Ascendis Pharma A/S (ASND) 2022 Q3 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Ascendis Pharma Third Quarter Earnings Conference Call. (Operator Instruction] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Tim Lee, Senior Director, Investor Relations. Please go ahead.

Thank you, operator, and thank you, everyone, for joining our third quarter 2022 financial results conference call. I'm Tim Lee, Senior Director of Investor Relations at Ascendis Pharma.

Joining me on the call today is Jan Mikkelsen, President and Chief Executive Officer; Scott Smith, Senior Vice President and Chief Financial Officer; Dr. Stina Singel, Head of Clinical Development, Oncology; Dr. Birgitte Volck, Senior Vice President, Head of Clinical Development and Medical Affairs, Endocrinology Rare Diseases; and Joe Kelly, Head of U.S. Commercial Endocrinology.

Before we begin, I would like to remind you that this conference call will contain forward-looking statements that are intended to be covered under the safe harbor provided by the Private Securities Litigation Reform Act. Examples of such statements may include, but are not limited to our U.S. commercialization and continued development of SKYTROFA for the U.S. market, the commercialization of TransCon hGH for the EU market, our progress on our pipeline candidates and our expectations with respect to their continued progress, statements regarding the expected timing of approval and launch of TransCon PTH in the U.S. market next year, statements regarding our strategic plans, our goals regarding our clinical pipeline, including the timing of clinical results, statements regarding the U.S. market approval of SKYTROFA and our pipeline product candidates, statements regarding our planned regulatory filings, our expansion into new therapeutic areas, and statements regarding the ability to create a sustainable leading global biopharma company.

These statements are based on information that is available to us today. Actual results and events could differ materially from those in the forward-looking statements, and we may not be able to achieve our goals, carry out our plans or intentions or expectations or projections disclosed in our forward-looking statements, and you should not place undue reliance on these statements.

Our forward-looking statements do not reflect the potential impact of any licensing agreements, acquisitions, mergers, dispositions, joint ventures or investments that we may enter into or terminate. We assume no obligation to update these statements as circumstances change, except as required by law. For additional information concerning the factors that could cause actual results to differ materially, please see our Forward-Looking Statements section in today's press release and the Risk Factors section of our most recent Annual Report on Form 20-F filed with the SEC on March 2, 2022.

TransCon Human Growth Hormone, or TransCon hGH, is approved by the FDA in the U.S. under the brand name SKYTROFA for the treatment of pediatric patients 1 year or older weighing at least 11.5 kilograms and have growth failure due to inadequate secretion of endogenous growth hormone. In addition, the European Commission has granted a marketing authorization for a lonapegsomatropin to Ascendis Pharma developed under the name TransCon hGH is a once-weekly subcutaneous injection for the treatment of children and adolescents aged 3 to 18 with growth failure due to insufficient secretion of endogenous growth hormone.

In general, we refer to this product as TransCon hGH, unless we're referring to the product in the context of a particular jurisdiction such as the United States or the European Union. Otherwise, please note that our product candidates are investigational and not approved for commercial use. As investigational products, the safety and effectiveness of the product candidates have not been reviewed or approved by any regulatory agency. None of the statements made on the conference call regarding our product candidates shall be viewed as promotional.

On today's call, we'll discuss our third quarter 2022 financial results and we'll provide further business updates. Following some prepared remarks, we will then open up the call for questions.

I'll now turn the call over to Jan Mikkelsen, President and Chief Executive Officer.

Thanks, Tim, for this long introduction. Good afternoon, and good evening, everyone. And again, an important quarter for Ascendis as we continue to achieve and approach new major milestones in our journey to file our Vision 3x3 to become a sustainable, profitable, leading biopharma company. Earlier this week, we announced we had achieved another important milestone, as FDA has accepted for priority review, our NDA for TransCon PTH for the treatment of adult patients with hypopara.

FDA expects to complete the review of our NDA by April 30, 2023. If approved, we believe we will bring a totally new treatment paradigm to the hypopara community. Today, we are reporting SKYTROFA U.S. revenue of EUR 12.3 million this third quarter, again, more than doubling our sales compared to last quarter. All patients continues in the Phase 2 ACcomplisH Trial for TransCon CNP, with no dropouts and the longest treatment duration now around 2 years. We are looking-forward in the coming weeks to sharing top line results, including early data in children aged 2 to 10 with achondroplasia.

