UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO SECTION 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April,
Commission File Number: 001-36815
(Exact Name of Registrant as Specified in Its Charter)
Tuborg Boulevard 12
DK-2900 Hellerup
Denmark
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
INCORPORATION BY REFERENCE
This report on Form 6-K shall be deemed to be incorporated by reference into the registration statements on Form S-8 (Registration Numbers 333-228576, 333-203040, 333-210810, 333-211512, 333-213412, 333-214843, 333-216883, 333-254101, 333-261550 and 333-270088) and Form F-3 (Registration Numbers 333-209336, 333-211511, 333-216882, 333-223134, 333-225284, and 333-256571) of Ascendis Pharma A/S (the “Company”) (including any prospectuses forming a part of such registration statements) and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.
Information Contained in this Form 6-K Report
Financial Statements
This report contains the Company’s Unaudited Condensed Consolidated Interim Financial Statements as of and for the period ended March 31, 2023, including Management’s Discussion and Analysis of Financial Condition and Results of Operations for the period presented therein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
Ascendis Pharma A/S |
|
|
|
|
|
Date: April 27, 2023 |
|
By: |
/s/ Michael Wolff Jensen |
|
|
|
Michael Wolff Jensen |
|
|
|
Executive Vice President, Chief Legal Officer |
TABLE OF CONTENTS
1. |
Unaudited Condensed Consolidated Interim Financial Statements – March 31, 2023 |
F-1 |
2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
1 |
ASCENDIS PHARMA A/S
INDEX TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
Page |
F-2 |
|
F-3 |
|
Unaudited Condensed Consolidated Interim Statements of Changes in Equity at March 31, 2023 and 2022 |
F-4 |
F-5 |
|
Notes to the Unaudited Condensed Consolidated Interim Financial Statements |
F-6 |
F-1
Unaudited Condensed Consolidated Interim Statements of Profit or Loss
and Comprehensive Income / (Loss) for the Three Months Ended March 31, 2023 and 2022
|
|
|
|
Three Months Ended |
|
|||||
|
|
Notes |
|
2023 |
|
|
2022 |
|
||
|
|
|
|
(EUR’000) |
|
|||||
Consolidated Statement of Profit or Loss |
|
|
|
|
|
|
|
|
||
Revenue |
|
5 |
|
|
|
|
|
|
||
Cost of sales |
|
|
|
|
|
|
|
|
||
Gross profit |
|
|
|
|
|
|
|
|
||
Research and development costs |
|
|
|
|
|
|
|
|
||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
||
Operating profit / (loss) |
|
|
|
|
( |
) |
|
|
( |
) |
Share of profit / (loss) of associate |
|
|
|
|
( |
) |
|
|
( |
) |
Finance income |
|
|
|
|
|
|
|
|
||
Finance expenses |
|
|
|
|
|
|
|
|
||
Profit / (loss) before tax |
|
|
|
|
( |
) |
|
|
( |
) |
Income taxes (expenses) |
|
|
|
|
( |
) |
|
|
( |
) |
Net profit / (loss) for the period |
|
|
|
|
( |
) |
|
|
( |
) |
Attributable to owners of the Company |
|
|
|
|
( |
) |
|
|
( |
) |
Basic and diluted earnings / (loss) per share |
|
|
|
€ |
( |
) |
|
€ |
( |
) |
Number of shares used for calculation (basic and diluted) (1) |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
(EUR’000) |
|
|||||
Statement of Comprehensive Income |
|
|
|
|
|
|
|
|
||
Net profit / (loss) for the period |
|
|
|
|
( |
) |
|
|
( |
) |
Other comprehensive income / (loss) |
|
|
|
|
|
|
|
|
||
Items that may be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
|
||
Exchange differences on translating foreign operations |
|
|
|
|
( |
) |
|
|
|
|
Other comprehensive income / (loss) for the period, net of tax |
|
|
|
|
( |
) |
|
|
|
|
Total comprehensive income / (loss) for the period, net of tax |
|
|
|
|
( |
) |
|
|
( |
) |
Attributable to owners of the Company |
|
|
|
|
( |
) |
|
|
( |
) |
F-2
Unaudited Condensed Consolidated Interim Statements of Financial Position
|
|
Notes |
|
March 31, |
|
|
December 31, |
|
||
|
|
|
|
(EUR’000) |
|
|||||
Assets |
|
|
|
|
|
|
|
|
||
Non-current assets |
|
|
|
|
|
|
|
|
||
Intangible assets |
|
|
|
|
|
|
|
|
||
Property, plant and equipment |
|
|
|
|
|
|
|
|
||
Investment in associate |
|
|
|
|
|
|
|
|
||
Other receivables |
|
10 |
|
|
|
|
|
|
||
Marketable securities |
|
10 |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
|
|
||
Inventories |
|
|
|
|
|
|
|
|
||
Trade receivables |
|
10 |
|
|
|
|
|
|
||
Income tax receivables |
|
|
|
|
|
|
|
|
||
Other receivables |
|
10 |
|
|
|
|
|
|
||
Prepayments |
|
|
|
|
|
|
|
|
||
Marketable securities |
|
10 |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
10 |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Total assets |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Equity and liabilities |
|
|
|
|
|
|
|
|
||
Equity |
|
|
|
|
|
|
|
|
||
Share capital |
|
8 |
|
|
|
|
|
|
||
Distributable equity |
|
|
|
|
|
|
|
|
||
Total equity |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Non-current liabilities |
|
|
|
|
|
|
|
|
||
Borrowings |
|
10 |
|
|
|
|
|
|
||
Derivative liabilities |
|
10 |
|
|
|
|
|
|
||
Contract liabilities |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
|
|
||
Borrowings |
|
10 |
|
|
|
|
|
|
||
Contract liabilities |
|
|
|
|
|
|
|
|
||
Trade payables and accrued expenses |
|
10 |
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
|
|
|
||
Income taxes payable |
|
|
|
|
|
|
|
|
||
Provisions |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
|
|
||
Total equity and liabilities |
|
|
|
|
|
|
|
|
||
F-3
Unaudited Condensed Consolidated Interim Statements of Changes in Equity
|
|
|
|
|
Distributable Equity |
|
|
|
|
|||||||||||||||
|
|
Share |
|
|
Share |
|
|
Treasury |
|
|
Foreign |
|
|
Accumulated |
|
|
Total |
|
||||||
|
|
(EUR’000) |
|
|||||||||||||||||||||
Equity at January 1, 2023 |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||||
Net profit / (loss) for the period |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Other comprehensive income / (loss), net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Total comprehensive income / (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Transactions with Owners |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Share-based payment (Note 7) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Capital increase |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Equity at March 31, 2023 |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||||
|
|
|
|
|
Distributable Equity |
|
|
|
|
|||||||||||||||
|
|
Share |
|
|
Share |
|
|
Treasury |
|
|
Foreign |
|
|
Accumulated |
|
|
Total |
|
||||||
|
|
(EUR’000) |
|
|||||||||||||||||||||
Equity at January 1, 2022 |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||||
Net profit / (loss) for the period |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Other comprehensive income / (loss), net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Total comprehensive income / (loss) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Transactions with Owners |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Share-based payment (Note 7) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Acquisition of treasury shares (Note 9) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Capital increase |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Equity at March 31, 2022 |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||||
F-4
Unaudited Condensed Consolidated Interim Cash Flow Statements for the
Three Months Ended March 31, 2023 and 2022
|
|
Three Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(EUR’000) |
|
|||||
Operating activities |
|
|
|
|
|
|
||
Net profit / (loss) for the period |
|
|
( |
) |
|
|
( |
) |
Reversal of finance income |
|
|
( |
) |
|
|
( |
) |
Reversal of finance expenses |
|
|
|
|
|
|
||
Reversal of gain and loss on disposal of property, plant and equipment |
|
|
|
|
|
|
||
Reversal of income taxes (expenses) |
|
|
|
|
|
|
||
Increase / (decrease) in provisions |
|
|
|
|
|
|
||
Adjustments for non-cash items: |
|
|
|
|
|
|
||
Non-cash consideration relating to revenue |
|
|
( |
) |
|
|
( |
) |
Share of profit / (loss) of associate |
|
|
|
|
|
|
||
Share-based payment |
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
|
||
Amortization |
|
|
|
|
|
|
||
Changes in working capital: |
|
|
|
|
|
|
||
Inventories |
|
|
