Ascendis Pharma A/S (NASDAQ:ASND) has announced its financial results for the second quarter of 2024, revealing a mix of growth and challenges. The company highlighted the U.S. approval of YORVIPATH for adult hypoparathyroidism, marking their second approved endocrinology rare disease product candidate in major markets.
Despite a decline in SKYTROFA revenue due to adjustments and higher sales deductions, Ascendis Pharma remains focused on innovation and seeks approval for all three of their product candidates by the end of 2025. The company also secured a new funding agreement with Royalty Pharma worth $150 million and aims to reach operating cash flow breakeven on a quarterly basis in 2024 or 2025.
Key Takeaways
- U.S. approval of YORVIPATH for adult hypoparathyroidism.
- SKYTROFA revenue forecasted to be EUR220 million to EUR240 million for full-year 2024.
- YORVIPATH revenue increased in Q2, with a 98% patient retention rate.
- Phase 2 trial updates for oncology product candidates and positive expectations for TransCon CNP.
- R&D costs decreased by 21% year-over-year, while SG&A expenses rose due to higher employee costs.
- Ascendis Pharma ended Q2 with EUR259 million in cash and equivalents.
- New $150 million funding agreement with Royalty Pharma.
- Constructive dialogue with the FDA regarding PTH drug shortage in the U.S.
Company Outlook
- Ascendis Pharma expects to continue growth with YORVIPATH and aims for full approval of their product candidates by end of 2025.
- The company anticipates reaching operating cash flow breakeven on a quarterly basis in 2024 or 2025.
Bearish Highlights
- SKYTROFA revenue decreased by 27% due to higher sales deductions and adjustments.
- SG&A expenses increased because of higher employee costs.
Bullish Highlights
- SKYTROFA revenue more than doubled in Q2 2024 compared to the same period last year.
- Positive feedback and strong market penetration for YORVIPATH in Germany and Austria.
- Expectations of an improved pickup in SKYTROFA prescriptions in the second half of the year.
Misses
- Reported net sales for the first half of the year were reduced by EUR7.6 million due to true-up adjustments.
Q&A Highlights
- The company clarified that Q2 reported net sales were around EUR53 million, with an expected improved pickup in Q3 and Q4.
- IQVIA data was deemed unreliable for trend analysis, leading the company to disregard it for forecasting purposes.
- Ascendis Pharma is in discussions with the FDA to manage the shortage of PTH drops in the U.S. and is working to avoid a potential crisis.
In summary, Ascendis Pharma's second-quarter results show a company at a crossroads, with significant achievements in drug approvals and promising product candidates, yet facing challenges in revenue consistency. With strategic plans in place, the company is poised to potentially overcome these challenges and achieve steady growth in the coming years.
InvestingPro Insights
Ascendis Pharma A/S (ASND) has demonstrated a dynamic performance with significant revenue growth, yet it faces several challenges as indicated by recent data and analysis. According to InvestingPro Tips, analysts have revised their earnings expectations downwards for the upcoming period, signaling caution about the company's near-term profitability. Additionally, short-term obligations exceeding liquid assets may suggest liquidity concerns that investors should monitor closely.
InvestingPro Data provides a snapshot of the company's financial health and market valuation. With a market capitalization of approximately $7.72 billion, Ascendis Pharma is trading at a negative P/E ratio of -14.24, reflecting investor concerns about the company's current lack of profitability. Despite this, the company has seen a substantial revenue growth of 166.54% over the last twelve months as of Q2 2024, highlighting its potential for scaling up operations. However, it is important to note that the company is trading at a high revenue valuation multiple, which could indicate that the stock is priced optimistically relative to its sales.
Investors should also consider that Ascendis Pharma does not pay a dividend, which may affect its attractiveness to income-seeking shareholders. Nevertheless, the company has achieved a high return over the last decade, which could be of interest to long-term investors.
For those looking to delve deeper into the financial metrics and strategic outlook of Ascendis Pharma, InvestingPro offers additional insights and tips that can help inform investment decisions. There are currently 7 additional InvestingPro Tips available for Ascendis Pharma at https://www.investing.com/pro/ASND.