In oncology, we will have our first oral presentation at next week's Society of Immunotherapy in Cancer, or SITC, conference. We look-forward to sharing our first in-human safety and initial efficacy data supporting our recommended Phase 2 dose for TransCon TLR7/8 agonist. Last quarter, I made the following statement. We believe that we are on track to become cash flow positive, without the need for additional equity from investors, given the successful launch of SKYTROFA in the U.S., combined with the expected U.S. launch of TransCon PTH in the middle of next year, supported with our strong cash position of around EUR 1 billion.

After this quarter, my confidence that we will fulfill this belief has been reinforced. Okay, let me now share with you more details on our program. We designed TransCon -- now marketed as SKYTROFA in the U.S. to address the unmet medical need that results from children taking [growth hormone]. With a different set of product, we are building SKYTROFA into the global market-leading brand and, at the same time, expanding the overall value of the growth hormone market.

For this quarter, we reported SKYTROFA revenue of EUR 12.3 million compared to EUR 4.4 million in the second quarter. As we expect that majority of patients will be on SKYTROFA treatment for at least 3 to 5 years, revenue for each quarter becomes the new base for the next quarter. From that base, revenue continues to grow through the addition of new reimbursed patients. In Q4, we expect to grow the number of new reimbursed patients at a similar level to what we have -- saw in Q3, providing a strong base for revenue growth in 2023 and beyond.

I believe, with our improved commercial execution, we are achieving the goals we set up when we launched SKYTROFA in the U.S. by building on the product strength of SKYTROFA and providing patients with a differentiated treatment. Over the coming quarters, we will continue to provide updates on all our programs that support our efforts to build TransCon into the leading global brand in a growing growth hormone market.

Let us turn to TransCon PTH, a product candidate we are dedicated to bring to patients as soon as possible. Earlier this week, we announced that FDA has accepted for priority review our NDA for TransCon PTH for treatment of adults with hypopara. This is our second product candidate in a row that we are taking all the way from product design to successful regulatory filing. These patients faced an urgent need for treatment to effectively address their disease. It's complication and importantly help restore normal life for them. We hope to have a regulatory decision by April 13 of next year from FDA in the U.S.

Our view of the importance of PTH replacement therapy was confirmed by the recent guidelines update for the management of hypopara. The [authors] suggested consideration of PTH replacement therapy for HP patients insufficiently controlled due to any one of the following; symptomatic hypoglycemia, hyperosmia, renal insufficient hypocalcemia, or (inaudible). They also observed that patients with poor compliance, more absorption or who are intolerant of large doses of calcium on active vitamin D might also benefit for PTH therapy.

With the potential to treat all HP patients regardless of disease background and growing dividend for long-term clinical trial data showing durable responses, we believe that TransCon PTH could address this major unmet medical need. With the U.S. regulatory timeline set and review underway, we are focusing on preparation for an expected U.S. approval and launch in Q2 next year. Expanding our global reach for TransCon PTH, we are on track to submit our MAA in Europe, and we remain on track to report top line results from our Phase 3 PaTHway Japan Trial, both events expected to happen this quarter.

We are dedicated to further optimizing treatment option for patients. With up to 3 years of follow-up data from our clinical trial of TransCon PTH, we believe that HP patients on stable PTH doses, a once-weekly PTA product could be a potential attractive treatment option. Our data demonstrates that each patient goes to multiple titration and reaches normalization of calcium hemostasis at different times. We believe once patient obtain that stable doses of daily TransCon PTH, that is when they become optimal candidates for switching to a once-weekly PTH therapy with the same mode of action.

Our once-weekly TransCon PTH product candidate now in preclinical development is based on the same TransCon technology and PTH parent drug as daily TransCon PTH, enabling, we believe, predictable and safe switching of patients from daily to weekly TransCon PTH.

Turning now to TransCon CNP. We are looking forward in the coming weeks to sharing top line results from the ACcomplisH Trial. Our Phase 2 randomized, double-blinded, placebo-controlled clinical trial of TransCon CNP in children aged 2 to 10 with achondroplasia. The ACcomplisH Trial was designed to enroll 4 dose cohort with up to 15 patients each, randomized 3:1 active to placebo in sequential cohort of 6 micrograms per kilo, 20 micrograms per kilo, 50 micrograms per kilo and 100 micrograms per kilo per week followed for 1 year on double-blinded base.

A total of 57 patient were enrolled in the 4 cohorts, with 40 of the patients younger than 5 years old. All 57 patients enrolled completed the blinded portion with no dropouts. After 1 year of double-blind treatment, patients transitioned from that dose cohort to an open label extension, OLE, portion of the trial. As of today, all patients had been transitioned to the 100 micrograms per kilo per week dose level, and all continue in the open-label extension at that dose.

