Tim, do you want to read the forward-looking statements?
Would you like to start, or would you like me to start?
Yeah, I can start. So, welcome, everyone. I'm Jose Schwartz from the Biopharma Equity Research Team at Leerink Partners. It's my sincere pleasure to host this fireside chat with Ascendis Pharma, and we have a very special guest, Jan Mikkelsen, CEO, who was not on the bill, but we're very pleased to see you. Thank you for joining us. As well as Scott Smith, EVP and CFO. Tim Lee is here with us, Senior Director of Investor Relations, and he's going to read the forward-looking statements before we carry it away.
Great. Thanks, Joe. We may make forward-looking comments during this discussion. Actual results may differ materially from those expressed or implied, and you should not place undue reliance on these statements. For information concerning the risk factors that can cause actual results to differ materially, please see the Risk Factors section of our most recent annual report on Form 20-F. With that, let me turn it back to you, Joe.
Thanks, Tim. All right, so thanks for bearing with us as we synced up with the webcast. So let's start off with your first commercial product, Skytrofa, which seems to be gaining a lot of strong momentum. Your sales in 2023 came in nicely above your guidance of $170 million-$175 million at $178.7 million, and you know, it seems to be gaining some really good traction. So can you talk to us about where you're seeing the biggest adoption now, and what kinds of assumptions are built into your 2024 sales guidance of $320 million-$340 million, which is a very nice step up?
First, thanks, Joe, for inviting us. This is a pleasure to be here with Tim and Scott, and meeting you here. Skytrofa, our first product, launched here in the U.S. around two years ago. And when we launched Skytrofa in the U.S., we had two strategic goals in the commercialization. One, to bring it up to the leading product in value as fast as possible. The second element, which typically is likely the most difficult one, to do it in a growing growth hormone market. So the strategic goal for us was to increase the overall growth hormone market in the U.S. from the current value, around $1.5 billion, 100% up. We started our commercial strategy building on our product strengths, a best-in-class product opportunity, really described to what I call what was a stereotype patient for us.
A stereotypical patient for us was a patient starting on daily growth hormone. After some time, the realization from the physician to the patient, potentially you didn't get the right outcome, but it's basically happening with 80% of the patients that are treated with daily growth hormone. Then going to medical exemption, and then ending up on Skytrofa and getting an improved treatment outcome. We have now been in a position where we basically have been executing on this strategy. We are also coming to a situation where we are getting on more and more formulary. You can see our market access is basically improving quarter by quarter, year by year.
And what we have learned from the U.S. is that when you start on Skytrofa, you stay on Skytrofa. And this is when we started to give you financial guidance. It was very, very, very simple because we took last quarter, and then Scott, he is really good in numbers. He multiplied it with four, and then we basically saw how we actually increased quarter by quarter with new patient, and then he added that up.
Yeah.
It took a spreadsheet, but after some time, we got it right. Actually, many places, it was hard for people to follow this algorithm. So instead of that, we started to give numbers this time, because, even we thought we gave a simple algorithm, it really didn't go well in a lot of the calculation by a lot of different people. So therefore, we came out with this clear financial guiding, where we give numbers, so no one need to do any mathematical algorithm.
Yeah.
So when-
I appreciate that. We do enough.
So, what we have seen of trends before in Skytrofa is continue. Skytrofa is not being affected by any of the other long-acting competition coming in, because we always had a competition. We have the daily growth hormone before, and when we see the outcome of the other long-acting, they are not living up to just the effect that you expect to see out from a daily growth hormone treatment. And therefore, our journey is not being changed. Our strategic goal for the future for Skytrofa is pretty clear. We want to make it in a blockbuster just in the U.S. We will do that in the coming year. We will not change our strategy. We will execute on our strategy. We will still be a value-driven product built on the best-in-class property of it. Scott, you are running a lot of financial numbers on it.
Do you have anything to add?
Nothing to add.
Well, we appreciate you making that easy for us. Yeah, it's fantastic growth, and that's even, you know, just in the first indication, and you're about to submit an sNDA for adults with growth hormone deficiency, and traditionally, that's been a really small market. Can we talk about whether or not you think that, you know, your once weekly, which seems to have some benefits, which it seems like it could resonate? And in some ways, they seem like the flip side of what we see with the GLP-1s, which are gaining so much interest here. So, you know, do you think this is a market that you might be able to expand as well?