Full transcript - Ascendis Pharma AS (ASND) Q2 2024:
Operator: Hello. Thank you for standing by. Welcome to Ascendis Pharma's Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Operator instructions] I would now like to turn the call over to Tim Lee, Senior Director of Investor Relations at Ascendis Pharma. Sir, you may begin.
Jan Moller Mikkelsen: Thanks, Tim. Good afternoon, everyone. With the recent US approval of YORVIPATH as the first and the only FDA approved treatment of hypoparathyroidism in adults, Ascendis has successfully obtained approval for two out of three endocrinology rare disease product candidates in two major markets, the US and EU. And with pivotal data from our third product candidate TransCon CNP in achondroplasia expected in the coming weeks, we are nearing our vision to achieve approval of all three product candidates by the end of 2025. Our algorithm for product innovation, combined with our TransCon technology have enabled us to bring new highly-differentiated product candidates through the clinical development of [indiscernible] and with a higher success rate compared to traditional drug development. We attempt to continue to develop new product candidates in endocrine rare disease. And larger therapeutic areas such as oncology, obesity, metabolic disease and cardiovascular with best-in-class potential to make a meaningful difference for patients across the globe based on our strong scientific focus. Let us begin with YORVIPATH. In the US alone, an estimated 70,000 to 90,000 patients are living with hypoparathyroidism. For those who haven't seen it, please take time to watch the patient arranged FDA hearing on the hypoparathyroidism associated website, providing an in-depth understanding of the serious consequence of having this disease. With the FDA approval of YORVIPATH, physician and adult patients in United States can now look forward to having a treatment option for treatment of hypoparathyroidism. We are preparing for YORVIPATH's lungs in the US, levering our established commercial infrastructure and expertise. We are expanding our dedicated team of sales reps and field medical personnel who will engage with around 6,000 physicians who treat 80,000 -- 80% of patients with hypoparathyroidism in the US. Other key launch initiatives are underway, including the rollout of our patient support programs designed to support access to YORVIPATH. For example, [eligible] (ph) patient on commercial insurance will pay as little as $5 a month for the YORVIPATH prescription. In addition, following our goal to take care of all patients with this disease, we will also introduce a patient assistance program. We have also started engaging US payers [indiscernible]. We expect product availability in the US in the first quarter of 2025 or sooner if it's possible. Consistent with premium responsible pricing, we will launch with a best price corresponding to 285,000 annual per patient, reflecting the value of YORVIPATH to the US healthcare system. In the US, there are around 140 patients currently active in the expanded HHS program and about 50 more patients in the open-label extension of our clinical studies. Physician will begin transferring these patients over to commercial product as soon as is available. In Europe, the number of patient and prescribing physicians indicating YORVIPATH continues to increase, and we see a good mix of [PK’s because of the obvious effect everyone can observe just going to the databases that describe tolerability and other things like that, we see, we are always doing extremely well to -- in general, we see the same thing with SKYTROFA. SKYTROFA have and preferred position on some of the big and we have other places. But what I'm generally seeing is there is no doubt we always said that SKYTROFA had a best-in-class potential, but what we also see in the market that is really realizing as the best-in-class product opportunity. And that is the strength we want to continue to build on, not only in pediatric growth hormone deficiency, but also in all the different label expansion when we coming into first-generation when we also get them. So for example, you should also look on what happening with, for example, the largest volume supplier of growth hormone in the second quarter that basically have a revenue down on 73%. So clearly, there was an reset of the entire market that potentially come a little bit more unexpected to many of us that it was so fast adapted into a system.
Operator: Thank you. [Operator Instructions] Thank you. Our next question comes from the line of Derek Archila with Wells Fargo. Your line is open.
Derek Archila: Hi, there. Thanks for taking the questions. Just wanted to know what payer feedback you might have received thus far on the proposed YORVIPATH pricing in the US? And then I have a follow-up.
