Earnings Call Transcript - ASND Q2 2021

Operator, Operator

Good day and thank you for standing by. Welcome to Ascendis Pharma Q2 Earnings and SKYTROFA Approval Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Scott Smith, Senior Vice President and Chief Financial Officer at Ascendis Pharma. Please go ahead.

Scott Smith, CFO

Thank you, operator. Thank you everyone for joining our conference call today. I am Scott Smith, Chief Financial Officer of Ascendis. Joining me on today’s call are Jan Mikkelsen, President and Chief Executive Officer; Jesper Hoiland, Global Chief Commercial Officer; Dr. Dana Pizzuti, Head of Development Operations and Chief Medical Officer; and Dr. Juha Punnonen, Head of Oncology. Before we begin, I would like to remind you that this conference call will contain forward-looking statements that are intended to be covered under the Safe Harbor provided by the Private Securities Litigation Reform Act. Examples of such statements may include, but are not limited to, our commercialization and continued development of SKYTROFA, our progress on our pipeline candidates and our expectations with respect to their continued progress; statements regarding our strategic plans, our goals regarding our clinical pipeline; statements regarding the market potential of SKYTROFA; and our pipeline product candidates; and statements regarding our regulatory filings. These statements are based on information that is available to us today. Actual results or events could differ materially from those in the forward-looking statements and we may not achieve our goals, carry out our plans or intentions or meet the expectations or projections disclosed in our forward-looking statements and you should not place undue reliance on these statements. Our forward-looking statements do not reflect the potential impact of any licensing agreements, acquisitions, mergers, dispositions, joint ventures or investments that we may enter into or terminate. We assume no obligation to update these statements as circumstances change, except as required by law. For additional information concerning the factors that could cause actual results to differ materially, please see the forward-looking statements section in today’s press release and the Risk Factors section of our most recent Annual Report on Form 20-F. SKYTROFA was approved by the FDA today for the treatment of pediatric patients one year and older, who weigh at least 11.5 kilograms and have growth failure due to inadequate depletion of endogenous growth hormone. Otherwise, please note that our product candidates are investigational product candidates and have not been 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 SKYTROFA and our product candidates shall be viewed as promotional. On today's call, we will walk through available slides on our website to discuss the FDA approval of SKYTROFA. We'll discuss our second quarter of 2021 financial results and provide further business updates. Following some prepared remarks, we will then open up the call to questions. I will now turn the call over to Jan Mikkelsen, our President and Chief Executive Officer.

