Ascendis Pharma - Q1 2023

Transcript

Operator (participant)

Thank you for standing by, and welcome to the Q1 2023 Ascendis Pharma Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentations, there will be a question-and-answer session. To ask a question at that time, please press star one one on your telephone. As a reminder, today's call is being recorded. I will now turn the call over to your host, Mr. Tim Lee, Senior Director of Investor Relations. Please go ahead.

Tim Lee (Senior Director of Investor Relations)

Thank you, operator, and thank you everyone for joining our Q1 2023 financial results conference call. I'm Tim Lee, Senior Director of Investor Relations at Ascendis Pharma. Joining me on the call today is Jan Mikkelsen, President and Chief Executive Officer; Scott Smith, Executive Vice President and Chief Financial Officer; Dr. Stina Singel, Executive Vice President and Head of Clinical Development Oncology; and Joe Kelly, Senior Vice President and Head of Commercial Endocrinology. Before we begin, I'd 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 statement may include but are not limited to our U.S. commercialization and continued development of SKYTROFA for the U.S. market, our revenue projections for SKYTROFA, the commercialization of TransCon hGH for the EU market, statements regarding the expected timing of the approval of the.

the expected timing of potential approval and launch of TransCon PTH in the U.S. market, statements regarding the expected timing of the potential approval of TransCon PTH in Europe, statements regarding the potential market size for TransCon PTH, 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 our pipeline product candidates, statements regarding our ongoing and planned regulatory filings, and our expectations regarding the timing of the results of regulatory decisions, our expansion into new therapeutic areas, and statements regarding our ability to create a sustainable, profitable, 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 our forward-looking statements, we may not be able to achieve our goals, carry out our plans, our intentions, our expectations, or our projections disclosed in our forward-looking statements. 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 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 filed February 16th, 2023.

TransCon Human Growth Hormone or TransCon hGH is approved by the FDA in the US under the brand name SKYTROFA for the treatment of pediatric patients 1 year and older, weighing at least 11.5 kilograms and having growth failure due to inadequate secretion of endogenous growth hormone. In addition, the European Commission has granted a marketing authorization for SKYTROFA to Ascendis Pharma, developed under the name TransCon hGH as a once-weekly subcutaneous injection for the treatment of children and adolescents aged 3-18 for growth failure due to insufficient secretion of endogenous growth hormone. In general, if we refer to this product as TransCon growth hormone unless referring to the product in the context of particular jurisdictions such as the United States or the European Union. Otherwise, please note that our product candidates are investigational and are 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 the call today, we'll discuss our Q1 2023 financial results, and we'll provide further business updates. Following some prepared remarks, we'll then open up the call for questions. I'll now turn the call over to Jan Mikkelsen, President and Chief Executive Officer. Jan, to you.

Jan Mikkelsen (President and CEO)

Thanks, Tim. Good afternoon, everyone. Ascendis continues to execute on the strategy we have laid out in our Vision 3x3 and our commitment to improve patient lives by building a sustainable, profitable leading biopharma company. Based on the strength of our clinical data for TransCon PTH, including the positive feedback from patient and their physician, and the significant unmet medical needs of patients living with hypoparathyroidism, we remain convinced that TransCon PTH can be approved and become an important new treatment option. We remain dedicated to working with FDA to bring this product to the U.S. market as quickly as possible. We are on track in E.U. with an expected regulatory decision later this year.

In the U.S., our PDUFA date of April 13, 2023 is coming up, and we expect to get feedback from FDA soon on the next steps forward. While there are multiple possible scenarios, our team is well prepared, and our belief in the approvability of TransCon PTH in the U.S. is unchanged. We launched SKYTROFA with a commercial strategy built on its product strength, with the goal of making it the leading product in value in a growing growth hormone market. With each quarter, we believe that it's more and more clear that SKYTROFA is on track to become the U.S. market leader in value in a growing growth hormone market and a blockbuster product. We believe the success of SKYTROFA we are seeing now is driven by the following three factors. First, treatment experience.

