendis remains focused on building and maintaining a sustainable, profitable, leading biopharma company. With all programs making significant progress, we are nearing the completion of our Vision 3x3 and have already begun the foundation for the next phase of Ascendis. I will now turn the call over to Scott for our financial review before we open up for questions.

Scott Smith, CFO

Thank you, Jan. As Jan noted, we are making very strong progress at Ascendis. I will touch on key points surrounding our financial results. For further details, please refer to our Form 8-K filed today. Total revenue for the second quarter was €47.4 million, including SKYTROFA revenue as well as licensing services provided to third parties, primarily VISEN Pharmaceuticals. SKYTROFA revenue for the second quarter of 2023 was €35.9 million, compared to €31.6 million reported in the first quarter. Second quarter revenue was negatively impacted by two items: a negative adjustment to the provision for estimated sales rebates of €2.1 million, which resulted from stronger-than-expected payer adoption related to prior periods; and a negative foreign currency impact of €0.6 million compared to the first quarter of 2023 due to a weaker U.S. dollar. Based on reported results from other growth hormone manufacturers, SKYTROFA was the U.S. market leader in the second quarter of 2023 with less than 10% penetration into the U.S. pediatric GHD patient population. We see a large opportunity in front of us to grow our patient share in pediatric GHD, which we estimate to be only half of the addressable U.S. growth hormone market. Turning to expenses, R&D costs declined 1% sequentially, primarily driven by lower endocrinology related costs, partially offset by an increase in oncology related costs. SG&A expenses grew 6% sequentially, reflecting higher external commercial expenses for SKYTROFA in the U.S., pre-launch activities for SKYTROFA outside the U.S., global pre-launch activities for TransCon PTH, and higher employee-related expenses. Total operating expenses were €175 million for the second quarter, up 2% sequentially from the first quarter of 2023. Overall, our operating loss declined sequentially by 2% to €141 million for the second quarter from €144 million in the first quarter of 2023. We ended the second quarter with cash, cash equivalents, and marketable securities totaling €431 million. Finally, we have entered into a capped synthetic royalty funding agreement with Royalty Pharma for $150 million in exchange for a 9.15% royalty on net sales of SKYTROFA within the United States, with no royalty payments until 2025. The royalty payments are capped at 1.65 times the purchase price and fully paid prior to December 31, 2023, or 1.925 times the purchase price if not fully paid by December 31, 2023. Further details are disclosed in a separate 6-K filed today. Looking forward, we expect continued momentum for SKYTROFA in the United States for the balance of the year and we are raising our expectations for SKYTROFA revenues to €165 million to €170 million for the full year of 2023. Let me now also provide a review of selected key program milestones. For TransCon Growth Hormone, we are on track to launch SKYTROFA in Germany this month, and we expect to report topline data from the global Phase 3 foresiGHt trial in adult GHD, our first potential label expansion in Q4. For TransCon PTH, we believe we will be in a position to resubmit the NDA for adults with hypoparathyroidism in October, and we expect a European Commission decision in Q4. If approved, we plan for TransCon PTH as our second product launch in Germany in early 2024. For TransCon CNP, we plan to share follow-up data from the open-label extension of our Phase 2 ACcomplisH trial in Q4 this year, and we expect to report topline results from ApproaCH, our pivotal Phase 3 trial, in the second half of 2024. Within the oncology therapeutic area, during this quarter, we expect to dose the first patient with a combination of TransCon TLR7/8 agonist and TransCon IL-2 beta/gamma. During Q4, we will be presenting dose escalation data supporting the Recommended Phase 2 Dose at ESMO on TransCon IL-2 beta/gamma in combination with pembrolizumab and updated monotherapy dose escalation data. As Jan mentioned, we will not comment further on the NDA resubmission procedure for TransCon PTH while we are having ongoing communications with the FDA. With that, operator, we are now ready to take questions.

Operator, Operator

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

Li Watsek, Analyst

Hey, great. So, thank you for taking my question. So, I understand that there is a limited color that you can provide regarding the NDA resubmission, but just wondering if you can sort of elaborate on the additional information that's needed from the Type A meeting and what are the gating steps for you to reapply NDA?

Scott Smith, CFO

Yeah, Li, this is Scott. We cannot comment further on the resubmission procedure while we're having ongoing communications with the FDA. But we believe we'll be in a position to resubmit in October as we stated.

Li Watsek, Analyst

Okay, understood. So, my second question is maybe just comment on the timing behind doing a Royalty Pharma deal right now?

Scott Smith, CFO

Yeah, this is Scott again. I think we looked at a transaction that had very attractive terms and allowed us to lower the cost of capital.