Jan Mikkelsen, CEO

Thanks, Scott and good afternoon. Sometimes when you wake up in the morning, you think about what the day will bring. But I have to say today was one of those days where you had a specific agenda. You adapt to it, like a dominant I must say. You need to adapt; that's the best way of survival. And I think we are in a great place today. And I have to say, if you could see me, you would see a very happy Jan, as I am very happy with what we have achieved today. But never forget, at Ascendis, the key element in our core values is to make a meaningful improvement in patients' lives. We feel strongly that with all focus on science and data, we can use our innovative TransCon technologies to develop new and potential best-in-class products that address major unmet medical needs. With the approval in the U.S. of our TransCon Growth Hormone or SKYTROFA for pediatric growth hormone deficiency today, we are one step closer to fulfilling our vision 3x3 to become a leading biopharma company. Before I provide a general business update related to our advancing broad pipeline of opportunities, I would like to give a brief update related to the approval of SKYTROFA. As Scott mentioned, the slides can be found on our website. I would like to refer you to the slides. Going to slide number three. SKYTROFA, our first product developed with the TransCon technology, is now approved in the U.S. The TransCon technology is one we have taken from design to preclinical to clinical, and now the approval in the U.S. At the same time, it's the first approval of the TransCon technology, and it's also the first FDA approved once-weekly product for pediatric growth hormone deficiency. And we are really proud of it. When we go to the next slide, I think you can see the labeled different pieces. You will see what we have seen come out from the label; it's essentially what we could hope for. Everything starts with a mode of action that describes how we are releasing growth hormone with the right efficacy and safety. We feel really confident with the approval and the labeling we have; we have a strong foundation to build SKYTROFA as a leading brand. But it has not been an easy journey for the patients. If you go to slide five, I have often discussed how it has been possible to develop a long-acting product that addresses the unmet medical needs specific to pediatric populations about daily injection. Despite 30 years of clinical development attempts by different kinds of concepts, currently today in the U.S., in Europe, and in Japan, patients with growth hormone deficiency are treated with the same agency that existed in the 80s. There have been advancements in pen devices and room temperature stability with some single products. With the approval of SKYTROFA to date, this is the first once-weekly opportunity that provides what we call the same efficacy as daily growth hormone. We also have implemented optimal elements for the patient, including an auto-injector, which facilitates room temperature stability. When I discuss our clinical programs supporting the approval of SKYTROFA, they include the heiGHt Trial, the FliGHt Trial, and the enliGHten Trial. The heiGHt Trial, as you recall, included clinical trials with new patients. We also had a switch trial in the FliGHt Trial, and we continue in the enliGHten Trial to generate long-term data on the benefits of our product over time, both related to efficacy and safety. We are committed to building the most comprehensive clinical program to support this approval. The heiGHt Trial was a direct comparison to a daily growth hormone at the same dose, as we randomized the patients two to one, which is essential for the approval related to efficacy. Looking at slide eight, you can see the results. We observed and analyzed high velocity at 52 weeks illustrated from a statistical perspective. Regarding safety, when treating pediatric patients, safety is of utmost importance, as it is for all treatments. When we established safety with daily growth hormone, it is hard to believe that we could not achieve similar outcomes. In our summary of adverse events, we observed a profile similar to that of daily growth hormone, including immunogenic profiles. Now we are coming to the next phase. We don't want to develop TransCon