Many physicians have now had patients with 12 months real-world experience with SKYTROFA, the time period that is necessary to observe an improvement in linear growth and other endocrine benefits. Second, consolidation of daily growth hormone market. This consolidation started 3, 4 years ago, when daily growth hormone companies began to realize that their existing daily product would be phased out with time when once weekly treatments came to the market. We saw daily growth hormone companies reduce investment and optimize their business in this phase out period. We believe the current supply challenge of daily growth hormone products are a consequence of this, which further support the uptake of SKYTROFA. Third, Ascendis' dedication and investment in endocrinology. We are investing in building relationships with physicians, patients, caregivers, providers with our investment in a dedicated commercial organization and medical affairs team supporting our endocrinology efforts.

We are also building a robust supply chain for SKYTROFA, indicating to patients, physicians and providers that we are a trusted partner with a solid supply chains. As a result, Q1 2023 SKYTROFA revenue grew to EUR 31.6 million. Based on the algorithm we described earlier this year for 2023 outlook, using Q1 sales of EUR 31 million and our goal of adding as many new reimbursed patients in 2023 as we did in 2022, we now expect full year 2023 SKYTROFA revenue between EUR 150 million and EUR 160 million. Our revised outlook for 2023 provides a new higher foundation for 2024. We are pushing global market leadership for SKYTROFA to geographic expansion and potential label expansion. The SKYTROFA commercial launch in Germany is on track for the Q3 of 2023.

In the Q4, we expect top line results for the Phase III foresight trial in adult growth hormone deficiency, which is designed to demonstrate the impact of SKYTROFA on body composition in adult patients with growth hormone deficiency. Turning now to TransCon PTH. As I mentioned at the start of today's call, we are dedicated to get TransCon PTH to patients suffering from the serious health and quality of life issues caused by hypoparathyroidism. We know that the patient community share our goal. We continue to be excited about the potential TransCon PTH could have on addressing the significant unmet medical needs of hypoparathyroidism patients.

The open label extension of our Phase II Path Forward and Phase III Pathway trials for TransCon PTH are ongoing with 145 of 154 of the original clinical trial patients continuing on treatment with TransCon PTH for now up to three years. In the U.S., our expanded access program continues to enroll new patients every week. In Europe, as previously announced, we received the comprehensive Day 120 response from European Medicines Agency, and we are very pleased with the feedback. We anticipate a decision on our MAA during the Q4, and if approved by the EC, we expect to launch in Germany in early 2024, leveraging our established commercial infrastructure. We have also applied to initiate an early access program for TransCon PTH initially in Germany.

Assuming approval for this program, we expect to initiate and enroll the first patient in Germany this quarter. Moving to achondroplasia, TransCon CNP. Our clinical data and positive physician feedback continues to differentiate TransCon CNP and reinforce our conviction that it has a potential best-in-class product profile in the four key pillars of drug development: safety, efficacy, tolerability, and convenience. More importantly, we believe TransCon CNP also has a beneficial effect on achondroplasia comorbidity besides promoting increased linear growth. We believe that is why all 57 patients who started in our Phase II AccomplisH trial remain in this open label extension. Later this year, we will have an R&D event focused on TransCon CNP to share new clinical data and the science that we believe support its best-in-class profile. Switching to oncology.

We have two programs moving ahead with recommended phase two doses in specific indications, TransCon TLR7/8 Agonist and TransCon IL-2 β/γ. Next month in May, we will hold an oncology R&D event in New York around ASCO to give you an update on these two important programs. At this event, Ascendis and key opinion leaders with experience in our clinical studies plan will share key data from the dose escalation portion of our two, first in human trials. Finally, as I said before, we are managing our business for long-term value creation and continue to aim to achieve cash flow break even without the need for additional dilutive equity financing. I will now turn the call over to Scott for a financial review before we open for questions.

