Ascendis Pharma - Q2 2023

Transcript

Operator (participant)

Hello, and welcome to Ascendis Pharma Q2 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask the question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star one one again. I would now like to hand the conference over to Tim Lee, Senior Director, Investor Relations, Ascendis Pharma A/S. Sir, you may begin.

Tim Lee (Senior Director of Investor Relations)

Thank you, operator, and thank you everyone for joining our second quarter 2023 financial results conference call. I'm Tim Lee, Senior Director, Investor Relations of 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; and Dr. Stina Singel, Executive Vice President, Head of Clinical Development, Oncology. 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 statements 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 E.U. market, and our planned launch of SKYTROFA in Germany.

Statements regarding our NDA for TransCon PTH and the expected timing of the potential approval and launch, and launch of TransCon PTH in the U.S. market. Statements regarding the expected timing of the potential approval and launch of TransCon PTH in Europe. Statements regarding the potential approval of TransCon CNP, our expectations regarding our new TransCon technology, and 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 and the results of regulatory, regulatory decisions, our expansion into new therapeutic areas, and statements regarding our progress towards Vision 3x3, and our ability to create a sustainable, profitable and leading global pharma 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, and we may not be able to achieve our goals, carry out our plans, our intentions, our expectations, or projections disclosed in our forward-looking statements. And you should not place undue reliance on these statements. Our forward-looking statements do not reflect the potential impact of any licensing agreements, acquisitions, mergers, dispositions, joint ventures, or investments that we may enter into or terminate. We assume no obligation to update these statements as circumstances change, except as required by law. For additional information concerning the factors that could cause actual results to differ materially, please see our forward-looking statement section in today's press release, and the risk factors section of our most recent annual report on Form 20-F, filed February 16, 2023.

TransCon Human Growth Hormone, or TransCon HGH, is approved by the FDA in the U.S. under the brand name SKYTROFA, for the treatment of pediatric patients one year 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 three to 18 with growth failure due to insufficient secretion of endogenous growth hormone. In general, refer to this product as TransCon Growth Hormone, unless we're 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 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 in the conference call regarding our product candidates shall be viewed as promotional. On the call today, we'll discuss our second quarter 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?

Jan Møller Mikkelsen (President and CEO)

Thanks, Tim. Good afternoon, everyone. In 2019, at the JPMorgan conference, we announced our Vision Three by Three for building a leading sustainable global biopharma company by 2025. Today, I'm pleased to share with you update how close we are to achieving our vision. As outlined in our Vision Three by Three, using our TransCon technology platform and our algorithm for product innovation, we are on the pathway to achieve the regulatory approval of three independent endocrinology rare disease products: TransCon Growth Hormone, TransCon PTH, and TransCon CNP by 2025. In addition, we are building global commercialization capabilities to bring this growing portfolio of highly differentiated products to patients. In the U.S., for the second quarter, we reported SKYTROFA revenue of EUR 36 million.

SKYTROFA achieved growth hormone market value leadership in the U.S. in the second quarter, with a penetration of less than 10% of treated U.S. pediatric growth hormone deficiency patients, which represent about half of the growth hormone market in the U.S. today. For the full year of 2023, we now expect SKYTROFA U.S. revenues to be EUR 165 million-EUR 170 million. We believe three factors continue to drive demand. First, a growing number of physicians have patients with over a year of experience on SKYTROFA, and these physicians have observed the long-term benefit for both treatment-naive and switched patients. Second, the de-consolidation of the daily growth hormone market continues, and the recent approvals of two other long-acting growth hormone products, which could accelerate this shift to long-acting.

Third, Ascendis has become a trusted partner within the endocrinology community as we continue to invest in our products, in science, and in our support for patients and healthcare, and provide them with a reliable supply chain. In our global commercial reach, we are ready to launch SKYTROFA this month in Germany. Our medical affairs and commercial teams are in place and have been actively engaging endocrinologists across the country. We recently received FDA approval at launch for a high-capacity drug substance manufacturing site, for which we expect EU approval in the first half next year. This added drug substance manufacturing capacity supports our goal to commercialize in new markets and additional indication, and to achieve our goal of global market leadership and value in a growing global growth hormone market.

