Earnings Call Transcript - ASND Q4 2020

Operator, Operator

Good morning, everyone, and welcome to the Q4 2020 Ascendis Pharma Earnings Conference Call. This call is being recorded. I will now hand it over to your host, Mr. Scott Smith, Senior Vice President and Chief Financial Officer of Ascendis Pharma. Please proceed.

Scott Smith, CFO

Thank you, operator. Thank you everyone for joining our full year 2020 financial results 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; Dr. Mark Bach, Head of Clinical Development and Medical Affairs for Endocrinology Rare Diseases; Jesper Høiland, Global Chief Commercial Officer; Dr. Dana Pizzuti, Head of Development Operations; 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 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 our pipeline 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 prospectus supplement filed on July 9, 2020 and our Annual Report on Form 20-F being filed today. Please note that our TransCon product candidates are investigational product candidates and are not approved for commercial use. As investigational products, the safety and effectiveness of the TransCon product candidates have not been reviewed or approved by any regulatory agency. None of the statements made on the conference call regarding our TransCon product candidates shall be viewed as promotional. On today’s call, we will discuss our full year 2020 financial results and provide a business update. 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 everyone. For Ascendis, 2020 was a year to remember. We succeeded as a team and were able to meet and in some cases, exceed all our cohort goals in 2020. I am proud to be able to say that the Ascendis team was adaptive, creative and focused on achieving the goals we outlined at the beginning of last year to bring our TransCon product candidates to patients as fast as possible. For 2021, we are well-positioned to continue to execute and achieve the milestones we have laid out across all of our 5 independent product candidates. Going back, the importance of the science, one of Ascendis’ core values is really at the center of what we do, 365 days a year. Our understanding of the biology and the science drives our top development process. I see it again and again. If we stick to the science, understand and respect the biology, we will be successful. With our algorithm for product development focused on the patient and the unmet medical need, combined with the TransCon technology, we have a powerful platform that has allowed Ascendis to create not just one potential blockbuster product candidate, but a portfolio of five potential blockbuster candidates in two therapeutic areas with more to come. Beginning with TransCon growth hormone, throughout the development, we have kept the patient needs in mind. From the beginning, we were committed to building on the last 30 years of knowledge with daily growth hormone and other long-acting growth hormone programs. We designed our TransCon growth hormone to have a similar tissue distribution pattern, receptor activation, and exposure as seen for daily growth hormone once somatropin is released from the TransCon growth hormone product. For more than 30 years, most of the companies have tried to develop a long-acting growth hormone product using several different technologies, providing comparable safety, efficacy, tolerability, immunogenicity and mode of action as daily growth hormone. In spite of all this effort, today, all patients are still being treated with daily growth hormone in the U.S., Europe, and Japan. I am excited to be close to our potential regulatory approval of TransCon growth hormone in the U.S. and Europe. Last year, we submitted our BLA for TransCon growth hormone for the treatment of pediatric growth hormone deficiency and we have a PDUFA date of June 25, 2021. Later in September last year, we submitted our M&A in Europe and we expect potential approval in the fourth quarter this year. Since our regulatory submission, I can see the payoff from our design of TransCon growth hormone and the extensive preclinical and clinical programs in our interactions with the FDA and EMA. We believe our data clearly demonstrate that once-weekly TransCon growth hormone has comparable mode of action and distribution in key growth hormone responsive tissues, such as brain, bone, mass, liver and fat tissue as the growth hormone demonstrated for daily growth hormone and in doses of growth hormone. In our discussions with the FDA and EMA, I feel comforted that we have developed a convincing body of non-clinical and clinical data to support our beliefs. In December last year, we had a positive mid-cycle meeting with the FDA, where they indicated the agency has no plans for an advisory committee. We continue to have a constructive dialogue and have begun labeling discussions with the FDA and we are looking forward to a potential regulatory approval next quarter. In Europe, our M&A submission for TransCon growth hormone last September followed the agreement with PEDCO on our proposed pediatric investigation plan, or PIP, covering the non-clinical and clinical development of TransCon growth hormone in children down to age 6 months. To our knowledge, no growth hormone or growth hormone analogs has an approved PIP. Our expectation for potential approval of the M&A in the fourth quarter of this year is unchanged, but our innovation did not stop with the signing of our drug substance. As part of our effort to address the unmet medical need, we have also developed an auto-injector for the administration of TransCon growth hormone, providing room temperature stability and a small injection volume via a 31g needle. We introduced a TransCon growth hormone auto-injector