We continue to see, on a blinded basis, the same well-tolerated safety profile we reported to you last December, with the longest treatment duration now around 2 years without any dose reduction and 100% patient retention. The primary endpoint of the ACcomplisH trial is annualized height velocity after 1 year of treatment. The primary analysis is to compare mean annualized height velocity for TransCon CNP cohort to that for placebo-treated patients.

We also plan to report the mean annualized height velocity data for the 2 patient groups, patients aged 2 to 5 and 5 to 10 years. In addition to the top line randomized double-blinded data, we also plan to report preliminary data from the open-label extension portion of the study. These data will provide information on treatment impact when [switching] from placebo or lower dose up to 100 micrograms per kilo weekly dose of TransCon CNP.

I get a lot of questions about what my expectations are for this filing. First priority, treatment needs to be safe and well-tolerated. From the perspective of outcome, annualized height velocity, or call it annualized growth velocity, has been validated as the regulatory primary endpoint. Just as with height velocity in other growth disorder trials, this endpoint in achondroplasia is dependent on multiple demographic factors. In particular, the age of the patient is a major factor determining the outcome.

So, the only approved treatment in the U.S. for achondroplasia, the analyzed height velocity for patients aged 5 to 14, was around 5.4 centimeter per year, with a greater treatment effect in annualized height velocity for the group 8 to 11 compared to age group 5 to 8. I estimate the benchmark for annualized height velocity for the age group 5 to 10 in the ACcomplisH trial will be slightly lower than the 5.4 centimeter per year as the ACcomplisH trial has fewer patients in the faster growing age group of 8 to 11 compared to the age group of 5 to 8.

To further evaluate TransCon CNP at 100 micrograms per kilo per weekly dose, we have submitted a protocol to FDA to initiate a global randomized, double-blinded, placebo-controlled Phase 2b trial in children with achondroplasia from 2 to 11 years of age. This trial is expected to enroll about 80 patients and measure annualized growth velocity after 1 year of treatment as the primary endpoint. Perhaps more important, we believe this trial will enroll sufficient patients to analyze additional secondary endpoints, which may help to explain why we see 100% patient retention in our trials. We expect to complete enrollment early next year of this trial.

In summary, we remain on track with our Vision 3x3 goal to obtain approval for 3 endocrinology rare disease products by 2025.

Turning now to oncology. With our first 2 immunotherapy programs, we are levering both the TransCon systemic technology for TransCon IL-2 beta/gamma, and for the first time in human with TransCon hydrogel technology for TransCon TLR7/8 Agonist. TransCon TLR7/8 Agonist is designed to kick-start the immune system in [solid tumor] and using our intratumoral hydrogel technology to provide sustained release of the TLR7/8 Agonist over weeks, thereby activating the immune system within the tumor microenvironment without systemic toxicity.

We recently completed dose escalation and declared the recommended data Phase 2 dose for our TransCon TLR7/8 Agonist candidate. With a favorable safety profile and early signs of clinical activity observed as monotherapy, or in combination with a checkpoint inhibitor, we are pleased that our abstract for top line dose-escalation data was selected for an oral presentation at SITC, the Annual Meeting of the Society for Immunotherapy in Cancer being held in Boston next week.

Our second oncology product candidate, TransCon IL-2 beta/gamma is designed to broadly increase systemic stimulation of the body's immune system. And we believe it has the potential to become a new backbone for cancer immunotherapy. TransCon IL-2 beta/gamma continues to be well tolerated as monotherapy, or in combination therapy, and we are seeing promising pharmacodynamic responses and we continue dose escalation.

We plan to share monotherapy top line results later this quarter. As you can hear, there are so many great milestones we have achieved, but also so many, many more in the near-term. With a cash position of EUR 935 million, Ascendis is on track to achieve our Vision 3X3. And I remain confident in our ability to drive continued progress.

I will now turn the call over to Scott for additional details and a financials review before we open up for questions.

Thank you, Jan. So, as you heard from Jan, we are making great progress on behalf of the patients across our entire portfolio, with SKYTROFA launched in the U.S. and expected to launch in Germany mid next year. Combined with the expected U.S. approval and launch of TransCon PTH in Q2 next year, our advancing pipeline of product opportunities addressing major unmet medical needs and our cash position, which is very strong, we are more confident than ever in our ability to become cash flow positive and to deliver sustainable, profitable, long-term growth.