Yes. We are dedicated to be the leading company in growth disorder. We have the fundamentals by the two cornerstone, TransCon Growth Hormone and TransCon CNP, and we will continue to invest in TransCon Growth Hormone. We will do it by label expansion, as we did in adult growth hormone deficiency. We also have a Turner trial coming out. We're still advancing our auto-injector, even as it's being taken out as one of the best new combo auto-injector that have been seen in the industry, with a lot of what I call unique pluses for its features. What we're doing in the adult growth hormone is quite different compared to the pediatric. The pediatric is what we call a well-penetrated segment, meaning there still is growth in the penetration still in the pediatric segment.
When we go to adult growth hormone deficient, I will more do a conversation saying it is under-penetrated. Different numbers give different penetration. In general, I would say it's under 10% in the U.S. Very different demographic compared to the pediatric, because many of them coming from treatment where it has an impact on the secretion of hormone. So often you have multi-hormone deficit. It can be coming from oncology setting, it can be severe trauma, it can come from also from the pediatric segment, where it's more organic growth hormone deficiency instead of the idiopathic. And you will see that, we measure truncal fat on the primary endpoint. It's more a surrogate marker for the endocrine benefit you expect to give to the adult growth hormone deficiency. You can also look on lean body mass.
You know, growth hormone has also been used in, for example, muscle wasting, or if you have been on treatment on the medication that really give you a major impact on muscle wasting, then you take 1-2 years treatment of growth hormone, really to build up the muscle again. So we will come in and be dedicated to Scott is using it. I'm not using it for obvious reason. But, but, from that perspective is that we feel that it's really are a product that really are having a lot of interesting, you can say, pharmaceutical application, not only in adult growth hormone deficiency, but we will continue the label expansion and also combine it with TransCon CNP in other growth disorder.
What about combining it with GLP-1s, and what are your plans in that regard, too? And do you think that you could have a differentiated product profile relative to the current roster of GLPs?
I need to go a little bit back because everyone know our Vision 3/ 3. Vision 3/ 3 is our strategic pathway we're fulfilling here in 2024 and 2025. And it's had the main element on getting our three rare disease endocrinology product approved, focus on oncology, which we have done. I will not talk about that a lot today. And now we're moving into our next vision, Vision 2030. And it's basically built on two element: making blockbuster product out of our rare disease endocrinology products, like Skytrofa in U.S. itself, TransCon PTH outside U.S., TransCon PTH when we're getting approval in U.S., also inside U.S., and TransCon CNP when we get the treatment of achondroplasia, instead of just providing linear growth. But we also have the TransCon technology broad applicability in areas outside rare disease endocrinology.
I call it big products, because this is where you will have a continued interest in big products. People associate obesity with one of the big product, but it's only one. There is a lot of big diseases, like in, for example, resistant hypertension. There can be a lot of immunological diseases, where you really have an opportunity to apply the TransCon technology, utilizing the same algorithm that we have applied in rare disease endocrinology. And we will do that, and that is part of the vision that we basically, in the beginning of the year, laid out. How Ascendis Pharma will focus on the rare disease endocrinology, continue executing on the commercialization of our three independent product opportunity, growth hormone, PTH, and CNP, but still continue making new rare disease endocrinology. Focus on big product.
Big product is element like we see, like what we're doing obesity, what we will do in other indication with the TransCon technology. Many of them will have a different business strategy in how we're really creating value for investors and with all our people that is dependent on how we come out with new product opportunities. We will have business model that will come from out licensing directly on preclinical stage, take it to a phase one, phase two, make joint venture, direct licensing, and you will see a lot of these activity coming out.
What we did with GLP-1, obesity, was the first one, but our plan is to have it coming again and again because we're dedicated to these two work streams, focus on the rare disease with own commercialization, many in most countries, sales, distribution, and other places, and then really work into big product. Also, where we will basically move material to a stage where we believe that the value creation is really coming to a stage where we have done what is necessary to really get the valuation that all these product opportunities really should have.
Great. Well, let's go back to a small product, but it might not be that small. TransCon PTH or Yorvipath seems to be off to a really strong start in Germany. I was wondering if, you know, you could provide any additional commentary on the patients that are being treated there. Are there any common characteristics? Were all these patients that you said you saw prescriptions in right from the get-go from the EAP, or are you seeing any de novo patient demand? Maybe we can just start there for Yorvipath.
But Germany and more is interesting for a global commercialization because it's the first place outside U.S. where you can be direct, fully commercial, because you're getting reimbursed by day one after approval. For hypoparathyroidism, it's also pretty interesting. In Germany alone, there is about 70,000 patient. And then you think about U.S., that's 80,000-100,000. What is wrong here? Can you not calculate when you just look on the population, it's nearly 2.5 the incidence of what you have in the U.S. And it's. I didn't really believe them in the beginning, but I got convinced by numbers. The numbers can always convince me, and it's right. There is basically 70,000 in the U.S. And why?