Growth Hormone as a product addressing just one geographical region; we want to develop it as a global commercial strategy. We have established how we will address the two largest commercial markets, the U.S., where we are building up our own commercial organization, as we have a pipeline of rare disease endocrinology products in the same therapeutic area. In the next few slides, Jesper will provide you with more details on this. But before he starts, I would like to provide you with a perspective on the growth hormone market. The global growth hormone market is around more than $4 billion, with the U.S. market being around $1.3 billion. The pediatric growth hormone market is estimated to be about $700 million but has remained highly fragmented with multiple products performing similarly. We believe this market is primed for disruption—innovation that has been lacking for 30 years—which is what we intend to bring. Jesper, could you please discuss our U.S. commercial effort in more detail?

Jesper Hoiland, Global Chief Commercial Officer

Absolutely. This is the moment of truth for me. I have to say that I've been waiting for more than 30 years for this very moment. It was very emotional. I sold my first growth hormone back in 1988. Even then, everyone was asking, why can we not have a once-weekly growth hormone for patients? Now it's done. With SKYTROFA, we have the opportunity to truly shape the market and change the landscape. For me, having spent my entire career in this field, I can honestly say this is truly the first commercial launch that we will make with Ascendis and SKYTROFA, paving the way for the success that we have been waiting for. You might ask about our ambitions; I can only say we aspire to achieve market leadership. Market leadership is the absolute goal, because then you determine what the market should look like. There are key pillars to this vision, which are highlighted on slide 12. First, we need to build credibility by hiring the right people to do the job, and that is accomplished. Next, we realize market access, which we are currently working on to secure the necessary access for SKYTROFA. It is also crucial to engage and motivate the caregivers, because at the end of the day, you can have the best drug available, but without the engagement of patients and caregivers, we won't make significant strides. We are focused on this and actively working on it. Finally, we are also directing our efforts toward healthcare providers. One of our first initiatives, as shown on slide 13, is building educational efforts to disseminate knowledge about growth hormone deficiency (GHD). We launched this effort back in February and have already attracted over 100,000 unique visitors to our site, a clear indication of strong interest in SKYTROFA and lonapegsomatropin. Our entry into the market is particularly fortunate, as we are addressing a relatively small segment of pediatric endocrinologists. This segment comprises approximately 1,400 prescribers in total and represents a concentrated market, as about 80% of all prescriptions are generated by about 20% of the physicians. We intend to penetrate this market effectively. I am absolutely confident that we are taking the right steps moving forward. Our team, which has been built with my esteemed colleagues, is absolutely ready to progress from this moment on. We have been waiting for this opportunity, and now is the moment of truth, as I mentioned. A key component of our strategy is the Ascendis Signature Access Program, or ASAP, which integrates various elements crucial for ensuring market access. All my colleagues involved possess extensive experience in endocrinology as well as in the pharmaceutical industry, so we have a deep understanding of what it takes to gain true access to the market. This includes patient enrollment, which we are currently focusing on, alongside motivation and access. Our ASAP program is designed with all these components to ensure the successful launch of SKYTROFA. I genuinely feel comfortable with our current position and cannot wait to meet all of you in the near future at upcoming conferences. With that, Jan, I would like to turn it over to you to expand on our activities outside of the U.S. and with SKYTROFA and all the preparations that have taken place.

