Form 20-F
falseFY0001612042G7P2YP2YP2YtrueA total of 7,085,073 warrants outstanding as of December 31, 2021 (a total of 6,148,004 warrants and 5,820,211 warrants outstanding as of December 31, 2020 and 2019, respectively) can potentially dilute earnings per share in the future but have not been included in the calculation of diluted earnings per share because they are antidilutive for the periods presented. 0001612042 2019-01-01 2019-12-31 0001612042 2020-01-01 2020-12-31 0001612042 2021-01-01 2021-12-31 0001612042 2018-01-01 2018-12-31 0001612042 2017-01-01 2017-12-31 0001612042 2021-12-31 0001612042 2020-12-31 0001612042 2019-12-31 0001612042 2018-12-31 0001612042 2017-12-31 0001612042 2016-12-31 0001612042 asnd:AscendisPharmaOncologyDivisionAsMember 2021-01-01 2021-12-31 0001612042 asnd:AscendisPharmaGrowthDisordersASMember 2021-01-01 2021-12-31 0001612042 asnd:AscendisPharmaBoneDiseaseASMember 2021-01-01 2021-12-31 0001612042 asnd:AscendisPharmaEndocrinologyDivisionASMember 2021-01-01 2021-12-31 0001612042 asnd:AscendisPharmaOphthalmologyDivisionASMember 2021-01-01 2021-12-31 0001612042 asnd:AscendisPharmaEndocrinologyIncMember 2021-01-01 2021-12-31 0001612042 asnd:AscendisPharmaIncMember 2021-01-01 2021-12-31 0001612042 asnd:AscendisPharmaGmbHMember 2021-01-01 2021-12-31 0001612042 asnd:VISENPharmaceuticalMember 2021-01-01 2021-12-31 0001612042 ifrs-full:GoodwillMember ifrs-full:GrossCarryingAmountMember 2021-01-01 2021-12-31 0001612042 ifrs-full:GrossCarryingAmountMember ifrs-full:ComputerSoftwareMember 2021-01-01 2021-12-31 0001612042 ifrs-full:GrossCarryingAmountMember 2021-01-01 2021-12-31 0001612042 asnd:RightToUseMember 2021-01-01 2021-12-31 0001612042 asnd:NonexecutiveseniorManagementMember 2021-01-01 2021-12-31 0001612042 asnd:ExecutiveBoardMember 2021-01-01 2021-12-31 0001612042 asnd:BoardOfDirectorsMember 2021-01-01 2021-12-31 0001612042 asnd:Warrant1Member 2021-01-01 2021-12-31 0001612042 asnd:Warrant1Member 2021-01-01 2021-12-31 0001612042 asnd:PlantAndMachineryMember ifrs-full:GrossCarryingAmountMember 2021-01-01 2021-12-31 0001612042 ifrs-full:OtherPropertyPlantAndEquipmentMember ifrs-full:GrossCarryingAmountMember 2021-01-01 2021-12-31 0001612042 ifrs-full:LeaseholdImprovementsMember ifrs-full:GrossCarryingAmountMember 2021-01-01 2021-12-31 0001612042 ifrs-full:RightofuseAssetsMember ifrs-full:GrossCarryingAmountMember 2021-01-01 2021-12-31 0001612042 asnd:BritishPoundsToEuroMember 2021-01-01 2021-12-31 0001612042 asnd:UsDollarsToEuroMember 2021-01-01 2021-12-31 0001612042 ifrs-full:KeyManagementPersonnelOfEntityOrParentMember 2021-01-01 2021-12-31 0001612042 asnd:EntitiesAffiliatedWithFmrLlcMember country:US 2021-01-01 2021-12-31 0001612042 asnd:EntitiesAffiliatedWithArtisanPartnersLimitedPartnershipMember country:US 2021-01-01 2021-12-31 0001612042 asnd:EntitiesAffiliatedWithRaCapitalManagementLlcMember country:US 2021-01-01 2021-12-31 0001612042 asnd:TRowePriceAssociatesincMember country:US 2021-01-01 2021-12-31 0001612042 asnd:EntitiesAffiliatedWithJanusHendersonGroupPlcMember country:US 2021-01-01 2021-12-31 0001612042 asnd:EntitiesAffiliatedWithWellingtonManagementGroupLlpMember country:US 2021-01-01 2021-12-31 0001612042 asnd:BakerBrosAdvisorsLPMember country:US 2021-01-01 2021-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember ifrs-full:GoodwillMember 2021-01-01 2021-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember ifrs-full:ComputerSoftwareMember 2021-01-01 2021-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember 2021-01-01 2021-12-31 0001612042 asnd:PlantAndMachineryMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2021-01-01 2021-12-31 0001612042 ifrs-full:OtherPropertyPlantAndEquipmentMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2021-01-01 2021-12-31 0001612042 ifrs-full:LeaseholdImprovementsMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2021-01-01 2021-12-31 0001612042 ifrs-full:RightofuseAssetsMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2021-01-01 2021-12-31 0001612042 ifrs-full:AccumulatedDepreciationAndAmortisationMember 2021-01-01 2021-12-31 0001612042 asnd:Warrant1Member ifrs-full:BottomOfRangeMember 2021-01-01 2021-12-31 0001612042 asnd:Warrant1Member ifrs-full:TopOfRangeMember 2021-01-01 2021-12-31 0001612042 asnd:VISENPharmaceuticalMember ifrs-full:AssociatesMember 2021-01-01 2021-12-31 0001612042 ifrs-full:GoodsOrServicesTransferredAtPointInTimeMember 2021-01-01 2021-12-31 0001612042 ifrs-full:GoodsOrServicesTransferredOverTimeMember 2021-01-01 2021-12-31 0001612042 asnd:CollaborationPartnersAndLicenseAgreementsMember 2021-01-01 2021-12-31 0001612042 asnd:CommercialCustomersMember 2021-01-01 2021-12-31 0001612042 ifrs-full:ReserveOfSharebasedPaymentsMember 2021-01-01 2021-12-31 0001612042 ifrs-full:RetainedEarningsMember 2021-01-01 2021-12-31 0001612042 ifrs-full:CostOfSalesMember 2021-01-01 2021-12-31 0001612042 asnd:ResearchAndDevelopmentCostsMember 2021-01-01 2021-12-31 0001612042 asnd:GeneralAndAdministrativeExpenseMember 2021-01-01 2021-12-31 0001612042 asnd:GrantedIn2012To2017Member 2021-01-01 2021-12-31 0001612042 asnd:GrantedIn2018Member 2021-01-01 2021-12-31 0001612042 asnd:GrantedIn2019Member 2021-01-01 2021-12-31 0001612042 asnd:GrantedIn2020Member 2021-01-01 2021-12-31 0001612042 asnd:GrantedIn2021Member 2021-01-01 2021-12-31 0001612042 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 2021-01-01 2021-12-31 0001612042 ifrs-full:TreasurySharesMember 2021-01-01 2021-12-31 0001612042 ifrs-full:IssuedCapitalMember 2021-01-01 2021-12-31 0001612042 ifrs-full:SharePremiumMember 2021-01-01 2021-12-31 0001612042 dei:BusinessContactMember 2021-01-01 2021-12-31 0001612042 asnd:AmericanDepositarySharesMember 2021-01-01 2021-12-31 0001612042 ifrs-full:TopOfRangeMember 2021-01-01 2021-12-31 0001612042 ifrs-full:BottomOfRangeMember 2021-01-01 2021-12-31 0001612042 srt:NorthAmericaMember 2021-01-01 2021-12-31 0001612042 country:CN 2021-01-01 2021-12-31 0001612042 ifrs-full:RightofuseAssetsMember ifrs-full:TopOfRangeMember 2021-01-01 2021-12-31 0001612042 ifrs-full:RightofuseAssetsMember ifrs-full:BottomOfRangeMember 2021-01-01 2021-12-31 0001612042 ifrs-full:LeaseholdImprovementsMember ifrs-full:TopOfRangeMember 2021-01-01 2021-12-31 0001612042 ifrs-full:LeaseholdImprovementsMember ifrs-full:BottomOfRangeMember 2021-01-01 2021-12-31 0001612042 asnd:OtherEquipmentMember ifrs-full:TopOfRangeMember 2021-01-01 2021-12-31 0001612042 asnd:OtherEquipmentMember ifrs-full:BottomOfRangeMember 2021-01-01 2021-12-31 0001612042 asnd:ProcessPlantAndMachineryMember ifrs-full:TopOfRangeMember 2021-01-01 2021-12-31 0001612042 asnd:ProcessPlantAndMachineryMember ifrs-full:BottomOfRangeMember 2021-01-01 2021-12-31 0001612042 asnd:USDollarsMember 2021-01-01 2021-12-31 0001612042 asnd:VisenPharmaceuticalsMember 2021-01-01 2021-12-31 0001612042 ifrs-full:LiquidityRiskMember 2021-01-01 2021-12-31 0001612042 ifrs-full:CostOfSalesMember 2021-01-01 2021-12-31 0001612042 asnd:ResearchAndDevelopmentCostsMember 2021-01-01 2021-12-31 0001612042 ifrs-full:SellingGeneralAndAdministrativeExpenseMember 2021-01-01 2021-12-31 0001612042 country:DK asnd:AdditionalOfficeFacilityMember 2021-01-01 2021-12-31 0001612042 asnd:RestrictedStockUnitsMember 2021-01-01 2021-12-31 0001612042 asnd:CollaborationPartnersAndLicenseAgreementsMember 2021-01-01 2021-12-31 0001612042 asnd:WarrantsGranted2012UntilNovember2021Member ifrs-full:LaterThanOneYearMember 2021-01-01 2021-12-31 0001612042 asnd:WarrantsGranted2012UntilNovember2021Member 2021-01-01 2021-12-31 0001612042 asnd:WarrantsGrantedFromDecember2021Member ifrs-full:LaterThanOneYearMember 2021-01-01 2021-12-31 0001612042 asnd:WarrantsGrantedFromDecember2021Member 2021-01-01 2021-12-31 0001612042 asnd:VISENPharmaceuticalMember 2020-01-01 2020-12-31 0001612042 ifrs-full:GrossCarryingAmountMember ifrs-full:GoodwillMember 2020-01-01 2020-12-31 0001612042 ifrs-full:GrossCarryingAmountMember ifrs-full:ComputerSoftwareMember 2020-01-01 2020-12-31 0001612042 ifrs-full:GrossCarryingAmountMember 2020-01-01 2020-12-31 0001612042 asnd:ExecutiveBoardMember 2020-01-01 2020-12-31 0001612042 asnd:BoardOfDirectorsMember 2020-01-01 2020-12-31 0001612042 asnd:NonexecutiveseniorManagementMember 2020-01-01 2020-12-31 0001612042 asnd:Warrant1Member 2020-01-01 2020-12-31 0001612042 asnd:Warrant1Member 2020-01-01 2020-12-31 0001612042 asnd:PlantAndMachineryMember ifrs-full:GrossCarryingAmountMember 2020-01-01 2020-12-31 0001612042 ifrs-full:OtherPropertyPlantAndEquipmentMember ifrs-full:GrossCarryingAmountMember 2020-01-01 2020-12-31 0001612042 ifrs-full:LeaseholdImprovementsMember ifrs-full:GrossCarryingAmountMember 2020-01-01 2020-12-31 0001612042 ifrs-full:GrossCarryingAmountMember ifrs-full:RightofuseAssetsMember 2020-01-01 2020-12-31 0001612042 asnd:BritishPoundsToEuroMember 2020-01-01 2020-12-31 0001612042 asnd:UsDollarsToEuroMember 2020-01-01 2020-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember ifrs-full:GoodwillMember 2020-01-01 2020-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember ifrs-full:ComputerSoftwareMember 2020-01-01 2020-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember 2020-01-01 2020-12-31 0001612042 asnd:Warrant1Member ifrs-full:BottomOfRangeMember 2020-01-01 2020-12-31 0001612042 asnd:Warrant1Member ifrs-full:TopOfRangeMember 2020-01-01 2020-12-31 0001612042 asnd:VISENPharmaceuticalMember ifrs-full:AssociatesMember 2020-01-01 2020-12-31 0001612042 ifrs-full:GoodsOrServicesTransferredAtPointInTimeMember 2020-01-01 2020-12-31 0001612042 ifrs-full:GoodsOrServicesTransferredOverTimeMember 2020-01-01 2020-12-31 0001612042 asnd:CollaborationPartnersAndLicenseAgreementsMember 2020-01-01 2020-12-31 0001612042 ifrs-full:ReserveOfSharebasedPaymentsMember 2020-01-01 2020-12-31 0001612042 ifrs-full:RetainedEarningsMember 2020-01-01 2020-12-31 0001612042 asnd:ResearchAndDevelopmentCostsMember 2020-01-01 2020-12-31 0001612042 asnd:GeneralAndAdministrativeExpenseMember 2020-01-01 2020-12-31 0001612042 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 2020-01-01 2020-12-31 0001612042 ifrs-full:TreasurySharesMember 2020-01-01 2020-12-31 0001612042 ifrs-full:IssuedCapitalMember 2020-01-01 2020-12-31 0001612042 ifrs-full:SharePremiumMember 2020-01-01 2020-12-31 0001612042 srt:NorthAmericaMember 2020-01-01 2020-12-31 0001612042 country:CN 2020-01-01 2020-12-31 0001612042 asnd:USDollarsMember 2020-01-01 2020-12-31 0001612042 asnd:ResearchAndDevelopmentCostsMember 2020-01-01 2020-12-31 0001612042 ifrs-full:SellingGeneralAndAdministrativeExpenseMember 2020-01-01 2020-12-31 0001612042 asnd:ExecutiveBoardMember 2019-01-01 2019-12-31 0001612042 asnd:BoardOfDirectorsMember 2019-01-01 2019-12-31 0001612042 asnd:NonexecutiveseniorManagementMember 2019-01-01 2019-12-31 0001612042 asnd:Warrant1Member 2019-01-01 2019-12-31 0001612042 asnd:Warrant1Member 2019-01-01 2019-12-31 0001612042 asnd:PlantAndMachineryMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2019-01-01 2019-12-31 0001612042 ifrs-full:OtherPropertyPlantAndEquipmentMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2019-01-01 2019-12-31 0001612042 ifrs-full:LeaseholdImprovementsMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2019-01-01 2019-12-31 0001612042 ifrs-full:AccumulatedDepreciationAndAmortisationMember ifrs-full:RightofuseAssetsMember 2019-01-01 2019-12-31 0001612042 ifrs-full:AccumulatedDepreciationAndAmortisationMember 2019-01-01 2019-12-31 0001612042 asnd:Warrant1Member ifrs-full:BottomOfRangeMember 2019-01-01 2019-12-31 0001612042 asnd:Warrant1Member ifrs-full:TopOfRangeMember 2019-01-01 2019-12-31 0001612042 country:CN 2019-01-01 2019-12-31 0001612042 ifrs-full:GoodsOrServicesTransferredAtPointInTimeMember 2019-01-01 2019-12-31 0001612042 ifrs-full:GoodsOrServicesTransferredOverTimeMember 2019-01-01 2019-12-31 0001612042 asnd:CollaborationPartnersAndLicenseAgreementsMember 2019-01-01 2019-12-31 0001612042 ifrs-full:ReserveOfSharebasedPaymentsMember 2019-01-01 2019-12-31 0001612042 ifrs-full:RetainedEarningsMember 2019-01-01 2019-12-31 0001612042 asnd:ResearchAndDevelopmentCostsMember 2019-01-01 2019-12-31 0001612042 asnd:GeneralAndAdministrativeExpenseMember 2019-01-01 2019-12-31 0001612042 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 2019-01-01 2019-12-31 0001612042 ifrs-full:TreasurySharesMember 2019-01-01 2019-12-31 0001612042 ifrs-full:IssuedCapitalMember 2019-01-01 2019-12-31 0001612042 ifrs-full:SharePremiumMember 2019-01-01 2019-12-31 0001612042 srt:NorthAmericaMember 2019-01-01 2019-12-31 0001612042 asnd:USDollarsMember 2019-01-01 2019-12-31 0001612042 asnd:ResearchAndDevelopmentCostsMember 2019-01-01 2019-12-31 0001612042 ifrs-full:SellingGeneralAndAdministrativeExpenseMember 2019-01-01 2019-12-31 0001612042 asnd:VISENPharmaceuticalMember 2021-12-31 0001612042 currency:DKK 2021-12-31 0001612042 asnd:UsDollarsToEuroMember 2021-12-31 0001612042 asnd:BritishPoundsToEuroMember 2021-12-31 0001612042 ifrs-full:OrdinarySharesMember 2021-12-31 0001612042 asnd:BoardOfDirectorsMember srt:MinimumMember 2021-12-31 0001612042 asnd:BoardOfDirectorsMember srt:MaximumMember 2021-12-31 0001612042 asnd:ExecutiveBoardMember srt:MinimumMember 2021-12-31 0001612042 asnd:ExecutiveBoardMember srt:MaximumMember 2021-12-31 0001612042 asnd:Warrant1Member 2021-12-31 0001612042 ifrs-full:FinancialAssetsAtAmortisedCostMember 2021-12-31 0001612042 ifrs-full:FinancialLiabilitiesAtAmortisedCostMember 2021-12-31 0001612042 ifrs-full:BottomOfRangeMember asnd:Warrant1Member 2021-12-31 0001612042 ifrs-full:TopOfRangeMember asnd:Warrant1Member 2021-12-31 0001612042 ifrs-full:NotLaterThanOneYearMember 2021-12-31 0001612042 ifrs-full:LaterThanOneYearAndNotLaterThanFiveYearsMember 2021-12-31 0001612042 ifrs-full:LaterThanThreeYearsAndNotLaterThanFiveYearsMember 2021-12-31 0001612042 ifrs-full:LeaseholdImprovementsMember 2021-12-31 0001612042 ifrs-full:CountryOfDomicileMember 2021-12-31 0001612042 asnd:NorthAmerica1Member 2021-12-31 0001612042 asnd:Germany1Member 2021-12-31 0001612042 ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:LiquidityRiskMember 2021-12-31 0001612042 ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:LiquidityRiskMember 2021-12-31 0001612042 asnd:UsGovernmentBondsMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:LiquidityRiskMember 2021-12-31 0001612042 asnd:UsGovernmentBondsMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:LiquidityRiskMember 2021-12-31 0001612042 asnd:CommercialPapersMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:LiquidityRiskMember 2021-12-31 0001612042 asnd:CommercialPapersMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:LiquidityRiskMember 2021-12-31 0001612042 asnd:CorporateBondsMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:LiquidityRiskMember 2021-12-31 0001612042 asnd:CorporateBondsMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:LiquidityRiskMember 2021-12-31 0001612042 asnd:AgencyBondsMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:LiquidityRiskMember 2021-12-31 0001612042 asnd:AgencyBondsMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:LiquidityRiskMember 2021-12-31 0001612042 asnd:VISENPharmaceuticalMember ifrs-full:AssociatesMember 2021-12-31 0001612042 country:DK asnd:AdditionalOfficeFacilityMember 2021-12-31 0001612042 asnd:TwoThousandAndTwentyTwoMember 2021-12-31 0001612042 asnd:TwoThousandAndTwentyThreeToTwoThousandAndTwentySixMember 2021-12-31 0001612042 ifrs-full:FixedInterestRateMember ifrs-full:FinancialAssetsAtAmortisedCostMember 2021-12-31 0001612042 ifrs-full:FixedInterestRateMember ifrs-full:FinancialAssetsAtFairValueMember 2021-12-31 0001612042 ifrs-full:FloatingInterestRateMember ifrs-full:FinancialAssetsAtAmortisedCostMember 2021-12-31 0001612042 ifrs-full:FloatingInterestRateMember ifrs-full:FinancialAssetsAtFairValueMember 2021-12-31 0001612042 asnd:ZeroCouponMember ifrs-full:FinancialAssetsAtAmortisedCostMember 2021-12-31 0001612042 asnd:ZeroCouponMember ifrs-full:FinancialAssetsAtFairValueMember 2021-12-31 0001612042 ifrs-full:FinancialAssetsAtAmortisedCostMember 2021-12-31 0001612042 ifrs-full:FinancialAssetsAtFairValueMember 2021-12-31 0001612042 asnd:PrimeMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:CreditRiskMember 2021-12-31 0001612042 asnd:PrimeMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:CreditRiskMember 2021-12-31 0001612042 asnd:HighGradeMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:CreditRiskMember 2021-12-31 0001612042 asnd:HighGradeMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:CreditRiskMember 2021-12-31 0001612042 asnd:UpperMediumGradeMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:CreditRiskMember 2021-12-31 0001612042 asnd:UpperMediumGradeMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:CreditRiskMember 2021-12-31 0001612042 asnd:LowerMediumGradeMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:CreditRiskMember 2021-12-31 0001612042 asnd:LowerMediumGradeMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:CreditRiskMember 2021-12-31 0001612042 ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:CreditRiskMember 2021-12-31 0001612042 ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:CreditRiskMember 2021-12-31 0001612042 asnd:EmployeesAndConsultantsMember ifrs-full:LaterThanOneYearMember asnd:WarrantsGrantedFromDecember2021Member 2021-12-31 0001612042 asnd:EmployeesAndConsultantsMember asnd:WarrantsGrantedFromDecember2021Member 2021-12-31 0001612042 asnd:BoardMembersOfGroupMember ifrs-full:LaterThanOneYearMember asnd:WarrantsGrantedFromDecember2021Member 2021-12-31 0001612042 asnd:BoardMembersOfGroupMember asnd:WarrantsGrantedFromDecember2021Member 2021-12-31 0001612042 asnd:BoardMembersOfGroupMember 2021-12-31 0001612042 asnd:VISENPharmaceuticalMember 2020-12-31 0001612042 asnd:BritishPoundsToEuroMember 2020-12-31 0001612042 asnd:UsDollarsToEuroMember 2020-12-31 0001612042 asnd:BoardOfDirectorsMember 2020-12-31 0001612042 asnd:ExecutiveBoardMember 2020-12-31 0001612042 asnd:Warrant1Member 2020-12-31 0001612042 ifrs-full:FinancialAssetsAtAmortisedCostMember 2020-12-31 0001612042 ifrs-full:FinancialLiabilitiesAtAmortisedCostMember 2020-12-31 0001612042 ifrs-full:LaterThanThreeYearsAndNotLaterThanFiveYearsMember 2020-12-31 0001612042 ifrs-full:LaterThanOneYearAndNotLaterThanFiveYearsMember 2020-12-31 0001612042 ifrs-full:NotLaterThanOneYearMember 2020-12-31 0001612042 ifrs-full:LeaseholdImprovementsMember 2020-12-31 0001612042 ifrs-full:CountryOfDomicileMember 2020-12-31 0001612042 asnd:NorthAmerica1Member 2020-12-31 0001612042 asnd:Germany1Member 2020-12-31 0001612042 ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:LiquidityRiskMember 2020-12-31 0001612042 ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:LiquidityRiskMember 2020-12-31 0001612042 asnd:UsTreasuryBillsMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:LiquidityRiskMember 2020-12-31 0001612042 asnd:UsTreasuryBillsMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:LiquidityRiskMember 2020-12-31 0001612042 asnd:UsGovernmentBondsMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:LiquidityRiskMember 2020-12-31 0001612042 asnd:UsGovernmentBondsMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:LiquidityRiskMember 2020-12-31 0001612042 asnd:CommercialPapersMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:LiquidityRiskMember 2020-12-31 0001612042 asnd:CommercialPapersMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:LiquidityRiskMember 2020-12-31 0001612042 asnd:CorporateBondsMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:LiquidityRiskMember 2020-12-31 0001612042 asnd:CorporateBondsMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:LiquidityRiskMember 2020-12-31 0001612042 asnd:AgencyBondsMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:LiquidityRiskMember 2020-12-31 0001612042 asnd:AgencyBondsMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:LiquidityRiskMember 2020-12-31 0001612042 asnd:VISENPharmaceuticalMember ifrs-full:AssociatesMember 2020-12-31 0001612042 ifrs-full:FixedInterestRateMember ifrs-full:FinancialAssetsAtAmortisedCostMember 2020-12-31 0001612042 ifrs-full:FixedInterestRateMember ifrs-full:FinancialAssetsAtFairValueMember 2020-12-31 0001612042 ifrs-full:FloatingInterestRateMember ifrs-full:FinancialAssetsAtAmortisedCostMember 2020-12-31 0001612042 ifrs-full:FloatingInterestRateMember ifrs-full:FinancialAssetsAtFairValueMember 2020-12-31 0001612042 asnd:ZeroCouponMember ifrs-full:FinancialAssetsAtAmortisedCostMember 2020-12-31 0001612042 asnd:ZeroCouponMember ifrs-full:FinancialAssetsAtFairValueMember 2020-12-31 0001612042 ifrs-full:FinancialAssetsAtAmortisedCostMember 2020-12-31 0001612042 ifrs-full:FinancialAssetsAtFairValueMember 2020-12-31 0001612042 asnd:PrimeMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:CreditRiskMember 2020-12-31 0001612042 asnd:PrimeMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:CreditRiskMember 2020-12-31 0001612042 asnd:HighGradeMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:CreditRiskMember 2020-12-31 0001612042 asnd:HighGradeMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:CreditRiskMember 2020-12-31 0001612042 asnd:UpperMediumGradeMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:CreditRiskMember 2020-12-31 0001612042 asnd:UpperMediumGradeMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:CreditRiskMember 2020-12-31 0001612042 asnd:LowerMediumGradeMember ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:CreditRiskMember 2020-12-31 0001612042 asnd:LowerMediumGradeMember ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:CreditRiskMember 2020-12-31 0001612042 ifrs-full:FinancialAssetsAtAmortisedCostMember ifrs-full:CreditRiskMember 2020-12-31 0001612042 ifrs-full:FinancialAssetsAtFairValueMember ifrs-full:CreditRiskMember 2020-12-31 0001612042 asnd:ExecutiveBoardMember 2019-12-31 0001612042 asnd:BoardOfDirectorsMember 2019-12-31 0001612042 asnd:Warrant1Member 2019-12-31 0001612042 ifrs-full:MajorBusinessCombinationMember 2021-01-08 2021-01-08 0001612042 ifrs-full:MajorBusinessCombinationMember asnd:VISENPharmaceuticalMember 2021-01-08 2021-01-08 0001612042 asnd:VISENPharmaceuticalMember 2021-01-08 2021-01-08 0001612042 country:DK asnd:OfficeFacilityMember asnd:EventsAfterReportingPeriodMember 2022-02-20 2022-02-20 0001612042 country:DK asnd:OfficeFacilityMember asnd:EventsAfterReportingPeriodMember 2022-02-20 0001612042 asnd:AmericanDepositarySharesMember 2021-09-29 0001612042 asnd:PlantAndMachineryMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2021-12-31 0001612042 ifrs-full:OtherPropertyPlantAndEquipmentMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2021-12-31 0001612042 ifrs-full:LeaseholdImprovementsMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2021-12-31 0001612042 ifrs-full:RightofuseAssetsMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2021-12-31 0001612042 ifrs-full:AccumulatedDepreciationAndAmortisationMember 2021-12-31 0001612042 asnd:PlantAndMachineryMember 2021-12-31 0001612042 ifrs-full:OtherPropertyPlantAndEquipmentMember 2021-12-31 0001612042 ifrs-full:RightofuseAssetsMember 2021-12-31 0001612042 asnd:PlantAndMachineryMember ifrs-full:GrossCarryingAmountMember 2021-12-31 0001612042 ifrs-full:OtherPropertyPlantAndEquipmentMember ifrs-full:GrossCarryingAmountMember 2021-12-31 0001612042 ifrs-full:LeaseholdImprovementsMember ifrs-full:GrossCarryingAmountMember 2021-12-31 0001612042 ifrs-full:RightofuseAssetsMember ifrs-full:GrossCarryingAmountMember 2021-12-31 0001612042 ifrs-full:GrossCarryingAmountMember 2021-12-31 0001612042 ifrs-full:GoodwillMember 2021-12-31 0001612042 ifrs-full:ComputerSoftwareMember 2021-12-31 0001612042 ifrs-full:GrossCarryingAmountMember ifrs-full:GoodwillMember 2021-12-31 0001612042 ifrs-full:ComputerSoftwareMember ifrs-full:GrossCarryingAmountMember 2021-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember ifrs-full:GoodwillMember 2021-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember ifrs-full:ComputerSoftwareMember 2021-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember 2021-12-31 0001612042 ifrs-full:IssuedCapitalMember 2021-12-31 0001612042 ifrs-full:SharePremiumMember 2021-12-31 0001612042 ifrs-full:TreasurySharesMember 2021-12-31 0001612042 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 2021-12-31 0001612042 ifrs-full:ReserveOfSharebasedPaymentsMember 2021-12-31 0001612042 ifrs-full:RetainedEarningsMember 2021-12-31 0001612042 asnd:RestrictedStockUnitsMember 2020-12-31 0001612042 asnd:RestrictedStockUnitsMember 2021-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember ifrs-full:GoodwillMember 2019-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember ifrs-full:ComputerSoftwareMember 2019-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember 2019-12-31 0001612042 ifrs-full:GrossCarryingAmountMember ifrs-full:GoodwillMember 2019-12-31 0001612042 ifrs-full:GrossCarryingAmountMember 2019-12-31 0001612042 ifrs-full:ComputerSoftwareMember ifrs-full:GrossCarryingAmountMember 2019-12-31 0001612042 ifrs-full:GrossCarryingAmountMember ifrs-full:RightofuseAssetsMember 2019-12-31 0001612042 asnd:PlantAndMachineryMember ifrs-full:GrossCarryingAmountMember 2019-12-31 0001612042 ifrs-full:OtherPropertyPlantAndEquipmentMember ifrs-full:GrossCarryingAmountMember 2019-12-31 0001612042 ifrs-full:LeaseholdImprovementsMember ifrs-full:GrossCarryingAmountMember 2019-12-31 0001612042 asnd:PlantAndMachineryMember ifrs-full:GrossCarryingAmountMember 2020-12-31 0001612042 ifrs-full:OtherPropertyPlantAndEquipmentMember ifrs-full:GrossCarryingAmountMember 2020-12-31 0001612042 ifrs-full:LeaseholdImprovementsMember ifrs-full:GrossCarryingAmountMember 2020-12-31 0001612042 ifrs-full:GrossCarryingAmountMember ifrs-full:RightofuseAssetsMember 2020-12-31 0001612042 ifrs-full:GrossCarryingAmountMember 2020-12-31 0001612042 asnd:PlantAndMachineryMember 2020-12-31 0001612042 ifrs-full:OtherPropertyPlantAndEquipmentMember 2020-12-31 0001612042 ifrs-full:RightofuseAssetsMember 2020-12-31 0001612042 asnd:PlantAndMachineryMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2020-12-31 0001612042 ifrs-full:OtherPropertyPlantAndEquipmentMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2020-12-31 0001612042 ifrs-full:LeaseholdImprovementsMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2020-12-31 0001612042 ifrs-full:RightofuseAssetsMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2020-12-31 0001612042 ifrs-full:AccumulatedDepreciationAndAmortisationMember 2020-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember ifrs-full:GoodwillMember 2020-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember ifrs-full:ComputerSoftwareMember 2020-12-31 0001612042 ifrs-full:AccumulatedImpairmentMember 2020-12-31 0001612042 ifrs-full:GoodwillMember 2020-12-31 0001612042 ifrs-full:ComputerSoftwareMember 2020-12-31 0001612042 ifrs-full:GrossCarryingAmountMember ifrs-full:GoodwillMember 2020-12-31 0001612042 ifrs-full:ComputerSoftwareMember ifrs-full:GrossCarryingAmountMember 2020-12-31 0001612042 ifrs-full:IssuedCapitalMember 2020-12-31 0001612042 ifrs-full:SharePremiumMember 2020-12-31 0001612042 ifrs-full:TreasurySharesMember 2020-12-31 0001612042 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 2020-12-31 0001612042 ifrs-full:ReserveOfSharebasedPaymentsMember 2020-12-31 0001612042 ifrs-full:RetainedEarningsMember 2020-12-31 0001612042 ifrs-full:AccumulatedDepreciationAndAmortisationMember ifrs-full:RightofuseAssetsMember 2018-12-31 0001612042 asnd:PlantAndMachineryMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2018-12-31 0001612042 ifrs-full:OtherPropertyPlantAndEquipmentMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2018-12-31 0001612042 ifrs-full:LeaseholdImprovementsMember ifrs-full:AccumulatedDepreciationAndAmortisationMember 2018-12-31 0001612042 ifrs-full:AccumulatedDepreciationAndAmortisationMember 2018-12-31 0001612042 asnd:Warrant1Member 2018-12-31 0001612042 ifrs-full:RetainedEarningsMember 2018-12-31 0001612042 ifrs-full:ReserveOfSharebasedPaymentsMember 2018-12-31 0001612042 ifrs-full:TreasurySharesMember 2018-12-31 0001612042 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 2018-12-31 0001612042 ifrs-full:SharePremiumMember 2018-12-31 0001612042 ifrs-full:IssuedCapitalMember 2018-12-31 0001612042 ifrs-full:IssuedCapitalMember 2019-12-31 0001612042 ifrs-full:SharePremiumMember 2019-12-31 0001612042 ifrs-full:TreasurySharesMember 2019-12-31 0001612042 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 2019-12-31 0001612042 ifrs-full:ReserveOfSharebasedPaymentsMember 2019-12-31 0001612042 ifrs-full:RetainedEarningsMember 2019-12-31 iso4217:EUR xbrli:pure xbrli:shares iso4217:USD utr:Year utr:Month asnd:Segment asnd:Licenses iso4217:DKK xbrli:shares iso4217:EUR xbrli:shares asnd:Employee utr:Y
Table of Contents
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
 
