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spk07: Good day and thank you for standing by. Welcome to the first quarter 2022 Ascendus Pharma earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and then one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star and then zero. I would now like to hand the conference over to your speaker today, Tim Lee, Senior Director, Investor Relations. Please go ahead.
spk11: Tim Lee Thank you, operator. Thank you, everyone, for joining our first quarter 2022 Financial Results Conference call today. I'm Tim Lee, Senior Director, Investor Relations of Ascendus Pharma. Joining me on the call today is Jen Mickelson, President and Chief Executive Officer, Scott Smith, Senior Vice President and Chief Financial Officer, Dr. Dana Pizzuti, Head of Development Operations and Chief Medical Officer, Dr. Yuha Poonanen, Head of Oncology, and Dr. Steena Singhal, 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, the commercialization of Transcon HGH for the EU market, our progress on our pipeline candidates and our expectations with respect to their continued progress, statements regarding our strategic plans, our goals regarding our clinical pipeline, including the timing of clinical results, statements regarding the U.S. market approval of Skytrofa, and our pipeline product candidates, statements regarding our planned regulatory filings, our expansion to new therapeutic areas, and statements regarding our ability to create a sustainable, leading global biopharma company. These statements are based on information that is available to us today. Actual results and events could differ materially from those in the forward-looking statements, and we may not be able to achieve our goals, carry out our plans, or intentions or meet the expectations or projections disclosed in our forward-looking statements, and you should not place undue reliance on these statements. Our forward-looking statements do not reflect the potential impact of any licensing agreements, acquisitions, mergers, dispositions, joint ventures, or investments that we may enter into or terminate. We assume no obligation to update these statements as circumstances change except as required by law. For additional information concerning the factors that cause actual results to differ materially, please see our forward-looking statement section in today's press release and the risk factors section of our most recent annual report on Form 20F filed with the SEC on March 2, 2022. Transcon Human Growth Hormone, or Transcon HGH, is approved by the FDA in the U.S. under the brand name Skycropa for the treatment of pediatric patients one year or older 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 Lone Rumpet Xanthotropin Ascendis Pharma, developed under the name Transcon HGH, as a once-weekly subcutaneous injection for the treatment of children and adolescents age 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. Otherwise, please note that our product candidates are investigational and not approved for commercial use. As investigational products, the safety and effectiveness of the product candidates have not been reviewed or approved by any regulatory agency. None of the statements made on the conference call regarding our product candidates shall be viewed as promotional. On today's call, we will discuss our first quarter 2022 financial results and will 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 Jens Nicholson, President and Chief Executive Officer.
spk05: Jens Nicholson, President and Chief Executive Officer, Jens Nicholson, President and Chief Executive Officer, Thanks, Tim, and good afternoon. 2021 was an extraordinary year for Ascendis. As we became a fully integrated commercial states biopharma company, the balance of in the U.S. and the expansion of our clinical pipeline to five independent programs in endocrinology, rare disease, and oncology. These successes confirm that we have the right strategy, the people and capabilities in place to allow us to achieve our vision tree by tree. and to build a sustainable, profitable, leading global biopharma company. In 2022, we have already achieved an important milestone. In March, we reported results for the Transcon PTH phase 3 program, and our pathway trial met the primary and all key secondary endpoints. Transcon-PTH is a product candidate, addressing a major unmet medical need for adults with chronic hypoparathyroidism patients. A large rare disease population with around 200,000 patients in North America, Europe, and Japan alone. It is rare for a biotech company to have two potential blockbuster product candidates in a row achieving their target product profile and successfully meet their phase three trial objectives. What has put Ascendis in this unique position? First, our Transcon technology platform and our approach to product innovation, the uniqueness of the Transcon technology platform, combining the benefits of two independent technology platforms, the classical product technology and a predictable sustained release technology. The Transcon technology platform can be applied broadly to multiple dog types, We believe this, combined with our validated approach to product innovation, enables us to achieve a higher rate of success compared to traditional drug development. Second, our commitment to patients and their science. Our commitment to patients and science has guided our product development strategies. We seek to design optimal clinical programs to bring differentiated product candidates to patients as quickly as possible with robust clinical data. Third, and in this time, perhaps extremely important, we have a strong balance sheet to support long-term