Scott Smith (EVP and CFO)

Thank you, Jan. I will quickly touch on a few points surrounding our financial results. For further details, please refer to our Form 6-K, filed today. As Jan noted, SKYTROFA revenue for the Q1 of 2023 was EUR 31.6 million. Revenue in Q1 would have been EUR 1.4 million higher, excluding a negative foreign currency impact compared to the Q4 of 2022. Total revenue was EUR 33.6 million, including SKYTROFA revenue, as well as license, clinical supply, and services provided to third parties, primarily VISEN Pharmaceuticals. During the quarter, we continued to demonstrate our cost discipline, offsetting seasonally higher employee costs in Q1. Total operating expenses were EUR 173 million for the Q1, up 5% sequentially from the Q4 of 2022.

Overall, R&D costs declined 2% sequentially, primarily driven by lower endocrinology-related costs, partly offset by an increase in oncology-related costs. SG&A expenses grew 18% sequentially, primarily due to increased support for SKYTROFA commercialization and pre-launch activities for TransCon PTH. Overall, our operating loss declined sequentially by 3% to EUR 144 million for the Q1 from EUR 147 million in the Q4 of 2022. Our main 2023 commercial product manufacturing campaigns, which are capitalized rather than expensed, are expected to be completed in the first half of 2023, which would further reduce cash expenses in the second half. We ended the Q1 with cash equivalents, and marketable securities totaling EUR 586 million.

Based on Q1 results, we are on track to exceed the current Ascendis Pharma-compiled 2023 consensus estimate of EUR 98 million for SKYTROFA. Using the algorithm that Jan Mikkelsen laid out in his remarks, SKYTROFA revenue is expected to reach EUR 150 million-EUR 160 million for full year 2023. Supporting our goal of achieving cash flow break even without additional dilutive equity financing, we are implementing additional cost controls and productivity improvements, which we anticipate will be realized starting in Q3 and beyond. Let me now also provide an update on selected key 2023 corporate milestones. For TransCon Growth Hormone, we are on track to launch SKYTROFA in Germany in Q3, and we expect to report top-line data from the global phase III foresiGHt trial in adult GHD, our second indication, in Q4.

For TransCon PTH in the U.S., our PDUFA date is April 30. We expect additional clarity on our NDA application in the coming days. We expect a European Commission decision in Q4. If approved, we plan TransCon PTH as our second product launch in Germany in early 2023. For TransCon CNP, we are on track to complete enrollment of the phase IIb Approach trial in achondroplasia in Q2. Later this year, we will share long-term follow-up data from patients on 100 micrograms from our open label extension of our phase II AccomplisH trial.

Within our oncology therapeutic area, as Jan mentioned in his remarks, we will host a research event on May 31 in New York to review the science underlying our oncology portfolio, review initial data on TransCon IL-2 Beta Gamma, and hear from KOLs who have clinical experience with both of our oncology product candidates. As you know, the PDUFA date for our NDA for TransCon PTH is this Sunday, April 30, and we expect to receive a response from the FDA by then. Given the proximity to the PDUFA date for the NDA for TransCon PTH, we will not be providing additional details regarding this NDA at this time.

With that operator, we are now ready to take questions.

Operator (participant)

Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press star one one on your telephone. Again, to ask a question, please press star one one. We do ask that you please limit yourself to one question and a follow-up, and feel free to rejoin the queue. One moment please for our first question. Our first question comes from the line of Jessica Fye of J.P. Morgan. Your line is open.

Jessica Fye (Managing Director, Equity Research Analyst – Biotechnology)

Great. Good afternoon. Thanks for taking my question. I know it's difficult to comment in advance of the PTH PDUFA, but at a minimum, can you just say if you now know the deficiencies that the FDA has regarding the PTH NDA? I believe those were not previously outlined in the letter. Do you know them now?

Jan Mikkelsen (President and CEO)

I can say no to your question and have no further comments.

Jessica Fye (Managing Director, Equity Research Analyst – Biotechnology)

Okay. Then when you talk about managing the business to achieve the goal of cash flow breakeven without the need for dilutive equity financing, can you elaborate just on, like, what your expectations are for PTH that are kind of embedded in that breakeven assumption?