into the Phase 3 enliGHten trial, where it is currently being successfully used by over 160 subjects in the U.S. with accumulated use of more than 225 devices. We expect the TransCon growth hormone auto-injector will be available to patients at the same time as the potential commercial launch. Going forward, we are developing an integrated connected health program that links the TransCon growth hormone auto-injector with an app and provides information for the patient and caregivers related to adherence and doses. The pediatric growth hormone market is an established market in the U.S. and Europe with several daily growth hormone products, but we also know that drugs don’t work in patients who don’t take them. Even modest lack of adherence leads to suboptimal outcomes and potentially to dropout of therapy. In fact, we see that almost all pediatric patients in the U.S. stop therapy after 3 to 4 years of treatment. We have submitted for publication a manuscript based on claims data demonstrating that the problems of adherence and lack of treatment are potentially much worse than reported in published literature. I often get asked if we think we can expand the current market with TransCon growth hormone. These new data describing lack of adherence and lack of treatment tell me that there is a potential big opportunity to improve patient care through improved adherence, persistence, and penetration, which will lead to better outcomes for patients and better outcomes for society. So far, I have talked about the U.S. and Europe, but we are not stopping there. Ascendis is a global company with global thinking addressing unmet needs for a worldwide population. In Japan, we filed a clinical trial notification last year to initiate the Phase 3 riGHt trial for pediatric growth hormone deficiency. In China, in 2018, we formed VISEN Pharmaceuticals with an investor group to develop TransCon endocrinology rare disease products in Greater China. VISEN continues to execute on its Phase 3 clinical trial of TransCon growth hormone in children with growth hormone deficiency and will soon initiate clinical development for TransCon PTH and TransCon CNP. Moving to label expansion, we have the global Phase 3 foreSight trial underway for adult growth hormone deficiency. The primary objective of the foreSight trial from a regulatory perspective is to demonstrate efficacy compared to placebo. However, the most important comparison is to daily growth hormone, which is included as a third arm in the foreSight trial, where we plan to randomize 240 subjects 1 to 1 to 1. I am often asked why adult growth hormone deficiency is so important? What do you get out of the foreSight trial? Growth hormone deficiency is not just about height. In children, height emerged as the primary regulatory endpoint. Since adults are not growing in height, the primary regulatory endpoint is to measure their metabolic consequences of growth hormone deficiency to measure change in truncal fat. Only if a once-weekly growth hormone therapy is equivalent or better to daily growth hormone in both the pediatric and adult growth hormone deficient populations will it provide all the endocrine benefits of daily growth hormone. We believe from our Phase 3 pediatric programs that TransCon growth hormone can provide all these endocrine benefits, combined with the success in adult growth hormone deficiency Phase 3 trial. We believe we will continue to differentiate from oral once-weekly growth hormone product candidates. We expect to complete enrollment of the foresiGHt trial by late 2021 or early 2022. Moving to TransCon PTH, I have never seen a product like this before, a product that not only can address short-term symptoms of the disease by restoring biochemical control and the quality of life for patients, but also potentially can address the long-term complication of the disease as well. Hypoparathyroidism (HP) is a condition with more than 200,000 patients just in the U.S., Europe, and Japan. Similar to growth hormone deficiency, we have the insufficient amount of their respective hormone; in this case, for HP, PTH. In chronic post-surgery HP, in around 75% of all cases, the parathyroid glands—the organ that produces PTH—have been damaged or destroyed, and the body cannot be stimulated to produce a sufficient amount of PTH. Therefore, the only way PTH can be restored to normal physiological levels is by PTH hormone replacement. TransCon PTH is designed to replace the hormone at physiological levels and restore the patient to normal health. When we speak to patients suffering from HP, we hear over and over again about how poor the quality of life is and how they had to stop going to work, worried about calcium crashes and making it to an emergency room. These are the short-term symptoms driven by lack of serum calcium control and physiological PTH levels. In addition to the short-term effect, HP patients have multiple long-term complications, such as insufficient kidney function, cardiovascular risk, and abnormal turnover. As TransCon PTH is designed to restore PTH to physiological levels 24 hours a day, we expect to normalize serum calcium to improve short-term symptoms. We also expect to normalize kidney function and bone health to reduce long-term complications. So what have we seen? With our 6-month open-label extension or OLE data, we saw all mean summary and sub-domains, SF 33 quality of life scores being normalized. Later this month, we will present data at an oral presentation at ENDO, where you will see results for the first time from our HP disease-specific patient-reported outcome instrument after 6 months in the OLE. Since then, all 58 subjects have now completed 12 months of treatment on TransCon PTH without any additional