Ascendis Pharma A/S (ASND) 2018 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the First Quarter 2018 Ascendis Pharma Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Scott Smith, Chief Financial Officer. Sir, you may begin.

Thank you, operator. Thank you, everyone, for joining our first quarter 2018 financial results conference call today. I'm Scott Smith, Chief Financial Officer of Ascendis. Joining me on today's call are Jan Mikkelsen, President and Chief Executive Officer; and Dr. Jonathan Leff, Chief Medical Officer.

Before we begin, I would like to remind you that this conference call will contain forward-looking statements that are indented 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 of rare disease endocrinology programs; statements regarding the market potential of our pipeline candidates; and statements regarding the planned 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 annual report on Form 20-F filed on March 28, 2018.

On today's call, we will discuss our first quarter 2018 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?

Thanks, Scott, and good afternoon. My introduction today will summarize the excellent progress we're making across our rare disease endocrinology pipeline. And then I will share some reflection related to why TransCon PTH has the potential to be the first true PTH replacement therapy. We have now 3 product candidates in clinical development, all of which will have significant clinical milestones in the next 12 months.

For our most advanced candidate, TransCon Growth Hormone, the Phase III program continues with 3 trials ongoing and top line results expected for the pivotal heiGHt Trial in the first quarter of 2019.

Our next program, TransCon PTH has highlighted again that we can translate positive preclinical results into successful clinical data, reinforcing the target product profile. Supported by these positive Phase I data, TransCon PTH is proceeding towards a planned Phase III [in this agent] in Q1 2019, pending discussion with regulatory agencies. Also, we recently began dosing subject for our third endocrinology candidate, TransCon CNP, with a goal of top line Phase I results in the fourth quarter of this year.

For this program, we plan to repeat what we observed in preclinical studies and show that TransCon CNP can deliver an effective therapy through continuous CNP exposure without dose-limiting cardiovascular side effects and with a once-weekly demonstration. With these 3 candidates, we have built a diversified rare disease endocrinology pipeline.

We intend to further expand this [franchise] by label expansion beyond the 3 initial indications. On this call, I would like to reflect on why Ascendis is positioned to create the first true PTH replacement therapy. One that could offer patients a treatment to more fully address all aspects of the disease. Our development process start by identifying the unmet medical need. In this case, there are around [200] patients worldwide with hypoparathyroidism, around 80,000 are in the United States. Patients suffer diverse range of both short- and long-term symptoms. The short-term symptom can include muscle cramps, seizure and altered mental state. Despite currently available therapies, the majority of patients still experience these severe symptoms and reduced quality of life. Over the long term, patients have additional complications, such as tissue calcification and abnormal bone turnover. Of specific concerns are the fourfold increased risk of renal disease compared to healthy controls. Again, this is despite currently available treatments.

The economic burden of hypoparathyroidism is also high. Studies of patient in the U.S. show 79% of patients require hospital stays or ER visits. 85% are unable to perform household duties, 20% have disease-related change in employment. Clinical research conducted by NIH and our group has demonstrated the benefit of giving PTH 1-34 as a subcutaneous infusion by insulin pump in patients with hypoparathyroidism. This PTH 1-34 infusion provided the closest approach to [official] vertical replacement therapy to date. The underlying product concept of TransCon PTH is to reproduce basic biology. The goal is simply replace the missing hormone, provide the right concentration of the hormone in the blood 24 hours a day.

By fulfilling these 2 elements, we believe, we can restore normal biological function. We know the strategy of replacement therapy works with higher success when treatments are based on the replacement of the identical compound, such as daily Growth Hormone and insulin.

To realize our TransCon PTH product candidate, we looked in our extensive library of TransCon linkers and carriers. We selected a combination that can deliver sustained levels of PTH 1-34 over 24 hours a day with a flat steady-state exposure within the normal physiological rates.

Another question we're often asked is, can others match our TransCon PTH target product profile. Without the TransCon platform, we believe it would be extremely difficult to develop a product, providing the same physiological PTH replacement therapy.

For TransCon PTH, we had established a simple and clear scientific rationale and product design. With each profile, we believe, it can become a new standard of care for patients with hypoparathyroidism.

