Ascendis Pharma A/S (ASND) Q4 2021 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Q4 2021 Ascendis Pharma Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Tim Lee, Senior Director of Investor Relations. So Lee, the floor is yours.

Thank you, operator. Thank you, everyone, for joining our full year 2021 financial results conference call today. I'm Tim Lee, Senior Director, Investor Relations of Ascendis Pharma. Joining me on today's call is Jan Mikkelsen, President and Chief Executive Officer; Scott Smith, Senior Vice President and Chief Financial Officer; Jesper Hoiland, Global Chief Commercial Officer; Dr. Dana Pizzuti, Head of Development Operations and Chief Medical Officer; Dr. Juha Punnonen, Head of Oncology; and Dr. Stina Singel, Head of Clinical Development Oncology. Before we begin, I would like to remind you that this conference call will contain forward-looking statements that are intended to be covered under the safe harbor provided by the Private Securities Litigation Reform Act. Examples of such statements may include, but are not limited to, our U.S. commercialization and continued development of SKYTROFA for the U.S. market. Our progress on our pipeline candidates and our expectations with respect to their continued progress, statements regarding our strategic plans, our goals regarding our clinical pipeline, statements regarding the U.S. market potential for SKYTROFA and our pipeline product candidates as statements regarding our regulatory filings. 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 achieve our goals, carry out our plans or intentions meet 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. 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 one year over who weigh 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 lonapegsomatropin, Ascendis Pharma develop under the name TransCon hGH as a once weekly subcutaneous injection for the treatment of children and adolescents ages 3 to 18 years with growth failure due to insufficient secretion of endogenous growth hormone. In general, we refer to this product as TransCon hGH unless we are referring to the product in the context of a particular jurisdiction, such as the United States or the European Union. SKYTROFA was approved by the FDA in August 2021 for the treatment of pediatric patients one year older who weight at least 11.5 kilograms and have growth failure due to inadequate secretion of endogenous growth hormone. Otherwise, please note that our product candidates are investigational product candidates 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 will discuss our full year 2021 financial results and provide further business updates. Following some prepared remarks, we will then open up the call for questions. I will now turn the call over to Jan Mikkelsen, President and Chief Executive Officer.

