Good day ladies and gentlemen, and welcome to the Q3 2018 Ascendis Pharma Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we will host a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call may be recorded for replay purposes. It is now pleasure to hand the conference over to Mr. Scott Smith, Chief Financial Officer. Sir you may begin.

Thank you, operator. Thank you everyone for joining our third quarter 2018 financial results conference call today. I'm Scott Smith, Chief Financial Officer of Ascendis. Joining me on today's call are as usual, 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 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 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 third 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.

Thanks, Scott, and good afternoon. We continued to make progress towards our goal to create sustainable growth by building a diversified pipeline of three independent product opportunities in rare disease endocrinology. Let me review our recent progress. We are reporting today, the expected and predicted Phase 1 clinical results for the third rare disease endocrinology product candidate in a row, TransCon CNP. Our clinical with us to-date support our target product profile and confirm findings from our preclinical research. Our goal is to provide continuous and therapeutic levels of CNP for [20] hours a day, seven days a week without increased cardiovascular risk and without weekly administration. We have now clinical data that reinforces our target product profile. We expanded our global footprint through the formation of VISEN Pharmaceuticals in Greater China. Earlier this month, we announced the VISEN partnership which provides us with a compelling upside opportunity in China. VISEN also expands the potential reach of our rare disease clinical programs into China, which has a larger population than the United States and Europe combined. And at the end of the third quarter, we completed recruitment in our fliGHt trial, which brings us up to more than 300 pediatric subjects enrolled in our TransCon Growth Hormone Phase 3 program. This was another key step to advance our long-acting growth hormone therapy towards patient as we await readout of the Phase 3 heiGHt trial in the first quarter of 2019. My reflections today will focus on TransCon CNP. TransCon CNP is now the third rare disease endocrinology product candidate where we have created a potential best in class therapy. The clinical results presented to-date also demonstrate once again and excellent translation from preclinical to clinical data, and the broad applicability of the TransCon technology. As you may know, the fibroblast…

Thanks, Jan. I am pleased to provide an update today on recent pipeline developments, including additional details on our TransCon CNP program. First, I will share some highlights for our other two clinical candidates TransCon Growth Hormone and TransCon PTH. We remain on track to report top-line results for our Phase 3 heiGHt trial in the first quarter of 2019. As a reminder, heiGHt is a randomized, open-label, active-controlled trial comparing once weekly TransCon Growth Hormone to daily Genotropin in treatment naïve pediatric subjects with growth hormone deficiency. The primary endpoint is annualized height velocity at 52 weeks. A non-inferiority analysis will compare both treatment groups. We enrolled 161 subjects ranging in age from 3 to 12. We believe the strong statistical power of heiGHt bodes well for the potential of TransCon Growth Hormone. We also recently passed our third Data Safety and Monitoring Board review for heiGHt during which independent experts evaluated the safety data and recommended the trial continue as planned. We are pleased with the safety profile for TransCon Growth Hormone as our review of aggregate data from heiGHt continue to be consistent with that of published literature and experience with daily growth hormone therapies. Our second clinical trial for TransCon Growth Hormone, the fliGHt or were SWITCH trial also completed enrollment at the end of the third quarter. The total of 146 subjects were enrolled, which means we now have more than 300 pediatric subjects enrolled in our Phase 3 clinical program. The combined safety data will form an important component of our filing package and achieves the safety database as agreed with regulatory authorities in Europe and the U.S. To review, the fliGHt trial is evaluating safety in subjects who switched from Daily Growth Hormone therapy to weekly trends on TransCon Growth Hormone with the…

Thank you, Jonathan. Turning to our financial results for the three months ended September 30, 2018. Let me review some highlights. For the third quarter, we reported a net loss of €34 million or €0.81 per basic and diluted share compared to a net loss of €33.9 million or €1.04 per basic and diluted share during the same period in 2017. Third quarter 2018 results reflect financial income of €4.3 million due to foreign currency exchange rate fluctuations of our cash holdings. Research and development costs for the third quarter were €31.5 million compared to €29.1 million during the same period in 2017. The overall higher costs were primarily attributable to an overall increase in R&D activities across all programs including an increase in personnel costs due to a higher number of employees in R&D functions and general increases due to growth in headcount and activities including an increase in facility, IT and patent costs allocated to R&D. For TransCon Growth Hormone, external development costs were lower due to lower costs associated with manufacturing TransCon Growth Hormones for use in clinical trials, partially offset by an increase in costs related to the continued execution and expansion of our Phase 3 clinical program and the ongoing development of the auto injector as well as the preparation and manufacturing of TransCon Growth Hormone validation batches. For TransCon PTH, higher external development costs were driven by costs related to Phase 2 enabling activities, including manufacturing of TransCon PTH and device development, partially offset by lower preclinical costs and lower clinical trial costs due to completion of our Phase 1 trial. And for TransCon CNP external, development costs were comparable to the same period in 2017, reflecting higher costs associated with execution of the Phase 1 trial and ongoing Phase 2-enabling activities, offset by…

Thank you, sir. [Operator Instructions] And our first question will come from the line of Michelle Gilson with Canaccord Genuity. Your line is now open.