Now on to our results. Today, we reported SKYTROFA U.S. revenue for the third quarter more than doubled sequentially to EUR 12.3 million from EUR 4.4 million in Q2. Based on continued growth in the number of reimbursed patients and in line with comments Jan made in May about doubling our revenue quarter-to-quarter, we believe we remain on track to achieve fourth quarter SKYTROFA U.S. revenue of at least EUR 16 million based on Jan's simple algorithm from May, compared to the company-compiled sell-side analyst consensus estimate of EUR 11.9 million.

This expected Q4 revenue would then provide us with a very strong base for SKYTROFA U.S. revenue in 2023 and beyond. Growth in U.S. SKYTROFA revenue during the third quarter primarily reflects the strong increase in reimbursed demand. The stronger U.S. dollar provided a minor benefit of approximately EUR 0.5 million.

Now turning to operating expenses. Research and development costs for the third quarter were EUR 97.4 million compared to EUR 58.8 million during the third quarter of 2021. As a reminder, the third quarter of 2021 included a onetime reversal of previous write-downs of pre-launch inventories, which reduced R&D cost by EUR 54 million. Overall, this reflects ongoing normalization of our overall R&D cost structure as more programs progress from early through late-stage development and approval.

Selling, general and administrative expenses for the third quarter were EUR 60.7 million compared to EUR 39.3 million during the third quarter of 2021. These expenses primarily reflect higher commercial costs following the launch of SKYTROFA in preparation for future product launches in the U.S. and Europe.

Net finance expenses of EUR 20.9 million for the third quarter included a foreign exchange rate gain of EUR 44.1 million related to translation of our U.S. dollar holdings of cash, cash equivalents and marketable securities to euro. Overall, we had a net loss for the third quarter of EUR 169 million or EUR 3.03 per basic and diluted share compared to a net loss of EUR 80.3 million or EUR 1.47 per basic and diluted share during the third quarter of 2021. Importantly, we ended the third quarter with cash, cash equivalents and marketable securities totaling EUR 935 million.

Let me now also provide an update on timing for selected key milestones for the remainder of the year. For TransCon hGH, we are on track to complete enrollment in the global Phase 3 foresiGHt trial in adult growth hormone deficiency in Q4. For TransCon PTH, we are on track for a planned MAA submission in Europe in Q4, and for PaTHway Japan, top line results are expected in Q4.

For TransCon CNP, we look forward to sharing the top line results from the Phase 2 ACcomplisH trial in the coming weeks. For TransCon TLR7/8 Agonist, we plan to present top line monotherapy and combo therapy dose-escalation data from the Phase 1/2 transcendIT-101 clinical trial at the SITC conference next week. And for TransCon IL-2 beta/gamma, monotherapy top line results are expected from the Phase 1/2 [IL Believe] trial in Q4. As you can see, it's an incredibly busy time for Ascendis going into the end of the year with key catalysts across the pipeline, both in endocrinology rare diseases and in oncology.

With a strong balance sheet, strong commercial progress and disciplined cost focus, we believe we are well positioned to fulfill Vision 3x3, have the capital to fund our growth initiatives and become cash flow positive.

With that, operator, we are now ready to take questions.

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

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

That is a great question, Jess. And what we believe is the most important part for our Phase 2 trial, the ACcomplisH Trial, is really to prove that we're providing a meaningful benefit to the patients, that we really are hitting the target product profile that we lay out when we designed TransCon CNP to be in best-in-class product opportunity for treatment as a contemplation.

We decided from the perspective that it was not only focused on efficacy, but included everything related to safety tolerability, the once-weekly dosing profile because we know from 20 years in growth hormone division that a daily dosing is not a function. All that we incorporated and that is the most important part that we want to see from the ACcomplisH Trial.

When you come to the question that if we can some way file on this data, I think it depends what we see in the coming weeks. And I will be much better -- some way suited on for me to really answer this question when the data has been unblinded. I have looked at that and we have reported to you. Then I think I will be really, really well-positioned to come with my belief [from that end] that can be a lot of difference to between different geographic regions, there can be a lot of different elements, which basic with someone saying we would like to wait for the 2b trial. And I need to wait to see the data.

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

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

Our next question comes from Josh Schimmer with Evercore ISI.

And just wanted to follow-up on the 1 from Jessica. I guess, given how close we are to the Phase 2 results for TransCon CNP, why not wait for them to be reported and then design a more fulsome Phase 3 protocol. Why kind of move quickly and why specifically a Phase 2 instead of Phase 3 given how close we are to the data?