dropout, which gives me confidence that these subjects are continuing to see the quality of life benefits with a safe once-daily PTH injection. In addition to the great data on quality of life, TransCon PTH also demonstrated normalization of key biochemical parameters related to long-term complications. After 6 months in the OLE, mean 24-hour urinary calcium excretion fell on average 57% compared to baseline. Almost all subjects demonstrated normalization or improvement in urinary calcium excretion. On measures of bone health, HP patients typically have low bone turnover and as a consequence, abnormal dense bone compared to people without HP, particularly the trabecular bone. As expected, as we restore physiological PTH levels, we saw bone turnover increase with the initiation of TransCon PTH treatment, resulting in a trend towards normalization of the abnormal dense bone, particularly the trabecular bone. So, what is next for TransCon PTH? During the second quarter of 2021, we plan to provide 12 months OLE data. We expect to see continued normal quality of life, sustained reduction of HP symptoms, continued normal serum calcium, continued normal levels of urinary calcium, and continued normal bone turnover. As part of extending our global reach for this potential life-changing therapy, during the second quarter, in addition to the 12-month PTH forward update, we plan to submit a clinical trial notification for a trial evaluating TransCon PTH for adult HP in Japan. Later this year in the fourth quarter, we plan to report top-line results from the PaTHway trial, a Phase 3 randomized, double-blinded, placebo-controlled trial investigating the safety, tolerability, and efficacy of TransCon PTH in adults with HP. The trial is expected to enroll 76 subjects at sites in North America and Europe. We are pleased with the data that we have generated so far and we believe the data support our co-filed for TransCon PTH to be a potential first-line therapy for HP. We are confident we can truly make a difference in the lives of HP patients. Turning to TransCon CNP, we are conducting two double-blinded placebo-controlled Phase 2 trials in children ages 2 to 10 years old. The first, the ACcomplisH trial is a dose escalation trial of 12 to 15 subjects in each cohort conducted mainly in North America and Europe. The second is the ACcomplisH China trial, which is a cohort expansion trial of at least 60 subjects conducted in China. VISEN received approval from the Center for Drug Evaluation to conduct their ACcomplisH China, which is designed for dose expansion at an effective dose term from the ACcomplisH trial. Combined, these two studies will enroll more than 120 subjects aged 2 to 10 to be followed for 12 months in a double-blinded manner. Both ACcomplisH and ACcomplisH China will remain blinded until the 20-month follow-up is completed. Once completed, we will have robust clinical data from two independent, randomized, double-blinded, placebo-controlled trials. We plan to provide a TransCon CNP clinical program update in the fourth quarter of 2021. Finally, in endocrinology, we announced today that Ascendis will have a presentation at the ENDO 2021 annual meeting. This will include an oral presentation of the 6-month open-label extension from the PaTH Forward trial for TransCon PTH, as I mentioned. In our second therapeutic area, we hosted our first oncology R&D Day back in November to share our vision on how to use TransCon systemic and intratumoral technology to establish a new paradigm for the treatment of cancer. We think we can develop entirely new treatment paradigms in oncology using TransCon technologies and address all steps of the immunity cycle. We are applying the same product development aggregate in quality as we have successfully used in endocrinology, applying TransCon technology to clinically validated targets and biological pathways. For TransCon TLR7/8 agonist, an IND was submitted in December 2020 to initiate the Phase 1/2 transcendIT-101 trial. During the second quarter of 2021, following monotherapy dosing, we plan to initiate dose escalation in combination with a checkpoint inhibitor. Initial monotherapy dosing results are expected in the fourth quarter of 2021. For TransCon IL-2 beta/gamma, earlier this year, we reported potential best-in-class preclinical data. Our TransCon IL-2 beta/gamma is designed to have best-in-class potency receptor bias, combined with a long half-life of around 22 hours and a low Cmax concentration. In non-human primate studies, we have observed a highly biased potent activity with sustained exposure leading to best-in-class immune cell expansion with minimal effect on eosinophils, IL-5 or ILC and vascular leak. Based on this data, we believe TransCon IL-2 beta/gamma has the potential to become a backbone agent in oncology treatment. We expect to submit an IND or similar for TransCon IL-2 beta/gamma in the third quarter of 2021. I sincerely believe that our goals of building a fully integrated global biopharmaceutical company gets one step closer each day. 2020 was indeed a year to remember for our sectors as we advanced our endocrinology, rare disease, and oncology product candidates. In 2021, we look forward to achieving additional successes as we advance our pipeline ahead and closer to patients with unmet medical needs. We are continuing to apply our algorithm to build a pipeline in oncology and are committed to entering a third therapeutic area. This is how we will achieve sustainable growth, not by advancing just one program, but succeeding with multiple potential blockbuster programs in multiple therapeutic areas in multiple geographies. Now, let me turn the call over to Scott for a financial review before we open up for questions.