 
FORM
20-F
 
 
(Mark One)
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
                    
to
                    
OR
 
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file number:
001-36815
 
 
Ascendis Pharma A/S
(Exact name of Registrant as specified in its charter and translation of Registrant’s name into English)
 
 
The Kingdom of Denmark
(Jurisdiction of incorporation or organization)
Tuborg Boulevard 12
DK-2900
Hellerup, Denmark
(Address of principal executive offices)
Jan Møller Mikkelsen
President and Chief Executive Officer
Tuborg Boulevard 12
DK-2900
Hellerup, Denmark
Telephone: +45 70 22 22 44
(Name, Telephone,
E-mail
and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbol
 
Name of each exchange on which registered
American Depositary Shares, each representing one ordinary share, nominal value DKK 1 per share
 
ASND
 
The Nasdaq Stock Market LLC
     
Ordinary shares, nominal value DKK 1 per share*
     
The Nasdaq Stock Market LLC*
 
*
Not for trading, but only in connection with the registration of the American Depositary Shares.
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
 
 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
56,937,682 ordinary shares
(as of December 31, 2021)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    ☒  Yes    ☐  No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    ☐  Yes    ☒  No
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes    ☐  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    ☒  Yes    ☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule
12b-2
of the Exchange Act. (Check one):
 
Large accelerated filer
  ☒
 
Accelerated
filer  ☐
 
Non-accelerated filer  ☐
  Emerging growth company  
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. 
Indicate by check mark which basis of accounting the registrant has used to
prepare
the financial statements included in this filing:
 
U.S. GAAP  ☐   
International Financial Reporting Standards as issued
by the
International Accounting Standards Board
  ☒
   Other  ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:    ☐  Item 17    ☐  Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    ☐  Yes      
No
 
Auditor Firm ID:
  
 
Auditor Name:    Deloitte Statsautoriseret
  

  
 
Auditor Location:
1294
  
 
Revisionspartnerselskab
  

  
 
 
 
 
Copenhagen, Denmark
 
 
 

TABLE OF CONTENTS
 
 
1
 
1
 
3
Item 1
 
 
3
Item 2
 
 
3
Item 3
 
 
3
Item 4
 
 
51
Item 4A
 
 
92
Item 5
 
 
92
Item 6
 
 
106
Item 7
 
 
119
Item 8
 
 
124
Item 9
 
 
125
Item 10
 
 
125
Item 11
 
 
144
Item 12
 
 
145
 
146
Item 13
 
 
146
Item 14
 
 
146
Item 15
 
 
146
Item 16A
 
 
147
Item 16B
 
 
147
Item 16C
 
 
147
Item 16D
 
 
148
Item 16E
 
 
148
Item 16F
 
 
148
Item 16G
 
 
148
Item 16H
 
 
149
Item 16I
 
 
149

 
150
Item 17
 
 
150
Item 18
 
 
150
Item 19
 
 
II-1

General
As used herein, references to “we”, “us”, the “company”, “Ascendis”, or “Ascendis Pharma”, or similar terms in this annual report on Form
20-F
shall mean Ascendis Pharma A/S and, as the context requires, its subsidiaries.
Our consolidated financial statements are presented in euros except where otherwise indicated, and are prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. All references in this annual report to “Dollars”, “USD” and “$” are to U.S. Dollars, and all references to “euro”, “EUR” or “€” are to European Union euro. Throughout this annual report, references to ADSs mean ADSs or ordinary shares represented by ADSs, as the case may be.
Special Note Regarding Forward-Looking Statements
This annual report contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:
 
   
the timing or likelihood of regulatory filings and approvals for our product candidates;
 
   
our expectations regarding the commercial availability of TransCon hGH, known by its brand name SKYTROFA (lonapegsomatropin-tcgd), in the United States and related patient support services;
 
   
the commercialization of TransCon hGH and our other product candidates, if approved;
 
   
our commercialization, marketing and manufacturing capabilities of TransCon Growth Hormone, or TransCon hGH, and our other product candidates and associated devices;
 
   
the scope, progress, results and costs of developing our product candidates or any other future product candidates, and conducting preclinical studies and clinical trials;
 
   
our pursuit of oncology as our second of three independent therapeutic areas of focus, and our development of a pipeline of product candidates related to oncology;
 
   
our expectations regarding the potential market size and the size of the patient populations for TransCon hGH and our other product candidates, if approved for commercial use;
 
   
our expectations regarding the potential advantages of TransCon hGH and our other product candidates over existing therapies;
 
   
our ability to enter into new collaborations;
 
   
our expectations with regard to the ability to develop additional product candidates using our TransCon technologies and file Investigational New Drug Applications, or INDs, or similar for such product candidates;
 
   
our expectations with regard to the ability to seek expedited regulatory approval pathways for our product candidates, including the potential ability to rely on the parent drug’s clinical and safety data with regard to our product candidates;
 
   
our expectations with regard to our current and future collaboration partners to pursue the development of our product candidates and file INDs or similar for such product candidates;
 
   
our development plans with respect to TransCon hGH and our other product candidates;
 
   
our ability to develop, acquire and advance product candidates into, and successfully complete, clinical trials;
 
   
the implementation of our business model and strategic plans for our business, TransCon hGH and our other product candidates and technologies, including global commercialization strategies;
 
   
the scope of protection we are able to establish and maintain for intellectual property rights covering TransCon hGH and our other product candidates;
 
1

Table of Contents
   
estimates of our expenses, future revenue, capital requirements, our needs for additional financing and our ability to obtain additional capital;
 
   
our financial performance;
 
   
developments and projections relating to our market conditions, competitors and industry; and
 
   
the potential effects on our business of the worldwide
COVID-19
pandemic.
These forward-looking statements are based on senior management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this annual report may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section of this annual report titled “Item 3.D—Key Information—Risk Factors” and elsewhere in this annual report. You are urged to consider these factors carefully in evaluating the forward-looking statements. These forward-looking statements speak only as of the date of this annual report. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. Given these risks and uncertainties, you are cautioned not to rely on such forward-looking statements as predictions of future events.
You should read this annual report and the documents that we reference in this annual report and have filed as exhibits to this annual report completely and with the understanding that our actual future results may be materially different from what we expect. You should also review the factors and risks we describe in the reports we will file or submit from time to time with the SEC after the date of this annual report. We qualify all of our forward-looking statements by these cautionary statements.
Summary of Material Risks Associated with Our Business
The principal risks and uncertainties affecting our business include the following:
 
   
The global pandemic caused by
COVID-19
could materially adversely impact our business, including our clinical trials, supply chain operation, regulatory timelines and commercial activities.
 
   
We have a limited operating history and we may incur significant losses in the future, which makes it difficult to assess our future viability.
 
   
We may require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, scale back or cease our commercialization activities, product development or any other or all operations.
 
   
We are substantially dependent on the success of TransCon hGH and our other product candidates, which may not be successful in nonclinical studies or clinical trials, receive regulatory approval or be successfully commercialized.
 
   
Clinical drug development involves a lengthy and expensive process with uncertain outcomes, and we may encounter substantial delays in our clinical studies. Furthermore, results of earlier studies and trials may not be predictive of results of future trials.
 
   
Interim, “top-line” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
 
   
Our sales and marketing efforts for TransCon hGH may not be effective and we may not be successful in our commercial efforts.
 
   
Competition in the biotechnology and pharmaceutical industries is intense and our competitors may discover, develop or commercialize products faster or more successfully than us. If we are unable to compete effectively our business, results of operations and prospects will suffer.
 
   
We rely on third-parties to manufacture our preclinical and clinical drug supplies, and we rely on third-parties to produce commercial supplies of TransCon hGH and its device components.
 
   
Our operating results may vary significantly from period to period and these variations may be difficult to predict.
 
   
The parent drug, drug substance, drug product and other components of TransCon hGH and our other product candidates are currently acquired from certain single-source suppliers. The loss of these suppliers, or their failure to supply could materially and adversely affect our business.
 
2

Table of Contents
   
The regulatory approval processes of the U.S. Food and Drug Administration, the European Medicines Agency and comparable authorities are lengthy, time consuming, and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.
 
   
If we are sued for allegedly infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in such litigation could harm our business.
The summary risk factors described above should be read together with the text of the full risk factors below in the section entitled “Risk Factors” and the other information set forth in this annual report on Form
20-F,
including our consolidated financial statements and the related notes, as well as in other documents that we file with the U.S. Securities and Exchange Commission. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not precisely known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, results of operations, and future growth prospects.
PART I
 
Item 1
Identity of Directors, Senior Management and Advisers
Not applicable.
 
Item 2
Offer Statistics and Expected Timetable
Not applicable.
 
Item 3
Key Information
 
A.
Reserved.
 
B.
Capitalization and Indebtedness
Not applicable.
 
C.
Reasons for the Offer and Use of Proceeds
Not applicable.
 
D.
Risk Factors
Our business faces significant risks. You should carefully consider all of the information set forth in this annual report and in our other filings with the U.S. Securities and Exchange Commission (the “SEC”), including the following risk factors which we face and which are faced by our industry. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. This report also contains forward-looking statements that involve risks and uncertainties. Our results could materially differ from those anticipated in these forward-looking statements, as a result of certain factors including the risks described below and elsewhere in this report and our other materials we file or furnish with the SEC. See “Special Note Regarding Forward-Looking Statements” above.
Risks Related to Our Limited Operating History, Financial Condition and Capital Requirements
We have a limited operating history and we may incur significant losses in the future, which makes it difficult to assess our future viability.
We are applying our innovative TransCon technologies to build a leading, fully integrated, global biopharmaceutical company and develop a pipeline of product candidates with potential
best-in-class
profiles to address unmet medical needs. We currently have a pipeline of multiple independent endocrinology rare disease and oncology product candidates in development. We are also working to apply our TransCon technology platform in additional therapeutic areas to address unmet medical needs. On August 25, 2021, the U.S. Food and Drug Administration (the “FDA”) approved TransCon hGH, known by its brand name SKYTROFA
®
and its international nonproprietary name lonapegsomatropin-tcgd in the U.S. for the treatment of pediatric patients one year and older who weigh at least 11.5 kg (25.4 lb) and have growth failure due to inadequate secretion of endogenous growth hormone. In addition, Lonapegsomatropin Ascendis Pharma (developed under the name TransCon hGH) was granted marketing authorization by the European Commission (“EC”) as a once-weekly subcutaneous injection for the treatment of children and adolescents ages 3 to 18 years with growth failure due to insufficient secretion of endogenous growth hormone on January 12, 2022. Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. To date, we have focused substantially all of our efforts on our
 
3

Table of Contents
research and development activities relating to our lead product candidates, TransCon hGH, TransCon Parathyroid Hormone, or TransCon PTH, TransCon
C-Type
Natriuretic Peptide, or TransCon CNP, our product candidates in oncology and our proprietary TransCon technologies and the commercialization of TransCon hGH. We have only a limited operating history upon which our shareholders and ADS holders can evaluate our business and prospects. Going forward, we may incur significant losses from our operations. We had a net loss of €383.6 million during the year ended December 31, 2021 and a net loss of €419.0 million during the year ended December 31, 2020. Our total equity was €883.6 million as of December 31, 2021 compared to €838.7 million as of December 31, 2020. Neither the net loss nor net profit we have experienced in prior years are necessarily indicative of our future results.
Apart from the FDA’s recent approval of SKYTROFA and the EC’s recent approval of Lonapegsomatropin Ascendis Pharma, none of our other product candidates have been approved for commercial sale by the FDA, the EC or similar
non-U.S.
regulatory authorities. We expect that our annual operating expenses may increase over the next several years as we expand our research and development efforts and incur additional commercialization expenses. Although we have begun to receive revenue from commercial product sales, we may incur substantial operating losses for the foreseeable future as we execute our operating plan.
Possible future losses would have an adverse effect on our shareholders’ equity. Further, the net losses or net income we incur may fluctuate significantly from quarter to quarter and year to year, such that a
period-to-period
comparison of our results of operations may not be a reliable indication of our future performance.
We have limited revenue from commercial product sales of SKYTROFA.
We have limited revenue from commercial product sales of SKYTROFA in the U.S. and are yet to commercially launch Lonapegsomatropin Ascendis Pharma (developed under the name TransCon hGH) in the European Union (“EU”). Our ability to generate revenue from commercial product sales will continue to depend on our ability to successfully commercialize SKYTROFA
in the U.S., to successfully launch and commercialize TransCon hGH in the EU, and to complete the research and development of our other product candidates and obtain the regulatory and marketing approvals necessary to commercialize such product candidates. Our ability to generate additional revenue from commercial product sales or pursuant to milestone payments or royalties from collaboration partners depends heavily on many factors, including but not limited to:
 
   
completing research and preclinical and clinical development of our product candidates;
 
   
on our own, or together with our strategic collaboration partners, obtaining additional regulatory approvals for our products and product candidates;
 
   
negotiating favorable terms of and entering into collaboration, licensing or other arrangements;
 
   
our ability to commercialize or
co-promote,
and/or the ability of our collaboration partners to successfully commercialize, our products and product candidates;
 
   
developing and sustaining a scalable manufacturing process for TransCon hGH and for any of our other product candidates, if approved, and establishing and maintaining supply and manufacturing relationships with third-parties that can conduct the process and provide adequate, in amount and quality, products to support clinical development and the market demand for TransCon hGH and for our other product candidates, if approved;
 
   
obtaining market acceptance of TransCon hGH, and of our other product candidates, if approved, as viable treatment options;
 
   
addressing any competing technological and market developments;
 
   
identifying, assessing, acquiring,
in-licensing
and/or developing new product candidates;
 
   
maintaining, protecting, and expanding our portfolio of intellectual property rights, including patents, trade secrets, and
know-how,
and our ability to develop, manufacture and commercialize our product candidates and products without infringing intellectual property rights of others; and
 
   
attracting, hiring, and retaining qualified personnel.
In cases where we are successful in obtaining regulatory approvals to market one or more of our product candidates (such as TransCon hGH), our revenue will be dependent, in part, upon the size of the markets in the territories for which regulatory approval is granted, the accepted price for the product, the availability of competing products, the ability to get reimbursement for our products at any price and the extent of our royalty rights for that territory. If the number of patients suitable for our product candidates is not as significant as we estimate, the indication approved by regulatory authorities is narrower than we expect or the reasonably accepted population for treatment is narrowed by competition, physician choice, treatment guidelines or third-party payor restrictions, we may not generate significant revenue from the sale of such product candidates, even if approved. Limitations on our ability to generate
 
4

Table of Contents
revenue from commercial product sales or pursuant to
up-front
or milestone payments and royalties from collaboration partners would likely depress our market value and could impair our ability to raise capital, expand our business, discover or develop other product candidates or continue our operations.
We may require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, scale back or cease our commercialization activities, product development or any other or all operations.
Since our inception, most of our resources have been dedicated to our research and development activities and, in particular, developing our proprietary TransCon technologies and product candidates. We have funded our operations primarily through issuance of our preference shares, ordinary shares and convertible debt securities and payments to us under collaboration agreements. For example, in September 2021, we received $436.5 million (€367.7 million) in net proceeds from a public offering of American Depositary Shares (“ADSs”) representing our ordinary shares after deducting the underwriting commissions and offering expenses payable by us. As of December 31, 2021, we had cash, cash equivalents and marketable securities totaling €789.6 million. We believe that we will continue to expend substantial resources for the foreseeable future, including costs associated with research and development, commercialization activities, conducting preclinical studies, clinical trials, obtaining regulatory approvals and sales and marketing. Because the outcome of any clinical trial and/or regulatory approval process is highly uncertain, we cannot reasonably estimate the actual amounts of additional financing necessary to successfully complete the development, regulatory approval process and commercialization or
co-promotion
of any of our product candidates.
Based on our current operating plan, we believe that our existing cash, cash equivalents and marketable securities as of December 31, 2021 will be sufficient to meet our projected cash requirements for at least twelve months from the date of this annual report. However, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned. Our future funding requirements will depend on many factors, including, but not limited to:
 
   
the manufacturing, selling and marketing costs associated with TransCon hGH and with our other product candidates, if approved, including the cost and timing of building our sales and marketing capabilities;
 
   
the timing, receipt, and amount of sales of, or royalties on, TransCon hGH and any future products;
 
   
the sales price and the availability of adequate third-party coverage and reimbursement for TransCon hGH and for our other product candidates, if approved;
 
   
our ability to establish and maintain strategic partnerships, licensing or other arrangements and the financial terms of such agreements;
 
   
our ability to collect payments which are due to us from collaboration partners (if any), which in turn is impacted by the financial standing of any such collaboration partners;
 
   
the progress, timing, scope, results and costs of our preclinical studies and clinical trials and manufacturing activities for our product candidates, including the ability to enroll patients in a timely manner for clinical trials;
 
   
the time and cost necessary to obtain regulatory approvals for our product candidates and the costs of post-marketing studies that could be required by regulatory authorities;
 
   
the cash requirements of any future acquisitions or discovery of product candidates;
 
   
the number and scope of preclinical and discovery programs that we decide to pursue or initiate;
 
   
the potential acquisition and
in-licensing
of other technologies, products or assets;
 
   
the time and cost necessary to respond to technological and market developments, including further development of our TransCon technologies;
 
   
the achievement of development, regulatory and commercial milestones resulting in the payment to us from collaboration partners of contractual milestone payments and the timing of receipt of such payments, if any;
 
   
our progress in the successful commercialization and
co-promotion
of TransCon hGH and of our other product candidates, if approved, and our efforts to develop and commercialize our other existing product candidates; and
 
   
the costs of filing, prosecuting, maintaining, defending and enforcing any patent claims and other intellectual property rights, including litigation costs and the outcome of such litigation, including costs of defending any claims of infringement brought by others in connection with the development, manufacture or commercialization of our product candidates.
 