During the fourth quarter, we expect to share a top-line result for our global Phase III foresiGHt trial of TransCon Growth Hormone in adult growth hormone deficiency. We believe adult growth hormone deficiency is an under-penetrated indication. The recent study showed that less than 4% of adult patients suspected of having growth hormone deficiency are treated with growth hormone. Moving to TransCon PTH for adult hypoparathyroidism. In June, we requested a Type A meeting with FDA and submitted an updated control strategy. The Type A meeting was held with FDA in late August, based on the agency's availability. Following a constructive Type A meeting, we submitted additional information to FDA, supporting the updated control strategy. I believe the materials submitted to FDA, combined with the Type A meeting discussion, will position us to resubmit the NDA for TransCon PTH for adults with hypoparathyroidism in October 2023.

If our NDA is accepted, which we expect within 30 days following resubmission, FDA will notify us whether the resubmission is Class one or Class two, and provide a new PDUFA date, which we estimate could be in December this year or April 2024. It's important to note that we will not know the new PDUFA date until our resubmission is accepted and its classification is communicated to us. Besides this information, we will not comment further on the resubmission procedure while we are having ongoing communication with FDA. In the European Union, we received our Day 180 assessment report with feedback on our MAA for TransCon PTH, and have submitted our response to the list of outstanding issues.

We remain on track for a European Commission decision during the fourth quarter, and if approved, we plan to launch TransCon PTH in Germany in early 2024. Finally, today, we released new positive data supporting the potential beneficial effect of TransCon PTH on kidney. Over the course of one year, patients in our phase III trial demonstrated profound increases in eGFR, a key marker of kidney function, with increases of around +9 mL/min across all patients. Importantly, in the subset of patients with eGFR <60 at baseline, the threshold for kidney dysfunction, TransCon PTH demonstrated increases of 11-12 mL/min. Around half of the PATHway patients with an eGFR <60 after TransCon PTH treatment for one year experienced eGFR improving to >60.

Meaning they went from having a diagnosis of renal impairment to be within the normal range of kidney function. For patients treated with TransCon PTH, sustained improvement in eGFR of this magnitude may reduce risk of progressing to chronic or late-stage kidney diseases. This is a major comorbidity in patients with hypoparathyroidism, and a major contributor to medical costs. We plan to present detailed results at our upcoming medical conferences. The U.S. Expanded Access Program and German Compassionate Use Program for TransCon PTH continues to be open for enrollment of patients, and we expect to initiate comparable programs in additional countries. In the ongoing extension portion of our clinical trial, 145 out of the initial 154 patients from the original clinical trials continued treatment with TransCon PTH for over three years. We continue to prepare for the expected launch in U.S. and Europe.

We are confident that TransCon PTH can, if approved, become an important new treatment option for adult patients living with these serious diseases. Switching now to TransCon CNP. Following our end of phase II meetings with U.S. and EU regulatory agencies, we have an agreed pathway to achieve regulatory approvals for TransCon CNP. First, FDA and EU regulatory agencies confirmed that absolute annualized growth velocity is acceptable as the primary endpoint for our pivotal phase III APPROACH trial. Second, these regulatory agencies agreed to our dose selection of 100 microgram per kilo per week dose for APPROACH. Third, based on this discussion, we expect that an indication for treatment of achondroplasia will be supported by evaluating the beneficial impact of TransCon CNP on comorbidities and other important aspects of achondroplasia in addition to height.

Fourth, our pivotal phase III trial APPROACH is now fully enrolled, with top-line data expected in the second half of 2024. We believe that achondroplasia is a disease of both skeletal growth and muscle disorder. Based on the rapid functional improvement observed in our ongoing phase II ACCOMPLISH trial, and based on literature review, there may be a primary muscular component to achondroplasia phenotype, besides the well-described effect on skeletal growth. We believe it's essential to have a continuous exposure to CNP to optimally improve muscle strength and endurance. In our pivotal trial, we will explore endpoint to measure how CNP might modulate the muscular weakness. In addition, this also mean that there could be a treatment option for adults living with achondroplasia.