Scott Smith, CFO

Thanks a lot, Jan. Turning to our financial results for the full year ended December 31, 2020, we reported a net loss of €419 million or €8.28 per basic and diluted share compared to a net loss of €218 million or €4.69 per basic and diluted share during 2019. Now, let me run through some components of these results. Research and development costs for 2020 were €260.9 million compared to €191.6 million during 2019. R&D costs in 2020 reflect continued advancement of our pipeline with the primary drivers of the increase, including an overall increase in personnel-related and R&D infrastructure costs and for TransCon growth hormone or lonapegsomatropin, costs were higher due to buildup of pre-launch inventories as well as increased clinical trial activities. As a reminder, we currently expense manufacturing costs of lonapegsomatropin as R&D in advance of our anticipated product launch. At the time of product approval, a portion of these R&D costs may be reversed and capitalized as inventory, which will result in a one-time benefit to R&D costs. For TransCon PTH, costs were higher primarily due to device development and increased clinical trial costs. For TransCon CNP, costs were higher primarily due to increased manufacturing and clinical trial costs. And finally, for our oncology therapeutic area, costs were higher due to increased manufacturing and preclinical activities primarily related to TransCon TLR7/8 agonist and TransCon IL-2 beta/gamma. Selling, general and administrative expenses for 2020 were €76.7 million compared to €48.5 million during 2019. These higher costs primarily reflect an increase in personnel-related, IT, and other infrastructure costs as well as expenses associated with the continued build-out of our commercial capabilities. Finance income and expenses in 2020 included a foreign exchange rate loss of €78.9 million compared to a gain of €7.7 million in 2019 primarily related to unrealized losses on the translation of our U.S. dollar holdings of cash and marketable securities to euros. We ended 2020 with cash, cash equivalents, and marketable securities totaling €834.1 million. As of December 31, 2020, Ascendis had 53,750,386 ordinary shares outstanding. Subsequent to year-end, on January 8, 2021, we invested $12.5 million in VISEN Pharmaceuticals, $150 million Series B financing. Following the financing, we own approximately 44% of VISEN’s issued and outstanding shares. As a result of this transaction, we expect to recognize a non-cash gain in the first quarter of 2021 of €42.3 million. Turning to 2021, we expect our expenses to increase as we continue to build our commercial capabilities and prepare for launch, advance our endocrinology rare disease pipeline, expand our activities in oncology, and continue to invest in the TransCon technology platform, including lonapegsomatropin, buildup of commercial inventory ahead of potential launch, execution of commercial pre-launch and launch activities, investment in expanding commercial manufacturing capacity to support anticipated future demand, continued execution of the foresiGHt trial, a global Phase 3 randomized controlled clinical trial in adult GHD; an execution of the riGHt trial, a Phase 3 randomized controlled clinical trial in pediatric GHD in Japan. For TransCon PTH, continued execution of the Phase 2 PaTH Forward trial, which continues to retain 58 subjects in the open-label extension, and execution of the PaTHway trial, a North American and European Phase 3 randomized controlled clinical trial in adult HP. For TransCon CNP, execution of the clinical program, which includes two randomized placebo-controlled Phase 2 clinical trials in achondroplasia, the ongoing ACcomplisH trial and the ACcomplisH China trial, which is being conducted through our strategic investment in VISEN Pharmaceuticals. And 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 beta/gamma program into clinical development. We expect other SG&A expenses in addition to lonapegsomatropin commercial pre-launch and launch activities will include continued investments in personnel, systems, and infrastructure to support our rapidly progressing portfolio and growing organization. For 2021, we remain on track for hitting our corporate milestones. For lonapegsomatropin, these include the PDUFA date of June 25, 2021, anticipating approval for pediatric GHD in the second quarter, followed by commercial launch in the third quarter, and we anticipate European Commission approval for pediatric GHD in the fourth quarter. For TransCon PTH, we plan to file a clinical trial notification for our Japanese Phase 3 trial in adult HP in the second quarter, followed by reporting top-line results for the Phase 3 PaTHway trial in North America and Europe for adult HP. For TransCon CNP, we expect to provide a clinical program update in the fourth quarter. For TransCon TLR7/8 agonist, after dosing in the monotherapy part of the transcendIT-101, we plan to initiate the dose escalation part in combination with a checkpoint inhibitor in the second quarter and plan to present initial transcendIT-101 results in the fourth quarter. And finally, for IL-2 beta/gamma, we plan to submit an IND or similar filing in the third quarter. Before we open up the call for questions, I want to make some points about our anticipated commercial activities for lonapegsomatropin in 2021. During Q2 this year, we anticipate approval for pediatric GHD on the PDUFA date of June 25. Then during Q3, we expect to have product available in the U.S. for pediatric GHD. During Q3, once the product is available, we anticipate beginning to provide access to lonapegsomatropin for pediatric GHD patients by onboarding patients through our dedicated patient hub, and we do not expect to have placement on commercial formularies at that time. Finally, during Q4, we anticipate European Commission marketing approval for pediatric GHD. We plan to provide guidance on the timing of launch in Europe later this year. With that, operator, we are ready to take questions.

