Ascendis Pharma A/S (ASND) Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Second Quarter 2026 Ascendis Pharma Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to Chad Fugure, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and thank you, everyone, for joining our second quarter 2026 financial results conference call. I'm Chad Fugure, Vice President, Investor Relations at Ascendis Pharma. Joining me on the call today are Jan Mikkelsen, President and Chief Executive Officer; Scott Smith, Chief Financial Officer; Sherrie Glass, Chief Business Officer; and Jay Wu, Executive Vice President and President, Ascendis U.S. Before we begin, I'd like to remind you that this conference call including the Q&A session that follows our prepared remarks will contain forward-looking statements that are intended to be covered under the safe harbor provided by the Private Securities Litigation Reform Act. All statements made on this call, other than the statements of historical fact are forward-looking statements. Examples of such statements may include, but are not limited to, statements regarding our commercialization and continued development of SKYTROFA, YORVIPATH and YUVIWEL, including label expansion and combination treatment, certain expectations regarding patient access and financial outcomes, our pipeline candidates and our expectations with respect to their continued progress and potential commercialization, our strategic plans, partnerships and investments, our goals regarding our clinical pipeline, including the timing of clinical results and trials, our ongoing and planned regulatory filings and our expectations regarding the timing and results of regulatory decisions and our financial outlook and Vision 2030 objectives. These statements are based on information that is available to us as of today. Actual results may differ materially from those in our forward-looking statements, and you should not place undue reliance on these statements. We assume no obligation to update these statements as circumstances change, except as required by law. For additional information concerning the factors that could cause actual results to differ materially, please see the forward-looking statements section of today's press release and the Risk Factors section of our annual report on Form 20-F filed with the SEC on February 11, 2026. In addition, during this call, we will refer to certain non-IFRS financial measures. These measures are not prepared in accordance with IFRS accounting standards and should not be considered in isolation from or as a substitute for our IFRS results. A reconciliation of each non-IFRS measure to the most directly comparable IFRS measure together with an explanation of why management believe these measures are useful to investors is included in today's press release. TransCon Growth Hormone or TransCon PTH is now approved in the U.S. by the FDA for the replacement of endogenous growth hormone in adults with growth hormone deficiency in addition to the treatment of pediatric growth hormone deficiency and in the EU has received MAA authorization for the European Commission for the treatment of pediatric growth hormone deficiency. TransCon PTH is approved in the U.S. by the FDA for the treatment of hypoparathyroidism in adults and the European commission in the United Kingdom's Medicines and Healthcare products Regulatory Agency of granted marketing authorization for TransCon PTH replacement therapy indicated for the treatment of adults with chronic hypoparathyroidism. TransCon CNP is approved in the U.S. by the FDA to increase linear growth in pediatric patients 2 years of age and older with achondroplasia with open up PPCs continued approval for this indication, which was based on an improvement of annualized growth velocity, may be contingent upon verification and description of clinical benefit in confirmatory trials. Other than the approved products I've just described, our product candidates are investigational and not approved for commercial use. As investigational products, the safety and effectiveness of product candidates have not been reviewed or approved by any regulatory agency, none of the statements during this conference call regarding our product candidates shall be viewed as promotional. On the call today, we'll discuss our second quarter 2026 financial results, and we'll provide further business updates. Following some prepared remarks, we'll then open up the call for questions. With that, let me turn it over to Jan.