5

Table of Contents
Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to delay, limit, scale back or cease our research and development activities, preparing for potential commercialization, preclinical studies and clinical trials for our product candidates for which we retain such responsibility and our establishment and maintenance of sales and marketing capabilities or other activities that may be necessary to commercialize TransCon hGH and our other product candidates.
Raising additional capital may cause dilution to our holders of shares or ADSs, restrict our operations or require us to relinquish rights to our products or product candidates on unfavorable terms to us.
We may seek additional capital through a variety of means, including through public or private equity, debt financings or other sources, including
up-front
payments and milestone payments from strategic collaborations. To the extent that we raise additional capital through the issuance of convertible debt or equity securities, the ownership interest of our shareholders and ADS holders would be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our shareholders and ADS holders. Such financing may result in dilution to holders of shares or ADSs, imposition of debt covenants and repayment obligations, or other restrictions that may affect our business. If we raise additional funds through
up-front
payments or milestone payments pursuant to strategic partnerships with third-parties, we may have to relinquish valuable rights to our products or product candidates, or grant licenses on terms that are not favorable to us. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
Risks Related to Our Business
We are substantially dependent on the success of TransCon hGH and our other product candidates, which may not be successful in nonclinical studies or clinical trials, receive regulatory approval or be successfully commercialized.
To date, we have invested a significant amount of our efforts and financial resources in the research and development of our current product candidates utilizing our proprietary TransCon technologies and in the commercialization of TransCon hGH. Our near-term prospects, including the extent of revenue from commercial product sales, will depend heavily on our successful development and commercialization of TransCon hGH and of our other product candidates, if approved. The clinical and commercial success of TransCon hGH and our other product candidates and our TransCon technologies will depend on a number of factors, including the following:
 
   
the outcome and successful execution of our ongoing and planned clinical trials of TransCon hGH and our other product candidates;
 
   
our ability and that of any collaboration partners to establish and maintain commercial-scale manufacturing processes for our products, product candidates and device components;
 
   
whether our product candidates’ safety, purity, potency, tolerability and/or efficacy profiles will be satisfactory to the European Medicines Agency (“EMA”), the FDA and similar regulatory authorities to warrant marketing approval;
 
   
whether the EMA, the FDA or similar regulatory authorities will require additional clinical trials prior to approving our product candidates, if ever;
 
   
the prevalence and severity of adverse side effects of TransCon hGH and our other product candidates;
 
   
the occurrence of adverse events that implicate the TransCon technologies, including among any
out-licensed
product candidates;
 
   
the timely receipt of necessary marketing authorizations or certifications for our product candidates and associated device components from the FDA, similar regulatory authorities and notified bodies;
 
   
our ability and that of any collaboration partners to successfully commercialize TransCon hGH or to commercialize our other product candidates, if approved for marketing and sale by the FDA or similar regulatory authorities, including educating physicians and patients about the benefits, administration and use of such products;
 
   
achieving and maintaining compliance with all applicable regulatory requirements;
 
   
acceptance of TransCon hGH, or our other product candidates, if approved, as safe and effective by patients and the medical community;
 
   
acceptance of the device components of our combination products and combination product candidates, if approved, including the TransCon hGH auto-injector and the TransCon PTH drug delivery device and associated Bluetooth connectivity features, by patients and the medical community;
 
6

Table of Contents
   
the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing treatments;
 
   
obtaining and sustaining an adequate level of coverage and reimbursement for TransCon hGH and our other product candidates by third-party payors;
 
   
the effectiveness of our and any collaboration partners’ marketing, sales and distribution strategies and operations;
 
   
our ability and that of any collaboration partners, or any third-party manufacturer we contract with, to manufacture supplies of TransCon hGH and/or our other product candidates and to develop, validate and maintain commercially viable manufacturing processes that are compliant with current good manufacturing practice, or cGMP, or similar requirements;
 
   
enforcing intellectual property rights in and to TransCon hGH and our other product candidates;
 
   
avoiding third-party interference, opposition, derivation or similar proceedings with respect to our patent rights, and avoiding other challenges to our patent rights and patent infringement claims; and
 
   
continued acceptable safety profiles of TransCon hGH and of our other product candidates following any potential approval.
Many of these factors are beyond our control, including clinical development, the regulatory submission process, potential threats to our intellectual property rights and the manufacturing, marketing and sales efforts of any collaboration partners.
We cannot be certain that TransCon hGH will be successfully commercialized or approved in other jurisdictions and we cannot be certain that any of our other product candidates will ever be approved or successfully commercialized, or that we will ever generate revenue from sales of such other product candidates. If we are not successful in completing the development of, obtaining approval for, and commercializing our product candidates, or are significantly delayed in doing so, our business will be harmed.
Clinical drug development involves a lengthy and expensive process with uncertain outcomes, and we may encounter substantial delays in our clinical studies. Furthermore, results of earlier studies and trials may not be predictive of results of future trials.
Before obtaining marketing approval from regulatory authorities for the sale of any product candidates, we must conduct extensive clinical studies to demonstrate the safety, purity, potency and/or efficacy of the product candidates in humans. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process; the results of preclinical and clinical studies of our product candidates may not be predictive of the results of later-stage clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed through preclinical studies and initial clinical trials. A number of companies in the pharmaceutical, biopharmaceutical and biotechnology industries have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier studies, and we cannot be certain that we will not face similar setbacks. Even if our clinical trials are completed, the results may not be sufficient to obtain regulatory approval for our product candidates.
We may experience delays or setbacks in our ongoing clinical trials, and we do not know whether future clinical trials will begin on time, need to be redesigned, enroll an adequate number of patients on time or be completed on schedule, if at all. Clinical trials can be delayed or terminated for a variety of reasons, including delay or failure to:
 
   
generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation or continuation of clinical trials;
 
   
reach consensus with regulatory authorities on study design or implementation of the clinical trials and/or obtain regulatory authorization to commence a trial;
 
   
reach agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
 
   
identify, recruit and train suitable clinical investigators;
 
   
obtain institutional review board (“IRB”) or ethics committee approval at each site;
 
   
manufacture, test, release, validate or import sufficient quantities of drug product for use in a trial;
 
   
recruit, screen and enroll suitable patients to participate in a trial;
 
   
have patients complete a trial or return for post-treatment
follow-up;
 
7

Table of Contents
   
ensure that clinical sites observe trial protocol or continue to participate in a trial;
 
   
address any patient safety concerns that arise during the course of a trial;
 
   
address any conflicts with new or existing laws or regulations; or
 
   
initiate or add a sufficient number of clinical trial sites.
The
COVID-19
pandemic has had, and may continue to have an evolving impact on the conduct of clinical trials of investigational therapeutic candidates, and any challenges which may arise, for example, from quarantines, site closures, travel limitations, interruptions to the supply chain for our product candidates, or other considerations if site personnel or trial subjects become infected with
COVID-19,
which may lead to difficulties in meeting protocol-specified procedures, including administering or using the product candidate or adhering to protocol-mandated visits and laboratory/diagnostic testing, unavoidable protocol deviations due to
COVID-19
illness and/or
COVID-19
control measures, which will likely vary depending on many factors, including the nature of disease under study, the trial design, and in what region(s) the study is being conducted.
Patient enrollment is a significant factor in the timing of clinical trials and is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs or treatments that may be approved for the indications we are investigating. In addition, our Phase 3 foresiGHt Trial includes clinical sites located in Ukraine, and the recent invasion of Ukraine has impacted and may further impact our ability to enroll patients at those clinical sites or collect data from patients who are already enrolled at those clinical sites. We will continue to closely monitor the rapidly evolving geopolitical situation in Ukraine and Russia and its impact on our clinical trial operations and timelines.
We could also encounter delays if a clinical trial is suspended or terminated by us for a product candidate, by the IRBs of the institutions in which such trials are being conducted, by an independent data safety monitoring board (“DSMB”), for such trial or by the FDA or similar regulatory authorities. Such authorities, or we, may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or similar regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
Further, we are conducting, and plan to conduct, clinical trials in sites outside of the United States. Conducting clinical trials in foreign countries presents additional risks that may delay completion of clinical trials. These risks include the failure of physicians or enrolled patients in foreign countries to adhere to clinical protocol as a result of differences in healthcare services or cultural customs, managing additional administrative burdens associated with foreign regulatory schemes, as well as political and economic risks relevant to such foreign countries. In addition, the EMA or the FDA may determine that the clinical trial results obtained in foreign subjects do not establish the safety, purity, potency and/or efficacy of a product candidate when administered in EU or U.S. patients, and are thus not supportive of an application for a marketing authorization in the EU or of a New Drug Application (“NDA”), or Biologics License Application (“BLA”), approval in the United States. As a result, the EMA or the FDA may not accept data from clinical trials conducted outside the EU or the United States, respectively, and may require that we conduct additional clinical trials or obtain additional data before we can submit an NDA or BLA in the United States or a Marketing Authorization Application (“MAA”) in the EU. The EMA or the FDA may even require conducting additional clinical trials in the EU or the United States, respectively.
If there are delays in the completion of, or termination of, any clinical trial of our product candidates or if we are required to conduct additional clinical trials in addition to those we have currently planned, the commercial prospects of our product candidates may be harmed, and our ability to generate revenue from commercial product sales from any of these product candidates will be delayed. In addition, any delays in completing the clinical trials will increase costs, slow down our product candidate development and approval process and jeopardize the ability to commence product sales and generate revenue from commercial product sales. Any of these occurrences may significantly harm our business, financial condition and prospects. Clinical trial delays may also allow our competitors to bring products to market before we do, which could impair our ability to obtain orphan exclusivity for our products that potentially qualify for orphan drug designation. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.
In addition, the FDA’s and other regulatory authorities’ policies with respect to clinical trials may change and additional government regulations may be enacted. For instance, the regulatory landscape related to clinical trials in the EU recently evolved. The EU Clinical Trials Regulation (“CTR”) which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022. While the Clinical Trials Directive required a separate clinical trial application (“CTA”) to be submitted in each member state, to both the competent national health authority and an independent ethics committee, the CTR introduces a centralized process and only requires the submission of a single application to all member states concerned. The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state. The assessment procedure of the CTA has been harmonized as well, including a joint assessment by all member states concerned, and a separate assessment by each member state with respect to specific requirements related to its own territory, including ethics rules. Each member state’s decision is communicated to the sponsor via the centralized EU portal. Once the CTA is approved,
 
8

Table of Contents
clinical study development may proceed. The CTR foresees a three-year transition period. The extent to which ongoing and new clinical trials will be governed by the CTR varies. For clinical trials whose CTA was made under the Clinical Trials Directive before January 31, 2022, the Clinical Trials Directive will continue to apply on a transitional basis for three years. Additionally, sponsors may still choose to submit a CTA under either the Clinical Trials Directive or the CTR until January 31, 2023 and, if authorized, those will be governed by the Clinical Trials Directive until January 31, 2025. By that date, all ongoing trials will become subject to the provisions of the CTR. Compliance with the CTR requirements by us and our third-party service providers, such as CROs, may impact our developments plans.
It is currently unclear to what extent the UK will seek to align its regulations with the EU. The UK regulatory framework in relation to clinical trials is derived from existing EU legislation (as implemented into UK law, through secondary legislation). On January 17, 2022, the UK Medicines and Healthcare products Regulatory Agency (“MHRA”) launched an eight-week consultation on reframing the UK legislation for clinical trials. The consultation closes on March 14, 2022 and aims to streamline clinical trials approvals, enable innovation, enhance clinical trials transparency, enable greater risk proportionality, and promote patient and public involvement in clinical trials. The outcome of the consultation will be closely watched and will determine whether the UK chooses to align with the regulation or diverge from it to maintain regulatory flexibility. A decision by the UK not to closely align its regulations with the new approach that will be adopted in the EU may have an effect on the cost of conducting clinical trials in the UK as opposed to other countries and/or make it harder to seek a marketing authorization in the EU for our product candidates on the basis of clinical trials conducted in the UK.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies governing clinical trials, our development plans may be adversely impacted.
Certain of our product candidates are in various stages of preclinical development and we may not be successful in our efforts to successfully develop these products or expand our pipeline of product candidates.
A key element of our strategy is to expand our pipeline of product candidates utilizing our proprietary TransCon technologies, and to advance such product candidates through clinical development. Certain of our product candidates are in preclinical development and may require significant time and additional research and development before we can submit INDs or equivalent foreign regulatory applications to regulatory authorities to begin clinical studies. Of the large number of drugs and biologics in development, only a small percentage of such drugs successfully complete the EMA or FDA regulatory approval process and are commercialized. Accordingly, even if we are able to continue to fund such development programs, our product candidates may not be advanced to clinical studies or be successfully developed or commercialized. In addition, our preclinical product candidates may not demonstrate the advantages we expect from application of our TransCon technologies in preclinical studies. In such event, we may decide not to progress any such product candidates into clinical trials.
Research programs to identify product candidates require substantial technical, financial and human resources, whether or not any product candidates are ultimately identified. Although our research and development efforts to date have resulted in several development programs, we may not be able to develop product candidates that are safe, pure, potent and/or effective. Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development or commercialization for many reasons, including the following:
 
   
the research methodology used and our TransCon technologies may not be successful in creating potential product candidates;
 
   
competitors may develop alternatives that render our product candidates obsolete or less attractive;
 
   
product candidates we develop may nevertheless be covered by third-parties’ intellectual property rights or other types of exclusivity and we may not be able to obtain a license from such third-party or the license terms may not be acceptable to us;
 
   
the market for a product candidate may change during our program or we may discover that such market was smaller than initially expected so that such a product may become financially unfeasible to continue to develop;
 
   
a product candidate may be demonstrated to have harmful side effects or not to be effective, or otherwise not to meet other requirements for regulatory approval;
 
   
a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and
 
   
a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors, or reimbursable by third-party payors, if applicable.
Even if we are successful in continuing to expand our pipeline, through our own research and development efforts or by pursuing
in-licensing
or acquisition of product candidates, the potential product candidates that we identify or acquire may not be suitable for
 
9

Table of Contents
clinical development, including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely to receive marketing approval and achieve market acceptance. If we do not successfully develop and commercialize a product pipeline, we may not be able to generate revenue from commercial product sales in future periods or achieve or sustain profitability.
Interim, “top-line” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
From time to time, we may publicly disclose preliminary or
top-line
data from our preclinical studies and clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the
top-line
or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated.
Top-line
data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result,
top-line
data should be viewed with caution until the final data are available.
From time to time, we may also disclose interim data from our preclinical studies and clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available or as patients from our clinical trials continue other treatments for their disease. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects.
Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure. If the interim,
top-line,
or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.
By expending our limited resources to pursue particular product candidates and areas of focus we may fail to capitalize on product candidates or areas of focus that are more profitable or for which there is a greater likelihood of success.
We have focused on research programs and product candidates within the endocrinology and oncology therapeutic areas. As a result, we may forego or delay pursuit of opportunities with other product candidates or in other therapeutic areas that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.
We rely on third-parties to conduct our nonclinical studies and clinical trials. If these third-parties do not successfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain regulatory approval for, or commercialize, our product candidates.
We do not currently have the ability to independently conduct clinical trials or
IND-enabling
nonclinical studies. We rely on medical institutions, clinical investigators, contract laboratories, collaboration partners and other third-parties, such as CROs, to conduct clinical trials of TransCon hGH and our other product candidates. The third-parties with whom we contract for execution of our clinical trials play a significant role in the conduct of these trials and the subsequent collection and analysis of data. However, these third-parties are not our employees, and except for contractual duties and obligations, we control only certain aspects of their activities and have limited ability to control the amount or timing of resources that they devote to our programs. Although we rely on these third-parties to conduct our nonclinical studies and our clinical trials, we remain responsible for ensuring that each of our nonclinical studies and clinical trials is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards and our reliance on third-parties does not relieve us of our regulatory responsibilities. We and these third-parties are required to comply with current good laboratory practices (“GLPs”), for nonclinical studies, and good clinical practices (“GCPs”), for clinical studies. GLPs and GCPs are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for all of our products in nonclinical and clinical development, respectively. Regulatory authorities enforce GCPs through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of our third-party contractors fail to comply with applicable regulatory
 
10

Table of Contents
requirements, including GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the EMA, the FDA, or similar regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot be certain that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP regulations. In addition, our clinical trials must be conducted with products produced under cGMP or similar regulations outside the United States. The failure of our contract manufacturers to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process.
The acceptance and commercial success of TransCon hGH, or any of our other product candidates, if approved, will depend, in part, upon the degree of acceptance among physicians, patients, patient advocacy groups, third-party payors and the medical community.
Even if our other product candidates obtain FDA or other regulatory approvals, and are ultimately commercialized, TransCon hGH and our other product candidates may not achieve significant market acceptance among physicians, patients, third-party payors, patient advocacy groups and the medical community. The degree of market acceptance, if any, for TransCon hGH and our other product candidates for which marketing approval is obtained will depend on a number of factors, including:
 
   
the safety, purity, potency and/or efficacy of the products as demonstrated in clinical trials;
 
   
the prevalence and severity of any side effects and overall safety profile of the product;
 
   
the perceived safety of the TransCon technologies;
 
   
the convenience and features of the auto-injector or drug delivery device used to administer the drug;
 
   
the clinical indications for which the product is approved;
 
   
acceptance by physicians, major operators of clinics and patients of the product as a safe and effective treatment and their willingness to pay for them;
 
   
relative convenience and ease of administration of our products;
 
   
the potential and perceived advantages of our product candidates over current treatment options or alternative treatments, including future alternative treatments;
 
   
the availability of supply of our products and their ability to meet market demand;
 
   
marketing and distribution support for our product candidates;
 
   
the quality of our relationships with patient advocacy groups; and
 
   
coverage and reimbursement policies of government and other third-party payors.
If TransCon hGH or our other product candidates that obtain regulatory approval do not achieve significant market acceptance or commercial success, this could harm our business, results of operations and prospects, and the value of our shares or ADSs.
Our products and product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following regulatory approval, if any. If any of our product candidates receives marketing approval and subsequently causes undesirable side effects, the ability to market the product candidates could be compromised.
Undesirable side effects caused by any of our approved products or product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or similar authorities. In the event that trials conducted by us or any collaboration partners, or trials we conduct with our product candidates, reveal a high and unacceptable severity and prevalence of side effects, such trials could be suspended or terminated and the FDA or similar regulatory authorities could order any collaboration partners or us to cease further development of or deny approval of our product candidates for any or all targeted indications. The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly.
Additionally, if we successfully develop a product candidate and it receives marketing approval, the FDA could require us to adopt a Risk Evaluation and Mitigation Strategy (“REMS”) to ensure that the benefits of treatment with such product candidate outweigh the risks for each potential patient, which may include, among other things, a communication plan to health care practitioners, patient education, extensive patient monitoring or distribution systems and processes that are highly controlled, restrictive and more costly than what is typical for the industry. Foreign regulatory authorities may require us to adopt similar risk management measures.
 
11

Table of Contents
In addition, in the event that any of our product candidates receives regulatory approval and we or others later identify undesirable side effects caused by one of our products including TransCon hGH, a number of potentially significant negative consequences could occur, including:
 
   
regulatory authorities may withdraw their approval of the product or seize the product;
 
   
we, or any collaboration partners, may be required to recall the product;
 
   
additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product or any component thereof, including the imposition of a REMS or requirements for similar actions, such as patient education, certification of health care professionals or specific monitoring;
 
   
we, or any collaboration partners, may be subject to fines, injunctions or the imposition of civil or criminal penalties;
 
   
regulatory authorities may require additional warnings on the label, including “boxed” warnings, or issue safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warnings or other safety information about the product;
 
   
we could be sued and held liable for harm caused to patients;
 
   
the product may become less competitive; and
 
   
our reputation may suffer.
For example, a number of adverse reactions have been reported among users of daily somatropin, and we may observe and be required report similar adverse reactions for users of SKYTROFA. This reporting may result in Dear Healthcare Provider letters or other communications containing warnings or other safety information about the product.
Any of the foregoing events could prevent us, or any collaboration partners, from achieving or maintaining market acceptance of TransCon hGH or any other product candidate, if approved, and could result in the loss of significant revenue to us, which would harm our results of operations and business.
Competition in the biotechnology and pharmaceutical industries is intense and our competitors may discover, develop or commercialize products faster or more successfully than us. If we are unable to compete effectively our business, results of operations and prospects will suffer.
The markets in which we intend to compete are undergoing, and are expected to continue to undergo, rapid and significant technological changes. TransCon hGH and some of our other product candidates are for fields in which competitive products already exist and are established. We expect competition to intensify as technological advances are made or new drugs and biotechnology products are introduced. New developments by competitors may render our TransCon hGH and our other current or future product candidates and/or technologies
non-competitive,
obsolete or not economical. Our competitors’ products may be more efficacious or marketed and sold more effectively than TransCon hGH or any of our other product candidates.
We are aware of several pharmaceutical and biopharmaceutical companies that have commenced clinical studies of products or have successfully commercialized products addressing areas that we are targeting. A permanently PEGylated long-acting growth hormone developed by GeneScience Pharmaceuticals Co., Ltd. is available in China and the Somatropin Biopartners product (LB03002), is available in Korea. Novo Nordisk has received regulatory approval in the United States, Japan, and Europe of once-weekly somapacitan (brand name Sogroya) for replacement of endogenous growth hormone in adult patients with GHD. Pfizer (in collaboration with OPKO Health Inc.) has received regulatory approval of once-weekly somatrogon (brand name NGENLA) in the EU, Canada, Australia, and in Japan for pediatric GHD. In January 2022, Pfizer (in collaboration with OPKO Health) announced the FDA issued a Complete Response Letter for the Biologics License Application (“BLA”) for somatrogon. Other experimental growth hormone therapies based on permanent modification are in different stages of clinical development by various companies, including GeneScience Pharmaceuticals Co., Ltd., Genexine Inc.,
I-MAB,
and JCR Pharmaceuticals Co., Ltd. In addition,
Shire-NPS
Pharmaceuticals Inc., a Takeda company owns the rights to parathyroid hormone (brand name Natpara), a treatment for hypoparathyroidism. Parathyroid hormone was voluntarily recalled in September 2019 in the U.S. and is now only available to a limited number of patients through a Special Use Program offered by its manufacturer,
Shire-NPS
Pharmaceuticals Inc., a Takeda company. In addition, we are aware of several academic groups and companies working on making longer-acting agonists of the PTH receptor, or PTH1R. Other companies and groups are developing or commercializing therapies for hypoparathyroidism, including Chugai Pharmaceutical Co., Ltd., Entera Bio, Extend Biosciences, Massachusetts General Hospital, Amolyt Pharma, and Eli Lilly and Company. Other companies are developing therapies for achondroplasia, including BioMarin, Pfizer, QED Therapeutics and BioClin Therapeutics. BioMarin Pharmaceutical, Inc. has received regulatory approval for vosoritide (brand name VOXZOGO) in the United States and EU and is developing vosoritide for the treatment of achondroplasia, and Therachon and BioClin Therapeutics, Inc. are developing compounds for achondroplasia. Other companies are developing toll like receptor agonists for cancer immunotherapy including: Nektar Therapeutics, CureVac N.V., Seven and Eight Biopharmaceuticals Inc., Idera Pharmaceuticals, Inc., Checkmate Pharmaceuticals, Inc., Exicure, Inc., Bolt Therapeutics, Inc., and Silverback Therapeutics, Inc. In addition to product-based
 
12

Table of Contents
competition, our TransCon technologies face technology-based competition as we believe other companies are developing or evaluating enhanced drug delivery and sustained release technologies. In particular, we believe Nektar Therapeutics, OPKO Health, Inc., ProLynx LLC and Serina Therapeutics, Inc. are developing technologies that use reversible linkers and that may be competitive with our TransCon technologies.
TransCon hGH is approved by the FDA in the U.S. under the brand name SKYTROFA (lonapegsomatropin-tcgd) for the treatment of pediatric patients one year and older who weigh at least 11.5 kg (25.4 lb) and have growth failure due to inadequate secretion of endogenous growth hormone. In addition, the European Commission has granted a marketing authorization for Lonapegsomatropin Ascendis Pharma (developed under the name TransCon hGH) as a once weekly subcutaneous injection for the treatment of children and adolescents ages 3 to 18 years with growth failure due to insufficient secretion of endogenous growth hormone. However, it is also possible that our competitors will commercialize competing drugs or treatments before we can launch any other product candidates that are ultimately approved by regulatory authorities. We also anticipate that we will face increased competition in the future as new companies enter into our current and target markets.
Furthermore, to the extent we are developing TransCon product candidates that incorporate already approved drugs, we face competition from the pharmaceutical companies which are currently marketing such approved products. These pharmaceutical companies can generally be expected to seek to delay the introduction of competing products through a variety of means including:
 
   
filing new formulation patent applications on drugs whose original patent protection is about to expire;
 
   
filing an increasing number of patent applications that are more complex and costly to challenge;
 
   
filing suits for alleged patent infringement that automatically delay FDA or foreign regulatory authorities approval;
 
   
developing patented controlled-release or other “next-generation” products, which may compete with TransCon product candidates;
 
   
establishing exclusive contracts with third-party payors; or
 
   
changing product claims and product labeling.
Any one of these strategies may increase the costs and risks associated with our efforts to develop and commercialize TransCon hGH and any of our other product candidates and may delay or altogether prevent such development or commercialization.
Many of our competitors have:
 
   
significantly greater name recognition, financial, marketing, research, drug development and technical and human resources than we have at every stage of the discovery, development, manufacturing and commercialization process and additional mergers and acquisitions in the biotechnology industries may result in even more resources being concentrated in our competitors;
 
   
more extensive experience in commercializing drugs, conducting preclinical testing, conducting clinical studies, obtaining regulatory approvals, challenging patents and in manufacturing and marketing pharmaceutical products;
 
   
products that have been approved or are in late stages of development; and
 
   
collaboration arrangements in our target markets with leading companies and research institutions.
With respect to TransCon hGH and any other product candidates that we successfully develop, we will face competition based on many different factors, including:
 
   
the safety and effectiveness of such product candidates;
 
   
the timing of and specific circumstances relating to regulatory approvals for these product candidates;
 
   
the availability and cost of manufacturing, marketing and sales capabilities;
 
   
the effectiveness of our marketing and sales capabilities;
 
   
the price of our product candidates;
 
   
the availability and amount of third-party reimbursement for our product candidates; and
 
   
the strength of our patent position.
In addition, academic institutions, government agencies, and other public and private organizations conducting research may seek patent protection with respect to potentially competitive products or technologies. These organizations may also establish exclusive collaborative or licensing relationships with our competitors.
 