Operator, Operator

Your first question comes from Michelle Gilson from Canaccord Genuity. Your line is open.

Michelle Gilson, Analyst

Hi, thank you for taking my questions. I guess the first one can you maybe discuss the cadence for TransCon GH of getting onto the formularies, how did that happen over the course of the year? And then my second question for TransCon PTH, from a safety perspective, is there a difference between replacing PTH at physiological levels in hypopara patients, I guess at the dosage you are evaluating versus adding pulses of PTH to stimulate an anabolic effect? And then I guess, at the doses that you are evaluating for TransCon PTH, would you expect there to eventually be a black box warning or limitation duration therapy like there is for Forteo given these different effects on the bone?

Jan Mikkelsen, CEO

Thanks, Michelle. So, before I potentially will turn it over to Jesper, I could perhaps take a little of the PTH question that you asked. And let me just repeat what we are doing with TransCon PTH related to bone structure. If you have an untreated HP patient, they have higher bone density because you basically have an unnaturally low bone turnover, as you do not have the physiological PTH level of PTH. And if you look at the serum level of PTH, it is well documented in the literature that you see a basic curve with a peak to trough about 30% during the entire 24-hour cycle. What we saw in the 6-month open-label extension data was that when we restored physiological PTH levels, we activated the normal bone turnover that you see in a normal human being who has no issues related to potential lower levels of PTH. We saw that by accelerating at a higher level of both the anabolic and catabolic bone markers but still being placed in what we call the higher level of the normal levels. What we saw was the associated consequence of that. We also observed that this bone density that is abnormally dense began to normalize. Therefore, we saw that trend approaching normal levels with our SAT score defined as zero. That is what we observed in the 6-month data. This is a continued process, where we saw the main effect on trabecular bone; if we basically looked at cortical bone, there was not the same kind of decline in SAT score; it was stable because they do not have the elevated high density that you typically see specific for trabecular bone structure. What we saw with our bone markers and in our bone density is just following exactly as we expected based on the physiology of restoring a normal PTH level. In our interaction with the FDA and EMA, our first discussion related to PTH and its effect as an anabolic compound was when we discussed whether we should conduct a COG study. A COG study has been done for all other PTH products to my knowledge. We received a clear answer back from the FDA indicating that there was no need to conduct a COG study because what you are applying in the TransCon PTH product is simply a normalization of PTH levels and not generating what I call a super-physiological PTH level as you do with a classical compound of PTH that is being used as an adjunct therapy in osteoporosis. Therefore, I believe there is a fair chance that we can avoid any kind of REMS program because we continue to see with our clinical data – and remember, at the time of filing, we will have 18 months of data, so we can follow this for one or more. We expect to have such strong data that we can provide evidence supporting our view which is simply a normalization of the condition. I am also encouraged to see that if you look at the osteoporosis compounds that the black box has been removed for Forteo; and that is the basic positioning in the U.S., as they don’t believe the preclinical findings associated with osteoporosis or osteosarcoma for short-acting PTH are relevant for humans. So from that perspective, I think we have a strong scientific justification to avoid both a black box warning and our REMS program. The other part, which also supports our scientific justification, is that patients have been on pumps using either Forteo or NEPA for multiple years. And just recall, if you use a pump system with either Forteo or PTH, you have an IV injection for 8 to 12 times in a subcutaneous tissue in 1 hour. This provides a flat, continuous exposure inside the plasma compartment. Also, when you look at long-term case studies, even in children, pediatric patients show normal growth there. So I don’t believe there is any scientific justification to substantiate serious concerns about significant impact on the bone structure. Jesper, will you talk about how we are addressing and ensuring we have the optimal position for our market access?