Thanks, Chad. Good day, everyone. During the second quarter, achievement of important milestones and strong demand for our TransCon products continue to drive the transformation of Ascendis into a leading global biopharma company. The uniqueness of the TransCon technology platform. our strong development and global commercialization capability and our values of visions are the fundamentals driving this transformation. We believe the same strength will continue to drive Ascendis growth in the following years. Starting with the long-term durability of our highly differentiated approved protein and peptide-based combination products. SKYTROFA, YORVIPATH and YUVIWEL, we believe these products to be the key driver of our growth story for the next 10 to 15 years to global commercialization potential for label expansion, including combination treatments, and investment in patient support offerings. The continued expansion of the TransCon technology platform. It enable us to fulfill our plans to file at least 1 IND [indiscernible] yearly each based on a new NCE laying the foundation for strong growth for many decades. This will also enable us to stay new topics errors in addition to hypopara and group dissolves. As a further upside, our status partners are advancing TransCon candidates in that indications. This is why we believe Ascendis is well positioned for self sustained long-term growth. Let's begin with a more detailed look at YORVIPATH. YORVIPATH is the first and only approved treatment for adults with hypopara that addresses the underlying disease by replacing the missing industrious PTH throughout the body. Uptake of YORVIPATH has grown steadily since launch both in the U.S. and many other countries, reflecting the significant unmet medical need among the more than 800,000 patients living with this serious rare disease in the geographic region covered by our global commercial infrastructure. Outside of the U.S. we see consistent new patient demand and continued expansion of global commercialization launches with full reimbursement. YORVIPATH is now available commercially or 2 named patient programs in more than 35 countries. This illustrates the strength of our ability to execute a rapid, broad global loans of the rare disease product. In the U.S., new patient domain for YORVIPATH in the second quarter has remained robust, consistent with prior quarters. In addition, persistent prescribing is broadening and deepening. A patient who has successfully initiated YORVIPATH treatment, continue to stay on therapy, indicating a high level of satisfaction. We continue to be excited by the growth of YORVIPATH in the U.S. and outside the U.S. and to see its continued strong loan performance. data from our long-term Phase II and Phase III trials of YORVIPATH, presented in the second quarter highlight why EPS is becoming extending standard of care in post surgical and all subset of hypopara, including ultra rare genetic causes like [indiscernible], ADS 1 and ADS 2. Results showed sustained response rate of 82% to 86% for the multi-covenant endpoint with clinical benefit across multiple organ systems, CMS, kidney, small intestine and bone plus meaningful improvement in quality of life. Patient retention as high as 95% after 5 years of 3, pretty unique. In parallel, we are working to further advance our leadership in hypopara with additional clinical trials that include expanding the label to include the 12 to 18 years. and in the U.S. higher doses for patients and developing a once-weekly product for the patient that is on stable doses of YORVIPATH. Turning now to YUVIWEL. We believe YUVIWEL is positioned to become the market leader therapy for achondroplasia. Rapid uptake of YUVIWEL is already transforming the U.S. market. Across the board, we see a highly favorable response among patients and physicians to YUVIWEL's different state of profile. In the U.S. through June 30 we had more than 170 unique patients enrolled. Since then, uptake has continued with more than 220 enrollment and more than 65% approved for reimbursement in the U.S. through the end of July. Really and unique loans. The rapid uptick is by patient of all kinds of background, those Swisses returning to medical therapy or starting therapy for achondroplasia for the first time. We believe YUVIWEL is really growing the U.S. market. Which is exactly the pattern you will love to see whether a highly differentiated product is introduced into air where there still exists a high unmet medical need. Long-term data for the now completed pivotal approach trial, show durable and consistent improvement growth like body proportional along with the general well-tolerated safety profile. Compared to placebo, underscoring while the community is quickly adopting YUVIWEL. In the EU, a regulatory decision for YUVIWEL is expected in the fourth quarter of 2026. We are also making YUVIWEL available in select international markets. to early access program using the U.S. FDA group. Longer term, we are pursuing expansion opportunities for TransCon CMP 2 ongoing and planned trials. These include ongoing activities such as infants, 0 to less than 2 years of 8. And we recently announced completion of this target enrollment faster than expected. Adult with achondroplasia, children with hypochondroplasia and still continue graphic expansions. Turning now to combination therapy with TransCon CNP and TransCon Growth Hormone. Third biological rationale for this combination treatment is clear and extremely well founded on science. TransCon CNP is removing the limitation for the active FDR3 pathway. So TransCon Growth Hormone can provide a strong complementary effect. In addition, it has been observed that in achondroplasia there is a partial impairment of the IGF-1 growth hormone axis. This is illustrated by children with achondroplasia have a negative IGF-1 SDS value as shown of the demographic in both our Phase II and Phase III trial. In our COS clinical trial or children with achondroplasia, this unique combination has demonstrated sustained transformative to annualized growth velocity and ATH Highscore, including improvement in body proputionality. Based on this result, we believe this unique combination of once-weekly TransCon based therapies will transform the treatment of achondroplasia and other indications over time. Our recent week 78 cost tried data show sustained efficacy over 78 weeks. We now comprises to safety and tolerability. This point to the potential for this novel combination to establish a new treatment standard in attestation. We have Phase III combination trials in children with achondroplasia will begin enrolling later this year. Turning to SKYTROFA. The once-weekly growth hormone treatment built on the mode of action of unmodified somatropin. With indications for pediatric and adult growth hormone deficiency. We continue to be the #1 long-acting growth hormone by brand value in the U.S. We are extremely proud that SKYTROFA recently achieved more than 20,000 unique enrollment. This illustrates the strength of our capabilities from supply chain, commercial infrastructure, [ online ] market support to benefit such a last number of patients or rare disease patients. And we are working to make TransCon Growth Hormone available to more patients to label and geographic expansions to support label expansion going that described in our achondroplasia program. we are conducting the Phase III basket time investigating TransCon Growth Hormone in ISS, SDA and Turner syndrome. As an integrated part of our global growth disorder strategy, we expect to launch TransCon Growth in the same countries where we also expect to launch TransCon CNP. Turning now to our partnership. In metabolic disorders and obesity, our once-monthly TransCon semiglutide program with Novo Nordisk continue to involve events. In ophthalmology, our partner [indiscernible] recently initiated a first-in-human clinical trial of the anti-BDF treatment built on the TransCon technology in patients with AMD. In closing, by all of us putting patients first, Ascendis has delivered 3 highly differentiated leading TransCon based products, YORVIPATH, YUVIWEL and SKYTROFA. We are on track to achieve our Vision 2030 objective of being a leading global biopharma building on a strong foundation for the future. With that, I will turn the call over to Scott to review our financial results and some additional comments.