Our research in this area continues, and we expect to share more later this year, along with new data from ACCOMPLISH, where all the initial 57 patients continue on treatment with TransCon CNP for over three years. Turning to oncology, we today announced that we have completed dose escalation for TransCon IL-2 β/γ in combination with pembro, and declared recommended phase II dose at 120 microgram per kilo every three weeks. No dose-limiting toxicity, vascular leak syndrome, or grade three or four cytokine release syndrome were observed at any dose level evaluated. Finally, I'm excited to share with you some new development expected to drive Ascendis' sustained growth. We have developed a new TransCon carrier platform, which integrates our reversible linkages and complements our two established carrier technologies, the soluble and hydrogel platforms.

Among the many applications, we believe this technology supports high volume, low cost manufacturing, enabling products for new therapeutic areas. We have established proof of principle for once-monthly dosing of the GLP-1 analog, semaglutide, and on our website, you can see our preclinical data. In summary, Ascendis remains focused on building and maintaining a sustainable, profitable, leading biopharma company. With all programs making significant progress, we are nearing completion of our Vision 3x3, and have already begun the foundation for the next stage of Ascendis. I'll now turn the call over to Scott for a financial review before we open up for questions.

Scott Smith (EVP and CFO)

Thank you, Jan. As Jan noted, we are making very strong progress at Ascendis Pharma. I will touch on key points surrounding our financial results. For further details, please refer to our Form 8-K filed today. Total revenue for the second quarter was EUR 47.4 million, including SKYTROFA revenue, as well as license and services provided to third parties, primarily ViiV and VISEN Pharmaceuticals. SKYTROFA revenue for the second quarter of 2023 was EUR 35.9 million, compared to EUR 31.6 million reported in the first quarter.

Second quarter revenue was negatively impacted by two items, a negative adjustment to provision for estimated sales rebates of EUR 2.1 million, which resulted from stronger than expected payer adoption related to prior periods, and a negative foreign currency impact of EUR 0.6 million as compared to the first quarter of 2023, due to a weaker U.S. dollar. Based on reported results from other growth hormone manufacturers, SKYTROFA was the U.S. market leader in the second quarter of 2023, with less than 10% penetration into the U.S. pediatric GHD patient population. We see a large opportunity in front of us to grow our patient share in pediatric GHD, which we estimate to be only half of the addressable U.S. growth hormone market.

Turning to expenses, R&D costs declined 1% sequentially, primarily driven by lower endocrinology-related costs, partially offset by an increase in oncology-related costs. SG&A expenses grew 6% sequentially, reflecting higher external commercial expenses for SKYTROFA in the U.S., pre-launch activities for SKYTROFA outside the U.S., global pre-launch activities for TransCon PTH, and higher employee-related expenses. Total operating expenses were EUR 175 million for the second quarter, up 2% sequentially from the first quarter of 2023. Overall, our operating loss declined sequentially by 2% to EUR 141 million for the second quarter, from EUR 144 million in the first quarter of 2023. We ended the second quarter with cash, cash equivalents, and marketable securities totaling EUR 431 million.

Finally, we have entered into a capped synthetic royalty funding agreement with Royalty Pharma for $150 million, in exchange for a 9.15% royalty on net sales of SKYTROFA within the United States, with no royalty payments until 2025. The royalty payments are capped at 1.65 times the purchase price, if fully paid prior to December 31, 2023, or 1.925 times the purchase price, if not fully paid by December 31, 2023. Further details are disclosed in a separate 6-K filed today. Looking forward, we expect continued momentum for SKYTROFA in the United States for the balance of this year, and we are raising our expectations for SKYTROFA revenues to EUR 165 million-EUR 170 million for full year 2023.

Let me now also provide a review of selected key program milestones. For TransCon Growth Hormone, we are on track to launch SKYTROFA in Germany this month, and we expect to report top-line data from the global phase III foresiGHt trial in adult GHD, our first potential label expansion in Q4. For TransCon PTH, we believe we will be in a position to resubmit the NDA for adults with hypoparathyroidism in October, and we expect a European Commission decision in Q4. If approved, we plan TransCon PTH as our second product launch in Germany in early 2024. For TransCon CNP, we plan to share follow-up data from the open label extension of our phase II ACCOMPLISH trial in Q4 this year, and we expect to report top-line results from APPROACH, our pivotal phase III trial, in the second half of 2024.