 
13

Table of Contents
Our competitors may develop or commercialize products with significant advantages in regard to any of these factors. Our competitors may therefore be more successful in commercializing their products than we are, which could adversely affect our business, results of operations and prospects, and the value of our shares or ADSs.
Our sales and marketing efforts for TransCon hGH may not be effective and we may not be successful in our commercial efforts.
We have limited direct sales and distribution capabilities and we have only recently begun commercial sales of our first approved product, TransCon hGH, known by its brand name SKYTROFA and its international nonproprietary name lonapegsomatropin-tcgd in the United States for the treatment of pediatric patients one year and older who weigh at least 11.5 kg (25.4 lb) and have growth failure due to inadequate secretion of endogenous growth hormone. Except for our license agreements with VISEN for Greater China and certain limited sales and distribution agreements with specialty pharmacies in the U.S. for TransCon hGH, we have no sales, marketing or distribution agreements for TransCon hGH, TransCon PTH, TransCon CNP, or our other product candidates. We may enter into arrangements with third-parties to market and sell TransCon hGH and certain of our other product candidates in one or multiple geographies. We may not be able to enter into such marketing and sales arrangements with others on acceptable terms, if at all. To the extent that we enter into marketing and sales arrangements with other companies, our revenues, if any, will depend on the terms of any such arrangements and the efforts of others. These efforts may turn out not to be sufficient.
We have a newly established U.S. sales organization and, although members of this organization have extensive experience commercializing endocrinology rare disease products at other companies, we have only recently begun U.S. commercial sales of our first approved product, TransCon hGH, and there can be no assurance that we will commercialize successfully.
Factors which may affect the success of our commercialization of TransCon hGH include:
 
   
our ability to hire and retain required sales and marketing personnel;
 
   
our ability to provide sufficient training to develop and strengthen the technical expertise of our sales and marketing personnel;
 
   
our ability to provide required support materials and resources to our sales personnel to help them educate physicians and healthcare providers regarding TransCon hGH and its proper administration; and
 
   
our resources to meet and timely fulfill supply obligations to our customers.
Additionally, to commercialize any of our other product candidates, we or any collaboration partners must build and/or maintain marketing, sales, distribution, managerial and other
non-technical
capabilities or make arrangements with third-parties to perform these services, and we or any collaboration partners may not be successful in doing so. If one or more of our other product candidates receives regulatory approval, we may establish a specialty sales organization with technical expertise and supporting distribution capabilities to
co-promote
and/or commercialize our product candidates, which will be expensive and time consuming. As a company, we have only just begun to sell and distribute our first approved drug and there are significant risks involved in managing a sales organization, including our ability to hire, retain, and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, comply with regulatory requirements applicable to the marketing and sale of drug products and effectively manage a geographically dispersed sales and marketing team. Any failure or delay in the development of our internal sales, marketing and distribution capabilities with respect to TransCon hGH or any other
non-licensed
product candidate that we develop would adversely impact the commercialization of TransCon hGH or such other product candidate.
We may choose to work with third-parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems. If we are unable to enter into such arrangements on acceptable terms or at all, we may not be able to successfully commercialize our product candidates.
Our proprietary TransCon technologies include a new approach to extending the residence time and duration of action of a variety of drug products.
Our TransCon technologies have been developed to improve the delivery of a variety of drug products. TransCon hGH is approved by the FDA in the U.S. under the brand name SKYTROFA (lonapegsomatropin-tcgd) for the treatment of pediatric patients one year and older who weigh at least 11.5 kg (25.4 lb) and have growth failure due to inadequate secretion of endogenous growth hormone. The European Commission has granted a marketing authorization for Lonapegsomatropin Ascendis Pharma (developed under the name TransCon hGH) as a once weekly subcutaneous injection for the treatment of children and adolescents ages 3 to 18 years with growth failure due to insufficient secretion of endogenous growth hormone. However, we cannot be certain that any of our other product candidates using our TransCon technologies will be deemed safe or efficacious (or that TransCon hGH will be deemed safe or effective for other indications), nor that any aspects of our TransCon technologies will yield additional product candidates that could be commercially valuable. Further, one of our two carrier systems, the use of TransCon hydrogel carrier system, has been limited in
 
14

Table of Contents
humans. As a result, our TransCon hydrogel carriers, when dosed extensively in humans, may fail to perform as we expect. Failure of any of our product candidates to be successfully developed, approved and commercialized may result in our TransCon technologies being viewed as an ineffective approach to developing drug products which would harm our business and prospects.
We apply our TransCon technologies to both approved and unapproved parent drugs to extend the life of such drugs in the body, and to enhance the overall benefit of a given therapy. Even when applied to approved parent drugs, we have generated limited clinical data on our product candidates using our systemic TransCon technologies with respect to safety and efficacy for long-term treatment in humans. The long-term safety and efficacy of our TransCon technologies and the extended life in the body of our product candidates utilizing TransCon technologies is unknown, and it is possible that our product candidates may have an increased risk of unforeseen reactions following extended treatment relative to other approved products. If extended treatment with TransCon hGH or other product candidates utilizing TransCon in our ongoing or future clinical trials results in any concerns about the safety or efficacy of our TransCon technologies, we may be unable to successfully develop or commercialize TransCon hGH or our other product candidates.
We have limited clinical data on product candidates utilizing our TransCon technologies to indicate whether they are safe or effective for long-term use in humans.
TransCon hGH and our other product candidates are designed to transiently link a parent drug molecule to select TransCon carriers via our TransCon linkers. Once injected, we believe that our prodrugs predictably release the unmodified parent drug molecule over time, thus preserving the parent drug’s original mode of action, and, we believe, the parent drug’s original safety and efficacy profile. We believe that our TransCon carriers remain bound to our TransCon linkers and that they are cleared from the body predominantly by renal filtration and biliary transport with fecal excretion. We have limited clinical data regarding utilizing the systemic TransCon technologies to indicate whether they are safe, pure, potent and/or effective for long-term use in humans, including the safety of any degradation products that may result after the TransCon carrier and TransCon linker are cleaved from the parent drug molecule. If treatment with any of our product candidates in our clinical trials results in concerns about their safety or efficacy, we and any collaboration partners may be unable to successfully develop or commercialize any or all of our TransCon technologies based on such product candidates or enter into collaborations with respect to our product candidates.
We depend on certain collaboration partners to develop and conduct clinical studies with, obtain regulatory approvals for, market and sell product candidates, and if such collaboration partners fail to perform as expected, or are unable to obtain the required regulatory approvals for such product candidates, the potential of such product candidates would be significantly reduced and our business would be significantly harmed.
We rely on our collaboration partners to conduct certain clinical studies. For example, in November 2018, we announced the formation of VISEN Pharmaceuticals (“VISEN”), a company established to develop, manufacture, and commercialize our endocrinology rare disease therapy candidates in Greater China. In connection with the formation of VISEN, we granted VISEN exclusive rights to develop and commercialize our rare disease endocrinology products based on our proprietary TransCon technologies, including TransCon hGH, TransCon PTH and TransCon CNP, in Greater China for use in all human indications, subject to certain exceptions. We may also enter into collaboration agreements with other parties in the future relating to our other product candidates.
If our collaboration partners do not perform in the manner we expect or fulfill their responsibilities in a timely manner, or at all, if our agreements with them terminate or if the quality or accuracy of the clinical data they obtain is compromised, the clinical development, regulatory approval and commercialization efforts related to our collaboration product candidates could be delayed or terminated and it could become necessary for us to assume the responsibility at our own expense for the clinical development of such product candidates. In that event, we would likely be required to limit the size and scope of efforts for the development and commercialization of such product candidate, to seek additional financing to fund further development, or to identify alternative collaboration partners, and our potential to generate future revenue from royalties and milestone payments from such product candidate would be significantly reduced or delayed and our business would be harmed. Our existing collaborations and any future collaboration arrangements that we may enter into with third-parties may not be scientifically or commercially successful. In addition to the risks inherent in the development of a drug product candidate, factors that may affect the success of our collaborations include the following:
 
   
our collaboration partners have the unilateral ability to choose not to develop a collaboration product for one or more indications for which such product has been or is currently being evaluated, and our collaboration partners may choose to pursue an indication that is not in our strategic best interest or to forego an indication that they believe does not provide significant market potential even if clinical data is supportive of further development for such indication;
 
   
our collaboration partners may choose not to develop and commercialize our collaboration products in certain relevant markets;
 
   
our collaboration partners may take considerably more time advancing our product candidates through the clinical and regulatory process than we currently anticipate, which could materially delay the achievement of milestones and, consequently the receipt of milestone payments from our collaboration partners;
 
15

Table of Contents
   
our collaboration partners have substantial discretion under their respective agreements regarding how they structure their efforts and allocate resources to fulfill their obligations to diligently develop, obtain regulatory approval for and commercialize our collaboration products;
 
   
our collaboration partners control all aspects of commercialization efforts under their respective license agreements and may change the focus of their development and commercialization efforts or pursue higher-priority programs and, accordingly, reduce the efforts and resources allocated to their collaborations with us;
 
   
our collaboration partners are solely responsible for obtaining and maintaining all regulatory approvals and we or our collaboration partners may fail to develop a commercially viable formulation or manufacturing process for our product candidates, and we or our collaboration partners may fail to manufacture or supply sufficient drug substance for commercial use, if approved, which could result in lost revenue under such collaborations;
 
   
our collaboration partners may not comply with all applicable regulatory requirements or may fail to report safety data in accordance with all applicable regulatory requirements;
 
   
if any of our agreements with our collaboration partners terminate, we will no longer have any rights to receive potential revenue under such agreement, in which case we would need to identify alternative means to continue the development, manufacture and commercialization of the affected product candidates, alone or with others;
 
   
our collaboration partners have the discretion to sublicense their rights with respect to our collaboration technology in connection with collaboration product candidates to one or more third-parties without our consent; and
 
   
our collaboration partners may be pursuing alternative technologies or developing alternative products, either on their own or in collaboration with others, that may be competitive with products on which they are collaborating with us or which could affect our collaboration partners’ commitment to the collaboration.
The timing and amount of any milestone and royalty payments we may receive under agreements with collaboration partners and the value of any equity we own in our collaboration partners (such as the equity we own in VISEN) will depend on, among other things, the efforts, allocation of resources, and successful development and commercialization of our product candidates by our collaboration partners. We cannot be certain that any development and regulatory milestones will be achieved or that we will receive any future milestone payments under agreements we may enter into with collaboration partners. In addition, in certain circumstances we may believe that we have achieved a particular milestone and the applicable collaboration partner may disagree with our belief. In that case, receipt of that milestone payment may be delayed or may never be received, which may require us to adjust our operating plans. We also cannot be certain that any equity we own in our collaboration partners (such as the equity we own in VISEN) will maintain its value or grow in value.
We may form additional strategic collaborations in the future with respect to our proprietary programs, but we may not realize the benefits of such collaborations.
We may form strategic collaborations, create joint ventures or enter into licensing arrangements with third-parties with respect to our independent programs that we believe will complement or augment our existing business. We have historically engaged, and intend to continue to engage, in partnering discussions with a range of biopharmaceutical companies and could enter into new collaborations at any time. For example, in November 2018, we announced the formation of VISEN, a company established to develop, manufacture, and commercialize our endocrinology rare disease therapies in Greater China. In connection with the formation of VISEN, we granted VISEN exclusive rights to develop and commercialize our rare disease endocrinology products based on our proprietary TransCon technologies, including TransCon hGH, TransCon PTH and TransCon CNP, in Greater China for use in all human indications, subject to certain exceptions. We face significant competition in seeking appropriate strategic partners, and the negotiation process to secure appropriate terms is time-consuming and complex. Any delays in identifying suitable development partners and entering into agreements to develop our product candidates could also delay the commercialization of our product candidates, which may reduce their competitiveness even if they reach the market. Moreover, we may not be successful in our efforts to establish such a strategic partnership for any future product candidates and programs on terms that are acceptable to us, or at all. This may be for a number of reasons. For example, under our collaboration with VISEN, VISEN has a right of first negotiation to develop certain of our endocrinology product candidates in Greater China, so our ability to negotiate such a collaboration with suitable third-parties may be hampered by such rights we granted to VISEN. Additionally, our product candidates and programs may be deemed to be at too early of a stage of development for collaborative effort, our research and development pipeline may be viewed as insufficient, and/or third-parties may not view our product candidates and programs as having sufficient potential for commercialization, including the likelihood of an adequate safety and efficacy profile. Even if we are successful in entering into a strategic alliance or license arrangement, there is no guarantee that the collaboration will be successful, or that any future collaboration partner will commit sufficient resources to the development, regulatory approval, and commercialization of our product candidates, or that such alliances will result in us achieving revenues that justify such transactions.
 
16

Table of Contents
We may seek orphan drug designation for some of our product candidates and we may be unsuccessful, or may be unable to maintain the benefits associated with orphan drug designation, including the potential for market exclusivity, for product candidates for which we obtain orphan drug designation.
Regulatory authorities in some jurisdictions, including the United States, may designate drugs or biologics intended to treat relatively small patient populations as orphan drug products. Under the Orphan Drug Act, the FDA may designate a drug or biologic as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States. In the EU, orphan designation is granted by the EC based on a scientific opinion of the EMA’s Committee for Orphan Medicinal Products. A medicinal product may be designated as orphan if its sponsor can establish that (i) the product is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; (ii) either (a) such condition affects no more than 5 in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the EU to justify investment; and (iii) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the medicinal product will be of significant benefit to those affected by the condition. The application for orphan designation must be submitted before the application for marketing authorization. Orphan drug designation must be requested before submitting a BLA or NDA in the United States or a MAA in the EU.
If a drug or biologic with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the drug or biologic is entitled to a period of marketing exclusivity, which precludes the FDA from approving another marketing application for the same drug or biologic for the same disease or condition for a seven year period, except in limited circumstances. If our competitors are able to obtain orphan drug exclusivity prior to us, for products that constitute the “same drug” and treat the same diseases or conditions as our product candidates, we may not be able to have competing products approved by the applicable regulatory authority for a significant period of time. The applicable period is seven years in the United States. The applicable exclusivity period is ten years in the EU, but such exclusivity period can be reduced to six years if, at the end of the fifth year, a product no longer meets the criteria for orphan designation or if the product is sufficiently profitable so that market exclusivity is no longer justified.
As part of our business strategy, we intend to pursue orphan drug designation for certain of our product candidates. For example, in June 2018, we were granted orphan drug designation by the FDA for TransCon PTH for the treatment of hypoparathyroidism, in February 2019, we were granted orphan drug designation by the FDA for TransCon CNP for the treatment of achondroplasia, and in April 2020, we were granted orphan drug designation by the FDA for TransCon hGH for the treatment of GHD. Additionally, in July 2020, we were granted orphan designation by the EC for TransCon CNP for the treatment of achondroplasia and in October 2020, we were granted orphan designation by the EC for TransCon PTH for treatment of hypoparathyroidism. In October 2019, we were granted orphan designation by the EC for TransCon hGH for GHD. In July 2021, we were granted orphan drug designation from the Japanese Ministry of Health, Labor and Welfare for TransCon PTH. However, we may be unsuccessful in obtaining orphan drug designation or orphan designation for other product candidates, and may be unable to maintain the benefits associated with orphan drug designation.
Even if we obtain orphan drug exclusivity for any of our product candidates, that exclusivity may not effectively protect those product candidates from competition because different drugs can be approved for the same condition, and orphan drug exclusivity does not prevent the FDA or foreign regulatory authorities from approving the same or a different drug in another indication. Even after an orphan drug is granted orphan exclusivity and approved, the FDA or foreign regulatory authorities can subsequently approve a later application for the same drug for the same condition before the expiration of the exclusivity period if the FDA or foreign regulatory authorities conclude that the later drug is clinically superior in that it is shown to be safer in a substantial portion of the target populations, more effective or makes a major contribution to patient care. In addition, a designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. Moreover, orphan-drug-exclusive marketing rights in the United States and in foreign jurisdictions may be lost if the FDA or foreign regulatory authorities later determine that the request for designation was materially defective or if we are unable to manufacture sufficient quantities of the product to meet the needs of patients with the rare disease or condition. Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process.
Any biological product for which we intend to seek approval may face competition sooner than anticipated.
The Affordable Care Act (“ACA”), includes a subtitle called the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an
FDA-licensed
reference biological product. Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may
 
17

Table of Contents
not be made effective by the FDA until twelve years from the date on which the reference product was first licensed. During this twelve-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its product.
We believe that any of our future biological product candidates approved under a BLA should qualify for the twelve-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to Congressional action or otherwise, or that the FDA will not consider our product candidates to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated. Jurisdictions in addition to the United States have established abbreviated pathways for regulatory approval of biological products that are biosimilar to earlier approved reference products. For example, the EU has had an established regulatory pathway for biosimilars since 2006. Moreover, the extent to which a biosimilar, once approved, could be substituted for any one of our reference products in a way that is similar to traditional generic substitution for
non-biological
products will depend on a number of marketplace and regulatory factors that are still developing.
We rely on third-parties to manufacture our preclinical and clinical drug supplies, and we rely on third-parties to produce commercial supplies of TransCon hGH and its device components.
We do not own facilities for manufacturing TransCon hGH and our other product candidates for the potential pivotal clinical studies and/or commercial manufacturing of our products and product candidates. We depend on third-parties to manufacture and provide analytical services with respect to TransCon hGH and our other product candidates and device components.
In addition, to produce the quantities necessary to meet anticipated market demand, we and/or any collaboration partners will need to secure sufficient manufacturing capacity with third-party manufacturers. For TransCon hGH, we believe we have secured agreements to provide for sufficient manufacturing capacity with third-party manufacturers; however, our estimates of market demand may be inaccurate and third-party manufacturers may fail to produce sufficient quantities on a timely basis or at all. If we and/or any collaboration partners are unable to produce TransCon hGH or our other product candidates in sufficient quantities to meet the requirements for the launch of the product or to meet future demand, our revenues and gross margins would be adversely affected. For example, public health epidemics or pandemics, such as
COVID-19
currently impacting multiple jurisdictions worldwide may impact the ability of our existing or future manufacturers to perform their obligations under our manufacturing agreements with such parties. Such failure or substantial delay could materially harm our business. To be successful, TransCon hGH and our other product candidates must be manufactured in commercial quantities in compliance with regulatory requirements and at acceptable costs. We and/or any collaboration partners will regularly need to maintain access to facilities to manufacture TransCon hGH and our other product candidates commercially. All of this will require additional funds and inspection or audits and approval by the FDA, other regulatory authorities and notified bodies with respect to the device components. If we and/or any collaboration partners are unable to establish and maintain a manufacturing capacity within our planned time and cost parameters, the development and sales of our products and product candidates as well as our business, results of operations and prospects, and the value of our shares or ADSs could be adversely affected.
We and/or any collaboration partners may encounter problems with aspects of manufacturing TransCon hGH and our other product candidates, including the following:
 
   
production yields;
 
   
quality control and assurance;
 
   
shortages of qualified personnel;
 
   
compliance with FDA and foreign regulations;
 
   
production costs; and
 
   
development of advanced manufacturing techniques and process controls.
We evaluate our options for clinical study supplies and commercial production of TransCon hGH and our other product candidates on a regular basis, which may include use of third-party manufacturers, or entering into a manufacturing joint venture relationship with a third party. We are aware of only a limited number of companies on a worldwide basis who operate manufacturing facilities in which TransCon hGH and our other our product candidates can be manufactured under cGMP regulations, a requirement for all pharmaceutical products. We cannot be certain that we will be able to contract with any of these companies on acceptable terms, if at all, all of which could harm our business, results of operations and prospects, and the value of our shares or ADSs.
In addition, we, as well as any third-party manufacturer, will be required to register such manufacturing facilities with the FDA (and have a U.S. agent for the facility, if outside the United States) and other regulatory authorities. The facilities will be subject to
 
18

Table of Contents
inspections confirming compliance with the FDA, and other regulatory authority GMPs requirements. We do not control the manufacturing process of our product candidates, and we are dependent on our contract manufacturing partners for compliance with cGMPs or similar regulations for manufacture of both active drug substances and finished drug products. If we or any third-party manufacturer fails to maintain regulatory compliance, our business, financial condition and results of operations may be harmed, and the FDA or other regulatory authorities can impose regulatory sanctions that range from a warning letter to withdrawal of approval to seeking product seizures, injunctions and, where appropriate, criminal prosecution.
Under our agreements with VISEN, we are obligated to use commercially reasonable efforts to supply clinical trial material for VISEN to conduct certain clinical trials, and will negotiate in good faith with VISEN the terms and conditions governing our commercial supply of relevant products to VISEN. In turn, we currently rely on third-party manufacturers in fulfilling our supply obligations to VISEN.
If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or similar regulatory authorities, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities. In addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a similar regulatory authority does not approve these facilities for the manufacture of TransCon hGH or our other product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market TransCon hGH or our other product candidates, if approved.
We rely on our manufacturers to purchase from third-party suppliers the materials necessary to produce TransCon hGH and our other product candidates. Any significant delay or discontinuation in the supply of such materials would delay commercialization and the completion of our clinical studies and harm our business.
There are a limited number of suppliers for raw materials that we use to manufacture TransCon hGH and our other product candidates, and there may be a need to identify alternate suppliers to prevent a possible disruption of the manufacture of the materials necessary to produce TransCon hGH and our other product candidates for commercial sale and our clinical studies. We do not have any control over the process or timing of the acquisition of these raw materials by our manufacturers. Although we generally do not begin a clinical study unless we believe we have on hand, or will be able to manufacture, a sufficient supply of a product candidate to complete such study, and we currently envision that VISEN, which relies on us for clinical supply of our product candidates, would do the same, any significant delay or discontinuity in the supply of a product candidate, or the raw material components thereof, for a clinical study due to the need to replace a third-party manufacturer could considerably delay completion of our or VISEN’s clinical studies, product testing, and potential regulatory approval of our product candidates, which could harm our business and results of operations.
Any inability to obtain suppliers, including an inability to obtain, or delay in obtaining, approval of a supplier from the FDA or other regulatory authorities, would delay or prevent the clinical development and commercialization of TransCon hGH and our other product candidates.
If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of TransCon hGH and our other product candidates.
Our business exposes us to potential product liability risks which are inherent in research and development, preclinical and clinical studies, manufacturing, marketing and use of our TransCon hGH and our other product candidates. For example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, and a breach of warranties. Claims could also be asserted under state consumer protection acts. Product liability claims may be expensive to defend and may result in judgements against us which are potentially punitive. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of TransCon hGH and our other product candidates. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:
 
   
decreased demand for TransCon hGH and our other product candidates;
 
   
injury to our reputation;
 
   
withdrawal of clinical trial participants;
 
   
costs to defend the related litigation;
 
   
a diversion of management’s time and our resources;
 
   
substantial monetary awards to trial participants or patients;
 
19

Table of Contents
   
regulatory investigations, product recalls or withdrawals, or labeling, marketing or promotional restrictions;
 
   
loss of revenue; and
 
   
the inability to commercialize or
co-promote
TransCon hGH or our other product candidates.
It is generally necessary for us to secure certain levels of insurance as a condition for the conduct of clinical studies. We believe that our product liability insurance for clinical studies is sufficient to cover claims. We currently maintain liability insurance with certain specified coverage limits. We cannot be certain that the insurance policies will be sufficient to cover all claims that may be made against us. Our inability to obtain and maintain sufficient product liability insurance at an acceptable cost and scope of coverage to protect against potential product liability claims could prevent or inhibit the commercialization of any products we develop. We currently carry product liability insurance covering use in our clinical trials in the amount of $20 million in the aggregate on our primary insurance policy and $100 million in the aggregate on our excess insurance policy. Any claim that may be brought against us could result in a court judgement or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies also have various limits, exclusions and deductibles, and given these various limits, exclusions and deductibles, we may be subject to a product liability claim for which we have no coverage. We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. Moreover, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses. Product liability insurance is expensive, difficult to obtain and may not be available in the future on acceptable terms.
We will need to continue to significantly increase the size of our organization and we may have difficulties in managing our growth and expanding our operations successfully.
As of December 31, 2021, we had 639 employees worldwide, with key facilities in Denmark, Germany, and the United States. As we advance TransCon hGH and our other product candidates through the development and commercialization process, we will need to expand managerial, operational, financial, sales and marketing and other resources to manage our operations, preclinical and clinical trials, research and development activities, regulatory filings, manufacturing and supply activities, and any marketing and commercialization activities or contract with other organizations to provide these capabilities for us. As operations expand, we expect that we will need to manage additional relationships with various suppliers and other organizations. Our ability to manage our operations and growth requires us to continue to improve our operational, financial and management controls, reporting systems and procedures across a global organization. Such growth could place a strain on our administrative and operational infrastructure. We may not be able to make improvements to our management information and control systems in an efficient or timely manner and may discover deficiencies in existing systems and controls. Our management, personnel, systems and facilities currently in place may not be adequate to support this future growth. Our need to effectively execute our growth strategy requires that we either internally, together with collaboration partners or through third-party contractors, as applicable:
 
   
expand our general and administrative functions;
 
   
identify, recruit, retain, incentivize and integrate additional employees;
 
   
manage our internal development efforts effectively while carrying out our contractual obligations to third-parties;
 
   
establish and build a marketing and commercial organization; and
 
   
continue to improve our operational, legal, financial and management controls, reporting systems and procedures.
If we are not able to attract, retain and motivate necessary personnel to accomplish our business objectives, we may experience constraints that will significantly impede the achievement of our development objectives, our ability to raise additional capital and our ability to implement our business strategy.
We incur significant costs as a result of operating as a public company, and our management devotes substantial time to compliance initiatives. We may fail to comply with the rules that apply to public companies, including Section 404 of the Sarbanes-Oxley Act of 2002, which could result in sanctions or other penalties that would harm our business.
We incur significant legal, accounting and other expenses as a public company, including costs resulting from public company reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and regulations regarding corporate governance practices. Our senior management and other personnel need to devote a substantial amount of time to ensure that we maintain compliance with all of these requirements. Moreover, the reporting requirements, rules and regulations increase our legal and financial compliance costs and make some activities more time consuming and costly. Any changes we make to comply with these obligations may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis, or at all. These reporting requirements, rules and regulations, coupled with the increase in potential litigation exposure associated with being a public company, could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or board committees or to serve as members of our senior management, or to obtain certain types of insurance, including directors’ and officers’ insurance, on acceptable terms.
 