Thanks, Tim, and good afternoon. 2021 was an extraordinary year for Ascendis. The regulatory approvals of TransCon growth hormone in the U.S. and Europe were a key milestone in achieving our Vision 3x3. The approvals of TransCon growth hormone in the U.S. and Europe were a validation of the TransCon technology platform. Validation of our algorithm for product innovation and validation of our infrastructure and capabilities to achieve approvals in the U.S. and Europe offer combination product, including biological manufacturing. We believe these successes confirm that we have the right strategy and the people and capabilities in place to achieve our Vision 3x3 and to build a sustainable, profitable, leading global biopharma company, but we didn't stop here. In 2021, we also realized significant advances in other areas essential to our Vision 3x3. These include embarrassing important studies for TransCon PTH program in adult hypoparathyroidism, and progressing our TransCon CNP program in achondroplasia. Both of the programs are central to our goal of achieving regulatory approvals for three independent endocrinology rare disease products. To achieve our goal of global market leadership for each of our products, we continue expanding our global clinical reach and label expansion in the endocrinology rare disease spaces this year. In our second therapeutic area, oncology, we have two highly differentiated cancer immunotherapy programs being advanced through clinical development. We believe we can transform the treatment in immuno-oncology with our products. Lastly, for our third independent therapeutic area, we are conducting research using our TransCon technologies and that Ascendis algorithm for product innovation to create a pipeline of independent product candidates addressing major unmet medical need. As for all our established product candidates, we have the same high expectation for each of the product candidates in our third therapeutic area to achieve global leadership and create a multibillion dollar product opportunity. A key element in our Vision 3x3 is sustainable growth. We intend to continue developing new product candidates using the TransCon technologies and the Ascendis algorithm for product innovation. We plan to continue to build our organization capability with the aim to bring safe, highly differentiated product to patients as quickly as possible across multiple therapeutic areas, indication and geographies. I expect that 2022 will be another unforgettable year. You can expect us to share data and regulatory milestones across our five independent clinical programs throughout the year that demonstrate solid progress towards long-term growth. Equally important, we plan to provide you with updates related to the commercial launch of SKYTROFA in the U.S. and the planned launch for commercialization in Europe as the expense assess to this important treatment option for pediatric growth hormone deficiency. In the area of growth hormone, we are here to build a leading global brand. Today, SKYTROFA is the only approved once weekly growth hormone on the U.S. market. In the four short months since its launch, our commercial teams had levers that indicates endocrinology experience and relationships to meet the target prescribers, maximize awareness of SKYTROFA through multiple channels and events and provide patient treatment and support through our Ascendis Signature Access Program. Because of the industry knowledge and efforts, physician interest and adoption of SKYTROFA continues to grow. As of February 28, 704 SKYTROFA prescriptions have been written by 259 prescribers. 44% of prescribing physicians have written prescriptions for more than one of their patients. In November 2021 in Europe, we received a positive CHMP opinion for TransCon growth hormone for pediatric growth hormone deficiency followed quickly by the European Commission approval in mid-January 2022. As a Danish company, Europe is an important market to us and the unmet medical need for pediatric growth hormone deficient patient is just as great. But because the market opportunity for growth hormone and time lines to secure reimbursement varies from country to country, we plan to a bit to establish direct sales capabilities in some European countries and establish distribution partnership in others. In this way, we look forward over time to maximize value and intend to bring a broad portfolio of TransCon based product to European physicians and patients. Moving to the adult growth hormone deficient indication, we expect TransCon growth hormone to make a meaningful different adults suffering from adult growth hormone efficiency. We expect by releasing unmodified somatropin, TransCon Growth Hormone maybe able to address the many different aspects of the disease and restore overall endocrine benefit. In addition, during the second quarter of 2022, we plan to submit a protocol to the FDA internal [indiscernible] and chromosomal disorder affecting development in fee rates. We are pursuing this label expansion to help more patients and create a market-leading brand in growth hormone therapy. Turning now to TransCon PTH. We believe 2022 will be a very important year for patients living with hypoparathyroidism, who faced significant challenges in both health and quality of life. Today, HP remains the last large classical hormone deficiency for which the hormone replacement therapy is not yet available. Conventional therapy with calcium supplement and activate vitamin D is aiming at maintaining serum calcium in the normal range with the hope of reducing short-term symptoms, and is not able to address the underlying disease. In addition, these conventional therapies can lead to long-term complication that include severe diseases such as chronic kidney diseases, renal and other classification, cardiovascular complication and bone damage. Numerous publications have reported that despite being on conventional therapies, patients continue to experience short-term symptoms, often resulting in hospital stays and emergency department visits. Finally, patient with HP reports below normal quality of life at the same or worse level than many other chronic diseases with significant impact on daily activities. With this in mind, we designed TransCon PTH to restore physiological levels of paratide hormone PTH. Later this month, we look forward to sharing top-line results from our Phase 3 pathway trial. As a reminder, this is a six months randomized, double-blinded, placebo-controlled clinical trial in North America and Europe in investigating the safety, tolerability and efficacy in TransCon PTH in adults with HP. We believe that all chronic HP patients could beneficial – did benefit from a restoration of physiological levels of PTH. And we believe that TransCon PTH if approved could become an important treatment option for these patients. We are often asked how does TransCon PTH differ from other PTH therapies that have been in other market. First, TransCon PTH allows the release of predictable levels of PTH in the physiological range across the 24-hour period. Second, we designed TransCon PTH to be a first-line hormone replacement therapy, potentially eliminating the requirement from conventional therapies by restoring calcium hemostasis and quality of life. Let me recap the Phase 2 data that gave us the initial insight in the potential for this important product candidate. In the open-label extension part of the study, at month six, 86% of the subject had normal serum calcium, whereof conventional therapy of activated vitamin D and taking less than 600-milligram per day of calcium. These are the same parameters being used as our primary endpoint in the Phase 3 trial. In addition, subject reported normalized quality of life scores are all summary and sub-domains. Importantly subject randomized to TransCon PTH demonstrate a statistic improvement compared to placebo after four weeks in the blinded portion of the trial and continued normalization from week six to months six. We believe that these improvements in quality of line could be one of the main reason why 57 out of 59 patients continue to be part of the open-label extension study, even now after two years. As you know, we remain excited by the data we have seen so far. And we think TransCon PTH could introduce a paradigm shift in how HP is treated. Among the Phase 3, assuming the Phase 3 results are positive, we plan to submit an NDA for TransCon PTH to the FDA in the third quarter of 2022, followed by M&A submission to EMEA in the fourth quarter. In Japan, where the PaTHway Japanese Phase 3 study of TransCon PTH is underway, we expect top line results in the third quarter. Because hypothyroidism can affect all ages, we also plan to initiate a study of TransCon PTH in children with ASP during the fourth quarter of 2022. With an estimated, more than 200,000 patients suffering from HP in the U.S., Europe and Japan alone and the lack of options to treat the underlying disease, we believe TransCon PTH if approved could become our largest endocrine rare disease product. We think and believe TransCon PTH could potentially be the only product to fully address this plus €5 billion market opportunity. I would like to update you on TransCon CNP for achondroplasia. Continuous exposure of CMP has shown to counteract the growth inhibition effect of FGFR3 mutation associated with achondroplasia and to stimulate growth. We are investigating TransCon CMP’s ability to provide prolonged exposure in CMP, allowing for penetration into the target growth rates at predictable levels or time to rebalance the pathway that we can improve. In the fourth quarter of 2022, we expect to share top line data from the ACcomplisH trial. Our Phase 2 randomized, double-blinded, placebo-controlled clinical trial of TransCon CNP in North America, Europe and few other countries in New Zealand and Australia, age from two to 10 with children with achondroplasia. In the ACcomplisH trial, 42% of the subjects are in the age group from two to five years. We are really thrilled by the blinded safety data reported last December at our R&D update. And we're looking forward to share the top line results in the fourth quarter of this year. Given the serious and adverse early impact of this disease, we also planned during the second quarter of this year to file an IND application or similar for ACcomplisH Infant trial in the patient age zero to two years. Switching now to oncology, we believe our product candidates have the potential to transform cancer immune therapy. Initial data from the TransCon TLR7/8 Agonist first-in-human dose escalation trial has been promising, and we expect to see further validation of our technology and process in oncology later this year. For TransCon TLR7/8 Agonist, enrollment continues in transcendIT-101, a Phase 1/2 study of TransCon TLR7/8 Agonist with or without checkpoint inhibitor in patient with advanced and metastatic solid tumors. We expect top line dose escalation data for TransCon TLR7/8 Agonist monotherapy and in combination therapy with checkpoint inhibitor in the third quarter of 2022. For TransCon IL-2 beta/gamma, we expect top line monotherapy data from the IL-βelieγe trial in the fourth quarter of 2022. During the fourth quarter of 2022, we plan to submit an IND or similar for Phase 2 cohort expansion to investigate TransCon TLR7/8 Agonist and TransCon IL-2 beta/gamma as a combination therapy. We took major step in 2021 by progressing towards our Vision 3x3. We believe we are moving towards becoming a viable, sustainable and profitable biopharmaceutical company. We estimate that our first therapeutic area of endocrinology rare disease alone represents a combined US$10 billion global market opportunity. We also have a highly differentiated oncology pipeline, and we plan to add a third therapeutic area. I look forward to updating you further as the year progress. I will now turn the call over to Scott for a financial review before we open up for questions.

