Yahoo Finance Ascendis Pharma A/S (NASDAQ:ASND) Q1 2024 Earnings Call Transcript
Ascendis Pharma A/S (NASDAQ:ASND) Q1 2024 Earnings Call Transcript May 4, 2024
Ascendis Pharma A/S isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day, and welcome to the Q1 2024 Ascendis Pharma Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there'll be a question-and-answer session. [Operator Instructions] As a reminder, this call may be recorded. I would now like to turn the call over to Tim Lee, Senior Director, Investor Relations, Ascendis Pharma. Please go ahead.
Tim Lee: Thank you, operator, and thank you, everyone, for joining our first quarter 2024 financial results conference call. I'm Tim Lee, Senior Director of Investor Relations at Ascendis Pharma. Joining me on the call today are Jan Mikkelsen, President and Chief Executive Officer; Scott Smith, Executive Vice President and Chief Financial Officer; Dr. Stina Singel, Executive Vice President of Clinical Development, Oncology; and Joe Kelly, US General Manager. 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 statements regarding our commercialization and continued development of SKYTROFA for the US and European markets, as well as certain financial expectations for 2024, our commercialization and development of YORVIPATH in the EU and expected timing of the FDA review and potential launch of TransCon PTH in the US, our pipeline candidates and our expectations with respect to their continued progress and potential commercialization, our strategic plans, our goals regarding our clinical pipeline, including the timing of clinical results, our ongoing and planned regulatory filings, and our expectations regarding the timing and the results of regulatory decisions, our ability to create value in multiple therapeutic areas outside of endocrinology rare disease and our progress towards Vision 2030.
These statements are based on information that is available to us today. Actual results may differ -- could differ materially from those in our forward-looking statements, and you should not place undue reliance on these statements. We assume no obligation to update these statements as circumstances change, except as required by law. For additional information concerning the factors that can 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 with the SEC on February 7, 2024. TransCon Growth Hormone, or TransCon hGH, is approved by the -- is approved in the US by FDA and the EU has received MAA authorization from the European Commission for the treatment of pediatric growth hormone deficiency.
The European Commission and the United Kingdom Medicines and Healthcare products Regulatory Agency have granted marketing authorization for TransCon PTH as replacement therapy indicated for the treatment of adults with chronic hypoparathyroidism. Otherwise, please note that our product candidates are investigational and not approved for commercial use. As investigational products, the safety and effectiveness of product candidates have not been reviewed or approved by any regulatory agency. None of the statements during this conference call regarding our product candidates shall be viewed as promotional. On the call today, we'll discuss our first quarter 2024 financial results and we'll provide further business updates. Following some prepared remarks, we'll open the call up for questions.
Note, with our PDUFA date for TransCon PTH coming up in less than two weeks, we will not comment on our ongoing discussions with FDA and we will not be taking any questions on this topic today. With that, let me turn it over to Jan.
Jan Mikkelsen: Thank you, Tim. Good afternoon, everyone. Ascendis is applying its TransCon technology platform to build a leading fully-integrated biopharma company focused on making a meaningful difference in patients' life. Two approved TransCon products and solid progress across programs, growing commercial presence, and strong partnerships, we believe Ascendis is on the path to sustainable growth and operating cash flow breakeven on a quarterly basis by the end of 2024. Our long-term commitment in the last three, four years to build out profitable and robust supply chains and the decision we took in 2023 to streamline the company and make ourselves leaner and more efficient organization. You can see the progress towards operating cash flow breakeven later this year, without compromising our development and commercialization progress.
We believe we are well positioned to successfully deliver on our strategic goals and close out our Vision 3x3 with regulatory approvals for three independent endocrinology rare disease product and continue building a pipeline in other therapeutic areas. Looking to Vision 2030, we believe each of our three rare disease endocrinology products has the potential to achieve blockbuster status, while we also further expand our pipeline and TransCon platform for future innovation. We have seen validation of our commercialization approach with the ongoing success of SKYTROFA in the US, and are seeing it again with successful launch of YORVIPATH in Germany and Austria. In the US, the PDUFA date for TransCon PTH is coming up in less than two weeks on May 14.
If approved, we expect to be ready to launch in the US soon thereafter in the third quarter. Now, let me give an update on each of our programs. When we launched SKYTROFA in the US about two years ago, we had two goals: one to make SKYTROFA the leading product in there; the second to drive US growth hormone market to become a $3 billion market. Our strategy is working. Thousands of patients are now treated with SKYTROFA, the value leader in the US. We have a reliable supply chain, ensuring that every patient can benefit from SKYTROFA once they have approval from their insurance company. We estimate that SKYTROFA penetration in the US pediatric growth hormone deficiency patient population grow to about 17% at the end of the first quarter. We are proud to observe SKYTROFA extend its market value leadership as the only growth hormone product to grow in value in the third quarter of '24 based on reported results.