Jan Moller Mikkelsen: We are coming up with a responsible pricing. We're coming with a pricing where we basically can support the statement we want to go every patient that have hypoparathyroidism, we aim to support that can be treated. In that entire mathematic algorithm to achieve that, we came to this responsible pricing on back and we have not got any feedback against that. That is not totally acceptable.
Derek Archila: Got it. Very helpful. And then second question, just in terms of the patients that you've talked about on YORVIPATH in Germany and Austria, I think you commented about 250 patients on the approval call for the US. I guess, how do you think about that penetration relative to the overall market size in Germany? And how do you believe you're tracking thus far in the launch? Is it ahead of where you expected or less than you expected? Thanks.
Jan Moller Mikkelsen: I can come with some initial comments, and you can get some further comments from Camilla. Our initial aim and how we look at how we expected the penetration profile would be that we will see typical one to two patient per physician in the beginning, there was what we expected to see. Before each single physician really see the benefit of really what YORVIPATH can give to the patients, when they observe that, we expect later in this year that each patient or each physician will start to prescribe more and more patients from the number of patients each of them. So when we look on the number of physicians that already have prescribed in Germany and Austria, around 125 prescriber have really prescribed it. We are extremely proud about this penetration through physicians. But I think what does really are the most impressive thing for me in these [indiscernible] is basic retention. When you think about rehab and retention, when you start to take patient in and really test them, are they really providing a benefit for the patient and then they have a retention of 98%. I have never seen that for any product before. That is really, really unique. But it's really described the benefit that is really are giving to the patient and the stay on the treatment exactly as we have observed in our clinical trials. I do not know, Camilla, you have further comments to the [indiscernible] in specific in Germany and Austria?
Camilla Harder Hartvig: Jan, I think you said it very, very well. We are very pleased with the uptake of the YORVIPATH in Germany. We are benchmarking all the rare disease launches and we are doing very well compared to them. And so, the team is working hard on both breadth and depth and that's working well and also creating the mix between the PTH naive patients and the ones that have been on net power and the switch that we are making from that path to YORVIPATH is going very, very fast. So all in all, we are very pleased with how it's going and where it will go in the future.
Jan Moller Mikkelsen: Yes. What we have seen in different European countries that YORVIPATH basic because of its stop of manufacturing, there is a tendency to keep the patient on that path until all the, you can say, accumulated drug are being utilized in the specific regions. And we also see now that it's starting to change a lot where we see much, much more small we see much taking up from net we see much patients coming in now. But one thing, we have now been launched in Germany and Austria. In our Europe direct strategy, we go to France and then here, hopeful in this year and then in 2025, we will have the next six, seven, eight European countries being added in. Really are rolling out in the way we generate revenue from this region in a much faster speed.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Li Watsek with Cantor. Your line is open.
Li Watsek: Hey, guys. Thanks for taking my questions. Maybe just a follow-up on SKYTROFA. Maybe help us understand what went into the assumptions for the lower guidance for SKYTROFA this year. I'm just looking for more details on what's driving that EUR100 million reduction. Maybe talk a little bit about the dynamics between broader market access and pricing? And I have a follow-up.
Jan Moller Mikkelsen: I can come with some overall statement first related to how we did the forecasting because what we basic did that we saw a growth in volume between Q1 and Q2. And if we utilize that growth basically to predict rest of the year and it basically giving the lower value. And after we now have reset our market access portfolio, we are in a position that we expect that the GTN will be keeping constantly throughout the year. What we have observed, like last year, we saw a last seasonal effect between the first half compared to the second half. We still see that as an upside which potential will materialize, but we also know that it could not materialize. So this is how we have basically taken the guidance forward in that. And that is not anything believing in that we potentially can accelerate growth. We see the potential, we see the best-in-class potential on it. Joe, that is responsible for our US, you can also give a short summary about all the effect that's getting implemented now that first will provide effect in the second half of this year.