Jan Mikkelsen (President and CEO)

We are dealing with a lot of different scenarios because as we indicated before, we do not know the exact nature of the deficiency, and we are working with what we call the best case and worst case. We're looking on our Vision 3x3. We want still to fulfill that. We want to build up a leading biopharma that both sustainable and profitable. We will continue to this. From our perspective is that we are taking into the assumption we are launching SKYTROFA in Germany here in Q3. We're taking into the assumption we are launching TransCon PTH in Germany and Europe through different systems in beginning of 2024. We are building that SKYTROFA in the U.S. is going to the assumption we have laid out in 2023, and we'll continue that growth in 2024.

Even from the worst case to the best case, we can get the two things together and still fulfill our Vision 3x3.

Jessica Fye (Managing Director, Equity Research Analyst – Biotechnology)

Thank you.

Operator (participant)

Thank you. One moment, please. Our next question comes from the line of Tazeen Ahmad of Bank of America. Your line is open.

Tazeen Ahmad (Managing Director, Equity Research Analyst)

Hi, guys. Good afternoon. A couple of questions, if I can, on GHD. You visited sales guidance for the year. I think as recently as the beginning of the year, you might have been more tentative on that prospect. I guess what's changed during the quarter to, I guess, number one, make you feel confident that you can project out the rest of the year? Can you tell us some of the major drivers you took into consideration when putting together the sales guidance, such as, perhaps, switch rates versus new patient starts? Any assumptions you can share on compliance would be great as well. Thank you.

Jan Mikkelsen (President and CEO)

Thanks for the question. We're feeling much more confident now when we go to a Q1, because now we accumulated on top of a big sum. That is a mathematical algorithm even I can understand without an MBA. The situation is very, very simple. You have $31 million here in Q1. We have seen in our experience for the many months we have with SKYTROFA, we're not losing patients. If I multiply the $31 million with four times, and then we just add the same amount of new patients as we did in 2022, are getting exactly to this number between $150 million and $160 million. I think it's a very simple agreement built on solid number, and this is exactly why I feel I can stand in for this year.

I have everyone in the Ascendis organization to sign on for this, so we feel confident that we can fulfill this. This is why I'm feeling we will come out with guidance when we're feeling we can give you reliable guidance that you can use in the modeling so you're feeling that we're feeling that we give you an number that we can stand in for.

Operator (participant)

Thank you. One moment, please. Our next question comes from the line of David Lebowitz of Citi. Your line is open.

David Lebowitz (Senior Research Analyst, Biotechnology)

Well, thank you very much for taking my question. When you look at, SKYTROFA, into the rest of the year, and the dramatic growth you're expecting, how should we look at that, in the U.S. versus, Europe?

Jan Mikkelsen (President and CEO)

The guidance we are providing to you is only reflecting U.S. sales. We have not given you a guidance related to Europe. That would be on top of that.

David Lebowitz (Senior Research Analyst, Biotechnology)

Got it. I guess could you just, remind us of when we can expect the next TransCon CNP, updates and what your expectations are going into that?

Jan Mikkelsen (President and CEO)

The update we will provide for you, as we indicated here in when we come to the beginning of the fall, likely in Q3, we will host an research event in New York as we do now in oncology here in May, where we will go through the science behind the CNP. I think sometimes it's getting Forgotten that every product has its own mode of action, its science, and the science in the end will decide the clinical outcome you will get, and how to understand the clinical outcome. We have always said we are not here for just addressing linear growth. We're here for addressing the key element of what a treatment for achondroplasia need, treatment of comorbidities, and that is what we always have been focused on.

I believe we at that research event can give you the data, the science behind the data, that really can give you the way we are thinking and believe that we're building up in best-in-class product opportunity in this disease area.

David Lebowitz (Senior Research Analyst, Biotechnology)

Thanks for taking my question.

Operator (participant)

Thank you. One moment, please. Our next question comes from the line of Paul Choi of Goldman Sachs. Your line is open.