Finally, we believe our TransCon PTH is supported by established regulatory pathways, where extensive experience with PTH 1-34 and PTH 1-84 should enable their management from Phase I to Phase III. We are planning to initiate a Phase III program in the first quarter of 2019. We are executing on all fronts according to our goals and time lines. The Phase I trial is now completed. The preclinical safety program to support Phase III indication is being finalized. And Phase III manufacturing at convergent scale is in place. We have also developed a simple and easy-to-use pen device for use in the Phase III program.

We continue to believe that there remains a significant unmet medical need, an opportunity for us with a differentiated PTH replacement therapy. Our approach for product development reflects our core values, a cornerstone of (inaudible).

Finally, our platform and product development acumen provide long-term sustainability by supporting steady stream of product candidates across multiple therapeutic areas.

Finally, I would also like to welcome Tom Larson, who joined Ascendis as Chief Commercial Officer in April. Tom has a broad commercial background, and he is heading us and leading us towards commercialization, our original strategic goal.

Now Jonathan will review our clinical progress.

Thanks, Jan. The first quarter has been highly productive for our pipeline. And we now have 3 rare disease endocrinology candidates in clinical trials. We are on track with all of our clinical milestones.

Let me summarize our progress, starting with TransCon Growth Hormone. Early in the first quarter, we wrapped up recruitment of the heiGHt Trial, exceeding our target enrollment with final randomization of 161 subjects. The expanded enrollment further strengthens the statistical power of the trial to demonstrate noninferiority of TransCon Growth Hormone to a daily growth hormone.

As noted in today's press release, the observed aggregate data from the heiGHt Trial continue to demonstrate a safety profile consistent with the reported safety profile of the active comparator, Genotropin.

In other words, there have been no unusual safety findings to date and our trial continues as planned. Our fliGHt Trial is actively enrolling subjects and has been picking up steam. Now recall that fliGHt evaluates TransCon Growth Hormone in subjects who switch from daily growth hormone, providing more data on the safety and tolerability of TransCon Growth Hormone administered weekly as well as providing physicians real-world evidence on how to switch existing patients onto long-acting growth hormone therapy.

We currently have around 25 sites, mainly in the U.S., nearly all of whom participated in our heiGHt Trial. We are pleased with the response to fliGHt, indicating interest on the part of patients and investigators to switch from daily to weekly Growth Hormone. FliGHt also enlarges our safety package with TransCon Growth Hormone. We are on track with our goal to complete enrollment of 150 subjects during third quarter of this year.

Additionally, we have been successfully rolling over the initial group of subjects from heiGHt to the enliGHten Trial, our long-term extension study. This trial is designed to add insights on the long-term efficacy and safety of TransCon Growth Hormone, further enhancing the safety and efficacy package to support our future BLA filing.

We continue to be pleased with the clinical progress of our Phase III program for TransCon Growth Hormone. Our TransCon PTH program has also made exciting progress this year. We are pleased to have now completed the Phase I trial in healthy adults. We recently reported results of the final multiple ascending dose cohorts at the European Congress of Endocrinology. These results continue to support our target product profile and indicate the pharmacokinetic and pharmacodynamic effects of TransCon PTH, which are consistent with our modeling and preclinical data. As a recap, we conducted 7 single ascending dose and 6 multiple ascending dose cohorts in the Phase I trial. Data from the final cohorts continue to show dose-dependent increases in serum calcium and effects on endogenous PTH 1-84, an indicator of biological activity.

As we reported, these serum calcium effects show low intersubject variability, suggesting the ability to titrate patients with hypoparathyroidism into the normal calcium range. With the recent MAD data, we will be able to determine the clinical starting dose in the range of clinical doses in our Phase III program. The adverse effects leading to the maximum tolerated dose reflect known PTH pharmacology, and TransCon PTH was generally well tolerated across the likely clinical dose range.

Combined with the flat steady-state PK profile within the physiological normal range, our results support the potential of this candidate as a true replacement therapy, one that can restore PTH to physiological levels for 24 hours a day and more fully address all aspects of the disease than current therapies do.

One example of these broader effects is the potential for TransCon PTH to control urinary calcium. Supported by data from the SAD cohorts that suggested normal renal calcium handling and reabsorption.