Because they have a much higher level of head and neck operation compared to what you see in the U.S., and it's basic inherent in this kind of procedure that you generate a percentage of patients with hypopara every time you do this kind of operation. You see the same trend in Austria, same incidence in Germany. France is actually different. It's more like U.S. If you go to South Korea, more like Austria and Germany. So you see this kind of a pocket of different incidence of hypoparathyroidism. So we went into Germany, and we started for about 4 or 5 weeks, and I saw a lot of research coming out from a lot of research group, interviewing a lot of German doctors.
What will basically come out of all this research when I read it, because I actually read it, there actually is some way supporting everything, what we really already did know about the treatment landscape in Germany. Yes, this is a huge unmet medical need that exists there. The same unmet medical need is also existing in the U.S. There was actually, from the U.S. perspective, there was a patient advisory hearing about the unmet medical need in hypoparathyroidism and also how they can benefit from treatment. Just listen to that. I think it's open on the internet, on YouTube. I actually think I was crying when I heard the patient story. It's really, really dramatic to hear what it really is to have a life with hypoparathyroidism.
In Germany, we came in and launched, and we are getting exactly the attraction that we wanted to have. We're getting the penetration, the uptake of patient that we hope for, but it's more reflect the severity of this disease. This is a disease like type 1 diabetes, that really deserve the treatment with a hormone replacement therapy, and that is missing. Think about, do you want to have a type 1 diabetes patient go around without insulin? Do you want to have a hypoparathyroid patient without PTH? No. And when you hear the patient story, you understand how they change their life back. It's really severe for the patient that came from the past surgery.
Why? Because they had a knowledge about to be normal. The patient that is born never to having PTH, they have an idea what it means to be normal. But when they come on PTH treatment, they're finding a complete different quality of life, which really give me the view everyone that have hypopara should, like a type 1 diabetes, also be on the hormone replacement therapy.
Yeah, it can be quite debilitating. There's so many different symptoms for so many different organ groups. Or is there like a continuum of severity in the community? Who would not go on your path?
Yeah. What was really think will be give you a lot of the, what I call the diversity of this patient group, because in the patient hearing, there's a patient coming up and saying, "I really have not high symptoms in my short-term way of life, but what I'm really scared of is the long-term risk, because I'm trying to compensate my short-term symptoms with a big amount of active vitamin D and calcium supplement. And I know there's only one destiny when I do it, long-term risk, like renal impairment, basic calcification throughout the body, and other things like that. You cannot win with that disease.
Right.
You cannot win with a conventional treatment because there is no way you can balance the two. You need to compromise, and this is the dilemma, and this is where a hormone replacement therapy comes in.
So, is that how you got to the estimate of 22,000 patients being initially addressable in Germany out of the 70,000?
So-
Thinking through this kind of a rubric.
All 70,000 patients will benefit from PTH treatment, no doubt about that. What we said as our initial target will be patients that, basically, are coming to a more severe stage. Meaning that, for example, could have renal impairment, which is a huge burden for the society. The quality of life could be so poor that they cannot manage themselves in this way. High level of burden for the society. So we basically took it out, not of the treatment benefit, but of the burden for the society, because it's what we call health economic calculation on how fast you can take patients on it. This is not any way indicating that I personally don't believe, and we have any data that in some way indicate that not all patients should be on treatment.
Okay, that's a very helpful perspective. And then what about the U.S.? I know we still are awaiting approval. I'm not gonna ask about that directly. But, I'm wondering, you know, do you foresee a similar type of market breakdown here? And you mentioned that, you know, the ramp in Germany can be fast, maybe faster. How do you think the cadence of launch could unfold here?
One of the key elements when you launch a product, and you need to take the element of the unique system you have in the U.S. related to reimbursement. One of the elements that really help in any launch, if you have guidelines that's supporting the utilization of your treatment in the specific disease. Last year, I think it was, Scott, or the year before, new guidelines came out that basically support PTH replacement therapy for the vast majority of all patients. I hope and believe such a clear message from guidelines will facilitate that it will not be a reimbursement discussion on any patient to be on treatment in the U.S. At least then it will be treatment against an established guidelines.
Yep. Okay. That must be some good wind in your sails. So switching gears to TransCon CNP, achondroplasia we've seen is a market that, you know, is ripe for new treatment options, based on what we've seen from BioMarin's Voxzogo, and I know we're gonna get a number of TransCon CNP updates in the fourth quarter this year. So, can we talk about the phase III data that we're gonna get, and what are you hoping to see when you report that?
