Good day, ladies and gentlemen, and welcome to the Ascendis Pharma Year End 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session, and instructions will follow at that time. [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, Senior Vice President and Chief Financial Officer of Ascendis Pharma. Sir, you may begin.

Thank you, operator. Thank you, everyone, for joining our full year 2018 financial results conference call today. I'm Scott Smith, Chief Financial Officer of Ascendis. Joining me on today's call is 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, progress on our pipeline candidates, and our expectations with respect to their continued progress, statements regarding our strategic plans, our goals regarding our clinical pipeline, statements regarding the market potential of our pipeline candidates, and statements regarding 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 in 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 which was filed with the SEC on March 28, 2018. On today's call, we will discuss our full year 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.

Good afternoon, everyone. Thank you for joining us today. Today, we are reporting our full year 2018 financial results, and I will review some of our major achievements and milestones during the past year. In 2018, we continue to make progress toward our strategic goal to create sustainable growth by building a diversified pipeline of three independent product opportunities in rare disease endocrinology. For TransCon Growth Hormone, we successfully advanced our Phase 3 program, including the pivotal heiGHt Trial, fliGHt or Switch trial, and the enliGHten [ph] long-term extension trial. For TransCon PTH, we completed our Phase 1 program. Our data reinforced the target product profile of this product candidate as a true replacement therapy for patients living with hyperparathyroidism. For TransCon CNP, we completed and reported positive Phase 1 results. The clinical results support our target product profile to provide continuous and therapeutic levels of CNP for 24 hours a day, seven days a week, without increasing cardiovascular risk and with a weekly demonstration. 2018 was the best year ever for Ascendis Pharma, and this trend has continued into 2019. First, we introduced our next strategic roadmap through 2025, Vision 3x3. The strategic goal of Vision 3x3 is to achieve sustainable growth through multiple approaches. We also established oncology as our second therapeutic area. Next, we reported for TransCon PTH, the initiation of a global Phase 2 trial. And finally, for TransCon Growth Hormone, we reported top line results from our first Phase 3 clinical trial, the heiGHt trial. Not only did the trial achieve its primary objective of non-inferiority compared to daily growth hormone, in pediatric growth hormone deficiency. But it also demonstrated superior efficacy by maintaining comparable safety and tolerability to a daily growth hormone therapy. In addition, we also demonstrated a three-fold lower incidence of poor-responders…

Thanks a lot, Jan. Turning to our financial results for the full year ended December 31, 2018, let me review some highlights. For the full year 2018, we reported a net loss of EUR130.1 million or EUR3.17 per basic and diluted share compared to a net loss of EUR123.8 million or EUR3.68 per basic and diluted share during 2017. The 2018 net loss includes an unrealized non-cash gain of EUR20.7 million compared to an unrealized non-cash loss of EUR13.7 million in 2017 due to foreign currency exchange rate fluctuations. Research and development costs for 2018 were EUR140.3 million compared to EUR99.6 million during 2017. Higher R&D costs in 2018 reflect increased personnel and infrastructure costs due to growth and headcount, and overall, R&D activities. For TransCon Growth Hormone, costs were higher, primarily due to costs related to running our Phase 3 clinical program, including our heiGHt, fliGHt and enliGHten trials, preparation of validation batches and continued development of our proprietary auto injector, which were partially offset by lower costs associated with manufacturing of TransCon Growth Hormone for use in our clinical trials. For TransCon PTH costs were higher, primarily due to execution of the Phase 1 clinical study as well as Phase 2 enabling an ongoing device development activities which were partially offset by lower preclinical costs. For TransCon CNP costs were higher primarily due to continued progression of the program, including execution of the Phase 1 trial and Phase 2 enabling activities. General and administrative expenses for 2018 were EUR25.1 million compared to EUR13.5 million during 2017. These higher costs primarily reflect an increase in personnel and site costs, as well as the initial costs of building out commercial capabilities. We ended 2018 with cash and cash equivalents of EUR277.9 million on a reported basis. In March this year…

Thank you. [Operator Instructions] Thank you. Our first question comes from Michelle Gilson with Canaccord Genuity. Your line is now open.

