Ascendis Pharma A/S — 2020 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2020; filed March 10, 2021. This is an annual report, not a standalone fourth-quarter filing. Financial statements are in euros and prepared under IFRS as issued by the IASB.
Business context
Ascendis is a clinical-stage biopharmaceutical company developing therapies using its TransCon drug-delivery technology. It had no approved products and no commercial product sales in 2020. Its lead candidate, lonapegsomatropin (TransCon hGH), was under U.S. and European regulatory review for pediatric growth hormone deficiency. TransCon PTH and TransCon CNP were in clinical development; oncology candidates were at earlier stages.
Key financial metrics
| Metric (€ millions unless stated) | 2020 | 2019 |
|---|---|---|
| Revenue | 7.0 | 13.4 |
| Research and development expense | 260.9 | 191.6 |
| Selling, general and administrative expense | 76.7 | 48.5 |
| Operating loss | 330.6 | 226.7 |
| Net loss | 419.0 | 218.0 |
| Loss per share | €8.28 | €4.69 |
| Cash flow used in operating activities | 271.5 | 175.9 |
| Cash, cash equivalents and marketable securities at year-end | 834.1 | 598.1 cash and cash equivalents; no marketable securities reported |
| Total equity at year-end | 838.7 | 597.1 |
| Total liabilities at year-end | 141.1 | 79.6 |
Revenue was generated mainly from VISEN collaboration licenses, services and clinical-supply sales, not product sales. The filing does not present a meaningful commercial gross margin; profitability margins are not meaningful given the small collaboration-revenue base and development-stage costs.
Ascendis reported no interest-bearing third-party debt. It had €92.0 million in lease liabilities at year-end (including €6.9 million current and €85.1 million non-current). Total assets were €979.8 million. The company reported €249.6 million of marketable securities and €584.5 million of cash and cash equivalents.
Changes versus prior year
- Revenue fell 48% to €7.0 million, primarily from lower license and service revenue, partly offset by clinical-supply sales to VISEN.
- R&D expense increased 36%, reflecting progress and costs across endocrine and oncology programs, including trials, manufacturing, and staffing.
- SG&A expense increased 58%, including greater personnel, IT, insurance, professional and pre-commercialization costs.
- Net loss nearly doubled. A €78.9 million foreign-exchange loss, mainly related to U.S.-dollar positions reported in euros, contributed to €80.8 million of finance expenses. Finance income fell to €1.8 million from €17.8 million.
- Operating cash use rose to €271.5 million. Financing cash flow was €602.7 million, including €580.5 million net proceeds from the July 2020 ADS offering and €26.9 million from warrant exercises. Cash and cash equivalents increased by €39.9 million; cash-flow investing activity also reflected substantial purchases of marketable securities.
Outlook, commentary and risks
- Management stated that year-end cash, cash equivalents and marketable securities were expected to fund projected requirements for at least 12 months from the report date, based on the then-current operating plan. Funding needs could change; additional capital might be required.
- The FDA’s target action date for lonapegsomatropin was June 25, 2021. Management expected a U.S. launch in the third quarter of 2021 if approved and anticipated a European Commission decision in the fourth quarter of 2021. These were expectations, not assurances.
- Management expected phase 3 PaTHway topline results for TransCon PTH in the fourth quarter of 2021; it also expected an update on the TransCon CNP program in that quarter and initial results from the first part of the TransCon TLR7/8 oncology trial.
- COVID-19 had not caused significant operational disruption in 2020, according to management, but continued to pose risks to clinical-trial enrollment and execution, manufacturing capacity, supply chains, regulatory inspections and launch activities.
- Other major risks include clinical or regulatory failure, competition, dependence on third-party and single-source manufacturers, uncertain reimbursement and market acceptance, collaboration-partner performance, and intellectual-property disputes.
- Unusual or judgment-sensitive items include €53.2 million of share-based payment expense, pre-launch inventory write-downs, and estimates for clinical-trial accruals and prepayments. The auditor identified clinical-trial accruals as a critical audit matter. The financial-statement and internal-control audits received unqualified opinions; management and the auditor reported effective internal control over financial reporting.
- In January 2021, Ascendis invested $12.5 million in VISEN’s $150 million Series B financing, reducing its ownership from 50% to approximately 44%. The company expected to recognize a non-cash gain of €42.3 million in first-quarter 2021.
Most important facts for investors to verify
- Regulatory decisions, label scope, device review and any inspection-related delays for lonapegsomatropin; distinguish reported expectations from actual outcomes.
- Latest trial results, enrollment and timelines for TransCon PTH, TransCon CNP and oncology candidates, including whether preliminary data changed after review.
- Cash burn, liquidity runway and financing needs, including the impact of commercialization spending, supply commitments and lease obligations.
- Exposure to currency movements: management estimated that a 10% strengthening of the U.S. dollar against the euro would increase pre-tax profit or loss and equity by about €79.8 million.
- Manufacturing readiness, supplier concentration, commercial supply obligations and the ability to meet regulatory and market demand.
- VISEN’s performance, ownership dilution, milestone and royalty prospects, and the accounting and realization of the anticipated non-cash gain.