strategic executions. we have the capital necessary to deliver on both short and long-term goals. During the first quarter, we further strengthened our balance sheet to a convertible notes offering. As a result, with the cash on hand today, we believe we are well positioned to deliver on our vision 3x3 strategy, independent of further financing. What makes me so optimistic for the future, so optimistic for the patient, so optimistic for Ascentis is that all our five independent clinical programs are based on the Transcon technology platform and developed using the same algorithm for product innovation. And we will navigate the regulatory pathway with the same experienced global Ascendis team that brought Transcon Growth Hormone to approval in the US and Europe. We believe we have demonstrated that we have the fundamentals for creating a continuous stream of product candidate with the potential to address major unmet medical needs with greater success than traditional drug development. In short, we believe Ascendis has the right approach a growing portfolio of product candidates, the right people and capabilities, and the necessary funding to deliver on our goal to create a sustainable, leading global biopharma company. Throughout the rest of the year, we look forward to sharing clinical data from across our pipeline, including our third endocrinology rare disease product candidate, Transcon-CMP in Fort Worth and from our oncology programs, which have multiple important milestones this year. For Transcon-Glutamone, which is now approved in both the U.S. and Europe, we continue to build awareness and increase adoption and covers in the U.S., where it's marketed under the brand name Skytofa. We believe that SkyTrofa is a unique, important treatment option for patients. And we are determined to build it into a leading global brand. As we work to shift the daily treatment paradigm for physicians and payers, I'm pleased to share that brand penetration continues to grow with increased prescriptions, treated patients, and covered lives. As part of our commitment to make Transcon Growth Hormone the leading treatment option in the global growth hormone market, we continue to recruit patients for our global phase three foresight trial of Transcon Growth Hormone in adults with growth hormone deficiency. As a result, of the ongoing war in Ukraine. We do not expect any patient in certain Eastern European countries to be part of the Foresight Trial. And we have modified our recruitment efforts to focus on our countries to compensate. As a result, we are now targeting completion of enrollment of the Foresight Trial during the fourth quarter of this year. In addition, to support further label expansion for trans-con growth hormone. We are planning a protocol submission in the second quarter to FDA for Turner syndrome. Turning now to trans-con PTHs. We believe that the best way to treat a hormone deficiency is to replace the missing endogenous PTH hormone at physiological levels over 24 hours. For this unmet need, we designed Transcon PTA to become, if approved, the first complete PTH hormone replacement therapy, with addressing the underlying cause of this disease. The positive phase III pathway trial results from the composite primary endpoint and all key secondary endpoint confirm our belief in this potential. As a reminder, the phase III results at week 26, the data showed that 95% of transcomptate treated patients, that is, 57 out of 60 patients were able to eliminate, eliminate conventional treatment with therapeutic doses of calcium supplement and active vitamin D. In addition, for the key secondary endpoint, two separate quality of life instruments show Transcon PTH treated patients reported significant decrease in disease symptoms and significant improvement in their physical function. Our Phase II and Phase III trials are the first clinical trials ever to show statistic improvement in quality of life measurement and demonstrate consistent results across both studies. I believe these improvements, specific renormalization of quality of life measurement are why, after more than two years, 57 out of 59 patients in our Phase II trial and all 79 patients who completed the Phase III trial are continued treatment in these studies. These results from our trials are promising outcomes for adults suffering from chronic ASPs. who often experience multi-organ comorbidities and a diminished quality of life. We are doing the work required to build this new market and treatment paradigm because these patients deserve a better life. Understanding the urgent need, we are working to bring Transcom PTAs through the regulatory process in the US and Europe as quickly as possible. The robust data sets from our Phase 2 and Phase 3 studies will be the foundation of our planned U.S. and European regulatory findings, which remain on track with a U.S. NDA-finding plan for Q3 and a European MAA-finding plan for Q4. In Japan, we recently completed enrollment in our pathway Japan Phase 3 trial. and we plan to report top-line results later this year, which demonstrates Ascendi's global development capabilities. If approved, we believe Transcon PTH has the potential to become our largest endocrinology rare disease product, and the only PTH replacement therapy available in an estimated more than 5 billion plus market opportunities. Let me switch now to Transcon-CMP for a contemplation. We designed Transcon-CMP to provide sustained release of an effective level of CMP over the course of a week, while avoiding a high CMAX which may be the driver of cardiovascular complications. Last December, We completed enrollment and accomplished our Phase 2 randomized double-blinded placebo-controlled