Thanks so much, Jan, and good afternoon, everyone. I will touch on some key points surrounding our second quarter financial results. For further details, please refer to our Form 6-K filed today. Total product revenue was EUR 315 million, more than doubling year-over-year. Total revenue for Q2 2026 was EUR 339 million which included nonproduct collaboration revenue of EUR 24 million, which further included a EUR 17 million milestone related to TransCon CNP. YORVIPATH revenue was EUR 252 million in Q2, reflecting consistent new patient demand in the U.S. and continued growth outside of the U.S., reaching blockbuster status on a run rate basis in the second year of launch in the U.S. SKYTROFA contributed EUR 55 million in Q2 which reflects increased demand in the U.S. and includes product sales to a collaboration partner. YUVIWEL was commercially launched in the U.S. during Q2 and generated EUR 8 million in revenue in its first quarter on the market, reflecting strong demand and rapid conversion to paid therapy with limited stocking. Continuing to expenses. R&D expenses in Q2 were EUR 76 million, up from EUR 59 million in Q1, reflecting continued investment in our pipeline and innovation. Recall, Q1 included a favorable EUR 11 million reversal of prior period write-downs of TransCon CNP prelaunch inventories. SG&A expenses were EUR 173 million in Q2 compared to EUR 145 million in Q1, reflecting additional investments in the commercial launches of YORVIPATH and YUVIWEL to accelerate growth for the long term. Operating profit of EUR 220 million in Q2, a included EUR 158 million of other operating income related to the sale of the PRV. Non-IFRS operating profit was EUR 92 million and non-IFRS operating margin was 27%, refer to our press release for details. For Q2 '26, net profit was EUR 207 million, and non-IFRS net profit was EUR 61 million. We ended Q2 2026 with EUR 812 million in cash and cash equivalents, which includes the use of EUR 56 million in Q2 for our previously announced share repurchase program including the net settlement of certain RSUs. Following the settlement of our convertible notes, we have no bank debt, no convertible debt and EUR 1.4 billion of equity. Turning to our outlook for the rest of 2026. For YORVIPATH, we expect growth and performance consistent with prior quarters. For SKYTROFA, we expect relatively stable revenue in the U.S. For YUVIWEL, we are encouraged by the early demand trends. We believe it is expanding the market and is on pace to be the leading achondroplasia therapy in the U.S., reflecting the large unmet medical need and the highly differentiated profile of YUVIWEL. Our Q2 performance reinforces our belief that we can achieve EUR 5 billion in revenues in 2030. With our existing portfolio and our TransCon technology is a strong foundation we believe we are well positioned to grow revenue to more than EUR 10 billion in the next decades while developing and launching new TransCon products with blockbuster potential. We expect significant operating leverage as revenue scales through the balance of the year, while maintaining new investments in global product launches and patient access to reach as many patients as possible and support our long-term revenue aspirations. Even with these investments, we expect to generate more than EUR 500 million in cash flow from operating activities this year. With that, operator, we are now ready to take questions.