So what we are providing with our TransCon CNP is the perspective of establishing a treatment for achondroplasia. A treatment for achondroplasia is not just to address linear growth. We will obviously address linear growth, but a treatment for me is to address comorbidities of a disease. As I'm saying, often, to be short is not a disease. To have comorbidity is the part of your disease stage. So what we want to show in our pivotal trial, will come out end of this year, that we will provide linear growth. I believe we will provide the same linear growth that you see in all treatment that basically address the hyperactive FGFR3 pathway, that you get normalization of growth back to the states of being seen on normal child. What we hope, in addition, to show that we can address the comorbidities.
We have established through regulatory discussion, a series of secondary endpoint that should address these comorbidities. Some of the flavor of them are we looking on, for example, muscle strength, because we know achondroplasia also is a muscle strength disease. We are looking at X-ray, hardcore facts, looking on different position of the body with achondroplasia, how it can be affected by treatment. We are looking on patient-reported caregivers, reported outcome related to the benefit of the treatment. We are looking on different body composition and other things like that. All of that is building up one single element to see how we can address the comorbidities. We also have established other trial that is helping us, that we are now and have children down to newborn already being treated with TransCon CNP between the age zero to two. Basic to address severe comorbidity, like the effect of foramen stenosis.
We are addressing if you have a child that basically not have been treated with a CNP analog from newborn, therefore missing catch-up growth. We're making a combination trial between Skytrofa and TransCon CNP, where I personally believe you can get all the linear growth you want to have because you are decoupling the limitation in the differentiation. At the same time, you're providing the unique form for catch-up growth that inherent in growth hormone treatment. Children with growth hormone deficiency are basically being before treatment have the same annualized height velocity as an achondroplasia child. But because growth hormone providing catch-up growth, when you start treatment of them in an age, 6, 7, 8, 9, 10, they're basically catching up extremely, extremely fast, growing faster than a normal child would be just to have catch-up growth.
Can we do the same thing in achondroplasia? The data there has been by giving achondroplasia children growth hormone. Yes, it's possible. There is unlabeled use of achondroplasia in more countries of growth hormone, where the results are providing more linear growth I ever have seen with anyone and defining on a CNP analog. So this is the integrated package. A lot of different trials, not one single trial, that all are building one single element, how really to treat achondroplasia.
Okay, very helpful. So, I guess this kind of brings us to the rest of the pipeline, which we don't have to talk about a lot. We don't have a lot of time left, but the ophthalmology and oncology programs, I know you're looking for a partner in the latter area.
Already done.
And so bring us up to speed on that deal structure, and does that talk about that program.
Perhaps, Scott, you can talk about the financial terms about ophthalmology.
Yes. So we announced that the formation of Eyconis to take our ophthalmology products forward. Eyconis was formed with an investor group led by Frazier and RA and a couple of other investors that put in a hundred, or committed $150 million. And in return, we have an equity stake in the company, also regulatory development sales milestones, as well as royalties on any developed and commercialized products. From a cost structure perspective, ophthalmology then is basically off of our balance sheet for 2024 going forward, so to speak.
Is this a template for what you'd like to do in oncology?
I can take that because it's really a key element. We don't have a specific template in our life. We have not a special way to do it. We have what we call the Ascendis way to do it. The Ascendis way is to find out how do we really do the optimal for the patient, at the same time, create most value. So when people say you should do it in this one way, I don't believe there's one single way to do it. There are a lot of different ways to do it.
Yeah, that's fair. So it seems like one of the goals of the company to bring all this together is to, you know, get some good operating leverage. Scott, can you talk a little bit about the company's vision for the cost structure and, you know, how much that we might be able to see come to the bottom line?
Sure. Maybe I'll take some of the proof points, and Jan can also talk more about the vision. But I think that, you know, we've been talking for a while about the benefits of having a therapeutic area of focus, like endocrine rare disease, and also that TransCon Growth Hormone was probably the most expensive product ever to develop, and as that has matured, you should see our R&D fall. So if you look at our overall guidance, we're guiding to taking operating expenses down by about EUR 80 million to EUR 600 million this year. And going forward for the endocrine rare disease programs, and that mix is maybe 50/50 SG&A R&D. We'd expect as those programs mature, that R&D would continue, you know, continue to drop.
Essentially, the organization to commercialize the products is mostly in place with regard to U.S. and Germany, and by the end of this year, should be in place more or less globally. So there should be pretty good operating leverage when you think about that cost structure as, I would say, pretty stable. And by the end of the decade, as part of our vision, 2030, we've discussed having all three of the endocrine rare disease programs, EUR 1 billion+, EUR 2 billion+, EUR 3 billion+ each of revenue, in and of themselves.
Okay. Great. Thank you so much for the update. I think we're out of time.
Thanks so much.