Thank you, Jan. Turning to our financial results for the full year ended December 31, 2021. We reported a net loss of €383.6 million or €7 per basic and diluted share compared to a net loss of €419 million or €8.28 per basic and diluted share during 2020. Let me now run through some components of these results. Total revenues for 2021 were €7.8 million compared to €7 million during 2020. Revenues include U.S. SKYTROFA sales as well as license, clinical supply and services provided to third parties, primarily VISEN Pharmaceuticals. Reported U.S. SKYTROKA sales for 2021, reflecting the launch in October were €0.9 million. This was reduced by provisions we made to cover estimated sales deductions and product returns the term of that initial launch. The majority of SKYTROFA sales in 2021 were related to initial inventory stocking. As a reminder, we recognize revenue upon receipt by our specialty pharmacy and specialty distributor customers, and not upon dispense of the product to the patient. Now turning to operating expenses. Research and development costs for 2021 were €295.9 million compared to €260.9 million during 2020. R&D costs in 2021 reflect continued advancement of our pipeline, with the primary drivers of the increase, including an overall increase in personnel-related. And then for TransCon hGH, R&D costs were lower primarily due to a onetime benefit related to capitalization of inventory as a result of the FDA approval in the third quarter of TransCon hGH, known by its U.S. trade name of SKYTROFA. This was partially offset by investments to expand our future manufacturing capacity as well as increased clinical trial-related activities to support increased global clinical reach and label expansion. For TransCon PTH, R&D costs were higher primarily due to increased clinical trial-related spend device development costs and manufacturing costs, including the successful completion of drug substance PPQ batches as well as initial costs of building commercial inventory. For TransCon CNP, costs were higher primarily due to increased manufacturing and clinical trial-related costs. And finally, for our oncology therapeutic area, R&D costs were higher due to increased manufacturing and clinical trial costs for TransCon TLR7/8 Agonist and also due to increased manufacturing, preclinical and clinical trial costs for TransCon IL-2 beta/gamma. Selling, general and administrative expenses for 2021 were €160.2 million compared to €76.7 million during 2020. These higher expenses primarily reflect an increase in personnel related and commercial expenses as well as IT systems and other infrastructure costs as we prepared for and launched SKYTROFA in the U.S. Finance income and expenses in 2021 included a net foreign exchange rate gain of €59 million compared to a net loss of €78.9 million in 2020, the primarily related to unrealized gains on translation of our U.S. dollar holdings of cash and marketable securities to Europe. We ended 2021 with cash, cash equivalents and marketable securities totaling €789.6 million. Turning to an update on our U.S. launch of SKYTROFA for pediatric GHD. Overall, demand for SKYTROFA has continued to grow since launch in October 2021. Through February 28, 708 SKYTROFA prescriptions have been written by 263 prescribers. Each prescription is usually written for one year. Of those 263 prescribers, 44% have prescribed SKYTROFA to more than one patient. And as of the end of February, 36% of lives were covered per MIT. From a market access perspective, we continue to see more health care plans making SKYTROFA available to their members over time. With an increasing percentage of prescriptions approved for reimbursement through the prior authorization or medical exception processes where needed. And we are also in active dialogue with major PBMs and other payers to broaden patient access to SKYTROFA. In summary, we continue to be excited by the strong physician and patient interest in SKYTROFA, and we look forward to updating you on our progress in the coming quarters. Turning to 2022, we expect our expenses to increase as we continue to build our commercial capabilities in organization in preparation for additional anticipated product launches in 2023. And as we advance our endocrinology rare disease pipeline, expand our activities in oncology and continuing to invest in the TransCon technology platform. Including for TransCon Growth Hormone, continued investment in expanding commercial manufacturing capacity to support anticipated future demand geographic expansion for pediatric GHD in the European Union, following MAA approval in January 2022, and continued execution of label and geographic expansion in our ongoing clinical trials. For TransCon PTH, key activities will include continued execution of the adult hypopara program, including the Phase 2 PaTH Forward trial in the Phase 3 clinical program including the PaTHway trial and the PaTHway Japan trial. Preparation for the initiation of a Phase 3 pediatric hypopara trial and ongoing manufacturing of PPQ batches and activities to build commercial inventory. For TransCon CNP, key activities include continued execution of our Phase 2 clinical program, which includes two randomized, double-blind, placebo-controlled clinical trials in achondroplasia, the ongoing ACcomplisH trial and the ACcomplisH China trial, which is being coordinated through VISEN Pharmaceuticals. And lastly, in our oncology therapeutic area, key activities include continued execution of the transcendIT-101 clinical trial for our TransCon TLR7/8 Agonist in the IL-βelieγe trial for TransCon IL-2 beta/gamma. In addition to SKYTROFA commercial launch activities in the U.S., we expect other SG&A activities will include TransCon PTH prelaunch activities, and continued investments in personnel, systems and infrastructure to support our rapidly progressing portfolio and growing organization. As Jan noted, we have a lot happening at Ascendis. So let me now provide also an update on our remaining corporate milestones and other key events. For TransCon Growth Hormone, we plan to submit a protocol to FDA to initiate a trial in Turner syndrome in Q2 2022. Related to the foresiGHt trial, our Phase 3 trial in adult growth hormone deficiency, the invasion of Ukraine has impacted our ability to continue clinical trial activities in Ukraine, Russia and Belarus. While this may affect our time lines, there is currently no material impact to our business from the situation. For TransCon PTH, we expect to report top line results from our Phase 3 PaTHway trial in North America and Europe this month, followed by an expected NDA submission to FDA in Q3 2022 and an expected MAA submission to EMA in Q4 2022. PaTHway Japan top line results are expected in Q3 this year. And finally, we plan to submit an IND or equivalent for pediatric hypoparathyroidism in Q4 2022. For TransCon CNP, top line data from the Phase 2 accomplished trial are expected in Q4 this year. And we plan to file an IND or equivalent for the ACcomplisH infants trial in Q2 2022. Within our oncology therapeutic area for TransCon IL-2 beta gamma, monotherapy top line results are expected in Q4 this year. For TransCon TLR7/8 Agonist, top line monotherapy and combo therapy dose escalation data in the transcendIT-101 clinical trial are expected in Q3 this year. And lastly, for oncology, we expect to submit an IND or equivalent for a Phase 2 cohort expansion for evaluating the combination of TransCon TLR7/8 Agonist and TransCon IL-2 beta gamma therapy in the fourth quarter. Finally, we plan to announce our third therapeutic area in the fourth quarter this year. And with that, operator, we are now ready to take questions.