Over the coming weeks, we will complete the full bioanalytical analysis of data from the Phase I trial, including bone marker data and analysis of secondary measures, such as phosphate levels and immunogenicity. We plan to present a detailed data package to the medical community at the American Society of Bone and Mineral Research Conference in September. This is a leading U.S. conference for physicians who manage patients with hypoparathyroidism.

Separately, we are working diligently on preparations to move into a Phase III program, together with an easy-to-use pen device in the first quarter of 2019. We recently held an advisory board of experts, who provided helpful input on the product development path. With their feedback in mind, we are preparing to discuss the program in our proposed Phase III plan with regulatory agencies.

Now that we have shown our preclinical data translated well into clinical results and the clinical profile has fulfilled expectations, we remain confident in this goal and our planned next steps.

Turning to the CNP program, another exciting recent development was initiation of dosing for the TransCon CNP Phase I trial. TransCon CNP is our third endocrinology pipeline candidate in the clinic, under evaluation as a potential therapeutic option for achondroplasia and related skeletal disorders. The Phase I trial will evaluate safety, tolerability and pharmacokinetics with top line data anticipated by the fourth quarter of 2018. We believe our TransCon technology can enable continuous exposure to CMP at levels that optimize efficacy without adverse cardiovascular effects with a convenient once-weekly dose. Our preclinical results and model Cmax strongly support this profile.

Now we look forward to the data from our Phase I trial to confirm this profile in healthy volunteers so that we can proceed into an efficacy study in achondroplasia subjects planned to begin next year. We recently listened with interest to the FDA advisory committee meeting that discussed drug development for the treatment of children with achondroplasia. The discussion of clinically meaningful endpoints was in line with our internal views, and it will help further inform planning for our TransCon CNP program. With no FDA-approved treatments available, achondroplasia remains a significant unmet need. Our pipeline of product candidates for rare endocrine diseases is advancing toward important milestones, each step moving them closer to patients. It's an exciting and dynamic time at Ascendis Pharma.

Now Scott will provide a financial update.

Thanks, Jonathan. Turning to our financial results for the 3 months ended March 31, 2018, let me review some highlights.

For the first quarter, we reported a net loss of EUR 41.4 million or EUR 1.07 per basic and diluted share compared to a net loss of EUR 25.1 million or EUR 0.78 per basic and diluted share during the same period in 2017. The first quarter 2018 net loss included an unrealized EUR 7 million finance expense due to foreign currency exchange rate fluctuations of our cash holdings.

Research and development costs for the first quarter were EUR 30.5 million compared to EUR 20.6 million during the 2017 quarter. The higher costs were primarily attributable to, for TransCon Growth Hormone, continued execution and expansion of our Phase III clinical program, including the heiGHt, fliGHt and enliGHten trials and the ongoing development of the auto-injector. And costs associated with our Phase III program clinical supply and initiation of the manufacturing of TransCon GH validation batches. These batches are required as part of the regulatory approval process and will be recognized as R&D costs when incurred. However, they go into inventory and may be used for either a clinical trial supply, or upon approval, for commercial sale. For TransCon PTH, costs related to the Phase I clinical trial in activities related to Phase III initiation, including manufacturing and device development. And for TransCon CNP, costs associated with preparation of the Phase I trial in ongoing Phase II enabling activities.

General and administrative expenses for the first quarter of 2018 were EUR 4.7 million compared to EUR 3.3 million during the first quarter of 2017. We ended the first quarter with cash and cash equivalents of EUR 348.4 million and 41,523,765 ordinary shares outstanding, which includes the February 2018 public offering. We expect the increase in R&D cost to continue throughout the remainder of 2018 as we advance our wholly-owned internal pipeline programs and invest in the TransCon technology platform. R&D will include, for TransCon Growth Hormone, costs associated with our Phase III program in manufacturing of validation batches as well as development and manufacturing of the auto-injector. For TransCon PTH, Phase III enabling activities, including nonclinical talks, manufacturing, regulatory and device development activities.

