Earnings Call Transcript - ASND Q3 2022

Operator, Operator

Good day, and thank you for standing by. Welcome to the Ascendis Pharma Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tim Lee, Senior Director of Investor Relations. Please go ahead.

Tim Lee, Senior Director Investor Relations

Thank you, operator, and thank you everyone for joining our Third Quarter 2022 Financial Results Conference Call. I'm Tim Lee, Senior Director of Investor Relations at Ascendis Pharma. Joining me on the call today is Jan Mikkelsen, President and Chief Executive Officer; Scott Smith, Senior Vice President and Chief Financial Officer; Dr. Stina Singel, Head of Clinical Development Oncology; Dr. Birgitte Volck, Senior Vice President Head of Clinical Development and Medical Affairs Endocrinology Rare Diseases; and Joe Kelly, Head of US Commercial Endocrinology. 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 US commercialization and continued development of SKYTROFA for the US market, the commercialization of TransCon hGH for the EU market, our progress on our pipeline candidates, and our expectations with respect to their continued progress, statements regarding the expected timing of approval and launch of TransCon PTH in the US market next year, statements regarding our strategic plans, our goals regarding our clinical pipeline, including the timing of clinical results, statements regarding the US market approval of SKYTROFA, and our pipeline product candidates statements, regarding our planned regulatory filings, our expansion into new therapeutic areas, and statements regarding the ability to create a sustainable leading global biopharma company. These statements are based on information that is available to us today. Actual results and events could differ materially from those in the forward-looking statements, and we may not be able to achieve our goals, carry out our plans or intentions, or meet 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 cause actual results to differ materially, please see our forward-looking statements section in today’s press release and the Risk Factors section of our most recent annual report on Form 20-F filed with the SEC on March 2, 2022. TransCon Human Growth Hormone or TransCon hGH is approved by the FDA in the US under the brand name SKYTROFA for the treatment of pediatric patients one year older weighing at least 11.5 kilograms who have growth failure due to inadequate secretion of endogenous growth hormone. In addition, the European Commission has granted a marketing authorization for lonapegsomatropin, which we developed under the name TransCon hGH, as a once-weekly subcutaneous injection for the treatment of children and adolescents aged 3 to 18 years with growth failure due to the insufficiency of endogenous growth hormone. In general, we refer to this product as TransCon hGH unless we are referring to the product in the context of a particular jurisdiction such as the United States or the European Union. Otherwise, please note that our product candidates are investigational and not for approved 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 should be viewed as promotional. On today's call, we'll discuss our third quarter 2022 financial results and 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 & CEO