Hi. Congratulations on the data. I'm just wondering, can you talk a little bit about the path forward for TransCon CNP? And what is the age range [ph] of patients that you plan to enroll in your Phase 2 study? And then, you talk a lot about correcting comorbidities, and can you talk a little bit about how young that you think that patients need to be treated in order to correct for those comorbidities? And then, I have a follow-up as well.

It's going back to our vision about what we really want to achieve with TransCon CNP. Our hope with TransCon CNP is really not only addressing height but really can address the comorbidity of this disease. And your 100% right, to address these comorbidities, we strongly believe that we need to go down to basic newborn children. So, we can ensure they get at balanced growth of bones, so that can develop them in a more normal manner. Because sometime you potentially first see the physical symptoms later on in life but potential is already pretty turned in the beginning of the early part of the development. So, therefore, we are not spending years on making heiGHt trial. Our vision is to move as fast as possible through and stage process that we will discuss with the regulatory agencies and ensure, we can get the right pathway forward, so we can get this treatment as fast as possible down to newborn children. This is basic our overall vision for that. More concrete question, I'm quite sure Jonathan can follow up with.

Yes. I don't have a whole lot to add. I mean, we'll likely start because of our very clean safety profile in children as young as two and above, and then move quickly as quickly as we can, after discussions with regulatory authorities to newborns. So, our clear goal is to get to the newborn children, those are the ones with the greatest need, where the impact can be the greatest. So, we look forward to those discussions with regulatory authorities, based on our safety profile that we've developed in the Phase 1 study.

Okay. And then, when you think about dose in that Phase 2, when you're choosing a Phase 2 dose range or dose, are you looking at trends that you see in nature with CNP within the population or data from others in space or what you're seeing in animals? And then, are you thinking about it about looking at based on concentration or titrating that dose?

That is an excellent question. And what we have done, we have done an integrated analysis where we are integrating preclinical finding in models of achondroplasia and other related diseases, what we have seen of what CNP can promote in overgrowth in humans, and also, the literature, all the data that is related to CNP and the prototype of CNP in patients with achondroplasia. I can give you a little bit of flavor on this last integrated analysis. For example when we look on continuous exposure on preclinical models, there’s a clear effect on dose and the effective dose is down for 2 to 15 picomolars. So, we down in a range of very, very low dose of CNP, if it's just being provided on a continuous manner. If you go to overgrowth in humans; there was a girl with overgrowth, meaning that you grow up to 97% of the percentile. And this person only had two fold higher concentrations than normal people of CNP. And when we go to achondroplasia children, there’s a really nice correlation between height velocity and the propeptide of CNP. And always what we are seeing of data is that the propeptide of CNP is already correlating to the CNP. And what you see with the propeptide is that 2 to 3-fold increase in this pro type can promote or correlate up to -- growth up to 8 to 10 centimeters in achondroplasia. So, this is why we someway know exactly what the dose and potential of a dose need to be individualized to each single patient. But we believe a range between 4 to 30 picomole is where we expect, and perhaps 30 is just too high. But, this is the level where we exactly believe where we will be in our -- what we call, our target therapeutic range.

And just to add, I think it's very unlikely, there'll be a single target level that we want to achieve in all subjects. I think it's very likely there'll be a distribution of response. And as you suggested, it may well be the titration individually by patient is the way to go here. So, we look forward to learning a whole lot in our Phase 2 study where we will explore different doses and begin to correlate the growth that we see and other beneficial effects versus the target levels that we see in their blood.

Thank you. Our next question will come from Jim Birchenough with Wells Fargo Securities. Your line is now open.

Hi, guys. Thanks for taking the question. Congrats on all the progress. Just a question on each program. So, for TransCon Growth Hormone, the patients that have gone into open-label extension, what proportion of available patients does that represent? On the PTH program, I'm interested in, if you've got more detail on what defines a responder. It seems like you're contemplating serum calcium, urine calcium, use of Vitamin D in calcium. Just understanding more explicitly, what a responder might be. And then, finally, on CNP, do you think the natural history study could provide a control arm ultimately for registration of the product? And when do you think you'll get better visibility from FDA on what an approvable profile would represent? Thanks.