Li Watsek, Analyst

Okay, thank you.

Operator, Operator

Thank you. Please stand by for our next question. Our next question comes from the line of Paul Choi with Goldman Sachs. Your line is open.

Paul Choi, Analyst

Hi, good afternoon, and thank you for taking the question. Just on the commercial piece, can you maybe comment on where additional share opportunities remain for SKYTROFA? One thing we noticed was that there was a sequential decline in the gross margin. So, can you maybe just comment on whether some of these share gains and opportunities are coming at the expense of potentially higher rebating and/or discounting? And then, I have a follow-up.

Jan Mikkelsen, President and CEO

Let us just go back and give what was really the fundamentals for us in our commercial strategy in the U.S. market. And this is exactly the same strategy, we are basically moving into each single market. We want to be the leading product in value and we want to do it in a growing growth hormone market. So, we are basically building on the product strength of SKYTROFA. And we have seen that is really happening in the U.S. We have seen where we basically come in and reset the market and this is what we’re doing now. What we see? We see continuous stable growth in patients coming both from switch patients, patients coming as naive patients, and we see it in continued manual coming week by week, month by month. And we also feel that we are now in a position, as we said in the script, that the physicians, the patients, everyone have seen really the full potential of SKYTROFA, because they have seen how we really are in position to give a better outcome related to the analyses that you would typically see even in a highly compliant daily growth hormone setting. And that is why we see this. And it will only be reinforced when we really can get additional indications. This is why we are thrilled for year-end, Q4 to come out with data from our adult growth hormone deficiency, which we can show also that we really can provide an improved treatment option to this patient too.

Scott Smith, CFO

And, Paul, on the gross margin question, remember that the gross margin is for all revenue, which includes some pass-through revenue, as we mentioned. I would say the SKYTROFA gross margins are largely unchanged, pretty stable over the last several quarters.

Paul Choi, Analyst

Okay. Got it. Thanks for the additional color, Scott. And then, as my follow-up question, on TransCon CNP for the Phase 3 trial, can you comment on whether the regulators have asked for any additional clinical endpoints besides absolute growth velocity as focal points for potential approval positions in addition to AGV or absolute height growth, and just sort of any other data you may be collecting to differentiate from the approved product on the market? Thank you.

Jan Mikkelsen, President and CEO

Yeah. First of all, the primary endpoint is analyzed growth velocity over 12 months, and that is the primary endpoint. We are in discussions regarding additional secondary endpoints related to the primary endpoint we already have, which will really go into the biology, the idea of how we can really address. As we said in the script, we believe that achondroplasia is not only a skeletal dysfunction, but also has a muscular impact. We really have significant benefits there, which are being supported by our review where you can show how achondroplasia has a muscle weakness. We believe that this is one of the reasons why we see 100% retention in our trial and it was an immediate effect we observed in our Phase 2 trial. This is why we are extremely thrilled to move this product, TransCon CNP, forward, as we believe there is a clear benefit for pediatric, and the potential that it could also be approved for adults with achondroplasia.

Operator, Operator

Thank you. Please standby for our next question. Our next question comes from the line of an unidentified analyst with Leerink Partners. Your line is open.

Unidentified Analyst, Analyst

Great. Thanks so much and congrats on all the progress. I was wondering how the gross to net for SKYTROFA has been evolving in the United States and what your pricing strategy will be in Germany and other European markets. Thank you.

Jan Mikkelsen, President and CEO

Let me take the last part of your question first. We believe we're providing an improved treatment for the patients. We also believe that we're following up on what we said before, a responsible premium pricing. This is how we have launched our price structure in the U.S., and we will continue to implement that throughout all the different markets. This is where we want to be because we're providing an improved treatment. Scott, will you take the last part?

Scott Smith, CFO

So, Joe, we don't comment on GTN evolution. We just want you to focus on revenues ultimately, but I think we gave some interesting points that reported revenues. We were the market value leader in the quarter with less than 10% penetration into the pediatric GHD market, which itself is only half of the total growth hormone market in the U.S.

Jan Mikkelsen, President and CEO

Yes. And so, when you start to make this calculation, which you likely will do setting and calculating that, what does that mean? The basic means is that we have the vision on being the value driver, the most valuable product, but in a growing growth hormone market. And that's definitely what we are managing to do here because of the improvement in treatment we're providing.

Unidentified Analyst, Analyst

Thank you.

Operator, Operator

Thank you. Please stand by for our next question. Our next question comes from the line of Andreas Argyrides with Wedbush Securities. Your line is open.