Thanks, Tim, for this long introduction. Good afternoon, and good evening everyone. Again, an important quarter for Ascendis, as we continue to achieve and approach new major milestones in our journey to file our Vision 3x3, to become a sustainable, profitable leading biopharma company. Earlier this week, we announced that we had achieved another important milestone as the FDA has accepted our NDA for priority review for TransCon PTH for the treatment of adult patients with hypopara. The FDA expects to complete the review of our NDA by April 30, 2023. If approved, we believe we will bring a totally new treatment paradigm to the hypopara community. Today, we are reporting SKYTROFA US revenue of €12.3 million this third quarter, again, more than doubling our sales compared to last quarter. All patients continue in the Phase 2 ACcomplisH Trial for TransCon CNP, with no dropouts and the longest treatment duration now around two years. We are looking forward in the coming weeks to sharing top-line results, including early data in children aged 2 to 10 with achondroplasia. In oncology, we will have our first oral presentation at next week's Society of Immunotherapy in Cancer (SITC) conference. We look forward to sharing our first-in-human safety and initial efficacy data supporting our recommended Phase 2 dose for TransCon TLR7/8 agonist. Last quarter, I made the following statement: we believe that we are on track to become cash flow positive without the need for additional equity from investors, given the successful launch of SKYTROFA in the US combined with the expected US launch of TransCon PTH in the middle of next year, supported by our strong cash position of around €1 billion. After this quarter, my confidence that we will fulfill this belief has been reinforced. Let me now share with you more details on our program. We designed TransCon Growth Hormone, now marketed as SKYTROFA in the US, to address the unmet medical need that results from children taking daily growth hormone. With a different set of product, we are building SKYTROFA into the global market-leading brand while also expanding the overall value of the growth hormone market. For this quarter, we reported SKYTROFA revenue of €12.3 million, compared to €4.4 million in the second quarter. As we expect that the majority of patients will be on SKYTROFA treatment for at least three to five years, revenue for each quarter becomes the new base for the next quarter. From that base, revenue continues to grow through the addition of new reimbursed patients. In Q4, we expect to grow the number of new reimbursed patients at a similar level to what we saw in Q3, providing a strong base for revenue growth in 2023 and beyond. I believe that with our improved commercial execution we are achieving the goals we set out when we launched SKYTROFA in the US by building on the product strength of SKYTROFA and providing patients with a differentiated treatment. Over the coming quarters, we will continue to provide updates on all our programs that support our efforts to build TransCon into the leading global brand in a growing growth hormone market. Let us turn to TransCon PTH, a product candidate we are dedicated to bring to patients as soon as possible. Earlier this week we announced that the FDA has accepted for priority review our NDA for TransCon PTH for the treatment of adults with hypopara. This is our second product candidate in a row that we are taking all the way from product design to successful regulatory filing. These patients face an urgent need for treatment to effectively address their disease. Its complications, and importantly help restore normal life for them. We hope to have a regulatory decision by April 13 of next year from the FDA in the US. Our view of the importance of PTH replacement therapy was confirmed by the recent guidelines update for the management of hypopara. The authors suggested consideration of PTH replacement therapy for HP patients insufficiently controlled due to symptomatic hypoglycemia, hyperosmia, renal insufficiency, hypocalcemia, or electrolyte disturbances. They also observed that patients with poor compliance or who are intolerant of large doses of calcium on active vitamin D might also benefit from PTH therapy. With the potential to treat all HP patients regardless of disease background and growing demand for long-term clinical trial data showing durable responses, we believe that TransCon PTH could address this major unmet medical need. With the US regulatory timeline set and review underway, we are focusing on preparation for an expected US approval and launch in Q2 next year. Expanding our global reach for TransCon PTH, we are on track to submit our MAA in Europe and we remain on track to report topline results from our Phase 3 PaTHway Japan Trial, both events expected to happen this quarter. We are dedicated to further optimizing treatment options for patients. With up to three years of follow-up data from our clinical trial of TransCon PTH, we believe that HP patients on stable PTH doses with a once-weekly PTH product could be an attractive treatment option. Our data demonstrates that each patient undergoes multiple titration and reaches normalization of calcium hemostasis at different times. We believe once patients obtain stable doses of daily TransCon PTH, that is when they become optimal candidates for switching to a once-weekly PTH therapy with the same mode of action. Our once-weekly TransCon PTH product candidate is now in preclinical development and is based on the same TransCon technology as the daily TransCon PTH, enabling we believe predictable and safe switching of patients from daily to weekly TransCon