Thank you. [Operator Instructions] Our first question comes from Jessica Fye of JPMorgan. Your line is open.

Guys, good afternoon. Thanks for taking my question. Did the 708 prescriptions as of February 28 equate to 708 patients, given what you said about each script usually being written for a year? Or are any of those scripts refills? And to make sure when you say a script is written for a year, are you seeing that’s like a script for the first month of therapy has 11 refills? Or is it the single script really written for like a full year’s worth of product? And I have a follow-up.

Thanks, Jess. I think it’s a good clarification that we are building is that because we wanted to get it clear when a prescription is being written to because we will be covering for one year. And sure, there is a lot of refill, but it’s still covering under the same prescription. So when we talk about the number 704, we basically believe that this all of them are independent patients. Scott is correcting me, 708.

Okay. Great. Next one is, does the CRL for somatrogon affect your discussions with payers at all. I guess, were any of the payers waiting to see how that FDA decision and potential contracting with that product played out prior to finalizing contracts with Ascendis.

First of all, we are the only approved once-weekly product opportunity in the U.S. market. We have seen how long-acting has not been approved. We have no explanation and knowledge about it. What we are moving forward is our planned commercial launch strategy, and we’re following it, and we really believe that we’re executing as we only had hoped for. So when we saw there was a CRL for this product opportunity, we also believe that it was part of our expectations. We have different scenarios, and there was definitely one of the scenarios we were working into our long strategy. I believe Jesper’s team and the market access team under Jesper is doing an amazing job to get this market assets. And I also think the numbers we’ve seen and how we’re getting covers is living up to exactly the plan that we expect it to be at the time where we are now. So when I should summarize my read about the launch, we believe we will have been the leading brand in the U.S. market independent on other product opportunity. We only see if there will be one more or two more long-acting there are in the U.S. market is only about what is the total conversion of the entire market segment over to long-acting and how fast it’s going. We have no doubt when we look in our product profile, we see what we have seen from our label, we believe we have everything built in to build up a leading brand here in the U.S. and be doing it day by day.

Thank you. Our next question comes from Tazeen Ahmad of Bank of America. Your line is open.

Hi. Good afternoon. Thanks for taking my questions. Maybe a point of clarification around gross to net. Can you give us a sense, it’s very early days of where you’re starting out and where you might think it will flatten out as the year progresses? And then as far as the quarter goes, did you see any kind of heightened impact from Omicron particularly in December? We just want to get a sense of any kind of additional variability to expect from COVID going forward. Thank you.

I think Scott will take the first question. And yes, we can explain how the commercial infrastructure has adapted to all different kind of scenarios and how they’re adapting to the change in the COVID.

Tazeen, on your question about gross to net, the – so products sold through at this point is I would say, with nimble discount, and we’re not specifically disclosing where we expect it to go. We did take a provision, as you can see in the financial statements to reduce reported net sales that accounts for the initial launch phase that we’re in now and the fact that you might have product returns, you might have other prompt pay discounts and chargeback and rebates. But I would say, I wouldn’t necessarily look at that as any forward-looking guidance.

Jesper?

Yes. If I can add, we are very pleased with where we are right now. When we were sitting doing the launch, we did anticipate COVID to be in place. And of course, we have seen pediatric centers being locked from the point of view that our representatives has not been able to do face-to-face calls. That has then transformed into virtual calls with them. However, as we are speaking, we are certainly seeing the market, i.e., the hospitals opening up and giving us access on a face-to-face call which is, of course, a preference to us. So in short, we had baked it into our expectations. And certainly, we anticipate to see the market opening up now as spring is coming and also, hopefully, COVID is going to be behind us.