clinical trials of Transcon-CMP in children with acondyloplasia from the age of 2 up to 10. We look forward to sharing the top-line results for this Phase 2 study during the fourth quarter of this year. Moving to oncology, an era where unmet need remains high. In oncology, we are applying the same algorithm we have used in endocrinology rare diseases to bring forward product candidates that we believe will address major unmet medical needs with higher success compared to traditional drug development by building on well-understood biological pathways. We believe that transplant technology can address some of the challenges that have limited these immunotherapies and address additional aspect of the immunity cycle to induce the patient's own immune system to potentially eliminate the tumor. To transform this treatment paradigm in oncology, we are using Transcon intratumor and systemic technology to enhance intratumor effects. by providing sustained modulation of tumor microenvironments and activating of pseudotoxics in immune cells. Transcon TLR78 Agonist is using the Transcon intertumor technology platform and is designed to kickstart the immune system inside the tumor. Transcon IL-2 Beta Gamma is using the Transcon systemic technology platform and is designed to increase the systemic stimulation of the body's own cancer immune system. We believe Transcon IL-2 Beta Gamma development program may yield advances over all current treatment options. We are beginning to see promising results and we will provide additional data by the end of the year. The results we plan to present later this year will include additional clinical data from our TLR7-8 agonist program. At the end of last year, we reported early signs of clinical efficacy and a well-tolerated safety profile. Enrollment continues in our Phase 1-2 study of Transcon TLR788 agonist monotherapy and in combination with checkpoint inhibitor in patients with advanced or metastatic solid tumor. Later this year, we expect to share both top-line monotherapy and combo therapy dose escalation data from this trial. For Transcon IL-2 Beta Gamma, we have already moved into our third monotherapy cohort in our Phase I-II, I believe, trial, with dosing at 80 micrograms per kilo, with the expected strong safety profile and effect just as we designed this molecule. We are using the Transcon technology to release a permanent high-potent beta-gamma-bias IL-2 molecule. Through the Transcon technology, we are flattening the PK profile and expanding the therapeutic window by avoiding the hyzimax that is known to drive toxicity. During this summer, we look forward to share initial data related to transcon IL-2 beta gamma activation of the vector immune cells. We also expect top-line monotherapy data by the end of 2022. Later this quarter, we are targeting the first patient dose in a combination therapy portion of phase 1 to IL-2 beta, I believe, trials. Transcon IL-2 beta gamma and Transcon TLR-7-8 agonist act on different parts of the immune system. And we are developing the programs in parallel, as we believe they could be working together in synergy to become a new backbone in therapy, in immunotherapy, independent of checkpoint inhibitors. We expect to initiate clinical trials exploring this potential clinical synergy together later this year. Going beyond endocrinology and oncology, we are finalizing the selection of our third therapeutic area. And I'm looking forward to sharing more information of this with you in the end of this year. It's the best time for incentives, but we never forget why we're here. to make a meaningful difference in the life of patients. Our corporate strategy has been clearly defined in our vision 3x3, and we continue to achieve consistently impactful results as we're walking across the portfolio. The values that drive our organization, patient, science, and passion, combined with our strong financial position and expanding in-house capabilities, position us to advance the regulatory, clinical, and commercial milestones that will contribute to our long-term sustainability and profitability. I firmly believe we have the right team, culture, and capability in place to execute. I will now turn the call over to Scott for additional details and financial review before we open for questions.
spk02: As Yen eloquently laid out, 2022 is an important transition year for Ascendus. We have demonstrated we have all the elements of success in place to deliver sustainable growth, and we have a strong balance sheet to support execution of our vision three-by-three strategy and long-term profitability. Turning now to our financial results for the quarter ended March 31, 2022, we reported a net loss of 125.5 million Euro or 2.21 Euro per basic and diluted share compared to a net loss of 62.3 million Euro or 1.17 Euro per basic and diluted share during the first quarter of 2021. And we ended the first quarter with cash, cash equivalents, and marketable securities. totaling approximately 1.1 billion euro. Let me now run through some key components of these results. Total revenues for the first quarter were 6.8 million euro, compared to 0.7 million euro during the first quarter of 2021. Revenues include U.S. Skytropha net sales, as well as licensed clinical supply and services provided to third parties, primarily these in pharmaceuticals. Reported U.S. Skytropa net sales for the first quarter, which are net of provisions to cover estimated sales deductions and product returns, were 1.9 million euro. Now turning to operating expenses. Research and development costs for the first quarter were 83.2 million euro compared to 88.1 million euro during the first quarter of 2021. This reflects stabilization