Paul Choi (Biotechnology Analyst)

Hi. Thank you, and good afternoon, and thanks for taking our questions. Jan and team, I guess one, you know, question that investors have with regard to PTH is, as you think about your earlier statement, where you expect a, you know, clarification from the FDA shortly, have you, since the call that you held a few weeks ago, provided any additional data updates, or have there been any other requests from the agency?

Jan Mikkelsen (President and CEO)

I think we need to refer to the statement that Scott clearly wrote up, that we will not comment further on any interaction we have of FDA at this time.

Paul Choi (Biotechnology Analyst)

On the commercial side, with regard to the European launch for growth hormone, can you maybe comment on any preliminary discussions you either have had with IQWiG or GKSB and just kinda how to think about the reference pricing versus the potential reference pricing in Germany versus some of the other available products in the category?

Jan Mikkelsen (President and CEO)

I believe the dynamic we saw in U.S. and how we tackled in U.S. is exactly happening in the same way in Europe. That is established daily growth amounts that have the same issue that they have here in the U.S. We will come in with a treatment regime that is superior for the patient, and I believe we will have the same responsible superior pricing that we do in the U.S. also in Europe.

Paul Choi (Biotechnology Analyst)

Okay, thanks. I'll hop back in queue.

Operator (participant)

Thank you. One moment, please. Our next question comes from the line of Li Watsek of Cantor. Your line is open.

Li Watsek (Equity Research Analyst)

Hey. Thanks for taking our questions. I guess can you provide maybe some guidance on the OPAG side, I guess starting in Q3, given that you may have a delay with TransCon PTH? You mentioned earlier that you will have a focus on cost control. Maybe help us understand how should we think about, you know, OPAG going forward. For the early access program in Germany, how many patients will be eligible for this?

Jan Mikkelsen (President and CEO)

Let me take the last question, first. Because the program in Germany, where we start in Germany, where we have applied for an approval for initiated is different compared to the U.S. program because it's actually electable for both all patients with hypoparathyroidism and not as the U.S. is highly restricted to patients that basic is highly PTH experience. It will be a much broader program. The dynamic is also very, very, very different because, for example, the program is terminated automatic the day you're getting approval, and the patient is automatic converted over to reimbursed patient. It's a different system than you actually have in the U.S. system. This is why we will some way give access to the patients that is the same unmet medical need. There is a series of patient, multiple hundreds of patients on Natpara today.

They know they're under highly restricted constraints because Natpara is disappearing in the beginning of 2024. They want to have time to really change this patient over to TransCon PTH. At the same time, we open it up for all other patients because there was so much, and you can say strong desire from the treatment physician also to give it to patients that actually never have seen other PTH program before. This is why it's a different program. Going back to your comments about how we are some way of running the financials at Ascendis, and I actually made it very, very simple in this way. We have 1 bucket with cash in, which are the water, and then we take something in every day, and you can see we grow it and grow it, grow it now with US SKYTROFA.

We will grow it with US, outside US, also revenue there. We always want to have a solid amount of water into this bucket. We do that by basic ensuring that we run our business, optimizing our business, optimizing the way we perform our procedure. What functioned perhaps for two years ago is not functioned today, is not the most productive way to do it. This is how we adapt it. We are a global company, which give us a lot of benefit to really optimize our business in different means, and that is exactly what we are doing to ensuring we always will have enough water in the bucket to feel safe. If it start to be dry around us, we always have enough to drink.

Li Watsek (Equity Research Analyst)

Okay, Jan.

Operator (participant)

Thank you. One moment, please. Our next question comes from the line of Derek Archila of Wells Fargo. Your line is open.

Derek Archila (Managing Director, Co-Head of Therapeutics Research)

Hey, great. Good afternoon. Thanks for taking the questions. Just two from us. Jan, you mentioned earlier in the call, you're not commenting on interactions with the FDA. Is it fair to assume that you've had some interactions since the deficiency letter that you do not want to comment on? That's question number one. Question number two is, you talked about this attrition strategy in the growth hormone market, kind of expecting these competitors to exit the market, maybe because it's not profitable for them, leaving you and maybe one or two other players in the market. I guess, what catalyst needs to happen for this to play out? You know, what's kind of the timing on that? Thank you.