This is because we are dedicated to bring this product out to the patient as fast as possible. So what we basic are doing, we are incorporating as in exploratory endpoint and choose menu list of all the element we basically believe we are providing to the benefit of the patients. And as soon as we basic have gone through the entire ACcomplisH Trial, really understand what is the key element we are sitting on, we basic can relate all 1 or 2, 3 or 4 of this exploratory endpoint up to secondary endpoint and therefore that basic can be integrated in the labeling discussion.

So, we get so many patients and caregivers coming to us when can we get this product out to the market. And this is why we dedicated to work in this way, where we basic are cutting down about 1 year in development time. Before we look at the data to go in and discuss it, we basic will have enrolled basic all the patient in the beginning of next year, and then we basically can evaluate and basic achieve the same thing.

Got it. If I could ask another very quick 1, you've indicated that you disclosed new therapeutic category for the TransCon platform by year-end. When can we expect that in what form, and what are the gating steps for that announcement?

The gating step is basic that, we are executing on the pre-clinical candidates. We are building up the pipeline, we're building up what we need to do as we did when we disclosed our rare disease endocrinology pipeline with TransCon PTH and TransCon CNP. We disclosed that in 2015. In 2018, we disclosed our oncology pipeline, and we said we will go out and disclose our quality pipeline and now we are disclosing our third therapeutic area.

And I can guarantee, I'm really thrilled to be going back again to a therapeutic area, while locked of really unmet medical need but also a lot of established target, established parent drug with well function mode of action that really fit our TransCon technology systems. And it will be end of this year, potentially at JPMorgan, if you want to provide some benefit to where there is a lot of investors at that time.

Our next question comes from David Lebowitz with Citibank.

Additional question on achondroplasia. When we look forward to the data coming out, given the cross trial comparisons in the different geographies, populations are going to be different. What is the way that we can benchmark, what we are seeing and what it's clinical meaningfulness is and how it might actually compare with the competing products?

So, thanks a lot for the question. Because as I said in the prepared remark, this is a question I really get a lot. And what we are building on when we're trying to benchmark our TransCon CNP to the only approved product here in the U.S., we're building on [IL-2]. We are building on science. For example, I'm looking on a publication just in front of me. Safety and persistent growth promoting effect of vosoritide in children with achondroplasia 2 years results from that open dated Phase 3 extension study. This publication is really interesting because there you have analyzed growth velocity. Rest are the same as annualized height velocity. And basically you have the annualized growth velocity both from the patient population that got transferred up -- got directly on vosoritide but also the placebo that got transferred up to vosoritide.

And in this publication, there is direct the annualized growth velocity on an absolute level because that is how we can compare it. Then you go back and saying, how can you compare in the trial, because there is always dependency on outcome annualized growth velocity depending on different demographic factors. And one of the key element in ACcomplisH is clearly for all the literature there is, is the age of the patient population. And this is why, as I said in the prepared remarks, we will split it up between 2 to 5, 5 to 10, because there's not really any good comparison for 2 to 5 because there is not really data, that's really providing a good benchmark for the 2 to 5.

Where we have a good benchmark mainly coming out from this publication and all the FDA filing documents is for the 5 and up. And there is clearly dependency if you look on the patient group between 5 to 8, or 8 to 11, because there is a much, much more treatment effect with vosoritide in that 8 to 11 group. And therefore, if you adjust for this difference with that, you basically can pretty precise go in and make this comparison. And I will have no problem to show my own calculation how I do it. I have no problem if I share that because it's built on science, it's built on peer-reviewed publication and not built on perception.

Our next question comes from Li Watsek with Cantor.

Maybe just 1 on TransCon PTH. Now you have a PDUFA date in April next year. Just wondering if you can maybe talk about your launch preparation right now and potential synergy with SKYTROFA in the U.S. And also, how should we think about your commercial strategy in Europe?

You said the right word, synergy. Because that was why we built-up a pipeline in rare disease endocrinology with 3 independent product opportunities where we expect to launch 1 product after the other, with an [injury] of 2 years. And that is what we have built '21 for SKYTROFA, we hope '23 for TransCon PTH, and we hope the next 1 coming 2 years after.