Hi. Thank you for taking my question. Congratulations on the very productive year. I guess I'm wondering what should we be looking for in terms of data from the Phase 2 PATH study for TransCon PTH and hypoparathyroidism in the fourth quarter? Are there any other end points that you're planning to look at aside from safety and ability to titrate off supplements that we should be focused on, especially as you get into the extension portion of that study, specifically you've presented at ENDO on a PRO that you developed with the broad group?

I think -- thanks, Michelle. Great question. We cannot look forward to share that data from the Phase 2 with you, because we think really this is an exciting development for the patients, and we now got the clearance to move into and starting recruiting patients and we are really looking forward to really to initiate this trial and starting dosing the patients. From a top level, you're perfectly right. What we are looking for? We are looking for seeing what we really can achieve. But I think one of the main thing when I look on the data that we have generated already in the Phase 1 trial, it gave us a strong confirmation about the effect on the TransCon PTH product. It showed how we can have the right PK profile. It showed the expected effect on calcium. It showed an expected effect on urinary calcium. It showed everything what we expected out from the oncology. And you are right. What we're doing with our Phase 2 trial, we are confirming this. You can say, target product profile we now saw in healthy volunteers over in a patient group and then we do one thing else, we add in, what I call, how we really can titrate and take the patient away from the supplements activated vitamin D, calcium supplement to a normal level of a normal patient group and that is a normal group. And this is what we will see in addition to this trial. Jonathan, you can add in also related to the patient reported outcome or how we do our validation there.

Sure. So we have gone through extensive validation testing for our PRO measure, the so-called HP PES measure, symptom measure, and that's included in the Phase 2 trial to validate it for ultimate use in our Phase 3 program.

And Michelle, you know, I'm always getting excited when I talk about TransCon PTH. And I really get excited because I'm getting so most exposed to patients with HP. And when I really talk with them, I hear not only the short-term symptom but long-term complication, how they get renal damage symptoms and everything like that. And also, what we have done in surveys both with the patient and also physician, how people really prescribe a true replacement therapy. I extremely anticipate for this product opportunity to get it as fast as possible out to the patients.

Okay. Thank you.

Thank you. And our next question comes from Jessica Fye with JP Morgan. Your line is now open.

Hi. This is Yuko on the call for Jessica. Thank you for taking our questions. As we get closer to BLA filing, could you recap the pre-clinical work you've done, evaluating PEG accumulation with TransCon growth hormone, and whether your regulatory discussions have indicated any outstanding work that they would like you to complete related to that?

That is a really, really great question. And I'm so lovely that we basic concluded of that work for about two years ago. And what we did accessing, we always had a dedicated pediatric program, dedicated to the patient group that we want to treat pediatric growth hormone deficiency. And we have to think that we are one of the few companies that started there. You see a lot of hemophilia products. They start up in the young and adults and then they believe they also can get it into the pediatric population without performing the necessary needed pre-clinical work that need to get it approved in the pediatric. It sometime, it applies in the U.S., but definitely not -- applies in the U.S., but definitely not applying in Europe. I can guarantee it. There are always request that you want to see all the integrated pre-clinical in the right species for the right duration. And when you talk about Europe, the right species to evaluate it is typical juvenile primate and typical time period for about six to twelve months. We have conducted all this work. It has been shared both to EMEA, it has been shared to FDA. We are impressed after we have shared that to FDA was that we got to ask, could we expand the age range? We wanted to only go down to three years down to new born. And this is why Jonathan now in his fliGHt Trial had more children under three years. And this is exactly what we have done in our pre-clinical pack.

Thank you.

Thank you. And our next question comes from Adam Walsh with Stifel. Your line is now open.