of our overall R&D costs due to successful progression of early-stage programs through late-stage development and approval. Selling, general, and administrative expenses for the first quarter were €47.4 million compared to €37.2 million during the first quarter of 2021. These higher expenses primarily reflect increased costs to establish our commercial organization in the U.S., Finance income and expenses for the first quarter included a net foreign exchange rate gain of €11.7 million compared to a net gain of €34.2 million during the first quarter of 2021, primarily related to unrealized gains on translation of our U.S. dollar holdings of cash and marketable securities to euro. Finance expenses for the first quarter also included €4.2 million in transaction costs, related to our U.S. $575 million convertible senior notes financing. Going forward, we may potentially report significant volatility in the finance income and expense line as IFRS accounting rules will require us to remeasure the conversion option embedded in the convertible notes at fair value on a quarterly basis. Finally, we ended the first quarter with cash, cash equivalents, and marketable securities totaling approximately 1.1 billion euro. Turning to an update on our U.S. launch of Skytropha for Pediatric GHD, demand for Skytropha continues to be strong. The total number of patients receiving prescriptions enrolled through our patient hub grew from 369 at the end of 2021 to 978 as of March 31st. the number of healthcare practitioners prescribing Skytropha increased from 139 at the end of 2021 to 349 as of March 31st. In addition, through the first quarter of 2022, 46% of these healthcare practitioners have prescribed Skytropha to more than one patient, compared to 41% at the end of 2021. From launch, Through April 29th, 1,231 Skytropha prescriptions have been written by over 400 prescribers and submitted to our patient hub for processing. Of those prescribers, nearly 50% have prescribed Skytropha to more than one patient. From a market access perspective, 45% of U.S. lives were covered per MMIT as of the end of April. reflecting continued adoption of Skytropha on formulary by healthcare plans. We believe Skytropha has unique benefits for patients and payers alike, and we will continue to work with payers, PBMs, and GPOs to maximize coverage within our premium responsible pricing strategy. As a reminder, once approved for reimbursement by a payer, the patient will generally finish their current supply of daily growth hormone or Skytropa Fast Start treatment before beginning reimbursed therapy with Skytropa. Turning to the remainder of 2022, we expect our expenses to increase modestly as our pipeline matures and we continue to build our commercial capabilities and organization in preparation for additional anticipated product launches, and as we advance our endocrinology rare disease pipeline, expand our activities in oncology, and continue to invest in the TransCon technology platform. Let me now also provide an update on select corporate milestones. For TransCon PTH, we are on track for a planned NDA submission in Q3 2022 and a planned MAA submission in Q4 2022. And for Pathway Japan, top-line results are expected later this year. For Transcon CNP, top-line data from the Phase II accomplished trial are expected in Q4 2022. For Transcon TLR78 agonist, top-line monotherapy and combo therapy dose escalation data from the Phase I-II Transcend IT 101 clinical trial are expected in Q3 2022. For Transcon IL-2 Beta Gamma, we are on track to dose the first patient in the checkpoint combination dose escalation arm of the IL-Believe clinical trial in the second quarter of 2022, and monotherapy top-line results are expected from IL-Believe in Q4 this year. Within oncology, we expect to submit an IMD or equivalence for a Phase II cohort expansion in order to evaluate the combination of Transcon TLR78 agonist and Transcon IL-2 beta gamma therapy in Q4 2022. Finally, we plan to announce our third therapeutic area in the fourth quarter this year. As you can see, it's a busy year ahead for Ascendus. with key catalysts across the pipeline, both in endocrinology rare disease and oncology. As Yen noted, we strengthened our finances earlier this year, raising capital at favorable terms with our convertible note financing in Q1. And now, with over €1 billion on our balance sheet, we have the capital to fund our growth initiatives and execute on our vision 3x3 to build a sustainable global biopharma company. We very much look forward to seeing many of you face-to-face at the B of A conference in Las Vegas tomorrow. And with that, operator, we are now ready to take questions.
spk07: Thank you. As a reminder, to ask a question, you need to press star and then one on your telephone. To withdraw your question, please press the pound key. And in the interest of time, we kindly ask that you please limit yourself to one question and one follow-up. You may rejoin the queue if you have any additional questions. And our first question comes from Jessica Tsai from JP Morgan. Your line is open.
spk01: Hey, guys. Good afternoon. Thanks for taking my question. In light of the Skytropha number, I had a couple questions there just to kind of clarify what we're seeing here. Of the patients who have been prescribed Skytropha, what proportion were reimbursed during the first quarter? And in light of the lag that you mentioned between plans adopting coverage and patients starting up on reimbursed product after they finish using their free drug, can you tell us of the patients who have been prescribed Skytropha, what proportion of those patients are on plans that now cover Skytropha? And I have a follow-up.