Okay. Thanks, Jim for all the questions. And starting with growth hormone. As I said, we have 165 subjects in the enliGHten trial. So, that's over half of all the subjects are now already in enliGHten. So, we're really thrilled with the execution of the trial. It's moving along as expected, and we're just accumulating more and more data every week. In terms of PTH, our primary endpoint will be a composite endpoint, requiring normalization of serum calcium, importantly normalization of urinary calcium and a reduction in calcium and vitamin D, which may be quite extensive in some subjects. So, in order to achieve the primary endpoint, you need to achieve all 3 components of the composite. And that will be in both our Phase 2 and our subsequent Phase 3 studies. In terms of CNP, the natural history study will be beneficial in a lot of ways. It will conform a controlled group. There’s also published literature and norms they can represent a controlled group. It’s a little premature to talk about the actual Phase 2 and Phase 3 study designs; we’ve not finalized those yet. But certainly, the natural history study will form an important component to the analysis of those studies.

And Jonathan, just to follow-up on the question, on TransCon Growth Hormone. Just on the 165 patients that have gone into enliGHten, what proportion of eligible patients does that represent? It sounds like it represents 50% of total, but patients may not yet be eligible to go into the open label extension. So, what proportion of eligible patients does that represent? And what reasons are you seeing for patients not going to open-label expansion, if there are many?

Sure. So, that represents the vast majority of patients who are capable. So, they were literally one, maybe two, who for logistical reasons, chose not to answer enliGHten but they were not due to any adverse experience. One patient moved from one-site away from the site for example. So, the vast majority of patients have very willingly joined the enliGHten trial.

Thank you. [Operator Instructions] And our next question will come from the line of Jessica Fye with JP Morgan. Your line is now open.

I wanted to follow-up on one of the earlier questions. I’m curious, as you think about discussing Phase 2 with the FDA for TransCon CNP, what you want to measure and what you might kind of ask the FDA for feedback on in terms of what you measure in that study, I guess outside of just growth?

I think, this is really a great question. And this is actually where we’re spending a lot of thinking about, what is the optimal endpoint that’s really affecting comorbidities. And we also need to be practical. It needs to be something we can measure pretty fast. We don’t want to wait 3, 4, 5 years. So, we basically have generated an integrated list of opportunities. We are evaluating all this list of opportunities to prepare with the key opinion leaders, getting a lot of feedback with them. We also will discuss that with the regulatory agencies. But, the obvious one from the list is someway where we really can address something that is extremely meaningful for the patient. It can be something like severe sleep apnea, it can be way to look on spinal stenosis, it can be other element. This is the thinking about few, we will also measure height because there’s also some way to test the efficacy of the compound. But, when we saw these results, it was basically the best we ever had hoped for. And when we saw that, we really for the first time got a strong belief that we have an opportunity to provide a highly effective treatment. And we know from preclinical models, we can basically reverse the phenotypes and I think that is what we want to receive.

Okay. And I guess, I'm kind of asking because, if you're -- if you think titration to maybe -- given pre-CNP level might be how the product is used, I'm curious what you might measure to establish an association that different levels have different effects on whatever those metrics are?

You’re 100% right. This is what we call the feasibility of conducting the trials and often that we are addressing a lot of respect and it could be specific biomarkers that's reflecting growth velocity or effect on growth rate. It could also be different kinds of imaging system where we are looking about how can we see the development of the growth plate. So that is what we are integrating into our decision how really to bring forward this product as fast as possible. And really address some of the more morbidities.

Okay. And I just want to reask my question from last quarter. Can you just provide the latest status of where you stand on manufacturing for TransCon GH and those validation batches?

It's going forward as we have hoped, according to our plans. No deviation, no change. So, we are executing as we had planned for. And every month, we’re executing on our plan, are getting more and more happy.

Thank you. And our next question will come from the line of Liana Moussatos with Wedbush Securities Your line is now open.

Thank you for taking my question. Will VISEN pharma have the same pipeline as Ascendis? What is the cash runway from the €310 million? And did the third DSMB meeting have a futility analysis?

So, I will take first part of the first question. No, VISEN Pharmaceuticals will not have the same pipeline as Ascendis Pharma; we are providing, to VISEN Pharmaceuticals; and three, define product opportunities in the era of TransCon Growth Hormone, TransCon PTH and TransCon CNP and we have provided them an option for negotiation and looking on other endocrinology products, the potential was developed. So there is no overlap between the two pipeline. Scott would take the second part of that question, and then Jonathan will take the last one.