( |
) |
|
|
( |
) |
Receivables |
|
|
( |
) |
|
|
( |
) |
Prepayments |
|
|
( |
) |
|
|
( |
) |
Contract liabilities (deferred income) |
|
|
( |
) |
|
|
( |
) |
Trade payables, accrued expenses and other payables |
|
|
|
|
|
( |
) |
|
Cash flows generated from / (used in) operations |
|
|
( |
) |
|
|
( |
) |
Finance income received |
|
|
|
|
|
|
||
Finance expenses paid |
|
|
( |
) |
|
|
( |
) |
Income taxes received / (paid) |
|
|
|
|
|
( |
) |
|
Cash flows from / (used in) operating activities |
|
|
( |
) |
|
|
( |
) |
Investing activities |
|
|
|
|
|
|
||
Acquisition of property, plant and equipment |
|
|
( |
) |
|
|
( |
) |
Reimbursement from acquisition of property, plant and equipment |
|
|
|
|
|
|
||
Purchase of marketable securities |
|
|
|
|
|
( |
) |
|
Settlement of marketable securities |
|
|
|
|
|
|
||
Cash flows from / (used in) investing activities |
|
|
|
|
|
|
||
Financing activities |
|
|
|
|
|
|
||
Payment of principal portion of lease liabilities |
|
|
( |
) |
|
|
( |
) |
Net proceeds from convertible senior notes |
|
|
|
|
|
|
||
Proceeds from exercise of warrants |
|
|
|
|
|
|
||
Acquisition of treasury shares, net of transaction costs |
|
|
|
|
|
( |
) |
|
Cash flows from / (used in) financing activities |
|
|
( |
) |
|
|
|
|
Increase / (decrease) in cash and cash equivalents |
|
|
|
|
|
|
||
Cash and cash equivalents at January 1 |
|
|
|
|
|
|
||
Effect of exchange rate changes on balances held in foreign currencies |
|
|
( |
) |
|
|
|
|
Cash and cash equivalents at March 31 |
|
|
|
|
|
|
||
Cash and cash equivalents include: |
|
|
|
|
|
|
||
Bank deposits |
|
|
|
|
|
|
||
Short-term marketable securities |
|
|
|
|
|
|
||
Cash and cash equivalents at March 31 |
|
|
|
|
|
|
||
F-5
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
Note 1—General Information
Ascendis Pharma A/S, together with its subsidiaries, is applying its innovative TransCon technologies to build a leading, fully integrated, global, biopharma company. Ascendis Pharma A/S was incorporated in 2006 and is headquartered in Hellerup, Denmark. Unless the context otherwise requires, references to the “Company,” “we,” “us,” and “our,” refer to Ascendis Pharma A/S and its subsidiaries.
The address of the Company’s registered office is Tuborg Boulevard 12, DK-2900, Hellerup, Denmark.
On February 2, 2015, the Company completed an initial public offering which resulted in the listing of American Depositary Shares (“ADSs”), representing the Company’s ordinary shares, under the symbol “ASND” in the United States on The Nasdaq Global Select Market.
The Company’s Board of Directors (the “Board”) approved these unaudited condensed consolidated interim financial statements on April 27, 2023.
Note 2—Summary of Significant Accounting Policies
Basis of Preparation
The unaudited condensed consolidated interim financial statements of the Company are prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting.” Certain information and disclosures normally included in the annual consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) have been condensed or omitted. Accordingly, these unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited annual consolidated financial statements for the year ended December 31, 2022, and accompanying notes, which have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (the “IASB”) and as adopted by the European Union (the “EU”).
The accounting policies applied are consistent with those of the previous financial year. A description of the accounting policies is provided in the Accounting Policies section of the audited consolidated financial statements as of and for the year ended December 31, 2022.
The preparation of financial statements in conformity with IFRS requires the use of certain significant accounting estimates and requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the unaudited condensed consolidated interim financial statements are disclosed in Note 3, “Significant Accounting Judgements and Estimates.”
New International Financial Reporting Standards Not Yet Effective
The IASB has issued a number of new or amended standards, which have not yet become effective or have not yet been adopted by the EU. Therefore, these new standards have not been incorporated in these unaudited condensed consolidated interim financial statements.
Amendments to IAS 1, “Classification of Liabilities as Current or Non-current”
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1, “Presentation of Financial Statements,” to specify the requirements for classifying liabilities as current or non-current. The amendments clarify:
F-6
If approved by the EU, the amendments are effective for annual reporting periods beginning on or after January 1, 2024, and must be applied retrospectively. The amendments are expected to require the convertible notes (presented as part of borrowings on the statement of financial position) and derivative liabilities, both presented as non-current liabilities at March 31, 2023, to be presented as current liabilities.
On March 31, 2023, the carrying amount of convertible notes and derivative liabilities were €
The consolidated financial statements are not expected to be affected by other new or amended standards.
F-7
Note 3—Significant Accounting Judgements and Estimates
In the application of the Company’s accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Judgements, estimates and assumptions applied are based on historical experience and other factors that are relevant, and which are available at the reporting date. Uncertainty concerning estimates and assumptions could result in outcomes that require a material adjustment to assets and liabilities in future periods.
The unaudited condensed consolidated interim financial statements do not include all disclosures for significant accounting judgements, estimates and assumptions, that are required in the annual consolidated financial statements, and therefore should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2022.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively. While the application of critical accounting estimates is subject to material estimation uncertainties, management’s ongoing revisions of critical accounting estimates and underlying assumptions have not revealed any material impact in any of the periods presented in the unaudited condensed consolidated interim financial statements. Additionally, there have been no other changes to the application of significant accounting judgements, or estimation uncertainties regarding accounting estimates compared to December 31, 2022.
Note 4—Significant Events in the Reporting Period
Global Banking Situation
In March 2023, the Federal Deposit Insurance Corporation (the “FDIC”) announced that Silicon Valley Bank (“SVB”) had been closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. The Company did not hold deposits or securities or maintain any accounts at SVB. Following the closure of SVB and subsequent developments in the global banking sector, the Company considered the risk of expected credit loss on bank deposits and marketable securities, including the hypothetical impact arising from the probability of default, which is considered in conjunction with the expected loss caused by default by banks or securities with similar credit-ratings and attributes.
In line with previous periods, this assessment did not reveal a material impairment loss, and accordingly no provision for expected credit loss has been recognized.
Conflict in the Region Surrounding Ukraine and Russia
The ongoing conflict in the region surrounding Ukraine and Russia has impacted our ability to continue clinical trial activities in those countries. The conflict did not have a direct material impact on the unaudited condensed consolidated interim financial statements.
COVID-19 Pandemic
The COVID-19 pandemic has affected countries where we are operating, where we have planned or have ongoing clinical trials, and where we rely on third-parties to manufacture preclinical, clinical and commercial supply.
COVID-19 did not have a direct material impact on the unaudited condensed consolidated interim financial statements.
