Ascendis Pharma A/S (ASND) Earnings Call Transcript & Summary

Hello, everyone. I'm Max Skor, biotech analysts with Morgan Stanley. Welcome. And just to start off for important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com research disclosures. And with that, I'd like to welcome Jan Mikkelsen, CEO, Scott Smith, CFO; Jay Wu, Head of U.S. market. Thank you very much for joining us today, team.

And thanks a lot of inviting us.

Really appreciate it. So I think in regards to the Ascendis story, let's start with last night's announcement, you've recaptured full rights to the metabolic and cardiovascular franchise. How are you thinking about what comes next for Ascendis?

That is an open question where I can convey a lot of answers because a lot of things is happening at Ascendis. First of all, we also had a press release yesterday related to buying back shares for $400 million and I think that is part of our integrated strategy that we laid out in our Vision 2030, how to be a leading biopharma and before I start, I think Scott would like to say a few words related to our financial positioning, how we are generating a profitable company and how will it progress in the next years?

Thanks so much, Jan. As Jan mentioned, we announced a $400 million share repurchase agreement, and that's really on the back of the strength of the financial transformation that happened with Ascendis this year in 2026 going from historically R&D to having approval and launch of 3 highly differentiated products with YORVIPATH achieving blockbuster status this year. As you know, we've guided to over EUR 500 million of operating cash flow. And with the strength of the launch as well as the new launch of UBE well, we expect that, that could potentially double next year or even more. So it's a great time for Ascendis to buy back shares. And we still retain all the capital we need to continue to advance R&D. And in particular, I think with the other announcement we made, it gives us a lot of opportunity to basically ensure the growth of Ascendis beyond 2030 and to the 2040s.

So when I see us in this -- and this laid out really well in our Vision 2030 because I really like this framework where we go out and lay a 5 years plan and how we follow on and how we execute it. So there's 2 cornerstones in our 2030 plan. One is to hit EUR 5 billion in product revenue. That is EUR 5 billion coming from our 3 approved product SKYTROFA, [indiscernible] and YUVIWEL. That is the cornerstone in our revenue generation and is coming from U.S. and also coming from our key effort we have to be independent on the U.S. revenue, but building up a sustainable part of our revenue flow the ex U.S. I think one of the few biotechs that really have this effort going on, where we're building up a global organization. We recognize revenue more than for 40 countries now. And it takes longer time in the ex U.S. segment. So when we come to '27, '28 we will see about 10 to 20 countries every year being full commercial with our product. Jay will a few words about U.S. because U.S. is still a cornerstone in our revenue generation and also explain a little bit of the effort we're doing really so we can grow the revenue every year.

Sure. Thanks, Jan. As Jan mentioned, from a U.S. standpoint, we now have 3 approved products in the U.S. We're feeling encouraging about all 3 of them, right? So YORVIPATH, I know we spent a lot of time talking about given from a pure scale standpoint, it represents tremendous opportunity as you think about not only what it's generating in the near term, but also the longer-term potential of the hypoparathyroidism space overall. Within that, we've been investing quite heavily in a few areas. So one, we've talked a lot about prescriber education as being a key area we launched during a time where following that pair. This is a differentiated product, and we're reshaping people's expectations for what patients that have hypoparathyroidism need and what the condition actually entails. I think the second area where we've been investing quite heavily in is patient activation. If you think about 70,000 to 90,000 patients in the U.S. having hypoparathyroidism, this is a space where many of those patients are actively either seeking care, have established care with their specialist and/or are searching for something more above and beyond the conventional therapy that they're on and that takes time, but we're seeing some really encouraging signs of some of those behaviors and beliefs changing. And then lastly, with the ever-evolving access landscape, patient experience, we know that this condition in particular, these patients go through things like brain fog, they might go through fatigue and making sure that they have the requisite level of patient support both during their journey to get a prescription as well as post prescription is another area that we've been ensuring that we're supporting from a seamless experience standpoint. YUVIWEL, we just recently launched this year. You've seen some of the numbers that we've shared previously, incredibly encouraged by what we're seeing with that new product launch to date. And again, really speaking to the fact that this is a clinically differentiated profile. We believe is best in class. And from a standpoint of offering something unique to this community, we're seeing really positive sentiment across providers patients, patient advocacy groups and conversations with payers have all been going very well. And then, of course, we mentioned the cornerstone of SKYTROFA. We're still seeing continued growth in that segment tracking with what we see in prescriptions. And then because SKYTROFA continually being developed in other areas as well, we do see SKYTROFA as a foundation to start with a very bright future ahead.