Andreas Argyrides, Analyst

Thanks for taking our questions. Congrats on all the progress. With the eGFR data, how should we interpret the 50% response rate? And how do you expect the eGFR analysis to be reflected on the potential label? And looking at the baseline characteristics of patients in the TransCon PTH group, can you speak to the impact of TransCon PTH on kidney stones? And if you plan on sharing this data in the future? And then, I have one follow-up.

Jan Mikkelsen, President and CEO

Okay. Thanks a lot. We are extremely thrilled with this data. We believe it's providing a huge benefit to the patients. A huge benefit, because one of the elements that the patients really fear is on conventional therapy. You're basically are dividing renal impairment, which at the end can be the worst case scenario where you go into dialysis and really need a new kidney. So, from that perspective, when we looked at the data, we selected 60 from the perspective as some kind of accepted definition of really where you have insufficient or not. Why we were thrilled with the data is that we couldn't take 50% of the patients that were basically already classified as having renal insufficiency and basically move them up to what we call normality. I believe that is a key element for how we can work with that and help the patient group here. I think when we saw the data, it was the first time we really saw any compound that demonstrated this effect. Related to the labeling, we did this year as a post hoc analysis. You could say we should have included this in our key analysis from the beginning when we saw this major impact, but still for us, it was unbelievable when we saw the data and how well it is. We will soon, when we present this data, be in communication with patient groups. So they will really understand the benefits that can be gained from TransCon PTH. We will go out and talk with regulatory agencies. We also believe that having it in peer-reviewed publications is the key element for us to communicate about this fantastic data.

Andreas Argyrides, Analyst

Fantastic. And then, comments on the kidney stones?

Jan Mikkelsen, President and CEO

The kidney stones, I believe, I have not seen data on that point, but potentially I can ask them if there is a post hoc analysis we can do specific to kidney stones. I cannot recall I've seen anyone.

Operator, Operator

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

David Lebovitz, Analyst

Thank you very much for taking my question. Could you run us through the differences of the new linker you were talking about? You have preclinical data for a GLP-1. When might we see that candidate move towards the clinic? Additionally, what other types of candidates do you see applying this towards?

Jan Mikkelsen, President and CEO

Yeah. We are extremely appreciative of this expansion of the TransCon technology, because we believe we need to be everywhere where the patients are. It's built on the same principle again. When you think about the TransCon linker, they are identical or exactly the same kind that you have seen on both TransCon growth hormone, TransCon PTH, and TransCon CNP, as well as for all the other projects also in oncology, all the same we can use are the same linker. The only change is that we have developed what we call a novel carrier system. This novel carrier system, we wanted to provide one example on. One example was to go into a GLP-1 analog, because there you really demand a high level of capability to produce mass production of drugs. You need to do it at an extremely low cost. So your company can have a more non-expensive manufacturing process by having fewer injections and other efficiencies. This was the rationale behind developing the new novel platform. We believe it can be used in many areas. Specifically, we can target 10 options in metabolic diseases. We have 10 targets now looking into cardiovascular and other areas. It's really moving up and opening doors for scientists to explore new fields that we couldn't address with the two TransCon carrier platforms we already had established, our soluble carrier and the hydrogel carrier.

Operator, Operator

Thank you. Please standby for our next question. Our next question comes from the line of Yaron Werber with TD Cowen. Your line is open.

Unidentified Analyst, Analyst

Hi, this is Joyce on for Yaron. Thanks so much for taking our question. Maybe just a follow-up first on the previous question for your GLP-1. If you could just clarify whether you plan to file an IND in the future? And if so, how do you think this will fare relative to some of the drugs from your competitors with double and triple mechanisms of action? And then I just had a follow-up on SKYTROFA.

Jan Mikkelsen, President and CEO

Yeah. First of all, we used semaglutide because we felt there was a good GLP-1 analog to demonstrate our new technology platform. But also at the same time, semaglutide is also an interesting product opportunity itself, and with the TransCon technology, it will release a completely unmodified semaglutide. So, we're not changing the mode of action because we are a long-acting product technology. This will make it both unique in relation to clinical trials and also unique in terms of regulatory pathways. From that perspective, as we look at our pipeline, we are still discussing optimal product opportunities because we can also utilize other GLP-1s. This is where we are still having internal discussions about positioning, and when we are ready to start generating clinical data, we will come back to you and explain what exact analog we are working on.

Unidentified Analyst, Analyst

Okay, great. And then for my follow-up for SKYTROFA, can you provide any additional color on how much share you've gained while Novo has had supply constraints for their daily growth hormone? And also, does your new fiscal year '23 guidance reflect competition from once-weekly drugs from Novo and Pfizer? Thank you.