20

Table of Contents
We are subject to Section 404 of The Sarbanes-Oxley Act of 2002 (“Section 404”), and the related rules of the Securities and Exchange Commission (“SEC”), which generally require our senior management and independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting. Section 404 requires an annual management assessment of the effectiveness of our internal control over financial reporting, and we are required to include an opinion from our independent registered public accounting firm on the effectiveness of our internal controls over financial reporting.
As we grow our business and enter into new activities, and as the reporting requirements increase, we may identify deficiencies and be unable to remediate them before we must provide the required reports. Furthermore, if we have a material weakness in our internal controls over financial reporting, we may not detect errors on a timely basis and our consolidated financial statements may be materially misstated. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting, which could harm our operating results, cause investors to lose confidence in our reported financial information and cause the trading price of the ADSs to fall. In addition, as a public company we are required to file accurate and timely annual reports with the SEC under the Exchange Act. Any failure to report our financial results on an accurate and timely basis could result in sanctions, lawsuits, delisting of the ADSs from The Nasdaq Global Select Market or other adverse consequences that would harm our business.
Our operating results may vary significantly from period to period and these variations may be difficult to predict.
Our operating results are expected to vary significantly from period to period due to a number of factors. Many of these factors are outside of our control. These factors include:
 
   
the timing of regulatory approvals, if any, for our product candidates;
 
   
the amount and timing of revenue from product sales;
 
   
the initiation of intellectual property litigation by third-parties or by us;
 
   
the amount and timing of operating costs and capital expenditures relating to the expansion of our business operations and facilities;
 
   
the timing of the commencement, completion or termination of collaboration agreements;
 
   
the timing and amount of payments to us under collaboration agreements, if any;
 
   
the introduction of new products and services by us, collaboration partners or our competitors;
 
   
delays in preclinical testing and clinical studies;
 
   
changes in regulatory requirements for clinical studies;
 
   
costs and expenses associated with preclinical testing and clinical studies; and
 
   
payment of license fees for the right to use third-party proprietary rights, if any.
Our revenues in any particular period may be lower than we anticipate and, if we are unable to reduce spending in that period, our operating results will be harmed.
We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management.
We may consider strategic transactions, such as acquisitions of companies, asset purchases, and
in-licensing
or
out-licensing
of products, product candidates or technologies. Additional potential transactions that we may consider include a variety of different business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings, divestitures, business combinations and investments. Any such transaction may require us to incur
non-recurring
or other charges, may increase our near- and long-term expenditures and may pose significant integration challenges or disrupt our senior management or business, which could adversely affect our operations and financial results. For example, these transactions may entail numerous operational and financial risks, including:
 
   
up-front,
milestone and royalty payments, equity investments and financial support of new research and development candidates including increase of personnel, all of which may be substantial;
 
   
exposure to unknown liabilities, including potential indemnification claims from a potential
spin-off
or
out-license
of certain of our intellectual property rights;
 
21

Table of Contents
   
disruption of our business and diversion of our management’s time and attention to develop acquired products, product candidates or technologies;
 
   
incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions;
 
   
higher-than-expected acquisition and integration costs;
 
   
lower-than-expected benefits, from
out-licensing
or selling our technology, intellectual property or any of our subsidiaries or, from
in-licensing
intellectual property or purchasing assets;
 
   
write-downs of assets or goodwill or impairment charges;
 
   
difficulty and cost in combining or separating the operations and personnel of any acquired or sold businesses with our existing operations and personnel;
 
   
impairment of relationships with key suppliers or customers of any acquired or sold businesses due to changes in our senior management and ownership; and
 
   
inability to retain key employees of any acquired businesses.
Accordingly, although we cannot be certain that we will undertake or successfully complete any transactions of the nature described above, any transactions that we do complete may be subject to the foregoing or other risks, and could harm our business, results of operations, financial condition and prospects.
Exchange rate fluctuations or abandonment of the euro currency may harm our results of operations and financial condition.
Due to the international scope of our operations, fluctuations in exchange rates, particularly between the Euro, the Danish Krone and the U.S. Dollar, may adversely affect us. Although we are based in Denmark, we source research and development, manufacturing, consulting and other services from several countries. Further, potential future revenue may be derived from abroad, including from the United States. We currently attempt to limit our exposure to exchange rate risks by maintaining cash positions in the currencies in which we expect to incur the majority of our future expenses; however, for a variety of reasons we may be unable to maintain cash positions in the currencies in which we expect to incur the majority of our future expenses and we may fail to predict the currency of our future expenses, accurately or at all. As a result, our business and the price of the ADSs may be affected by fluctuations in foreign exchange rates between the Euro and these other currencies, which may also have a significant impact on our reported results of operations and cash flows from period to period. We currently do not enter into foreign exchange contracts to cover our exposure to exchange rate fluctuations, or any other form of exchange rate hedging arrangements. If we fail to manage foreign exchange risk adequately our business, results of operations and prospects, and the value of our shares or ADSs may be adversely affected.
In addition, the possible abandonment of the Euro by one or more members of the European Union (“EU”) could harm our business in the future. Despite measures taken by the EU to provide funding to certain member states in financial difficulties and by a number of European countries to stabilize their economies and reduce their debt burdens, it is possible that the Euro could be abandoned in the future as a currency by countries that have adopted its use. This could lead to the
re-introduction
of individual currencies in one or more EU member states. The effects on our business of a potential dissolution of the EU, the exit of one or more EU member states from the European Union or the abandonment of the Euro as a currency, are impossible to predict with certainty, and any such events could harm our business, financial condition and results of operations.
The United Kingdom’s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business.
The United Kingdom (“UK”) left the EU on January 31, 2020, following which existing EU legislation continued to apply in the UK during a transition period under the terms of the
EU-UK
Withdrawal Agreement. The transition period, which ended on December 31, 2020, maintained access to the EU single market and to global trade deals negotiated by the EU on behalf of its members. The transition period provided time for the UK and EU to negotiate a framework for partnership for the future, which was then crystallized in the Trade and Cooperation Agreement (“Trade and Cooperation Agreement”) which became effective on the January 1, 2021.
The long term effects of Brexit on our business in the UK, the EU and worldwide will depend on the effects of the implementation and application of the Trade and Cooperation Agreement and any other relevant agreements between the UK and the EU. EU laws which have been transposed into UK law through secondary legislation continue to be applicable as “retained EU law”. However, new legislation will not be applicable. The UK government has passed a new Medicines and Medical Devices Act 2021, which introduces delegated powers in favor of the Secretary of State or an ‘appropriate authority’ to amend or supplement existing regulations in the area of medical devices. This allows new rules to be introduced in the future by way of secondary legislation, which aims to allow flexibility in addressing regulatory gaps. There is a possibility that over time, national laws will be amended and that consequently the regulatory framework in Great Britain will diverge from that of the EU. As of January 1, 2021, the MHRA is the UK’s standalone
 
22

Table of Contents
medicines and medical devices regulator. As a result of the Northern Ireland protocol, different rules will apply in Northern Ireland than in England, Wales, and Scotland, together, Great Britain; broadly, Northern Ireland will continue to follow the EU regulatory regime, but its national competent authority will remain the MHRA.
These developments, or the perception that any related developments could occur, have had and may continue to have a material adverse effect on global economic conditions and financial markets, and may significantly reduce global market liquidity, restrict the ability of key market participants to operate in certain financial markets or restrict our access to capital. Any of these factors could have a material adverse effect on our business, financial condition and results of operations and reduce the price of the ADSs.
Risks associated with our international operations, including seeking and obtaining approval to commercialize our product candidates in foreign jurisdictions, could harm our business.
We engage extensively in international operations, which include seeking marketing approval for certain of our product candidates in foreign jurisdictions. We expect that we are or will be subject to additional risks related to entering into these international business markets and relationships, including:
 
   
different regulatory requirements for drug approvals in foreign countries;
 
   
differing drug import and export rules;
 
   
reduced protection for intellectual property rights in foreign countries;
 
   
unexpected changes in tariffs, trade barriers and regulatory requirements;
 
   
different reimbursement systems, and different competitive drugs;
 
   
economic weakness, including inflation, or political instability in particular foreign economies and markets;
 
   
compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
 
   
foreign taxes, including withholding of payroll taxes;
 
   
foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country;
 
   
workforce uncertainty in countries where labor unrest is more common than in the United States;
 
   
production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;
 
   
potential liability resulting from work conducted by these distributors;
 
   
regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the Foreign Corrupt Practices Act, its books and records provisions, or its anti-bribery provisions; and
 
   
business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters.
The manufacture of TransCon hGH and our other product candidates is dependent upon third-party manufacturers that are based in other parts of the world, including the United States, Europe, Japan and China. This manufacturing process requires that the components used in TransCon hGH and our other product candidates are transported long distances, through multiple countries, which increases the risk that issues in the global supply chain or other disruptions to the international marketplace could harm our business.
The parent drug, drug substance, drug product and other components of TransCon hGH and our other product candidates are currently acquired from certain single-source suppliers. The loss of these suppliers, or their failure to supply could materially and adversely affect our business.
Our growth hormone parent drug as well as our TransCon hGH drug substance are supplied by Fujifilm Diosynth Biotechnologies UK Limited (“Fujifilm”), pursuant to our agreement with Fujifilm. TransCon hGH drug product in vials is manufactured by Vetter Pharma Fertigung (“Vetter”), pursuant to our agreement with Vetter. TransCon hGH drug product in dual chamber cartridges is supplied by Vetter for use in our drug delivery device made by Philips Medisize A/S (formerly Medicom Innovation Partner A/S). The intermediates of our proprietary TransCon linkers are made by CARBOGEN AMCIS AG under an agreement with CARBOGEN AMCIS AG and accompanying purchase orders. For products that utilize soluble TransCon carriers, NOF Corporation (Japan) (“NOF”), supplies PEGs. Furthermore, NOF is responsible for coupling the TransCon linker used for TransCon hGH to methoxy PEG, under manufacturing agreements and accompanying purchase orders. Our PTH as well as our TransCon PTH drug substance is supplied by Bachem, Switzerland, pursuant to our agreement with Bachem. Vetter manufactures the TransCon PTH drug product in
 
23

Table of Contents
cartridges and assembles the cartridges with a drug delivery device made by Ypsomed AG. CNP drug substance is supplied by Wacker Biotech, Germany. Our TransCon CNP drug product in vials is manufactured by Vetter pursuant to our agreement with Vetter. With the exception of Lonza, who will be supplying TransCon hGH drug substance, we do not currently have any other suppliers for the drug substance, drug product or other components of our TransCon hGH, TransCon PTH and TransCon CNP, although we believe that there are alternate sources of supply that could satisfy our clinical and commercial requirements, we cannot provide assurance that identifying alternate sources and establishing relationships with such sources would not result in significant delays in the commercialization or development of TransCon hGH and our other product candidates. Additionally, we may not be able to enter into supply arrangements with alternative suppliers on commercially reasonable terms or at all. A delay in the commercialization or development of TransCon hGH or our other product candidates or having to enter into a new agreement with a different third-party on less favorable terms than we have with our current suppliers could have a material adverse impact upon on our business.
We may not be successful in our efforts to identify additional product candidates based on our TransCon technologies.
An important element of our strategy is to develop new products and product candidates based on our TransCon technologies. Research programs to identify new product candidates require substantial technical, financial and human resources. These research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for a number of reasons, including that:
 
   
the research methodology used may not be successful in identifying potential product candidates; or
 
   
potential product candidates may, on further study, be shown to have inadequate efficacy, harmful side effects or other characteristics suggesting that they are unlikely to be effective or safe products, or that they may not be sufficiently differentiated or offer substantial improvement over the currently available treatment options or standard of care in a given therapeutic category.
If we are unable to develop suitable product candidates through internal research programs or otherwise, we will not be able to increase our revenues in future periods, which could harm our business, results of operations and prospects, and the value of our shares or ADSs.
We are highly dependent on the services of our President and Chief Executive Officer, Jan Møller Mikkelsen, and if we are not able to retain this member of our senior management or recruit additional management, clinical and scientific personnel, our business will suffer.
Our success depends in part on our continued ability to attract, retain and motivate highly qualified personnel. We may not be able to attract or retain qualified management and scientific and clinical personnel in the future due to the intense competition for qualified personnel among biotechnology, pharmaceutical and other businesses. Our industry has experienced a high rate of turnover of management personnel in recent years. If we are not able to attract, retain and motivate necessary personnel to accomplish our business objectives, we may experience constraints that will significantly impede the achievement of our development objectives, our ability to raise additional capital and our ability to implement our business strategy.
In particular, we are highly dependent upon Jan Møller Mikkelsen, our President and Chief Executive Officer. The loss of services of this individual could result in delays in product development and harm our business.
We may have difficulties in attracting and retaining key personnel, and if we fail to do so our business may suffer.
We are highly dependent on the principal members of our senior management and scientific staff, the loss of whose services could adversely affect the achievement of planned development objectives. In addition, we could experience difficulties attracting and retaining qualified employees in the future. For example, competition for qualified personnel in the biotechnology and pharmaceuticals field is intense due to the limited number of individuals who possess the skills and experience required by our industry. As such, we could have difficulty attracting experienced personnel to our company and may be required to expend significant financial resources in our employee recruitment and retention efforts.
For us to further expand our product development plans, we will need to hire additional qualified scientific personnel to perform research and development. We will also need to hire personnel with expertise in clinical testing, government regulation, sales and marketing, and finance, and might need to hire personnel with expertise in manufacturing. We may not be able to attract and retain personnel on acceptable terms, given the competition for such personnel among biotechnology, pharmaceutical and healthcare companies, universities and
non-profit
research institutions. Although we may be successful in attracting and retaining suitably qualified scientific personnel, there can be no assurance that we will be able to attract and retain such personnel on acceptable terms given the competition for experienced scientists from numerous pharmaceutical and chemical companies, specialized biotechnology firms, universities and other research institutions. Our failure to do so could adversely affect our business, results of operations and prospects, and the value of our shares or ADSs.
 
24

Table of Contents
Our information technology systems, or those of our CROs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs and other critical business functions.
Despite the implementation of security measures, our information technology systems and those of our CROs and other contractors and consultants are vulnerable to attack and damage from computer viruses and malware (e.g., ransomware), unauthorized access, natural disasters, terrorism, war, telecommunication and electrical failures, malfeasance by external or internal parties, human error (e.g., social engineering, phishing). Attacks upon information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise. Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. We may also experience security breaches that may remain undetected for an extended period.
Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
As a result of the
COVID-19
pandemic, we may also face increased cybersecurity risks due to our reliance on internet technology and the number of our employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities.
We and certain of our service providers may from time to time be subject to cyberattacks and security incidents. While we do not believe that we have experienced any significant system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our and our critical third parties’ operations, it could result in a material disruption of our programs, our operations, and ultimately, our financial results. For example, the loss of clinical trial data from completed or ongoing clinical trials for TransCon hGH or any of our other product candidates could result in delays in our regulatory approval efforts, and the loss of research data could result in delays of our research and development efforts and it would be expensive to recover or reproduce the data. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of TransCon hGH or our other product candidates could be delayed.
The global pandemic caused by
COVID-19
could materially adversely impact our business, including our clinical trials, supply chain operation, regulatory timelines and commercial activities.
In December 2019, a novel strain of coronavirus,
COVID-19,
was reported to have surfaced in Wuhan, China. Since then, the
COVID-19
coronavirus has been declared by WHO to be a worldwide pandemic. As a result of the rapidly growing spread of
COVID-19
throughout the areas we operate, we may experience disruptions that could severely impact our business, clinical trials and commercialization activities, including:
 
   
delays or difficulties in enrolling and retaining patients in our clinical trials, which could potentially have a negative impact on clinical trial timelines;
 
   
delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;
 
   
significant increases in expenses required to manage impacts to our business to complete our planned operations within our projected timelines;
 
   
diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;
 
   
interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others;
 
   
limitations in employee resources that would otherwise be focused on the conduct of our clinical trials and commercialization activities, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;
 
   
delays in receiving approval from local regulatory authorities to initiate our planned clinical trials;
 
   
delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials;
 
   
interruption in global storage and shipping that may affect the supply of TransCon hGH or the transport of clinical trial materials, such as comparator drugs used in certain of our clinical trials;
 
   
interruptions in our global supply chain with regards to clinical trials and commercial supply;
 
25

Table of Contents
   
changes in local regulations as part of a response to the
COVID-19
outbreak which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;
 
   
delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees;
 
   
refusal of regulatory authorities to accept data from clinical trials in these affected geographies;
 
   
in conducting our clinical trials, suppliers may experience delays in providing necessary equipment, consumables and services, which could cause temporary delays in clinical trial activities;
 
   
global demand for
COVID-19
vaccines or
COVID-19
therapeutics could result in contract manufacturers not having sufficient capacity to meet scheduled manufacturing. In addition, sourcing of certain types of raw materials, consumables and equipment could result in scheduled manufacturing being delayed or postponed;
 
   
travel restrictions and local outbreaks of
COVID-19
could restrict authorities from performing site inspections in connection with their review procedures of marketing applications for TransCon hGH, which could potentially delay the commercial launch in areas outside of the United States; and
 
   
our commercial launch strategy, including for TransCon hGH, could be negatively impacted by patients not being able to see their physicians, and similarly, our commercial team not being able to meet
in-person
with physicians and payors, which could both have a negative impact on the commercial launch strategy.
In addition, the pandemic has caused, and may cause further, disruption to global financial markets. This may reduce our ability to access capital on favorable terms or to access capital at all. Furthermore, sustained adverse market events (such as a recession or depression) resulting from the pandemic could materially and adversely affect our business and the price of our ADSs.
The extent to which the
COVID-19
pandemic further impacts our business and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the speed and extent of geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the affected areas, business closures or business disruptions and the effectiveness of actions taken in the affected areas to contain and treat the disease.
Natural disasters or other events beyond our control could disrupt our business and result in loss of revenue or higher expenses.
Natural disasters, terrorist activities, and other business disruptions including, but not limited to, internet security threats and violence motivated by political or social causes, could seriously harm our revenue and financial condition and increase our costs and expenses. For example, the March 2011 earthquake and tsunami in Japan and their aftermath created economic uncertainty and disrupted economic activities in Japan, including a reduction in hospital spending. Moreover, global climate change could result in certain types of natural disasters occurring more frequently or with more intense effects. Some of our corporate and operational functions, including certain of our oncology research facilities, are located in California, which has experienced both severe earthquakes and other natural disasters in the past and is vulnerable to climate change effects. For example, increasing intensity of drought throughout the state and annual periods of wildfire danger increase the probability of planned power outages in the communities where we work and live. This danger has the potential to impact our employees’ abilities to commute to work or to work from home and stay connected effectively during the
COVID-19
pandemic. We do not have multiple-site capacity for all of our operations in the event of a business disruption. Furthermore, parties in our supply chain and our customers are similarly vulnerable to natural disasters or other sudden, unforeseen, and severe adverse events. A natural disaster in any of our major markets, or an unanticipated business disruption caused, for example, by internet security threats, damage to global communication networks, or similar events, could have a material adverse impact on our business, financial condition, results of operations, or cash flows.
Risks Related to Government Regulatory and Legal Requirements
The regulatory approval processes of the EMA, the FDA and comparable authorities are lengthy, time consuming, and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.
The research, testing, manufacturing, labeling, approval, selling, import, export, marketing and distribution of drug products are subject to extensive regulation by the FDA, EU legislative bodies and other regulatory authorities in the United States, the EU and other jurisdictions, which regulations differ from country to country. We are not permitted to market any drug product in the United States until we receive marketing approval from the FDA. Equally, we are not permitted to market any drug product in the EU until we receive a marketing authorization from the EC or EU member state competent authorities.
 
26

Table of Contents
Obtaining regulatory approval of an NDA, BLA or MAA, can be a lengthy, expensive and uncertain process. In addition, failure to comply with FDA and other applicable U.S., EU and foreign regulatory requirements may subject us to administrative or judicially imposed sanctions or other actions, including:
 
   
warning letters;
 
   
civil and criminal penalties;
 
   
injunctions;
 
   
withdrawal of regulatory approval of products;
 
   
product seizure or detention;
 
   
product recalls;
 
   
total or partial suspension of production; and
 
   
refusal to approve pending NDAs or BLAs, MAA, or supplements to approved NDAs or BLAs or extensions or variations to marketing authorizations.
Prior to obtaining approval to commercialize a drug or biological product candidate in the United States, the EU or other regions, we must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the EMA, the FDA or other similar regulatory authorities, that any drug product candidates are safe and effective for their intended uses, and that any biological product candidates are safe, pure and potent for their intended uses. The number of nonclinical studies and clinical trials that will be required for FDA, or EMA approval varies depending on the product candidate, the disease or condition that the product candidate is designed to address, and the regulations applicable to any particular product candidate. Results from nonclinical studies and clinical trials can be interpreted in different ways. Even if we believe the nonclinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities. Administering drug or biological product candidates to humans may produce undesirable side effects, which could interrupt, delay or halt clinical trials and result in the FDA or other regulatory authorities denying approval of a product candidate for any or all targeted indications.
The time required to obtain approval by the FDA and comparable authorities is unpredictable, typically takes many years following the commencement of clinical studies, and depends upon numerous factors. The EMA, the FDA and comparable authorities have substantial discretion in the approval process and we may encounter matters with the EMA, the FDA or such comparable authorities that requires us to expend additional time and resources and delay or prevent the approval of our product candidates. For example, the FDA or EMA may require us to conduct additional studies or trials for drug or biological product candidates either prior to or post-approval, such as additional drug-drug interaction studies or safety or efficacy studies or trials, or it may object to elements of our clinical development program such as the number of subjects in our current clinical trials from the United States or Europe. In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions, which may cause delays in the approval or result in a decision not to approve an application for regulatory approval. Despite the time and expense exerted, failure can occur at any stage. Applications for our product candidates could fail to receive regulatory approval for many reasons, including but not limited to the following:
 
   
the EMA, the FDA or other comparable foreign regulatory authorities may disagree with the design or implementation of our, or any collaboration partners’, clinical studies;
 
   
the population studied in the clinical program may not be sufficiently broad or representative to assure safety in the full population for which approval is sought;
 
   
the EMA, the FDA or comparable foreign regulatory authorities may disagree with the interpretation of data from preclinical studies or clinical studies;
 
   
the data collected from clinical studies of our product candidates may not be sufficient to support the submission of an NDA or BLA, MAA, or other submission or to obtain regulatory approval in the United States, the EU or elsewhere;
 
   
we, or any collaboration partners, may be unable to demonstrate to the EMA, the FDA or comparable foreign regulatory authorities that a product candidate’s risk-benefit ratio for its proposed indication is acceptable;
 
   
the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes, test procedures and specifications, or facilities of third-party manufacturers responsible for clinical and commercial supplies; and
 
   
the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
 
27

Table of Contents
In addition, FDA and foreign regulatory authorities may change their approval policies and new regulations may be enacted. For instance, the EU pharmaceutical legislation is currently undergoing a complete review process, in the context of the Pharmaceutical Strategy for Europe initiative, launched by the EC in November 2020. A proposal for revision of several legislative instruments related to medicinal products (potentially revising the duration of regulatory exclusivity, eligibility for expedited pathways, etc.) is expected to be adopted by the EC by the end of 2022. The proposed revisions, once they are agreed and adopted by the European Parliament and European Council (not expected before the end of 2024) may have a significant impact on the pharmaceutical industry in the long term.
This lengthy approval process, as well as the unpredictability of the results of clinical studies, may result in our failure to obtain regulatory approval to market any of our product candidates, which would significantly harm our business, results of operations, and prospects. Additionally, if the EMA, the FDA or comparable foreign regulatory authorities require that we conduct additional clinical studies, place limitations on our label, delay approval to market our product candidates or limit the use of our products, our business and results of operations may be harmed.
In addition, even if we ultimately obtain approval for any product candidate, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, may not approve the price we intend to charge for our products, may grant approval contingent on the performance of costly post-marketing clinical trials, may impose a REMS or similar risk management measures, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing scenarios could harm the commercial prospects for our product candidates.
Additional time may be required to obtain marketing authorizations for any of our product candidates that we develop as combination products.
We are developing a pen-injector device with Ypsomed to facilitate patient administration of TransCon PTH. We anticipate that, if successfully developed, the pen-injector version of TransCon PTH would be regulated as a combination product by the FDA and other regulatory authorities. Combination products require coordination within the FDA and within comparable regulatory agencies for review of their drug and device components. For example, the FDA’s review of TransCon PTH may include the participation of both the FDA’s Center for Drug Evaluation and Research and the FDA’s Center for Devices and Radiological Health. The EU regulates medical devices and medicinal products separately, through different legislative instruments, and the applicable requirements will vary depending on the type of drug-device combination product. For instance, drug-delivery products intended to administer a medicinal product where the medicinal product and the device form a single integral product are regulated as medicinal products in the EU. In such a case, the MAA must include – where available – the results of the assessment of the conformity of the device part with the EU Medical Devices Regulation contained in the manufacturer’s EU declaration of conformity of the device or the relevant certificate issued by a notified body. If the MAA does not include the results of the conformity assessment and where for the conformity assessment of the device, if used separately, the involvement of a notified body is required, the EMA or the EU member state competent authority must require the applicant to provide a notified body opinion on the conformity of the device. By contrast, in case of drug-delivery products intended to administer a medicinal product where the device and the medicinal product do not form a single integral product (but are e.g.
co-packaged),
the medicinal product is regulated in accordance with the rules for medicinal products described above while the device part is regulated as a medical device and will have to comply with all the requirements set forth by the Medical Devices Regulation.
Although the FDA and comparable foreign agencies have or may have systems in place for the review and approval of combination products, we may experience additional delays in the development and commercialization of such product candidates due to regulatory timing constraints and uncertainties in the product development and approval process. Moreover, although we anticipate that the device component of any combination product candidates we develop will be reviewed within the usual time frames expected for the underlying drug component application, and that no separate marketing application for the device components of such product candidates will be required in the United States, the FDA or comparable regulatory authorities may delay approval or require additional studies with the device which may delay the approval of the combination product.
Even after a regulatory approval for a product candidate, we are subject to ongoing regulatory obligations and review, which may result in significant additional expenses. Additionally, TransCon hGH and any other product candidates, if approved, could be subject to labeling and other restrictions and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products.
The governmental regulation of the development of products, including SKYTROFA (lonapegsomatropin-tcgd), and our other product candidates extend beyond clinical studies to approval required for their sale and monitoring of such products after sale. This regulation, approval and monitoring is the responsibility of numerous authorities in the United States, the EU and authorities in other territories. Following any regulatory approval of a product candidate, we, any collaboration partners and the manufacturers of our products will be subject to continuing regulatory obligations, including safety reporting requirements, regulatory oversight of product
 
28

Table of Contents
promotion and marketing, and cGMP or similar requirements. Furthermore, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. These regulations cover all aspects of manufacturing, testing, quality control and recordkeeping of our products. If we or any collaboration partners or manufacturers fail to comply with applicable regulatory requirements, we may be subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs or similar requirements and GCPs for any clinical trials that we conduct post-approval. As such, we and our third-party contract manufacturers will be subject to continual review and periodic inspections to assess compliance with regulatory requirements. Accordingly, we and others with whom we work must continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production, and quality control. Regulatory authorities may also impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-marketing studies. Furthermore, any new legislation addressing drug safety issues could result in delays or increased costs to assure compliance.
In addition, under the Federal Food, Drug, and Cosmetic Act, particular restrictions are placed on the distribution of human growth hormone products, including TransCon hGH. The distribution of product samples to physicians must also comply with the requirements of the Prescription Drug Marketing Act. Manufacturing facilities remain subject to FDA inspection and must continue to adhere to International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use and the FDA’s cGMP requirements. Application holders must obtain FDA approval for many product and manufacturing changes, depending on the nature of the change. Sales, marketing, and scientific/educational grant programs must comply with the U.S. Anti-Kickback Statute, the False Claims Act, as amended and similar state laws. Certain payments and other transfers of value to U.S. licensed physicians (as defined under statute) and teaching hospitals must be reported under the Physician Payments Sunshine Act. Pricing and rebate programs must comply with the Medicaid Drug Rebate Program requirements of the Omnibus Budget Reconciliation Act of 1990, as amended, and the Veterans Health Care Act of 1992, as amended. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. All of these activities are also potentially subject to U.S. consumer protection and unfair competition laws.
We will also be required to report certain adverse reactions and production problems, if any, to the FDA or foreign regulatory authorities, and to comply with requirements concerning advertising and promotion for our products. Promotional communications with respect to prescription pharmaceutical products are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved label. As such, we may not promote our products for indications or uses for which they do not have FDA or foreign regulatory authorities approval.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:
 
   
warning letters, fines or holds on clinical trials;
 
   
restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market or voluntary or mandatory product recalls;
 
   
injunctions or the imposition of civil or criminal penalties;
 
   
suspension or revocation of existing regulatory approvals;
 
   
suspension of any of our future or ongoing clinical trials;
 
   
refusal to approve pending applications or supplements to approved applications submitted by us;
 
   
restrictions on our or our contract manufacturers’ operations; or
 
   
product seizure or detention, or refusal to permit the import or export of products.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response, and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize our product candidates. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company and our operating results will be adversely affected.
In addition, the FDA’s and foreign regulatory authorities’ policies may change and additional government laws or regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may be subject to enforcement action and we may not achieve or sustain profitability.
 