Jan Mikkelsen, CEO

Thank you, Jesper. A key part of our vision 3x3 is our global clinical read and label expansion. In Europe, we anticipate a decision from the EMEA Commission regarding our M&A for TransCon Growth Hormone for pediatric growth hormone deficiency in the fourth quarter of this year. In Japan, we continue to enroll patients in the foresiGHt Phase III riGHt trial for pediatric growth hormone deficiency. In China, VISEN Pharmaceuticals completed enrollment for the Phase III clinical trials of TransCon Growth Hormone in children with growth hormone deficiency in March this year. We also have the global Phase III foresiGHt Trial underway for adult growth hormone deficiency to support our planned label expansion for TransCon Growth Hormone. Beyond the foresiGHt Trial, we expect additional studies to support our efforts to expand the label beyond pediatric and teenage growth hormone deficiency. As I mentioned earlier, we are dedicated to understanding the patient stories and interactions, not only in the area of growth hormone but also in other diseases we are working with. We recognize that the change we can make for patients is one of the most important parts of our journey here at Ascendis. Moving on to our pipeline update, we will first discuss TransCon PTH. TransCon PTH has the potential to be the first hormone replacement therapy for treating adult hypoparathyroidism (HP). In the U.S., Europe, Japan, South Korea, and China, there are approximately 400,000 patients in these five regions. We are dedicated to ensuring TransCon PTH is available to as many of these patients as possible, as quickly as possible. Our Phase II study and the 58-week open-label extension data have demonstrated all the benefits of physiological PTH levels, including normalization of serum calcium, serum phosphate, urinary calcium, bone turnover, and improved quality of life. We have achieved these promising results by successfully eliminating standard-of-care treatment for these patients. The 58-week results exhibit the response and safety profile we hoped for with TransCon PTH in adult HP patients. What is particularly exciting is that 58 patients continue to remain in the open-label extension study. This shows the positive impact TransCon PTH has on the short-term symptoms of these patients. Feedback from patients and providers indicates that patients' lives are improving; they have become more active and can engage in daily activities, including work. With our Phase II PaTH Forward data, we have seen how adult HP patients may benefit regardless of prior treatments. They are experiencing the advantages of TransCon PTH, mainly due to a better understanding of the unmet medical needs. Later this year, in the fourth quarter, we expect to announce the 84-week topline early data from PaTH Forward. In our Phase III trial, we have randomized and dosed 82 adult subjects in North America and Europe. The enrollment includes leading influential clinical sites with a demographic representation similar to that of our Phase II trial, including a broad representation of non-surgical HP subjects and ADH1 syndrome. We expect to announce topline results for the Phase III trial in the first quarter of 2022. If successful, we plan to submit an NDA in mid-2022. In Japan, we announced the acceptance of the clinical trial notification for the PaTHway Japan trial, a single-arm Phase III trial of TransCon PTH involving a minimum of 12 adult Japanese patients with HP. In greater China, VISEN has initiated the Phase III PaTHway China trial of TransCon PTH in patients with HP. The design of the PaTHway China trial mirrors that of the PaTHway trial. As you can see, we are taking a global clinical approach with TransCon PTH. The data being generated is driven by the science in establishing TransCon PTH as a potential first-line therapy for all forms of adult hypoparathyroidism. Turning our focus to TransCon CNP, we are eager to provide an update on our clinical program in the third quarter of this year. As you know, we are conducting two randomized, double-blind placebo-controlled Phase II trials in children aged 8-10 years. The first, ACcomplisH Trial, is a dose-escalation study with 12 to 15 subjects, taking place primarily in North America, Australia, and Europe. The second study, ACcomplisH China Trial, is an extensive cohort study of at least 60 subjects conducted in China. We plan to keep the data blind for one year for both cohorts. Once completed, we will have robust clinical data from two independent randomized double-blinded placebo-controlled trials. For achondroplasia patients, our priority is to develop and commercialize a highly differentiated, safe, and effective treatment option that addresses the comorbidities of the disease and not just height. Switching to oncology, we continue to advance both programs. Our TransCon TLR7/8 Agonist is designed for intratumoral delivery, allowing for long-term sustained local release with the potential for superior efficacy and minimal systemic adverse events. Filing an IND last year was a major achievement for the company, marking our first IND leveraging TransCon hydrogen technology for sustained localized delivery. Just a few comments on our hydrogen technology: what we are developing at Ascendis is not just traditional intratumoral delivery based on injection, but instead, we are ensuring that the formulation remains in the tumor for an extended period. This technology is designed to achieve a sustained local concentration within the tumor site, with the goal of kick-starting the immune system without inducing systemic toxicity, activating the immune system locally to not only eradicate the injected tumor but also targeting non-injected tumors. This is the potential we aim to realize with this true intratumoral delivery technology. We have begun dosing subjects with TransCon TLR7/8 Agonist in monotherapy and recently initiated dose escalation in the combination arm with a checkpoint inhibitor. We expect to have initial results for the monotherapy dose escalation of TransCon TLR7/8 Agonist in the fourth quarter. For our second oncology program, we are planning to submit an IND for TransCon IL-2 ß/y in the third quarter of this year. Our understanding of the underlying biology has guided us in designing a compound with independently optimized receptor bias, potency, and pharmacokinetics, with aspirations for a best-in-class IL-2 product. By addressing the various elements related to efficacy and safety independently, we believe it is feasible to realize the full potential of the IL-2 pathway. To summarize, we now have our first approved product on the schedule. We are focused on delivering a successful launch for SKYTROFA and remain dedicated to improving patients' lives. We are confident in our strategic approach across all programs, both clinically and commercially, as we target the large rare disease markets with our product opportunities. We estimate the global daily growth hormone market to be worth around $4 billion, representing up to 200,000 patients in North America, Europe, and Japan. We believe that TransCon PTH addresses a market opportunity greater than $5 billion. We are committed to being the market leader in each of these endocrinology rare disease market segments. With the approval of SKYTROFA, we see it as a validation of the TransCon technology and believe it positions us well to meet significant unmet medical needs with a high success rate. Our vision has remained consistent, and I will reiterate, we aim to establish Ascendis as a fully integrated leading global biopharmaceutical company with a portfolio of multiple independently market-leading products across different therapeutic areas. Now, let me hand the call over to Scott for a financial review before we open for questions.