Joe Kelly: So the healthcare providers right now have extreme clarity about where they can provide SKYTROFA to patients with a high chance of reimbursement, but also where SKYTROFA is not on formulary, healthcare providers are documenting intolerance of growth below the average per rental height while on other growth hormones, therefore allowing a resubmission, so that pediatric growth hormone deficient patients can have access to SKYTROFA. So, there's time left in this year. Obviously, things will stabilize in 2025. So we know now where we can continue to add patients and grow our net revenue and expand and grow the value of the entire growth hormone marketplace.
Li Watsek: Okay. And I also wonder if you can talk a little bit about where you can further reduce from a cost perspective? And is there any chance you can still breakeven this year, given the lower schedule for guidance?
Jan Moller Mikkelsen: Scott is really good at numbers. So I will someway give you an all perspective and then Scott can go more back to some of the way we are looking at it today. One of the things we are proud about is that we really keep our operating expenses in control and we really see that we really have a good internal system to keep Ascendis Pharma to be a highly effective organization. We also see that there is revenue, specific Europe has different regions are really starting to take in now. So potentially, we have a YORVIPATH outside US. We're still in a situation where we are still discussing with FDA related to how we can really help a patient that is in shortage of a treatment here in the US. We hope we can help them. We will do everything to help them. It -- meaning that we will have a much faster launch that we actually are taking into our plans. We hear the voice from the patients, we hear the voice from the physicians. We will do everything, so we can have an earlier launch. And as soon as we get clarity about that, we will come back to you. So, we have a lot of potential upside. We have a lot of different ways where we're looking about how we can strengthen our revenue, how we basically still keeping our expenses in control, and this is how we are operating. Scott, any comments?
Scott Smith: I think you said it well, Jan. Li, as you know, we always look to be cost effective in what we do as a company and we evaluate expenses that aren't tied to getting the product to patient as soon as possible. But at the same time, of course, we don't want to sacrifice doing that and getting the product. So that's part of the reason we announced the new financing today after the close for the additional $150 million. But we continue to have great scrutiny on costs, particularly where they're not leading to getting our products to patients.
Li Watsek: Thank you.
Operator: Thank you. Please standby for our next question. Our next question comes from the line of Gavin Clark-Gartner with Evercore ISI. Your line is open.
Gavin Clark-Gartner: Hey, guys. Thanks for taking the questions. First, I just wanted to ask for SKYTROFA, when did these policies with more favorable access go into place? And when should we expect a pickup in prescriptions?
Jan Moller Mikkelsen: I think it was gradual during the first half year. So some of them are first ticking in -- here in Q2. The complexity of these agreements are very complex in this way that potential rebate compared to volume increase are some way not really aligned and there was some of the issue we ran into that the rebate basically got established much faster than really we can start to grow the volume. So from a modeling perspective, we see a double-digit number in increase in volume between Q1 and Q2, but we really will expect first, all the effort that we now have installed, as Joe told before, is first ticking in, in the second half, okay. So I will first see the expected growth coming in, in the second half.
Gavin Clark-Gartner: Okay. That makes sense. And just wanted to ask on IQVIA data overall. Have you guys noticed any changes in capture rate trends over time?
Jan Moller Mikkelsen: I think the issue I personally have with the data is that it's a sampling of few places. And if you somewhere keep everything stable, you can use it as an overall trend. If there is a shift between different PBMs, between different market access, you often will see some difference in volume that really are totally unpredictable from the perspective at the sampling between the different PPMs are different. So out from that, I think you should pay it. If you give them all the money for the utilization of these data, at least I'm not paying for it. I get it for free because I showed so many times they were totally not useful to have. But still buy it if you want.
Gavin Clark-Gartner: Okay. Thanks.
Operator: Thank you. Please standby for our next question. Our next question comes from the line of Vikram Purohit with Morgan Stanley. Your line is open.
Vikram Purohit: Hi, good afternoon. Thank you for taking our questions. I guess switching to TransCon CNP, we were just curious for the upcoming ApproaCH readout and then also for the COACH readout in 2Q25. Just which parameters of data you expect to report out and how you would currently guide people to compare and contrast the datasets versus competitor CNP datasets available in this space? Thank you.