PTH. Turning now to TransCon CNP. We are looking forward in the coming weeks to sharing topline results from the ACcomplisH Trial. Our Phase 2 randomized double-blinded placebo-controlled clinical trial of TransCon CNP in children aged two to ten with achondroplasia. The ACcomplisH Trial was designed to enroll four dose cohorts with up to 15 patients each randomized 3:1 active to placebo in sequential cohorts of six micrograms per kilo, 20 micrograms per kilo, 50 micrograms per kilo, and 100 micrograms per kilo per week followed for one year on a double-blinded basis. A total of 57 patients were enrolled in the four cohorts, with 40 of the patients younger than five years old. All 57 patients enrolled completed the blinded portion with no dropouts. After one year of double-blind treatment, patients transitioned from that dose cohort to an open-label extension (OLE) portion of the trial. As of today, all patients had been transitioned to the 100 micrograms per kilo per week dose level and all continue in the open-label extension at that dose. We continue to see on a blinded basis the same well-tolerated safety profile we reported to you last December, with the longest treatment duration now around two years without any dose reduction and 100% patient retention. The primary endpoint of the ACcomplisH trial is annualized height velocity after one year of treatment. The primary analysis is to compare mean annualized height velocity for TransCon CNP cohort to that for placebo-treated patients. We also plan to report the mean annualized height velocity data for the two patient groups: patients aged two years to five years and five years to ten years. In addition to the top-line randomized double-blinded data, we also plan to report preliminary data from the open-label extension portion of the study. These data will provide information on treatment impact when treatment is transitioned from placebo or lower dose up to 100 micrograms per kilo weekly dose of TransCon CNP. I get a lot of questions about what my expectations are for this filing. First priority, treatment needs to be safe and well-tolerated. From the perspective of outcome, annualized height velocity has been validated as the regulatory primary endpoint. Just as with height velocity in other growth disorder trials, this endpoint in achondroplasia is dependent on multiple demographic factors. In particular, the age of the patient is a major factor determining the outcome. The only approved treatment in the US for achondroplasia analyzed height velocity for patients aged five to fourteen was around 5.4 centimeters per year, with a greater treatment effect in annualized height velocity for the group aged eight to eleven compared to the age group of five to eight. I estimate the benchmark for annualized height velocity for the age group five to ten in the ACcomplisH trial will be slightly lower than 5.4 centimeters per year, as the ACcomplisH trial has fewer patients in the faster growing age group of eight to eleven compared to the age group of five to eight. To further evaluate TransCon CNP at a 100 micrograms per kilo weekly dose, we have submitted a protocol to the FDA to initiate a global randomized double-blinded placebo-controlled Phase 2b trial in children with achondroplasia from two to eleven years of age. This trial is expected to enroll about 80 patients and measure annualized growth velocity after one year of treatment as the primary endpoint. Perhaps more important, we believe this trial will enroll sufficient patients to analyze additional secondary endpoints, which may help to explain why we see 100% patient retention in our trials. We expect to complete enrollment early next year for this trial. In summary, we remain on track with our Vision 3x3 goal to obtain approval for three endocrinology rare disease products by 2025. Turning now to oncology. With our first two immunotherapy programs, we are leveraging both the TransCon systemic technology for TransCon IL-2 beta/gamma and for the first time in human with TransCon hydrogel technology for TransCon TLR7/8 Agonist. TransCon TLR7/8 Agonist is designed to kick-start the immune system inside the tumor using our intratumoral hydrogel technology to provide sustained release of the TLR7/8 Agonist over weeks thereby activating the immune system within the tumor microenvironment without systemic toxicity. We recently completed dose escalation and declared the recommended dose for our TransCon TLR7/8 Agonist candidate. With a favorable safety profile and early signs of clinical activity observed as monotherapy or in combination with a checkpoint inhibitor, we are pleased that our abstract for top-line dose escalation data was selected for an oral presentation at the SITC, the Annual Meeting of the Society for Immunotherapy in Cancer being held in Boston next week. Our second oncology product candidate, TransCon IL-2 beta/gamma, is designed to broadly increase systemic stimulation of the body's immune system. We believe it has the potential to become a new backbone for cancer immunotherapy. TransCon IL-2 beta/gamma continues to be well tolerated as monotherapy or in combination therapy, and we are seeing promising pharmacodynamic responses as we continue dose escalation. We plan to share monotherapy top-line results later this quarter. As you can hear, there are so many great milestones we have achieved, but also so many more in the near-term. With a cash position of €935 million, Ascendis is on track to achieve our Vision 3x3. I remain confident in our ability to drive continued progress. I will now turn the call over to Scott for additional details and a financials review before we open up for questions.