Jesper Høiland, Global Chief Commercial Officer

Absolutely, Jan, and Michelle, thank you very much. Basically, for lonapegsomatropin, our key focus is market access for the commercial market. The commercial market represents roughly 180 million Americans, and it represented also mainly 75% of the market is via the three major PBMs. The way to negotiate with the PBMs for market access is sent out during the summer months. The final call for addressing the market access for 2022 basically comes in the last week of August, beginning of September. We have a golden opportunity to be the first on the market with lonapegsomatropin as we are anticipating the PDUFA date on the 25 of June. Therefore, we will be negotiating with the three big PBMs for market access in 2022, and we do believe that we will have good market access for 2022 on the basis that we would be the first in the long-acting segment potentially with lonapegsomatropin. I hope that answers your question.

Michelle Gilson, Analyst

Thank you very much.

Jan Mikkelsen, CEO

Thanks a lot.

Operator, Operator

And your next question comes from the line of Jessica Fye from JPMorgan. Your line is open.

Jessica Fye, Analyst

Hey, guys. Good afternoon. Thanks for taking my question. This one might be for Dana. Can you tell us whether the necessary pre-approval inspections have taken place yet for TransCon growth hormone? And your expectations for those being completed prior to the PDUFA given any COVID travel issues? I know you said multiple times on the call that you guys expect approval in 2Q. So it sounds like maybe things are on track there, but that’s the first question. And then second, kind of building on the last question, thinking ahead to the 12-month open-label extension data for the PTH Phase 2 trial coming up in 2Q. Can you talk about what you would expect to see on BMD at the 12-month time point and what that means for the product? I guess, more specifically, at what point do you expect to have clinical data that will demonstrate that the normalization that you’re seeing in BMD early on does not overshoot and lead to below-normal BMD? Thank you.

Jan Mikkelsen, CEO

So Dana, would you take the first question?

Dana Pizzuti, Head of Development Operations

Yes. As far as the inspections go, we’re finally starting to see a bit of movement from the FDA in terms of their activity. In fact, we’ve recently had a GCP inspection at a site for our number one enroller of growth hormone. So that was completed last week. As far as the manufacturing inspection goes, we are still in communication with the FDA about when that would be scheduled. There are a couple of opportunities in terms of alternate approaches that are available. So we still feel that we can address these issues before it has any impact on the PDUFA date. But we’re also noticing that FDA is doing more manufacturing inspections outside the U.S. as COVID is somewhat subsiding in certain places, okay.