So what Jay has talked about how we implement an excellent center of commercialization in the U.S. with doing the same ex-U.S. building up a global organization where we want to reach basically more than the 400,000 to 500,000 patients, for example, with hypopara that is sitting ex U.S. huge amount of patients. And this is one of the efforts we will continue to doing. So when we talk about revenue in 2030 of EUR 5 billion. We have a strong fundament to achieve that just with our 3 current products. This is the fundamental hit by EUR 5 billion. This is not peak sales of this portfolio. The peak sales comes years after that. We continue label expansion. We have 5 to 10 trial ongoing now. Many of them are late states, both in label expansion, combination therapy really to build on further how to really reach the best kind of treatment to all the different patients. At the same time, and is coming to the second part is in our Vision 2030. How to be sustainable with a continued new growth of new chemical entity like one like SKYTROFA, like one like EUROpest, like one like YUVIWEL. And we have now a strategic strategy to take at least one new clinical development besides all the label expansion we continue to do with our current portfolio of products. And it's coming both in rare disease endocrine. It will come in other indication outside. And part of our strategic approach for 2030 is that we have built a new fundamental for a new [indiscernible] areas beside our rare disease endocrine. And we are not limit ourselves to rare diseases more. We have the capacity as a company. We have the infrastructure to move outside rare diseases. And when we see how we build up our rare disease endocrine. It was built on a product at least 3 where we add 1 product more after the time really have the economy of scale in synergies bothcommercial organization, in manufacturing, regulatory exercise really to do it, and we will do the same thing in a new terpotic era. We are not dependent on in-licensing. We are a company built on an R&D development on our strong technology platform with TransCon technology, which have given us 3 out of 3. Scott is still calculating what is the change to start with 3 preclinical and get 3 products approved. He still believes is very, very, very, low. And think about all 3 of them are highly differentiated. All 3 of them really showing best-in-class -- care to anyone. All of them are extremely durable. They have IP up to the end of the 30s in the 40s. They are a combination product. They don't have a patent cliff like a small tablet. They're just falling down the cliff 1 year after it basically in a position the IP disappear. We own the products. So we're not ending in like other companies that will royalty suddenly disappear the day after their IP disappeared, but the product stand for 10 years more. We will own the product because we do own commercialization. So when you look on the future of Ascendis Pharma. We're just in the beginning of the beginning. We're not even at the end of the beginning because the first therapeutic area, we're first starting to mature, first starting to grow. So this is why I really believe when you ask me this question. This is a long answer because we have so many possibilities. We're doing so many things, but I'm so happy to the stake we coming. We are independent in the way that we wrote in our Vision 2030, and independent meant that we are developing everything in our -- from the TransCon technology and be financial independent, and we can give EUR 1 billion back potential every year to the shareholder if we want to do that.

Maybe if I can ask on the cardiometabolic effort or what it looks like going forward, capital expenditure does the base business fund the expansion? Should we think about any sort of equity raise trying to think about it through the lens of the share buyback also. I think are your bankers in the meeting?

I think the bankers are a little bit disappointed. First of all, Scott is never getting right up to [indiscernible] bankers now because some were all of them have given up that we're going to raise capital. So we're not really interesting, no. We say [indiscernible] still being invited here. We are not going to raise capital, I can guarantee and when you see our company, how we are as a company, most people expand R&D expenses because they don't take product out. Hey, we take 1 product out all the time. And when it's out, they're not sitting in the pipeline more. We take a new one. So when I see the expenses on our basic research and development, we are pretty stable. We will have a growth every year will be dependent on inflation. It will be tendered on a few other element parts we are expanding a little bit more and other things like that. is not making material difference. Scott gave me a simple algorithm. If we go revenue 100% year-by-year, and we only grow expenses by 10% to 15%. Would that give a lot of profit. And Scott convinced me about that. And this is basically the story we are implementing for the time being. Should be not raising capital.