And we believe SKYTROFA will expand the US [go-to-market] (ph) with the potential to become a blockbuster in the US alone. SKYTROFA sales this quarter more than doubled compared to the first quarter of 2022, with a steady quarter-to-quarter increase in treated patients. We expect to continue this trend rest of this year. With these strong SKYTROFA results, we continue to expect the full year 2024 SKYTROFA revenue will be between €320 million to €340 million, representing year-to-year growth of 80% to 90%. We expect SKYTROFA sales to continue to grow through further penetration in the pediatric growth hormone [deficiency] (ph). To further solidify growth, we are also pursuing our first label expansion in adult growth hormone deficiency, for which we plan to submit a supplemental BLA to the FDA in the third quarter of this year.
In addition, we expect top line data from our Phase 2 trial in Turner syndrome in the fourth quarter of 2024. Now, turning to TransCon PTH. In Europe, YORVIPATH was launched in Germany and Austria at the end of January with the early launch objective of building physician experience with YORVIPATH. Initial physician feedback from YORVIPATH has been positive. Just eight weeks in the launch, we estimate prescriptions have been written by 55 doctors, representing around 25% of the target prescribing base with about 100 patients receiving commercial product. As physicians begin to get comfort with the treatment benefit of YORVIPATH in the first patient, we expect physicians to take more and more of the patients on treatment. As we expand our geographic reach of YORVIPATH to our Europe Direct and our International Markets segment, we are supporting named patient supply programs and plan to provide reimbursed products to meet the needs of patients.
In the US, pre-launch preparation are underway, including the expansion of the US field infrastructure, while we are waiting FDA's decision. Moving now to TransCon CNP. Our value proposition with TransCon CNP is simple. It's to establish a treatment for patients of all ages with achondroplasia. Our ambition is to address the significant comorbidities associated with achondroplasia that impact health and quality of life, as well as linear growth. Later this year in the third quarter, we plan to report top line results for our pivotal ApproaCH Trial, which is measuring not only linear growth but also physical function, body compensation, and quality of life parameters. We are also evaluating TransCon CNP in newborns with achondroplasia less than two years of age.
We believe that treatment achondroplasia with TransCon CNP as early as possible might mitigate associated comorbidities. In addition, to provide catch-up growth for children who did not receive early treatment, we are evaluating TransCon CNP in combination with TransCon Growth Hormone. We expect to enroll all patients in this trial this quarter and provide 26-week top line data for this trial in the fourth quarter this year. This is our integrated approach to address achondroplasia with multiple trials that are all building towards one goal to treat the disease. And we are optimistic that our highly differentiated product candidate will continue to show best-in-class potential across these multiple studies. Switching now to oncology. Both TransCon IL-2 beta/gamma and TransCon TLR7/8 Agonist have shown promising clinical activity as monotherapy and in combination treatment with pembro in late-stage patients whose disease has progressed after standard of care treatments.
Next month at ASCO, we will report updated patient data from the ongoing Phase 1/2 trial. I believe that has been reported last year at ESMO. We will present updated clinical data and new biomarker data that further differentiates our clinical program. We will also report promising early data from the ongoing dose expansion cohort of patients with melanoma who had progressed from checkpoint using the combination of TransCon IL-2 beta/gamma and TransCon TLR7/8 Agonist in these patients. Later this year in the fourth quarter, we expect data readout in several well-defined patient population from our TransCon IL-2 beta/gamma and TransCon TLR7/8 Agonist programs. Our achievement this quarter give me further confidence that all the elements are in place to fulfill our strategic goals to deliver three independent endocrinology rare disease products and a strong pipeline in larger therapeutic areas such as oncology, ophthalmology and metabolic diseases with much more to come.
I will now turn it over to Scott.
Scott Smith: Thanks, Jan. In Q1, we demonstrated significant financial progress toward our goal of becoming operating cash flow breakeven on a quarterly basis by the end of 2024. I will touch on some key points surrounding our financial results, but for further details, please refer to our 6-K filed today. SKYTROFA revenue for the first quarter of 2024 was €65 million compared to €31.6 million reported in the first quarter of 2023, an increase of 106% year-over-year. This growth was driven by significant increase in demand volume, more than doubling compared to the prior-year period, with a slight offset by a combination of slower channel build, coverage mix, and a modest negative currency impact of €0.8 million. On a sequential basis, first quarter SKYTROFA revenue increased 1% compared to the fourth quarter of 2023.