Scott Smith, CFO

Thank you, Jan. So as you heard from Jan, we are making great progress on behalf of the patients across our entire portfolio, with SKYTROFA launched in the US and expected to launch in Germany in mid-next year. Combined with the expected US approval and launch of TransCon PTH in Q2 next year, our advancing pipeline of product opportunities addressing major unmet medical needs and our strong cash position, we are more confident than ever in our ability to become cash flow positive and to deliver sustainable, profitable long-term growth. Now on to our results. Today we reported SKYTROFA US revenue for the third quarter more than doubled sequentially to €12.3 million from €4.4 million in Q2. Based on continued growth in the number of reimbursed patients and in line with comments Jan made in May about doubling our revenue quarter-to-quarter, we believe we remain on track to achieve fourth-quarter SKYTROFA US revenue of at least €16 million, based on Jan's simple algorithm from May, compared to the company-compiled sell-side analyst consensus estimate of €11.9 million. This expected Q4 revenue would then provide us with a very strong base for SKYTROFA US revenue in 2023 and beyond. Growth in US SKYTROFA revenue during the third quarter primarily reflects the strong increase in reimbursed demand. The stronger US dollar provided a minor benefit of approximately €0.5 million. Now turning to operating expenses: Research and development costs for the third quarter were €97.4 million compared to €58.8 million during the third quarter of 2021. As a reminder, the third quarter of 2021 included a one-time reversal of previous write-downs of pre-launch inventories which reduced R&D cost by €54 million. Overall, this reflects ongoing normalization of our overall R&D cost structure as more programs progress from early through late-stage development and approval. Selling, general and administrative expenses for the third quarter were €60.7 million, compared to €39.3 million during the third quarter of 2021. These expenses primarily reflect higher commercial costs following the launch of SKYTROFA in preparation for future product launches in the US and Europe. Net finance expenses of €20.9 million for the third quarter included a foreign exchange rate gain of €44.1 million related to translation of our US dollar holdings of cash, cash equivalents, and marketable securities to euro. Overall, we had a net loss for the third quarter of €169 million or €3.03 per basic and diluted share compared to a net loss of €80.3 million or €1.47 per basic and diluted share during the third quarter of 2021. Importantly, we ended the third quarter with cash, cash equivalents and marketable securities totaling €935 million. Let me now also provide an update on timing key milestones for the remainder of the year. For TransCon hGH, we are on track to complete enrollment in the global Phase 3 foresiGHt trial in adult growth hormone deficiency in Q4. For TransCon PTH, we are on track for a planned MAA submission in Europe in Q4, and for PaTHway Japan, top-line results are expected in Q4. For TransCon CNP, we look forward to sharing the top-line results from the Phase 2 ACcomplisH trial in the coming weeks. For TransCon TLR7/8 Agonist, we plan to present top-line monotherapy and combo therapy dose-escalation data from the Phase 1/2 transcendIT-101 clinical trial at the SITC conference next week. And for TransCon IL-2 beta/gamma therapy, top-line results are expected from the Phase 1/2 IL Believe trial in Q4. As you can see, it's an incredibly busy time for Ascendis going into the end of the year with key catalysts across the pipeline both in endocrinology rare diseases and in oncology. With a strong balance sheet, strong commercial progress, and disciplined cost focus, we believe we are well positioned to fulfill Vision 3x3, have the capital to fund our growth initiatives and become cash flow positive. With that operator, we are now ready to take questions.

Operator, Operator

Thank you. Our first question comes from Jess Fye with JPMorgan. Thank you for standing by. Your line is now open.

Jess Fye, Analyst

Hey, guys. Good morning. Nice results tonight. How are you thinking about the potential for the Phase 2b CNP trial to be registrational?

Jan Mikkelsen, President & CEO

That is a great question, Jess. And what we believe is the most important part for our Phase 2 trial, the ACcomplisH Trial, is really to prove that we're providing a meaningful benefit to the patients and that we are hitting the target product profile that we laid out when we designed TransCon CNP to be a best-in-class product opportunity for treatment of achondroplasia. We decided from the perspective that it was not only focused on efficacy but included everything related to safety, tolerability, and the once-weekly dosing profile because we know from 20 years in the growth hormone division that daily dosing is not often preferred. All that we incorporated and that is the most important part that we want to see from the ACcomplisH Trial. When you come to the question of whether we can somehow file based on this data, I think it depends on what we see in the coming weeks. I will be better positioned to really answer this question when the data has been unblinded and we have reported it to you. Then I think I will have a much clearer idea since there can be a lot of differences between different geographic regions and various elements which could influence the decision on whether to wait for the 2b trial. I need to wait to see the data.

Jess Fye, Analyst

Sorry, I was asking about whether the Phase 2b could be registrational?