[Operator Instructions] And our first question is going to come from Jessica Fye with JPMorgan.

On that outlook for at least $500 million of operating cash flow this year, I think you gave that in the beginning of the year prior to the PRV sale. And I was just wondering if you're able to kind of update your cash flow expectations for the year. I know it's sort of like a greater than is unbounded. But curious, if anything more you can add there? And then on that comment that YUVIWEL seems to be expanding the market, is it possible to estimate how much of these patient enrollments are coming from market expansion.

Thanks, Jess, for the questions. And I have a happy person besides me, Scott. So Scott got the opportunity to be the first one answering questions. So please, Scott.

Yes. With respect to our cash flow guidance, just to be clear, greater than EUR 500 million. I thought -- I heard you say EUR 100 million, so greater than EUR 500 million. And at this time, we don't want to bound the upper side because we're initial into the launch of YUVIWEL. And that's euro, by the way, EUR 500 million, Jan likes to point out.

And just related to the question. And it comes back to what we some communicated last time we had this call, that we don't have really the insight in exactly the distribution of where the patients are coming from. And our general feelings and how we see it is that with such a strong demand, we have a really strong belief that it's not only coming from switches. This must also coming for either patients that had stop therapy or new patients that base are coming to a situation because of the highly differentiated nature of Newell that they want to start therapy. And I think this is where we have this strong belief that we see any expansion of the market.

And the next question is going to come from Tazeen Ahmad with Bank of America.

So Jan, I wanted to get your thoughts about the IT challenge on YUVIWEL. We know, obviously, what the blue trend scenario is for Ascendis. And most of the scenarios a little positive, but can you just maybe walk us through what the potential outcomes are? This is for a patent that expires, obviously, in 2030 and so between now and then, can you just tell us what could happen and what the potential for payments that Ascendis would need to make in the worst case scenario could be.

Thanks, Tazeen, for the question. And it's basically is a question that is addressing the ongoing legal, I would call it, battle between Ascendis and biomarine. And let me just come back to some facts. The fact is that this patent that we discussion got complete invalid in Europe. So we never really come to a discussion if we were infringing anything like that. So when we see the situation outside U.S., we got the pattern in valued immediately to the patent system in Europe. In the U.S., we never managed to come into the patent system because BioMarin selected to go to the ITC case, which are system, which we can easily say, traditional none have really dealt with a lot of cases that dealing with branded pharmaceutical. In the ITC case, there will be a first opinion from single judge, and he will come with an opinion here in August and then no next time will be in December. That will be a opinion from the ITC. And then later on, he will be and potential confirmation of the ITC decision 2 to 3 months after to a presidential order. So you can see we are not guiding any clarification in August in one way or the other way even if it's possible for one company and negative for the other one is not really any kind of decision where it's going to be ended. And after the first initial opinion from a single judge because the ITC case will be taken to a decision for -- I cannot remember how many judges that will be part of that decision. There is a huge opportunity to provide what we call interest for this product. And when we see the public interest means the element of how these product opportunities are really been serving an unmet medical need in the U.S. market with this rapid uptake rotation is really, really clear that is a huge topic interest to keep that. And just recall, I cannot remember one single case in the U.S. where a branded product that provides a benefit to U.S. patients had been delayed. But you can see we just in a case where it only is a U.S., it has been cleared ex U.S. And so whatever happened it will not have any material impact on Ascendis pathway. I can guarantee that. It's some kind of -- people take it up as a life and death for Ascendis. This is a total not taken into the perspective, what it means for Ascendis. And out from that, I see it's not really is a material element for our destiny to be a leading biopharma and with EUR 5 billion in 2030.

And our next question will come from Gavin Clark-Gartner with Evercore.