Within the oncology therapeutic area, during this quarter, we expect to dose the first patient with a combination of TransCon TLR7/8 agonist and TransCon IL-2 beta gamma. And during Q4, we will be presenting dose escalation data supporting recommended phase two dose at ESMO on TransCon IL-2 beta gamma in combo with pembrolizumab and updated monotherapy dose escalation data. As Jan mentioned, we will not comment further on the NDA resubmission procedure for TransCon PTH while we are having ongoing communications with FDA. With that, operator, we are now ready to take questions.

Operator (participant)

Thank you. Ladies and gentlemen, as a reminder to ask a question, please press star one one on your telephone and then wait to hear your name announced. To withdraw your question, please press star one one again. We ask that you limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from the line of Li Watsek with Cantor. Your line is open.

Li Watsek (Stock Analyst)

Hey, great. So thank you for taking my question. So I understand that, you know, there is limited color that you can provide regarding the NDA resubmission, but just wondering if you can sort of elaborate on sort of the additional information that's needed from the Type A meeting and what are the gating steps for you to refile NDA?

Scott Smith (EVP and CFO)

Yeah, Lee, this is Scott. We cannot comment further on the resubmission procedure while we're having ongoing communications with FDA. But we believe we'll be-

Li Watsek (Stock Analyst)

Okay.

Scott Smith (EVP and CFO)

in a position to resubmit in October, as we stated.

Li Watsek (Stock Analyst)

Okay, understood. So, my second question is maybe just comment on the timing behind doing a Royalty Pharma deal right now.

Scott Smith (EVP and CFO)

... Yeah, this is Scott again. I think that, you know, we looked at a transaction that had very attractive terms and allowed us to lower the cost of capital.

Li Watsek (Stock Analyst)

Thank you.

Operator (participant)

Thank you. Please stand by for our next question. Our next question comes from the line of Paul Choi with Goldman Sachs. Your line is open.

Paul Choi (Executive Director)

Hi, good afternoon, and thank you for taking the question. Just on the commercial piece, can you maybe comment on where additional share opportunities remain for SKYTROFA? One thing we noticed was that there was a, you know, sequential decline in the growth margin. So can you maybe just comment on whether some of these share gains and opportunities are coming at the expense of potentially higher rebating and/or discounting? And then I had a follow-up.

Jan Møller Mikkelsen (President and CEO)

Let us just go back and give what was really the fundamentals for us in our commercial strategy in the U.S. market. This is exactly the same strategy we basically moving into each single market. We want to be the leading product in value, and we want to do it in a growing growth hormone market. We basically building on the product strength of SKYTROFA, and we have seen that is really happening in the U.S.. We have seen where we basically come in and we set the market, and this is basically what we are doing now. What we see, we see a continued stable growth on patient coming, both from switch patient, patient coming as a new patient, and we see it in a continuous manner coming week by week, month by month.

We also feel that we are now in a position, as we said in the script, the physician, the patient, everyone have seen really the full potential of the SKYTROFA because they have seen how we really are in position to give a better outcome related to annualized height than you would typically will see, even in a highly compliant daily growth hormone setting. That is basically why we see this, and it will only be reinforced when we basically can get additional indication. This is why we really are thrilled for here, end of the year, Q4, Q4, come out with data from our adult growth hormone deficiency, which we really can show also that we really can provide an improved treatment option to these patients too.

Scott Smith (EVP and CFO)

Paul, on the gross margin question, the SKYTROFA, remember, the gross margin is for all revenue, which includes some pass-through revenue, as we mentioned. So I would say the SKYTROFA gross margins are largely unchanged, pretty stable over the last several quarters.

Paul Choi (Executive Director)

Okay. Got it. Thanks for the additional color, Scott. And then as my follow-up question, on TransCon CNP for the phase III trial, can you comment on whether the regulators have asked for any additional clinical endpoints besides, as a focal point for potential approval positions in addition to HGB or absolute height growth, and just sort of, you know, any other data you may be collecting to differentiate from the approved product on the market? Thank you.

Jan Møller Mikkelsen (President and CEO)

Yeah. First of all, the primary endpoint is analyze height velocity over 12 months, and that is the primary endpoint. We are discussing additional secondary endpoint in relation to the endpoint we already have, which really should go into the biology. The idea how we really can address, as we said in the script, we believe that achondroplasia is not only a skeletal dysfunction, but also have a muscle impact. And we really have seen benefit there, which are really being supported with our review of literature, where you really can show how achondroplasia have a muscle weakness. And we believe that this is one of the reason why we see 100% retention in our trial, and it was an immediate effect we observed in our phase II trial. And this is why we really is extremely thrilled to really take this product, TransCon CNP out.