Well, thanks. Thanks for taking my questions, guys. So I've got a couple here real quick. The first one, Jon, I think did you help clarify expectations around the fliGHt trial. What will we be looking for in terms of IGF 1 exposure and also heiGHt in efficacy data? I know in the past you've talked about, you know, patients coming into the trial, being on various varying lengths of growth hormone therapy. So can you kind of help us understand what exactly we should look upon it when we get the data as a measure of success? That's one. And then the second one is, would you expect TransCon Growth Hormone to ultimately go in front of an AdCom prior to approval? Thank you.

I think, Adam, why I'm coming in now, because I like the two product of fliGHt trial. Jonathan has a clear, dedicated mission from the clinical side. And we also are using the fliGHt Trial as a big part to support our commercial activity to ensuring that with optimal can enter in the market. So we also have a proven aggregator for physician, patient to show how we can switch patients that's already established on daily growth hormone can be switched over to our product in a safe manner. So you can also see this is a part of our integrated commercial assessment. How can we get the faster penetration of these product opportunities, with TransCon Growth Hormone and being a leading brand in the Growth Hormone market. That is exactly what we're doing. We are having an integrated Phase 3 program that is both addressing the youth patient that we do in the heiGHt trial, but also patient that at least have been for six months treatment for daily because this provide us an unique agreement, how to change what is revive dose and other things like that. So, I see you should take it from this holistic view. Jonathan?

So, yeah. So, as Jan just said that the fliGHt Trial is clearly very instructive for commercial purposes as to how switching will happen in the real world. But from a purely clinical development perspective, we should probably view this mainly as a safety study. So it clearly will provide a huge chunk of much needed safety data to round out a very comprehensive package that we'll be submitting to the FDA. So 146 subjects. So that's the primary deliverable from a clinical development perspective. And certainly we're going to get a lot of information on IGF-1 levels, comparison of IGF-1 levels on TransCon to the IGF-1 levels that they came into the study on using a daily growth hormone product, that will be very interesting and very informative as it reads through to the marketplace, when patients are actually switched. We will of course collect height in everybody. It will be somewhat confounded since almost everyone in the study has been previously exposed some for zero months to six months, some for one year, some for even 2.5 years. So many of them have already gone through their growth spurt. So, the analysis will have to carefully deconstruct them by previous exposures. And in so doing, there'll be a little bit of confounding. It will still be informative for sure. But just heighten or blunt your expectations in terms of it won't be like heiGHt, which is completely clear cut data in treatment naive patients. We will also get information on things like immunogenicity as well and some patient reported outcomes. So a really nice big data set, which will be quite important moving forward. As for TransCon Adcom, I wouldn't expect An Advisory Committee; of course, we could always get one. It's up to FDA's prerogative. My hope is that since the data set for heiGHt was so unambiguous, there really is not a lot of fodder for an Advisory Committee. So that would be my hope.

One thing, I also need to say, I need to congratulate Jonathan because he also managed to finalize the fliGHt trial in the most optimal perfect manner. Not meaning exactly on the time expected that fliGHt has already been finalized all patient is out, but more or less he also had the same height level of retention of the patient. So I've never seen pediatric growth hormone trial being done in such a manner and I think this is both the skills of Jonathan and his group on the entire Ascendis team that can do it, but also that we have a unique product opportunity.

Thank you.

Thank you. And our next question comes from Liana Moussatos with Wedbush Securities. Your line is now open.

Thank you for taking my question. What do you think -- can you remind us of your commercial plans for TransCon hGH in the U.S., Europe, rest of world and China?

Yes, those are lot of geographic regions.