So, we had about €310 million as of the quarter end. As you know, we don't give cash burn guidance. But, if you pro forma cash from the beginning of the year, we had about 300 -- little over €390 million. So, if you do the math, that's €80 million or so for the nine months. Jonathan?

There is no futility analysis in the DSMB meeting.

All right. But, you said, Scott that costs are going to increase from the €80 million over the nine months. So, that's a base. And what are you thinking over the next 12 months, increase over that base?

I mean, we haven't changed our policy, we still don't give official forward-looking guidance. But you're right, we would expect costs to increase in those different categories overall, but specifically because of those categories. But we have -- I mean, we have plenty of cash going forward, if that's the question. I mean there's no liquidity concerns.

Thank you. Our next question will come from Adam Walsh with Stifel. Your line is now open.

Hey, guys. Thanks for taking my questions. I got a couple of quick ones here. The first one is for Jonathan. Obviously, the safety data looks pretty clean here with no serious AEs. I'm just curious to check a safety box here, over the most commonly observed AEs in CNP study, TransCon CNP. And then a second question, in terms of advancing the CNP program next year, can you give us some guess at what the timing would be in terms of trial launch and what they expect the duration of such trial would be. Just trying to figure out when we might see the next data point from the CNP program? Thanks.

So, in terms of AE, there is really nothing remarkable. I mean, it's headaches, it's just the usual AEs that you see in the clinical trial, back pains, that sort of thing. When you look for what the static blood pressure changes, you can see some of that, even in placebo pre-dose levels, post-dose, so just the normal scattering of AE that you see in trials. The CNP study, we would initiate it mid next year. So, that will take many, many months. So, we don't even have our timelines for recruitment established yet. So, it certainly would not be in 2019.

So, Adam, I think it's a great question. I think it's a question where we will come clear milestones when we feel confident that we really have been in a sufficient high level discussion with regulatory agents that we feel comfortable with the timeline. So, when we give you a timeline, this is timeline we basically believe we can reach and keep.

Thank you. And our next question will come from the line of Tiago Fauth with Credit Suisse. Your line is now open.

Hey, guys. Thanks for taking the question. So, fliGHt trial I understand that that’s mostly a safety study but should we be looking for anything on the secondaries? And can you perhaps recap the work that you're going to introduce the device into the extension study for GH? Thanks.

You're really nailing it down to a great point because I feel when I think of height, this is most important for regulatory approval. But the fliGHt trial is really the most interesting trial related to the commercial opportunities we have with our TransCon Growth Hormone, because we basically will know what is the prescription of the daily growth hormone before they have, meaning is that we get a reality check what do you really prescribe of daily growth hormone before you go out to a TransCon Growth Hormone that will provide much, much higher adherence. And this is why it's so really interesting to get this data, analyze them and we will -- can provide you with guidance about what is really the ratio that will be when you have for example 0.30 milligram on average of a daily growth hormone, do you need to go down to all points to 0.24 or 0.27 or what is the ratio you need to go or 0.20 for having the amount of our TransCon Growth Hormone. Besides that, Jonathan is thrilled to give all the safety data because that is what he has committed himself into, in both Europe and U.S. and this is why he -- so once we get it done, so he can start closing his data bases.

You’re probably also wondering about height and efficacy data. And we will measure height, of course, in every patient. And I only caution you these patients or subjects who are on daily growth hormone therapies for varying lengths of time, some for a few months, some for a year, some for two years, so, when you do those analyses, it will be compounded in our assessment. So, we will, of course, look at it, we will do our best to carry out real heiGHt data. Jan already mentioned the varying potency of effect of IGF-1 when we switch 0.24 mgs/kg per week. And in terms of the device, we’re in the second quarter of 2019 beginning to roll the device into our expansion program. So patients won’t come in specifically for that; they’re on a schedule of every three months. So, the next visit that they come in, they will get the device. So, over the course of 2019, we’ll be rolling out the device beginning in the second quarter.

And our next question will come from the line of Joseph Schwartz with Leerink Partners. Your line is now open.

So, regarding the CNP data first. I was just wondering if you’ve captured any pharmacodynamic biomarkers, which you could present beyond this preliminary data, things like collagen 10 or alkaline phosphatase or anything else, all the complex bone signaling pathways?