Okay. Thanks, Jesper. Just to jump back to Scott for a second. Can you just clarify on gross to net? Are you saying that you did not discount this first quarter? I just want to understand that a little bit better.

So we have especially pharmacy and specialty distributor network that’s set up. There’s on-invoice discounts that are, I would say, fairly minimal single digits in the aggregate. And we also, on top of that, booked a provision that you could see in the financials to reflect the start-up phase that reduced our net sales down from the on-invoice price. That provision was about €1.2 million.

Thank you. Our next question comes from Michelle Gilson of Canaccord Genuity. Your line is open.

Hi. Thank you for taking my question. I guess to start one for Scott. You mentioned that the revenue recognition is to the specialty distributor. Can you maybe help us understand how much is in the channel? And then one on PTH for me too, can you remind us what kind of regulatory discussions you’ve had around PTH? And to what extent the FDA had some input in the Phase 3 trial design and the primary endpoint. And then what really needs to be shown within the Phase 3 data set to get a label as a PTH replacement therapy versus an adjunctive therapy in that differentiation from NATPARA in the labeling in terms of what regulators want to see to differentiate, I guess, the two programs?

Michelle, that was many questions. But I think Dana and I can combine take the second part. But I think we should let Scott get some speaking time. So he will be first.

Michelle, so the question I believe was what inventories in the channel versus what’s sold through. As of December 31, as I think we said on the prepared remarks, the initial sales were largely stocking as of that period. But separately, of course, we reported the same launch metrics that we gave you at JPMorgan through the end of February. So you can see how patient demand overall has grown.

Michelle, going back to you and I will start, and then I will turn it over to Dana and she will explain how the interaction is on. But let us just go back and look about why are we taking a home replacement therapy? And what do it really mean for this composite endpoint we have. First of all, we have some of the same meters in our primary endpoint that you basically have seen in an adjunct labeling. Normalization of the patient taking away vitamin D, taking away calcium supplement. But then everything comes back to what is really the definition of success for each single parameter. And just taking something like serum cancer, we need to be higher than 8.3% because we believe that is a north we call normal serum calcium. If you go into an adjunct labelling, then you say, I’m highly successful if I just take 50% away. What we do, for example, doing with activated vitamin D, it needs to be down to zero because no normal person to pay, to my knowledge take activated vitamin D. If you go to the adjunct labeling, you need to reduce 50% of the calcium supplement. So if you take 8-grams of calcium supplement, which are not unnatural for an HP patient. Then if you take 3.9 gram per day you’re successful in an adjunct labeling. We need to take it down to the level what you take with a multivitamin tablet because we cannot – my people to take a multivitamin tablet. So you can see, even if we have the same parameter, what our primary endpoint is really reflecting is a hormonal replacement therapy, where you go in and you basically take our TransCon PTH on a daily treatment and then you basically get a normal serum calcium, don’t take activated vitamin D and just take the same amount of a normal vitamin – multivitamin tablet. That is a hormone replacement therapy. And that is why we’re discussing that with the regulatory agencies. Dana, you can comment about our interaction, how we’re progressing, how we have discussed it, how we have basically agreed to everything of the Phase 3 endpoints.

Yes. Sure, Michelle. Thanks for the question. We’ve had numerous interactions with FDA. And actually, before we even started the Phase 3 and even sent them the protocol, we talked with them about our Phase 2 data and the fact that we wanted to be a replacement therapy, okay? So we designed a fairly rigorous trial. So as soon as the protocol was done before we started to enroll people, we sent the agency, the protocol, they sent back comments. And we’ve had sort of a few interactions as we enroll patients and then as patients progress through the trial. And right up until the last few months, we talked with them about our analysis plan before we hit the sort of end of the double-blind period, we had to finalize that, send that to the FDA before we do anything. And so we think we’re in a pretty good place, and we’ve acknowledged the FDA input and are planning to analyze the data consistent with what their advice has been. So it’s been an ongoing collaboration with them.

So we really proud to have the data coming out in the next week.

Thank you. Our next question comes from Josh Schimmer of Evercore. Your line is open.

Thanks so much for taking the questions. I guess first on the on the schedule for launch. Why are you already noting provisions for product returns? It seems a little bit early. Have you been seeing any product returns thus far and why? And then for the PTH program, what do you see as the primary barriers to broader adoption of PTH replacement? It looks like Takeda was trying to promote some of the quality of life benefits of NATPARA and the cardiorenal benefits of NATPARA. They did have some supportive data, but didn’t seem like they were getting much traction to a broader hypoparathyroidism audience. And last question as we think about the decision tree for TransCon CNP at the end of the year, are there certain Phase 2 outcomes that you think could support filing for accelerated approval? And if so, what might they be? Thank you.

Thanks. Yes. We will say, more questions. So – but I think I will let Scott start first.

Josh, related to the question, are you seeing product returns. To my knowledge, no, although it is early, so the end is small. The reason we take a provision is from an accounting perspective, based on the experience we have commercializing, we take a conservative position and just account for the fact that there’ll be a number of chargebacks returns, rebates, write-offs, things like that. Over time, of course, we would expect the provision to bleed off if none of those things are realized.