Strong mid-teens percent demand volume growth was offset primarily by seasonal channel inventory, co-pay resets, insurance reauthorizations, and a modest negative currency impact of €0.6 million. Q1 was in line with our high internal expectations. And with seasonal headwinds behind and the steady pace of new patient adds expected to persist, we continue to expect full year SKYTROFA revenue to be in the range of €320 million to €340 million at average 2023 exchange rates. Shifting to TransCon PTH. YORVIPATH contributed for the first time this quarter with revenue of €1.5 million, representing two months of shipments. In Germany and Austria, we ship directly to retail pharmacies for patient pickup. And as a result, there is no channel inventory buildup compared to a typical US launch like we saw with SKYTROFA, where specialty pharmacies hold channel inventory.
Closing out the top line, total revenue for the first quarter was €95.9 million, including €24.8 million of non-cash license revenue recognized in relation to the formation of Eyconis and €3 million of service revenue related to Eyconis, which is offset in operating expenses. Turning to expenses, R&D costs in the first quarter totaled €70.7 million compared to €106.1 million during the first quarter of 2023. The 33% decline was largely tied to lower external development costs for TransCon Growth Hormone and TransCon PTH, including a reversal of prior period write-downs of pre-launch inventories, as well as oncology programs, partially offset by an increase in TransCon CNP costs. Sequentially, R&D costs declined 22%. SG&A -- sorry, SG&A expenses in the quarter totaled €66.8 million, essentially flat compared to €66.5 million during the first quarter of 2023.
Higher employee costs, including the impact from commercial expansion, was partially offset by lower external pre-launch and administrative expenses. Sequentially, SG&A expenses increased 4%. Total operating expenses were €137.5 million for the first quarter, a 20% decrease compared to the €172.7 million during the first quarter of 2023. Sequentially, operating expenses declined 11%. Overall, our operating loss in the first quarter totaled €49.1 million compared to an operating loss of €143.7 million during the first quarter of 2023 as a result of increased revenue and lower operating expenses. Sequentially, operating loss increased 34%. Finance expense in the quarter was €77.2 million compared to €8.4 million expense in the fourth quarter of last year.
This higher finance expense was largely driven by a non-cash derivative loss tied to our outstanding convertible notes. Quick comment on the balance sheet. As of March 31, 2024, due to amended IFRS rules, which came into effect on January 1, 2024, you'll notice our convertible notes with face value of US$575 million are now reported as current liabilities, even though they do not mature until April 2028 and would not require cash settlement in case of conversion by holders. IFRS still requires the carrying value of the convertible notes and associated derivative liabilities to be presented separately within current liabilities, which together total €622 million. As per IFRS rules, comparative amounts have been reclassified to reflect the change in presentation.
The applied amendments had no other impact on the financial statements. We ended the first quarter with cash and cash equivalents totaling €320 million. And for the full year 2024, based on current plans, we expect SKYTROFA revenue to be in the range of €320 million to €330 million -- sorry, to €340 million at average 2023 exchange rates, we expect total operating expenses, SG&A, and R&D to be approximately €600 million, and we expect to be operating cash flow breakeven on a quarterly basis by the end of 2024. Let me now also highlight selected key milestones. For TransCon growth hormone, we now plan to submit an sBLA to FDA for adult GHD in the third quarter of 2024 compared to the previous plan of Q2, and we expect to report top line results from our Phase 2 Turner syndrome trial in the fourth quarter of 2024.
For TransCon PTH, in the US, our PDUFA date is May 14, 2024. If approved, we plan to launch it as YORVIPATH as quickly as possible thereafter. Outside the US with a commercial rollout of YORVIPATH underway in Germany and Austria, we plan to roll out YORVIPATH in our Europe Direct and International Markets segments throughout 2024 and 2025. For TransCon CNP, we expect to report top line results from the pivotal ApproaCH Trial as well as submit our NDA for treatment of children with achondroplasia, both in the fourth quarter of 2024, and also report week 26 top line data from the COACH Trial in combination with TransCon Growth Hormone also in the fourth quarter of 2024. Within our oncology therapeutic area during the fourth quarter of 2024, we plan to provide a clinical update from the Phase 2 indication-specific dose expansion cohorts from our TransCon IL-2 beta/gamma and TransCon TLR7/8 Agonist clinical trials.
With that, operator, we are now ready to take questions.
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