spk05: Thanks, Jess, for the two questions. Let us start with... the last question you have about the time. This is actually a time that's still getting developed when you come to a more steady state situation. So if we start to discuss the number now, then we will basically give you a completely different number in two to three weeks from now, in two to three months from now, because It's basically applying a general principle because we have the fast start program. In the fast start program, you come in without the majority of the patient comes. So we basically will have in position that, as we also have seen from the data that Scott released, The majority of the patients are still coming from SVEX patients. So we still, many of them will have daily growth hormone supply. And first of all, it will take some time before they have used up their daily growth hormone supply before they start with Skytrover. And also the reimbursement system in that. There is a wider delay in this number. We will come up, as we said before, in a situation when we come up with our Q2 finances, we will give you an updated perspective both on what we expect to be our revenue basis for the rest of the year, and we will also give you much more solid data Why do we believe we can provide you much more solid data? Because we will have all the fundamental analytics for two full quarters. And when we have that, we feel much more in comfort for basically being in a position that can give you information, data that can give you a way to make a reliable forecasting of the sales. For the first question, I think Scott has a question related to that.
spk02: Jess, your question related to how many patients are reimbursed now that came on to therapy I think is the one that I'm addressing. Once the patient receives their first claim reimbursed, I would say we have limited information after they start being dispensed via the specialty pharmacy. However, from a financial perspective, as I mentioned, we take a net provision for a variety of different discounts and rebates and product returns, and we try to be as conservative as possible until, as Yen mentions, we get our experience around how the patient evolves over time.
spk05: So basically, yes, what we're doing here when we talk about net revenue, we basically have some of what I call basically the worst-case scenario, both We incorporate already at that stage if there is a product recall and other things like that because we don't want to be in a position that we suddenly are in a position that we need to redo a lot of expected revenue basis on a net base because something comes up in the end of the year. I know it's a pretty conservative way to do it, but we believe it's a right way to do it because it gives you a great fundamentals for having what we call a real net revenue basis instead of what we call a potent net revenue basis.
spk01: Okay, thanks. And the follow-up question was just, do you expect priority review in the U.S. for Transcon PTH?
spk05: I think Dana, she has her hands up in the air, so I do not know what I mean.
spk03: Well, I think we're going to make a strong case for it. You know, I think it's always up to the agency to, you know, sort of make their ultimate decisions. But, you know, we'll be talking with them about it definitely.
spk01: Thanks.
spk07: Thank you. Our next question comes from Josh Shimmer from Evercore ISI. Your line is open.
spk09: Thanks so much for taking the question. For Transcon PTH, heard a lot of interest and enthusiasm for the product to have nephroprotective and potentially cardioprotective properties. When do you think you'll be in a position to generate clinical data to really support that and go beyond the theoretical into the more tangible proven advantage things?
spk05: So when we look on the potential of transcon PTAs, we believe the way we are providing PTH to the patient, giving the right molecule in the physiological level 24 hours a day. It's providing, as you said, total right. We are getting to a place where we do normalization of all biochemical, physical, everything what we are measured, including quality of life parameters. When we specifically go to elements like cardiovascular risk, I actually think we already have what I call surrogate markers that in my best way have a strong scientific clinical correlation. For example, phosphate, calcium phosphate complex. I think there is a strong scientific connection that they also are providing. If you have them elevated up to a higher level, they are providing what we call cardiovascular risk. If we, for example, go to the kidney, which are a huge issue for the patient group because they're basically in a position to dumping all the calcium to the kidney system and basically are going to renal damage. And one of the elements we can do, Josh, is that when we now have patients already in treatment for two, three, four years, we can go back and look and look on their, for example, the filtration, look at the way their basics are performing, And sure, we cannot have what we call double-blind placebo control because we cannot really be in a position that we can defend to have patients going out on treatment for a long time without giving them access to our medication. But what we can do, which I believe is a very, very strong benchmark, is compare to all the data that is built on the patient population of patients with hypothyroidism. And I think that would be a strong comparison to it. But I believe also in this case there are strong surrogate markers like urinary 24-hour calcium with basic INF position that we really can give a strong scientific rationale why it should be giving a positive impact on that. Dana also has a few comments to add.
spk03: Well, yeah, Josh, as we've looked at the data and some of the correlation between the PTH levels that we have and the urinary calcium levels, you know, what we're seeing is that it doesn't take much PTH to restore the resorptive ability in the kidney. So I don't know how long it's going to take to see, you know, clinical benefits or the lack of progression. of like particularly renal, you know, complications related to the calcium. But the longer that we look, the better, you know, the better it should be or more stable these patients should be. So, you know, that's one way that we're looking at it.
spk09: Are there ways to quantify the amount of calcium in the kidney like there are for the heart?