Thanks, Scott. Related to the PTH question. And as I understood you right, just is that you’re asking the basic why some of the shorter acting PTH have not really got the right penetration. But it goes back to how you use the best optimal way the short acting. You open the cartridges. Take the content, take it into an infusion pump. So, you can give it into the physiological level 24 hours, seven days a week. That is what is happening with a lot of that. If you give a short acting, the best case you can see is that you can get a past the normalization of [indiscernible]. Parting adoption of activated vitality, partly adoption on calcium supplement. You’re not seeing the expected 24-hour urinary capture benefit. You’re not seeing any kind of statistic effect related to quality of life. So, when you compare this short-acting PTH product with the target product profile or what we’re aiming to show in our Phase 3 clinical trial that’s coming up in the coming next week is a true hormone replacement therapy. And this is how Dana just explained how she has built up in interaction with regulatory agencies, what is the meaning of a hormone replacement therapy. There is the same thing to think about hormone replacement therapy. Will it not be unbelievable to think any diabetes, type 1 diabetes patient not should have insulin. Why it’s so difficult to believe that when you can have a physiological level of PTH patient that lack sufficient induces PTH, not sure have that. And this is what the benefit we want to show in all our clinical trials. Everything from the primary end point we discussed urinary calcium continuing quality of life, et cetera, et cetera change in bone remodeling everything what we want to see. Really showing what is really how to normalize the life of this patient by having restoring the normal physiological PTH. The CNP question you’re addressing is a really, really good one. And it also at one of the interaction I have on always with Dana and her team from regulatory. What is basically the strategy to get this important product out to the patient at as possible. And I can guarantee you, Josh, we’re working dedicated to get that done. And I think Dana and her team to get the right of the clinical development team and everyone is trying to do that. So what we believe is a important part of that is to look and see the data we’re getting up end of this year. Because this is data that’s coming from a really robust treatment, data that’s coming from 57 patients. And remember, more than 40% of the patients are in the A group from two to five. This is not all children more than 40% are in the age group two to five. And we will look on that on a double-blinded placebo-controlled efficacy and safety after one year with all the different cohorts. At the same time, we’re also doing cohort expansion really enrolling on what we believe could be a recommendated dose. And we also want to initiate in newborn or in the study between zero and two years this year. So, I actually believe the package we’re building up now related around our TransCon CNP is unique, not only for Achondroplasia, but passed from many other growth disorder, because where we believe CNP could be important an important compound.

Thank you. [Operator Instructions] Our next question comes from Vikram Purohit of Morgan Stanley.

Great. Thanks for taking my question. So, I had two on SKYTROFA. First, of the prescriptions that you’ve seen written so far, could you comment on how many have been for treatment-naïve patients versus for patients that are being switched over from a previous daily growth hormone? And then secondly, from any conversations you may have had with doctors prescribing the therapy since launch, how have they described the authorization process where that’s been applicable in terms of how long it took to get their patients approved? And how much of an administrative burden the discussions with insurers have posted their staff. Thank you.

Thanks a lot. I think I will start and then both Jesper and Scott can help me in adding in some fact is I forget it. What we see, we see a development in the ratio between what I call naïve patient compared to switch patients. What we saw from the beginning was the vast majority of patients were switched patients, because they didn’t need to wait for the stepping of the right diagnosis with involved multiple tests including a stem test of growth hormone stimulation. So what we saw from the initial part of this is mainly switch patients. We see now it’s switching more and more over to naïve patients from that. And one of the things I was most surprised about was just after one week, we got our first commercial patient. But I think Jesper in a general perspective, can explain what our effort is really to be quite sure we are converting as fast as possible as many as possible over to commercial patient. And we have a unique setup to our hub that really are the fundament in getting this done. Jesper?

Absolutely, Jan. Basically, what we are having is, we have the ASAP program that I’m sure that you have seen Vikram. And that is very common to have also normally called the Fast Start program. And you will anticipate that it takes anywhere between two weeks to six weeks for the normal prior off, which is the typical routine that all growth hormone patients are going through. Prior office is common standard for drugs that cost more than $1,000 a month, which is, of course, what we are talking about here. And then in case of a rejection, we are going forward, call medical exceptions and there is paperwork involved, but doctor see as an opportunity to help their patients going from, you could say, hard work of once daily treatment and transferring the patients on to once weekly and thereby getting much better compliance from the patients in terms of remembering to take the injections. So all in all, that’s the scheme that the patients go through. And we are certainly focusing in, as Jan said, in the first place on the switch patients because they were in the queue to get transferred. And then, of course, as time goes by, we will also see naïve patients and new patients coming on Bolt.

Thank you, Jesper. Great.

Thank you. Our next question comes from Joseph Schwartz of SVB Leerink. Your line is open.

Hi, I’m Joori dialing in for Joe. Thank you for taking our questions. I know it’s early days, but when can we expect to see sales guidance for SKYTROFA?

When we’re feeling confident in giving you numbers that we believe in it will going to be reflecting how the sales is progressing during the first period of time. And one of the guidance at least for myself, and this is something we discussion because we have different cord-free means everyone at least I would like to see at least two full quarters. And then when we have seen at least two full quarter, we can look at it and then think about it and saying, is that really sufficient good enough to give you guidance into a range that is not really meaningless for you, but really give you what we call financing modeling guidance. But I really don’t really care some of about the first quarter. What I really want to know, and this is one I’m saying to you, Jesper. We are here to build out the leading brand. We want to have a plan that we’re executing on, not only be the most prescribed growth hormone product, but also the most high-value growth hormone product. And that is what we’re building our strategy on. And that is involving yes from the commercial side, but also in clinical development, even Scott, where we want to go in and be sure that we’re building out the right label expansion so we can address the entire growth hormone market. And this is how we built up a leading brand, not only in the U.S. but on a global basis.