Scott Smith, CFO

Thank you, Jan. Turning to our financial results for the quarter ended June 30th, 2021. We reported a net loss of €134.4 million or €2.5 per basic and diluted share compared to a net loss of €94.9 million or €1.97 per basic and diluted share during the same period in 2020. Let me now run through some key components of these results. Research and development costs for the second quarter were €83.3 million compared to €63.6 million during the same period in 2020. The increase in R&D costs reflects continued advancement of our pipeline, with the primary drivers being an overall increase in personnel-related costs. For TransCon growth hormone or lonapegsomatropin, costs were higher due to building up pre-launch inventories, investments to expand our future manufacturing capacity, as well as increased clinical trial-related activities. As a reminder, we currently expense manufacturing activities of lonapegsomatropin as R&D costs in advance of approval. At the time of product approval, a portion of these R&D costs may be reversed and capitalized to inventory as raw materials, work in progress, and finished goods, which will result in a one-time benefit to R&D costs. As of today, this would have been approximately €50 million. For TransCon PTH or palopegteriparatide, costs were higher, primarily due to increased clinical trial-related manufacturing and device development costs. For TransCon CNP, costs were higher mainly due to increased manufacturing and clinical trial-related costs. Lastly, in our oncology therapeutic area, costs were higher due to increased manufacturing and preclinical costs for TransCon IL-2 ß/y, and for TransCon TLR7/8 Agonist, higher clinical-related costs were partially offset by lower manufacturing and preclinical costs. Selling, general and administrative expenses for the second quarter were €35.3 million compared to €20.8 million during the same period in 2020. These higher expenses primarily reflect an increase in personnel-related IT and other infrastructure costs as we prepare for the launch of SKYTROFA. Financial income and expenses in the second quarter included a foreign exchange rate loss of €11.3 million compared to a foreign exchange rate loss of €9.9 million in the second quarter of 2020, primarily related to the translation of our U.S. dollar holdings of cash and marketable securities to euros. We ended the second quarter with cash, cash equivalents, and marketable securities totaling €641.3 million. As of June 30th, 2021, the company had 53,900,990 ordinary shares outstanding. Turning to the remainder of 2021, we expect our operating expenses to reflect the first half run rate with some quarter-to-quarter variability, with key drivers including the anticipated launch of SKYTROFA, advancing our endocrinology rare disease pipeline, expanding our activities in oncology, and investing in the TransCon technology platform, including for lonapegsomatropin, building up commercial inventory ahead of launch, executing commercial launch activities, investment in expanding commercial manufacturing capacity to support anticipated future demand, continued execution of the foresiGHt Trial, and the global Phase III randomized controlled clinical trial for adults with GHD, as well as continued execution of the riGHt Trial, a Phase III randomized controlled clinical trial for children with GHD in Japan. For palopegteriparatide, continued execution of the Phase II PaTH Forward Trial, which continues to retain 58 subjects in the open-label extension, along with continued execution of the PaTHway trial, a North American and European Phase III randomized controlled clinical trial in adults with hypoparathyroidism and ongoing manufacturing of PPQ batches. For TransCon CNP, execution of the clinical program includes two randomized controlled Phase II clinical trials in achondroplasia, the ongoing ACcomplisH trial and the ACcomplisH China trial, conducted in parallel through our strategic investment in VISEN Pharmaceuticals. Lastly, in our oncology therapeutic area, execution of the transcendIT-101 clinical trial for our TransCon TLR7/8 Agonist and advancing the TransCon IL-2 ß/y program into clinical development. We expect other SG&A expenses, including SKYTROFA commercial activities, to involve lonapeg pre-launch activities and continued investments in personnel, systems, and infrastructure to support a rapidly progressing portfolio and a growing organization. Let me now provide an update on our upcoming clinical milestones. For lonapegsomatropin, we have received FDA approval for SKYTROFA for the treatment of pediatric GHD in the United States. We continue to expect European Commission approval for pediatric GHD in the fourth quarter of this year. For palopegteriparatide, we have exceeded the target enrollment in the PaTHway trial and now expect to report topline results in the first quarter of 2022. For TransCon CNP, we expect to provide a clinical program update in the fourth quarter this year. For TransCon TLR7/8 Agonist, we have initiated the dose escalation arm in combination with the checkpoint inhibitor and plan to report initial monotherapy dose escalation data for transcendIT-101 in the fourth quarter of this year. Finally, for TransCon IL-2 ß/y, we plan to submit an IND later this quarter. Before we open up the call for questions, I want to reiterate a few points about our anticipated commercial activities for SKYTROFA in 2021. Following the FDA approval of SKYTROFA today, we expect to have product available shortly. Once the product is available, we anticipate beginning to provide access to SKYTROFA for pediatric GHD patients through our dedicated patient support program. Our medical affairs, our U.S. commercial team, and the entire Ascendis organization are currently ready and prepared to execute launch activities. And finally, during Q4, we anticipate European Commission marketing approval for pediatric GHD. With that operator, we are now ready to take questions.

Operator, Operator

First question comes from Jessica Fye from JP Morgan. Your line is now open.

Jessica Fye, Analyst

Hey, guys. Good afternoon. Congrats on the approval and thanks for taking our questions. A couple for me. First, can you please explain which part of the data investors should look to in the label that reflects the superiority of SKYTROFA efficacy over Genotropin? Is it the lower bound of the 95% confidence interval in table four of the clinical study section? Second...

Jan Mikkelsen, CEO

Exactly.

Jessica Fye, Analyst

Okay. How does this timing of approval impact your payer conversations, if at all? Is it possible you can catch the late summer window for coverage for the session and what's the list price per milligram going to be?

Jan Mikkelsen, CEO

Let me at least start with your first question, Jess. You can describe how you achieve a higher analyzed velocity. From my perspective, the best place to look is for the confidence interval you mentioned in the label. So I would concur there. Regarding the payer system, we have indeed started working with payers over the last two years. Our discussions have been intensively focused on how Ascendis is building a pipeline of product opportunities and our strategy for long-term relationships with payers, both in the U.S. and across other territories. Jesper, do you have a comment on this?