What we're also doing is that, we do a global commercialization. We cater to a global commercialization. Joe, that is sitting in front of me, he is responsible for the group here in the U.S. that do commercialization for us. As you have seen, we have different strategies in different geographic regions. We are building up now the long capabilities in Europe ourself. We just opened a German headquarter in Munich. So we are ready to launch from there. We are doing in Greater China through our JV or we can say our ownership in VISEN Pharmaceuticals. So we are also creating value from that perspective.

When we come to the U.S., yes, there is a lot of synergy. And this is why we have a pipeline approach where we have 2 things need to be fulfilled for really be checking into our (technical difficulty) pipeline where it is endocrinology. First, there needs to be synergy between the product, and the other thing is needs to have at least EUR 1.5 billion in sales revenue expectation.

If any chance it's not on that is not really something we want to take on it, because we come from system where we run P&L and not just dreams. So therefore, we are building our pipeline on synergy. So when you think about synergy, then the logical is infrastructure. And people don't actually think about infrastructure as a key element. I really believe IT solution, facilities, people, everything like that. This is really where you have so much infrastructure and synergy, Just conference, you go to one endo conference you have one group for 3-product. This is meaning that you basically save 2/3.

And out from that perspective, and Joe can comment about it how we can do where people some way think a little bit in their mind is to think about just sales force. So, just think about medical affairs, which are running on different part of the organization. How much do you really have synergy and obvious that synergy we can switch between from 1 to the other 1. But perhaps, Joe, you can say how we have prepared. We are in the full launch mode. We have been in the full launch mode for 6 to 12 months now, and we want to be ready for Q2 next year. It's going to be our biggest (inaudible) on TransCon PTH.

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

The Phase 2b protocol is already filed by FDA, so we are full-blown into our Phase 2b. We expect to enroll all the patients basically aligned now in our ACHIEVE trial on national history. The patients are just waiting to be switched over in the beginning of next year in the trial. What we have in our protocol is pretty simple that we have a huge menu list, a huge menu list, of all different element where we believe the benefit could be. But I think Birgitte is in the call and she is heading up the Clinical Development, Regulatory and Medical Affairs of our Rare Disease Endocrinology.

Perhaps, Birgitte, you will say some words about all the different exploratory endpoint we have built into the protocol, and we hope we can evaluate them up to secondary endpoint when we really have looked at all the data for ACcomplisH.

Yes. So I think we are very excited about the 2b protocol. And again, our objective is to hopefully provide timely access to this potential treatment opportunity. So, patient relevant outcome measures is something we have included (technical difficulty) exploratory measures. That was something we were very proud of having [each test] developed for our PTAs program, and we aim to have similar relevant outcome measures for this program.

And then, we would also have other [anti-inflammatory] measures, including (technical difficulty) body mass index, et cetera. So, the relevant menu of relevant endpoints are captured as exploratory and will be addressed appropriately as bring insights into evidence evolved in this relatively new field of medical intervention in that contemplate.

Our next question comes from Paul Choi with Goldman Sachs.

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

We -- as has been commented before, we have looked on the blinded data for the ACcomplisH trial, and we also have been looking on the open-label extension data. We believe we can do that without jeopardizing anything to the double-blinded nature on the trials. We're feeling confident this is a responsible way to do it. And when we look on the data, we're just looking very much forward to really disclose it to you in the coming weeks.

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

I think I can just start that we are in a position that we basically are evaluating exactly the optimal price structure, so we can really follow the value we have in Ascendis Patient First. And we came out with (inaudible) on a premium pricing. And I think we did it well, really respecting the value of what the product is providing not only for the patient, the caregivers, but also for the society. And we believe we will do the same responsible thing when we come to TransCon PTH.

Joe, will you comment on the more factual part on it or...?

Yes. Sure, Paul. So, right now, MMIT says that we have around 60% coverage at this point. But really what we've seen so far since the launch is, that's really not important. Because we are -- HCPs are getting patients reimbursed, whether they are covered or not. If they are willing, which most are, to put in the work to get that patient reimbursed, typically they're getting a thumbs up from the PBM and the payer.

I think it was coming a little bit about our TransCon Growth Hormone SKYTROFA sales. But I think, Paul, wanted to more hear about the PTH pricing structure. If you have any comments?

Yes. I mean, there are synergies. When we're out in the marketplace in front of the payers and PBMs that will certainly leverage between SKYTROFA, and TransCon PTH once approved. That's all (technical difficulty).

Our next question comes from Vikram Purohit with Morgan Stanley.

So first one on SKYTROFA. So, we all know that obviously you provided a threshold for revenues for SKYTROFA, that you could achieve for 2022 last quarter. But I guess, looking forward, do you plan to provide formal yearly SKYTROFA sales guidance in 2023?