F-8
Note 5—Revenue
Revenue from commercial sale of products relates to sale of SKYTROFA® (lonapegsomatropin-tcgd) on the U.S. market, which is sold to specialty pharmacies and a specialty distributor (“commercial customers”). Customer payment terms are typically
Other revenue is generated primarily from three license agreements, which were entered into in 2018. The licenses grant VISEN Pharmaceuticals exclusive rights to develop and commercialize TransCon hGH, TransCon PTH and TransCon CNP in Greater China.
|
|
Three Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(EUR’000) |
|
|||||
Revenue from external customers |
|
|
|
|
|
|
||
Commercial sale of products |
|
|
|
|
|
|
||
Rendering of services |
|
|
|
|
|
|
||
Sale of clinical supply |
|
|
|
|
|
|
||
Licenses |
|
|
|
|
|
|
||
Total revenue from external customers |
|
|
|
|
|
|
||
Attributable to |
|
|
|
|
|
|
||
Commercial customers |
|
|
|
|
|
|
||
Collaboration partners and license agreements |
|
|
|
|
|
|
||
Total revenue from external customers |
|
|
|
|
|
|
||
Specified by timing of recognition |
|
|
|
|
|
|
||
Recognized over time |
|
|
|
|
|
|
||
Recognized at a point in time |
|
|
|
|
|
|
||
Total revenue from external customers |
|
|
|
|
|
|
||
Revenue by geographical location |
|
|
|
|
|
|
||
Europe |
|
|
|
|
|
|
||
North America |
|
|
|
|
|
|
||
China |
|
|
|
|
|
|
||
Total revenue from external customers |
|
|
|
|
|
|
||
Note 6—Segment Information
The Company is managed and operated as
Note 7—Share-based Payment
As an incentive to the senior management and the Executive Board, other employees, members of the Board and select consultants, Ascendis Pharma A/S has established warrant programs, a Restricted Stock Unit (“RSU”) program adopted in December 2021, and a Performance Stock Unit (“PSU”) Program adopted in February 2023, which are all classified as equity-settled share-based payment transactions.
Share-based Compensation Costs
Share-based compensation costs are determined using the grant date fair value and are recognized over the vesting period as research and development costs, selling, general and administrative expenses, or cost of sales. For the three months ended March 31, 2023 and 2022, share-based compensation costs recognized in the unaudited condensed consolidated interim statement of profit or loss were €
Restricted Stock Unit Program
RSUs are granted by the Board to certain members of senior management and the Executive Board, certain other employees and certain members of the Board (“RSU-holders”). In addition, RSUs may be granted to select consultants.
F-9
One RSU represents a right for the RSU-holder to receive one ADS of Ascendis Pharma A/S upon vesting, if the vesting conditions are met. RSUs granted vest over three years with 1/3 of the RSUs vesting on each anniversary date from the date of grant, and require RSU-holders to be employed, or provide a specified period of service (“service conditions”).
Performance Stock Unit Program
PSUs are granted by the Board to certain members of senior management and the Executive Board (“PSU-holders”). In addition, PSUs may be granted to other employees, select consultants and members of the Board. PSUs were granted for the first time in March 2023.
One PSU represents a right for the PSU-holder to receive one ADS of Ascendis Pharma A/S upon vesting. PSUs vest in a manner similar to the service conditions of the RSUs; however, vesting is also contingent upon achievement of performance target goals as determined by the Board, provided that no more than 10% of each tranche may be directly attributable to accomplishment of financial results achieved in the financial year prior to the vesting date. Exceeding performance target goals will not result in granting of additional ADSs.
RSUs and PSUs generally cease to vest from the date of termination of employment or board membership, as applicable, whereas unvested RSUs or PSUs will forfeit. The Board may at its discretion and on an individual basis decide to deviate from the vesting conditions, including deciding to accelerate vesting in the event of termination of employment or board membership, as applicable.
All RSUs and PSUs are settled at the time of vesting by treasury shares that are ADSs repurchased in the market. The Company may at its sole discretion choose to make a cash settlement instead of delivering ADSs.
RSU and PSU Activity
The following table specifies the number of RSUs and PSUs granted and outstanding at March 31, 2023:
|
|
Restricted Stock Units |
|
|
Performance Stock Units |
|
|
Total |
|
|||
Outstanding |
|
(Number) |
|
|||||||||
January 1, 2023 |
|
|
|
|
|
|
|
|
|
|||
Granted during the period |
|
|
|
|
|
|
|
|
|
|||
Forfeited during the period |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|||
Specified by vesting year |
|
|
|
|
|
|
|
|
|
|||
2023 |
|
|
|
|
|
|
|
|
|
|||
2024 |
|
|
|
|
|
|
|
|
|
|||
2025 |
|
|
|
|
|
|
|
|
|
|||
2026 |
|
|
|
|
|
|
|
|
|
|||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|||
Warrant Program
Warrants are granted by the Board in accordance with authorizations given to it by the shareholders of Ascendis Pharma A/S to all employees, members of the Board and select consultants. Each warrant carries the right to subscribe for one ordinary share of a nominal value of DKK
F-10
Warrant Activity
The following table specifies the warrant activity for the three months ended March 31, 2023:
|
|
Total |
|
|
Weighted |
|
||
|
|
(Number) |
|
|
(EUR) |
|
||
Outstanding |
|
|
|
|
|
|
||
January 1, 2023 |
|
|
|
|
|
|
||
Granted during the period |
|
|
|
|
|
|
||
Exercised during the period |
|
|
( |
) |
|
|
|
|
Forfeited during the period |
|
|
( |
) |
|
|
|
|
March 31, 2023 |
|
|
|
|
|
|
||
Vested at March 31, 2023 |
|
|
|
|
|
|
||
The exercise prices of outstanding warrants under the Company’s warrant programs range from €
Note 8—Share Capital
The share capital of Ascendis Pharma A/S consists of
Note 9—Treasury Shares
The holding of treasury shares is as follows:
|
|
Nominal |
|
|
Holding |
|
|
Holding in |
|
|||
|
|
(EUR’000) |
|
|
(Number) |
|
|
|
|
|||
Treasury shares |
|
|
|
|
|
|
|
|
|
|||
January 1, 2023 |
|
|
|
|
|
|
|
|
% |
|||
March 31, 2023 |
|
|
|
|
|
|
|
|
% |
|||
F-11
Note 10—Financial Assets and Liabilities
Financial assets and liabilities comprise the following:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
(EUR’000) |
|
|||||
Financial assets by category |
|
|
|
|
|
|
||
Trade receivables |
|
|
|
|
|
|
||
Other receivables (excluding income tax and indirect tax receivables) |
|
|
|
|
|
|
||
Marketable securities |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
|
||
Financial assets measured at amortized cost |
|
|
|
|
|
|
||
Total financial assets |
|
|
|
|
|
|
||
Classified in the statement of financial position |
|
|
|
|
|
|
||
Non-current assets |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Total financial assets |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Financial liabilities by category |
|
|
|
|
|
|
||
Borrowings |
|
|
|
|
|
|
||
Convertible senior notes |
|
|
|
|
|
|
||
Lease liabilities |
|
|
|
|
|
|
||
Trade payables and accrued expenses |
|
|
|
|
|
|
||
Financial liabilities measured at amortized cost |
|
|
|
|
|
|
||
Derivative liabilities |
|
|
|
|
|
|
||
Financial liabilities measured at fair value through profit or loss |
|
|
|
|
|
|
||
Total financial liabilities |
|
|
|
|
|
|
||
Classified in the statement of financial position |
|
|
|
|
|
|
||
Non-current liabilities |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Total financial liabilities |
|
|
|
|
|
|
||
F-12
Marketable Securities
The composition of the portfolio of marketable securities is specified in the following table:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
(EUR’000) |
|
|||||
Marketable securities |
|
|
|
|
|
|
||
U.S. Treasury bills |
|
|
|
|
|
|
||
U.S. Government bonds |
|
|
|
|
|
|
||
Corporate bonds |
|
|
|
|
|
|
||
Agency bonds |
|
|
|
|
|
|
||
Total marketable securities |
|
|
|
|
|
|
||
Classified based on maturity profiles |
|
|
|
|
|
|
||
Non-current assets |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Total marketable securities |
|
|
|
|
|
|
||
Specified by rate structure |
|
|
|
|
|
|
||
Fixed rate |
|
|
|
|
|
|
||
Floating rate |
|
|
|
|
|
|
||
Zero-coupon |
|
|
|
|
|
|
||
Total marketable securities |
|
|
|
|
|
|
||
Specified by investment grade credit rating |
|
|
|
|
|
|
||
High grade |
|
|
|
|
|
|
||
Upper medium grade |
|
|
|
|
|
|
||
Total marketable securities |
|
|
|
|
|
|
||
The portfolio of marketable securities is all denominated in U.S. Dollars. At March 31, 2023, the portfolio had a weighted average duration of
F-13
Convertible Senior Notes
In March 2022, the Company issued an aggregate principal amount of $
The convertible notes accrue interest at a rate of
The convertible notes will be optionally redeemable, in whole or in part (subject to certain limitations), at the Company’s option at any time, and from time to time, on or after
On March 31, 2023, the carrying amount of the convertible notes was €
Derivative Liabilities
Derivative liabilities relate to the foreign currency conversion option embedded in the convertible notes.