spk05: The way we actually are qualifying what we call the how to look on what we call the short-term weight is to look on 24-hour UMAI calcium because just look at different documentation from FDA. There is a clear correlation between what we call renal impact impairment compared to effect that you see with having an elevated 24-hour urinary calcium. But as Dana said, it's really interesting from a scientific perspective what we're seeing now because we basically can track because we have so many patients on different doses. And what we see, different part of the body because it's a multi-organ disease. And we see the threshold, which we believe is the most important, the stable physiological PCS level. But different organs have basic different way to respond to it. And as Dana said before, the kidney is actually one of the easiest organs to some way to normalize with the PTAs. And we see that really, really easy in low-dose PTAs. As long as it's a constant in the low level of the physiological level, then we see the improvement.
spk07: Thank you. Our next question comes from David Leibowitz from Citi. Your line is open.
spk12: Thank you very much for taking my question. Could you, understanding that at this point in time you're not comfortable giving us timing and certain specifics on reimbursement, could you run us through the typical process for a patient coming to a doctor to get prescribed for growth hormone, what it takes to get the prescription, how the prescription gets submitted to the insurer, how long, you know, Can they be looking at, depending on what the nature of their insurer is and where their status of coverage is, just to get some sort of idea of what the process is facing these patients right now?
spk05: Yeah, this is a question where there is so many, many, many scenarios for answering the question. First of all, it's very much dependent. Are you a native patient? or you already have been established a treatment on daily growth hormone. Then you just take the big group of these two into the new patient. You basically need to go through all the different kinds of tests that involve stem tests, x-ray, or you still have open growth plate, a lot of different tests that take a period of time really to get established that you have the diagnosis of growth hormone deficiency. If you take the patient that's coming from already established on data growth hormone, from that perspective, it's much, much, much easier because you already have been to all the different diagnoses and therefore have established. This is why potentially we see a majority of the patients coming for switch patients because they don't need to go to the entire system to be established the diagnosis of having growth hormone deficiency. There was two big, big groups. Then you go into each of the two big groups. There much depends. Are you coming for a system where we already have market assets or not market assets? And then there is different place to have market assets. This is not a simple way to have market assets. You will have different what I call power of market assets. And either of them will basically require a lot of different elements to fulfill it. And it will take different times. in different systems you have, depending on the market assets you have in your insurance. But what we see of all these groups, we get all the groups now. And we get them both on what we call, they already have the pre-autization. We also get them from the system where you go to medical exemption. This is mainly typical where there is no market assets. They're still getting medical exemptions. Because if you have a child on daily growth and they're not growing, and you have scartola, some optimal treatment option, then it's actually possible to get medical exemption, and this is where we see them come from. Sadly enough, I cannot answer your question better because this is describing about 200 different pathways in the complexity of the U.S. system related to basically getting reimbursed and establishing you as a commercially treated patient.
spk12: Thank you for that. And one follow-up here. Could you possibly outline for us what the revenues might have been before provisions to give us just perspective on the level of impact at this point?
spk05: I think this is something we typically never disclose in our numbers because As I said and what Scott said, we do it in a very, very conservative manner where we're both subtracting elements like rebate, but we're also basically taking away if there is any kind of material that's not getting sold and other things like that. So I think we have four or five ways where we're subtracting for what we call the gross margin. And then you have gross margin one, you have gross margin two, you have gross margin three, you have gross margin four. Before we go back to the final one, we call net net revenue. And that is what we give to you. And that is not realized net net revenue. This is where we believe that in the future, if there's any kind of discounting coming, then we will take it away. So it's not what we call net-net gravity of today. This is where we will be in a position where we expect for future, with WB, any kind of element that we need to discount it is already being taken into consideration.
spk07: Thank you. Our next question comes from Vikram Purohit from Morgan Stanley. Your line is open.
spk06: Great. Thanks for taking my question. So first, could you just give us an update on where Transcon HGH stands in Europe and what are the next steps there for securing reimbursement across some of the key geographies that you need to start commercializing in to really start initially ramping that launch?
spk05: Yeah, it's a question. And what we were really waiting for was basic Transcon PTH to get the positive phase three data that we achieved. And you can say, why? Because the complexity of Europe is that it's not a single market. It's a multiple, multiple differentiated market. And one of the elements we are focused on is to be profitable and having a P&L play. And this is why to have the optimal way to penetrate the different European markets we will be in a position that we can build on the synergy, the economy of scale of launching two extremely important products just after Isola. Now we have the phase three data. We have the approval in Europe. We basically are executing on our European strategy. And this is a strategy that is built on not spending 120 million and generate 5 million in revenues, It's building and P&L play because we are a European company. We, sadly enough, know what to do because I've seen, sadly enough, a lot of companies coming into Europe and believe that it's a place where you basically can execute and make a highly profitable business on what I call rapid global expansion. You don't do that. You go country by country, build it up, and take high volumes high-marketing country as the first state, and then you build the extension from there.