Jan Moller Mikkelsen: I think the most easiest way to compare anything is to go through vosoritide because this is two, you can say mode of action that is very most aligned between them, even if there is a difference in how we function because we have a continuous exposure of CNP molecule where from the vosoritide, it basically is only have an active cohorts for two or three hours in every 24 hours dosing cycle. So when we look on our aim, as we have said in the last eight years, we want both to provide linear growth, but also provide and address the comorbidity of the disease. And what we have seen until now and now I'm referring into Phase 2 because this is the data I can talk about today is that we have seen and analyzed height velocity exactly at the same level of vosoritide with a once-weekly dosing profile. But we have seen the improvement in many of the way that the children, the physician, the caregivers talk about the benefit to the patient. And out from that perspective, we also couldn't show when we compare our Phase 2 data directly to placebo and improvement in quality of life related to physical function. And this is why we basically are taking into our trial different measuring on key secondary endpoint that basically hope for us that it can give an effect that really shows how we address the comorbidity, which have never, never been shown by any other product. And when we go to the biochemical process, the science behind it, which we always love, then we basically can come with great explanation why you need to have a continuous exposure of CNP basic to address some of the comorbidities. So it give you where we started from. I need to see the data that coming in the next week. So it's pretty, pretty, pretty near. So the database has been locked. People are running the stat now. So as soon they're finished, I will be taken into a room and see the data.
Vikram Purohit: Got it. It. Thank you.
Operator: Thank you. Please standby for our next question. Our next question comes from the line of Kelly Shi with Jefferies. Your line is open.
Kelly Shi: Thank you for taking my questions. Maybe for PTH, could you please elaborate more on your ongoing interactions with regulators regarding commercialization of existing batches for the US launch, which is likely of 4Q or the first quarter of next year at the moment?
Jan Moller Mikkelsen: We have an extremely constructive dialogue with FDA related to how potential to address the shortage of PTH drops in the US. It's being driven by patients that basic are seeing the huge unmet medical need, the situation where patients have been missing that power for a long time and extremely serious consequence of patients that now today are on that par and suddenly need to be disrupted of the treatment because that part will not be available longer. Out from that, both patient organization, physician and us and FDA recognize this issue. And I think everyone is working together in an extremely constructive manner to find out how we can help the patient to avoid such a crisis that potentially will be.
Kelly Shi: Thanks.
Operator: Thank you. Please standby for our next question. Our next question comes from the line of David Lebowitz with Citi. Your line is open.
David Lebowitz: Well, thank you for taking my question. I got two here. First, on the SKYTROFA adjustments, just to make sure I got this right that you came to an agreement on new net pricing with the payers and as part of it, you had to true-up on prior sales in the last couple of quarters. And then I'll have one more after that.
Jan Moller Mikkelsen: I think you have understood it correct. This is a true-up that is basic reflecting net revenue from mainly net revenue for Q1, but about 7.6 million also from 2023. That is the true-up that is being taken away from Q2 revenue. So basically, if you want to calculate real sales in Q2, you need to add all this true-up to the net revenue from Q2. That is reported here. Scott, any comments? Or did I get it right?
Scott Smith: You got it right, Jan. Good.
David Lebowitz: Got it. And on CNP, what is -- what has occurred to actually essentially accelerate the pivotal data timeline from prior updates?
Jan Moller Mikkelsen: I have to say how fast physicians, the setup of our clinical operation has been function in this case have brought the data to come in much, much faster than we ever thought. I believe there is such a dedication that I only can compare to what we have seen for both PTH and SKYTROFA to get this product out as fast as possible. We're also seeing the same kind of extremely, extremely high retention in this year too. So I think always when I see this data, when I see this positive thing coming in, I think people have one dedication to get it out to the patients as fast as possible.
David Lebowitz: Got it. Thank you.
Operator: Thank you. Please standby for our next question. Our next question comes from the line of Alex Thompson with Stifel. Your line is open.