Jan Mikkelsen (President and CEO)

Yeah. Obvious, it's easier for me to answer first question because there's no answer. Going to the second question, which are really a high valid question because it's I believe someone should write a textbook of what happened in the growth hormone market here in the U.S. It was the first place you saw biosimilar having Teva and Sandoz coming in. We saw how the entire market developed, and now we're coming to the next phase. The first thing, the biosimilar going in, then it went over to market access. I can guarantee we had so much interaction with nearly every one of the daily, growth hormone company, except one, I think. We somewhere got a really, really good insight in their thinking, and the insight is exactly how I also would act.

The element is that when you have a superior treatment coming into that basic, making a paradigm shift in the treatment regime, you know if you're sitting with the, what we call the established that cannot follow this treatment regime, it's only how really to optimize your business at that time. You follow the classical textbook. First of all, you get rid of the sales force. The second one, you get rid of all promotion. You get basic optimizing the manufacturing source of the way, you never invest in it. Then you terminate the manufacturing after you have a bulk product sitting, and then you're just selling that, and then you're out. I can guarantee it's one of the best P&L you can get out of that business. This is really where you have a great P&L. The problem is, it's not sustainable.

Some of the daily growth hormone, you can find that out. They try to sell it. No one wanted to buy a dying product. That was why no one can sell it. Therefore, the entire consolidation started three or four years. What you start to see now is the consequence of it, and you're likely right, there will only be one or two daily growth hormone provider because there will potentially be a cash segment. There will be other things where the potential will be an element of what we can call a low price element, where they don't really need optimal treatment or anything like that. This is where you typically will see one or two player be.

Operator (participant)

Thank you. One moment, please. Our next question comes from the line of Leland Gershell of Oppenheimer. Your line is open.

Leland Gershell (Managing Director, Senior Biopharma Analyst)

Hey, good afternoon, and thanks for taking my question. Just another question on the SKYTROFA trajectory. It's obviously very healthy bump up from Q4. Wondering if, Jan, if you can comment, you know, as that coincides with the turn of the year, were there any aspects related to more favorable reimbursement with the new year and/or changing dynamics of the daily growth hormone space, as you talked about, that may have favored SKYTROFA? Thank you.

Jan Mikkelsen (President and CEO)

I think we had the three pillars we discussed in my part of the script, which I actually think illustrate very, very well the transition we're coming to. I believe when we first go to the first, the treatment experience, it actually take 12 months for a physician really to see the improved really the improvement in linear growth and other endocrine benefits. When you see a new product, I think often as a physician, you will wait to see in a few number of patients before you expand further on. The second thing is the consolidation of the market, which sure is happening, and it was just a consequence when it start to tickling, whether tickling in 2023, whether tickling in 2024. We know it was happening, but we didn't know exactly when it would be.

I also believe, and this is where Joe comes in and will talk about, how we investing in a dedicated best-in-class endocrinology dedicated sales force and our medical affairs teams.

Joe Kelly (SVP and Head of Commercial Endocrinology)

Yeah, Jan. Yeah, the commercial team really has done a good job of executing in this particular market, where we really disrupted at how growth hormone is prescribed and also reimbursed by the PBMs and the payers. Really it comes down to the clinical strength of SKYTROFA. Its efficacy, the fact that we don't have a preservative, a best-in-class auto-injector, and again, the support that we can provide the offices and the patient to get reimbursed so that they can enjoy SKYTROFA for their entire course of therapy. The compelling story that we do have from a clinical standpoint is really a motivating factor for these healthcare providers to do the appropriate documentation so that patient can get approved and stay on our product.

Jan Mikkelsen (President and CEO)

Thanks, Joe.

Operator (participant)

Thank you. One moment, please. Our next question comes from the line of Vikram Purohit of Morgan Stanley. Your line is open.