spk06: Got it. Thank you. And a follow-up on a separate topic. So for the TLR7A and IL-2 readouts that we're looking forward to in 3Q and 4Q, what could we expect to learn in terms of number of patients, amount of follow-up, and what do you hope to see from each of these readouts to feel like each program has a viable path forward? Thanks.
spk05: You know, I will start with a few remarks and then Stina will take over. When we moved into oncology, I got asked multiple times, why do you do that again? You have rare disease endocrinology, you can dominate that. Perhaps it's easier to dominate rare disease endocrinology in going into oncology. But why I'm actually a Buddhist in the same way? Because we have the Transcom technology and the way we have our algorithm for innovation, where we can really make highly differentiated product opportunities that no one else ever, ever have made. And when I think the synergy we're building up in our pipeline approach, the kickstarter, the kickstarter in solid tumors, where we place inside a tumor inside the tumor, a drug that gets sustained release over weeks, one single injection. And then you activate the immune system inside the tumor. And then we're going out and saying, you have today established checkpoint inhibitors, but we've also seen the limitation. And we are not here to develop something in synergy with checkpoint inhibitors. We are here to develop something that is improvement, the next generation compared to checkpoint inhibitors. And this is our vision, and that is what we're building up with clinical data that really can support that vision. So Stephen can give a little bit more perspective what we have seen and our initial readout we have seen with all the data.
spk08: Thanks, Yan. For the TOR7-8 program, we expect to have about 18 patients dosed by the time that we disclose our data end of the year. And depending on how many patients make it to the first tumor assessment at week nine, we do expect to have approximately 10 patients with efficacy-evaluable data. For the IL-2 beta gamma program, we are actively in dose escalation. So it really depends on when we may or may not hit a maximum tolerated dose. We will have more patients. But as Yen has mentioned before, we are already dose escalating in dose level 3, which is a microgram per kilogram. And we're doing it with the standard 3 plus 3 dose escalation, 3 to 6 patients per dose level cohort in monotherapy and in combination with pembrolizumab.
spk05: So when I think about the IL-2 race, there's about 20 companies in the IL-2 race. We want to see how fast we are progressing. And why are we progressing so fast? Because we designed it in an optimal manner to see the right efficacy without any safety concern. And what we see today is really everything has allowed out how we designed it. So I'm really, really looking forward to share this data with you later this year.
spk07: Thank you. Our next question comes from Leland Gershel from Oppenheimer. Your line is open.
spk10: Hi, Leland. Thanks for taking my questions. Just one or two for me. First, maybe for Scott, just looking at the OPEX, your SG&A was maybe a little bit down this quarter versus 4Q. Clearly, you're in a launch and you guided to a modest increase the rest of the year. Just wondering... what was behind perhaps not spending as much this past quarter given the SkyTropical launch.
spk02: Thanks. Thanks for your question, Leland. I think that as we alluded to with regard to R&D, to some extent in SG&A there have been one-time costs to build the infrastructure. So I think a combination of some costs rolling off, you know, offset by, increased personnel basically led to flattish expenses.
spk10: Okay. And then also want to ask in terms of the China trial, given all the COVID impact in that geography, wanted to ask if there's any particular impact to accomplish with respect to COVID-19 things.
spk02: Yeah, and just a quick follow-up on, you know, I should have added that, you know, we also are basically in steady state with the SG&A infrastructure as well as the R&D infrastructure. And then your question about the status, it was the status of Accomplish in China, was it?
spk05: No, the East European part of SIO Institute equation. It's not like you're addressing the East European elements.
spk10: you know, Shanghai and so forth. Just wondering if there's been any impact on the accomplished China trial that you've been conducting with, you know, in that region.
spk05: Thanks. Yeah, the accomplished trial is actually pretty interesting because we managed to get a lot of enrollment done. So we actually got the cohort in as we wanted to do. We actually are Following up a lot of that, but we also realized that China is such a big country that basically there is element that is very, very affected on the COVID situation and there is other part that's not affected with it. So from that perspective, we feel that we are doing that. But as we said before, we're also planning to basically do the same parallel in the European and the U.S. set because we feel that and we're getting so much response from the patient groups that they really would like to see the same cord expansion. So we will do the same thing in what we call an U.S. and EU-focused trial where we do exactly the same thing what we did in China to have it doubled. And it's mainly being driven out from the perspective is that We have so many children in our chief tribe. This is our national history tribe. And the basic are asking us why can we not come into a treatment. And with our patient focus, we will do what we can do for the patient. And this is why we expand the access to basic having transcon CMP in this patient group too. One thing just to add in with Scott's comments about it. Ascendi's pharma is not now matured. We are mature to a stage when we take new product up, as we will do in our third therapeutic era, when we see new product come into oncology. We basically, nearly with the same speed, are taking out in the opposite end. Like Skytropha, finalized, out in commercial manufacturing now, out of research and development. We do the same thing now with PTAs. finalizing the validation fashion, all the PPQ activities. Next year, we move them out to commercial manufacturing. We do that nearly in the same speed as we actually generate the pipeline. So this is why we're coming to a steady state in Assetto's Farm, feeling on we are a machine developed to develop rocks successfully. And as we continue to do with the speed and dedication we have, So our overall plan is a new product be approved every year or every second year. And it looks like we really can fulfill that ambition.