No.

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

First of all, when I look on our IL-2 beta/gamma, we have a dream not to make something that can combine with a checkpoint inhibitor, but make a treatment we're seeing available for the patients, that's basically providing better efficacy, better safety than what you can achieve with checkpoint inhibitors. And our program is progressing on a speed and with data that really is supporting the speed. I'm really pleased to see it because the TransCon technology, together with our protein design of an optimal high potent non-alpha compound is an optimal combination to achieve this.

And what Stina and her teams are really executing on, and I'm really happy that we not have a recommended Phase 2 dose yet, because we are still dose escalating to complete the [time] what we expected to do because the profile is so extremely safe. So, Stina, your comments?

We are in the middle of monotherapy dose-escalation and also dose escalate in combination with a checkpoint inhibitor. By the end of this year, we hope to have some initial first results for you on the clinical data. Most impressively, I think as Jan has mentioned is that the safety is as we have designed with the TransCon technology to do, which is to make cytokine therapy very tolerable for patients. And I think the key thing we are looking for is the pharmacodynamic effects how far we can push it beyond what we have seen with any other IL-2 variants out there.

So, how we -- typically just to mention to give you a little bit more concrete flavor on how we look at ALC, we have a target we need to be plus 5 in ALC compared to, and no one else have ever meant to do that. Why do we believe that? Because if you look on product, if you really have a patient that can tolerate the treatment, they are about 2 to 3-fold in ALC. And then you start to see monotherapy effect. So, all the companies that are developing a non-alpha and have in ALC under 2 or 3, there is no expectation ever for them to see monotherapy effect because by biology, the science is not really supporting it. This is why we want to go up as fast as possible to an ALC that's higher than anyone else had do because then we know that the hematological system is really prime to fight and kill the cancer.

Our next question comes from Leland Gershell with Oppenheimer.

And good to see the progress. Just a question -- 2 questions from me. One on TransCon CNP, just again drilling down further on the regulatory side. The other company that's out there with its own achondroplasia product now has said that the accelerated approval pathway would be close to any new entrants given their approval. So, should we take that to mean that you would need the Phase 2b that you've planned at least to get approval? Or do you think that through discussions with FDA or other agencies, you may be able to file off of the ACcomplisH data, just to clarify that?

And also want to ask with respect to SKYTROFA, in the absence of any guidance expectation for next year, could you comment if you're comfortable with the current quarterly run rate as you've indicated for Q3 to Q4 of this year as we go into '23? Thank you.

Ye, let me start on the last question. Because what is recreating with SKYTROFA sales is that we're building on last quarter's baseline. So, if you, for example, are saying is that this quarter here we have EUR 12.4 million, we basically a keeping patients on treatment for 3 to 4 years. Meaning is that we already have EUR 12.4 million for Q4. So, when Joe and his team go and getting new patients, new reimbursed patients is just adding up.

So, if you're, for example, saying if he do with the same speed as he did in this last quarter in Q4, he will end with EUR 16 million to EUR 18 million in Q4. It's a similar calculation, even I can calculate it without an MBA. And if you then take 4 times for example 17 in the middle, and then you can say that is baseline we already have an expectation to see in 2023. So everything we add of new reimbursed patient is add on this baseline. And this is really nice calculation and a nice way to look at it. And I like mathematic algorithm a lot. And it gives me an easy way to some way make my own prediction about what I see of expected revenue for 2023.

The last question is a big, big, big, big question for me, because I really don't understand this question. I've got it about 20 times now, and I think it's somewhere being generated out from a lack of knowledge, a lack of understanding of regulatory pathway in the U.S. What is happening is that the primary endpoint is getting validated, utilizing annualized height velocity as the endpoint, this does mean is that it's not close for anyone else. So, I'm totally lost in this question and I don't think there is any kind of scientific regulatory element that really someway supporting this kind of statement.

Our next question comes from Joseph Schwartz with SVB Securities.

I think that's me. I was wondering, since you alluded to updated guidelines being a meaningful driver for TransCon PTH when it's hopefully launched, I was wondering if you can expand on that a bit and discuss how much this versus other factors might improve the reimbursement positioning which we've heard was very different for (inaudible) when it was launched. What are your current estimates for the revenue potential of TransCon PTH?