Fair value cannot be measured based on quoted prices in active markets or other observable inputs, and accordingly, derivative liabilities are measured by using the Black-Scholes option pricing model. Fair value of the option is calculated, applying the following assumptions: (1) conversion price; (2) the Company’s share price; (3) maturity of the option; (4) a risk-free interest rate equaling the effective interest rate on a U.S. government bond with the same lifetime as the maturity of the option; (5) no payment of dividends; and (6) an expected volatility using the Company’s share price (
For additional description of fair values, refer to the following section “Fair Value Measurement.”
Sensitivity Analysis
On March 31, 2023, all other inputs and assumptions held constant, a
Similarly, on March 31, 2023, all other inputs and assumptions held constant, a
Fair Value Measurement
Derivative liabilities are measured at fair value. All other financial assets and liabilities are measured at amortized cost.
Because of the short-term maturity for cash and cash equivalents, receivables and trade payables, their fair value approximate their carrying amount. Fair value compared to carrying amount of marketable securities, convertible notes and derivatives and their level in the fair value hierarchy is summarized in the following table, where:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
F-14
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
|
|
||||||||||
|
|
Carrying |
|
|
Fair value |
|
|
Carrying |
|
|
Fair value |
|
|
Fair value level |
||||
|
|
(EUR’000) |
|
|
(1-3) |
|||||||||||||
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
||||
Financial assets measured at amortized cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Convertible senior notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
3 |
||||
Financial liabilities measured at amortized cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
3 |
||||
Financial liabilities measured at fair value through profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Movements in level 3 fair value measurements are specified below:
|
|
2023 |
|
|
2022 |
|
||
|
|
(EUR’000) |
|
|||||
Derivative liabilities |
|
|
|
|
|
|
||
January 1 |
|
|
|
|
|
|
||
Additions |
|
|
|
|
|
|
||
Remeasurement recognized in financial (income) or expense |
|
|
( |
) |
|
|
( |
) |
March 31 |
|
|
|
|
|
|
||
Maturity Analysis
Maturity analysis (on an undiscounted basis) for non-derivative financial liabilities recognized in the unaudited condensed consolidated statements of financial position at March 31, 2023, is specified below:
|
|
< 1 year |
|
|
1-5 years |
|
|
>5 years |
|
|
Total |
|
|
Carrying |
|
|||||
|
|
(EUR’000) |
|
|||||||||||||||||
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Convertible senior notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Lease liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Trade payables and accrued expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Note 11—Subsequent Events
No events have occurred after the reporting date that would influence the evaluation of these unaudited condensed consolidated interim financial statements.
F-15
ASCENDIS PHARMA A/S
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated interim financial statements, including the notes thereto, included with this report and the section contained in our Annual Report on Form 20-F for the year ended December 31, 2022 – “Item 5. Operating and Financial Review and Prospects.” The following discussion is based on our financial information prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting.” Certain information and disclosures normally included in the consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) have been condensed or omitted. IFRS as issued by the International Accounting Standards Board, and as adopted by the European Union, might differ in material respects from generally accepted accounting principles in other jurisdictions.
Special Note Regarding Forward-Looking Statements
This 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:
1
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 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 in our Annual Report on Form 20-F for the year ended December 31, 2022 — “Item 3.D. Risk Factors.” 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 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 report and the documents that we reference in this report and have filed as exhibits to this 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 Securities and Exchange Commission after the date of this report. We qualify all of our forward-looking statements by these cautionary statements.
2
Overview
We are applying our innovative TransCon technology platform to build a leading, fully integrated, global biopharma company focused on making a meaningful difference in patients’ lives. Guided by our core values of patients, science, and passion, we use our TransCon technologies to create new and potentially best-in-class therapies.
Our Vision
In January 2019, we announced Vision 3x3, our strategic roadmap through 2025 to build a leading fully integrated, global, biopharma company and achieve sustainable growth through multiple approaches:
We have applied our TransCon technology platform in combination with clinically validated parent drugs or pathways using our algorithm for product innovation, with the goal of creating product candidates with the potential for best-in-class safety, efficacy, tolerability, and convenience in our therapeutic areas of Endocrinology Rare Diseases, Oncology, and Ophthalmology. We plan to apply this algorithm for product innovation in additional therapeutic areas. We believe our approach to product innovation may reduce the risks associated with traditional drug development, and that our TransCon technology platform has been validated by non-clinical and clinical programs completed to date.
3
Ascendis Algorithm for Product Innovation
When we apply our TransCon technology platform to clinically validated parent drugs or pathways, 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 in the graphic below, 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 the potential to address a large market.
TransCon Products and Product Candidates Pipeline
We currently have one marketed product and a diversified portfolio of product candidates in clinical development in the areas of Endocrinology Rare Diseases and Oncology. We are also working to apply our TransCon technology platform in additional therapeutic areas, including Ophthalmology.
4
Global Commercialization Strategy
We are establishing a global presence to commercialize approved TransCon products. In the U.S., we have established a multi-faceted organization to support the ongoing commercialization of SKYTROFA. This organization will also serve as the foundation for future Endocrinology Rare Disease product launches in the U.S. We are expanding our presence in Europe by building integrated organizations in select countries, beginning with the planned launch of SKYTROFA in Germany, and through established distribution channels in other countries. In other markets, we plan to establish commercial presence through partners with local expertise and infrastructure.
TransCon Technology Platform
Our TransCon technology platform is designed to combine the benefits of conventional prodrug and sustained release technologies to solve the fundamental limitations seen in other approaches to extending duration of a drug’s action in the body, with the goal of developing product candidates that are highly differentiated based on efficacy, safety, tolerability and convenience. In addition to retaining the original mode of action of the parent drug and potentially supporting dosing frequency from daily up to six months or more, we believe that predictable release over time can improve treatment efficacy, increase the likelihood of clinical development success, and provide intellectual property benefits.
5
TransCon molecules have three components: a parent drug, an inert carrier that protects it, and a linker that temporarily binds the two. When bound, the carrier inactivates and shields the parent drug from clearance. When injected into the body, physiologic pH and temperature conditions initiate the release of the active, unmodified parent drug in a predictable release manner. Depending upon the type of TransCon carrier we employ, we can design our TransCon prodrugs for sustained localized or systemic delivery.
TransCon Products – Endocrinology Rare Diseases
TransCon Growth Hormone (hGH) for Pediatric Growth Hormone Deficiency
TransCon hGH is a prodrug of somatropin (“hGH”) composed of an unmodified somatropin, administered once weekly, that is transiently bound to a carrier and proprietary linker. TransCon hGH is designed to maintain the same mode of action as daily therapies by releasing the same recombinant growth hormone molecule, somatropin, as used in extensively proven daily hGH therapy.