I actually just wanted to ask on the earlier pipeline. So you noted in your prepared remarks that TransCon platform can fuel 1 IND for an NCE annually. I guess there hasn't been 1 yet this year? Should we expect one in the near term? And what exactly are the go-forward plans for the earlier pipeline?

It will be because somewhere felt that the 2 product opportunities that we have developed to our partnership built on the TransCon technology will still consider at NCE. The one that is now in clinic with Iconis and the one we expect to go into the clinic now with Novo Nordisk. It's still some way being developed to the TransCon technology for. And Gavin, I mean, perhaps I shouldn't have done that, but I still believe I feel some kind of a little bit of ownership on these 2 product opportunities, at least we had major upside in both. So apart from that perspective, I still consider the potentially have this year 2 new chemical entity being entered into clinical trials. And I can -- Kenneth and his team and anyone else. They are working were hard on that will be at least one of these new entities coming into every year now. And I'm really proud about that. but it's also addressing the sustainability of Ascendis independent of going out and buying something no one else wants to have. And I think this is where we really feel extremely classed by deceleration but being a fundamental company that building on a strong, strong technology platform that provides both sustainability for self but also a continued flow of potential partner by licensing.

And the next question will come from Yaron Werber with TD Cowen.

Question on YUVI. The -- do you expect that there is some seasonality in terms of new patient starts in the summer as kind of kids are going on vacation. We're getting a lot of questions on sort of the 60 patient start forms kind of in April, and now you're sort of 220, it sounds like there's like 50 per month now. Is that sort of sustainable from now on? And then it sounds like you're planning -- you think you could be the #1 brand by the end of the year. BioMarin, we think, has about 750 patients on drug, you think, in the U.S. are you kind of referring to getting to a higher number than that by, let's say, late February?

Thanks for the question. I actually don't think Ascendis have really made some clear forward-looking statements related to how we see YUVIWEL be accelerating and expanding the market in a quantitative manner. I don't think we have come with any kind of indication related to that. I have no doubt if we do it, but it's not the same thing that we're going to quantify it currently. I think after basic only for month in the market, I feel really not prepared to come with clear guidance to it before we have more quarters really into our you can say, and a difficult system where we basically can look on trends and other things like that. But one person that really can give you a good feedback. Now we talk about the U.S. market is Jay. And he's extremely enthusiastic about what he's seeing, and you can give the latest way what you see how the market will develop.

Thanks, Jan. As Jan mentioned before, 4 months in, we're not prepared to give longer-term guidance, but what we can say is we're incredibly encouraged by what we're seeing today. When you look at some of the fundamentals behind the uveal uptake, whether it's prescriber reach, we talk a lot a bit before around this space, there's quite a few centers of excellence. We're seeing of them, nearly 80% already in a short 4-month period already prescribed YUVIWEL to their patients. So even in early days, we're seeing a lot of enthusiasm from providers around the clinical profile of this product. I think even more importantly, when you look at the patient enthusiasm, I think you can see in early days we're seeing a very positive trajectory. While we don't explicitly collect information on what therapy or nontherapy a patient is coming from. And again, that's driven largely by the fact that we have a broad label. So we don't need that information in order to ensure that this patient can get on therapy. This is rare disease. So qualitatively, we have heard confirmed anecdotes across all 3 categories for which our patients are coming from. And those 3 categories, again, are: one, patients that are switching from current therapy to patients that have previously discontinued pharmacological therapy and has now wanted to return pharmacological treatment. And then third, a group of patients that historically have set out and have said based on the clinical profile of YUVIWEL, they now want to try a therapeutic option for the first time. So all that, again, to underscore there is existing unmet need here. And because of our profile, we're definitely seeing that patients are coming out of the woodwork from growing the market standpoint and we're just getting started.

Just to summary to add on to Jay's excellent comments. Ultimate have no doubt we will be #1 in the achondroplasia space. Ultimately, we will explain the market because of the unmet mine. And that is just with the monotherapy. And when you look at how commitment we are after this area, where we now are making a complete new standard with the compartment. I believe we have dedicated to be not #1 in the first year, but continue to build for the next 5 to 10 years with monotherapy combination integrated treatment regimes. And I believe with our once-weekly TransCon product built on growth hormone and CMP we are extremely, extremely well positioned really to be the leader in this segment.

