Ascendis Pharma A/S — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter filing; Q4-only financial results are not provided in the supplied text. Financial statements are prepared under IFRS and reported in euros unless otherwise stated.
Business context and reporting period
Ascendis is a Denmark-based biopharmaceutical company developing medicines using its TransCon technology, focused on endocrinology rare diseases and oncology. In August 2021, the FDA approved SKYTROFA (lonapegsomatropin-tcgd), its once-weekly growth hormone product, for certain children with growth hormone deficiency. Commercial shipments began in the United States in Q4. The European Commission authorized the product in January 2022 for eligible children and adolescents.
At year-end, the company reported one marketed product and five product candidates in clinical development. It had 639 employees and 56,937,682 ordinary shares outstanding.
Key financial metrics
| Metric | FY2021 / year-end | Prior comparable period |
|---|---|---|
| Revenue | €7.8 million | €7.0 million in 2020 |
| Commercial product sales | €0.9 million | None in 2020 |
| Gross profit | €4.3 million; reported gross margin approximately 54.7% | €7.0 million in 2020 |
| Research and development costs | €295.9 million | €260.9 million in 2020 |
| Selling, general and administrative expenses | €160.2 million | €76.7 million in 2020 |
| Operating loss | €451.8 million | €330.6 million in 2020 |
| Net loss | €383.6 million; loss per share €7.00 | €419.0 million; loss per share €8.28 in 2020 |
| Cash used in operating activities | €417.6 million | €271.5 million in 2020 |
| Cash, cash equivalents and marketable securities | €789.6 million | €718.8 million in 2020 |
| Total equity | €883.6 million | €838.7 million in 2020 |
Revenue comprised €0.9 million of commercial sales, €3.7 million of clinical supply, €0.8 million of services and €2.4 million of license revenue. The gross margin is calculated from reported gross profit and revenue; commercial sales were only a small part of total revenue.
Year-end liquidity included €446.3 million of cash and cash equivalents and €343.4 million of marketable securities. The company reported no interest-bearing debt. IFRS lease liabilities were €105.0 million, with contractual lease cash flows of €126.9 million before discounting. The filing reports total assets of €1.085 billion.
Material changes versus 2020
- Revenue rose 12%, reflecting initial SKYTROFA sales and higher clinical-supply revenue, partly offset by lower license and service revenue.
- Operating loss widened by €121.2 million as R&D costs increased 13% and SG&A expenses more than doubled, including costs to build commercial operations and implement a new enterprise resource planning system.
- Net loss narrowed despite the larger operating loss. Results benefited from €59.7 million of finance income, principally foreign-exchange gains, compared with €80.8 million of finance expense in 2020, principally foreign-exchange losses. A €42.3 million non-cash gain related to VISEN’s Series B financing also contributed to the reported share of associate profit.
- Operating cash use increased €146.1 million, including a €75.4 million inventory build to support commercialization. The company raised €367.9 million net from a September 2021 ADS offering.
- Cash and cash equivalents declined to €446.3 million from €584.5 million, while marketable securities increased. Total cash, cash equivalents and securities nevertheless rose year over year.
Outlook, management commentary, risks and unusual items
- Management said existing cash, cash equivalents and marketable securities at December 31, 2021 were expected to fund projected requirements for at least 12 months from the filing date, based on the then-current operating plan. The company expected substantial R&D and commercialization spending to continue and cautioned that plans or funding needs could change.
- Management planned a 2022 NDA submission for TransCon PTH for adult hypoparathyroidism, with a planned FDA submission in Q3 and EU application in Q4. Top-line results from the global Phase 3 PaTHway trial were expected in Q1 2022. TransCon CNP achondroplasia trial results were expected in Q4 2022; oncology trial data were also anticipated during 2022. These are stated expectations, not guarantees.
- SKYTROFA had 369 prescriptions written by 139 prescribers as of December 31, 2021. The company described its U.S. sales organization as newly established and identified market access, reimbursement, physician adoption and supply as important to commercial success.
- Key risks include uncertain clinical and regulatory outcomes; competition; dependence on third-party and, in some cases, single-source manufacturers; commercialization and reimbursement uncertainty; intellectual-property challenges; and possible additional financing needs. COVID-19 had not caused significant operational disruption as of the report, but could affect trials, supply chains and launches.
- The company said the invasion of Ukraine had affected or could affect enrollment and data collection at sites in the adult growth-hormone Phase 3 trial. It reported no material business impact from the situation at the time of filing.
- Unusual items materially affected comparisons: a €53.7 million reversal of previously written-down pre-launch inventory following SKYTROFA approval reduced reported R&D costs; the VISEN financing generated a €42.3 million non-cash gain; and currency movements produced substantial finance gains. These items are not equivalent to recurring product revenue or operating cash generation.
- Foreign-currency exposure was material: a 10% strengthening of the U.S. dollar against the euro was estimated to increase pre-tax profit or loss and equity by €54.9 million. The company did not use currency derivatives.
- Deloitte issued unqualified audit opinions on the financial statements and internal control over financial reporting. Management also concluded disclosure controls and internal control were effective at year-end; the audit identified clinical-trial accrual estimation as a critical audit matter.
Most important facts for investors to verify
- Check the audited statements and notes for the sources of the €59.7 million finance income, the VISEN gain and the €53.7 million inventory reversal, and distinguish these from recurring operations.
- Track SKYTROFA prescription growth, net sales, rebates and returns, payer coverage, and whether manufacturing capacity supports demand; FY2021 product sales were only €0.9 million.
- Confirm cash burn, working-capital needs and liquidity against actual subsequent-period results, including the company’s 12-month runway statement and planned commercialization and pipeline spending.
- Monitor PaTHway, ACcomplisH, adult growth-hormone and oncology trial results and regulatory milestones against management’s stated timelines.
- Review supplier concentration, lease commitments, foreign-exchange exposure and potential dilution from future equity issuance or outstanding warrants.