In August 2021, the FDA approved TransCon hGH, known by its brand name SKYTROFA, 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 GHD. SKYTROFA is the first FDA approved product that delivers somatropin, or growth hormone, by sustained release over one week.
In January 2022, the EC granted marketing authorization for SKYTROFA (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.
In March 2023, we enrolled our first patient in SkybriGHt, a Phase 4 U.S. multi-center, non-interventional, observational cohort study of subjects treated with SKYTROFA in the post-marketing setting.
TransCon Product Candidates – Endocrinology Rare Diseases
TransCon Growth Hormone (hGH) for Other Indications
Clinical Development in Adults
We are currently conducting foresiGHt, a global Phase 3 trial investigating the metabolic benefits of TransCon hGH in adults with GHD. Patients in the trial are randomized in a 1:1:1 ratio into the three arms of the study—treatment with once-weekly TransCon hGH, once-weekly placebo, or daily hGH. The primary endpoint of the trial is a change from baseline in percentage trunk fat at 38 weeks. Following the 38-week main trial period, all patients will be eligible to receive once-weekly TransCon hGH during the 52-week open-label extension. During the fourth quarter of 2022, we completed recruitment into this trial, and topline results are expected in the fourth quarter of 2023.
Other Development Plans
In June 2022, we submitted a trial protocol to the FDA for New InsiGHTS, a Phase 2 trial to evaluate TransCon hGH in Turner Syndrome. We expect to complete enrollment in the third quarter of 2023. Based on the nature of Turner Syndrome, in this trial we are evaluating higher doses of TransCon hGH and daily hGH compared to doses studied for GHD. In addition, we are also considering other potential indications for TransCon hGH where we believe a long-acting hGH therapy may offer benefits to patients.
6
TransCon PTH
TransCon PTH (palopegteriparatide) is an investigational prodrug of parathyroid hormone composed of PTH(1-34) transiently conjugated to an inert carrier via a TransCon linker that is designed to be dosed once-daily to achieve and maintain a steady concentration of PTH in the bloodstream within the normal range, at levels similar to those observed in healthy individuals. TransCon PTH is designed to restore physiologic levels of PTH, 24 hours per day, thereby more fully addressing all aspects of the disease including normalizing serum and urinary calcium and serum phosphate levels. Pharmacokinetic data from our multiple ascending dose cohorts in our Phase 1 trial of TransCon PTH in healthy subjects demonstrated a half-life of approximately 60 hours, supporting an infusion-like profile with daily administration. We believe TransCon PTH can address the fundamental limitations of short-acting PTH molecules and become a highly differentiated therapy for hypoparathyroidism.
Clinical Development of TransCon PTH for Adult Hypoparathyroidism
Our ongoing Phase 3 PaTHway Trial, Phase 3 PaTHway Japan Trial, and Phase 2 PaTH Forward Trial evaluated TransCon PTH in adult patients with hypoparathyroidism. Following the primary outcome period, all three trials continue in the extension portion to collect long term data.
On April 3, 2023, we announced that the FDA has notified us that, as part of their ongoing review, the FDA has identified deficiencies in our NDA for TransCon PTH in hypoparathyroidism that at the time precludes them from holding further discussions about labeling and post-marketing requirements/commitments. The deficiencies were not disclosed in the letter. The FDA also stated that this does not reflect their final regulatory decision on our application. The FDA originally accepted for Priority Review our NDA in October 2022 and set a Prescription Drug User Fee Act (“PDUFA”) target action date of April 30, 2023. This development a month from the PDUFA action date may lead to a delay in the FDA’s final regulatory decision on the TransCon PTH NDA.
On April 3, 2023, we also announced that we received the comprehensive Day 120 response from the European Medicines Agency (“EMA”). We remain on track for a EC decision on the Marketing Authorisation Application (“MAA”) for TransCon PTH during the fourth quarter of 2023. If approved, first launch planned in Germany in early 2024.
During the second quarter of 2023, we submitted an application to German regulatory authorities to initiate an early access program in Germany. If approved, we expect to enroll first patient during the second quarter of 2023.
In January 2023, we announced topline data from PaTHway Japan, a single-arm Phase 3 trial to evaluate the safety, tolerability, and efficacy of TransCon PTH in adults with hypoparathyroidism. The study achieved its primary objective, with topline results consistent with our trials in North America and the EU. Twelve out of thirteen patients met the primary composite endpoint, which was defined as serum calcium levels in the normal range (8.3–10.6 mg/dL) and independence from conventional therapy (active vitamin D and >600 mg/day of calcium supplements). In this trial, TransCon PTH was generally well-tolerated, with no discontinuations related to study drug. Twelve patients continue in the ongoing 3-year extension portion of the PaTHway Japan Trial.
In December 2022, the FDA allowed Ascendis to initiate a U.S. expanded access program (“EAP”) for TransCon PTH for eligible adult patients with hypoparathyroidism with prior PTH treatment experience. This EAP is open for enrollment, allows U.S. physicians to request access to investigational TransCon PTH for their eligible patients.
In November 2022, we submitted a MAA to the EMA for TransCon PTH in adult patients with hypoparathyroidism.
In September 2022, we announced new Week 110 data from the Phase 2 PaTH Forward Trial showing that long-term therapy with TransCon PTH provided a durable response in adult patients with hypoparathyroidism, as evidenced by continued normalization of mean serum calcium levels and 93% of patients achieving independence from conventional therapy with active vitamin D and therapeutic levels of calcium. As of March 31, 2023, 57 out of the 59 patients continued in the open-label extension (“OLE”) portion of the trial, where they receive a customized maintenance dose of TransCon PTH. In addition, all 57 subjects have exceeded three years of follow-up in the PaTH Forward Trial. Two patients withdrew from the trial for reasons unrelated to safety or efficacy of the study drug.
7
In March 2022, we announced that topline data from the randomized, double-blind, placebo-controlled portion of our Phase 3 PaTHway Trial of TransCon PTH in adults with hypoparathyroidism demonstrated statistically significant improvement with TransCon PTH compared to control on the primary composite endpoint and all key secondary endpoints. The primary endpoint, defined as serum calcium levels in the normal range (8.3–10.6 mg/dL) and independence from conventional therapy (active vitamin D and >600 mg/day of calcium supplements) with no increase in prescribed study drug within the 4 weeks prior to the Week 26 visit, was achieved by 78.7% of TransCon PTH-treated patients (48 of 61), compared to 4.8% for patients (1 of 21) in control group (p-value <0.0001). In addition, all key pre-specified secondary endpoints were met with statistical significance. TransCon PTH was generally well tolerated, with no discontinuations related to study drug. Three patients discontinued during the treatment period, two from the placebo arm and one from the TransCon PTH arm. TransCon PTH-treated patients showed a mean decrease in 24-hour urine calcium excretion into the normal range.
Following an initial blinded study period of 26 weeks, all 79 patients completing the blinded period opted to receive treatment with TransCon PTH in the ongoing open-label extension portion of the study for up to 3 years (156 weeks). As of March 31, 2023, 76 out of 79 patients have exceeded two years of follow-up in the PaTHway Trial.
TransCon CNP
TransCon CNP is an investigational long-acting prodrug of C-type natriuretic peptide designed to provide continuous CNP exposure at therapeutic levels with a well-tolerated and convenient once-weekly dose. It is being developed for the treatment of children with ACH. TransCon CNP is designed to provide effective shielding of CNP from neutral endopeptidase degradation in subcutaneous tissue and the blood compartment, minimize binding of CNP to the NPR-C receptor to decrease clearance, reduce binding of CNP to the NPR-B receptor in the cardiovascular system to avoid hypotension, and release unmodified CNP, which is small enough in size to allow effective penetration into growth plates. Shorter-acting CNP and CNP analogs in development have resulted in high Cmax levels that may cause adverse cardiovascular events. We believe the therapeutically sustained release of TransCon CNP offers advantages that may mitigate this issue, leading to more constant CNP exposure at lower Cmax to correlate with better therapeutic outcomes.