Jan Mikkelsen, President & CEO

That is what we believe. The Phase 2b was basic in the system being developed in such a manner that we hope in the Phase 2b we can come with an explanation for why we are seeing this 100% retention in our ACcomplisH Trial because we must provide something more to this patient group than just analyze growth velocity. I don't believe this is the first trial in achondroplasia where you basically see 100% retention. We hear stories from the patients. We hear when we talk with the caregivers, but we need to quantify that, and that is what we hope we can quantify in the Phase 2b.

Josh Schimmer, Analyst

Thanks much for taking the question. I’ve follow-up on the one from Jessica. I guess, given how close we are to the Phase 2 results for TransCon CNP, why not wait for them to be reported and then design a more comprehensive Phase 3 protocol? Why move quickly and why specifically conduct a Phase 2 instead of a Phase 3 given how close we are to the data? Thank you.

Jan Mikkelsen, President & CEO

Hey, Josh. This is because we are dedicated to bring this product out to the patient as fast as possible. So, what we are doing is incorporating exploratory endpoints and choosing a menu list of all the elements we believe are beneficial to the patients. As soon as we have gone through the entire ACcomplisH Trial and fully understand the key elements we are observing, we can relate all or some of these exploratory endpoints to secondary endpoints, and therefore that can be integrated into the labeling discussions. We receive many inquiries from patients and caregivers asking when can we get this product out to the market. And this is why we are dedicated to work in this way, where we can shorten development time by about a year. We will have all the patients enrolled by the beginning of next year, and then we can evaluate the data and achieve the same outcome.

Josh Schimmer, Analyst

Got it. If I could ask another very quick one, you've indicated that you would disclose a new therapeutic category for the TransCon platform by year-end. When can we expect that in what form and what are the gating steps for that announcement?

Jan Mikkelsen, President & CEO

The gating step is basic; we are building up the pipeline and what we need to do as we did when we disclosed our rare disease endocrinology pipeline with TransCon PTH and TransCon CNP. We disclosed that in 2015. In 2018, we disclosed our oncology pipeline, and we said we will go out and disclose our oncology pipeline, and now we are preparing to disclose our third therapeutic area. I can guarantee, I am really thrilled about this new therapeutic area, which has an important unmet medical need, but also established targets and mechanisms of action that align well with our TransCon technology systems. We will likely make this announcement by the end of the year, potentially at JPMorgan when many investors are present.

David Lebowitz, Analyst

Hello. Thank you for taking my question. Additional question on achondroplasia. When we look forward to the data coming out, given the cross-trial comparisons in the different geographies and populations, what is the way that we can benchmark what we are seeing and what its clinical meaningfulness is and how it might actually compare with the competing products?

Jan Mikkelsen, President & CEO

So thanks for the question. As I mentioned in the prepared remarks, this is a question I receive frequently. When we're trying to benchmark our TransCon CNP to the only approved product in the US, we're building on the science. For example, I have a publication in front of me discussing safety and persistent growth-promoting effects of vosoritide in children with achondroplasia, two-year results from an open-label Phase 3 extension study. The publication provides an analysis of growth velocity, which is similar to annualized height velocity. It analyzes growth velocity both from the patient population directly on vosoritide and from placebo that transitioned to vosoritide. In this publication, they report the absolute figures for annualized growth velocity, which is important for clear comparisons. We have to acknowledge that different demographic factors influence outcomes. This is why we will separate the two age groups of two to five and five to ten, as there is not enough solid data to benchmark the two to five age group effectively. However, for the age group five and up, we can derive a meaningful comparison from the available literature and FDA filings, considering the differences between the age groups in treatment effects.

Li Watsek, Analyst

Okay, great. Thanks for your question, and congrats on the quarter. Maybe just one on TransCon PTH. Now you have a PDUFA date in April next year. Just wondering if you can maybe talk about your launch preparation right now and potential synergy with SKYTROFA in the US? And also how should we think about your commercial strategy in Europe?