Vikram Purohit (Executive Director, Equity Analyst)

Hi. Good afternoon. Thanks for taking our question. We had one on TransCon hGH. Could you just help us frame expectations for the foresiGHt data expected in adult GHD in the Q4, and also speak a bit about, you know, how you're viewing the commercial potential for hGH for this part of the GHD population versus the pediatric population? Thanks.

Jan Mikkelsen (President and CEO)

Really interesting way to look. Why the adult growth hormone deficiency trial is so really interesting for us is because we are in a situation where many of the other indications where you use growth hormone, you use linear growth as the primary outcome. Here in adult growth hormone deficiency, the primary endpoint is built on change in body composition, which are also one of the elements you want to achieve in the pediatric population, it's not really the primary endpoint. What we also have, we have a situation where we have a benchmark related to the daily growth hormone. We have a benchmark related that both the two other long-acting have initiated phase III trial, have reported phase III trials in adult growth hormone deficiency. One of them didn't manage to be better than placebo.

The second one showed half of the effect compared to daily growth hormone. We believe because SKYTROFA is built on somatropin, an unmodified molecule that can have the same mode of action like daily growth hormone and doses growth hormone, we will be in a position that we hope at least we can see the same benefit as daily growth hormone. Potentially, we will be superior as we were in a situation in the pediatric, but we will wait to see the data. We believe that it's a really, really strong integrated packet to see because it's first time where you really go out and analyzing really the impact on a growth hormone treatment on the endocrine health, which body composition is part of it, but it's really parallel to some of the other benefit where you need to have the distribution throughout the body.

Operator (participant)

Thank you. One moment, please. Our next question comes from the line of Joseph Schwartz of SVB Securities. Your line is open.

Joseph Schwartz (Managing Director, Senior Biotechnology Analyst)

Hi. Thanks very much. How leverageable is a sales force across the three endocrine indications you're currently pursuing? I know when we look for physicians to speak on these topics, it seems a bit fragmented to us, and we almost never find anyone who can speak on two, never mind three of these endocrine conditions. Can you just talk a little bit about how the sales force is currently structured and whether you won't have to actually expand it significantly in order to reach achondroplasia and hypoparathyroidism specialists in addition to growth hormone folks?

Jan Mikkelsen (President and CEO)

Yeah. This is the holistic picture. You basic are saying, why did we focus on building up as really a strong pipeline of three independent product, really focused on endocrinology. The first one we have is SKYTROFA. It both have a pediatric and adult indication. We have pursued the pediatric, now we go for the adult. We have TransCon PTH. The main indication is adult, but it also have a pediatric. We are going now, as I said before, we expect to getting an approval in what we call the adult hypoparathyroidism. As soon as we get the feedback, what is the deficiencies, when we know what the deficiencies is, we can address it, and this is what we will do extremely fast and ensure this product going out to the market. We will also pursue the pediatric indication in this segment. We have TransCon CNP.

People believe this is pediatric disease because they're just focused on linear growth. We believe this basic is a treatment regime for achondroplasia also rest of their life. This is one of the things we also would like to discuss when we come to the research state. When you see the holistic part on it, yes, it give us a lot of synergy, specific when you think about reach out. We go to endo, we have one stand. People come to us, perhaps interest in PTH, perhaps interest in CNP, perhaps interest in growth hormone, and they get the entire package.

They see endocrinologists, the physician, they see us dedicated to be a leader in endocrinology because we so much focused on all different product opportunities. You go to dedicated sales force, you can build it up in different means. It's very much dependent on geographic regions. If you just think about U.S., I actually think what Joe and his team have done, they're actually building up what we call a sales force that basically are dedicated to SKYTROFA, dedicated to PGH, but that basically can exchange it back and forth between the different sales force because both have all the capability to be in it in this way. I actually believe that we have so much synergy in this way of operating.

Operator (participant)

Thank you. One moment, please. Our next question comes from the line of Andreas Argyrides. Again, Andreas Argyrides, your line is open.