Jesper Hoiland, Global Chief Commercial Officer

Yes, I would say that we are well-prepared for what lies ahead. Ascendis has laid a good foundation over the years, and we understand it is a long game. It's not just about gaining access; it’s also about access on the right terms. We are working diligently, especially in the coming days and weeks.

Jessica Fye, Analyst

Great. Thank you.

Jan Mikkelsen, CEO

To build on your point, Jess, our commercial strategy focuses on maximizing the long-term value of our best-in-class growth hormone. This includes not just pricing but a multi-faceted value proposition that takes patient caregivers and healthcare providers into account.

Tazeen Ahmad, Analyst

Good afternoon and congratulations on the approval, good hard work. Jan, can I just clarify one point as much as pricing? Is it the plan to announce pricing before you launch, or would we know the price on the day that the actual product becomes available? And then, Jesper, I'm hoping you can walk me through how patients will initially be able to get access to the drug before it ends up on formulary.

Jan Mikkelsen, CEO

Absolutely. Our pricing strategy, reflecting what we describe as premium responsible pricing, is designed. We have a clear view of where we want to be on pricing and will announce this shortly. Jesper, do you want to summarize how we will manage access?

Jesper Hoiland, Global Chief Commercial Officer

Yes. The ASAP program is designed to provide rapid access to SKYTROFA before it gets on formulary. Essentially, we will be providing the product upfront while navigating the prior authorization process. This involves the physician submitting a request to the health plan for approval, which gets assessed. In many cases, the initial request may be denied, requiring the physician to justify why the patient is best suited for once-weekly SKYTROFA. This is a complex process, but we anticipate managing it effectively.

Tazeen Ahmad, Analyst

Okay, thank you so much for the clarity.

Michelle Gilson, Analyst

Hi, congratulations. I'm also a very happy Michelle. I see that the label looks very similar to daily growth hormone. Do you think physicians will see SKYTROFA as interchangeable with daily growth hormone, based on the way the label is structured? Additionally, do you foresee any pull-through demand beyond the initial indication?

Jan Mikkelsen, CEO

From our discussions with physicians and analyses of the data, we anticipate physicians will interpret our labeling as denoting a strong efficacy equivalent to daily growth hormone. In fact, all clinical data we have supports the notion of interchangeability. Approval in pediatric growth hormone deficiency is just our starting point, and we are actively working on label expansions to address other indications now.

Josh Schimmer, Analyst

Thanks for taking the questions. Moving back to SKYTROFA, how long do you think it will take to gain widespread formulary adoption? Is that likely to be the key gating step for uptake, or is it likely to be physician hesitancy? Additionally, it looks like consensus for SKYTROFA for next year has been $110 million in sales. Is that in the general ballpark of what you think is reasonable, considering some launch headwinds that you may face?

Jan Mikkelsen, CEO

Thanks, Josh. To start with your last question, we have not provided guidance on expected sales for 2022 yet. Our main strategy is centered on creating long-term value from this product opportunity and ensuring robust clinical data is available for both physicians and payers for growth hormone therapy.

Jesper Hoiland, Global Chief Commercial Officer

Exact steps are already underway to address the market effectively. Our team has been preparing for this launch for the last couple of years, ensuring we have everything in place for a successful integration into the market, not just with SKYTROFA but also building our foundation for future endeavors.

Alethia Young, Analyst

Hey guys, thanks for taking my questions and congrats on the approval. I have a couple of questions, the first on SKYTROFA; can you talk a little about the Medicare/Medicaid versus commercial payer mix? Then on the $2.8 billion rest-of-world market source, could you break that out by patient numbers or how to think about revenue bases between Europe and Asia? Lastly, regarding the TLR7/8 program, should we expect dosing levels by the end of the year that might show efficacy? And how do we interpret the initial results of the combination study, useful for next year?

Jan Mikkelsen, CEO

The U.S. remains the largest market, followed closely by Japan and then China, which will likely surpass Japan this year, surpassing $800 million as a single market entry. We expect Europe to fall just under this market. We believe our strategy ensures that we're positioned to penetrate all major markets effectively. As for our commercial focus, our primary aim is the commercial realm, targeting the estimated 185 million patients in that segment. Let me turn it over to Jesper for additional thoughts on dosing.