Not only we believe there is a clear benefit for pediatric, but potential that could also be an improvement for adults with Achondroplasia.

Operator (participant)

Thank you. Please stand by for our next question. Our next question comes from the line of Joe with Leerink Partners. Your line is open.

Joe Chnorhokian (Business Development Manager)

Great. Thanks so much, and congrats on all the progress. I was wondering, how the gross to net for SKYTROFA has been evolving in the United States, and what your pricing strategy will be in, Germany and other European markets. Thank you.

Jan Møller Mikkelsen (President and CEO)

Let me take the last part of the question first. We know we believe we're providing an improved treatment for the patients. We also believe that we following up to what we said before, a responsible premium pricing. This is how we really have launched our price structure in the U.S., and we will continue to implement that throughout all the different markets. This is where we want to be because we are providing an improved treatment. Scott, will you take the last part?

Scott Smith (EVP and CFO)

... So Joe, we don't comment on GTN evolution. We just want you to focus on, you know, revenues ultimately. But I think we gave some interesting points that on reported revenues, we were the market value leader in the quarter, with less than 10% penetration into the pediatric GHD market, which itself is only half of the total growth hormone market in the U.S..

Jan Møller Mikkelsen (President and CEO)

Yeah, and so when you start to make this calculation, which you likely will do, sitting and calculate that, what it mean? It basically means that we have the vision on being the value driver, the most value product, but in a growing growth hormone market. That's definitely what we managed to do here because of the improvement in treatment we're providing.

Andreas Argyrides (Managing Partner)

Thank you.

Operator (participant)

Thank you. Please stand by for our next question. Our next question comes from the line of Andreas Argyrides with Wedbush Securities. Your line is open.

Andreas Argyrides (Managing Partner)

Thanks for taking our question, and congrats on all the progress. With the eGFR data, how should we interpret the 50% response rate, and how do you expect the eGFR analysis to be reflected on the potential label? In looking at the baseline characteristics of patients in PATHway 15 in the TransCon PTH group, history of kidney stones, can you speak to the impact of TransCon PTH had on kidney stones, and if you plan on sharing this data in the future? I have one follow-up.

Jan Møller Mikkelsen (President and CEO)

Okay, thanks a lot. We are extremely thrilled with this data. Why are we thrilled? Because we really believe it's providing a huge benefit to the patients. A huge benefit because one of the element that the patient really fear is really on conventional therapy, you basically are driving renal impairment, which in the end, can be worst case scenario, where you go into dialysis and really need to have a new kidney. So from that perspective, when we looked on the data, we basically selected 60 from the perspective is that some kind of accepted definition of really where you have renal insufficiency or not. And why we were thrilled with the data, that we could take 50%, 50, of the patient that basically already were classified of having renal insufficiency, and basically move them up to what we call normality.

I believe that isna key element for how we really can work with the, and help the patient group here. And I think when we saw the data, we believe that this first time we've really seen any compound that basic ever, ever have shown this effect. Related to the labeling, we are, that did this here as a post-hoc analysis. You can say, yes, we should have included in our key segment there already from the beginning when we saw this major impact. But still, for us, it was really unbelievable when we really have seen the data and how well it is. And we will soon, when we are presenting this data into publication, to interaction with patient groups, so they really also understand the benefits they can get for TransCon PTH in there.

We will go out and also talk with regulatory agencies, but we also believe that having it in peer-reviewed publication is the key element for us really to be in a position really to communicate about this fantastic data.

Andreas Argyrides (Managing Partner)

Fantastic. And then comments on the kidney stones?

Jan Møller Mikkelsen (President and CEO)

The kidney stones, I believe, I have not seen data on that point, but potentially I can ask them if there is a post-hoc analysis we also can do, specifically related to kidney stones. I cannot recall I've seen anyone.

Operator (participant)

Thank you. Please stand by for our next question. Our next question comes from the line of David Lebowitz with Citi. Your line is open.