Andreas Argyrides (Analyst)

Yeah, good afternoon. Thanks for taking our question. A quick one here on TransCon CNP. Looking at the growing achondroplasia market and the competitive landscape, could you expand on what data you're tracking and plan to provide to support TransCon CNP's impact outside of height? Do you see a potential to expand into patients or children under two years old? Forgive us if that was already addressed.

Jan Mikkelsen (President and CEO)

No, I believe that is some way. What we want to do is that you have linear growth with an element where we believe, sure, we can help a lot, we can do a lot, when we can also potential accelerate it in a combination between SKYTROFA and TransCon CNP. The element of what we call achondroplasia-specific comorbidities. In the presentation we did, when we released our AccomplisH data, we basic indicated that we could see an effect on the achondroplasia-specific side effects, meaning is that they got less. We are building on that, and we have regulatory interaction, how we potentially can prove that in a more clinical specific manner in our Phase IIb, which we hope is our pivotal trial, that we basic are recruiting now for full speed and hope to have all patient in this quarter here.

This is where we see the element of us providing and treatment of achondroplasia, really to ensure that we are not only correcting linear growth but also addressing the comorbidities.

Andreas Argyrides (Analyst)

Great. Thanks for taking our question.

Operator (participant)

Thank you. One moment, please. Our next question comes from the line of Yaron Werber of Cowen. Your line is open.

Joyce Arnson-Werber (Managing Director and Senior Biotechnology Analyst)

Hi, this is uncertain. Thanks so much for taking our questions. Historically, I think you've held this Q1 call in early May. I think some investors were maybe thinking that the call was moved up this time to get ahead of the PDUFA date and that we might get an update on the deficiencies. If you could just help us understand this a little bit more, that'd be helpful. Just quickly, secondly, I know you're not able to comment that much, but just given the lack of interactions it seems with the FDA, are you expecting a CRL? If that does happen, how quickly do you guys think you can refile? Thank you.

Jan Mikkelsen (President and CEO)

Let me take the last question. As I said before, we have no knowledge about the deficiencies, and we cannot comment further on anything of regulatory interaction related TransCon hGH and FDA. I actually believe what we illustrate to optimize processes to think, to do things smarter and faster. I actually think I give all the credit to Scott. It's not often I do that, but I will actually give him credit to Scott or Mads, the head of finance that is sitting here beside us today too. They can tell about how they really have optimized all our financial processes. I think by just pressing a button and then we get everything finalized. Scott, Mads?

Scott Smith (EVP and CFO)

Yes. just as we reported earlier for the annual report, we'll now report earlier for the quarterly report. I would say nothing specific to look into it. In fact, if anything, I think next year we'll probably report the annual even earlier. Right, Mads?

Jan Mikkelsen (President and CEO)

January 31.

Scott Smith (EVP and CFO)

January 31 next year.

Jan Mikkelsen (President and CEO)

I hope that answer your question. It's just because we increased productivity and do it faster.

Joyce Arnson-Werber (Managing Director and Senior Biotechnology Analyst)

All right. Thank you so much.

Operator (participant)

Thank you. One moment, please. Our next question comes from the line of Caroline Palomeque of Berenberg. Your line is open.

Caroline Palomeque (VP and Senior Equity Research Analyst)

Hi. Good afternoon. Thanks for taking the question. Were there any material differences in the MAA application in Europe versus the NDA application in the U.S., given that, to my understanding, there hasn't been any feedback from the European regulatory agencies? A second question is just a follow-up on expenses. Just given the updated SKYTROFA revenue guidance, do you also anticipate adjustments in SG&A expenses, such as in sales force? Will you add any more people? I'll stop there. Thanks.

Jan Mikkelsen (President and CEO)

In our regulatory filing between the different regions, Europe and U.S., is basic built on exactly the same data packet that will be filed both places with, sure, there is a different formatting of a different filing because they need to be made in a different format, but the data is exactly the same for both Europe and U.S. Related to the last question is a clear no.

Caroline Palomeque (VP and Senior Equity Research Analyst)

Great. Thank you.

Operator (participant)

Thank you. I'm showing no further questions at this time. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.