I'm very happy you guys are here. In regards to the cardio metabolic opportunity, though, should we think about it as potential upside to the Vision 2030?

Yes, this a major upside because I want to be independent. I have -- we have multiple collaboration. All of them have actually failed but we've been extremely successful as a company. I don't think anyone should be dependent on a big pharma that is really a big mistake. The first major collaboration we had with Sanofi. We made the first triple agonist once weekly, but then they got a new CEO, and he didn't like metabolic diseases. If that continue on that, they'll likely have been larger than really today. Then we basically made an ophthalmology with Roche genetic and went into a CMC problem, which we solved after that. But now we have [indiscernible]. Mark is sitting there with the CEO of Iconis. Our major spin up extremely successful. So the products are still fantastic. And then we have now a collaboration with Novo Nordisk. And in every contract, there is a way how to live together, how to work together. And one is not fast enough, we likely have a chance to go out of it. And I think we will get it back, it would give us a lot of opportunities, not only to have the best-in-class once-monthly semaglutide, but also have the possibility to access rare diseases in obesity and other metabolic diseases, which we couldn't do before to the same degree. So it opened up an extremely positive for us to really expand our opportunities in this way.

I know it's early, but can you just talk about time lines and capital allocation towards this cardiometabolic effort?

The capital application, it's basically are going to be in combined Phase I, Phase II trial, in which we will give you time lines on when we come to the beginning of next year. And it's not changing any way material our expenses in any way. So it's not going to be a driver of a new raise capital because that is definitely not needed from our side.

Okay. Maybe pivoting a bit, let's talk about YORVIPATH, which really anchors your vision 2030. What are you doing to continue the momentum, potentially accelerate growth? What should we expect over the next 6 to 12 months.

Jay, you can take U.S.

Sure. When you think about YORVIPATH, transformational change from where you are requires something beyond just prescriber education, classic reach frequency, et cetera, right? Because 70,000, 90,000 patients with the number that you're treating, you actually need to get patients to raise their hand and come out of the woodwork. So a lot of our investments and commercial focus has been around that piece specifically, so I'll give you a few examples. We've been looking at direct-to-consumer education. You've probably seen some of that depending on the demographic and the shows that you watch or streaming online or however, but we are starting to see some preliminary positive signs from some of those investments that we've made from a digital standpoint. We've invested heavily in patient-facing roles. So we now have an entire infrastructure of roles that we call patient access liaisons -- they coordinate with patients directly. They support them in all aspects, whether it's field reimbursement, clinical education and essentially supporting them through their journey, both in terms of wanting information about the therapy, accessing therapy as well as supporting them once they're on therapy. And then lastly, when you're starting to think about digital infrastructure for more commercial stage organizations, how do you have channels increasingly embedded within one another, right? So from diagnosis to field personnel to nonpersonnel digital channels, how do you have them all work together in a way where you're offering people a seamless experience so that they get the information they need at the right and in the right way. So those are 3 examples for which we have been actively investing in activating patients more broadly. And again, we're seeing some encouraging signs, and it's really an investment and not just today but in the future as well.

From the ex U.S. on the top level is to make more and more countries fully commercial. Today, we have about 7, 8 countries ex U.S. that is fully commercial. Next year, we will add between 10% to 15%, '27, and we will do that again in '28. So the overall perspective, besides each country have their own, you can say, execution of commercial operational execution is on a high level to get as money as possible country, full commercial where we still keep the value of our product because we believe the value we're providing with, for example, [indiscernible] providing creation not only for the patient, but also for the society, and this is why we not compromise really the value what it really costs to basically implement such a treatment in each country.

Should we expect the investment in the YORVIPATH launch to increase over time? How does that look?

I think we full-blown why we can basically be in this way, being in countries. We have a mixed model in ex U.S. in countries. We are down rate. We basically have built up all the legal entities to affiliate the basic people on ground in the countries where we have distribution agreement we are basically not responsible for any expenses in this. So out from that, you can say it's a mixed model where we basically have built the infrastructure supporting a global launch in all the countries that is needed.