So let us talk to one of the more important markets. So what we are doing and what we are being dedicated in. But I think you need to figure it the contest that we are not a single product. We have a pipeline of three independent product opportunities in rare disease endocrinology. It gave us the reason for us to do as a company, because we have the synergy and economy of scale to move and forward integrate in the commercial organization. And Tom has been hired. He has been here for a long time. He has really built up a unique team of everyone that for market access, which is going to be extremely important, marketing, analytical, everything what we need, really, really executing on getting this infrastructure up ready, so as soon as we get our approval, we're ready to go out and launch this product in the U.S. We will follow up in Europe. We are also seeing how we operate outside what we believe is our core areas, U.S. and Europe. We take a very opportunistic value creating approach. For example, Greater China where you make a partnership, 50%-50% owned. We have investor coming in, the capital, the infrastructure, knowledge about how to do in China and we still have 50% upside. It gave us a huge opportunity in Greater China. You will see the same way we will think. Jonathan's team is doing a great effort to get the Regulatory Affairs to get the alignment of our pathway now in Japan, South Korea, major markets for both growth hormone PTH, and we all have this strategy nearly aligned now. So, we also can start to share plans with you, how we will penetrate the rest of the world. So basic, we are dedicated here to get this unique product opportunity as fast as possible out to the benefit of the patients we dedicated to do that, probably, also do it in a way where we create optimal value for everyone.

So, on your owned U.S. and Europe and then partners for the rest of the world?

Yes, or something like Greater China, where we went into a 50% -- 50% owned partnership.

Thank you. That's great.

Thank you. And our next question comes from Jim Birchenough with Wells Fargo. Your line is now open.

Yes. Hi, guys. Congrats on all the progress. Just a question on TransCon PTH and initial Phase 2 data we'll get by year end. I'm just wondering if you could maybe frame what we should be looking for at that point in the analysis? Is it early enough to see effects on urine calcium? And is there any kind of responder analysis you might construct, i.e., normalization of serum, calcium with reduction in urine calcium? Just trying to get a sense of what you're shooting for and if we'll be able to see that kind of profile emerge by year end?

Hi, Jim. It's Jonathan here. Thanks for the question. So, the primary endpoint of that study is a very clinically meaningful endpoint, and it's the proportion of patients who achieve a normal calcium level, a significant reduction in calcium and vitamin D, essentially -- completely tapering off vitamin D and maybe maintaining a small amount, maybe zero of calcium in a normal urinary calcium or a reduction in urinary calcium. So it's a composite endpoint and that is certainly what we're expecting to see by the end of the year and that includes the urinary calcium component, which is one of the more clinically meaningful components of the study.

And as a follow up, you might have spoken to this earlier, Jonathan, but is this a composite endpoint that you've added with FDA and are you confident that that would be the regulatory endpoint?

We're quite confident that FDA is very aware of the issues of normalizing serum calcium, reducing supplementation, and most importantly, managing urinary calcium. So, to include all three of these in a composite endpoint, we're highly confident, and have had discussions with them. They're very aware of what we're doing in support of.

Terrific. Thanks for taking the question.

Sure.

Thank you. And our next question comes from Tiago Fauth with Credit Suisse. Your line is open.

Hey, guys. Thanks for taking the questions. So just a quick question on TransCon hGH. If you could just update us where you stand on the manufacturing validation batches for regulatory purposes and how does they deliver the right kind of fits into this validation? Is it a separate process? And what are some of the real-time requirements around data with auto-injector for approval? Thank you.

Hey, thanks. Great questions. So, I will -- let me go to the manufacturing. First of all, as we are working with our biological, it was extremely important for us we didn't have that change in manufacturing between Phase 3 and the market. So therefore, we actually already when we started producing material for our Phase 3 trial, we actively performed the necessary upscaling and moved to a real manufacturing facility to ensuring that we didn't need to change between Phase 3 and the market. And I think this is our active major investment before we actually have the Phase 3 results. But I think this is a necessary thing you need to do because no one want to change for biologic, because of risk of never really can ensuring to have the same profile of the two product opportunity. Related to where we're eyeing the validation batches. We are basically in a position that is three, maybe four major steps for seeing the starting materials to basic product. And now we are in a situation where we have complete finalizes the two first step. We are now in the middle of the third step going very, very, very well. So, we basically missed half of the third step and then the fourth step. So we're really confident everyone we have seen now -- we really are just repeating that eight, nine manufacturing batches that we basically have performed before. We are repeating them to the validation batches. So we're feeling really confident. Related to the auto-injector, which we really think is really unique because it's the only product opportunity that integrated and connected healthcare platform because we have automatic data capture of dose and injection time. And this auto-injector will be actually introduced now in the U.S. here in Q2. We're ready. Everything is going now. So we basically switching the patients from the vial syringe that have been until now over to our auto-injector and DCC, where exactly our commercial presentation that is actually happening here in April and May.