Jan Mikkelsen, CEO

I think, Jess, going back to your second question, we need to take it into perspective with my initial comments to Michelle because there, we laid out that what we’re seeing now is just a normalization of the bone structure that you expect to see when you are coming into a replacement therapy and observing that you are providing PTH at physiological levels. You can also see the differentiation between trabecular and cortical bone. If you look at the data, you can see where we expect to see the biggest remodeling is on trabecular bone, and we’re also seeing the right structure coming in the bone. From my perspective, I cannot see any worry about that because that is normal biology, and we have children that have been on infusion pumps for 10 years growing up with normal bone structure on infusion pumps. We have adults who have been on infusion pumps for 5 to 6 years observing all the same thing. Everyone that understands infusion pumps and insulin and other similar therapies would acknowledge that there is a flat continuous exposure that you provide with an infusion pump. I really lose track of the logic behind the concerns because what we’re seeing is just normal biology, as we see on other elements. We see the same thing with urinary calcium; we see the loss of soft tissue classification; we see all normal physiological expectations. I cannot change physiology. If you want to have a home replacement therapy, you have to expect to see the outcome of being a normal human being.

Jessica Fye, Analyst

Okay, thank you.

Jan Mikkelsen, CEO

We just follow the science, and that is what we’re doing. I cannot change science. I can follow and adapt to science.

Operator, Operator

And your next question comes from the line of Alethia Young from Cantor. Your line is open.

Alethia Young, Analyst

Yes. Thanks for taking my question and congrats on the progress. I just wanted to flip maybe two questions. One, just clarifying on the formulary. Maybe I missed it. Do you think that you’ll have kind of a broad formulary that could include adults in some of the other growth hormones? And then the second one is just in Oncology. As you continue to do work there, do you feel like there is one target between IL-2 or TLR7 that has a greater target risk or do you feel like it’s somewhat equal and you have a fair amount of confidence in both? Thank you.

Jan Mikkelsen, CEO

Jesper, I think what you are now addressing is part of our important long-term strategy. For every product, one step is to get approved, and we have seen actually long-acting products being approved in the U.S. without being launched because there is not what I call an associated launch strategy, where the product access is meaningful to launch. So what you’re addressing is the key element in our entire long-term strategy. We feel highly confident in what we’re doing because we’re not only providing a best-in-class product opportunity but also targeting the first-in-class growth hormone deficiency market for pediatric patients. Jesper, do you have anything further to add?

Jesper Høiland, Global Chief Commercial Officer

Yes. Just to add that in the initial phase, we anticipate to get the pediatric indication, which is the vast, vast majority of the market; whereas the adult indication only represents 10% to 12% of the market. So we will enter into the lion’s share of the market with the pediatric indication.

Jan Mikkelsen, CEO

Going back to Oncology, you saw we built up a pipeline of three independent product opportunities in endocrinology and rare disease. We will continue to build up our pipeline in Oncology. What we have with our two hopeful clinical programs now in the next 3 to 4 months, we really have a paradigm shift in how to treat tumors. What we want to do with a tumor is to kick-start the hemogenic response into a solid tumor. This is how we think. At the same time, we believe we can create the next generation of hemological stimulation. We have seen the success of checkpoint inhibitors, but we’re also observing their limitations. Our TransCon IL-2 beta/gamma is a unique compound. The entire research effort headed by Juha and his group aims to build more product opportunities. We intend to be a fully integrated oncology company addressing all aspects of the hemological immune cycle, where we have validated all parts. This is our vision of becoming a major player in that segment too. Juha, do you have other comments?

Juha Punnonen, Head of Oncology

I think just to add that we believe that both have very unique properties and provide opportunities in the treatment of cancer. They obviously are very different product profiles, one being intratumoral administration, and one being systemic. We expect them to work very effectively together. It’s hard to compare with each other, but I think our point really is that both have their unique spots in cancer treatment and will also work additively when treating patients.

Jan Mikkelsen, CEO

I believe we want to make a significant impact in oncology—even though we think the environment is different from rare disease endocrinology. We have great confidence in the power of TransCon technology, which allows us to create unique product opportunities that no one else can produce. We build on our algorithm of clinically validated targets and parent drugs. We believe we will replicate the successful approach we’ve applied in endocrinology into our future projects.

Alethia Young, Analyst

Great, thank you.

Operator, Operator

And your next question comes from the line of Joseph Schwartz from SVB Leerink. Your line is open.

Unidentified Analyst, Analyst

Hi, guys. Thanks for taking my questions. I guess two from my side. So first one on TransCon growth hormone, now that you have the 2 years data, can you remind us how long you’re planning to continue following up these patients? And what will you do with this data? Do you anticipate to submit these data to the regulators as well? And the second question is on TransCon PTH. It’s great to see that almost all patients are on therapy in the open-label extension part. Maybe moving ahead toward commercialization, what are the lessons you learned from NATPARA? Why do you think TransCon PTH will be commercially more successful?