So, great question. What we’re using here is adult; and because adult we’re using would have close growth basis. So, therefore measuring some of the things that you basically can measure in a pediatric population where the child is still growing, it’s not possible in an adult population. And we had a lot of funny discussion about cyclic GMP. And Jonathan came back to me and saying Jan, if we see cyclic GMP, I would be worried, because then I will actually believe we see dilation. And definitely, this is really pretty clear, the cyclic GMP in our view the best predictor of vasodilation and cardiovascular risk, because cyclic GMP not likely is coming from the growth place, but highly, highly likely coming from the cardiovascular system where you actually are introducing in vasodilation effect. So, therefore, when you see that with all the CNP product, you see cyclic GMP, I don’t think you can ever reflect that into any kind of effect related to -- effect on both, but it’s mainly effect on how you actual receive cardiovascular risk effect.

And then, regarding TransCon PTH Natpara was associated or is associated, but it’s -- pivotal trial associated with hypo and hypercalcemia. I was wondering if -- based on your agreement with the updated dose ranging study, how you're ensuring that patients will be titrated accordingly?

Well, it's pretty straightforward. With a infusing like profile like we see, of course, we're going to measure serum calcium levels very frequently in these subjects. So, we'll be monitoring them very closely. We don't think we will see the hypo or hypercalcemia that Natpara saw, because we think that's very clearly related to the pharmacokinetics of Natpara where you have very high CMAX, and then a very low C trough over the course of the day. Instead, we'll have a steady level over the course of the day, which should make it much easier to monitor the calcium levels and we should see much fewer excursions of serum calcium. So, we’ll essentially just monitor it, and I'm sure FDA will be very comfortable with that approach.

Okay, great. Thanks for taking my question.

Thank you. [Operator Instructions] And our next question will come from the line of Jim Birchenough with Wells Fargo Securities. Your line is now open.

Thanks for taking the follow-ups. We get a lot of questions on how to think about the scenarios in the heiGHt trial. So, maybe from a commercial planning perspective, you can give us your thoughts on different outcomes and whether it's just success or failure in non-inferiority or whether you think numerical superiority is important for growth velocity? And then, I've got a follow-up. Thanks.

Jim, that is a great question. But, what we did, we tried to derisk everything on a Phase 2 stage. There was where we had the same setup with inclusion, exclusion criteria as we now have in Phase 3. This is where we use the same comparative, actually this is where we have the same clinical endpoint. So, what we did and what we are hopeful we'll see here in our Phase 3 study that we can repeat what we did in our Phase 2 study because that is basic what we are trying to attempt to happen with our Phase 3 study. Main difference, this is one single dose, and it's a 12 months instead of 6 months but the fundamentals are not changed. We are providing the same mode of action as daily growth hormone, and [indiscernible] growth hormone in the same footing, being proven to give optimal efficacy out from daily growth hormone, and that is what we are doing. So, I think that the question is not some of the speculation, I think the best thing you can do, analyze our Phase 2 data and see how robust they are and how well we can predict. And this is why are we happy to have all this data that have provided us bio stat analysis to really give us confident in the outcome on all heiGHt trial.

That’s helpful, Jan. And then just on CNP, it seems like spinal stenosis contributes a fair amount of morbidity to these patients. And so, do you have a sense from the published literature on how early you’d have to treat and hope that having an effect on spinal stenosis or is that still to be determined from your own natural history work? Thanks.

I think, it's a great, great, great, great question. I think, I would take from where I got confident. Jonathan will go out and can explain when it's closely because it's actually pretty well known. Where I got confident is this our preclinical model where we couldn’t really prevent the premature fusion of the synchondrosis. Meaning is that if we give TransCon CNP after then we have really the impact we want to have on the forearm. And this is where I actually believe that it gives me a confidence that I really hope that we have an opportunity to really, really address one of these severe morbidities spinal stenosis.

So, Jim I think it’s pretty clear that the spinal stenosis begins to occur very, very early in beginning near birth. And the way you know that though is heavily dependent on the treatment patterns at the sites. So, there’s some centers that routine we measure MRI in everybody. And of course when you do that, you see a lot of spinal stenosis that would otherwise go unnoticed, even as high as 47% of children in the first two years, if you do routine MRIs. Other sites don’t do MRIs other than for clinical reasons and they will see a little bit less. But, I think it’s really clear that you start to see changes soon after birth, which is why we’re so eager to get down to the neonates as soon as we can to make the biggest difference.

Thank you. There are no further questions in queue at this time. Ladies and gentlemen, thank you for your participation on today’s conference. This does conclude the program and we may all disconnect. Everybody, have a wonderful day.