Clinical Development of TransCon CNP for Achondroplasia
TransCon CNP is currently being evaluated in a global Phase 2 trial, known as the ACcomplisH Trial, which is designed to evaluate the safety and efficacy of TransCon CNP in children (ages two to ten years) with ACH.
8
In November 2022, we announced topline results from ACcomplisH, a Phase 2 randomized, double-blind, placebo-controlled, dose-escalation trial evaluating the safety and efficacy of once-weekly TransCon CNP compared to placebo.
The ACcomplisH Trial evaluated 57 children with ACH aged 2 to 10 years old, randomized in a 3:1 ratio to receive either sequential ascending doses of once-weekly TransCon CNP or placebo for 52 weeks. The trial met its primary objectives, demonstrating that TransCon CNP at 100 µg/kg/week met the primary efficacy endpoint of annualized height velocity (“AHV”) at 52 weeks (p=0.0218). All 57 randomized children completed the blinded portion of ACcomplisH and continued in the OLE portion of ACcomplisH at the 100 µg/kg/week dose. As of March 31, 2023, 57 out of 57 children continued in the OLE.
TransCon CNP Dose Group (n) |
AHV (cm/year) |
p-value
|
6 µg/kg/week (n=10) |
4.09
|
0.6004 |
20 µg/kg/week (n=11) |
4.52
|
0.7022 |
50 µg/kg/week (n=10) |
5.16
|
0.0849 |
100 µg/kg/week (n=11) |
5.42
|
0.0218 |
Pooled Placebo (n=15) |
4.35
|
NA |
Additional highlights:
One-year data from the OLE portion of the ACcomplisH Trial is expected during the fourth quarter of 2023.
In October 2022, we submitted protocols to initiate ApproaCH, a global randomized, double-blind, placebo-controlled Phase 2b trial of TransCon CNP in children ages 2–11 years with ACH. The trial targets enrollment of ~80 patients. During the second quarter of 2023, we expect to complete enrollment in ApproaCH.
We are also conducting ACHieve, a multi-center natural history study designed to gain insight into the experiences of pediatric subjects with ACH. ACHieve will study growth velocity, body proportionality, and comorbidities over time in children with ACH up to eight years old. No study medication will be administered.
In addition, we are planning a trial to evaluate TransCon CNP in children under the age of 2 years. We plan to submit an IND or similar application for this trial in the third quarter of 2023.
9
TransCon Product Candidates—Oncology
TransCon for Immuno-Oncology
We believe prolonging therapeutic activity and targeting drug activity to relevant cell types and tissues have the potential to improve treatment outcomes while reducing toxicities, and could offer potential new combination and multi-agent regimens that would not otherwise be feasible. In addition, we believe our TransCon technology platform is well-suited to improve cancer treatments given the large number of validated targets with known limitations. We are currently investigating two clinical-stage product candidates designed to activate the patient’s own immune system to eradicate malignant cells.
Clinical Development in Immuno-Oncology
Our two product candidates in Oncology are designed to provide sustained therapeutic levels of an active drug locally (TransCon TLR7/8 Agonist), or systemically (TransCon IL-2 ß/g), which we believe could provide potent and durable systemic anti-tumor efficacy.
TransCon TLR7/8 Agonist for Sustained Localized Release
TransCon TLR7/8 Agonist is an investigational long-acting prodrug, designed for sustained release of resiquimod, a small molecule agonist of TLR 7 and 8. It is designed to provide sustained and potent activation of the innate immune system in the tumor and tumor draining lymph node for weeks following a single intratumoral injection and to have a low risk of systemic toxicity. The transcendIT-101 Trial, a Phase 1/2 clinical trial to evaluate the safety and efficacy of TransCon TLR7/8 Agonist in locally advanced or metastatic solid tumors, alone or in combination with pembrolizumab, is enrolling patients in four indication-specific cohorts.
In November 2022, we announced new data from the dose-escalation portion of transcendIT-101. All 23 of the patients enrolled in the dose escalation portion of the trial had advanced or metastatic solid tumors that had progressed on prior treatments, 9 in the monotherapy cohort (intratumoral TransCon TLR7/8 Agonist alone) and 14 in the combination therapy cohort (intratumoral TransCon TLR7/8 Agonist plus the check-point inhibitor pembrolizumab). Two dose levels were evaluated: 0.3 mg/lesion and 0.5 mg/lesion. The recommended Phase 2 dose was declared at 0.5 mg/lesion for up to two lesions, which is being evaluated in four cohorts focused on cancers where increased TLR activity has potential to improve innate and adaptive immune activation and host defense against cancers. The cohorts include head and neck squamous-cell carcinoma; other HPV-associated cancers; melanoma; and cutaneous squamous cell carcinoma.
TransCon IL-2 ß/g for Sustained Systemic Release
TransCon IL-2 b/g is an investigational long-acting prodrug designed to improve cancer immunotherapy through sustained release of an IL-2 variant that selectively activates IL-2Rß/g, with minimal binding to IL-2Rα. The Phase 1/2 IL-Believe Trial evaluating TransCon IL-2 b/g monotherapy or in combination with pembrolizumab in patients with advanced cancer is enrolling patients in dose escalation cohorts.
In April 2023, we announced that initial dose escalation data from our ongoing Phase 1/2 IL-Believe Trial of TransCon IL-2 β/γ alone or in combination with pembrolizumab has been accepted for online publication at ASCO 2023, the American Society of Clinical Oncology annual meeting held in June. Results from monotherapy dose escalation including data supporting declaration of recommended Phase 2 dose for monotherapy are now expected to be announced during the second quarter of 2023. Combination therapy dose escalation results are expected during the third quarter of 2023.
Other Development Plans
We believe that a combination TransCon TLR7/8 Agonist and TransCon IL-2 b/g may have the potential to produce greater anti-tumor activity than either candidate alone. We plan to evaluate clinical activity of the combination of TransCon TLR7/8 Agonist and TransCon IL-2 b/g in 2023.
10
TransCon Product Candidates—Ophthalmology
Market Opportunity in Ophthalmology
According to the Centers for Disease Control and Prevention, more than four million Americans aged 40 years and older are either legally blind or live with low vision. Age-related eye diseases such as age-related macular degeneration (“AMD”), cataract, diabetic retinopathy, and glaucoma are the leading causes of blindness and low vision. Advances in technology have resulted in new treatment options for disorders such as wet AMD, diabetic macular edema, and retinal vein occlusion. Through intravitreal injections, medication is placed directly into a space in the back of the eye called the vitreous cavity.
The use of anti-vascular endothelial growth factor (“anti-VEGF”) agents have transformed the treatment of wet AMD. Clinical studies have shown that anti-VEGF treatments are very successful in preventing vision loss resulting from wet AMD and may help regain some lost vision. However, anti-VEGF treatment requires repetitive intravitreal injections, representing a high treatment burden for the patients. Lack of adherence and undertreatment remains a significant issue in real-world outcomes, and extending duration of therapeutic effect and reduce treatment frequency remains a key unmet medical need. Intravitreal treatments represent an established, well-understood, and high-value therapeutic category, characterized by high unmet medical need. We estimate the global market for ophthalmology treatments exceeds $10 billion and is primed for disruption.
Our Solution: TransCon Hydrogel for Ophthalmology
Our TransCon Hydrogel platform has been designed to provide sustained levels of a drug at a localized site and to allow for prolonged, continuous release over months. In vivo data demonstrated that the TransCon Hydrogel platform provided continuous local drug release over at least six months, supporting twice yearly administration. By reducing the frequency of intravitreal injection, we believe the TransCon Hydrogel platform could potentially increase patient adherence and persistence, resulting in better outcomes.