It's what I really were extremely pleased. What really are giving Joe a much easier life. I'll try to make his life pretty hard. But what's really giving him a much easier way to get the right market access in the U.S. is the updated guidelines. Because when I read the guidelines, the guidance is basic justifying that you are taking the majority of the patient on PTH 3. And to my knowledge, even I have not really, with the case studies I've seen, it's very, very hard for U.S. market assist system to avoid something that's already are taken into guidelines.

So, I actually feel when we discuss the sales, revenue prediction of this year, I always start on one single thing, the unmet medical need. The unmet medical need is really dramatical for the patients with hypopara. Not only the short-term symptoms but also long-term complications. And the problem with conventional therapy, it basically makes the disease worst. It's basic are making the disease worse and worse because the treatment of it choose amount of calcium supplement and activate vitamin D. It basically is increasing all the complications, base case complications and not really providing a relief for short-term symptoms.

So, when I look at the number of patients in the U.S. that is available for treatment, 80,000 to 100,000 in a broad perspective. I believe that majority of these patients should be on PTH treatment. Will all of them be commercial reimbursed [life]? I cannot guarantee that. But I think the majority should be it. And the price structure, as we said before, we will be responsible. We will still -- saying is that we are providing a huge benefit not only for the patient, the caregiver but also for the society. And this is why we believe in a premium pricing for best-in-class product opportunities.

And then, I have a question about the pen device for TransCon PTH, which I think is important but hasn't really been discussed much. So, I was wondering, if you could talk about the pen and how it compares to what's used for the SKYTROFA, and maybe how does it help patients titrate to the right dose of TransCon?

You're right. We don't talk so much about the pen device for TransCon PTH compared to SKYTROFA, because for SKYTROFA we develop a complete new pin auto-injector for this. It's actually really boring in TransCon PTH, because we're using a pen device that's getting utilized million and million and million of times in the U.S. every day, because it's a basic classical insulin pen device. And it's prefilled liquid formulation for room temperature are optimal for the patient. So it's pre-filled, you don't need to prime it, and then you use the pen device for 2 weeks, 14 days, and then you take a new pen.

And it's basic is built on a low-dose, medium dose, high-dose and each pen, the low-dose, medium dose and high-dose have 3 different strengths. So we basically are covering 9 different presentation or that 9 different way. So, each subject, each patient can be optimized to the treatment. But, Joe, why we don't talk about it, because it's really a proven technology, a technology that is used in the insulin era millions and millions of times everyday.

Our next question comes from Andreas Argyrides at Wedbush Securities.

Congrats on the progress in the quarter and SKYTROFA beat. Can you provide an update on the status of filing for children in Turner Syndrome?

We just need to do the clinical trial first. And based on the clinical trial, we will provide you a date on that. So, we will provide that when we basically have done the clinical trial. We will provide an update when we expect to file and what is the next step.

Okay. And then, for pediatric HP as well?

Pediatric HP is an interesting element for us, because we [actively] initiate the strike. We have designed or taking the insulin pen into a new consideration because we have a pediatric system for the pediatric population and I believe, and I'm little bit perhaps Birgitte you can help me here, because I cannot really exactly remember what time next year we start the clinical trial.

I don't have the exact details to be shared now, but we are working our path forward for these studies. So, no additional details for that.

Sometime next year, we will start the clinical trial. It's a very, very small clinical trial, single-arm. This is what we got all the regulatory feedback. I think it's about between 20 to 25 patients, last for 6 months, not a last trial at all.

Our final question comes from Yaron Werber with Cowen.

Jan, maybe just an integrated question relating to CNP. So, the 5.4 centimeters per year, you're obviously referring to the 2-year extension on [Vaxogo] in patients older than 5. The placebo did about 3.8 centimeters per year at baseline. And then, when it switched over, they did 5.4 obviously on Vaxogo . Is 3.8 sort of a good comp to what to expect in the placebo? And that's all-in the 5-year-old plus. What about the 2 to 5-year-olds? So how should we think about that when we see the data?

Yes. This is where the 2 to 5 is really not an patient population where that's good benchmarking at all. All the data, I have seen, is filled with huge amount of the ability. And I actually hate to benchmark against anything that basically are already built on huge amount of the ability without solid data because then you take 2 datasets, one dataset that is built on a limited number of patients compared and benchmarked it to and other dataset that also built on a limited number of patients, we choose their ability.

So, this is why I separated between 2 to 5 and 5 and up, before there's a really solid data-set in the patient population from 5 and up. For example, the publications that you're referring to. And this is why I don't believe it's meaningful really to do a lot of comparison from the 2 to 5 because of the lack of real benchmarking.

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