And our next question will come from Derek Archila with Wells Fargo.

Congrats on the progress. Scott, I just wanted you to clarify a comment on YORVIPATH growth for the rest of the year. I think you said it's going to be like prior quarters, I guess which quarters are you referring? Because I think the quarter-over-quarter growth in 1Q was negatively impacted saw some catch-up here in the second quarter. So maybe you could just clarify which quarters you are referring to?

Yes, Derik, thanks for the question. I think that 2 points. One is the consistent performance with the KPIs that we've given you, for example, with enrollments. We expect those to continue and be consistent. The other would be -- and you can refer to our prior quarters and maybe Chad can point to prior comments. But I think that now that we've seen a full year the various trends that will come into play related to Q3 and Q4 and then Q1 next year. So we think actually, folks did a pretty good job modeling out Q2. And now you have all the information we need to model the rest of the year going forward until we update basically the KPIs.

Just to give you some kind of what is our value in this year. The value for us, we want to give you not so basic getting a lower number, so we look like here. We want to give you the number so you are right, nearly every time. And I think this is the way we try to come up with our different mathematic algorithm, how we see and give you all the information for you really to be right in this manner. And I think this is the way we like to be extremely transparent with everything what we perform. So we're quite sure that you basically can go out and really some way feeling always contract with the guidance we give you.

And our next question will come from Joseph Schwartz with Leerink.

Congrats on all the progress. As you embark on a Phase III in high-low chondroplasia I wanted to ask how you're defining the enrolled population. And -- how do you -- how large do you see the diagnosed treatable pool of hypochondroplasia patients who are not already being treated in some cases, clear the more severe end versus achondroplasia?

Yes. This is from -- this is a very interesting question because it's actually somebody going into the situation on how we basic are to genetic testing taking a big patient group that was in old days were called ISS idiopathic me. We have no clue what is the underlying diseases. And then you go out and do more and more, more genetic testing. And then when you find a mutation in the FDR3 receptor and you find it in the right regions. And then you suddenly are not an ISS patient but then your hypochondroplasia patient, even if you don't have, you can say, the phenotype of looking like achondroplasia patient or a hypochondroplasian that we saw for 10 years ago. So therefore, you can see that ISS population is someway getting smaller and smaller because of the genetic testing is basically going out and giving them an underlying reason why you perfect will have a short status without potential to have the other element that you see for the phenotype of that. So this is where you can -- when you go into ISS, you define it from a genetic perspective. how you define it for a phenotype or anything like that. And we are in a situation where when you see the clinical trial, how we're doing it, you will basically see that is 1 of the pathway we have selected.

And our next question will come from Daniel Bronder with Cantor.

Congrats on the quarter. On for Li Watsek. We were just wondering if you could give us a little more color on the quality of life metrics in the COACH trial. You already alluded to the body segment ratios, but how should we think about benefit on ARM span and other metrics?

Just to recall, the COACH trial is the combination trial where we're combining the to TransCon based product, our TransCon Growth Hormone and TransCon CNP. And I have to say, when I look on elements like spend, it's actually -- we already reported some of the data we have reported the 52-week data. And if you cannot find that deck, I can send it to you or Scott consented or chat consented or I don't know we have so many IR people I don't know all names now. So from that perspective, it is already came out. And I have to say there was one of the -- I will say, extremely positive surprises I saw because when we look on monotherapy, but either at CMP-based one or a growth hormone based one, we not so the expected hopeful development that we can hope for. But we definitely saw it when we look under combination therapy. And then you can ask me what is the scientific reason why you see it much more influenced benefit by the combination therapy. And I have to say, I don't know. But what we saw was an ARM spend that was really give us this hope with the combination therapy, you basically will be in a position that you basically could avoid all kind of link elongation surgeries in achondroplasia, both related to both legs and arms by that. And it's this Slide #5, as I remember it. And what we see, Scott, read up.

The unprecedented improvements in the ARM spend with combination were plus 9.4 centimeters with TransCon CNP naive cohort and 7.9 centimeters with the TransCon CNP-treated cohort.

So it was really and...