Jan Mikkelsen, CEO

Yes. Thanks a lot for the questions. The first one is basically addressing what we do in the fliGHt trial and that we continue on in our Phase 3, where we have an open-label extension for both from fliGHt and heiGHt, which continues to provide valuable information. Currently, we see patients coming to their final height, and we are in a position to continue this open-label extension trial to collect unique information about how we are treating patients. We will continue to run our trial in multiple countries, and we hope and expect this to continue as we collect long-term data. Mark, do you have an update about patient follow-up?

Mark Bach, Head of Clinical Development and Medical Affairs

Sure. I can say a few words. We have ongoing studies, and as Jan mentioned, the enliGHten trial, which is providing us very valuable data. Some of the patients are indeed moving towards their expected heights, while others still have room to grow. The study is continuing, and I think both clinicians and regulators will have interest in longer-term data. So at this point, it’s premature to make specific commitments on how long it will continue, but it is ongoing and very informative.

Jan Mikkelsen, CEO

Now, addressing the learning we’ve taken from NATPARA. Even if you develop a product as an adjunct to standard of care, there is still a vast need for such a product. You can only imagine the demand when you have a hormone replacement therapy targeting all aspects of the disease, compared to an adjunct therapy. This is the fundamental differentiation. TransCon PTH is positioned as a hormone replacement therapy, addressing both short-term symptoms and long-term complications.

Unidentified Analyst, Analyst

Thanks for that answer.

Operator, Operator

And your next question comes from the line of an analyst from Wells Fargo Securities.

Unidentified Analyst, Analyst

Hi, thanks for taking my question. So a couple on the CNP program and a couple on the PTH program. For the CNP program, to identify a dose to move forward into the ACcomplisH China trial, do you need to wait until 4 blinded dose cohorts in the U.S./EU accomplished trial to be completed? Or could you unblind each dose cohort as you go? And then is there a plan to open a U.S./EU dose expansion trial for the CNP program?

Jan Mikkelsen, CEO

Great question. We aim not to unblind it. We feel that maintaining the blind is essential. However, we believe it is feasible to provide good guidance about having an active dose through other results without unblinding data. Mark is leading a major effort in developing strategies to analyze this data while maintaining the blinding until everything is completed. For potential dose expansion, we could discuss that later, as our current focus is on how VISEN Pharmaceuticals conducts these trials and patients in Greater China, but also in Europe and the U.S. and Australia.

Mark Bach, Head of Clinical Development and Medical Affairs

No, we have not yet decided to open up a dose expansion trial in the U.S. or Europe; we focus on the current studies. However, should it be necessary, we can consider it in the future, but it isn’t on our agenda right now.

Unidentified Analyst, Analyst

Got it. And on the PTH program, what kind of interest are you seeing in the PaTHway Phase 3 trial? Are there enthusiasm due to the data you reported from the Phase 2 open-label extension? And then—is the safety database from 76 patients considered sufficient for the regulators? Thank you.

Jan Mikkelsen, CEO

That’s two questions. The first question is regarding the understanding of what we can provide with TransCon PTH to HP patients and physicians. I’ve never seen anything like it. Our assessments suggest that many people are eager to participate in this trial. It is clear that TransCon PTH is a game changer for more than 200,000 patients across Europe, the U.S., and Japan. We are seeing that all subjects continue to benefit significantly from this treatment. Regarding the safety database, Dana, could you explain how we are building our combined safety database both from our Phase 2 trial and Phase 3 trial?

Dana Pizzuti, Head of Development Operations

Yes. For the approval process, as discussed with the agencies, the combination of data from both the Phase 2 and Phase 3 trials will satisfy the criteria for safety thresholds for our applications. Did that answer your question?

Unidentified Analyst, Analyst

Got it. Thank you. Yes, very helpful. Thank you.

Operator, Operator

And ladies and gentlemen, this concludes today’s conference call. Thank you all for your participation, and have a wonderful day. You may all disconnect.

Jan Mikkelsen, CEO

Thanks a lot.

Scott Smith, CFO

Thanks.