Ascendis Pharma: Recent FDA Setbacks Present A Buying Opportunity
Summary
- We are upgrading from a hold to buy rating for ASND following a 35% drop in stock price after FDA deficiency findings in the NDA for TransCon PTH for hyperparathyroidism.
- We expect potential US FDA approval delays beyond the April 30 PDUFA date but an eventual approval.
- Despite uncertainties around the deficiencies, we see the recent sell-off as a buying opportunity based on TransCon PTH's positive Phase 3 data and ongoing EAP enrollment.
- Risks include regulatory, competition, clinical trial, and revenue stream uncertainties.
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Update: recent setbacks in the NDA represents a buying opportunity
We upgrade Ascendis Pharma A/S (ASND) to a buy rating from a hold rating after the recent 35% drop in stock price following the announcement of FDA deficiency findings in the New Drug Application (NDA) for TransCon PTH for hyperparathyroidism. We believe this may cause a delay in US FDA approval beyond the April 30 PDUFA date. Albeit the company has not revealed the specifics of the deficiencies identified, they have assured that they will be dealt with promptly. ASND refrained from guessing what the issues entail but emphasized that any delay of a few months would not significantly affect their operations. Encouragingly, the management noted that the launch of ASND's PTH product in the EU is still scheduled for possible approval in the fourth quarter of 2023, and management is aiming for a potential launch in early 2024 in the first EU country.
Although the unknown nature of the deficiencies understandably spooked investors, we believe it is likely that ASND will get a PDUFA extension or even receive a Complete Response Letter (CRL) but eventually gain approval. Our optimism resides around a) positive Phase 3 data and b) an ongoing Expanded Access Program (EAP), which continues to enroll patients, which wasn't halted after the news. We remind readers that ASND's TransCon PTH is an orphan indication with a high unmet need, especially with Natpara recalled in 2019 and expected to be discontinued by the end of 2024. Therefore, approval will eventually happen once the company gathers and resubmits additional data. Furthermore, the fact that Skytrofa, another therapeutic based on similar technology, has already received the FDA's approval gives us comfort that the FDA will be fairly accommodative moving forward.
Here's a table summarizing the Phase 3 clinical data of TransCon PTH for hypoparathyroidism:
| Parameter | Results |
|---|---|
| Efficacy | TransCon PTH achieved the primary composite endpoint with a response rate of 78.7%. |
| All key secondary endpoints, including measures evaluating patient-reported disease symptoms and impacts, showed statistically significant improvements. | |
| Safety | TransCon PTH was generally well-tolerated, with no discontinuations related to study drug. |
| Mechanism of action | TransCon PTH achieved serum calcium levels in the normal range and independence from conventional therapy. |
| Trial Size | 82 dosed adults with chronic hypoparathyroidism randomized 3:1 (TransCon PTH:placebo). |
| Trial Design | Randomized, double-blind, placebo-controlled trial. |
| Trial Name | Phase 3 PaTHway Trial. |
Moving forward, ASND has set its sights on a worldwide release, encompassing its product marketing in Japan.
Risks
- Regulatory risks associated with obtaining approvals for its products from relevant regulatory authorities.
- Competition from established pharmaceutical companies and emerging biotech firms.
- Clinical trial risks such as failure to meet clinical endpoints, delays, or adverse events.
- Uncertainty of future revenue streams due to potential competition, regulatory changes, or patent expirations.
Conclusion
We have upgraded Ascendis Pharma A/S to a buy rating from a hold rating following the recent 35% drop in stock price after the announcement of FDA deficiency findings in the New Drug Application (NDA) for TransCon PTH for hyperparathyroidism. Despite the potential delay in US FDA approval, which may go beyond the April 30 PDUFA date, we remain optimistic about ASND's future prospects, mainly due to the positive Phase 3 data and an ongoing Expanded Access Program (EAP). We believe that the deficiencies identified will be dealt with promptly, and the launch of ASND's PTH product in the EU is still scheduled for possible approval in the fourth quarter of 2023, and management is aiming for a potential launch in early 2024 in the first EU country. While there is still uncertainty about the nature of the deficiencies, ASND's orphan indication for hyperparathyroidism presents a high unmet need, making eventual FDA approval highly probable. We are comforted by the fact that Skytrofa, another therapeutic based on similar technology, has already received FDA approval. Finally, ASND's global launch plans, including Japan, are within reach, given positive Phase 3 results in Japanese subjects.
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