29

Table of Contents
Within the EU, once a marketing authorization is obtained, numerous post-approval requirements similar to the above ones also apply, and as in the United States, advertising and promotional activities for the product must be consistent with the approved summary of product characteristics and therefore
off-label
promotion of medicinal products is not permitted. Furthermore, the advertising and promotion of medicinal products is also subject to laws concerning promotion of medicinal products, interactions with physicians, misleading and comparative advertising and unfair commercial practices.
Direct-to-consumer
advertising of prescription medicines is also prohibited in the EU. The requirements are regulated by both EU regulations as well as national applicable regulations.
The regulatory requirements relating to the manufacturing, testing, marketing and sale of pharmaceutical products are subject to periodic change. This may impact our development plans. Changes in the regulations governing us could increase costs and adversely affect our business.
Furthermore, companies developing pharmaceutical products are facing increased demands to publish clinical trial results. Any such publication by us may, in addition to the additional cost of the publication, lead to investors misinterpreting the published data due to its technical and scientific nature, which, in turn, may adversely affect our business, results of operations and prospects and the value of our shares or ADSs.
Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
The ability of the FDA and foreign regulatory authorities to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s or foreign regulatory authorities’ ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s or foreign regulatory authorities’ ability to perform routine functions. Average review times at the FDA and foreign regulatory authorities have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies, such as the EMA following its relocation to Amsterdam and resulting staff changes, may also slow the time necessary for new drugs, medical devices and biologics or modifications to approved drugs, and biologics to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities.
Separately, in response to the
COVID-19
pandemic, in March 2020, the FDA announced its intention to postpone most inspections of foreign manufacturing facilities, and on March 18, 2020, the FDA temporarily postponed routine surveillance inspections of domestic manufacturing facilities. Subsequently, in July 2020, the FDA resumed certain
on-site
inspections of domestic manufacturing facilities subject to a risk-based prioritization system. The FDA utilized this risk-based assessment system to assist in determining when and where it was safest to conduct prioritized domestic inspections. Additionally, on April 15, 2021, the FDA issued a guidance document in which the FDA described its plans to conduct voluntary remote interactive evaluations of certain drug manufacturing facilities and clinical research sites, among other facilities. According to the guidance, the FDA may request such remote interactive evaluations where the FDA determines that remote evaluation would be appropriate based on mission needs and travel limitations. In May 2021, the FDA outlined a detailed plan to move toward a more consistent state of inspectional operations, and in July 2021, the FDA resumed standard inspectional operations of domestic facilities. More recently, the FDA has continued to monitor and implement changes to its inspectional activities to ensure the safety of its employees and those of the firms it regulates as it adapts to the evolving
COVID-19
pandemic. Regulatory authorities outside the United States have adopted similar restrictions or other policy measures in response to the
COVID-19
pandemic. If a prolonged government shutdown occurs, or if global health concerns continue to hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Third-party payor coverage and reimbursement status of newly-approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for our product candidates could limit our ability to market those products and decrease our ability to generate revenue.
The availability and adequacy of coverage and reimbursement by governmental healthcare programs such as Medicare and Medicaid, private health insurers and other third-party payors in the United States are essential for most patients to be able to afford treatments such as TransCon hGH or our other product candidates, assuming approval. Our ability to achieve acceptable levels of coverage and reimbursement for drug treatments by governmental authorities, private health insurers and other organizations will have an effect on our ability to successfully commercialize TransCon hGH, and potentially attract additional collaboration partners to invest in the development of our product candidates. We cannot be sure that adequate coverage and reimbursement in the United States, the EU or
 
30

Table of Contents
elsewhere will be available for TransCon hGH or any other product that we may develop, and any reimbursement that may become available may be decreased or eliminated in the future. Third-party payors increasingly are challenging prices charged for pharmaceutical products, medical devices and services, and many third-party payors may refuse to provide coverage and reimbursement for particular drugs when an equivalent generic drug is available. It is possible that a third-party payor may consider TransCon hGH or our other product candidates, if approved, and the generic or biosimilar parent drug as substitutable and only offer to reimburse patients for the generic drug. Even if we show improved efficacy or improved convenience of administration with TransCon hGH or our other product candidates, if approved, pricing of the existing parent drug may limit the amount we will be able to charge for such product. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize TransCon hGH or our other product candidates, and may not be able to obtain a satisfactory financial return on products that we may develop.
There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, third-party payors, including private and governmental payors, such as the Medicare and Medicaid programs, play an important role in determining the extent to which new drugs, biologics and medical devices will be covered. The Medicare and Medicaid programs increasingly are used as models for how private payors and other governmental payors develop their coverage and reimbursement policies for drugs, biologics and medical devices. It is difficult to predict at this time what third-party payors will decide with respect to the coverage and reimbursement for TransCon hGH or our other product candidates.
Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada, and other countries has and will continue to put pressure on the pricing and usage of TransCon hGH, and our other product candidates, if approved, and on related parent drugs. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. Many countries, including the European Union member states, established complex and lengthy procedures to obtain price approvals, coverage and reimbursement. These procedures vary from country to country but are commonly initiated after grant of the related marketing authorization. Other countries allow companies to fix their own prices for medical products, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for TransCon hGH or our other product candidates. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits. As an example, many EU member states review periodically their decisions concerning the pricing and reimbursement of medicinal products. The outcome of these reviews cannot be predicted and could have adverse effects on the pricing and reimbursement of our medicinal products in the EU member states.
Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for TransCon hGH or our other product candidates. We expect to experience pricing pressures in connection with the sale of TransCon hGH and any of our other product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs, medical devices and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products.
We and contract manufacturers are subject to significant regulation with respect to manufacturing TransCon hGH and our other product candidates. The manufacturing facilities on which we rely may not continue to meet regulatory requirements or may not be able to meet supply demands.
We depend on third-parties to manufacture products employing our TransCon technologies. Components of a finished therapeutic product approved for commercial sale or used in late-stage clinical studies must be manufactured in accordance with cGMP or similar requirements outside the United States. These regulations govern manufacturing processes and procedures (including record keeping) and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved for sale. All entities involved in the preparation of TransCon hGH and our other product candidates for clinical studies or commercial sale, including our existing contract manufacturers for TransCon hGH and our other product candidates, are subject to extensive regulation. Manufacturing facilities are subject to
pre-approval
and ongoing periodic inspection by the FDA and other corresponding governmental authorities, including unannounced inspections, and must be licensed before they can be used in commercial manufacturing of products employing our TransCon technologies. After regulatory approvals or licensure are obtained, the subsequent discovery of previously unknown manufacturing, quality control or regulatory documentation problems or failure to maintain compliance with the regulatory requirements may result in restrictions on the marketing of a product, revocation of the license, withdrawal of the product from the market, seizures, injunctions, or criminal sanctions. Poor control of production processes can lead to the introduction of contaminants or to inadvertent changes in the properties or stability of our product candidates that may not be detectable in final product testing. We or our
 
31

Table of Contents
contract manufacturers must supply all necessary documentation in support of an NDA, BLA, MAA or comparable regulatory filing on a timely basis and must adhere to cGMP or similar regulations enforced by the FDA and other regulatory authorities through their facilities inspection programs. Some of our contract manufacturers have never produced a commercially approved pharmaceutical product and therefore have not obtained the requisite regulatory authority approvals to do so. Although we oversee the contract manufacturers, we cannot control the manufacturing process of, and are completely dependent on, our contract manufacturing partners for compliance with the regulatory requirements. If these facilities do not pass a
pre-approval
plant inspection, regulatory approval of the products may not be granted or may be substantially delayed until any violations are corrected to the satisfaction of the regulatory authority, if ever. In addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel.
The regulatory authorities also may, at any time following approval of a product for sale, audit the manufacturing facilities of our third-party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly and/or time consuming for us or a third-party to implement, and that may include the temporary or permanent suspension of a clinical study or commercial sales or the temporary or permanent suspension of production or closure of a facility. Any such remedial measures imposed upon us or third-parties with whom we contract could harm our business.
If we or any of our third-party manufacturers fail to maintain regulatory compliance, the FDA or other applicable regulatory authority can impose regulatory sanctions including, among other things, refusal to approve a pending application for a new pharmaceutical product, withdrawal of an approval, or suspension of production. As a result, our business, financial condition, and results of operations may be harmed.
Additionally, if supply from one approved manufacturer is interrupted, an alternative manufacturer would need to be qualified through an NDA or BLA, a supplemental NDA or BLA, a marketing authorization variation application or equivalent foreign regulatory filing, which could result in further delay. The regulatory authorities may also require additional studies if a new manufacturer is relied upon for commercial production. Switching manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines. Furthermore, interruption or delay in supplies from one contract manufacturer may cause delays further down the supply chain, as certain contract manufacturers may rely on delivery of materials from other contract manufacturers.
These factors could cause us to incur higher costs and could cause the delay or termination of clinical studies, regulatory submissions, required approvals, or commercialization of our product candidates. Furthermore, if our suppliers fail to meet contractual requirements and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical studies may be delayed, or we could lose potential revenue.
Our operations involve hazardous materials and we and third-parties with whom we contract must comply with environmental laws and regulations, which can be expensive and restrict how we do business.
As a pharmaceutical company, we are subject to environmental and safety laws and regulations, including those governing the use of hazardous materials. The cost of compliance with health and safety regulations is substantial. Our business activities involve the controlled use of hazardous materials. Our research and development activities involve the controlled storage, use and disposal of hazardous materials, including the components of our product candidates and other hazardous compounds. We and manufacturers and suppliers with whom we may contract are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. In some cases, these hazardous materials and various wastes resulting from their use are stored at our and our manufacturers’ facilities pending their use and disposal. We cannot eliminate the risk of accidental contamination or injury from these materials, which could cause an interruption of our commercialization efforts, research and development efforts and business operations, environmental damage resulting in costly
clean-up
and liabilities under applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. We cannot guarantee that the safety procedures utilized by third-party manufacturers and suppliers with whom we may contract will comply with the standards prescribed by laws and regulations or will eliminate the risk of accidental contamination or injury from these materials. In such an event, we may be held liable for any resulting damages and such liability could exceed our resources and European, U.S. federal and state or other applicable authorities may curtail our use of certain materials and/or interrupt our business operations. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent. We cannot predict the impact of such changes and cannot be certain of our future compliance. In the event of an accident or environmental discharge, we may be held liable for any consequential damage and any resulting claims for damages, which may exceed our financial resources and may materially adversely affect our business, results of operations and prospects, and the value of our shares or ADSs.
If we fail to comply or are found to have failed to comply with EU, FDA and other regulations related to the promotion of our products for unapproved uses, we could be subject to criminal penalties, substantial fines or other sanctions and damage awards.
The regulations relating to the promotion of products for unapproved uses are complex and subject to substantial interpretation by the FDA and other regulatory authorities, as well as courts. Our first product SKYTROFA (lonapegsomatropin-tcgd) was approved by the
 
32

Table of Contents
FDA on August 25, 2021 for the treatment of pediatric patients 1 year and older who weigh at least 11.5 kg and have growth failure due to inadequate secretion of endogenous growth hormone, and we are restricted from marketing SKYTROFA and any other product candidate that receives marketing approval outside of its approved labeling, also referred to as
off-label
promotion. However, physicians may nevertheless lawfully prescribe an approved product to their patients in a manner that is inconsistent with the approved label, which is an
off-label
use. The FDA or other government authorities may allege or find that our practices constitute prohibited promotion of TransCon hGH for unapproved uses.
Over the past several years, a significant number of pharmaceutical and biotechnology companies have been the target of inquiries and investigations by various U.S. federal and state regulatory, investigative, prosecutorial and administrative entities in connection with the promotion of products for unapproved uses and other sales practices, including the Department of Justice and various U.S. Attorneys’ Offices, the Office of Inspector General of the Department of Health and Human Services, the FDA, the Federal Trade Commission and various state Attorneys General offices. These investigations have alleged violations of various U.S. federal and state laws and regulations, including claims asserting antitrust violations, violations of the Food, Drug and Cosmetic Act, the False Claims Act, the Prescription Drug Marketing Act, anti-kickback laws, and other alleged violations in connection with the promotion of products for unapproved uses, pricing and Medicare and/or Medicaid reimbursement. Many of these investigations originate as “qui tam” actions under the False Claims Act. Under the False Claims Act, any individual can bring a claim on behalf of the government alleging that a person or entity has presented a false claim, or caused a false claim to be submitted, to the government for payment. The person bringing a qui tam suit is entitled to a share of any recovery or settlement. Qui tam suits, also commonly referred to as “whistleblower suits,” are often brought by current or former employees. In a qui tam suit, the government must decide whether to intervene and prosecute the case. If it declines, the individual may pursue the case alone.
If the FDA or any other governmental agency initiates an enforcement action against us or if we are the subject of a qui tam suit and it is determined that we violated prohibitions relating to the promotion of products for unapproved uses, we could be subject to substantial civil or criminal fines or damage awards and other sanctions such as consent decrees and corporate integrity agreements pursuant to which our activities would be subject to ongoing scrutiny and monitoring to ensure compliance with applicable laws and regulations. Any such fines, awards or other sanctions would have an adverse effect on our revenue, business, financial prospects and reputation.
Our employees, independent contractors, principal investigators, CROs, consultants, vendors and collaboration partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
We are exposed to the risk that our employees, independent contractors, principal investigators, CROs, consultants, vendors and collaboration partners may engage in fraudulent conduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or unauthorized activities that violate: (1) FDA or similar foreign regulations, including those laws that require the reporting of true, complete and accurate information to the FDA or foreign regulatory authorities; (2) manufacturing standards; (3) U.S. federal and state fraud and abuse and other healthcare laws and regulations including foreign requirements; or (4) laws that require the reporting of true and accurate financial information and data. Specifically, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. These activities also include the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter misconduct by employees and other third-parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Additionally, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other U.S. federal or non U.S. healthcare programs, imprisonment, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
We are subject to global anti-corruption laws, including the U.S. Foreign Corrupt Practices Act,
and non-compliance with such laws can subject us to criminal or civil liability and harm our business, financial condition and results of operations.
Our business activities may be subject to the Foreign Corrupt Practices Act (the “FCPA”), and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate. The FCPA generally prohibits offering, promising, giving, or authorizing others to give anything of value, either directly or indirectly, to a
non-U.S.
government official in order to influence official action, or otherwise obtain or retain business. The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls. Our business is heavily regulated and, therefore, involves significant interaction with public officials, including officials of
non-U.S.
governments. Additionally, in many other countries, the health care providers who prescribe pharmaceuticals are employed by their government, and the purchasers of pharmaceuticals are government entities; therefore, our dealings with these prescribers and purchasers are subject to regulation under the FCPA.
 
33

Table of Contents
There is no certainty that all of our employees, agents, contractors, or collaborators, or those of our affiliates, will comply with all applicable laws and regulations, particularly given the high level of complexity of these requirements. We have adopted a code of conduct, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may be ineffective in controlling unknown or unmanaged risks or losses or in protecting us from allegations, governmental investigations or other actions or lawsuits stemming from a failure to comply with these requirements. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including civil or criminal fines and penalties, disgorgement of profits, injunctions and debarment from government contracts, as well as related stockholder lawsuits and other remedial measures, all of which could adversely affect our reputation, business, financial condition and results of operations. Investigations of alleged violations can also be disruptive and cause us to incur significant legal and investigatory fees.”
Our failure to comply with trade compliance and economic sanctions laws and regulations of the United States and applicable international jurisdictions could materially adversely affect our reputation and results of operations.
Our business must be conducted in compliance with applicable economic and trade sanctions laws and regulations, such as those administered and enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council and other relevant sanctions authorities. Our global operations expose us to the risk of violating, or being accused of violating, economic and trade sanctions laws and regulations. Our failure to comply with these laws and regulations may expose us to reputational harm as well as significant penalties, including criminal fines, imprisonment, civil fines, disgorgement of profits, injunctions and debarment from government contracts, as well as other remedial measures. Investigations of alleged violations can be expensive and disruptive. Despite our compliance efforts and activities we cannot assure compliance by our employees or representatives for which we may be held responsible, and any such violation could materially adversely affect our reputation, business, financial condition and results of operations.
Failure to obtain regulatory approvals in
non-U.S.
jurisdictions would prevent us from marketing our products outside of the United States.
In order to market our products outside of the United States, we, or any potential partner, must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy and governing, among other things, clinical trials and commercial sales, pricing and distribution of our products. The time required to obtain approval in other countries might differ from and be longer than that required to obtain FDA approval. The regulatory approval process in other countries may include all of the risks detailed in these “Risk Factors” , as well as other risks.
In the EU, medicinal products can only be commercialized after obtaining a marketing authorization. For additional information, see “Item 4 B. Information on the Company – Business Overview – Foreign Regulation.”
Outside the U.S. and the EU, approval procedures vary among countries and can involve additional clinical testing, and the time required to obtain approval may differ from that required to obtain FDA or EU approval. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries. Approval by the FDA, EC, or EU member state competent authorities does not ensure approval by regulatory authorities in other countries, and approval by one or more foreign regulatory authorities does not ensure approval by regulatory authorities in other foreign countries or by the FDA, EC, or EU member states competent authorities. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval, EC, or EU member states competent authority. We may not be able to file for regulatory approvals or to do so on a timely basis, and even if we do file, we may not receive necessary approvals to commercialize our products in any market.
We are subject to healthcare laws, regulation and enforcement; our failure to comply with these laws could harm our results of operations and financial conditions.
We are subject to healthcare, statutory and regulatory requirements and enforcement by the U.S. federal government and the states and foreign governments in which we conduct our business. The laws that affect our ability to operate include:
 
   
the U.S. Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under U.S. federal healthcare programs such as the Medicare and Medicaid programs. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;
 
   
U.S. false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent. In addition, the government may assert that a claim including items or services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act;
 
   
U.S. federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
 
   
the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare benefits, items or services; similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;
 
   
the U.S. federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics, and medical supplies to report annually to the CMS information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain
non-physician
practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse midwives) and teaching hospitals, and ownership and investment interests held by physicians (as defined under statute) and their immediate family members;
 
34

Table of Contents
   
state law equivalents of each of the above U.S. federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers;
 
   
state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the U.S. federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources;
 
   
state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information; and
European and other foreign law equivalents of each of the laws, including regulation regarding advertising of medicinal products and reporting requirements detailing interactions with and payments to healthcare providers.
Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. The risk of our activities being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations.
Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. If our operations are found to be in violation of any of the laws described above or any other governmental laws and regulations that apply to us, we may be subject to significant penalties, including civil and criminal penalties, damages, fines, the curtailment or restructuring of our operations, the exclusion from participation in U.S. federal and state and/or foreign healthcare programs and imprisonment, any of which could adversely affect our ability to market our products and adversely impact our financial results.
Changes in and failures to comply with U.S. and foreign privacy and data protection laws, regulations and standards may adversely affect our business, operations and financial performance.
The global data protection landscape is rapidly evolving, and we are or may become subject to numerous state, federal and foreign laws, requirements and regulations governing the collection, use, disclosure, retention and security of personal data, such as information that we may collect in connection with clinical trials. Implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or perception of their requirements may have on our business. This evolution may create uncertainty in our business, affect our ability to operate in certain jurisdictions or to collect, store, transfer use and share personal information, necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us. Complying with these numerous, complex and often changing regulations is expensive and difficult, and any failure or perceived failure to comply with any data privacy laws or security laws, our policies and procedures, our contracts governing our processing of personal information or any security incident or breach involving the misappropriation, loss or other unauthorized use or disclosure of sensitive or confidential patient or consumer information, whether by us, one of our partners or another third-party, could adversely affect our business, financial condition and results of operations, and could result in negative publicity, government investigations and enforcement actions, claims by third-parties and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance and business.
As our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities. In the U.S., HIPAA imposes, among other things, certain standards relating to the privacy, security, transmission and breach reporting of individually identifiable health information. Certain states have also adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners. In addition, California enacted the California Consumer Privacy Act (“CCPA”), which went into effect on January 1, 2020. The CCPA creates individual privacy rights for California consumers and increases the privacy and security obligations of entities handling certain personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. Further, the California Privacy Rights Act (the “CPRA”) recently passed in California. The CPRA will impose additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data. It will also create a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. The majority of the provisions will go into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required. Similar laws have passed in Virginia and Colorado, and have been proposed in
 
35

Table of Contents
other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging. In the event that we are subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.
Even when HIPAA or a state law does not apply, according to the Federal Trade Commission (the “FTC”), violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair and/or deceptive acts or practices in violation of Section 5(a) of the Federal Trade Commission Act. The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.
In Europe, the General Data Protection Regulation (the “GDPR”) imposes strict requirements for processing the personal data of individuals within the EEA, including clinical trial data. For example, the GDPR requires us to make detailed disclosures to data subjects, requires disclosure of the legal basis on which we can process personal data, makes it harder for us to obtain valid consent for processing and in other cases prevents the use of consent as legal basis for processing of personal data, requires the appointment of data protection officers when sensitive personal data, such as health data, is processed on a large scale, provides robust rights for data subjects, imposes mandatory data breach notification through the EU and EEA, imposes additional obligations on us when contracting with service providers and requires us to adopt appropriate privacy governance including policies, procedures, training and data audit. If we do not comply with our obligations under the GDPR, we could be exposed to fines of up to the greater of €20 million or up to 4% of our total global annual revenue in the event of a significant breach. In addition, we may be the subject of litigation and/or adverse publicity, which could adversely affect our business, results of operations and financial condition. The law in this area is also developing rapidly. For example, in July 2020, the Court of Justice of the EU invalidated the Privacy Shield, limiting how organizations could lawfully transfer personal data from the EEA to the U.S. Relatedly, from January 1, 2021, companies have had to comply with both the GDPR and the GDPR as incorporated into United Kingdom national law, the latter regime having the ability to separately fine up to the greater of £17.5 million or 4% of global turnover. The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, for example around how data can lawfully be transferred between each jurisdiction, which exposes us to further compliance risk. The European Commission has adopted an adequacy decision in favor of the United Kingdom, enabling data transfers from EU member states to the United Kingdom without additional safeguards. However, the UK adequacy decision will automatically expire in June 2025 unless the European Commission
re-assesses
and renews or extends that decision.
Although we work to comply with applicable laws, regulations and standards, our contractual obligations and other legal obligations, these requirements are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another or other legal obligations with which we must comply. Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators or other third parties to comply with such requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and liability to us, damage our reputation and adversely affect our business and results of operations. Further, we cannot assure you that our third-party service providers with access to our or our customers’, suppliers’, trial patients’, and employees’ personally identifiable and other sensitive or confidential information in relation to which we are responsible will not breach contractual obligations imposed by us, or that they will not experience data security breaches or attempts thereof, which could have a corresponding effect on our business including putting us in breach of our obligations under privacy laws and regulations and/or which could in turn adversely affect our business, results of operations and financial condition. In addition, if our practices are not consistent, or viewed as not consistent, with legal and regulatory requirements, including changes in laws, regulations and standards or new interpretations or applications of existing laws, regulations and standards, we may also become subject to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, criminal or civil sanctions, all of which may harm our business, financial condition and results of operations.
Legislative or regulatory healthcare reforms in the United States and in foreign jurisdictions may make it more difficult and costly for us to obtain regulatory clearance or approval of our product candidates in the United States and in foreign jurisdictions and to produce, market and distribute our products in the United States and in foreign jurisdictions after clearance or approval is obtained.
From time to time, legislation is drafted and introduced in U.S. Congress that could significantly change the statutory provisions governing the regulatory clearance or approval, manufacture, and marketing of regulated products or the reimbursement thereof. In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business. Similar risks exist in foreign jurisdictions. We cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and if promulgated, enacted or adopted may have on our business in the future. Such changes could, among other things, require:
 
   
additional clinical trials to be conducted prior to obtaining approval;
 
   
changes to manufacturing methods;
 
36

Table of Contents
   
recall, replacement, or discontinuance of one or more of our products; and
 
   
additional record keeping.
Each of these would likely entail substantial time and cost and could harm our business and our financial results. In addition, delays in receipt of or failure to receive regulatory clearances or approvals for any future products would harm our business, financial condition and results of operations.
In addition, the trend toward managed healthcare in the United States and the changes in health insurance programs, as well as legislative proposals to reform healthcare or reduce government insurance programs, may result in lower prices for pharmaceutical products, including TransCon hGH or any other product that may be offered by us. In addition, any future regulatory change regarding the healthcare industry or third-party coverage and reimbursement may affect demand for TransCon hGH and any other products that we may develop and could harm our sales and profitability. For example, in the United States, the ACA was enacted in 2010 with a goal of reducing the cost of healthcare and substantially changing the way healthcare is financed by both government and private insurers. The ACA, among other things, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, established annual fees and taxes on manufacturers of certain branded prescription drugs and medical devices, and created a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50%
point-of-sale
discounts, which, through subsequent legislative amendments, was increased to 70%, starting in 2019, off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D.
Since its enactment, there have been judicial, executive and Congressional challenges to certain provisions of, the ACA. For example, on June 17, 2021, the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. Thus, the ACA will remain in effect in its current form. Further, prior to the U.S. Supreme Court ruling, President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining health insurance coverage through the ACA marketplace from February 15, 2021 through August 15, 2021. The executive order instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is unclear how other healthcare reform measures of the Biden administration will impact our business.
In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted, including reductions in Medicare payments to providers, capped at 2% per fiscal year, which went into effect on April 1, 2013. These reductions, extended by subsequent legislation will stay in effect through 2030, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless additional Congressional action is taken. Further, the American Taxpayer Relief Act of 2012 reduced Medicare payments to several types of providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
Recently, there has also been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed bills designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for pharmaceutical products. Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including through constraints on reimbursement, imposition of mandatory discounts, discounts, restrictions on access to certain products, transparency measures, and programs for importation from other countries or bulk purchasing.
We expect that additional U.S. local and national healthcare reform measures will be adopted within and outside the United States in the future, any of which could limit the amounts that governments will pay for healthcare products and services, which could result in reduced demand for TransCon hGH or our other product candidates or additional pricing pressures. The continuing efforts of the U.S. government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may adversely affect the demand for any drug products for which we may obtain regulatory approval, including TransCon hGH, our ability to set a price that we believe is fair for our products, our ability to obtain coverage and reimbursement approval for a product, our ability to generate revenues and achieve or maintain profitability, and the level of taxes that we are required to pay.
In the EU, similar developments may affect our ability to profitably commercialize our product candidates, if approved. In addition to continuing pressure on prices and cost containment measures, legislative developments at the EU or member state level may result in significant additional requirements or obstacles that may increase our operating costs. The delivery of healthcare in the EU, including the establishment and operation of health services and the pricing and reimbursement of medicines, is almost exclusively a matter for
 
37

Table of Contents
national, rather than EU, law and policy. National governments and health service providers have different priorities and approaches to the delivery of health care and the pricing and reimbursement of products in that context. In general, however, the healthcare budgetary constraints in most EU member states have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers. Coupled with ever-increasing EU and national regulatory burdens on those wishing to develop and market products, this could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to commercialize our product candidates, if approved. In markets outside of the United States and EU, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies.
In December 2021, Regulation No 2021/2282 on Health Technology Assessment (“HTA”) amending Directive 2011/24/EU, was adopted. This regulation which entered into force in January 2022 intends to boost cooperation among EU member states in assessing health technologies, including new medicinal products, and providing the basis for cooperation at the EU level for joint clinical assessments in these areas. The regulation foresees a three-year transitional period and will permit EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the most potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas. Individual EU member states will continue to be responsible for assessing
non-clinical
(e.g., economic, social, ethical) aspects of health technology, and making decisions on pricing and reimbursement.
Risks Related to Our Intellectual Property
If our intellectual property related to TransCon hGH or our other product candidates is not adequate, we may not be able to compete effectively in our market.
Our success depends in part on our ability to:
 
   
protect our trade secrets;
 
   
apply for, obtain, maintain and enforce patents; and
 
   
operate without infringing upon the proprietary rights of others.
We will be able to protect our proprietary technologies from unauthorized use by third-parties only to the extent that such proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets. Any
non-confidential
disclosure to or misappropriation by third-parties of our confidential or proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, thus eroding our competitive position in our market. Where we elect to pursue patent protection on our proprietary technologies, we file, prosecute and maintain international and other national patent applications covering such technologies, including in the United States, Europe, China, and other jurisdictions.
As of December 31, 2021, 30 patents have been issued to us in the United States, 17 of which are directed to our TransCon technologies and seven of which are directed to TransCon hGH. In addition, as of December 31, 2021, we have over 190 issued patents in jurisdictions outside of the United States, at least 100 of which are directed to our TransCon technologies, and 54 of which are directed to TransCon hGH and/or our other product candidates. For additional information, see “Item 4 B. Information on the Company – Business Overview – Intellectual Property.” We are not aware of any challenge to our issued patents, in the United States, Europe or in any other jurisdiction.
The patent application process, also known as patent prosecution, is expensive and time-consuming, and we and our current or future licensors and licensees may not be able to prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we or our current licensors, or any future licensors or licensees, will fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection on them. Therefore, these and any of our patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. It is possible that defects of form in the preparation or filing of our patents or patent applications may exist, or may arise in the future, for example with respect to proper priority claims, inventorship, although we are unaware of any such defects. If we or our current licensors or licensees, or any future licensors or licensees, fail to establish, maintain or protect such patents and other intellectual property rights, including due to the impact of the
COVID-19
pandemic on our or our licensors’ business operations, such rights may be reduced or eliminated. If our current licensors or licensees, or any future licensors or licensees, are not fully cooperative or disagree with us as to the prosecution, maintenance or enforcement of any patent rights, such patent rights could be compromised. If there are material defects in the form or preparation of our patents or patent applications, such patents or applications may be invalid and unenforceable. Any of these outcomes could impair our ability to prevent competition from third-parties, which may harm our business.
 