Jan Mikkelsen, President & CEO

Yeah. Thanks a lot. You mentioned the right word, synergy. That's why we built a pipeline in rare disease endocrinology with three independent product opportunities where we expect to launch one product after the other within a span of two years. We launched SKYTROFA in 2021, we hope to launch TransCon PTH in 2023, and we hope the next one will follow two years later. We are committed to global commercialization. Joe is responsible for the US group that handles commercialization. As you have seen, we have different strategies across geographic regions. We are building our local capabilities in Europe, having just established a German headquarters in Munich. In the US, there is significant synergy. Our pipeline approach necessitates synergy between products, along with sales revenue expectations exceeding €1.5 billion for each product for us to consider bringing it into the Ascendis pipeline. We focus not just on sales force but also on infrastructure, IT solutions, facilities, and personnel, which greatly enhance our operational efficiency. By integrating our efforts, we maximize our resources. So when considering our strategy, think about how we can streamline operations across our product offerings.

Li Watsek, Analyst

Okay, great. Maybe just a quick follow-up on the TransCon CNP Phase 2b. I wonder if you can share some of the secondary endpoints that you talk about. My understanding is that your Phase 2 trial is still blinded. So I guess, what insight can you gain from the Phase 2 trial to help you finalize the Phase 2b protocol?

Joe Kelly, Head of US Commercial Endocrinology

The Phase 2b protocol is already filed with the FDA, so we are fully engaged in our Phase 2b. We expect to enroll all the patients aligned now in our ACHieve trial in the near future. In our protocol, we have a comprehensive menu of different elements that we believe could be beneficial. Birgitte, who is overseeing Clinical Development Regulatory and Medical Affairs of our Rare Disease Endocrinology program, is on the call. Perhaps you could share more about the exploratory endpoints incorporated into the protocol and how we hope to evaluate them alongside secondary endpoints after analyzing all the data from ACcomplisH.

Birgitte Volck, SVP, Clinical Development & Medical Affairs

Yes, thank you so much, Joe, and thanks for the questions. We are very excited about the 2b protocol. Our objective is to provide timely access to this potential treatment opportunity. We aim to include patient-relevant outcome measures similar to what we developed for our PTAs program, and we will incorporate additional measures like body mass index, etc. We have a comprehensive list of relevant exploratory endpoints that we will address appropriately as we evolve the evidence in this relatively new field of medical intervention.

Paul Choi, Analyst

Hi. Thank you. Good afternoon. And let me add my congratulations on all the progress. Just a point of clarification. Can you comment on whether you have seen anything from the blinded portion of the Phase 2 that has informed your decision with regard to trial design for the Phase 2b APPROACH study, or was it just based solely on the available open-label extension data?

Jan Mikkelsen, President & CEO

We have indeed looked at the blinded data from the ACcomplisH trial and we have also reviewed the data from the open-label extension. We believe this is a responsible approach and it allows us to design our upcoming studies effectively without jeopardizing the integrity of the trials. We are looking forward to sharing these insights with you in the coming weeks.

Paul Choi, Analyst

Okay. Thank you for that. And then as a follow-up on the commercial, maybe for Joe. Can you provide us an update on what your payer conversations or feedback has been like with regard to potential pricing of TransCon PTH? You obviously launched SKYTROFA at a premium to the market average in the growth hormone category. So just any qualitative or quantitative feedback you can provide would be great.

Jan Mikkelsen, President & CEO

I can start by saying we are evaluating the optimal price structure to ensure we accurately reflect the value we provide in Ascendis, keeping the patient first concept in mind. We previously set a premium pricing for SKYTROFA and gauge feedback accordingly, and we plan to responsibly replicate this approach with TransCon PTH. Joe, do you have any additional comments?

Joe Kelly, Head of US Commercial Endocrinology

Sure. Right now, MMIT indicates that we have around 60% coverage at this point. That being said, we've seen that HCPs are effectively getting patients reimbursed whether they are covered or not. Most willing to put in work to secure reimbursement are having success.

Jan Mikkelsen, President & CEO

I think we were reflecting mainly on our TransCon Growth Hormone, SKYTROFA sales, but I think Paul wanted to hear more on the PTH pricing structure.

Joe Kelly, Head of US Commercial Endocrinology

That's correct.

Paul Choi, Analyst

Yes.

Jan Mikkelsen, President & CEO

If you have any thoughts?

Joe Kelly, Head of US Commercial Endocrinology

Right. The synergies we enjoy in the marketplace with our products when engaging with payers and PBMs will certainly be leveraged uniquely between SKYTROFA and TransCon PTH once approved.