spk07: Thank you. Our next question comes from Joseph Schwartz from SVB Securities. Your line is open.
spk04: Thank you. Just a question on Skytropa and then one on PTH. First, I was wondering if you could describe for us your free drug policy in terms of the duration of therapy that patients are entitled to receive before they need their insurance to cover the bill. And do you have any data at all that you can share with us that illustrates the success rate for patients being able to receive insurance coverage once their free drug supply runs out?
spk05: A good question from the perspective is that it's something we're analyzing a lot, looking on the data a lot every month, and we see the expected development. We see the exhibit development is that when we start a patient, they have the opportunity to come into our start program. But it's not actually all of them that are doing that. And we actually see there's perhaps two-thirds that do it. Rest go directly into it. So two-thirds opt into this opportunity to get early assets to that. And what we now are following, and this is where I really, really love to see more, more, more, more, more data, because it has different patient groups, one with a new patient, one with a switched patient, but what is really dependent is also how we build up the market assets because with more and more market assets and how we get market assets, it also changes the ratio when they're moving over. So what we're seeing is not a steady state. But what we expect, we expect that the majority of patients that is starting on this fast start program basically will end up as commercial patients. But what we do not know is exactly the timing and how long time it takes. We have some average time, but it's not meaningful for us to give you an average time because it's actually changing month by month, getting faster and faster.
spk04: Okay, thank you. On PTH, to what extent do patients feel better when they're on Transcon PTH therapy? I'm asking because it seems like many of the day-to-day symptoms you'd capture in a clinical trial are cognitive, but there seems to be a bigger impact on physical functioning than cognitive in your data, so I'm wondering why that is and what it might mean in the real world.
spk05: Yeah, it's a good question, and Dana will come with further questions about it, but what we did basically in Phase II and what we did in phase three, it's a little bit different. Because in phase two, we basically have the entire, I do not know how many different subdomains we analyzed. It was 20 plus or something like that. And we saw basic improvement in all of them. After Dana, and she can explain it, is that she had an intense discussion with the rectatory agents and what they believed was the most important one and what they believed its potential is the one that they would like for us to move forward with. We actually selected this subdued main mainly in working in a strong discussion with FDA which one they saw was most important for this patient group. But Dana, you can explain some of the discussion
spk03: As you know from, you know, prior sort of releases that we've had, with the phase two, we looked at, you know, sort of our, you know, the SF-36 scale, and we saw normalization essentially across all the domains. Again, it's not disease-specific. And then we were continuing to develop our HPAS, which is disease-specific, you know, sort of instrument. Now, we still use both of them. in the phase three. And what the FDA asked us to do for phase three was to focus on what we felt were some of the most important domains. And I think that in particular, they are particularly interested in the symptoms and then the functioning. So we did you know, sort of focus on those particular areas. And as we, you know, disclosed back in March, you know, we were highly statistically significant for pretty much every single one. So, you know, and then, you know, even if we drilled down into some of the smaller ones, we still, you know, saw very, you know, sort of favorable results for the patients. But you know, the FDA asked us to focus on the things that they felt were probably the most important.
spk05: I think another way to look at it, Joe, is look about patient retention. Because I actually think patient retention is the short-term benefit you get on treatment. You don't stay in a clinical trial or an open-label extension because you believe long-term complications may be are getting solved. You do it because you feel normal again, that you see the immediate benefit of the drug. When I see we still have 57 out of 59 after more than two and a half years in open labral extension. We saw all the patients from our phase three is now under treatment. I think this is the best way for me to measure Sure, we can quantify it in all the different things we did in our key secondary element in our phase two, but patient retention for me is the key element because this is why patients take the therapy, why they keep going every day with a daily injection with an adherence frequency about 98 to 99. They do it because they get the short-term relief. They're feeling normal again. And this is one of the best measurements for me.
spk07: Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.
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