Upcoming SKYTROFA And YORVIPATH Launches Will Expand Global Reach

Key Takeaways

• Expanding product offerings and market reach, especially through SKYTROFA and YORVIPATH, aims to boost revenue and capture new opportunities.
  
• Strong cash reserves enable investment in product development and expansions, potentially leading to diversified revenue and improved margins.
  
• The reliance on new product launches, regulatory approval risks, and partnerships, along with competitive pressures and expansion costs, could impact growth and profitability.

Catalysts

A biopharmaceutical company, focuses on developing TransCon-based therapies for unmet medical needs in Denmark, rest of Europe, North America, and internationally.

• Ascendis Pharma is set to expand the market reach of SKYTROFA, with planned commercial launches across multiple countries and additional therapeutic indications such as adult growth hormone deficiency, potentially boosting future revenue.
  
• The strong market uptake of YORVIPATH, the only FDA-approved treatment for hypoparathyroidism in adults, indicates growing demand which could significantly impact the company's revenue growth as it gains approval and launches in additional regions.
  
• Ascendis Pharma's potential NDA submission for TransCon CNP for achondroplasia and the development of combination therapies with TransCon Growth Hormone may result in expanded market opportunities and increased earnings in the coming years.
  
• The expansion of the TransCon technology platform into additional therapeutic areas, such as metabolic, cardiovascular diseases, and ophthalmology through collaborations, could diversify revenue streams and improve net margins over time.
  
• A strong financial position with a cash reserve of €665 million allows Ascendis Pharma to invest in commercial uptake and new product development, supporting continued revenue growth and possibly enhancing margins through economies of scale.

Ascendis Pharma Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Ascendis Pharma's revenue will grow by 61.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from -104.0% today to 31.8% in 3 years time.
• Analysts expect earnings to reach €485.2 million (and earnings per share of €7.45) by about March 2028, up from €-378.1 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €1.4 billion in earnings, and the most bearish expecting €171.0 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 32.7x on those 2028 earnings, up from -23.8x today. This future PE is greater than the current PE for the US Biotechs industry at 19.6x.
• Analysts expect the number of shares outstanding to grow by 4.36% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.38%, as per the Simply Wall St company report.

Ascendis Pharma Future Earnings Per Share Growth

Risks

• The company's reliance on new product launches for growth presents risks if any of its investigational products fail to receive regulatory approval or face delays, impacting revenue growth and profitability.
  
• The need for extensive physician education and payer negotiations when launching new treatments like YORVIPATH could affect the pace of uptake and the financial impact from these products.
  
• Competitive pressure and entry of new products in the same therapeutic areas could threaten Ascendis Pharma's market share and anticipated revenue, especially for treatments reliant on differentiation like YORVIPATH.
  
• The company's expansion plans involve significant investment in commercial infrastructure across multiple regions, which could strain financial resources and impact net margins if sales do not meet expectations.
  
• Dependency on partnerships for pipeline development, such as the collaboration with Novo Nordisk, could pose risks if these external partnerships do not progress as planned, potentially affecting future revenues and earnings.

Valuation

• The analysts have a consensus price target of $212.336 for Ascendis Pharma based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $293.62, and the most bearish reporting a price target of just $162.41.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €1.5 billion, earnings will come to €485.2 million, and it would be trading on a PE ratio of 32.7x, assuming you use a discount rate of 6.4%.
• Given the current share price of $164.65, the analyst price target of $212.34 is 22.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.