Okay. Great. And then I have a question relating to TransCon CNP. So a competitor recently announced that in children less than five, they saw trends favoring their agent compared to placebo on an annualized growth velocity. We haven’t seen the data, but it appears that there could be some differences based on age. I know that you’re studying TransCon CNP in children as young as two and accomplish an even younger and accomplished infants. So, I’m curious what you make of that and if you’re anticipating any differences in younger children. Thank you very much.

Thanks a lot. I think I can comment about some of the facts and Dana and her team are really always looking into the safety and also we provide a safety update in our R&D Day. But the facts are we have 42% of our children in the ACCOMPLISH Trial is at in the age between two and five. And we have – for many of them, we have more than one-year safety database. So Dana, perhaps you can someways sum up some of what we have seen from a safety perspective and the easiest way for you just take it on a blinded basis.

Yes. Well, so far, the compound has been extremely safe, and we haven’t seen any problems related to cardiovascular side effects or things like that. So, we’re very pleased with that. And we also feel that the sort of continuous release of CNP is an advantage. I think to your other point, though, we do notice that the younger kids grow faster, right? And so there is an opportunity to potentially have a greater impact on that group once we can unblind the data. But again, even sort of our natural history shows that – that’s sort of the some of the biggest changes that they have in their growth. So, we’re very excited about finally being able to tease it out and break it down, right, by age group, so that we can get a better idea of whether the effects are even more magnified in the younger age group.

Thanks a lot. But I think Scott can somebody also provide you with our link or the slide related to our research and development date that we had in December last year where we provided an extensive safety update of our patient in the ACCOMPLISH Trial, on a blinded basis. There you can see all the concrete elements we have.

Thank you. Our next question comes from David Lebowitz of Citi. Your line is open.

Thank you very much for taking my questions. I’ve got two for you here. A quick one on SKYTROFA. Given the uptick from earlier in January on prescriptions, how can we think in that in terms of cadence going forward on sales for the drug throughout the year? And flipping over to TransCon PTH, on what basis do physicians typically prescribe for these patients? Is it based on things such as reduction of vitamin D – active vitamin D and calcium because it is more on intangible quality of life type items. And with that in mind, you have two different quality of life type items as secondary endpoints. Could you compare each of those end points? And what they mean? And how would these actual endpoints be meaningful to prescribers?

Okay. There was a lot of question related to PTH. But let us start with SKYTROFA first and think about what is how read about this year. And we share three different KPIs with you. But Jesper, he has about 2040 KPIs. He's looking on week by week to secure we are matching and really going in the right direction. So the KPIs, we are using in because we don't believe at our current state of our initial loans, we basically have what we call revenue bases that really are predicting how this product opportunity really are performed inside the U.S. market. And this is why we follow the different KPIs. And one of the numbers, the 708. This is a pretty good number in prescription. 708 patients now under treatment with SKYTROFA in the U.S. I actually are pretty proud of that, and I'm proud of the organization that have managed to get this to happen. And I'm quite sure we will be marking to this number and increase it month by month. So when we look on all the different integrated KPIs, we're using to follow the long, we are in a position that we feel pretty – we know what okay because we always want to do it better. And the day we stop actually not to believe that we can do it better. I have to think we're doing a make mistake. But what we have seen until now in this launch is it's living up to everything what we have expected. And we will see that continue to continue. And I believe the more and more we get in market assessment faster, faster, we can penetrate also to get them not only the prescription done, but we also can get it or to commercial patients faster and faster. And that is the trend we see it. I do not know if you have anything to add Jesper to this before I go to PTH.

No, I think it's bang on. We are following it very closely, and we are very pleased with where we are right now. So week by week, we are looking at it and making judgment. And also, as you're saying, again, we have very positive feedback. So that's, of course, giving us momentum and trust for the future. We will be the market leader in the long-acting segment.

Yes. Going back to PTH. And I think this is a question that somebody going back to me when I look and what we have seen in the open-label extension trial. Because what we have seen in the open-label extension trial is that the science is really true. And typical, when we see something that's not expected to happen is because we don't understand the signs. But the signs where you have physiological PTH and what the impact of that is actually being proven to so many publication where they have been using a short-acting PTH and infusion pumps. And we're seeing the same thing in our Phase 2 open-label extension part. But think about the facts, we have this patient now for two years in an open-label study. Two years, we have 57 out of 59, taking a daily inject. It's only happening because they see a major, major benefit. And this is not long-term complication we're seeing there because in my experience is that people don't really are compliance in any open-label extension just for long-term factors. They do it because it goes back to your question about quality of life. They are feeling the getting their life back. Do, we invested that with our SF-36 with, where some of the subdomains are specific to some of the benefits we expect to see. We saw the benefit both on the summary and all the softening or we go to the patient reported outcome with a more disease-specific one. –: And we know there's a lot of PTH receptor inside the bring, really accessible for the PTH. And this is my personal view about the science behind it is that it's the combination of a stable CMP and a stable stabilization of the physiological PTH level that provides all the benefits. But at the same time, we also see vol benefit on uncaring. On one, I can continue to talk about what it means for a person to have normal physiological level. But sure, in our Phase 3 trial when we come out here, we will be in a position that we will give you what we call the numbers that also reflecting how we see the quality of life.

Thank you. Our next question comes from Yaron Werber of Cowen. Your line is open.