38

Table of Contents
The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be highly uncertain. The patent applications that we own or license may fail to result in issued patents in the United States or in other countries. Even if patents do issue on such patent applications, third-parties may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable. For example, U.S. patents can be challenged by any person before the USPTO Patent Trial and Appeals Board at any time within the
one-year
period following that person’s receipt of an allegation of infringement of the patents. Patents granted by the European Patent Office may be similarly opposed by any person within nine months from the publication of the grant. Similar proceedings are available in other jurisdictions, and in the United States, Europe and other jurisdictions third-parties can raise questions of validity with a patent office even before a patent has granted. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property or prevent others from designing around our claims. For example, a third-party may develop a competitive product that provides therapeutic benefits similar to TransCon hGH or one or more of our other product candidates but that has a different composition that falls outside the scope of our patent protection. If the breadth or strength of protection provided by the patents and patent applications we hold or pursue with respect to TransCon hGH or our other product candidates is successfully challenged, then our ability to commercialize TransCon hGH or such other product candidates could be negatively affected, and we may face unexpected competition that could harm our business. Further, patents have a limited lifespan and patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time. In the United States, if all maintenance fees are paid timely, the natural expiration of a patent is generally 20 years after its first effective filing date excluding U.S. provisional patent applications. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such product candidates are commercialized. Although various extensions may be available, the life of a patent, and the protection it affords, is limited. If we encounter delays in our clinical trials, the period of time during which we could market TransCon hGH or our other product candidates under patent protection would be reduced. If we do not have sufficient patent life to protect our products, our business and results of operations will be adversely affected.
The degree of future protection of our proprietary rights is uncertain. Patent protection may be unavailable or severely limited in some cases and may not adequately protect our rights or permit us to gain or keep our competitive advantage. For example:
 
   
we might not have been the first to invent or the first to file the inventions covered by each of our pending patent applications and issued patents;
 
   
others may independently develop similar or alternative technologies or duplicate any of our technologies;
 
   
the patents of others may have an adverse effect on our business;
 
   
any patents we obtain or our
in-licensed
issued patents may not encompass commercially viable products, may not provide us with any competitive advantages or may be challenged by third-parties;
 
   
any patents we obtain or our
in-licensed
issued patents may not be valid or enforceable; or
 
   
we may not develop additional proprietary technologies that are patentable.
If we or our current licensors or licensees, or any future licensors or licensees, fail to prosecute, maintain and enforce patent protection for TransCon hGH or our other product candidates, our ability to develop and commercialize TransCon hGH or our other product candidates could be harmed and we might not be able to prevent competitors from making, using and selling competing products. This failure to properly protect the intellectual property rights relating to TransCon hGH or our other product candidates could harm our business, financial condition and operating results. Moreover, our competitors may independently develop equivalent knowledge, methods and
know-how.
Even where laws provide protection, costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and the outcome of such litigation would be uncertain. If we were to initiate legal proceedings against a third-party to enforce a patent covering TransCon hGH or another product candidate, the defendant could counterclaim that our patent is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or
non-enablement.
Patents may be unenforceable if someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. The outcomes of proceedings involving assertions of invalidity and unenforceability are unpredictable. It is possible that prior art of which we and the patent examiner were unaware during prosecution exists, which would render our patents invalid. Moreover, it is also possible that prior art may exist that we are aware of, but that we do not believe are relevant to our current or future patents, that could nevertheless be determined to render our patents invalid. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability of our patents covering TransCon hGH or one of our other product candidates, we would lose at least part, and perhaps all, of the patent protection on TransCon hGH or such other product candidate. Such a loss of patent protection would harm our business. Moreover, our competitors could counterclaim in any suit to enforce our patents that we infringe their intellectual property. Furthermore, some of our competitors have substantially greater intellectual property portfolios, and resources, than we do.
 
39

Table of Contents
We license intellectual property rights from third-parties. Such licenses may be subject to early termination if we fail to comply with our obligations in our licenses with third-parties, which could result in the loss of rights or technology that are material to our business.
We are or may become a party to licenses that give us rights to third-party intellectual property or technology that is necessary or useful for our business, and we may enter into additional licenses in the future. Under these license agreements, we are or may become obligated to pay the licensor fees, which may include annual license fees, milestone payments, royalties, a percentage of revenues associated with the licensed technology and a percentage of sublicensing revenue. These fees may be significant, which could make it difficult for us to achieve or maintain profitability. In addition, under certain of such agreements, we are or may become required to diligently pursue the development of products using the licensed technology. If we fail to comply with these obligations, including due to the impact of the
COVID-19
pandemic on our business operations or our use of the intellectual property licensed to us in an unauthorized manner, and fail to cure our breach within a specified period of time, the licensor may have the right to terminate the applicable license, in which event we could lose valuable rights and technology that are material to our business, harming our ability to develop, manufacture and/or commercialize our platform, TransCon hGH or our other product candidates.
In addition, the agreements under which we license intellectual property or technology to or from third-parties can be complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
The licensing and acquisition of third-party intellectual property rights is a competitive practice, and companies that may be more established, or have greater resources than we do, may also be pursuing strategies to license or acquire third-party intellectual property rights that we may consider necessary or attractive in order to commercialize our product candidates. More established companies may have a competitive advantage over us due to their larger size and cash resources or greater clinical development and commercialization capabilities. There can be no assurance that we will be able to successfully complete such negotiations and ultimately acquire the rights to the intellectual property surrounding the additional product candidates that we may seek to acquire. The failure to obtain or
in-license
any compositions, methods of use, processes or other third-party intellectual property rights at a reasonable cost or on reasonable terms, could harm our business. If we fail to obtain licenses to necessary third-party intellectual property rights, we may need to cease use of the compositions or methods covered by such third-party intellectual property rights. Furthermore, we may need to seek to develop alternative approaches that do not infringe on such intellectual property rights which may entail additional costs and development delays, even if we were able to develop such alternatives, which may not be feasible. Even if we are able to obtain a license, it may be
non-exclusive,
thereby giving our competitors access to the same technologies licensed to us. In that event, we may be required to expend significant time and resources to develop or license replacement technology.
If we are unable to prevent disclosure of our trade secrets or other confidential information to third-parties, our competitive position may be impaired.
In addition to patents, we rely on trade secrets and proprietary
know-how.
We seek protection, in part, through confidentiality and proprietary information clauses in agreements with our collaboration partners, employees, consultants, outside scientific collaboration partners and sponsored researchers and other advisors. Although we generally require all of our employees, consultants, advisors and any third-parties who have access to our proprietary
know-how,
information or technology to assign or grant similar rights to their inventions to us, and endeavor to execute confidentiality agreements with all such parties, we cannot be certain that we have executed such agreements with all parties who may have contributed to our intellectual property or who had access to our proprietary information, nor can we be certain that our agreements with such parties will not be breached. These agreements may not effectively prevent disclosure of confidential and proprietary information and may not provide an adequate remedy in the event of unauthorized use or disclosure of confidential and proprietary information. We cannot guarantee that our trade secrets and other confidential proprietary information will not be publicly disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position. Furthermore, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United States and abroad. The failure to obtain or maintain trade secret protection could adversely affect our competitive business position.
 
40

Table of Contents
If we are sued for allegedly infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in such litigation could harm our business.
Our commercial success depends significantly on our ability to operate without infringing, violating or misappropriating the patents and other proprietary rights of third-parties. Our own technologies may infringe, violate or misappropriate the patents or other proprietary rights of third-parties, or we may be subject to third-party claims of such infringement. Numerous U.S. and foreign issued patents and pending patent applications owned by third-parties exist in the fields in which we are developing TransCon hGH and our other product candidates. For example, we are aware of several issued patents related to auto-injection devices that may be relevant to our auto-injection device under development with Phillips-Medisize A/S (formerly Medicom Innovation Partner A/S); however, we believe that these (i) are invalid, and/or (ii) do not and will not cover our product or device. Additionally, we are aware of patents owned by a competitor that are related to CNP variants. Although we believe that these patents are not infringed by us and/or are invalid, we could be wrong in our assessment. We cannot be certain that TransCon hGH or our other product candidates will not infringe these or other existing or future patents. The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our products. Additionally, because patent applications can take many years to issue and may be confidential for 18 months or more after filing, and because pending patent claims can be revised before issuance, there may be applications now pending which may later result in issued patents that may be infringed by the manufacture, use or sale of TransCon hGH or our other product candidates or our TransCon technologies. We may not be aware of patents that have already issued that a third-party might assert are infringed by TransCon hGH or our other product candidates. It is also possible that patents of which we are aware, but which we do not believe are relevant to TransCon hGH or our other product candidates, could nevertheless be found to be infringed by TransCon hGH or our other product candidates. Moreover, we may face patent infringement claims from
non-practicing
entities that have no relevant product revenue and against whom our own patent portfolio may thus have no deterrent effect.
In addition, we may face costly and time-consuming intellectual property litigation with the NDA holders, BLA holders and Orange Book patentees of the products in respect of which we seek to obtain FDA approval. Companies that produce branded pharmaceutical products for which there are listed patents in the FDA’s Orange Book routinely bring patent infringement litigation against applicants seeking FDA approval to manufacture and market branded and/or generic forms of their products. Accordingly, we may face patent litigation as a result of our submission of NDA and BLA applications to the FDA or as a result of submitting an MAA with the EMA.
Intellectual property litigation involves many risks and uncertainties, and there is no assurance that we will prevail in any lawsuit brought against us. Third-parties making claims against us for infringement, violation or misappropriation of their intellectual property rights may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize TransCon hGH and our other product candidates. Further, if a patent infringement suit were brought against us, we could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the subject of the suit. Defense of these claims, regardless of their merit, would cause us to incur substantial expenses and, would be a substantial diversion of resources from our business. In the event of a successful claim of any such infringement, violation or misappropriation, we may need to obtain licenses from such third-parties and we may be prevented from pursuing product development or commercialization and/or may be required to pay damages. We cannot be certain that any licenses required under such patents or proprietary rights would be made available to us, or that any offer to license would be made available to us on commercially reasonable terms. If we cannot obtain such licenses, we may be restricted or prevented from manufacturing and selling products employing our technologies. These adverse results, if they occur, could adversely affect our business, results of operations and prospects, and the value of our shares or ADSs.
We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful.
The biotechnology and pharmaceutical industries have been characterized by extensive litigation regarding patents and other intellectual property rights. The defense and prosecution of contractual or intellectual property lawsuits, USPTO interference or derivation proceedings, European Patent Office oppositions and related legal and administrative proceedings in the United States, Europe and other countries, involve complex legal and factual questions. As a result, such proceedings may be costly and time-consuming to pursue and their outcome is uncertain.
Litigation may be necessary to:
 
   
protect and enforce our patents and any future patents issuing on our patent applications;
 
   
enforce or clarify the terms of the licenses we have granted or may be granted in the future;
 
   
protect and enforce trade secrets,
know-how
and other proprietary rights that we own or have licensed, or may license in the future; or
 
41

Table of Contents
   
determine the enforceability, scope and validity of the proprietary rights of third-parties and defend against alleged patent infringement.
Competitors may infringe our intellectual property. As a result, we may be required to file infringement claims to stop third-party infringement or unauthorized use. This can be expensive, particularly for a company of our size, and time-consuming. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings and some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patent claims do not cover its technology or that the factors necessary to grant an injunction against an infringer are not satisfied. An adverse determination of any litigation or other proceedings could put one or more of our patents at risk of being invalidated, interpreted narrowly, or amended such that they do not cover our product candidates. Moreover, such adverse determinations could put our patent applications at risk of not issuing, or issuing with limited and potentially inadequate scope to cover TransCon hGH or our other product candidates or to prevent others from marketing similar products.
Interference, derivation or other proceedings brought at the USPTO, may be necessary to determine the priority or patentability of inventions with respect to our patent applications or those of our licensors or potential collaboration partners. Litigation or USPTO proceedings brought by us may fail or may be invoked against us by third-parties. Even if we are successful, domestic or foreign litigation or USPTO or foreign patent office proceedings may result in substantial costs and distraction to our management and scientific personnel. We may not be able, alone or with our licensors or potential collaboration partners, to prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rights as fully as in the United States.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or other proceedings, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation or other proceedings. In addition, during the course of this kind of litigation or these kind of proceedings, there could be public announcements of the results of hearings, motions or other interim proceedings or developments or public access to related documents. If investors perceive these results to be negative, the market price for the ADSs could be significantly harmed.
Changes to the patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our products.
As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain. Patent reform legislation in the United States and other countries, including the Leahy-Smith America Invents Act, or Leahy-Smith Act, signed into law on September 16, 2011, could increase those uncertainties and costs. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art and provide more efficient and cost-effective avenues for competitors to challenge the validity of patents. In addition, the Leahy-Smith Act has transformed the U.S. patent system into a “first to file” system. The Leahy-Smith Act could make it more difficult to obtain patent protection for our inventions and increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could harm our business, results of operations and financial condition.
The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. Additionally, there have been recent proposals for additional changes to the patent laws of the United States and other countries that, if adopted, could impact our ability to obtain patent protection for our proprietary technologies or our ability to enforce our proprietary technologies. Depending on future actions by the U.S. Congress, the U.S. courts, the USPTO and the relevant
law-making
bodies in other countries, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.
Certain of our employees and patents are subject to German law.
As of December 31, 2021, 105 of our employees work in Germany and are subject to German employment law. Ideas, developments, discoveries and inventions made by such employees are generally subject to the provisions of the German Act on Employees’ Inventions, which regulates the ownership of, and compensation for, inventions made by employees. Under this act, we face the risk that we may be required to pay additional compensation for assigned patent rights and disputes can occur between us and our employees or
ex-employees
pertaining to alleged
non-adherence
to the provisions of this act that may be costly to defend and consume our management’s time and efforts whether we prevail or fail in such dispute. In addition, under the German Act on Employees’
 
42

Table of Contents
Inventions, certain employees may have retained rights to patents they invented or
co-invented
before October 2009. Although substantially all of these employees have assigned their interest in these patents to us, to the extent permitted by law, there is a risk that the compensation we provided to them may be deemed to be insufficient and we may be required under German law to increase the compensation due to such employees for the use of the patents. In those cases, where employees have not assigned their interests to us, we may need to pay compensation for the use of those patents. If we are required to pay additional compensation or face other disputes under the German Act on Employees’ Inventions, our results of operations could be adversely affected.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for
non-compliance
with these requirements.
The USPTO and various foreign patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions to maintain patent applications and issued patents. Although an inadvertent lapse, including due to the effect of the
COVID-19
pandemic on us or our patent maintenance vendors, can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance with these requirements can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Losing our patent rights could enable competitors to enter the market earlier than would otherwise have been the case.
Failure to secure trademark registrations for a commercial trade name for TransCon hGH or any of our other product candidates in the United States or elsewhere could adversely affect our business.
We use various trademark rights in our business, including, Ascendis, Ascendis Pharma, TransCon and our U.S. product name SKYTROFA. A trademark application for TransCon hGH has been filed in the European Union and other countries across the globe. However, our current or future trademarks and trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks, and we may not be able to obtain trademark protection in other territories that we consider of significant importance to us. Furthermore, other than for TransCon hGH and TransCon PTH, we have not yet registered trademarks for a commercial trade name for any other of our product candidates in the United States or elsewhere. During trademark registration proceedings, our trademark applications may be rejected. Although we are given an opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, in the USPTO and in comparable agencies in many foreign jurisdictions, third-parties can oppose pending trademark applications and seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition and could require us to devote resources to advertising and marketing our products under new brands. We may license our trademarks and trade names to third-parties, such as distributors. Though these license agreements may provide guidelines for how our trademarks and trade names may be used, a breach of these agreements or misuse of our trademarks and tradenames by our licensees may jeopardize our rights in or diminish the goodwill associated with our trademarks and trade names.
The FDA has approved the use of SKYTROFA for TransCon hGH in the United States; however, any name we propose to use with TransCon hGH or our other product candidates in the United States or any other country must be approved by the FDA, EMA or any other relevant health authority regardless of whether we have registered it, or applied to register it, as a trademark. For example, the FDA has approved the use of SKYTROFA in the United States. We have applied for the use of SKYTROFA for TransCon hGH in the European Union (EMA), however as of the date of this report, SKYTROFA is not an approved name for TransCon hGH in the European Union. The FDA as well as EMA typically conducts a review of proposed product names, including an evaluation of potential for confusion with other product names. If the FDA, EMA or any other relevant approval authority objects to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of third-parties and be acceptable to the FDA, EMA or any other relevant approval authority.
We may not be able to enforce our intellectual property rights throughout the world.
Patents are of national or regional effect, and filing, prosecuting and defending patents on TransCon hGH and our other product candidates in all countries throughout the world would be prohibitively expensive. The requirements for patentability may differ in certain countries, particularly in developing countries. Moreover, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws. Additionally, laws of some countries outside of the United States and Europe do not afford intellectual property protection to the same extent as the laws of the United States and Europe. For example, patents with claims directed to dry pharmaceutical formulations of TransCon hGH have issued in the United States, Europe, and other jurisdictions, but related claims were rejected in China. An initial appeal upheld the rejection. We intend to appeal this decision and vigorously advocate for the patentability of these claims. However, we may be unsuccessful, and our patent protection for TransCon hGH may expire sooner in China than in other jurisdictions. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries, including India, China and certain developing countries, do not favor the enforcement of patents and other intellectual property rights.
 
43

Table of Contents
This could make it difficult for us to stop the infringement of our patents or the misappropriation of our other intellectual property rights in such countries. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third-parties. Consequently, we may not be able to prevent third-parties from practicing our inventions in certain countries outside the United States and many countries in Europe. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection, if our ability to enforce our patents to stop infringing activities is inadequate. These products may compete with our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and resources from other aspects of our business. Furthermore, while we intend to protect our intellectual property rights in major markets for our products, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our products. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate.
We may be subject to claims that we or our employees have misappropriated the intellectual property, including
know-how
or trade secrets, of a third-party, or claiming ownership of what we regard as our own intellectual property.
Many of our employees, consultants and contractors were previously employed at or engaged by other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Some of these employees, consultants and contractors, executed proprietary rights,
non-disclosure
and
non-competition
agreements in connection with such previous employment. Although we try to ensure that our employees, consultants and contractors do not use the intellectual property, proprietary information,
know-how
or trade secrets of others in their work for us, we may be subject to claims that we have wrongfully hired an employee from a competitor or that we or these employees, consultants and contractors have used or disclosed such third-party intellectual property, including
know-how,
trade secrets or other proprietary information. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, or access to consultants and contractors. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.
In addition, while we typically require our employees, consultants and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own, which may result in claims by or against us related to the ownership of such intellectual property. If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to our senior management and scientific personnel.
We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.
We may be subject to claims that former employees, collaborators, or other third-parties have an interest in our patents or other intellectual property as an inventor or
co-inventor.
The failure to name the proper inventors on a patent application can result in the patents issuing thereon being unenforceable. Inventorship disputes may arise from conflicting views regarding the contributions of different individuals named as inventors, the effects of foreign laws where foreign nationals are involved in the development of the subject matter of the patent, conflicting obligations of third-parties involved in developing TransCon hGH or our other product candidates or as a result of questions regarding
co-ownership
of potential joint inventions. For example, we may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing TransCon hGH or our other product candidates. Alternatively, or additionally, we may enter into agreements to clarify the scope of our rights in such intellectual property. Litigation may be necessary to defend against these and other claims challenging inventorship. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
We or our licensors may have relied on third-party consultants or collaborators or on funds from third-parties, such as national governments, such that we or our licensors are not the sole and exclusive owners of the patents we
in-licensed.
If other third-parties have ownership rights or other rights to our patents, including
in-licensed
patents, they may be able to license such patents to our competitors, and our competitors could market competing products and technology. This could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.
 
44

Table of Contents
Risks Relating to Our Ordinary Shares and ADSs
The price of the ADSs may be volatile and the holders of the ADSs may not be able to resell ADSs at or above the price they paid.
The trading price of the ADSs has been and could continue to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. These factors include:
 
   
our ability to commercialize or obtain regulatory approval for TransCon hGH or our other product candidates, or delays in commercializing or obtaining regulatory approval;
 
   
results from, or any delays in, clinical trial programs relating to TransCon hGH or our other product candidates;
 
   
the effects on our business, operating results, prospects and financial condition of the worldwide
COVID-19
pandemic;
 
   
our ability to apply our TransCon technologies to therapeutic areas other than endocrinology, including the therapeutic area of oncology;
 
   
announcements of regulatory approval or a complete response letter to our product candidates, or specific label indications or patient populations for use, or changes or delays in the regulatory review process;
 
   
announcements relating to current or future collaborations or joint ventures;
 
   
announcements of therapeutic innovations or new products by us or our competitors;
 
   
announcements regarding the parent drugs that we use in developing our product candidates;
 
   
adverse actions taken by regulatory authorities with respect to our clinical trials, manufacturing supply chain or sales and marketing activities;
 
   
changes or developments in laws or regulations applicable to TransCon hGH or our other product candidates;
 
   
any adverse changes to our relationship with any manufacturers or suppliers;
 
   
the success of our testing and clinical trials;
 
   
the success of our efforts to acquire, license or discover additional products or product candidates;
 
   
any intellectual property infringement actions in which we may become involved;
 
   
announcements concerning our competitors or the pharmaceutical industry in general;
 
   
achievement of expected product sales and profitability;
 
   
manufacture, supply or distribution shortages;
 
   
actual or anticipated fluctuations in our operating results;
 
   
EMA, FDA or other similar regulatory actions affecting us or our industry or other healthcare reform measures in the European Union, United States or in other markets;
 
   
changes in the structure of healthcare payment systems;
 
   
changes in financial estimates or recommendations by securities analysts;
 
   
trading volume of the ADSs;
 
   
sales or purchases of ordinary shares and/or ADSs by us, our senior management and board members, holders of the ADSs or our shareholders in the future;
 
   
general economic and market conditions and overall fluctuations in the United States and international equity markets, including deteriorating market conditions due to investor concerns regarding inflation and hostilities between Russia and Ukraine; and
 
   
the loss of any of our key scientific or senior management personnel.
In addition, the stock markets in general, and the markets for pharmaceutical, biopharmaceutical and biotechnology stocks in particular, have experienced extreme volatility that may have been unrelated to the operating performance of the issuer. These broad market fluctuations may adversely affect the trading price or liquidity of ADSs. In the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the issuer. If any of the holders of ordinary shares or ADSs were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit and the attention of our senior management would be diverted from the operation of our business, which could seriously harm our financial position. Any adverse determination in litigation could also subject us to significant liabilities.
 