David Lebowitz (Senior Research Analyst)

Thank you very much for taking my question. Could you run us through the differences of the new linker you were talking about? And, you know, you have preclinical data for a GLP-1. When might we see that candidate move towards the clinic? Additionally, what other types of candidates do you see applying this towards?

Jan Møller Mikkelsen (President and CEO)

Yeah, we are, we are really, really extremely enthusiastic of this expanding of the TransCon technology, because we believe we need to be everywhere, where the patients are. And it's building on the same principle again. So when you think about the TransCon linker, they are identical or exactly the same kind that you have seen on both TransCon Growth Hormone, TransCon PTH, and TransCon CNP, all the other products also in oncology. All the same we can use are the same linker. The only changes that we have developed, what we call a novel carrier system. This novel carrier system, we wanted to make one example on, and one example was to go into a GLP-1 analog, because there you really demand really, really, really high level of capability to produce mass production of drugs.

You need to do it on extremely low cost, so you basically potentially have a cheaper, more non-expensive manufacturing process by having less injection and other things like that. And this was why we developed the new novel platform. We believe it can be used many, many places, and specifically, we can have 10 targets in metabolic diseases. We have 10 targets now looking into in cardiovascular and other things like that. So it's really moving up and open up for Ascendis to move into new areas that we basically not really could address with the two TransCon carrier platform we already had established, our soluble carrier and the hydrogel carrier.

David Lebowitz (Senior Research Analyst)

Thank you for taking my questions.

Operator (participant)

Thank you. Please stand by for our next question. Our next question comes from the line of Yaron Werber with TD Cowen. Your line is open.

Speaker 11

Hi, this is Joy on for Yaron. Thanks so much for taking our question. Maybe just to follow up first on the previous question for your GLP-1, if you could just clarify whether you plan to file an IND in the future, and if so, how do you think this will fare, you know, relative to some of the drugs from your competitors with double and triple MOAs? And then I just had a follow-up on SKYTROFA.

Jan Møller Mikkelsen (President and CEO)

Yeah. First of all, we—as we said, we used semaglutide because we thought it was a good GLP-1 analog, really, to make an example of our tech, new technology platform, but also at the same time, semaglutide is also an interesting product opportunity itself. And, you know, with the TransCon technology, we release a complete unmodified semaglutide. So we're not changing the mode of action because we are a long-acting product technology, would make it both unique related to clinical trials, but also really unique to regulatory pathways. So from that perspective is, when we look in our pipeline, we are still discussing a lot, which is the optimal product opportunities, because we can also utilizing other GLP-1s.

So this is where we still are having internal discussion, where we really want to position it that, and the day we really are moving it into a situation where we will be ready to start to generate a clinical data. We will come back to you and explain what is exactly the analog we are working on.

Speaker 11

Okay, great. And then for my follow-up for SKYTROFA, can you provide any additional color on how much share you've gained while Novo has had supply constraints for their daily growth hormone? And then also, does your new fiscal year 2023 guidance reflect competition from once-weekly drugs from Novo and Pfizer? Thank you.

Jan Møller Mikkelsen (President and CEO)

The guidance we have built in, the competitive landscape that is out there and the guidance we are fully integrated, what we see, the trend or you can say, how it really are helping us basically to convert it over to a much more long-acting. But I also think you need some way to take the perspective of the shortage of daily growth hormone, which is a long-term process that basically are partly all driven by what we call the consolidation of the daily growth hormone, where basically they are leaving the market, and there will be very few players left in the daily growth hormone.

So what we see here, we just see as we have basically predicted in the last one-two years, the development of the competitive landscape, and we feel really, really, really confident with how SKYTROFA will continue to basically be in a position to be the leading product in value and continue to be in the future.

Operator (participant)

Thank you. Please stand by for our next question. Our next question comes from the line of Caroline Palomeque with Berenberg Capital Markets. Your line is open.

Speaker 10

Hi, this is Lucy for Caroline. Thank you so much for taking my question. So I'm just curious about the plan for launching in the EU for the TransCon PTH. So you said, like, first you were going to launch in Germany, then what would be the next steps? So, we would love to learn more about that. Thanks.