This is Gabe on for Yaron. Thanks for taking my questions. So first, you've shared that about 369 prescriptions have been written as of December 31. And so all of those would be at least two months ago. Can you give us a sense of how many of these patients are now on therapy which would also help provide some insight into the success rate of the prior authorization process that I believe was asked about previously? And then I have a follow-up.

I think the Jesper indicated that what we have, we have a fast start-up program. So I believe that the majority of all patients are what we call coming into our fast start program. So the basic will be on treatment. And then during this period that will be converted into commercial patients dependent on the speed as Jesper talked about some where we expect two weeks, some can take up to eight weeks or something like that related to the process of getting the move from what we over to a commercial patient.

Okay. Yes, that makes sense. So how many of those patients have been converted among the first 369 as of December 31 since those would be more than eight weeks ago? Or can you provide any insight there just to give us a sense of how the conversion is going.

The conversion is going exactly as what we have expected in Maxwell as we said, which I indicated, so the first commercial patient coming after one week. So the commercial patients are coming exactly as we expected to be compared to what we expected to see from our knowledge how the growth hormone market function, how growth hormone treatment. We are not very different compared to that.

Thank you. Our next question comes from Leland Gershell of Oppenheimer. Your line is open.

Hey, good afternoon. Thanks for the update and taking my questions. Just a couple on SKYTROFA. Thanks for the update on the 36% of covered lives. Could you comment maybe on how that process is going, or negotiating with payers relative to what your expectations have been? Are there any sources of pushback or challenges that you're encountering? Or is it simply taking the time that it takes? And then I have a follow-up. Thank you.

Very, very interesting question because I believe we are in a situation. And yes, well, he has the entire market access team at his shoulder. And what we're doing to the market assess team is building on the strategy we have explained in multiple time. The strategy is to build up not only the most prescribed growth hormone product, but also the most high-value product opportunity. So for us, it's basic optimizing the value of SKYTROFA here in the U.S., we know it's the best-in-class product opportunity. We're providing a real benefit to the patient, which are providing not only a once-weekly treatment but also an improvement in treatment outcome, which in measured by high velocity. We saw that in our Phase 3 study. So we're providing really benefit to the patient. And we're getting the market assets as we wanted to have in the speed we expected to have, but more important, on the right conditions. Because this is how you build a high-value product opportunity, not just go in and get it as fast as possible. You do it in the right manner. And I think this is what Jesper and his team is doing. Do you have any comments, more Jesper?

No. I mean, we're coming in at the point of time where we are negotiating and these things are, of course, ongoing as we are also indicating and so far, the access that we're having, we are quite pleased with and also the approval rate that we are getting. So all in all, it develops according to our plan, which we are, of course, pleased with.

And if you go to the numbers because that is Scott. And I think what he said was as we now have 36% of life covered now. I feel pretty good with that number. Perhaps you can correct me if you're right or what's wrong.

Yes. 36% of lives covered.

Okay. I heard you right, Scott.

Yes, 36%.

36%

Thank you. And just a question on PTH. Just with respect to the regulatory process, will the FDA be taking the Phase 2 and the Phase 2 open-label extension data into account and to what extent as they presentably review your application pending the results from PaTHway. Thanks.

Yes, you're correct. We are building out, for example, the safety database in – from both price. And Dana, do you have some further comments about that?

Well, yes, I think the Phase 3 PaTHway trial will be the sort of flagship registrational trial. I think that the long-term results from path forward, though, will be extremely helpful, not only just to show the durability of the response, right? As Jan said, 57 out of 59 are still in the trial. And that will also give us a lot more information about what happens to the bone, right? And sort of help us to validate the sort of disease-specific quality of life instrument that we've been working on as well. So I think the two trials would be sort of going sort of hand in hand. I mean one is the pivotal registrational trial, you could call it. And then the other one would be strongly supportive. Before we even sort of started the Phase 3 trial, we explained to the FDA what we would have in terms of long-term safety from path forward. I think we didn't even expect we would have such great adherence in that trial but they were satisfied that the totality of the safety database would be sufficient for them to do their review. So I think both trials are extremely important. I think the PaTHway trial though, is sort of the linchpin for the replacement concept as well.

Thanks, Dana.

Thank you. Our next question comes from Anita Dushyanth of Berenberg Capital Markets. Your line is open.

Good afternoon. Thanks for taking my question. Just regarding the number of prescribers for SKYTROFA, I think in the commentary, you mentioned 263. Could you talk about maybe when internally, the team – the sales team to be able to cover the 1,400 prescribers?

I think what we are doing already now and how our long strategy have been is to do targeting. So we are caring – yes, be correct me, it's – I think it's more 80% of the prescription being done in the growth hormone market by only targeting 20% of the prescriber. So typical in the states, we initiated our launch we actually covered 80% of all the prescription being written in the growth hormone market. Yes, was wrong in understanding this right.

No. What we are basically doing is we are breaking the 1,400 into deciles. And then, of course, we are keep targeting on the highest prescribers, and that's where we have, you could say, the best sort of penetration. So we will continue to work on it and expanding it in particular now that the market opens up that we can do face-to-face calls. We can do it. We have a match in terms of competitive forces with our size force with the competition of both Novo and Pfizer. So we certainly believe that we can maintain and focus on the market leadership that, of course, we're having right now as we are the only one in the market, but that we're also going to continue to have when we see competition coming on to the market.

Thank you, Anitha.

Yes, thank you. Yes.

Thank you. I see no further questions in the queue. I want to thank everyone. This concludes today's conference call. Thank you all for participating. You may now disconnect, and have a pleasant day.