Got it. Thank you.

Thank you. And our next question comes from Olivia Yang with Cantor Fitzgerald. Your line is now open.

Hey, guys, thanks for taking my question. I guess I want to talk about further development beyond pediatrics. So just how are you thinking about, potentially running an adult study or do you think you'll need to run Prader-Willi or any of those sort of studies, and then just follow on to that is, how do you think about the formula positioning? Do you think you'll be on the formulary with daily or do you think of your own? Any color around that would be helpful? Thank you.

I can take the last one and then Jonathan can give you a plan for our adult growth hormone deficient trial and potential and other indication we are thinking about. And going to that, I have to think with this unique result we got out from a Phase 3, we already had initial discussion with payer. Can we make an independent bucket compared to the daily growth hormone because -- their interest because they don't need to go into a read negotiation of all the contracts. Cost is also positive for us because we will be in a position that we basically don't need to wait to until they have finalized the negotiation of all the contracts. And what we are getting must comfort is that we already initial had conflict that we really want to create it because it makes sense for them to create a new bucket of the once weekly product, but when we got the results where we clearly had a differentiation and then justification to be different compared to daily growth hormone, because we basically have a better outcome. We're basically also eliminating that last portion of the poor responders you see with daily growth hormone who basically have a complete different treatment paradigm. And this is why we believe -- now we're feeling much, much more confident that we will create a new product or at least the majority of the payer. We do it because they are not one single, they are not homogeneous in the way of thinking, but we believe that pertains to the majority of people will be in a situation where they also can see the benefit and create a new pocket. And Tom and his commercial team have actually already went out and done the validation of this and we are getting much, much more comfort that this is the way we will end up. Jonathan, would you talk about the Phase or the other trials we want to conduct?

Sure. Sure. So we previously announced that we will be doing an adult growth hormone trial. When we start, it will depend on our resources. Clearly, our focus in the near-term is all about the BLA and getting all the documentation required for that. We will start an adult growth hormone trial no later than next year for sure. We also are considering small for gestational age as well as all the other indications. I will note that very few companies, really all of them, do not have all of the indications. So, it's unlikely we would ever do every indication. But we do feel that having a pediatric indication as well as an adult indication at the very least will serve us quite well moving forward.

Thank you. [Operator Instructions] And our next question comes from Joseph Schwartz of SVB Leerink. Your line is now open.

Hi. Thanks very much. So back on the auto-injector. I was wondering if you could give us any insight into how closely related it is to the beta connect injector, which is already approved here in Europe? And is it -- has it evolved significantly -- so significantly that you think that there's any regulatory risk? How are you balancing the desire to add additional functionality, while not complicating it too much?

Hey, Jo, that is a great question. Okay. You are 100% right. Basic, a big part of our auto-injector is already built on proven technology. So, you're right. The part of that, for example, our Bluetooth system, other parts are actually the same as a U.S.-based product that be a connect system. So we feel pretty, pretty confident that what we have done with our own auto-injector that has really been mostly adapted to what I call a pediatric population and it basic what we have done. And I am also feeling really, really confident that we have done all the necessary testing. We're now filing all the INDs related to the introduction. Jonathan, had we not filed it or have we already filed it? I cannot remember.

Yes, we filed it.

We already filed it. So we already have filed the IND to that, meaning is that we have all the factor study done, which have been agreed. We have all the -- what I call, the testing done that was necessary to do the filing and the positive part that the company that developed BETACONNECT is actually the same company that actually also develop and manufacturing parts. So this company have expertize to develop and to get out and get that approved in the U.S. market. So I'm feeling pretty, pretty confident that we are doing something that we really are having a high success rate to get this introduced in the market.

That's helpful. Thank you.

Thank you. 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 wonderful day.

Thank you.

Thanks a lot.

Thank you.

Bye-bye.