Vikram Purohit, Analyst

Hi. Good afternoon. Thanks for taking our question. So first one on SKYTROFA. So we all know that you provided a threshold for revenues for SKYTROFA that you aim to achieve for 2022 last quarter. But, looking forward, do you plan to provide formal yearly SKYTROFA sales guidance in 2023?

Jan Mikkelsen, President & CEO

No.

Vikram Purohit, Analyst

Okay. Understood. So follow-up question then, separate topic. IL-2 beta/gamma data expected by the end of the year, what could we expect to learn there? And do you think that would be enough of a dataset to make decisions on next steps for that program?

Jan Mikkelsen, President & CEO

First of all, when I look at our IL-2 beta/gamma program, we aspire to create a treatment option that combines effectively with a checkpoint inhibitor while also offering better efficacy and safety than check point inhibitors. Our program is progressing rapidly and the data we are observing supports this momentum. We are excited to share these updates because our TransCon technology and optimal protein design represent a potent non-alpha compound that can greatly benefit patients. Stina, would you like to add?

Stina Singel, Head of Clinical Development Oncology

Thank you, Jan. We are in the process of monotherapy dose escalation and also dose escalation in combination with a checkpoint inhibitor. By the end of this year, we hope to have initial results for you regarding clinical data. Most impressively, as previously mentioned, is that safety has remained as we designed with the TransCon technology. The key thing we are looking for is pharmacodynamic effects and how far we can extend beyond the observed results with other IL-2 variants.

Jan Mikkelsen, President & CEO

Typically, to elaborate a bit more, we observe ALC (absolute lymphocyte count) as a critical measure and aim to achieve a target increase of plus five in ALC. This outcome has not been achieved by any other entity to date. If we can reach an ALC above two or three, we foresee corresponding improvements in monotherapy effects. Thus, we are eager to elevate ALC, as it significantly primes the hematological system to fight cancer effectively.

Leland Gershell, Analyst

Hey, guys. Thanks.

Jan Mikkelsen, President & CEO

Good morning, Leland.

Leland Gershell, Analyst

Hello, good afternoon. Thank you for taking my questions, and I appreciate the progress being made. I have two questions. The first is about TransCon CNP, specifically regarding the regulatory aspects. Another company with its own achondroplasia product has mentioned that the accelerated approval pathway will be restricted for any new entrants due to their approval. Should we understand this to mean that you will need to complete the Phase 2b study at a minimum to obtain approval, or do you believe that discussions with the FDA or other agencies might allow you to file based on the ACcomplisH data?

Jan Mikkelsen, President & CEO

I find this question intriguing because I have received it multiple times and it appears to stem from a misunderstanding about the regulatory pathway in the US. Just because the primary endpoint is validated utilizing analyzed data, this does not mean that it is closed for anyone else. I'm a bit perplexed by this question, as I don't believe there is any scientific regulatory element supporting such a statement.

Leland Gershell, Analyst

Okay. Thank you very much.

Operator, Operator

Thank you. Our final question comes from Yaron Werber with Cowen. Thank you so much for standing by. Please go ahead.

Yaron Werber, Analyst

Yes, thank you for taking my questions. Jan, I have an integrated question regarding the 5.4 centimeters per year that you mentioned in relation to the two-year extension on Vaxogo for patients over five. The placebo showed about 3.8 centimeters per year at baseline. Once it switched to Vaxogo, the figure increased to 5.4. Is 3.8 a reasonable comparison for what to anticipate with the placebo? This pertains to the five-year-olds and older. How should we interpret this data when it becomes available?

Jan Mikkelsen, President & CEO

Yes. This is where the two to five-year-olds present a challenge; the data supporting that population is inadequate for reliable benchmarking. I've seen many datasets filled with variability. As such, I prefer to separate the two to five from the five and up group. The data available for the five and older group is more robust; however, there is no solid benchmark for the younger age group. That’s why I’m reluctant to make direct comparisons.

Operator, Operator

Thank you so much. The question-and-answer session is now finished. This does conclude today's conference call. Thank you for participating. You may now disconnect.