Jesper Hoiland, Global Chief Commercial Officer

Focusing on dosing potentials, we are very eager about what we can accomplish in the clinical space, and we have plans in place to ensure we are positioned ready for scalable commercialization moving forward.

David Lebovitz, Analyst

Hi. This is someone filling in for David today. I have a couple of questions regarding access. Firstly, what percentage of major payers have already been engaged? Secondly, can you clarify what premium responsible pricing entails? Lastly, how do you think a step therapy requirement through a cheaper alternative will affect adoption?

Jan Mikkelsen, CEO

It is crucial to understand that we are not disclosing specific engagement percentages or details about our long-term strategy as it revolves around securing optimal pricing and further entrenching our value propositions as we continue these ongoing discussions with payers to maximize our company's value. Premium pricing refers to ensuring that we maintain a competitive edge, but it is tied closely to effective long-term outcomes for patients, caregivers, and payers alike. Jesper, do you have further comments?

Jesper Hoiland, Global Chief Commercial Officer

I believe we are correctly set up to make optimal pricing arrangements as market access discussions deepen. As we analyze current market dynamics in place with PBMs, we are already ahead in terms of our planning. Our team is diligently working within a tight timeline; many processes take place quickly around September to ensure access within formulary contexts.

Yanan Zhu, Analyst

Hi. Thanks for taking my question and congrats on the approval. I’ll ask one question about the adoption of SKYTROFA. I understand that in a real-world setting, physicians often prescribe daily growth hormone above the labeled 0.24 mg/kg/week. How prevalent is this, and how do you think this will influence physicians' interpretations of the SKYTROFA label?

Jan Mikkelsen, CEO

The label indicates a specific dosing of 0.24 mg/kg/week; this is what we used in previous trials. We recognize that physician discretion allows for titration according to individual patient needs. Having a product that allows this kind of titration and adjustment is vital. We can affirm that our compound is designed for flexibility regarding effective responses.

Unidentified Analyst, Analyst

Hi, this is [Indiscernible] for Joe. Thank you for taking my question. I’d like to ask about TransCon PTH, particularly the data we expect in the fourth quarter. How do you view the use of kidney function data, knowing that all patients will be on the medication? What could be a solid indicator of outcomes for those patients with existing calcium levels? What defines a small or large effect as we analyze responses among patients?

Jan Mikkelsen, CEO

Indeed. When observing the 24-hour urinary calcium, it is pivotal to note how these numbers reflect reabsorption capacities in the kidney. We have positive expectations based on our 58-week data and anticipate we will see continuation of this trend once we analyze the 84-week data. However, we aim to emphasize the wide-ranging positive effects of our approach—this is important to us.

Rene Wouters, Analyst

Yes. Hi, good evening. And thanks for taking my question. First of all, congratulations also from my end.

Jan Mikkelsen, CEO

Thanks.

Rene Wouters, Analyst

I wanted to ask how the approval impacts your plans regarding further label extension, looking beyond adult growth hormone deficiency. Are there indications where growth hormone is impacted?

Jan Mikkelsen, CEO

I strongly believe we will continue to expand our label beyond just the current indications. Our approval only strengthens our conviction in the trajectory we have set for addressing additional growth hormone indications.

Trevor Allred, Analyst

Hey guys. Thanks for taking the question and congrats as well. I wanted to ask about the upcoming CMP update in Q4. Have you determined what you will be sharing? Will we be seeing any initial growth velocity data?

Jan Mikkelsen, CEO

We are actively analyzing which data we can share at this stage and are excited to provide an update. We desire to balance information dissemination carefully while keeping confidentiality around clinical trials. We will provide a balanced approach to your inquiry.

Anita Dushyanth, Analyst

Hi, good afternoon. Congratulations on the approval, and thanks for taking my question. Jesper, could you help me understand a bit more regarding access support around prior authorizations? Additionally, can you offer clarity on the European application timeline? Are we still expecting approval in Q4?

Jan Mikkelsen, CEO

Yes. Jesper has outlined our ASAP program, which facilitates easier early access to the product for patients while we work through the reimbursement process. For Europe, we still expect timing to hold around Q4 for approval—this involves continuous engagement with the relevant European bodies.

Operator, Operator

There are no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.

Jan Mikkelsen, CEO

Thank you. Bye-bye.