And finally, for TransCon CNP, costs associated with the ongoing Phase I trial and Phase II enabling activities, including nonclinical talks and manufacturing. We believe Ascendis is very well positioned with 3 wholly-owned rare disease endocrinology products in clinical development, each representing a market opportunity greater than $1 billion. We plan to continue to create opportunities as we apply our innovative TransCon technology and algorithm across other therapeutic areas.

Operator, we are now ready to take questions.

(Operator Instructions) Our first question comes from Jessica Fye with JPMorgan.

This is Yuko on the call for Jessica. For TransCon CNP, do you think we could get insight into whether TransCon CNP would have lower rates of hypotension with the top line data in 4Q? And then, also, as we think about the potential for TransCon to expand into new therapeutic verticals, were there disease areas that, that lend themselves more or less to the long-acting approach?

Hi, Yuko, it's Jonathan. Thanks for the questions. Yes, I think we can very clearly establish the lack of hypotension in the Phase I volunteer study. We will push to relatively high doses. Notably, we've been unable to cause hypotension in our preclinical models. And we fully expect that we will reproduce that findings in the Phase I study. So we should pretty clearly be able to demonstrate that. As far as other therapeutic indications, hypochondroplasia comes to mind, but there's a whole host of other FGFR3 and R2 related disorders, any one of which would lend themselves to a once-weekly therapy over a daily therapy. So scientifically, there's a lot of rationale for multiple diseases.

(Operator Instructions) Our next question comes from Joseph Schwartz with Leerink Partners.

I was wondering if you could talk a little bit more about your takeaways from the Adcom on achondroplasia. I think the panelists were asked to vote on things like the evidence required to establish a dose response, study design and duration and the like, endpoints and things like that. I was just wondering if you could talk a little bit about those things and how they might impact your strategy, if at all?

Sure. Thanks, Joe. It's Jonathan here. We were very interested, obviously, in the advisory committee. I don't think there were any terrific surprises. We were really pleased that they, like us, are very focused on what are the clinically meaningful endpoints in this population, whereas, there was a lot of support for heiGHt as an end point, that's validated and easy to measure. We certainly can do that. But we are far more interested in other meaningful endpoints, such as proportionality and others, maybe even radiographic endpoints. And I think there was a general interest from the panel in all of those things, and it really aligns with what our thinking has been all along. It's not about just heiGHt, it's obviously about the comorbidities and making a clinically important impact in this disease and intervening as young as you possibly can because the benefits are going to accrue much, much higher, the earlier you intervene. And I think there was general support for that approach.

Okay. Great. And then, on TransCon PTH, do you think there's any way that you can improve the dosing schedule to once-weekly, so that it could have a more patient-friendly administration than once-daily subcutaneous injections like NATPARA?

Joe, this is a great question and is something we had a lot of thought about when we make the initial target product profile. But what we actually considered at that time was that we will prefer the daily dosing profile because at that way we can have the most optimal way to titrate each single patient to the optimal dose in the fastest possible way. We see the once-weekly dosing profile as the potential way where we can go into life cycle management in patient that now is stabilized on the right PTH concentration, potentially we would see it as a way to transfer them over to a once-weekly dosing profile. But what we address in this product opportunity is really, what I call, having a highly effective compound that really can give a true replacement therapy in this patient population, really, really addressing, what I call, all aspects of the disease, specific elements like the (inaudible).

Great. And dose ranging for NATPARA was pretty challenging because there were episodes of hypo and hyperparathyroidism. How do you expect that to compare for TransCon PTH given the longer half-life, is it (inaudible)?

I think, Joe, the fundamental is when we see this product opportunities, it goes to back what we saw 2 things need to be fulfilled in an -- what I call, in a true replacement therapy. Point one is that you need to give back to the patient the right product they are missing which are reflecting the national counterpart in the body. But what it is also extremely important is that you give it in the right PK profile. And you only can have a right and optimal replacement therapy when both of this are fulfilled. So if, for example, not enough just to give back PTH 1-84 as NATPARA, you also need to ensure it's been giving back in the right PK profile, that is providing PKs always in the physiological level 24 hours a day. And therefore I'll say you need to combine the true element to having a true replacement therapy.

Thank you. I'm not showing any further questions at this time.

Thanks, everyone, for joining us on the call today. See you. Bye-bye.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. And you may all disconnect. Everyone, have a great day.