45

Table of Contents
ADS holders do not directly hold our ordinary shares and do not have the rights of a holder of our ordinary shares.
ADS holders are not treated as our shareholders and do not have the rights of a holder of our ordinary shares. Danish law governs shareholder rights. Our depositary, Bank of New York Mellon, is the holder of the ordinary shares underlying our ADSs. The deposit agreement among us, the depositary, and all other persons directly and indirectly holding ADSs, sets out ADS holder rights as well as the rights and obligations of the depositary. In addition, our depositary charges certain fees to holders of our ADSs.
ADS holders may not be able to exercise their right to vote the ordinary shares underlying their ADSs.
Holders of ADSs may exercise voting rights with respect to the ordinary shares represented by the ADSs only in accordance with the provisions of the deposit agreement and not as a direct shareholder in the Company. The deposit agreement provides that, upon receipt of notice of any meeting of holders of our ordinary shares, the depositary will fix a record date for the determination of ADS holders who shall be entitled to give instructions for the exercise of voting rights. Upon timely receipt of notice from us, if we so request, the depositary shall distribute to the holders as of the record date (1) the notice of the meeting or solicitation of consent or proxy sent by us and (2) a statement as to the manner in which instructions may be given by the holders. However, we may not request the depositary to distribute this information which could effectively limit the ability of ADS holders to direct voting of the ordinary shares underlying their ADSs.
ADS holders may instruct the depositary of their ADSs to vote the ordinary shares underlying their ADSs. Otherwise, ADS holders are not able to exercise their right to vote, unless they withdraw the ordinary shares underlying the ADSs they hold. However, they may not know about the meeting far enough in advance to withdraw those ordinary shares. If we ask for instructions from ADS holders, the depositary, upon timely notice from us, will notify the ADS holders of the upcoming vote and arrange to deliver our voting materials to the ADS holders. We cannot guarantee that ADS holders will receive the voting materials in time to ensure that such holders can instruct the depositary to vote the ordinary shares underlying their ADSs or to withdraw the ordinary shares underlying their ADSs so that they can vote such shares directly. If the depositary does not receive timely voting instructions from an ADS holder, the depositary may give a proxy to a person designated by us to vote the ordinary shares underlying ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that ADS holders may not be able to exercise any right to vote, and there may be nothing an ADS holder can do if the ordinary shares underlying their ADSs are not voted as they requested.
An ADS holder may be subject to limitations on the transfer of their ADSs and the withdrawal of the underlying ordinary shares.
ADSs, which may be evidenced by American Depositary Receipts, or ADRs, are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary think it is advisable to do so because of any requirement of law, government or governmental body, or under any provision of the deposit agreement, or for any other reason subject to an ADS holders’ right to cancel their ADSs and withdraw the underlying ordinary shares. Temporary delays in the cancellation of ADSs and withdrawal of the underlying ordinary shares may arise because the depositary has closed its transfer books or we have closed our transfer books, the transfer of ordinary shares is blocked to permit voting at a shareholders’ meeting or we are paying a dividend on our ordinary shares. In addition, an ADS holder may not be able to cancel their ADS and withdraw the underlying ordinary shares when such holder owes money for fees, taxes and similar charges and when it is necessary to prohibit withdrawals to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of ordinary shares or other deposited securities.
If we issue shares or ADSs in future financings, shareholders or holders of ADSs may experience immediate dilution and, as a result, the price of our ADSs may decline.
We may from time to time issue additional shares or ADS at a discount from the trading price of our ADSs. As a result, our shareholders and holders of ADSs would experience immediate dilution upon the issuance of ADSs at such discount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preference shares, ADSs or ordinary shares. If we issue shares or securities convertible into shares of our share capital, our ordinary shareholders and holders of ADSs would experience additional dilution and, as a result, the price of our ADSs may decline.
Sales of a substantial number of our ordinary shares or ADSs in the public market could cause the price of the ADSs to fall.
If our existing shareholders or holders of ADSs sell, or indicate an intention to sell, substantial amounts of our ordinary shares or ADSs representing our ordinary shares in the public market, the trading price of our ADSs could decline. If our outstanding warrants are exercised or ADS subject to restricted stock units vest, additional ordinary shares or ADSs may become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules and Rule 144 and Rule 701 under the Securities Act. If these additional ordinary shares or ADSs are sold, or if it is perceived that they will be sold, in the public market, the trading price of the ADSs could decline. Any sales of securities by these security holders could have a negative effect on the trading price of the ADSs.
 
46

Table of Contents
Our principal shareholders and senior management own a significant percentage of our shares and are able to exert significant control over matters subject to shareholder approval.
As of February 1, 2022, our senior management, board members, holders of 5% or more of our share capital and their respective affiliates beneficially own approximately 70.6% of our outstanding voting securities. See “Item 7 A. Major Shareholders” for information relating to the determination of the number of shares beneficially owned by an entity or a person. As a result, these security holders have the ability either alone or voting together as a group to determine and/or significantly influence the outcome of matters submitted to our shareholders for approval, including the election and removal of board members, payment of dividends, amendments to our articles of association, including changes to our share capital or any mergers, demergers, liquidations and similar transactions. This may prevent or discourage unsolicited acquisition proposals or offers for our ordinary shares or ADSs that our shareholders or ADS holders may feel are in their best interest as a shareholder or holder of ADSs. In addition, this group of shareholders may have the ability to control our management and affairs. Such control and concentration of ownership may affect the market price of the ADSs and may discourage certain types of transactions, including those involving actual or potential change of control of us (whether through merger, consolidation, take-over or other business combination), which might otherwise have a positive effect on the market price of the ADSs.
The rights of our shareholders may be different from the rights of shareholders in companies governed by the laws of U.S. jurisdictions.
Our corporate affairs are governed by our articles of association and by the laws governing companies incorporated in Denmark, including the Danish Companies Act. The rights of shareholders and the responsibilities of members of our board of directors may be different from the rights and obligations of shareholders in companies governed by the laws of U.S. jurisdictions. In the performance of its duties, our board of directors is required by Danish law to consider the interests of our company, its shareholders and its creditors. It is possible that some of these parties will have interests that are different from, or in addition to, the interests of our shareholders.
Claims of U.S. civil liabilities may not be enforceable against us.
We are incorporated under the laws of Denmark. Substantially all of our assets are located outside the United States. A significant portion of our board members and employees reside outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or to enforce against them or us in U.S. courts, including judgements predicated upon the civil liability provisions of the U.S. securities laws of the United States.
The United States and Denmark currently do not have a treaty providing for the reciprocal recognition and enforcement of judgements, other than arbitration awards, in civil and commercial matters. Consequently, a final judgement for payment given by a court in the United States, whether or not predicated solely upon U.S. securities laws, would not automatically be recognized or enforceable in Denmark. To obtain a judgement which is enforceable in Denmark, the party in whose favor a final and conclusive judgement of the U.S. court has been rendered will be required to file its claim with a court of competent jurisdiction in Denmark. Such party may submit to the Danish court the final judgement rendered by the U.S. court. If and to the extent that the Danish court finds that the jurisdiction of the U.S. court has been based on grounds which are internationally acceptable and that proper legal procedures have been observed, the Danish court should, in principle, give binding effect to the judgement of the U.S. court, unless such judgement contravenes principles of public policy of Denmark. Danish courts are likely to deny the recognition and enforcement of punitive damages or other awards. Moreover, a Danish court may reduce the amount of damages granted by a U.S. court and recognize damages only to the extent that they are necessary to compensate for actual losses or damages. Enforcement and recognition of judgements of U.S. courts in Denmark are solely governed by the provisions of the Danish Administration of Justice Act.
Based on the lack of a treaty as described above, U.S. investors may not be able to enforce against us or members of our board of directors, our executive board, our senior management or certain experts named herein who are residents of Denmark or countries other than the United States any judgements obtained in U.S. courts in civil and commercial matters, including judgements under the U.S. federal securities laws.
As a foreign private issuer, we are not subject to U.S. proxy rules and are not subject to certain Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.
We report under the Exchange Act, as a
non-U.S.
company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act and although we are subject to Danish laws and regulations with regard to such matters and intend to furnish quarterly financial information to the SEC, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or
 
47

Table of Contents
authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form
10-Q
containing unaudited financial and other specified information, or current reports on Form
8-K,
upon the occurrence of specified significant events. In addition, foreign private issuers are not required to file their annual report on Form
20-F
until four months after the end of each fiscal year, while U.S. domestic issuers that are large accelerated filers are required to file their annual report on Form
10-K
within 60 days after the end of each fiscal year. Foreign private issuers are also exempt from the Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, our shareholders and the holders of our ADS may not have the same protections afforded to shareholders of companies that are not foreign private issuers.
Our status as a “foreign private issuer” allows us to adopt International Financial Reporting Standards (“IFRS”) accounting principles, which are different than accounting principles under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”).
We have adopted and presented our consolidated financial statements in accordance with IFRS as issued by the International Accounting Standards Board and as adopted by the European Union. IFRS is an internationally recognized body of accounting principles that are used by many companies outside of the United States to prepare their financial statements; and the SEC permits foreign private issuers such as our company to prepare and file their financial statements in accordance with IFRS rather than U.S. GAAP. IFRS accounting principles are different from those of U.S. GAAP, and SEC rules do not require us to provide a reconciliation of IFRS accounting principles to those of U.S. GAAP. Investors who are not familiar with IFRS may misunderstand certain information presented in our consolidated financial statements. Accordingly, we suggest that readers of our consolidated financial statements familiarize themselves with the provisions of IFRS accounting principles to better understand the differences between these two sets of principles.
As a foreign private issuer and as permitted by the listing requirements of The Nasdaq Global Select Market, we rely on certain home country governance practices rather than the corporate governance requirements of The Nasdaq Global Select Market.
As a foreign private issuer, in accordance with the listing requirements of The Nasdaq Global Select Market, we rely on home country governance requirements and certain exemptions thereunder rather than relying on the corporate governance requirements of The Nasdaq Global Select Market. For instance, the Listing Rules for The Nasdaq Stock Market, or The Nasdaq Listing Rules, for domestic U.S. issuers require listed companies to have, among other things, a majority of their board members be independent, and to have independent director oversight of executive compensation, nomination of board members and corporate governance matters. As a foreign private issuer, however, while we intend to comply with these requirements, we are permitted to follow home country practice in lieu of the above requirements. Danish law does not require that a majority of our board consist of independent directors or the implementation of a remuneration committee or nominating and corporate governance committee, and our board may thus in the future not include, or include fewer, independent directors than would be required if we were subject to The Nasdaq Listing Rules, or they may decide that it is in our interest not to have a remuneration committee or nominating and corporate governance committee, or have such committees governed by practices that would not comply with The Nasdaq Listing Rules. Since a majority of our board of directors may not consist of independent directors, if we decide to rely on the foreign private issuer exemption to The Nasdaq Listing Rules, our board’s approach may, therefore, be different from that of a board with a majority of independent directors, and as a result, the management oversight of our company could, in the future, be more limited than if we were subject to The Nasdaq Listing Rules. We intend to follow home country practice with regard to, among other things, quorum requirements generally applicable to general meetings of shareholders.
Furthermore, Danish law does not have a regulatory regime for the solicitation of proxies and the solicitation of proxies is not a generally accepted business practice in Denmark, thus our practice varies from the requirement of Nasdaq Listing Rule 5620(b). In addition, our shareholders have authorized our board of directors to issue securities including in connection with certain events such as the acquisition of shares or assets of another company, the establishment of or amendments to equity-based compensation plans for employees, a change of control of us, rights issues at or below market price, certain private placements and issuance of convertible notes. To this extent, our practice varies from the requirements of Nasdaq Rule 5635, which generally requires an issuer to obtain shareholder approval for the issuance of securities in connection with such events. Accordingly, our shareholders and holders of our ADS may not have the same protections afforded to shareholders of companies that are subject to these Nasdaq requirements.
We may lose our foreign private issuer status, which would then require us to comply with the Exchange Act’s domestic reporting regime and cause us to incur significant legal, accounting and other expenses.
We qualify as a foreign private issuer and therefore we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S. domestic issuers. We may no longer be a foreign private issuer as of June 30, 2022, which would require us to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S. domestic issuers as of January 1, 2023. To maintain our current status as a foreign private issuer, either (a) a majority of our ordinary shares or ADSs must be either directly or indirectly owned of record by
non-residents
of the United States or (b) (i) a majority of our executive officers or directors may not be U.S. citizens or residents, (ii) more than 50% of our
 
48

Table of Contents
assets cannot be located in the United States and (iii) our business must not be administered principally inside the United States. If we lost this status, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and Nasdaq rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time consuming and costly. We also expect that if we were required to comply with the rules and regulations applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors and members of our senior management.
We do not currently intend to pay dividends on our ordinary shares or ADSs, and, consequently, our shareholders’ and ADS holders’ ability to achieve a return on their investment will depend on appreciation in the price of the ADSs or our ordinary shares.
We do not currently intend to pay any cash dividends on our ordinary shares for the foreseeable future. We currently intend to invest our future earnings, if any, to fund our growth. Therefore, our shareholders and ADS holders are not likely to receive any dividends on their investment for the foreseeable future. Because we do not intend to pay dividends, our shareholders’ and ADS holders’ ability to receive a return on their investment will depend on any future appreciation in the market value of our ADSs. There is no guarantee that our ordinary shares or ADSs will appreciate or even maintain the price at which our holders have acquired them.
Investors should be aware that the rights provided to our shareholders and holders of ADSs under Danish corporate law and our articles of association differ in certain respects from the rights that would typically be provided to a shareholder of a U.S. company under applicable U.S. federal and state laws.
Under Danish corporate law, except in certain limited circumstances (which require as a minimum that a proposal for inspection has been supported by a minimum of 25% of the shareholders voting and being present at a general meeting), our shareholders may not ask for an inspection of our corporate records, while under Delaware corporate law any shareholder, irrespective of the size of such shareholder’s shareholdings, may do so. Shareholders of a Danish limited liability company are also unable to initiate a derivative action, a remedy typically available to shareholders of U.S. companies, to enforce a right of our company, in case we fail to enforce such right ourselves, other than in certain cases of board member or management liability under limited circumstances. In addition, a majority of our shareholders may release a board member or manager from any claim of liability we may have, including if such board member or manager has acted in bad faith or has breached his or her duty of loyalty and only if a minority of at least 10% of the shareholders represented at the relevant general meeting have opposed the decision, may a shareholder bring a derivative action on behalf of our company. In contrast, most U.S. federal and state laws prohibit a company or its shareholders from releasing a board member from liability altogether if such board member has acted in bad faith or has breached such board member’s duty of loyalty to our company. Additionally, distribution of dividends from Danish companies to foreign companies and individuals can be eligible for
non-refundable
withholding tax, and not all receiving countries allow for deduction. Also, the rights as a creditor may not be as strong under Danish insolvency law, as under U.S. law or other insolvency law, and consequently creditors may recover less in the event our company is subject to insolvency compared to a similar case including a U.S. debtor. In addition, the use of the tax asset consisting of the accumulated tax deficit requires that we are able to generate positive taxable income and can be restricted by future amendments to Danish tax law. Further, repurchases of ordinary shares or ADSs by Ascendis Pharma A/S may have adverse tax consequences to the Company or shareholders under applicable Danish law. Finally, Danish corporate law may not provide appraisal rights in the case of a business combination equivalent to those generally afforded a shareholder of a U.S. company under applicable U.S. laws. As a result of these differences between Danish corporate law and our articles of association, on the one hand, and U.S. federal and state laws, on the other hand, in certain instances, shareholders and ADS holders could receive less protection as an equity holder of our company than they would as a shareholder of a U.S. company.
Holders of our ordinary shares or ADSs may not be able to exercise their
pre-emptive
subscription rights and may suffer dilution of their equity holding in the event of future issuances of our shares.
Under the Danish Companies Act, our shareholders benefit from a
pre-emptive
subscription right on the issuance of ordinary shares for cash consideration only and not in the event of issuance of shares against
non-cash
contribution or debt conversion. Even the shareholders’
pre-emptive
subscription rights in the event of issuances of shares against cash payment may be disapplied by a resolution of the shareholders at a general meeting of our shareholders and/or the shares or ADSs may be issued on the basis of an authorization granted to the board of directors pursuant to which the board may disapply the shareholders’
pre-emptive
subscription rights. Such shares or ADSs may be issued above, or at market value as well as by way of incorporation of available reserves (including premium). In addition, a shareholder may not be able to exercise the shareholder’s
pre-emptive
right on a timely basis or at all, unless the shareholder complies with the Danish Companies Act and applicable laws in the jurisdiction in which the shareholder is resident. Furthermore, the use of
pre-emptive
subscription rights in relation to future capital increases in our company can be restricted for U.S. residents according to U.S. securities law. As a result, the shareholding or holding of ADSs of such shareholders or ADS
 
49

Table of Contents
holders may be materially diluted in the event shares or ADSs are issued in the future. Shares or ADSs may be issued at a discount to market price in rights offerings provided that the resolution is approved by
two-thirds
of the votes cast and the share capital represented at the general meeting and in these cases a restriction on the ability to exercise
pre-emptive
rights may materially dilute the value of the ordinary shares or ADSs held by the shareholder or ADS holder in question. Rights issues may also be carried out by the board of directors according to valid authorizations in our articles of association.
However, our ADS holders in the United States are not entitled to exercise or sell such
pre-emptive
subscription rights related to the ordinary shares, which they represent unless we register the
pre-emptive
subscription rights and the securities to which the
pre-emptive
subscription rights relate under the Securities Act or an exemption from the registration requirements is available. In addition, the deposit agreement provides that the depositary will not make rights available to ADS holders unless the distribution to ADS holders or both the rights and any related securities are either registered under the Securities Act or exempted from registration under the Securities Act. Further, if we offer holders of our ordinary shares the option to receive dividends in either cash or shares, under the deposit agreement the depositary may require satisfactory assurances from us that extending the offer to holders of ADSs does not require registration of any securities under the Securities Act before making the option available to holders of ADSs. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, ADS holders may be unable to participate in our rights offerings or to elect to receive dividends in shares and may experience dilution in their holdings. In addition, if the depositary is unable to sell rights that are not exercised or not distributed or if the sale is not lawful or reasonably practicable, it will allow the rights to lapse, in which case our shareholders and ADS holders will receive no value for these rights.
If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our ordinary shares or ADSs, the price of the ADSs and trading volume could decline.
The trading market for the ADSs may be influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or performance of the ADSs, or if our commercial sales, clinical trials or operating results fail to meet the expectations of analysts, the price of the ADSs would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause the price of the ADSs or trading volume to decline.
We may be a “passive foreign investment company” for U.S. federal income tax purposes for our current taxable year and future taxable years, which could result in adverse U.S. federal income tax consequences to U.S. investors.
Under the Internal Revenue Code of 1986, as amended, the determination of passive foreign investment company, or PFIC, status is fact-specific, and generally cannot be made until after the close of the taxable year in question. Based on the market price of the ADSs and the value and composition of our income and assets, we do not believe we were a PFIC for U.S. federal income tax purposes for our taxable year ended December 31, 2021. However, the application of the PFIC rules is subject to uncertainty in several respects, and we cannot assure you we will not be a PFIC for any taxable year.
A
non-U.S.
corporation will be considered a PFIC for any taxable year if either (1) at least 75% of its gross income for such taxable year is passive income or (2) at least 50% of the value of its assets (generally based on an average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive income. A separate determination must be made each taxable year as to whether we are a PFIC (after the close of each such taxable year). If we are a PFIC for any taxable year during which a U.S. Holder (as defined in “Taxation—Material U.S. Federal Income Tax Consequences to U.S. Holders”) holds ordinary shares or ADSs, the U.S. Holder may be subject to adverse tax consequences, including (i) the treatment of all or a portion of any gain on disposition as ordinary income, (ii) the application of an interest charge with respect to such gain and certain dividends and (iii) compliance with certain reporting requirements. Although we do not believe we were a PFIC for U.S. federal income tax purposes for our taxable year ended December 31, 2021, the application of the PFIC rules is subject to uncertainty in several respects. Whether we will be a PFIC in any year depends on the composition of our income and assets, and the relative fair market value of our assets from time to time, which we expect may vary substantially over time. In addition, because the value of our assets for purposes of the asset test will generally be determined by reference to the market price of the ADSs, our PFIC status will depend in large part on the market price of the ADSs, which may fluctuate significantly. For these reasons, we cannot assure you we will not be a PFIC for any tax year. Each U.S. Holder is strongly urged to consult its tax advisor regarding these issues. See “Taxation—Material U.S. Federal Income Tax Consequences to U.S. Holders.”
If a United States person is treated as owning at least 10% of our ordinary shares or ADSs, such holder may be subject to adverse U.S. federal income tax consequences.
If a U.S. Holder (as defined in “Taxation—Material U.S. Federal Income Tax Consequences to U.S. Holders.”) is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of our ordinary shares or ADSs, such U.S. Holder will
 
50

Table of Contents
be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group (if any). Because our group includes one or more U.S. subsidiaries, certain of our
non-U.S.
subsidiaries could be treated as “controlled foreign corporations” (regardless of whether we are treated as a “controlled foreign corporation”). A “United States shareholder” of a “controlled foreign corporation” may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible
low-taxed
income” and investments in U.S. property by “controlled foreign corporations,” regardless of whether we make any distributions. Failure to comply with these reporting obligations may subject a “United States shareholder” to significant monetary penalties and may prevent the statute of limitations from starting with respect to such shareholder’s U.S. federal income tax return for the year for which reporting was due. Further, an individual that is a “United States shareholder” with respect to a “controlled foreign corporation” generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a “United States shareholder” that is a U.S. corporation. We cannot provide any assurances that we will assist investors in determining whether any of our
non-U.S.
subsidiaries are treated as a “controlled foreign corporation” or whether such investor is treated as a “United States shareholder” with respect to any of such “controlled foreign corporations.” Further, we cannot provide any assurances that we will furnish to any “United States shareholders” information that may be necessary to comply with the aforementioned reporting and tax payment obligations. U.S. Holders should consult their tax advisors regarding the potential application of these rules to their investment in our ordinary shares or ADSs.
 
Item 4
Information on the Company
 
A.
History and Development of the Company
We were organized under the laws of the Kingdom of Denmark in September 2006 as a private limited liability company (
Anpartsselskab
, or ApS) and then transformed into a public limited liability company (
Aktieselskab
, or A/S), effective December 17, 2007. In connection with this conversion, our legal name changed from Ascendis Pharma ApS to Ascendis Pharma A/S. We commenced operations in December 2007 in connection with the acquisition of the company that invented our TransCon technologies, Complex Biosystems GmbH.
Our registered office and principal executive offices are located at Tuborg Boulevard 12,
DK-2900
Hellerup, Denmark and our telephone number is +45 70 22 22 44. Our agent for service of process in the United States is Ascendis Pharma, Inc. Our corporate website address is www.ascendispharma.com. The information on, or that can be accessed through, our website is not part of and should not be incorporated by reference into this annual report or any other report we file or furnish to the SEC. We have included our website address as an inactive textual reference only. Our ADSs are traded on The Nasdaq Global Select Market under the symbol “ASND”.
The SEC maintains an internet site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
For additional information relating to the development of our company, see “Item 4 B. Information on the Company – Business Overview.” For additional information relating to the Company’s capital expenditures, see “Item 5 A. Operating Results.”
 
B.
Business Overview
Overview
We are applying our innovative TransCon technologies to build a leading, fully integrated, global biopharmaceutical company and develop a pipeline of product candidates with potential
best-in-class
profiles to address unmet medical needs.
Our product candidates combine our TransCon technologies with clinically validated parent drugs and pathways, with the goal of optimizing therapeutic effect and improving tolerability and convenience.
We have applied these technologies in combination with a clinically validated parent drug or pathway using our algorithm with the goal of creating product candidates with the potential to be
best-in-class
in endocrinology rare diseases and oncology. In addition, we plan to apply this algorithm for product innovation and selection in new therapeutic areas. We believe our approach to product innovation may reduce the risks associated with traditional drug development, and that our TransCon technologies have been validated by
non-clinical
and clinical programs completed to date.
 
51

Table of Contents
Ascendis Algorithm for Product Innovation
 
 

When we apply our TransCon technologies to already approved drug compounds, we may benefit from established clinical safety and efficacy data, which we believe increases the probability of success compared to traditional drug development. As presented above, our algorithm for product innovation focuses on identifying indications that have an unmet medical need, have a clinically validated parent drug or pathway, are suitable to our TransCon technologies, have potential for creating a clearly differentiated product, have a potential established development pathway and have a large potentially addressable market.
We currently have one marketed product and a diversified portfolio of five product candidates in clinical development in the areas of endocrinology rare diseases and oncology. We are also evaluating additional therapeutic areas and indications.
 
   
First Marketed Product
– Our first marketed product is SKYTROFA
®
(lonapegsomatropin-tcgd), developed as TransCon Growth Hormone (“TransCon hGH”), which has received regulatory approval in the United States for the treatment of pediatric patients one year and older who weigh at least 11.5 kg and have growth failure due to inadequate secretion of endogenous growth hormone, also known as growth hormone deficiency (“GHD”) and which is now commercially available for prescription in the United States. TransCon hGH is also approved under the name Lonapegsomatropin Ascendis Pharma for the treatment of children and adolescents aged from 3 years up to 18 years due to insufficient endogenous growth hormone secretion in the European Union (“EU”).
 
   
Endocrinology Rare Disease Pipeline
– We are developing three product candidates in our endocrinology rare disease portfolio spanning seven different clinical programs. These include: TransCon hGH for pediatric GHD in Japan; TransCon hGH for adults with GHD; TransCon PTH for adult hypoparathyroidism; the last classical hormone deficiency for which complete hormone replacement has been elusive; and TransCon CNP for pediatric achondroplasia, the most common form of dwarfism. Our associate VISEN Pharmaceuticals is also developing TransCon hGH in China.
In addition, we are preparing to initiate new trials in other endocrinology rare disease indications: TransCon hGH for Turner Syndrome; TransCon PTH for pediatric hypoparathyroidism; and TransCon CNP for infants (age
0-2
years) with achondroplasia.
 
   
Oncology
– In oncology, we are leveraging our TransCon technologies in effort to enhance anti-tumor effects of clinically-validated parent drugs and pathways and to provide sustained modulation of tumor microenvironments and activate cytotoxic immune cells. We have initiated clinical development of two product candidates: TransCon TLR7/8 Agonist, an investigational, long-acting prodrug of resiquimod, a small molecule agonist of Toll like receptors (“TLR”) 7 and 8 for intratumoral delivery and TransCon
IL-2
ß/
g
for systemic delivery, which is designed for prolonged exposure to an
IL-2
variant that selectively activates the
IL-2Rß/
g
, with minimal binding to
IL-2Rα.
Our clinical development program for these product candidates also includes evaluation of them as a potential combination therapy.