Alex Thompson: Hey, great. Thanks for taking my question. I guess again on sort of the YORVIPATH potential in the US, could you talk specifically about the data that FDA needs to or wants to see in order to understand whether the material you have currently would be suitable for a US launch in the fourth quarter? Thanks.
Jan Moller Mikkelsen: I could think that they have all the data to take this decision and I don't believe any data need to be brought to them, at least the request we have on is not really on anything of the data. It's mainly how fast can we supply, how much material do we have and other things like that. So, we can ensure that when we start, we basic are in a position, we really can manage this entire demand that we expect to come.
Operator: Thank you. Please standby for our next question. Our next question comes from the line of Paul Choi with Goldman Sachs. Your line is open.
Paul Choi: Hi, thank you. Good afternoon, and thank you for taking our question. On -- to revisit SKYTROFA, can you maybe comment on what percentage of your payer contracts were affected by this -- by the true-up and whether the duration of this -- these changes are multi-year? Basically, it would be helpful to understand if this is an issue we'll have to potentially revisit next year. So any comments there would be helpful. And second, just in terms of the Royalty Pharma agreement that was announced this year, I just want to confirm that from your perspective, is this potentially the last source of external capital that you think you'll need prior to achieving operating cash flow breakeven either this year or next year? Thank you very much.
Jan Moller Mikkelsen: The question that you are asking for related to the implementation of the new contracts, the implementation of the new contract was a continued process to Q1 and Q2. We are now in a position that we have reset it. This is why Scott used the great work reset. We have reset our coverage in the US and out from that perspective, the [indiscernible] we expect to see in the second half will be aligned to what we saw in the first half, and we expect the same GTN in 2025, 2026, 2027, 2028, 2029 and 2030. I can only come with five years guidance.
Operator: Thank you. Our last question will come from the line of Yaron Werber from TD Cowen. Your line is open.
Yaron Werber: Great. Thanks for taking my question. Hope you can hear me. My question is two parts just relating to the -- as you think about the guidance for the year, the EUR220 million to EUR240 million, does that entail that the EUR71.5 million that you sort of did in the first half for SKYTROFA on a net basis? Or is that including the EUR91 million, assuming you did EUR65 million in Q1? And then secondly on, you said you did EUR53 million in Q2. Is that a good run rate to then start into Q3? And four, should we really think of the EUR26 million this quarter as a good run rate into the second half? Thank you.
Jan Moller Mikkelsen: Yes. There was a lot of question in what you basically gave to Scott and me and Joe and the commercial team into it. I think when you start on the last question about basic the reported number today here in our numbers. And I see that the real number is basically the reported net sales plus the true out that we basically provided to you. So you take the number that we had in our Q2 sales and then basically add everything what we took in throughout both from 2023 and what we did in Q1, there you will get a basic and net sales of what we had in the second quarter of '24. So I think that is the real number. And when you look at that, it is around EUR53 million, if I calculate it right. That I think is the real number for Q2. If I do my calculation, it's 53.4 or something like that to be concrete. So we see, without doubt, a really good pickup in -- from Q1 to Q2. And when you go back and look on the seasonal variance that pertains to the [indiscernible], we will see an improved pickup in Q3 and Q4. And when we did the forecasting, we basically took a conservative approach and saying we use the number between Q1 and Q2 and use that as a forthcoming number for every quarter, rest of the year, meaning is that we have not calculated any seasonal effect in the numbers we have given you today. I think it answered most question related to your mathematic algorithm related to the numbers. Scott, do you have anything to add?
Scott Smith: Yeah. Just one thing, Yaron. The -- for the first half, we reported EUR91.2 million without any -- those were the actual reported numbers. And as we said in the prepared remarks in the press release, that number was reduced -- had been reduced by EUR7.6 million of true-up for periods prior to January 1. So in other words, it would have been 7.2 higher or about EUR100 million for the first half.
Operator: Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. This concludes today's conference call. Thank you for your participation. You may now disconnect.
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