Development of TransCon Ophthalmology Pipeline Candidates
TransCon RBZ (ranibizumab) has been selected as our lead pipeline candidate for Ophthalmology. Lucentis® (ranibizumab) was first approved by the FDA in 2006 for the treatment of wet AMD. It has been studied extensively and demonstrated efficacy following sustained infusion from an implantable osmotic minipump. Thus, we believe ranibizumab represents a clinically validated parent drug that could provide lower development risk compared to new candidate discovery.
In addition to TransCon RBZ, we are evaluating additional Ophthalmology product candidates.
11
Results of Operations
|
|
Three Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(EUR’000) |
|
|||||
Statement of Profit or Loss |
|
|
|
|
|
|
||
Revenue |
|
|
33,589 |
|
|
|
6,828 |
|
Cost of sales |
|
|
4,621 |
|
|
|
4,246 |
|
Gross profit / (loss) |
|
|
28,968 |
|
|
|
2,582 |
|
Research and development costs |
|
|
106,114 |
|
|
|
83,193 |
|
Selling, general and administrative expenses |
|
|
66,539 |
|
|
|
47,418 |
|
Operating profit / (loss) |
|
|
(143,685 |
) |
|
|
(128,029 |
) |
Share of profit / (loss) of associate |
|
|
(1,227 |
) |
|
|
(4,873 |
) |
Finance income |
|
|
45,135 |
|
|
|
13,044 |
|
Finance expenses |
|
|
9,840 |
|
|
|
5,399 |
|
Profit / (loss) before tax |
|
|
(109,617 |
) |
|
|
(125,257 |
) |
Income taxes (expenses) |
|
|
(1,297 |
) |
|
|
(241 |
) |
Net profit / (loss) for the period |
|
|
(110,914 |
) |
|
|
(125,498 |
) |
We had a net loss of €110.9 million for the three months ended March 31, 2023, compared to a net loss of €125.5 million for the same period last year. Total equity was €167.2 million as of March 31, 2023, compared to €263.3 million as of December 31, 2022. Further details about our results of operations are described in the following sections.
Revenue
Revenue for the three months ended March 31, 2023 was €33.6 million, representing an increase of €26.8 million compared to the three months ended March 31, 2022. This increase was primarily attributable to the higher commercial sale of products and higher revenue from rendering of services, partly offset by lower sale of clinical supply.
The development in quarterly revenue from sale of commercial products in 2022 and 2023, was:
|
|
Three Months Ended, |
|
|||||||||||||||||
|
|
March 31, 2022 |
|
|
June 30, 2022 |
|
|
September 30, 2022 |
|
|
December 31, 2022 |
|
|
March 31, 2023 |
|
|||||
|
|
(EUR’000) |
|
|||||||||||||||||
Sale of commercial products |
|
|
1,888 |
|
|
|
4,435 |
|
|
|
12,252 |
|
|
|
17,084 |
|
|
|
31,551 |
|
Cost of Sales
Cost of sales for the three months ended March 31, 2023 was €4.6 million, representing an increase of €0.4 million compared to the three months ended March 31, 2022. This increase was primarily attributable to higher costs arising from higher commercial revenue, however partly offset by lower cost of sales for clinical supplies.
12
Research and Development Costs
The following table specifies external project costs on the development pipeline and other research and development costs.
|
|
Three Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(EUR’000) |
|
|||||
External project costs |
|
|
|
|
|
|
||
TransCon hGH |
|
|
18,010 |
|
|
|
19,939 |
|
TransCon PTH |
|
|
12,514 |
|
|
|
11,686 |
|
TransCon CNP |
|
|
10,945 |
|
|
|
9,555 |
|
TransCon IL-2 ß/γ |
|
|
10,135 |
|
|
|
1,446 |
|
TransCon TLR7/8 |
|
|
8,492 |
|
|
|
2,137 |
|
Other project costs |
|
|
3,288 |
|
|
|
602 |
|
Total external project costs |
|
|
63,384 |
|
|
|
45,365 |
|
Other research and development costs |
|
|
|
|
|
|
||
Employee costs |
|
|
31,926 |
|
|
|
30,417 |
|
Other costs |
|
|
8,100 |
|
|
|
4,691 |
|
Depreciation |
|
|
2,704 |
|
|
|
2,720 |
|
Total other research and development costs |
|
|
42,730 |
|
|
|
37,828 |
|
Total research and development costs |
|
|
106,114 |
|
|
|
83,193 |
|
The development of research and development (“R&D”) costs reflects the advancement of our pipeline of endocrinology and oncology, where we have multiple prodrug therapies in development, as well as initial activities within our new therapeutic area of ophthalmology.
R&D costs for the three months ended March 31, 2023 was €106.1 million, representing an increase of €22.9 million compared to the three months ended March 31, 2022. This increase was primarily due to higher development costs for our oncology programs, TransCon IL-2 ß/g and TransCon TLR7/8, reflecting the advancement of these product candidates and higher employee and other costs attributable to organizational growth.
Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses for the three months ended March 31, 2023 was €66.5 million, representing an increase of €19.1 million compared to the three months ended March 31, 2022. This increase was primarily due to higher external commercial expenses related to SKYTROFA and pre-launch activities for TransCon PTH of €8.6 million, higher employee related expenses of €4.4 million, and an increase in other general and administrative expenses attributable to organizational growth of €5.8 million.
Net Profit / (Loss) of Associate
Net loss of associate for the three months ended March 31, 2023 was €1.2 million, representing a decrease of €3.6 million compared to the three months ended March 31, 2022, and reflects our share of loss in VISEN.
Finance Income and Finance Expenses
Finance income for the three months ended March 31, 2023 was €45.1 million, representing an increase of €32.1 million compared to the three months ended March 31, 2022. This increase was primarily due to a €40.1 million higher remeasurement gain on derivative liabilities and €3.7 million higher interest income, partly offset by €11.7 million lower exchange rate gains compared to the same period last year.
Finance expenses for the three months ended March 31, 2023 was €9.8 million, representing an increase of €4.4 million compared to the three months ended March 31, 2022. This increase was primarily due to €8.2 million higher interest and amortization charges on convertible notes, partly offset by €4.2 million lower transaction costs attributable to the convertible notes financing in March 2022.
13
Impact from COVID-19 Pandemic
The COVID-19 pandemic has affected countries where we are operating, where we have planned or have ongoing clinical trials, and where we rely on third-parties to manufacture preclinical, clinical and commercial supply.
While COVID-19 had an impact on how we work and conduct our activities, we have managed to avoid significant disruptions to our clinical and manufacturing operations.
We monitor the risks from the pandemic closely, and work with relevant stakeholders to avoid and limit disruptions, and to develop and establish working measures. However, while COVID-19 continues to impact global societies, the uncertainty related to the duration and direction of the pandemic makes the future impact from COVID-19, including the magnitude of any impact on our operational results, highly uncertain and unpredictable.
For additional description of COVID-19 related risks, please refer to “Item 3D. Risk Factors,” set forth in our 2022 Annual Report on Form 20-F.
14
Liquidity and Capital Resources
Our liquidity and capital resources comprise cash, cash equivalents and marketable securities (“capital resources”).
As of March 31, 2023, these amounted to €585.7 million, specified as follows:
|
|
Carrying |
|
|
Fair |
|
||
|
|
(EUR’000) |
|
|||||
March 31, 2023 |
|
|
|
|
|
|
||
Liquidity and capital resources |
|
|
|
|
|
|
||
Marketable securities |
|
|
84,460 |
|
|
|
83,525 |
|
Cash and cash equivalents |
|
|
501,281 |
|
|
|
501,281 |
|
Total liquidity and capital resources |
|
|
585,741 |
|
|
|
584,806 |
|
Classification in consolidated statement of financial position |
|
|
|
|
|
|
||
Current assets |
|
|
585,741 |
|
|
|
584,806 |
|
Total liquidity and capital resources |
|
|
585,741 |
|
|
|
584,806 |
|
As of March 31, 2023, marketable securities had a weighted average duration of 3.4 months and are classified as current positions (i.e., those maturing within twelve months after the reporting date).