Jan Møller Mikkelsen (President and CEO)

Thanks a lot. First of all, we are not looking on... EU is one place where we basically are launching now, but we're not stopping there. We are also going for the international operation. We have a strong person that is leading our global commercial effort, Camilla. She has a very, very strong background in Europe and international operation. We are launching in Germany as the first country, what you do, but it will not be a single launch because we first actually launched with SKYTROFA, which we're doing this month here. We are launching SKYTROFA here this month in Germany, and we're starting to launching PTH expected in the beginning of next year. Really, really in the beginning of next year.

We will then roll out in all the different EU countries where we expect to get the approval, and including U.K., which we still can apply for in a very fast manner. We are starting to progress in the international operation, meaning is this country where you can support the launch of a product, either from an EU approval or from a U.S. approval. This is how we really are going to build our global commercial strategy.

Speaker 10

Okay, thank you very much for taking my question, and, congrats with all of the progress. Thank you.

Jan Møller Mikkelsen (President and CEO)

Thanks so much.

Operator (participant)

Thank you. Please stand by for our next question. Our next question comes from the line of Leland Gershell with Oppenheimer. Your line is open.

Hartaj Singh (Managing Director)

Great, thanks for taking my questions. Just one question from us as it pertains to SKYTROFA. You know, in discussions with endocrinologists, they've said that you know, at the same time that you've grown the product, they've also seen you know, shortages in the daily injectables market, you know, kind of providing more opportunity for SKYTROFA, which may be due to some manufacturers shifting over to pens that may be for GLP-1s versus growth hormones. Just wondering if you'd comment on that dynamic and how you may see those shortages persisting or changing in the near term. Thank you.

Jan Møller Mikkelsen (President and CEO)

First of all, the daily growth hormone market in the U.S. is consisting of five-six players. And I actually, to my knowledge, I only believe there's one or two of them, or two of them have a GH-GLP-1 players. So I don't believe that you can generally take the comments on shifting to the GLP-1 segment is the reason for shortage in our daily growth hormone. I think the key element is basically the long-term perspective of what's happening in the daily growth hormone. That started already for two-three years ago when our phase II data came out, where we saw that there was an... what I call a classical way to leave a market. We saw most of them basically got rid of their sales force. They got rid of every promotion. They got rid of the hub.

Today, many of them basically have stopped manufacturing for year back, stopped subcontracting to European countries. This is a part what you see is driving the basic, the daily growth hormone shortage, because the consolidation got, everyone got stopped. If there has been in the old days for four to five years, everyone else can just take in. It's not happening because they are leaving the growth hormone market. I think we need to go back to fundamentals. The fundamentals is that the daily growth hormone consolidation already started for three to four years because this is how you basically get optimal financial return to ensure. What you see now is the end of the consolidation, where you see some shortage in the daily, because there is not so many that really want to supply it, because it's not really an interesting business.

If you have a big pharma, a large entity, selling for less than EUR 100 million, you cannot have a positive P&L of such product. You want to leave, and they are leaving, and I will leave, too. I will get out as fast as possible, and this is what you're seeing.

Hartaj Singh (Managing Director)

Thank you. And then also a question with respect to the new GLP-1 work that you've been doing. Want to ask about what your freedom to operate there is. Presumably, if you were to move forward with a candidate using one of the APIs, you'd have to be with you in agreement with one of the respective pharmas in attendance. Is that something we should look out for? Thank you.

Jan Møller Mikkelsen (President and CEO)

Yeah, the GLP-1 is really interesting from an IP perspective because there's actually a lot of freedom to operate in the GLP-1 space. This is really surprising, but it's not surprising when you think about many of them are old product that basically was developed and diabetes and then got repositioned into the era of obesity. So from that perspective, there is a lot of freedom to operate, of really interesting. What we're doing with our them, is basically making to the best-in-class product opportunities, because we can really address some of the tolerability there is by providing, for example, if you use it once weekly, you will have a flat curve. Meaning is that a flat PK curve, not really the excursion that gives you a side effect. You can also take it if you have problem with adherence.

We know that only one-third of the patient are on treatment after one year, after GLP treatment. So we need to do something to improve the adherence, improve the way that they get a product, both related to tolerability and adherence, which one is the most important for the patient.

Hartaj Singh (Managing Director)

Great. Thanks very much for taking the question.

Operator (participant)

Thank you.