Jan Mikkelsen, President and CEO

The guidance we have considers the competitive landscape that is out there, and we've fully integrated the threats or how it really is helping us to convert over to a much more long-lasting treatment. But I also think you need to take into account the shortages of daily growth hormone, which is a long-term process partly driven by what we call the consolidation of a daily growth hormone market. We are facing competitors leaving the market, and there will be very few left in the daily growth hormone sector. What we see here is exactly what we have predicted in the last one to two years regarding the competitive landscape. We feel really confident with how SKYTROFA will continue to be the leading product in terms of value and continue to be it in the future.

Operator, Operator

Thank you. Please standby for our next question. Our next question comes from the line of Caroline Palomeque with Berenberg Capital Markets. Your line is open.

Unidentified Analyst, Analyst

Hi, this is Lucy for Caroline. Thank you so much for taking my question. So, I'm just curious about the plans for launching in the EU for the TransCon PTH. So you had mentioned that first you were going to launch in Germany, then what would be the next steps? So, we'd love to learn more about that. Thanks.

Jan Mikkelsen, President and CEO

Thanks a lot. First of all, we are not looking to launch only in the EU; we are also planning for international operations. We have a strong person that is leading our global commercial effort, Camilla, who has a strong background in Europe and international operations. We are launching in Germany as the first country, but it will not be a single launch because we first actually launch SKYTROFA, which we are doing this month in Germany, and we're starting to launch TransCon PTH in early 2024. We will then roll out in all the different EU countries where we expect to get approval, including the UK, which we can still apply for in a very fast manner. We are also progressing in international operations, meaning this country where you can support the launch of a product either from an EU approval or from a U.S. approval. This is how we are building our global commercial strategy.

Unidentified Analyst, Analyst

Okay. Thank you very much for taking my questions and congrats on all the progress. Thank you.

Jan Mikkelsen, President and CEO

Thanks so much.

Operator, Operator

Thank you. Please standby for our next question. Our next question comes from the line of Leland Gershell with Oppenheimer. Your line is open.

Leland Gershell, Analyst

Great. Thanks for taking my questions. Just one question from us as it pertains to SKYTROFA. In discussions with endocrinologists, they've said that at the same time that you've grown the product, they've also seen shortages in the daily injectables market, providing more opportunity for SKYTROFA, which may be due to some manufacturers shifting to pens that may be for GLP-1s versus growth hormones. Just wondering if you could comment on that dynamic and how you may see those shortages persisting or changing in the near term? Thank you.

Jan Mikkelsen, President and CEO

First of all, the daily growth hormone market in the U.S. consists of five to six players. To my knowledge, I only believe there's one or two of them that have GLP-1 products. So, I don't believe that you can generally take the comments on shifting to the GLP-1 segment as the reason for shortages in our daily growth hormone. The key element is the long-term perspective of what happened in the daily growth hormone market that started two or three years ago when our Phase 2 data came out. We saw a classical way to leave a market; most manufacturers got rid of their sales force, stopped promotions. Today, many of them have stopped manufacturing for a year and subcontracting to European countries. This is part of what you see driving the basic daily growth hormone shortage. The consolidation has reached a point where manufacturers are leaving the growth hormone market. I think we need to go back to fundamentals, where we have seen the daily growth hormone consolidation starting three to four years ago. That is the reason we are experiencing shortages now; there are simply not many players left that want to supply it because it’s not an attractive business. If you have a big pharmaceutical company earning less than $100 million in revenue, you cannot maintain a positive P&L on such a product.

Leland Gershell, Analyst

Thank you. And then also a question about the new GLP-1 work that you've been doing. I wanted to ask about what your freedom to operate there is? Presumably, if you were to move forward with the candidate using one of the APIs, would we be able to see an agreement with one of the respective companies? Is that something we should look out for? Thank you.

Jan Mikkelsen, President and CEO

Yeah, the GLP-1 space has a lot of freedom to operate, which is surprising. Many of them are old products that were developed for diabetes and then repositioned into obesity. Thus, there's significant freedom to operate. We are making the best-in-class product opportunities because we can really address the patient adherence issue; we know that only one-third of patients remain on treatment after one year of GLP-1 therapy. We need to improve adherence and the tolerability of the treatments.

Leland Gershell, Analyst

Great. Thanks very much for taking the question.

Operator, Operator

Thank you. I'm showing no further questions. Ladies and gentlemen, that concludes our Q&A portion. We would like to thank you for your participation in today's call. This concludes the call. You may now disconnect.