Our expenditures primarily relate to research and development activities and selling, general and administrative activities to support our business, including our continued development of therapeutic areas within endocrinology, oncology and ophthalmology, the commercialization of SKYTROFA and expenses made in anticipation of potential future product launches. We manage our liquidity risk by maintaining adequate cash reserves and banking facilities, and by matching the maturity profiles of financial assets including marketable securities, with cash-forecasts including payment profiles on liabilities. We monitor the risk of a shortage of funds through a liquidity planning tool, to ensure sufficient funds are available to settle liabilities as they become due.
Based on our current operating plan, we believe that our existing capital resources as of March 31, 2023, will be sufficient to meet our projected cash requirements for at least twelve months from the date of this 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.
Historically, we have funded our operations primarily through issuance of preference shares, ordinary shares, including our initial public offering, follow-on offerings and exercise of warrants, convertible debt securities, and payments to us made under collaboration agreements. Including our initial public offering, since February 2015, we have completed public offerings of American Depositary Shares (“ADSs”) with net proceeds of $2,256.6 million (or €1,968.4 million at the time of the offerings).
In March 2022, we issued an aggregate principal amount of $575.0 million of fixed rate 2.25% convertible notes. Refer to Note 10, “Financial Assets and Liabilities” for further information. We used $116.7 million (€105.3 million) of the net proceeds from the offering in March 2022 to repurchase 1,000,000 ADSs representing the Company’s ordinary shares. Total holding of treasury shares is disclosed in Note 9, “Treasury Shares.”
For additional description of our cash requirements, public offerings, expense structure and commitments, refer to “Item 5B. Liquidity and Capital Resources,” set forth in our 2022 Annual Report on Form 20-F.
Our future funding requirements will depend on many factors, including, but not limited to:
15
Additional funds may not be available if we need them or 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 and commercialization activities, preclinical studies and clinical trials.
The following table summarizes our cash flows for the three months ended March 31, 2023 and 2022:
|
|
Three Months Ended |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|||
|
|
(EUR’000) |
|
|||||||||
Cash flows from / (used in) |
|
|
|
|
|
|
|
|
|
|||
Operating activities |
|
|
(147,044 |
) |
|
|
(130,788 |
) |
|
|
(16,256 |
) |
Investing activities |
|
|
210,646 |
|
|
|
38,542 |
|
|
|
172,104 |
|
Financing activities |
|
|
(702 |
) |
|
|
397,735 |
|
|
|
(398,437 |
) |
Net increase / (decrease) in cash and cash equivalents |
|
|
62,900 |
|
|
|
305,489 |
|
|
|
(242,589 |
) |
Cash Flows from / (used in) Operating Activities
Cash flows used in operating activities for the three months ended March 31, 2023 was €147.0 million, representing an increase of €16.3 million compared to the three months ended March 31, 2022. This increase was primarily attributable to a €21.0 million higher loss for the period when adjusted for non-operating financial income and expenses, taxes and non-cash items.
16
Cash Flows from / (used in) Investing Activities
Cash flows from investing activities for the three months ended March 31, 2023 was €210.6 million, representing an increase of €172.1 million compared to the three months ended March 31, 2022. This increase was primarily attributable to net settlements of marketable securities of €173.2 million in line with our liquidity management strategy.
Cash Flows from / (used in) Financing Activities
Cash flows used in financing activities for the three months ended March 31, 2023 was €0.7 million, representing a decrease of €398.4 million compared to cash flows from financing activities for the three months ended March 31, 2022. This decrease was primarily attributable to the convertible notes issuance and acquisition of treasury shares completed during the three months ended March 31, 2022.
Off-balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements or any holdings in variable interest entities.
Qualitative Disclosures about Market Risk
Our activities expose us to financial risks of changes in foreign currency exchange rates, inflation rates and interest rates. We do not enter into derivative financial instruments to manage our exposure to such risks. Further, we are exposed to credit risk, equity risk and liquidity risk. For a description of our exposure to liquidity risks and processes for managing these risks, please refer to “Liquidity and Capital Resources,” set forth above.
Foreign Currency Risk
We are exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the U.S. Dollar, the Swiss Franc and the British Pound. We have received payments in U.S. Dollars under our collaboration and license agreements, and the proceeds from our Series D financing in November 2014, our initial public offering in February 2015 and our follow-on offerings were in U.S. Dollars. In addition, our outstanding convertible notes are denominated in U.S. Dollars. We seek to minimize our exchange rate risk by maintaining cash positions in the currencies in which we expect to incur the majority of our future expenses and we make payments from those positions.
Interest Rate Risk
Outstanding convertible notes comprise a 2.25% coupon fixed rate structure. In addition, the interest rate on lease liabilities is fixed at the lease commencement date. Future indebtedness, including those related to lease arrangements, if any, may be subject to higher interest rates. In addition, future interest income from interest-bearing bank deposits and marketable securities may fall short of expectations due to changes in interest rates.
Derivative liabilities are measured at fair value through profit or loss. Accordingly, since the fair value is exposed from the development in interest rates, the profit or loss is exposed to volatility from such development.
Inflation Risk
Inflation affects us as our vendors may pass on any increased costs to us and accordingly increase our R&D costs, SG&A expenses and cost of manufacturing. We do not believe that inflation had a material impact on our results of operation for the three months ended March 31, 2023.
17
Credit Risk
We have adopted an investment policy with the primary purpose of preserving capital, fulfilling our liquidity needs and diversifying the risks associated with cash, cash equivalents and marketable securities. Our investment policy establishes minimum ratings for institutions with which we hold cash, cash equivalents and marketable securities, as well as rating and concentration limits for marketable securities held. All material counterparties are considered creditworthy. While the concentration of credit risk may be significant, the credit risk for each individual counterpart is considered to be low. Our exposure to credit risk primarily relates to cash, cash equivalents, and marketable securities. The credit risk on our bank deposits is limited because the counterparties holding significant deposits are banks with high credit-ratings (minimum A2/A-) assigned by international credit-rating agencies.
We maintain the majority of our cash and cash equivalents in accounts with major financial institutions, and our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business and financial position. The banks are reviewed on a regular basis and deposits may be transferred during the year to mitigate credit risk.
In order to mitigate the concentration of credit risks on bank deposits and to preserve capital, a portion of the bank deposits have been placed into primarily U.S. treasury bills, U.S. government bonds and corporate bonds. Our investment policy, approved by the Board, only allows investment in marketable securities having investment grade credit-ratings, assigned by international credit-rating agencies. Accordingly, the risk from probability of default is low.
On each reporting date, we consider the risk of expected credit loss on bank deposits and marketable securities, including the hypothetical impact arising from the probability of default, which is considered in conjunction with the expected loss caused by default by banks or securities with similar credit-ratings and attributes. In line with previous periods, this assessment did not reveal a material impairment loss, and accordingly no provision for expected credit loss has been recognized.
Equity Risk
We are exposed from the development in the Company’s share price, when remeasuring derivative liabilities at fair value.
Derivative liabilities relate to the foreign currency conversion option embedded in the convertible notes and are measured at fair value through profit or loss. Fair value cannot be measured based on quoted prices in active markets, or other observable input, and accordingly, derivative liabilities are measured by using the Black-Scholes option pricing model, where the pricing is exposed from changes in the Company’s share price. Sensitivity analysis over derivative liabilities is disclosed in Note 10, “Financial Assets and Liabilities.”
18